Gachie t/a Regent Auctioneers v Platinum Distillers Limited (Commercial Case E427 of 2024) [2026] KEHC 10531 (KLR) (Commercial and Tax) (19 June 2026) (Ruling)

**THE REPUBLIC OF KENYA** **IN THE HIGH COURT OF KENYA AT NAIROBI** **COMMERCIAL AND TAX DIVISION** **HCCOMMISC NO E427 OF 2024** P.M GACHIE T/A REGENT AUCTIONEERS...AUCTIONEER/RESPONDENT VERSUS PLATINUM DISTILLERS LIMITED……….….... RESPONDENT/APPLICANT ARISING FROM KENYA REVENUE AUTHORITY…...……. COMMISSIONER OF DOMESTIC TAXES/APPLICANT VERSUS PLATINUM DISTILLERS LIMITED……………………………..RESPONDENT *(A Reference from the Ruling of Hon. Chembeni Adisa, Taxing Master, delivered on 28th July 2025).* **RULING** 1. A Ruling was delivered by Hon Chembeni L. Adisa on 28th July 2025 on an Amended Bill of Costs dated 13th May 2024 filed by the Auctioneer/respondent “*hereinafter the Auctioneer”.* 2. Upon delivery of the said Ruling, the applicant herein filed a Chamber Summons application (Reference) dated 30th July 2025, under the provisions of Sections 1A, 1B and 3A of the Civil Procedure Act, Cap 21 Laws of Kenya, Rule 55(4) and (5) of the Auctioneers Rules, 1997, and all enabling provisions of the law. The applicant prays for stay of execution and the setting aside of the Ruling delivered on 28th July 2025 and for costs of the Amended Bill of Costs dated 13th May 2025. The applicant also prays for costs of the instant Reference. 3. The Auctioneer opposed the Reference by way of a Notice of Preliminary Objection dated 28th August 2025. This Ruling determines both the Reference and the Notice of Preliminary Objection. 4. The Reference is premised on the grounds set out on the face of it, and it is supported by an affidavit sworn on 30th July 2025 by Ms Mary Wanjiru Kinyua, a Director of the applicant. She deposed that the Auctioneer filed an Amended Bill of Costs dated 13th May 2024 in the sum of Kshs.11,448,111.00, arising from instructions to distrain upon the applicant’s goods and chattels so as to realize the sum of Kshs.492,642,716.00. Ms Kinyua averred that at the time the said Auctioneer was instructed, the applicant and the Kenya Revenue Authority had executed an Alternative Dispute Resolution Agreement arising from **Tax Appeals Tribunal Case No. 394 of 2019,** which had a payment plan. 5. Ms Kinyua averred that the Taxing Master delivered a Ruling and taxed the applicant Kshs.9,890,855.00, without any basis for taxing it. She contended that the same amounts to unjust enrichment of the applicant. She stated that the Auctioneer has applied for a Certificate of Taxation so that it can commence execution proceedings. 6. She argued that the Ruling in issue is erroneous in law and that this Court has powers under Rules 55(4) and (5) of the Auctioneers Rules, 1997, to set aside or review the decision of the Taxing Master. She contended that the Auctioneer has not demonstrated that it received proper instructions to distrain the applicant’s goods or that it operated as a Licensed Auctioneer or that the applicant was indebted to the Kenya Revenue Authority. She urged this Court to determine the application since the Auctioneer will proceed to recover its costs. 7. In opposition to the Reference, the Auctioneer filed a Notice of Preliminary Objection dated 28th August 2025, on the grounds that the application is fatally defective and incompetent, that the Reference contravenes the mandatory provisions of Rule 55(5) of the Auctioneers Rules, 1997, which provides for Seven (7) days as the statutory timeline for filing a Reference, from the date of delivery of a Ruling. The Auctioneer contended that the Reference herein was filed after nine (9) days of the Ruling of 28th July 2025 and the application herein, should be struck out with costs to the Auctioneer. 8. The Auctioneer also filed a replying affidavit sworn on 24th October 2025 by Mr. Peter M. Gachie. He stated that the Reference is flawed since it was filed seven (7) days late, outside the statutory timelines required under Rule 55(4) and (5) of the Auctioneers Rules. He averred that the applicant had filed a Notice of Preliminary Objection on the same issues raised in the Reference herein, and the Taxing Master heard and determined the Preliminary Objection in a Ruling delivered on 25th April 2025. 