Introduction
1. The Petition dated 17th October 2022 is supported by the Petitioner’s affidavit in support of similar date and further affidavits dated 30th May 2023 and 12th June 2023.
2. The Petition is founded on alleged inaction by the Respondent in processing the Fit and Proper Application required under the Capital Markets Authority Act for the key personnel thereby causing the Petitioner to lose employment opportunities at Genghis Capital Limited and Mayfair Asset Managers Limited.
3. Consequently, the Petitioner asserts that the Respondent violated his right to earn a living under Article 43 of the Constitution and right to a fair administrative action under Article 47 of the Constitution.
4. Accordingly, the Petitioner seeks the following reliefs against the Respondent:
a) A declaratory order declaring that the Respondent is in breach of the Petitioner's right to fair administrative action under Article 47 of the Constitution for taking an inordinately and an unjustified long time to make a decision on the Petitioner's "Fit & Proper" Applications made on 14th September 2018 and on 25th March 2022.
b) A declaratory order declaring that the Respondent is in breach of the Petitioner's right to earn a living as entailed in his economic and social rights guaranteed under Article 43 of the Constitution by the inordinate and unjustified delay in making a decision on the Petitioner's "Fit & Proper" Applications made on 14th September 2018 and on 25th March 2022 leading to him missing out on two significant employment opportunities with Genghis Capital Investment Bank and Mayfair Asset Managers Limited respectively.
c) An order for compensation in the sum of KES 45,946,366 against the Respondents to compensate the Petitioner for loss of income from the lost employment opportunities due to the inordinate and unjustified delay in a decision on the Petitioner's "Fit & Proper" Applications made on 14th September 2018 and on 25th March 2022 leading to him missing out on two significant employment opportunities with Genghis Capital Investment Bank and Mayfair Asset Managers Limited respectively.
d) Interest on the monetary sums above (3) at court rates from the date of filing suit until full settlement.
e) A declaratory order declaring that the Respondent is in breach of the Petitioner's right to fair administrative action under Article 47 for placing in abeyance a decision on the Petitioner's "Fit & Proper" Application made on 14th September 2018 and in its place unfairly and unreasonably instituting unfounded disciplinary proceedings against the Petitioner by way of a Notice to Show Cause issued on 10th July 2020.
f) A declaratory order that there is a threat to the Petitioner's right to fair administrative action and to fair hearing by the intent of the Respondent to make a decision in respect of the Notice to Show Cause issued on 10th July 2020 against the Petitioner notwithstanding the pendency of the Petitioner's request for a review of the Respondent's decision refusing to provide the Petitioner with information and documents that are necessary for the petitioner to effectually respond to the Notice to Show Cause.
g) A prohibitory injunction and/or order restraining the Respondent from making decision in respect of the Notice to Show Cause issued on 10th July 2020 against the Petitioner pending the hearing and determination of the Petitioner's request for a review of the Respondent's decision refusing to provide the Petitioner with information and documents that are necessary for the petitioner to effectually respond to the Notice to Show Cause.
h) An order of certiorari quashing the decision made by the Respondent in its letter dated 16th January 2019 holding in abeyance a decision on the Petitioner's Fit and Proper Application dated 14th September 2018 with respect to Genghis Capital Limited.
i) An order of mandamus directing the Respondent to make a decision the Petitioner's Fit and Proper Application dated 14th September 2018 with respect to Genghis Capital Limited and 25th March 2022 with respect to Mayfair Asset Managers Limited.
j) Such further or other orders as it may deem just and expedient for the ends of justice.
Petitioner’s Case
5. The Petitioner described himself as a professional in the Finance Services and Investments Industry. By way of background, he stated that that he left his employment at Sanlam Investment Limited in December 2017 to begin his new role at Genghis Capital Limited.
6. On 14th September 2018, he made an application for the ‘Fit and Proper’ assessment with the Respondent through his new employer. This was in line with the requirement under the Capital Market Authority Act wherein the Respondent is required grant approval or objection for key personnel in companies licensed under the Act.
7. The Petitioner is aggrieved that the Respondent did not make that assessment. Instead, the Respondent in a confidential letter dated 16th January 2019 informed Genghis Capital Limited that his application had been held in abeyance.
8. The Petitioner decries that as a consequence of the Respondent’s inaction; he lost his position at Genghis Capital Limited. This is because he was forced to vacate the acting status in the role to avoid contravening the Act.
9. On 25th March 2022, the Petitioner filed another ‘Fit and Proper’ application in relation to May Fair Asset Managers Limited where again was subjected to the same treatment.
10. The Petitioner contended that as a result of the Respondent’s delay in considering the Applications is in violation of Article 47 of the Constitution and as a consequence, he has lost income estimated at Ksh.45,946,366/-.
11. In a turn of events, the Petitioner alleged that the Respondent despite not responding to his applications, went ahead and issued him a Notice to Show Cause on 10th July, 2020 in relation to disciplinary proceedings arising from a complaint that had been filed by Sanlam Life Insurance Limited against the Petitioner during his tenure as the Chief Executive Officer at Sanlam Investments Limited.
12. In a letter dated 11th August 2020, the Petitioner sought relevant documents concerning the said complaint. The Respondent did not respond to this request despite sending a follow up letter dated 24th September 2021. The Petitioner avers that the Respondent in view of this fact violated his right under Article 35 of the Constitution as read with Section 9 of the Access to Information Act.
13. On 26th May 2022, the Respondent invited him to a meeting that was held on 7th June 2022. The Petitioner avers that the Respondent did not provide the requested information in that meeting; instead, on 29th August 2022 he was sent the were a misrepresentation of the content of the proceedings of 7th June, 2022.
14. On the said 29th August 2022, along with the impugned minutes, the Respondent also some documents in purported compliance with the Petitioner’s request for information. It did not provide all the requested documents. On 5th September 2022, the Petitioner wrote to the Respondent insisting on the request for information and rejecting the false minutes.
15. The Petitioner states that despite the follow ups; the Respondent neglected to provide the information sought. The Petitioner thus lodged a complaint with the Commission of Administrative Justice (CAJ) on 5th October 2022. As a result, on 18th October, 2022; the Respondent threatened to make a decision on the Notice to Show Cause.
