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ELCPartially AllowedTaxation of Advocate/Client Bill of Costs – Reference under Rule 11(2) of the Advocates (Remuneration) Order (Mombasa ELC)· [2020] KEELC 1100 (KLR)

Shiva Enterprises v Mwangi Njenga & Company Advocates [2020] KEELC 1100 (KLR)

Environment and Land Court of Kenya
23 September 2020
MSMunyao Sila
6,667 words in judgment
View original judgmentRead on Kenya Law Watch case
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The bottom line

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A Kenyan court ruled that fee agreements with advocates must be in writing to be enforceable, and land legal fees should be taxed on actual property value.

What this practically means

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Executive summary

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This was a reference under Rule 11(2) of the Advocates (Remuneration) Order by Shiva Enterprises Limited, with a cross-reference by its former advocate, against a taxing officer's ruling of 11 December 2019 taxing an advocate/client bill arising from defence of Mombasa ELC No. 4 of 2017. The applicant contended that it had agreed to pay KShs. 3,218,200/- in full and final settlement of fees for three matters and had paid it, so the bill should be struck out; the respondent denied any agreement or payment for this brief. Munyao Sila J held that under Section 45 of the Advocates Act any fee agreement must be in writing, and the correspondences and RTGS payments exhibited did not evidence an agreement covering the subject suit, the payments having been made to a third firm, Taibjee & Bhalla Advocates. Taxation therefore rightly proceeded under the Advocates Remuneration Order. The court held that in land cases the value of the subject matter may be established by a valuation report even where value is not disclosed in the pleadings, disagreeing with S.G Mbaabu and following its own dictum in Masore Nyangau. However, the taxing officer erred in using the forced sale value instead of the actual value, in taxing instruction fees at 75% when the suit had not been determined summarily, and in taxing on the value of the whole of Plot No. 1000/III/MN when the applicant retained only a 4.787 Ha subdivision after the decree in Mombasa ELC No. 160 of 2014. The bill was remitted for fresh taxation on the value of that subdivision, and the applicant was ordered to bear the costs of the reference. The reference partially succeeded; the cross-reference on items 28 and 41 was not entertained.

Key legal issues

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01

Whether there was a written agreement on fees under Section 45 of the Advocates Act

Holding

No agreement was proved in writing in respect of Mombasa ELC No. 4 of 2017; the correspondence relied on did not refer to that suit or fix any fee for it

Reasoning

Section 45 permits an advocate and client to agree remuneration, but such agreement is binding only if in writing and signed by the client or agent. The letters of 8 and 23 November 2018 were written by the advocate and referenced other suits; the RTGS payments went to a third firm with no evidence they reached the respondent. The court thus found no proof of agreement covering the subject suit and upheld the taxing officer's finding.

p. 4
02

Whether a valuation report may be used where the value of the subject matter is not in the pleadings

Holding

Yes; in land cases remuneration is pegged on the value of the land whether or not disclosed in the pleadings, and a valuation report may be presented to establish it

Reasoning

Schedule 6 of the Advocates Remuneration Order prescribes fees where value can be determined from pleadings, judgment or settlement, but is silent where value is undisclosed. The court reasoned that land has value whether disclosed or not, and an advocate should not be disadvantaged by non-disclosure. Rule 13 empowers the taxing officer to receive evidence. The court thereby disagreed with S.G Mbaabu and followed its own earlier dictum in Masore Nyangau.

p. 6
03

Whether the taxing officer erred in using the forced sale value and in taxing instruction fees at 75%

Holding

Both were errors: taxation should have been on actual value, and at 100% of instruction fees since the suit was not determined summarily

Reasoning

No reason was given for using the forced sale value; the correct basis is the actual value of the property absent special circumstances. The 75% discount appears drawn from the summary-determination provision of paragraph 1(b), which was inapplicable because the suit was still pending and had not gone to full trial. Instruction fees were earned in full on filing of the pleadings.

p. 6
04

What value of land should form the basis of taxation where the client held only part of the parcel

Holding

Taxation should be based on the value of the subdivision retained by the applicant (4.787 Ha), not the whole of Plot No. 1000/III/MN, requiring fresh valuation or agreement

Reasoning

The applicant had lost 5 ¾ acres by decree in Mombasa ELC No. 160 of 2014, and Plot No. 1000/III/MN had been subdivided. The advocate was engaged to protect only the applicant's remaining interest of 4.787 Ha. Since the court lacked the value of that subdivision, it remitted the bill for taxation on that basis rather than taxing it itself.

p. 7

Legal principles established

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  • An advocate-client agreement on remuneration is valid and binding only if in writing and signed by the client or duly authorised agent
  • Where the value of the subject matter is not disclosed in the pleadings, a taxing officer may rely on evidence such as a valuation report to determine value for taxation, especially in land cases
  • In land cases, taxation of instruction fees should be based on the actual value of the land, not the forced sale value
  • Instruction fees are earned in full upon filing of pleadings unless the suit is determined summarily; it was erroneous to tax at 75%

Court orders

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  1. 1.The bill of costs is remitted back to the taxing officer for taxation based on the value of the subdivision that remained to the applicant after the decree in Mombasa ELC No. 160 of 2014
  2. 2.The applicant, having failed, will shoulder the costs of this reference

Authorities

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Legislation

  • Advocates Act, CAP 16Section 45(1), 45(6)
  • Advocates Act, CAP 16Section 46
  • Advocates (Remuneration) OrderRule 11(2)
  • Advocates (Remuneration) OrderRule 13A (Powers of taxing officer)
  • Advocates (Remuneration) OrderSchedule 6, Part A, paragraph 1(b)
  • Civil Procedure RulesOrder IX A

Cases cited (6)

  • D Njogu & Company Advocates vs National Bank of Kenya Limited
    Civil Appeal No. 165 of 2007 (2016) eKLR
  • S.G Mbaabu & Co Advocates vs Joseph Muoki Kakenyi & 2 Others
    (2018) eKLR
  • Masore Nyangau & Company Advocates vs Kensalt Limited
    ELC Nakuru, Miscellaneous Application No. 196 of 2015 (2019) eKLR
  • Mbeyu Mwandaza Mwangoni & 2 Others vs Shiva Carriers Limited and 6 Others
    Mombasa ELC No. 4 of 2017
  • Javan Lewa Muye vs Shiva Enterprises & 3 Others
    Mombasa ELC No. 160 of 2014 (formerly Mombasa HCCC No. 242 of 1995)
  • Johnstone Humphrey Lwembe vs Shiva Enterprises Limited
    Mombasa High Court Civil Suit No. 101 of 2008
Jurisdiction invoked
Rule 11(2) of the Advocates (Remuneration) Order

Key timeline

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Practical implications

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Frequently asked questions

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Later judgments citing this (8)

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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, "Shiva Enterprises v Mwangi Njenga & Company Advocates [2020] KEELC 1100 (KLR)", Case Analysis (2020). Taxation of Advocate/Client Bill of Costs – Reference under Rule 11(2) of the Advocates (Remuneration) Order (Mombasa ELC). Source: https://new.kenyalaw.org/akn/ke/judgment/keelc/2020/1100/eng@2020-09-23

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