[2022] KEHC 10037 (KLR)

Lubulellah & Associates, Advocates v Kisia (Miscellaneous Civil Application 1060 of 2020) [2022] KEHC 10037 (KLR) (Commercial and Tax) (15 July 2022) (Ruling)

Neutral citation: [2022] KEHC 10037 (KLR)

Republic of Kenya

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

Commercial and Tax

Miscellaneous Civil Application 1060 of 2020

A Mabeya, J

July 15, 2022

Between

Lubulellah & Associates, Advocates

Applicant

and

Patrick Sagwa Kisia

Respondent

Ruling

1. Before Court are two applications to be determined together. The first is dated 15/10/2021. It was brought under section 51 of the Advocates Act, rule 13A Advocates Remuneration Rules, order 41 rule 1 of the Civil Procedure Rules and section 3A, 63 (e) of the Civil Procedure Rules.

2. It seeks an order that the amount certified on the certificate of taxation dated 13/10/2021 be entered as judgment against the respondent. That consequently, a decree thereof do issue with the applicant having liberty to execute for recovery thereof against the respondent.

3. The application was supported by the affidavit of Eugene Lubale Lubulellah sworn on 15/10/2021. It was contended that the advocate’s and client’s bill of costs was taxed at Kshs. 6,234,961. 40 and the advocate wished to proceed with execution.

4. On the other hand, the respondent filed the second application being a reference brought vide chamber summons brought under paragraph 11(2) of the Advocates Remuneration Order and section 3A of the Civil Procedure Act. The summons were dated 19/10/2021.

5. The respondent sought orders; for stay of execution pending the determination of the reference; the setting aside of the taxing officer’s decision of 13/10/2020; a finding that the taxing officer erred in taxing Kshs. 2,600,000. 00/= in item 1 of the bill of costs dated 16/9/2020, and orders reassessing the fees in item 1 or in the alternative, orders directing that costs be taxed afresh before a different taxing officer.

6. The application was supported by the affidavit of Patrick Sagwa Kisia sworn on 19/10/2021, and a further affidavit sworn on 16/11/2021. It was contended that the taxing officer awarded exorbitant instruction fees and thereby failed to consider that;i)The advocate’s participation was limited only to making a stay application and filing a suit against insurance companies.ii)The advocate only filed a suit at the High Court but did not prosecute the claim against the insurance company.iii)The ruling on the stay application was arrived at by consent.iv)Taxing the bill of costs at Kshs. 177,097. 20 without outlining reasons.v)The respondent had paid Kshs. 100,000/= as legal fees in addition to Kshs. 50,000/= charged for preparing a legal opinionvi)Other factors to be considered in assessing instruction fees such as care and labor required, number and length of papers perused, nature and importance of the matter, value of the subject matter, interest of the parties and complexity of the matter.

7. The application was opposed vide the replying affidavit of Eugune Lubale Lubulellah sworn on 20/10/2021. On the application for stay of execution, it was deponed that the Civil Procedure Act was inapplicable and the Advocates Act did not contemplate stay of execution hence this Court lacked jurisdiction to stay execution of costs. Further, that the applicant had not established how he would suffer substantial loss if the stay was not granted.

8. On the application to set aside the award on instruction fees, it was deponed that the applicant had not established a legal or valid ground for the Court to interfere with the taxing master’s decision. That the allegation that basic instruction fees was not indicated was unfounded as the same was indicated at Kshs. 450,794/= at paragraph 12 of the ruling. That the amount was increased to Kshs. 2,600,000/= to cater for the prayer for interest which ran from 16/11/2008 to when the advocate ceased acting. That Kshs. 7,347,326. 70 was taxed off from the advocates bill and no further reductions were justified.

9. That the increase was reasonable as the taxing master exercised his jurisdiction and took into consideration principles of taxation by giving his reasons, and appreciated that a claim for interest was an integral part of the subject matter of the suit. That the value of the subject matter could be ascertained from the pleadings and no judgment had been delivered on instruction fees. That the value of the matter was in excess of Kshs.257,607,130. 35 by the time the advocate ceased acting as demonstrated in the applicant’s application dated 19/8/2020 seeking the defendant to furnish security of Kshs. 257,607,130. 35.

10. It was further contended that the applicant did not deny that he issued instructions to the respondent to sue for the sum plus interest. That the applicant has not abandoned the claim for the above sum and it would be unfair for the applicant to benefit from the advocate’s pleadings and at the same time deny him his fees. That the suit was complex and time consuming and included perusal of voluminous documentation. That at the time the advocate ceased acting, the matter was already part heard, and the respondent was engaging in settlement negotiations immediately prior to the applicant’s change of advocates. It was urged that the application be dismissed.

11. I have considered the pleadings, evidence and written submissions filed by both parties which are on record. The main issue for determination is whether the application has set grounds for this Court to interfere and set aside the taxing officer’s decision of 16/9/2021. The second incidental issue is whether the aforementioned decision ought to be adopted as an order of the Court.

12. The application was brought under Rule 11 (2) of the Advocates Remuneration Order. Rule 11 provides that: -“11. Objection to decision on taxation and appeal to Court of Appeal(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.”

