[2017] KEHC 9275 (KLR)

REPUBLIC OF KENYA

IN THE HIGH COURT OF KENYA AT NAIROBI

MILIMANI LAW COURTS

COMMERCIAL & TAX DIVISION

MISC. CAUSE NO. 181 OF 2013

IN THE MATTER OF THE ADVOCATES ACT, CHAPTER 16 OF THE LAWS OF KENYA

AND

IN THE MATTER OF TAXATION OF COSTS BETWEEN ADVOCATE AND CLIENT

KAGWIMI KANG'ETHE & CO. ADVOCATES....................APPLICANT

VERSUS

NAIROBI MAMBA VILLAGE LIMITED.........................RESPONDENT

RULING

[1]The application that is the subject of this Ruling is the Chamber Summons dated 9 September, 2016. It was filed pursuant to Paragraph 11(1), (2) and (3)of theAdvocates (Remuneration) Order by the law firm of M/s Kagwimi Kang'ethe & Co. Advocates for the following orders:

[a]That the Court be pleased to review the Ruling and Award of the Taxing Master given on 15 August 2016 by amending the arithmetical and/or clerical errors apparent in the said Ruling.

[b] That the taxed amount be amended to read Kshs. 5,939,773. 92 instead of Kshs. 5,266,973. 92.

[c]That a Certificate of Costs be issued for the said taxed amount of Kshs. 5,939,773. 92.

[d]That the costs of the application be provided for.

[2] The application was premised on the ground that there is an arithmetical mistake or error apparent on the face of the Ruling in the addition of the various figures which were taxed and allowed by the Taxing Master, thereby leading to the wrong result. According to the Applicant, the total taxed and allowed amount should read Kshs. 5,939,773. 92 instead of Kshs. 5,266,773. 92. It was therefore the Applicant's prayer that the error be corrected and a Certificate of Costs be issued that reflects the correct figures.

[3] The application was supported by the affidavit of Advocate George Kang'ethe, filed therewith, together with the documents annexed thereto. He averred that the Applicant filed an Advocate/Client Bill of Costs for services rendered to the Client, Nairobi Mamba Village Limited inHigh Court Civil Case No. 624 of 2005: Nairobi Mamba Village Limited vs. National Bank of Kenya Limited;and that the said Bill of Costs was initially taxed by Hon. D. Nyambu and, in a Ruling dated 24 February 2014, she allowed the Bill in the sum of Kshs. 7,296,974. The Respondent was however dissatisfied with the award and, in consequence thereof, a Reference was filed before Kamau, J. The Reference was heard and determined on 21 July 2015 with the result that it was partially allowed with directions that the Bill be remitted to the Taxing Master for reconsideration, and in particular that Item No. 6 be excluded from the Bill.

[4]It was further averred by the Applicant that the Bill of Costs was accordingly placed before Hon. Elizabeth Tanui on 15 August, 2016 for reconsideration and that, upon taking into account the instructions of the Kamau, J, she taxed and allowed the Bill of Costs in the total sum of Kshs. 5,266,973. 92. However, upon perusing the Ruling on Taxation, he noted that it contained arithmetical and/or clerical errors in the addition of the figures by the Taxing Master. Accordingly, the Applicant applied for the reasons for the taxation vide the letter dated 29 August 2016 with a view of filing a Reference; and upon being advised that the reasons were provided in the Ruling dated 15 August 2016, the Applicant proceeded to file the instant Reference vide the Chamber Summons dated 9 September 2016.

[5]The Respondent opposed the application, and to that end, it filed the following Grounds of Opposition on 8 February 2017:

[a]That the application is misconceived and lacks merit;

[b]There is no error of principle or otherwise to justify interference with the Taxing Master's Award;

[c] The Grounds raised by the Advocate cannot justify the Court's intervention.

On the basis thereof, the Court was urged to dismiss the application dated 9 September 2016 with costs to the Client.

[6] Paragraph 11 of the Advocates (Remuneration) Order, pursuant to which the application was brought, provides that:

"(1) Should any party object to the decision of the taxing officer, he may within fourteen days after the decision give notice in writing to the taxing officer of the items of taxation to which he objects.

(2) The taxing officer shall forthwith record and forward to the objector reasons for his decision on those items and the objector may within fourteen days from the receipt of the reasons apply to a judge by chamber summons, which shall be served on all the parties concerned, setting out the grounds of his objection.

(3) Any person aggrieved by the decision of the judge upon any objection referred to such judge under subparagraph (2) may, with the leave of the judge but not otherwise, appeal to the Court of Appeal."

