Republic v Attorney General, Energy Regulatory Commission & Kenya Revenue Authority Ex-parte Joseph Otuma Shiroko [2015] KEHC 2299 (KLR)

REPUBLIC OF KENYA

IN THE HIGH COURT OF KENYA AT BUSIA

JUDICIAL REVIEW NO. 24 OF 2012

IN THE MATTER OF AN APPLICATION BY JOSEPH OTUMA SHIROKO FOR JUDICIAL REVIEW ORDERS OF CERTIORARI, PROHIBITION AND MANDAMUS

IN THE MATTER OF ENERGY ACT NO. 12 OF 2006

AND

IN THE MATTER OF NOTICE DATED 11. 7.2012 BY THE ENERGY REGULATORY COMMISSION

AND

IN THE MATTER OF LAW REFORM ACT CAP 261 LAWS OF KENYA BETWEEN

REPUBLIC---------------------------------------------------------APPLICANT

AND

JOSEPH OTUMA SHIROKO----------------------------------EX PARTE APPLICANT

VERSUS

THE ATTORNEY GENERAL---------------------------------------RESPONDENT

AND

THE ENERGY REGULATORY COMMISSION-------- 1ST INTERESTED PARTY

KENYA REVENUE AUTHORITY--------------------------- 2ND INTERESTED PARTY

JUDGMENT

1.     The Ex parte Applicant is Joseph Otuma Shiroko. He is a resident of Busia county and trades under the business name of Magharibi Services Station  which operates a Petrol station situate in Malaba Town.

2.     In a Notice of Motion dated 7th August 2012,  the Ex parte Applicant seeks the following prayers:-

1. That this Honourable court be pleased to issue an Order of Certiorari to remove into this Honourable Court and quash all the provisions, stipulations order directions contained in the letter dated 11. 7.2012 by the Energy Regulatory Commission to the Commissioner for Customs Services, Kenya Revenue Authority and the district Commissioner Teso North District and copied to the Station owner Magharibi Filing Station the Exparte Applicant herein.

2. That this court be pleased to issue an order of prohibition against the 1st and 2nd Interested Parties from enforcing and implementing the directions, orders stipulations, provisions of the letter dated 11. 7.2012 by the Energy Regulatory Commission to the Commissioner for Customs services, Kenya Revenue Authority and the District Commissioner Teso North District and copied to the Station owner Magharibi Filing Station the Exparte applicant herein.

3. That an order of mandamus be issued to compel the 1st Interested Party to revoke and/ withdraw the letter dated 11. 7.2012 to the Commissioner for Customs Services, Kenya Revenue Authority and the District Commissioner Teso North District and copied to the Station owner Magharibi Filing Station the Exparte Applicant herein.

4. That the costs of this application be provided for.

3.     The said Application was triggered by a letter dated 11th July 2012 authored  by the 1st Interested Party instructing the 2nd Interested Party to impose stiff penalties against Magharibi filling station run by the Exparte Applicant. This letter is also said to have asked the District Commissioner Teso North District to suspend the Retail Petroleum Licence issued to the owner.

4.     The Commission, through an affidavit of 8th April 2013 sworn by Ezra Kimutau Terer stated that based on information received by it that some truck drivers were complaining that their trucks were breaking down after fueling at the Applicant’s Petrol Station, it dispatched its agent SGS Kenya Limited to test fuel samples from the Petrol Station.  Those samples were under the custody of the Officer Commanding  Malaba Police Division. The tests were conducted and the agents made a report of the results.  Analysis showed that Kerosene traces were found in the Diesel fuel and hence the fuel was adulterated.  On the basis of this evidence the Commission recommended that the District Commissioner, Teso North to suspend the licence of the Dealer until such time that he corrected the anomalies.

5.     The complaint by the Exparte  Applicant is that the action of  the 1st Interested Party was arbitrary, capricious and irregular because there was no proper inspection of the Petrol station.  Secondly, the purported inspection by SGS Kenya was done without any prior notice to the Applicant or his authorized agents.  Further that the directive to the District Commissioner was irregular, unlawful and oppressive because the Applicant was not offered any reason, grounds and/or allegations to which he could get his side  heard. The Commission denied that its acts were either malicious or arbitrary.   It justified its action as  motivated by its obligation to protect members of the  public and to ensure fair play amongst competitors.

