Introduction
1. Before this court for determination is a chamber summons application dated 30th August, 2024 brought pursuant to the provisions of Sections, 1A, 1B, 3A of the Civil Procedure Act, 2010, Rule 11 (1) and (4) of the Advocates (Remuneration) Order, 1962 Section 51 (2) of the Advocates Act, seeking the following orders;
i. Spent.
ii. THAT the Honourable Court be pleased to set aside the taxing officer’s ruling delivered on 9th April 2024 that dismissed the Advocates/Client Bill of Costs dated 26th January 2022.
iii. THAT this Honourable court be pleased to reassess the fees due to the Advocate/Applicant and /or in the alternative the matter to be remitted to such other Taxing officer as the court may direct for re-assessment ab initio.
iv. THAT cost of this application be provided for.
2. The application is premised on the grounds on the face of it and is also supported by the affidavit of Mwamba Roy Daniel, the managing partner of the Applicant herein.
3. In the said affidavit, the applicant avers that he is an advocate and the managing partner in the applicant law firm. That, following the failure by the Client/Respondent to settle their fees they filed an advocate-client bill of costs dated 26th January, 2022 in which the taxing officer delivered her ruling on 9th April, 2024 dismissing the Bill of Costs.
4. The applicant further avers that the taxing officer did not consider the bill of costs and the pleadings on merit and instead made an erroneous conclusion that there was no advocate-client relationship between the parties.
5. According to the applicant, the taxing officer misguided herself on what amounts to instructions when she ruled that the Respondent never issued any instructions to the advocate/applicant. That the Taxing Officer also failed to take into consideration the established principles of taxation as set out under the Advocates Remuneration Order and relevant judicial pronouncements on the issue.
6. The applicant avers that the Taxing Officer failed to consider evidence provided by the Advocate/applicant demonstrating the existence of an advocate-client relationship in this case. Further that the Taxing Officer failed to appreciate that the further affidavit dated 26th April, 2023 in Milimani High Court Income Tax Appeal No. E096 of 2020 was executed by the Respondent’s director himself.
7. The applicant deposed that no objection was ever raised in the Milimani High Court Income Tax Appeal No. E096 of 2020 as to the representation of the Client/Respondent by the Advocate and the Client/Respondent enjoyed the services of the applicant from the start of the suit until judgment.
8. The Applicant avers that no pleadings were ever filed and executed by the Client/Respondent’s tax agent identified as Rosalia Mutuku so as to assert the position that it was the tax agent who was the principal instructing party and not the Client/Respondent herein.
9. According to the Advocate, the Respondent’s substantive objection in its replying affidavit dated 22nd June 2023, was on the amount, and that out of the amount demanded by the Advocate, the Respondent/Client had conceded to a sum of Kshs. 422,775/= which they prayed to be awarded.
10. The Applicant deponed that the advocate-client relationship can be instituted orally and does not have to be expressly in writing. That the tax agent can never be sued when the principal is well-known and identifiable.
11. The Application was opposed by the Respondent who filed a Replying affidavit by Ramnik Shantilal Pethad dated 25th September 2024 in response to the Advocate’s Chamber Summons application. In the said affidavit, he deposes that he is the director of the Respondent and that the Respondent had instructed its Tax representative Ms. Rosalia Mutuku to handle its tax dispute with KRA following the issuance of an objection decision by the Commissioner of Investigations and Enforcement.
12. The deponent avers that he is not aware of any discussions held between the Respondent with the law firm of Mwamba Gitonga Advocates or any of its advocates or representatives to act for the Respondent. The said law firm did not have instructions from the Respondent. In the absence of such a relationship, the Taxing officer was justified in not taxing the bill of costs as presented by the applicant.
13. The Respondent avers that the issue of instruction formed the crux of his affidavit sworn on 22nd March, 2024 in response to the Bill of costs. That the Applicant has not produced even a single correspondence by the Respondent to demonstrate that there existed advocate-client relationship between the parties herein. That in the absence of such proof, the Taxing officer was justified in striking out the Bill of costs.
14. The Respondent further avers that the application is fatally defective for want of compliance with provisions of paragraph 11 of the Advocates (Remuneration) Order, 2014 and the same ought to be struck out. He prays for this court to dismiss it with costs.
15. The Application was canvassed by way of written submissions. The Advocate’s/Applicant’s Submissions are dated 15th October 2024 while the Respondent’s submissions are dated 16th October 2024.
Applicant’s submissions
16. The Applicant submitted that the singular reason cited by the Taxing officer in her dismissal of the bill of costs was that there was no advocate-client relationship between the Applicant and the Respondent to give rise to the obligation on payment of fees and taxation. According to the Applicant, the taxing officer failed to take into account that instructions to an advocate can either be in writing, oral, or implied. The Applicant cited among others, the case of Ochieng’ Onyango, Kibet & Ohaga Advocates vs Akiba Bank Limited [2007] eKLR in support of this argument.
