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Court of AppealDismissedCivil Appeal 220 of 2004· [2005] KECA 325 (KLR)

Kipkorir,Titoo & Kiara Advocates v Deposit Protection Fund Board [2005] KECA 325 (KLR)

Court of Appeal
29 April 2005
Philip Kiptoo TunoiP. K. TunoiEGE. M. GithinjiJOJ. W. Onyango Otieno
2,848 words in judgment
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The bottom line

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Kenya's Court of Appeal confirmed that judges can overturn a taxing officer's fee ruling where the officer misapplied the formula or ignored relevant factors, and this firm's appeal failed.

What this practically means

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Executive summary

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The Court of Appeal at Nairobi (Tunoi, Githinji and Onyango Otieno, JJ.A.) dismissed an appeal by the firm of Kipkorir, Titoo & Kiara Advocates against a High Court ruling of Azangalala, Ag. J. dated 21st July 2004, which allowed the Deposit Protection Fund Board's reference under Rule 11(2) of the Advocates (Remuneration) Order, set aside the taxation of an advocate/client bill of costs and remitted it for taxation by a different taxing officer. The bill, claiming Shs.10,527,836/07 including instruction fees of Shs.6,000,515/50, arose from a suit in which the firm acted for the Board as liquidator of Trust Bank Limited (in liquidation). The appellant contended that the reference was incompetent because the taxing officer had not recorded and forwarded reasons and was filed out of time, and that the objection was essentially on quantum. The Court held time for filing the reference did not begin to run on the date of the notice of objection since no reasons had been given and the Deputy Registrar's endorsement was undated; and that although there was no strict compliance with Rule 11(2) there was substantial compliance, a total failure to give reasons being itself a good ground for a reference. On the merits, the taxing officer committed grave errors of principle: she computed instruction fees on a figure supplied as the value of the subject matter although she had found the claim declaratory, and ignored the proviso (i) factors in Schedule VIA(1). Independently, the ruling was delivered by a magistrate who never heard the submissions, itself a grave and substantial irregularity justifying re-taxation. The appeal was dismissed with costs to the respondent.

Key legal issues

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01

When time begins to run for filing a reference under Rule 11 where the taxing officer has not recorded and forwarded reasons

Holding

The reference was filed within the prescribed time. The taxing officer never recorded reasons, and the Deputy Registrar's letter of 3rd June 2004 did not state when the endorsement that the reasons were in the ruling was made; there was no evidence the objector knew before that date that the ruling would serve as reasons.

Reasoning

Rule 11(1) requires notice of objection within 14 days of the ruling; the respondent's letter of 24th February 2004 complied. Rule 11(2) then obliges the taxing officer to record and forward reasons, after which the objector has 14 days to file a reference. Since the taxing officer never recorded reasons and the endorsement was undated, the Court held the appellant's premise that time started on 24th February 2004 was untenable; the objector could not be penalised for reasons it had not received.

p. 3
02

Effect of a taxing officer's failure to record and forward reasons under Rule 11(2)

Holding

Although there was no strict compliance with Rule 11(2), there was substantial compliance because the ruling of 23rd February 2004 at least disclosed the formula applied; and a total failure to record and forward reasons is itself a good ground for a reference and does not preclude a competent reference.

Reasoning

The Court distinguished strict from substantial compliance: the ruling disclosed the formula used to assess instruction fees, enough for the objector to frame its objections. More significantly, the Court held that a taxing officer's total failure to give reasons cannot defeat the objector's right of reference - it is a ground for the reference. The adequacy of the reasons contained in the ruling was left as a separate matter for the judge on the reference.

p. 3
03

The standard for interference with a taxing officer's discretion and what constitutes an error in principle

Holding

A judge on reference will not normally interfere with a taxing officer's discretion unless the taxing officer erred in principle; manifest excessivity, over-emphasis of the difficulties, importance and complexity of the suit, failure to apply the Schedule VI formula and failure to consider the proviso (i) factors are all errors in principle.

Reasoning

Following Arthur v Nyeri Electricity Undertaking, questions purely of quantum are for the taxing officer and interference is exceptional. Where error in principle is found, the general practice is to remit quantum to a taxing officer, though the judge retains discretion to decide the matter himself if justice requires. Failure to apply the statutory formula or to weigh the matters in proviso (i) to Schedule VIA(1) - the nature and importance of the matter, the amount involved, the interests of the parties, the general conduct of proceedings and all other relevant circumstances - is an error in principle.

p. 2
04

Whether the taxing officer erred in principle and whether the judge properly allowed the reference

Holding

Yes. The taxing officer used Shs.116,344,789/30 supplied by the appellant as the value of the subject matter although she had found the claim was not monetary but for declaratory orders, and she failed to consider the proviso (i) factors, including the instruction fees previously claimed, the absence of reasonable progress, the Board's position as liquidator, the work done and the advocate's conduct.

