[2022] KEHC 550 (KLR)

Kisia v Lubulella and Associates Advocates (Miscellaneous Application E1059 of 2020) [2022] KEHC 550 (KLR) (Commercial and Tax) (5 May 2022) (Ruling)

Neutral citation: [2022] KEHC 550 (KLR)

Republic of Kenya

In the High Court at Nairobi (Milimani Commercial Courts Commercial and Tax Division)

Commercial and Tax

Miscellaneous Application E1059 of 2020

JN Mulwa, J

May 5, 2022

Between

Patrick Sagwa Kisia

Client

and

Lubulella and Associates Advocates

Applicant

Ruling

1. Before the court for consideration are two applications. The first one is the Client’s Reference brought by way of a Chamber Summons dated 22nd November, 2021 while the second is the Advocates Notice of Motion dated 25th November, 2021. The two applications arise from the Deputy Registrar’s ruling dated 8th November, 2021 in respect to the Advocate-Client Bill of Costs dated 16th September, 2020.

The Client’s Reference: Ist Application. 2. The Client’s Reference was brought under Rule 11(2) of the Advocates Remuneration Order 2014 and Section 3A Civil Procedure Act. It seeks the following orders That;1. Spent.2. The decision of the taxing master made on 8th November 2021 taxing the bill of costs dated 16th September 2020 in the sum of Kshs. 5,788,537. 40 be set aside.3. This Honorable court be pleased to reassess the fees in respect to the Advocates-Client Bill of costs dated 16th September 2020 taxed at Kshs. 5,788,537. 40 on 8th November 2021 and make a finding on the same.4. In the alternative and without prejudice to the foregoing, the costs be taxed afresh before a different taxing master.5. The costs of this application be awarded to the applicant.

3. The application is supported by the Client’s Affidavit and based on the grounds that the Bill arose from the proceedings in Nairobi HCCC No. 60 of 2016: Patrick Sagwa Kisia t/a Steg Consultants v Kay Construction Company Limited where the client had instructed the Advocates to represent him. In the subject suit, the Client claimed a sum of Kshs. 142,234,965. 60 from the defendant together with interest and costs. That the taxing master committed a grave error of principle by using the said amount as the value of the subject matter for purposes of calculating instruction fees in the Bill, yet the said amount is just but a moving target which cannot be ascertained until the suit is concluded. That the taxing master committed an error of principle by failing to take into account the relevant factors to be considered in assessing instruction fees. That the taxed amount of Kshs. 5,788,537. 00 awarded by the taxing master is unreasonably high considering that there were no evidence demonstrating the complexity of the matter or the care and labor involved.

4. The Advocates responded to this application vide Grounds of Opposition dated 3rd February 2022 and Replying Affidavit sworn by Eugene Lubale Lubulellah on 23rd March, 2022, stating that the Client had failed to lay any legal or factual basis for the orders sought as he had not demonstrated that either the decision was based on an error of principle, or the fees awarded was manifestly excessive.

5. Further,it was deponed that the taxing officer took into consideration only relevant factors and legal principles in taxing the bill of costs; That the instruction fees was based on the monetary value of the subject matter of the suit which was aptly disclosed in the Plaint; That the Taxing Master in fact awarded the Advocate less than the basic allowable instruction fees as would have been awarded if based on the monetary sums claimed and pleaded by the Client; That the Client failed to await for the reasons for the taxing master's exercise of discretion in arriving at the instruction fees, before filing the Reference. It is the Advocates contention that the full instruction fees to prosecute or defend a suit are earned the moment a Plaint or Defence is filed and the subsequent progress of the matter is irrelevant to that item of fees, and that any errors by the taxing officer as may be found, did not materially affect the assessment.

6. The Advocates further aver that the matter was extremely complex and entailed the perusal of copious documents coupled with the preparation of the necessary pleadings, correspondences, court and registry attendances, all being time-consuming exercises. Lastly, the Advocates state that the judgment was delivered in the subject suit on 25th March 2022, and the client was awarded Kshs. 142,234,965. 60 hence the Client's reference is unmerited and should be dismissed.

The Advocates Application 7. On the other hand, the Advocates Notice of Motion was brought under Section 51 of the Advocates Act; Rule 13A of the Advocates Remuneration Rules; Section 3A and 63(e) of the Civil Procedure Act and Order 41 Rule 1 of the Civil Procedure Rules. The Advocates seek the following orders: -1. That the Court be pleased to enter Judgment against the Respondent on the amount of Kshs. 5,788,537. 00/- certified on the Certificate of Taxation herein dated 17th November, 2021, together with interest at the rate of 14% per annum from 24th August 2020 until payment in full.2. That a Decree issues in respect of the sum of Kshs. 5,788,537. 00/- certified on the Certificate of Taxation dated 17th November, 2021, together with interest at the rate of 14% per annum from the 24th August 2020 until payment in full, and that the Applicant be at liberty to execute for recovery of same in such manner as a Decree of this Honourable Court.3. That the costs of this application be provided for.

