1. This Ruling determines the Defendants’ Chamber Summons Application dated 9th December 2022 brought under Rule 11(1)-(4) of the Advocates (Regulations) Remuneration Order and Sections 1A, 1B, and 3A of the Civil Procedure Act, in which the Defendants seek the following orders: -
i. That this Honourable Court be pleased to vary/set aside the decision of the Taxing Officer contained in her ruling delivered on 30th November 2022.
ii. That this Honourable Court be pleased to tax the Bill of Costs itself.
iii. That the costs of this application/reference be provided for.
2. The application is grounded on the claims that the taxing officer had taxed the Defendants’ party and party Bill of Costs dated 4/8/2020 at Kshs. 1,301,477/-, an amount the Defendants argue was unjustifiably low. They contended that the taxing officer failed to consider key legal precedents from Kenya, Australia, and England, particularly regarding the indemnity principle which underpins party-and-party costs. According to the Defendants, the low amount awarded suggested a fundamental error in principle.
3. The Defendants emphasized that the underlying suit involved complex financial claims exceeding USD 44 million, grounded in loan agreements, promissory notes, and guarantees governed by New York and Kenyan law. These agreements entailed compound interest and the application of international law, further increasing the complexity and value of the case.
4. The Defendants also cited judicial authorities in support of their contention that interest should be considered in assessing instruction fees. They maintained that the taxing officer erred in law by excluding this and in applying incorrect principles in the taxation process. They further alleged bias, claiming that the taxing officer favored the Plaintiff and disregarded precedents such as Joreth Limited v Kigano & Associates [2002] KECA 153 (KLR), which outlines how to determine the value of the subject matter.
5. Additionally, the Defendants criticized the assessment of instruction fees (Kshs. 794,390/-) and getting-up fees as manifestly low, lacking a transparent and reasoned basis. They argued that the discretion exercised by the taxing officer was misdirected, non-transparent, and failed to consider the case's complexity, novelty, and demands.
6. The Plaintiff objected to the instant application vide grounds of opposition and a replying affidavit, both dated 30/1/2025.
7. In the ground of opposition, the Plaintiff asserted first that the taxing officer had not erred in fact or principle in the ruling delivered on 30/11/2022, in which the value of the subject matter was correctly assessed at USD 438,623.87, as outlined in the Judgment. The Plaintiff further argued that the application was premature, as the taxing officer had not yet provided reasons for the ruling.
8. Additionally, the Plaintiff asserted that the Defendants’ objection to the taxation was vague, lacking both specific items being contested and the reasons for such objections. It was further the Plaintiff’s position that the Defendants had improperly relied on the Plaintiff’s written submissions to determine the value of the subject matter, despite those submissions not qualifying as pleadings or a judgment for that purpose.
9. The Plaintiff also described the instruction fees in the Bill of Costs as unreasonable and exorbitant. It was submitted that a failure by the taxing officer to apply the formula set out in Schedule VI of the Advocates (Remuneration) Order would amount to an error of principle.
10. Moreover, the Plaintiff pointed out that the Defendants had miscalculated interest on the decretal sum, disregarding the 6% interest rate already determined in the ruling. The Plaintiff also maintained that the court lacked jurisdiction to consider any issues related to a purported fee agreement at that stage.
11. It was further argued that the matter was not complex, being a straightforward debt recovery case. Consequently, the Plaintiff emphasized that the court should not interfere with the taxing officer’s decision unless it was based on an identifiable error of principle.
12. In the replying affidavit, Mark H. Chu, the Assistant General Counsel for Litigation, Fraud, and Compliance at the Plaintiff bank, noted that the 4th Defendant had not provided proof that he was authorised by the other Defendants to swear the supporting affidavit on their behalf.
13. He stated that the application sought not only to set aside the taxing officer’s decision delivered on 30/11/2022 but also substantive reliefs such as a re-taxation of the Defendants’ Bill of Costs.
14. Chu recounted that the matter had been mentioned in court on two specific occasions in 2024, but the Plaintiff was only served with the hearing notice for 24/2/2025 via email on 5/11/2024. He asserted that the Plaintiff had not been served with prior notices and was unaware of the proceedings due to this lack of notice. This failure in service prompted a protest email from the Plaintiff’s advocates, and Chu stressed that no notices were received through any official or unofficial channels. He explained that this lack of participation in the hearings was not due to negligence but to lack of notification.
15. The Plaintiff’s position, as advised by their counsel, was that proper service of notices is a fundamental requirement of procedural fairness and constitutional principles under Articles 10, 47, 48, and 50 of the Kenyan Constitution. Consequently, Chu argued that granting the reliefs in the Defendants’ application based on alleged non-opposition would be unconstitutional and unjust.
