PAUL LEMAYIAN NAITAWANG VS State Law AND SIMON MAGARE MATARA AND 3 Others

RULING

1. The Plaintiff in this suit (hereinafter referred to as “the Applicant”) filed an Application dated 30.09.2023 (hereinafter referred to as “the present Application”) seeking for the following Orders against the Ruling of the Taxing Officer issued on the 24.08.2023; -
2. The Honourable Court be pleased to review, revise and/or vary the decision of the Honourable Taxing Master rendred and/or delivered on the 24^th of August 2023 and in particular the decision relating to Item 1 and various items in terms of the Notice of Motion dated 28^th August 2023 and filed in Court on the same date.
3. The Honourable Court be pleased to review, revise and/or rescind the amount of costs vide the decision of the Honourable Taxing Master rendered and/or delivered on the 24^th of August 2023 in favour of the Defendants/Respondents.
4. The Honourable Court be pleased to award unto the Defendants/Respondents such costs as accords with the Advocates (Remuneration) Amendment Order, 2014.
5. Consequently, to prayer (3) herein above being granted, the Honourable Court be pleased to substitute the Certificate of Costs issued pursuant to the decision of the Honourable Taxing Master rendered on the 24^th day of August 2023 with a new Certificate reflecting the correct costs payable unto the Plaintiff/Applicant.
6. Costs of this Application be borne by the Defendants/Respondents.
7. Such further and/or other orders be granted as the Court may deem fit and expedient.
8. The grounds outlined hereinabove are founded on the following grounds which are contained in the body of the present application; -
9. The Plaintiff instituted the present suit on the 31^st of May 2022 against the Defendant over the property known as LR.NO.TRANSMARA/MOYOI/107.
10. The suit was indeed served on the Defendant who filed their Defences and other supporting documents thereof.
11. After the close of pleadings, the Defendants filed a Preliminary Objection against the entire suit which was upheld by the Court on the 08.12.2022.
12. The determination of the Preliminary Objection was to the effect that the Plaintiff’s suit was struck out.
13. In essence therefore, the Plaintiff’s suit never proceeded for full hearing and was dismissed on a preliminary point of law.
14. On the 12.06.2023, the Defendant filed a Bill of Costs which after hearing of the same, the amount assessed was KShs 1,205,224/- on the 24.08.2023.
15. The Applicant therefore is aggrieved by the assessment by the Honourable Taxing Master for the reasons that the figure of KShs 1,205,224/- was excessive, erroneous and devoid of the principles of taxation as guided by the Advocates (Remuneration) Amendment Order, 2014.
16. Consequently, the Applicant is seeking for the said assessment of KShs 1,205,224/- to be reviewed, re-assessed and/or re-taxed based on the relevant principles of taxation under the Advocates (Remuneration) Amendment Order, 2014.
17. The present Application was duly served on the Respondents who opposed the same by filing a Replying Affidavit sworn 02.11.2023 and stated as follows; -
18. The Honourable Taxing Master gave an opportunity to both parties to file their submissions of the items contained in the Bill of Costs being assessed before pronouncing the assessment thereof.
19. Consequently therefore, the assessment of KShs 1,205,228/- was rightfully done keeping in mind the principles relating to taxation.
20. The Respondents pointed out that the Item No.1 in the Bill of costs taxed at KShs 1,000,000/- was justified keeping in mind that the approximate acreage of the property in dispute was 58.34 Hectares whose value was high.
21. In essence therefore, the Respondents sought for this Court to dismiss the present Application with costs.
22. The Applicant then filed his submissions on 28.04.2024 while the Defendants filed their submissions on the same day.
23. The Court has indeed perused the present Application, the Replying Affidavit and the submissions by the parties and identify the following issues for determination.

ISSUE NO. 1- WHAT ARE THE PRINCIPLES TO BE CONSIDERED IN A TAXATION?

ISSUE NO. 2- WAS THE ASSESSMENT OF KSHS 1,000,000/- ON ITEM NO.1 REASONABLE?

ISSUE NO.3- IS THE APPLICANT ENTITLED TO THE PRAYERS SOUGHT IN THE PRESENT APPLICATION?

ISSUE NO.4- WHO BEARS THE COSTS OF THE PRESENT APPLICATION?

1. Based on the above identified issues, the same will now be discussed and determined as provided hereinbelow; -

ISSUE NO. 1- WHAT ARE THE PRINCIPLES TO BE CONSIDERED IN A TAXATION?

1. In the case of JORETH LIMITED-VERSUS- KIGANO & ASSOCIATES (2002) 1 EA, the Court observed the following; -

“ We would at this stage point out that the value of the subject matter of a suit for purposes of taxation of a Bill of Costs ought to be determined from the pleadings, judgement or settlement ( if such be the case), but if the same is not so ascertainable the taxing officer is entitled to use his discretion to assess such instruction fee as he considers just, taking into account, amongst other matters, the nature and the importance of the cause or matter, the interest of the parties, general conduct of the proceedings, any directions by the trial judge and all other relevant circumstances.”

1. The above authority clearly outlines the principles and/or issues that any Taxing Officer is required to consider while assessing and/or taxing a Bill of Costs before him.

ISSUE NO. 2- WAS THE ASSESSMENT OF KSHS 1,000,000/- ON ITEM NO.1 REASONABLE?

