[2022] KEHC 17107 (KLR)

Kenya Orient Insurance Company Limited v Nduati & Co Advocates (Miscellaneous Application E027 of 2021) [2022] KEHC 17107 (KLR) (6 May 2022) (Ruling)

Neutral citation: [2022] KEHC 17107 (KLR)

Republic of Kenya

In the High Court at Voi

Miscellaneous Application E027 of 2021

MN Mwangi, J

May 6, 2022

Between

Kenya Orient Insurance Company Limited

Client

and

Nduati & Co Advocates

Advocate

(Being a Reference from taxation of a bill of costs and the ruling thereof by Hon. C. Kithinji, Deputy Registrar, dated 3rd November, 2021 in Voi High Court Miscellaneous Application No. E011 of 2021)

Ruling

1. The applicant filed the reference herein by way of a Chamber Summons dated 11th November, 2021 brought under the provisions of Section 48 of the Advocates Act, Cap 16 Laws of Kenya, Paragraphs 11(1) & (2), Paragraphs 49, 50 and Schedule 5 (Part II) of the Advocates Remuneration Order, and Sections 1A, 1B & 3A of the Civil Procedure Act. The applicant seeks the following orders-i.That the Court be pleased to set aside the ruling of the Taxing Officer delivered on 3rd November, 2021;ii.That the Court be pleased to review downwards or tax afresh the applicant’s bill of costs dated 27th July, 2021; andiii.That the costs of the application be provided for.

2. The application is anchored on the supporting affidavit sworn on 11th November, 2021 by Mr. Mcmillan Jengo, who deposed that the Taxing Officer erred in law and fact when he held that an election to have the bill of costs taxed under Schedule 5 of the Advocates Remuneration Order had been duly communicated to the applicant when no evidence was adduced and no Affidavit of Service was provided in the bundle of documents to prove there was service of the requisite notice under Paragraph 22 of the Advocates Remuneration Order.

3. He also averred that the Taxing Officer failed to apply Schedule 7 of the Advocates Remuneration Order under Paragraph 49 of the said Order when taxing a contentious matter.

4. It was further averred that Taxing Officer misapprehended the evidence, misapplied, and misunderstood the legal principles and judicial precedent by using the Judgment amount inclusive of costs and interest as the award other than using the principal amount, which led to taxing the bill of costs at an inordinately high amount of Kshs. 359,051. 80 for a Judgment award of Kshs. 464,707. 00.

5. The applicant prayed for the Taxing Officer’s decision be set aside and for the bill of costs to be re-adjusted, or re-assessed and or sent back for re-taxation.

6. The respondent opposed the reference through a replying affidavit sworn on 26th November, 2021 by Stanley Nduati Advocate. He deposed that the instant application is mala fides and its sole aim is to vex the respondent and delay him from enjoying the fruits of taxation, which are imminent. He further averred that the reference as filed is incurably defective for want of compliance with Order 11 Rule 1 of the Advocates Remuneration Order.

7. He deposed that the applicant had not identified any error in principle by the Taxing Officer to warrant interference with the decision. He stated that it is clear that the gist of the reference is the mere dissatisfaction with the quantum which is not a ground for interfering with the discretion of the Taxing Officer, since taxation is not a mathematical exercise but is the opinion of the Taxing Officer based on experience, which this Court should be slow in interfering with.

8. Mr. Nduati averred that the applicant was served with a Notice of Election to proceed under Schedule 5 Part II of the Advocates Remuneration Order, simultaneously with the bill of costs. He stated that the same was evidenced by the Affidavit of Service filed by Agatha Peter, a Process Server. The respondent also averred that the issue of service was never raised in the applicant’s submissions during taxation, despite the respondent having filed submissions first, and indicated in the said submissions the issue of election of Schedule 5 Part II of the Advocates Remuneration Order.

9. It was also stated that the Taxing Officer has the discretion to consider and tax any such items not provided for under Schedule 5 Part II of the Advocates Remuneration Order, and that this Court should only interfere with the Taxing Officer’s decision, after it is satisfied that the error substantially affected the decision on quantum and that upholding the amount allowed would cause injustice to one of the parties.

10. The application was canvassed by way of written submissions: The applicant’s submissions were filed on 7th February, 2022 by the law firm of Jengo Associates Advocates while the respondent’s submissions were filed on 1st March, 2022 by the law firm of Nduati & Co. Advocates.

11. Mr. Jengo, learned Counsel for the applicant identified three issues for determination being: whether election of applicable Schedule in taxation notice was served; whether the award was inordinately high and whether the Taxing Officer misapprehended the guiding principles of taxation.

