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LEGAL ALERT: Digital lenders on the cusp of coming under CBK’s radar with the proposed amendments to the CBK Act.
LEGAL ALERT: Digital lenders on the cusp of coming under CBK’s radar with the proposed amendments to the CBK Act. 150 150 Admin_salclaw

The Central Bank of Kenya (Amendment) Bill 2020 is currently before the National Assembly’s finance committee, with the public participation stage having ended on 11th August 2020. After that, the finance committee will report to the house sitting in plenary on their consideration of the Bill before members of Parliament brace themselves for debating and voting on the same. The Bill aims to arrest the excessive digital lending rates that have entrapped many borrowers and to tame predatory lending. Further, the Bill aims to bring some sanity to the digital lending marketplace as there have been several complaints by members of the public over the unorthodox and humiliating tactics lenders use to pursue debt payment. For example, some lenders contact close family members of the debtors incessantly for them to appeal to the debtors to settle their debt.

A survey conducted by the Star newspaper in 2019 regarding interests charged by some digital lenders in Kenya revealed that a majority of them were charging interest rates as high as 15 percent per month, which translates to an Annual Pricing Rate of 180 percent. This figure is 15 times more than what commercial Banks charge for unsecured loans, with the present average rate being 11.95 percent, according to CBK.

If the Bill is passed, digital lenders will require CBK’s approval to vary their interest rates and to introduce new loan products. While digital lenders do not oppose the idea of regulation, some of them are however, against strict supervision by the CBK as they are not deposit-taking institutions like banks.  Instead, digital lenders consider regulation under the Microfinance Act as a more rational and suitable approach as this law caters for non-deposit taking microfinance institutions.  They also hold that regulation under the Microfinance Act will ensure that digital lenders maintain flexibility in the innovation of loan products as CBK approval will not be required.

 

Written by Edward O. Sudi

edwardsudi@salclaw.co.ke

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Child maintenance proceedings should not be employed to serve ulterior motives against fathers, court rules.
Child maintenance proceedings should not be employed to serve ulterior motives against fathers, court rules. 150 150 Admin_salclaw

The High Court in (JR. 5 of 2020) has ruled that in Child maintenance disputes, courts are supposed to take into account the financial means of both parents to avoid overburdening and arbitrarily purging either of them. This decision was made after a man who had been jailed for a month on account of failing to honour a court order that required him to pay Ksh. 900,000 towards child upkeep, sued to the High Court at Mombasa on the constitutionality and fairness of the process adopted by the magistrates’ Court in issuing the order. In his judgment, Justice Ogola held that the magistrate, who was the first respondent, acted outside the laid down legal procedure by failing to take heed of section 101 of the Children’s Act. Notably, the said section 101 under subsection 4, mandates courts to conduct inquiries pertaining to the financial ability of persons liable for child maintenance to pay the sums of money they owe.

It was revealed that the man had made an application in the trial court to have an inquiry on the parties’ financial position conducted, which was granted. However, before a report on the parties’ financial position could be presented, the trial magistrate went ahead and declared that the man had intentionally ignored and disobeyed a previous court order before committing him to jail. It is this bizarre turn of events that the judge took utmost issue with, adjudging the magistrate’s decision to proceed in the absence of the financial report to have been irregular, unreasonable, and unfair.

Consequently, the judge expunged the orders of contempt and committal and subsequently directed the Magistrates’ Court to conduct a proper investigation into the man’s financial capability in order to reach a fair arrangement regarding the contributions of both parents towards the minor’s care and upkeep without overwhelming either of them.

