[2022] KEHC 11717 (KLR)

Housing Finance of Kenya Ltd v Njenga & 3 others (Commercial Suit 5 of 2021) [2022] KEHC 11717 (KLR) (16 June 2022) (Ruling)

Neutral citation: [2022] KEHC 11717 (KLR)

Republic of Kenya

In the High Court at Kisumu

Commercial Suit 5 of 2021

FA Ochieng, J

June 16, 2022

Between

Housing Finance of Kenya Ltd

Plaintiff

and

Ruth Wanjiru Njenga

1st Defendant

Mohamed Mohamud Habibi

2nd Defendant

Legacy Auctioneers

3rd Defendant

Daniel Philip Kwaro

4th Defendant

Ruling

1. When the matter first came up in court, it was handled by Hon. Lady Justice T. W. Cherere. The learned Judge was convinced that the High Court lacked jurisdiction to handle the application, because;“3. There is no doubt that the subject matter of this reference arose from Kisumu CMCCElc No. 311 OF 2018. ”

2. It was the considered opinion of the learned Judge that whereas the High Court enjoys countrywide unlimited jurisdiction in both Criminal and Civil matters, article 162 (2) of the Constitution of the Republic of Kenya conferred upon the Environment and Land Court, the jurisdiction over land matters.

3. On July 8, 2020, the High Court transferred the case to the Environment and Land Court.

4. When the matter came up before Hon. Justice A. Ombwayo, the issue of jurisdiction was revisited.

5. In his considered view, the dispute revolved on a loan of Kshs 1,000,000/= which the 1st defendant had advanced to its customer. As security for the said loan, the suit property was offered as a security. In the circumstances, Ombwayo J. held that;“….. this was purely a commercial venture and therefore the dispute therein was neither related to environment nor land use or title to land; but recovery of security as aresult of default in loan repayment.”

6. The learned Judge concluded that the dominant issue in the case was the settlement of the amounts owing from the respondents to the appellant, on account of a contractual relationship of a banker and lender.

7. For those reasons, the case was, on October 1, 2021, transferred back to the High Court.

8. I have set out the history of the application solely for the purposes of making it clear why it has taken a long period of time to determine the application.

9. When the parties appeared before me, on March 24, 2022, they informed the court that they had already filed their respective submissions.

10. The parties set down the following issues for determination;(a)Does the court have jurisdiction to entertain the reference?(b)Should the court extend time for the filing of the reference?(c)Should the Ruling of the Taxing Officer, dated October 3, 2019, be set aside?

11. To my mind, as neither of the parties have challenged the Ruling delivered by Ombwayo J. on October 1, 2021, I deem the issue regarding jurisdiction as having been determined conclusively.

12. Pursuant to Paragraph 11 of the Advocates Remuneration Order, a Reference from Taxation ought to be filed within 14 days from the date when the Taxing Officer provides the reasons for the disputed decision.

13. The decision herein was delivered by the Taxing Officer on October 3, 2019.

14. OnOctober 7, 2019, the applicant filed a Notice of Objection, and requested the Taxing Officer to provide the reasons for her decision.

15. On January 27, 2020the learned Taxing Officer supplied the reasons for her decision.

16. It is common ground that the reference ought to have been filed within 14 days, from January 27, 2020.

17. However, the reference was filed 7 days late.

18. According to the applicant’s advocates, the reason for the delay was that counsel who had the conduct of the matter was away from the office, as she had to deal with a personal matter.

19. The said advocate told this court that whilst she was away from the office, she forgot to delegate the matter to a colleague, who could then have handled it on her behalf.

20. The respondent submitted that the applicant had not given any good reason for the delay.

21. In my considered opinion, I find the candid explanation by counsel, to constitute a plausible explanation for the delay.

22. Secondly, I find that the period of 7 days does not constitute unreasonable delay.

23. Thirdly, I hold the view that the respondent cannot be prejudiced by the delay in question.

24. In the circumstances, I do hereby extend the time for the lodging of the reference, so that it is deemed to have been filed within time, (as now extended).

25. As regards the decision of the Taxing Officer, it is well settled that the court can only interfere with it if it is based on an error of principle.

26. When the fee awarded was either manifestly low or manifestly excessive, that would justify an interference by the court.

27. In this case the Taxing Officer awarded Kshs 557,500/= as Instruction Fees.

28. The said Instruction Fees was based on the Value of the suit property, which was set by Crystal Valuers Limited, at Kshs 18,000,000/=.

