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Here is the abridged version of the Judicial Review on Interim Administration

 HC Misc. Appl. No 409 of 2017 R Vs RBA ex parte Network for Water and Sanitation International and Network for Water and Sanitation International Staff Retirement Benefit Scheme

Odunga J, Delivered on 8 February 2018

 Introduction

 The Retirement Benefits Authority (the Authority) is a State Corporation established under the Retirement Benefits Act, Cap 197 (the Act). The primary role of the Authority is stated in the preamble to the Act as, the regulation, supervision and promotion of retirement benefits schemes and development of the retirement benefits sector.

 The Act provides for unique statutory action that can be undertaken by the Authority to further its mandate. The circumstances under which an interim administrator may be appointed, the manner of appointment, term and responsibilities of the interim administrator is provided in Section 45 of the Act as follows:

 45. Appointment of interim administrator

 

(1)   This section applies and the powers conferred by subsection (2) may be exercised in the following circumstances—

 

(a)   If the trustees of a scheme fail to submit to the Chief Executive Officer the annual accounts required under section 34 for over six months after the end of the financial year to which they relate;

 

(b)  If the trustees are found to have submitted or provided any accounts, returns, statements, books, records, correspondence, documents or other information relating to the scheme fund which are false or misleading; or

 

(c)   If the Chief Executive Officer, whether on inspection or otherwise, becomes aware of any fact or circumstance which, in his opinion, warrants the exercise of the relevant power in the interests of the sponsors and members of the scheme or in the public interest.

 (2)   The Chief Executive Officer may, with the approval of the Authority—

  (a)   Appoint any person (in this Act referred to as “an interim administrator”) to assume the management, control and conduct of the affairs and business of the trustees, the manager, the custodian or the administrator, as the case may be, to exercise all the powers of the trustees, the manager, the custodian or the administrator to the exclusion of such trustees, manager, custodian or administrator;

 (b)  Remove any officer or employee of the trustees, the manager, the custodian or the administrator who, in the opinion of the Chief Executive Officer, has caused or contributed to any contravention of the provisions of this Act or any regulations made thereunder or to any deterioration in the financial stability of the scheme or has been guilty of conduct detrimental to the interests of the members or sponsors of the scheme; or

 (c)   By notice in the Gazette, revoke or cancel any existing power of attorney, mandate, appointment or other authority by the trustees, the manager, the custodian or the administrator in favour of any officer, employee or any other person.


 

 (3)   The appointment of an interim administrator shall be for such period, not exceeding twelve months, as the Chief Executive Officer may specify in the instrument of appointment but may be extended by the High Court, upon application by the Chief Executive Officer, if such extension appears justified.

 

 (4)   An interim administrator shall, upon assuming the management, control and conduct of the affairs and business of the trustees, the manager, the custodian or the administrator, discharge his duties with diligence and in accordance with sound actuarial and financial principles and in particular, with due regard to the interests of the trustees, the manager, the custodian, the administrator, the members and sponsors of the scheme.

 

 (5)   The responsibilities of the interim administrator shall be—

 a)     Tracing, preserving and securing all the assets and property of the scheme;

 b)    Recovering all debts and other sums of money due to and owing to the scheme;

 c)     Evaluating the solvency and the liquidity of the scheme;

 d)    Assessing the scheme’s, the manager’s, the custodian’s and the administrator’s compliance with the provisions of this Act and any regulations made thereunder;

 

 e)     Determining the adequacy of the capital and reserves and the management of the scheme and recommending to the Chief Executive Officer any restructuring or re-organization which he considers necessary and which, subject to the provisions of any other law, may be implemented by him on behalf of the trustees, the manager, the custodian or the administrator; and

 f)      Obtain from any former trustee, manager or administrator of the scheme or any officer, employee or agent thereof, any documents, records, accounts, statements, correspondence or information relating to the scheme.

 

 (6)   The interim administrator shall, within a period of twelve months from the date of his appointment, prepare and submit to the Chief Executive Officer, a report on the financial position and the management of the scheme with recommendations as to whether—

 a)      The scheme is capable of being revived; or

 b)    The scheme should be deregistered.

 

 (7)   The Chief Executive Officer shall, after taking into account the report of the interim administrator, make appropriate recommendations to the Board, which shall take a decision on the matter.

