July 13, 2020

The Law of Succession (Amendment) Bill, 2020: A welcome review of the legislation relating to Succession in Kenya

Filed under: Insight — KRK Advocates LLP @ 5:45 am

By Marion Ogeto, Ann Wangui and Sharon Ndinda (Legal Assistants) with assistance from Joyce Muriithi (Associate)

Introduction

The Law of Succession Act (Cap 160 Laws of Kenya) (“the LSA”) has been operational for decades following its enactment in 1981. Prior to the enactment of the LSA, succession matters were governed by a plethora of laws including the African Wills Act (testate succession – where the deceased has a will) and customary law (intestate succession – where the deceased has no will) for Africans. There was also the Hindu Succession Ordnance (intestate succession) and the Hindu Marriage and Divorce Ordnance (testate succession) governing Hindus and the Mohammedan Marriage, Divorce and Succession Act for Muslims. The LSA was therefore enacted in order to consolidate these laws into one system.

Given that the LSA has been operative for many years, it was imperative to revise the Act to bring it into conformity with fundamental societal developments especially gender equality.  To this end, the Senate has proposed amendments to the LSA which are outlined in the Law of Succession (Amendment) Bill 2020 (“the Bill”). The overall effect of the amendments proposed by the Bill is to ensure gender equity is observed in the law of succession in Kenya.

The Proposed Amendments

Some of the proposed amendments captured in the Bill include amendments to the following provisions of the LSA:

  1. Dependency clause – section 29, which presently provides the definition of dependents, is to be amended to provide that husbands need not prove dependency as is required under the LSA. The provision would therefore allow either spouse to inherit as a matter of right;
  2. Community land clause – section 32, which presently provides for the property excluded from the intestacy provisions in Part V of the LSA, is to be amended to include community land under Article 63 of the Constitution of Kenya thus community land shall be governed by the existing customary law of the respective community;  
  3. Re-marriage clause – section 35, which presently provides the manner of distribution of property where the deceased has left one spouse and children, is to be amended to provide either spouse will lose their interest on inheritance if they re-marry. This is different from the current Act where only the widow loses her inheritance interest upon re-marrying;
  4. Equal distribution rights between parents clause – section 39, which presently provides the manner of distribution where a person dies intestate and has no surviving spouse or children, is to be amended to provide the first recipients as the parents of the deceased in equal share as opposed to the current provision whereby the father was to receive first before the mother.

An analysis of the effects of the Amendments to the Law of Succession Act (LSA) 1981

The amendments seek to address some of the most pertinent issues that contribute to succession law disputes in Kenya, including:

In particular, the following concerns are addressed by the Bill:

a) Dependency and Gender Equality
b) Communal Land Protection
c) Effects of Re-marriage to succession of the Deceased’s Estate
d) Equal distribution rights between parents of the deceased

Conclusion

Overall, the effect of the amendments has been to embrace the principle of gender equality espoused under Article 27(4) of the Constitution of Kenya into the law on succession in Kenya. It is indeed appalling that the LSA as currently enacted still perpetuates gender biases and differential treatment that is prejudicial to women for the most part. The Amendments to the LSA are therefore a very welcome move to the extent that they promote gender equality.

However, further revision of the Act may be needed to consider the questions of dependents raised above and the termination of the right to inheritance upon re-marriage.

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May 27, 2020

PR&MB 2020 – Penalties and Offences

Filed under: Hidden Insight — KRK Advocates LLP @ 7:47 am

The Bill establishes various offences and provides penalties. These include

  1. A person who obstructs a public officer in the discharge of the person’s functions under this Act; or (b) refuses to comply with any direction given by a competent authority in the furtherance of provisions under this Act, commits an offence and is liable on conviction to a fine not exceeding one million shillings or to imprisonment for a term not exceeding one year, or both.
  2. A person who commits an offence under subsection (1) and the offence results in the loss of life shall, on conviction, be liable to imprisonment for a term not exceeding five years. Penalty for false claim.
  3. A person who knowingly- (a) makes a claim which the person knows or has reason to believe to be false, for the purpose of obtaining any relief, assistance, repair, reconstruction or other benefit from a public office; or Makes or circulates a false alarm knowingly or warning as to a pandemic or its severity or magnitude leading to panic commits an offence and is liable on conviction to a fine not exceeding one million shillings or to imprisonment for a term not exceeding one year, or to both.
  4. A person who, being entrusted with any money or materials, or otherwise being in custody of money or goods meant for providing relief during a pandemic- (a) misappropriates the money or goods; (b) appropriates the money or goods for the person’s own use; (c) compels another person to misappropriate the money or goods; commits an offence and is liable on conviction to a fine not exceeding ten million shillings or to imprisonment.
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PR&MB 2020 – Information Technology and Business

