REPUBLIC OF KENYA
IN THE HIGH COURT OF KENYA AT NAIROBI
MILIMANI LAW COURTS
COMMERCIAL AND TAX DIVISION
CORAM: F. MUGAMBI, J
MISC APPLICATION NO E762 OF 2021
BETWEEN
VIRENDRA RAMJI GUDKA………………................. APPLICANT
VERSUS
VIOLET MARANGA t/a as the
legal representative of the firm of
RAMESH SHARMA ADVOCATE….................1ST RESPONDENT
ESTATE OF RAMESH SHARMA……………..2ND RESPONDENT
Brief facts
1. The 1st respondent is sued in a representative capacity, on behalf of the estate of Ramesh Sharma Advocate. The applicant appointed the respondent to represent him in Civil Suit No 480 of 2011 and Judicial Review Application No 145 of 2016, Virendra Ramji Gudka v The Attorney General and Ministry of Transport (hereinafter the suits).
2. The matters were litigated to conclusion and judgment was entered in favour of the applicant for a sum of Kshs. 433,015,700/=. The decretal amount was paid out to the deceased firm’s account after deducting legal fees. It is the legal fees charged and deducted that forms the crux of the present dispute vide the application dated 14th October 2021. The same was filed under Certificate of Urgency and brought under Order 33 rule 1, Order 1 rule 3, rule 5, rule 9, Order 9 rule 10 of the Civil Procedure Rules, Section 45 of the Advocate's Act, Section 79, 82, 83 and 45 of the Law of Succession Act, and all other enabling provisions of the Law.
3. The application seeks the following orders;
i. SPENT
ii. The exorbitant legal fees billed by the 1st Respondent as against the Applicant with regards to Civil No. 480 of 2011 and Judicial Review Application No. 145 of 2016 Virendra Ramji Gudka and 3 others Versus The Attorney General and Ministry of Transport be hereby rendered illegal unenforceable and a nullity in law.
iii. The representation and legal work done by the 1st Respondent as regarding the subject suit Civil No. 480 of 2011 and Judicial Review Application No. 145 of 2016 Virendra Ramji Gudka and 3 others Versus The Attorney General and Ministry of Transport be submitted for taxation before the Taxing Officer of this Honourable Court.
iv. The 1st Respondent does remit and issue to the Applicant all that decretal amount held in her custody and awarded by the Honourable court in Civil No. 480 of 2011 and Judicial Review Application No. 145 of 2016 Virendra Ramji Gudka and 3 others Versus The Attorney General and Ministry of Transport
v. The 1st and 2nd Respondents be hereby restrained from dealing with the affairs and matters of the firm of Ramesh Sharma Advocate pending the hearing of this application interpartes.
vi. The 1st and 2nd Respondents be hereby restrained from dealing with the affairs and matters of the firm of Ramesh Sharma Advocate pending the hearing and determination of the substantive suit.
vii. The 1st Respondent be hereby restrained from executing instructions on behalf of the Applicant.
viii. All actions by the 1st Respondent, be hereby deemed illegal, null and voidable in law.
ix. The 1st and 2nd Respondent do issue a full and accurate account on behalf of the Applicant for all remitted accounts as regards all of the Applicant's dealings with the 1st Respondent since the demise of Ramesh Sharma.
4. It is supported by the grounds on the face of it, the supporting affidavit dated 14th October 2021 and further affidavit dated 15th November 2021 both sworn by the applicant. It is also substantiated through written submissions filed in this Court dated 21st March 2022. These documents form the basis of the applicant’s case.
5. The applicant’s case is that he had expected that the respondent’s remuneration for work done in the matters would be charged based on the Advocates Remuneration Order. The applicant faulted the respondent for instead, charging legal fees at 10% of the decretal amount, and a further 50% on the amount of 10%, and took issue with the exorbitant amount. The applicant particularly denies entering into an agreement with the respondent where these fees were agreed upon. He however confirms issuing a Power of Attorney to one Kaushik Gudka, to step in his shoes should he (the applicant) be unavailable to attend to matters relating to the suits.
6. The applicant terms the alleged agreement as an illegal contract. It was averred that the legal fees were a contingency, chargeable as a percentage of the decretal amount and therefore dependent on a pre-determined outcome. This was in breach of section 46(c) of the Advocates Act. Further, as the instructing client, the applicant also reaffirms that he was not a party to the agreement as required under the Advocates Act. As to whether the said Kaushik Gudka had authority to enter into the agreement on his behalf, the applicant contends that the general Power of Attorney relied on by the respondents was signed way back in 2011 and was for a sale of property, which was in no way connected to the suit. If anything, the applicant argues that it is one Ashwin Ramji Gudka who had a Power of Attorney to make decisions on behalf of the applicant relating to the suit.
7. He additionally raises doubts on the legality of the alleged instruction note, observing that the same is undated leading to glaring concerns about when it was executed. For these reasons it is the applicant’s case that the agreement was not binding on him. The applicant states that even if the Court were to find the agreement legal, the fees charged were harsh, unconscionable, exorbitant and unreasonable, in breach of section 45(2) of the Advocates Act.
8. The applicant states that upon determination, there was an agreement between the parties that the decretal amount relating to the suits would be paid in four (4) instalments. Already 3 instalments had been paid to the respondent, out of which the unconscionable fees had been deducted. The applicant raised concerns with the deceased about the manner in which deductions in legal fees had been made. The applicant and the respondent agreed that there would be no further deductions towards legal fees other than the 3 instalments which had been deducted already. It was further agreed that the applicant and the deceased would meet to reconcile accounts including the overpaid legal fees.
