[2020] KEHC 1196 (KLR)

REPUBLIC OF KENYA

IN THE HIGH COURT OF KENYA

AT NAIROBI

JUDICIAL REVIEW MISC. APPLICATION NO. 565 OF 2017

BETWEEN

REPUBLIC.........................................................................................................APPLICANT

VERSUS

REGISTRAR OF COMPANIES ....................................................................RESPONDENT

BOARD OF DIRECTORS MUHOTETU FARMERS LIMITED....1ST INTERESTED PARTY

KEDONG RANCH LIMITED ......................................................2ND INTERESTED PARTY

EX PARTE APPLICANTS:DAVID JOHN NDERITU& JOSEPH WAGURA NG’ANG’A

RULING

The Application

1. This ruling is on a Chamber Summons application dated 10th December 2019 by the 2nd Interested Party, seeking the following orders:

1. THATthe Ruling of the Taxing Master dated 13th November 2019 together with the Certificate of Taxation resultant thereto be and is hereby set aside and the 2nd Interested Party’s Bill of Costs dated 28th May 2019 be taxed afresh and/or;

2. THATthis Court be pleased to set aside the Taxing Master’s decision delivered on 13th November 2019 as relates to items 1 and 2 of the 2nd Interested Party’s Bill of Costs dated 28th May 2019.

3. THATthis Court be pleased to reassess items 1 and 2 of the 2nd Interested Party’s Bill of Costs dated 28th May 2019, make a finding on the same and substitute its decision to that of the Taxing Master;

4. THATin the alternative and without prejudice to the foregoing, this Court be pleased to remit items 1 and 2 of the 2nd Interested Party’s Bill of Costs dated 28th May 2019 for review and reconsideration with the direction on their taxation by another Taxing Master;

5. THATcosts of this Application be provided for.

2. The said application is supported by an affidavit sworn by Wahura Mwangi, an advocate from the firm of J.K. Kibicho & Company Advocates, who have conduct of this matter on behalf of the 2nd Interested Party. The said Advocates also filed submissions dated 13th November 2019 in support of the application. The ex parte Applicants and Respondents did not file any response to the application, although Mr. Munene, the counsel for the Respondent, indicated during the hearing thereof that they were not opposing the application.

3. The 2nd Interested Party has faulted the Taxing Master’s ruling dated 13th November 2019 on the grounds the instruction fees as assessed at Kshs. 250,000/- by the Taxing Master in the Ruling is excessively low as to occasion an injustice to the 2nd Interested Party. Further, that the Taxing Master erred in principle in failing to consider the time, research and resources expended by the 2nd Interested Party in canvassing the matter, failed to appreciate the magnitude and complexity of the matter and assessed instruction fees at an inordinately low figure.

4. Lastly, that the Taxing Master failed to appreciate the import of the value of the subject matter determinable from the pleadings and the interest of the matter to the parties thereby rendering the award on instruction fee as based on an error of principle.

The Determination

5. Arising from the pleadings and submissions filed, the main issue for determination is whether the taxation by the Taxing Master of the disputed items in the 2nd Interested Party’s Party and Party Bill of Costs dated 28th May 2019 was made in error of principle, and whether the remedies sought are merited.

6. The 2nd Interested Party’s case is that the Taxing Master failed to take into consideration such relevant factors when assessing instruction fees and that it is trite law that the value of the subject matter is crucial in taxing the Bill of Costs. Further, that in this case, the value of the subject matter being 181,250 shares at Kshs. 11,586. 20/- per share was Kshs. 2,099,998,750/-, and should have been used in assessing the amount payable as instruction fees and getting up fees.

7. Reliance was placed on the case of Karen & Associates Advocates vs Caroline Wangari Njoroge, [2019] eKLR, where the court held that the value of the estate disclosed in the pleadings was applicable in taxation of the Bill of Costs and affirmed that the value of subject matter should be considered to determine instruction fees. Also cited was the decisions in Joreth vs Kigano & Associates,(2002) EA 92 which set out the various factors that are to be considered by the taxing officer in determining instruction fees including the value of the subject matter. The decision in Ochieng, Onyango, Kibet and Ohaga Advocates vs Adopt Light Ltd, HC Misc 729 of 2006 was further cited for the same proposition.

8. On the principles that should guide the court on whether to interfere with the Taxing Officer’s exercise of discretion, the 2nd Interested Party relied on the cases of B Mbai & Associates Advocates v Clerk, Kiambu County Assembly & another [2017] eKLRand First American Bank Ltd v Shah & Another [2002] 1 EA 64.

