When Can a County Government Charge for Services?

Introduction

In Base Titanium Ltd vs the County Government of Mombasa and the Attorney General, the Supreme Court found that a cess of Kes.3,000 imposed upon each of the trucks belonging to Base Titanium (the appellant) by the County Government of Mombasa ((the 1st respondent) from 17th June 2014, whenever transporting the appellant’s minerals from Kwale County to Mombasa Port which is within the 1st respondent’s jurisdiction was unconstitutional, null and void.

Background

It is amazing that this is a matter that had to be decided by the Supreme Court. The High Court and the Court of Appeal do not appear to have rendered themselves properly in this matter. This appeal, i.e., Base Titanium Ltd vs the County Government of Mombasa and the Attorney General, was an appeal concerning a cess of Kes.3,000 imposed upon each of the appellant’s trucks from 17th June 2014, whenever transporting its minerals from Kwale County to Mombasa Port which is within the 1st respondent’s jurisdiction. The 1st respondent continued to impose the cess despite a protest from the appellant that the same contravened the Constitution, and a further confirmation from the Attorney General that the cess imposed was unconstitutional.

Aggrieved by the 1st respondent’s action, the appellant filed a petition in the High Court where it sought (a) a declaration that the actions of the 1st respondent to charge the appellant a cess in the sum of Kshs.3,000 per truck, or any sum at all, a condition for the appellant to move its goods across the boundaries of the 1st respondent’s County is unconstitutional, null and void; b) a declaration that the 1st respondent has no mandate under the Constitution to pass any legislation that restricts the appellant’s right of movement by imposing a tax or revenue to be paid by the appellant as a condition for moving its goods across the 1st respondent’s boundaries; and (c) a mandatory injunction compelling the 1st respondent to refund to the appellant the sum of Kshs.1,542,000 paid by the appellant to the 1st respondent under duress as at 31st December 2014, and/or any other additional sums that the appellant has so paid to the 1st respondent from 1st January 2015, as cess on trucks transporting goods across the 1st respondent’s boundaries to the date of compliance with the mandatory injunction.

While properly identifying the one issue for determination as being, whether levy by the 1st respondent of a cess charge for transportation of the appellant's goods through Mombasa County is constitutional within the power of the 1st respondent under Article 209 of the Constitution, the High Court, quite surprisingly dismissed the appellant’s petition on the ground that County Governments have, under Article 209 (3) and (4) of the Constitution, the power to levy taxes and charges for services that they provide including road transport and that the charge levied by the 1st respondent was not a tax or charge on the mineral product of Titanium mined and transported by the appellant, and that the charge was, accordingly, not barred by reference to Article 62 of the Constitution. The appellant was naturally aggrieved by this decision and appealed to the Court of Appeal, which surprisingly upheld the High Court decision. This forced the appellant to seek justice in the Supreme Court (the Court).

Determination

The Court identified two issues for determination. i.e., whether the cess charge imposed by the 1st respondent upon each of the appellant’s trucks was a charge on services as contemplated under Article 209 (4) and (5) of the Constitution of Kenya, and if so, what remedies would the Court offer.

Citing with approval the definition of the word ‘service’ as provided in the Oxford Dictionary of English 3rd Edition 2015 as “a system that provides something that the public needs, organized by the government or a private company,” the Court clarified that a service may include, for County transport, which entails County roads; street lighting; traffic and parking; public roads transport; and ferries and harbors, excluding the regulation of international and national shipping and matters related thereto comprising some of the functions and powers of County Governments under schedule four Part 2, section 5 of the Constitution. To this limited extent, the Court agreed with the High Court and the Court of Appeal, that County Governments have the mandate to charge levies for services rendered.

