[2020] KEHC 1627 (KLR)

IN THE HIGH COURT OF KENYA

MILIMANI LAW COURTS

COMMERCIAL AND TAX DIVISION

CORAM: D. S. MAJANJA J.

MISC. CIVIL APPLICATION NO. E228 OF 2019

BETWEEN

RACHUONYO & RACHUONYO ADVOCATES...APPLICANT/ADVOCATE

AND

NATIONAL BANK OF KENYA LIMITED................RESPONDENT/CLIENT

RULING

Introduction and Background

1. The Applicant (“the Advocates”) have filed the reference under Rule 11 of the Advocates Remuneration Order (“the Order”) brought by the Chamber Summons dated 11th June 2020. The application is supported by the affidavit of Clifford Owuor Rachuonyo, an advocate of the High Court and a partner in the Applicant firm, sworn on 11th June 2020. The reference is opposed the Respondent (“the Bank”) by the affidavit of its Head of Credit Remedial, Collections and Recoveries, Eustace Nyaga, sworn on 6th July 2020. Both parties filed written submissions in support of their respective positions.

2. The genesis of the matter is the Advocates Client Bill of Costs dated 13th June 2019 in which the Advocates claimed Kshs. 22,398,218. 40 for services rendered in defending Nairobi Court of Appeal Civil Appeal No. 18 of 2017, David Kihara Gitonga and Simon Peter Kihara (suing as the legal representative of John Kihara Gitonga (Deceased) v National Bank of Kenya, Foursome Development Limited, Dove Court Limited, Shaba Investments Limited, Kamuthi Houseing Co-operative Society Limited and K-Rep Bank Limited (“the Appeal”). The Appeal arose from a ruling of Ogola J., dismissing two applications in HC COMM No. 478 of 1998 and HC COMM No. 258 of 2020.

3. The principal issue before the Deputy Registrar was the assessment of the instruction fees. After considering the submissions of the parties, the court made the following findings:

[3] The bill of costs is taxed under schedule 6 of the Advocates (Remuneration)(Amendment) Order, 2014. I have considered the filed documents. The appeal was from a ruling made in HCCC 258 of 2010 on 29th September 2010 in which the Notice of Motion dated 28th July 2014 and 29th August 2014 were dismissed with costs. From the two application(s) it is not possible to ascertain the value of the subject matter ……..

[4] The Advocates Remuneration Order provides that, “To present or oppose an appeal in any case not provided for above; such sum as may be reasonable but not less than Kshs. 25,000. ” I have considered the appeal was from a ruling made in determination of an application, the parties involved as well as the number of documents filed by the parties and the interest therein which was land and increase the instruction fees to Kshs. 100,000/-.

4. The parties have filed written submissions in support of their respective positions and the issue for resolution concerns the proper charging order for taxation and ascertainment of the subject matter for purposes of determining the instruction fee.

The Reference

5. The thrust of the Advocates’ reference is that the Deputy Registrar erred by treating the subject appeal as an application and therefore applied the wrong scale. They submitted that the Deputy Registrar ought to have applied Rule 111(3)of the Court of Appeal Rules, 2010which provides for appeals to be taxed as defended suits under Schedule 6 of the Order and not Paragraph J Schedule 6A1 of the Order which provides for instruction fees for appeals from Subordinate Courts to the High Court.

6. The Advocates further contended that the Deputy Registrar erred in holding that the appeal was from a ruling in an ordinary application, and by implication, that instruction fees ought to be lower than instruction fees for a substantive appeal from a final decision. They stated that the appeal was a substantive one and not interlocutory as it sought final orders on the question of reopening a concluded sale and for nullifying concluded sale transactions and also for setting aside registered transfers among others. They maintained that in any case, in taxation, all appeals, whether from an interlocutory decision or a final decision, are in law treated as suits and taxed as such, the procedure, labour, care and skill involved being materially similar.

7. The Advocates further submitted that the Deputy Registrar erred in principle by failing to identify the real subject matter and its value from the pleadings and ruling of the High Court. The Advocates contended that the Deputy Registrar erred in failing to consider the real subject matter and its value, being either the declared market value of Kshs. 600 Million expressly pleaded by the Plaintiff, or the mortgage value of Kshs. 760,970,000/- or at the very least, the sale price of Kshs. 190 Million.

8. The Advocates further explained that the Deputy Registrar erred in considering the applications filed in the High Court to the exclusion of the related applications filed in HCCC No. 478 of 1998, the subject matter of the Appeal as captured in the filed Memorandum of Appeal and the decision appealed from.

