Kasarani Mall Limited v Uba Bank Kenya Limited [2022] KEHC 16495 (KLR)

Kasarani Mall Limited v Uba Bank Kenya Limited (Miscellaneous Application 1123 of 2020) [2022] KEHC 16495 (KLR) (Commercial and Tax) (8 December 2022) (Ruling)

Neutral citation: [2022] KEHC 16495 (KLR)

Republic of Kenya

In the High Court at Nairobi (Milimani Commercial Courts Commercial and Tax Division)

Commercial and Tax

Miscellaneous Application 1123 of 2020

WA Okwany, J

December 8, 2022

Between

Kasarani Mall Limited

Applicant

and

Uba Bank Kenya Limited

Respondent

(Arising From Hon. Claire Wanyama's Ruling On The Applicant's Bill Of Costs Delivered And Issued On 24{{^th}} September, 2020. )

Ruling

Introduction 1. Githunguri Dairy Farmers Co-operative Society instituted insolvency proceedings against Uchumi Supermarkets PLC being IP Cause No 25 OF 2018 wherein the Respondent herein was one of the creditors. Upon realizing that Uchumi Supermarkets PLC through its fully owned subsidiary Company, (the Applicant herein), owns a parcel of Land that was being sold, the Respondent herein made an Application dated November 12, 2018, seeking to enjoin the Applicant to the suit as an interested party.

2. In a Ruling delivered on March 5, 2019, the Court dismissed the joinder Application with costs to the Applicant herein who thereafter filed a Party to Party Bill of Costs seeking costs to the tune of Kshs 77,374,027. The Bill of Costs was however taxed at Kshs 59,285 thereby precipitating the filing of the application/reference that is the subject of this ruling.

The Application 3. Through the application/reference dated November 2020, the applicant seeks the following orders: -a.That the Honourable Court be pleased to set aside the Ruling of Hon Claire Wanyama (DR) delivered on September 24, 2020. b.That the Honourable Court be pleased to allow items 1, 2 and 3 of the Applicant's Bill of Costs dated May 31, 2019 and filed on even date.c.That the Honourable Court be pleased to declare Schedule 6, para. 1 of the Advocates Remuneration Order as inconsequential and inapplicable to the Applicant's Bill of Costs.d.That the Honourable Court be pleased to review and reconsider the Applicant's Bill of Costs.

