[2022] KEHC 16520 (KLR)

Nyachoti & Company Advocates v Amiran Communications Limited (Miscellaneous Application E117 of 2021) [2022] KEHC 16520 (KLR) (Commercial and Tax) (16 December 2022) (Ruling)

Neutral citation: [2022] KEHC 16520 (KLR)

Republic of Kenya

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

Commercial and Tax

Miscellaneous Application E117 of 2021

A Mabeya, J

December 16, 2022

Between

Nyachoti & Company Advocates

Applicant

and

Amiran Communications Limited

Respondent

Ruling

1. Before court is an application by the advocate dated October 29, 2021 (“the reference”). It was brought pursuant to rule 11 (1) (2) & (4) of the Advocates (Remuneration) Order, and section 1A, 1B and 3A of the Civil Procedure Act.

2. The application sought orders that the ruling of Hon S Githongori, Deputy Registrar, delivered on September 21, 2021 in respect of the applicant’s bill of costs dated January 18, 2021 be reviewed, varied and set aside.

3. The grounds for the application were set out on the face of the application and on the supporting affidavit of Philip Nyachoti sworn on October 29, 2021. It was averred that the Deputy Registrar stayed the taxation of the applicant’s advocate-client bill of costs dated January 18, 2021 pending the determination of ELRC Cause No 1130 of 2018.

4. That in doing so, the Deputy Registrar failed to appreciate that the applicant was duly instructed on May 11, 2015 through an email from one Mr Nir Sher who was then the Managing Director of the respondent. The instructions were to represent the respondent in filing a complaint with the Trademark East Africa Complaint Review Board (”the Board") against the decision of the Tender Committee of Trademark East Africa (”the TMEA”) concerning the Tender for the proposed design and construction of a data centre at the Kenya Revenue Authority [PO/20130854} (“} the Tender”).

5. That the Deputy Registrar lost sight of the fact that, several correspondences were exchanged between the respondent and the advocate in respect of the complaint on the tender which further confirmed the instructions to the applicant.

6. That whereas the applicant represents the said Nir, Amir and Gal in Nairobi ELRC Cause No 1130 of 2018 Gal Abel and 2 Others v Balton CP [consolidated with No 1139 of 2018; Amir Grinberg v Bolton CP and No 1100 of 2018; Nir Sher v Bolton CPIE, the said cases were purely employment issues between the respondent and the claimants therein and have no bearing whatsoever on the bill of costs filed by the advocate. The advocate was not a party in those proceedings. The Deputy Registrar therefore erred in law and in fact in staying the taxation of the bill of costs herein because of the pendency of the said cases.

7. The applicant further stated that the Deputy Registrar failed to appreciate the fact that whether Nir, Amir and Gal breached their terms of employment while being the most senior executives of the respondent, that had no bearing and/or relevance whatsoever with the bill of costs herein.

8. That no similar issues of fact or law arise between the employment dispute and the bill of costs herein. In the premises, the Deputy Registrar erred in upholding the respondent’s alleged averments of conflict of interest in so far as the said bill of costs is concerned.

9. That the applicant was properly instructed and as such, there was a valid advocate-client relationship between the applicant and the respondent. That therefore, the bill of costs dated January 18, 2021 was properly filed before the Deputy Registrar and the same should be allowed to proceed for taxation.

10. The respondent opposed the reference vide a replying affidavit sworn on September 19, 2022, by Mr Andrew Baker, the Group Chief Executive of the Balton CP Group of which the respondent is a 100% owned subsidiary.

11. He averred that there was no valid advocate-client relationship between the applicant and the respondent in the matter arising from the complaint that the applicant lodged with the Board against the decision of the TMEA.

12. That any legal services provided by the applicant in connection with the Tender were not provided for the benefit of the respondent. The same was on behalf of Amir Grinberg (Amir), Nir Sher (Nir) and Gal Arbel (Gal, the respondent’s former employees in their personal capacity and Powernet limited, a third party in competition with the respondent. The latter had disguised its participation in the tender as a member of the consortium with Amiran, a subsidiary of Balton CP limited (Balton).

13. He further averred that the instructions issued to the advocate to lodge a complaint with the Board was made by and on behalf of Nir, Amir and Gal. It was solely intended to secure and further Powernet's interests in the TMEA bid, rather than those of the respondent. It was meant to fraudulently charge the respondent for the legal costs associated with those instructions.

14. That the respondent was not aware of the fraudulent scheme in connection with the joint bid presented by the former employees to the TMEA. That any subsequent instructions to the advocate to lodge a complaint before the Board were improper and not on behalf of their employer.

15. That the applicant did not provide particulars of the fee note as requested and instead filed a bill of costs more than 5 years after issuing the fee note. In the bill of costs, he was seeking a sum that was almost 90 times higher than what was indicated in the fee note.

16. That the issues for determination in the employment matter were fundamentally linked to the issues in question in this matter. This is so because, the employment court’s examination and determination concerning Nir, Gal and Amir’s conduct was necessary before the Deputy Registrar could determine whether an advocate-client relationship existed between the applicant and the respondent.

17. The application was disposed of by way of written submissions which the court has duly considered.

18. The court does not usually interfere with the ruling of the Deputy Registrar as the taxing master except in exceptional circumstances where there is an error in principle. See Lubelellah & Associates Advocates v Kenyatta National Hospital [2010] eKLR.

19. Further, in Hamilton Harrison & Mathews v Keroche Breweries Limited [2021] eKLR, it was held: -“The High Court should not interfere with the exercise of the Deputy Registrar’s discretion unless it appears that such discretion has not been exercised judicially or it was exercised improperly or wrongly…”

20. The dispute between the parties is whether or not there was a valid advocate-client relationship between the advocate in relation to the complaint filed with the Board. This was a preliminary issue that was raised before the Deputy Registrar, but in her ruling, she failed to determine the issue and instead stayed the bill of costs pending the hearing and determination of the ELRC matter.