17. The Applicant maintained that they discharged their burden of proof as required under Section 107 of the Evidence Act (Cap 80) by demonstrating to the Taxing Master that not only was there no objection to representation raised by the Client in Milimani High Court Income Tax Appeal No. E096 of 2020, but that the pleadings were actually executed by the Client/Respondent’s director identified as Ramnik Shantilal Pethad. That by the Respondent’s said Director’s own admission, Ms. Rosalia Mutuku (the Respondent’s independent tax agent who instructed the Advocates herein) was an agent of the Respondent and her actions are capable of binding the Respondent. The Applicant submitted that under agency law, an agent of a disclosed principal can never be sued when the principal is well-known and identifiable to the party suing.
18. In the circumstances, the Applicant therefore urged this court to make a finding that there existed an advocate-client relationship between the parties herein and thereafter proceed to ascertain the fees that ought to be paid for acting and representing the Client/Respondent in Milimani High Court Income Tax Appeal No. E096 of 2020. That in the alternative, an Order be made by this Court returning the Bill of Costs in question to the Taxing Master for ascertainment of the fees payable.
Respondent’s submissions
19. First, the Respondent argued that the Application is defective for want of compliance with the provisions of Paragraph 11 (1) and (2) of the Advocates Remuneration Order, 2014. The Respondent submitted that the Taxing Master having given reasons for the dismissal of the Applicant’s Advocates/Client Bill of Costs in his Ruling of 9th April 2024, the instant Application/Reference was filed outside the 14 days prescribed under Paragraph 11 (1) and (2) of the Advocates Remuneration Order, 2014, without the requisite leave from the court.
20. Secondly, the Respondent submitted that it had not issued any instructions to the Applicant herein and therefore, there was/is no Advocate-Client relationship between the Applicant and the Respondent herein in respect of the Milimani High Court Income Tax Appeal No. E096 of 2020. According to the Respondent, they only got to know the firm of Mwamba and Gitonga Advocates, when the bill of costs was served upon them in May 2023. The Respondent maintained that the Applicant has not provided any document including any fee note or invoice addressed to the Respondent seeking payment neither has the Applicant produced any written instructions or payment to demonstrate that it had instructions to represent the Respondent before the Tax Appeals Tribunal or the High Court.
21. The Respondent maintained that the existence of an Advocate-Client relationship is central as it gives jurisdiction to the Taxing officer to entertain a Bill of Costs. The Respondent cited the decision of the Court of Appeal in the case of Wilfred N. Konosi T/A Konosi & Co. Advocates v Flamco Limited [2017] eKLR in support of this argument.
22. It was further the Respondent’s argument that in any event, there was no board resolution by the Respondent’s directors authorizing the appointment of the Applicant herein to act for the Respondent in the Milimani High Court Income Tax Appeal No. E096 of 2020 in respect of which the Bill of Costs is premised. Citing the case of East African Safari Air Limited v Anthony Ambaka Kegode & another [2011] eKLR, the Respondent maintained that a board resolution is critical for a limited liability company to either defend or institute a suit in Court.
23. On the burden of proof, the Respondent submitted that Section 107 of the Evidence Act places on the Advocate the burden to prove that he had instructions to represent the client. The Respondent put reliance on the case of Mereka & Company Advocates vs Zakhem Construction (Kenya) [2014] eKLR and asserted that where there is no evidence of a retainer except the oral statements of the advocates which is contradicted by the client, the court will treat the advocate as having acted without authority.
24. The Respondent maintained that they did not issue any instructions to the respondent in respect of the Milimani High Court Income Tax Appeal No. E096 of 2020, and asks this Court to so find, and accordingly uphold the Ruling by the Taxing Master dismissing the Bill of Costs.
Analysis and determination
25. I have carefully considered the Chamber Summons Application, the Respondent’s Replying Affidavit, the written submissions, and the cited authorities, and find that the only issue for determination is whether the Taxing Master erred in dismissing the Applicant’s/Advocate Bill of Costs dated 22nd January 2024.
26. This being a reference application challenging a ruling delivered by the Taxing Master on 9th April 2024, the first port of call is the Advocates (Remuneration) Order. Paragraph 11 of the ARO provides as follows; -
1) Should any party object to the decision of the taxing officer, he may within fourteen 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.
27. The provisions of Paragraph 11 (1) of ARO above require an aggrieved party intending to object to a decision by a Taxing officer to, within 14 days of the decision, give notice in writing to the Taxing officer on the items which he objects. The Taxing Officer, upon receipt of the notice, immediately furnish to the objector with the reasons for the decision, who may then file a reference within 14 days from the date of receipt of the reasons.
