Introduction and Background
The plaintiff’s case:
1. The plaintiff is an advocate of the High Court of Kenya, practicing under the name Taib A. Taib Advocates. The 1st and 2nd defendants were previously husband and wife. Pursuant to a Power of Attorney dated 24th February 2003, the 2nd defendant, acting as the duly authorized agent of the 1st defendant executed five (5) Retainer Agreements (hereinafter collectively referred to as ‘the Agreements’) on the following dates:
i. 20th March 2015 – Minimum retainer fee of Kshs. 60,000,000/=.
ii. 4th March 2016 – Two separate agreements, each with a minimum retainer fee of Kshs. 15,000,000/= (totaling Kshs. 30,000,000/=).
iii. 16th December 2016 – Minimum retainer fee of Kshs. 35,000,000/=.
iv. 16th December 2019 – Minimum retainer fee of Kshs. 35,000,000/=.
2. Pursuant to the Agreements, the 1st defendant retained the plaintiff’s services with the specified minimum fees as noted above. The underlying dispute for which the plaintiff was instructed commenced with the filing of High Court Civil Case No. 226 of 2003. Following the determination of the matter by the High Court, two appeals were lodged in the Court of Appeal as Civil Appeal No. NAI 31 of 2016 and Civil Appeal No. NAI 32 of 2016. The litigation ultimately proceeded to the Supreme Court in Supreme Court Civil Application No. 37 of 2019 and Supreme Court Petition No. 46 of 2019.
3. The plaintiff avers that he diligently and successfully represented the defendants throughout the entirety of the proceedings. In High Court Civil Case No. 226 of 2003, he secured a judgment in favour of the defendants for a sum exceeding Kshs. 2 billion. Despite the appeals that followed, the plaintiff asserts that he effectively defended the judgment before both the Court of Appeal and the Supreme Court. He further states that he filed an application in the Supreme Court challenging that Court’s jurisdiction to entertain the matter.
4. Before the Supreme Court could determine the plaintiff’s jurisdictional application, the 2nd defendant, acting on behalf of the 1st defendant, unilaterally instructed the law firm of E.K. Mutua & Company Advocates. The plaintiff objects to the actions of the 2nd defendant who without the plaintiff’s knowledge directly engaged with the respondent in the application, being Housing Finance Company Kenya (HFCK), and reached a compromise. This compromise was recorded as a consent judgment dated 25th September 2020, before the Supreme Court.
5. The present suit, filed by way of an amended plaint dated 13th October 2020, arises from these events, which effectively removed the plaintiff from the final stages of the case.
6. The plaintiff contends that the defendants did not raise any objection to the fee notes issued pursuant to the Agreements, yet they failed to remit any payment for the legal services rendered. He maintains that he fully discharged his professional obligations by successfully representing the defendants at all stages of the litigation. The plaintiff further asserts that, had he been permitted to proceed with the execution of the High Court judgment, his legal fees could have been recovered from the judgment debtor.
7. According to him, the defendants’ settlement with the opposing party was financially disadvantageous. He states that the defendants agreed to settle for Kshs. 280,000,000/= under the consent judgment, in a matter where they had a decree for over Kshs. 2,000,000,000/= (inclusive of costs and accrued interest).
8. The plaintiff claims that as a result of his legal work, he is entitled to Kshs. 216,600,000/= in fees, comprising Kshs. 190,000,000/= in agreed legal fees and Kshs. 26,600,000/= in VAT (14% of the fee). He further asserts a lien over any decretal sums payable by HFCK to the defendants, up to the amount of Kshs. 216,600,000/=, which he seeks to enforce until his outstanding fees are paid in full.