[7]It accordance with the aforestated provision of the law, the Applicants wrote the letter dated 29 August 2016 (marked Annexure GK5 to the Supporting Affidavit) to the Taxing Master, seeking to be furnished with reasons for the taxation, but was advised, vide the letter dated 7 September 2016, that the reasons were evident in the Ruling on Taxation dated 15 August 2016. The Reference was thus filed on 9 September, 2016; well within the timelines stipulated by Paragraph 11 aforementioned. It is now trite, and no objection was taken in this regard, that where the Ruling on Taxation contains the reasons for the decision of the Taxing Master, it would be superfluous to require reasons in the manner envisaged by Paragraph 11(1) of the Advocates (Remuneration) Order. For instance, in the case of Ahmednassir Abdikadir & Company Advocates vs. National Bank of Kenya Ltd (No. 2) [2006] 1 EA 5, this viewpoint was expressed thus:

"Although rule 11(1) of the Advocates Remuneration Order stipulates that any party who wishes to object to the decision of the taxing officer should do so within 14 days from the date of the receipt of the reasons, where the reasons for the taxation on the disputed items in the bill are already contained in the considered ruling, there is no need to seek for further reason simply because the unfortunate wording of Sub-rule (2) of Rule 11 of the Advocates Remuneration Order demands so. The said rule was not intended to be ritualistically observed even when reasons for the disputed taxation are already contained in the formal and considered ruling."

[8] Thus, having considered the application, the affidavits filed in respect thereof as well as the written submissions and the court record, there are only two issues for my determination, namely:

[a] Whether an arithmetical error is a proper subject of reference to the High Court from the decision of a Taxing Master;

[b]Whether there is indeed an arithmetical error herein and if so, whether it amounts to an error of principle to warrant the intervention of the Court.

[9] There is no gainsaying that taxation of costs is governed by a special and complete code whose purpose was well explicated by Ringera, J as he then was in Machira vs Magugu [2002] 2 EA 428 thus:

"...the Advocates Remuneration Order is a complete code and there is no provision for the invocation of the Civil Procedure Rules. It does not provide for an appeal from any sort of decision by the taxing officer and indeed Order XLII of the Civil Procedure Rules is clear that appeals lie either as of right or with leave from orders made under the Civil Procedure Rules. No mention is made of orders made under the Advocates Remuneration Order. And it is a basic principle of procedural law that appeals to the High Court lie only where a right of appeal has been conferred by statute. Secondly, ... any complaint about any decision of the taxing officer whether it relates to a point of law taken with regard to taxation or to a grievance about the taxation of any item in the bill of costs is ventilated by way of a reference to the Judge in accordance with paragraph 11 of the Advocates Remuneration Order..."

[10]The foregoing viewpoint was, on appeal, upheld by the Court of Appeal in Machira & Co. Advocates vs. Arthur K. Magugu & Another [2012] eKLRthus:

"With regard to advocates' bills of costs, we agree with the decision of Ringera, J (as he then was) in Machira vs Magugu [2002] 2 EA 428 that the Advocates Remuneration Order is a complete code which does not provide for appeals from taxing master's decisions. Rule 11 thereof provides for ventilation of grievances from such decision through references to a judge in chambers. The effect may be viewed as an appeal or a review but these being legal terms in respect of which different considerations apply, they should not be loosely used. Appeals require the typing of proceedings, compiling records of appeal and hearing of the same in open court. Reviews, however, would require provisions akin to those inSection 80 of the Civil Procedure Act of discovery of new and important matters, errors on the face of the record and so on. In our view the Rules Committee intended to avoid all that and provide a simple and expeditious mode of dealing with decisions on advocates' bills of costs through references under Rule 11 to a judge in Chambers..."

[11] In the premises, the only avenue available for a party who is aggrieved with the decision of a Taxing Officer is to approach the High Court under Paragraph 11 of the Advocates (Remuneration) Order, whether the matter is in the nature of appeal or one that involves an error on the face of the record, as is alleged herein. Accordingly, I have no hesitation in holding that the application is competently before the Court and that the error sought to be corrected is one that directly arises out of the taxation exercise and therefore falls within the strictures of Paragraph 11 of the Advocates (Remuneration) Order.

