THE JURISDICTION OF CID/POLICE TO INVESTIGATE A FINANCIAL INSTITUTION OVER THE MANNER IN WHICH A CLIENT'S ACCOUNT HAS BEEN OPERATED

Introduction

The Criminal Investigations Department (CID) is a department within the Kenya Police whose mandate is to investigate alleged crimes. This function is derived from the function of the Kenya Police as contained in the Police Act[1], namely: “……the prevention and detection of crime….., and the enforcement of all laws.”

Jurisdiction of the Cid to Purport to Investigate a Matter Currently Before a Court Of Law

By law, criminal investigation is the function of the Police and its various departments which functions may be exercised in the event of an alleged or suspected commission of an offense. The CID, being a department of the Kenya Police which by law is expressly empowered to undertake prevention and detection of crime (through investigation, etc) is therefore competent to commence criminal investigations against anyone.

That power however is not absolute, and must be exercised in view of the Constitution and other laws governing the just administration of justice such as the Criminal Procedure Code and the Civil Procedure Act and the rules made thereunder.

Further, in instances where a court of law has heard and determined a matter, certain principles of law are applicable to bar further debate on rights or liabilities of the respective parties. The main principles are:

1. Sub judice; and
2. Res judicata.

Sub Judice in Criminal Law

Matters are considered to be sub judice once legal proceedings become active. The Principle dictates that:

“NO COURT shall proceed with the trial of any suit or proceeding in which the matter in issue is also directly and substantially in issue in a previously instituted suit or proceeding between the same parties, or between parties under whom they or any of them claim, litigating under the same title, WHERE SUCH SUIT OR PROCEEDING IS PENDING IN THE SAME OR ANY OTHER COURT having jurisdiction in Kenya to grant the relief claimed.”[2]

The rule is part of the law relating to contempt of court, and governs what public statements can be made about ongoing legal proceedings before, principally, the courts. It seeks to prevent the miscarriage of justice through communication of information which may prejudice the effective and fair administration of justice.

The rule restricts Courts and or Quasi-Judicial Tribunals from purporting to hear and determine a matter which is before another court of law of competent jurisdiction for determination of same issues. It however, does not prohibit the Police or CID from performing its statutory duty of investigation of alleged or suspected crimes.

Res Judicata in Criminal Law

Res judicata as a principle of law restricts Courts from purporting to “try any suit or issue in which the matter directly and substantially in issue has been directly and substantially in issue in a former suit between the same parties, or between parties under whom they or any of them claim, litigating under the same title, in a court competent to try such subsequent suit or the suit in which such issue has been subsequently raised, and has been heard and finally decided by such Court.”[3]

As is the case with sub judice rule, the Police or CID are not barred from investigating any matter in which a offense has been alleged or an offence is suspected to have been committed, notwithstanding that the same has been heard and determined by a competent civil Court.

Obligation to Exercise Statutory Duty

In addendum, the CID and Police generally exercise statutory functions. These functions cannot be gagged by Civil Procedure Rules as long as a party confines to such actions within the law. It would be breach of statutory duty for the CID to refuse to investigate an alleged commission of an offense or suspicion of commission of an offense, and for which redress may be sought against the CID and Office of the Attorney General in judicial review (compelling the latter – through the former, to conduct an investigation).

CONCLUSION

In the foregoing, the CID has jurisdiction to investigate a financial institution in the manner in which transactions relating to a client’s account has been conducted. As such, the CID may lawfully make all enquiries and undertake such discoveries as it may require for the determining the allegation of or suspicion of commission of an offense in relation to the said account for purposes of commencement of a prosecution.

However, in the course of making enquiries and obtaining information from financial institution, the CID must not publish or cause to be published any such information in a manner even remotely likely to prejudice such financial institution’s position in the civil suits presently before the Courts of law.

We would therefore recommend that such financial institutions do comply with all requests for information in relation to the client account.

Nonetheless, the law precludes a person under investigation from giving evidence likely to incriminate him or her. This rule applies to corporate entities as well, and as such, a financial institution would be acting within the law should it refuse to disclose any matter which in its informed view is likely to incriminate it in any criminal proceeding.

We hope you find this advice informative. Should you require any advice on litigious or potentially litigious matters, please contact our Patrick ANAM at panam.stralexgroup@gmail.com. You may also reach him on +254 720 756 343 / +254 773 865 798.

For: Strategic Legal Solutions Group

Teddy OKELLO

MD & Group CEO

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[1] Section 14 of the Police Act, Chapter 84 of the Laws of Kenya.