9. He seeks the following final orders:
a) Specific performance and payment of the fees due under the retainer agreements;
b) Damages for breach of contract;
c) Special damages and payment of the minimum fees as set out in the retainer agreements of Kshs. 190,000,000/=;
d) VAT on the sum above at 14%, making a total of Kshs. 26,600,000/=;
e) A declaration that the plaintiff, as counsel on record for the defendants, is entitled to a lien in the sum of Kshs. 216,600,000/= over the decretal amounts due to the defendants;
f) Costs of the suit and
g) Interest at the rate of 24% per annum on a compounding basis.
The defendants’ case:
10. The defendants filed separate defences in response to the suit. The 1st defendant’s defence, counterclaim, and set-off is dated 21st June 2021, while the 2nd defendant’s defence is dated 17th June 2021. Both defences challenge the plaintiff’s claim on largely similar grounds.
11. The defendants dispute the plaintiff’s entitlement to legal fees under the Agreement dated 16th December 2019, which pertains to Supreme Court Petition No. 46 of 2019. They contend that the plaintiff did not appear or represent them in that matter, which was ultimately settled by consent between the parties. Additionally, the 2nd defendant asserts that by the time the said agreement was signed, the defendants had already withdrawn their instructions to the plaintiff.
12. The defendants’ position is that the Agreements are invalid, unenforceable, contrary to public policy, null and void, on grounds that they are champertous and premised on contingency fees. They confirm that the plaintiff’s legal fees were contingent upon securing a favourable outcome for them, specifically based on the success of a claim involving compounded interest.
13. The defendants further argue that the Agreements were based on inflated and inconsistent subject matter values, which, in their view, substantially exceeded the amounts pleaded or awarded in the final judgments. They contend that the Agreements were both unconscionable and ambiguous. Additionally, they assert that the variation in subject matter values across the different Agreements reflects a common mistake and demonstrates that there was no true “meeting of the minds” at the time the Agreements were executed.
14. The defendants also allege that the Agreements were procured through undue influence, intimidation, and misrepresentation. They claim that the plaintiff exploited their precarious financial position and coerced them into executing the Agreements. According to them, the plaintiff leveraged their inability to afford standard legal fees and insisted on the execution of multiple retainer agreements, assuring them that he would secure a court award of interest on a compound basis.
15. The defendants further assert that the plaintiff declined a proposed payment of KShs. 17,000,000/= from HFCK, electing instead to await what he believed would be a more favourable outcome. They justify their decision to settle Supreme Court Petition No. 46 of 2019 by consent, stating that they were forced to do so after the plaintiff failed to act on their instructions to pursue the settlement. Consequently, they retained new counsel and maintain that there was no breach of the retainer agreements. They attribute the change in legal representation to delays and inaction on the part of the plaintiff.
16. The defendants pray that the validity of the retainer agreements be determined in accordance with Section 45 of the Advocates Act, and that the said agreements be declared unenforceable, invalid, null, and void. They seek the dismissal of the plaintiff’s suit in its entirety and urge the court to allow their counterclaim. Additionally, the 2nd defendant prays for the dismissal of the suit against her on the ground that she acted solely as a disclosed agent.
17. By way of set-off, the defendants claim the following amounts:
a) Kshs. 9,000,000/=, being proceeds from a sale in ELC No. 430 of 2008; and
b) Kshs. 20,000,000/=, being security for costs deposited in Court of Appeal Civil Appeal No. 31 of 2016.
18. At the hearing, the plaintiff testified as PW1. By consent, it was agreed that the documents filed by the 1st defendant would be deemed properly on record, as he was unable to testify due to ill health. The 2nd defendant testified and produced her evidence. Given that the testimonies are consistent with the summaries of the case already set out, I find it unnecessary to replicate the testimony in full. However, reference will be made to specific portions of the evidence where relevant in the analysis.
19. Upon the close of the hearing, the parties filed their respective written submissions, which the Court has carefully considered alongside the evidence, pleadings, and relevant case law. The following are the issues that have been identified for determination:
i. Whether the suit against the 2nd defendant should be dismissed;
ii. Whether a special court should be appointed under Section 45 of the Advocates Act to determine the validity of the retainer agreements;
iii. Whether the retainer agreements are valid and enforceable;
iv. Whether the plaintiff is entitled to legal fees amounting to Kshs. 190,000,000/= plus VAT of Kshs. 26,600,000/=.