9. Mr. Gachie argued that the applicant is seeking to re-litigate issues as to whether the Auctioneer was properly instructed, yet the same was dismissed. He stated that the applicant ought to have filed an Appeal or review against the said Ruling, but failed to do so and the matter proceeded until determination of the Amended Bill of Costs. He contended that the instant Reference offends the doctrine of *res judicata* since the issues brought up by the applicant, were already litigated upon, which indicates that this Court lacks jurisdiction. He further contended that the Amended Bill of Costs was duly taxed and it will be in the interest of justice for this Court to allow the Notice of Preliminary Objection and to strike out the Reference. 10. Mr. Andrew Kabugu, the applicant’s Advocate, later filed a replying affidavit sworn on 2nd December 2025, to oppose the Notice of Preliminary Objection. He exhibited a Judiciary receipt showing that the Reference dated 30th July 2025, was filed on 1st August 2025. 11. This Court directed that the Reference and the Notice of Preliminary Objection would be determined together by way of written submissions. The applicant filed submissions dated 24th November 2025 through the law firm of Kabugu & Co. Advocates. The Auctioneer filed submissions dated 28th October 2025 through the law firm of Stanley & Antony Advocates. 12. Mr. Kabugu, learned Counsel for the applicant submitted that the Auctioneer is misleading this Court by stating that the Reference was filed outside the statutory timelines ofRules 55(5) of the Auctioneers Rules, 1997. He stated that the Reference was filed on 1st August 2025, which was four (4) days after delivery of the Ruling of 28th July 2025. He urged for the Preliminary Objection to be dismissed. 13. On the issue of *res judicata*, Counsel submitted that the Notice of Preliminary Objection initially filed was on the issue of the jurisdiction of the Taxing Master, which is different from the issues raised in the Reference herein, hence it has not been demonstrated that the doctrine of *res judicata* applies to the instant Reference. 14. Mr. Kabugu urged this Court to allow the Reference since the Ruling by the Taxing Master offends Section 41(9) of the Tax Procedures Act, which states that any costs of taking, keeping and selling property that is the subject of a distress order should be treated as tax, yet the Auctioneer seeks to recover it as costs for personal gain. 15. Counsel argued that in this case there was no proclamation as required under Rules 12(1)(b) of the Auctioneers Rules, 1997. He argued that the Auctioneer produced a Proclamation Notice dated 23rd July 2021 which indicated that they were denied access to the factory, yet the proclamation contained a schedule of movable assets, which leads to the inference that the Proclamation Notice was issued based on assumptions which makes it illegal. He cited the case of **Hughes Limited versus Mohammed Kassam** (2008) KEHC 469 KLR, where the Auctioneer indicated that the security personnel had refused him permission to take proper inventory, and the Court found that there was no attachment in execution of a decree due to the failure by the Auctioneer therein to prepare an inventory of the goods attached, the condition of each item and the value thereof. 16. Mr. Kabugu argued that in the absence of a lawful and properly executed proclamation, there cannot be deemed to have been a valid attachment. He stated that the Taxing Master erred in law for allowing some items in the Amended Bill of Costs. He stated that item No. 2 at Kshs 4,000/= relates to filing possession of property, which is provided for under the Fourth Schedule, Part II, Paragraph 6 of the Auctioneers Rules, 1997, which relates to fees on sale of immovable property but in this case, there was no attachment or sale of immovable property, hence item No. 2 ought to have been disallowed. 17. On item No. 3 of the Amended Bill of Costs, Counsel stated that it is not itemized and that in the impugned Ruling, the Taxing Master listed item No. 3 as fees on attachment. In making reference to the Fourth Schedule, Part II, Paragraph 4 of the Auctioneers Rules, 1997, Counsel stated that it provides for fees on attachment, repossession, distraint and expenses. He contended that since the applicant’s goods were not attached or repossessed, the Auctioneer is not entitled to any fees for attachment under the Auctioneers Rules, 1997, as he did not set foot inside the applicant’s premises. 18. On item No. 4 on personal service of a Notice, Mr. Kabugu contended that the taxed amount is untenable as the Auctioneer’s Rules do not provide for service of any such Notice in the circumstances described, and there is no evidence whatsoever that any Notice was served on the applicant herein, which is reinforced by the Auctioneer’s own admission that he did not access the premises. 