John Bosco Wahinya & 1 other v Michael Maitha

4. The ruling was in respect of taxation of costs in Msambweni Magistrates' Court ELC Suit No. E010 of 2022 is annexed to the supporting affidavit. 5. The reference is opposed. The respondent filed a replying affidavit sworn on 31st October 2024. He deposes that the reference is premature and contrary to Rule 11 of the Advocates Act (sic) and incompetent and should be struck out with costs. 6. He deposes further that this court lacks jurisdiction to interfere with the assessment of costs by the learned magistrate on a Party and Party Bill of Costs as the case herein. 7. That the taxing officer properly exercised her discretion and taxed the Party and Party Bill of Costs fairly and justly and the same should not be taxed afresh by this court or remitted for fresh taxation by a different taxing officer. 8. The reference was disposed of by way of written submissions filed by learned counsels. 9. I have considered the reference filed herein by way of the chamber summons, the supporting affidavit, the decision of the learned magistrate and the submissions by parties. The issue for determination is whether or not the decision of the learned magistrate is for disturbing as prayed by the applicant. 10. I first deal with a preliminary issue raised by the respondent. Learned counsel for the respondent submits that there is no legal provision that grants this court jurisdiction to interfere with the decision of the magistrate in assessment of the Party & Party Bill of Costs and on that ground alone the applicant's chamber summons dated 25th October 2024 should be dismissed with costs. 11. On his part, learned counsel for the applicant submits that Rule 11 of the Advocates Remuneration Order cloths this Court with the jurisdiction to hear objections from the decision of the Taxing Officer. 12. In some instances the High Court has held that the subordinate courts should not involve themselves in the taxation of detailed bills of costs which largely contain items that are not allowed under schedule VII of the Advocates Remuneration Order. In the case of Angelo Gitonga v Angelo Gitonga & another [2010] KEHC 1983 (KLR) the High Court found as much . However, court proceeded to consider the reference under article 65(2) of the repealed constitution and also indicated that in an earlier case, it had proceeded under the inherent power of the court. Article 65(2) of the old constitution is now better expressed in Article 165(6) and (7) of the constitution on the supervisory power of the High Court over subordinate courts. 13. In the case of Supply Linkages v Hudson Mangeni [2020] KEHC 6226 (KLR), one of the issues for the High Court's determination was whether the learned trial magistrate had jurisdiction to tax the respondent's bill of costs. In answer to the issue, the High Court was even more explicit. It found that the terms "assessment of costs" as applied to the magistrates' courts and "taxation of bill of costs" as applied to the High Court mean one and the same thing and is simply a question of semantics and practice in our courts at different levels. 14. I am persuaded to follow these decisions and find that the reference to this court is proper. I only wish to add that in assessing costs before the magistrates' costs, the learned magistrates should be strictly guided by the provisions of Schedule VII in the ARO and not be carried away to bring in provisions of Schedule VI where certain items are not provided for assessment. 15. Learned counsel for the respondent submits that this court should find that the Chamber Summons dated 25th October 2024 offends Rule 11 paragraphs 1 and 2 of the Advocates Remuneration Order which deals with objection to decision on taxation and appeal to the Court of Appeal. The said Rule provides that: https://new.kenyalaw.org/akn/ke/judgment/kehc/2025/19679/eng@2025-10-28 2

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1. Should any party object to the decision of the taxing officer, he may within fourteen days after the decision give notice in writing to the taxing officer of the items of taxation to which he objects. 2. The taxing officer shall forthwith record and forward to the objector the reasons for his decision on those items and the objector may within fourteen days from the receipt of the reasons apply to a judge by chamber summons, which shall be served on all the parties concerned, setting out the grounds of his objection." 16. Learned counsel for the respondent submits that the applicant has not given any notice to the taxing officer indicating items the applicant objects relating to the Bill of Costs dated 10th July 2024 as required by the said Rules. 17. It is apparent from a reading of the two rules together that an objecting party is required to give a written notice to the taxing officer for purposes of the taxing officer to give reasons for her decision to the objector. 18. There are varied opinions of the High Court on the necessity of giving such notice to the taxing officer requiring reasons to be furnished by the taxing officer. Some say it is mandatory while others say where reasons are contained in the ruling it is not necessary. (see generally the discussion in the case of Crescent Construction company Limited v Kenya Ports Authority & another [2014] KEHC 5255 (KLR). I am persuaded to follow the line of decisions that says that where the decision of the taxing officer is elaborate on each item, then there need not be issued a notice to offer any other reasons because there will simply be no more for the taxing officer to offer. 19. In the taxation ruling dated 11th October 2024, the taxing officer was quite elaborate, giving reasons at every paragraph of the items she was considering. In that case, there were no further reasons for her to give for her decision and so the applicant needed not to seek for the same from her by way of a notice. 20. On the principles governing references on taxation to this court, learned counsel for the applicant cites the Court of Appeal decision in the case of Kipkorir,Titoo & Kiara Advocates v Deposit Protection Fund Board [2005] KECA 325 (KLR), where it held inter alia: “ On a reference to a judge from the taxation by the Taxing Officer, the judge will not normally interfere with the exercise of discretion by the taxing officer unless the taxing officer, erred in principle in assessing the costs. 21. Further, the Court in the case of Republic v Competition Authority ex-parte Ukwala Supermarket Limited & another [2017] KEHC 1874 (KLR) Justice G.V. Odunga gave circumstances under which the Judge can interfere with the Taxing Officers decision and stated: “ .the court cannot interfere with the taxing officers decision on the taxation unless it is shown that either the decision was based on an error of principle, or the fee warded was manifestly excessive so as to justify an inference that it was based on an error in principle to take into account irrelevant factors or omit to consider relevant factors and, according to the order itself , some of the relevant actors to be taken into account include the nature and importance of the cause or matter, the amount 2 or value of the subject matter involved, the interest of the parties , the general conduct of the proceedings and any direction of the trial judge. (3) if the court considers that the decision of the taxing officer discloses errors of principle, the normal practice is to remit it back to the taxing officer for reassessment ." https://new.kenyalaw.org/akn/ke/judgment/kehc/2025/19679/eng@2025-10-28 3