13. On circumstances where a Judge can interfere with the decision of a taxing master, it was in First American Bank of Kenya Ltd v Gulab P. Shah & 2 others [2002] eKLR, that: -“I have considered the above submissions. First, I find that on the authorities, this 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 so manifestly excessive as to justify an inference that it was based on an error of principle. (See Steel & Petroleum (E.A) Ltd Vs. Uganda Sugar Factory (supra). Of course. It would be an error of principle to take into account irrelevant factors or to omit to consider relevant factors. And according to the Advocates Remuneration Order itself, some of the relevant factors to take into account include the nature and importance of the cause or matter, the amount or value of the subject matter involved, the interest of the parties, the general conduct of the proceedings and any direction by the trial Judge. Needless to state not all the above factors may exist in any given case and it is therefore open to the Taxing Officer to consider only such factors as may exist in the actual case before him. 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 re-assessment unless the Judge is satisfied that the error cannot materially have affected the assessment. (see Nanyuki Esso Service V Touring Cars Ltd; Steel & Petroleum (E.A.) Ltd V Uganda Sugar Factory; Thomas James Arthur V Nyeri Electricity Undertakers And Joreth V Kigano & Associates).”

14. In the same case, the court held that a taxing officer had discretion to increase or reduce instructions fees. The court observed: -“The other general principle is that it is within the discretion of the Taxing Officer to increase or reduce the instruction fees and that the amount of the increase or reduction is discretionary. (See Thomas James Arthur V Nyeri Electricity Undertakers). In that respect, I must reject the submission made on behalf of the third defendant that the taxing officer has no discretion to reduce the basic instruction fees. On the contrary, I accept the submission made on behalf of the plaintiff that such discretion exists and that the only fees which cannot be reduced are those in respect of which it is provided that the amount thereof shall not be less than what is prescribed. An example is schedule VI (1) (g) (i): the instruction fees in matrimonial causes.”

15. In the instant case, the applicant’s main contention was that the taxing officer did not apply his discretion judiciously in increasing the instructions fees from Kshs. 450,794/= to Kshs. 2,600,000/=. The respondent on the other hand submitted that the Advocates Remuneration Order did not provide for guidelines for the taxing officer to follow in increasing instruction fees, and that the discretion was properly exercised considering that interest formed part of the subject matter.

16. It was also submitted that this Court could not interfere with such discretion unless the order was excessive or low which was not the case. The respondent also submitted that the taxing officer considered the value of the subject matter and the period it had taken since the instructions were given to the time the advocate ceased acting. He relied on the case of First American Bank of Kenya Ltd v Gulab P. Shah & 2 others [2002] eKLR in arriving at that decision.

17. In the ruling of 5/10/2021, the taxing officer found that the value of the subject matter was Kshs. 17,539,699. 92 plus interest of 19. 5%, though interest was yet to be ascertained. He then identified the instructions fees as Kshs. 450,794/= and proceeded to increase the same with reason that there was a claim for interest.

18. That because interest had not been ascertained, he took into consideration the time between the issuing of instructions in 2008 and when the advocate ceased from acting in 2020, in order to resonate with the claim for interest. He also took into consideration the fact that an advocate did not need to wait for the client’s case to conclude to recover his costs. In the end, instruction fees was increased to Kshs. 2,600,000. 00/=.

19. The question that this Court must now answer is whether the taxing officer’s decision was based on an error of principle, or the fee awarded was so manifestly excessive as to justify an inference that it was based on an error of principle. The applicant was not clear on which exact principle the taxing officer made an error on. This Court sees no error committed by the taxing officer as his identification of the claim and instructions costs was well within the law. As for his exercise of discretion to increase the instructions costs and resonate with the prayer for interest, his reasons were justified and he never fell to any error.

20. It is now settled law that an advocate’s remuneration for work done has to be such that the profession is not undermined, and in a manner that encourage worthy recruits to join the profession. In Frenchard Rinchand & Another –vs – Quary Services of East Africa Africa Limited and Others(1972) E.A 162, the Court of Appeal stated at page163 that: -“We would add two other considerations. First, the general level of the remuneration of Advocates must be such as to attract worthy recruits to an honourable profession.Secondly, there must, so far as is practicable, be consistency in the awards made, both to do justice between one person and another and so that a person contemplating litigation can be advised by his advocates very approximately what, for the kind of cause contemplated, is likely to be his potential liability for costs.”

21. The attachment marked as “ELL2 & ELL3” contained an application dated 19/8/2020 wherein the client was seeking security for costs of Kshs.257,607,130. 35. This alone signifies the importance of the claim to the respondent and the commercial value he had fixed on the claim.

22. Instructions to the advocate was not denied. It was also not denied that the advocate did prepare pleadings and defended the matter on behalf of the respondent up until he was debriefed. It was also not denied that at the time the advocate ceased acting, the matter was part heard. It is therefore not proper for the client to claim that the advocate never faced the complexity of the case. It is expected that before drafting pleadings, an advocate must research and heavily engage in a client’s case.

23. The input of an advocate’s work in the preparation of documents alone cannot be undermined. It includes extensive research to understand the nature of the claim and how best to present it in order to meet the client’s interests. He has to intensely apply his drafting skills in the drafting of a client’s case. That alone is worthy of fair remuneration. In the instant case, the applicant continued to be in conduct of the case even after a defence was filed, hence his instructions fees were justifiably awarded and increased.

24. This Court also agrees with the taxing officer’s consideration of the time the applicant was in conduct of the matter to the time he ceased acting. The matter was filed in 2008 and the advocate ceased acting in 2020. Even going by the applicant’s contention that the claim kicked off in 2009, the advocate was in conduct of the matter for about 12 years. The judgment was delivered in 2021 shortly after the advocate had ceased acting. It is therefore undeniable that the advocate was for the better part of the lifetime of the case in conduct of the matter.

25. In view of the foregoing, I find no justifiable reason to interfere with the taxing officer’s decision of 5/10/2021 and the same is up held. Consequently, the client’s application dated 19/10/2021 is dismissed with costs to the advocate.

26. In light of the above, the application dated 15/10/2021 is allowed as prayed with costs.It is so ordered.

DATED AND DELIVERED AT NAIROBI THIS 15TH DAY OF JULY, 2022. A. MABEYA, FCIArbJUDGE