Reasoning

Instruction fees for a defending advocate fall under Schedule VIA(1)(d), computed under Schedule VI subject to the taxing officer's discretion. Using a monetary figure the taxing officer had herself rejected was an error of principle, the more so as the true value of the subject matter (the two charged properties) was never stated and no discretion was exercised at all. The objections went to the principles for arriving at quantum, not to quantum alone, so the judge was entitled to interfere. His discretion could only be disturbed on the section 72(1) grounds, none of which was established.

p. 4
05

Ruling on taxation delivered by a taxing officer other than the one who heard the submissions

Holding

The delivery of the taxation ruling by G. L. Nzioka, a Senior Resident Magistrate, when the bill had been fixed before and submissions heard by D. K. Kaikai, a Deputy Registrar, was a grave and substantial irregularity which in itself would have justified an order for retrial - the order the judge in effect made.

Reasoning

It was common ground, conceded by both counsel, that the bill was not fixed before Nzioka and that she did not hear the submissions, yet the ruling of 23rd February 2004 is shown to have been made and delivered by her. A ruling authored by someone other than the taxing officer who heard the parties undermines the integrity of the taxation. Independently of the errors of principle, this irregularity justified setting aside the taxation and remitting the bill for taxation by a different taxing officer.

p. 4

Legal principles established

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  • On a reference to a judge from a taxing officer, the judge will not normally interfere with the exercise of the taxing officer's discretion unless the taxing officer erred in principle in assessing the costs; questions solely of quantum are for the taxing officer and the court will interfere only in exceptional cases.
  • A taxing officer's failure to apply the formula for assessing instruction fees or costs specified in Schedule VI, or failure to give due consideration to the relevant circumstances specified in the proviso to Schedule VIA(1), constitutes an error in principle.
  • Where a taxing officer totally fails to record and forward reasons for the taxation, that is a good ground for a reference and does not in itself preclude the objector from filing a competent reference.
  • Where reasons for a taxation have not been given and the Deputy Registrar's endorsement providing them is undated, time for filing a reference does not begin to run from the date of the notice of objection.
  • An appeal to the Court of Appeal from a judge's decision on a reference from a taxing officer is akin to a second appeal governed by section 72(1) of the Civil Procedure Act and can only be allowed on the three grounds specified therein.
  • An appellate court cannot interfere with a judge's exercise of discretion on a reference unless it is shown that the judge acted on wrong principles of law.
  • It is a grave and substantial irregularity for a taxation ruling to be made and delivered by a taxing officer other than the one before whom the bill was fixed and who heard the submissions; such an irregularity in itself justifies an order for retrial (re-taxation).

Court orders

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  1. 1.The appeal is dismissed.
  2. 2.Costs of the appeal are awarded to the respondent.

Authorities

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Legislation

  • Advocates (Remuneration) OrderRule 11(1)
  • Advocates (Remuneration) OrderRule 11(2)
  • Advocates (Remuneration) OrderSchedule VI Part A (1)(b)
  • Advocates (Remuneration) OrderSchedule VIA
  • Advocates (Remuneration) OrderSchedule VIB
  • Advocates (Remuneration) OrderSchedule VIA (1)(d)
  • Advocates (Remuneration) OrderProviso (i) to Schedule VIA (1)
  • Civil Procedure ActSection 72(1)

Cases cited (3)

  • Arthur v Nyeri Electricity Undertaking
    [1961] EA 497
  • Devshi Dhanji v Kanji Naran Patel (No. 2)
    [1978] KLR 243
  • D'Souza v Ferrao
    [1960] EA 602
On appeal from
High Court
Jurisdiction invoked
Section 72(1) of the Civil Procedure Act - the Court held that an appeal from a judge on reference from a taxing officer is akin to a second appeal governed by that section

Key timeline

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Practical implications

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Frequently asked questions

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Later judgments citing this (25)

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Judgments in the corpus that rely on this one. Where the Court said how it treated the authority, that is shown.

Cite this brief

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Cite this brief

Caselaw, "Kipkorir,Titoo & Kiara Advocates v Deposit Protection Fund Board [2005] KECA 325 (KLR)", Case Analysis (2005). Civil Appeal 220 of 2004. Source: https://new.kenyalaw.org/akn/ke/judgment/keca/2005/325/eng@2005-04-29

Suggested citation format for research notes or client memos. Always verify the original judgment before relying on any point.