Kago & another v Assets Recovery Agency & another [2022] KEHC 14177 (KLR)

Kago & another v Assets Recovery Agency & another (Constitutional Petition E011 of 2021) [2022] KEHC 14177 (KLR) (Anti-Corruption and Economic Crimes) (18 October 2022) (Judgment)

Neutral citation: [2022] KEHC 14177 (KLR)

Republic of Kenya

In the High Court at Nairobi (Milimani Law Courts)

Anti-Corruption and Economic Crimes

Constitutional Petition E011 of 2021

EN Maina, J

October 18, 2022

Between

Tebby Wambuku Kago

1st Petitioner

Jane Wangui Kago

2nd Petitioner

and

Assets Recovery Agency

1st Respondent

Equity Bank Limited

2nd Respondent

Judgment

1. By the Petition dated 1st December 2021 supported by affidavit sworn by the 1st Petitioner, on even date, the Petitioners challenge the order of the Chief Magistrates court dated 22nd November 2021, issued in Misc. Criminal Application No. E 4065 of 2021 restricting transactions in the following bank accounts belonging to the Petitioners:- 01501XXXX

01501XXXX

17501XXXX

77701XXXX

17501XXXX

17501XXXX

The accounts are all domiciled at Equity Bank, Garden City Branch.

2. The Petition which is brought under Articles 20, 21, 22, 23, 31, 40(1) (a) and (b), (3), 47 and 50 of the Constitution seeks the following reliefs:“a.An Order ofCertiorari to remove into this Court and quash the warrants, decision/order dated the 22nd day of November 2021 and issued in nrb chief Magistrates Misc Criminal Application No.E4065 OF 2021 for breach of the Petitioners’ fundamental rights and freedoms under the provisions of Articles 31,40 (1), 40(2),47 (1), 47(2) and 50 (1) of the Constitution of Kenya 2010 hence void for all intents and purposes.b.A Declarationthat the actions of the 2nd Respondent restricting debits on the Petitioners Bank Account Numbers 01501XXXX, 01501XXXX, 17501XXXX and 01501XXXX 7745XXXX, as well as Account Numbers 7770XXXX,17501XXXX, and 17501XXXX are in breach of the Petitioners' fundamental rights and freedoms under the provisions of Articles 31, 40 (1), 40(2),47(1), 47(2) and 50 (1) of the Constitution of Kenya 2010 hence void for all intents and purposes.c.A Prohibitory Orderto bar the 2nd Respondent from disclosing or transmitting any document or information concerning the Petitioners Bank Accounts Numbers 01501XXXX, 01501XXXX, 17501XXXX and 01501XXXX, as well as Account Numbers 7770XXXX, 17501XXXX, and 17501XXXX domiciled at the Equity Bank, Garden City Branch without prior notice to the Petitioners.d.General damagese.Costs.f.Such other orders that the Honourable court shall deem just to grant.”

3. The Petition was filed alongside a Notice of Motion dated 1st December 2021 seeking, inter alia, temporary access to the subject bank accounts, a conservatory order and a stay of the impugned Order dated 22nd November 2021. When the Application came up for hearing on 8th December 2021, the parties consented that the Application being subsumed into the Petition so that the two could be heard together.

The Petitioners’ case 4. The Petitioners contend that on 22nd November 2021, the Nairobi Chief Magistrates Court made an order in Misc. Criminal Application No. E 4065 of 2021 restricting debits in their bank accounts for a period of sixty (60) days in order to authorize and authorized the 1st Respondent's investigator, one Cpl. Fredrick Muriuki No.62047 to investigate, inspect and obtain information in relation to the accounts. They contend that this was done without any notice to themselves in complete disregard to their rights under Articles 31, 40, 47 & 50 of the Constitution. Further, that the 2nd Respondent went ahead and froze and restrained other accounts which were not the subject of the Court Order to wit: Account Numbers 01501XXXX, 17501XXXX operated by the 1st Petitioner and Account Numbers 77701XXXX, 17501XXXX and 7501XXXX operated by the 2nd Petitioner which action is not only arbitrary but unconscionable and unlawful. The Petitioners contend that the ex-parte Orders are null and void, the same having been granted by a criminal court without jurisdiction under Sections 37 (1) (2), and 56 (1) of the Proceeds of Crime & Anti-Money Laundering Act which section confers jurisdiction upon a civil court. They contend that the impugned ex-parte orders and the actions of the Respondents amount to condemning them of the offences under the Proceeds of Crime & Anti-Money Laundering Act unheard contrary to the provisions of Article 50 (1) of the Constitution thus defeating the tenets of a criminal justice system that every person is presumed innocent until proven guilty.