Written by Edward O. Sudi

edwardsudi@salclaw.co.ke

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YOUR RIGHTS DURING A POLICE INVESTIGATION!
YOUR RIGHTS DURING A POLICE INVESTIGATION! 150 150 Admin_salclaw

Police and the state in general, are empowered to conduct investigations in a bid to solve crime and bring criminals to book. Indeed, members of the public are required to comply with summons requiring their attendance at police stations for the purpose of investigations. Tellingly, failure to honour requisitions for attendance at police stations without a plausible excuse is an offence. Similarly, showing up at a police station and refusing to respond to the questions that may be legitimately asked or untruthfully responding to them amounts to an offence. However, a person is under no obligation to respond to questions that may tend to expose him/her to a criminal charge or penalty. This exemption springs from the constitutional right to refuse to give self-incriminating evidence afforded to a person involved in a criminal inquiry.
Crucially, a police officer who seeks to record a statement from a person against whom a criminal charge may be preferred or who is already facing a criminal charge MUST WARN such a person that the statement they will make may be used as evidence against them. If such a person forfeits their right to remain silent after being warned and moves on to record a statement, then any admissions they make in their statement may be legally used against them in a criminal trial. Although admissions need not be given voluntarily as the Supreme Court observed, confessions, on the other hand, MUST be procured through express consent from the person providing it. To this end, it must be appreciated that despite all confessions being admissions, not all admissions are confessions. The difference lies in the effect either of the two would have in a criminal case.
A confession would automatically return a guilty verdict because it is an express and explicit acknowledgement of guilt by an accused person. Further, there are strict rules to be followed in order for a confession made in a police station to be accepted in court. Conversely, an admission is an acknowledgement by an accused person of a matter (s) relevant to a criminal charge, which may give the impression that the accused is guilty. Since an admission only insinuates that the accused is guilty, it cannot, by itself, be used to render a conviction; other evidence is hence required to support an admission. Therefore, it follows that an incriminating revelation made voluntarily by a suspect or accused person to police officers in the course of investigations would be treated as an admission if such a revelation is not recorded in strict compliance with the Evidence Act so as to be regarded as a confession under law. This position, which was reiterated by the Supreme Court, is an effort to strike a balance between the rights of persons under a criminal inquiry, and the rights of the public to peace and security . So that, the constitutional mandate of security agencies to maintain/restore peace and security is not hampered by the rights of persons under criminal inquiry, and vice versa.

Way forward: It is best for any person subjected to police investigations, who fears that the information they may disclose will cast them in the bad light of being viewed as the culprits, to choose to remain silent on that aspect.

Prepared by Ochwaya E. Sudi
Advocate of the High Court of Kenya

Edwardsudi@salclaw.co.ke

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LEGAL ALERT: IMPACT OF CORONA VIRUS ON BUSINESS CONTRACTS-FORCE MAJEURE
LEGAL ALERT: IMPACT OF CORONA VIRUS ON BUSINESS CONTRACTS-FORCE MAJEURE 150 150 Admin_salclaw

Overview
The outbreak of Coronavirus is impacting global markets, trade and commerce. Quarantine and travel measures have begun to impact local businesses and the supply chains supporting them. Many businesses may thus seek to rely on force majeure clauses or other contractual rights for relief from the performance of certain obligations due to the impact of the Coronavirus outbreak.
What is force Majeure
Force majeure refers to a clause that is included in contracts to remove liability for natural and unavoidable catastrophes like war, natural disasters, terrorist attacks Etc that interrupt the expected course of events and restricts parties from fulfilling their obligations under the said contracts.
What does your force majeure clause actually say?
There is no single “standard” force majeure clause. Just because your business may include force majeure clauses in its contracts does not mean they are necessarily all uniform. Since the virus is a relatively new phenomenon, it is unlikely that any force majeure clauses would explicitly refer to the event of a Coronavirus outbreak. Thus the party relying on the clause will still likely need to prove that the force majeure event was not “reasonably contemplated” by the parties when making the contract, and that the event is “beyond the reasonable control” of the party seeking relief.
How can you seek / prevent relief for force majeure?
The onus is on the party seeking to rely on the force majeure clause to prove that the force majeure event has prevented, hindered, delayed or affected the performance of the contract. Generally, if a force majeure event occurs, performance of certain obligations within the contract will be suspended for a specified period of time (for example, until the Coronavirus outbreak is contained or its consequences on the contract parties come to an end). In some cases, a suspension of obligations may not be viable and parties may seek to terminate the contract entirely.
Is notice required?
Force majeure clauses vary in their notice requirements. Some require notice within a certain timeframe of the occurrence of an event of force majeure, whereas others only require prompt or “reasonably” prompt notice. In the context of the coronavirus pandemic, is notice required upon WHO’s declaration the coronavirus outbreak a pandemic? Was it when a travel ban was entered? Was it when a local lock down measures were enacted?
What if there is no force majeure clause?
If there is no force majeure clause one can rely on the doctrine of frustration which means that events beyond their control may occur which frustrate the purpose of their agreement, or render it very difficult or impossible, or as even illegal, to perform obligations under a contract.
Understanding Your Contract
Be sure to fully understand what the contract requires for one declare a force majeure event. Many force majeure provisions include procedural requirements the claiming party must abide by in order to effectively enforce the provision, including notice requirements.

