Bhavasar Anadkumar t/a Sarax Enterprises v Beloilco Holdings Limited & 3 others
The bottom line
#A Kenyan court confirmed large instruction fee awards stand unless clearly wrong, but VAT cannot be charged on party-and-party legal costs.
What this practically means
#Executive summary
#Key legal issues
#Increase of instruction fees from Kshs 100,000 to Kshs 3,000,000
The increase was a proper exercise of the taxing master's judicial discretion given the nature and complexity of the defended constitutional petition; no sufficient reason to interfere.
The taxing master expressly indicated the basic fee for a defended constitutional petition was Kshs 100,000 but increased it due to the nature and complexity of the matter, taxing off Kshs 5,000,000. Applying Joreth Ltd v Kigano & Associates and First American Bank v Shah, discretion may only be interfered with where exercised capriciously, in abuse of correct principles, or where fees are excessive to the point of error in principle. None was established here.
Award of 16% VAT on a party and party bill of costs
The taxing master erred; VAT is not applicable on party and party costs absent evidence that the party paid VAT and was entitled to indemnity. The VAT award was set aside.
Following Pyramid Motors v Langata Gardens and Eddie J Amadi v Titus O Koceyo, VAT does not apply to party and party bills because neither party supplies services to the other; costs are a reimbursement. VAT is awardable only on advocate-client bills or where tendered evidence shows the party paid VAT and is entitled to indemnity. The record contained no such evidence, so the award was an error of principle.
Whether the court should re-tax or remit the bill
The bill was remitted to the taxing master to correct the VAT anomaly, following the general practice in Steel Construction & Petroleum Engineering (EA) Ltd v Uganda Sugar Factory Ltd.
Relying on Spry JA in Steel Construction, where a fee must be re-assessed on different principles the proper course is generally to remit to the same or another taxing officer, the judge exercising jurisdictional discretion. Since only the VAT item was impugned and set aside, remittal for correction was the appropriate course rather than the court re-taxing the bill itself.
Legal principles established
#- A court will not interfere with a taxing officer's decision unless it is based on an error of principle or the fee awarded is so manifestly excessive as to indicate an error of principle
- VAT is not applicable on a party and party bill of costs since no services are rendered by one party to the other
Court orders
#- 1.The award of 16% VAT by the taxing master is set aside
- 2.The bill of costs is remitted to the taxing master to correct the anomaly on the inclusion of 16% VAT
- 3.The costs of the reference to be borne by the respondent
- Jurisdiction invoked
- Advocates Remuneration Order rule 11(2) and (4), Advocates Act, and article 159 of the Constitution of Kenya; inherent powers of the court
Key timeline
#Practical implications
#Frequently asked questions
#Later judgments citing this (1)
#Judgments in the corpus that rely on this one. Where the Court said how it treated the authority, that is shown.
- Mawando Limited v Thousand Palms Beach Hotel Limited & 2 others [2019] KEELC 2420 (KLR)[2019] KEELC 2420 (KLR)8 Jul 2019
Cite this brief
#Cite this brief
Caselaw, "Bhavasar Anadkumar t/a Sarax Enterprises v Beloilco Holdings Limited & 3 others", Case Analysis (2022). Petition 23 of 2017. Source: https://new.kenyalaw.org/akn/ke/judgment/keelc/2022/12656/eng@2022-09-27
Suggested citation format for research notes or client memos. Always verify the original judgment before relying on any point.