Section 21 of the Government Proceedings Act, Cap 40, has in the recent past, attracted legal attention in the face of conflicting decisions of the High Court in ABSA Bank Kenya PLC v Kenya Deposit Insurance Corporation High Court Commercial Case No E411 of 2023 and Tom Ojienda & Associates v County of Nairobi and Cooperative Bank Environment and Land Court Application No E138 of 2021.
Section 21 prohibits attachment and execution against government property where a party prevails against the government in a civil suit. In ABSA Bank Kenya PLC, in a ruling delivered on 15th March, 2024, Justice (Prof) Nixon Sifuna held that section 21 was unconstitutional as it is discriminatory in the government’s favour. Under section 22, the government can attach and execute against a party who loses a civil claim against the government. In contrast, in Tom Ojienda, on 5th April, 2024, the High Court held that section 21 was constitutional. Thus, a party who prevails against the government in a civil claim cannot attach the government’s property.
However, the jurisprudential chaos surrounding the constitutionality of section 21 was settled by the Court of Appeal in Five Star Agencies Ltd v National Land Commission and National Bank of Kenya Nairobi Court of Appeal Civil Appeal E290 of 2023, in its decision rendered on 12th April 2024.
Five Star Agencies Ltd v National Land Commission and National Bank of Kenya Nairobi Court of Appeal Civil Appeal E290 of 2023
In Five Star, the dispute between the Appellant and the Respondents arose in relation to a claim for compensation to the Appellant by the first respondent, following the compulsory acquisition of the appellant’s land by the first respondent for purposes of constructing a public road. The first Respondent compensated the Appellant the sum of Kenya Shillings 87,804,225. The Appellant claimed that this was not a true and fair compensatory value for its land was Kenya Shillings, and appealed. The High Court agreed with the Appellant, and substituted the sum of Kes 87,804,225 with Kes 413,192,500.
The first Respondent did not settle the sum awarded by the High Court. In response, the Appellant commenced proceedings to garnish the first respondent’s account held with the second respondent bank. The first respondent is a constitutional body charged with the mandate of generally managing public land, which makes it a government organ for the purposes of section 21 of the Government Proceedings Act.
The Court of Appeal dismissed the action to garnish the National Land Commission’s accounts, holding that as a government body, the procedure to be followed in enforcing a judgment debt against the Government is through the procedure set out in Section 21 of the Government Proceedings Act. Under Section 21, an elaborate procedure is set out through which a successful litigant can enforce judgment against the Government. Under section 21(1) of the Act, the successful can only enforce the judgment by bringing judicial review proceedings seeking an order of mandamus compelling the accounting officer of the relevant Government agency or department to make the payment. Before seeking such an order, the litigant must obtain a Certificate of Costs 21 days after the order was made. Under Section 21(2), the Certificate is served on the Attorney General, and upon such service, section 21(3) imposes a statutory obligation on the Accounting Officer of the relevant government department to make payment to the successful litigant.
With respect to section 21(4), which bars execution against the Government, the Court, in paragraph 87 of its judgment, cited with approval the judgment of the High Court in Kisya Investments Ltd v Attorney General and R L Odupoy Nairobi High Court Civil Case 2832 of 1990, in which case the High Court, Ibrahim and Visram JJ held thus:
History and rationale of government’s immunity from execution arises from the following….
Firstly, there has been a policy in respect of Parliamentary control over revenue and this is threefold and is exercised in respect of (i) The raising of revenue (by taxation or borrowing); (ii) Its expenditure; and (iii) The audit of public accounts.
The satisfaction of decree or judgments is deemed to be an expenditure by Parliament and as a result of this must be justified in law and provided for in the Government’s expenditure. It is for this reason that Section 32 of the Government Proceedings Act provides that any expenditure incurred by or on behalf of the Government by reason of this Act shall be defrayed out of the monies provided by Parliament.
Parliamentary control over expenditure is based upon the principle that all expenditure must rest upon legislative authority and no payment out of public funds is legal unless it is authorized by statute, and any unauthorized payment may be recovered. As a result of the foregoing, which was borrowed from the Crown Proceedings Act, 1947 (Section 37) of England, this is a warning that any payment by Government must be covered by some appropriation. It is said that parliament is very jealous of its control over the expenditure and this is as it should be. No ministry or department has any ready funds at all times to satisfy decrees or judgments – while existence of claims and decrees may be known to the ministries and departments, they have to notify the Ministry of Finance and Treasury of the same so that payment is arranged for or provisions made in the government expenditure.
The second situation, which arises from the above, is that once a decree or judgment is obtained against the government, it would require some reasonable time to have it forwarded to the Ministry of Finance, Treasury, Controller and Auditor General etc. for scrutiny and approvals for it to be paid from the consolidated fund. The Ministries and Departments do not have their ‘own’ funds to settle such decrees or payments and considering the nature of the government structure, procedures, red tape and large number of claims, this could take a long time.
If execution and or attachment against the government were allowed, there is no doubt that the government will not be able to pay immediately upon passing of decrees and judgments and will be inundated with executions and attachments of its assets day in day out. Its buildings will be attached and its plants and equipment will be attached, its vehicles, aircraft, ships and boats will be attached. There will be no end to the list of likely assets to be attached and auctioned by the auctioneer’s hammer.
No government can possibly survive such an onslaught. The government and therefore the state operations will ground to a halt and paralyzed and soon the government will not only be bankrupt but its constitutional and statutory duties will not be capable of performance and this will lead to chaos, anarchy and the breakdown of the Rule of Law. This is the rationale or the objective of the law that prohibits execution against and attachment of the government assets and property.
The upshot of the Court of Appeal’s holding in Five Star Agencies Ltd v National Land Commission and National Bank of Kenya is to reverse the holding of the High Court in ABSA Bank Kenya PLC v Kenya Deposit Insurance Corporation, wherein Justice (Prof) Sifuna declared Section 21 of the Government Proceedings Act unconstitutional. The Court of Appeal breathed life into Section 21 of the Government Proceedings Act.