16. Chu also addressed the issue of taxation. He argued that the taxing officer's decision to tax the bill of costs at KES 1,301,477.00 was legally sound, as the subject matter’s value had already been determined by the court in its judgment of 11/3/2020 to be USD 447,943.02. He rejected the Defendants’ contention that this value should be assessed differently, noting that once a judgment exists, its valuation supersedes any previous figures stated in the pleadings.
17. He emphasized that written submissions do not qualify as pleadings for valuation purposes under the Advocates Remuneration Order and rejected the Defendants’ reliance on U.S. law, pointing out that the court had already affirmed that Kenyan law governed the dispute. Chu reiterated that the case was a straightforward debt recovery matter, and references to U.S. law did not render it complex.
18. Chu also disputed the Defendants' calculation of interest on the decretal sum, emphasizing that the court had already addressed the matter conclusively in its ruling and judgment. He noted that even if the Plaintiff had succeeded, the court might not have awarded the interest claimed in their submissions.
19. He contended that since the suit had already been determined and a judgment delivered, the value of the subject matter should be derived from that judgment. He further argued that the Defendants were improperly attempting to review the judgment through a taxation reference.
20. Chu criticized the Defendants’ objection to the ruling for being vague and lacking specific grounds, asserting that the 14-day window for filing a proper objection had expired. He also described the instruction fees quoted in the bill of costs as unreasonable and potentially hindering access to justice if they were accepted.
21. He affirmed that the taxing officer had acted within the scope of her discretion and in accordance with the Advocates Remuneration Order. Should the Court find merit in the Application, Chu submitted that any re-taxation should be referred back to the taxing officer rather than handled directly by the Court.
22. Finally, he maintained that the taxing officer’s decision should not be overturned unless it was based on an identifiable error of principle, which the Defendants had failed to demonstrate. He therefore prayed for the application to be dismissed with costs and for the taxing officer's ruling to be upheld.
23. The Application proceeded by way of written submissions. The Defendants filed written submissions dated 29/10/2024, while the Plaintiff filed submissions in opposition dated 20/2/2025. The submissions were highlighted in Court on 5th March 2025.
Analysis and Determination:
24. I have carefully read and considered the Defendant’s Chamber Summons Application dated 9th December 2022, which essentially is a reference application against the taxation ruling of 30/11/2022, which taxed the Defendants’ party and party bill of costs dated 4/8/2020 at Kshs 1,301,477/-. I have also read and considered the response thereto and the parties’ submissions in support of their respective positions.
25. From the pleadings and the parties’ submissions, I note that the main issues for this court’s determination are: -
i. Whether the application/reference is premature
ii. Whether there are sufficient grounds to interfere with the taxing officer’s discretion
Whether the Reference application is premature
26. The Plaintiff submitted that the instant application is premature as the taxing officer has yet to pronounce reasons for her taxation ruling of 30/11/2022, and that the Defendants ought to have waited for the taxing officer’s reasons before filing this application. The Defendant did not submit on this issue.
27. The procedure for challenging a Taxing Officer’s decision in the High Court is provided for under Paragraph 11(1) & (2) of the Advocates (Remuneration) Order, which states that –
“1. Should any party object to the decision of the taxing officer, he may within 14 days after the decision give notice in writing to the taxing officer of the items of taxation to which he objects.
2. The taxing officer shall forthwith record and forward to the objector the reasons for his decision on those items and the objector may within fourteen days from the receipt of the reasons apply to a judge by chamber summons, which shall be served on all the parties concerned, setting out the grounds of his objection…”
28. From the above, it is clear that before filing a Reference as contemplated under Rule 11 of the Advocates (Remuneration) Order, an aggrieved party has to first give the Taxing Officer a Notice of within fourteen (14) days of his decision, of the items of taxation to which he objects to. The Taxing Officer is thereafter required to forward to the objector the reasons for the decision, after which the objector may, within fourteen (14) days from the receipt of the said reasons, file a Reference to a Judge by way of Chamber Summons, setting out the grounds of objection.
29. In the case of Machira v Magugu [2002] 2 EA 428, the Court stated as follows on the procedure of challenging the decision of a taxing master–
“...the Advocates Remuneration Order is a complete code and there is no provision for the invocation of the Civil Procedure Rules... any complaint about any decision of the taxing officer whether it relates to a point of law taken with regard to taxation or to a grievance about the taxation of any item in the bill of costs is ventilated by way of a reference to the Judge in accordance with paragraph 11 of the Advocates Remuneration Order..."
30. The provision above provision (Rule 11(1) & (2) of the Advocates (Remuneration) Order) stipulates that a party who wishes to object to a taxation decision must obtain the reasons for the decision first from the taxing officer before filing a reference to this court.
31. In this case, the taxation decision was rendered on 30/11/2022. On 5/12/2022, the Defendants’ advocate wrote a letter to the taxing officer requesting reasons for the ruling to enable them to lodge a taxation reference. Four days later, the Defendants filed the present reference application before the requested reasons were issued.