8. The application is supported by the Affidavit of Eugene Lubale Lubulellah and premised upon the grounds that the Bill was taxed and a Certificate of Taxation issued; that the Advocates wish to proceed and realize the costs taxed by way of execution hence judgment and Decree are required therefrom; and that it is just and fair that the orders sought be granted.

9. In opposition, the Client filed a Replying Affidavit sworn on 17th December, 2021. He averred that by filing the said above Reference application, the Certificate of Taxation automatically stands as challenged and cannot be enforced until the Reference has been heard and determined.

Analysis and Determination 10. The Court has carefully analyzed both applications, the Affidavits, the parties’ rival arguments and authorities cited. The issues that present themselves for determination, in my view are:1. Whether there is a competent reference before this court.2. Whether the Advocate’s application is merited.3. Who should bear the costs of the applications.

1. Whether there is a competent reference before this court? 11. The Advocates contended that this court has no jurisdiction to entertain the instant reference as the Client failed to lodge a Notice of Objection to Taxation within 14 days of the Taxing Master's decision contrary to the mandatory requirements of Rule 11(1) of the Advocates Remuneration Order. The Advocates asserted that compliance with this requirement is not a mere technicality. In the Advocates view, the Client’s conduct of circumventing the process by filing a substantive Reference without first taking the essential step of lodging a Notice of Objection to Taxation is akin to a litigant proceeding to file a Record of Appeal before filing a Notice of Appeal which is the instrument that invokes the appellate jurisdiction of the court.

12. Further, the Advocates faulted the Client for filing the instant reference before sending a request for reasons to the Deputy Registrar/Taxing Master and waiting to receive a response thereto. To the Advocates therefore, the Reference should be struck as being incompetent and fatally defective. The Advocates relies on the following cases to support their position: Tranquility Development Limited v Andrew Barney Khakula t/a J.S. Khakula & Co Advocates[2017] eKLR, Matiri Mburu & Chepkemboi Advocates v Occidental Insurance Company Limited[2017] eKLR, Machira & Co Advocates v Arthur K. Magugu & Margaret Wairimu Magugu [2012] eKLR and Daly & Figgis & Company Advocates v Karuturu Networks Ltd & Another [2009] eKLR.

13. On the other hand, the Client submitted that the provisions of Rule 11(1) of the Advocates Remuneration Order are not couched in mandatory terms. He submitted that the notice of objection envisaged under Rule 11 can take varied forms as long as the intention to object is well spelt out. In his view therefore, the jurisdiction of this honourable court has been correctly invoked by filing a valid and proper reference.

14. The procedure for challenging the results of a taxation is provided under Rule 11 of the Advocates Remuneration Order which stipulates as follows: -“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 the 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 subsection (2) may, with the leave of the judge but not otherwise, appeal to the Court of Appeal.

4. The High Court shall have power in its discretion by order to enlarge the time fixed by subparagraph (1) or subparagraph (2) for the taking of any step; application for such an order may be made by chamber summons upon giving to every other interested party not less than three clear days’ notice in writing or as the Court may direct, and may be so made notwithstanding that the time sought to be enlarged may have already expired.”

15. It is not in dispute that the Client did not file the Notice of Objection to taxation contemplated under Rule 11(1) above but instead jumped straight into filing the Reference under Rule 11(2). The Client’s justification for the same is that this was not a mandatory requirement. I find this argument erroneous because it is the said Notice that sets in motion the jurisdiction of this court to deal in taxation disputes. In OJSC Power Machines Limited, Trancentury Limited, and Civicon Limited (Consortium) v Public Procurement Administrative Review Board; Kenya Electricity Generating Company Limited & another (Interested Parties) [2019] eKLR Nyamweya J. aptly stated that:“12. The provisions of Rule 11 of the Advocates’ Remuneration Order contemplate a notice in writing requesting for reasons of the Taxing Officer’s decision on taxation of specified items of the Bill of Costs, and upon receipt thereof, an application commonly referred as a reference to a judge, setting out the grounds of objection to the taxation. The 1st Interested Party did not dispute that no such notice was given to the Taxing Officer. It is my view that even though the requirement of giving notice to the Taxing Officer of items objected to is not couched in mandatory terms, it is necessary for purposes of ensuring the necessary timelines are observed, and that such references are filed and heard timeously.”