Filed under: Hidden Insight — KRK Advocates LLP @ 7:43 am

National and county governments shall put in place social safety schemes designed to support vulnerable persons, vulnerable households and informal sector workers whose incomes have been disrupted by the pandemic. The Bill has not however defined the scope of vulnerable persons nor the procedure for identifying them. Some of the economic safeguards to be enforced include unconditional cash transfers to support the identified groups. Kenya currently already has safety net programmes for certain groups such as the elderly, orphaned children and persons with disabilities.

However there is a significantly large group of Kenyans who are not in existing social safety net groups. As such, cash transfer programmes to these groups seems to be a difficult challenge. Going forward, it appears that Kenya should have a more comprehensive social net programme. These programmes should be existent even in times when the county is not facing a pandemic.

The Bill also charges the National and County governments with providing for the waiver of water and electricity charges for identified vulnerable persons and households; and adjustment of tariff rates in order to reduce utility charges to individuals and businesses; and withhold disconnections for non-payment of utility bills.

Suspension of Rates and Licenses

The Bill provides that county governments may suspend fees payable on renewal of trade licenses and payment of property rates during the pandemic.

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PR&MB 2020 – Labour Relations and Social Safety

Filed under: Hidden Insight — KRK Advocates LLP @ 7:34 am

It is no doubt that the pandemic has caused significant disruption of employment. The Bill provides that where a pandemic adversely affects the ability of an employer to pay salaries or wages:

  1. Notwithstanding the provisions of the Employment Act, an employer shall not terminate a contract of service or dismiss an employee;
  2. An employer shall not coerce an employee to take a salary cut.

The Bill further adds that despite subsection (1), where an employer is unable to meet his obligations to pay salaries or wages, the employer shall permit an employee to take leave of absence without pay for the duration of the pandemic.

The spirit of the Bill is to ensure that no employee loses their job or is forced to take a salary cut due to the pandemic. The Bill also seems to attempt to oust the provisions Employment Act which is the primary Act with regards to employment. There is therefore an outright conflict with regards to the two pieces of legislation as the Employment Act allows for termination of an employee provided they are given sufficient written notice.

Social safety net and economic safeguards

National and county governments shall put in place social safety schemes designed to support vulnerable persons, vulnerable households and informal sector workers whose incomes have been disrupted by the pandemic. The Bill has not however defined the scope of vulnerable persons nor the procedure for identifying them. Some of the economic safeguards to be enforced include unconditional cash transfers to support the identified groups. Kenya currently already has safety net programmes for certain groups such as the elderly, orphaned children and persons with disabilities.

However there is a significantly large group of Kenyans who are not in existing social safety net groups. As such, cash transfer programmes to these groups seems to be a difficult challenge. Going forward, it appears that Kenya should have a more comprehensive social net programme. These programmes should be existent even in times when the county is not facing a pandemic.

The Bill also charges the National and County governments with providing for the waiver of water and electricity charges for identified vulnerable persons and households; and adjustment of tariff rates in order to reduce utility charges to individuals and businesses; and withhold disconnections for non-payment of utility bills.

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PR&MB 2020 – Tenancy Agreements

Filed under: Hidden Insight — KRK Advocates LLP @ 7:26 am

Following the financial impact of Covid-19, a lot of Kenyans have implored the government to provide for a way forward with regards to the payment of rent. The Bill in an attempt to do this provides that where a pandemic has affected the financial capacity of a tenant to meet their obligations:

  1. the tenant shall give a notice in writing to the landlord or contracting party that they are unable to meet their obligations because of the pandemic;
  2. Upon receipt of a notice under paragraph the contracting parties shall enter into an agreement on how the tenant shall meet their obligation at the end of the pandemic.

