1. Before the court for determination are two reference applications, the first to be filed is the application dated 29/10/2024 by the Client, while the second is the one dated 7/11/2024 filed by the Advocate.
Clients Application:
2. The Client’s reference prays for an order of this Court vacating and setting 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. 17,500,340/= and tax the matter afresh or refer the matter for fresh taxation before a Taxing Master.
3. The Application is supported by an affidavit sworn on the same date by ALFERD ARUNGA, a Legal Officer of the Client/Applicant. The basis of the application is that the Deputy Registrar misdirected herself in law, particularly concerning Items 1,2,3, 5, and 18, and the unnumbered Item on VAT of the Bill of Costs dated 11th July 2027, rendering the decision untenable.
4. A central grievance raised by the Client was that the taxing officer failed to recognize the interrelation between the present matter and several other suits before her, all of which stemmed from the same subject matter. Despite this, the Deputy Registrar applied an identical subject value of Kshs. 949,705,000/= across multiple matters, leading to an unjustified escalation of costs. This, the Client asserted, was an error, as it resulted in an impermissible duplication of instruction fees.
5. The related matters, according to the Client, were:
i. HCCOMMMISC/E556/2024 arising out of HCCOMMIN/E093/2021;
ii. HCCOMMMISC/E559/2024 arising out of COACA/E215/2022;
iii. HCCOMMMISC/E558/2024 arising out of HCCOMM/E106/2022;
iv. HCCOMMMISC/E549/2024 arising out of HCCOMM/E976/2021; and
v. HCCOMMMISC/E560/2024 arising out of COACAPPL/E004/2022.
6. The Client stated that in all the above listed matters where -Thika Nursing Home Limited (Under Administration) and Thika School of Medical and Health Sciences Limited were sued jointly – were all related and that (except for HCCOMMMISC/E549/2024 arising out of HCCOMM/E976/2021), the taxing master erroneously used THE SAME SUBJECT VALUE of Kshs. 949,705,000/=, thereby reaching a wrong conclusion.
7. That the taxing master, in assessing the fees, failed to take into account that the application (HCCOMMIN/E092/2021) to which the present Bill of Costs relates was simply seeking to challenge to the appointment of the joint administrators and that the suit was not filed through a Plaint as postulated in the Bill of Costs and neither was any Statement of Defence filed.
8. Additionally, the Client contended that the Deputy Registrar disregarded the binding precedent set by the Supreme Court in Kenya Airports Authority v Otieno Ragot and Company Advocates (Petition E011 of 2023) [2024] KESC 44 (KLR) (2 August 2024) (Judgment) , which, in the Client’s view, had a direct bearing on the taxation of costs in this matter. Additionally, the Deputy Registrar is said to have overlooked the fact that the underlying dispute revolved around an application challenging the appointment of joint administrators, rather than a substantive suit filed by way of a plaint, as erroneously presumed in the taxation.
9. The Client also argued that the taxing officer failed to consider that the Advocate had admitted to receiving a sum of Kshs. 3,580,000/= from the Client, an amount that ought to have been factored into the taxation. Moreover, the Deputy Registrar is faulted for disregarding payments made and acknowledged in related matters, thereby imposing a taxation that was excessive and unjustified.
10. It is further submitted that the impugned taxation, particularly in relation to Items 1, 2, 5, and 18 of the Bill of Costs, is said to be untenable in law.
Advocate’s Application
11. The Advocate prayed to have the court vacate the taxation of the Deputy Registrar delivered on 14/10/2024, specifically items 5 and 18, and tax the matter afresh and to award interest which was not granted despite being prayed for.
12. The grounds of the application were that the Bill of Costs dated 11/7/2024 was taxed at Kshs. 17,505,552/- by the Deputy Registrar on 14/10/2024. The Advocate argued that the Deputy Registrar erred in her assessment, particularly concerning items 5 and 18 of the Bill of Costs; that she correctly determined that the subject matter was valued at Kshs. 949,705,000/- and calculated instruction fees accordingly at Kshs. 14,445,575/-. However, she failed to increase this amount by 50% as required under Part B of Schedule 6 of the Advocates Remuneration Order; that this omission resulted in an underpayment, as the correct instruction fees should have been Kshs. 23,175,000/-.
13. Furthermore, that the Deputy Registrar failed to award getting-up fees, which should have been 1/3 of the instruction fees, amounting to Kshs. 7,975,000/-. Additionally, the Advocate contended that the ruling did not apply Rule 7 of the Advocates Remuneration Order, which entitles an Advocate to interest on outstanding fees at a rate above 12%. The Advocate contended that failure to award interest has led to an unfair financial burden and that the ruling also neglected to factor in VAT adjustments, resulting in an incorrect VAT award.
Submissions
14. The Applications were canvassed by way of written submissions. The Advocate filed two sets of submissions, both dated 7th November 2024, one in support of his reference and the other in opposition to the Client's application. The Client’s submission is dated 20th November 2024.
15. The parties’ submissions essentially restated their respective positions as highlighted in the applications. It is therefore not necessary to reproduce the same; suffice to say that I have carefully read and considered the same in this Ruling as highlighted below.
Analysis and Determination.
16. I have carefully read and considered both applications, the responses, and the parties’ submissions supporting their respective positions.
17. 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.”
18. 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. 26,203,282 as Advocate-Client costs emanating from Insolvency Case No. E092 of 2021. The Bill of Costs covered the period between 25/11/2021 to 22nd April 2022.
