Background
1. This appeal arises from the decision of the Chief Magistrate’s Court at Milimani Commercial Courts in Miscellaneous Application No. E1197 of 2023, delivered on 18th April 2024, concerning the taxation of Auctioneer’s costs following instructions to realize charged property in Mombasa County.
2. The Applicant, Mr. Joseph Gikonyo, trading as Garam Investments, filed a Bill of Costs dated 4th August 2023 for professional fees arising from instructions issued by the 2nd Respondent, First Community Bank Limited, to recover a loan sum of Kshs. 3,702,965.95 owed by the 1st Respondent, Fatma Ali Dabaso. The instructions entailed selling the property identified as L.R No. Mainland North/II/8463 Shree Swaminarayan Estate Phase II Kiembeni Area, Mombasa County.
3. The Applicant’s claim is based on two sets of instructions purportedly issued on 10th July 2020 and 17th September 2021. The Applicant contends that both sets of instructions are distinct and independent, entitling him to separate commissions for each. However, the Deputy Registrar taxed off items 7, 8, 9, 10, 14, and 15 of the Bill of Costs, finding that the alleged second set of instructions was merely a continuation of the initial instructions and did not warrant any additional charges.
4. The Deputy Registrar further reduced the Auctioneer’s commission under Item 5 of the Bill of Costs by 50 per cent, reasoning that the property was never sold and that the work done did not justify the full amount claimed.
The Appeal
5. Aggrieved by the decision of the Deputy Registrar, the Applicant, Joseph Gikonyo t/a Garam Investments, filed the present appeal vide a Chamber Summons dated 16th May 2024, raising the following five grounds:
i. That the Deputy Registrar erred in law and in fact by failing to recognize that the instructions issued to the Applicant on 17th September 2021 constituted a second set of instructions, separate from those issued on 10th July 2020, and therefore improperly taxed off items 7, 8, 9, 10, 14, and 15 of the Bill of Costs.
ii. That the Deputy Registrar erred in law and in fact by miscomputing the Applicant’s commission under Item 5 of the Bill of Costs, reducing the commission by 50 percent despite the fact that the claimed amount already reflected a 50 percent reduction in accordance with Paragraph 7 of Part II of the Fourth Schedule to the Auctioneer Rules, 1997.
iii. That the Deputy Registrar erred in principle by failing to properly consider the provisions of the Auctioneer Rules, 1997, particularly Paragraph 7 of Part II of the Fourth Schedule, which entitles an Auctioneer to fees for work performed, including where a sale is stayed or postponed.
iv. That the Deputy Registrar’s failure to assess the full scope of work performed by the Applicant caused substantial financial prejudice, depriving the Applicant of his lawful entitlement to commissions and costs.
v. That the Deputy Registrar’s ruling contained errors in both law and fact, warranting this court’s intervention to set aside the ruling and direct the reassessment of the Bill of Costs.
6. The appeal was canvassed by way of written submissions. The Applicant’s submissions are dated 16th October 2024, while the 2nd Respondent’s submissions are dated 16th October 2024. The 1st Respondent did not file any submissions and did not participate in these proceedings.
Appellant’s submissions
7. The Appellant submitted that the Deputy Registrar erred in law and fact by failing to recognize that the instructions issued on 17th September 2021 were separate and distinct from those issued on 10th July 2020, thereby wrongfully taxing off items 7, 8, 9, 10, 14, and 15 of the Bill of Costs. The Appellant contended that the two sets of instructions were independent and each required separate actions, as evidenced by the issuance of fresh notices, advertisements, and related services.
8. Further, the Appellant argued that the computation of the commission under Item 5 of the Bill of Costs was flawed. Specifically, the Deputy Registrar reduced the commission by 50 percent without considering that the claimed amount had already been halved in line with Paragraph 7 of Part II of the Fourth Schedule of the Auctioneer Rules, 1997. The Appellant submitted that this double reduction resulted in an unlawful deprivation of their entitled fees.
