[2022] KEHC 11418 (KLR)

Otieno Okeyo & Co. Advocates v Stone Contractors Limited & another (Anti-Corruption and Economic Crimes Appeal 7 of 2020) [2022] KEHC 11418 (KLR) (Anti-Corruption and Economic Crimes) (12 May 2022) (Ruling)

Neutral citation: [2022] KEHC 11418 (KLR)

Republic of Kenya

In the High Court at Nairobi (Milimani Law Courts)

Anti-Corruption and Economic Crimes

Anti-Corruption and Economic Crimes Appeal 7 of 2020

EN Maina, J

May 12, 2022

Between

Otieno Okeyo & Co. Advocates

Respondent

and

Stone Contractors Limited

1st Applicant

Joseph Hamisi Dena

2nd Applicant

Ruling

Introduction 1. The applicants, Stone Contractors Limited and Joseph Hamisi Dena have filed the reference dated November 24, 2021 challenging the decision of the Taxing Officer in the Advocate/Client Bill of Costs dated August 6, 2021.

2. The Bill of Costs related to services rendered by the respondent, Otieno Okeyo & Company Advocates to Miscellaneous Application No 7 of 2020, Ethics and Anticorruption Commission vs Standard Chartered Bank Limited and 4 Others, wherein the Respondent represented the Applicants. The reference is brought under Paragraph 11(2) of the Advocates Remuneration Order 2014 and it seeks orders that:i.Leave be granted to the applicants to file this reference out of time for review of the ruling on the Respondent’s Advocate/Client Bill of Costs dated February 15, 2021 as well as the Certificate of Taxation dated November 16, 2021 and this reference be deemed as duly filed.ii.This Court be pleased to grant stay of execution of the Certificate of Taxation pending the hearing and determination of this reference.iii.The entire decision on the Taxing Master on the Advocate – Client Bill of Costs dated February 15, 2021 be set aside and re-taxed by a different taxing masteriv.This Court does find that the Taxing Master erred in Principle by applying Schedule VI of theAdvocates Remuneration Order 2014 in an Advocate-Client Bill of Costs arising out of a criminal matterv.This Court does find that that the Taxing Master erred in principle by increasing the Advocate’s Instruction fee by ½ or 50% when no such increase is envisaged under Schedule V of the Advocates Remuneration Order 2014vi.The Court does find that the Taxing Master erred in principle in failing to appreciate the fact that the Respondent Advocate did not handle the relevant Miscellaneous Criminal application to completion and that he was consequently only entitled to be paid for the work actually done.vii.Costs of the application be provided for.

3. The application is supported by the grounds on the face thereof and the supporting affidavit of Phanuel Omondi sworn on November 24, 2021 where he deposes that he is an advocate practising as such in the firm of Migos, Ogamba & Waudo Advocates who are on record for the applicants. The deponent avers that the delay in filing the reference was inadvertent and in the circumstances, it has been filed without inordinate delay. He narrates that the respondent filed an Advocate/Client Bill of Costs dated February 15, 2021 arising from High Court ACEC Misc Application No 7 of 2020. That the matter was last before Hon R Aganyo (DR) on August 26, 2021 when she gave a ruling date of September 21, 2021. The deponent alleges that on the said date he attended proceedings online but the ruling was not delivered and there was no notice issued as to when it would be. This prompted the firm to write an email to the Deputy Registrar on November 18, 2021 requesting a copy of the ruling only to receive correspondence from the respondents on November 22, 2021 demanding settlement of the taxed costs. Counsel deposes that he immediately dispatched their clerk to follow up, extract a copy of the ruling and also sent an email to the respondent for a copy of the ruling for their further action which he received on November 23, 2021.

4. The Applicant seeks to stay the award of Kshs 3,100,575 as costs as he deems the same to be manifestly high. He contends that the Applicant shall suffer substantial loss should the respondent be allowed to execute.

5. In their submissions the applicants state that the present reference was filed one day after receipt of the ruling well within the requisite fourteen days limited for filing a reference under Paragraph 11(2) of the Advocates Remuneration Order but that they have sought an order for extension of time out of abundance of caution. With respect to extension of time Counsel for the applicants relied on the following cases: Republic vs Capital Markets Authority Ex parte Solomon Muyeka Alubala: National Bank of Kenya (Interested Party)(2021)eKLR where the court stated:-