32. From the above, it is evident that the taxation ruling having been delivered on 30th November 2022, the Defendants’ notice of objection dated 5th December 2022 to the Taxing Master was issued outside the fourteen (14) days permitted in law. Additionally, it is also clear from the record that the instant reference application was lodged by the Defendants on 9th December 2022, just four days after their letter of 5th December 2022 to the taxing master, before the expiry of the 14 days allowed for the taxing master to provide the reasons of the ruling, making the reference application premature.
33. The Court (Meoli J), when striking out a Reference in the case of Matiri Mburu & Chepkemboi Advocates vs Occidental Insurance Company Limited [2017] eKLR, for failure to comply with the provisions of Paragraph 11 of the Advocates Remuneration Order, held as follows –
“4. Paragraph 11 (1) of the Remuneration Order requires a party seeking reasons for a taxation decision to give notice of the items of taxation to which the party objects, which requirement was evidently not complied with in this case. Until the reasons sought under Paragraph 11 (2) of the Remuneration Order are furnished the period of 14 days as contemplated therein does not begin to run…
6. In my own view the provisions of paragraph 11 of the Remuneration Order serve several purposes. Firstly, the requirement that a party seeking reasons gives notice of items objected to, serves to narrow down the issues, and secondly, give notice to the adverse party and the taxing master of his objection. Thus the taxing master, adverse party and ultimately the reference court in their respective roles can focus on the specific matter objected to rather than entire bills of costs, which often run into several pages.
7. The objective is obvious: the expeditious disposal of taxation disputes. Thus compliances with the requirements of paragraph 11 of the Remuneration Order is not a mere technicality that can be pushed aside peremptorily as the Applicant appears to suggest. The provisions of Article 159 (2) (d) of the Constitution were not intended to overthrow procedural or technical requirements, but to guard against “undue regard” to procedural technicalities in the administration of justice.”
34. Guided by the above authorities, it is clear that the instant reference application was filed in non-compliance with Paragraph 11 of the Advocates Remuneration Order and is therefore incompetent in that regard.
35. My findings above notwithstanding, this Court is alive to the provisions of Article 50 of the Kenyan Constitution, 2010, which guarantees the right to a fair hearing, and the need to have disputes determined on merits. I will therefore proceed and examine the Reference on merits.
Whether there are sufficient grounds to interfere with the taxing officer’s discretion
36. On merits, the Defendant/Applicant impugned the decision of the taxing master on the basis that the costs awarded were too low as to lead to the irresistible conclusion that there was an error of principle. In particular, the Applicant asserted that the taxing master committed an error of law in determining the subject matter value of the primary dispute by disregarding various superior court decisions on the issue.
37. The principles that guide this Court when considering a reference from the decision of a taxing officer are that matters of quantum of taxation belong in the province and competence of a taxing master, and that the High Court, on a reference, should be slow to interfere. See the case of Peter Muthoka & another v Ochieng & 3 others [2019] eKLR, where the Court of Appeal held: -
“It is not lost to us … that matters of quantum of taxation properly belong in the province and competence of taxing masters. They fall within their discretion and so the High Court upon a reference will be slow to interfere with them. It is not a wild and unaccountable discretion, however, because it is at its core and by definition a judicial discretion to be exercised, not capriciously at a whim, but on settled principles. When it is shown that there was a misdirection on some matter resulting in a wrong decision, or it is manifest from the case as a whole that the discretion was improperly exercised, resulting in mis-justice, to borrow the holding in MBOGO -vs- SHAH (Supra), then the decision though discretionary, may properly be interfered with. See also ATTORNEY GENERAL OF KENYA -vs- PROF. ANYANG’ NYONG’O & 10 OTHERS, EACJ App. No. 1 OF 2009.”
38. Again, in the case of Kipkorir, Tito & Kiara Advocates v Deposit Protection Fund Board [2005] eKLR, the Court of Appeal stated: -
“The learned judge like the taxing officer was exercising judicial discretion when he allowed the reference. This Court cannot interfere with the exercise of that discretion unless it is shown that the learned judge acted on the wrong principles of law. The appeal to this Court from the decision of a judge on reference from a taxing officer is akin to a second appeal and should be governed by Section 72 (1) of the Civil Procedure Act. In our view, such an appeal can only be allowed on any of the three grounds specified in Section 72 (1) of the Civil Procedure Act, that is to say, if the decision is contrary to law or some usage having the force of law; or the decision has failed to determine some issue(s) of law or usage having the force of law or where there is a substantial error or defect in the procedure provided by law which may possibly have produced error or defect in the decision on the case upon merits.”
