[2020] KEELC 2709 (KLR)

REPUBLIC OF KENYA

IN THE ENVIRONMENT & LAND COURT

AT MOMBASA

ELC MISC. NO. 47 OF 2018

AMBWERE T.S & ASSOCIATES...........................................................APPLICANT

VERSUS

FRANK NYAMBU WAFUKWA & OTHERS..................................RESPONDENTS

RULING

(Reference in the matter of taxation of an advocate/client bill of costs; applicant faulting the taxing master for failing to consider the value of the subject matter in taxing instruction fees; case being one for adverse possession where the value of the land was not disclosed in the pleadings; a valuation done in the course of taxation of fees; taxing master however not considering the valuation of the land when taxing fees; position of applicant that this was erroneous; cross-reference arguing that the value of the land ought not to be considered and that fees had been agreed and paid; no evidence of any agreement on fees; fees ought to have been based on the value of the subject matter; bill taxed afresh on the basis of the value of the subject matter)

1. The applicant is an advocate who has a dispute over the advocate/client fee payable. The applicant was engaged by the respondents to represent them in a case where the respondents sought orders that they have acquired title through the doctrine of adverse possession to the land parcel Mainland North/Section 1/413. Pursuant to the instructions, the applicant filed the suit Mombasa ELC No. 81 of 2016 (OS) wherein the respondents, being 37 in number, sought the orders of adverse possession. The suit was defended. Before the case could be heard, the respondents changed counsel, and thereafter the applicant filed his advocate/client bill for taxation listing 44 items. The first item was instruction fees where the applicant sought the sum of Kshs. 1,500,000/= and the second item was getting up fees, where he sought the sum of Kshs. 500,000/=. In total, he sought the sum of Kshs. 3, 539,558/= inclusive of VAT on items 1 and 2.

2. The bill was resisted with the respondents claiming that they had an agreement to pay the sum of Kshs. 285,000/= as legal fees, which they asserted they paid, and they annexed various receipts to support their allegations.

3. In the course of the taxation, the parties agreed to have the disputed property valued and this was done with the property being valued at Kshs. 26,200,000/=. The value of the suit property is therefore no longer disputed.

4. In presenting his bill for taxation, Mr. Ambwere submitted inter alia that the case involved 42 plaintiffs and was not a simple adverse possession claim. Mr. Chebukaka for the respondents, on the other hand, submitted inter alia that the suit property belonged to a third party and not the respondents. He submitted that the taxation should be on work done and not the value of the land. He pointed out that the case had yet to proceed for full trial. He opposed some items in the bill which he pointed out.

5. In taxing the bill, the Honourable Deputy Registrar, first held that there was no retainer agreement between the parties as there was none presented. She therefore did not accept the respondents’ assertion that they had agreed on a fee of Kshs. 285,000/=. She however did not use the valuation report as a basis for calculating the fee payable to the applicant but instead reverted to the discretion granted under Schedule VI of the Advocates Remuneration Order which provides for a basic instruction fee of Kshs. 75,000/= if the suit is defended. She then considered the nature and amount of work done by the applicant, the number of plaintiffs involved, and the difficulties that the applicant may have encountered, and thought it fit to increase the basic instruction fees. She indeed proceeded to do so and arrived at the figure of Kshs. 500,000/=. She did not award item 2 (getting up fees) since the case was yet to proceed for trial.

6. Both the applicant and respondents were aggrieved by the taxation and have filed references to this court. On the part of the applicant, it is his view that the taxing master ought to have taxed his bill based on the value of the property, and from his application, it does appear that his only gripe is with the instruction fees. On the part of the respondents, I can see that in their cross-reference they oppose all items in the bill of costs. They aver that the taxing master erred in failing to consider that the suit had yet to proceed for hearing and was not a complex matter requiring great industry from counsel.

7. In arguing his reference, Mr. Ambwere reiterated that the taxing officer ought to have used the valuation report in taxing his instructions fees. Mr. Chebukaka for the respondents maintained that the fee was agreed at Kshs. 285,000/= and that was fully paid. He further submitted that the matter never proceeded for hearing and also stated that the fee could not be pegged on the value of the land as the land did not belong to the respondents.

8. I have considered the arguments. Before I go too far, in as much as the respondents stated that they oppose all items in the bill, they never made any submissions before me on what the problem was with the taxation of all other items save for the instruction fees. I will therefore assume that the only contention is on instruction fees.