12. On whether the Notice of Election of the applicable Schedule was served upon the applicant, Mr. Jengo submitted that no proof was provided of the respondent having filed a Notice of Election and/or having informed the client of his election of Schedule 5. He submitted that failure to file a Notice of Election and serve the same upon a client negates the election and the same is contrary to Paragraph 22(1) of the of the Advocates Remuneration Order.

13. He also submitted that Schedule 5 of the said Order is framed in such a manner as to suggest that it is strictly for matters not provided for in the other Schedules and that it is not for matters that an Advocate in his decision believes that the other Schedules provide for a lesser amount of costs. He stated that there was an error in principle when the Taxing Officer in her ruling oscillated from one Schedule to the other and as a result, price shopping is evident in items 7, 19, 40, 41, 44, 46, 48, and 50 of the said ruling.

14. Mr. Jengo further submitted that the Taxing Officer made an assumption that the Election Notice had been served when service of the same had not been effected.

15. On whether the award was inordinately high, he submitted that the amount of Kshs. 359,051. 80 awarded to the respondent herein was more than 77% of the Judgment sum, which is Kshs. 464,707. 00. He stated that the same was excessive as to render injustice to the client seeing as there is already a provision within the Advocates Remuneration Orderfor such costs to be increased by 50%.

16. It was submitted that the bill of costs which was taxed was an Advocate/Client bill and not a party & party bill of costs. He stated that there was no legal basis for increasing the bill of costs by 50%, as the party and party costs had not been taxed. He cited the decision in Mumias Sugar Company Limited v Proffessor Tom Ojienda & Associates [2019] eKLR to support his submission.

17. Mr. Jengo also submitted that the Taxing Officer never considered the elements provided for within Schedule 5 of the Advocates Remuneration Order, which is a clear error in principle as was held inKipkorir, Titoo & Kiara Advocates v Deposit Protection Fund Board [2005] eKLR, where the Court of Appeal stated that if a Taxing Officer fails to apply the formula for assessing instruction fees or costs or fails to give due consideration to all relevant circumstances of the case, that would amount to an error in principle.

18. Mr. Nduati, learned Counsel for the respondent submitted that from the Court record, it is clear that the Advocate filed contemporaneously with his bill of costs, a Notice of Election to proceed under Schedule 5 Part II of the Advocates Remuneration Order, which Notice was served upon their client together with the bill of costs as evidenced in the Affidavit of Service by Agatha Peter, a Process Server. He stated that the issue of election to proceed was also captured in the respondent’s submissions before the Taxing Officer, and that the Counsel for the client never raised any objection and/or raised the issue of non-service of the requisite notice under Rule 22 of the Advocates Remuneration Order at the taxation stage. He submitted that the applicant was estopped from raising such an issue from the Bar at the reference stage, as parties are bound by their own pleadings. Mr. Nduati relied on the decision in Mutisya & Co. Advocates vs Lazaro Omita Nyago [2004] eKLR, to support his submission.

19. On whether the applicant has made a good case for issuance of the orders sought, he submitted that the client (applicant) is simply vexing the Advocate (respondent) with the sole aim of maintaining the status quo ante, and delaying him from enjoying the fruits of the taxation, since a grievance on the quantum awarded is not a ground for a reference at all as the Court properly seized does not review Judgment simply because a losing party is unhappy. He relied on the case of Daniel Lago vs Safari Park Hotel & another [2018]eKLR, to support his submission.

20. On the submission made by Mr. Jengo to the effect that that the taxed sum of Kshs. 359,051. 80 for a Judgment award of Kshs. 464,707. 00 was excessive, Mr. Nduati stated that the said submission by the applicant was speculative and misplaced in law, for taxation of costs is not a mathematical exercise and it is entirely based on experience. He relied on the decision in Premchand Raichand Ltd & another (1972) EA 162.

21. In regard to the instruction fee, Mr. Nduati submitted that the applicable rule in Schedule 7 of the Advocates Remuneration Order, 2014 as modified by Legal Notice No. 5 of 2014 is that 50% is added to the instruction fees under Schedule 7 Part B of theAdvocates Remuneration Order, 2014, hence the Taxing Officer was right in her assessment of instruction fees.

Analysis And Determination. 22. I have considered the applicant’s reference as well as the rival affidavits. I have also considered the submissions of the Counsel on record. In Voi High Court Miscellaneous Application No. E011 of 2021, the Taxing Officer assessed the Advocate-Client bill of costs at Kshs. 359,051. 80. The issue for determination is whether there are sufficient grounds to warrant interference with her decision.