6.     As the Court sets out in its duty of determining the application, it observes that neither the Respondent nor the 2nd Interested Party filed responses to the Notice of Motion.

7.     The purpose and object of Judicial Review has been stated on countless occasions by the Courts.  The Court of Appeal in Commissioner of Land  V Kunste Hotel Limited [1997] eKLR held as follows:-

But it must be remembered that judicial review is concerned not with private rights or the merits of the decision being challenged but with the decision making process.  Its purpose is to ensure that the individual is given fair treatment by the authority to which he has been subjected.

8.     It is undoubted that two of the objects and functions of the Commission is to regulate the sale of Petroleum and Petroleum Products and to protect the interest of consumers, investors and other stakeholders.  (See Section 5 of the Energy act  12 of 2006 hereinafter the “Act”).  For purposes of carrying out its mandate and functions, Section 6 of the Act has donated various powers to the Commission one of which is to issue, review, modify, suspend and revoke Licences and permits for all Undertakings and Activities in the Energy Sector.

9.     Section 23 of the Act permits the Commission to appoint Committees or agents and delegate some powers to such Committees or agents. The Section provides as follows:-

Appointment of committees or agents

(1)The Commission may appoint committees, or agents, as may be necessary or expedient for the better carrying out of the objects and purposes of this Act.

(2)Every such committee or agent shall be appointed by the Commission in writing, setting out the duration of the appointment, the duties, reporting requirements, functions authority and powers so conferred.

(3)Any instrument issued by the Commission under sub section (2) may be issued for a limited period or without limit of period, and may be varied or revoked by the Commission at any time.

(4)The Commission shall pay such allowances and fees to the members of such committees or such agents as the Commission may determine.

10.                       The letter that ignited these proceedings is that of 11. 7.2012. It is not a long letter and there is no difficulty reproducing it in full:-

Energy Regulatory Commission

Our Ref. ERC/PET/3

Commissioner for Customs Services

Kenya Revenue Authority

Times Tower

NAIROBI -  Attn: PMU

Ms Josephine A. Onunga

District Commissioner

Teso North District

P.O. Box 2  - 502044

AMAGORO.

Dear Madam

RE: POSSESSION OF MOTOR FUELS CONTAMINATED WITH DOMESTIC KEROSENE – MAGHARIBI SERVICE STATION

Attached hereto please find copies of self explanatory test results carried out by SGS Kenya Limited indicating the presence of Domestic Kerosene in motor fuels in the service station as shown below:-

Owner/Dealer Site & location Product and comment Date and time of testing

Magharibi Filing Station Teso District AGO Unspecified Volume Traces of Domestic Kerosene present 9. 7.2012 @ 1340 hrs

The purpose of this letter is to ask KRA to impose stiff penalties against the service station owner (operator) under Cap 472.   The District Commissioner is also asked to suspend the Retail Petroleum Licence issued through delegated powers under the Energy Act No. 12 of 2006, to the owner(dealer) of the affected station with immediate effect . The station should remain closed until you receive further advise from the Energy Regulatory Commission.

Please let me know the action taken against  that station operator  promptly. This will discourage unscrupulous businessman from undertaking this illegal activity and enable the Energy Regulatory Commission to monitor the effectiveness of this consultancy with SGS.