9. Unfortunately, the applicant avers that this never happened as the 1st respondent thereafter passed away. Following his demise, the 4th and last instalment of the payment was made, out of which the 1st respondent deducted legal fees. This was against the agreement between the applicant and the deceased.
10. The applicant also took issue with the appointment of the 1st respondent as personal representative of the estate of the deceased. It was averred that the 1st respondent had not attained the required minimum period of practice, being 7 years. For this reason, the applicant stated that her actions and particularly with respect to the monies in dispute in this application were illegal.
11. In response to the application the respondents put in their grounds of opposition (undated), a replying affidavit dated 1st November 2021 and supplementary affidavit (date unclear) both sworn by the 1st respondent, Violet Maranga. The respondents’ case was further substantiated by the written submissions dated 21st March 2022.
12. A brief summary of the respondents’ case was that the deceased, Ramesh Sharma Advocate was a sole proprietor and practitioner of the firm of Ramesh Sharma Advocates. He had appointed the 1st respondent to manage his firm upon his demise. The 1st respondent also later became the executrix of his estate.
13. The 1st respondent confirmed having personal knowledge that the applicant resided in the UK and that he had delegated his powers to his brothers Kaushik Ramji Gudka and Ashwin Ramji Gudka. This included acting for him in the already mentioned suits. This was information that had been shared by the deceased. The 1st respondent further stated that the said Kaushik Ramji Gudka had on several occasions been the instructing client on behalf of the applicant.
14. After the suit was concluded in 2014, the deceased advocate entered into an agreement for legal fees in 2019 with Kaushik Rasmji Gudka as the holder of the Power of Attorney on behalf of the applicant. The agreement was for the sum of Kshs. 64,952,355/= which was payable in installments to be deducted from the decretal amount. It was further agreed that the remittances would be payable to one Ashwin Ramji Gudka by way of cheques. The deceased also requested Kaushik Ramji Gudka, together with other parties to the suit to issue indemnities to the effect that they would indemnify the deceased and his estate in the event of any disputes arising from payments. This was done.
15. Pursuant to the contract, the legal fees were deducted in three (3) instalments as follows: on 23rd March 2019 Kshs. 26,588,125/=; on 15th October 2019 Kshs. 13,038,000 and on 26th November 2020 Kshs. 25,326,230/=. The respondent argues that this agreement had been there during the life of the deceased and if the applicants felt that the fees were exorbitant, the same should have been discussed with the deceased. In any case, there was the option of taxing the bill which ought to have been done when the deceased was alive and managing his firm.
16. The 1st respondent refutes the claim that Kaushik Rasmji Gudka was a stranger to the relationship between the deceased and the applicant. She states instead that the said Kaushik Rasmji Gudka had a valid Power of Attorney from the applicant herein who is his brother and that all correspondences in regard to the matter had always been channeled through him. The 1st respondent argues that a General Power of Attorney gave broad and unlimited authorization to the agent to do anything on behalf of the donor. This included entering into the agreement which is the subject matter of this application.
17. Responding to the genuineness of the signature on the said contract, the respondents presented the ID Card of the said Kaushik Rasmji Gudka to prove that the signature was the same. The 1st respondent also referred the Court to the Deed of Indemnity dated 13th November 2019 duly executed by the deceased and referring to Kaushik Rasmji Gudka as the instructing client.
18. On the application of section 45 of the Advocates Act, the 1st respondent averred that the said provision permitted an advocate and his client to draw an agreement with regard to payment of fees even after judgement. The 1st respondent denied knowledge of the same being illegal. She emphasized that it was not her work to rewrite agreements that the deceased had already entered into but to execute the same on behalf of the deceased. In any event, if the agreement was in fact illegal, then, the 1st respondent argued that both parties to the agreement would be guilty of committing an illegality. They would be both estopped by their conduct from seeking relief in a court of law out of such an agreement.
19. The 1st respondent further averred that the prayers in the application were moot. Not only had all the activities of the firm been scaled down, the decretal amount had already been remitted as against settlement of agreed fees to their newly appointed Counsel and the amounts had been applied to the deceased’s estate. This means that there was nothing left for taxation. It was further urged that the application was also time barred by virtue of section 45(2) of the Advocates Act. It related to a contract for legal fees that had been entered into in 2019. The suit was being instituted 3 years after the agreement was entered into and was therefore out of time
Analysis
20. Before getting into the analysis of the substantive issues, I must agree with the submission by the 1st respondent that there is an error in the citing of parties. This does not affect the determination of the matter. I must however state that I concur that the right citation would have been Virendra Ramji Gudka vs Violet Maranga sued as the legal representative of the estate of Ramesh Sharma.
21. This Court has also steered clear of the dispute relating to the appointment and the administration of the estate of the deceased which have also been raised by the applicant. This Court takes the view that these two issues should be litigated in the succession cause and evidence presented to that forum. This Court will therefore not make any finding on this aspect.
22. Having said that, I have considered the pleadings and rival submissions by counsel. The main issue for determination is whether the applicant has made out a case for the orders sought.
23. Section 45 of the Advocates Act provides that:
(1) Subject to section 46 and whether or not an order is in force under section 44, an advocate and his client may-
(a) before, after or in the course of any contentious business, make an agreement fixing the amount of the advocate’s remuneration in respect thereof;
(b) before, after or in the course of any contentious business in a civil court, make an agreement fixing the amount of the advocate’s instruction fee in respect thereof or his fees for appearing in court or both;
(c) before, after or in the course of any proceedings in a criminal court or a court martial, make an agreement fixing the amount of the advocate’s fee for the conduct thereof, and such agreement shall be valid and binding on the parties provided it is in writing and signed by the client or his agent duly authorized in that behalf”.
