On reaffirming procedural rights and limiting abuse/Balancing public interest in tax enforcement with individual constitutional rights: The Case of Robert K. Ayisi v Kenya Revenue Authority & another [2018] KEHC 6948 (KLR)

Full Case Available Here 

1. Constitutional Tension: Revenue Enforcement vs. Individual Rights

a) State Interest:

The Kenya Revenue Authority (KRA) has a statutory and constitutional mandate under Article 209 and Article 210 to collect taxes lawfully imposed. Effective enforcement mechanisms are vital to prevent revenue leakage, tax evasion, and abuse of public funds.

b) Individual Rights at Stake:

Dr. Ayisi’s case exposed how statutory powers, when exercised without restraint or judicial supervision, can infringe on constitutionally protected rights such as:

• Right to privacy (Article 31)
• Right to dignity and humane treatment (Article 28, 29)
• Right to fair administrative action (Article 47)
• Due process protections for arrested persons (Article 49)

This created a constitutional tension between public interest in tax enforcement and individual rights — especially when the public officer was acting on behalf of a public entity (Nairobi County).

2. Key Legal Doctrines & Principles Applied

a) Principle of Proportionality (Article 24 test)

Justice Odunga applied the Article 24 limitation test to assess whether the rights limitations by the Tax Procedures Act were reasonable and justifiable in an open and democratic society. The Court found that:

• Seizure and search powers without a court order (sections 44 & 60 TPA) lacked safeguards against abuse.
• Enforcement mechanisms should not become tools of intimidation or humiliation.
• Constitutional rights must not be overridden by mere statutory convenience.

b) Due Process and Procedural Fairness

• Arresting and detaining Dr. Ayisi, without formal charges or notice, violated basic procedural fairness (Article 47).
• KRA’s actions amounted to administrative overreach, not authorized by law or justified by exigency.

c) Limits on Delegated Powers

Statutory powers granted to KRA under the TPA must comply with the Constitution. The Court reaffirmed that:

"The Constitution is the supreme law; legislation cannot override it, and all public power must be exercised in conformity with it."

3. Judicial Oversight: The Role of Courts in Controlling Administrative Abuse

The Court criticized KRA’s non-transparent and forceful approach, emphasizing the judiciary's role in:

• Checking misuse of statutory authority.
• Interpreting laws in light of constitutional values, especially when rights are curtailed.

The unconstitutional provisions in the TPA were declared invalid to the extent they permitted:

• Searches without court warrants.
• Disclosure demands overriding legal privilege.
• Detentions without clear legal processes.

This ruling thus reinforced that executive enforcement must be legally bounded and subject to judicial review.

4. Practical Implications

a) For Public Officials

• Dr. Ayisi was acting in his official capacity; the Court noted the unjust targeting of a public officer for records beyond his control (held by EACC).
• This sets a precedent protecting public servants from personal liability or coercion when acting in good faith and within official limitations.

b) For KRA and Tax Agencies

• The judgment temporarily weakened KRA’s enforcement powers by striking down key investigative provisions.
• Agencies must balance enforcement with procedural fairness, and seek court supervision where rights are involved.

c) For Legal and Tax Practitioners

• The case highlighted how client–advocate privilege, privacy, and administrative accountability intersect with tax law.
• It encouraged litigation-based oversight of agencies that exceed their mandate.

5. Impact of the Appeal (Court of Appeal, 2023)

The Court of Appeal (Civil Appeal 287 of 2018):

• Reinstated sections 44 and 60 of the TPA — allowing KRA to search, seize, and enforce without a prior court order, under conditions.
• However, it maintained that Dr. Ayisi's arrest was unconstitutional, reaffirming procedural rights and limiting abuse.

Key Takeaway:

• The appellate court restored the statutory enforcement powers, but emphasized that they must be exercised with constitutional restraint, and not punitively or arbitrarily.

6. Broader Legal Significance

a) Constitutional Supremacy

This case illustrates the principle that all legislation and state action is subordinate to the Constitution — a foundational element of Kenya’s 2010 legal framework.

b) Human Rights in Administrative Law

The judgment deepened the application of human rights standards in administrative contexts, especially involving powerful government agencies.

c) Developing Kenyan Jurisprudence

Justice Odunga’s ruling contributes to:

• The growing body of constitutional administrative law.
• Judicial efforts to harmonize statutory frameworks like the TPA with constitutional rights and democratic values.