 

 (8)   Neither the Chief Executive Officer nor any officer, employee or agent of the Authority nor the interim administrator nor any other person appointed, designated or approved by the Chief Executive Officer under the provisions of this Part shall be liable in respect of any act or omission done in good faith in the execution of the duties undertaken by him.

 

 (9)   The costs of an interim administrator of a scheme shall be a charge of the Fund.

 The case was filed in the Judicial Review division of the High Court at Nairobi. A judicial review proceeding is different from ordinary proceedings of the court as it does not apply itself to the merits of a decision of an administrative body, rather, it examines the way in which a decision was made with reference to the principles of natural justice. A judicial review is utilized by the court to consider an administrative action of an administrative body usually where there are no other effective means of challenging that decision.


 

 Facts of the case

 By notice of motion dated 24 July 2017 Network for Water and Sanitation International and Network for Water and Sanitation International Staff Retirement Benefits Scheme (the scheme) sought an order of certiorari from the court to quash the decision of the Authority appointing Roberts Insurance Brokers Limited as interim administrators for the scheme. The Authority appointed the interim administrator for a period of 3 months from 29 May 2017. The scheme argued that the Authority had no legal basis to appoint an interim administrator to assume the management, control and conduct of affairs and business of the trustees.

 An order of certiorari is one of the four traditional remedies in administrative law and the most commonly sought after. The result of the order is the quashing or invalidating of the decision of the administrative body, in this case, the Authority. The court cannot substitute its decision with that of the administrative body as it has no statutory mandate to do so. Other administrative law remedies include mandamus, prohibition and habeas corpus.

 Authority’s case

 a)    Clear violations of the law were captured and documented to support the Authority’s decision to place the scheme under interim administration. In particular violation to sections 26, 33 ,34, 40 (c) and (d)and 53 (A) (1) of the Act;

 b)    The Authority had documented key actions such as inspection, subsequent meetings, letters and reminders regarding the status of the scheme;

 c)     There was deducted and unremitted contributions to the scheme;

 d)    There was no evidence to show that the outstanding contribution due from the sponsor had been remitted and outstanding sum remained unpaid;

 e)     The remedial plan as provided was wholly inadequate.

  Scheme case

 

a)     That majority of the issues raised as violation of the law had been dealt with by appointment of trustees, and preparation of audited accounts though they had not been submitted. The scheme had also submitted a “remedial plan”;

 b)    The Authority did not communicate its rejection of the plan;

 c)     By their own admission, no further contributions were put into the scheme from January 2014;

 d)    The scheme had an administrator in place.

 

   Court finding

a)     The Authority is empowered by the Act to appoint an interim administrator where conditions of section 45(1) are satisfied;

 

b)    In judicial review matters, the court considers the compliance of the decision making process with established criteria of fairness. Therefore the court did not make a determination as to the merits of the decision;

 

c)     The court considered three principle heads of judicial review as highlighted in Council of Civil Service Unions V Minister of State for Civil Service 1984 3 All ER 93. The court further expounded on these principles as follows:


 

 

1.     Illegality- the decision maker must understand the law that regulates his decision-making powers and must give effect to it. The decision must not be ultra vires, there should be no errors of law or fact and improper purpose, bad faith unauthorized delegation and failure to act;

 

2.     Procedural impropriety- Failure to comply with the mandatory procedures such as breach of natural justice, bias, duty to act fairly, audi alteram partem and failure to give reasons.

 

3.     Irrationality - As Lord Diplock put it in the Council of Civil Service Unions V The Minister for the Civil Service [1983] UKHL 9, a decision so outrageous in its defiance to logic or of accepted moral standards that no sensible person who had applied his mind to the question would have arrived at it.

 

 d)    The court found that the applicant raised only merit oriented issues failing to touch on the key issues of illegality, procedural impropriety and irrationality.

 e)     The Retirement Benefits Appeals Tribunal is properly seized with the jurisdiction to deal with matters on merit by virtue of section 48 of the Act.

 f)      The application for order of certiorari was dismissed with costs to the Respondent.

 Import of the judgment

 1.     The Authority has the powers to appoint an interim administrator provided the appointment is in line with the law and free from procedural impropriety and irrationality.

 2.     Schemes and Authority to continuously work together for the better management and supervision of schemes;

 3.     There needs to be a fully constituted Retirement Benefits Appeals Tribunal in order for retirement benefit matters to be considered based on merit.

 

Clare Abuodha, legal officer at Retirement Benefits Authority

 

 


 
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