19. On item No. 5 on general disbursements, the applicant’s Counsel submitted that it is a well-established principle in taxation of Bills of Costs, that a party seeking reimbursement must substantiate such claims with receipts or other documentary proof, which the Auctioneer failed to produce, to support the expenses allegedly incurred. He contended that the claim for disbursements cannot be sustained. Counsel cited the case of **AM Kimani & Co Advocates v Trident Insurance Co. Ltd** [2016] eKLR, to support his assertion. 20. He faulted the Taxing Master’s Ruling for making reference to the Advocates Rules under the Fourth Schedule, Part II, which was inapplicable as what was before the Taxing Master was an Auctioneer’s Amended Bill of Costs. Further, that reliance on the said Rules in the assessment of the Auctioneer’s Amended Bill of Costs was misplaced and contrary to the law. 21. He concluded his submissions by stating that the Auctioneer’s Amended Bill of Costs is untenable and should be struck out in its entirety, with no order for payment. 22. Mr. Mwaura, learned Counsel for the Auctioneer, raised two issues in support of the Auctioneers Notice of Preliminary Objection and in opposition to the applicant’s Reference. On the issue of the instant application being *res judicata* as per the Auctioneer’s Preliminary Objection, he cited Section 7 of the Civil Procedure Rules and the case of **Waso Building & Works Co Ltd v. Fayo Galgalo** [2022] eKLR, on the doctrine of *res judicata*. He submitted that the applicant had filed an earlier Notice of Preliminary Objection which had raised similar issues between the same parties, in the same cause of action, which was heard and determined by a Court of competent jurisdiction. Still on the doctrine of *res judicata*, he cited the Supreme Court case of **Kenya Commercial Bank Ltd v Muiri Coffee Estate Ltd & another** Motion No 42 of 2014 [2016] eKLR. 23. On the second issue as to whether this Court has the requisite jurisdiction to determine the instant Reference, he cited the case of **Samuel Kamau Macharia & another v Kenya Commercial Bank Ltd & 2 others** [2012] eKLR, and submitted that this Court (sic) is now *functus officio*, having delivered a Ruling on 25th April 2025, rendering a definitive decision on the Preliminary Objection, conclusively affirming the validity and competence of the applicant’s Amended Bill of Costs and its right to proceed to taxation, which bars this Court from hearing the Reference herein. To support his submissions on the issue of jurisdiction, Counsel cited the case of **Telkom Kenya Ltd v John Ochanda (Suing on his own behalf and on behalf of 996 former employees of Telkom Kenya Ltd** [2014] eKLR and the case of the **Owners of Motor Vessel “Lilian S” v Caltex Oil (Kenya) Ltd** (1989) KLR 1. He urged this Court to strike out the Reference dated 30th July 2025. **ANALYSIS AND DETERMINATION** 1. I have considered the Reference filed by the applicant and its supporting affidavit. I have also considered the replying affidavit and Notice of Preliminary Objection filed by the respondent herein, as well as the written submissions by Counsel for the parties. The issues for determination are- 2. **Whether the Notice of Preliminary Objection should be sustained; and** 3. **Whether the Reference should be allowed as prayed.** **Whether the Notice of Preliminary Objection should be sustained.** 1. In the case of **Mukisa Biscuits Manufacturing Co. Ltd –vs- West End Distributors Ltd** (1969) EA 696, the Court defined what a proper Preliminary Objection is, and held as follows- ***“---a preliminary objection consists of a point of law which has been pleaded, or which arises by clear implication out of pleadings, and which if argued as a preliminary point may dispose of the suit. Examples are an objection to the jurisdiction of the Court or a plea of limitation or a submission that the parties are bound by a contract giving rise to the suit to refer the dispute to arbitration”.*** In the same caseSir Charles Newbold, P. stated thus- ***“a preliminary objection is in the nature of what used to be a demurrer. It raises a pure point of law which is argued on the assumption that all the facts pleaded by the other side are correct. It cannot be raised if any fact has to be ascertained or if what is sought is the exercise of judicial discretion. The improper raising of preliminary objections does nothing but unnecessarily increase costs and on occasion, confuse the issue, and this improper practice should stop”.