The Kenya Airports Authority (KAA) got a reprieve after the Court of Appeal upheld a decision prohibiting the Kwale County Government from demanding Sh43.2 million or any money as land rates for the Ukunda airstrip.
Appellate Judges Alnashir Visram, Wanjiru Karanja and Martha Koome said they are satisfied with the High Court’s finding that no land rates are chargeable in respect to the airstrip.
“A county government would not only be acting in ultra vires (beyond legal authority) in imposing rates on exempted properties but would also be in contravention of Article 209 (5) of the Constitution,” said the judges.
The decision is a major blow to the devolved unit which was seeking to overturn a High Court decision delivered last year by Justice Anyara Emukule.
No separate properties
The judges said that while a county government is empowered to impose property rates, the power is qualified to the extent that it should not be exercised in a manner prejudicial to the national mobility of goods and services.
However, they noted that the Salim Mvurya-led government wanted the properties separated so that rates can be paid for places such like lounges, reception areas and restaurants while excluding other key installations such as runways.
“This would lead in absurdity as the county government might one day decide to close the check in areas or lounges in case of default, how would the passengers be processed?” asked the judges, noting that it is not possible to separate one airport into parts with some being ratable and others being exempt.
In its appeal, the county government of Kwale had argued that Justice Emukule last year erred in law and fact by holding that KAA is exempted from payment of rates.
It also said that the judge erred by disregarding evidence which he ought to have taken into account, hence arriving at what they termed as an erroneous decision.
Service delivery organ
Kwale County reckons that since KAA is a State profit-oriented entity, it ought to pay rates for all ratable properties.
However, through lawyer Augustus Wafula, KAA argued that it is a national body run by the national government for purposes of national economic policy and delivery of services to people.
Justice Emukule then ruled in the Authority's favour, saying that State agencies like KAA - which offer vital services that ‘parent’ ministries would provide - enjoy the same or similar privileges as the national government.
“The establishment and running of aerodromes, ports and similar activities is made through economic policies and activities which are beneficial to both the national and county governments,” Justice Emukule ruled last year.
Although the judge noted that Article 209 (5) of the Constitution empowers County Governments to impose rates, he said the scope of imposition is limited in such a way that the tax does not prejudice the economic policies and activities of the national government.
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