5. The Petitioners also assert that their right to privacy and human dignity as guaranteed under Articles 28 and 31 have been violated and continue to be violated by the Respondents who have obtained and continue to obtain personal information and details on their personal bank accounts without their knowledge. Further, that the Petitioners have been subjected to humiliation in the eyes of their friends and of the public when their cards are rejected thus making them unable to effect any transactions or meeting their daily needs. The Petitioners aver that they have not in any way engaged or benefited in money laundering activities as alleged by the 1st Respondent in the Magistrates Court. They contend that given the gravity of the sentence for money laundering it is only just and fair that they should have been heard before the impugned order was issued. They urge that it is in the interest of justice that the orders sought in this petition are granted.

The Response 6. The 1st and 2nd Respondents opposed the Application vide the replying affidavits sworn by CPL Fredrick Muriuki on 15th December 2021 and Samuel Wanjiru on 21st March 2022 respectively.

7. The 1st Respondent contends that the Petition is an abuse of the court process. That the Chief Magistrates court did not grant the impugned orders ex parte as alleged by the Petitioners; that, the court directed that the application be served upon all the account holders and that subsequently the account holders were represented by Counsel Mr. Owaga, Miss Ndidi and Mr. Nadida, who unsuccessfully challenged the court’s jurisdiction vide a preliminary objection raised on 26th November 2021. That it was upon the dismissal of the Preliminary Objection that a consent was recorded restricting debits from the accounts until 16th December 2021 when the matter was to be heard.

8. It is contended that debits from bank account numbers 1750180591737 and 0150177532822 held at Equity Bank were restricted pursuant to an Order of the Court in Misc. Criminal Application No. 1047 of 2021 dated 8th December 2021 but not the order that is the subject of this petition.

9. It is also contended that the 1st Respondent became aware of the 2nd Petitioner's bank accounts numbers 77701XXXX, 17501XXXX and 17501XXXX held at the 2nd Respondent Bank through the instant petition as they were not a subject of the impugned order; that the 1st Respondent then filed a Miscellaneous Criminal Application No. 4272 of 2021 at the CM’s court seeking warrants to investigate and restrict debits of the 2nd Petitioner’s bank accounts no. 77701XXXX, 17501XXXX and 17501XXXX but the matter is yet to heard. Therefore, this petition is premature and is sub-judice as the issues it raises herein should be ventilated at the Chief Magistrates Court Miscellaneous Criminal Application No. 4272 of 2021.

10. It is further contended that the instant petition is an abuse of court process as the 2nd Petitioner has an alternative avenue to canvass the issues raised in the petition in the respective applications filed in the Chief Magistrates Court and thus this court ought to exercise the doctrine of constitutional avoidance as espoused in the case of Roshanara Ebrahim v Ashley Kenya Limited & 3 others [2016] eKLR. Lastly, the 1st Respondent contends that the Petition lacks merit and should be dismissed.

11. On its part, the 2nd Respondent denies that the impugned order restricted the petitioners from accessing 01501XXXX, 01501XXXX, 17501XXXX and 17501XXXX It is contended that the preservation of the funds in respect of the above accounts was done pursuant to an Agency Notice dated 26th November 2021 from the Kenya Revenue Authority issued under Section 43(2) of the Tax Procedures Act, 2015. It is urged that this Petition be dismissed.

12. The Petition was canvassed by way of written submissions which I have fully considered.

Analysis and determination 13. From the Petition, the responses thereto, the rival submissions of Learned Counsel for the parties, the cases cited thereat and the law the issues that arise for determination are:-a.Whether the Magistrate’s court had jurisdiction to issue the order restricting debits from the Petitioners’ bank accounts that are the subject of this Petition;b.Whether the Petitioner’s constitutional rights have been infringed/violated.c.Whether a prohibitory order should issue to bar the 2nd respondent from disclosing or transmitting ay document or information concerning the Petitioner’s bank accounts without prior notice to the petitioners.

a) Whether the Magistrate’s court had jurisdiction to issue the order restricting debits from the Petitioners’ bank accounts that are the subject of this Petition 14. The impugned orders issued in Misc. Criminal Application No. E4065 of 2021 subject of the Petition were issued pursuant to an application dated 22nd November 2021 made by the 1st Respondent under the provisions of Sections 118, 118A, 119 and 121 of the Criminal Procedure Code and Section 180 of the Evidence Act.