28. In the instant case, the Advocate/Applicant filed his notice of objection and request for reasons dated 16th April 2024, and the same was responded to vide a letter dated 22nd August 2024 by the Taxing Officer, stating that the reasons for taxation were contained in the ruling. The Applicant lodged the instant Application/Reference on 30th August 2024 which was less than 14 days specified under Paragraph 11 (2) of the ARO. Consequently, I find and hold that contrary to the Respondent’s submissions, the instant Application/Reference was filed within the timelines specified in law.
29. The next issue for this Court’s determination is whether or not an Advocate Client relationship existed between the parties herein.
30. The applicant is seeking to have the Taxing officer’s ruling delivered on 9th April 2024 be set aside. The principles on setting aside Taxing officer’s decision were laid down in the case of Kipkorir, Titoo & Kiara Advocates vs Deposit Protection Fund Board (2005) eKLR
“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 a kin 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.”
31. A similar position was adopted by the court in the case of Kariuki Njuguna & 17 Others vs Ngatho Kairu & 2 Others (2015) eKLR where the court held thus;
“It is settled law that a court cannot interfere with the taxing master's decision on taxation unless it is shown that either the decision was based on an error of principle, or the sums awarded are manifestly high or low as to lead to an injustice.”
32. As to whether the Court can set aside the Taxing Officer’s ruling in this case, it is first important to determine whether there existed advocates-client relationship between the parties herein. The leading authority on this issue is the Court of Appeal decision in the case of Wilfred N. Konosi t/a Konosi & Co. advocates vs Flamco Limited (2017) eKLR where the court held thus; -
“The issue whether an advocate-client relationship exists in taxation of a Bill of Costs between an advocate and his/her client is core. The jurisdiction is conferred on the Taxing Officer by law. It is derived from the Advocates Act and the Advocates Remuneration Order. The Taxing Officer sits in taxation as a Judicial Officer. His or her task is to determine legal fees payable for legal services rendered. The jurisdiction cannot arise by implication nor can parties by consent confer it. And inherent jurisdiction cannot be invoked where adequate statutory provision exists. It was held in Taparn vs Roitei [1968] EA 618 that inherent jurisdiction should not be invoked where there is specific statutory provision to meet the case. The Advocates Act and the Advocates Remuneration Order confer on the Taxing Officer jurisdiction to tax bills of costs between advocates and their clients (as well as between party and party in litigation) so as to determine legal fees for legal services rendered.
The nexus between the advocate and his or her client is the advocate/client relationship which springs from instructions by the client to the advocate. Absent such relationship, the Taxing Officer would be bereft of jurisdiction to tax a bill.”
33. I have had the opportunity to peruse and consider the proceedings in High Court Income Tax Appeal No. E096 of 2020-Commissioner of Domestic Taxes vs Samrat Supermarket Limited, on which the Bill of Costs is premised. I have also carefully considered the Taxing Master’s Ruling on 9th April 2024 as well as the parties’ submissions thereon.
34. From the proceedings, it is not in doubt that the Applicant herein acted and/or participated in the High Court Income Tax Appeal No. E096 of 2020-Commissioner of Domestic Taxes vs Samrat Supermarket Limited and that the Respondent herein was the Appellant in that case. What however is in dispute is whether the Respondent instructed the Applicant to act for them in that case, so as to create an Advocate-Client relationship between them.
35. While the Applicant/Advocate argues that he had implied instructions from the Respondent herein to so act in the High Court Income Tax Appeal No. E096 of 2020-Commissioner of Domestic Taxes vs Samrat Supermarket Limited, the Respondent on the other hand submits that they did not give any instructions to the firm of Mwamba & Gitonga Advocates (Applicant herein) to act for them in this matter. According to the Respondent, they only became aware of the said law firm when they were served with the Bill of Costs in question.
36. According to the Respondent sometimes in 16th April 2018, the Commissioner of Domestic Taxes, Kenya Revenue Authority, issued additional income tax assessments and demanded payment of the sum of Kshs. 26,631,885.24 and income tax of Kshs. 55,400,977.08, that they then referred the tax dispute to its external tax consultant Ms. Rosalia Mutuku to handle with the KRA on its behalf.
37. From the record, it is apparent that it is the said Ms. Rosalia Mutuku who then enlisted the services of the law firm of Mwamba & Gitonga Advocates (the Applicant’s herein) to handle the matter, both the Tax Appeals Tribunal and at the High Court, where an appeal was preferred from the decision of the Tribunal. This position is evident from the Applicant’s affidavit of 26th April 2023 where the Advocates deponed at Paragraphs 3 and 4 thereof as follows; -
“3. THAT the Applicant was appointed by the Respondent’s tax agent Ms. Rosalia Mutuku pursuant to section 5 (a)(c)(d) of the Kenya Revenue Authority (Tax agents) Regulations 2022 to engage KRA in the Alternative Dispute Resolution (ADR) proceedings.