[2] See Section 6 of the Civil Procedure Act, Cap 21 of the Laws of Kenya.

[3] See Section 7 of the Civil Procedure Act, Cap 21 of the Laws of Kenya.

THE LAW AND PROCEDURE FOR OBTAINING CHANGE OF USER OF PROPERTY IN KENYA

1.       INTRODUCTION

The land law of Kenya allows change of user of property from one category to another. The Government as the custodian of all property (see the principle of Eminent Domain) is seized of right and power to restrict the use of property to which it has available to residents. Often, issuance of Government Leases will be subject to certain restrictions. To use such property in a manner inconsistent with the terms of the lease would automatically breach the contract, and the Government would be entitled to repossess the property without compensation on the ground of breach of lease terms (contract).

For this reason, a developer must apply for and obtain change of user where the intended development is not envisaged within the user contemplated in the title document.

2.       PROCEDURE

The procedure for procuring a change of user is prescribed by law. The relevant Government Office for purposes of processing a change of user is the Local Authority Planning & Architecture Department. Every local authority has such a department.

In summary, the following steps are followed:

• Obtain PPA 1 Form (in triplicate);
• This is submitted to and signed by a registered planner;
• The Registered Planner prepares a planning brief and signs the same;
• Ownership/Title document are appended to the application documents;
• A comprehensive location plan is also attached;
• Copy of Local Authority Payment Receipt for purposes of change of user;
• Copy of Local Authority rate payment receipt;
• The application is addressed to the Town Clerk;
• The Town Clerk issues an approval to the application for change of user;
• An announcement on the proposed change of user is advertised both in the daily newspapers and on site of the property;
• An application is further made to the Commissioner of Lands for change of user;
• The Commissioner of Lands issues an approval/consent to effect change of user, subject to Banker’s Cheque payments towards Surrender (Conveyancing and registration) and Grant of New Title (Conveyancing, registration an stamp duty);
• The Consent from Commissioner of Lands is then forwarded together with all documents to Survey of Kenya to obtain deed plan;
• Surrender the title.

It must be noted that a change of user may be effected only by the owner of the property or a lessee under a duly executed lease. As such, the applications must be signed by the owner or a legitimate leasee holding a valid lease.  Lawyers will often engage the services of a registered planner for purposes of obtaining approval for the change of user at City Council. 

Change of user is often necessary when a developer is desirous of converting a property limited for residential use to commercial purposes (such as Commercial Property Development) or change the use of property restricted for school projects to residential housing.

The process takes six to eight months due to the verification and approval processes between the relevant local authority, the Commission of Lands Office and the Kenya Surveys.

3.       COSTS

3.1.  Disbursements

The disbursements towards obtaining a change of user include:

a)       Payment fee to Local Authority for Change of User;

b)       Advertising Notice of the National Newspaper (The Standard or Daily Nation);

c)       Surrender Fees to the Commissioner of Lands; and

d)      New Titles Charges.

These charges vary, depend on the value of the land, and may best be advised by the relevant authorities as the application process progresses.

3.2.  Professional Fees

The fees towards the professional services range from Kshs. 170,000 and above depending on the value of the land and complexity of the matter.

CONCLUSION

We hope we have sufficiently canvassed the procedure for application for change of user in respect of land. However, should you need further clarification, do email us at stralexgroup@gmail.com or call us on +254 715 310 677 for more details.

Yours sincerely,

For: Strategic Legal Solutions Group Limited

Teddy OKELLO

© 2011, Strategic Legal Solutions Group Limited

CAPACITY OF NON-CITIZENS TO HOLD ABSOLUTE TITLES TO LAND IN KENYA

INTRODUCTION

The Constitution of Kenya at Article 40 gurantees the right to property to ALL persons, whether citizens or non-citizens. The right to acquire and hold interest in land is envisaged within this provision.

This right, like most other rights, is not absolute. For instance, whereas one may acquire and own property of any description in any part of the Kenyan territory, the law grants the State the power of eminent domain (and or compulsory acquisition) over private property if the same is deemed necessary in public interest (subject to payment in full and just compensation and the right to access to court for redress).

HOLDING OF TITLES TO LAND BY NON-CITIZENS

The issue of land holding by non-citizens is adequately envisaged under Article 65 of the Constitution of Kenya 2010, which is to the effect that non-citizens can hold interest in land provided that such interests are restricted to LEASEHOLD INTEREST and no more. In addendum, the lease term must not exceed a period of more than 99 years (See Art. 65 (1) of the Constitution of Kenya, 2010), and should any agreement purport to covenant a longer duration, such leases would be contrued as 99-years lease for all intents and purposes (See Art. 65 (2) of the Constitution of Kenya, 2010).

