Odhiambo Owiti & Co. Advocates v Dominion Farms Limited [2022] KEHC 11994 (KLR) | Taxation Of Costs | Esheria

Odhiambo Owiti & Co. Advocates v Dominion Farms Limited [2022] KEHC 11994 (KLR)

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Odhiambo Owiti & Co. Advocates v Dominion Farms Limited (Miscellaneous Civil Application 9 of 2019) [2022] KEHC 11994 (KLR) (18 May 2022) (Ruling)

Neutral citation: [2022] KEHC 11994 (KLR)

Republic of Kenya

In the High Court at Siaya

Miscellaneous Civil Application 9 of 2019

RE Aburili, J

May 18, 2022

Between

Odhiambo Owiti & Co. Advocates

Decree holder

and

Dominion Farms Limited

Judgment debtor

Ruling

1. This ruling determines the Notice of Motion application by the applicant brought under Certificate of Urgency dated June 3, 2021 and filed in court on the June 11, 2021 in which the applicant seeks the following orders:a.Spentb.That pending hearing and determination of this application, this Honourable Court be pleased to order stay of execution of the Certificate of Costs issued to the respondent in Siaya PMCC NO. 42 of 2017 (Vero Investment Company Limited v Dominion Farms Limited)c.That this Honourable Court be pleased to grant the applicant leave and enlarge the time within which to file a reference against the decision of the Taxing Officer that gave forth the Certificate of Costs.d.That the decree holder’s advocate-client bill of costs be duly served upon the Judgement Debtor and taxed a fresh with the participation of the Judgement Debtor/Applicant.e.That the respondent to bear auctioneers costsf.That the costs of this application be provided for.

2. The application was grounded on points a-v on the face thereof as well as the supporting affidavit sworn by Moses Otieno Oduor on the June 3, 2021.

3. The court gave directions for the parties to canvass the application by way of written submissions but only the applicant complied with court orders and filed written submissions.

4. The applicant’s case is that the respondent/advocate decree holder did, vide warrants of attachment and sale as annexed, attached movable properties of Sukari Industries Ltd claiming that the same were the applicant’s properties and that the said properties were due for sale on May 25, 2021.

5. The applicant further deposed that the respondent instituted the cause to tax an Advocate-Client Bill of Costs without serving the applicant as alleged in their affidavit of service dated March 13, 2019 and further that Jeremiah Ouma, whom the respondent alleged to have served the documents upon, was not a clerk but a security guard of the applicant who was not authorized to receive documents on behalf of the applicant.

6. It is the applicant’s case that the respondent’s application dated October 2, 2019 seeking to adopt the certificate of costs together with its annexures was also not served upon the applicant on the October 15, 2019 as alleged.

7. The applicant further deposed that the said bill of costs dated February 12, 2019 was taxed as presented at a sum of Kshs. 988,734 which was erroneous as the amount in issue was Kshs. 9,686,000 which commands an instruction fee of Kshs. 312,150 and not Kshs. 500,000 as taxed. Further, that no reasons were given as to why the instruction fees were hiked yet the advocate summarily withdrew from representing the applicant and did not defend the applicant to the conclusion of the suit.

8. The applicant further averred that the costs as taxed were exorbitant as a result of undue exercise of the taxing master’s discretionary powers and that the same were taxed outside the set scale.

9. It is the applicant’s case that the execution of the Certificate of Costs and/or Decree will occasion upon the applicant extra and unwarranted costs and irreparable loss yet it is being condemned unheard.

10. The applicant further averred that it is the subject of insolvency petition vide Nairobi HC. Com & Tax Division, Insolvency Petition No. E001 of 2020 (Re Dominion Farms Ltd) and therefore it cannot be subject of any execution of any decree or certificate of costs as per the provisions of the Insolvency Act, 2015.

11. The applicant further avers that they are ready to put up security as may be determined by the court and further that the respondents will not be prejudiced in any way if stay is granted and enlargement of time to file a reference is granted.