16. The Petitioner avers that the CAJ in a Ruling dated 31st January 2023 directed release of the following documents:
(a) My recorded statement taken in the course of the investigations carried out by the Respondent prior to the issuance of the NTSC dated 10 July 2020;
(b) Portions of financial accounts that were presented to Sanlam’s Board audit committee meetings at the two meetings of 3 August 2017 and 7 November 2017 as well as the complete minutes for the two Board Audit Committee meetings.
(c) Investment Reports for all Sanlam Life Portfolios sent monthly by Sanlam Investments Limited to the management of Sanlam Life Insurance for the months of June, July, August and September 2017 together with the cover emails.
(d) Correspondence between the Authority and Sanlam Investments Ltd with regard to my Fit and Proper Application made in September 2018
(e) With reference to the notice on revocation of the license for Sanlam Investments Ltd, issued by CMA in 2018 in Kenya Gazette Notice No 2548, dated 16 March 2018, copies of complaints, received by the Authority from Sanlam Life Insurance Ltd.
(f) Information on the position relating to my fit and proper application with respect to Genghis Capital and Mayfair.
17. He asserts that the Respondent did not honour the foregoing orders causing the CAJ to issue further orders on 16th March 2023 as follows:
a) A redacted or an abridged version of thereof and supply such redacted or abridged version of the Investigation report
b) Copies of the complaints lodged with Authority or in the alternative, the information contained in the complaints in a manner that allows compliance with the law.
18. The Petitioner contends that the Respondent similarly failed to provide these documents causing him to send further correspondence through his Counsel on 13th April 2023.
19. The Petitioner equally contends that the Respondent did not comply with the timelines set out under its Citizen’s Service Delivery Charter. In light of the foregoing, the Petitioner asserts that the Respondent’s actions have violated his constitutional rights.
Respondent’s Case
20. The Respondent filed his Replying Affidavit through its Senior Manager, Investigations and Enforcement Department, Lawrence Mumina, sworn on 26th April 2023.
21. With reference to the Petitioner’s application for the ‘Fit and Proper evaluation,’ the Respondent stated that the Petitioner was the Chief Executive Officer of Sanlam Investments Limited between November 2012 and December 2017. At the time, Sanlam Investments Limited was undertaking fund management on behalf of Sanlam Life Insurance. Both companies were under the umbrella of Sanlam Group Kenya PLC.
22. The Respondent stated that the Fit and Proper Test Application was lodged by Genghis Capital Limited on 5th September 2018 and not the Petitioner as is alleged in this Petition. It stated that Genghis Capital applied for the ‘letter of no objection’ in respect of the Petitioner’s employment as its General Manager, Asset Management.
23. Upon the receipt of the application by Genghis Capital, the Respondent embarked on the fit and proper exercise pursuant to Section 24A of the Capital Markets Authority Act and Regulation 52 of the Capital Markets (Licensing Requirement) (General) Regulations, 2022. The Respondent wrote to the then Chief Executive Officer (CEO) of Sanlam Investment Limited, Jonathan Stitchbury on 4th October 2018.
24. That even before that, the Respondent had already received complaints on 13th September 2018 from the senior executives at Sanlam Group Kenya PLC, concerning the Petitioner’s conduct during his tenure at Sanlam but at the time, Sanlam Group PLC was still undertaking forensic investigations. In that meeting, it was agreed that the Respondent would contact Mr. Patrick Tumbo of Sanlam Kenya PLC since those allegations were being conducted forensically through an investigation commissioned by Sanlam Group. In or about October, 2018; the Respondent appraised Genghis Capital Limited about the progress made in respect of ‘fit and proper exercise’ which disclosed to the Petitioner vide email dated 12th October, 2018.
25. On 29th October, 2018 the Respondent wrote Mr. Patrick Tumbo of Sanlam Group PLC seeking further information on investigations. In a letter dated 9th November 2018, the Respondent was informed by Sanlam in-depth investigation focussing on operations at Sanlam Investments Limited were still on and was not able to respond to propriety and fitness of the Petitioner at that moment.
26. At the conclusion of its investigations, Sanlam Group PLC lodged a formal complaint against the Petitioner with the Respondent on 20th December 2018 on the claims of fraud and professional negligence.
27. In a further update vide letter dated 21st January 2019, the Respondent informed Genghis Capital Limited that its application for fitness and propriety on the Petitioner (‘no objection letter) will be held in abeyance to enable it complete its investigations into Sanlam Group PLC complaint against the Petitioner.
28. In view of the stated account, the Respondent avers that it cannot be faulted with delay in conducting the fit and proper evaluation as it was not indolent in conducting reference checks as it was relied on information in the hands of others which was beyond the Respondent’s control. Furthermore, it was not in control of the nature of feedback the Petitioner’s former employer would provide as in this case which came in form of complaint against the Petitioner for potential fraud/professional negligence that raised concerns about Petitioner’s suitability hence the Respondent had a duty to investigate by putting in abeyance the ‘no objection approval application.’
29. He argues that the Petitioner’s allegations that the Respondent’s conduct cost him his role at Genghis Capital Investment’s is baseless as all the Respondent did was to give an update of the factual confirmation that the Petitioner was under active investigation and that it thought it wise to withhold confirming his fitness before concluding the propriety and fitness test as is expected under Section 24 of the Act.
30. He depones that once the Respondent concluded its investigations, it issued the Petitioner the Notice to Show Cause (NTSC) dated 20th July 2020. He states that the letter informed the Petitioner of the outcome of its investigations being, materially understating the investments made by Sanlam Investments Limited through Sanlam Life Insurance Limited thus was required to issue a response. He informs that the NTSC also contained the relevant evidence in the matter.
31. He depones that the Petitioner also requested additional documents through a letter dated 11/8/2020.
32. In the meeting dated 7th June 2022, he asserts that the Respondent explained why it was unable to share the requested supplementary information. Nonetheless, he avers that the information was later on furnished to the Petitioner on 29th August 2022.
33. Thereafter, the Respondent asked the Petitioner respond to the NTSC on 12th September 2022.
34. It is emphasised that instead of making a response to the NTSC, the Petitioner lodged a complaint with CAJ through a letter dated 5th October, 2022 arguing that the Respondent had not provided some of the relevant documentation he required.
