1. Two applications are before the court for determination. The first one, dated 29/10/2024, was filed by the Client, while the second one, dated 7/11/2024, was filed by the Advocate.
Clients Application:-
2. The Client prayed for an order to set aside in its entirety the ruling of the deputy registrar, dated and delivered on 14/10/2024, taxing the Advocate-Client Bill of Costs dated 11/7/2024, at Kshs. 16,790,739/= and tax the matter afresh or refer the matter for fresh taxation before a Taxing Master.
3. The Client contended that the Deputy Registrar misdirected herself in law, particularly concerning Items 2 (Instructions fees) and 12 (VAT) of the Bill of Costs, rendering the decision untenable.
4. According to the Client, the Deputy Registrar allegedly failed to consider the Client’s comprehensive submissions opposing the Bill of Costs and did not acknowledge that the matter was related to several other matters before her, which the taxing master erroneously applied the subject value of Kshs. 949,705,000/=, in all the matters, leading to erroneous taxation.
5. The Client further alleged that the Deputy Registrar also failed to appreciate that the core dispute was merely an application for a stay of execution pending appeal, which, under the Court of Appeal Rules, could have been filed within the substantive appeal.
6. Additionally, the Client argued that the Deputy Registrar disregarded a binding Supreme Court decision in Supreme Court Petition No. E011 of 2023 (Kenya Airports Authority v. Otieno Rago & Company Advocates) and failed to consider fees already paid and acknowledged in related matters. The exercise of discretion in taxing Items 2 and 12 was allegedly unreasonable, unclear, and legally unsound, with the Registrar considering irrelevant issues while ignoring critical ones.
Advocate’s application:
7. The Advocate filed an amended chamber application dated 7/11/2024 pursuant to section 1A, 1B and 3A of the Civil Procedure Act and rule 11(2) of the Advocates (remuneration) Order 2009.
8. The Advocate sought the following orders:
“ 1. The Honorable Court be pleased to vacate and or set aside the Ruling and reasoning of the Honorable C. L. Adisa Deputy Registrar dated and delivered on 14th October 2024 specifically Items 2. 12 and tax the matter afresh and thereafter award interest which was not granted despite being prayed for.
2. That the costs of this Application be provided for.”
9. The application was based on the grounds that the Deputy Registrar misdirected herself in law and fact, resulting in an erroneous assessment of the fees due. The primary grievance is that, while the Deputy Registrar correctly determined the subject matter value at Kshs. 949,705,000 and calculated the instruction fees at Kshs. 14,445,575 in accordance with Schedule 6, Part A of the Advocates Remuneration Order, she failed to apply the required 50% increase under Part B of the same Schedule, thereby under-taxing the fees that ought to have been awarded.
10. The Advocate asserted that had the proper calculations been undertaken, the correct instruction fees would have amounted to Kshs. 23,175,000, which he sought to be awarded through fresh taxation.
11. Additionally, the Advocate contended that the failure to apply the correct instruction fee resulted in the erroneous taxation of Value Added Tax (VAT) on Item 12 and that VAT was awarded at Kshs. 2,315,964 was based on the wrongly assessed instruction fees, whereas a correct application of the Advocates Remuneration Order should have increased this amount by Kshs. 1,155,646, bringing it to Kshs. 3,471,610. The Advocate argued that this miscalculation further compounded the prejudice suffered by him due to the inaccurate taxation.
12. Another fundamental issue raised in the application was the Deputy Registrar’s failure to award getting-up fees, which the Advocate contended was a well-established entitlement in defended suits. The Advocate submitted that the failure to award one-third of the instruction fees as getting-up fees was contrary to settled legal principles and sought an award of Kshs. 7,975,000 under this head. The failure to grant this amount, he argued, reflected an incomplete taxation process that did not align with precedent and practice.
13. Further, the Advocate challenged the Deputy Registrar’s failure to apply Rule 7 of the Advocates Remuneration Order, which entitles an Advocate to charge interest at 12% per annum on outstanding legal fees. The Advocate argued that, having served the Advocate-Client Bill of Costs on 12/7/2024, interest ought to have been awarded from that date until full payment. The failure to award interest, according to him, has resulted in a prejudicial and incomplete assessment of the Advocate’s entitlements under the law.
14. The applicant further faults the Deputy Registrar for failing to properly consider the comprehensive submissions filed on 12/9/2024, which addressed the correct approach to taxation, particularly with respect to Items 2, 12, and the issue of interest.