(2) A client may, apply by chamber summons to the Court to have the agreement set aside or varied on the grounds that it is harsh and unconscionable, exorbitant or unreasonable, and every such application shall heard before a judge sitting with two assessors, who shall be advocates of not less than five years’ standing appointed by the Registrar after consultation with the chairman of the Society for each application and on any such application the Court, whose decision shall be final, shall have power to order–
(a) that the agreement be upheld; or
(b) that the agreement be varied by substituting for the amount of the remuneration fixed by the agreement such amount as the Court may deem just; or
(c) that the agreement be set aside; or
(d) that the costs in question be taxed by the Registrar; and that the costs of the application be paid by such party as it thinks fit.
(2A) An application under subsection (2) may be made within one year after the making of the agreement, or within three months after a demand in writing by the advocate for payment under the agreement by way of rendering a fee note or otherwise, whichever is the later.
(3) An agreement made by virtue of this section, if made in respect of contentious business, shall not affect the amount of, or any rights or remedies for the recovery of, any costs payable by the client to, or to the client by, any person other than the advocate, and that person may, unless he has otherwise agreed, require any such costs to be taxed according to the rules for the time being in force for the taxation thereof:
Provided that any such agreement shall be produced on demand to a taxing officer and the client shall not be entitled to recover from any other person, under any order for the payment of any costs to which the agreement relates, more than the amount payable by him to his advocate in respect thereof under the agreement.
4) Where any agreement made by virtue of this section is made by the client as the guardian or committee of, or trustee under deed or will for, any person whose property will be chargeable with the whole or any part of the amount payable under the agreement, the advocate shall, before payment thereunder is accepted or demanded and in any event within six months after its due date, apply by chamber summons to the Court for approval of such agreement, and every such application shall be dealt with in accordance with subsection (2).
(5) If, after an advocate has performed part only of the business to which any agreement made by virtue of this section relates, such advocate dies or becomes incapable of acting, or the client changes his advocate as, notwithstanding the agreement, he shall be entitled to do, any party, or the legal personal representatives of any party, to such agreement may apply by chamber summons to the Court to have the agreement set aside or varied, and every such application shall be dealt with in accordance with subsection (2):
Provided that, in the case of a client changing his advocate, the Court shall have regard to the circumstances in which the change has taken place and, unless of opinion that there has been default, negligence, improper delay or other conduct on the part of the advocate affording to the client reasonable ground for changing his advocate, shall allow the advocate the full amount of the remuneration agreed to be paid to him.
(6) Subject to this section, the costs of an advocate in any case where an agreement has been made by virtue of this section shall not be subject to taxation nor to section 48.”
24. The purport of this provision is that an advocate is at liberty to enter into an agreement with his client on remuneration payable for services. This may happen before, during or after his instructions. Ochieng, J (as she then was) in Ahmednasir Abdikadir & Co. Advocates vs. National Bank of Kenya Limited (2) [2006] 1 EA held that agreements in respect of remuneration would be valid and binding on the parties thereto provided that the agreements were in writing and signed by the client or his agent duly authorized in that behalf.
25. In the present case, it is not disputed that there exists an agreement on the legal fees. The applicant however disputes the agreement stating that he was not a party to the agreement therefore it was not binding on him. The respondent avers that the agreement was made in relation to the Power of Attorney. The purport of a Power of Attorney was discussed by this Court in Francis Ben Njuguna t/a Propensity Properties & Consultants v Stanley M. Githunguri & another [2019] eKLR. The Court defined a power of attorney as;
“A legal document giving one person, usually (an agent) the power to act for another, (the principal) to make legal decisions on behalf of the principal. The power is usually used when the principal is ill or under a disability or when the principal cannot be present to sign necessary legal documents (usually in financial transactions).”
26. I have perused the Power of Attorney which is attached to the respondents replying affidavit. It seems to have been executed in 2011 and registered on 26th July 2011. The same is witnessed by one Stella Musau. The Power of Attorney, whose authenticity is not in issue, donates wide powers but provides in part as follows: -
I, the Undersigned VIRENDRA RAMJI GUDKA of Post Office Box 17700-00500 Nairobi in the Republic of Kenya do hereby ordain, nominate and appoint KAUSHIK RAMJI GUDKA of the same address as me to be my lawful Attorney and Agent, with full power and authority, for me and in my name, … also, if necessary, for me and in my name, to commence, prosecute, defend, any action or actions, suit or suits, at law or equity in any of the Courts of KENYA and… to manage and transact all my affairs in KENYA and execute such deeds or instruments as may be necessary, or most to my advantage, and to use all lawful ways and means thereto, as fully and effectively to all intents and purposes as I might or could do if personally present (emphasis mine)
27. I have also seen the undated instruction note entered into pursuant to these powers, signed by Kaushik Ramji Gudka on behalf of Virendra Ramji Gudka. It is this that forms the basis of the contract between the applicant and the deceased. The same would pass for a simple agreement for legal fees, noting that there is no prescribed format for the same. I therefore have no doubt that Kaushik Ramji Gudka acted within powers donated to him by the applicant under the Power of Attorney when he entered into the agreement over legal fees with the deceased.