9. I will first deal with the issue whether it matters that the matter had proceeded for hearing or not. It was affirmed in the case of Joreth vs Kigano & Associates, Civil Appeal No. 66 of 1999 (2002) eKLR that instruction fees is static and is charged once and this does not depend on the extent that the case in court has reached. The Court of Appeal in addressing this point stated as follows :-

“We come now to the Notice of Grounds for affirming the decision of the learned judge. By the first ground thereof the respondent states that Instruction Fee is an independent and static item, is charged once only and is not affected or determined by the stage the suit has reached. In principle that is correct. There is nothing however to suggest in the ruling of C.K. Njai, Esq., that he had considered the Instruction Fee on the stage the suit had reached. It was the learned judge who so considered the matter. The learned judge was clearly wrong in saying that one-half the work done qualifies for one-half Instruction Fee.”

10. From the above, it will be seen that Mr. Chebukaka’s argument that the taxing officer ought to have considered that the matter is yet to be concluded, fails. The instruction fee is earned once the advocate is instructed and once he has filed a plaint, or other originating process, he is entitled to full fees on the suit.

11. The second argument by Mr. Chebukaka is that there was an agreement on the fees and that the fee was fully paid. Nothing was presented to the taxing officer or to this court to demonstrate any agreement between the applicant and the respondents showing that they agreed on fees. If there was one, there would have been nothing easier than to annex the agreement. I cannot fault the taxing officer for holding that there was no agreement on fees.

12. The only issue left is whether the taxing officer erred in failing to use the valuation report to tax the instruction fees. The suit was before the Environment and Land Court and the taxation ought to be similar to that of a High Court matter. The operative Schedule is Schedule 6. Schedule 6 (1) (b) does provide for the rate chargeable where there is a defence and “where the value of the subject matter can be determined from the pleading, judgment or settlement between the parties.”In this instance, the value of the subject matter was certainly not in the pleadings for what the respondents claimed was the land based on the doctrine of adverse possession. However, in my decision in Masore Nyang’au & Company Advocates vs Kensalt Limited, Nakuru ELC Miscellaneous Application No. 196 of 2015 (2019) eKLR, I did hold that where the value of the subject matter is not in the pleadings, there is nothing to bar the taxing officer from proceeding to have the subject matter valued and proceeding to base the taxation on the value thereof. I held as follows in the said case :-

“20. Schedule 6 above, does prescribe how costs should be assessed ‘where the value of the subject matter can be determined from the pleading, judgment or settlement between the parties’. The said schedule does not however explicitly prescribe what should be done, where the value of the subject matter is not in the pleadings, judgment or settlement. You could indeed have litigation where the value of the subject matter is not given in the pleadings, judgment or settlement. A common example is in land cases, where say, the plaintiff files suit to cancel the defendant’s title claiming that the defendant acquired the title through fraud but the title rightfully belongs to the plaintiff. In such a case, all that may be given in the pleadings is the registration particulars of the said land and no more. Assuming the plaintiff in such a case succeeds, and the court orders the defendant’s title to be cancelled, and in place, the plaintiff to be registered as proprietor, what would the plaintiff be entitled to as costs in respect of instruction fees since no actual value may be given in such a judgment ?

21. At the end of the day, costs will need to be pegged on the value of the subject matter, and my own view of the matter, is that the court is not precluded from asking for evidence so as to determine what the value of the subject matter may be for purposes of taxing costs, or refer to other documents provided in the course of the case, and which may point at the value of the subject matter. Such documents may include the sale agreement, valuation report, or the consideration noted in the transfer instrument or title. Indeed, Rule 13 of the Advocates’ Remuneration Order does allow the court to even call for evidence for purposes of determining a dispute before it. The said provision of the law is drawn as follows :-

13 A. Powers of taxing officer

For the purpose of any proceeding before him, the taxing officer shall have power and authority to summon and examine witnesses, to administer oaths, to direct the production of books, paper and documents and to direct and adopt all such other proceedings as may be necessary for the determination of any matter in dispute before him.”

13. I am still of the persuasion that taxation ought to be based on the value of the subject matter barring any special circumstances that parties will need to present at the time of taxation, such as but not restricted to, an agreement on fees. In the instance of this case, the parties under the supervision of the taxing officer did agree to have the disputed property valued. This was for no other reason other than to determine the value of the subject matter for purposes of taxation. It was therefore erroneous, in my view, for the taxing officer not to peg instruction fees on the value of the subject matter, but instead fall back upon her discretion. I am thus persuaded to allow the reference of the applicant on this ground.

14. I have the option of returning the matter back for taxation or proceeding to tax the bill myself. I opt to finalize the issue once and for all since the matter is already before me.

