Peter Julius Njoroge v Fidelity Commercial Bank Limited & Lucy Wanjiru Njoroge [2018] KEHC 6374 (KLR)

REPUBLIC OF KENYA

IN THE HIGH COURT OF KENYA

AT NAIROBI

COMMERCIAL & ADMIRALTY DIVISION

HCC NO.1001 OF 2001

PETER JULIUS NJOROGE...................................PLAINTIFF

VS.

FIDELITY COMMERCIAL BANK LIMITED........DEFENDANT

AND

LUCY WANJIRU NJOROGE................INTERESTED PARTY

RULING

1.  At least two issues arise from this Reference. First, the manner in which an aggrieved party can challenge the striking out of a Bill of Costs by a Taxing Officer, as opposed to its Taxation on item to item.  Second, whether a Reference can be properly filed before the aggrieved party has sought and obtained the reasons of the Decision of the Taxing Master.

2. These two issues are among others in the Chamber Summons dated 13th June 2017 in which the Applicant seeks the following orders:-

1.   THAT this Honourable Court be pleased to enlarge time for the Applicant to file this Reference to the Ruling of the Deputy Registrar delivered on 29th March, 2017 on the Defendant/Applicant’s Advocate-Client Bill of Costs dated 14th November, 2016.

2.  THAT this Honorable Court be pleased to set aside the said Deputy Registrar’s Ruling dismissing the Defendant/Applicant’s Advocate-Client Bill of Costs dated 14th November, 2016.

3.  THAT this Honourable Court be pleased to refer back the Bill of Costs to the Deputy Registrar for taxation in accordance with the law.

4.  THAT the costs of the reference be awarded to the Applicant.

3.  The gist of the Plaintiffs Claim was that he had fully paid a facility he had borrowed from the Defendant and therefore sought a discharge of the Securities he had offered one of which was a Charge over Nairobi/Block 75/78. The Defendant not only resisted the claim but mounted a counterclaim for Ksh. 10,124,351. 75 .The Interested Party is the Wife of the Plaintiff and stakes a claim as Beneficial owner of the Charged Property. A substantial part of the Dispute was settled through a negotiated compromise by Parties. The event leading to the impugned decision is the recording of the following Consent on 7th October 2016.

“By consent the Taxing Master to tax further Advocates-clients costs incurred after 20th November 2009 to date. Further order: The Costs to be paid by the Interested Party and/or Defendant”.

4.  Subsequently, the Applicant prepared a Bill dated 9th November 2016 and presented it to Court on 11th November 2016.  That Bill was to meet an abrupt end in the following Decision by the Taxing Officer on 29th March, 2017:

“Before me is an Advocates Client Bill of Cost dated 9th November 2016.  The said Bill has been filed in the main suit which should not be the case. In the circumstances the said bill is struck out with no orders to costs. The applicant is to file the bill in the correct way and serve the parties.”

5. The Applicant sought a Review of the Ruling by way of an Oral application on 25th May 2017. The Taxing Officer had the matter mentioned on 31st May 2017 on which day the Taxing Officer allowed the Applicant to file a Formal Application for Review within 7 days. The current Application, which is now for determination, is the Application that the Applicant choose to file.

6. The two issues identified at the beginning of this Decision were raised by the Respondent and require an immediate resolution.

7. Mr. Wetangula for the 1st Respondent argues that the Bill of Cost was not taxed but struck out and so the Applicant can only challenge it by way of Appeal.  Counsel cited Rule 11(1) and (4) of the Advocates Remuneration Order(1962) which reads:-

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.

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.

8.  This Court was asked to find persuasive value in the decision of Hon. Limo J. in Bernard Gichobi Njira vs. Kanini Njira Kathendu & another [2015] eKLR where the Judge held,

“The decision by the learned trial Magistrate that he had jurisdiction to determine the issue of costs dissatisfied the Applicant and being aggrieved I do agree with the Respondents that the available remedy was to appeal against the ruling. I am not persuaded by the decision of Ringera J (as he then was) quoted by the Applicant in the case of MACHIRA & CO. ADVOCATES (supra). In my considered view the decision is quoted out of context and is not relevant in this case.  The decision by Ringera J. related to an actual taxation that had been done by a taxing officer despite the opposition that the bill had been filed prematurely. The distinction here is that the subordinate court in this reference had not taxed the costs courtesy of this reference.  The Applicant should have appealed against the decision of the learned trial Magistrate because the operation of paragraph 11 of the Advocates Remuneration Order can be invoked after taxation or assessment of costs”.

9.  Mr. Kanjama confronted that argument by pointing out that the Decision in Bernand Gichobi Njira (supra) is distinguishable because it was in regard to an assessment of costs awarded by the Subordinate Court. This, I was told, differentiates it from this matter where the Taxing Officer was acting as an Officer of this Court exercising delegated authority.