As such,  an agreement for the sale of a freehold title to a non-citizen would be illegal and or enforceable. However, an agreement granting a lease for over 99 years would not necessarity be illegal but the lessee will be entitled to a 99 year lease notwithstanding covenants to contrary in any deed or agreement between the parties.

CONCEPT OF TRUSTEESHIP IN LAND HOLDING

The Former Constitution of Kenya did not purport to restrict land holding by non-citizens. This was due to the fact that contemporary challenges in property acquisition and manner of their use in the country had not been contemplated.

However, with real challenges such as scarcity of land for the local poulation, terrorism, money laundering and influx of illegal migrants into the country (some of whom are adequately resourced), the drafters of the Constitution were creative in sealing loopholes for attempts by non-citizens to hold freehold titles to land. Article 65 (3) of the Constitution envisages and thwarts possible avenues for maneuvers by unscrupulous non-citizens to acquire freehold titles, for instance, through the use of corporate entities whose shareholding are held by citizens to acquire freehold titles.

In company law, the case of Salomon v. Salomon [1897] AC 22 established the principle  of corporate personality - that a company is a distinct entity seperate from its owners/shareholders, and will all rights like any human person, including right to hold property. And with the invention of the concept of trusteeship, non-citizens would easily incorporate companies with Kenyan citizens as shareholders/directors subject to underlying Trust Deeds and Rights Deeds. The twin documents would often recite that all shares in the company are held in trust for a third party (non-citizen).

In view of such possibilities, the Constitution considers a corporate body as a citizen (and therefore entitles to Freehold Title) if the same is WHOLLY owned by one or more citizen. Property held by a corporate entity will also be considered as held by a Citizen only if the BENEFICIAL INTEREST in the TRUST PROPERTY is held for the benefit of A CITIZEN.

CONCLUSION

Whereas non-citizens can hold leasehold interest over land in Kenya, the law expressly outlaws holding of freehold interest by non-citizen. As such, any attemp to enter into a transaction for the holding of freehold interest in land in favour of a non-citizen would be based solely on good faith, for which no court of law will enforce (for ILLEGALITY - being contrary to express provisions of the law, and the Court will not assist a party enforce an illegal contract - See generally Cope v Rowlands (1836) 2 M & W 149).

In view of the above, it would be easy to proclaim that the Constitution of Kenya is discrimatory as against non-cititens in respect of right to hold freehold titles. Interestingly, however, a careful construction of Article 27 (4) of the Contitution reveals that it prohibits discrimination on the basis of "race, sex, pregrancy, marital status, health status, ethnic or social origin, colour, age, disability, religion, conscience, belief, culture, dress, language or birth" BUT does allow discrimination on the basis of Nationality or Citizenship, albeit tacitly. As such, an argument as to the unconstitutionality of such discrimination would be unsustainable in law.

Feel free to contact us at stralexgroup@gmail.com for any enquiries on the matters addresed hereinabove or incidental to the same.

Teddy OKELLO
Centre for Legal Research & Policy Development, a participating consultancy firm in the SLS Group of consultancies.

TIMELINES WITHIN WHICH A PUBLIC OFFICER MUST RESIGN FROM PUBLIC OFFICE BEFORE VYING FOR A POLITICAL OFFICE - OFFICE OF COUNTY GOVERNOR

1.       INTRODUCTION

In this advice, we determine the law on timelines within which a public officer must resign from public office before vying for a political office, in this case, the office of the County Governorship. In preparing this advice, we have considers:

a)       The Constitution of Kenya;

b)       The Election Act, Act No. 24 of 2011; and

c)       Independent Electoral and Boundaries Commission Act, Act 9 of 2011.

2.       THE ADVICE

2.1.  EXECUTIVE AUTHORITY IN COUNTY GOVERNMENT

The election to governorship in a devolved government is envisaged and governed by the Constitution of Kenya and the Election Act, Act No. 24 of 2011.