28. The second issue that must be dealt with is the legality of the contract entered into. The said contract stipulates the matters that it relates to and states that the legal fees payable will be 10 per cent decretal amount as read with schedule 6B. The applicant states that this agreement is illegal because the fees are dependent on a determined outcome, in breach of section 46(c) of the Advocates Act. Section 46(c) states as follows: -
“Nothing in this Act shall give validity to—
(c)any agreement by which an advocate retained or employed to prosecute or defend any suit or other contentious proceeding stipulates for payment only in the event of success in such suit or proceeding or that the advocate shall be remunerated at different rates according to the success or failure thereof;
29. On the interpretation of this section and section 45 above, the Court of Appeal in Njogu & Company Advocates v National Bank of Kenya Limited [2016] eKLR held that:-
A plain reading of the above provisions of the Advocates Act shows that section 45 gives advocates and clients the discretion to agree on remuneration. However that discretion is subject to section 46 of the Act, which makes any agreement for remuneration that is conditional on success, or payment at different rates according to success or failure of the case, illegal. Sub-section (d) of Section 46 also invalidates any agreement that provides for payment of what is less than what is prescribed.
30. The interpretation of section 46(c) was further canvassed in National Bank of Kenya Ltd vs. Mahesh Manubhai Patel, Mombasa Miscellaneous Civil Application No.583 of 2003, where the High Court (Maraga J, as he then was), applying section 46(1) of the Advocates Act, to an agreement between an advocate and a client; stated:
“Section 45 itself says that it is subject to section 46. This section makes an agreement providing for payment of advocates fees on success or less than that provided in the order invalid. The agreement in this case provides for payment of up to 60% of the scale fees on success. It also provides for advocates fees which is less than the scale fees provided for in the Order. For these reasons given, I find that the agreement offends the provisions of section 46(c) & (d) and declare it illegal.
31. Regrettably, the agreement is not dated. The respondent avers that the same was entered into after the conclusion of the suit in February 2014. The applicant has not controverted this position. If the Court were to go by this position, it means that the agreement was not contra statute at least not under the provisions of section 46(c).
32. On the contrary, it is clear that the applicant (acting through his agent) and the deceased had clearly agreed on the stated terms. Moreover, indemnities were even executed further to the agreement. Although the applicant states that he asked the deceased not to deduct the final instalment so that parties could renegotiate the legal fees, there is no evidence to prove that parties intended to vary the agreement. It is on this basis that the deceased deducted the first instalments and the final instalment was deducted by the 1st respondent upon the demise of Counsel. It is not right that the applicant now comes back to change his mind, when the deceased is no longer here.
33. The next question is whether the applicant can be allowed to ‘wriggle out’ of the situation and maintain this application. Section 45(2) provides for a way out of a situation where a client feels that the agreement entered into is harsh and unconscionable, exorbitant or unreasonable. This avenue is unfortunately not open to the applicant because of section 2A which further provides that:-
(2A) An application under subsection (2) may be made within one year after the making of the agreement, or within three months after a demand in writing by the advocate for payment under the agreement by way of rendering a fee note or otherwise, whichever is the later.
34. It has been about (4) years since the execution of the agreement and already the fees have been paid out in the watch of the applicant, who chose not to raise an issue. No reasons have been given by the applicant for the current change of heart. Since the applicant has lost his right to question the contract, under section 45(2), so too has he lost the right to taxation. Section 45(6) states as follows:
(6) Subject to this section, the costs of an advocate in any case where an agreement has been made by virtue of this section shall not be subject to taxation nor to section 48.”
35. Either way, even if this court were to hold that the agreement for payment of legal fees was entered into prior to the judgment in the suits, this still makes it difficult for the applicant to benefit from the same. The provisions in section 46 would set in. The contract would be illegal, void, ab initio and therefore unenforceable as it would be predicated on a successful outcome of the suits. The result of which would be as observed by the Court of Appeal in Njogu & Company Advocates v National Bank of Kenya Limited [2016] eKLR. The Court cited a passage by Nyarangi, JA from the case of Archbolds (Freightage) Ltd v S Spanglett Ltd [1961] 1 QB 374, at page 388 as follows:-
“The effect of illegality upon a contract may be threefold. If at the time of making the contract there is an intent to perform it in an unlawful way, the contract, although it remains alive, is unenforceable at the suit of the party having that intent; if the intent is held in common, it is not enforceable at all. Another effect of illegality is to prevent a plaintiff from recovering under a contract if in order to prove his rights under it he has to rely upon his own illegal act; he may not do that even though he can show that at the time of making the contract he had no intent to break the law and that at the time of performance he did not know what he was doing was illegal. The third effect of illegality is to avoid the contract ab initio and that arises if the making of the contract is expressly or impliedly prohibited by statute or is otherwise contrary to public policy.”
36. Warsame, J. as he then was, reiterated this position by stating as follows:
“The cause of action of the applicant is based on the agreement dated 28th July, 1999, which it now calls illegal contract. The answer is that, a party cannot sustain his cause of action by showing that he participated (sic) sanctioned an illegality which had the effect of giving undue advantage. In such circumstances, the Court cannot come to his aid to wriggle out of that relationship. No Court will lend his aid to a party who founds his case on an illegal contract.”
37. This Court would have no choice than to therefore render the application unenforceable as against all the parties including the applicant who now seeks to rely on the same illegality. Whether or not he was aware of it, it was still an illegality.
Determination and orders
38. Having so found, the upshot of this is that the application is dismissed with costs to the respondents.
DATED, SIGNED AND DELIVERED IN NAIROBI
THIS 16th DAY OF MAY 2023
F. MUGAMBI
JUDGE
Court Assistant: Ms. Lucy Wandiri.