[12]As to whether the orders sought are warranted, the Applicant's argument was simple, that there is an arithmetical mistake/error on the face of the Ruling of the Taxing Master dated 15 August 2016. The relevant excerpt of Ruling of the Taxing Master is as hereunder:

"...this matter is before me for reconsideration of item No. 6 of the Applicant's Bill of costs dated 22nd May 2013. ..I have considered the ruling delivered herein by the Judge on 21st July 2015. ..The Judge ordered that the Taxing master ought to reconsider Item No. 6 of the Applicant's bill of costs with a view of issuing a certificate of costs bearing the correct figure of the taxed costs. In the light of the Judge's finding that Item No.6 was not allowable, the issue before me is therefore purely on arithmetic. I will add the amount of Kshs. 1,170,000 to the amount of Kshs. 6,098,384 taxed off from the Applicant's bill of costs dated 22nd May 2013. The said Bill of costs therefore works out as follows:

Amount of the Bill - Kshs. 12,604,396

Amount taxed off - Kshs. 7,848,384

Subtotal - Kshs. 4,756,012

Add 16% VAT - Kshs. 760,962

Subtotal - Kshs. 5,516,973. 92

Less amount paid - Kshs. 250,000

Total - Kshs. 5,266,973. 92

The upshot of the above is that the bill of costs dated 22nd May 2016 is taxed at Kshs. 5,266,973. 92. An amount of Kshs. 9,104,125. 44 is taxed off."

[13] The Applicant contends that the Taxing Master had it all wrong, as the figures, based on her reasoning, ought to have been as hereunder:

Amount of the Bill - Kshs. 12,604,396. 00

Amount taxed off - Kshs. 7,268,384. 00

Subtotal - Kshs. 5,336,012. 00

Add 16% VAT - Kshs. 853,761. 92

Subtotal - Kshs. 6,189,773. 92

Less amount paid - Kshs. 250,000. 00

TOTAL - Kshs. 5,939,773. 92

[14] Counsel for the Respondent, on their part supported the decision of the Taxing Master arguing that, since Item No. 6 of the Bill, namely, Kshs. 1,750,000, was to be taxed off, the amount taxed off by Hon. Nyambu, that is Kshs. 6,098,384. 00 was to increase to Kshs. 7,848,384. 00. This however is fallacious for two reasons. Firstly, in her Ruling dated 24 February 2014, Hon. Nyambu had already reduced Item No. 6 to Kshs. 1,170,000, thereby taxing off an amount of Kshs. 580,000. To reduce the Applicant's Bill by the sum of Kshs. 1,750,000 would be clearly erroneous as it would expose the Applicant to double jeopardy, as it were. Secondly, in her Ruling Hon. Tanui did recognize that what needed to be added to the taxed off sum, in keeping with the Ruling of Kamau J, was only Kshs. 1,170,000. 00, and therefore, had she worked with that figure, she would have returned the sum proposed by the Applicant, granted that the total taxed off sum would have beenKshs. 7,268,384. 00 and not Kshs. 7,848,384. 00.

[15] I am therefore satisfied that the Taxing Master misdirected herself in the foregoing respect and that that misdirection amounts to an error of principle for the purposes of Paragraph 11 of the Advocates (Remuneration) Order,noting that it has the effect of denying the Applicant a substantial amount in terms of costs that was otherwise earned by the firm. In this regard, I find instructive the following expressions of the Court of Appeal in the case of Kamunyori & Co. Advocates vs. Development Bank of Kenya Limited [2015] eKLR:

"Failure to ascertain the correct subject matter in a suit for the purpose of taxation is an error of principle. So too, failure to ascribe the correct value of the subject matter is an error of principle. Authorities on taxation show that a Judge will normally not interfere with the Taxing Officer's decision on taxation unless it is based on an error on principle..."

[16] By parity of reasoning, failure to arrive at the correct figure by reason of arithmetic or computational error is, in my view, an error of principle, as its effect would be to either accord a party of sums that are not earned or deprive a party of just sums that are due on taxation. It is my resultant finding, therefore, that the Plaintiff's Reference is meritorious and the same is hereby allowed and orders issued as hereunder:

[a]That the Ruling and Award of the Taxing Master given on 15 August 2016 be and is hereby reviewed by amending the arithmetical and/or clerical error apparent in the said Ruling by substituting the amount taxed off, namely Kshs. 7,848,384. 00 with Kshs. 7,268,384. 00.

[b]That the taxed amount be and is hereby amended to read Kshs. 5,939,773. 92 instead of Kshs. 5,266,973. 92.

[c]That a Certificate of Costs be issued for the said taxed amount of Kshs. 5,939,773. 92.

[d]That the costs of the application be borne by the Respondent.

It is so ordered.

DATED AND SIGNED AT NAIROBI THIS 12TH DAY OF SEPTEMBER, 2017

OLGA SEWE

JUDGE