35. The Respondent filed its response in the matter on 20th February 2023.
36. In its finding dated 16th March 2023, the CAJ affirmed that the Respondent had taken all the necessary lawful and reasonable steps in furnishing the Petitioner with the relevant documents and addition delivered two addition documents being the redacted complaint and the Investigation Report dated 4th April 2023 per CAJ order.
37. Turning to the Petitioner’s allegations concerning May Fair Asset Managers Limited, he asserts that the same is equally unfounded. This is because the Respondent issued the sought licence vide a letter dated 4th August 2022, without issuing any adverse reference to the Petitioner’s fit and proper evaluation. He notes that May Fair Asset Managers Limited nonetheless in its own independent determination resolved to recall the Petitioner’s employment as its Head Business Development personnel.
38. Taking these averments into consideration, he maintains that the Respondent did not violate the Petitioner’s rights under Article 43 and 47 of the Constitution as claimed. Additionally, he stressed that the Respondent had acted within its jurisdiction lawfully. For this reason, he argues that the Petition should be dismissed.
Petitioner’s Submissions
39. AKO Advocates LLP for the Petitioner filed submissions dated 3rd September 2023 and underscored the issues for determination as: whether the Petitioner has locus standi in the matter, whether the delay in making a decision on the Petitioner’s Fit and Proper Applications amounts to breach of the Petitioner’s constitutional rights, whether the Petitioner has suffered loss as a result of the delay and thus entitled to the relief sought.
40. Counsel submitted that the Respondent in stating that the application for fit and proper was made by Genghis Capital Limited argued that the Petitioner lacks the requisite locus standi. Counsel in reaction submitted that this allegation is false as is evident from the Petitioner’s annexture at Page 19 in his supporting affidavit. Counsel emphasised thus that the Petitioner rightly instigated this suit as as the Respondent’s purported indecision directly affected him.
41. Reliance was placed in Enrico Quercioli & another v Director of Public Prosecutions & 2 others; Maria Angela (Interested Parties) [2021] eKLR where it was held that:
“As a consequence, locus standi is required in a litigation involving violation of fundamental rights, to be capable of sustaining the petition. In my humble view, if a petitioner applies to the Court to declare a law or a decision by a public body invalid, he or she must be able to prove to the Constitutional Court not only is the decision or provisions of the stature invalid but if no remedy is availed, he/she will suffer injury as a result of the violation or some other class of persons.
It is true as stated in various precedent setting decisions that the Question on locus standi must not be construed in a narrow and pedantic sense, for a constitution like ours embodies fundamental rights with far reaching consequences when threatened with infringement or violations. In our present reality, the provisions of Article 22 & 23 of the Constitution are intended to afford protection to the fundamental rights and freedoms granted to the individual. For this reason, it is desirable that all persons, individuals and organizations should have access to the High Court as a creature of the Constitution under Article 165 (2) (b) & (d) and Article 23 to seek redress for any perceived contravention of their rights. These are the attendant provisions of the Constitution must therefore be interpreted liberally to give wide access to the Courts under Article 48 of the same constitution. As standing to sue epitomizes the phraseology that the Court is no place for Busy Bodies. Any person who wants to sue either as an individual, organization, body corporate must show that he or she has locus standi being the right to sue for a remedy and capacity to pursue it before a Court of law. Locus standi does not even rest on the consent of parties to litigate on behalf of each other.”
42. Turning to the second issue, Counsel submitted that the Respondent was guilty of inordinate delay. This is owing to the 6 years period it took to issue a response to the Petitioner’s fit and proper application. As such, Counsel underscored that the Respondent’s delay was unconstitutional.
43. Reliance was placed in Judicial Service Commission v Daniel Ochenja [2020] eKLR where a delay of 2 and a half years was held to be in violation of Article 47 of the Constitution. Like dependence was placed in Kamal Jadva Vekaria v Director General, Kenya Citizens and Foreign Nationals Management Service [2016] eKLR, Grace A. Omolo v Attorney General & 3 others [2012] eKLR and Timothy Nchoe Sironka v Judical Service Commission [2020] eKLR.
44. In addition, Counsel submitted that the Respondent had violated the Petitioner’s legitimate expectation given the Respondent’s own timelines for action in its Service Charter, which is generally not more than 21 days in any matter. Equally, Counsel submitted that the Respondent had not provided an explanation for the delay despite the numerous correspondence issued by the Petitioner.
45. Reliance was placed in Communications Commission of Kenya & 5 Others v Royal Media Services & 5 Others SC Petition Nos. 14, 14A, 14B & 14C of 2014 where it was held that:
“Legitimate expectation would arise when a body, by representation or by past practice, has aroused an expectation that is within its power to fulfil. Therefore, for an expectation to be legitimate, it must be founded upon a promise or practice by public authority that is expected to fulfil the expectation."
46. Like dependence was placed in Republic v Kenya Revenue Authority Ex-Parte: Cosmos Limited [2016] eKLR and Kenya Hospital Association t/a Nairobi Hospital v Medical Practitioners and Dentists Board & 4 others [2018] eKLR.
47. In addition, Counsel submitted that the Respondent’s actions had caused the Petitioner economic loss. Counsel in light of the Petitioners averments argued that due to the Respondent’s regulatory demands and dictates, both Mayfair and Genghis could not sustain his employment. In fact, Counsel submitted that no other regulated entity in Kenya can employ the Petitioner until the Respondent gives the approval.
48. In light of the foregoing, Counsel submitted that the Petitioner was entitled to the reliefs sought. Counsel pointed out that the Petitioner was set to earn a monthly income of Kshs 850,000 at Genghis limited and Ksh.360,000 at Mayfair Investment. On this premise, Counsel submitted that the Petitioner was entitled to an award of compensation based on the monthly income opportunity lost per month. In respect of Genghis from September 2018 to March 2022 and for Mayfair from March 2022 to date.
Respondent’s Submissions
49. On 12th September 2024, the Respondent’s Counsel, Githendu E. Timothy filed submissions and highlighted the issues for discussion as: whether the Respondent exercised its powers to approvals and licensing powers lawfully and constitutionally, whether the Respondent's enforcement proceedings commenced vide the Notice to Show Case (NTSC) dated 20th July, 2020 are lawful and constitutional and whether the Respondent is liable to compensate the Petitioner for supposed lost employment opportunities.
