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Court of AppealAllowedCivil Appeal No. 48 of 2014

Makhecha & Company Advocates v Central Bank of Kenya [2017] KECA 122 (KLR)

Court of Appeal of Kenya
8 December 2017
2,714 words in judgment
View original judgmentRead on Kenya Law Watch case
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The bottom line

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Kenya's Court of Appeal ruled that a lawyer can only enforce a special fee agreement if it is written and signed by the client; Makhecha Advocates recovered its taxed fees.

What this practically means

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Executive summary

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This Court of Appeal decision (Waki, Nambuye and Kiage, JJA) arises from an advocate/client bill of costs taxed at Ksh. 8,917,163, where the advocate claimed a balance of approximately Ksh. 25.3 million. The High Court (Havelock, J) dismissed the advocate's reference from the taxing officer's decision, upholding the position that a letter of 13th May 2010 constituted an agreement fixing fees at Ksh. 12,972,240. The Court of Appeal framed two issues: whether an agreement on fees existed, and whether the judge misdirected himself in finding one. Applying section 45(1) of the Advocates Act, which requires a written fee agreement signed by the client, and reading the correspondence with the parties' conduct, the court held that the 13th May 2010 letter accepted settlement per the Bank's 23rd April 2010 letter, which pegged fees to Schedule VI B of the Advocates Remuneration Order; there was no clear acceptance of the lower figure, and the respondent never maintained that Ksh. 12,972,240 was the total agreed fees until the falling-out. The judge therefore erred in principle. The appeal was allowed, the High Court ruling set aside, and the appellant's reference allowed, with costs of the appeal and reference to the appellant. A subsequent order of 6th December 2019 corrected a typographical error in the judgment under Rule 35(1) of the Court of Appeal Rules, with no order as to costs for the correction.

Questions the Court framed

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

  1. 1.whether there existed an agreement on fees between the parties
  2. 2.whether the learned judge erred and exercised his discretion wrongly in holding that there was an agreement on fees

Key legal issues

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01

Existence of a binding fee agreement under section 45(1) of the Advocates Act

Holding

The letter of 13th May 2010 did not constitute a valid agreement fixing fees at Ksh. 12,972,240; the parties had agreed that fees would be computed under Schedule VI B of the Advocates Remuneration Order.

Reasoning

The court read section 45(1) of the Advocates Act together with the correspondence and the parties' conduct. The 13th May 2010 letter accepted settlement of fees per the Bank's 23rd April 2010 letter, which pegged fees to Schedule VI B. There was no clear acceptance of the 12th May 2010 offer, and the respondent never maintained that Ksh. 12,972,240 was the total agreed fees until it fell out with the advocate. Accordingly no enforceable agreement on fees existed.

p. 6
02

Interference with the High Court's discretionary dismissal of the reference

Holding

The learned judge erred in principle in holding that there was an agreement on fees, and his dismissal of the appellant's reference could not stand.

Reasoning

Applying the Pil Kenya Ltd vs Oppong discretion principle, the court found the judge had misdirected himself on the existence of the fee agreement, which vitiated the dismissal of the reference. Since no valid fee agreement existed, the reference against the taxing officer's decision had to be allowed and the High Court ruling set aside.

p. 6

Legal principles established

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  • A valid agreement fixing an advocate's remuneration under section 45(1) of the Advocates Act must be in writing and signed by the client or its duly authorised agent; whether such an agreement exists is determined from the correspondence, its intent and purport, and the conduct of the parties.
  • An appellate court will not interfere with a judge's exercise of discretion unless the judge misdirected himself and arrived at a wrong decision, or it is manifest that he was clearly wrong and injustice was occasioned.

Court orders

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  1. 1.The ruling and order of the High Court (J.B. Havelock, J) dated 23rd January, 2013 setting aside the taxing officer's decision is set aside and substituted by an order allowing the appellant's reference
  2. 2.The appellant shall have the costs of this appeal and of the reference
  3. 3.On correction of the typographical error (6th December, 2019): the year 2012 at page 10, line 6 of the judgment substituted with 2013 so the order reads 'January, 2013 is hereby set aside and substituted by an order allowing the appellant's reference'
  4. 4.No order as to costs for the correction of the typographical error

The bench

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

majority
majority
majority
On appeal from
High Court of Kenya at Nairobi
H.C. Misc. Civil Application No. 296 of 2012
Jurisdiction invoked
First appeal/second appeal jurisdiction over the High Court ruling on a reference from the taxing officer (Court of Appeal, Civil Appeal No. 48 of 2014)

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.

Being of that mind, we find that the learned Judge erred in principle in holding that there was agreement on fees and in consequence dismissing the appellant's reference.
p. 6Error in principle in the decision below
Having found that there was no valid agreement on fees, we are satisfied that the appeal has merit and the same is allowed. The ruling dated 23rd January, 2012 is hereby set aside and substituted by an order allowing the appellant's reference.
p. 6Final orders - disposal of the appeal
The appellant shall have the costs of this appeal and of the reference.
p. 6Costs
In the exercise of our mandate donated to the Court pursuant to the above Rule 35(1) of the rules of the Court, we proceed to make the following correction in the said Judgement.
p. 2Slip rule correction of typographical error

Issues in the judgment

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minor

The judgment's final orders state the High Court ruling was dated '23rd January, 2012', contradicting the record which shows the ruling was dated 23rd January, 2013; the error was corrected on 6th December 2019 pursuant to Rule 35(1).

Key timeline

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Practical implications

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Frequently asked questions

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Cite this brief

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Cite this brief

Caselaw, "Makhecha & Company Advocates v Central Bank of Kenya [2017] KECA 122 (KLR)", Case Analysis (2017). Civil Appeal No. 48 of 2014. Source: https://new.kenyalaw.org/akn/ke/judgment/keca/2017/122/eng@2017-12-08

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