The procedure laid out seeks to cushion tenants from facing eviction for failure to pay rent during the pandemic but at the same time binds tenants to fulfil their obligations after the pandemic. The Bill does not however indicate the period for issuing a written notice to the landlord. The Bill is also silent on encouraging landlords and tenants to re-negotiate the rent payable. However, ideally nothing bars a landlord and a tenant from re-negotiating the amount of rent payable.

However it is obvious that the landlords may have gotten the short end of the stick as tenants (including those who may still be able to pay part or full rent) may use this provision to temporarily avoid paying rent. Nonetheless the Bill reiterates that the Cabinet Secretary responsible for matters relating to housing may, with the approval of Parliament, provide measures to cushion landlords and tenants.

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PR&MB 2020 – Contractual Obligations

Filed under: Hidden Insight — KRK Advocates LLP @ 7:24 am

Where the declaration of a pandemic affects the performance of contractual obligations by a party to a contract, several remedies that would be available to the other party are waived. As such, the following activities are prohibited:

  1. Commencement of levying of execution;
  2. Enforcement of security over movable and immovable property used for the purpose of a trade, business or profession;
  3. Repossession of any goods used for the purpose of a trade, business or profession; or termination of lease or licence of immovable property in connection with non-payment of rent or other monies.

The Bill appreciates that a pandemic may cause significant frustration and hardship in performance of contracts and seeks to cushion parties whose performance of obligations is impaired. The Bill also takes cognizance of the fact that not all contracts may be affected by the pandemic and thus only those rendered incapable of performing their obligations may take advantage of this clause.

However, several commentators have argued that this clause of the Bill seems to ignore the fact that parties may have other obligations which may be tied to the performance of particular contract. As such, these measures would lead to a negative ripple effect and cause further disruption of the economy.

It is worth noting in certain cases, the pandemic may constitute force majeure (unforeseeable circumstances preventing parties from fulfilling their contractual obligations hence making the performance of the contract impossible). While the mere existence of a pandemic isn’t sufficient enough to invoke force majeure, measures taken to mitigate its effects such as lock-down of movement and business could ultimately constitute force majeure or cause hardship.

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PR&MB 2020 – Loans and Mortgages

Filed under: Hidden Insight — KRK Advocates LLP @ 7:19 am

The Bill makes provision for the status of contracts for loans and mortgages entered into prior to the declaration of a pandemic. The Bill stipulates that where a pandemic has a negative impact on the capacity of the public to meet its contractual obligations entered into prior to the declaration of a pandemic, the following measures shall apply during the pandemic up to three months after the end of the pandemic —

  1. A borrower and the respective lending financial institution shall enter into an arrangement to review repayment modalities;
  2. Penalties shall not be imposed on a defaulter; and
  3. A defaulter shall not be listed by a credit reference bureau.

The Bill provides that a lending financial institution shall not charge fees, interest or any other penalty for non-payment or late payment of obligations during the pandemic period. Therefore, interests will be accruing at the new “pandemic rate” agreed upon by both the lenders and borrowers but late payment or default interests or penalties shall be suspended.

The Bill having taken a purely suggestive approach presents the challenge that there is a huge possibility of the failure to agree on repayment modalities between lenders and borrowers. The Bill also seems to encourage individual debt restructuring of loans as opposed to a blanket reduction of interest rates sanctioned by law. The complexity presented by this approach is obvious as it is a cumbersome process. And it is purely suggestive hence isn’t likely to be enforced. This could lead to a myriad of legal issues after the pandemic. For instance, would failure to agree mean that the default interest rates applicable before the pandemic would be deemed to have automatically applied during the pandemic?

Further, as it stands, the Bill seems to primarily cushion borrowers and not lenders. The effect of this is that financial institutions would be unwilling to cooperate in this process as they stand to suffer loss. However, the Bill states that the Cabinet Secretary responsible for matters relating to finance may, with the approval of Parliament, provide measures to cushion both lenders and borrowers. Perhaps these measures would work best if initiated by Central Bank of Kenya.

