Republic v Kenya Revenue Authority, Conmissioner Enforcement and Investigations & Commissioner of Domestic Taxes Ex Parte Jonathan Adrian Jackson [2020] KEHC 735 (KLR) | Departure Prohibition Orders | Esheria

Republic v Kenya Revenue Authority, Conmissioner Enforcement and Investigations & Commissioner of Domestic Taxes Ex Parte Jonathan Adrian Jackson [2020] KEHC 735 (KLR)

Full Case Text

REPUBLIC OF KENYA

IN THE HIGH COURT OF KENYA

AT NAIROBI

JUDICIAL REVIEW MISCELLANOUS APPLICATION NO. E067 OF 2020

BETWEEN

REPUBLIC..................................................................................................APPLICANT

VERSUS

KENYA REVENUE AUTHORITY......................................................1ST RESPONDENT

CONMISSIONER ENFORCEMENT AND INVESTIGATIONS......2ND RESPONDENT

COMMISSIONER OF DOMESTIC TAXES....................................3RD RESPONDENT

EX PARTE: JONATHAN ADRIAN JACKSON

RULING

The Application

1. Jonathan Adrian Jackson, the ex parte Applicant herein, has filed an application by way of a Chamber Summons dated 1st December 2020, seeking the following orders:

a. The application be certified urgent and service therefore be dispensed with in the first instance;

b. That Jonathan Adrian Jackson, the Applicant herein, be granted leave to apply for an order of Certiorari to quash the Departure Prohibition Order dated 5th November 2020 and issued to the Applicant on 19th of November, 2020.

c. That Jonathan Adrian Jackson, the Applicant herein, be granted leave to apply for an order of Prohibition to restrain the Respondents or any other person acting on behalf and/or under the authority from issuing a further Departure Prohibition Order against the Applicant until all lawful avenues of tax dispute resolution in Income Tax Appeal E021 of 2020 are exhausted.

d. The grant of leave herein do operate as a stay of the Departure Prohibition Order dated 5th November 2020 issued against the Applicant.

e. That the costs of this application be in the cause.

2. The grounds for the application are stated in an accompanying statement dated 1st December 2020, and a verifying affidavit sworn on the same date by the ex parte Applicant. In summary, the main grounds are that the ex parte Applicant is a Kenyan citizen and a director of Space Investments Limited, which company has a tax dispute with the Respondents currently pending hearing in the High Court in Income Tax Appeal Number E021 of 2020. Further, that on 19th November 2020, without any reasonable justification, the Respondent issue a Departure Prohibition Order against the Applicant under section 45 of The Tax Procedures Act, on account of tax arrears owed by Space Investments Limited, despite being aware that the said dispute is in Court and that Space Investments Limited has not exhausted all the legal avenues available to it to challenge their tax assessment.

3. The ex parte Applicant alleges that the  decision by the Respondents to issue the Departure Prohibition Order is unreasonable given that Space Investments has not declined to pay any lawful taxes and is  only acting within its rights to dispute the Respondents' assessment, the  Applicant is a Kenyan citizen with substantial investments in and resident in the country and as such has no reason whatsoever to leave this jurisdiction permanently, and has travelled in and out of the country numerous times during the pendency of the dispute. Lastly, that despite a demand having been made by his lawyers for the reasons for issuing the Departure Prohibition Order, the Respondents have not given any justifiable answer.

4. The ex parte Applicant annexed a copy of the of the Memorandum of Appeal lodged in Income Tax Appeal Number E021 of 2020, of his Kenyan passport and air tickets of his travel in and out of the country, a copy of the Departure Prohibition Order dated 5th November 2020 issued against him, and a copy of the letter from his lawyers demanding the reasons for the Departure Prohibition Order.

The Determination

5. I have considered the application dated 1st December 2020 and the reasons offered in support of the urgency, and I am satisfied that the ex parte Applicant has demonstrated that this matter is urgent. This for reason that the impugned Departure Prohibition Order will have immediate effects on the ex parte Applicant’s mobility and operations.

6. On the orders sought by the ex parte Applicant for leave to commence judicial review proceedings, the applicable law is Order 53 Rule 1 of the Civil Procedure Rules, which provides that no application for judicial review orders should be made unless leave of the court was sought and granted. The main reason for the leave as explained by Waki J. (as he then was), in Republic vs. County Council of Kwale & Another Ex Parte Kondo & 57 Others,Mombasa HCMCA No. 384 of 1996,is to ensure that an applicant is only allowed to proceed to substantive hearing if the Court is satisfied that there is a case fit for further consideration.

7. It is also trite that in an application for leave such as the present one, the Court ought not to delve deeply into the arguments of the parties, but should make cursory perusal of the evidence before the court, and make the decision as to whether an applicant’s case is sufficiently meritorious to justify leave. It was explained by Lord Bingham in Sharma vs Brown Antoine(2007) I WLR 780, that a ground of challenge is arguable if its capable of being the subject of sensible argument in court, in the sense of having a realistic prospect of success.

8. In the present application, the ex parteApplicant has provided evidence of the impugned Departure Prohibition Order, and advanced the grounds why it considers the Respondent’s decision to be illegal. To this extent I find that the ex parte Applicant has met the threshold of an arguable case, and is therefore entitled to the leave sought to commence judicial review proceedings against the Respondent.

9. On the question of whether the said leave can operate as a stay of the impugned report, the applicable principle is that the grant of such leave is discretionary, but the Court should exercise such discretion judiciously. Order 53 Rule 1(4) of the Civil Procedure Rules provides as follows in this respect:

“The grant of leave under this rule to apply for an order of prohibition or an order of certiorari shall, if the judge so directs, operate as a stay of the proceedings in question until the determination of the application, or until the judge orders otherwise.”