9. On the issue of delay in filing the appeal, the Appellant submitted that the delay was occasioned by factors beyond their control. They explained that the ruling was initially scheduled for delivery on 19th April 2024 but was instead delivered on 18th April 2024 without proper notice to the parties. That the ruling was uploaded on the CTS platform on 5th May 2024, and the Appellant discovered it on 13th May 2024. The present appeal was then filed promptly on 16th May 2024.
10. The Appellant further submitted that the errors in the taxation of the Bill of Costs caused significant financial prejudice, amounting to Kshs. 171,720. They emphasized that the Auctioneer Rules, 1997, guarantee payment for work performed, even where the sale of property is stayed or postponed, as provided under Paragraph 7 of Part II of the Fourth Schedule.
11. In support of their submissions, the Appellant relied on Civil Appeal Case 34 of 2019; Peter M. Mwangi t/a Cash Crop Auctioneers vs Agricultural Finance Corporation [2019] eKLR, where the court held that auctioneers are entitled to their professional fees upon issuance of requisite notices, regardless of whether the sale proceeds.
12. The Appellant argued that denying the appeal would set a dangerous precedent for undermining the rights of auctioneers to recover fees for services lawfully rendered. They urged the court to exercise its discretion under Rule 55(5) of the Auctioneer Rules, 1997, to extend the time for filing the appeal, set aside the Deputy Registrar’s ruling, and order a fresh assessment of the Bill of Costs.
13. The Appellant concluded by reiterating that the Deputy Registrar’s decision was based on an erroneous interpretation of the law and facts, thereby warranting the intervention of this Honorable Court to correct the injustice caused.
The 2nd Respondent’s Submissions
14. The 2nd Respondent submitted that the appeal is time-barred under Rule 55(5) of the Auctioneer Rules, 1997, which requires an appeal to be filed within 7 days of the delivery of the ruling. They argued that the ruling was delivered on 18th April 2024 and that even though it was uploaded on the CTS platform on 5th May 2024, the Appellant delayed filing the appeal until 16th May 2024, which was 27 days after the delivery of the ruling.
15. The 2nd Respondent contended that the Appellant failed to demonstrate sufficient cause for the delay in filing the appeal. They emphasized that Rule 55(5) is couched in mandatory terms, leaving no room for discretion unless exceptional circumstances are proven. They relied on Leo Sila Mutiso v Rose Hellen Wangari Mwangi – Nairobi Civil Application No. 251 of 1997, which outlines the factors to be considered when granting an extension of time, including the length of delay, reasons for delay, chances of success, and prejudice to the opposing party.
16. On the taxation of items 7, 8, 9, 10, 14, and 15 of the Bill of Costs, the 2nd Respondent submitted that these items were properly taxed off by the Deputy Registrar as they were not based on a separate set of instructions. They argued that the communication dated 17th September 2021 merely instructed the Appellant to resume the process of auctioning the property under the initial instructions issued on 10th July 2020. The 2nd Respondent maintained that no new instructions were issued and cited Muganda Wasulwa T/A Keysian Auctioneers v National Cereals & Produce Board [2015] eKLR, which held that commission cannot be charged twice for the same instructions.
17. Regarding the computation of the commission under Item 5, the 2nd Respondent argued that the Deputy Registrar acted correctly in reducing the claimed amount by 50 percent. They submitted that the sale of the property did not proceed due to an injunction obtained by the 1st Respondent, and as such, the Auctioneer was only entitled to half commission as provided under Paragraph 7 of Part II of the Fourth Schedule to the Auctioneer Rules, 1997.
18. The 2nd Respondent emphasized that the Appellant’s methodology of calculating fees based on the forced sale value of the property was erroneous, as no sale occurred. They relied on National Industrial Credit Bank Limited v S. K. Ndegwa Auctioneer [2005] eKLR, where the Court of Appeal held that an auctioneer is to be remunerated for actual work done and not on speculative grounds based on what could have been achieved had the sale proceeded.