15. The value of the subject matter was Kshs. 26,200,000/=. Schedule 6 provides for instruction fees at the following rates where there is a defence or other denial of liability :-

(b) To sue in any proceedings described in paragraph (a) where a defense or other denial of liability is filed; or to have an issue determined arising out of inter-pleader or other proceedings before or after suit; or to present or oppose an appeal where the value of the subject matter can be determined from the pleadings, judgment or settlement between the parties and—

That value exceeds Kshs. But does not exceed Kshs. Kshs. - 500,000 75,000

500,000 750,000 90,000

750,000 1,000,000 120,000

1,000,000 20,000,000 fees as for Kshs. 1,000,000 plus an additional 2%. Over 20,000,000 fees as for 20,000,000 plus an additional 1. 5%.

16. In our case the value is Kshs. 26,200,000/=. We therefore first must get the fees for Kshs. 20,000,000/= which is the fees for Kshs. 1,000,000/= (Kshs. 120,000/-) plus an additional 2% for what is charged between Kshs. 1,000,000/= and Kshs. 20,000,000( Kshs. 19,000,000/- X 2% = 380,000). You then need to add 1. 5% on the additional figures above Kshs. 20,000,000/= ( Kshs. 6,200,000/= x 1. 5% = 93,000/-). The total amount due as instruction fees was therefore Kshs. 120,000/- + Kshs. 380,000/- + Kshs. 93,000/- = 593,000/-. This is of course party and party costs and in respect of advocate-client fees, this needs to be increased by ½ following Part B of Schedule 6, thus the sum of Kshs. 296,500/-. If you add Kshs. 593,000/- to Kshs. 296,500/- you get Kshs. 889,500/=.

17. A court may, apart from the value of the subject matter, also consider other issues, and this is contained in the proviso to Schedule 6 (1) which inter alia states as follows :-

Provided that:

(i) the taxing officer may take into consideration other fees and allowances due to the advocate (if any) in respect of the work to which any such allowance applies, the nature and importance of the cause or matter, the amount involved, the interest of the parties, the general conduct of the proceedings, a direction by the trial judge, and all other relevant circumstances;

18. The purpose of the proviso is to ensure that the advocate is adequately remunerated for the work done, for it may happen that the dispute involves subject matter of small value, yet involve complex issues of law and/or fact or there are other circumstances which need extra industry from the advocate. The court is therefore allowed to use the proviso to increase fees but reason for this must clearly be stated.

19. In our case, I am not persuaded to use the proviso. The case was one of adverse possession which is not in the course of things a complex matter. The case may have involved a large number of parties but it has not been demonstrated to me that there was an overly extra burden on the advocate merely because the numbers involved were big. I do not therefore think that the applicant is entitled to anything more than what is prescribed as instruction fees based on the value of the subject matter and I will therefore leave it at Kshs. 889,500/-. This amount of Kshs. 889,500/= is of course subject to VAT at 16% (Kshs. 142,320/-) and must also be reduced by what the respondents had paid. I have gone through the receipts and calculated the amount that the respondents had paid. The receipts are as follows :-

8/3/2016 – Kshs. 20,000/= (Receipt No. 554)

17/3/2016- Kshs. 30,000/= (Receipt No. 561)

29/3/2016 – Kshs. 30,000/= (Receipt No. 563)

5/4/2016 – Kshs. 10,000/= (Receipt No. 566)

13/4/2016- Kshs. 20,000/= (Receipt No. 568)

28/4/2016 – Kshs. 40,000/= (Receipt No. 572)

14/6/2016 – Kshs. 30,000/= (Receipt No. 579)

23/2/ 2018 – Kshs. 20,000/= (Receipt No. 755)

(NB: there is a repetition of this receipt)

10/4/2018 – Kshs. 35,000/= (Receipt No. 713)

TOTAL – Kshs, 235,000/=.

20. The amount of Kshs. 235,000/= is therefore what the respondents had paid and not Kshs. 275,000/- recorded by the taxing officer.

21. The other items, as I have stated, were not contested before me.

22. I therefore proceed to vary the decision of the taxing master as noted above only on the instruction fees. The taxation on the other items remains and is not disturbed and that includes the refusal to award any getting up fees, which I think was justified, as the case had not proceeded for hearing and it was not demonstrated that the applicant had otherwise prepared for hearing.

23. In respect of the costs before me, in my discretion I will award the sum of Kshs. 10,000/= to the applicant payable by the respondents. Counsel also submitted that he is the one who paid the sum of Kshs. 60,000/= in respect of the valuation report before the taxing officer. Subject to a receipt being tabled, he can also have this sum as against the respondents.

24. Orders accordingly.

DATED, SIGNED and DELIVERED at MOMBASA this 26th day of February, 2020.

_____________

MUNYAO SILA

JUDGE.

IN THE PRESENCE OF:

Mr Wesonga holding brief for Mr Ambwere for the applicant.

Mr Chebukaka for the respondents.

Court Assistant; David Koitamet.