IN THE HIGH COURT OF KENYA AT NAIROBI
MILIMANI LAW COURTS
COMMERCIAL AND TAX DIVISION
CORAM: F. MUGAMBI, J
MISC APPLICATION NO E762 OF 2021
BETWEEN
VIRENDRA RAMJI GUDKA………………................. APPLICANT
VERSUS
VIOLET MARANGA t/a as the
legal representative of the firm of
RAMESH SHARMA ADVOCATE….................1ST RESPONDENT
ESTATE OF RAMESH SHARMA……………..2ND RESPONDENT
Brief facts
1. The 1st respondent is sued in a representative capacity, on behalf of the estate of Ramesh Sharma Advocate. The applicant appointed the respondent to represent him in Civil Suit No 480 of 2011 and Judicial Review Application No 145 of 2016, Virendra Ramji Gudka v The Attorney General and Ministry of Transport (hereinafter the suits).
2. The matters were litigated to conclusion and judgment was entered in favour of the applicant for a sum of Kshs. 433,015,700/=. The decretal amount was paid out to the deceased firm’s account after deducting legal fees. It is the legal fees charged and deducted that forms the crux of the present dispute vide the application dated 14th October 2021. The same was filed under Certificate of Urgency and brought under Order 33 rule 1, Order 1 rule 3, rule 5, rule 9, Order 9 rule 10 of the Civil Procedure Rules, Section 45 of the Advocate's Act, Section 79, 82, 83 and 45 of the Law of Succession Act, and all other enabling provisions of the Law.
3. The application seeks the following orders;
i. SPENT
ii. The exorbitant legal fees billed by the 1st Respondent as against the Applicant with regards to Civil No. 480 of 2011 and Judicial Review Application No. 145 of 2016 Virendra Ramji Gudka and 3 others Versus The Attorney General and Ministry of Transport be hereby rendered illegal unenforceable and a nullity in law.
iii. The representation and legal work done by the 1st Respondent as regarding the subject suit Civil No. 480 of 2011 and Judicial Review Application No. 145 of 2016 Virendra Ramji Gudka and 3 others Versus The Attorney General and Ministry of Transport be submitted for taxation before the Taxing Officer of this Honourable Court.
iv. The 1st Respondent does remit and issue to the Applicant all that decretal amount held in her custody and awarded by the Honourable court in Civil No. 480 of 2011 and Judicial Review Application No. 145 of 2016 Virendra Ramji Gudka and 3 others Versus The Attorney General and Ministry of Transport
v. The 1st and 2nd Respondents be hereby restrained from dealing with the affairs and matters of the firm of Ramesh Sharma Advocate pending the hearing of this application interpartes.
vi. The 1st and 2nd Respondents be hereby restrained from dealing with the affairs and matters of the firm of Ramesh Sharma Advocate pending the hearing and determination of the substantive suit.
vii. The 1st Respondent be hereby restrained from executing instructions on behalf of the Applicant.
viii. All actions by the 1st Respondent, be hereby deemed illegal, null and voidable in law.
ix. The 1st and 2nd Respondent do issue a full and accurate account on behalf of the Applicant for all remitted accounts as regards all of the Applicant's dealings with the 1st Respondent since the demise of Ramesh Sharma.
4. It is supported by the grounds on the face of it, the supporting affidavit dated 14th October 2021 and further affidavit dated 15th November 2021 both sworn by the applicant. It is also substantiated through written submissions filed in this Court dated 21st March 2022. These documents form the basis of the applicant’s case.
5. The applicant’s case is that he had expected that the respondent’s remuneration for work done in the matters would be charged based on the Advocates Remuneration Order. The applicant faulted the respondent for instead, charging legal fees at 10% of the decretal amount, and a further 50% on the amount of 10%, and took issue with the exorbitant amount. The applicant particularly denies entering into an agreement with the respondent where these fees were agreed upon. He however confirms issuing a Power of Attorney to one Kaushik Gudka, to step in his shoes should he (the applicant) be unavailable to attend to matters relating to the suits.
6. The applicant terms the alleged agreement as an illegal contract. It was averred that the legal fees were a contingency, chargeable as a percentage of the decretal amount and therefore dependent on a pre-determined outcome. This was in breach of section 46(c) of the Advocates Act. Further, as the instructing client, the applicant also reaffirms that he was not a party to the agreement as required under the Advocates Act. As to whether the said Kaushik Gudka had authority to enter into the agreement on his behalf, the applicant contends that the general Power of Attorney relied on by the respondents was signed way back in 2011 and was for a sale of property, which was in no way connected to the suit. If anything, the applicant argues that it is one Ashwin Ramji Gudka who had a Power of Attorney to make decisions on behalf of the applicant relating to the suit.
7. He additionally raises doubts on the legality of the alleged instruction note, observing that the same is undated leading to glaring concerns about when it was executed. For these reasons it is the applicant’s case that the agreement was not binding on him. The applicant states that even if the Court were to find the agreement legal, the fees charged were harsh, unconscionable, exorbitant and unreasonable, in breach of section 45(2) of the Advocates Act.
8. The applicant states that upon determination, there was an agreement between the parties that the decretal amount relating to the suits would be paid in four (4) instalments. Already 3 instalments had been paid to the respondent, out of which the unconscionable fees had been deducted. The applicant raised concerns with the deceased about the manner in which deductions in legal fees had been made. The applicant and the respondent agreed that there would be no further deductions towards legal fees other than the 3 instalments which had been deducted already. It was further agreed that the applicant and the deceased would meet to reconcile accounts including the overpaid legal fees.
