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Court of AppealPartially AllowedCivil Appeal (Nairobi) arising from Nairobi HCCC No. 183 of 1998

Odera t/a AJ Odera & Associates v Machira t/a Machira & Co Advocates (Civil Appeal 161 of 1999) [2013] KECA 208 (KLR)

Court of Appeal of Kenya
11 October 2013
EGE. M. GithinjiRNR. N. NambuyeMartha Karambu KoomeM. K. Koome
8,654 words in judgment
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The bottom line

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Kenya's Court of Appeal cut an advocate's fee award to 8% of the reduced claim amount and replaced the 25% interest rate with standard court rates.

What this practically means

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Executive summary

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The appellant, an advocate, had retained the respondent under an agreement of 4th March 1996 to recover Kshs. 296,019,767.80 from Kenya Posts and Telecommunications Corporation at a professional fee of 8% of the amount recovered. The respondent sued for Kshs. 23,681,581.35 (8% of the original claim) with interest at 25% per annum. The High Court dismissed the appellant's striking-out application and granted the respondent summary judgment. On appeal, the Court of Appeal first held it had jurisdiction: the decision appealed from was on summary judgment under order XXXV of the Civil Procedure Rules, appealable as of right, not a decision under section 45(2) of the Advocates Act. The court then overruled objections to the competence of the appeal, invoking the overriding objective in sections 3A and 3B of the Appellate Jurisdiction Act to sustain an appeal filed before those provisions took effect, the defects in the notice of appeal and the omission of the memorandum of appearance being non-fatal and causing no prejudice. On the merits, the court held the contingency fee agreement valid: section 46(a) of the Advocates Act did not invalidate it because no suit or contentious proceedings existed when it was executed, and non-compliance with the Stamp Duty Act was not fatal, the court directing impounding and assessment. The payment of Kshs. 4 million was not an admission of the entire claim. However, the court found the trial judge erred in computing the fees on the unrecovered original claim and in awarding 25% interest from a pre-claim period; the claim had been scaled down by consent to Kshs. 101,955,962.88. The court partially allowed the appeal, entering summary judgment for Kshs. 8,156,477.05 (8% of the scaled-down figure) less the Kshs. 4 million paid, with interest at court rates, and made orders on costs and stamp duty.

Questions the Court framed

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The issues the Court set itself to decide, in its own words.

  1. 1.Whether the Court of Appeal has jurisdiction to entertain this appeal, the respondent contending it was a decision under section 45(2) of the Advocates Act
  2. 2.Whether the appeal is competent given defects in the notice of appeal and the omission of the memorandum of appearance from the record of appeal
  3. 3.Whether sections 3A and 3B of the Appellate Jurisdiction Act (the overriding objective) can cure defects in an appeal filed before those provisions came into force
  4. 4.Whether the respondent, having an advocate on record, could properly argue the application in person absent a notice to act in person under order III rule 9(1) of the Civil Procedure Rules
  5. 5.Whether the respondent was professionally negligent in handling HCCC No. 518 of 1996
  6. 6.Whether the appellant's payment of Kshs. 4,000,000.00 amounted to an admission of the respondent's entire claim
  7. 7.Whether the agreement of 4th March 1996 was invalid for non-compliance with the Stamp Duty Act or section 46(a) of the Advocates Act
  8. 8.Whether summary judgment was properly entered, including the rate of interest and the figure on which the 8% professional fees should be computed

Key legal issues

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01

Jurisdiction of the Court of Appeal over the summary judgment decision

Holding

The court had jurisdiction because the decision appealed from was on summary judgment under order XXXV, not a decision under section 45(2) of the Advocates Act.

Reasoning

The court distinguished decisions of a High Court judge sitting with assessors under section 45(2) of the Advocates Act, against which there is no automatic appeal, from interlocutory decisions on summary judgment. A summary judgment decision under order XXXV is appealable as of right under order XLII rules (1) and (2). The court accordingly held itself properly seized of the appeal and proceeded to the merits.

p. 4
02

Competence of the appeal despite defects in the notice of appeal and omission of the memorandum of appearance

Holding

The appeal was competent; the objections were overruled, the defects being non-fatal, raised belatedly, and causing no prejudice.

