Republic v Lucas M. Maitha Chairman, Betting Control and Licensing Board, A.O. Kwasi, Director, Betting Control and Licensing Board, Flint East Africa Limited & Mama Fatuma Children’s Home Ex Parte Interactive Gaming and Lotteries Limited [2015] KEHC 2673 (KLR)

REPUBLIC OF KENYA

IN THE HIGH COURT OF KENYA AT NAIROBI

MISCELLANEOUS CIVIL APPLICATION NO. 370 OF 2010

REPUBLIC…………..………………………………………………APPLICANT

VERSUS

HON. LUCAS M. MAITHA CHAIRMAN,

BETTING CONTROL AND LICENSING BOARD….1ST RESPONDENT

A.O. KWASI, DIRECTOR,

BETTING CONTROL AND LICENSING BOARD...2ND RESPONDENT

AND

FLINT EAST AFRICA LIMITED……………………INTERESTED PARTY

MAMA FATUMA CHILDREN’S HOME….….….…………BENEFICIARY

EX PARTE:

INTERACTIVE GAMING AND LOTTERIES LIMITED

RULING

Introduction

On 16th February, 2015 I delivered a ruling in this matter, after interrogating the provisions of section 36 of the Betting, Lotteries and Gaming Act, Cap 131 Laws of Kenya, in which I expressed myself as follows:

“Blacks Law Dictionary9th Edn. page 831 defined “gross income” as “Total income from all sources before deductions, exemptions, or other tax deductions”. Similarly “gross receipts” is defined at page 772 thereof as “The total amount of money or other consideration received by a business taxpayer for goods sold or services performed in a taxable year, before deduction.” “Proceeds” on the other hand is defined at page 1325 as inter alia “Something received upon selling, exchanging, collecting, or otherwise disposing of collateral”. “Net proceeds” on the other hand is defined at the same page as “The amount received in a transaction minus the costs of the transaction (such as expenses and commissions). Also termed net balance”…In this case the parties were agreed that section 36 of the Act applied to the lottery in question. That section deals with lotteries intended to raise funds for social service, public welfare, relief of distress or patriotic purposes or to provide recreational or sporting facilities. That being the object of the subject lottery the phrase “gross proceeds” must in my view be given an interpretation which promotes the object of the statute. If this interpretation is adopted it is my view that to interpret the phrase other than in the manner defined by Blacks Law Dictionary would defeat the purpose for which the lottery was licenced… It is therefore clear that no less than 25% of the gross proceeds is to be devoted to the object for which the lottery is promoted. However this percentage may be increased up to a maximum of 45%. It follows that the argument by the applicant that since there was no condition imposed the amount payable could go below 25% cannot be correct. To protect the promoters of the lottery, the section itself provides that the percentage devoted to the object for which the lottery is promoted cannot exceed 45% of the gross proceeds. Therefore the Act itself protects the interest of the promoter and that in my view bars the promoter from purporting to resort to self-protection as it were.”

This decision followed an earlier decision by Musinga, J (as he then was) issued on 2nd September, 2011 in which he expressed himself as follows:

“The 1st applicant must comply with the request made by the Board by its letter dated 2nd December, 2010. In particular, it must satisfy the court that it has paid or is prepared to pay to the Children’s Home 25% of the gross proceeds of the lottery. The service providers will have to provide to the 1st applicant the total number of SMS received so that the total amount of money raised through the lottery can be computed. Without that information it may not be possible to determine what the gross proceeds were.”

Following this Court’s said ruling of 16th February, 2015, an application was filed on behalf of the Beneficiary herein, Mama Fatuma Children’s Home, dated 9th March, 2015 in which the Beneficiary sought an order for the release of the sum of Kshs 50,000,000/= plus interest held by the Court pursuant to the said order issued by Musinga, J to the beneficiary. It also sought an order for costs.

On 8th July, 2015, the partes herein recorded a consent in which they settled all matters the subject of the said application save for the issue of the interest. It is the issue of who is entitled to the interest arising from the said deposit that falls for determination in this ruling.

In this Court’s said earlier ruling I expressed myself inter alia as follows:

“The law on this issue is that if the words of an enactment are themselves precise and unambiguous, then no more is necessary than to expound those words in their ordinary and natural sense. The words themselves alone do, in such a case, best declare the intention of the lawgiver. But where the meaning is not plain, a court of justice is still bound to construe it, and, as far as it can, make it available for carrying out the objects of the Legislature, and for doing justice between the parties. When the words of an enactment are not clear, it is permissible to go to certain sources of information outside the enactment for the purpose of throwing light upon its meaning. In construing Acts of Parliament, the words which are used are not alone to be regarded. Regard must also be had to the intent and the meaning of the Legislature to be collected from the cause and necessity of the Act being made, from a comparison of its several parts and from foreign (meaning extraneous) circumstances so far as they can justly be considered to throw light upon the subject. In all cases the object is to say what is the intention expressed by the words used. But, from the imperfection of language, it is impossible to know what that intention is without inquiring farther, and seeing what the circumstances were with reference to which the words were used, and what was the object, appearing from those circumstances, which the person using them had in view, for the meaning of words varies according to the circumstances with respect to which they are used. In construing any enactment regard must be had not only to the words used but to the history of the Act and the reasons which led to its being passed. You must look at the mischief which had to be cured as well as to the cure provided. Under the ordinary rules for the construction of statutes the reports of commissioners are not admissible for the purposes of directly ascertaining the intention of the Legislature, though they may perhaps be looked at as part of the surrounding circumstances for the purpose of seeing what was the evil or defect which the Act under construction was designed to remedy. The statement of the objects and reasons for a bill are not admissible to aid in its construction; neither may reference be made to the proceedings of the Legislature which resulted in its passing. By analogy the Government’s statement of intended policy presented to Parliament in the form of a White Paper would be equally inadmissible as an aid to construction of the resulting legislation. See The Katikiro of Buganda vs. The Attorney General of Uganda Civil Appeal No. 11 of 1959 [1959] EA 382. ”