“15. I am however not persuaded that the letters by the Respondent requesting for the ruling without specifying the items objected to is a fatal error with respect to the procedure provided in Rule 11(1) of the Advocates Remuneration Order, given that the requirement to give notice provided therein is not couched in mandatory terms. In this respect it is also notable that the mandatory nature of the timelines are with respect to the filing of the reference, upon receipt of the reasons by the taxing officer.16. I also note that the Respondent did annex a copy of the ruling delivered by the Deputy Registrar on June 4, 2020 to its supporting affidavit to the instant application, and of correspondence showing that the said ruling was availed to it on June 22, 2020. The omission to file a notice of objection was therefore not fatal, as in any case the ruling containing the reasons were availed to the Respondent, and the reference was filed within the 14 days of the date of receipt of the said ruling, and contained the substance of the objections made. Lastly, the provisions of Article 159(2) of the Constitution, require that substantive justice should be delivered expeditiously and should not be sacrificed at the altar of procedural technicalities.17. I accordingly find that the Respondent’s application dated July 6, 2020 and filed in Court on the same date is properly on record for the foregoing reasons. Having so found, I will proceed to consider the outstanding issue of whether there was an error made by the Deputy Registrar in the taxation of the disputed items of the subject Bill of Costs.”

County Executive of Kisumu vs County Government of Kisumu & 8 Others (2017) eKLR where it was held that:-

“(23) It is trite law that in an application for extension of time, the whole period of delay should be declared and explained satisfactorily to the Court. Further, this Court has settled the principles that are to guide it in the exercise of its discretion to extend time in the Nicholas Salat case to which all the parties herein have relied upon. The Court delineated the following as:“the under-lying principles that a Court should consider in exercise of such discretion:1. Extension of time is not a right of a party. It is an equitable remedy that is only available to a deserving party at the discretion of the Court;2. A party who seeks for extension of time has the burden of laying a basis to the satisfaction of the court;3. Whether the court should exercise the discretion to extend time, is a consideration to be made on a case to case basis;4. Whether there is a reasonable reason for the delay. The delay should be explained to the satisfaction of the Court;5. Whether there will be any prejudice suffered by the respondents if the extension is granted;6. Whether the application has been brought without undue delay; and7. Whether in certain cases, like election petitions, public interest should be a consideration for extending time.”

6. On the merits of the reference, the applicants submitted that the nature of the case culminating in the impugned Certificate of Costs was a criminal matter not a civil matter. According to the applicants, the freezing orders of the suspect funds obtained by the Ethics and Anti-Corruption Commission in ACEC Misc No 7 of 2020 were filed to facilitate criminal investigations and hence it cannot be described as a civil suit; That for that reason, the taxing master erred in assessing instruction fees under Part A of Schedule 6 of the Advocates Remuneration Order (2014) which pertains to civil suits. The applicants contended that the applicable schedule is Schedule 5 of the Advocates Remuneration Order (2014) which applies to fees in respect of business the remuneration for which is not otherwise prescribed or which has been the subject of election under paragraph 22.

7. Counsel for the applicant further argued that the taxing master erred as the matter was not certified as complex and on actual work done, the respondent did not file any replying affidavit or written submissions in the case; did not make any oral submissions and only made one court attendance for recording of the initial consent order on preservation of the subject funds. The applicants faulted the Taxing Officer for finding “volume of work done by learned counsels in the matter looking at documents prepared and perused” which documents Counsel stated were not presented to the Taxing Officer . The applicants opine that the Originating Motion filed by the Ethics and Anti-Corruption Commission was not voluminous. They contend that moreover after parties recorded a consent on March 4, 2020, the respondent’s services were terminated and on September 9, 2020 a Notice of Change of Advocates was filed by the current firm on record for the applicants. It was contended that since the case was subsequently settled on February 24, 2021 the Taxing Master ought to have appreciated that the respondent did not handle the case to completion. The applicants aver that the foregoing amount to errors of principle warranting intervention by this court. They relied on the following cases: Kipkorir, Tito & Kiara Advocates vs Deposit Protection Fund Board (2005) eKLR where it was held that:-

“On a reference to a judge from the taxation by the Taxing Officer, the judge will not normally interfere with the exercise of discretion by the taxing officer unless the taxing officer, erred in principle in assessing the costs….”

Kanu National Elections Board & 2 Others vs Salah Yakub Farah (2018) eKLR where the court stated:-

“7. The general principles governing interference with the exercise of the taxing master’s discretion were authoritatively stated by the South African Court[2] as follows:-“The court will not interfere with the exercise of such discretion unless it appears that the taxing master has not exercised his discretion judicially and has exercised it improperly, for example, by disregarding factors which he should properly have considered, or considering matters which it was improper for him to have considered; or he had failed to bring his mind to bear on the question in issue; or he has acted on a wrong principle. The court will also interfere where it is of the opinion that the taxing master was clearly wrong but will only do so if it is in the same position as, or a better position than, the taxing master to determine the point in issue . . . The court must be of the view that the taxing master was clearly wrong, i.e. its conviction on a review that he was wrong must be considerably more pronounced than would have sufficed had there been an ordinary right of appeal.””

