Isaack v Commissioner of Domestic Taxes [2023] KETAT 614 (KLR)

Isaack v Commissioner of Domestic Taxes (Miscellaneous Application E083 of 2023) [2023] KETAT 614 (KLR) (19 October 2023) (Ruling)

Neutral citation: [2023] KETAT 614 (KLR)

Republic of Kenya

In the Tax Appeal Tribunal

Miscellaneous Application E083 of 2023

E.N Wafula, Chair, EN Njeru, M Makau, E Ng'ang'a & AK Kiprotich, Members

October 19, 2023

Between

Abdullahi Ibrahim Isaack

Appellant

and

Commissioner of Domestic Taxes

Respondent

Ruling

1. The application which was by way of a Notice of Motion dated and filed on 20th July 2023 is supported by an Affidavit sworn by the Applicant, Abdullahi Ibrahim Isaack, on the even date seeks for the following Orders:-a.Spent.b.This Honourable Tribunal be pleased to grant the Applicant an extension of time to file the Notice of Appeal, Memorandum of Appeal, Statement of Facts, objection decision and any other relevant supporting document.c.This Honourable Tribunal be pleased to grant the Applicant leave to file the Notice of Appeal, Memorandum of Appeal, Statement of Facts, Objection Decision, and any other relevant supporting document out of time.d.The Annexed draft Notice of Appeal, Memorandum of Appeal, and Statement of Facts be admitted and deemed to be properly on record and to have been so filed within the stipulated time.e.The cost of the application be in the cause.

2. The application is premised on the following grounds, that:-a.The Applicant through his representatives filed Appeal number 295 of 2021 at the Tax Appeals Tribunal and the same was struck out vide a Judgment delivered on 29th June 2023. b.The reasons given for striking out the Appeal was that the Appeal was found to be incompetent having been filed without first issuing a Notice of Appeal.c.Failure to institute a proper appeal was not the fault of the Applicant but of its representatives and is excusable in the circumstances.d.The Respondent does not stand to suffer any prejudice in the event the orders sought are granted.e.It is in the interest of justice, fairness, and fair play and only fit to grant the orders sought to allow the hearing and determination of the Appeal.

The Applicant’s Submissions i. On whether this Honourable Tribunal has jurisdiction to grant leave and extend the time for lodging a Notice of Appeal and whether the court was functus officio. 3. The Applicant cited Section 13(3) and (4) of the Tax Appeals Tribunal Act 2013 and Rule 10(2) and (3) of the Tax Appeals Tribunal (Procedures) Rules 2015 and submitted that the matter was started off on a wrong footing inadvertently as in its dismissal in the judgment of 29th June 2023, the Tribunal was right in not determining the matter on merit since the procedure of lodging an Appeal goes to the root of the jurisdiction.

4. He relied on the following authorities:a.Fortune Finance Ltd v Geoffrey Ngugi Githaiga CA No. NAI. 22 of 1999-:“A Notice of Appeal is a primary document within which the meaning of Rule 85 of the Rules and learned judge had clearly with no jurisdiction to make an order for filing a fresh Notice of Appeal while the original was still extant.”b.Jersey Evening Post Ltd v A1 Thani [2002] JLR 542 at 550: ““A court is functus when it has performed all its duties in a particular case. The doctrine does not prevent the court from correcting clerical errors nor does it prevent a judicial change of mind even when a decision has been communicated to the parties. Proceedings are only fully concluded, and the court functus, when its judgment or order has been perfected. The purpose of the doctrine is to provide finality. Once proceedings are finally concluded, the court cannot review or alter its decision; any challenge to its ruling on adjudication must be taken to a higher court if that right is available”c.Black’s Law Dictionary, Ninth Edition at page 743- meaning of “Fucntus Officio”d.Chandler v Alberta Association of Architects [1989] 2 S.C.R 848e.Chacha Mwita Mosenda v Baya Tsuma & 2 Others (2017) eKLRf.Telkom Kenya Limited v John Ochanda (suing on his own behalf and on behalf of 966 former employees of Telkom Kenya Limited (2014) eKLR.

5. He submitted that the failure to seek leave before the Appeal was lodged was not raised as a preliminary issue and the matter proceeded without any party realising the same and the judgment proffered did not determine the matter substantively thus the Tribunal cannot be held to be functus officio when the Appeal had not been properly lodged due to defective and improper primary documents.

6. The Applicant opined that the exceptions to the rules are reflected to the Civil Procedure Rules and Section 99 of the Civil Procedure Act which provide for review of judgments and corrections of judgments therefore, the rule on Functus Officio is strictly limited in circumstances where a court can revisit an order or judgment, the main policy concern being that of finality of litigation.

ii. On whether the Application to file an Appeal out of time is competent 7. The Applicant submitted that the current application does not seek review or alteration of the judgment delivered by the Honourable Tribunal but is guided by the judgment where it was found that the Appeal was not properly lodged and is now seeking to approach the court properly by seeking leave through the instant application.