Section 36 aforesaid provides as follows:

(1) The Board may issue a permit authorizing the promotion and conduct of a lottery (not being a lottery promoted and conducted under section 40, section 41 or section 42)—

(a) which is intended to raise funds for social service, public welfare, relief of distress or patriotic purposes or to provide recreational or sporting facilities; and

(b) at least twenty-five per centum of the gross proceeds of which is to be devoted to the object for which the lottery is promoted:

Provided that the Board may require as a condition that a specified proportion of greater than twenty-five per centum of the proceeds be devoted to the object for which the lottery is promoted, but in no case shall the Board require a proportion greater than forty-five per centum of the gross proceeds.

(2) Where in the case of a lottery authorized under this section less than twenty-five per centum, or less than the proportion provided by the Board under the proviso to subsection (1), of the gross proceeds of the lottery is devoted to the object for which the lottery is promoted or any of the proceeds are devoted to a purpose, other than expenses and prizes, which is not such an object, each promoter of the lottery shall be guilty of an offence and liable to a fine not exceeding five thousand shillings or to imprisonment for a term not exceeding six months or to both.”

This Court has already determined what constitutes “gross proceeds” for the purposes of the Act. In my view, “gross proceeds” cannot be deemed to include interests accrued as a result of an order for deposit in a joint earning interest account made by a Court. Such an order is usually made in recognition of the fact that the value of the money depreciates with time as a result of inflation. It is therefore an order which is meant to cushion the successful party so that he/she is able at the end of the dispute to receive what he/she would have been entitled to had he/she not been kept away from a sum which was rightfully due to him/her. In my view interest accruing from a deposit resulting from an order of the Court ought not to be considered as part of the decretal sum so as to be subjected to deduction when calculating the decretal amount. Whereas it may well be that it may be taken into account in calculating the amount of interests due in respect of a decree, where an issue of interest on a decree does not arise, the same ought not to be considered to inure in favour of the judgement debtor.

In Latavs. Mbiyu [1965] EA592 it was held:

“The award of interest on a decree for payment of money for a period from the date of the suit to the date of the decree is a matter entirely within the court’s discretion, by section 26 of the Civil Procedure Act but such discretion must, of course, be judicially exercised, and where no reasons are given for the exercise of a judicial discretion in a particular manner, it will be assumed that the discretion has been correctly exercised, unless the contrary be shown…It is clearly right that in cases where the successful party was deprived of the use of goods or money by reason of a wrongful act on the part of the defendant, the party who has been deprived of the use of goods or money to which he is entitled should be compensated for such deprivation by the award of interest.”

Similarly in Highway Furniture Mart Ltd vs. Permanent Secretary Office of the President & Another [2006] eKLR it was held:

“The justification for an award of interest on principal sum is to compensate a plaintiff for the deprivation of any money, or specific goods through the wrong act of a defendant.”

In the same vein it was held in Lwanga vs. Centenary Rural Development Bank [1999] 1 EA 175 that:

“The award of interest prior to the institution of the suit is rationalised in two ways: (1). that the plaintiff is thereby being compensated for being kept out of his money. He has been deprived of the use of his money from the time he incurred his loss. On that basis, interest is to run from that date. (2). that the defendant wrongfully withheld the plaintiff’s money. The emphasis here is on the Defendant’s wrongful withholding of the Plaintiff’s money. On that basis, interest is to run from the date when the Defendant ought reasonably to have settled the plaintiff’s claim. This is rather punitive.”

It is therefore clear that an award of interest is a form of reimbursement or compensation to a person who has been deprived of the use of goods or money by reason of a wrongful act on the part of the other party, by the party who has wrongfully deprived him of the use of goods or money. In this case, it is clear that both the Beneficiary and the ex parte applicant were deprived of a sum money which was, pursuant to a statute, lawfully due to them. The Court deemed it fit to give some measure of compensation to whoever it would found was rightfully entitled to the money deposited. Musinga, J did not order that payment be made to the Beneficiary. In his order the applicant was to either satisfy the court that it had paid or was prepared to pay to the Children’s Home 25% of the gross proceeds of the lottery. It was this state of affairs that led to the order for deposit. It is therefore clear that by the order of deposit both parties were denied of the use of the money deposited and are entitled to the respective interest arising from the said deposit.

The parties herein have agreed that the Beneficiary is entitled to a sum of Kshs 34,632,709. 63 while the ex parte applicant is entitled to the sum of Kshs 15,367,290. 36.

Accordingly the order which commends itself to me and which I hereby make is that the interest accruing from the sum deposited be disbursed to the account of the Beneficiary and the ex parte applicant on a pro rata basis in the ratio of their agreed entitlements pursuant to the consent recorded herein. If the parties are unable to agree on the exact sum due to each party the matter to be determined by the Deputy Registrar of this Court.

Each party will bear own costs.

It is so ordered.

Dated at Nairobi this day 30th day of September, 2015

G V ODUNGA

JUDGE

Delivered in the presence of:

Mrs Kashindi for Mr Nganga for the Applicant

Mr Kyalo for the Beneficiary

Cc Patricia