Mwangi Keng’ara & Co. Advocates v Invesco Assurance Co. Ltd [2017] KEHC 2635 (KLR)

REPUBLIC OF KENYA

IN THE HIGH COURT OF KENYA

AT MACHAKOS

MISCELLENOUS APPLICATION NO. 59 OF 2016

MWANGI KENG’ARA & CO. ADVOCATES.........ADVOCATE/RESPONDENT

VERSUS

INVESCO ASSURANCE CO. LTD....................................CLIENT/APPLICANT

RULING OF THE COURT

1. The respondent filed a bill of costs dated 25th February, 2016 before the Taxing Officer. Before it could be taxed, the applicant filed a notice of motion dated 27th April, 2016 seeking the striking out of the bill of costs for the reason that it was in contravention of section 48 and 45 (6) of the Advocates Act and that it was time barred under section 4 of the Limitation of Actions Act. The Taxing Officer referred the matter to this court pursuant to paragraph 12 (1) of the Advocates Remuneration Order since it touched on jurisdiction.

2. The said motion which was brought under section 48 and 45 (6) of the Advocates Act Cap 16 paragraph 12 and 13A of the Advocates Remuneration Order and section 4 of the Limitation of Actions Act is now before this court. The applicant seeks the following orders:

a)That the bill of costs be struck out and the same be dismissed with costs.

b)That the bill of costs be struck out for being in contravention of section 48 and section 45 (6) of the Advocates Act.

c)That the bill of costs be struck out and or dismissed for being time barred under section 4 of the Limitation of Actions Act.

d)That the respondent be condemned to pay costs.

3. The grounds upon which the motion is premised are that there existed a fee agreement between the respondent and the applicant which renders the bill otiose. That the respondent has been paid a sum of Kshs. 17,013,237/- in honour of the agreement which money remains unaccounted for to date. That the respondent has not acknowledged either of the amounts but has indicated nil amounts has been paid. That the primary suit herein the subject of taxation was included in the 300 matters in the agreement and appears in the list attached to the agreement. It was stated that the agreement was express and implied through the letters of instruction on payment of legal fees between the parties herein as follows; that fees would be paid under schedule 6 for High Court matters and Schedule 7 for lower court matters of the Advocates Remuneration Order; that an interim fee of Kshs. 10,000/= plus value added tax would be paid upon instructions in lower court matters; that final fee would be paid according to the quantum awarded, and party and party fees as per schedule 6 and 7 respectively depending on where each matter was filed and the final fees due would be net of interim fees earlier paid. That the applicant settled over Kshs. 12 Million on account of legal fees drawn under the same schedules. That sometime in the year 2006 between June and October, the respondent received Kshs. 3. 5 Million on account of legal fees without reference to any specific fee notes which payments were duly acknowledged. That in or about October, 2006, the respondent rendered a comprehensive schedule of 300 cases where it was on record for the applicant. That together with that schedule, the respondent tabulated the fees due and owed to on account of the same matters at Kshs. 11,796,000/-. That the same was reduced to an agreement by the respondent wherein she duly acknowledged receipt of Kshs. 3,572,821/- and Kshs. 8,223,179/- which she demanded be settled at Kshs. 800,000/- per month as a condition for her continued conduct in the 300 cases. That between October, 2006 and December, 2007 the applicant in performance of the contractual obligation paid the respondent Kshs. 8,551,661/- bringing the total payment on account of the same agreement at Kshs. 12,124,482/-. That within the same period, the applicant further paid Kshs. 4,480,482/- without reference to any particular case which the respondent contends constitutes payments on account and without consideration. That in view of the payments alluded to herein, the respondent has received a total of Kshs. 17,013,237/- from the applicant during the period under reference and which amount is Kshs. 4,809,283/- in excess of the total fees acknowledged as owed to the respondent in the agreement. That the applicant was placed under legal moratorium on 29th February, 2008. In the wake of the moratorium, the applicant’s operational departments were raided by a host of auctioneers who carted away numerous files and most data was lost. The applicant was later re-licenced to resume operation as a going concern about 18th June, 2010. Upon resuming operation, the applicant formally and informally requested the respondent to table her statement of account of legal fees outstanding before the moratorium was issued. Instead of heeding to the request, the respondent embarked in numerous taxation proceedings. It was further contended that the bill of costs is time barred since more than 7 years have lapsed since the matter was concluded.

4. That the bill of costs is null and void within the provision of section 4 of the Limitation of Actions Act having been filed more than 7 years after the finalization of the primary suit therein since the relationship between the respondent and the applicant is contractual and within the provision of the Law of Contract Act. That the respondent will not suffer any prejudice if this application is allowed since they can always reply to the issues raised.