50. Counsel pointed out that the Petitioner was essentially faulting the Respondent's actions in respect of various processes which work in tandem being licensing and approvals and investigation and enforcement. In this regard, Counsel submitted that the Respondent under Sections 2, 23, 24(8) and 24A of the Capital Markets Act and regulation 52, of the Capital Markets (Licensing Requirements) (General) Regulations, 2002 is mandated to regulate and control activities of intermediaries who participate in capital markets. This includes requirement of the intermediaries to apply for approvals for change of key personnel through an application of ‘no objection’. The threshold for the fitness and probity test is outlined under Sections 24A (1) and 24A (2) of the Act and Regulation 52 of the Regulations, 2002.
51. Counsel submitted that to make this assessment, the Respondent obtains information about an individual appointee through his self-declaration form and from other 3rd parties or anyone who may provide relevant information. Counsel in view of this, submitted that the Respondent conducted this process as set out in its affidavit.
52. Particularly, Counsel submitted that the Petitioner had no claim concerning Genghis Capital Limited as he did not lodge the said application for ‘no objection’. Counsel enlightened as well that the conduct of the fit and proper assessment is part of the review of the said application confirmation. Counsel registered equal sentiments with reference to the Mayfair Asset Managers application.
53. Counsel argued that the Respondent’s engagement of Sanlam Group contrary to the Petitioner’s allegation was lawful as the Respondent is permitted to engage any person it considers necessary to enable it make a holistic evaluation on the fitness and probity of the designated appointee.
54. Counsel equally contended that there was no delay on the Respondent’s part in considering the two applications as is apparent from the averments in the Respondent’s affidavit. Counsel also stressed that the argument for legitimate expectation was not viable as the timelines specified in the service charter represents aspirational targets thus not legally binding. Counsel noted moreover that the claim was misleading as the Respondent had already made decisions in the matters.
55. In like manner, Counsel submitted that Respondent’s decision to hold Genghis application in abeyance was lawful as was made in view of the ongoing investigations relating to his conduct during his tenure as the Chief Executive of Sanlam Investments Management Kenya Ltd and its own pending investigations.
56. Nonetheless, Counsel submitted that the purported legitimate expectation was applicable to Genghis and Mayfair not the Petitioner. Counsel equally relied in Communications Commission of Kenya (supra) in this matter. Additional reliance was placed in Republic v Principle Secretary, Ministry of Transport, Housing and Urban Development Ex Parte Soweto Residents Forum CBO (2019) eKLR.
57. On the second matter, Counsel submitted that the Respondent is empowered under Section 25A of the Capital Markets Act as read with Section 11(3)(cc) to take enforcement action against any person who violates provisions of the Act. This action is preceded by the NTSC which is issued by dint of Section 26 (8) of the Act and provisions of the Fair Administrative Actions Act, 2015. In this matter, Counsel submitted that the Respondent had received a complaint concerning the Petitioner in December 2018. Investigations were conducted and the NTSC issued. Accordingly, Counsel submitted that the Respondent has jurisdiction over the Petitioner in this regard and thus the issued NTSC was lawful being that the Petitioner is key personnel. Reliance was placed in Republic v Capital Markets Authority Ex parte: Joyce Ogundo [2018]eKLR where it was held that:
“I therefore do not subscribe to the views actions cannot be imposed against former directors. In my view former directors are culpable if what is complained of occurred under their watch."
58. Furthermore, Counsel submitted that the enforcement proceedings do not violate Article 47 of the Constitution as the issuance of the NTSC was in line with the dictates of this provision that is being an opportunity for the Petitioner to be heard and granting the Respondent an opportunity to make an objective decision.
59. On the claim that the requested documents and information was not supplied despite CAJ’s orders, Counsel submitted that Respondent did indeed issue the sought documents and has also issued all the relevant evidence alongside the NTSC. On the final issue, Counsel submitted in light of the foregoing and Respondent’s averments the Petitioner was not entitled to compensation for the supposed lost employment opportunities.
Analysis and Determination
60. In view of the foregoing, it is my considered view that the issues that arise for determination in this matter are as follows:
i. Whether the Petitioner has the necessary locus standi.
ii. Whether the Respondent’s delay in determining the fit and proper application violated the Petitioner’s right to a fair administrative process under Article 47 of the Constitution in the circumstances of this case.
iii. Whether the Respondent violated the Petitioner’s legitimate expectation.
iv. Whether the Petitioner is entitled to the relief sought.
Whether the Petitioner has the necessary locus standi
61. The Respondent argued that the fit and proper information was sought by Genghis Capital Limited in respect of the Petitioner on 5th September, 2018 and thus was not the Petitioner’s application. That on 4th October, it wrote to Sanlam Group PLC (Petitioner’s former employer who had on 13th September approached the Respondent with allegations against the Petitioner) to provide more information on the matter. Sanlam responded on 12th October indicating that it was still carrying forensic investigations which information was passed to Genghis Capital which in turn informed the Petitioner. The long and short of this is that Sanlam upon completion of its investigations eventually lodged a formal complaint against the Petitioner and the Respondent was supposed to investigate and determine as part of considerations for determining the propriety of the Petitioner to serve in a licensed entity under the Act.
62. Even without getting deeper into this fact, the argument that the Petitioner lacks locus standi in view of this facts is preposterous. It is manifest that although the Application for Fit and Proper Application was lodged by the Petitioner’s new employer, the actual impact of that decision was on the prospects of the Petitioner’s employability or suitability for the job hence had a direct bearing on the Petitioner. The Petitioner thus had a direct legal interest which he is entitled to defend. In Daykio Plantations Limited v National Bank of Kenya Limited & 2 others [2019] KEELC 37 (KLR) defined locus standi as follows:
“…In the case of Law Society of Kenya …Vs… Commissioner of Lands & Others, Nakuru High Court Civil Case No.464 of 2000, the Court held that ;-
“Locus Standi signifies a right to be heard, A person must have sufficiency of interest to sustain his standing to sue in Court of Law”. Further in the case of Alfred Njau and Others ..Vs.. City Council of Nairobi ( 1982) KAR 229, the Court also held that;-
“the term Locus Standi means a right to appear in Court and conversely to say that a person has no Locus Standi means that he has no right to appear or be heard in such and such proceedings”.
