Eastland Hotel Limited v Wafula Simiyu & Co. Advocates [2014] KECA 296 (KLR)
The bottom line
#Kenya's Court of Appeal ruled lawyer fees in a shareholder dispute must be based on the disputed share, not the company's total value taken from an affidavit.
What this practically means
#Executive summary
#Questions the Court framed
#The issues the Court set itself to decide, in its own words.
- 1.Whether the value of the subject matter was properly determined by the taxing officer
- 2.Whether the taxing officer exercised her discretion in accordance with the law
Key legal issues
#Determination of the value of the subject matter for instruction fees
The subject matter of the underlying suit was the plaintiff's 30% shareholding interest and the management/directorship dispute, not the entire company valued at Kshs.1,000,000,000/=; the taxing officer erred in taking the company's worth from an affidavit.
The court examined the originating summons and held that the dispute concerned management and directorship, not ownership of the company. The plaintiff sought to protect his 30% interest. The Kshs.1,000,000,000/= figure appeared only in the plaintiff's affidavit, which is evidence, not a pleading, and could not found the instruction fee assessment.
Whether an affidavit is a pleading for purposes of taxation
An affidavit is not a pleading; it is evidence, and the taxing officer misconstrued paragraph 9 of the plaintiff's affidavit in adopting the Kshs.1,000,000,000/= figure.
Relying on the definition of 'pleading' in Section 2 of the Civil Procedure Act, the court held that affidavits fall outside the statutory definition. The taxing officer's ruling expressly stated she took the figure from the pleadings, demonstrating error of principle. Even assuming the company's value, the plaintiff's claim was limited to 30% (Kshs.300,000,000/=).
Interference with a taxing officer's discretion on reference
The High Court ought to have interfered where the taxing officer's decision rested on an error of principle or produced manifestly excessive fees; the Judge fell into the same error and was wrong not to disturb the taxation.
Citing Kipkorir, Titoo & Kiara Advocates and Steel Construction Petroleum Engineering, the court reiterated that a Judge on reference will not normally interfere with a taxing officer's discretion absent error of principle, but where such error or manifest excessiveness is shown intervention is warranted. Here both the taxing officer and the Judge erred.
Nominal share capital as the value of the subject matter
The taxing officer was not obliged to adopt the company's nominal share capital of Kshs.1,000,000/= as the value of the subject matter.
The appellant argued the officer should have used nominal share values. The court rejected this, holding that what the plaintiff was protecting was his substantial financial investment amounting to 30% of whatever the value of the company was, not merely the nominal value of his shares.
Legal principles established
#- The value of the subject matter for taxation of a bill of costs must be determined from the pleadings, judgment or settlement; an affidavit is not a pleading but evidence
- A taxing officer's decision based on an error of principle, or where fees are manifestly excessive so as to occasion injustice, may be interfered with on reference
Court orders
#- 1.The ruling of the High Court dated 21st January, 2014 is set aside
- 2.The appellant's application dated 31st July, 2013 is reinstated
- 3.The respondent's bill of costs dated 23rd November, 2012 is to be taxed afresh by any other taxing officer (deputy registrar) apart from D.W. Nyambu
- 4.The respondent shall bear the costs of this appeal as well as the costs in the High Court
The bench
#One judgment of the whole court — no separate or dissenting opinions.
- On appeal from
- High Court of Kenya at Nairobi
- HC Misc. No. 713 of 2012
- Jurisdiction invoked
- First appellate jurisdiction under the Appellate Jurisdiction Act (appeal from High Court ruling on a reference against a taxing officer's decision)
Relief refused
#Respondent's cross-appeal seeking that the amount paid (Kshs.2,050,000/=) be subtracted from the taxed costs instead of remitting the bill for taking accounts
The main appeal having succeeded, the cross-appeal necessarily fails
Costs
The respondent shall bear the costs of this appeal as well as the costs in the High Court
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.
It is the value of the subject matter in dispute which determines the amount of instruction fees payable to an advocate.
An affidavit is not a pleading, it is evidence.
Where it is demonstrated, as in this appeal, that a taxing officer’s decision was based on an error of principle or the fees awarded are so manifestly excessive as to occasion injustice or an inference that it was based on an error of principle, the High Court can intervene.
The ruling of the High Court dated 21st January, 2014 is hereby set aside and the appellant’s application dated 31st July, 2013 reinstated with the consequence that the respondent’s bill of costs dated 23 rd November, 2012 is ordered to be taxed afresh by any other taxing officer (deputy registrar) apart from D.W. Nyambu.
Issues in the judgment
#The judgment records the instruction fees claimed in the bill of costs inconsistently - first as Kshs.18,653,750/= then as Kshs.18,663,750/= in the quoted extract from the bill
Key timeline
#Practical implications
#Frequently asked questions
#Cite this brief
#Cite this brief
Caselaw, "Eastland Hotel Limited v Wafula Simiyu & Co. Advocates [2014] KECA 296 (KLR)", Case Analysis (2014). Civil Appeal No. 105 of 2014. Source: https://new.kenyalaw.org/akn/ke/judgment/keca/2014/296/eng@2014-10-24
Suggested citation format for research notes or client memos. Always verify the original judgment before relying on any point.