The Constitution dictates that executive authority in the county government shall vest in the County Executive Committee. (See Article 179 (1) of the Constitution)

The County Executive Committee is composed of the County Governor, Deputy County Governor and such other persons as the county governor may nominate with the approval of the National Assembly. (See Article 179 (2) of the Constitution)

The County Governor and the Deputy County Governor are the Chief Executive and Deputy Chief Executive Officers of the county, such that when the county governor is absent, the Deputy County Governor acts as the county governor. (See Article179 (4) of the Constitution)

Meanwhile, members of a county executive committee are accountable to the county governor for the performance of their functions and exercise of their powers (See Article 179 (6) of the Constitution)

2.2.  ELECTION OF COUNTY GOVERNOR

Article 180 (1) of the Constitution dictates that the county governor shall BE DIRECTLY ELECTED BY THE VOTERS REGISTERED IN THE COUNTY, on the same day as a general election of Members of Parliament, being the second Tuesday in August, in every fifth year.

TO BE ELIGIBLE FOR ELECTION AS COUNTY GOVERNOR, a person MUST BE ELIGIBLE FOR ELECTION AS A MEMBER OF THE COUNTY ASSEMBLY. (See Article 180 (2) of the Constitution.)

2.3.  ELIGIBILITY FOR ELECTION AS MEMBER OF THE COUNTY ASSEMBLY

To be eligible for election as a member of a county assembly, the prospective candidate must:

1.       Be registered as a voter;

2.       Satisfy any educational, moral and ethical requirements prescribed by the Constitution or an Act of Parliament; and

3.       Either:

3.1.  be nominated by a political party; or

3.2.  is an Independent Candidate supported by At Least Five Hundred Registered Voters in the ward concerned

SECTION 43 (5) of the Election Act, 2011 stipulates that a public officer who intends to contest an election under the act must resign from public office at least seven months before the date of election.

Fundamentally, however, THIS SECTION “SHALL NOT APPLY TO- (a)  the President; (b)  the Prime Minister; (c)  the Deputy President; (d)  a member of Parliament; (e)  A COUNTY GOVERNOR; (f)  a deputy county governor; (g)  a member of a county assembly.” (See Section 45 (6) of the Election Act, 2011)

Subject cited exceptions, the Constitution dictates that a holder of a public office cannot, while still serving in that public office, vie for the post of County Governor.

2.4.  DISQUALIFICATION FROM ELECTION AS MEMBER OF COUNTY ASSEMBLY

A person is disqualified from being elected a member of a county assembly if the person:

1.       is a State officer or other public officer, other than a member of the county assembly;

2.       has, at any time within the five years immediately before the date of election, held office as a member of the Independent Electoral and Boundaries Commission;

3.       has not been a citizen of Kenya for at least the ten years immediately preceding the date of election;

4.       is of unsound mind;

5.       is an undischarged bankrupt;

6.       is serving a sentence of imprisonment of at least six months; or

7.       has been found, in accordance with any law, to have misused or abused a State office or public office or to have contravened Chapter Six. (See Article 193 (2) of the Constitution)

2.5.  FURTHER LIMITATIONS

In addition to disqualifying factors above, Section 26 (1) of the Election Act provides that a person who DIRECTLY OR INDIRECTLY PARTICIPATES in any manner IN ANY OR PUBLIC FUNDRAISING OR HARAMBEE WITHIN EIGHT MONTHS PRECEDING A GENERAL ELECTION or during an election period, in any other case, shall be disqualified from contesting in the election held during that election year or election period.

2.6.  INITIATION OF COUNTY GOVERNOR ELECTION

Whenever an election for a County Governor is to be held, the Commission shall publish a notice of the holding of the election in the Gazette and in the electronic and print media of national circulation, in the case of a general election, at least sixty days before the date of the general election. (See Section 17 (1) of the Election Act)

The notice of the holding of the election in the Gazette shall be in the prescribed form and shall specify:

(a) the day for the nomination of candidates for the county governor election; and

(b) the day or days on which the poll shall be taken for the county governor election, which shall not be less than twenty-one days after the day specified for nomination. (See Section 17 (2) of the Elections Act)

As such, it is our advice that A Candidate Should Vacate Public Office Before The Date Of Nomination Of Candidates For The County Governor Elections, failure of which a nomination may be challenged on the ground that a candidate is disqualified by virtue of Article 193 (2) (a) of the Constitution.

Further, the Constitution of Kenya does not purport to dictate the time when a candidate shall be deemed to have presented himself for an election. Therefore, the issue as to the time as to when one should vacate public office for purposes of qualification to vie for a political office can only be obtained from interpretation of the law. 

Consequently, the decision as to the time of vacation of public office would be based on the notice issued by the Independent Electoral and Boundaries Commission on the day for the nomination of candidates for the county governor elections.