*** 1. The Auctioneer herein, filed separate submissions dated 18th September 2025 to support his Preliminary Objection and stated that the applicant did not comply with the timelines of Rule 55(5) of the Auctioneers Rules, which requires a Reference to be filed within 7 days of a Ruling on taxation. He contended that the Reference was filed on 6th August 2025 which was nine (9) days after delivery of the Ruling of 28th July 2025. 2. Counsel cited the case of **Mutia Muindi t/a Mutibra Auctioneers v CFC Stanbic Bank Limited Garnishee & another** [2015] eKLR, the case of **Mae Properties Limited v Joseph Kibe & another** [2015] eKLR and the case of **Martin Kabaya v David Mungania Kiambi** [2015] eKLR, on the necessity for parties to adhere to set timelines. He contended that this Court does not have the requisite jurisdiction to hear the Reference and cited the case ofthe **Owners of Motor Vessel “Lilian S” V Caltex Oil (Kenya) Ltd** (supra) and **Mohamed v Walker Kontos Advocates & another** [2022] KEHC 16797 (KLR). 3. An appeal from the decision of a Taxing Master is provided for under Rule 55(5) of the Auctioneers Rules, which states as follows- ***“The memorandum of appeal, by way of chamber summons setting out the grounds of appeal, shall be filed within 7 days of the decision of the registrar or magistrate.”*** (Emphasis added). 1. This Court has seen a rebuttal of the allegation that the Reference herein was filed late through the replying affidavit of Mr. Andrew Kabugu Advocate, exhibiting a Judiciary receipt aimed at showing that the Reference was filed on 1st August 2025 within the seven (7) days stipulated by the Auctioneer’s Rules. In essence that goes to prove that the Preliminary Objection in regard to the timeline within which the Reference was filed is not a valid Preliminary Objection, as it calls for probing of facts to ascertain if the Reference was filed within time. The Notice of Preliminary Objection therefore fails on that ground. 2. In addition, the applicant’s replying affidavit in opposition to the said Preliminary Objection is hereby struck out because a replying affidavit cannot be filed in response to a Notice of Preliminary Objection. The applicant should have challenged the validity of the Preliminary Objection in its written submissions, in that the issue of when the Reference was filed required factual evidence. The Notice of Preliminary Objection fails the validity test set out in the case of **Mukisa Biscuits Manufacturing Co. Ltd –vs- West End Distributors Ltd** (supra) and **Oraro v Mbaja** [2005] KEHC 3182 (KLR),where the Court stated as follows- ***“I think the principle is abundantly clear. A “Preliminary Objection” correctly understood, is now well identified as, and declared to be a point of law which must not be blurred with factual details liable to be contested and in any event, to be proved through the processes of evidence. Any assertion which claims to be a Preliminary Objection and yet it bears factual aspects calling for proof, or seeks to adduce evidence for its authentication, is not, as a matter of legal principle, a true Preliminary Objection which the Court should allow to proceed.”*** **Whether the Reference should be allowed as prayed**. 1. The Court can only interfere with the decision of a Taxing Master if the same is based on an error in principle. That was the holding of the Court of Appeal in the case of **Kipkorir, Tito & Kiara Advocates vs Deposit Protection Fund Board**[2005] eKLR, where the said Court stated as follows- **“On reference to a Judge from the Taxation by the Taxing Master, the Judge will not normally interfere with the exercise of discretion by the Taxing Master unless the Taxing Master, erred in principle in assessing the costs.”** 1. This Court must also consider whether the Reference herein offends the doctrine of *res judicata*. The substantive law on the said doctrine is found in Section 7 of the Civil Procedure Act, which provides that: ***“No court shall try any suit or issue in which the matter directly and substantially in issue has been directly and substantially in issue in a former suit between the same parties, or between parties under whom they or any of them claim, litigating under the same title, in a court competent to try such subsequent suit or the suit in which such issue has been subsequently raised, and has been heard and finally decided by such court”*** 1. According to the Auctioneer, the Reference herein raises issues similar to those raised in the Notice of Preliminary Objection dated 1st July 2024, mainly on jurisdiction of the Taxing Master to hear the matter, the fact that the Proclamation Notice was illegal and that there was no valid distress order. This Court has gone through the Ruling delivered by Hon Chembeni L. Adisa on 25th April 2025, which analyzed the said issues. She held that the Auctioneer was properly instructed and a Proclamation Notice was lawfully issued. 