12. Despite notice and service upon the respondent/advocate, and indulgence by the court in allowing them to comply with the court’s directions given on December 14, 2021, the respondent did not file any response to the applicant’s application dated June 3, 2021.

The Applicant’s Submissions 13. The applicant’s counsel submitted in writing that it stands to suffer substantial loss in the absence of the order of stay which powers to grant this court is fully vested with. Reliance was placed on this court’s decision in the case of Wilfred Nyawira Maina v Peterson Onyiengo Gichana (2015) eKLR in which the court laid down the pre-requisites for grant stay of execution.

14. The applicant’s counsel submitted that the applicant stands to suffer substantial loss as the respondent has taken 6 motor vehicles from the applicant in settlement of his fees and still has failed/refused to set off their value from the cost and/or render an account of the same and continued to demand for erroneously taxed fees. The applicant’s counsel further submitted that the Bill of Costs dated February 12, 2019 was taxed erroneously and that the decision of the taxing master was arbitrary and unreasonable.

15. It was further submitted that the taxing master erred in law and fact by violating the principles of Natural Justice in condemning the applicant unheard.

16. It was submitted that no service and/or proper service of the respondent’s Bill of Costs was effected upon the applicant as the alleged service by the respondent was upon a guard, who is not legally authorized to receive documents on behalf of the applicant and further, that the guard was not a custodian of the applicant’s official stamp and as such, it was obligatory that service be dully effected upon the applicant or in the alternative the court orders the respondent’s process server, James Otieno Okudo, to appear before it for purposes of cross-examination, as was held in the case of Francis Kigo Njenga v Bodymasters Autotech Limited.

17. The applicant submitted that the court is commanded by Article 159 of the Constitution to do justice where technicalities tend to derail it and therefore in the instant case proceed to grant the orders sought.

Analysis & Determination 18. I have carefully considered the application by the applicant/client / judgment debtor, the grounds and the supporting affidavit as well as the submissions as filed by the applicant’s counsel and the case law cited.

19. The main issue for determination is whether the applicant is entitled to orders for enlargement of time within which to file a notice of objection and whether stay of execution should be granted.

20. From the pleadings herein, the applicant concedes that it did not comply with the provisions of Paragraph 11 (1) and (2) of the Advocates Remuneration Order which sets out the time lines within which to file an objection to taxation. The applicant/ Client attributes the delay and failure to object to the taxation to the alleged failure by the respondent to give it notice, via service, of the respondent’s Bill of Costs dated 12. 2.2019 and the subsequent application dated October 2, 2019 that sought and obtained orders adopting the Certificate of Costs as judgment of the court for purposes of a decree being issued for execution.

21. Paragraph 11 of the Advocates Remuneration Order provides that:1. Should any party object to the decision of the taxing officer, he may within fourteen days after the decision give notice in writing to the taxing officer of the items of taxation to which he objects.2. The taxing officer shall forthwith record and forward to the objector the reasons for his decision on those items and the objector may within fourteen days from the receipt of the reasons apply to a judge by chamber summons, which shall be served on all the parties concerned, setting out the grounds of his objection.3. Any person aggrieved by the decision of the judge upon any objection referred to such judge under subsection (2) may, with the leave of the judge but not otherwise, appeal to the Court of Appeal.4. The High Court shall have power in its discretion by order to enlarge the time fixed by subparagraph (1) or subparagraph (2) for the taking of any step; application for such an order may be made by chamber summons upon giving to every other interested party not less than three clear days’ notice in writing or as the Court may direct, and may be so made notwithstanding that the time sought to be enlarged may have already expired.”

