Why justice is expensive for poor firms
Delayed conclusion of cases has had an effect on survival rates of cash-strapped companies.
It is rare for a judge to take a good chunk of his time when delivering a ruling to sympathise with a litigant.
This is even more so when he is empathetic to involved parties over how long their case has dragged on, especially because quick delivery of justice at the courts is an exception and not the rule, with hundreds of thousands of disputes dragging on for years on end.
But when this happens, it opens a good window into the long-standing pain of individuals, businesses and even the government in waiting for the painfully slow wheels of justice to turn a little faster.
It was, therefore, pleasantly surprising to see High Court Judge Alfred Mabeya of the Milimani Commercial and Tax Division Court sympathise with litigants in a case that he had first heard nearly a decade earlier but was put on ice following his transfer from Nairobi.
“It is said that the wheels of justice in this country really grind slowly. If there is a case in point, this is it. The first witness took the stand before me on November 5, 2012. The plaintiff closed his case on November 20, 2013. However, I was transferred shortly thereafter to Bungoma High Court on November 25, 2013,” said Justice Mabeya.
“Thereafter, I was further transferred to the Civil Division, Chuka and Meru High Courts until November 1, 2020 when I finally returned to the Commercial Division of this Court. On November 19, 2020, the parties once again found themselves before me and the matter proceeded and was concluded on March 3, 2021,” he said.
Delayed justice
Before delving into his ruling, Justice Mabeya went on to highlight the case as the epitome of delayed justice in Kenya’s judicial system, leaving many, big and small, similarly suffering as they wait in silence to know their fate, that of their loved ones and businesses.
The Judge added: “For seven years the case was in limbo during which period the parties must have suffered unnecessary anxiety. Probably, it is an example of not how to dispense justice. Due to Covid-19, there was a delay in delivery of this judgment. Be that as it may, all is well that ends well.”
In the case, Joseph Siro Mosioma had moved to court in 2007 against Housing Finance Company (HFC) who had sold his property, which he had used as collateral for a loan to a third party.
Mr Mosioma had used the property to take a Sh600,000 loan from the firm in 1985 at a 13.2 per cent interest and was given a repayment schedule of Sh7,857 per month for seven years.
He told the court that even after paying Sh2 million, HFC continued to levy interest on the loan and eventually sold the property to third parties for Sh14 million, leading to the long-dragging case.
Mr Mosioma’s case is just one among tens of thousands that have dragged on for years, with Judiciary data showing that 35,359 suits have snaked on for five or more years at various courts as they pile up litigation costs.
But the hours that morph into years at court corridors are costly for businesses – billions of shillings are held by courts as deposits in form of bond money, land titles, car log books, fixed deposit certificates and other valuable instruments pending conclusion of cases.
This means that money that should be invested lies idle at the court and losing value through inflation, while businesses are also unable to use their deposited instruments of value to close transactions such as raising capital.
For individuals such as Mr Mosioma, in the 14 years that have passed since he first filed the case, he could use the property to secure a loan or sell it before the case is concluded.
Meanwhile, for companies that have pivotal court cases ranging from matters tax, ownership, management, competition to intellectual property rights, this spells huge litigation costs as the cases drag on.
At the same time the government, which perennially underfunds the Judiciary, is ironically also not spared as the taxman loses billions of shillings in potential revenue as cases against targeted large taxpayers with huge demands drag at the courts.
It also delays crucial decisions on matters recruitment, procurement and major investment decisions.
Commercial cases
This as issues that lead to a backlog of pivotal commercial cases continue to mount.
Covid-19 pandemic has also led to a fall in number of cases being concluded following downsizing of allowable individuals in court for proceedings, moving cases online and other restrictions that have further lengthened the time it takes firms to get decisions on their cases.
However, more and more companies are choosing to sidestep the lengthy court battles and solving their disputes through alternative dispute resolution (ADR) that is less costly and also faster at dispensing justice.
Kenya Revenue Authority (KRA) has also been a big winner of ADR, which is aiding its pursuit of netting more revenue by cutting long battles against taxpayers in the corridors of justice.
The taxman in April said the system had netted Sh21 billion between July last year and March, adding that the time taken to conclude cases had reduced from 89 days to 42 days.
"Taxpayers have embraced ADR and this is evidenced by the increasing number of ADR applications being received by KRA. In the current financial year, KRA recorded a 56 per cent growth in the number of ADR applications from 425 received in the financial year 2019/2020 to 661," KRA said earlier.
"The process provides a win-win outcome for the parties, which leaves both parties happy with the outcome and prevents further escalation of disputes," it said.