It is therefore evident that locus standi is the right to appea
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1. The Petition dated 17th October 2022 is supported by the Petitioner’s affidavit in support of similar date and further affidavits dated 30th May 2023 and 12th June 2023.
2. The Petition is founded on alleged inaction by the Respondent in processing the Fit and Proper Application required under the Capital Markets Authority Act for the key personnel thereby causing the Petitioner to lose employment opportunities at Genghis Capital Limited and Mayfair Asset Managers Limited.
3. Consequently, the Petitioner asserts that the Respondent violated his right to earn a living under Article 43 of the Constitution and right to a fair administrative action under Article 47 of the Constitution.
4. Accordingly, the Petitioner seeks the following reliefs against the Respondent:
a) A declaratory order declaring that the Respondent is in breach of the Petitioner's right to fair administrative action under Article 47 of the Constitution for taking an inordinately and an unjustified long time to make a decision on the Petitioner's "Fit & Proper" Applications made on 14th September 2018 and on 25th March 2022.
b) A declaratory order declaring that the Respondent is in breach of the Petitioner's right to earn a living as entailed in his economic and social rights guaranteed under Article 43 of the Constitution by the inordinate and unjustified delay in making a decision on the Petitioner's "Fit & Proper" Applications made on 14th September 2018 and on 25th March 2022 leading to him missing out on two significant employment opportunities with Genghis Capital Investment Bank and Mayfair Asset Managers Limited respectively.
c) An order for compensation in the sum of KES 45,946,366 against the Respondents to compensate the Petitioner for loss of income from the lost employment opportunities due to the inordinate and unjustified delay in a decision on the Petitioner's "Fit & Proper" Applications made on 14th September 2018 and on 25th March 2022 leading to him missing out on two significant employment opportunities with Genghis Capital Investment Bank and Mayfair Asset Managers Limited respectively.
d) Interest on the monetary sums above (3) at court rates from the date of filing suit until full settlement.
e) A declaratory order declaring that the Respondent is in breach of the Petitioner's right to fair administrative action under Article 47 for placing in abeyance a decision on the Petitioner's "Fit & Proper" Application made on 14th September 2018 and in its place unfairly and unreasonably instituting unfounded disciplinary proceedings against the Petitioner by way of a Notice to Show Cause issued on 10th July 2020.
f) A declaratory order that there is a threat to the Petitioner's right to fair administrative action and to fair hearing by the intent of the Respondent to make a decision in respect of the Notice to Show Cause issued on 10th July 2020 against the Petitioner notwithstanding the pendency of the Petitioner's request for a review of the Respondent's decision refusing to provide the Petitioner with information and documents that are necessary for the petitioner to effectually respond to the Notice to Show Cause.
g) A prohibitory injunction and/or order restraining the Respondent from making decision in respect of the Notice to Show Cause issued on 10th July 2020 against the Petitioner pending the hearing and determination of the Petitioner's request for a review of the Respondent's decision refusing to provide the Petitioner with information and documents that are necessary for the petitioner to effectually respond to the Notice to Show Cause.
h) An order of certiorari quashing the decision made by the Respondent in its letter dated 16th January 2019 holding in abeyance a decision on the Petitioner's Fit and Proper Application dated 14th September 2018 with respect to Genghis Capital Limited.
i) An order of mandamus directing the Respondent to make a decision the Petitioner's Fit and Proper Application dated 14th September 2018 with respect to Genghis Capital Limited and 25th March 2022 with respect to Mayfair Asset Managers Limited.
j) Such further or other orders as it may deem just and expedient for the ends of justice.
Petitioner’s Case
5. The Petitioner described himself as a professional in the Finance Services and Investments Industry. By way of background, he stated that that he left his employment at Sanlam Investment Limited in December 2017 to begin his new role at Genghis Capital Limited.
6. On 14th September 2018, he made an application for the ‘Fit and Proper’ assessment with the Respondent through his new employer. This was in line with the requirement under the Capital Market Authority Act wherein the Respondent is required grant approval or objection for key personnel in companies licensed under the Act.
7. The Petitioner is aggrieved that the Respondent did not make that assessment. Instead, the Respondent in a confidential letter dated 16th January 2019 informed Genghis Capital Limited that his application had been held in abeyance.
8. The Petitioner decries that as a consequence of the Respondent’s inaction; he lost his position at Genghis Capital Limited. This is because he was forced to vacate the acting status in the role to avoid contravening the Act.
9. On 25th March 2022, the Petitioner filed another ‘Fit and Proper’ application in relation to May Fair Asset Managers Limited where again was subjected to the same treatment.
10. The Petitioner contended that as a result of the Respondent’s delay in considering the Applications is in violation of Article 47 of the Constitution and as a consequence, he has lost income estimated at Ksh.45,946,366/-.
11. In a turn of events, the Petitioner alleged that the Respondent despite not responding to his applications, went ahead and issued him a Notice to Show Cause on 10th July, 2020 in relation to disciplinary proceedings arising from a complaint that had been filed by Sanlam Life Insurance Limited against the Petitioner during his tenure as the Chief Executive Officer at Sanlam Investments Limited.
12. In a letter dated 11th August 2020, the Petitioner sought relevant documents concerning the said complaint. The Respondent did not respond to this request despite sending a follow up letter dated 24th September 2021. The Petitioner avers that the Respondent in view of this fact violated his right under Article 35 of the Constitution as read with Section 9 of the Access to Information Act.
13. On 26th May 2022, the Respondent invited him to a meeting that was held on 7th June 2022. The Petitioner avers that the Respondent did not provide the requested information in that meeting; instead, on 29th August 2022 he was sent the were a misrepresentation of the content of the proceedings of 7th June, 2022.
14. On the said 29th August 2022, along with the impugned minutes, the Respondent also some documents in purported compliance with the Petitioner’s request for information. It did not provide all the requested documents. On 5th September 2022, the Petitioner wrote to the Respondent insisting on the request for information and rejecting the false minutes.
15. The Petitioner states that despite the follow ups; the Respondent neglected to provide the information sought. The Petitioner thus lodged a complaint with the Commission of Administrative Justice (CAJ) on 5th October 2022. As a result, on 18th October, 2022; the Respondent threatened to make a decision on the Notice to Show Cause.