Analysis and Determination:
i. Whether the suit against the 2nd defendant should be dismissed:
20. The 2nd defendant contends that the suit against her is unsustainable, as she acted at all material times as a disclosed agent of the 1st defendant. In response, the plaintiff argues that the 2nd defendant was properly joined in these proceedings due to her failure to stand down as the 1st defendant’s lawful attorney, despite the plaintiff’s withdrawal and revocation of the Power of Attorney dated 11th December 2019, and the affidavit he swore on the same date.
21. The plaintiff further asserts that, in any event, the 2nd defendant admitted during her testimony to having a personal interest in the proceedings that gave rise to the current suit. Indeed, the record confirms that during cross-examination, she stated:
“The retainer agreements recognize us both as the clients… I was involved in the cases in my right as co-owner of the properties and as an agent of my ex-husband, the 1st defendant.”
22. It is trite law that a party does not become part of legal proceedings merely by virtue of their own belief or understanding. A review of the pleadings filed in the underlying matters reveals that the 2nd defendant was not named as a party in those proceedings. Rather, the 1st defendant was consistently identified as acting through his duly appointed attorney, Sharok Kher Mohammed Ali Hirji.
23. That notwithstanding, the retainer agreements which form the subject matter of this suit were executed jointly and/or severally by the 1st and 2nd defendants, with the 2nd defendant also signing the Agreements in her capacity as the 1st defendant’s representative. These agreements are distinct contracts from the suits, for the payment of legal fees. On that basis, I am satisfied that the 2nd defendant is properly enjoined in these proceedings, having executed the agreements in her own name and capacity.
24. Regarding the plaintiff’s claim that the 2nd defendant is sued for failing to step down as attorney despite the revocation of the Power of Attorney, I observe that no documentary evidence of such revocation has been produced before this Court. In any event, even assuming such revocation were on record, the plaint does not seek any substantive relief in relation to that specific averment. Accordingly, the matter warrants no further consideration.
ii. Whether the retainer agreements are valid and enforceable:
25. Section 46 of the Advocates Act prohibits advocates from entering into champertous or contingency fee agreements. This is an agreement whereby an advocate agrees to finance or conduct a suit in return for a share of the proceeds or an outcome-based payment. The provision explicitly declares that “Nothing in this Act shall give validity to” certain types of agreements involving advocates, including:
a) any purchase by an advocate of any interest in the subject matter of a suit,
b) any agreement in which an advocate’s remuneration is contingent on the success of a case or where it varies based on success or failure, and
c) any fee agreement for contentious matters where the advocate is to be paid a percentage of damages or an amount that is below the minimum or above a certain maximum (such as more than 25% of general damages).
26. In Njogu & Company Advocates V National Bank of Kenya Limited, [2016] eKLR, Koome, J (as she then was) stated the following about an agreement contrary to section 46 of the Advocates Act:
“The agreement being invalid, the parties should return to the neutral grounds, and be allowed to tax the bill of costs to ascertain the fees payable. My humble understanding of this provision as I see it is because an advocate is aware of the provisions of the Advocates Act more than the client. It is the advocate who has a higher duty of upholding the provisions of the Act in order to uphold his integrity and that of the legal profession.”
27. In assessing the nature of the five Agreements, this Court is not bound by the absence of explicit language indicating a contingency fee arrangement. Admittedly, there is no express provision suggesting that the fees charged by the plaintiff were conditional upon the outcome of the litigation. However, it is the Court’s view that substance must prevail over form. Even in the absence of a specific “no win, no fee” clause, the Court is entitled to scrutinize the underlying realities of the arrangement.