22. In Fahim Yasin Twaha v Timamy Issa Abdalla & 2 Others [2015] eKLRthe Supreme Court, laid out the general principles governing extension of time thus:“As regards extension of time, this Court has already laid down certain guiding principles. In the Nick Salat case, it was thus held:“… it is clear that the discretion to extend time is indeed unfettered. It is incumbent upon the applicant to explain the reasons for delay in making the application for extension and whether there are any extenuating circumstances that can enable the Court to exercise its discretion in favour of the applicant.“… we derive the following as the underlying principles that a Court should consider in exercising such discretion:1. extension of time is not a right of a party. It is an equitable remedy that is only available to a deserving party, at the discretion of the Court;2. a party who seeks extension of time has the burden of laying a basis, to the satisfaction of the Court;3. whether the Court should exercise the discretion to extend time, is a consideration to be made on a case- to- case basis;4. where there is a reasonable [cause] for the delay, [the same should be expressed] to the satisfaction of the Court;5. whether there will be any prejudice suffered by the respondents, if extension is granted;6. whether the application has been brought without undue delay; and7. whether in certain cases, like election petitions, public interest should be a consideration for extending time”.

23. On the issue of delay, in George Kagima Kariuki & 2 Others v George M. Gichimu & 2 Others [2014] eKLR it was held that:“The law does not set out any minimum or maximum period of delay. All it states is that any delay should be explained. A plausible and satisfactory explanation for delay is the key that unlocks the court’s flow of discretionary favour. There has to be valid and clear reasons, upon which discretion can be favorably exercisable.”

24. The same position was taken by the Court of Appeal in the case of Stanley Kahoro Mwangi & 2 Others v Kanyamwi Trading Company Limited [2015] eKLRwhere it was stated that:“A plausible and satisfactory explanation for delay is the key that unlocks the court’s flow of discretionary favour. There has to be valid and clear reasons, upon which discretion can be favorably exercised.”

25. The common thread that runs through the above cited decisions is that the court is clothed with the discretion of allow an application for extension of time where the applicant demonstrates that there was sufficient cause for the delay.

26. In the instant case, it is not in dispute that the Notice of Objection herein was not filed within the stipulated time. The applicant stated that the Notice of Objection was not filed within the stipulated time because the applicant was never served with the Bill of Costs, Notice of Taxation or any other subsequent document as alleged by the respondent.

27. The question thus before this court is whether the reasons for the delay advanced by the applicant are plausible or acceptable to invoke the discretionary power of this court to grant extention.

28. The pleadings presented before this court by the applicant reveal that the respondent allegedly served the application dated February 16, 2019 together with the bill of costs upon the applicant on the March 1, 2019 and specifically upon one Jeremiah Ouma.

29. It is the applicant’s contention that Jeremiah Ouma is not a clerk with the applicant but a security guard who was not, at the time of the alleged service, the custodian of the applicant’s official stamp and who was not legally authorized to receive documents on behalf of the applicant.

30. The applicant further submitted that this notwithstanding, it had, with leave of court, served upon the respondent a Notice to Cross Examine the process server who allegedly effected service upon the applicant, but the respondent had intentionally chosen to ignore the Notice to produce the said process server for cross examination.

31. The manner of service of summons on a Corporation is set out in Order 5 rule 3 of the Civil Procedure Rules as follows:3. Subject to any other written law, where the suit is against a corporation the summons may be served –(a)on the secretary, director or other principal officer of the corporation; or(b)if the process server is unable to find any of the officers of the corporation mentioned in rule 3(a) –i.by leaving it at the registered office of the corporation;ii.by sending it by prepaid registered post or by a licensed courier service provider approved by the court to the registered postal address of the corporation; oriii.if there is no registered office and no registered postal address of the corporation, by leaving it at the place where the corporation carries on business; oriv.by sending it by registered post to the last known postal address of the corporation. [Emphasis mine]

32. From the aforesaid provisions, the Summons must, in the first instance, be served, “on the secretary, director or other principal officer of the corporation”, before resorting to other modes of service.

33. The respondent failed to present any evidence to counter the allegations by the applicant which are on oath and in addition, despite being served with the Notice to Cross Examine the process server, the respondent refused to present the process server who allegedly served the applicant to substantiate the respondent’s claim of service.

34. As the learned authors of the Book Chitaley and Annaji Rao, The Code of Civil Procedure Vol. II page 1670 observe:“…But if the fact of service is denied, it is desirable that the process server should be put in the witness box and opportunity of cross-examination given to those who deny service.”

