Why allowing creditors to attach public assets will expose us more

On the 15th of March 2024, Justice (Professor) Nixon Sifuna dealt a massive blow on government.

In a case between ABSA Bank and the Kenya Deposit Insurance Corporation, the latter made a fairly innocuous application for extension of time to file a defence and stop the bank from obtaining default judgement (judgement entered on the basis that a party did not file a defence).

The application was based on the fact, inter alia, that ABSA had not complied with the Government Proceedings Act requirement for notice to government prior to institution of a suit against it and that it had also not complied with parts of the Civil Procedure Act which required the court’s approval before entry of default judgement.

The learned Judge first determined that the corporation was not government and so the protections under the Act were not available to it. The matter would easily have ended at that point.

But in true Justice Sifuna style, he then decided to sort out some “outstanding issues” on protections the law had traditionally accorded to government.

He ultimately declared, not just the two provisions which had brought the parties to court unconstitutional, but also that Section 21(4), which bars executions against government assets, and which was not part of issues before the court, unconstitutional!

Some procedural and substantive issues cloud this judgement. Procedurally, there is a question whether a judge can on his own motion and in interlocutory proceedings declare a statutory provision, which is not the subject of the proceedings before him, unconstitutional.

This is especially critical where the parties have not had the benefit of making submissions before him on the issue. In this case, the party to be injured by his decision is the government, and the Attorney General was neither a party, nor was he called to submit on this question by the court.

More fundamentally, the question of protecting government from direct action is not without merit. It is not just a colonial and anachronistic relic that offends constitutional principles. The requirement to give notice before instituting a suit was, inter alia, intended to give government an opportunity to remedy its errors before being dragged into courts where extensive costs would then be payable.

In my years of practice, I am aware of many unnecessary suits that were averted because this procedure was applied. One must remember that avoidable costs against government are borne by the citizen through taxes, not by the “government”. There is no government money!

Which brings me to the issue of executions against government which the good judge permitted and which Kenyans seem excited about. There are good reasons for not allowing private persons to execute against assets of government.

Firstly, government assets are public assets applied for the benefit of the public at large and their conversion into private hands denies the broader public the benefit of services. You can imagine some judgement creditor turning up at a public hospital and attaching dialysis machines or attaching waste collection vehicles based on some judgement against government. It is not “government” that will suffer, it is the people!

Secondly, this process is the easiest one to be compromised by the same public officers who Kenyans assume will suffer from executions! I can foresee all manner of “collusion judgements” being entered against government and execution carried out against the most valuable of government assets. Want the Minister’s new V8? In true Kenyan fashion a suit can be engineered, default judgement quickly obtained and voila! The Minister now needs a new car which will also soon be the subject of execution. The people who we think will benefit from the unconstitutionality edict will continue to wallow in desperation as fat cats now take over government assets.

Why do we pretend we don’t live in this Republic? My own take is that while government owing creditors money is reprehensible, anyone who enters into contracts with government (and they are usually well connected) know the risks.

The problem is administratively remediable. To allow creditors benefit of public assets is injurious to broader public interest. The Attorney General needs to seek urgent review of the judgment otherwise, there will be many tears. And not by “government”.

The writer is an advocate