Kenya Bus Services Ltd. v Susan Muteti [1996] KECA 190 (KLR)
The bottom line
#Kenya's Court of Appeal confirmed that insurers settling injury claims must pay both damages and legal costs to the claimant's advocate, not directly to the claimant.
What this practically means
#Executive summary
#Questions the Court framed
#The issues the Court set itself to decide, in its own words.
- 1.Whether an insurer (or tortfeasor) settling a claim through the injured party's advocates may pay the damages sum directly to the injured party while paying party and party costs separately to the advocates
- 2.Whether an advocate has authority to receive, on behalf of the client, moneys due under a settlement, including party and party costs
Key legal issues
#Scope of an advocate's authority to receive settlement moneys and costs on behalf of a client
An advocate is the client's general agent in all matters reasonably arising in the cause, which includes receiving moneys due to the client; payment of party and party costs must be made to the advocate
Relying on Re: Newen and Freswitch v. Foley, the court held a solicitor/advocate has general authority to compromise an action and, a fortiori, to receive moneys due to the client. Order III rule 6 of the Civil Procedure Rules keeps the advocate on record until conclusion of the matter. The Advocates Act and Accounts Rules provide safeguards against misappropriation, so insurers need not protect claimants by paying them directly.
Misapplication of section 136 of the Indian Transfer of Property Act 1882
Section 136 prohibits judges, legal practitioners and court officers from acquiring an interest in actionable claims; it does not deny advocates the right to receive moneys on behalf of clients
The court found counsel's reliance on section 136 misplaced: the section bars interested trafficking in actionable claims, not receipt of client funds by an advocate as agent. The learned judge below accepted the opinion on its face without considering the section's implications, but nonetheless reached the correct conclusion.
Insurer's position vis-à-vis the claimant and protection of the insuring public
An insurer defending or settling steps into the insured's shoes under subrogation; a third-party claimant is not part of the 'insuring public', and a signed discharge voucher protects the insurer
The court rejected the insurer's asserted duty to shield the insuring public from dishonest advocates, noting statutory disciplinary safeguards. It also corrected the judge below, who erred in saying there was nothing between insurer and claimant, since subrogation places the insurer in the insured's position; nevertheless the final decision below was correct.
Legal principles established
#- An advocate on record has general authority, as the client's agent, to demand and receive moneys due to the client, including party and party costs, until instructions are withdrawn or the advocate is properly removed
- An insurer or tortfeasor settling a claim through the injured party's advocates must pay the settlement and party and party costs to those advocates, not directly to the injured party
- Insurers cannot assume a duty of protecting the insuring public from allegedly dishonest advocates; statutory safeguards under the Advocates Act and the Advocates (Accounts) Rules govern that risk
Court orders
#- 1.Appeal dismissed with costs
The bench
#One judgment of the whole court — no separate or dissenting opinions.
- On appeal from
- High Court of Kenya at Nairobi
- H.C.C.C. No. 4972 of 1987
- Jurisdiction invoked
- First appeal to the Court of Appeal under the applicable appellate statute (not expressly stated in the judgment)
Relief refused
#The appellant's challenge to the High Court ruling permitting payment of costs to the claimant's advocates
The court held the advocate has general authority to receive the client's moneys and the learned judge reached the correct conclusion
Costs
Appeal dismissed with costs to the respondent
Quotable passages
#Verbatim from the judgment, each located to the page it appears on in the official PDF — so these can be cited and checked directly.
The upshot is that this appeal is dismissed with costs. It is so ordered.
It follows therefore in our view that an attorney is obviously entitled to demand and receive moneys due to his client unlit such time his instructions are withdrawn.
That section primarily stops any such person from having an interest in an actionable claim. It does not talk of an advocate having no right to receive moneys on behalf of his client.
Insurers cannot take upon themselves the alleged duty of protecting the "insuring public". The law as stated takes care of the problems.
Order III rule 6 of Civil Procedure Rules clearly stipulates that an advocate on record, until properly removed or changed, is considered the advocate of the party until final conclusion of the cause or matter, including any review or appeal.
Issues in the judgment
#The judgment text appears incomplete or poorly transcribed: the facts recite that Mutula Kilonzo & Co sought orders 'to enter Judgment in that only if there was a proper assignment by the client to the advocate, could the advocate seek payment', with the sentence breaking off mid-thought, and the substance of the High Court ruling is only inferable
The judgment contains internal tension: it states the learned judge 'misdirected himself' on subrogation and 'did not consider the implication' of section 136, yet affirms his conclusion
Key timeline
#Practical implications
#Frequently asked questions
#Cite this brief
#Cite this brief
Caselaw, "Kenya Bus Services Ltd. v Susan Muteti [1996] KECA 190 (KLR)", Case Analysis (1996). Civil Appeal No. 15 of 1992. Source: https://new.kenyalaw.org/akn/ke/judgment/keca/1996/190/eng@1996-03-08
Suggested citation format for research notes or client memos. Always verify the original judgment before relying on any point.