19. The 2nd Respondent argued that matters of quantum of taxation fall squarely within the discretion of the Deputy Registrar and should not be interfered with unless there is a clear error of principle. They cited Kipkorir, Tito & Kiara Advocates v Deposit Protection Fund Board [2005] eKLR, which held that judicial interference is only warranted where the taxing officer erred in principle.
20. In conclusion, the 2nd Respondent submitted that the Deputy Registrar’s ruling was lawful, fair, and based on a proper interpretation of the Auctioneer Rules, 1997. They urged the court to dismiss the appeal, uphold the taxation ruling of 18th April 2024, and award costs to the 2nd Respondent.
Analysis and Determination
21. Upon careful consideration of the grounds of appeal, the submissions by both the Appellant and the 2nd Respondent, I raise three issues for determination herein; -
i. Whether the prayer of extension of time to file the appeal out of time is merited.
ii. Whether the Deputy Registrar erred in taxing off items 7, 8, 9, 10, 14, and 15 from the Bill of Costs, and
iii. Whether the Deputy Registrar erred in reducing the Applicant’s commission under Item 5 of the Bill of Costs by 50 percent.
Whether the prayer of extension of time to file the appeal out of time is merited.
22. Rule 55 of the Auctioneer Rules, 1997 provides that an appeal from the decision of a registrar of a magistrate or the Board shall be to a judge (High Court) by way of Chamber Summons Application and it to be filed within seven (7) days from the date of the decision appealed from. Sub Rule 5 thereof provides that; -
“(5) The memorandum of appeal, by way of chamber summons setting out the grounds of the appeal, shall be filed within 7 days of the decision of the registrar or magistrate.”
23. The decision in this matter was rendered on 18th April 2024. However, the Appellant filed the appeal on 16th May 2024, a delay of 27 days.
24. Section 95 of the Civil Procedure Act deals with the question of enlargement of time in civil proceedings and provides that; -
“Where any period is fixed or granted by the court for the doing of any act prescribed or allowed by this Act, the court may, in its discretion, from time to time, enlarge such period, even though the period originally fixed or granted may have expired.”
25. An applicant approaching the Court under Section 95 must however demonstrate "good and sufficient cause' for not filing the appeal in time. In Thuita Mwangi v Kenya Airways Ltd [2003] eKLR, the Court of Appeal while dealing with the question of extension of time in civil proceedings reiterated its decision in Mutiso vs Mwangi [1997] KLR 630 and stated as follows: -
"It is now well settled that the decision whether or not to extend the time for appealing is essentially discretionary. It is also well settled that generally, the matters which this court takes into account in deciding whether to grant an extension of time are first, the length of the delay; secondly, the reason for the delay; thirdly (possibly) the chances of the appeal succeeding if the application is granted; and fourthly, the degree of prejudice to the Respondent of the application is granted."
26. The Supreme Court in the case of Nicholas Kiptoo Korir arap Salat v IEBC and 7 others [2014] e KLR set out the principles applicable in an application for leave to appeal out of time. The Court stated inter alia that: -
"The underlying principles a court should consider in the exercise of such discretion include;-
i. Extension of time is not a right of any party. It is an equitable remedy that is only available to a deserving party at the discretion of the court;
ii. A party who seeks for extension of time has the burden of laying a basis to the satisfaction of the court;
iii. Whether the court should exercise the discretion to extend time is a consideration to be made on a case-to-case basis;
iv. Whether there is a reasonable reason for the delay. The delay should be explained to the satisfaction of the court;
v. Whether there will be any prejudice suffered by the Respondent if the extension is granted;
vi. Whether the application has been brought without undue delay.
27. In this case, the Appellant attributed the delay to administrative errors, asserting that the ruling was initially scheduled for 19th April 2024 but was unexpectedly delivered a day earlier on 18th April 2024. Further, the Appellant contended that their advocate made diligent efforts to monitor the CTS platform and only discovered the ruling had been uploaded on 5th May 2024, without prior notice to the parties.