4. THAT the Respondent had appointed Ms. Rosalia Mutuku as its Tax Representative to handle the tax dispute with KRA following the Objection decision of the Commissioner of Domestic Taxes. This is confirmed by the Respondent under paragraph 8 of their Replying Affidavit.”
38. The Advocates having acknowledged that their appointment emanated from the Respondent’s tax agent, this Court, like the Taxing Master, finds that there was no Advocate-Client relationship between the Applicant herein and the Respondent. The relationship was with the appointing authority, who in this case is the tax agent.
39. It is critical to note that Section 2 of the Advocates Act defines the term “Client” to include “any person who, as a principal or on behalf of another, or as a trustee or personal representative, or in any other capacity, has power, express or implied, to retain or employ, and retains or employs, or is about to retain or employ an advocate and any person who is or may be liable to pay to an advocate any costs;”
40. In Muri Mwaniki & Wamiti Advocates v Wings Engineering Services Limited [2019] KEELC 3613 (KLR), the Advocates had been engaged by a third party (a bank) to act of the Respondent, the Court in finding that there was no Advocate-Client relationship between the Advocate and the Respondent therein stated as follows; -
“The question then that arises is whether in line with the definition of a client, the Respondent fits the description. Did the Respondent employ the Advocates? Did they retain their services of the Applicant or did any of their representatives do? The answers to these questions are certainly No…..
From the Bill of Costs, it is clear that it is the bank that gave instructions to the Advocates and not the Respondent/Client and therefore it is this Court’s opinion that it is the bank that was liable to pay and not the Respondent. See the case Desai Sarvia & Pallan Advocates…Vs…Tausi Assurance Company Limited (2017)eKLR, where the Court of Appeal held that:-
“It is not in dispute that instructions to defend the defendants emanated from the Respondent. As such the respondent was the appellant’s client. Accordingly it is the Respondent and not the defendants that is liable to meet the appellant’s fees.’’
41. In the circumstances, this Court therefore finds that no Advocate Client relationship existed between the Applicant and the Respondent. Consequently, the Bill of Costs cannot be taxed against the Respondent as argued by the Advocate. See the case of Wilfred N. Konosi t/a Konosi & Co. Advocates…Vs…Flamco Limited (2017)eKLR, where the Court of Appeal cited the Lower Court Judge who stated:-
“On taxing a bill of costs, it must be established that there exists an Advocate/ Client relationship and that the Advocate was instructed as per law provided. Since the Applicant failed to demonstrate the above, I find that there is no basis for varying or setting aside the taxing officer’s orders. Even if the bill went to another taxing officer, it would suffer the same fate. For this reason, I dismiss the Application with costs to the Respondent.’’
Without an Advocate/Client relationship, the taxing officer has no jurisdiction to tax the bill and with no jurisdiction therefore the taxing master has to down his/her tools….”
42. The position in law therefore is that an Advocate-Client relationship can only exist where instructions are issued (expressly or impliedly) to an Advocate by a party to act in a matter. Where there is evidence that instructions were issued by a third party (as is the case herein) , then, the Advocate-Client relationship can only exist between the Advocate and the third party who instructed them and not the Respondent. The Court of Appeal (Nambuye, Gatembu & Kantai, JJ. A) in the case of Nyachoti & Company Advocates v Muga Apondi Advocate [2021] eKLR, confirmed this position and stated that; -
“In the persuasive case of Obaga & Company Advocates v Kipkebe Limited [2009] eKLR the applicant law firm was instructed by another law firm (Timamy & Company Advocates) to act for their client, the respondent, in about 25 matters. Upon finalization of the matters the applicant would send their fee notes to the instructing law firm which would in turn draw fee notes to their client and would then pay the applicant. The High Court (Musinga, J – as he then was) held that the applicant (Obaga & Company Advocates) did not have a retainer with the respondent and their cause of action lay with the law firm that instructed them.”
43. This is the position in the present case. The Applicant (Advocate) expressly admitted that they were not instructed by the Respondent, but that they were instructed by the Respondent’s tax agent. The Advocates, in the instant application, did not exhibit any correspondence between them and the Respondents on the issue of instructions neither did they produce in evidence where they sent their invoices for payment.
44. In view of the above, and taking into account the existing judicial precedent, this Court finds that the Applicant herein has failed to demonstrate that there was an Advocate-Client relationship between them (Advocates) and the Respondents herein.
45. The upshot of the above is that the Advocate’s Application herein is hereby dismissed with costs to the Respondents.
46. Accordingly, the Taxing Master’s Ruling of 9th April 2024 is hereby upheld.
47. 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
Lesikito h/b for Butala……………for the Applicant
Gitonga………………………….for the Respondent