8. It urged the Tribunal to be guided by the following authorities:a.Dilpack Kenya Ltd v William Muthama Kitonyi[2018] eKLR “As to the principles to be considered in exercising the discretion whether or not to enlarge time in First American Bank of Kenya Ltd vs. Gulab P Shah & 2 Others Nairobi (Milimani) HCCC NO. 2255 of 2000 [2002] 1 EA 65 the Court set out the factors to be considered in deciding whether or not to grant such an application and these are (i). the explanation if any for the delay; (ii). the merits of the contemplated action, whether the matter is arguable one deserving a day in court or whether it is a frivolous one which would only result in the delay of the course of justice; (iii). Whether or not the Respondent can adequately be compensated in costs for any prejudice that he may suffer as a result of a favourable exercise of discretion in favour of the applicant.”b.Jedida Alumasa & 3 Others v SS Kesitany Civil Application No. Nai of 1996: “ It is now established that a litigant whose appeal has been struck out has the liberty to restart the appellate procedures, provided he can be able to come to court promptly for an order extending time, at least to lodge a fresh notice of appeal. ”

9. He asserted that the Respondent will not be prejudiced in any way should the present application be allowed as the issues for determination fall entirely within the jurisdiction of the Honourable Tribunal, the Appeal was merely struck out for want of procedure even before the same was adequately dealt with substantively.

iii. On whether the mistakes of an advocate/ tax agent should be visited on the client 10. The Applicant argued that where a client places reliance on the service of an expert such as an advocate or a tax agent, they are expected to act in good faith and negligently to ensure best services are offered to the client and when a professional fails to exercise due diligence and becomes negligent, it would not be just to punish the client whose only mistake was to seek the services of an advocate/ agent who ought to have acted in a professional manner.

11. He relied on the following cases:a.Lucy Bosire v Kenhancha Division Land Dispute Tribunal & 2 Others Miscellaneous Application No. 699 of 2007 [2013] eKLR “In this case the blame is placed at the door steps of the applicant’s erstwhile advocates. It is true that where the justice of the case mandates, mistakes of advocates even if blunders should not be visited on the clients when the situation can be remedied by costs. It must be recognised that blunders will continue to be made from time to time and it does not follow that because a mistake has been made a party should suffer the penalty of not having his case determined in its merits…”b.Belinda Murai & Others v Amoi Wainaina [1978] LLR 2782 (CALL): “A mistake is a mistake. It is no less a mistake because it is an unfortunate slip. It is no less pardonable because it is committed by senior counsel though in the case of a junior counsel the court might feel compassionate more readily. A blunder on a point of law can be a mistake. The door of justice is not closed because a mistake has been made by a person of experience who ought to have known better. The court may not forgive or condone it but it ought certainly to do whatever is necessary to rectify it if the interests of justice so dictate. It is known that courts of justice themselves make mistakes which is politely referred to as erring in their interpretation of laws and adoption of a legal point of view which courts of appeal sometimes overrule…”c.Lucy Bosire (supra) “In Branco Arabe Espanol vs. Bank of Uganda [1999] 2 EA 22, Oder, JSC stated:“The administration of justice should normally require that the substance of all disputes should be investigated and decided on their merits, and that errors, lapses should not necessarily debar a litigant from the pursuit of his rights and unless a lack of adherence to rules renders the appeal process difficult and inoperative, it would seem that the main purpose of litigation, namely the hearing and determination of disputes, should be fostered rather than hindered”.d.Samwel Mwangi Mathu v Commissioner of Domestic Taxes (TAT Misc. Application No. 69 of 2022) “the Tribunal finds the explanations and reasons raised by the Applicant as to the cause for delay on its part in commencing the Appeal process plausible and reasonable in all possible probabilities as sins of a professional should not be visited upon the Clients. The Applicant has in the circumstances met the statutory and judicially established threshold for the grant of Application for the enlargement of time to file an Appeal.”

iv. On whether procedural technicalities should stand in the way of substantive justice 12. The Applicant relied on Article 159(2)(d) and the case of Okoth Obado v Edward Akong’o Oyugi & 2 Others (2014) eKLR where it argued that the court held that a party’s right should not be abruptly excluded from non- compliance with a procedural rule especially where no apparent injustice to the other party can be deduced.

v. On whether the Respondent will suffer any prejudice if the extension of time is granted. 13. The Applicant reiterated that the Respondent will not suffer any prejudice whatsoever if the extension of time is granted as it will still collect taxes together with penalties and interest should the Applicant’s Objection not be sustained.