Reasoning

The court invoked the overriding objective in sections 3A and 3B of the Appellate Jurisdiction Act, noting case law applying it to proceedings filed before those sections came into force. Striking out would merely restore the parties to the pre-appeal stage, causing delay and costs. The defect in the notice of appeal was not misleading, and the omission of the memorandum of appearance did not go to the root of the controversy, appearance not being in issue.

p. 7
03

Validity of the agreement of 4th March 1996 under section 46(a) of the Advocates Act and the Stamp Duty Act

Holding

The agreement was valid and enforceable; it was made before any suit was pending, and non-stamping was not fatal.

Reasoning

Section 46(a) prohibits an advocate purchasing an interest in a client's claim in a suit or contentious proceedings. Since the agreement was executed on 4th March 1996 and the suit (HCCC No. 518 of 1996) was filed on 5th March 1996, no suit was pending when the agreement was made. On stamping, sections 19(3)(a)(b)(c), 20 and 21 of the Stamp Duty Act provide for impounding and assessment rather than invalidity.

p. 9
04

Basis of the summary judgment figure and interest

Holding

Summary judgment should have been for 8% of the scaled-down consent figure of Kshs. 101,955,962.88, with interest at court rates, not 8% of the original claim with interest at 25%.

Reasoning

The original claim of Kshs. 296,019,767.80 was special damages requiring strict proof, and the parties' conduct in scaling the claim down to Kshs. 101,955,962.88 without any caveat showed they intended the 8% fees to be computed on the scaled-down figure. The agreement was silent on interest, and the trial judge gave no reasons for awarding 25% from a pre-claim period; the discretion under section 26(1) of the Civil Procedure Act must be exercised judiciously.

p. 13
05

Whether the respondent's appearance in person without a notice to act in person vitiated the proceedings

Holding

No; the appellant waived the objection by not raising it below, and the rule carries no penal consequences.

Reasoning

The respondent appeared in person on several occasions with no objection from the appellant, who thereby waived the right to complain, under section 120 of the Evidence Act (estoppel). Order III rule 9(1) provides no penalty for non-compliance, and no prejudice was demonstrated, nor was it shown the judge would have decided differently had the respondent been represented.

p. 7
06

Professional negligence of the respondent

Holding

The claim of professional negligence failed; there was no instruction to refer the dispute to arbitration.

Reasoning

The agreement of 4th March 1996 instructed the respondent to file a suit to claim the amount indicated, not to refer matters to arbitration. Indeed, when the Corporation applied to refer the dispute to arbitration in HCCC No. 518 of 1996, the appellant opposed the application and appealed against the order of reference, demonstrating that a failure to refer was not negligent.

p. 8

Legal principles established

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  • A decision on an application for summary judgment under order XXXV of the Civil Procedure Rules is appealable to the Court of Appeal as of right and is not a decision under section 45(2) of the Advocates Act.
  • The overriding objective in sections 3A and 3B of the Appellate Jurisdiction Act may be applied to sustain an appeal filed before those provisions came into force where the defects are not misleading and no prejudice is shown.
  • Non-compliance with order III rule 9(1) of the Civil Procedure Rules (notice to act in person) carries no penal consequences and does not vitiate proceedings absent demonstrated prejudice.
  • For section 46(a) of the Advocates Act to invalidate an agreement for purchase of an interest in a client's claim, the agreement must have been made during the pendency of a suit or contentious proceedings; an agreement made before the suit was filed is valid and enforceable.
  • Non-compliance of an agreement with the Stamp Duty Act is not fatal to its enforcement; the court should impound the agreement and assess or direct assessment and payment of the duty.
  • The discretion under section 26(1) of the Civil Procedure Act to award interest must be exercised judiciously, with reasons, and cannot be exercised on a pre-claim period where the agreement is silent on interest.
  • A payment made by a defendant does not amount to an admission of the entire claim under order XII rule 6 (now order 13 rule 2) unless premised on the pleadings or accompanied by an admission of the full amount claimed.