Conclusion

The Robert K. Ayisi v. KRA case is a landmark in constitutional law, demonstrating the judiciary’s crucial role in:

• Enforcing the supremacy of the Constitution.
• Protecting citizens (and officials) from arbitrary state action.
• Balancing public interest in tax enforcement with individual constitutional rights.

Even though the Court of Appeal later restored KRA’s powers, the core message of constitutional accountability and due process remains intact.

Step-by-Step Process for Registering Sectional Properties

Step 1: Preparation and Documentation

1. Draft a Sectional Plan: Engage a registered surveyor to prepare a sectional plan of the property, which includes detailed diagrams showing the boundaries of individual sections and common areas.

2. Create a Declaration of Condominium: Prepare a declaration that outlines the ownership structure, rights, and responsibilities of individual owners, and the management of common areas.

3. Develop Bylaws: Draft bylaws that govern the operation and management of the sectional property, including rules for maintenance, usage of common areas, and dispute resolution procedures.

Step 2: Obtain Necessary Approvals 

1. Consult with Local Authorities: Ensure that the sectional plan and bylaws comply with local zoning and building regulations. Obtain any necessary approvals or permits from municipal or county authorities.

2. Secure Consent from Property Owners: If the property is already occupied, obtain written consent from existing owners to proceed with the registration.

Step 3: Submit Application for Registration 

1. Prepare Registration Documents: Compile the following documents for submission to the Registrar of Titles:

• The sectional plan, certified by a registered surveyor.

• The by laws for the management of the property.

• Proof of ownership or a title deed for the property.

• Consent from existing property owners (if applicable).

2. File Application with the Registrar: Submit the completed application and supporting documents to the Registrar of Titles at the relevant land registry office. Pay the required registration fees.

Step 4: Registrar’s Review and Approval 

1. Review Process: The Registrar will review the submitted documents to ensure they comply with the Sectional Properties Act and other relevant regulations.

2. Approval and Registration: Upon approval, the Registrar will register the sectional property and issue a certificate of registration, which includes details of individual ownership sections and common areas.

Step 5: Establish Management Committee or (homeowners' association)HOA 

1. Form a Management Committee: Establish a management committee or HOA to oversee the administration and maintenance of common areas. This committee is typically elected by property owners and is responsible for enforcing bylaws and managing communal services.

2. Register the Management Committee: Register the management committee with the relevant authorities if required, and ensure it operates in accordance with the by laws.

Step 6: Issuance of Title Deeds 

1. New title deeds are issued for each sectional unit. The original register is closed, and new registers are opened for each unit.

2. Owners will not incur additional stamp duty if they paid the requisite fees during the registration of long-term leases.

Advisory: Change of Purchaser in an Agreement for Sale of Property

When a purchaser initially bought property as an individual but now intends to change ownership to a company, the process depends on whether the company already exists and at what stage the transaction is (e.g., before or after registration of the transfer). Here's how it works in Kenya:

 

Scenario A: Before Transfer Is Registered (Ideal Case)

If the transfer has not yet been registered in the purchaser’s name (i.e. the title is still in the seller’s name), the steps are relatively straightforward:

Steps:

1. Incorporate the Company
• Register the intended company via eCitizen if not already incorporated.
2. Amend the Sale Agreement (if already signed)
• Draft and execute a Deed of Assignment or Addendum to reflect that the company will now be the purchaser.
• All parties (seller, individual purchaser, and the company) must sign.
3. Update the Transfer Documents
• Prepare new transfer forms in the company's name as transferee (e.g., Form L.R. 1, transfer instrument).
4. Generate a New Stamp Duty Valuation in Company Name
• Request the stamp duty assessment through Ardhisasa under the company’s Ardhisasa ID.
5. Pay Stamp Duty
• Based on the current valuation, stamp duty (typically 4% for urban property) must be paid by the company.
6. Complete Registration of Transfer
• Submit the stamped documents and pay registration fees to the Land Registry.

 

Scenario B: After the Title Has Been Transferred to the Individual

If the individual already owns the property and now wishes to transfer it to a company, this is treated as a fresh conveyance, attracting stamp duty and transfer formalities.