14. He contended that the Appellant’s recourse for justice solely lies in an Appeal to the Tribunal who stands to suffer irreparably should the extension of time not be granted.

15. He cited the following cases:a.Philip Chemwolo & Another v Augustine Kubede [1982-88] KAR 103 at 1040 “Blunders will continue to be made from time to time and it does not follow that because a mistake has been made that a party should suffer the penalty of not having his case heard on merit. I think the broad equity approach to this matter is that unless there is fraud or intention to overreach, there is no error or default that cannot be put right by payment of costs. The court as is often said exists for the purpose of deciding the rights of the parties and not the purpose of the imposing discipline.”b.Ngoni-Matengo Co-operative Marketing Union Ltd v Alimahomed Osman (1959) EA 577: “”

16. The Applicant reiterated that he could not apply for a review as there is no provision of law he can rely on to do so because he is neither aggrieved by the decision to strike out the Appeal in the decision of 29th June 2023.

17. He asserted that he cannot make an application for review as there is no error on the Tribunal’s judgment and there is no new, compelling evidence to warrant the granting of the review thus the Tribunal should allow the present application because disallowing it would amount to disallowing the Appeal and go against the spirit of overriding objectives and the provisions of Article 159 of the Constitution.

Response to the Application 18. The Respondent filed a Replying Affidavit sworn by Faith Onyango, an Advocate for the Respondent, on 9th August 2023 and filed on 10th August 2023 citing the following as the grounds for opposition.a.That the Applicant has not attached any documents to support his averments nor explain the reasons or grounds to warrant the prayers sought.b.That the Applicant has failed to provide the reasons or evidence as espoused in Section 13(4) of the Tax Appeals Tribunal Act 2013. c.That the Appeal No. 295 of 2021 was struck out vide a judgment delivered on 29th June 2023 hence rendering this Honourable Tribunal functus officio.d.That in any event, the objection decision was given on 27th November 2020.

19. Given that the Respondent did not file its submissions, the Tribunal will rely on the Replying Affidavit filed by the Respondent to determine the totality of its case.

Analysis and Findings 20. The Tribunal is enjoined to determine the length and reason for the delay when considering an application for the extension of time to appeal out of time. The power to extend time is discretionary and unfettered but the same must be exercised judiciously and it is not a right to be granted to the Applicant.

21. In determining whether to extend time, the Tribunal was guided by the decision in the case of Leo Sila Mutiso -vs- Rose Hellen Wangari Mwangi - Civil Application No. Nai. 255 of 1997 (unreported), where the Court expressed itself as thus:-“It is now well settled that the decision whether or not to extend the time for appealing is essentially discretionary. It is also well settled that in general the matters which this court takes into account in deciding whether to grant an extension of time are: first, the length of the delay; secondly, the reason for the delay; thirdly (possibly), the chances of the appeal succeeding if the application is granted; and, fourthly, the degree of prejudice to the respondent if the application is granted.”

22. The Tribunal, guided by the principles set out in John Kuria v Kelen Wahito, Nairobi Civil Application Nai 19 of 1983 April 10, [1984] where the court used the following criteria to consider the application.a.Whether there is a reasonable cause for the delay?b.Whether the appeal is merited?c.Whether the application for extension has been brought without undue delay?d.Whether there will be prejudice suffered by the Respondent if the extension is granted?

a. Whether there is a reasonable cause for the delay 23. In considering what constitutes a reasonable reason for the delay, the court in Paul Wanjohi Mathenge v Duncan Gichane Mathenge [2013] eKLR, held that:-“...it is clear that the discretion to extend time is indeed unfettered. It is incumbent upon the applicant to explain the reasons for delay in making the application for extension and whether there are any extenuating circumstances that can enable the Court to exercise its discretion in favour of the applicant.”

24. The Applicant averred that through his representatives he filed Appeal Number 295 of 2021 at the Tax Appeals Tribunal and the same was struck out vide a judgment delivered on 29th June 2023 with the reasons given for striking out the Appeal being the Appeal was found to be incompetent having been filed without first issuing a Notice of Appeal.

25. He asserted that the failure to institute a proper appeal was not the fault of the Applicant but of its representatives and is excusable in the circumstances.

26. The Respondent asserted that the Applicant has not attached any documents to support his averments nor explained the reasons or grounds to warrant the prayers sought and failed to provide the reasons or evidence as espoused in Section 13(4) of the Tax Appeals Tribunal Act 2013. It added that the Appeal No. 295 of 2021 was struck out vide a judgment delivered on 29th June 2023 hence rendering this Honourable Tribunal functus officio.

27. The Tribunal takes judicial notice of the existence of the case TAT No. 295 of 2021 because it heard the case and rendered the judgment striking it out, therefore, is well versed with the issues that arose therein. Additionally, the Respondent is not disputing the fact that the Appeal was struck out for lack of a Notice of Appeal.