10. In R (H). vs Ashworth Special Hospital Authority (2003) 1 WLR 127, it was held that such a stay halts or suspends proceedings that are challenged by a claim for judicial review, and the purpose of a stay is to preserve the status quo pending the final determination of the claim for judicial review.  The circumstances under which a Court may grant a direction that the grant of leave do operate as a stay of proceedings or of a decision, and the factors to be taken into account by the Courts in this regard were laid down in the said decision, and in various decisions by Kenyan Courts.

11. The main factor is whether or not the decision or action sought to be stayed has been fully implemented. It was thus held in Jared Benson Kangwana vs. Attorney General,Nairobi HCCC No. 446 of 1995 that stay of proceedings should be granted where the situation may result in a decision which ought not to have been made being concluded.  A similar decision was made by  Maraga J. (as he then was) in Taib A. Taib vs. The Minister for Local Government & Others Mombasa HCMISCA. No. 158 of 2006 .

12. This factor was also discussed in R (H). vs Ashworth Special Hospital Authority(supra)where Dyson L.J. held as follows:

“As I have said, the essential e­ffect of a stay of proceedings is to suspend them. What this means in practice will depend on the context and the stage that has been reached in the proceedings. If the inferior court or administrative body has not yet made a final decision, then the e­ffect of the stay will be to prevent the taking of the steps that are required for the decision to be made. If a final decision has been made, but it has not been implemented, then the e­ffect of the stay will be to prevent its implementation. In each of these situations, so long as the stay remains in force, no further steps can be taken in the proceedings, and any decision taken will cease to have e­ffect: it is suspended for the time being.”

13. It therefore follows that were the action or decision is yet to be implemented, a stay order can normally be granted in such circumstances. Where the action or decision is implemented, then the Court needs to consider the completeness or continuing nature of such implementation.  If it is a continuing nature, then it is still possible to suspend the implementation.

14. In this regard, the decision by the Respondent in the impugned Departure Prohibition Order require certain action not to be undertaken by the ex parte Applicant, namely to depart from the country, and it is therefore of a continuing nature. However, despite the decision being amenable to stay, two factors make it necessary for this Court to hear the prayer for stay inter partes. Firstly, the fact that there is a pending suit involving the same or similar parties in Income Tax Appeal Number E021 of 2020, and the risk that this Court may give orders that conflict with those given in the appeal. Secondly, there is need to give the Respondents an opportunity to indicate what prejudice if any, they may suffer if stay is granted.

The Orders

15. In light of the foregoing observations and findings, the ex parte Applicants’ Chamber Summons dated 1st December 2020 is found to be merited to the extent of the following orders:

I. The ex parte Applicants’ Chamber Summons application dated 1st December 2020 be and is hereby certified as urgent, and is hereby admitted for hearing ex partein the first instance.

II. Theex parteApplicant isgranted leaveto apply for an order of Certiorari to quash the Departure Prohibition Order dated 5th November 2020 and issued to the Applicant on 19th of November, 2020.

III. Theex parteApplicant isgranted leaveto apply for an order of Prohibition to restrain the Respondents or any other person acting on behalf and/or under the authority from issuing a further Departure Prohibition Order against the Applicant until all lawful avenues of tax dispute resolution in Income Tax Appeal E021 of 2020 are exhausted.

IV. Prayer (d) of the Chamber Summons dateddated 1st December 2020seeking orders that thegrant of leave herein do operate as a stay of the Departure Prohibition Order dated 5th November 2020 issued against the Applicant,shall be heard at an inter partes hearing to be held on19th January2021.

V. The ex parte Applicant shall file and serve the Respondents with (i) the substantive Notice of Motion, (ii) the Chamber Summons dated 1st December2020and skeletal submissions on prayer(d)thereof, (iii) a copy of this ruling, and (v) a hearing notice, within fourteen (14) days from today’s date.

VI. Upon being served with the said pleadings and documents, the Respondents shall be required to file their responses, and submissions on prayer(d)of the Chamber Summons dated 1st December2020within fourteen (14) days from the date of service.

VII. In view of the Ministry of Health directives on the safeguards to be observed to stem the spread of the current COVID-19 pandemic, this Court shall hear and determine the prayer(d)of the Chamber Summons dated 1st December2020on the basis of the electronic copies of the pleadings and the written submissions filed by the parties.

VIII. All the parties shall file their pleadings and submissions electronically, by filing them with the Judiciary e-filing system, and send copies by electronic mail to  the Deputy Registrar of the Judicial Review Division atjudicialreview48@gmail.com and asunachristine51@gmail.com.

IX. The service of pleadings and documents directed by the Court shall be by way of personal service andelectronic mail, and in the case of service by way of electronic mail, the parties shall also email a copy of the documents so served to the Deputy Registrar of the Judicial Review Division atjudicialreview48@gmail.comwith copies toasunachristine51@gmail.com.

X. The parties shall also be required to file and send to the Deputy Registrar of the Judicial Review Division their respective affidavits of service evidencing personal service, by way of electronic mail tojudicialreview48@gmail.comwith copies to asunachristine51@gmail.com.

XI. The Deputy Registrar of the Judicial Review Division shall put this matter on the Division’s causelist for hearing on 19th January2021.

XII. The Deputy Registrar ofthe Judicial Review Division shall send a copy of this ruling to the ex parte Applicant by electronic mail by close of business on Friday, 4th December 2020.

XIII. Parties shall be at liberty to apply.

16. Orders accordingly.

DATED AND SIGNED AT NAIROBI THIS  3RD DAY OF DECEMBER 2020

P. NYAMWEYA

JUDGE