16. The Petitioner avers that the CAJ in a Ruling dated 31st January 2023 directed release of the following documents:
(a) My recorded statement taken in the course of the investigations carried out by the Respondent prior to the issuance of the NTSC dated 10 July 2020;
(b) Portions of financial accounts that were presented to Sanlam’s Board audit committee meetings at the two meetings of 3 August 2017 and 7 November 2017 as well as the complete minutes for the two Board Audit Committee meetings.
(c) Investment Reports for all Sanlam Life Portfolios sent monthly by Sanlam Investments Limited to the management of Sanlam Life Insurance for the months of June, July, August and September 2017 together with the cover emails.
(d) Correspondence between the Authority and Sanlam Investments Ltd with regard to my Fit and Proper Application made in September 2018
(e) With reference to the notice on revocation of the license for Sanlam Investments Ltd, issued by CMA in 2018 in Kenya Gazette Notice No 2548, dated 16 March 2018, copies of complaints, received by the Authority from Sanlam Life Insurance Ltd.
(f) Information on the position relating to my fit and proper application with respect to Genghis Capital and Mayfair.
17. He asserts that the Respondent did not honour the foregoing orders causing the CAJ to issue further orders on 16th March 2023 as follows:
a) A redacted or an abridged version of thereof and supply such redacted or abridged version of the Investigation report
b) Copies of the complaints lodged with Authority or in the alternative, the information contained in the complaints in a manner that allows compliance with the law.
18. The Petitioner contends that the Respondent similarly failed to provide these documents causing him to send further correspondence through his Counsel on 13th April 2023.
19. The Petitioner equally contends that the Respondent did not comply with the timelines set out under its Citizen’s Service Delivery Charter. In light of the foregoing, the Petitioner asserts that the Respondent’s actions have violated his constitutional rights.
Respondent’s Case
20. The Respondent filed his Replying Affidavit through its Senior Manager, Investigations and Enforcement Department, Lawrence Mumina, sworn on 26th April 2023.
21. With reference to the Petitioner’s application for the ‘Fit and Proper evaluation,’ the Respondent stated that the Petitioner was the Chief Executive Officer of Sanlam Investments Limited between November 2012 and December 2017. At the time, Sanlam Investments Limited was undertaking fund management on behalf of Sanlam Life Insurance. Both companies were under the umbrella of Sanlam Group Kenya PLC.
22. The Respondent stated that the Fit and Proper Test Application was lodged by Genghis Capital Limited on 5th September 2018 and not the Petitioner as is alleged in this Petition. It stated that Genghis Capital applied for the ‘letter of no objection’ in respect of the Petitioner’s employment as its General Manager, Asset Management.
23. Upon the receipt of the application by Genghis Capital, the Respondent embarked on the fit and proper exercise pursuant to Section 24A of the Capital Markets Authority Act and Regulation 52 of the Capital Markets (Licensing Requirement) (General) Regulations, 2022. The Respondent wrote to the then Chief Executive Officer (CEO) of Sanlam Investment Limited, Jonathan Stitchbury on 4th October 2018.
24. That even before that, the Respondent had already received complaints on 13th September 2018 from the senior executives at Sanlam Group Kenya PLC, concerning the Petitioner’s conduct during his tenure at Sanlam but at the time, Sanlam Group PLC was still undertaking forensic investigations. In that meeting, it was agreed that the Respondent would contact Mr. Patrick Tumbo of Sanlam Kenya PLC since those allegations were being conducted forensically through an investigation commissioned by Sanlam Group. In or about October, 2018; the Respondent appraised Genghis Capital Limited about the progress made in respect of ‘fit and proper exercise’ which disclosed to the Petitioner vide email dated 12th October, 2018.
25. On 29th October, 2018 the Respondent wrote Mr. Patrick Tumbo of Sanlam Group PLC seeking further information on investigations. In a letter dated 9th November 2018, the Respondent was informed by Sanlam in-depth investigation focussing on operations at Sanlam Investments Limited were still on and was not able to respond to propriety and fitness of the Petitioner at that moment.
26. At the conclusion of its investigations, Sanlam Group PLC lodged a formal complaint against the Petitioner with the Respondent on 20th December 2018 on the claims of fraud and professional negligence.
27. In a further update vide letter dated 21st January 2019, the Respondent informed Genghis Capital Limited that its application for fitness and propriety on the Petitioner (‘no objection letter) will be held in abeyance to enable it complete its investigations into Sanlam Group PLC complaint against the Petitioner.
28. In view of the stated account, the Respondent avers that it cannot be faulted with delay in conducting the fit and proper evaluation as it was not indolent in conducting reference checks as it was relied on information in the hands of others which was beyond the Respondent’s control. Furthermore, it was not in control of the nature of feedback the Petitioner’s former employer would provide as in this case which came in form of complaint against the Petitioner for potential fraud/professional negligence that raised concerns about Petitioner’s suitability hence the Respondent had a duty to investigate by putting in abeyance the ‘no objection approval application.’
29. He argues that the Petitioner’s allegations that the Respondent’s conduct cost him his role at Genghis Capital Investment’s is baseless as all the Respondent did was to give an update of the factual confirmation that the Petitioner was under active investigation and that it thought it wise to withhold confirming his fitness before concluding the propriety and fitness test as is expected under Section 24 of the Act.
30. He depones that once the Respondent concluded its investigations, it issued the Petitioner the Notice to Show Cause (NTSC) dated 20th July 2020. He states that the letter informed the Petitioner of the outcome of its investigations being, materially understating the investments made by Sanlam Investments Limited through Sanlam Life Insurance Limited thus was required to issue a response. He informs that the NTSC also contained the relevant evidence in the matter.
31. He depones that the Petitioner also requested additional documents through a letter dated 11/8/2020.
32. In the meeting dated 7th June 2022, he asserts that the Respondent explained why it was unable to share the requested supplementary information. Nonetheless, he avers that the information was later on furnished to the Petitioner on 29th August 2022.
33. Thereafter, the Respondent asked the Petitioner respond to the NTSC on 12th September 2022.
34. It is emphasised that instead of making a response to the NTSC, the Petitioner lodged a complaint with CAJ through a letter dated 5th October, 2022 arguing that the Respondent had not provided some of the relevant documentation he required.