4. The application is supported by the affidavit of the applicant’s advocate Mr Paul Kibet and is premised on the grounds that: -1. The Applicant filed its Bill of Costs dated May 31, 2019, pursuant to a ruling delivered on March 5, 2019, in which costs were awarded to the Applicant herein.2. The ruling emanated from the Respondent's Application dated November 12, 2018, filed under Order 8 (1) of the Civil Procedure Rules, *Sections IA & 1 B of the Civil Procedure Rules,* Sections 3, 428, 692 and 698 of the Insolvency Act, and Regulation 10 of the Insolvency Regulations, 2016. 3.The said Application sought to enjoin the Applicant herein in the main Insolvency Petition against Uchumi Supermarkets PLC so as to recover debts owed to it from the Applicant, to the tune of Ksh Two Billion & Eight Hundred Million (Kshs 2,800,000,000)4. The said Application was defended strenuously by the Applicant herein, and the learned Judge found that the Applicant herein was not liable to pay the respondent the sums claimed, thereby dismissing the respondent's Application with costs being awarded to the Applicant herein, Kasarani Mall Limited.5. The Applicant proceeded to draw a Party and Party Bill of Costs, which was opposed by the Respondent. The said Bill of Costs was now left for determination by the Hon Deputy Registrar as the designated taxing master.6. The Application was canvassed by way of written submissions, wherein the Applicant supported its Bill of Costs on the following grounds;-a.That the respondent had instituted debt recovery proceedings as against the Applicant, by dint of Schedule VI of the Advocates Remuneration Order.b.That the Applicant herein defended/denied liability vide its Preliminary Objection and Grounds of Opposition dated November 27, 2018 and filed on November 28, 2018. c.That the value of the subject matter therein was Ksh 2. 8 Billion, and the Applicant had been exposed to risk of losing the said sums had the Application been allowed.d.That albeit being a Notice of Motion Application within a main petition, the respondent's Application was a suit and/or originating process for purposes of the Advocates Remuneration Order, since it was purporting to recover from a third party who was not party to the mother suit.e.That in taxing the Bill of Costs, the taxing master should consider the value of the subject matter (Ksh 2. 8 Billion), the risks/stakes involved in the matter, and that the taxing master ought to use her discretion to award commensurate fees to the instructions accepted and undertaken by Counsels for the Applicant.f.That the Bill of Costs was therefore taxable under Schedule VI paragraph 7 (d) of the Advocates Remuneration Order.6. The taxing master delivered her ruling on September 24, 2020, wherein it became apparent to the Applicant that there had been glaring errors of principle, since the amount awarded is inordinately low as compared to the subject matter and the instructions undertaken by Counsel.7. That the Applicant now files this reference before this Honourable Court as an appeal against the said ruling. It is the Applicant's contention that the Honourable DR misapplied the law and/or made errors of principle as follows;a.The taxing officer misapplied the Advocates Remuneration Order on the Applicant's Bill of Costs.b.The taxing officer misinterpreted the law and failed to adopt items 7 , 2 and 3 on the Applicant's Bill of Costs.c.The taxing officer misapplied Schedule VI of the Advocates Remuneration Order.d.The taxing officer misapplied Schedule VI paragraph 7 (f) of the Advocates Remuneration Order.e.The taxing officer relied on repealed legislation & regulations under the Companies Act and specifically under Section 1023 of the Companies Act, 2015. f.That the taxing Officer failed to recognize that the Companies (winding UP) rules on which Schedule VI paragraph 7 (f) is anchored is now repealed, and that that notwithstanding, the said section of the ARO would still not be applicable to the Applicant's Bill of Costs.g.The taxing officer misinterpreted the law by failing to recognize that the Applicant's Bill of Costs was drawn pursuant to an originating process/suit within the meaning of Schedule VI (A) of the Advocates Remuneration Order.h)The taxing officer failed to recognize and consider the value of the subject matter, and the risk that the respondent had been exposed to.i)That the taxing master misjudged the brevity of how the matter was concluded, and made conclusions that the matter was simple and straightforward, when in fact it was not.i)That it is immaterial of how long a matter takes to be decided in Court or how many documents are filed when considering the costs of litigation, so long as the same falls squarely under instructions to sue or defend as envisaged under Schedule VI (a) of the ARO.k.That the taxing master erroneously conjoined the issue of winding up of the mother company (Uchumi Supermarkets PLC) and the Application against the subsidiary company and in doing so, deemed the Application instituting these proceedings as one which involves the winding up of the subsidiary company.l.That the taxing master failed to appreciate the Company Law principle that Companies are separate Legal entities from their parent companies and/or subsidiaries.m.That the taxing master downplayed the fact that the Respondent was attempting to recover monies from the Applicant herein, and thereby erroneously denied the Applicant costs on Items 7, 2 & 3 of the Bill of Costs.n.The taxing officer failed to exercise her discretion, thereby awarding a manifestly low amount to the detriment of the Applicant.6. That this Honourable Court is urged to find that this Application has merit on the grounds adumbrated above.7. That the facts leading to the matter are that the respondent had attempted by various methods including a winding UP petition to recover sums owed to it by Uchumi Supermarkets Ltd, which is the mother Company to Kasarani Mall Limited, the subsidiary.8. That when the respondent realized that it could not recover fully from Uchumi Supermarkets, it rushed to court with an Application to have Kasarani Mall Limited held liable to pay the said monies by dint of it being the subsidiary of Uchumi Supermarkets.12. That it is the Applicant's contention that the two companies are separate legal entities, as was held by the Court in dismissing the Respondent's Application then.13. That it is the Applicant's contention that the respondent exposed the Applicant to the risk of losing Ksh 2. 8 Billion, notwithstanding the stage at which the said Application was introduced in Court.14. That by seeking to recover from the Applicant, the Respondent brought fire upon its own hands by exposing themselves to the risk of costs, which equally was the risk faced by the Applicant.15. That the Bill of Costs filed by the Applicant was proper and commensurate to the risks involved in the matter.16. That for the purposes of the Advocates Remuneration Order, it is immaterial whether the Applicant was sued from the beginning of the suit, or towards the tail end, and it is immaterial the simplicity or otherwise of what issues were being decided before court, so long as the Applicant was exposed to risk of suffering in assets and the Applicant had to defend itself.17. That it is trite that litigants should always put the cost factor in mind as they consider whether they have a strong case against a party before instigating proceedings against other parties, and they should be able to pay the same when costs are allowed to the defendants.18. That on the above grounds, the Applicant moves this Court to reconsider the Bill of Costs aforementioned and allow it as drawn.19. That this Honourable Court has jurisdiction to set aside, and/or vary the taxation ruling delivered by the taxing master as though it was being filed for the first time.20. That this Honourable Court is invited to find that the learned Deputy Registrar applied the wrong principles of Law in deciding on the Applicant's Bill of Costs.