9. Unfortunately, the applicant avers that this never happened as the 1st respondent thereafter passed away. Following his demise, the 4th and last instalment of the payment was made, out of which the 1st respondent deducted legal fees. This was against the agreement between the applicant and the deceased.
10. The applicant also took issue with the appointment of the 1st respondent as personal representative of the estate of the deceased. It was averred that the 1st respondent had not attained the required minimum period of practice, being 7 years. For this reason, the applicant stated that her actions and particularly with respect to the monies in dispute in this application were illegal.
11. In response to the application the respondents put in their grounds of opposition (undated), a replying affidavit dated 1st November 2021 and supplementary affidavit (date unclear) both sworn by the 1st respondent, Violet Maranga. The respondents’ case was further substantiated by the written submissions dated 21st March 2022.
12. A brief summary of the respondents’ case was that the deceased, Ramesh Sharma Advocate was a sole proprietor and practitioner of the firm of Ramesh Sharma Advocates. He had appointed the 1st respondent to manage his firm upon his demise. The 1st respondent also later became the executrix of his estate.
13. The 1st respondent confirmed having personal knowledge that the applicant resided in the UK and that he had delegated his powers to his brothers Kaushik Ramji Gudka and Ashwin Ramji Gudka. This included acting for him in the already mentioned suits. This was information that had been shared by the deceased. The 1st respondent further stated that the said Kaushik Ramji Gudka had on several occasions been the instructing client on behalf of the applicant.
14. After the suit was concluded in 2014, the deceased advocate entered into an agreement for legal fees in 2019 with Kaushik Rasmji Gudka as the holder of the Power of Attorney on behalf of the applicant. The agreement was for the sum of Kshs. 64,952,355/= which was payable in installments to be deducted from the decretal amount. It was further agreed that the remittances would be payable to one Ashwin Ramji Gudka by way of cheques. The deceased also requested Kaushik Ramji Gudka, together with other parties to the suit to issue indemnities to the effect that they would indemnify the deceased and his estate in the event of any disputes arising from payments. This was done.
15. Pursuant to the contract, the legal fees were deducted in three (3) instalments as follows: on 23rd March 2019 Kshs. 26,588,125/=; on 15th October 2019 Kshs. 13,038,000 and on 26th November 2020 Kshs. 25,326,230/=. The respondent argues that this agreement had been there during the life of the deceased and if the applicants felt that the fees were exorbitant, the same should have been discussed with the deceased. In any case, there was the option of taxing the bill which ought to have been done when the deceased was alive and managing his firm.
16. The 1st respondent refutes the claim that Kaushik Rasmji Gudka was a stranger to the relationship between the deceased and the applicant. She states instead that the said Kaushik Rasmji Gudka had a valid Power of Attorney from the applicant herein who is his brother and that all correspondences in regard to the matter had always been channeled through him. The 1st respondent argues that a General Power of Attorney gave broad and unlimited authorization to the agent to do anything on behalf of the donor. This included entering into the agreement which is the subject matter of this application.
17. Responding to the genuineness of the signature on the said contract, the respondents presented the ID Card of the said Kaushik Rasmji Gudka to prove that the signature was the same. The 1st respondent also referred the Court to the Deed of Indemnity dated 13th November 2019 duly executed by the deceased and referring to Kaushik Rasmji Gudka as the instructing client.
18. On the application of section 45 of the Advocates Act, the 1st respondent averred that the said provision permitted an advocate and his client to draw an agreement with regard to payment of fees even after judgement. The 1st respondent denied knowledge of the same being illegal. She emphasized that it was not her work to rewrite agreements that the deceased had already entered into but to execute the same on behalf of the deceased. In any event, if the agreement was in fact illegal, then, the 1st respondent argued that both parties to the agreement would be guilty of committing an illegality. They would be both estopped by their conduct from seeking relief in a court of law out of such an agreement.
19. The 1st respondent further averred that the prayers in the application were moot. Not only had all the activities of the firm been scaled down, the decretal amount had already been remitted as against settlement of agreed fees to their newly appointed Counsel and the amounts had been applied to the deceased’s estate. This means that there was nothing left for taxation. It was further urged that the application was also time barred by virtue of section 45(2) of the Advocates Act. It related to a contract for legal fees that had been entered into in 2019. The suit was being instituted 3 years after the agreement was entered into and was therefore out of time
Analysis
20. Before getting into the analysis of the substantive issues, I must agree with the submission by the 1st respondent that there is an error in the citing of parties. This does not affect the determination of the matter. I must however state that I concur that the right citation would have been Virendra Ramji Gudka vs Violet Maranga sued as the legal representative of the estate of Ramesh Sharma.
21. This Court has also steered clear of the dispute relating to the appointment and the administration of the estate of the deceased which have also been raised by the applicant. This Court takes the view that these two issues should be litigated in the succession cause and evidence presented to that forum. This Court will therefore not make any finding on this aspect.
22. Having said that, I have considered the pleadings and rival submissions by counsel. The main issue for determination is whether the applicant has made out a case for the orders sought.
23. Section 45 of the Advocates Act provides that:
(1) Subject to section 46 and whether or not an order is in force under section 44, an advocate and his client may-
(a) before, after or in the course of any contentious business, make an agreement fixing the amount of the advocate’s remuneration in respect thereof;
(b) before, after or in the course of any contentious business in a civil court, make an agreement fixing the amount of the advocate’s instruction fee in respect thereof or his fees for appearing in court or both;
(c) before, after or in the course of any proceedings in a criminal court or a court martial, make an agreement fixing the amount of the advocate’s fee for the conduct thereof, and such agreement shall be valid and binding on the parties provided it is in writing and signed by the client or his agent duly authorized in that behalf”.
