Kenya: Base Titanium wins long-running levy battle against Mombasa County

Heavy duty equipment for mining at the Base Titanium Site

Heavy duty equipment for mining at the Base Titanium Site in Kwale County in Kenya’s coastal area. PHOTO | FILE

By JAMES ANYANZWA

SATURDAY JULY 24 2021

Summary

  • Kenya’s Mineral sands operator Base Titanium has won a protracted legal battle with the County of Mombasa. 
  • The seven-year-long dispute has seen Base Titanium forced by the county to pay cess totalling Ksh1,542,000 ($14,411.21) as of December 31, 2014.
  • Titanium filed another appeal at the Supreme Court on grounds that the Court of Appeal erred in its interpretation and application of Article 209(4) of the Constitution. 

Kenya’s Mineral sands operator Base Titanium has won a protracted legal battle with the County of Mombasa over the imposition of a controversial Ksh3,000 ($28.03) cess on its trucks.

This comes after the Supreme Court of the land overturned decisions by the Superior courts — High Court and Court of Appeal — by declaring that the levy charged by the County on Titanium trucks transporting goods across its boundaries is ‘unconstitutional’

The seven-year-long dispute has seen Base Titanium, the Kenyan subsidiary of the Base Resources Group, an Australia-based, Africa-focused, mineral sands producer and developer, forced by the county to pay cess totalling Ksh1,542,000 ($14,411.21) as of December 31, 2014.

The Supreme Court through its ruling delivered on July 16, 2021 declared the actions by the County Government of Mombasa ‘unconstitutional, null and void and ordered the administration to refund Ksh1,542,000 ($14,411.21) already paid by the mineral sands operator.

“…..a declaration is hereby issued declaring that the actions of the First Respondent (Mombasa County) to charge the Appellant (Base Titanium) a cess in the sum of Ksh3,000 ($28.03) per truck, or any sum at all, a condition for the Appellant (Titanium) to move its goods across the boundaries of the 1st Respondent’s County is unconstitutional, null and void,” according to the ruling.

Interpretation

“The First Respondent (Mombasa County) is hereby directed to refund to the Appellant (Titanium) the sum of Ksh1,542,000 ($14,411.21) paid by the Appellant (Base Titanium) to the First Respondent as of December 31 2014.”

In its ruling the Supreme Court determined whether the levy charged by the County of Mombasa upon each titanium truckload was a charge on services as contemplated under Article 209(4) & (5) of the Constitution of Kenya, and if so what remedies the Court should offer.

“We, therefore, fault the superior Courts’ interpretation and application of Article 209(4) of the Constitution in their finding that the cess levied by the First Respondent (Mombasa County) was in line Constitution. Consequently, we set aside the Judgements of the High Court and of the Court of Appeal,” according to the ruling.

The levy dispute between Base Titanium and Mombasa County started in June 17, 2014 when the County authorities started imposing Ksh3,000 ($28.03) cess on Titanium trucks operating within its jurisdiction.

Additional sums

Aggrieved by Mombasa County’s action, Base Titanium filed a petition in 2015 seeking orders to the County’s actions to charge the firm a cess of Ksh3,000 ($28.03) per truck, unconstitutional, null and void, declaration that the County has no mandate under the Constitution to pass any legislation that restricts the firm’s right of movement by imposing a tax or revenue to be paid by Titanium as a condition for moving its goods across the County’s boundaries.

The firm also demanded a mandatory injunction compelling the County to refund the Ksh1,542,000 ($14,411.21) it had already paid under duress as at December 31, 2014, and/or any other additional sums that the firm had paid to the County from January 1, 2015, as cess on trucks transporting goods across the County boundaries to the date of compliance with the mandatory injunction.

In February 2017, the High Court dismissed the firm’s petition, arguing 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 services.

The High Court concluded that the cess charge imposed by the Mombasa County Finance Act, 2014 for “all goods carrying vehicles entering Mombasa County and offloading in Mombasa County” is not a tax or charge on the mineral product of titanium mined and transported by the firm, and the charge is, accordingly, not barred by reference to Article 62 of the Constitution, which vests minerals as part of public land under the authority of the National Government.

The Court also ruled that Titanium failed to demonstrate how the imposition of the cess on the vehicles carrying its product into Mombasa prejudices the national interests as per Article 209(5) of the Constitution

However, the firm was dissatisfied with the ruling and filed an appeal faulting the High Court judgment for finding that the cess was a charge for services referred to ‘road transport service’ provided by the County of Mombasa, and making a determination on issues not pleaded thus infringing on the firm’s right to a fair hearing.

The Constitution

Titanium also argued that the High Court ruling misapprehended the law with respect to implementation of Article 209(5) of the Constitution and failed to hold that the imposition of the cess was unconstitutional.

But the appeal was dismissed by the Court of Appeal in 2018 on grounds that Titanium failed to demonstrate the manner in which the County of Mombasa had violated Article 209(4) and (5) of the Constitution by hindering the movement of its goods or how it was prejudicial to national economic policies or unlawful in any way.

However, Titanium filed another appeal at the Supreme Court on grounds that the Court of Appeal erred in its interpretation and application of Article 209(4) of the Constitution when it found that a levy in the Mombasa County Finance Act, 2014 was properly imposed as a charge for services provided within the meaning of the Article without specifying whether the levy related to a service offered by the County government of Mombasa, and if so, the nature of the specified service.

The firm also faulted the court of Appeal’s finding that the said levy was properly imposed for services provided by the County without considering whether the levy complied with the Constitution.

SOURCE: https://www.theeastafrican.co.ke/tea/business/base-titanium-wins-levy-battle-against-mombasa-county-3484434

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