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PR&MB 2020 – The Provision of Tax Incentives

Filed under: Hidden Insight — KRK Advocates LLP @ 7:16 am

The Bill provides that were a pandemic is such that it affects the economic or purchase power of the public, the Cabinet Secretary responsible for matters relating to finance may, with the approval of Parliament, introduce tax measures to cushion the affected persons for the duration of the pandemic. Even though the Bill is yet to be assented to, the Government of Kenya has been keen to employ various tax incentives to cushion Kenyans from the economic ramifications of the persisting pandemic. On 25 March 2020, President Kenyatta urged the National Treasury to move to parliament to initiate deliberations on the enactment of various tax laws. This led to the enactment of the Tax Laws (Amendment) Act 2020 which has provided for various measures to cushion Kenyan citizens and corporates from the economic effects of the pandemic.

As per the Act, employees earning less than Kshs. 24, 000/= have been granted 100% tax relief. Further, those earning more than Kshs 24,000 shall only pay a maximum tax of 25% of their earnings. The VAT rate has also reduced from 16% to 14%. The language of the Bill is very temporal as it is only to apply during a pandemic and The Act has also reduced the corporate income tax rate from 30% to 25% for resident companies. In our opinion, the introduction of tax incentives is a welcome move and one of the most strategic measures in cushioning individuals and businesses.

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PR&MB 2020 – The Pandemic Response Fund

Filed under: Hidden Insight — KRK Advocates LLP @ 7:14 am

The Bill provides for the establishment of a Pandemic Response Fund upon the declaration of an emergency. The object of the Fund is to mobilize the resources that shall be used to contain the spread and income of the pandemic. The Bill provides that the Fund shall be administered by the Principal Secretary relating to matters of finance who shall supervise and control the administration of the Fund. The Bill further goes to provide some of the ways in which the fund shall be used. For instance, the Fund can be used to purchase the necessary equipment and supplies for the control of the pandemic, creation of isolation centres, increasing laboratories for testing etc.

The sources of the Fund shall be:

  1. Monies appropriated by the National Assembly;
  2. Grants, donations or gifts made to the Fund; and
  3. Monies received from any other source approved by the Cabinet Secretary.

With regards to accountability in the administration of the fund, the Administrator is tasked with ensuring that there is established proper systems of control and oversight as per the Public Finance Management Act; that proper books of accounts and other books and records relating to the Fund and the activities financed under the Fund; preparing and transmitting to the Auditor-General financial statements; and preparing quarterly financial and nonfinancial reports.

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PR&MB 2020 – The National and County Pandemic Response Committees

Filed under: Hidden Insight — KRK Advocates LLP @ 7:12 am

The National Pandemic Response Committee

The Bill provides for the establishment of a National Pandemic Response Committee upon the declaration of a pandemic. The implication is that the Committee dissolves as soon as a pandemic ends. The Committee is established by the President comprising the Cabinet Secretary for Health, the Principle Secretary for the ministry of Finance, the chairman of the Council of Governors as well as other Cabinet Secretaries, Principal Secretaries and Public officers that the President may choose. Some of the key functions of the Committee include co-ordinating the country’s response and management to the threat caused by the pandemic; co-ordinating capacity building of the relevant personnel for quick and effective response to the pandemic; and conducting economic impact assessments on the effects of the pandemic and develop mitigation strategies.

This Committee will be the control centre for the Country’s pandemic response. It is therefore important that it is properly constituted with personnel having sufficient knowledge and skills to handle a pandemic. On the face of it, the Committee only comprises of state and public officers which raises questions as to whether it is adequately comprised. The Bill however provides that the committee may co-opt into membership any other persons whose knowledge and skills are found necessary for the performance of the functions of the Committee. While this is acceptable, it is worth identifying certain fields and professions which must have expert representation in the committee. For instance, law and policy experts, financial risk analysts, data scientists as well as education and research experts. Further, it is not clear what the remuneration (if any) of the members of this Committee is going to be.

County Pandemic Response Committees

The Bill provides that each County Governor shall establish a County Pandemic Response Committee in their responsive counties. The primary responsibility of the committees is to implement the strategies and measures as directed by the National Committee as well as to coordinate the county’s response and management to the threats caused by the pandemic. The County Committees are particularly important as they are able to navigate around the effects of the Pandemic that are unique to their respective counties and come up with appropriate ways of facing these issues.

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