Court orders

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  1. 1.Summary judgment entered in favour of the respondent against the appellant at the rate of 8% of Kshs. 101,955,962.88, totalling Kshs. 8,156,477.05, less the Kshs. 4,000,000.00 earlier paid
  2. 2.The said sum to carry interest at court rates from the date of filing of the suit till payment in full
  3. 3.The respondent entitled to half the costs of the suit in the High Court
  4. 4.The respondent directed to submit the agreement of 4th March 1996 to the stamp duty collector for assessment of the duty payable, to be paid in the normal manner
  5. 5.The appellant, having succeeded partially in the appeal, awarded half the costs of the appeal

The bench

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One judgment of the whole court — no separate or dissenting opinions.

EG
majority
RN
majority
Martha Karambu Koome
M. K. KoomeJA
Currently serving
majority
On appeal from
High Court of Kenya, Nairobi
Nairobi HCCC No. 183 of 1998 (ruling of 30th July, 1998)
Jurisdiction invoked
Order XLII rule (1) and (2) of the Civil Procedure Rules - appeal as of right against a decision on summary judgment under order XXXV, and not a decision under section 45(2) of the Advocates Act

Relief refused

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Interest at 25% p.a. as claimed in the plaint

The rate of interest was neither provided for in the agreement of 4th March 1996 nor justified by the respondent or the trial judge

p. 12

Summary judgment on 8% of the full original claim of Kshs. 296,019,767.80

The claim scaled down by consent to Kshs. 101,955,962.88, and the parties' conduct showed the 8% fees were to be calculated on the recovered/scaled-down figure

p. 13

Costs

The respondent is entitled to half the costs of the suit in the High Court; the appellant, having succeeded partially in the appeal, will have half the costs of the appeal.

Quotable passages

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Verbatim from the judgment, each located to the page it appears on in the official PDF — so these can be cited and checked directly.

Summary Judgment be and is hereby entered in favour of the respondent as against the appellant at the rate of 8% of Kshs.101,955,962.88 total being Kshs.8,156,477.05 less the Kshs.4,000,000.00 earlier paid.
p. 13Final orders - substituted summary judgment figure
The said sum will carry interest at court rates from the date of filing of the suit till payment in full.
p. 13Final orders - interest at court rates
The respondent be and is hereby directed to submit the agreement of 4th March, 1996 to the stamp duty collector for the assessment of the duty payable, which should be paid in the normal manner.
p. 13Final orders - stamp duty
The appellant who has succeeded partially in this appeal will have half costs of the appeal.
p. 14Final orders - costs
We therefore hold that the agreement of 4th March, 1996 is valid and enforceable.
p. 9Validity of the contingency fee agreement
It has to be exercised judiciously, not with caprice or whim but with reason.
p. 12Judicial discretion on interest under section 26(1) of the Civil Procedure Act

Issues in the judgment

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minor

The judgment states the notice of appeal faulted a ruling given on 30th July 1999, while elsewhere and in the disposition the trial ruling is consistently dated 30th July 1998.

minor

The judgment states HCCC No. 183 of 1998 was filed on 2nd March 1988, an apparent typographical error for 1998 given the suit number.

minor

The appellant's claim figure is rendered inconsistently, once as Kshs. 296,019.767.80 and elsewhere as Kshs. 296,019,767.80 (and once Kshs. 296,019,769.80).

minor

The respondent's demand is described as 8% of Kshs. 296,019,769.80, while the agreed figure elsewhere is Kshs. 296,019,767.80.

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, "Odera t/a AJ Odera & Associates v Machira t/a Machira & Co Advocates (Civil Appeal 161 of 1999) [2013] KECA 208 (KLR)", Case Analysis (2013). Civil Appeal (Nairobi) arising from Nairobi HCCC No. 183 of 1998. Source: https://new.kenyalaw.org/akn/ke/judgment/keca/2013/208/eng@2013-10-11

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