39. In the present case, I note from the Ruling dated 30th November 2022 that the taxing master, in computing instruction fees, used a sum of Kshs. 54,391,228, being the amount the judge (Kasango J) indicated in the judgment she would have awarded had the claim been successful (USD 447,943,02 less USD 9,319,15) plus interest. The Taxing master explained in her ruling that her choice of interest was guided by the provisions of section 26(2) of the Civil Procedure Act,
40. The Applicant/Defendant argued that the subject matter value ought to have been USD 160,040,511.55 (Kshs. 309,883,388.785), being the amount the court (Kasango J) stated in the judgment that she would have awarded (USD 447,943,02) had the claim be successful plus a compound of interest 2% per month.
41. The Respondent, on the other hand, supported the Ruling by the taxing master and submitted that in coming up with Kshs. 309,883,388.785 as the subject matter value, the Defendant erroneously relied on the submissions by the Plaintiff/Respondent, which, according to the Respondent, is not a basis for the determination of subject matter value, for purposes of assessing Party and Party Costs.
42. It is settled by judicial precedent that the value of the subject matter can be determined from the pleadings, judgment, or settlement of the parties. In the case of Kenya Airports Authority v Otieno Ragot and Company Advocates (Petition E011 of 2023) [2024] KESC 44 (KLR) (2 August 2024) (Judgment), the Supreme Court, while concurring and approving the Court of Appeal decision in Peter Muthoka & Another vs. Ochieng & 3 Others, Civil Appeal No. 328 of 2017; [2019] eKLR stated that:-
“56. Equally, the Court of Appeal in considering the issue of how the value of a subject matter can be determined in Peter Muthoka & Another vs. Ochieng & 3 Others, Civil Appeal No. 328 of 2017; [2019] eKLR, stated as follows:
“It seems to us quite plain that the basis for determining subject matter value for purposes of instruction fees is wholly dependent on the stage at which the fees are being taxed. Where it happens before judgment, it is the pleadings that form the basis for determining subject value. Once judgment has been entered, and for what seems to us to be an obvious reason, recourse will not be had to the pleadings since the judgment does determine conclusively the value of the subject matter as a claim, no matter how pleaded, gets its true value as adjudged by the court.
Where, however, a suit is settled, then, from a literal and practical reading of the provision, the subject matter value must be sought by reference, in the first instance, to the terms of the settlement. Just as one would not start with the pleadings in the face of a judgment, it is indubitable that one cannot start with the pleadings where there is a settlement.”
43. I have carefully perused and studied the Bill of Costs in question as well as the taxing master’s Ruling dated 30th November 2022 on the same. It is common ground that I her judgment dated 11th March 2020, Kasango J dismissed the primary suit and stated that had the claim succeeded, the court would have awarded (USD 447,943,02 less USD 9,319,15) plus interest. The Judge, however, did not specify the rate of interest.
44. Section 26 of the Civil Procedure Act provides that the award of interest is discretionary and that where a decree is silent on the rate of interest, as is the case herein, then it shall be deemed that the court awarded interest at the rate of 6% per annum.
45. From the judgment of Kasango J in the primary suit, the amount that would have been awarded had the claim been successful is clearly stated. It is also not in dispute that the rate of interest was not specified by the judge. In the circumstances, it is the finding of this court that the taxing master cannot be faulted for having employed a rate of 6% as mandated under section 26(2) of the Civil Procedure Act, which provides that: -
“ 26. Interests
(1) Where and in so far as a decree is for the payment of money, the court may, in the decree, order interest at such rate as the court deems reasonable to be paid on the principal sum adjudged from the date of the suit to the date of the decree in addition to any interest adjudged on such principal sum for any period before the institution of the suit, with further interest at such rate as the court deems reasonable on the aggregate sum so adjudged from the date of the decree to the date of payment or to such earlier date as the court thinks fit.
(2) Where such a decree is silent with respect to the payment of further interest on such aggregate sum as aforesaid from the date of the decree to the date of payment or other earlier date, the court shall be deemed to have ordered interest at 6 per cent per annum.” [emphasis added]
46. I agree with the Respondent’s submissions that the Applicant’s reference to the figures in the Respondent’s submissions as the basis for coming up with the subject matter value is an incorrect approach since submissions are not pleadings.
47. As affirmed by the Supreme Court in the case of Kenya Airports Authority v Otieno Ragot and Company Advocates (Petition E011 of 2023) [2024] KESC 44 (KLR) (2 August 2024) (Judgment), affirmed that the value of the subject matter in taxation should be derived from the pleadings, judgment, or settlement.
48. Accordingly, I find that the Applicant’s/Defendant’s Reference dated 9th December 2022 lacks merit and is hereby dismissed with costs.