23. The respondent has submitted that he filed the bill of costs under Schedule 5 of the Advocates Remuneration Orderand elected to use the said Schedule in accordance with Paragraph 22(2) of the said Order, and that the election was duly communicated to the applicant as evidenced in the affidavit of service by Agatha Peters filed in Court on 2nd December, 2021 and which the applicant never rebutted.

24. The applicant’s main complaint on the other hand is that the Taxing Officer exercised her discretion unreasonably, unfairly, and applied the wrong principles by applying Schedule 5 to the bill of costs, yet the Notice of Election was never served upon the applicant as required under Paragraph 22(2) of the Advocates Remuneration Order, which allows an Advocate to opt out of a Schedule and to make an election to be remunerated wholly under Schedule 5, and the only condition set is that the Advocate must notify the client in advance or at the time of filing of its bill of costs, which was not done in this case.

25. The applicable law is found at Paragraph 22(1) & (2) of the Advocates Remuneration Order, which provides as hereunder-(1)In all cases in which any other Schedule applies, an advocate may, before or contemporaneously with rendering a bill of costs drawn as between advocate and client, signify to the client his election that, instead of charging under such Schedule, his remuneration shall be according to Schedule 5, but if no election is made his remuneration shall be according to the scale applicable under the other Schedule.(2)Subject to paragraph 3, an advocate who makes an election under subparagraph (1) of this paragraph may not by reason of his election charge less than the scale fee under the appropriate Schedule.”

26. In Mutisya & Co. Advocates vs Lazaro Omita Nyago (supra), the Court stated as follows on the option available to Advocates in taxation of a bill of costs-“The court considering both views above concluded that for any items that costs fell to be paid but were not provided for under Schedule VII, they were properly put forth under Schedule V and the taxing officer was obliged to consider them and tax according to her discretion as such and not strike them out altogether. Paragraph 22 applies when an advocate knowing that there exists a Schedule under which his remuneration ought to be charged opts out of it altogether and elects/decides instead to get remunerated wholly under Schedule V. In such a case he will notify his client in advance or at the same time as he files his bill of costs.” (emphasis added).

27. In the case of Nyangito & Co. Advocates vs Doinyo Lessos Creameries Ltd [2014] eKLR, the Court laid down the principles under which a Judge of the High Court may interfere with the Taxing Officer’s decision. The said principles are as set out hereunder -1)That the Court cannot interfere with the Taxing Officer’s decision on taxation unless it is shown that either the decision was based on an error of principle or the fee awarded was manifestly excessive as to justify an inference that it was based on an error of principle.2)It would be an error of principle to take into account irrelevant factors or to omit to consider relevant factors and, according to the Remuneration Order itself, some of the relevant factors to be taken into account include the nature and importance of the cause or matter, the amount or value of the subject matter involved; the interests of the parties, the general conduct of the proceedings and any direction by the Trial Judge; and3)If the court considers that the decision of the Taxing Officer discloses errors of principle, the normal practice is to remit it back to the Taxing Officer for reassessment unless the Judge is satisfied that the error cannot materially have affected the assessment.

28. This is a matter in which the applicant has disputed service. The Affidavit of Service in question indicated the dates, times and the mode through which service was effected. If the applicant disputed the averments in the said Affidavit of Service, then he ought to have summoned the Process Server for cross-examination in order to challenge the averments made by said Process Server.

29. In the case of Shadrack Arap Baiywo v Bodi Bach [1987] eKLR, the Court of Appeal held as follows-“There is a presumption of services as stated in the process server’s report, and the burden lies on the party questioning it, to show that the return is incorrect. But an affidavit of the process server is admissible in evidence and in the absence of contest it would normally be considered sufficient evidence of the regularity of the proceedings. But if the fact of service is denied, it is desirable that the process server should be put into the witness box and opportunity of cross examination given to those who deny the service.” (emphasis added).

30. In this instance, it is my finding that the Notice of Election under Paragraph 22(2) of the Advocates Remuneration Order was duly served upon the applicant as evidenced by the copy of the Affidavit of Service annexed to the respondent’s replying affidavit sworn on 26th November, 2021. For the said reasons, this Court is satisfied that the Taxing Officer did not err in principle in her decision by upholding the election of Schedule 5 of the Advocates Remuneration Order by the Advocate/respondent.

31. On the issue of whether the fee awarded was manifestly excessive as to justify an interference and that the award was based on an error of principle, this Court is guided by the principles enumerated in Nyangito & Co. Advocates vs Doinyo Lessos Creameries Ltd (supra). It is an established principle that the Taxing Officer has discretion while handling taxation matters. Such discretion must however be exercised fairly, judiciously and in the wider interest of justice. In addition, such discretion cannot be interfered with unless it is shown that that the Taxing Officer’s decision on taxation was based on an error of principle or the fee awarded was manifestly excessive so as to justify an inference that it was based on an error of principle.