19. 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.17,505,5522/, out of which, a sum of Kshs. 14,445,575 was in respect of the Instructions fee. The subject matter value was placed at Kshs. 949,705,000/- by the taxing master.
20. I further note from the record that the HCCOMMIN/E092/2021 to which the Bill of Costs relates was an application under the Insolvency Act, challenging the appointment of the Joint Administrators and it was canvassed by way of Replying Affidavits and Written Submissions after which a joint Ruling (together with HCCOMMIN/E093/2021) was delivered.
21. 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 HCCOMMIN/E092/2021 to which the Bill of Costs relates was a simple insolvency application which was disposed of by way of affidavit evidence and not the defaulted sums, then owing to the Client under the underlying loan agreements. Consequently, maintained that the instruction fees of Kshs.14,445,575/= granted by the taxing master was manifestly excessive.
22. The Advocate, on the other hand, while arguing that the taxing master 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, 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.
23. I have duly considered the rival submissions by the parties. It is not in dispute that the Bill of Costs filed herein, was respect to Insolvency Petition No. E092 of 2021 under the Insolvency Act, challenging the appointment of the Joint Administrators, which was canvassed by way of Replying Affidavits and Written Submissions, after which a joint Ruling (together with HCCOMMIN/E093/2021) was delivered. Based on this fact, I find that it was an error on the part of the taxing master to rely on the defaulted sums to determine instruction fees.
24. 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.
25. In the present matter, the claim for instruction fees based on the outstanding sums owed to the Client under various financial facilities is, 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.
26. A review of the Insolvency Petition No. E092 of 2021 to which the Bill of Costs relates, is clear that the matter was , challenging the appointment of the Joint Administrators, which was canvassed by way of Replying Affidavits and Written Submissions, after which a joint Ruling (together with HCCOMMIN/E093/2021) was delivered by the Court. It is also critical to note that the related High Court matters (HCCOMIN/E093) is also the subject of taxation in a different cause.
27. Bearing the above in mind, 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.
28. Further, the advocate’s request for a 50% increase in instruction fees under Schedule 6B was never pleaded in the Bill of Costs 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 of interfering with the same. See the Supreme Court decision in Petition No. E011 of 2023, Kenya Airports Authority v. Otieno Ragot & Company Advocates 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.”
29. 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."
30. 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.”
31. 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 extend and difficulty of the work down in lodging and handling the Appeal."
33. 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.”
32. On the claim by the Advocate that the taxing master erred by failing to award interest. The Client, on the other hand, submitted that in the instant case, the Advocate is not entitled to the interest since there was no claim of interest by the Advocate in its Bill of Costs or fee note as required under Rule 7. The Rule proves as follows:-
“7. Interest may be charged
An advocate may charge interest at 14 per cent per annum on his disbursements and costs, whether by scale or otherwise, from the expiration of one month from the delivery of his bill to the client, provided that such claim for interest is raised before the amount of the bill shall have been paid or tendered in full"
33. I have looked at the Bill of Costs dated 11th July 2024 by the Advocate and note that the Advocate did not include a charge for interest at 14% (or even the 12%) per annum in the Bill of Costs. Interest, having not been claimed in the Bill of Costs, the subject of reference, the issue cannot therefore be taken up on appeal in the current proceedings.
34. Accordingly, guided by the above, and taking into account that the award of interest was a matter within the discretion of the taxing master, I find and hold that the taxing officer did not err in failing to award interest.
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, I am of the considered view 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 HCCOMMIN/E092/2021 (just like in HCCOMMIN/E093/2021), the Advocate’s brief was to defend a Notice of Motion Application brought against the Client on 25th November 2021 under Articles 22 and 23 of the Constitution of Kenya, Order 40 Rules 1, 2 and 3 of the Civil Procedure Rules, Sections 1A, 1B, 3A and 63 (e) of the Civil Procedure Act. The main orders sought against the Client in the said Motion were: -
i. An order to restrain the respondents (the Client and joint administrators) from interfering with the affairs of the applicants, and
ii. An order terminating or revoking the appointment of the 1st and 2nd respondents as joint administrators of the applicants.
39. The Application in HCCOMMIN/E092/2021 (to which this Bill of Costs relates) and that in HCCOMMIN/E093/2021 (which is subject to taxation elsewhere) were heard together, and proceeded by way of affidavit evidence and submissions. A joint ruling was delivered on 29th December 2021 dismissing the two applications.
40. From the above, it is clear that the subject matter value could not be determined from the pleadings, nor could it be determined from the Ruling, which merely dismissed the applications. It therefore follows that the taxing officer’s adoption of Kshs. 949,705,000- as the value of the subject matter in this case was erroneous.
41. 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 was entitled to use his discretion in assessing the instruction fee and in doing so the factors to be taken into account included 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.
42. 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.
43. 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 and that a court will not readily interfere with an award of the taxing master, unless in instances where the court is of the opinion 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.”
44. 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.
45. 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. 5,000,000/- in instruction fees would be fair and just in the circumstances.
46. Accordingly, I allow the Client’s reference but only to the extent that the Instructions fees in Nairobi Civil Appeal No. E215 of 2022, which was taxed at Kshs. 14,445,575/- is hereby set aside and substituted with an award by this Court of Kshs. 5,000,000/-.
47. 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.
48. 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.
49. The Advocate’s application dated 7th November 2024 is hereby dismissed.
50. On costs, since the Client’s reference has only partially succeeded, I order that each party to meet their respective costs.
51. 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.