35. The Respondent filed its response in the matter on 20th February 2023.
36. In its finding dated 16th March 2023, the CAJ affirmed that the Respondent had taken all the necessary lawful and reasonable steps in furnishing the Petitioner with the relevant documents and addition delivered two addition documents being the redacted complaint and the Investigation Report dated 4th April 2023 per CAJ order.
37. Turning to the Petitioner’s allegations concerning May Fair Asset Managers Limited, he asserts that the same is equally unfounded. This is because the Respondent issued the sought licence vide a letter dated 4th August 2022, without issuing any adverse reference to the Petitioner’s fit and proper evaluation. He notes that May Fair Asset Managers Limited nonetheless in its own independent determination resolved to recall the Petitioner’s employment as its Head Business Development personnel.
38. Taking these averments into consideration, he maintains that the Respondent did not violate the Petitioner’s rights under Article 43 and 47 of the Constitution as claimed. Additionally, he stressed that the Respondent had acted within its jurisdiction lawfully. For this reason, he argues that the Petition should be dismissed.
Petitioner’s Submissions
39. AKO Advocates LLP for the Petitioner filed submissions dated 3rd September 2023 and underscored the issues for determination as: whether the Petitioner has locus standi in the matter, whether the delay in making a decision on the Petitioner’s Fit and Proper Applications amounts to breach of the Petitioner’s constitutional rights, whether the Petitioner has suffered loss as a result of the delay and thus entitled to the relief sought.
40. Counsel submitted that the Respondent in stating that the application for fit and proper was made by Genghis Capital Limited argued that the Petitioner lacks the requisite locus standi. Counsel in reaction submitted that this allegation is false as is evident from the Petitioner’s annexture at Page 19 in his supporting affidavit. Counsel emphasised thus that the Petitioner rightly instigated this suit as as the Respondent’s purported indecision directly affected him.
41. Reliance was placed in Enrico Quercioli & another v Director of Public Prosecutions & 2 others; Maria Angela (Interested Parties) [2021] eKLR where it was held that:
“As a consequence, locus standi is required in a litigation involving violation of fundamental rights, to be capable of sustaining the petition. In my humble view, if a petitioner applies to the Court to declare a law or a decision by a public body invalid, he or she must be able to prove to the Constitutional Court not only is the decision or provisions of the stature invalid but if no remedy is availed, he/she will suffer injury as a result of the violation or some other class of persons.
It is true as stated in various precedent setting decisions that the Question on locus standi must not be construed in a narrow and pedantic sense, for a constitution like ours embodies fundamental rights with far reaching consequences when threatened with infringement or violations. In our present reality, the provisions of Article 22 & 23 of the Constitution are intended to afford protection to the fundamental rights and freedoms granted to the individual. For this reason, it is desirable that all persons, individuals and organizations should have access to the High Court as a creature of the Constitution under Article 165 (2) (b) & (d) and Article 23 to seek redress for any perceived contravention of their rights. These are the attendant provisions of the Constitution must therefore be interpreted liberally to give wide access to the Courts under Article 48 of the same constitution. As standing to sue epitomizes the phraseology that the Court is no place for Busy Bodies. Any person who wants to sue either as an individual, organization, body corporate must show that he or she has locus standi being the right to sue for a remedy and capacity to pursue it before a Court of law. Locus standi does not even rest on the consent of parties to litigate on behalf of each other.”
42. Turning to the second issue, Counsel submitted that the Respondent was guilty of inordinate delay. This is owing to the 6 years period it took to issue a response to the Petitioner’s fit and proper application. As such, Counsel underscored that the Respondent’s delay was unconstitutional.
43. Reliance was placed in Judicial Service Commission v Daniel Ochenja [2020] eKLR where a delay of 2 and a half years was held to be in violation of Article 47 of the Constitution. Like dependence was placed in Kamal Jadva Vekaria v Director General, Kenya Citizens and Foreign Nationals Management Service [2016] eKLR, Grace A. Omolo v Attorney General & 3 others [2012] eKLR and Timothy Nchoe Sironka v Judical Service Commission [2020] eKLR.
44. In addition, Counsel submitted that the Respondent had violated the Petitioner’s legitimate expectation given the Respondent’s own timelines for action in its Service Charter, which is generally not more than 21 days in any matter. Equally, Counsel submitted that the Respondent had not provided an explanation for the delay despite the numerous correspondence issued by the Petitioner.
45. Reliance was placed in Communications Commission of Kenya & 5 Others v Royal Media Services & 5 Others SC Petition Nos. 14, 14A, 14B & 14C of 2014 where it was held that:
“Legitimate expectation would arise when a body, by representation or by past practice, has aroused an expectation that is within its power to fulfil. Therefore, for an expectation to be legitimate, it must be founded upon a promise or practice by public authority that is expected to fulfil the expectation."
46. Like dependence was placed in Republic v Kenya Revenue Authority Ex-Parte: Cosmos Limited [2016] eKLR and Kenya Hospital Association t/a Nairobi Hospital v Medical Practitioners and Dentists Board & 4 others [2018] eKLR.
47. In addition, Counsel submitted that the Respondent’s actions had caused the Petitioner economic loss. Counsel in light of the Petitioners averments argued that due to the Respondent’s regulatory demands and dictates, both Mayfair and Genghis could not sustain his employment. In fact, Counsel submitted that no other regulated entity in Kenya can employ the Petitioner until the Respondent gives the approval.
48. In light of the foregoing, Counsel submitted that the Petitioner was entitled to the reliefs sought. Counsel pointed out that the Petitioner was set to earn a monthly income of Kshs 850,000 at Genghis limited and Ksh.360,000 at Mayfair Investment. On this premise, Counsel submitted that the Petitioner was entitled to an award of compensation based on the monthly income opportunity lost per month. In respect of Genghis from September 2018 to March 2022 and for Mayfair from March 2022 to date.
Respondent’s Submissions
49. On 12th September 2024, the Respondent’s Counsel, Githendu E. Timothy filed submissions and highlighted the issues for discussion as: whether the Respondent exercised its powers to approvals and licensing powers lawfully and constitutionally, whether the Respondent's enforcement proceedings commenced vide the Notice to Show Case (NTSC) dated 20th July, 2020 are lawful and constitutional and whether the Respondent is liable to compensate the Petitioner for supposed lost employment opportunities.
