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High CourtDismissedChamber Summons dated 1st August 2013 (arising from suit judgment dated 5th July 2012)· [2014] KEHC 5872 (KLR)

BIO MEDICAL LABORATORIES LTD v THE HON ATTORNEY GENERAL

High Court of Kenya
1 April 2014
JHJ. B. Havelock
3,431 words in judgment
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The bottom line

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Accrued interest on a judgment is compensatory, not part of the principal value used to calculate legal fees.

What this practically means

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Executive summary

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The Plaintiff, a decree holder in a suit in which judgment was entered on 5th July 2012 for Kshs. 8,225,000/- plus commercial interest at 28% per annum from 1st January 2002 until payment in full, brought a Chamber Summons under section 48 of the Advocates Act and Rule 11 of the Advocates (Remuneration) Order. It sought a declaration that the value of the subject matter for taxation of its party/party Bill of Costs should include the principal sum plus accrued interest (which it computed at over Shs. 142 million), a review or setting aside of the Taxing Officer's Ruling of 27th June 2013, re-taxation, and settlement of the terms of the Decree as regards computation of interest. The Taxing Officer had taken the judgment sum of Kshs. 8,225,000/- as the basis for instruction fees, holding that the interest award was compensatory for being kept out of the money, and enhanced instruction fees to Kshs. 400,000/- for complexity. The Defendant opposed, arguing no error of principle was established and that interest does not enhance the judgment amount for taxation. Havelock J held that the reference provisions were properly invoked but found no error of principle: no authority supported adding accumulated interest to the judgment sum for calculating party/party costs, and the Taxing Officer had acted fairly. The court also declined to settle the Decree, holding the application should have been brought under Order 21 of the Civil Procedure Rules and that no Deputy Registrar's ruling on the draft decree existed. The application was dismissed with costs to the Defendant.

Key legal issues

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01

Whether accrued interest forms part of the value of the subject matter for taxation

Holding

No - the value is the judgment sum of Kshs. 8,225,000/-; interest is compensatory for being kept out of money and does not enhance the judgment amount for instruction fees

Reasoning

The Taxing Officer was guided by the judgment figure under Schedule VI paragraph 1(b) of the 1997 Advocates Remuneration Order. The court found no authority supporting the plaintiff's proposition that accumulated interest be added, and held the interest award was compensatory for delay in payment, not part of the decretal value for costs.

p. 5
02

Whether the Taxing Officer erred in principle

Holding

No error of principle; the Taxing Officer acted fairly and even enhanced instruction fees to Kshs. 400,000/- for complexity

Reasoning

The court reviewed the Taxing Officer's Ruling, noted the discretion exercised under paragraph 16 and Schedule VI scale 1 to enhance fees for complexity, and found the assessment of party/party costs fair. The plaintiff failed to put authorities before the court supporting its position.

p. 5
03

Whether the court could settle the Decree as regards interest computation

Holding

No - the application was not brought under Order 21 of the Civil Procedure Rules and no Deputy Registrar's ruling on the draft decree existed

Reasoning

The court accepted the defendant's submission that the proper procedure for settling a decree is under Order 21, which the plaintiff did not invoke, and that the Deputy Registrar had not ruled on the draft decree, so no application on decree settlement was properly before the court.

p. 6

Legal principles established

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  • A court may only interfere with a Taxing Officer's decision where an error of principle has been demonstrated
  • Accrued interest awarded as compensation is not added to the judgment sum when ascertaining the value of the subject matter for instruction fees

Court orders

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  1. 1.The Plaintiff's Chamber Summons dated 1st August 2013 is dismissed
  2. 2.Costs of the application to the Defendant

Authorities

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Legislation

  • Advocates Actsection 48
  • Advocates (Remuneration) OrderRule 11; paragraph 16; Schedule VI paragraph 1 (scale 1 and 1(b))
  • Civil Procedure Actsections 1A(1),(2),(3), 1B, 3A and 26(1)
  • Civil Procedure Rules, 2010Order 21 rule 3

Cases cited (2)

  • Tate & Lyle Food Distribution v Greater London Council
    (1882) 1 WLR 149

    The appropriate interest rate is the rate at which the actual plaintiff could borrow money.

  • Arthur v Nyeri Electricity Undertaking
    (1961) EACA 492

    A court may fault a taxing officer only where he made an error of principle in taxation.

Jurisdiction invoked
Section 48 of the Advocates Act and Rule 11 of the Advocates (Remuneration) Order; sections 1A, 1B, 3A and 26(1) of the Civil Procedure Act

Key timeline

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Practical implications

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Frequently asked questions

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Later judgments citing this (1)

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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, "BIO MEDICAL LABORATORIES LTD v THE HON ATTORNEY GENERAL", Case Analysis (2014). Chamber Summons dated 1st August 2013 (arising from suit judgment dated 5th July 2012). Source:

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