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ELCDismissedChamber Summons Application dated 31st July 2024 (ELC)· [2024] KEELC 6615 (KLR)

Paragon Electronics Limited & another v I&M Bank Ltd (aka Investment and Mortgage Bank); Velos Enterprises Limited & 2 others (Interested Parties) (Environment & Land Case E315 of 2022) [2024] KEELC 6615 (KLR)

Environment and Land Court
9 October 2024
5,910 words in judgment
View original judgmentRead on Kenya Law Watch case
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The bottom line

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Kenya's Environment and Land Court dismissed a challenge to taxed legal costs because the objectors never filed the required notice of objection to taxation first.

What this practically means

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Executive summary

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The Plaintiffs/Applicants filed a Chamber Summons (Reference) dated 31st July 2024 under Section 13 of the Environment and Land Court Act and Paragraph 11(2) of the Advocates Remuneration Order, seeking review and setting aside of the ruling of Taxing Master Hon. Omollo, Deputy Registrar, delivered on 24th July 2024 on the 1st Interested Party's Bill of Costs dated 14th May 2024, together with re-assessment or remittal to another taxing officer and a stay of execution. They contended that the taxing officer erred in principle by awarding instruction fees although the 1st Interested Party never filed a statement of defence, by awarding items beyond the prescribed scale fees, and by ignoring the peripheral status of an interested party. The 1st Interested Party opposed, submitting that instructions fees accrue upon receipt of instructions and that no error of principle was demonstrated. The court framed two issues: competency of the reference and error of principle. It held that a notice of objection to taxation under Rule 11(1) is a jurisdictional prerequisite to a reference; none was filed or exhibited, so the reference was incompetent, following Machira & Co. Advocates v Arthur K. Magugu. On the merits, applying Joreth Ltd v Kigano & Associates and Softa Bottling, the court held that instruction fees accrue the moment instructions are received and acted upon, including by filing a striking-out application, and that quantum falls within the taxing officer's discretion absent demonstrated error of principle. The reference was dismissed with costs of Kes. 25,000/= awarded to the 1st Interested Party.

Key legal issues

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01

Competency of a reference filed without a notice of objection to taxation

Holding

The reference was incompetent and invalid because no notice of objection to taxation was ever filed following the impugned ruling of 24th July 2024.

Reasoning

Rule 11(1) of the Advocates Remuneration Order requires an aggrieved party to file, within 14 days, a notice of objection itemising the impugned items. The court searched the CTS/online platform and the application but found no such notice. Relying on Machira & Co. Advocates v Arthur K. Magugu, a reference founded on no notice of objection is vitiated and incompetent; the notice is synonymous with a notice of appeal and cannot be dispensed with.

p. 7
02

Entitlement to instruction fees absent a statement of defence

Holding

The 1st interested party was entitled to instruction fees although no defence was filed, since instructions were received and acted upon by filing a striking-out application.

Reasoning

The court reaffirmed Joreth Ltd v Kigano & Associates that instruction fees are an independent, static item charged once and unaffected by the stage the suit has reached. Filing an application to strike out the suit, or raising a preliminary objection, constitutes acting on instructions. The view in First American Bank of Kenya v Shah that a defence is a condition precedent was not treated as inflexible.

p. 8
03

Whether the taxing officer committed an error of principle on quantum

Holding

No error of principle was demonstrated; a judge interferes with a taxing officer's discretion only where erroneous factors were taken into account, relevant factors ignored, or the award is manifestly excessive or low.

Reasoning

Guided by Kipkorir, Titoo & Kiara Advocates v Deposit Protection Fund Board and First American Bank of Kenya v Shah, quantum is a matter within the technical competence of the taxing officer. That another officer might have awarded a different figure does not demonstrate injudicious exercise of discretion; interference requires a misdirection or manifest excess amounting to an error of principle.

p. 11

Legal principles established

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  • Filing and service of a notice of objection to taxation, itemising the impugned items, is a jurisdictional prerequisite to a reference against a certificate of taxation; a reference mounted without it is incompetent.
  • Instruction fees are an independent item accruing the moment instructions are received and acted upon, whether or not a statement of defence is filed.

Court orders

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  1. 1.The Chamber Summons application [Reference] dated the 31st July 2024 be and is hereby dismissed.
  2. 2.Costs of the Reference be and are hereby awarded to the 1st interested Party.
  3. 3.Costs in terms of clause (ii) hereof be and are hereby assessed and certified in the sum of Kes. 25,000/= only.

Authorities

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Legislation

  • Environment and Land Court ActSection 13
  • Civil Procedure Act, CAP 21Sections 1A, 1B and 3A
  • Advocates Remuneration OrderParagraph 11(1), 11(2), 11(3), 11(4); Schedule VI; proviso (1) of Schedule VIA(1)
  • Arbitration ActSection 6

Cases cited (17)

  • First American Bank of Kenya v Shah & Another
    [2002] 1 EA 64
  • Tononoka Steels Ltd v Eastern & Southern African Trade & Development Bank [PTA Bank]
    MLHCC No. 267 of 1998
  • D Njogu & Co Advocates v Pan Africon Engineering Ltd
    [2006] eKLR
  • William Odhiambo Ramogi & 3 Others v Attorney General & 4 Others; Muslims for Human Rights & 2 Others (Interested Parties)
    [2020] eKLR
  • Masore Nyang'au & Co Advocates and Others v Supplies & Services Ltd
    [2018] eKLR
  • Machira & Co. Advocates v Arthur K. Magugu & another
    [2012] eKLR
  • Murgor & Murgor Advocates v Kenya Airports Authority
    (Miscellaneous Application 36 of 2020) [2023] KEELC 1848 (KLR) (22 May 2023) (Ruling)
  • Kipkorir, Titoo & Kiara Advocates v Deposit Protection Fund Board
    [2005] eKLR
  • Arthur v Nyeri Electricity Undertaking
    [1961] EA 497
  • Devshi Dhanji v Kanji Naran Patel (No. 2)
    [1978] KLR 243
  • Joreth Ltd v Kigano & Associates
    [2002] eKLR
  • Softa Bottling Company Ltd & Others v Nairobi City Council
    Civil Case 263 of 2005 [2006] eKLR
  • Mayers & Another v Hamilton & Others
    [1975] EA 13
  • Republic v Minister for Agriculture & 2 Others
    [2006] KLR
  • Peter Muthoka v Ochieng & 3 Others
    [2019] eKLR
  • Attorney General of Kenya v Peter Anyang Nyong'o & 9 Others
    Taxation Reference No. 5 of 2010
  • Mbogo v Shah
Jurisdiction invoked
Section 13 of the Environment and Land Court Act, 2015; Sections 1A, 1B and 3A of the Civil Procedure Act, CAP 21; Paragraph 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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Cite this brief

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Cite this brief

Caselaw, "Paragon Electronics Limited & another v I&M Bank Ltd (aka Investment and Mortgage Bank); Velos Enterprises Limited & 2 others (Interested Parties) (Environment & Land Case E315 of 2022) [2024] KEELC 6615 (KLR)", Case Analysis (2024). Chamber Summons Application dated 31st July 2024 (ELC). Source: https://new.kenyalaw.org/akn/ke/judgment/keelc/2024/6615/eng@2024-10-09

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