50. Counsel pointed out that the Petitioner was essentially faulting the Respondent's actions in respect of various processes which work in tandem being licensing and approvals and investigation and enforcement. In this regard, Counsel submitted that the Respondent under Sections 2, 23, 24(8) and 24A of the Capital Markets Act and regulation 52, of the Capital Markets (Licensing Requirements) (General) Regulations, 2002 is mandated to regulate and control activities of intermediaries who participate in capital markets. This includes requirement of the intermediaries to apply for approvals for change of key personnel through an application of ‘no objection’. The threshold for the fitness and probity test is outlined under Sections 24A (1) and 24A (2) of the Act and Regulation 52 of the Regulations, 2002.
51. Counsel submitted that to make this assessment, the Respondent obtains information about an individual appointee through his self-declaration form and from other 3rd parties or anyone who may provide relevant information. Counsel in view of this, submitted that the Respondent conducted this process as set out in its affidavit.
52. Particularly, Counsel submitted that the Petitioner had no claim concerning Genghis Capital Limited as he did not lodge the said application for ‘no objection’. Counsel enlightened as well that the conduct of the fit and proper assessment is part of the review of the said application confirmation. Counsel registered equal sentiments with reference to the Mayfair Asset Managers application.
53. Counsel argued that the Respondent’s engagement of Sanlam Group contrary to the Petitioner’s allegation was lawful as the Respondent is permitted to engage any person it considers necessary to enable it make a holistic evaluation on the fitness and probity of the designated appointee.
54. Counsel equally contended that there was no delay on the Respondent’s part in considering the two applications as is apparent from the averments in the Respondent’s affidavit. Counsel also stressed that the argument for legitimate expectation was not viable as the timelines specified in the service charter represents aspirational targets thus not legally binding. Counsel noted moreover that the claim was misleading as the Respondent had already made decisions in the matters.
55. In like manner, Counsel submitted that Respondent’s decision to hold Genghis application in abeyance was lawful as was made in view of the ongoing investigations relating to his conduct during his tenure as the Chief Executive of Sanlam Investments Management Kenya Ltd and its own pending investigations.
56. Nonetheless, Counsel submitted that the purported legitimate expectation was applicable to Genghis and Mayfair not the Petitioner. Counsel equally relied in Communications Commission of Kenya (supra) in this matter. Additional reliance was placed in Republic v Principle Secretary, Ministry of Transport, Housing and Urban Development Ex Parte Soweto Residents Forum CBO (2019) eKLR.
57. On the second matter, Counsel submitted that the Respondent is empowered under Section 25A of the Capital Markets Act as read with Section 11(3)(cc) to take enforcement action against any person who violates provisions of the Act. This action is preceded by the NTSC which is issued by dint of Section 26 (8) of the Act and provisions of the Fair Administrative Actions Act, 2015. In this matter, Counsel submitted that the Respondent had received a complaint concerning the Petitioner in December 2018. Investigations were conducted and the NTSC issued. Accordingly, Counsel submitted that the Respondent has jurisdiction over the Petitioner in this regard and thus the issued NTSC was lawful being that the Petitioner is key personnel. Reliance was placed in Republic v Capital Markets Authority Ex parte: Joyce Ogundo [2018]eKLR where it was held that:
“I therefore do not subscribe to the views actions cannot be imposed against former directors. In my view former directors are culpable if what is complained of occurred under their watch."
58. Furthermore, Counsel submitted that the enforcement proceedings do not violate Article 47 of the Constitution as the issuance of the NTSC was in line with the dictates of this provision that is being an opportunity for the Petitioner to be heard and granting the Respondent an opportunity to make an objective decision.
59. On the claim that the requested documents and information was not supplied despite CAJ’s orders, Counsel submitted that Respondent did indeed issue the sought documents and has also issued all the relevant evidence alongside the NTSC. On the final issue, Counsel submitted in light of the foregoing and Respondent’s averments the Petitioner was not entitled to compensation for the supposed lost employment opportunities.
Analysis and Determination
60. In view of the foregoing, it is my considered view that the issues that arise for determination in this matter are as follows:
i. Whether the Petitioner has the necessary locus standi.
ii. Whether the Respondent’s delay in determining the fit and proper application violated the Petitioner’s right to a fair administrative process under Article 47 of the Constitution in the circumstances of this case.
iii. Whether the Respondent violated the Petitioner’s legitimate expectation.
iv. Whether the Petitioner is entitled to the relief sought.
Whether the Petitioner has the necessary locus standi
61. The Respondent argued that the fit and proper information was sought by Genghis Capital Limited in respect of the Petitioner on 5th September, 2018 and thus was not the Petitioner’s application. That on 4th October, it wrote to Sanlam Group PLC (Petitioner’s former employer who had on 13th September approached the Respondent with allegations against the Petitioner) to provide more information on the matter. Sanlam responded on 12th October indicating that it was still carrying forensic investigations which information was passed to Genghis Capital which in turn informed the Petitioner. The long and short of this is that Sanlam upon completion of its investigations eventually lodged a formal complaint against the Petitioner and the Respondent was supposed to investigate and determine as part of considerations for determining the propriety of the Petitioner to serve in a licensed entity under the Act.
62. Even without getting deeper into this fact, the argument that the Petitioner lacks locus standi in view of this facts is preposterous. It is manifest that although the Application for Fit and Proper Application was lodged by the Petitioner’s new employer, the actual impact of that decision was on the prospects of the Petitioner’s employability or suitability for the job hence had a direct bearing on the Petitioner. The Petitioner thus had a direct legal interest which he is entitled to defend. In Daykio Plantations Limited v National Bank of Kenya Limited & 2 others [2019] KEELC 37 (KLR) defined locus standi as follows:
“…In the case of Law Society of Kenya …Vs… Commissioner of Lands & Others, Nakuru High Court Civil Case No.464 of 2000, the Court held that ;-
“Locus Standi signifies a right to be heard, A person must have sufficiency of interest to sustain his standing to sue in Court of Law”. Further in the case of Alfred Njau and Others ..Vs.. City Council of Nairobi ( 1982) KAR 229, the Court also held that;-
“the term Locus Standi means a right to appear in Court and conversely to say that a person has no Locus Standi means that he has no right to appear or be heard in such and such proceedings”.
It is therefore evident that locus standi is the right to appea
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