28. The Respondent’s argument that the Applicant has not provided any evidence to prove his assertions is counterproductive and a direct contradiction to its argument that the Tribunal, having pronounced itself on the matter, is rendered functus Officio.

29. The Tribunal opines that striking out an appeal is not the same as dismissing it as the latter denotes finality whereas the former denotes an act of setting a matter aside due to a possible curable defect in the case which can be reopened when the offending party cures the defect in its case within a reasonable time.

30. It is therefore the Tribunal’s finding that the reasons tendered by the Applicant to be a reasonable cause for the delay to the Tribunal.

b. Whether the Appeal is merited? 31. The Tribunal has examined whether the actions complained of by the Applicant were merited and there was an arguable appeal before the Tribunal or the appeal was frivolous to the extent that it would only result in a waste of the Tribunal’s time.

32. An appeal being merited does not mean that it should necessarily succeed rather it is arguable. The Tribunal is guided by the findings of the court in George Boniface Mbugua v Mohammed Jawayd Iqbal (Personal representative of the Estate of the late Ghulam Rasool Jammohamed) [2021] eKLR where it was held that:-“It must be remembered that the question whether an appeal is arguable, does not call for the interrogation of the merit of the appeal, and the Court, at this stage must not make any definitive findings of either fact or law. An arguable appeal is not one which must necessarily succeed, but one which ought to be argued fully by the Court.”

33. In the instant case, the Applicant has neither attached his Memorandum of Appeal and Statement of Facts nor the objection decision, to his Application therefore the Tribunal has not had any instance to peruse through the documents to make out its case.

34. The Tribunal therefore reverts to the previous case no. TAT 295 of 2021 where the main issue raised by the Tribunal in terms of the Appeal was the lack of a Notice of Appeal and not the merits of the case.

35. It is the Tribunal’s finding that since the defect in the Applicant’s Appeal No. TAT 295 of 2021 has been cured, the matter ought to be heard to its fruition as the same has triable issues that can only be gleaned in an evidentiary hearing before it.

c. Whether there will be prejudice suffered by the Respondent if the extension is granted? 36. The Respondent did not demonstrate how it would suffer prejudice if the prayer for expansion of time was granted.

37. The Tribunal observes and is in concurrence with the Applicant that the Applicant’s recourse to justice lies in an appeal to the Tribunal. Thus, the Appellant would suffer prejudice if it is not granted leave to file its appeal considering that the amount of money claimed is of significant value.

38. It is the view of the Tribunal that the Respondent would otherwise still collect the taxes together with penalties and interest should the Applicant be found to be at fault.

39. The Tribunal, therefore, finds that the Respondent will not suffer prejudice if the extension is granted.

d. Whether the Application for an extension has been brought without undue delay? 40. The Applicant contended that the Tribunal issued its judgment on 29th June 2023 where the Appeal was struck out for being incompetent and he intended to file a proper appeal and be able to regularise the said appeal, it is procedural that an application such as this one be advanced and orders obtained to cure the defects that affected the previous appeal.

41. The Respondent averred that whereas the judgment of the Tribunal was pronounced on 29th June 2023, the objection decision was given on 27th November 2020.

42. The Tribunal finds that whereas the objection decision was issued in November 2020, the lateness of the Appeal in the case of TAT No. 295 of 2021 was never raised as an issue to the Tribunal.

43. The Tribunal thus posits that the matter TAT No. 295 of 2021 was filed within the statutory timelines provided. The only issue that might have caused delays in this matter occasioning the instant Application is the Tribunal’s judgment dated 29th June 2023 striking out the Appeal for being incompetent thus giving room for the Appellant to cure the defect in his Appeal.

44. The Tribunal observes that the Applicant filed the instant Application on 20th July 2023, less than a month after the judgment striking out the Appeal was issued. Consequently, the Applicant has satisfactorily proven to it that he filed the application at the earliest convenient time after the judgment and the same has been brought without undue delay.

Disposition 45. The Tribunal in the circumstances finds the application is meritorious and finds in favour of the Applicant.

46. The Tribunal accordingly makes the following Orders:-a.The application for the extension of time is hereby allowed;b.The Applicant be and is hereby granted leave to file a Notice of Appeal and the appeal documents with the Tribunal within Fifteen (15) days of the date of delivery of this Ruling.c.The Respondent to file and serve its Statement of Facts within Thirty (30) days of the date of being served with the appeal documents.d.No orders as to costs.

DATED AND DELIVERED AT NAIROBI THIS 19TH DAY OF OCTOBER, 2023ERIC NYONGESA WAFULACHAIRMANELISHAH N. NJERUMEMBERMUTISO MAKAUMEMBEREUNICE N. NG’ANG’AMEMBERABRAHAM K. KIPTROTICHMEMBER