49. It is so ordered.
SIGNED, DATED, and DELIVERED IN VIRTUAL COURT
THIS 29TH DAY OF MAY 2025
ADO MOSES
In the presence of:
Moses………….C/A
Ms. Nduta Kamau h/b for Dr. Kamau Kuria, SC…………For Applicant
Obonyo & Owino………………………..........................For the Respondent
i. That this Honourable Court be pleased to vary/set aside the decision of the Taxing Officer contained in her ruling delivered on 30th November 2022.
ii. That this Honourable Court be pleased to tax the Bill of Costs itself.
iii. That the costs of this application/reference be provided for.
2. The application is grounded on the claims that the taxing officer had taxed the Defendants’ party and party Bill of Costs dated 4/8/2020 at Kshs. 1,301,477/-, an amount the Defendants argue was unjustifiably low. They contended that the taxing officer failed to consider key legal precedents from Kenya, Australia, and England, particularly regarding the indemnity principle which underpins party-and-party costs. According to the Defendants, the low amount awarded suggested a fundamental error in principle.
3. The Defendants emphasized that the underlying suit involved complex financial claims exceeding USD 44 million, grounded in loan agreements, promissory notes, and guarantees governed by New York and Kenyan law. These agreements entailed compound interest and the application of international law, further increasing the complexity and value of the case.
4. The Defendants also cited judicial authorities in support of their contention that interest should be considered in assessing instruction fees. They maintained that the taxing officer erred in law by excluding this and in applying incorrect principles in the taxation process. They further alleged bias, claiming that the taxing officer favored the Plaintiff and disregarded precedents such as Joreth Limited v Kigano & Associates [2002] KECA 153 (KLR), which outlines how to determine the value of the subject matter.
5. Additionally, the Defendants criticized the assessment of instruction fees (Kshs. 794,390/-) and getting-up fees as manifestly low, lacking a transparent and reasoned basis. They argued that the discretion exercised by the taxing officer was misdirected, non-transparent, and failed to consider the case's complexity, novelty, and demands.
6. The Plaintiff objected to the instant application vide grounds of opposition and a replying affidavit, both dated 30/1/2025.
7. In the ground of opposition, the Plaintiff asserted first that the taxing officer had not erred in fact or principle in the ruling delivered on 30/11/2022, in which the value of the subject matter was correctly assessed at USD 438,623.87, as outlined in the Judgment. The Plaintiff further argued that the application was premature, as the taxing officer had not yet provided reasons for the ruling.
8. Additionally, the Plaintiff asserted that the Defendants’ objection to the taxation was vague, lacking both specific items being contested and the reasons for such objections. It was further the Plaintiff’s position that the Defendants had improperly relied on the Plaintiff’s written submissions to determine the value of the subject matter, despite those submissions not qualifying as pleadings or a judgment for that purpose.
9. The Plaintiff also described the instruction fees in the Bill of Costs as unreasonable and exorbitant. It was submitted that a failure by the taxing officer to apply the formula set out in Schedule VI of the Advocates (Remuneration) Order would amount to an error of principle.
10. Moreover, the Plaintiff pointed out that the Defendants had miscalculated interest on the decretal sum, disregarding the 6% interest rate already determined in the ruling. The Plaintiff also maintained that the court lacked jurisdiction to consider any issues related to a purported fee agreement at that stage.
11. It was further argued that the matter was not complex, being a straightforward debt recovery case. Consequently, the Plaintiff emphasized that the court should not interfere with the taxing officer’s decision unless it was based on an identifiable error of principle.
12. In the replying affidavit, Mark H. Chu, the Assistant General Counsel for Litigation, Fraud, and Compliance at the Plaintiff bank, noted that the 4th Defendant had not provided proof that he was authorised by the other Defendants to swear the supporting affidavit on their behalf.
13. He stated that the application sought not only to set aside the taxing officer’s decision delivered on 30/11/2022 but also substantive reliefs such as a re-taxation of the Defendants’ Bill of Costs.
14. Chu recounted that the matter had been mentioned in court on two specific occasions in 2024, but the Plaintiff was only served with the hearing notice for 24/2/2025 via email on 5/11/2024. He asserted that the Plaintiff had not been served with prior notices and was unaware of the proceedings due to this lack of notice. This failure in service prompted a protest email from the Plaintiff’s advocates, and Chu stressed that no notices were received through any official or unofficial channels. He explained that this lack of participation in the hearings was not due to negligence but to lack of notification.
15. The Plaintiff’s position, as advised by their counsel, was that proper service of notices is a fundamental requirement of procedural fairness and constitutional principles under Articles 10, 47, 48, and 50 of the Kenyan Constitution. Consequently, Chu argued that granting the reliefs in the Defendants’ application based on alleged non-opposition would be unconstitutional and unjust.
16. Chu also addressed the issue of taxation. He argued that the taxing officer's decision to tax the bill of costs at KES 1,301,477.00 was legally sound, as the subject matter’s value had already been determined by the court in its judgment of 11/3/2020 to be USD 447,943.02. He rejected the Defendants’ contention that this value should be assessed differently, noting that once a judgment exists, its valuation supersedes any previous figures stated in the pleadings.