28. Upon review, this court finds that the delay was not inordinate given the peculiar circumstances. Administrative lapses and lack of notice on the CTS platform have been recognized as justifiable grounds for delay, as held in Dominic Obuya Mikwaya v South Nyanza Sugar Company Limited [2021] eKLR, where the court extended time due to the appellant’s late discovery of the judgment.
29. I note that the Appellant acted promptly upon discovering the ruling, filing the appeal within three days of obtaining the ruling on 13th May 2024. Moreover, the 2nd Respondent has not demonstrated any prejudice they may suffer if the period within which the Appeal is to be filed were to be extended.
30. Having regard to the circumstances of this case, I find that the explanation provided by the Applicant for the delay is reasonable and adequate. Accordingly, I allow this application, and the instant appeal shall be deemed to have been properly lodged.
Whether the Deputy Registrar erred in taxing off items 7, 8, 9, 10, 14, and 15 of the Bill of Costs
31. The Appellant argued that the instructions dated 17th September 2021 by the Respondent constituted a second set of distinct instructions requiring separate work, including preparation of fresh advertisements and notices, and therefore justified additional charges. The Appellant contended that the Deputy Registrar failed to account for these distinct tasks and incorrectly treated the second set of instructions as a mere continuation of those issued on 10th July 2020.
32. Conversely, the 2nd Respondent maintained that the instructions dated 17th September 2021 did not amount to a new set of instructions but were a resumption of the process initially authorized under the instructions of 10th July 2020. They cited Muganda Wasulwa T/A Keysian Auctioneers v National Cereals & Produce Board [2015] eKLR, where the court held that a commission cannot be charged twice for the same instructions, even if procedural steps are reinitiated.
33. I have reviewed the communication dated 17th September 2021 in light of the Appellant's argument and find that the letter merely directed the Appellant to proceed with the auction process, which had been temporarily halted. No new substantive obligation or task was introduced in the communication to warrant it being considered a second set of instructions. Instead, the communication reiterated the earlier directive to realize the security by way of auction.
34. This position aligns with the decision in National Industrial Credit Bank Limited v S. K. Ndegwa Auctioneer [2005] eKLR, which emphasized that auctioneers are entitled to fees for the actual work performed and not speculative or repetitive claims. In that case, the Court of Appeal clarified that proclamation and subsequent procedural actions may suffice to establish entitlement to fees. However, the entitlement must reflect the work done under specific instructions rather than duplicate claims arising from extensions or reiterations of existing tasks.
35. Further, Rule 12 of the Auctioneer Rules, 1997, provides that upon issuance of court warrants or instructions, the auctioneer must follow prescribed steps such as preparing a proclamation, serving notices, and ensuring safe storage of goods. The prescribed process aims to ensure transparency and efficiency in realizing security. However, the rule does not envision separate billing for the same property or security unless the auctioneer demonstrates a distinct new instruction requiring additional work beyond the initial scope.
36. The Appellant has not demonstrated that the tasks performed under the instructions of 17th September 2021 were materially different from those under the initial instructions of 10th July 2020. The subsequent communication appears to have been necessitated by administrative delays and legal challenges but did not create a fresh engagement warranting additional fees.
37. Furthermore, as pointed out in the National Industrial Credit Bank Limited case, the process of attachment takes effect once goods are proclaimed, and the auctioneer’s entitlement to fees is established at that stage. If the subsequent process is halted or delayed, the auctioneer may claim half the commission but not additional fees based on repetitive proclamations or extended timelines.
38. Therefore, it is the finding of this Court that the Deputy Registrar did not err in taxing off items 7, 8, 9, 10, 14, and 15 of the Bill of Costs. The decision was consistent with established principles that an auctioneer’s fees must reflect actual, distinct work performed under valid instructions. The Appellant's claim for additional fees therefore lacks legal justification under the Auctioneers Rules and relevant case law.
