National Assembly, Republic of Kenya & another v Matindi & 3 others (Civil Appeal (Application) E176 of 2023) [2023] KECA 1566 (KLR)
The bottom line
#Kenya's Court of Appeal paused a High Court ruling striking down tax exemptions, giving Parliament and KRA six months of legal breathing room while the appeal is heard.
What this practically means
#Executive summary
#Questions the Court framed
#The issues the Court set itself to decide, in its own words.
- 1.Whether the intended appeal is arguable
- 2.Whether, if the orders sought are not granted and the intended appeal succeeds, the appeal will be rendered nugatory
Key legal issues
#Whether the intended appeal was arguable
Arguability was common ground; the memorandum of appeal raised several arguable grounds, including the quashing of the Legal Notice and the unconstitutionality declaration against section 13(2) of the Income Tax Act.
Counsel for the parties tacitly agreed there was no dispute regarding the arguability of the appeal, so the court directed the parties to address it only on the nugatory aspect. The court nonetheless noted that the memorandum of appeal raised several arguable grounds, including whether the trial court erred in quashing the Legal Notice and in declaring section 13(2) of the Income Tax Act unconstitutional for authorising tax waivers by Gazette notice rather than legislation.
Whether the appeal would be rendered nugatory absent a stay
Yes. Great hardship and inconvenience would be occasioned to the applicants against the public interest: tax exemptions would have to be processed as money bills through the National Assembly, and recovery of taxes exempted over more than ten years under bilateral arrangements would be required.
The court weighed the far-reaching effect of the declarations, the practical impossibility of processing every tax exemption application as a money bill with public participation, the position of investors under country-to-country financing agreements, and the hardship of collecting taxes exempted since August 2010. It concluded that refusal of stay would cause great hardship and inconvenience to the applicants against the public interest.
The form of the relief: whether a declaration of unconstitutionality can be stayed or suspended
Rather than staying the declaration of unconstitutionality, the court granted an order temporarily suspending the coming into effect of the declarations of invalidity for six months pending the appeal.
The court accepted the 1st respondent's submission that a statute once declared unconstitutional cannot be stayed, but relied on comparative jurisprudence from Canada and South Africa as analysed by Mativo J in Law Society of Kenya v Kenya Revenue Authority, which recognises the power to suspend a declaration of invalidity to avoid a legal vacuum. It therefore crafted a suspension order rather than a stay of the declaration itself.
Legal principles established
#- An applicant for stay under rule 5(2)(b) must satisfy both limbs: an arguable appeal and that the appeal will be rendered nugatory if stay is not granted.
- A court has discretion to grant an order suspending the coming into effect of a declaration of unconstitutionality pending hearing of an appeal, drawing on comparative jurisprudence.
Court orders
#- 1.An order temporarily suspending the coming into effect of the declarations made by the High Court with respect to Legal Notice No. 15 of 2021 and section 13 of the Income Tax Act
- 2.The suspension shall remain in force for a period of six (6) months from the date of the order, pending hearing and determination of the applicants' appeal
- 3.Costs of the application shall abide the outcome of the appeal
The bench
#One judgment of the whole court — no separate or dissenting opinions.
- On appeal from
- High Court of Kenya
- Petition dated July 16, 2021
- Jurisdiction invoked
- Rule 5(2)(b) of the Court of Appeal Rules
Quotable passages
#Verbatim from the judgment, each located to the page it appears on in the official PDF — so these can be cited and checked directly.
the applicants must satisfy the court with respect to the existence of both principles in their favour
in this case, great hardship and inconvenience would be occasioned to the applicants, against the public interest, should the orders sought not be granted
given the far-reaching nature and enormity of the declarations and orders issued by the trial court, an order staying the coming into effect of the declarations of invalidity of the impugned Legal Notice and unconstitutionality of section 13 of the Income Tax Act is merited
The suspension of the said declarations shall remain in force for a period of six (6) months from the date hereof, pending hearing and determination of the applicants’ appeal
The costs of the application shall abide the outcome of the appeal.
Issues in the judgment
#The judgment refers inconsistently to the provision of the Income Tax Act declared unconstitutional - paragraph 4 refers to section 13(2), while paragraph 34 refers to section 13(1) and paragraph 38 to section 13.
Key timeline
#Practical implications
#Frequently asked questions
#Cite this brief
#Cite this brief
Caselaw, "National Assembly, Republic of Kenya & another v Matindi & 3 others (Civil Appeal (Application) E176 of 2023) [2023] KECA 1566 (KLR)", Case Analysis (2023). Civil Application No. E397 of 2023. Source: https://new.kenyalaw.org/akn/ke/judgment/keca/2023/1566/eng@2023-12-19
Suggested citation format for research notes or client memos. Always verify the original judgment before relying on any point.