15. From the outset, it is important to note that the impugned Order was in respect of the bank account 0150177455576 in the name of the 1st Petitioner at Equity Bank Limited.

16. In its affidavit the 2nd Respondent admitted that the funds in account Nos. 0150177455576, 0150177532822 and 1750180591737, and also Account No. 1750180591752 held at Equity Bank were preserved pursuant to Notices dated 26th November, 2021 by the Kenya Revenue Authority. The Notice is annexed to their affidavit. The remaining three bank accounts 7770177455595, 1750181059764, and 1750181059778 in the name of the 2nd Petitioner were the subject of proceedings in Misc. Criminal Application No. 4272/2021 before the Magistrate’s Court and therefore was sub judice by virtue of Section 6 of the Civil Procedure Act.

Jurisdiction of the Magistrate’s Court. 17. The jurisdiction of the Magistrates Court to grant search warrants and freezing of bank accounts is granted under Sections 118 and 121 of the Criminal Procedure Code and Section 180 of the Evidence Act. The law provides as follows:

18. Section 118 of the Criminal Procedure Code.118. Where it is proved on oath to a court or a magistrate that anything upon, with or in respect of which an offence has been committed, or anything which is necessary for the conduct of an investigation into an offence, is, or is reasonably suspected to be, in any place, building, ship, aircraft, vehicle, box or receptacle, the court or a magistrate may by written warrant (called a search warrant) authorize a police officer or a person named in the search warrant to search the place, building, ship, aircraft, vehicle, box or receptacle (which shall be named or described in the warrant) for that thing and, if the thing be found, to seize it and take it before a court having jurisdiction to be dealt with according to law.”

19. Section 121 of the Criminal Procedure Code“121(1) When anything is so seized and brought before a court, it may be detained until the conclusion of the case or the investigation, reasonable care being taken for its preservation”

20. Section 180 of the Evidence Act“180(1) Where it is proved on oath to a judge or magistrate that in fact, or according to reasonable suspicion, the inspection of any banker’s book is necessary or desirable for the purpose of any investigation into the commission of an offence, the judge or magistrate may by warrant authorize a police officer or other person named therein to investigate the account of any specified person in any banker’s book, and such warrant shall be sufficient authority for the production of any such banker’s book as may be required for scrutiny by the officer or person named in the warrant, and such officer or person may take copies of any relevant entry or matter in such banker’s book.”

21. In the case of Mape Building & General Engineering v Attorney General & 3 Others [2016] eKLR it was held that:- 73. The 2nd Respondent moved the court. Statute law under Section 118 of the Criminal Procedure Code and Section 180 of the Evidence Act allowed them to do so. The application could be made ex parte for very obvious reasons. To hold otherwise would not be in the public interest. It would indeed destroy the very fabric of forensic investigations. No suspect or offender, knowing that there existed evidence which if not destroyed or vanquished would lead to his guilt or liability, can be expected to sit back once notified of possible investigations. The suspect would rid the evidence out of sight and reach. Consequently, the investigator must where there is a foundational basis be allowed and be in a position to seize and secure the evidence.

74. To avoid arbitrary infringement of a citizen’s privacy or property through entries or searches or services, the Criminal Procedure Code provides a simple yet effective mode of obtaining authority through the court. The court has to be satisfied through an affidavit on oath that the warrant or order is necessary for the conduct of the investigations. The order or warrant is never to be granted as a matter of course.

75. It can thus be clearly understood why warrants or seizure orders are obtained ex parte when any matter is still at the investigation stage. The justification seems to fall within the provisions of Article 24 (1) of the Constitution.

76. In the circumstances of this case, the warrants and freezing orders were evidently necessary for the purposes of the investigation. Money moves. It moves fast. With the advent of e-banking, the movement is even faster. For the efficacy of the warrants and the investigations the 2nd Respondent was, in my view, justified in making the application for both the warrants and freezing order ex parte.

