Wetangula, Adan & Company Advocates v Bharat Ramji and Gami Properties Limited [2021] KEELC 1581 (KLR)
The bottom line
#The High Court dismissed a client's challenge to a Ksh 10.5 million legal fee bill, confirming judges rarely disturb a taxing officer's costs decision unless an error of principle is shown.
What this practically means
#Executive summary
#Key legal issues
#Timeliness of the reference
The reference was filed within time because the 14-day period runs from receipt of the reasons for the taxation decision, which the Client received on 2nd March 2021 and filed the reference on 5th March 2021.
Paragraph 11 of the Advocates Remuneration Order requires an objector to notify the taxing officer within 14 days of the decision, and then allows a further 14 days from receipt of the reasons to apply to a judge in chambers. The Client objected on 9th December 2020 and filed the reference within 14 days of receiving the reasons. The authorities relied on by the Advocate did not establish a contrary position, so no extension of time was necessary.
Whether the Taxing Officer erred in principle
No error of principle was established; the taxation on instruction fees, the one-third reduction issue, item 18 and the other items were all properly dealt with.
Applying the First American Bank and Premchand Raichand principles, the court may interfere only on an error of principle or where the award is manifestly excessive or inadequate. The Taxing Master applied the correct schedule, gave reasons for disallowing item 18 (services forming part of scale fees), and properly declined the one-third reduction as the proviso applies only to a vendor's advocate who does not prepare the agreement. The quantum was a matter for the taxing officer.
Applicable VAT rate on legal fees
The 16% VAT rate was correctly applied because the services were rendered between January and March 2016 when VAT stood at 16%.
Under Section 19(1) of the Value Added Tax Act, tax is due and payable at the time of service, as confirmed in Ericsson Kenya Limited v Attorney General. Since services were rendered in early 2016, the 16% rate, not 14%, applied. The Taxing Master gave clear reasons for this, and the Client's submission was misplaced.
Legal principles established
#- A reference under Paragraph 11 of the Advocates Remuneration Order must be filed within 14 days from receipt of the taxing officer's reasons for the decision, not from the date of the ruling itself.
- A judge will not interfere with a taxing officer's assessment of costs unless an error of principle is shown or the fee is manifestly excessive or so low as to amount to an injustice.
- VAT on legal fees falls due at the time the services are rendered, under Section 19(1) of the Value Added Tax Act.
Court orders
#- 1.The notice of preliminary objection dated 9th July 2021 is dismissed with costs.
- 2.The reference is declined and dismissed.
- 3.Each party shall meet their respective costs of the reference.
- Jurisdiction invoked
- Paragraph 11 of the Advocates Remuneration Order (reference to a judge in chambers against a taxing officer's decision)
Key timeline
#Practical implications
#Frequently asked questions
#Cite this brief
#Cite this brief
Caselaw, "Wetangula, Adan & Company Advocates v Bharat Ramji and Gami Properties Limited [2021] KEELC 1581 (KLR)", Case Analysis (2021). Chamber Summons application dated 5th March 2021 (Reference against Taxation Ruling of 2nd December 2020). Source: https://new.kenyalaw.org/akn/ke/judgment/keelc/2021/1581/eng@2021-10-12
Suggested citation format for research notes or client memos. Always verify the original judgment before relying on any point.