[2023] KEHC 26060 (KLR)

Mohamed Salim Balala & Abed Omar Abed p/a Balala & Abed Advocates v TSS Investment Limited (Miscellaneous Civil Application 182 of 2017) [2023] KEHC 26060 (KLR) (21 November 2023) (Ruling)

Neutral citation: [2023] KEHC 26060 (KLR)

Republic of Kenya

In the High Court at Mombasa

Miscellaneous Civil Application 182 of 2017

DKN Magare, J

November 21, 2023

Between

Mohamed Salim Balala & Abed Omar Abed p/a Balala & Abed Advocates

Applicant

and

TSS Investment Limited

Respondent

Ruling

1. This matter has been in our court since 28. 6.2017. on 16. 2.2023 the matter came before me for directions. I fixed the same for 24. 3.2023. on the said date I gave directions. There have been more directions till 18. 9.2023 when the parties highlighted submissions on the bill dated 26. 2.2018. the objects to the bill because the Advocates rule not relied.

2. This states that items 45, 46, 53, 19, 20, 21, 36 after the instructions were withdrawn. They state that the letter of instructions of instructions is contrary to their regulations as set out in the articles and memorandum of association. The advocates was bound to receive authority under sea signed by two directors.

3. Mr. Mohamed stated that he was instructed by 2 directors. They filed suits being HCCC 74/2016 - T.S.S. Investment Limited v NIC bank. I gave today as the Ruling date.

4. This matter has only one issue, this is, whether, the Advocate has a retainer. They state that the authority to plead was signed by only one director Mohamed Tahir Sheik Said and as such ultra vires.

5. They stated through the affidavit of Nurein Tahir Sheik said that they need a meeting of 23. 3.2017. There is a reference to liaison with the company directors in regard to maters the Advocate was acting for. The clients are said to have disowned instructions.

6. The advocates reportedly authorized fully by Mombasa HCCC 107 of 2018. I noted that only one director filed a supplementary affidavit. In their submissions they stated that retainership should be determined first. They rely on the decision of Wilfred N. Konosi t/a Konosi & Co. Advocates v Flamco Limited [2017] eKLR, where the court of Appeal held as doth:“The issue whether an advocate-client relationship exists in taxation of a Bill of Costs between an advocate and his/her client is core. The jurisdiction is conferred on the Taxing Officer by law. It is derived from the Advocates Act and the Advocates Remuneration Order. The Taxing Officer sits in taxation as a Judicial Officer. His or her task is to determine legal fees payable for legal services rendered. The jurisdiction cannot arise by implication nor can parties by consent confer it. And inherent jurisdiction cannot be invoked where adequate statutory provision exists. It was held in Taparn v Roitei [1968] EA 618 that inherent jurisdiction should not be invoked where there is specific statutory provision to meet the case. The Advocates Act and the Advocates Remuneration Order confer on the Taxing Officer jurisdiction to tax bills of costs between advocates and their clients (as well as between party and party in litigation) so as to determine legal fees for legal services rendered.”

7. The nexus between the advocate and his or her client is the advocate/client relationship which springs from instructions by the client to the advocate. Absent such relationship, the Taxing Officer would be bereft of jurisdiction to tax a bill.

8. The issue of retainership can be determined by the Taxing Master but the parties agree to have the matter heard by this Court.

9. They stated that instructions came from a person hold on 1 share of 1000 allotted. They rely on table A of Cap 486. They also rely on order 4 Rule 1 (2) (4) of the Civil Procedures Rules. They rely on East Asian Portland Cement v Capital Market Authority & 4 Others (2014) eKLR.

10. On the other hand, the Advocate annexed an interest statement where Tahir Sheikh Said record a witness statement resulting in a case against NIC Bank Ltd. He stated that he was expressly instructed by Mohamed Tahir Sheikh Said and Tahir Sheikh Said Ahmed on 25. 7.2016. They prepared and filed suit Mombasa HCCC no 74 of 2016 TSS Investment Ltd. v NIC Bank. They had received authorization authorizing one director to execute orders. They annexed a document dated 25. 7.2016.

11. That following death of one Tahir Sheikh Said Ahmed member of the family including Nuren Tahir Sheikh Said contacted the forum with conflicting instructions. The instructions were thus withdrawn by Mombasa HCC no 74 of 2016 by the remaining members of the family who happened to be shareholders and directors.