15. The Advocate also submits that the Deputy Registrar correctly disregarded the Respondent’s erroneous submission that the subject matters in different cases were the same. However, he contends that the Registrar nonetheless misdirected herself by failing to fully consider the correct subject matter values for each taxation separately, thereby failing to assess each Bill on its own merit as envisaged under Paragraph 13 of the Advocates Remuneration Order.
16. The Advocate further argued that the Deputy Registrar was correct in declining to apply the Supreme Court’s decision in Kenya Airports Authority v. Otieno Ragot & Co. Advocates, Petition No. E0100 of 2023, as that case related to a situation where the subject matter value was not discernible from the pleadings, whereas in this matter, the value of Kshs. 949,705,000 was expressly stated. However, despite correctly distinguishing the precedent, the Deputy Registrar still misdirected herself in the taxation of the instruction fees and related costs.
17. The Advocate contended that the errors in taxation have caused substantial loss to him, whose legal fees remain unpaid since 2021. The continued non-payment of these fees, he argued, has significantly prejudiced him, as legal fees are the lifeline of a practicing Advocate.
18. It is the Advocate's position that, in the interest of justice and fairness, the court should intervene to rectify the errors committed by the Deputy Registrar. The applicant prayed that the Court set aside the taxation of Items 2 and 12, reassesses and taxes afresh the instruction fees, VAT, and getting-up fees, and further awards interest in accordance with Rule 7 of the Advocates Remuneration Order.
Analysis and determination
19. I have carefully read and considered both applications, the responses filed thereto, and the parties’ submissions supporting their respective positions.
20. 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.”
21. From the record, I note that the Advocate filed an Advocate-Client Bill of Costs dated 11/07/2024 seeking a total sum of Kshs. 25,425,647 as Advocate-Client costs emanating from the Nairobi COA Civil Application No. E004 of 2022. The Bill of Costs covered the period between 6th January 2022 to 4th March 2022.
22. By a Ruling dated 14th October 2024, the Deputy Registrar taxed the Bill of Costs under Schedule 6B of the Advocates Remuneration Order at a total sum of Kshs.16,5790,739/, of which a sum of Kshs. 14,474,775 was in respect of the Instructions fee (Item 2). The subject matter value was placed at Kshs. 949,705,000/- by the taxing master.
23. From the record, I note that the COACAPPL/E004/2022 to which the Bill of Costs related was an interlocutory application at the Court of Appeal seeking to suspend temporarily the appointment of Joint Receivers pending the hearing and determination of the main appeal being the COACA/E215/2022 (which is also subject of taxation in a different cause).
24. The Client in its Reference application has objected to the use of Kshs. 949,705,000/- as the subject matter value on the basis that the COACAPPL/E004/2022 to which the Bill of Costs relates was a simple insolvency application, which was disposed of by way of affidavit evidence, and therefore the defaulted sums owing to the Client under the underlying loan agreements (Kshs. 949,705,000) could not be the subject value. The Client maintained that the instruction fees of Kshs.14,445,575/= granted by the taxing master was manifestly high and excessive.
25. The Advocate, on the other hand, while arguing that the taxing master correctly determined the subject matter value at Kshs. 949,705,000 and appropriately calculated the instruction fees at Kshs. 14,445,575 in accordance with Schedule 6, Part A of the Advocates Remuneration Order, submitted that the taxing master failed to apply the required 50% increase under Part B of the same Schedule, thereby under-taxing the fees that ought to have been awarded.
26. I have carefully considered the rival submissions by the parties. It is not in dispute that the Bill of Costs filed herein was in respect of COACAPPL/E004/2022 which was an interlocutory application at the Court of Appeal seeking to temporarily suspend the appointment of Joint Receivers pending the hearing and determination of the main appeal being the COACA/E215/2022.
27. The Supreme Court of Kenya, in 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, and where this is indeterminate, the taxing officer must exercise discretion based on the nature and importance of the case. The court emphasized that instruction fees must be reasonable, taking into account the work done, and must not be inflated to levels that hinder access to justice.
28. In the present matter, the taxation of instruction fees based on the outstanding sums owed to the Client under various financial facilities was, in the view of this Court, erroneous. As observed by the Supreme Court in Republic v. Ministry of Agriculture & 2 Others Ex parte Muchiri W’Njuguna & 6 Others [2006] eKLR, taxation must be conducted fairly and should not lead to unjust enrichment. The Court must ensure that fees are reasonable and proportionate to the work done.