Steps:

1. Incorporate the Company (if not done already)
2. Execute a Transfer of Property to the Company
• Draft a formal transfer instrument from the individual to the company.
3. Stamp Duty Payable
• Stamp duty will again be assessed based on current market value, even if no money changes hands.
4. Apply for Land Control Board Consent (if agricultural land)
5. Register the Transfer in Favour of the Company
• Submit documents for registration at the Land Registry or through Ardhisasa.

Note: KRA and the Land Registry will treat this as a sale/transfer and will require justification for the change (e.g., company ownership, internal restructuring).

 

Important Legal Considerations

• The company must be properly incorporated and have a valid Ardhisasa ID.
• If the individual and company are related, the transfer may raise capital gains tax (CGT) or tax planning implications.
• Consider consulting on Section 38 of the Stamp Duty Act (possible exemptions in restructuring, if applicable).
• The seller may need to consent to the change if it happens before registration.

 

Optional Documents Needed:

• Deed of Assignment / Addendum to Sale Agreement
• Board Resolution (if company is purchaser)
• Company Certificate of Incorporation
• KRA PIN for company
• CR12 or register of directors
• Transfer instrument in favor of company
• Application for stamp duty valuation (via Ardhisasa)

 

On Nature of the Employment Relationship: Substance Over Form - The Case of Adhiambo v Eidu Education Limited [2025] KEELRC 2276 (KLR)

In Adhiambo v Eidu Education Limited [2025] KEELRC 2276 (KLR), the Court examined the distinction between an employment relationship and a consultancy agreement. The Claimant was initially engaged by the Respondent as an employee, but her engagement was subsequently reclassified under a consultancy agreement. On 20th June 2019, she received a letter terminating her services with effect from the following day. She later filed a claim for unlawful termination.

The Respondent contended that the Claimant was a consultant, not an employee, and therefore the protections under the Employment Act—including the requirements for substantive justification and procedural fairness—did not apply.

In determining the nature of the relationship, the Court analyzed Section 2 of the Employment Act, which defines both "employer" and "employee." It also examined the terms of the consultancy agreement, noting features such as:

• a defined consultancy period;
• a specific role;
• fixed working hours (8 hours per day);
• a monthly consultancy fee payable at the end of each month; and
• supervision and oversight by the County Director.

The Court held that, despite being labeled a consultancy, the agreement exhibited elements characteristic of a contract of service. As such, it concluded that the relationship was that of employer and employee, rather than an independent consultancy.

Accordingly, the termination—having been effected without substantive justification or due process—was deemed unfair.

 Legal Analysis/Argument:

1. Nature of the Relationship: Substance Over Form

The central issue in Adhiambo v Eidu Education Limited was whether the Claimant was an employee or an independent consultant at the time of termination. While the Respondent relied on the consultancy agreement to argue that the Claimant was not entitled to protections under the Employment Act, the Court emphasized that the true nature of a working relationship must be determined by its substance rather than its form.

In line with established jurisprudence, the Court reiterated that mere labeling of an agreement as a consultancy does not oust the jurisdiction of the Employment and Labour Relations Court nor does it negate an employment relationship if the factual matrix suggests otherwise.

2. Statutory Definitions Under the Employment Act

The Court referred to Section 2 of the Employment Act, which defines:

• an employee as a person employed for wages or salary and subject to the control of the employer;
• an employer as any person employing one or more employees.

Applying this test, the Court found that the Claimant's engagement met the statutory criteria of an employment relationship, given her supervision by the County Director, fixed working hours, and monthly remuneration—all of which demonstrated control, integration, and economic dependency consistent with employment.

3. Indicators of a Contract of Service

The Court highlighted several features of the agreement that were indicative of a contract of service, despite its “consultancy” label:

• A defined role and responsibilities, akin to a job description;
• Fixed working hours (8 hours per day), contrary to the autonomy typically associated with consultancy;
• Regular monthly payment, similar to a salary, rather than payment upon completion of deliverables;
• Direct oversight and supervision, inconsistent with the independent discretion expected of a consultant.

These features mirror the multi-factor test commonly used to distinguish between a contract of service and a contract for services, including control, integration, mutuality of obligation, and exclusivity.

4. Procedural and Substantive Fairness

Having determined that an employment relationship existed, the Court held that the Claimant was entitled to the protections under the Employment Act, including the requirement for:

• Substantive justification for termination (Section 43); and
• Procedural fairness (Section 41), including the right to be heard and given reasons for termination.

The Respondent failed to comply with these mandatory provisions. The Claimant was summarily terminated via letter on 20th June 2019, effective the next day, without being afforded a hearing or any form of due process.