The Response

9. The Bank submitted that the Advocates charged the instruction fees based on a non-existent valuation of the suit properties and that the value of the suit properties could not be determined from the pleadings as it was untenable for the suit properties to retain the same valuation of Kshs. 600,000,000/= from the date of filing of the Plaint until the date of filing of the Amended Plaint (a span of four years).

10. The Bank added that no basis was established as to how the Plaintiff in High Court Civil Suit No. 258 of 2010 reached the valuation of the suit properties for this amount as no evidence was tendered in the case in support of the valuation of Kshs. 600,000,000/=. It further submitted that the value of the suit properties being the subject matter before the High Court was not established in the ruling delivered on 29th September 2015 which was appealed from.

11. The Respondent submitted that the instruction fee in the Bill of Costs is provided for under Schedule VI Part Aof the Order and that from the said provision the Advocates were was only entitled to Kshs. 75,000/=, which amount is reasonable for purposes of the Appeal in Civil Appeal No. 18 of 2017

12. The Respondent submitted that the Applicant’s instant claim for costs in Civil Appeal No. 18 of 2017is an abuse of the court process as it had already filed a Bill of Costs dated 13th June 2019 in Misc. Application E249 of 2019 Rachuonyo & Rachuonyo Advocates v National Bank of Kenya Limited, which Bill of Costs arose from the proceedings in High Court Civil Suit No. 258 of 2010. The Respondent added that the Advocates used the same valuation of Kshs. 600,000,000/= and there is a real danger that the Advocates would be unjustly enriched if it is allowed to tax both of these Bills of Costs. The Respondent further contended that the costs due, if any, based on the value of the suit properties can only be awarded in the Bill of Costs arising from High Court Civil Suit No. 258 of 2010and not the instant Bill of Costs in Civil Appeal No. 18 of 2017

Analysis and Determination

13. As this is a reference from a decision of the Deputy Registrar on taxation, it is important to recall the principle guiding the court’s jurisdiction. In Republic v Ministry of Agriculture and 2 Others; Ex-parte Muchiri W’Njuguna & others[2006] , it was held that:

The taxation of costs is not a mathematical exercise; it is entirely a matter of opinion based on experience. A court will not, therefore, interfere with the award of a taxing officer, particularly where he is an officer of great experience, merely because it thinks the award is somewhat too high or too low; it will only interfere if it thinks the award is so high or so low as to amount to an injustice to one party or the other…. The 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 manifestly excessive as to justify an inference that it was based on an error of principle. Of course it would be an error of principle to take into account irrelevant factors or to omit to consider relevant factors.

14. The bill of costs subject to this reference arose from instructions to defend an appeal. It is a matter of record that the appeal arose from the ruling and order of Ogola J., dated 29th September 2015. As the subject matter of the instructions was an appeal, it was the duty of the Deputy Registrar to determine the appropriate charging order in light of Rule 111(3) of the Court of Appeal Rules, 2010 which provides as follows:

111(3) The remuneration of an advocate by his clients in respect of application or appeal shall be governed by the rules and scales to proceedings in the High Court.

15. From the above provision, remuneration of an advocate in an appeal in the Court of Appeal is guided by the rules and scales applicable to proceedings in the High Court. The question then is whether an appeal in the Court of Appeal is a suit for purposes of the Order as urged by the Advocates. They submitted that the appeal ought to have been treated as a “defended suit” under Schedule 6A (b) of the Order.

16. Schedule 6A (b) of the Order provides for costs of proceedings in the High Court. Para (b) thereof provides that instruction fees shall be determined as follows:

To sue in any proceedings describe in (a) where a defense or other denial of liability is filed; or to have an issue determined arising out of inter-pleader or other proceedings before or after suit; or to present or oppose an appeal where the value of the subject matter can be determined from the pleadings, judgments or settlement between the parties and – [Emphasis mine]

17. Apart for the above provisions, Schedule 6 of the Order also refers to appeals under the heading “Other Matters” and provides as follows:

Other Matters

To sue or defend in any case not provided for above; such as may be reasonable but not less than –

i. If undefended 45,000

ii. If defended 75,000

Appeals

a. To present or oppose an appeal in any case not provided for above; such sum as may be reasonable not less than Kshs. 25,200. [Emphasis mine]

18. It is clear from the above provisions that appeals may be taxed under two provisions. The first provision under Schedule A 1 (b) is applicable when the value of the subject matter can be ascertained from the pleadings, judgment or settlement. Where the value of the subject matter cannot be determined from the “pleadings, judgment or settlement between the parties” then recourse may be made to “Appeals” as the basis for determining the instruction fees.

