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Court of AppealDismissedCivil Appeal No 60 of 2020· [2023] KECA 628 (KLR)

Bethsaida Resort & Spa Limited v Gauderlot (Civil Appeal 60 of 2020) [2023] KECA 628 (KLR)

Court of Appeal of Kenya
26 May 2023
2,247 words in judgment
View original judgmentRead on Kenya Law Watch case
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·~9 min to read original · ~4 min brief

The bottom line

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Kenya's Court of Appeal confirmed that lawyers' fees on property disputes are calculated from the full purchase price in the pleadings, not just the deposit claimed.

What this practically means

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Executive summary

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This was an appeal to the Court of Appeal at Mombasa against a ruling of the Environment and Land Court (A Omollo, J, delivered by C Yano, J) which partially allowed the appellant's application to set aside a certificate of stated costs dated February 7, 2018 certifying party and party costs of Kshs 1,210,475.00 inclusive of instruction fees of Kshs 1,195,000.00. The ELC had fixed instruction fees at 75% of the fee chargeable on Kshs 45,000,000.00. The appellant's sole complaint was that the judge erred in taking the purchase price of the suit properties (Kshs 45,000,000.00) rather than the deposit claimed in the suit (Kshs 4,500,000.00) as the value of the subject matter for taxation. The underlying suit in the Magistrate's Court at Kwale sought declarations that a sale agreement over two Kwale/Diani Complex properties was void and unenforceable, that the respondent frustrated completion, and a refund of the Kshs 4,500,000.00 deposit. The Court of Appeal, in a unanimous judgment, restated the settled principles limiting interference with a taxing officer's discretion - drawing on Arthur v Nyeri Electricity Undertaking, Premchand Raichand, First American Bank v Shah, Kipkorir Tito & Kiara and Peter Muthoka v Ochieng - and applied Joreth Ltd v Kigano & Associates on ascertaining value from the pleadings. It held that the refund of the deposit was only an aspect of a suit founded on the purchase agreement at Kshs 45,000,000.00 disclosed on the face of the amended plaint, and that neither the taxing officer nor the judge could be faulted for adopting that value. Discerning no error of principle, the Court dismissed the appeal with costs to the respondent. The decision binds subordinate courts and the ELC on the approach to valuing subject matter for taxation: the pleadings, judgment or settlement govern, and a claim for a deposit does not displace the pleaded transaction value.

Key legal issues

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01

Whether the value of the subject matter for taxation should be the amount sued for (deposit of Kshs 4,500,000.00) or the pleaded purchase price of the properties (Kshs 45,000,000.00)

Holding

The value of the subject matter is taken from the pleadings; since the amended plaint disclosed the purchase agreement over the properties at Kshs 45,000,000.00, the refund of the deposit was only one aspect of the suit and the taxing officer and judge correctly adopted the pleaded value.

Reasoning

The court examined the amended plaint, which pleaded a sale agreement over the properties including the hotel business at a purchase price of Kshs 45,000,000.00, of which Kshs 4,500,000.00 was a deposit. The relief sought - declarations of voidness and frustration plus refund of the deposit - arose from that whole transaction. Applying Joreth Ltd v Kigano & Associates, value is ascertained from the pleadings. Discerning no error of principle, the court declined to interfere with the exercise of discretion.

p. 4
02

The limits of appellate interference with a taxing officer's or judge's discretion on costs

Holding

Interference is warranted only where the discretion was exercised capriciously, on an error of principle, or where the award is so excessive or low as to amount to an injustice.

Reasoning

The court traced the settled principles from Arthur v Nyeri Electricity Undertaking and Premchand Raichand through First American Bank v Shah, Kipkorir, Tito & Kiara and Peter Muthoka v Ochieng, confirming that taxation is a matter of opinion based on experience, not a mathematical exercise, and that a discretionary decision may be disturbed only on misdirection or manifest impropriety.

p. 3

Legal principles established

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  • The value of the subject matter of a suit for purposes of taxation of a bill of costs is to be determined from the pleadings, judgment or settlement; where the pleaded subject matter is the sale of property at a stated price, a claim for refund of a deposit is only an aspect of that suit and does not displace the pleaded value.
  • Taxation of costs is an exercise of judicial discretion; an appellate court will interfere only on established error of principle, capricious exercise, or an award so excessive or low as to amount to an injustice.

Court orders

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  1. 1.Appeal dismissed with costs to the respondent

Authorities

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Legislation

  • Advocates (Remuneration) Order, 2014Schedule 7(1)
  • Advocates (Remuneration) Order, 2014Schedule 7(1)(b)

Cases cited (11)

  • Mwakio, Kirwa & Company Advocates v County Public Service Board Bome & Joshua Terer
    (Miscellaneous Cause 1 of 2020) [2022] KEELRC 834 (KLR) (10 February 2022)
  • First American Bank of Kenya v Shah and Others
    [2002] eKLR / [2002] EA 64
  • Morgan Air Cargo Limited v Evrest Enterprises Limited
    [2014] eKLR
  • Joreth Limited v Kigano & Associates
    (2002) eKLR / [2002] 1 EA 92
  • Kenyariri Advocates v Salama Beach Hotel Ltd & 4 others
    (2014) eKLR
  • Peter Muthoka & another v Ochieng & 3 others
    (2019) eKLR / [2019] eKLR
  • Arthur v Nyeri Electricity Undertaking
    [1961] EA 492
  • Premchand Raichand Limited & another v Quarry Services of East Africa Limited and another
    [1972] EA 162
  • Kipkorir, Tito & Kiara Advocates v Deposit Protection Fund Board
    [2005] eKLR
  • Mbogo v Shah
    (Supra - not fully cited)
  • Attorney General of Kenya v Prof. Anyang' Nyong'o & 10 others
    EACJ App No 1 of 2009
On appeal from
Environment and Land Court
Chamber summons application dated February 20, 2018; ruling of November 21, 2019 delivered by C Yano, J on December 16, 2019
Jurisdiction invoked
First appellate jurisdiction over the Environment and Land Court (ruling on a reference from taxation of costs)

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, "Bethsaida Resort & Spa Limited v Gauderlot (Civil Appeal 60 of 2020) [2023] KECA 628 (KLR)", Case Analysis (2023). Civil Appeal No 60 of 2020. Source: https://new.kenyalaw.org/akn/ke/judgment/keca/2023/628/eng@2023-05-26

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