35. in the case of Miruka v Abok & Another [1990] KLR. 541, the process server was cross-examined about the service of summons which the defendants had disputed, and Omolo J. (as he then was) quoted with approval the following words of Platt J.A in Baiywo v Bach [1987] KLR89 to the effect that;“There is a qualified presumption in favour of the process server recognized inMB Automobile v Kampala Bus Service [I966] E A 480 at page 484. as having been the view taken by the Indian courts in construing similar legislation. On Chitale and Annaii Rao; "The Code of Civil Procedure Vol II page 1670, the learned commentators say; Presumption of Service There is a presumption of service as stated in the process server’s report, and the burden lies on the party questioning it to show that the return is incorrect. But an affidavit of the process server is admissible in evidence and in the absence of contest it would normally be considered sufficient evidence of the regularity of the proceedings. But if the fact of service is denied, it is desirable that the process server should be put in the witness box and opportunity of cross-examination given to those who deny the service".

36. My conclusion is that the respondent never served the applicant herein with the disputed bill of costs and neither did they serve the notice of the date of taxation Further, I find that the applicants were never served with the application and date for hearing of the application for adoption of the Certificate of costs which the respondent purported to execute and which this court did find in a ruling delivered on 22nd November, 2021 that the property attached did not belong to the applicant herein, following objection to attachment by Sukari Industries Limited.

37. The refusal by the process-server to avail himself for cross-examination is one of the clearest indications that he swore and filed a false Affidavit of Service. The purported service of the bill of costs, and application for adoption of the Certificate of Taxation upon the client/applicant herein cannot stand.

38. I have considered all the uncontroverted depositions in the affidavit sworn on behalf of the applicant and I find that in the instant case, the applicant has clearly demonstrated that service of the application dated February 16, 2019 together with the Bill of Costs dated February 12, 2019 was not effected upon the applicant.

39. Accordingly, the matter proceeded to taxation without notice to the applicant and in breach of the rules of natural justice that no person shall be condemned unheard. For that reason, I find that the decision of the taxing officer was void ab initio and the same must be set aside. In addition, as the application for adoption of the Certificate of Costs was not served upon the applicant client herein, I find that the said adoption and decree issued subsequent to that adoption was void ab initio. It is hereby set aside. Consequently, the warrants of attachment of the properties purportedly belonging to the applicant having been lifted vide the ruling of this court delivered on 22nd November, 2021, there is nothing left. However, in the event that any of those properties attached are the property of the applicant and are still in the custody of the auctioneers, I hereby order for their immediate release to the applicant. The respondent shall pay the costs of this application and the auctioneers charges if any.

40. Having made the above orders, I find that it is superfluous to make any orders for stay of execution of decree which has been set aside. As the prayer is spent.

41. In the end, I allow this application to the extent that that I set aside the Certificate of Costs issued to the respondent in Siaya PMCC 42 of 2017 and as adopted by this court as judgment and decree drawn subsequent to the entry of judgment on the certificate of taxation and all the consequential orders in favour of the respondent including the attachment of the respondent’s property to wit, motor vehicles, in execution of the decree pursuant to the taxation proceedings are hereby vacated. The Respondent advocate is hereby ordered to release all the applicant’s motor vehicles if any, attached by the auctioneers, all at his own cost.

42. As the proceedings leading to the taxation and execution process have been declared void, I find no reason to deal with the issue of leave to file a reference out of time.

43. I direct that the respondent shall serve upon the applicant the impugned bill of costs for a fresh taxation interpartes.

44. The respondent also asserted that there are insolvency proceedings against the applicant hence no execution can be commenced against it. This court having set aside the taxation proceedings, there is no execution that is valid. The Applicant can raise the issue of execution at the opportune time challenging the any execution proceedings.

45. Orders accordingly.

DATED, SIGNED AND DELIVERED AT SIAYA THIS 18TH DAY OF MAY, 2022R.E. ABURILIJUDGE