The appeal in the Supreme Court arose from the Judgement of the Court of Appeal, which had upheld the decision of the High Court, dismissing Base Titanium Limited’s petition. The appeal concerns a cess fee of KES. 3000 imposed on each of Base Titanium Limited’s trucks from 17th June 2014, whenever transporting minerals from Kwale County to Mombasa Port which is within Mombasa county’s jurisdiction. The County Government of Mombasa imposed the cess, despite a protest from Base Titanium Limited that the same contravened the Constitution, as well as a confirmation from the Attorney General that the cess imposed was unconstitutional.
Aggrieved by the County Government of Mombasa’s imposition of the said cess, Base Titanium Limited filed High Court Petition No. 9 of 2015, seeking the following orders:
- a declaration that the actions of the County Government of Mombasa to charge it a cess in the sum of Kshs. 3,000 per truck, or any sum at all, as a condition for the Base Titanium Limited to move its goods across the boundaries of Mombasa County is unconstitutional, null and void;
- a declaration that the County Government of Mombasa has no mandate under the Constitution to pass any legislation that restricts Base Titanium Limited’s right of movement across Mombasa County boundaries; and
- a mandatory injunction compelling the County Government of Mombasa to refund to Base Titanium Limited the sum of Kshs.1,542,000 paid by it to Mombasa County under duress as cess on trucks transporting goods across the Mombasa County’s boundaries.
In dismissing the Petition by Titanium Base Limited, the High Court stated that County Governments have, under Article 209 (3) and (4) of the Constitution, the power to levy taxes and charges for services they provide, including road transport services, and that the cess charge imposed by the Mombasa County Finance Act, 2014 was not barred by Article 62 of the Constitution.
Dissatisfied by the above finding, Base Titanium Limited lodged an appeal at the Court of Appeal in which it faulted the trial judge, mainly for finding that the cess was a charge for services referred to as ‘road transport service’ provided by the County Government of Mombasa, and for failing to hold that its imposition was unconstitutional. In dismissing the Appeal, the appellate court agreed with the trial judge that the cess levied by the 1st Respondent was in line with Article 209(4) of the Constitution, which empowers a County Government to impose charges on services rendered.
Aggrieved further by the finding of the Court of Appeal, Base Titanium Limited filed a further appeal to the Supreme Court. The appeal was premised on the grounds that the Court of Appeal erred in its interpretation and application of Article 209(4) of the Constitution, when it found that a levy in the Mombasa County Finance Act, 2014 was properly imposed as a charge for services provided within the meaning of the said Article, without specifying whether the levy related to a service offered by the County Government of Mombasa or the National Government. Base Titanium Limited also found fault in the court’s finding that the said levy was properly imposed for services provided by the County Government of Mombasa, without considering whether the said levy complied with the Constitution.
ISSUES FOR DETERMINATION BEFORE THE SUPREME COURT
The issues for determination before the Supreme Court were:
- Whether the cess charge imposed by the Mombasa County Government on each of Base Titanium Limited’s trucks was a legal charge on services as contemplated under Article 209(4) & (5) of the Constitution of Kenya; and if not,
- What remedies should the Court grant?
On the first issue, the Supreme Court analyzed the type of road used by Base Titanium Limited to access Mombasa County, and the role of Mombasa County in maintaining the said road. The court came to the conclusion that there is a distinction between national roads and county roads. National roads are maintained solely by the national government through KeNHA, while Counties maintain their roads in collaboration with other authorities.
The Supreme Court further stated that it was not in dispute that to access the Port, Base Titanium Limited had to use the Likoni-Ukunda Road. The Kenyan Road Category system identifies this road as an A14 road, which falls under the scope of national roads. The mandate to develop, rehabilitate, manage and maintain this road thus lies on KeNHA and the National government. It held that the County Government of Mombasa failed to illustrate how maintenance or rehabilitation services on the said road are provided by the County, and it was therefore improper for the County Government of Mombasa to levy a charge on roads it does not maintain.
The Supreme Court concluded by stating as follows:
“We underline that it is the National government that is the provider of the road service in this instance. It is clear therefore that should a cess fee be owing, the proper entity to which that amount is owed should be the National government not the County government. In this regard, we find that the cess imposed by the County Government of Mombasa under Item 90 of the schedule to the Mombasa County Act 2014 was improperly imposed ………. And having nullified the County Government of Mombasa’s act of collecting the said amount, it is our finding that Base Titanium Limited is entitled to a refund of the sum of KES 1,542,000.00 being the amount remitted to the County as of 31st December 2014.”
The Supreme Court thus set aside the High Court and the Court of Appeal decisions, and declared the act of charging the said cess as unconstitutional, null and void.
By Andrew Wanga
www.mmsadvocates.co.ke