12. They state that contrary to the allegations, the notice dated 23. 3.2017 was to discuss removal of the Advocate’s firm from acting. He states that they are of the considered view that a letter of 23. 3.2017 was to the effect that the act advocate acted without instructions and continued to do so.

Analysis 13. I have perused the application herein. I note that every party herein is doing exactly opposite of what they stated in their pleadings. In a letter dated 23. 3.2012 and written signed by Fatma T.S. Said instructions are handed over to Kimani and Murithi Associates advocates by a single director. Secondly parties forgot that this case was filed in 2016. This was after the new Companies Act6 2015 came into force

14. There is essentially no dispute on the requirements. There is no basis for instructions to be issued by directors. Instructions should be made by officers of the companies. Problem only arises where no instructions were given. In this case no 74 of 2016, the company filed the case. I have perused the file no 74 of 2016, the company filed the case. I have perused the file no 74 of 2016. I note that the firm of Balala and Abeid were on record. A director Mohamed Tahir Sheikh Said signed an affidavit. The last action was on 2. 11. 2018 where Justice Njoki Mwangi gave hare Ruling striking out the application dated 21. 11. 2016.

15. There was a notice of change of Advocates to a different form and the matter was active as at 2021. The matter was before the Deputy Registrar on 15. 5.2023 for directions what comes to my mind? I have equally perused HCCC 107 of 2018. The same is Juja Coffee Exports Ltd. And TSS Investments v MIC Bank and KAAB instructions. The issue of the previous suit is raised by the defendant in Paragraph 23 of the Amended Defence.

16. The client has the motivation to deny instructions, in order to save HCCC 107 of 2018. The questions then the court has to settle, did the client instruct the Advocate herein? This will go to the question as to when instruction are issued. Does instructions to prepare a plaintiff amount to instructions? Does withdrawal of instructions amount to lack of instructions? At what point did anyone know that one has instructions. When does one cross the Rubicon and know that they have or do not have instructions. In order to handle this issue was used to settle a few background issues.

17. The instructions were said to have been issued in 2016 to file suit. A director filed a resolution, witness statement, affidavits and other documents. The defendant in that suit was filed and defended. At no time did the parties find it fit to disown instructions. Things went wild after the demise of the father of the remaining directors and majority shareholder. This is when instructions were withdrawn. The withdrawn instructions included withdrawal of instructions to act in 74/2016 by filing a notice of change of Advocates. If it is true, that there were no instructions there was nothing to take over. Notice of change is an acknowledgement that a party previously acted through an advocate.

18. There are two other pertinent grounds upon which this application fails. The Advocate did not wake up and file a suit. He had compliance documents gotten from the company. There was nothing suspicious to trigger him to confirm if all and internal Rules were complied with. In Geoffrey Kipkirui Cheruiyot & others v Toplis & Harding International Limited [2015] eKLR, Justice Hellen S. Wasilwa rendered herself as doth:“Royal British Bank v Turquand (1856) 6 E. & B. 327 and rendered themselves as follows:“while persons dealing with a company are assumed to have read the public documents of the company and to have ascertained that the proposed transaction is not inconsistent, therewith, they are not required to do more; they need not inquire into th e regularity of the internal proceeding- what Lord Hatherley called “the Indoor Management” and may assume that all is being done regularly. This rule which is based on the general presumption of law, is eminently practical, for business could not be carried on if a person dealing with the apparent agent of a company was compelled to call for evidence that all internal regulations had been duly observed. Thus, where the articles give power to borrow with sanction of an ordinary resolution of the general meeting, a leader who relies on this power need to inquire whether such sanction has in fact been obtained. He may assume that it has, and if he is acting bona fide, he will, even though the sanction has not been obtained, stand in as good position as if it had been obtained”.The learned JJA also cited “Gower’s Principles of Modern Company Law” which summarized the rule in Turquand’s case as follows:“This rule is manifestly based on business convenience, for business could not be carried out if everybody who had dealings with a company had meticulously to examine its Internal Machinery in order to ensure that the officers with whom he dealt with had actual authority Not only is it convenient, it is also just. The lot of creditors of a Limited Liability Company is not a particularly happy one. It would be unhappier still if the company could escape liability by denying the authority of the officer to act on its behalf.”