22. In the case of Republic v Asset Recovery Agency and 2 others ex- parte John Wachira Wahome [2019] eKLR in determining a similar challenge to the Magistrate Court’s jurisdiction quoted with affirmation the Court of Appeal decision in Samuel Watatua & Another v Republic, Court of Appeal, Nairobi, Criminal Appeal No. 2 of 2013 (unreported) where it was held: -“A reading of Section 180 of the Evidence Act together with Sections 118 and 121 of the Criminal Procedure Code leaves no doubt in anybody’s mind that the Court, upon application, has power not only to authorize access by police to bank accounts of suspected criminals but also to freeze those accounts for the purposes of preserving evidence and the subject matter of the alleged crime.”And further,In this case, we find that the limitations in Section 180 of the Evidence Act together with Sections 118 and 121 of the Criminal Procedure Code are in consonance with Article 24 of the Constitution.”On the basis of the above logical and convincing reasoning, I find that the lower Court had jurisdiction to issue the orders of inspection and freezing of the subject bank account. Incidentally, Section 118 of the CPC should be read in a purposive manner and objectively to achieve the intended and broader objective or goal of preserving the property in question or subject to investigation or seizure which in this case is money and which by its very nature cannot be confiscated or be taken away from the bank hence preservation through freezing the account pending completion of investigations. It is my finding that the order was procedurally obtained.”

23. In view of the above holdings the Magistrate’s court order delivered on 22nd November 2021 was well within the court’s jurisdiction under the said Sections 118, 121 of the Criminal Procedure Code and Section 180 of the Evidence Act. The Order was valid for a period of 60 days to allow for investigations, which in my view is reasonable time.

b) Whether the Petitioners’ Constitutional rights were violated by the order 24. On the second issue, the Petitioners contend that the impugned order violates their fundamental rights and freedoms under Articles 31, 40, 47 and 50 of the Constitution. Article 24 of the Constitution provides that the rights enumerated by the Petitioners, save for Article 50, are not absolute or non-derogable, and therefore may be limited, provided that the limitation is reasonable and justifiable in an open and democratic society based on human dignity, equality and freedom. Investigations such as those the subject matter of this petition, do not in themselves constitute a violation of the rights and freedoms of the person under investigation. The process is not only constitutional, but is also clothed with safeguards against the danger of infringement of one’s rights and freedoms.

25. Secondly, the Petitioner’s claim that the investigations and preservation of funds constitute unfair administration action is unmerited. The Supreme Court has recently in Petition No. 30 OF 2019 Ethics and Anti-corruption commission and Another v Prof. Tom Ojienda and 2 others [2022] eKLR conclusively determined that investigations into criminal conduct does not constitute “administrative action” and therefore do not fall under Article 47 of the Constitution. The Court held:-“(iii) Whether the 1st respondent’s fundamental rights and freedoms were violated by the 1st appellant’s investigative actions against him.(59)In his response, the 1st respondent maintains that by commencing and conducting investigations against him in the manner that it did, the 1st appellant violated his fundamental rights and freedoms guaranteed by the Constitution. In particular, he submits that his right to fair administrative action was violated by the 1st appellant due to its failure to issue Notice before commencing the investigations against him.[60]Article 20 (1) of the Constitution, provides that the Bill of Rights applies to all and bind all State organs and all persons. It entrenches the enjoyment of rights and fundamental freedoms in the Bill of Rights by every person and to the greatest extent consistent with the nature of the right or fundamental freedom. The right to fair administrative action, that is expeditious, efficient, lawful, reasonable and procedurally fair is one such right under the Bill of Rights.(61)Having already concluded that the investigative actions of the 1st appellant cannot be categorized as “administrative action” within the context of Article 47 of the Constitution, we find no basis upon which we can hold, that the 1st respondent’s rights were violated for failure to observe the requirements of the said Article. Therefore, in the absence of proof of violation of his other fundamental rights and freedoms guaranteed by the Constitution, the impugned warrants ought not to have been quashed on the basis of this claim.”