By Eugene Sudi
SUDI & ASSOCIATES
sudi@salclaw.co.ke

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JOB VACANCIES
JOB VACANCIES 150 150 Admin_salclaw

 

The law office of Sudi & Associates is seeking to competitively fill the following vacant positions:

1 Receptionist/Secretary

Must-

  1. Have a bubbly, cheery and chatty personality
  2. Well-organised, friendly and polite
  3. Professional appearance
  4. Solid communication skills both written and verbal
  5. Ability to be resourceful and proactive in dealing with issues that may arise
  6. Ability to organise, multitask, prioritise and work under pressure
  7. Self-motivated
  8. Good with computer systems
  9. Must have at least a diploma in the relevant field
  10. Must be between 20-29 years of age

2 Legal Assistants

Must-
(1) be in their final year of law school or about to graduate;
(2) have excellent academic credentials;
(3) have good communication, research and analytical skills;
(4) have ability to handle pressure and work under minimum or no supervision;
(5) have excellent interpersonal skills; and
(6) have exemplary computer skills.

How to apply
Please send your Application together with a detailed CV, copies of academic and other relevant testimonials to info@salclaw.co.ke on or before close of business 18th July, 2015.

 

 

 

 

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STANDARD OF PROOF IN IMPEACHMENT PROCEEDINGS
STANDARD OF PROOF IN IMPEACHMENT PROCEEDINGS 150 150 Admin_salclaw

audits, research & drafting
Burden of proof is the duty of a party to present evidence on the facts in issue necessary to establish his claim or defense by the amount of evidence required by law.In determining the burden of proof in impeachment proceedings has been debatable across the world, while contributing to the never ending debate Senator Miriam Defensor Santiago of the Senate of the Philippines while giving a keynote speech at the Joint Annual Convention Of The Philippines Society Of Hypertension said that, “an impeachment trial is a unique process, because it is a hybrid. Impeachment is both quasi-judicial and quasi-political. It is neither a civil case nor a criminal case. A criminal case is designed to punish an offender and to seek retribution. In contrast, impeachment is the first step in a process that tries to remedy a wrong in governance. It has been said that the purpose of impeachment is not personal punishment, but rather to maintain constitutional government, through the removal of an unfit official from a position of public trust.” The words quoted above are important in that they give the Kenyan Senate much needed direction on a question that has elicited unsettled debates depending which side of the road one lies
Therefore in determining the standard of proof, the question that comes to mind is the nature of impeachment proceedings i.e. are they civil, criminal or administrative. The standard of proof in civil cases in Kenya is on a balance of probabilities, while that of criminal cases is beyond reasonable doubt.
Proof beyond reasonable doubt is that degree of proof which produces a conviction in an unprejudiced mind which arises from moral certainty and not absolute certainty that the person to be convicted is guilty of a crime. One is therefore right to conclude that the end result of proving a case beyond reasonable doubt as is in criminal proceedings is a conviction. Bearing in mind the above it is therefore necessary to analyze the nature of each type of proceedings i.e. civil, criminal and administrative so as to determine the required standard of proof.
It is in order to conclude that impeachment proceedings are neither civil in nature nor criminal in nature. Impeachment proceedings are administrative in nature. Justice Joseph Story of the United States Supreme Court held that, “The design of impeachment is to remove the impeachable officer from office, not to punish. An impeachable act need not be criminal. That explains why the Constitution states that the officer removed shall be subject to prosecution in an ordinary criminal case” From the above quote it is clear that impeachment proceedings are not criminal in nature but administrative due to the simple fact that the end result is purely the removal of an officer from office.
Having determined that impeachment proceedings are neither civil nor criminal but indeed administrative in nature, the next question that arises is, what is the standard of proof in administrative proceedings?
Yale Law professor Charles Black Jr. who had published “Impeachment: A Handbook” in 1974. Prof. Black had written about “overwhelming preponderance of the evidence” as a suggested mid-level standard for impeachment cases. Black wrote: “Weighing the factors, I would be sure that one ought not to be satisfied, or anything near satisfied, with the mere ‘preponderance’ of an ordinary civil trial, but perhaps must be satisfied with something less than the ‘beyond a reasonable doubt’ standard of the ordinary criminal trial, in the full literal meaning of that standard. ‘Overwhelming preponderance of the evidence’ comes perhaps as close as can to denoting the desired standard.”
The words of Charles Black which we are swayed by, suggest that the standard of proof in administration cases should be high above a balance of probabilities as required in civil cases but should not reach beyond reasonable doubt as required in criminal cases. This assertion by Charles Black would be the most appropriate as it would guarantee the integrity of the impeachment proceedings

