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ELCPartially AllowedChamber Summons application dated 13/09/2021 (filed 15/10/2021)· [2022] KEELC 1194 (KLR)

S O Arama v Family Bank Limited [2022] KEELC 1194 (KLR)

Environment and Land Court
28 February 2022
2,632 words in judgment
View original judgmentRead on Kenya Law Watch case
AI-assisted case brief
·~11 min to read original · ~4 min brief

The bottom line

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Kenya's Environment and Land Court cut a lawyer's taxed costs by more than half, ruling that an unheard counterclaim cannot inflate instruction fees.

What this practically means

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Executive summary

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This is a ruling of the Environment and Land Court at Nakuru (Mwangi Njoroge J) on a reference by way of Chamber Summons dated 13/09/2021, in which the applicant, Hon. S.O. Arama, challenged the taxation by a taxing officer on 8/09/2021 of a party and party bill of costs in the sum of Ksh. 684,478.20. The applicant contended that the taxing master erred in principle by taking the value of the subject matter as Ksh. 9,831,745 from the defence and counterclaim, when the plaint had pleaded a credit facility of Ksh. 3,000,000 accruing to Ksh. 8,055,322, and that the instruction fee and getting up fee were excessive given that the suit was dismissed for want of prosecution without full trial. The respondent maintained that the taxed costs were modest and that no error of principle was demonstrated. The court applied Joreth Ltd v Kigano & Associates, Kipkorir, Titoo & Kiara Advocates v Deposit Protection Fund Board and First American Bank of Kenya v Shah. It held that a counterclaim is a separate suit and, having never been fixed for hearing, should not have anchored the taxation; the taxing master therefore erred in principle. The court re-taxed item 1 at Ksh. 75,000 enhanced by Ksh. 25,000 to Ksh. 100,000, struck off the getting up fee of Ksh. 138,878.30 entirely, and upheld items 3-99. The bill was re-taxed at a global sum of Ksh. 311,750/= with a certificate to issue, and there were no orders as to costs of the application.

Key legal issues

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01

Whether the taxing master erred in principle in valuing the subject matter from the defence and counterclaim

Holding

Yes. The counterclaim was never set down for hearing and the main suit was dismissed for want of prosecution, so the taxing master should have based the instruction fee on the plaint figure of Ksh. 8,055,322 rather than the counterclaim figure of Ksh. 9,831,745.

Reasoning

The court held that a counterclaim is in substance a separate suit. The record showed no directions were issued for the hearing of the defence and counterclaim, and the respondent never sought such directions. Since the suit was dismissed for want of prosecution before the counterclaim could be heard, the taxing officer's reliance on the counterclaim figure necessarily inflated the instruction fee, amounting to an error of principle justifying interference on the reference.

p. 3
02

Whether the instruction fee should have been taxed under Schedule 6 1(b) of the Advocates Remuneration Order 2014

Holding

Yes. As the suit was determined without going to full trial, being dismissed for want of prosecution, item 1 should have been taxed at 75% of the applicable fee, yielding Ksh. 75,000/=, which the court enhanced by Ksh. 25,000/= in recognition of the work done.

Reasoning

The court applied Schedule 6 1(b), which applies where a suit is determined in a summary manner without full trial. It acknowledged that although the suit never went to hearing, the respondent's advocates did substantial work including filing pleadings and seeking to have the matter set down. Balancing the statutory scheme against the importance of the matter and the labour involved, the court fixed the instruction fee at Ksh. 75,000 and raised it to Ksh. 100,000.

p. 3
03

Whether the getting up fee was properly awarded

Holding

No. The getting up fee is chargeable once a matter is confirmed for hearing; since no direction was ever made setting the suit down for hearing, the getting up fee of Ksh. 138,878.30 was struck off completely.

Reasoning

Paragraph 2 of Schedule 6A of the Advocates (Remuneration) Order 2014 makes the getting up fee one-third of the instruction fees and chargeable once the matter is confirmed for hearing. The court found that at no point did the court direct that the main suit be set down for hearing, so the conditions for charging a getting up fee were never met, and the taxing master therefore erred in principle in awarding it.

p. 3

Legal principles established

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  • A counterclaim is a separate suit distinct from the plaint, and where the counterclaim was never fixed for hearing, the taxing officer should not rely on the amount in it to assess instruction fees.
  • The value of the subject matter for taxation should be determined from the pleadings, judgment or settlement; where not ascertainable the taxing officer may exercise discretion.
  • A judge on a reference will not interfere with the taxing officer's decision unless it is shown the taxing officer erred in principle or the fee was so manifestly excessive as to justify an inference of error of principle.

Court orders

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  1. 1.The reasons sought in the applicant's letter dated 15/09/2021 deemed to be contained in the ruling delivered on 8/09/2021 and the application deemed properly filed
  2. 2.The decision of the taxing officer delivered on 8/09/2021 set aside as far as it relates to the taxation of the party and party bill of costs dated 28/09/2019, the quantum awarded and the reasoning
  3. 3.Item 1 (instruction fee) re-taxed at Ksh. 100,000/= (Ksh. 75,000 plus an enhancement of Ksh. 25,000), substituted for the sum previously awarded
  4. 4.The getting up fee of Ksh. 138,878.30 struck off completely
  5. 5.Items 3-99 upheld as taxed by the taxing master
  6. 6.Total taxed amount fixed at Ksh. 311,750/= and a certificate to issue for that sum
  7. 7.No orders as to costs of the application

Authorities

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Legislation

  • Advocates (Remuneration) Order 2014Schedule 6 Order 1(b)
  • Advocates (Remuneration) Order 2014Schedule 6 Order 2
  • Advocates (Remuneration) Order 2014Schedule 6A
  • Advocates (Remuneration) Order 2014Paragraph 2 of Schedule 6A
  • Civil Procedure RulesOrder IX A

Cases cited (7)

  • Republic Vs Ministry of Agriculture & 20 Others Ex Parte Muchiri W'Njuguna
    2006 eKLR
  • Nyangito & Co Advocates Vs Donyo Lessos Creameries Ltd
    2014 eKLR
  • Joreth Ltd Vs Kigano & Associates
    2002 eKLR; NRB CA Civil Appeal No. 66 of 1999
  • KANU National Elections Board & 2 others vs Salah Yakub Farah
    2018 eKLR
  • Premchand Raichand Ltd Vs Quarry Services of East Africa Ltd (No 3)
    1972 EA 162
  • Kipkorir, Titoo & Kiara Advocates v Deposit Protection Fund Board
    NRB CA Civil Appeal No. 220 of 2004 [2005] eKLR
  • First American Bank of Kenya vs Shah and Others
    [2002] 1 E.A. 64 at 69
Jurisdiction invoked
Reference against a taxing officer's decision under the Advocates (Remuneration) Order 2014

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, "S O Arama v Family Bank Limited [2022] KEELC 1194 (KLR)", Case Analysis (2022). Chamber Summons application dated 13/09/2021 (filed 15/10/2021). Source: https://new.kenyalaw.org/akn/ke/judgment/keelc/2022/1194/eng@2022-02-28

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