32. InJoreth Ltd v Kigano & Associates [2002] eKLR, the Court of Appeal in setting aside the order of the High Court which had reassessed the instruction fee allowed by the Taxing Officer and stated as follows-“What the learned Judge did not appreciate, was that sitting on a reference against the assessment of instructions fee by the taxing officer he ought not to have interfered with the assessment of costs unless the taxing officer had misdirected himself on a matter of principle.”

33. In this case, having found that a Notice of Election under Paragraph 22(1) of the Advocates Remuneration Order was filed in Court and duly served upon the applicant in accordance with the law, then the applicable Schedule during taxation was Schedule 5 of the Advocates Remuneration Order and not any other Schedule in the said Order.

34. It is apparent from the Taxing Officer’s ruling that the law as set out in Paragraph 22 was disregarded as the applicant’s election was not adhered to. I say so because in arriving at the taxation of item Nos. 7, 11, 13, 25, 31, 35, 38, 42 & 48 relating to service of process and item Nos. 19, 27 and 33 on attendance, the Taxing Officer applied Schedule 7 of the Advocates Remuneration Order, 2014, yet the respondent herein had elected that instead of charging under such Schedule 7, his remuneration shall be in accordance with Schedule 5. The Taxing Officer however proceeded to tax some of the items on the bill of costs under Schedule 7. I hold that the Taxing Officer was bound by the law and had no power to oust an Advocate’s election that had been exercised in accordance with the law.

35. It is worth noting that if at all an item is not provided for in Schedule 5 of the Advocates Remuneration Order, 2014 then the said item ought to be catered for in the instruction fees as provided under Paragraph 1 of Part II of Schedule 5 of the said Order which provides as follows -“InstructionsSuch fee for instructions as, having regard to the care and labour required, the number and length of the papers to be perused, the nature or importance of the matter, the amount or value of the subject matter involved, the interest of the parties, complexity of the matter and all other circumstances the case, may be fair and reasonable, but so that due allowances shall be given in the instruction fees for other charges raised under this Schedule.”

36. In Kipkorir Titoo & Kiara Advocates v Deposit Protection Fund C.A. No. 220/2004 U.R., the Court of Appeal held:“We have no doubt that if the taxing officer fails to apply the formula for assessing instructions fees or costs specified in Schedule VII or fails to give due consideration to all relevant circumstances of the case………. that would be an error in principle. And if a judge on reference from the taxing officer finds that the taxing officer has committed an error of principle, the general practice is to remit the question of quantum for the decision of taxing officer. The judge has however, a discretion to deal with the matter himself if the justice of the case so requires.”

37. On the issue of addition of 50% of the instruction fees to the bill of costs, the Court in Mumias Sugar Company Limited v Proffessor Tom Ojienda & Associates (supra) stated as follows-37. Finally, I hold that the learned taxing officer erred in principle, when she added 50% to the sum she had calculated. This is an Advocate/Client Bill of Costs. The taxing officer should have decided on the quantum which was being awarded through taxation, and should have stated that figure.38. It is only when Party & Party Costs have been taxed that the taxing officer may determine the related Advocate/Client costs by adding 50% to the Party & Party Costs.39. For all the reasons given above, I find that the decision of the learned taxing officer cannot be upheld. I therefore order that the said decision be set aside forthwith.”

38. In the light of the decisions cited in this ruling and the analysis made, as well as the fact that the Taxing Officer increased the bill of costs by 50%, I hold that the application of the wrong Schedule in the taxation of the costs was an error of principle, which calls for interference with the discretion of the Taxing Officer.

39. In the result, I make the following orders-i.The reference dated 11th November, 2021, is meritorious and it is hereby allowed;ii.The Taxing Officer is found to have applied the wrong principles in taxing the bill of costs on items Nos. 7, 10, 12, 24, 31, 34, 37, 41 & 47 relating to service of process and item Nos. 18, 26 and 32 on attendance;iii.The decision of the Taxing Officer dated the 3rd November, 2021 is hereby set aside;iv.The bill of costs is hereby referred back to the Taxing Officer for re-taxation in its entirety; andv.Costs are awarded to the applicant.

It is so ordered.

DATED, SIGNED AND DELIVERED AT MOMBASA ON THIS 6TH DAY OF MAY, 2022. RULING DELIVERED THROUGH TEAMS ONLINE PLATFORM.NJOKI MWANGIJUDGEIn the presence of:Ms Julu for the client/applicantMs Monda h/b for Mr. Nduati for the Advocate/respondentMr. Oliver Musundi – Court Assistant.