26. The Supreme Court also held that in exercising investigations EACC cannot be required to issue a prior mandatory notice to the intended targets as follows: -“[76] In view of the foregoing, we find it difficult to sustain the declaration by the Court of Appeal to the effect that, the 1st appellant is inflexibly bound to issue Notice in the conduct of its investigations. Where the 1st appellant is acting under its Police powers, it is bound by the laws pursuant to which the Police conduct their investigations and connected purposes. Where it conducts investigations in circumstances where the law requires it to issue written Notice, then it has to issue the Notice. At the end of the day, the people expect that the law enforcement agencies established under the Constitution and the law are effective enough to protect them from crime and related dangers. By the same token, the people expect that such agencies will carry out their mandates in accordance with the Constitution and the law.”It is my finding that the same position applied in the case of Assets Recovery Agency.

27. Thirdly, the right to property under Article 40 is not an absolute right and the Petitioners cannot be heard to claim that the preservation of the funds is an infringement to this right. Article 40(6) of the Constitution is clear that rights acquired under Article 40 do not extend to any property that is found to have been unlawfully acquired. (See the case of Assets Recovery Agency v Pamela Aboo; Ethics & Anti-Corruption Commission (Interested Party) [2018] eKLR.) It is imperative therefore that the order of the Magistrate court is upheld to enable the 1st Respondent complete investigations into the legitimacy of the funds subject of these proceedings.

28. The Petitioners are guaranteed the right to a fair hearing under Article 50 of the Constitution and at the opportune time, will be granted sufficient opportunity to explain the source of the funds in the accounts subject of the Order. (See Section 90(4) (a) & (b) of the Proceeds of Crime and Anti-Money Laundering Act.)

29. As for the right to be presumed innocent until proven guilty it has been held severally that the right is not violated merely by the grant of ex parte orders. In the case of Stephen V. Mangira & another v Senior Principal Magistrate, Shanzu & 9 others [2020] eKLR it was held and I fully agree with the findings:-“65. No emphasis is needed to reiterate that the presumption of innocence is a well-entrenched principle of criminal justice in the commonwealth and now enshrined in the Kenyan constitution as an ingredient of the right to a fair hearing. In my view, it is a presumption that furthers fair hearing and the rule of law by curtailing the operation by whim and arbitrariness. It says that only a judicial process is possessed of the right to say once is guilty of a criminal act.

66. For this petition, it is said that the petitioner’s assets have been frozen on the basis of the criminal case at Shanzu when in fact no judicial pronouncement has been made to invoke the provisions of Article 40(6) and that no person has come forward to complain about the property frozen. For those reasons it is asserted that Sections 2, 14, 17, 53, 54, 54A as well as Sections 56 – 80 (Part VII) and (Part VIII) Sections 81 -999 of the Proceeds of Crime and Anti-Money Laundering Act are unconstitutional for negating on the constitutional presumption of innocence and the right to remain silent. The particular grievance is with those provisions which require a citizen to disclose sources of property and those which allow conservation and forfeiture in the absence of a conviction for unlawfully/illegally obtained property.

67. I take the view that the position of the law complained about is not novel with the POCAMLA alone. Even prior to the advent of organized crimes there was always the doctrine of strict liability where the evidentiary burden was upon the accused person. In such case one may say the burden is shifted. However, in my opinion it is not the burden of proof that is shifted but the evidentiary burden. Like in all criminal case an accused only answers to the case as presented. It is not expected that he helps the prosecution in their mandate by self-incrimination or just filing the blanks in the prosecution’s case. The easy example I can give are the traffic offences of driving without a driving license.”

c) Whether a prohibitory order should issue to bar the 2nd respondent from disclosing or transmitting any document or information concerning the Petitioner’s bank accounts without prior notice to the petitioners. 30. On this issue it is my finding that an order of prohibition cannot issue against the 2nd Respondent in light of its reporting obligations under Sections 44, 45, 45A, 46, 47, 47A & 48 of the Proceeds of Crime and Anti-Money Laundering Act and Regulations 33 and 34 of the Proceeds of Crime and Anti-Money Laundering Regulations 2013.

31. The upshot is that the Petition and the Notice of Motion dated 1st December, 2021 are found to have no merit and they are dismissed with costs to the Respondents.

DATED, SIGNED AND DELIVERED VIRTUALLY THIS 18TH DAY OF OCTOBER, 2022. E N MAINAJUDGE