In the United States there has been debate on the burden of proof required in impeachment proceedings. The argument of beyond reasonable doubt i.e. the highest threshold in proving a case has been argued by those facing impeachment proceedings, on the other hand the members of the houses of senate and congress have argued for a lower standard of proof. The argument on the appropriate standard of proof in impeachment proceedings was played out in the 1986 Senate impeachment trial of Judge Harry Claiborne, where the attorney’s of the judge filed a motion to designate beyond a reasonable doubt as the applicable standard for the Senate in reaching its determination in support of the motion they argued that the constitutional language made it clear that an
impeachment trial was in the nature of a criminal proceeding; the standard of proof in all
criminal trials is beyond a reasonable doubt; historically impeachments have been
conducted in the nature of a criminal proceeding; and the consequences for the defendant
were grave, requiring the prosecutors to be held to the highest standard of proof, beyond
a reasonable doubt. The response of the House Managers in opposition to the Claiborne motion noted that the reasonable doubt standard was designed to protect criminal defendants who risked forfeitures of life, liberty and property. Such a standard was inappropriate, they maintained, because the Constitution limits the consequences of a Senate impeachment trial to removal from office and disqualification from holding office in the future, explicitly preserving the option for a subsequent criminal trial in the courts. The end result was that the Senate refused to impose the reasonable doubt rule as the Senate standard, individual members undoubtedly applied that standard in their own minds when weighing the sufficiency of the evidence in the Claiborne case.
In summary the United States Senate has traditionally left the choice of the applicable standard of proof to each individual Senator. While rejecting a motion to make the criminal standard the standard in the Claiborne impeachment, the discussion made clear that it was simply a decision to allow each member to make that choice and not a repudiation of the standard itself. Individuals might apply that or any other standard of their choice. A walk through history and an examination of the discussions of legal commentators may aid individuals in weighing their choices, but provides no definitive answers. Indeed, such an exercise is perhaps most useful in highlighting basic questions that members will want to ask themselves when searching for the appropriate standard.
I support the position of the United States and more particularly the position of Charles Black i.e. the standard of proof should be higher than on a balance of probabilities and lower than beyond reasonable doubt due to the simple fact that impeachment is an administrative function of the Senate and though quasi judicial, it is neither civil nor criminal in nature. We are also guided by Professor
Rotunda suggests that the appropriate standard of proof should be “clear and convincing
Evidence, this is an intermediate standard used in some important civil cases, more than preponderance and less than a reasonable doubt. Clear and convincing evidence is typically defined as that measure or degree of proof which will produce in the mind of the trier of facts a firm belief or conviction as to the allegation sought to be established.”