9. I have considered the pleadings and arguments made by the 2nd Interested Party on the taxation of the disputed items of the subject Bill of Costs. It is notable that the 2nd Interested Party does not dispute that the taxation of its Party and Party Bill of Costs dated 28th May 2019 is regulated by Schedule 6A of the Advocates (Remuneration) Order 2014. Paragraph 1(j) of the said Schedule provides as follows as regards instruction fees in constitutional petitions and prerogative orders :

“To present or oppose an application for a Constitutional and Prerogative Orders such fee as the taxing master in the exercise of his discretion and taking into consideration the nature and importance of the petition or application, the complexity of the matter and the difficulty or novelty of the question raised, the amount or value of the subject matter, the time expended by the advocate—

(i) where the matter is not complex or opposed such sum as may be reasonable but not less than 45,000

(ii) where the matter is opposed and found to satisfy the criteria set out above, such sum as may reasonable but not less than100,000

(iii) to present or oppose application for setting aside arbitral award- 50,000. ”

10. In addition, the applicable principles as regards setting aside or varying a taxation of a bill of costs are that a Court cannot interfere with the taxing officer’s decision on taxation, unless it is shown that the decision was based on error of principle, or the fee awarded was manifestly excessive as to justify interference. These legal parameters were laid down in First American Bank of Kenya vs Shah and Others [2002] 1 E.A. 64 at 69 by Ringera J. (as he then was) who delivered himself thus;

“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”.

11. These principles reiterate the position of the Court of Appeal in Joreth Ltd vs Kigano & Associates (2002) 1 EA 92,wherein the said Court held that a taxing master in assessing costs to be paid to an advocate in a bill of costs was exercising her judicial discretion, and that such judicial discretion can only be interfered with when it is established that the discretion was exercised capriciously and in abuse of proper application of the correct principles of law, or where the amount of fees awarded by the taxing master is excessive to amount to an error in principle.

12. Specifically as regards the taxing of instruction fees, the following guidelines were provided by Ojwang J. (as he then was) in Republic vs. Ministry of Agriculture & 2 Others Ex parte Muchiri W’Njuguna & 6 Others, (2006) e KLR :

“ 1. the proceedings in question were purely public-law proceedings and are to be considered entirely free of any private-business arrangements or earnings of the tea production sector;

2. the taxation of advocates’ instruction fees is to seek no more and no less than reasonable compensation for professional work done;

3. the taxation of advocates’ instruction fees should avoid any prospect of unjust enrichment, for any particular party or parties;

4. so far as apposite, comparability should be applied in the assessment of advocate’s instruction fees;

5. objectivity is to be sought, when applying loose-textures criteria in the taxation of costs;

6. where complexity of proceedings is a relevant factor, firstly, the specific elements of the same are to be judged on the basis of the express or implied recognition and mode of treatment by the trial judge;

7. where responsibility borne by advocates is taken into account, its nature is to be specified;

8. where novelty is taken into account, its nature is to be clarified;

9. where account is taken of time spent, research done, skill deployed by counsel, the pertinent details are to be set out in summarised form.”

13. These guidelines were also applied by Odunga J. in Nyangito & Co Advocates – Vs - Doinyo Lessos Creameries Ltd,[2014] eKLR,and the learned Judge in addition also held that the taxing officer must first recognize the basic instructions fee payable before venturing to consider whether to reduce or increase it.

14. I have perused the ruling by the Taxing Master dated 13th November 2019, and note that she correctly applied Schedule 6A1(j) of the Advocates Remuneration Order, and noted that the basic instruction fee was Kshs 100,000/=. While taxing on the item on instruction fees, the Taxing Officer after considering the applicable law, judicial authorities and principles guiding the exercise of her discretion, found as follows:

“Looking at the court record and the proceedings in the application, it appears that the amount claimed by the Applicant is excessive considering that this is a matter that the hearing was not protracted. I did not come across extremely voluminous or numerous documents that the Advocate had to synthesize and prepare in this matter.

15. The Taxing Master then reviewed several references in respect of Judicial review matters, and proceeded to hold as follows:

“The court has discretion to enhance instructions fees considering the complexity of the matter, responsibility by Counsel, time spent, reason done and skill deployed by Counsel. The court must ensure that the Advocates instructions fees is to seek and has more and no less than reasonable compensation for professional work done. Bearing in mind all the aforesaid factors and the reasons herein and in exercise of the discretion vested in me, I am fully convinced that the amount sought by the Applicant is grossly excessive. I am fairly convinced that the basic fee applicable is governed by Schedule 6 (J) (i) of the Advocates Remuneration Order, 2014 and the fee provided is Kshs.100,000/=.