5. In response thereto, the respondent filed an affidavit on 11th May, 2016. She contended that the supporting affidavit to the motion by Paul Gichuhi is materially and fundamentally defective; that the application is defective as the orders sought are founded on section 45 (6) of the Advocates Act and can only be issued in a substantive suit and not in a miscellaneous cause and that section 48 of the Advocates Act does not in any manner apply to the current proceedings. She denied that she has been paid Kshs. 17,013,237/- on the basis of the agreement of 19th October, 2006 whose terms he said were explicit together with matters related to it. She denied that there has been an agreement or payments in the manner alleged in the application or any agreement on fees barring taxation of the advocates costs or setting ceiling of the legal fees chargeable thereunder touching on this matter. She contended that the issues herein have been subject of previous litigation between the parties herein and in most cases judgments have been delivered by various courts which judgments are binding upon this court and this court has no jurisdiction to vary the said previous orders. That in HCCA No. 65 of 2015, 5799 of 2014, 5798 of 2014 and 5165 of 2014 among others Carolyne Shavulimo a legal officer of the applicant swore various affidavits stating that the respondent entered into a global fees agreement after the lifting of the moratorium on 22nd January, 2010 for payment of legal fees under a global scheme as opposed to on a file basis under which the applicant allegedly paid Kshs. 20,818,336/-. That by a ruling delivered on 22nd May, 2015, Judge Mabeya ruled in relation to the Kshs. 20 Million that if it be true that the applicant paid over to the respondent the alleged sum of Kshs. 20 Million plus and the same has not been accounted for, the law has provided for a remedy by way of accounts…Let the applicant follow the law in pursuing what it perceives to be its interests and rights. That in HCCC No. 504 of 2013 Judge Ougo was of the view that the suits be consolidated with a view of apportioning the monies that the respondent had already paid for various files. That the applicant is now barred from relitigating its case. It was contended that the applicant has in this case mischievously altered the figure from Kshs. 20,818,336/- to KShs. 17,013,237/- to confuse the court and to camouflage their claim and supposedly plead a new cause of action whereas the agreement relied upon is the one of 19th October, 2006 touching on 300 cases. That the respondent obtained orders in HCCC No. 1178 of 2007 whereas all proceedings that had taken place during the moratorium were declared null and void.

6. I have considered the application herein, the following issues fall for determination:

a) Whether the Advocate/Client Bill of costs should be struck out.

c)  Whether the bill of costs is time barred.

7. Section 45 of the Advocates Act recognizes that an advocate and his client may enter into an agreement with respect to remuneration. A perusal of the record reveals that there was an agreement on the issue of remuneration between the parties herein for 300 cases. Among the 300 cases was the subject case herein. The Respondent however contended that the agreement was only in relation to the instruction fee.  The applicant on the other hand suggests that the agreement was in respect of all the services which the Respondent rendered.  It is worth noting that there are various matters filed relating to fees which the Respondent herein claims against the Applicant.  For instance in one of the cases relied upon by the Respondent namely HCCA No. 65 of 2015 whereby Mabeya J, dismissed the client’s Application for stay of execution and directed that the client’s remedy lay in instituting a claim against the Respondent by taking of accounts so as to establish who owes what to the other.

8. As the Respondent has presented her bill of costs for taxation, it is proper for the Applicant to participate and to present before the Taxing Officer the requisite evidence regarding the fact that the Respondent has since been paid her fees in full or even in excess.  As the Applicant maintains that the Respondent has been paid in excess I find it rather curious for it to seek to have the Bill struck out  yet it requires the taxation of the said Bill as the right forum to avail evidence of fees received by the Respondent.  Why would the Applicant/Client wish away the kind of money that it claims was paid in excess to the erstwhile advocate?  My considered view is that the Applicant should be courageous enough and present evidence before the taxing officer that indeed the Respondent had not only been paid in full but had received excess fees whereupon the Applicant would then be able to get a credit in its favour during the taxation.  In the premises I find it is counter productive to have the Advocate/Client Bill of Costs struck out as sought by the Applicant.

9. As regards the remaining issue it is noted that an Advocate’s claim for costs is based on contract for professional services between him and his client.  It means that it is a claim founded on contract.  It follows therefore that an action for recovery of such costs would be subject to the limitation period set out in Section 4(1) (a) of the Limitation of Actions Act.  Time begins to run from the date of completion of work or lawful cessation of the retainer and not from the date of delivery of the bill of Costs.  Indeed Section 48 (1) of the Advocates Act cannot offer any defence against limitation.  The Applicant maintains that the Bill of Costs was lodged more than six (6) years after the completion of work and therefore it is statute barred by virtue of Section 4(10(a) of the Limitation of Actions Act.  However from the Supporting Affidavit of the Applicant it is admitted that the Applicant continued communicating with the Respondent over the issue of fees even after the Applicant was placed under a moratorium and even after the moratorium was lifted the applicant confirms that it entered into fresh agreements with the Respondent to continue rendering her professional services as regards the remainder of the 300 cases allocated to her by the Applicant.  This arrangement had the effect of extinguishing the limitation period by renewing or giving the Respondent’s claim in debt a new lease of life.  The Applicant further confirms that there are several cases that are yet to be finalized and further that the Respondent had not been given formal communication to stop handling those cases on behalf of the Applicant.  Indeed the Applicant confirms that there is a certain sum of about Kshs.20 million which was to cater for the 300 cases and that both the Applicant and the Respondent are yet to sort out the status of each case.  Under those circumstances, I am not convinced that the Respondent’s Bill of Costs is time barred as contended by the Applicant.

10. In the result it is the finding of this court that the Applicant’s Application dated 27/04/2016 lacks merit.  The same is ordered dismissed with costs to the Respondent.

Dated, signed and delivered at Machakos this 3rd day of November, 2017.

D. K. KEMEI

JUDGE

In the presence of:

No appearance for Gichuki for the Applicant

Mutuku for Mwangi for the Respondent

Mungai - court Assistant