1. The second issue is whether or not the assessment of KShs 1,000,000/- on Item No. 1 was justified.
2. The Applicant is of the view that the amount assessed on the Instruction fees by the Honourable Taxing Officer in favour of the Defendants was excessive and contrary to the principles of taxation.
3. The Applicant stated that the substantive suit did not go for full hearing having been struck out through a Preliminary Objection
4. The Respondents on the other hand submitted that the property in issue was about 58.34 Hectares and therefore the value was significant and justifies the amount assessed for instruction fees.
5. To be able to fully analysis this issue appropriately, the Court has carefully perused the Plaint filed by the Applicant and notes the reliefs to be declarations only and the value of the said property was neither pleaded nor assessed in the pleadings by the parties.
6. Secondly, the pleadings that were filed by the Defendants were the Defence, Preliminary Objection and submissions in support of the Preliminary Objection.
7. The Preliminary Objection was on a point of law which is a rather straight forward matter without much complexity.
8. In essence therefore, the complexity of the issues in the substantive suit were never under consideration in the Preliminary Objection and can not be the basis of the taxation.
9. Consequently therefore, this Court is of the considered view that an amount of KShs 200,000/- is sufficient for Instruction Fees contained in item No.1 of the Respondent’s Bill of Costs.

ISSUE NO.3- IS THE APPLICANT ENTITLED TO THE PRAYERS SOUGHT IN THE PRESENT APPLICATION?

1. The next issue is whether or not this Court should grant the prayers sought by the Applicant in the present Application.
2. The principles of setting aside the decisions of a Taxing Master were well established in the case of PREMCHAND RAICHAND LIMITED & ANOTHER -VERSUS- QUARRY SERVICES OF EAST AFRICA LIMITED & ANOTHER (1972) EA, 162 where the Court outlined the followings grounds as sufficient to set-aside and/or review a Taxation; -
3. That there was an error of principle.
4. The fee awarded was manifestly excessive or is so high as to confine access to the court to the wealthy
5. That the successful litigant ought to be fairly reimbursed for the costs he has incurred
6. That so far as practicable there should be consistency in the award.
7. The Court having made a finding that the reasonable amount for Instruction Fees to the Respondents is KShs 200,000/- then it is clear that the amount of KShs 1,000,000/- awarded to the Respondent was arrived contrary to the principles of fair taxation hence excessive.
8. To this end, the Applicants prayers are merited and the amount of KShs 1,000,000/- taxed for Item No. 1 in the Bill of Costs dated 12.06.2023 is hereby rescinded and substituted with a taxation of KShs 200,000/-.
9. In addition to the above finding, the Court that notes that the Bill of Costs dated 12.06.2023 included a figure of Value Added Tax (V.A.T) on the assessed amount.
10. In the case of PYRAMID MOTORS LIMITED-VERSUS- LANGATA GARDENS LIMITED (2015) eKLR, the Court observed as follows; -

“On the final issue of VAT, I hold the simple view that in allowing the same, the master erred under the Value Added Tax Act,2013 particularly Section 5 thereof.

Value Added Tax (VAT) is chargeable in taxable supply made by any registered person.

There was no taxable supply of either goods or services made to the Applicant herein by the Respondent herein.

The Bills herein concerned party and party costs and VAT could then not apply as neither party fetched nor supplied services to the other.

True, legal services were rendered but it is not the advocate who was being compensated herein. The Master could only have awarded VAT if the Bills were Advocate-Clients Bills or if there was tendered evidence before the Master that the Plaintiff had paid VAT and was consequently entitled to indemnify. But yet again is also debatable whether the Plaintiff was a vatable person. I would vacate the award on VAT as the Master erred.”

1. On the finding of the above authority which this Court concurs with, the sum of KShs 169,000/- included as VAT is hereby set-aside and/or rescinded altogether as VAT at the rate of 16% is not applicable in party and party Bills of Costs.
2. The other items remaining in the Bill of Costs shall remain the same.

ISSUE NO.4- WHO BEARS THE COSTS OF THE PRESENT APPLICATION?

1. On the issue of costs, each party should bear its own costs.

CONCLUSION

1. In conclusion therefore, the Court hereby makes the following Orders in determination of the Application dated 30.09.2023; -
2. THE AMOUNT OF KSHS 1,000,000/- AWARDED IN ITEM NO.1 OF THE BILL OF COSTS DATED 12.06.2023 BE AND IS HEREBY RESCINDED AND REVIEWED TO A SUM OF KSHS 200,000/- ONLY.
3. THAT THE TOTAL AMOUNT ASSESSED ON THE BILL OF COSTS SHALL NOT BE SUBJECT TO ANY VAT AND THE FIGURE OF KSHS 169,000/- AWARDED AS APPLICABLE VAT IN THE BILL OF COSTS DATED 12.06.2023 IS HEREBY SET-ASIDE.
4. THE REMAINING ITEMS IN THE BILL OF COSTS DATED 12.06.2023 WILL REMAIN AS EARLIER TAXED.
5. A FRESH CERTIFICATE OF COSTS BE ISSUED IN LINE WITH THE ASSESSED FIGURE OF KSHS 200,000/- IN ITEM NO.1 &  EXCLUSIVE OF VAT.
6. EACH PARTY TO BEAR ITS OWN COSTS.

DATED, SIGNED & DELIVERED Virtually in KILGORIS ELC Court on 22^ND OF MAY 2024.

IN THE PRESENCE OF:

COURT ASSISTANT: MR. NGENO.

ADVOCATE FOR THE APPLICANT: MS. MIRERI

ADVOCATES FOR THE RESPONDENTS: MR. RANAH FOR THE 4^TH & 5^TH RESPONDENT