However, in so finding, the Court went on further to consider, quite correctly in our humble view, whether the roads accessed by the appellant are those within the purview of the Counties. Looking at the relevant legislation, the Court found that

a. the Kenya National Highways Authority (KeNHA) is responsible for the development, rehabilitation, management, and maintenance of all National Trunk Roads comprising Classes S, A, and B roads. Class-S Road is defined as a highway that connects two or more cities and carries safely a large volume of traffic at the highest speed of operation; Class-A Road is defined as a highway that forms a strategic route and corridor connecting international boundaries at an identified immigration entry and exit points and international terminals such as international air or sea ports; and finally a Class-B Road, which is a highway that forms an important national route linking national trading or economic hubs, County Headquarters and other nationally important centres to each other and to the National Capital or to Class A roads;

b. the Kenya Urban Roads Authority (KURA) is responsible for the management, development, rehabilitation and maintenance of all public roads in cities and municipalities except where the roads are categorized as national roads. After the January, 2016, KURA’s mandate was expanded to all counties in line with article 6 (3) of the Constitution; and

c. the Kenya Rural Roads Authority (KERRA) is in charge of constructing, upgrading, rehabilitating and maintaining rural roads, controlling reserves for rural roads and access to roadside developments and implementing road policies in relation to rural roads. Under the classification of roads, KERRA is in charge of categories D, E, F, G, K, L, P, R, S, T, U, W.

Using these classifications, the Court found that to access the Port of Mombasa, the appellant must use the Likoni-Ukunda Road which the Kenyan road system identifies as an A14 road, and that the said road falls directly into the category of a national road, directly under the mandate of KeNHA and the National government. The Court further found that the 1st respondent had not clarified how its charge met the categories it set out in Item 90 of the Mombasa County Finance Act, 2014 and that the 1st respondent had not stated if they provide street lighting, parking or maintenance of the road accessed by the appellants. Having established that Likoni-Ukunda Road was not a county road, the Court found that it was improper for the 1st respondent to levy a charge for road service for the same road that vests in the National Government.

The Court also took issue with the 1st respondent for issuing receipts marked ‘miscellaneous income’ or ‘Likoni Revenue Barrier’, because they did not disclose the nature or details of the payment.

The Court therefore, correctly, in our humble view, faulted the High Court and Court of Appeal for their interpretation and application of article 209 (4) of the Constitution in their finding that the cess levied by the 1st respondent was in line Constitution since, quite clearly, there was no service provided by the 1st respondent on the Likoni-Ukunda Road.

Regarding the reliefs, and having found as it had, the Court set aside the judgements of the High Court and the Court of Appeal, declared that the actions of the 1st respondent to charge the appellant a cess in the sum of Kshs.3,000 per truck, or any sum at all, a condition for the appellant to move its goods across the boundaries of the 1st respondent’s county is unconstitutional, null and void, declared that the 1st respondent had no mandate under the Constitution to pass any legislation that restricted the appellant’s right of movement by imposing a tax or revenue to be paid by the appellant as a condition for moving its goods across the 1st respondent’s boundaries and issued a mandatory injunction compelling the 1st respondent to refund to the appellant the sum of Kes.1,542,000 paid by the appellant to the 1st respondent under duress as at 31st December 2014, and/or any other additional sums that the appellant had so paid to the 1st respondent from 1st January, 2015 as cess on trucks transporting goods across the 1st respondent’s boundaries to the date of compliance with the mandatory injunction.

Our comments

We think the Court was spot on this matter. There has been a troubling spectre of County Governments raising illegitimate charges and, like in this case, referring to these illegitimate charges as services. The Court was quite clear that before a County Government can claim to have provided a service, it must not only show that the service falls within its purview, but must also demonstrate what service they have provided. We would add that the fact that article 209 (4) of the Constitution provides that “the national and county governments may impose charges for the services they provide,” appears to point out that these Governments have a discretion to impose charges but that discretion can only be exercised for services that have actually been provided. It goes without saying that a County Government or the National Government cannot purport to have provided a service in an area where the said Government has no jurisdiction.

The decision of the Court is welcome in that it removes the doubt that existed in the minds of trans-county traders to the effect that they would be charged for alleged services every time they find themselves in a different county. This makes county governance workable and less expensive for the citizenry.

The decision also pointed to the fact that County Governments and indeed the National Government should be careful of the decisions they make as the Courts are not shy of ordering these Governments to pay compensation to persons that may be aggrieved by unlawful decisions made by the Governments.

The decision is available here http://www.okadvocates.com/blog/wp-content/uploads/2021/09/Base-Titanium-Limited-v-County-Government-of-Mombasa-and-another.pdf