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Court of AppealDismissedCivil Appeal No. 206 of 2006· [2015] KECA 595 (KLR)

Kamunyori & Company Advocates v Development Bank Of Kenya Limited [2015] KECA 595 (KLR)

Court of Appeal of Kenya
3 July 2015
WKWanjiru KaranjaHOH. OkwenguGKG. B. M. Kariuki
2,815 words in judgment
View original judgmentRead on Kenya Law Watch case
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·~11 min to read original · ~4 min brief

The bottom line

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Kenya's Court of Appeal confirmed lawyers' fees must be based on what the case is actually about, not inflated outside figures.

What this practically means

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Executive summary

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The appellant firm of advocates appealed against a High Court ruling by Ochieng J which allowed the respondent client's reference and returned the advocate/client Bill of Costs (taxed at Shs.14,045,854) to the Taxing Officer for taxation afresh. The fees arose from a suit in which Anspar Beverages Ltd challenged the respondent's receivership over it and the validity of a charge and debenture securing a loan of Shs.95 million. The Taxing Officer had based the instructions fee on US$7.1 million, said to represent the value of all the plaintiff's property and assets. The Court of Appeal framed one principal issue: whether the subject matter of the suit was the Shs.95 million loan or the US$7.1 million valuation. Holding that the pleadings showed the suit challenged instruments securing the Shs.95 million loan, and that the US$7.1 million was an unaccepted offer by Coca Cola SABCO, the Court found the Taxing Officer erred in principle both in identifying and valuing the subject matter, and that such errors warranted judicial intervention and remission for fresh taxation. The Court also held that the 2nd defendant, East African Development Bank, was not privy to the Bill of Costs and no sharing of the instructions fee was justified, only one set of instructions fee being payable. The Court affirmed the High Court's decision, dismissed the appeal, and awarded costs to the respondent.

Key legal issues

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01

Determination of the subject matter of a suit for purposes of computing instructions fees under the Advocates (Remuneration) Order

Holding

The subject matter was the Shs.95 million loan secured by the charge and debenture whose validity was challenged, not the plaintiff's entire property and assets valued at US$7.1 million

Reasoning

The pleadings showed the suit challenged the appointment of receivers and the validity of the charge and debenture instruments created to secure the Shs.95 million loan. The US$7.1 million figure was an offer by Coca Cola SABCO to the plaintiff which was never accepted, and could not therefore constitute the subject matter. Schedule VI B of the Remuneration Order requires instructions fee to be calculated on the value of the subject matter as determinable from the pleadings or judgment.

p. 4
02

Error of principle as the basis for judicial interference with taxation

Holding

Failure to ascertain the correct subject matter and its value is an error of principle; the High Court correctly set aside the taxation and remitted the Bill for taxation afresh

Reasoning

Citing Nanyuki Esso Service v Touring Cars Ltd, Arthur v Nyeri Electricity and Elmandry v Salim, the court reaffirmed that interference is only on error of principle, which may be inferred where an award is manifestly excessive. The Taxing Officer erred both in identifying the subject matter and in pegging its value at US$7.1 million, so the Judge correctly set aside the taxation and remitted the Bill.

p. 4
03

Whether instructions fees should be shared with a co-defendant for whom one joint defence was filed

Holding

No sharing was warranted; the 2nd defendant was not privy to the Bill of Costs, and there was no justification for more than one set of instructions fee where there was commonality of legal issues

Reasoning

The appellant filed one statement of defence on behalf of both defendants; there was commonality of legal issues and no conflict of interest. The Bill was taxed only against the respondent as client. The submission that the two defendants were not joint clients did not advance the claim for additional fees, and there would be no justification for more than one set of instructions fee.

p. 4

Legal principles established

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  • For taxation of instructions fees, the subject matter of the suit is determined from the pleadings; an unaccepted offer or collateral transaction cannot be the subject matter.
  • A court will not interfere with a Taxing Officer's decision unless it is based on an error of principle; failure to ascertain the correct subject matter or value thereof is an error of principle warranting remission for fresh taxation.
  • Where an error of principle is established, the matter will normally be remitted to the Taxing Officer for reconsideration.

Court orders

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  1. 1.The appeal is dismissed with costs to the respondent

Authorities

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Legislation

  • Advocates ActChapter 16 of the Laws of Kenya
  • Advocates (Remuneration) OrderSchedule VI B

Cases cited (3)

  • Nanyuki Esso Service v. Touring Cars Ltd
    [1972] EA 500
  • Elmandry and Others v. Salim
    [1956] EACA 313
  • Arthur v. Nyeri Electricity
    [1961] EA 492
On appeal from
High Court of Kenya at Nairobi
H.C. Misc Application No. 975 of 2003
Jurisdiction invoked
First appellate jurisdiction under the Constitution and Appellate Jurisdiction Act (appeal against a ruling of the High Court on an advocate/client bill of costs reference)

Key timeline

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Practical implications

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Frequently asked questions

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Later judgments citing this (10)

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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, "Kamunyori & Company Advocates v Development Bank Of Kenya Limited [2015] KECA 595 (KLR)", Case Analysis (2015). Civil Appeal No. 206 of 2006. Source: https://new.kenyalaw.org/akn/ke/judgment/keca/2015/595/eng@2015-07-03

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