(2) A client may, apply by chamber summons to the Court to have the agreement set aside or varied on the grounds that it is harsh and unconscionable, exorbitant or unreasonable, and every such application shall heard before a judge sitting with two assessors, who shall be advocates of not less than five years’ standing appointed by the Registrar after consultation with the chairman of the Society for each application and on any such application the Court, whose decision shall be final, shall have power to order–
(a) that the agreement be upheld; or
(b) that the agreement be varied by substituting for the amount of the remuneration fixed by the agreement such amount as the Court may deem just; or
(c) that the agreement be set aside; or
(d) that the costs in question be taxed by the Registrar; and that the costs of the application be paid by such party as it thinks fit.
(2A) An application under subsection (2) may be made within one year after the making of the agreement, or within three months after a demand in writing by the advocate for payment under the agreement by way of rendering a fee note or otherwise, whichever is the later.
(3) An agreement made by virtue of this section, if made in respect of contentious business, shall not affect the amount of, or any rights or remedies for the recovery of, any costs payable by the client to, or to the client by, any person other than the advocate, and that person may, unless he has otherwise agreed, require any such costs to be taxed according to the rules for the time being in force for the taxation thereof:
Provided that any such agreement shall be produced on demand to a taxing officer and the client shall not be entitled to recover from any other person, under any order for the payment of any costs to which the agreement relates, more than the amount payable by him to his advocate in respect thereof under the agreement.
4) Where any agreement made by virtue of this section is made by the client as the guardian or committee of, or trustee under deed or will for, any person whose property will be chargeable with the whole or any part of the amount payable under the agreement, the advocate shall, before payment thereunder is accepted or demanded and in any event within six months after its due date, apply by chamber summons to the Court for approval of such agreement, and every such application shall be dealt with in accordance with subsection (2).
(5) If, after an advocate has performed part only of the business to which any agreement made by virtue of this section relates, such advocate dies or becomes incapable of acting, or the client changes his advocate as, notwithstanding the agreement, he shall be entitled to do, any party, or the legal personal representatives of any party, to such agreement may apply by chamber summons to the Court to have the agreement set aside or varied, and every such application shall be dealt with in accordance with subsection (2):
Provided that, in the case of a client changing his advocate, the Court shall have regard to the circumstances in which the change has taken place and, unless of opinion that there has been default, negligence, improper delay or other conduct on the part of the advocate affording to the client reasonable ground for changing his advocate, shall allow the advocate the full amount of the remuneration agreed to be paid to him.
(6) Subject to this section, the costs of an advocate in any case where an agreement has been made by virtue of this section shall not be subject to taxation nor to section 48.”
24. The purport of this provision is that an advocate is at liberty to enter into an agreement with his client on remuneration payable for services. This may happen before, during or after his instructions. Ochieng, J (as she then was) in Ahmednasir Abdikadir & Co. Advocates vs. National Bank of Kenya Limited (2) [2006] 1 EA held that agreements in respect of remuneration would be valid and binding on the parties thereto provided that the agreements were in writing and signed by the client or his agent duly authorized in that behalf.
25. In the present case, it is not disputed that there exists an agreement on the legal fees. The applicant however disputes the agreement stating that he was not a party to the agreement therefore it was not binding on him. The respondent avers that the agreement was made in relation to the Power of Attorney. The purport of a Power of Attorney was discussed by this Court in Francis Ben Njuguna t/a Propensity Properties & Consultants v Stanley M. Githunguri & another [2019] eKLR. The Court defined a power of attorney as;
“A legal document giving one person, usually (an agent) the power to act for another, (the principal) to make legal decisions on behalf of the principal. The power is usually used when the principal is ill or under a disability or when the principal cannot be present to sign necessary legal documents (usually in financial transactions).”
26. I have perused the Power of Attorney which is attached to the respondents replying affidavit. It seems to have been executed in 2011 and registered on 26th July 2011. The same is witnessed by one Stella Musau. The Power of Attorney, whose authenticity is not in issue, donates wide powers but provides in part as follows: -
I, the Undersigned VIRENDRA RAMJI GUDKA of Post Office Box 17700-00500 Nairobi in the Republic of Kenya do hereby ordain, nominate and appoint KAUSHIK RAMJI GUDKA of the same address as me to be my lawful Attorney and Agent, with full power and authority, for me and in my name, … also, if necessary, for me and in my name, to commence, prosecute, defend, any action or actions, suit or suits, at law or equity in any of the Courts of KENYA and… to manage and transact all my affairs in KENYA and execute such deeds or instruments as may be necessary, or most to my advantage, and to use all lawful ways and means thereto, as fully and effectively to all intents and purposes as I might or could do if personally present (emphasis mine)
27. I have also seen the undated instruction note entered into pursuant to these powers, signed by Kaushik Ramji Gudka on behalf of Virendra Ramji Gudka. It is this that forms the basis of the contract between the applicant and the deceased. The same would pass for a simple agreement for legal fees, noting that there is no prescribed format for the same. I therefore have no doubt that Kaushik Ramji Gudka acted within powers donated to him by the applicant under the Power of Attorney when he entered into the agreement over legal fees with the deceased.