17. He emphasized that written submissions do not qualify as pleadings for valuation purposes under the Advocates Remuneration Order and rejected the Defendants’ reliance on U.S. law, pointing out that the court had already affirmed that Kenyan law governed the dispute. Chu reiterated that the case was a straightforward debt recovery matter, and references to U.S. law did not render it complex.
18. Chu also disputed the Defendants' calculation of interest on the decretal sum, emphasizing that the court had already addressed the matter conclusively in its ruling and judgment. He noted that even if the Plaintiff had succeeded, the court might not have awarded the interest claimed in their submissions.
19. He contended that since the suit had already been determined and a judgment delivered, the value of the subject matter should be derived from that judgment. He further argued that the Defendants were improperly attempting to review the judgment through a taxation reference.
20. Chu criticized the Defendants’ objection to the ruling for being vague and lacking specific grounds, asserting that the 14-day window for filing a proper objection had expired. He also described the instruction fees quoted in the bill of costs as unreasonable and potentially hindering access to justice if they were accepted.
21. He affirmed that the taxing officer had acted within the scope of her discretion and in accordance with the Advocates Remuneration Order. Should the Court find merit in the Application, Chu submitted that any re-taxation should be referred back to the taxing officer rather than handled directly by the Court.
22. Finally, he maintained that the taxing officer’s decision should not be overturned unless it was based on an identifiable error of principle, which the Defendants had failed to demonstrate. He therefore prayed for the application to be dismissed with costs and for the taxing officer's ruling to be upheld.
23. The Application proceeded by way of written submissions. The Defendants filed written submissions dated 29/10/2024, while the Plaintiff filed submissions in opposition dated 20/2/2025. The submissions were highlighted in Court on 5th March 2025.
Analysis and Determination:
24. I have carefully read and considered the Defendant’s Chamber Summons Application dated 9th December 2022, which essentially is a reference application against the taxation ruling of 30/11/2022, which taxed the Defendants’ party and party bill of costs dated 4/8/2020 at Kshs 1,301,477/-. I have also read and considered the response thereto and the parties’ submissions in support of their respective positions.
25. From the pleadings and the parties’ submissions, I note that the main issues for this court’s determination are: -
i. Whether the application/reference is premature
ii. Whether there are sufficient grounds to interfere with the taxing officer’s discretion
Whether the Reference application is premature
26. The Plaintiff submitted that the instant application is premature as the taxing officer has yet to pronounce reasons for her taxation ruling of 30/11/2022, and that the Defendants ought to have waited for the taxing officer’s reasons before filing this application. The Defendant did not submit on this issue.
27. The procedure for challenging a Taxing Officer’s decision in the High Court is provided for under Paragraph 11(1) & (2) of the Advocates (Remuneration) Order, which states that –
“1. Should any party object to the decision of the taxing officer, he may within 14 days after the decision give notice in writing to the taxing officer of the items of taxation to which he objects.
2. The taxing officer shall forthwith record and forward to the objector the reasons for his decision on those items and the objector may within fourteen days from the receipt of the reasons apply to a judge by chamber summons, which shall be served on all the parties concerned, setting out the grounds of his objection…”
28. From the above, it is clear that before filing a Reference as contemplated under Rule 11 of the Advocates (Remuneration) Order, an aggrieved party has to first give the Taxing Officer a Notice of within fourteen (14) days of his decision, of the items of taxation to which he objects to. The Taxing Officer is thereafter required to forward to the objector the reasons for the decision, after which the objector may, within fourteen (14) days from the receipt of the said reasons, file a Reference to a Judge by way of Chamber Summons, setting out the grounds of objection.
29. In the case of Machira v Magugu [2002] 2 EA 428, the Court stated as follows on the procedure of challenging the decision of a taxing master–
“...the Advocates Remuneration Order is a complete code and there is no provision for the invocation of the Civil Procedure Rules... any complaint about any decision of the taxing officer whether it relates to a point of law taken with regard to taxation or to a grievance about the taxation of any item in the bill of costs is ventilated by way of a reference to the Judge in accordance with paragraph 11 of the Advocates Remuneration Order..."
30. The provision above provision (Rule 11(1) & (2) of the Advocates (Remuneration) Order) stipulates that a party who wishes to object to a taxation decision must obtain the reasons for the decision first from the taxing officer before filing a reference to this court.
31. In this case, the taxation decision was rendered on 30/11/2022. On 5/12/2022, the Defendants’ advocate wrote a letter to the taxing officer requesting reasons for the ruling to enable them to lodge a taxation reference. Four days later, the Defendants filed the present reference application before the requested reasons were issued.