In the case of REPUBLIC -VS- MINISTRY OF AGRICULTURE &2 OTHERS EXPARTE SAMUEL MUCHIRI W'NJUGUNA &6 OTHERS (2006) EKLR at Pg 12 It was held that "Private Law claims do not fall in the same class as Public Law claims such as those in Judicial Review, in Constitutional Applications, in Public Electoral Matters. Such matters are in a class of their own and the instruction fees allowable in respect of them should not. in principle be extrapolated from the practices obtaining in the Private Law domain which may involve business claims and profit calculations ".

In Public Law Litigation, the amount involved is not the sole determinant when it comes to costs. Judicial Review suits are not money suits as they merely seek declaratory reliefs and orders.

On question of increase on the aforesaid basic fee and this being a Party and Party Bill of Costs, I am of the view that Kshs.250,000/= is reasonable instruction fees taking into account the time taken in this matter, scope of the work done, and the nature of the dispute herein. (Kshs.31,770,000/=) is hereby taxed off.”

16. It is my finding that while the Taxing Master did take into account most of the relevant considerations, it is apparent that the factor of the value of the subject matter was not considered. While the value of the subject matter in dispute may not be the determinant and only factor in deciding the quantum of costs payable, it was held inNyangito & Co Advocates vs Doinyo Lessos Creameries Ltd (supra) and National Oil Corporation Limited v Real Energy Limited & another[2016] eKLRthat the same may be taken into account in considering the interest and importance of the matter to the parties. This is particularly relevant in judicial review applications such as in the present case, which have as their basis commercial arrangements between the parties.

17. In the premises I find that the decision of the taxing master in awarding instruction fees of Kshs 250,000/= was in error of principle, as a relevant factor in the exercise of the discretion to increase the minimum instruction fee namely the value of the subject matter, and which is specifically provided for in Schedule 6A paragraph (1)(j) of the Advocates (Remuneration) Order 2014, was not considered.

18. As regards the taxation of item 2 on getting up fees and award of Kshs 83,333. 30/= by the taxing master for this item, paragraph 2 of Schedule 6A of the Advocates (Remuneration) Order 2014, only requires denial of liability in a case for getting up fees to payable, which is not contested in the present case, and provides for the allowable minimum as one-third of the instruction fees. Since the award on instruction fees of Kshs 250,000/= has been found to be in error, it therefore also follows that the taxation of the item on getting up fees was thus also in error.

The Relief

19. In the premises I find that the decision of the Taxing Master in awarding instruction fees of Kshs 250,000/= and consequent getting up fee of Kshs Kshs 83,333. 30/= was made in error of the applicable law and principles, and justifies interference by this Court with the said award.

20. The 2nd Interested Party’s Chamber Summons dated 10th December 2019 is accordingly allowed to the extent of the following orders:

I. The Taxing Master’s decision in the ruling delivered on 13th November 2019 taxing item 1 of the 2nd Interested Party’s Party and Party Bill of Costs dated 28th May2019on instruction fees at Kshs 250,000/=, and item 2 on getting up fees at Kshs 83,333. 30, be and is hereby set aside only with respect to the said items.

II. The 2nd Interested Party’s Party and Party Bill of Costs dated 28th May2019 shall be remitted toanother Taxing Master in the Judicial Review Division of the High Court at Nairobi, for the re-taxation of items 1 and 2 only.

III. Each party shall meet their respective costs of the 2nd Interested Party’s Chamber Summons dated10th December 2019.

21. Orders accordingly.

DATED AND SIGNEDAT NAIROBI THIS 4TH DAY OF DECEMBER 2020

P. NYAMWEYA

JUDGE

FURTHER ORDERS ON THE MODE OF DELIVERY OF THIS RULING

In light of the declaration of measures restricting Court operations due to the COVID -19 Pandemic, and following the Practice Directions issued by the Honourable Chief Justice dated 17th March 2020 and published in the Kenya Gazette on 17th April 2020 as Kenya Gazette Notice No. 3137, this ruling will be delivered electronically by transmission to the ex parte Applicants’ Respondent’s and Interested Parties’ counsels email addresses.

P. NYAMWEYA

JUDGE