29. A review of the COACAPPL/E004/2022 to which the Bill of Costs relates is clear that this was an interlocutory application at the Court of Appeal, which was seeking to temporarily suspend the appointment of Joint Receivers pending the hearing and determination of the main appeal being the COACA/E215/2022. It is also critical to note that the main appeal - COACA/E215/2022 is also subject to taxation under a different cause.
30. In the premises, I find that the taxing master erred in arriving at a sum of Kshs. 949,705,000 as the subject matter value of matter. Consequently, this Court agrees with the Client’s submissions that the instruction fees at Kshs. 14,445,575 as assessed by the taxing master, was manifestly high and excessive.
31. Further, the advocate’s request for a 50% increase in instruction fees under Schedule 6B was never pleaded or claimed in the Bill of Costs dated 11th July 2024, but was instead introduced in submissions. It is trite law that submissions are not pleadings and cannot be used to introduce new claims. The same is hereby disallowed on that account. In any event, it was a matter within the discretion of the taxing officer, and this court finds no basis for interfering with the same. See the Supreme Court decision in Petition No. E011 of 2023, Kenya Airports Authority v. Otieno Ragot & Company Advocates (supra) were the Court stated that:
“Bearing the above in mind, we find that the proper interpretation of Schedule VI Part B is that in assessing fees thereunder, including instruction fees, a Taxing Officer is required to exercise his/her discretion guided by the prescribed scale of fees in Part A. To our minds, that does not mean, as the impugned majority judgment found, that a Taxing Officer is simply to apply the mathematical formula to the instruction fees ascertained in the taxed Party-Party costs. Failure to evaluate a disputed item under taxation and determine it judiciously is contrary to the clear provisions of Rule 16 of the Advocates Remuneration Order. Besides, a Taxing Officer being a judicial officer exercising a judicial mandate cannot be said to be performing such mandate mechanically or merely as a formality.”
32. Regarding the claim for getting-up fees of Kshs. 7,975,000/=, it is evident from the record that the proceedings were determined by affidavit evidence and written submissions, with no witnesses called and no oral hearing conducted. As such, Schedule 6(3) of the Advocates Remuneration Order (ARO) does not apply, and the claim must be disallowed. I align with the decision in the case of C.N Kihara & Company Advocates v Maendeleo Ya Wanawake Organization (MYWO) [2021] eKLR, in which G.V. Odunga J (as he then was), stated as follows:
“58.…………., it is clear under Schedule 6 paragraph 2 of the Advocates Remuneration Order, 2014 that no fees is chargeable for getting up and preparing for trial until the case is confirmed for hearing and in case where the case is not heard, the taxing officer must be satisfied that the case has been prepared for trial.
33. Additionally, on the facts of this case, I also associate with the finding of the court in the case of Kerio Valley Development Authority v Nathan M. Pala t/a Muhatia Pala Auctioneers & 2 others (Miscellaneous Civil Application 348 of 2015) [2023] KEHC 24850 (KLR) (3 November 2023) (Ruling) where the court in declining to award getting up fees stated as follows:
“In this case, besides already finding that the instruction fee ought to have been assessed under the paragraph in Schedule 6 tiled “matters arising during proceedings” which would therefore not attract getting up fees, since the Notice of Motion was withdrawn at an early stage, I am also not satisfied that the matter required extensive preparation for trial so as to merit or justify an award of getting up fees.”
34. In any event, there was no certification by the Court for the payment of the same. See the case of Narok County Government v Kemboy Law Advocates (Miscellaneous Application E010 of 2023) [2024] KEELC 4497 (KLR) (3 June 2024) (Ruling) where the Court Stated that; -
“The Court’s understanding of the above provision of the Advocates (Remuneration) (Amendment) Order, 2014 is that getting up fees is actually payable to an Advocate but only if the same is certified by the Court based on the extent and difficulty of the work done in lodging and handling the Appeal.
Consequently, a Taxing Officer can only award getting up fees if there is a certification by the Appellate Judge that such an Appeal was of a difficult nature in its preparation and subsequent prosecution to warrant the getting up fee.”
35. The upshot of the above is that I find that the taxing officer wrongly exercised her discretion when considering the Bill of Costs dated 14th October 2024, only insofar as the Instructions Fees are concerned. The Client’s application dated 29th October 2024 is therefore allowed, but only to that extent. The Advocate’s Application dated 7th November 2024 is unsuccessful and is hereby dismissed.