16. Further, in Matiri Mburu & Chepkemboi Advocates v Occidental Insurance Company Limited[2017] eKLR, Meoli J. while confronted with a similar situation noted that:“4. Paragraph 11 (1) of the Remuneration Order requires a party seeking reasons for a taxation decision to give notice of the items of taxation to which the party objects which requirement was evidently not complied with in this case. Until the reasons sought under Paragraph 11 (2) of the Remuneration Order, are furnished the period of 14 days as contemplated therein does not begin to run…

6. In my own view the provisions of paragraph 11 of the Remuneration Order serve several purposes. Firstly the requirement that a party seeking reasons gives notice of items objected to, serves to narrow down the issues, and secondly, give notice to the adverse party and the taxing master of his objection. Thus the taxing master, adverse party and ultimately the reference court in their respective roles can focus on the specific matter objected to rather than entire bills of costs, which often run into several pages.

7. The objective is obvious: the expeditious disposal of taxation disputes. Thus compliances with the requirements of paragraph 11 of the Remuneration Order is not a mere technicality that can be pushed aside peremptorily as the Applicant appears to suggest. The provisions of Article 159 (2) (d) of the Constitution were not intended to overthrow procedural or technical requirements, but to guard against “undue regard” to procedural technicalities in the administration of justice.”

17. From the above authorities, it is evident that the notice of objection required to be given to the Taxing Officer is not just a mere technicality but a mandatory/necessary step in challenging the decision of a taxing officer. In the premises, I hold and find without a doubt that the Client did not properly invoke this Court’s jurisdiction to address or determine the issues raised in the Reference filed herein. The Reference is therefore incompetent, incurably defective and a non-starter. For that reason, the court will not venture into the merits of the Reference as filed. It is hereby struck out.

2. Whether the Advocate’s application is merited. 18. Having found that there is no competent Reference filed by the Client, it follows that there is no ground for setting aside or altering the decision of the Taxing Officer dated 8th November 2021. Section 51(2) of the Advocates Act which gives this court the mandate to enter judgment for the taxed costs provides:“The certificate of the taxing officer by whom any bill has been taxed shall, unless it is set aside or altered by the Court, be final as to the amount of the costs covered thereby, and the Court may make such order in relation thereto as it thinks fit, including, in a case where the retainer is not disputed, an order that judgment be entered for the sum certified to be due with costs."

19. In Lubulellah & Associates Advocates v NK Brothers Limited[2014] eKLR the Court stated as follows-“The law is very clear that once a taxing master has taxed the costs, issued a Certificate of costs and there is no reference against his ruling or there has been a ruling and a determination made and not set aside and/or altered, no other action would be required from the court save to enter judgment. An applicant is not required to file suit for the recovery of costs. The certificate of costs is final as to the amounts of the costs and the court would be quite in order to enter judgment in favour of the Applicant against the Respondent herein for the taxed sum indicated in the Certificate of Taxation ...”

20. Given that the Certificate of Taxation dated 17th November, 2021 has not been set aside by this court, the court hereby enters judgment in favour of the Advocates as against the Client for the sum of Kshs. 5,788,537. 40.

21. As regards interest on the taxed costs, the Advocate submitted that the same should be awarded at the rate of 14% per annum from 30th September, 2020. Rule 7 of the Advocates Remuneration Order stipulates as follows regarding the interest chargeable:“An advocate may charge interest at 14% per annum on his disbursements and costs, whether by scale or otherwise, from the expiration of one month from the delivery of his bill to the client, providing such claim for interest is raised before the amount has been paid or tendered in full.”

22. According to the Affidavit of Service on record, the Advocates-Client Bill of Costs dated 16th September, 2020 was served on the Client on 22nd September, 2020. The one month envisaged in Rule 7 of the Advocates Remuneration Orderlapsed on 22nd October, 2020. Interest will therefore accrue on the certified costs from 22nd October, 2020.

3. Who should bear the costs of the applications? 23. As regards costs, this court is guided by the well settled principle under Section 27 of the Civil Procedure Act that costs follow the event, unless there are special circumstances to persuade the court to depart from the said principle. None has been demonstrated. In the premises, the Advocates being the successful party is hereby awarded costs of both the Reference dated 22nd November, 2021 and the application dated 25th November, 2021. Orders accordingly.

DATED SIGNED AND DELIVERED AT NAIROBI THIS 5TH DAY OF MAY 2022. J.N.MULWAJUDGE