28. This assessment is not precluded by the defendants’ failure to offer an explanation for their delay in challenging the otherwise exorbitant Agreements within the timeframe prescribed under Section 45(2A) of the Advocates Act. The Court retains the discretion to consider the validity of the Agreements where the interests of justice so demand.
29. That said, the circumstances surrounding the Agreements in this case are particularly telling. It is noteworthy that the plaintiff advocate, fully aware of the defendants’ financial constraints, did not demand any upfront retainer or deposit. Instead, he undertook to finance the litigation himself, meeting filing fees and other court-related expenses on behalf of the defendants. He also agreed to defer payment of his legal fees until the conclusion of the matters. These actions strongly suggest that the expectation was for payment to arise from the proceeds of the litigation, namely, from a successful judgment or negotiated settlement.
30. Significantly, the anticipated settlement was exceptionally high, in the region of Kshs. 2,000,000,000/=. In my view, the facts support the inference that the advocate’s compensation was inextricably tied to the outcome of the suits. Had the litigation succeeded and resulted in substantial recoveries, the advocate stood to gain a considerable sum. Conversely, had the claims failed, it is reasonable to infer that little or no payment would have been made. The advocate thus assumed the financial risk of non-payment, and his remuneration was, in substance, contingent upon a favourable result.
31. The defendants’ allegation that the retainer agreements were procured through duress and intimidation is not supported by sufficient evidence beyond the bare assertions made. However, the pattern and timing of the fee agreements, with multiple successive contracts executed over several years, each escalating the fee payable, raises legitimate concerns about whether the advocate took advantage of the defendants’ dependency and vulnerable financial position.
32. The cumulative effect of these agreements, which imposed an enormous financial burden on clients who were admittedly impecunious, suggests that the defendants may have felt compelled to accede to the terms presented, rather than having entered into the agreements freely and with informed consent. This inference is reinforced by the ultimate decision by the defendants to enter into a consent with HFCK, expressly abandoning the plaintiff’s insistence on pursuing recovery of Kshs. 2,000,000,000/=.
33. The 2nd defendant candidly testified that they were in desperate need of funds and that the plaintiff had caused inordinate delays, by his persistence on getting them a judgment of Kshs. 2,000,000,000/=. Taken together, these circumstances reveal a significant imbalance in bargaining power, and a real possibility that the agreements were not the product of arms-length negotiation, but rather of necessity, pressure, and unequal footing.
34. For the above reasons, I do find that the five fee Agreements violate Section 46(c) of the Advocates Act and are null and unenforceable against the defendants.
35. The defendants have additionally sought an order for a referral of the Agreements under Section 45(2) of the Advocates Act. The provision allows a client to apply to court to have a fees agreement set aside or varied if it is deemed “harsh or unconscionable, exorbitant or unreasonable.” This application must be heard by a High Court judge sitting with two advocate assessors. However, having found that the Agreements are unenforceable, this prayer is rendered moot.
iii. Whether the plaintiff is entitled to legal fees amounting to Kshs. 190,000,000/= plus VAT of Kshs. 26,600,000/=.
36. As a cardinal rule, even if specific fee agreements are struck down or deemed unenforceable, an advocate is still entitled to be paid for professional work actually done for the clients. Having held that the Agreements are unenforceable, the issue of legal fees ought to now be referred to taxation before the Deputy Registrar.
37. Finally, the defendants have not substantiated their claims and the same must therefore fail.
Disposition
38. Accordingly, I do make the following final orders:
i. The plaintiff’s suit against the defendants is hereby dismissed.
ii. The defendants’ counterclaim is likewise dismissed.
iii. The matter is referred to the Deputy Registrar for taxation to determine the fees due to the plaintiff.
iv. The taxed fees shall be paid as a first charge from the balance of the decretal amounts due to the defendants from HFCK.
v. There shall be no orders as to costs.
DATED, SIGNED AND DELIVERED IN NAIROBI
THIS 22ND DAY OF APRIL 2025.
F. MUGAMBI
JUDGE