2. This Court agrees with the Auctioneer that the said issues were conclusively determined at that point, and if the applicant herein was aggrieved with the Ruling of 25th April 2025, it ought to have lodged an Appeal to the High Court or applied for review or setting aside of the said decision before the lower Court. 3. As to the issue of taxation of the Auctioneer’s Amended Bill of Costs, item No. 1 at Kshs 1,000/= on instruction fees to distrain the goods and chattels of the applicant is justified under Paragraph 1 of the Fourth Schedule, Part II. On Item No. 2 on filing possession of property, the amount taxed is justified. 4. Item No. 3 is for the sum of Kshs.9,852,854.32, for which the Taxing Master relied on paragraph 4 of the Fourth Schedule of the Auctioneers Rules (erroneously indicated as Advocates Rules), which error can be excused as the same is a typographical one. It states that if the amount claimed is more than Kshs.1,000,000/=, the commission earned by an Auctioneer is 2% for sale of movable property. In this case, it was admitted by both the Auctioneer and the applicant that there was no sale of movable properties. 5. The question then that arises is whether the commission was duly earned. Paragraph 7, Part II of the Fourth Schedule of the Auctioneer Rules, 1997, provides that- ***“Where requisite notices are served and sale is stayed, or postponed the Auctioneer shall be entitled to half (1/2) of fees to which he would have been entitled to after sale plus expenses.”*** 1. This Court finds that the Taxing Master erred in awarding full commission, yet there was no sale of any property. Awarding such an amount not duly earned will amount to unjust enrichment. Further, it is clear that the amount that forms the basis upon which Auctioneers charge fees is on the value of the properties attached and not the decretal sum. The Court in the case of **Ostrich Lion Auctioneers vs Paul Muchiri** [2007] eKLR, referred to the Court of Appeal decision in **National Industrial Credit Bank Ltd vs S. K. Ndegwa Auctioneers** [2005] KECA 22 (KLR), and stated as follows- ***“The Fees claimed by the Auctioneer and as awarded by Deputy Registrar were calculated upon the decretal sum, not upon the value of the property attached. Schedule IV of the Auctioneers Rules, 1997 under which an Auctioneer’s charges are calculated is silent on whether they ought to be calculated based on the decretal sum or on the value of the property attached. But the Court of Appeal has held that the Auctioneers fees ought to be calculated based on the value of properties attached.”*** 1. In this matter, there was no sale of property and the value of the properties attached is not clear. The Proclamation Notice indicates that the Auctioneer was denied access to the applicant’s property. It is therefore difficult for this Court to establish whether or not the assets listed in the Proclamation Notice were properly assessed to determine their value. 2. This Court finds that the Taxing Master erred in principle in assessing the Auctioneer’s fees based on the decretal sum, as that is contrary to the binding authority in **National Industrial Credit Bank Ltd vs S. K. Ndegwa Auctioneers** (supra). 3. This Court finds that there was no valid explanation on the taxed amounts on item Nos. 4 and 5 of the Amended Bill of Costs, as there were no receipts or documentation in support of the same. 4. This Court finds that the Reference dated 30th July 2025 has merits. The final orders are that- 5. **I hereby grant stay of execution and enforcement of the orders ensuing from the Taxing Master’s Ruling of 28th July 2025;** 6. **The Amended Bill of Costs dated 13th May 2024 is hereby remitted to another Deputy Registrar, in the Commercial and Tax Division other than Hon. Chembeni L. Adisa, for fresh taxation of item Nos. 3, 4 and 5; and** 7. **Costs shall** **be in the cause.** **DATED, SIGNED and DELIVERED IN KIAMBU on this 19TH day of JUNE 2026. Ruling delivered through Microsoft Teams Online platform.** **NJOKI MWANGI** **JUDGE** **In the presence of:** Mr. Kabugu for the applicant Mr. Mwaura for the respondent Ms Julia – Court Assistant.