19. The Deputy Registrar has the discretion to select the charging provision and provided it is exercised appropriately, this court will not intervene on a reference. In this case the Deputy Registrar was correct to observe that the appeal was from a ruling which dismissed two applications. In an appeal, the pleading is the Memorandum of Appeal (see John Gakuo and Another v County Government of Nairobi and Another NRB CA (Application) No. 201 of 2016 [2017] eKLR). From the record, it would appear that there is no judgment in respect of the appeal in Civil Appeal No. 18 of 2017and as such, the pleading is the document which would form the basis of determining the subject value in taxation.

20. The Memorandum of Appeal dated 25th January 2017 is rather prolix but in short, it impugns the exercise of discretion by the High Court Judge. The Memorandum of Appeal does not make any reference to the value of the property. What is in issue and therefore the subject matter in the appeal is whether the Judge of the High Court correctly dismissed the application.

21. The Advocates have referred to the prayers in the motion and the pleadings before the High Court which make reference to the suit properties and their respective values to submit that the Deputy Registrar ought to have determined the subject matter based on for example, the pleaded value in the Amended Plaint. I reject this approach, as the pleading in the Court of Appeal is the Memorandum of Appeal. It speaks for itself and since it does not refer to any value of the subject matter, the Deputy Registrar was correct selecting the charging provision.

22. Once the Deputy Registrar has selected the charging provision, whether or not to increase the basic fee is also a matter of discretion. In Makula International v Cardinal Nsubuga & Another [1982] UGSC 2, the Court of Appeal in Uganda expressed this principle as follows:

The taxing officer should, in taxing a bill, first find the appropriate scale fee in schedule VI, and then consider whether the basic fee should be increased or reduced. He must give reasons for deciding that the basic fee should be increased or decreased. When he has decided that the scale should be exceeded, he does not arrive at a figure which he awards by multiplying the scale fee by a multiplication factor, but places what he considers a fair value upon work or responsibility involved. Lastly, he taxes the instruction fee, either by awarding the basic fee or by increasing or decreasing it.

23. The factor for consideration under the proviso to Schedule 6(1) of the Order were reiterated in Eastland Hotel Limited v Wafula Simiyu & Co. Advocates [2014] eKLRwhere the Court of Appeal held as follows:

This Court’s decision in JORETH LIMITED v KIGANO & ASSOCIATES (supra) which was cited to us by both the appellant and the respondent, states that the value of the subject matter for purposes of taxation of a bill of costs ought to be determined from the pleadings, judgment or settlement. But where the same is not ascertainable from either the pleadings, judgment or settlement, the taxing officer is entitled to use his/her discretion to assess instruction fees. In so doing, the taxing officer will have to take into account, amongst other matters, the nature and importance of the cause or the matter, the interest of the parties, the general conduct of the proceedings and other relevant factors which may include the complexity of the case and its urgency. It is the value of the subject matter in dispute which determines the amount of instruction fees payable to an advocate. [Emphasis mine]

24. The next issue is whether the Taxing Master erred in awarding the instruction fees of Kshs. 100,000. 00 from the minimum of Kshs. 25,200. 00. The Deputy Registrar accepted that the appeal was from an application, considered that the parties interest was in the land and the number of documents filed.

25. Although the advocates complaint was in relation to the charging provision, their arguments concerning the manner in which the Deputy Registrar exercised discretion are valid. It is not apparent from the reasons given and which I have set out elsewhere that the Deputy Registrar took into account all relevant factors. For example, the fact that the appeal was from two applications, the complexity or otherwise of the matter, the interests of the parties in which case the issue of the value of the suit properties would be relevant but not decisive enough for consideration. As the authorities I have cited have stated, the factors to be considered are not closed. At the end of the day, I am satisfied that the Deputy Registrar failed to take into account relevant factors in increasing the basic instruction fees.

Disposition

26. For the reasons I have set out above, I allow the Chamber Summons dated 11th June 2020. I direct that the Bill of Costs be taxed afresh before a different Deputy Registrar other than Hon. Claire Wanyama in accordance with the decision I have set out.

27. The Respondent shall bear half the costs of this reference.

DATED andDELIVERED at NAIROBIthis 20thday of NOVEMBER2020.

D.S. MAJANJA

JUDGE

Court Assistant: Mr M. Onyango

Ms Matunda instructed by Moronge and Company Advocates for the Client/Applicant.

Mr Riunga Raiji with him Mr Kiura instructed by Riunga Raiji and Company Advocates for the Advocates/Respondents.