5. The respondent opposed the application through the replying affidavit of its Legal Officer Ms Mercy Wambugu who states that the Application is misconceived as the Taxing Master correctly applied the law and taxed the Bill of Costs to scale. She contends that the Respondent did not institute a suit against the Applicant but only made an Application for joinder of the applicant to an already existing winding up Petition.

6. It is the Respondent’s case that the Application dated November 12, 2018 was not a debt recovery suit and that Applicant’s claim that the said application is equivalent to instituting a debt recovery suit is totally misleading and incorrect.

7. The Respondent’s deponent averred that Schedule VI at paragraph (f) of the Advocates' Remuneration Order, 2014 is applicable in taxing matters concerning the winding up of companies. She stated that the said paragraph does not contemplate instruction fees, Advocates fees or getting up fees which ought not to have been included in the party to party costs in the present matter as alleged by the Applicant.

8. Parties canvassed the application by way of written submission which I have considered.

9. The applicant’s case was that the costs of Kshs 59,285 awarded out of Kshs 77,375,952 pleaded was too and disproportionate to the subject and inordinately low thereby amounting to a glaring error of principle. It was submitted that for purposes of the Advocates Remuneration Order, the proceedings that gave rise to the taxation were recovery proceedings as had the joinder application been allowed, the applicant would have been liable to pay up to Kshs 2. 8 Billion.

10. The applicant referred to the wording of Schedule 6 (a) of the Advocates Remuneration Order and argued that for purposes of the Advocates Remuneration Order, a Notice of Motion is considered to be a pleading capable of bringing a suit before a competent court. It was submitted that the nature of the proceedings instituted by the respondent exposed the applicant to risks of losing a substantial amount of money plus costs of the suit.

11. The applicant further argued that the Taxing Master relied on a section of the Advocates Remuneration Order that was not applicable to the case having been repealed by Section 1023 of the Companies Act. It was submitted that legal pronouncements founded on repealed rules and regulations are rendered nugatory ab initio.

12. The applicant maintained that the costs awarded were not commensurate with the subject matter and the Bill of Costs in question. For this argument, the applicant cited the decision in Masore Nyang’au & Co Advocates vs Kensalt Limited [2019] eKLR where it was held that: -'At the end of the day, costs will need to be pegged on he value of the subject matter, and my own view of the matter, is that the court is not precluded from asking for evidence so as to determine what the value of the subject matter may be for purposes of taxing costs, or refer to other documents provided in the course of the case, and which may point at the value of the subject matter.'

13. The respondent, on its part, submitted that the Taxing Master made the correct finding in taxing the Bill of Costs as a Notice of Motion should not be taxed in the same manner as an originating process. as had been suggested by the applicant.

14. The respondent argued that the costs awarded to the applicant in the application were specifically in respect to the application to enjoin the applicant as an interested party to the petition and not costs of the petition.

15. The issue for determination is whether the applicant has made out a case for the setting aside of the Taxing Master’s decision.