19. The advocate was bound to assume and correctly so, that all internal rules were complied with. It is the duty of the directors to comply with rules if association. These are not, in the ordinary course of business binding on the outsiders unless they have prior notice of such defect in instructions.

20. In any case I am satisfied that notwithstanding the rule in Turquand the advocates actually had instructions. These instructions were withdrawn and the advocates are entitled to their pound of flesh. A person dealing with a company is entitled to assume that its officers are properly dealing. Otherwise commerce will be untenable.

21. In this case a director framed up and signed a document signally that he has received authority to plead, it is sufficient for an advocate.

22. This is more so where The Companies Act was in fact has authorized companies to have a sole director. The requirements for 2 directors must be expressly be brought to the attention of the person. A dealing without such express injunction with a company acts reasonably when they assume that they have complied with the law.

23. The number of individuals dealing with companies are humongous, it is ridiculous to keep enquiring whether there has been a resolution and compliance with internal mechanism. Contracts are entered into daily, including Paper Manufacture, purchase of Airline tickets, purchase of cars and clothes. All these cannot work if the actual contracts have to be signed by directors. Managers and other cadre of officers are empowered to write some of these contracts. It is so hard to inquire from Kenya Airways whether the directors approved purchase of four tickets at ksh 17,000/= being with a 7. 5% discount. With such mundane, enquires life with the Hobbesian, state, indicated in the Levithan and nicely paraphrased by Justice Hon. Justice L.L. Naikuni, in Mary Musuki Mudachi & another v Anthony Muteke Mudachi & 2 others; Elijah K. Kimanzi & 6 others (Interested Parties) [2021] eKLR as doth: -“Unfortunately, if this court was to be guided by this legal parameter, it would tantamount to what the English Philosopher Thomas Hobbes described as a state of “Solitary, Nasty, Brutish and Short” as hardly any single suit would remain in the court.”

24. Life where enquiries are done cannot promote business. The clients obtained a benefit from the advocate for his hard labour. He needs his reward. Parties cannot approbate and reprobate. They are estopped from claiming some internal rules after the services were rendered.

25. Finally, we need to go into whether 2 directors were required and weather a seal was also required. One director available, signed requisite documents on behalf of the company. And a suit was filed. There was nothing else the advocate required to file suit. It is even not necessary to have two directors sign under the current Companies Act 2015. What comes out clear is that either the client is impecunious or somehow unwilling or unable to pay their advocates, and are doing all they can to frustrate the Advocate.

26. Consequently, there is nothing remaining for the advocates to proof. Whether, the instructions were issued is now moot. There are affidavits, witness statements and affidavit signed by the clients. The issues raised on withdrawal of instructions is unnecessary. Instructions purports withdrawal of instructions. Till a notice of change of Advocate, an advocate is bound to be on record or cease to act. The most surprising thing is that even the instructions not to act were issued by one director. When a company becomes multiheaded hydra, service providers cannot suffer.

27. In the circumstances I make the following findings. The Advocate, Mohamed Salim Balala and Abed O. Abed P/A Balala & Abed Advocates were properly retained by their clients TSS Investments Ltd. The challenge to instructions is therefore dismissed.

Determination 28. The court makes the following findings: -a)The Advocate, Mohamed Salim Balala and Abed O. Abed P/A Balala & Abed Advocates were properly retained by their clients TSS Investments Ltd.b)The challenge to instructions is therefore dismissed.c)The taxing master had jurisdiction to tax the bill of costs herein dated 20. 6.2017 and the amended Bill of Costs dated 26. 2.2018. d)The taxing master shall tax the Amended bill of costs dated on 26. 2.2018 without cavil, let or hindrance.e)The fact that the matter has been protracted therefore the court is unfortunate and anathema to good order. The matter should be fast-tracked and removed from the system.f)The matter be fixed for taxation on the bill of costs on 11. 1.2024 before the taxing masterg)Costs of ksh 35,000/= to the Advocates.

DELIVERED, DATED AND SIGNED AT MOMBASA ON THIS 21ST DAY OF NOVEMBER, 2023. RULING DELIVERED THROUGH MICROSOFT TEAMS ONLINE PLATFORM.KIZITO MAGAREJUDGEIn the presence of:Kongere for the Plaintiff/ApplicantMiss Julu for the advocateCourt Assistant - Brian