10.  I have always taken the view that a challenge or objection to a Decision of the Taxing Master from a Taxation under the Advocates Act to the High Court should be by way of a Reference. It matters not whether the objection is in respect to some items of the Bill, the whole Bill or an order disallowing or striking out the entire Bill or a decision in respect to a Preliminary Objection. This Court is aware that paragraph 11(1) of the ARO which reads,

“should any party object to the Decision of the Taxing Officer, he may within 14 days after the Decision, give notice in writing to the Taxing Officer of items of Taxation to which he objects….”

can well be construed to mean that a Reference is only on items of Taxation.  This would assume that a Bill has in fact been taxed. That nevertheless seems a narrow construction of the provision if the entire design of the Advocates Remuneration Order(ARO) is to be taken into account.  Take paragraph 12 for instance which reads,

“With the consent of both parties, the taxing officer may refer any matter in dispute arising out of the taxation of a bill for the opinion of the High Court. The procedure for such reference shall follow that of a case stated but shall be to a judge in chambers”.

The design of the ARO, it would seem, is to refer any challenge to the Decision of Taxing Officer or dispute arising out of a Taxation of a Bill to the High Court by way of Reference.  A Reference is often a speedy and simple procedure.

11. This approach has been endorsed by no less the Court  of Appeal in Otieno Ragot & Company Advocates vs. Kenya Airports Authority [2015] eKLR when it stated,

“Ringera, J (as he then was) in the Matter of Winding Up of Leisure Lodges Limited, Winding Up Cause No. 28 of 1996 expressed the opinion, correctly in our view, that a party aggrieved by a decision of a taxing officer “whether it be on the quantum awarded on the bill as a whole or any items thereof or on the validity of the bill as a whole or any items thereof” has recourse to the High Court by way of reference under Paragraph 11 of the Advocates (Remuneration) Order and that that Order is a complete code”.

12.  Paragraph 11 which is the provision on an objection to a Decision on Taxation and appeal to the Court of Appeal provides:-

“(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”.

13. Subparagraph (2) presupposes that a Taxing Officer may, in extempore fashion, render his/her decision on items of a Bill and so a party is entitled to bespeak the reasons for the Decision on the items sought to be objected to. But often, Taxing officers give reasons for their Decisions at the point of Taxing. This, I have said before, is a practice to be encouraged.  Yet even in such cases, there may still be need for an objecting party to seek reasons under subparagraph (2) in the event that the Decision rendered by the Taxing Officer does contain all the reasons.

14.  In the matter before Court the Taxing Officer struck out the entire Bill for reasons given in her Decision of 29th March 2017.  The Applicant/Objector filed this Reference without first seeking reasons as contemplated by subparagraph (2). What must be decided is whether this was a fatal oversight.

15.  The Chamber Summons is explicit that the objection taken up is in respect to the striking out decision that dismissed the Applicants Bill of Costs.  The Taxing officer gave the reason for the Decision as being that the Bill should not have been filed in the main suit and that “the Applicant is to file the bill in the correct way and serve the parties”.  The reason for the Decision is known to both Parties and the Respondent has not told Court what prejudice or disadvantage it has suffered because of the misstep by the Applicant.  This is an instance that the Court is willing to overlook a mechanical and strict adherence to the procedure.

16. Any party desirous of objecting to the Decision of the Taxing Officer may do so after giving Notice in writing to the Taxing Officer of the items of Taxation objected to. This should be within 14 days after the Decision (Paragraph 11(1)). Upon receiving the reasons from the Taxing Officer, the Objector ought to file the Reference within 14 days of receipt of the Reasons. Sometimes parties do not keep the timelines set by subparagraphs (1) and (2). However by dint of the provisions of subparagraph (4), the High Court is empowered to enlarge the time fixed by subparagraphs (1) and/or (2). The Rule on enlargement of time expressly pronounces that the power is discretionary.

17.  As always, Judicial discretion ought to be exercised judiciously.   Discretion will be exercised in favour of an Applicant if the delay is not inordinate, is excusable and where enlargement of time is not detrimental to the Rights by the Respondent.

18.  The Ruling herein was rendered on 29th March 2017. If the Applicant had sought reasons and the reasons given promptly by the Taxing Officer then the Application should have been filed by 1st May 2017.  Give or take 2 days. It is common knowledge that it was filed on 16th June 2017. This is about 45 days later.

19.  That delay may not seem to be excessive. But still it is important to know the reasons given for the Delay. On 2nd May 2017, about a month after the Decision was made, the Applicant’s Counsel asked for this matter to be mentioned for further Directions before the Taxing Officer. The mention was fixed for 25th May 2017. On that day, the Applicant’s Counsel orally sought a Review of the impugned decision.  The matter was refixed for 31st May 2017 for further Directions. On that day the Applicant’s Counsel informed Court that it would be filing a Formal application for Review.