16. The principles governing the taxation of costs were set out in the case of Premchand Raichand Ltd vs Quarry Services of East Africa Ltd (1972) EA 162, as follows:a.That costs should not be allowed to rise to a level as to confine access to justice as to the wealthy;b.That a successful litigant ought to be fairly reimbursed for the cost he has had to incur;c.that the general level of remuneration of Advocates must be such as to attract recruits to the Profession;d.so far as Practicable there should be consistency in the award made; ande.The Court will only interfere when the award of the taxing master is so high or so low as to amount to an injustice to one party.

17. In Joreth Limited vs Kigano and Associates (2002) EA 92 the Court set out the factors to be considered in determining the instruction fees and noted that they include; the importance of the matter, general conduct of the case, the nature of the case, time taken for its dispatch and the impact of the case on the parties.

18. In the instant case, I note that in the application that gave rise to the order for costs, the respondent sought to enjoin the applicant herein as an interested party. An interested party is not ordinarily a primary party to a suit and its participation is at the discretion of the court.

19. The ‘Mutunga Rules’, TheConstitution of Kenya (Protection of Rights and Fundamental Freedoms) Practice and Procedure Rules, Legal Notice No 117 of 2013, defines an interested party as;'A person or an entity that has an identifiable stake or legal interest or duty in the proceedings and may not be directly involved in the litigation'

20. The Black’s Law Dictionary, 9thEdition at page 1232 defines an interested party as;-'A party who has a recognizable stake (and therefore standing) in the matter'

21. In Yusuf Abdi Adan & Another vs Hussein Ahmed Farah & 3 others, Civil Case No 100 of 2016 (Nairobi)the court defined an interested party in the following terms;-'As an interested party is one who has a direct interest or stake in the case though he or she was not a party to the cause ab initio. That is one who will be affected by the decision of the court when it is made either way or a person who feels that his or her interest will not be well articulated unless he himself or she herself appears in the proceedings to champion his or her cause.'

22. Supreme Court, in the case ofFrancis Karioki Muruatetu & Another vs Republic & 5 Others [2016] eKLR referred to the case of Trusted Society of Human Rights Alliance v Mumo Matemu & 5 Others [2014] eKLR defined an interested party as:-'One who has a stake in the proceedings, though he or she was not party to the cause ab initio. He or she is one who will be affected by the decision of the Court when it is made, either way. Such a person feels that his or her interest will not be well articulated unless he himself or she herself appears in the proceedings, and champions his or her cause.'

23. In Methodist Church in Kenya v Mohammed Fugicha & 3 others [2019] eKLR it was held that: -'Therefore, in every case, whether some parties are enjoined as interested parties or not, the issues to be determined by the Court will always remain the issues as presented by the principal parties, or as framed by the Court from the pleadings and submissions of the principal parties. An interested party may not frame its own fresh issues or introduce new issues for determination by the Court.'

24. The principle that emerges from the above cited case is that an interested party is not a primary party to a suit but may merely be interested in its outcome. It is for this reason that I do not agree with the applicant’s argument that the respondent intended to recover a colossal amount of money from it thus justifying the amount claimed in the Bill of Costs. It is also noteworthy that the applicant’s participation or presence in the suit had not materialized as at the time the Bill of Costs was filed as the application for its joinder was dismissed and did not see the light of day.

25. Having regard to the findings and observations that I have made in this ruling I find that the Taxing Master correctly applied the law and her discretion in taxing the applicant’s Bill of Costs as she did. I am guided by the decision in Premchand Raichand Ltd vs Quarry Services of East Africa Ltd (No 3) [1972]EA 162 where it was held that:-'The taxation of costs is not a mathematical exercise; it is entirely a matter of opinion based on experience. A court will not, therefore, interfere with the award of a taxing officer, and particularly where he is an officer of great experience, merely because it thinks the award somewhat too high or too low: it will only interfere if it thinks the award so high or so low to amount to an injustice to one party or the other.

26. I find that the instant application is not merited and I therefore dismiss it with no orders as to costs.

DATED, SIGNED AND DELIVERED VIRTUALLY AT NAIROBI THIS 8TH DAY OF DECEMBER, 2022. W. A. OKWANYJUDGEIn the presence of: -Mr. Njuguna for Kibet for plaintiff/applicant.Ms Ngumo for respondentCourt Assistant- Sylvia