2.7.  TRANSITON OF MUNICIPAL TO COUNTY GOVERNMENT

The Constitution provides that while an election is being held to constitute a county assembly, the EXECUTIVE COMMITTEE OF THE COUNTY, AS LAST CONSTITUTED REMAINS COMPETENT TO PERFORM ADMINISTRATIVE FUNCTIONS until a new executive committee is constituted after the election. (See Article 198 of the Constitution)

The operations of the county shall therefore expected to proceed without interruption, and immediately upon declaration of the lawful appointment and swearing in of the new County Assembly and County Executive Committee, the new County Government automatically assumes management of county executive and legislative affairs. It should however be noted that a candidate must first resign from a public office before vying for County Governorship, which is a political office.

3.       CONCLUSION

Neither the Constitution nor the Election Act 2011 dictate the period within which a public officer must vacate office before running for a political office, and the office of the County Governorship for that matter. The legal position on the issues is therefore derived from interpretation. In this case, we advice that:

3.1.  A Candidate Should Vacate Public Office Before The Date Of Nomination Of Candidates For The County Governor Elections, failure of which a nomination may be challenged on the ground that a candidate is disqualified by virtue of Article 193 (2) (a) of the Constitution;

3.2.  The Constitution of Kenya does not purport to dictate the time when a candidate shall be deemed to have presented himself for an election. Therefore, the issue as to the time as to when one should vacate public office for purposes of qualification to vie for a political office can only be obtained from interpretation of the law;

3.3.  The decision as to the time of vacation of public office would be based on the notice issued by the Independent Electoral and Boundaries Commission on the day for the nomination of candidates for the county governor elections; and

3.4.  It is therefore safe to continue serving in a public office until a day before the date set for nomination of candidates for the county governor elections.

3.5.  It is also apparent that the current parliamentarians sought to protect 5hemselves by creating suitable Clauses in the Election Act. Section 43 (5) of the Election Act, 2011 stipulates that a Public Officer who intends to contest an election under the act must resign from public office at least seven months before the date of election. THIS SECTION, HOWEVER, “SHALL NOT APPLY TO - (A)  THE PRESIDENT; (B)  THE PRIME MINISTER; (C)  THE DEPUTY PRESIDENT; (D)  A MEMBER OF PARLIAMENT; (E)  A COUNTY GOVERNOR; (F)  A DEPUTY COUNTY GOVERNOR; (G)  A MEMBER OF A COUNTY ASSEMBLY.”

        For further clarification on the issues convassed herein or incidental thereto, please contact the undersigned a stralexgroup@gmail.com.

       Teddy OKELLO

       MD & GROUP CEO

       Strategic Legal Solutions Group

AN INTRODUCTION TO FUTURES AND OPTIONS

FUTURES

Futures are promissory notes. They take the form of contractual agreements, generally made on the Trading Floor of a Futures Exchange, to buy or sell a particular commodity or financial instrument at a pre-determined price in the future. Futures contracts detail the quality and quantity of the underlying asset; they are standardized to facilitate trading on a futures exchange. Some futures contracts may call for physical delivery of the asset, while others are settled in cash.

A futures contract gives the holder the obligation to buy or sell, which differs from an options contract, which gives the holder the right, but not the obligation. As such, the owner of an options contract may exercise the contract. Both parties of a "futures contract" must fulfill the contract on the settlement date. The seller delivers the commodity to the buyer, or, if it is a cash-settled future, then cash is transferred from the futures trader who sustained a loss to the one who made a profit.

OPTIONS

Options are yet another type of promissory note. Options are financial instruments that convey the right, but not the obligation, to engage in a future transaction on some underlying security, or in a futures contract. In other words, the holder does not have to exercise this right, unlike a  future.

The theoretical value of an option can be determined by a variety of techniques. These models, which are developed by quantitative analysts, can also predict how the value of the option will change in the face of changing conditions. Hence, the risks associated with trading and owning options can be understood and managed with some degree of precision compared to some other investments.

Exchange-traded options form an important class of options which have standardized contract features and trade on public exchanges, facilitating trading among independent parties. Over-the-counter options are traded between private parties, often well-capitalized institutions, that have negotiated separate trading and clearing arrangements with each other. Another important class of options, particularly in the U.S., are employee stock options, which are awarded by a company to their employees as a form of incentive compensation.

Other types of options exist in many financial contracts, for example real estate options are often used to assemble large parcels of land, and prepayment options are usually included in mortgage loans. However, many of the valuation and risk management principles apply across all financial options.

In the next series, we look at the place of futures and options in the Kenyan financial services market .

Feel free to participate in this discussion