Written by
Mweresa Eugene Sudi
Sudi & Associates

 

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Legal Basis for Property Rates
Legal Basis for Property Rates Admin_salclaw

Legal basis for property rates

Article 209(3) (a) of the Constitution of Kenya gives County governments the power to impose property taxes. Land rates are just but one of the many kinds of property taxes that the County governments can impose. Such kind of property taxes plays a major role in the financing of local authorities not only in Kenya but across the world. Land rates are an avenue by which County Governments are meant to raise revenue to supplement what the National Government is devolving in order ensure the respective development agenda is achieved. Thus the most important form of tax collected by local authorities now County Governments in Kenya are the rates which are levied on land and buildings. The Valuation Rating Act Cap 266 and Rating Act Cap. 267 are the basis of rating. Under the law, rates in Kenya are payable by individual property owners, business and the government. They are payable to the local authority in which the property is located. Remissions are given for timely payments, while rate payers are penalized for payments outstanding after the year they fall due.

In our country the valuation of property tax by local authorities as they were before the enactment of the new Constitution is guided by the Valuation of Rating Act. Assessment is done using an area rating (based on size) in combination with either an ad valorem system based on land or on both land and buildings. All local authorities levy the property tax based either on area and/or unimproved site valuation. Buildings are not taxed in Kenya i.e. only land is taxed. Typically area rating is used in the more rural counties while ad valorem land taxation is used in the more urbanized areas. Some local authorities use both area rating and site valuation rating simultaneously.

There are institutions which are by law exempted from payment of rates, including cemeteries, hospitals, public religious worship places, museums and national parks, etc. These institutions are specified in the Rating Act and are gazetted with the approval of the Minister.

Land owned by the National Government in Kenya is taxed by the county governments like it is private property such taxation is facilitated by Section 23 of the Rating Act which is the basis upon which the National Government pays rates to the Local Governments (Counties) in the form of Contribution in lieu of rates. In accordance with the Rating act such contribution is compulsory by the National Government the government however has not been making full payments in respect of the said rates. The law and literature available does not also define what contribution in lieu of rates is.

It is clear that property taxes are meant to contribute to a substantial amount of the revenue that county governments collects, it is possible therefore that the National Government, the Legislature, the Judiciary and other state organs might own a substantial amount of Land in the Counties and thus if such state organs refuse to pay property taxes on the basis that they are government, then we will cripple devolution by limiting the revenue raising capacity of the respective County Governments.

In other jurisdictions the government is exempted from paying property taxes, in our jurisdictions the government pays property taxes in the form of contribution in lieu of rates, in jurisdictions like South Africa and Namibia a 20% reduction is provided on tax owed with respect to government land, while in other jurisdictions the Government makes a lump sum ad hoc contribution to local authorities for services rendered in lieu of paying explicit property taxes.

Options to be considered in Kenya

  • Kenya has the option of maintaining the current system where the National Government makes compulsory contributions in lieu of rates. This system should however be changed and aligned with the new devolved structure as provided for the Constitution of Kenya 2010.
  • Kenya has also the option of exempting state organs from paying property taxes completely. Such a system will however cripple the revenue raising capacity of county governments because state organs own a large acreage of land that is within the jurisdiction of County Governments.
  • Kenya can adopt the system that was provided for in the Local Authorities Transfer Fund Act where 5% of the National Revenue collected went to local authorities. Such a mechanism however may not be practical because the Constitution already provides that not less than 15% of the national revenue shall be devolved to the Counties. Thus if such an idea is to work the wording should be to effect that a percentage of the national revenue shall be collected and devolved to the Counties for the purposes of paying land rates for land owned by the National Government. Such percentage should be calculated after stock taking to determine how much land is owned by the National Government in each county.

In light of the above and the fact that the it is clear that there is lack of a clear policy direction with respect to implementation of Article 209(3) (a) that gives County Governments the mandate to impose property taxes on the National Government and other state organs.

Written by
Mweresa Eugene Sudi
Sudi & Associates

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