32. From the above, it is evident that the taxation ruling having been delivered on 30th November 2022, the Defendants’ notice of objection dated 5th December 2022 to the Taxing Master was issued outside the fourteen (14) days permitted in law. Additionally, it is also clear from the record that the instant reference application was lodged by the Defendants on 9th December 2022, just four days after their letter of 5th December 2022 to the taxing master, before the expiry of the 14 days allowed for the taxing master to provide the reasons of the ruling, making the reference application premature.
33. The Court (Meoli J), when striking out a Reference in the case of Matiri Mburu & Chepkemboi Advocates vs Occidental Insurance Company Limited [2017] eKLR, for failure to comply with the provisions of Paragraph 11 of the Advocates Remuneration Order, held as follows –
“4. Paragraph 11 (1) of the Remuneration Order requires a party seeking reasons for a taxation decision to give notice of the items of taxation to which the party objects, which requirement was evidently not complied with in this case. Until the reasons sought under Paragraph 11 (2) of the Remuneration Order are furnished the period of 14 days as contemplated therein does not begin to run…
6. In my own view the provisions of paragraph 11 of the Remuneration Order serve several purposes. Firstly, the requirement that a party seeking reasons gives notice of items objected to, serves to narrow down the issues, and secondly, give notice to the adverse party and the taxing master of his objection. Thus the taxing master, adverse party and ultimately the reference court in their respective roles can focus on the specific matter objected to rather than entire bills of costs, which often run into several pages.
7. The objective is obvious: the expeditious disposal of taxation disputes. Thus compliances with the requirements of paragraph 11 of the Remuneration Order is not a mere technicality that can be pushed aside peremptorily as the Applicant appears to suggest. The provisions of Article 159 (2) (d) of the Constitution were not intended to overthrow procedural or technical requirements, but to guard against “undue regard” to procedural technicalities in the administration of justice.”
34. Guided by the above authorities, it is clear that the instant reference application was filed in non-compliance with Paragraph 11 of the Advocates Remuneration Order and is therefore incompetent in that regard.
35. My findings above notwithstanding, this Court is alive to the provisions of Article 50 of the Kenyan Constitution, 2010, which guarantees the right to a fair hearing, and the need to have disputes determined on merits. I will therefore proceed and examine the Reference on merits.
Whether there are sufficient grounds to interfere with the taxing officer’s discretion
36. On merits, the Defendant/Applicant impugned the decision of the taxing master on the basis that the costs awarded were too low as to lead to the irresistible conclusion that there was an error of principle. In particular, the Applicant asserted that the taxing master committed an error of law in determining the subject matter value of the primary dispute by disregarding various superior court decisions on the issue.
37. The principles that guide this Court when considering a reference from the decision of a taxing officer are that matters of quantum of taxation belong in the province and competence of a taxing master, and that the High Court, on a reference, should be slow to interfere. See the case of Peter Muthoka & another v Ochieng & 3 others [2019] eKLR, where the Court of Appeal held: -
“It is not lost to us … that matters of quantum of taxation properly belong in the province and competence of taxing masters. They fall within their discretion and so the High Court upon a reference will be slow to interfere with them. It is not a wild and unaccountable discretion, however, because it is at its core and by definition a judicial discretion to be exercised, not capriciously at a whim, but on settled principles. When it is shown that there was a misdirection on some matter resulting in a wrong decision, or it is manifest from the case as a whole that the discretion was improperly exercised, resulting in mis-justice, to borrow the holding in MBOGO -vs- SHAH (Supra), then the decision though discretionary, may properly be interfered with. See also ATTORNEY GENERAL OF KENYA -vs- PROF. ANYANG’ NYONG’O & 10 OTHERS, EACJ App. No. 1 OF 2009.”
38. Again, in the case of Kipkorir, Tito & Kiara Advocates v Deposit Protection Fund Board [2005] eKLR, the Court of Appeal stated: -
“The learned judge like the taxing officer was exercising judicial discretion when he allowed the reference. This Court cannot interfere with the exercise of that discretion unless it is shown that the learned judge acted on the wrong principles of law. The appeal to this Court from the decision of a judge on reference from a taxing officer is akin to a second appeal and should be governed by Section 72 (1) of the Civil Procedure Act. In our view, such an appeal can only be allowed on any of the three grounds specified in Section 72 (1) of the Civil Procedure Act, that is to say, if the decision is contrary to law or some usage having the force of law; or the decision has failed to determine some issue(s) of law or usage having the force of law or where there is a substantial error or defect in the procedure provided by law which may possibly have produced error or defect in the decision on the case upon merits.”