29. It was the applicant’s submissions that the Taxing Officer ought not to have taken into account the value of the subject matter because the 1st respondent had only sought declaratory reliefs in her Amended Plaint.

30. The applicant emphasized that in the suit, there was no specific sum sued for, claimed or awarded. Therefore, the applicant urged the court to hold that the Instruction Fee should have not exceeded Kshs 50,000/=, in accordance with Paragraph 2 of Schedule 7 of the Advocates Remuneration Order.

31. The applicant faulted the Taxing Officer for basing her calculations on Paragraph 1 of Schedule 7.

32. The Respondent did not controvert the arguments advanced by the Applicant, concerning the applicability of Paragraph 1 of Schedule 7. In other words, the said paragraph would be applicable in instances when the value of the subject matter was discernable from the pleadings or from the Judgment of the court.

33. The respondent’s position was that the value of the subject matter was ascertainable from the Valuation Report by Crystal Valuers Limited.

34. It was the understanding of the respondents that the Valuation Report indicated that the Open Market Value of the parcel of land L.R. No. Kisumu Municipality/Block4/364, Tom Mboya Estate was Kshs 18,000,000/=.

35. The respondents cited the case ofMasore Nyang’au & Co AdvocatesvKensalt Limited (2019) eKLR, to support their case.

36. They pointed out that, in that case the court made reference to;“……. documents tendered in the file, which pointed at what the value of the subject matter could be. One of these documents was a memorandum of transfer to the respondent, which was annexed by the plaintiff to its list of documents. alongside an extract of the title. These two documents showed that the property in dispute was transferred to the respondent in the year 2003, for the sum of Kshs 63,000,000/=.”

37. In the circumstances, the learned Judge held that nothing barred the taxing officer from making reference to such documents for determining the value of the subject matter, for purposes of ascertaining what was payable as instruction fees.

38. I have read the Ruling dated June 26, 2019. The claim for fees in that case arose from a case in which a parcel of land was sold by the 1st defendant to the plaintiff. However, after the plaintiff had paid the full purchase price, and had taken possession of the land, the 1st defendant transferred the land to the respondent.

39. In its defence, therespondent averred that it was an innocent purchaser.

40. In 1979 when the plaintiff purchased the land, it was valued at Kshs 5. 5 Million.

41. However, as at 2003, when the respondent bought the land, it was valued at Kshs 63 Million.

42. In my understanding of that case, the subject matter thereof was definitely the parcel of land.

43. It was for that reason that the value of the parcel of land was ascertainable, and that the instruction fees must be calculated based on the value thereof.

44. Based on the decision in the case ofMasore Nyang’au & Company AdvocatesvKensalt Limited(above-cited), the taxing officer held thus;“……..I find that the plaintiff rightly charged the instruction fees on the Market Value of the suit property, which was pegged at the market value of Kshs 18,000,000/= by Crystal Valuers Ltd, who are registered valuers ……….”

45. In my considered opinion that case is distinguishable from the case before me.

46. First, the Plaint makes it clear, at paragraph 3C that;“The dispute on the subject matter herein revolves around a loan amount of Kshs 7,000,000/= that was advanced to the 3rd defendant by the 1st defendant.The suit property that was used as security for the loan has been valued at Kshs 13,000,000/=.”

47. Whilst acknowledging the bank’s right to realize the security if the borrower defaulted, theplaintiff asserted that the bank never gave him any notice, which could have given him an opportunity to regularize the arrears.

48. In the event, the plaintiff challenged the attempt by the bank, to exercise its statutory power of sale.

49. Theplaintiff sought a declaration that she was entitled to the right to redeem her property, which had been charged to secure the loan.

50. She also wanted the court to compel the 2nd defendant to service the loan.

51. It is thus clear that;“By parity of reasoning, the dominant issue in this case was the settlement of amounts owing by the respondents to the applicant, on account of a contractual relationship of a banker and lender.”

52. The foregoing were the words pronounced by Ombwayo J. in his Ruling dated October 1, 2021.

53. I do concur with my learned brother.

54. Accordingly, I hold that the Taxing Officer erred by basing the value of the subject matter upon the Market Value of the security.

55. Therefore, I allow the reference, set aside the award of Kshs 557,500/= as Instruction Fees; and order that the Bill of Costs be taxed afresh, by a taxing officer other than Hon. W.K. Onkunya.

56. Costs of the reference are awarded to the applicant.

DATED, SIGNED AND DELIVERED AT KISUMU THIS 16TH DAY OF JUNE 2022FRED A. OCHIENGJUDGE