Official Receiver & Provisional Liquidator (Capital Finance Limited & Pioneer Building Society) v D. Njogu & Company Advocates [2022] KEHC 11022 (KLR)

Official Receiver & Provisional Liquidator (Capital Finance Limited & Pioneer Building Society) v D. Njogu & Company Advocates (Miscellaneous Civil Application E138 of 2021) [2022] KEHC 11022 (KLR) (Commercial and Tax) (13 June 2022) (Ruling)

Neutral citation: [2022] KEHC 11022 (KLR)

Republic of Kenya

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

Commercial and Tax

Miscellaneous Civil Application E138 of 2021

DAS Majanja, J

June 13, 2022

Between

Official Receiver & Provisional Liquidator (Capital Finance Limited & Pioneer Building Society)

Client

and

D. Njogu & Company Advocates

Advocate

Ruling

1. The applicant’s chamber summons dated March 1, 2022 is made under paragraph 11(2) of the Advocates Remuneration Order (‘’the Order”) seeking to set aside the decision of the Deputy Registrar dated October 14, 2021 regarding the Advocates Client Bill of Costs in respect of the instruction fee and getting up fee. The reference is supported by the affidavit of Diana Mumo, a Senior Assistant Official Receiver, sworn on March 1, 2022.

2. According to the ruling, the bill of costs was taxed in the sum of KES 250,857,563. 00. The client complaint that the Deputy Registrar erred in applying the wrong schedule of the order by assessing the instruction fee under paragraph 1(b) of the schedule 6 of the order. In its view, the matter before the court was a constitutional petition to wit; Constitutional Petition No 560 of 2015, Mugo Mungai and 4 Others v The Official Receiver and Provisional Liquidator (Capital Finance Limited and Pioneer Building Society) and 2 others hence the instruction fee ought to have been assessed under paragraph 1(j) of the schedule 6 which indicates a fee of KES 100,000. 00.

3. The client further urges that the matter was neither novel nor complex to warrant increasing the minimum instruction fee from KES 100,000. 00 to KES 110,320,000. 00. The client therefore faults the Deputy Registrar for failing to apply established principles and urges the court to set aside the ruling.

4. The advocates oppose the application and support the decision of the Deputy Registrar. They point out that the Official Receiver took over the matter midway during the defence case and notwithstanding the ultimate result, they are entitled to their fees. As regards the subject of the suit, the advocates states that the claim was a monetary and not constitutional claim and that if the suit succeeded, the application would end up with a monetary decree as prayed and not a declaration of constitutional breaches. They therefore urge that the Deputy Registrar applied the correct schedule in applying the instruction fee.

5. The advocates further contend that the suit was of a complex nature as evidenced by the large volumes of documents filed in court, the length of evidence given by the applicant and the fact the claim related to events that took place over a period of 30 years. All these, the advocates contend required them to put considerable effort in retrieving and perusing documents in the matter under very extreme conditions. The advocates state that the Official Receiver knew its fees as indicated on March 7, 2019 that the fee would be KES 250,666,800. 00 after giving credit of KES 5,800,000. 00 which has already been paid. In conclusion, the advocates maintain that their bill of costs was properly taxed and the reference should be dismissed.

6. The main issue for determination is whether the court is to set aside the Deputy Registrar’s award of instructions fees which the Official Receiver claims was based on the wrong schedule. It is now trite law that the court will only interfere with the decision of a taxing officer in cases where there has been shown to be an error of principle (seeKipkorir, Titoo & Kiara Advocates v Deposit Protection Fund Board NRB CA Civil Appeal No 220 of 2004 [2005] eKLR and Arthur v Nyeri Electricity Undertaking [1961] EA 497).

7. In considering the instruction fee, the Deputy Registrar pronounced herself as follows:I have considered the claim in the parental suit. Though the same is brought as a constitutional petition, it is a claim for monetary relief. The petitioner claims a sum of Kshs 7,341,000,000/=. Literally speaking, if the petitioner succeeds in the suit, a monetary decree will issue. Consequently, the provisions of paragraph 1 (b) of the order applies, and the value of the subject matter being Kshs 7,341,000,000/=, the instructions fees works as follow(s); ……… Item No 1 is therefore taxed at Kshs 110,320,000/=. A sum of Kshs 470,000/= is taxed off.

8. From the reasoning aforesaid, the Deputy Registrar held that the matter was a constitutional petition but in view of the fact that the claimant sought a monetary award, a different schedule would apply. In my view, having found as fact that the suit which the advocates were instructed to defend a constitutional petition, then the proper schedule was paragraph 1(j) of schedule 6. The nature of the relief or remedy sought does not convert a constitutional petition into an ordinary claim. Nor does the fact that the relief sought or ultimately granted is monetary in nature change the applicable schedule. Under Article 23(3) of the Constitution, the court in a petition for enforcement of fundamental rights and freedoms is empowered to grant appropriate relief including an order for compensation. Our courts have held that under the power the court can grant any relief including a monetary award.

9. It is clear therefore that the Deputy Registrar erred in applying paragraph 1(b) of schedule 6 instead of paragraph 1(j). In applying this provision, the Deputy Registrar would then be entitled to increase the award of fees from KES 100,000. 00 based on the factors set out in the proviso to part A of schedule 6 of the order (see Joreth Ltd v Kigano & Associates [2002] eKLR).

10. For the reasons I have set out, I allow the chamber summons dated March 1, 2022 to the following extent

a. The ruling dated October 14, 2021 is set aside to the extent of the instruction fees, getting up fees and the consequential award.b. That the bill of costs shall now be taxed by any other Deputy Registrar other than Hon E Tanui, DR.c. The Respondent shall bear the costs of the Reference assessed at KES 35,000. 00 only.

DATED AND DELIVERED AT NAIROBI THIS 13TH DAY OF JUNE 2022. D. MAJANJAJUDGECourt Assistant: Mr M. OnyangoMs Mumo-Change, Advocates instructed by the Office of the Official Receiver.