Please expedite

Yours faithfully

Mueni Mutung’a

For : DIRECTOR GENERAL

CC       Mr. Mutea Iringo

Acting Permanent Secretary

Ministry of state for Provincial Administration and Internal Security

Office of the President

Harambee House

NAIROBI

Mr. Patrick Nyoike, CBS

Permanent Secretary

Ministry of Energy

Nyayo House

NAIROBI

Mrs. Evah Oduor

Managing Director

Kenya Bureau of Standards

KEBS Headquarters

NAIROBI

Mr. Elphas Korir

OCPD Teso

P.O. Box 88-502044

AMAGORO

Station Owner

Magharibi Filling station

C/O District Commissioner  Teso North

P.O. BOX 2 -502044

AMAGORO

11.                       Apart from advising the addressees of the findings of SGS Kenya Limited it asked them to take certain actions.  It asked KRA (The 2nd  Interested Party) to impose stiff penalties against the service station owner under Cap 472. Secondly, it asked the District Commissioner to suspend the Retail Petroleum Licence issued to the owner. The two were required to act with immediate effect.  The District Commissioner was perhaps an agent of the Commission appointed under the Provision of Section 23  of the Act cited in paragraph 9 of this Decision.

12.                       Unlike what the Commission now states in Court, the letter did not contain mere recommendations to the two addressees. The language of the letter is patronizing and the ultimate paragraph of the letter reveals that the two were directed to act.  The District Commissioner in particular was merely to communicate the decision of the Commission to suspend.  This is the language of that paragraph:-

Please let me know the action taken against  that station operator  promptly. This will discourage unscrupulous businessmen from undertaking this illegal activity and enable the Energy Regulatory Commission to monitor the effectiveness of this consultancy with SGS. (my emphasis)

13.                       Now did the Commission have power to ask KRA to impose stiff penalties?  The source of such power was not pointed out to me by the Commission and I was unable to locate any in the Act.  I think that the Commission may have acted without jurisdiction.

14.                       What about the suspension of the Licence?  Under the Provisions of Section 85 (1) the Commission or licensing agent may suspend or revoke a license in the wherein:-

......... a) The undertaking or the execution of the works

related thereto    has not commenced at the expiry of twenty-four months from the date on which the licence or permit was granted, or at the expiry of any extended period which the Commission may allow;

b) It is satisfied that the licensee is either willfully or negligently not operating in accordance with the terms and conditions of the licence, permit or the provisions of this act or any regulations thereunder; or

c) The licensee is adjudged bankrupt.

15.      Sub section (2) then provides

Unless otherwise specified in the licence, the Commission or licensing agent may give a licensee fourteen days notice to show cause why the licence should not be revoked.

That subsection requires that in the event of revocation the Commission  may issue a Notice to Show Cause to a Licensee.  Subsection (3), again in respect to revocation, requires that the Commission or Licensing Agent shall determine the matter within 30 days from the expiry of the Notice.  The Statute says nothing about the procedure in the event of a suspension such as the one that the Exparte Applicant faced.

16. That said, a Constitutional Imperative is that Administrative Action must be fair.  Article 47 of the Constitution 2010 provides:-

(1)            Every person has the right to administrative action that is expeditious, effecient, lawful, reasonable and procedurally fair.

(2)            If a right or fundamental freedom of a person has been or is likely to be adversely affected by administrative action, the person has the right to be given written reasons for the action.

(3)            Parliament shall enact legislation to give effect to the rights of clause (1) and that legislations shall-

a)    Provide for the review of administrative action by a court or, if appropriate, an independent tribunal; and

b)    Promote efficient administration.

17. The impugned letter of 11th July 2012 is copied to the Exparte Applicant and contains reasons for the suspension of his licence. What the letter fails to do is to give the Licensee an opportunity of challenging the Action of the Commission.  The letter, in my view, ought to have set out the manner in which the licensee could challenge the suspension and give assurance that such  challenge would be determined expeditiously.  By failing to do so, I hold, the letter of 11th July 2012 failed the test of Administrative  fairness.

18. In the end, I am for allowing the Notice of Motion dated 7th August 2012.  It is hereby allowed in its entirety with costs.

19.               As explained to the Parties, this Decision could only be delivered on Notice to them as I was proceeding for my Annual Leave and thereafter for August vacation.  That explains the apparent delay.

Dated, signed and delivered at Busia this 1st day of October .2015.

F. TUIYOTT

J U D G E

In the presence of:-

Oile……………………….Court Clerk

N/A……………………. For Applicant

N/A……………………… For Respondent

N/A……………………. For Interested Parties