21. Paragraph 12 (1) of the Advocates (Remuneration) Order provides that; the taxing officer may refer any matter in dispute arising out of a taxation of a bill of costs for the opinion of the High Court. Paragraph 12(2) thereof provides the procedure for such reference which should follow that of a case stated but shall be to a judge in chambers.

22. It therefore follows that, when the preliminary issue of advocate-client relationship was raised, the Deputy Registrar had jurisdiction to determine it. That was to be the basis on whether or not she had jurisdiction to hear and determine the bill of costs.

23. The powers of the taxing officer is provided for under Paragraph 13A of the Advocates Remuneration Orderwhich provides that: -“For the purpose of any proceeding before him, the taxing officer shall have power and authority to summon and examine witnesses, to administer oaths, to direct the production of books, paper and documents and to direct and adopt all such other proceedings as may be necessary for the determination of any matter in dispute before him.”

24. From the foregoing, the taxing officer has the jurisdiction to hear and determine the issue of advocate-client relationship as it is a core issue on whether a matter can be sustained or not. In Wilfred N Konosi t/a Konosi & Co Advocates v Flamco Limited Nrb CA Civil Appeal No 154 of 2014 [2017] Eklr, the Court of Appeal held: -“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 vs 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. 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.As a judicial officer sitting to tax a bill of costs between an advocate and his or her client, a taxing officer must determine the question whether he/she has jurisdiction to tax a bill if the issue of want of advocate/client relationship is raised. An allegation that the advocate/client relationship does not obtain in taxation of an advocate/client bill of costs must be determined at once. The taxing officer has jurisdiction to determine that question. A decision in taxation where an advocate/client relationship does not exist is a nullity for want of jurisdiction.”

25. From the foregoing, it is clear that the Deputy Registrar erred in finding that she could only determine the bill of costs after the court in Nairobi ELRC Cause No 1130 of 2018 Gal Abel and 2 Others v Balton CP [consolidated with No 1139 of 2018; Amir Grinberg v Bolton CP and No 1100 of 2018; Nir Sher v Bolton CPIE makes a determination on the conduct of the three former employees of the respondent.

26. With the greatest respect, this court cannot see any nexus between the employment dispute between the respondent and its former employees and the matter that was before the Deputy Registrar. The issue before the employment court is about the relationship between the respondent and its former employees. Whether or not those employees misbehaved, that is an issue for employment court to determine. That court will not at all and cannot purport to determine the question whether there was an advocate-client relationship between the advocate and the respondent. That is an issue that was before the Deputy Registrar.

27. It follows therefore that to stay the advocate’s bill of costs to await the employment dispute between the respondent and its former employees was a misdirection.

28. In this regard, the submission by the Advocate that the matters before the ELRC court were fundamentally different from the issues raised in the bill of costs is correct. It is the taxing officer and not the labour court that was to determine whether or not an advocate-client relationship exists. To that end, the Deputy Registrar erred in principle. Section 10 of the Advocates Act is clear on this.

29. In Migos-Ogamba & Co Advocates v Chemelil Sugar Co Ltd (Miscellaneous Application 600 of 2018) [2022] KEHC 557 (KLR), the court held: -“The dispute before the Deputy Registrar was in the nature of an objection as to the validity of the bill since the advocate/client relationship was disputed. It is this court’s finding that such an objection amounts to a preliminary objection which can be dealt with by the taxing master. Once the taxing master determines that issue, then the court would either tax the bill of costs or dismiss it for want of instructions from the client. Any party dissatisfied with the ruling of the taxing master can thereafter approach the High Court. I am satisfied that the taxing master can substantively deal with the issue as to whether instructions were issued to the advocate or not. The upshot is that the file is sent back to the taxing officer for hearing and determination of all the issues therein.

30. This court fully associates itself with the above finding. Having found that the Deputy Registrar erred in principle in her ruling delivered on September 21, 2021, the court finds justifiable grounds to interfere with that ruling.

31. That being the case, with the evidence on record, was there an advocate-client relationship between the advocate and the respondent. There is admission that one Mr Nir was the Managing Director of the respondent at the time the email of May 11, 2015. There was no allegation that the said Managing Director did not have ostensible authority to bind the respondent. The advocate could not know the intentions and machinations of the respondent’s advocates. The fact that when the said employees fell out with the respondent, the advocate decided to side with the said employees does not vitiate the advocate-client relationship that had hitherto existed.

32. The Deputy Registrar referred to the fact that Companies act through resolutions and that there was no resolution here to appoint the advocate to act in the matter. Firstly, there is nothing to show that it is a legal requirement in matters dealing with board that an advocate should lodge such a resolution as is in the normal court business. Secondly, there was no dispute that the Managing Director had the ostensible authority to give the instructions he gave.

33. Further, there was no evidence to connect the advocate to the alleged fraudulent actions of the former employees of the respondent to vitiate the advocate-client relationship. If there was any, the respondent would have enjoined the advocate in those proceedings.

34. Accordingly, I hold that there was advocate-client relationship between the advocate and the respondent. The bill of costs was properly before the Deputy Registrar for taxation.

35. The upshot is that the ruling of the Deputy Registrar delivered on September 21, 2021 is hereby set aside. The matter is remitted back for taxation before another taxing officer other than Hon Stephanie Githongori.

36. It is so ordered.

DATED AND DELIVERED AT NAIROBI THIS 16TH DAY OF DECEMBER, 2022. A. MABEYA, FCIArbJUDGE