39. In the present case, I note from the Ruling dated 30th November 2022 that the taxing master, in computing instruction fees, used a sum of Kshs. 54,391,228, being the amount the judge (Kasango J) indicated in the judgment she would have awarded had the claim been successful (USD 447,943,02 less USD 9,319,15) plus interest. The Taxing master explained in her ruling that her choice of interest was guided by the provisions of section 26(2) of the Civil Procedure Act,
40. The Applicant/Defendant argued that the subject matter value ought to have been USD 160,040,511.55 (Kshs. 309,883,388.785), being the amount the court (Kasango J) stated in the judgment that she would have awarded (USD 447,943,02) had the claim be successful plus a compound of interest 2% per month.
41. The Respondent, on the other hand, supported the Ruling by the taxing master and submitted that in coming up with Kshs. 309,883,388.785 as the subject matter value, the Defendant erroneously relied on the submissions by the Plaintiff/Respondent, which, according to the Respondent, is not a basis for the determination of subject matter value, for purposes of assessing Party and Party Costs.
42. It is settled by judicial precedent that the value of the subject matter can be determined from the pleadings, judgment, or settlement of the parties. In the case of Kenya Airports Authority v Otieno Ragot and Company Advocates (Petition E011 of 2023) [2024] KESC 44 (KLR) (2 August 2024) (Judgment), the Supreme Court, while concurring and approving the Court of Appeal decision in Peter Muthoka & Another vs. Ochieng & 3 Others, Civil Appeal No. 328 of 2017; [2019] eKLR stated that:-
“56. Equally, the Court of Appeal in considering the issue of how the value of a subject matter can be determined in Peter Muthoka & Another vs. Ochieng & 3 Others, Civil Appeal No. 328 of 2017; [2019] eKLR, stated as follows:
“It seems to us quite plain that the basis for determining subject matter value for purposes of instruction fees is wholly dependent on the stage at which the fees are being taxed. Where it happens before judgment, it is the pleadings that form the basis for determining subject value. Once judgment has been entered, and for what seems to us to be an obvious reason, recourse will not be had to the pleadings since the judgment does determine conclusively the value of the subject matter as a claim, no matter how pleaded, gets its true value as adjudged by the court.
Where, however, a suit is settled, then, from a literal and practical reading of the provision, the subject matter value must be sought by reference, in the first instance, to the terms of the settlement. Just as one would not start with the pleadings in the face of a judgment, it is indubitable that one cannot start with the pleadings where there is a settlement.”
43. I have carefully perused and studied the Bill of Costs in question as well as the taxing master’s Ruling dated 30th November 2022 on the same. It is common ground that I her judgment dated 11th March 2020, Kasango J dismissed the primary suit and stated that had the claim succeeded, the court would have awarded (USD 447,943,02 less USD 9,319,15) plus interest. The Judge, however, did not specify the rate of interest.
44. Section 26 of the Civil Procedure Act provides that the award of interest is discretionary and that where a decree is silent on the rate of interest, as is the case herein, then it shall be deemed that the court awarded interest at the rate of 6% per annum.
45. From the judgment of Kasango J in the primary suit, the amount that would have been awarded had the claim been successful is clearly stated. It is also not in dispute that the rate of interest was not specified by the judge. In the circumstances, it is the finding of this court that the taxing master cannot be faulted for having employed a rate of 6% as mandated under section 26(2) of the Civil Procedure Act, which provides that: -
“ 26. Interests
(1) Where and in so far as a decree is for the payment of money, the court may, in the decree, order interest at such rate as the court deems reasonable to be paid on the principal sum adjudged from the date of the suit to the date of the decree in addition to any interest adjudged on such principal sum for any period before the institution of the suit, with further interest at such rate as the court deems reasonable on the aggregate sum so adjudged from the date of the decree to the date of payment or to such earlier date as the court thinks fit.
(2) Where such a decree is silent with respect to the payment of further interest on such aggregate sum as aforesaid from the date of the decree to the date of payment or other earlier date, the court shall be deemed to have ordered interest at 6 per cent per annum.” [emphasis added]
46. I agree with the Respondent’s submissions that the Applicant’s reference to the figures in the Respondent’s submissions as the basis for coming up with the subject matter value is an incorrect approach since submissions are not pleadings.
47. As affirmed by the Supreme Court in the case of Kenya Airports Authority v Otieno Ragot and Company Advocates (Petition E011 of 2023) [2024] KESC 44 (KLR) (2 August 2024) (Judgment), affirmed that the value of the subject matter in taxation should be derived from the pleadings, judgment, or settlement.
48. Accordingly, I find that the Applicant’s/Defendant’s Reference dated 9th December 2022 lacks merit and is hereby dismissed with costs.
49. It is so ordered.
SIGNED, DATED, and DELIVERED IN VIRTUAL COURT
THIS 29TH DAY OF MAY 2025
ADO MOSES
In the presence of:
Moses………….C/A
Ms. Nduta Kamau h/b for Dr. Kamau Kuria, SC…………For Applicant
Obonyo & Owino………………………..........................For the Respondent