5. Conclusion

The Court rightly found that the purported consultancy arrangement was a sham, used to disguise what was in fact an employment relationship. As such, the termination without cause and without following the procedures prescribed by law was held to be unfair and unlawful.

This decision underscores the principle that employers cannot contract out of statutory obligations by reclassifying employees as consultants, particularly where the practical realities of the engagement point to a contract of service.

 

 

 

The Legal Framework Governing Land Ownership in Kenya

 Land transactions in Kenya are governed by laws, including:

• The Land Registration Act, 2012
• The Land Act, 2012
• The Constitution of Kenya (2010)
• The National Land Commission guidelines

These laws require that all land transactions be documented and registered with the Ministry of Lands, ensuring the rightful ownership is traceable and that the land is free from encumbrances or disputes.

Bank & Lenders Risk Guide – Land Title Transactions (Based on the Decision from Musa v Musa & 6 Others [2025])

1. Due Diligence Beyond the Title Deed

• Don't rely solely on the title document. Investigate:
• Chain of ownership
• Family consent (especially for inherited or family land)
• Prior disputes or cautions registered on the land

2. Verify Authenticity of Documents

• Confirm signatures on transfer forms and consent letters are genuine.
• Cross-check land control board approvals, ID copies, and spousal consents.

3. Extra Caution for Family or Inherited Land

• Ask for succession documents and written agreement from all beneficiaries.
• Require proof of ownership under probate or letters of administration.

4. Independent Legal Verification

• Engage external counsel to review transaction legality—not just registration.
• Request statutory declarations from the seller about the property's status.

5. Register Cautions & Charges Early

• Secure interest by registering a caution immediately after initial agreement.
• Lodge a charge only after all ownership checks are confirmed.

6. High-Risk Red Flags

• Recently issued titles after succession
• Title transfers within family with no consideration
• Speedy changes in ownership history

7. Legal Clauses in Loan Agreements

• Include warranties from borrowers affirming clear, lawful title.
• Insert indemnity clauses covering title fraud and misrepresentation.

Conclusion/Practical Takeaway

Fraud nullifies title—even if you’re a bona fide lender. The onus is on banks to ensure the title is not just registered, but legitimately acquired.

Reference case: Musa v Musa & 6 Others [2025]

On the importance of strict procedural compliance in tax disputes: The Case of Browndot Enterprise Limited v Commissioner of Domestic Taxes - Tax Appeal E052 of 2025

Browndot Enterprise Limited v Commissioner of DomesticTaxes - Tax Appeal E052 of 2025 | [2025] KETAT 253 (KLR)

Parties

• Appellant: Browndot Enterprise Limited
• Respondent: Commissioner of Domestic Taxes (Kenya Revenue Authority - KRA)

Background

Browndot Enterprise Limited appealed against a tax assessment issued by the Commissioner of Domestic Taxes. The dispute arose from alleged non-compliance with tax obligations, where the KRA had raised additional tax assessments covering VAT and income tax.

The appellant objected to the assessments, but the Commissioner issued an objection decision upholding them. Browndot then filed this appeal before the Tax Appeals Tribunal, challenging both the merits of the tax assessment and the validity of the Commissioner’s decision.

Key Legal Issues

1. Whether the appeal was properly before the Tribunal – examining compliance with timelines and procedure under the Tax Procedures Act.
2. Whether the tax assessments issued by the Commissioner were lawful and justified.
3. Whether the appellant had discharged the burden of proof in challenging the assessments.

Tribunal’s Analysis

• The Tribunal found that the appellant had complied with the procedural requirements, including filing the notice of objection, appeal, and statement of facts within the statutory timelines.
• On the merits, the Tribunal held that the appellant failed to provide sufficient and credible evidence to challenge the assessments.
• The tax assessments issued by the KRA were presumed to be correct, and the appellant did not rebut that presumption with adequate documentation or explanations.

Decision / Holding

• The appeal was dismissed.
• The Tribunal upheld the Commissioner’s tax assessments in full.
• Browndot Enterprise Limited was found liable for the assessed taxes.

Significance

This case underscores:

• The importance of strict procedural compliance in tax disputes.
• The burden of proof lies squarely with the taxpayer to disprove KRA’s assessments.
• Even where timelines are met, substantive evidence is critical to succeed in tax appeals.