Desai, Sarvia & Pallan Advocates vs Jambo Biscuits (Kenya) Limited (2014) eKLR where it was stated:-

“15. Taxation of a bill of costs, like all other aspects of litigation, is based largely on evidence. It is also an adversarial process. As the bill was contested, it behoved the applicant to present to the taxing master all documents and materials in support of its claim. Having shirked that responsibility in the litigation, the applicant cannot shift the blame to the umpire. In the circumstances, the applicant was the author of its own misfortune. See L’Oreal Vs Interconsumer Limited (No 2) Nairobi, High Court, Miscellaneous Application 1089 of 2010 [2014] e KLR. See also Ochieng’, Onyango, Kibet & Ohaga Advocates Vs Meyer Enterprises Ltd Nairobi, High Court Misc App 489 of 2012 (unreported)…..”

Kamunyori & Company Advocates vs Development Bank of Kenya Ltd (2015) eKLR where it was stated:-

“Failure to ascertain the correct subject matter in a suit for the purpose of taxation is an error of principle. So too, failure to ascribe the correct value to the subject matter is an error of principle. Authorities on taxation show that a Judge will normally not interfere with the Taxing Officer’s decision on taxation unless it is based on an error of principle. Where it is shown that the sum awarded was so manifestly excessive as to justify interference, an error of principle can be inferred. If instructions fee is arrived at on the wrong principles, it will be set aside (see Elmandry and Others v Salim [1956] EACA 313). As long ago as 1961, the predecessor of this Court emphasized in Arthur v Nyeri Electricity [1961] EA 492 that “where there has been an error in principle, the Court will interfere, but questions solely of quantum are regarded as matters with which the taxing officers are particularly fitted to deal and the Court will intervene only in exceptional cases.” That is still good law.”

8. In opposition the Respondent filed a replying affidavit sworn on December 1, 2021 by Fredrick Okeyo, the respondent’s Managing Partner wherein he depones that the application for extension of time and the reference are incompetent, incapable of being granted, lacking in merit and an abuse of Court process. He deposes that having been present when the date for the ruling was given by the Deputy Registrar, the applicant’s advocates on record have not explained the reasons why they did not attend on-line proceedings on September 21, 2021 in which the ruling was deferred to September 27, 2021; That the Advocates did not explain why they did not take steps to inquire what transpired on 21st and why they failed to attend court on September 27, 2021 and as such the applicants have failed to lay the basis for the exercise of this court’s discretion in their favour.

9. The deponent further submitted that there are no legal or justifiable grounds advanced by the applicants for staying execution of the taxed costs. That the applicants have not demonstrated that they stand to suffer substantial loss or that the respondent firm is not capable of refunding the taxed costs in the event that the reference is allowed. Counsel also faulted the applicants’ withdrawal of the entire Kshs 73,000,000 from the escrow account jointly held with the respondent’s law firm without keeping aside Kshs 2,906,500 which the applicants had undertaken to hold as legal fees claimed by the respondent.

10. The deponent stated that the Taxing Officer’s decision followed the law, that the Taxing Officer did not apply wrong provisions of the law and neither did she consider irrelevant matters. He averred that Miscellaneous Application 7 of 2020 was an issue of asset tracing and recovery which is civil in nature and hence falls under Schedule 6 of the Advocates Remuneration Order (2014). He contends that the Advocates explained in detail and demonstrated the work done for the applicants which they did not object to nor challenge.

11. Counsel for the respondent submitted that as Advocate Phanuel Omondi has not deponed that he has the applicants’ authority to swear the supporting affidavit hence it should be struck out. Further, that the application should fail due to joinder of a prayer for discretionary remedy and the reference.

12. On the issue of extension of time, the respondent citing the case of County Executive of Kisumu vs County Government of Kisumu & 8 Others (supra) submitted that the applicants did not demonstrate that they are entitled to extension of time to file the reference. The respondent pointed out that it is the party that stands to be prejudiced for failure to preserve the Kshs 2,906,500 intended for their costs pursuant to an agreement between themselves and the applicants. The respondent further submitted that the Taxing officer applied correct principles in applying Schedule 6 of the Advocates Remuneration Order as the claim by the Ethics and Anti-Corruption Commission was purely civil in nature as the proceedings involved attachment of the applicant’s monies in their bank account and forfeiture of funds. Counsel urged this court to dismiss this reference with costs.

Analysis and Determination 13. I have carefully considered the parties’ pleadings, rival submissions and the applicable law. The issues arising for determination are whether the applicants are entitled to extension of time for filing this reference and if so whether they are entitled to the orders sought.