20.  There was obviously a change of mind as the Application for Review was never to be and instead this Application was presented. The delay was caused by the Applicants Advocates indecision on how to take on the Decision that had aggrieved their client.  It is not uncommon for time to be lost as Advocates contemplate which cause to take on behalf of their clients. Where the time lost leads to breach of timelines, then such delay can only be excused if there is provision for enlargement and when the delay is not inordinate and does not prejudice the Respondent.

21.  This Court has already found that a delay of about 45 days is not inordinate. As to whether the delay is prejudicial to the Respondents, the Respondents say nothing on this and this Court, on its own, does not see any. For this reason I allow the enlargement of time in terms of prayer 1 of the Summons.

22.   It is common ground that the Bill of costs that was presented for Taxation was an Advocate-Clients Bill of Costs. The Order for its Taxation was in the Consent recorded as follows:-

“By consent the Taxing Master to tax further Advocates-clients costs incurred after 20th November 2009 to date”.

23. The Consent Order was silent as to whether Taxation would proceed in these proceedings or elsewhere.  The Taxing Officer took the view that the Bill should not have been filed in these proceedings.  Whilst she did not cite the provisions of the Law in which the decision was anchored, there is Section 51 of the Advocates Act on the General Provisions as to Taxation which reads:-

“(1)   Every application for an order for the taxation of an advocate’s bill or for the delivery of such a bill and the delivering up of any deeds, documents and papers by an advocate shall be made in the matter of that advocate.

(2)   The certificate of the taxing officer by whom any bill has been taxed shall, unless it is set aside or altered by the Court, be final as to the amount of the costs covered thereby, and the Court may make such order in relation thereto as it thinks fit, including, in a case where the retainer is not disputed, an order that judgment be entered for the sum certified to be due with costs.

24.  As the Consent did not clarify the procedure to be adopted, this Court cannot fault the decision of the Taxing Officer. On the Law , the Decision of the Taxing is without error. However, there is a peculiarity here as the need for the Taxation arose by an agreement of the parties in these proceedings and the costs were to be paid by the Interested Party and/or the Defendant. The issue of Costs was to bring closure to the Matter as other aspects of the Dispute had been resolved. It would therefore be efficacious to have the Bill taxed within these proceedings.

25.  The Plaintiffs further position is that the basis of the costs was founded on the Charge document and events have happened before the filing of the Consent that rendered the entire exercise untenable.  The Plaintiff seeks to rely on clause X of the charge which reads as follows:-

“The Borrower shall pay to the Lender on demand all costs charges and expenses incurred by the Lender of and incidental to the negotiation and enforcement of this security together with interest thereon at the rate from time to time payable hereunder and so that any taxation of any such costs charges and expenses aforesaid shall be on an advocate and client basis.  All such costs shall until paid be a Charge on the premises” (my emphasis)

26.  It does not seem disputed that on 26th April 2017, a date after the Consent, the Defendant forwarded a duly executed Discharge of Charge to the Advocates for the Plaintiff. This was after the Bank had forwarded the original Title Document to Nairobi/Block 75/78 and five Logbooks to the said Advocates. There is evidence that the Discharge of Charge was registered on 5th May 2017.  The argument by the Plaintiff is that the act of discharging the Charge was confirmation that all sums owed by the Plaintiff to the Bank had been paid.

27.   The Bank retorted by arguing that the Respondents want to benefit from an Act of inequity despite an agreement to meet the costs. That the costs that were to be taxed were treated separately from other sums that enabled the Respondent to obtain a discharge of Charge.  Lastly that the Order for payment of those costs has not been complied with nor set aside or varied.

28.   This is not occasion, in my view, for this Court to decide on the possible implication of the discharge of Charge on the efficacy or continued credibility of the consent.  The matter raised by the Respondent may well be a plausible argument for setting aside or varying the Consent but this Court is deciding a Reference and not such application. As long as the Consent Order has not been set aside, varied or complied with then nothing stands on the way of the Taxation that was agreed under the terms of the Consent.

29.  For all the reasons given, I allow the Chamber Summons of 13th June 2017. Each party shall bear its Costs on the Application as it has succeeded not because of an error on the part of the Taxing Officer but on the need to have a convenient implementation of a consent reached by the parties on their own accord.  The Bill of Costs dated 9th November 2016 shall be referred to the Taxing Officer for Taxation.

Dated, Signed and Delivered in Court at Nairobi this 18th day of May ,2018.

F. TUIYOTT

JUDGE

PRESENT;

Kiptoo h/b Wetangula for Plaintiff

Simiyu h/b Kanjama for Defendant

Kiptoo h/b Kinyanjui for Interested Party

Nixon -  Court Assistant