36. Having so found, it is the position of this court that a proper approach would be for this Court to exercise its discretion, and to proceed and determine the instructions with some finality, as opposed to remitting the same back to the taxing officer for re-taxation.
37. In the case of First American Bank of Kenya Ltd v Gulab P. Shah & 2 others [2002] eKLR, the court observed that it would be a waste of judicial time and costs to remit back a bill of costs to the taxing officer with directions that they should determine the instructions fees.
38. In the present case, it is evident from the record that in COACAPPL/E004/2022, the Advocate’s brief was to defend an Interlocutory application and not the main appeal, and that the application proceeded by way of affidavit evidence and submissions.
39. Bearing in mind that the subject matter value could not be determined from the pleadings, Ruling, or settlement, it therefore follows that the taxing officer ought to have exercised her discretion in assessing costs, in line with the guidance provided by the various judicial precedents, and not to adopt the amount of the outstanding loan (Kshs. 949,705,000/-) in the manner that she did.
40. The Court of Appeal in the case of Joreth Ltd v Kigano And Associates (2002) 1 EA held that where the value of the subject matter of a suit cannot be determined from the pleadings, judgment or settlement, a taxing master is entitled to use his discretion in assessing the instruction fee and in doing so the factors to be taken into account includes the nature and importance of the cause, the interest of the parties, the general conduct of the proceedings, any directions of the trial judge and all other relevant circumstances.
41. Again, in the case of Kenya Airports Authority v Otieno Ragot and Company Advocates (supra) the Supreme Court approved the Court of Appeal holding in Peter Muthoka and Another v Ochieng and 3 Others NRB CA Civil Appeal No. 328 of 2017 [2019] eKLR that where the value of the subject matter cannot be determined from the pleadings, judgment, or settlement, as is the case herein, it is within the discretion of the Taxing Officer to determine such instructions as she may consider just, taking into account among other factors, the nature and importance of the cause or matter, the interest of the parties, the general conduct of the proceedings, any direction by the trial judge and all other relevant circumstance.
42. This Court is equally cognizant of the settled principle of law that taxation of costs is not a pure mathematical exercise, but is entirely a matter of opinion based on experience, and that a court will not readily interfere with an award of the taxing master unless in instances where the court is of the view that the award is either too high or too low as to amount to injustice. See the case of Republic v Ministry of Agriculture and 2 Others; Ex-parte Muchiri W’Njuguna & others NRB HC Misc. Civil Appl. No. 621 of 2000 [2006] eKLR the court held as follows:-
“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.”
43. In the present case, this court having found that the value of the subject matter cannot be determined from the pleadings, ruling, or settlement, the duty of this court therefore is to determine what instructions fees would be just and fair, taking into account the nature and importance of the matter, interest of the parties and general conduct of the proceedings.
44. Regarding the nature of the matter, it is obvious that the brief was important to the Client, the issues raised impacted heavily on the parties, searches in the law were involved as the matter was complex; counsel spent long hours with the company's directors drafting and reviewing the response to the application, submissions, and arguing the same. Bearing the above in mind and the principles in assessing costs as laid down in the case of Premchand Raichand Ltd vs. Quarry Services of East Africa Ltd. (No. 3) [1972] EA 162, I am of the view that a sum of Kshs. 4,000,000/- in instruction fees would be fair and just in the circumstances.
45. Accordingly, I allow the Client’s reference but only to the extent that the Instructions fees (Item 2) in respect of COACAPPL/E004/2022 is hereby set aside and substituted with an award of Kshs. 4,000,000/-.
46. The rest of the items, save for the resultant VAT (which will have to be recomputed by the taxing master taking into account the reduced instructions fees), are hereby upheld.
47. The Deputy Registrar of this court, being the taxing master, is directed to reissue an amended Certificate of Costs in terms of the reduced amounts in instructions fees, and also to recompute the resultant VAT.
48. The Advocate’s application dated 7th November 2024 is hereby dismissed.
49. On costs, since the Client’s reference has only partially succeeded, I order that each party to meet their respective costs.
50. It is so ordered.
SIGNED, DATED, and DELIVERED IN VIRTUAL COURT
THIS 15TH DAY OF MAY 2025
ADO MOSES
JUDGE
In the presence of:
Moses – Court Assistant.