Whether the Deputy Registrar erred in reducing the Applicant’s commission under Item 5 of the Bill of Costs by 50 percent
39. The Appellant contended that the Deputy Registrar erred in further reducing the commission claimed under Item 5 of the Bill of Costs. Specifically, the Appellant argued that the commission had already been halved in compliance with Paragraph 7 of Part II of the Fourth Schedule of the Auctioneer Rules, 1997, which provides that where a sale is stayed or postponed after requisite notices are issued, the auctioneer is entitled to half the commission that would have been earned upon the successful completion of the sale.
40. The 2nd Respondent on the other hand argued that the Deputy Registrar correctly reduced the commission, emphasizing that fees under the Auctioneer Rules are meant to compensate actual work done and not speculative amounts based on the forced sale value of the property, particularly where the sale did not proceed. They relied on the decision in National Industrial Credit Bank Limited v S. K. Ndegwa Auctioneer [2005] eKLR, where the Court of Appeal held that:-
“The auctioneer is to be remunerated for the actual work done and not on the basis of what he could have done had he attached goods equivalent in value to the decretal sum.”
41. Paragraph 7 of Part II of the Fourth Schedule of the Auctioneer Rules, 1997, indeed entitles an auctioneer to half the commission they would have earned had the sale been completed. However, the court’s role is to assess whether the amount claimed reflects actual work done within the scope of the instructions. This principle was reiterated in Co-operative Bank of Kenya Ltd v Jeofrick N. Muinde t/a Kimu Auctioneers [2019] eKLR, where the court observed that: -
“Auctioneers’ fees must correspond to actual steps taken, and where no sale has occurred, the fee ought to reflect the truncated process rather than the projected value of the auction.”
42. The Appellant’s claim under Item 5 of the Bill of Costs was based on the property’s forced sale value of Kshs. 3,200,000. The Appellant computed commission at 10 per cent, 5 percent, and 2percent for various tranches of the property’s value as prescribed under Paragraph 6 of Part II of the Fourth Schedule, which applies where a sale is successfully concluded. While Paragraph 7 modifies this by allowing half the commission for stayed or postponed sales, the Appellant failed to provide sufficient evidence to show that their computation was already halved or that the claimed amount reasonably corresponded to the actual work performed.
43. The court further notes that the Deputy Registrar’s role in taxation is not merely to rubber-stamp claims but to exercise discretion in ensuring that costs are reasonable, justified, and proportionate to the work done. As was held in First American Bank of Kenya Ltd v. Gulab P. Shah & Others [2002] 1 EA 65:-
“A taxing officer’s discretion must be exercised judiciously and in accordance with established principles of law, ensuring that costs reflect actual work done and are neither excessive nor speculative.”
44. In my view, the Deputy Registrar’s decision to further reduce the commission under Item 5 by 50 percent reflects a proper exercise of this discretion. The rationale aligns with the principle articulated in the National Industrial Credit Bank case (supra) that fees must be grounded in actual work performed rather than projected outcomes. The Appellant’s reliance on the forced sale value as the basis for the commission is flawed because the auction did not proceed, and no funds were realized
45. This reasoning underscores the need to balance the auctioneer’s right to compensation with the requirement to ensure that fees correspond to actual work done. The Deputy Registrar’s further reduction of the commission under Item 5 was, therefore, consistent with established principles and the applicable legal framework.
46. Consequently, this court finds that the Deputy Registrar did not err in reducing the Applicant’s commission under Item 5 of the Bill of Costs. The decision by the Deputy Registrar was therefore well-grounded in law and aligned with the principles articulated in Paragraph 7 of Part II of the Fourth Schedule of the Auctioneer Rules, 1997, and relevant case law.
47. Consequently, I find his Appeal not merited and is dismissed with costs to the 2nd Respondent. No costs have been awarded to the 1st Respondent since they did not participate in these proceedings.
48. It is so ordered.
SIGNED DATED and DELIVERED IN VIRTUAL COURT
THIS 22ND DAY OF JANUARY 2025
ADO MOSES
JUDGE
In the presence of:-
Moses – Court Assistant
Ms. Okullo ……………for the Appellant
Akiso……………………….for the Respondent