14. On the issue of leave to file the reference out of time it is my finding that the applicants filed this reference within 14 days of receipt of the ruling. Counsel has given a plausible explanation for not filing the reference within the time prescribed. Counsel also explained why the applicant was not represented in court when the ruling was read. I am convinced that the delay was occasioned by an inadvertent mistake on the part of Counsel which is excusable. Accordingly, the application for leave is granted and the reference is deemed to have been duly filed.

15. On the merits of the reference it is trite law that this court can only interfere if the Taxing Officer did not employ the correct principles in assessing the costs awarded. I am well guided by the holding of the court in the case of: Joreth Limited v Kigano & Associates[2002] eKLR that:-

“…..Besides it is not really in the province of a judge to re-tax the bill. If the judge comes to the conclusion that the taxing master has erred in principle he should refer the bill back for taxation by the same or another taxing officer with appropriate directions on how it should be done. It was stated by the predecessor of this Court in the case of Steel Construction & Petroleum Engineering (EA) Ltd vs Uganda Sugar Factory Ltd (1970) EA 141 per Spry JA at page 143:"Counsel for the appellant submitted, relying on D'Souza v Ferao[1960] EA 602 and Arthur v Nyeri Electricity Undertaking [1961] EA 492 that although a judge undoubtedly has jurisdiction to re-tax a bill himself, he should as a matter of practice do so only to make corrections which follow from his decision and that the general rule is that where a fee has to be re -assessed on different principles, the proper course is to remit to the same or another taxing officer. I would agree that, as a general statement, that is correct, adding only that it is a matter of juridical discretion. We have found that the learned judge erred in reassessing the instruction fee and we have also found that the taxing officer applied correct principles in arriving at the figure of instruction fee that he awarded. What the learned Judge did not appreciate was that sitting on a reference against the assessment of instruction 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.”

16. Counsel for the Applicant faulted the trial magistrate for taxing the Bill under Schedule 6 of the Advocates Remuneration Order. It was Counsel’s submission that the Bill ought to have been taxed under Schedule 5 given that the instructions arose from a criminal matter. I have considered this issue carefully and with due respect I do not agree. The Anti-Corruption and Economic Crimes Act makes provision for both civil and criminal matters. It caters both to criminal offences and to civil recovery proceedings. The application ACECA Misc Application No 7 of 2017, which gave rise to the bill of costs herein is civil in nature. This is evident from the standard of proof which is on a balance of probabilities (See Section 56(5) of Anti-Corruption and Economic Crimes Act) as opposed to proof beyond reasonable doubt which applies in criminal cases. I am not therefore persuaded that the taxing officer erred in adopting Schedule 6 in taxing the bill. It is also instructive that this issue was not raised before the taxing officer and it ought not to have been raised in this court.

17. On the instruction fees themselves the Applicant faulted the Taxing Officer for increasing the instruction fees by half and for not taking into consideration that the respondent made only one court attendance and did not file any documents which affected a substantial portion of the costs awarded. However, the ruling bears a contrary position. The Taxing Officer stated: -“6. I have considered the provisions of the ARO 2014 Schedule 6 which is applicable herein, noting that the applicant has quoted a sum of Kshs 2,045,000 only for instruction fees. However, since the applicant has requested for Kshs 2,045,000 only which I find reasonable in the circumstances, I decline to increase the amount and only award the same as requested…”It is clear therefore that the taxing officer did not increase the instructions fees by half as alleged.

18. On the issue of the costs themselves, work done and court attendances it is trite that this Court can only delve into matters of quantum in exceptional cases as was held in the case of Kipkorir, Tito & Kiara Advocates vs Deposit Protection Fund Board (supra) that:-“On a reference to a judge from the taxation by the Taxing Officer, the judge will not normally interfere with the exercise of discretion by the taxing officer unless the taxing officer, erred in principle in assessing the costs. In Arthur v Nyeri Electricity Undertaking[1961] EA 497, the predecessor of this Court said at page 492 paragraph I:“where there has been an error in principle the court will interfere; but questions solely of quantum are regarded as matters with which the taxing officers are particularly fitted to deal and the court will interfere only in exceptional cases”.

19. Having considered the subject matter of the Miscellaneous application which involved preservation of funds held in the applicant’s accounts pending investigations, the importance of the matter to the parties (it could have culminated in prosecution for corruption related offences) the sum involved which was Kshs 130,000,000/- the interest of the parties and the general conduct of the matter I am satisfied that the instruction fees of Kshs 2,045,000/- was reasonable. I find no error of principle on the part of the taxing officer to warrant this court to interfere. It is instructive that the Applicant intimates that a sum of Kshs 2,905,500/- had been set aside for the respondent’s costs. That fortifies my finding and that of the taxing officer that the instruction fees and the taxed costs are reasonable. Accordingly, I find no merit in this reference and it is dismissed with costs to the Respondent.

Signed, dated and delivered virtually this 12th day of May, 2022. E.N. MAINAJUDGE