28. The second issue that must be dealt with is the legality of the contract entered into. The said contract stipulates the matters that it relates to and states that the legal fees payable will be 10 per cent decretal amount as read with schedule 6B. The applicant states that this agreement is illegal because the fees are dependent on a determined outcome, in breach of section 46(c) of the Advocates Act. Section 46(c) states as follows: -
“Nothing in this Act shall give validity to—
(c)any agreement by which an advocate retained or employed to prosecute or defend any suit or other contentious proceeding stipulates for payment only in the event of success in such suit or proceeding or that the advocate shall be remunerated at different rates according to the success or failure thereof;
29. On the interpretation of this section and section 45 above, the Court of Appeal in Njogu & Company Advocates v National Bank of Kenya Limited [2016] eKLR held that:-
A plain reading of the above provisions of the Advocates Act shows that section 45 gives advocates and clients the discretion to agree on remuneration. However that discretion is subject to section 46 of the Act, which makes any agreement for remuneration that is conditional on success, or payment at different rates according to success or failure of the case, illegal. Sub-section (d) of Section 46 also invalidates any agreement that provides for payment of what is less than what is prescribed.
30. The interpretation of section 46(c) was further canvassed in National Bank of Kenya Ltd vs. Mahesh Manubhai Patel, Mombasa Miscellaneous Civil Application No.583 of 2003, where the High Court (Maraga J, as he then was), applying section 46(1) of the Advocates Act, to an agreement between an advocate and a client; stated:
“Section 45 itself says that it is subject to section 46. This section makes an agreement providing for payment of advocates fees on success or less than that provided in the order invalid. The agreement in this case provides for payment of up to 60% of the scale fees on success. It also provides for advocates fees which is less than the scale fees provided for in the Order. For these reasons given, I find that the agreement offends the provisions of section 46(c) & (d) and declare it illegal.
31. Regrettably, the agreement is not dated. The respondent avers that the same was entered into after the conclusion of the suit in February 2014. The applicant has not controverted this position. If the Court were to go by this position, it means that the agreement was not contra statute at least not under the provisions of section 46(c).
32. On the contrary, it is clear that the applicant (acting through his agent) and the deceased had clearly agreed on the stated terms. Moreover, indemnities were even executed further to the agreement. Although the applicant states that he asked the deceased not to deduct the final instalment so that parties could renegotiate the legal fees, there is no evidence to prove that parties intended to vary the agreement. It is on this basis that the deceased deducted the first instalments and the final instalment was deducted by the 1st respondent upon the demise of Counsel. It is not right that the applicant now comes back to change his mind, when the deceased is no longer here.
33. The next question is whether the applicant can be allowed to ‘wriggle out’ of the situation and maintain this application. Section 45(2) provides for a way out of a situation where a client feels that the agreement entered into is harsh and unconscionable, exorbitant or unreasonable. This avenue is unfortunately not open to the applicant because of section 2A which further provides that:-
(2A) An application under subsection (2) may be made within one year after the making of the agreement, or within three months after a demand in writing by the advocate for payment under the agreement by way of rendering a fee note or otherwise, whichever is the later.
34. It has been about (4) years since the execution of the agreement and already the fees have been paid out in the watch of the applicant, who chose not to raise an issue. No reasons have been given by the applicant for the current change of heart. Since the applicant has lost his right to question the contract, under section 45(2), so too has he lost the right to taxation. Section 45(6) states as follows:
(6) Subject to this section, the costs of an advocate in any case where an agreement has been made by virtue of this section shall not be subject to taxation nor to section 48.”
35. Either way, even if this court were to hold that the agreement for payment of legal fees was entered into prior to the judgment in the suits, this still makes it difficult for the applicant to benefit from the same. The provisions in section 46 would set in. The contract would be illegal, void, ab initio and therefore unenforceable as it would be predicated on a successful outcome of the suits. The result of which would be as observed by the Court of Appeal in Njogu & Company Advocates v National Bank of Kenya Limited [2016] eKLR. The Court cited a passage by Nyarangi, JA from the case of Archbolds (Freightage) Ltd v S Spanglett Ltd [1961] 1 QB 374, at page 388 as follows:-
“The effect of illegality upon a contract may be threefold. If at the time of making the contract there is an intent to perform it in an unlawful way, the contract, although it remains alive, is unenforceable at the suit of the party having that intent; if the intent is held in common, it is not enforceable at all. Another effect of illegality is to prevent a plaintiff from recovering under a contract if in order to prove his rights under it he has to rely upon his own illegal act; he may not do that even though he can show that at the time of making the contract he had no intent to break the law and that at the time of performance he did not know what he was doing was illegal. The third effect of illegality is to avoid the contract ab initio and that arises if the making of the contract is expressly or impliedly prohibited by statute or is otherwise contrary to public policy.”
36. Warsame, J. as he then was, reiterated this position by stating as follows:
“The cause of action of the applicant is based on the agreement dated 28th July, 1999, which it now calls illegal contract. The answer is that, a party cannot sustain his cause of action by showing that he participated (sic) sanctioned an illegality which had the effect of giving undue advantage. In such circumstances, the Court cannot come to his aid to wriggle out of that relationship. No Court will lend his aid to a party who founds his case on an illegal contract.”
37. This Court would have no choice than to therefore render the application unenforceable as against all the parties including the applicant who now seeks to rely on the same illegality. Whether or not he was aware of it, it was still an illegality.
Determination and orders
38. Having so found, the upshot of this is that the application is dismissed with costs to the respondents.
DATED, SIGNED AND DELIVERED IN NAIROBI
THIS 16th DAY OF MAY 2023
F. MUGAMBI
JUDGE
Court Assistant: Ms. Lucy Wandiri.