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22. Learned counsel for the respondent, submitting on the same issue has cited the case of Vincent Kibiwott Rono v Abraham Kiprotich Chebet & another [2022] KEHC 1243 (KLR) where the Court also referred to the case of First American Bank of Kenya vs Shah and Others [2002] E.A 64 at 69 by Ringera J. (as he then was) stated as follows: “ First, I find that on the authorities, this court cannot interfere with the taxing officer''s decision on taxation unless it is shown that either the decision was based on an error of principle, or the fee awarded was so manifestly excessive as to justify an inference that it was based on an error of principle". 23. In considering this application, this court is required to determine whether the learned magistrate made an error of principle in assessing the costs payable by the applicant. 24. Learned counsel for the applicant submits that the learned magistrate in assessing and awarding the disputed items failed to consider the provisions of the Advocates Remuneration Order which is the Order that provides for how the items should be taxed. 25. The respondent on his part submits that the grounds raised by the applicant lack any merit as the ruling issued by the Lower Court on the 11th October 2024 clearly gave the reasons of the Court''s decision on every item that was taxed. 26. Learned counsel for the respondent urged this court to note that there is no error of principle by the Lower Court and the costs awarded are not manifestly excessive. Further, that the Bill of Costs dated 10th July 2024 was properly taxed and the taxing officer properly exercised her discretion and there is no need for this court to interfere with the said discretion for the said bill of costs to be considered again afresh by this court or by another taxing officer. 27. The respondent therefore submits that the said Chamber Summons dated 25th October 2024 lacks merits and should be dismissed with costs. 28. In urging the reference, the applicant has taken out items 3 and 37 of the Bill of Costs and submits that these were properly assessed. That leaves items 4, 6, 13, 17, 22, 25, 29, 38, 40, 47, 55 and 57 as the disputed items. 29. The applicant submits that item Nos. 4 and 40 were assessed at KShs. 3,000/= each whereas what was pleaded was KShs. 2,500/= and KShs. 1,500/= respectively and the court did not explain the reasons for the enhancement. Learned counsel submits that the said items as pleaded were for costs for 9 folios and 3 folios respectively and KShs. 1, 400/- and KShs. 1, 200/- respectively should have been taxed off the bill. 30. I have looked at the Bill of Costs dated 10th July 2024 as drawn and it is true that the respondent pleaded for a sum of KShs 2,500/= and KShs 1,500/= on items 4 and 40 respectively while the taxing officer in her ruling awarded KShs 3,000/= on each without explanation. However, it would appear that the enhancement of those awards was because of an inadvertent understatement in the respondents Bill of Costs. I believe the same was then corrected by the taxing officer by awarding KShs 3,000/= for each of the two items because the Rule provides for a sum of KShs 3,000/=. I therefore find that, the enhancement by KShs 500/= and KShs 1,500/=for items 4 and 9 respectively was not erroneous. The further argument by the applicant that KShs. 1, 400/- and KShs. 1, 200/- respectively should have been taxed off due to the number of folios involved is not correct because the assessment was for preparing the documents, specifically, replying affidavits and not perusing which would have attracted KShs 100 per folio as per the submission of the applicant. This court will therefore not upset https://new.kenyalaw.org/akn/ke/judgment/kehc/2025/19679/eng@2025-10-28 4

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the assessment to the extend that it varied to KShs 3,000/= from KShs 2,500/= and KShs 1,500/= respectively for items 4 and 40. 31. In this reference, the applicant submits that under item 13, there are 3 folios therefore KShs. 2,300/ought to have been taxed off. However, before the magistrate's court, the applicant submitted that under item 13, there were 3 folios therefore KShs. 2,700/= should be taxed off. It is apparent that even the applicant is not sure of what the correct amount to be taxed off should have been. Looking at the Bill of costs, again this item as in the preceding paragraph was for preparing the documents and not perusal. 32. Learned counsel for the applicant submits further that under items 17, 25, 38, and 47, the Taxing Officer erred in allowing the items as drawn and failed to consider the folios on each item and assess the same as per the Advocates Remuneration Order of KShs.100/- per folio. Here, the same reasoning as has been applied in the preceding paragraph for item 13 applies. 33. Once again, looking at the Bill of costs, these items as in the preceding paragraphs were for preparing the documents and not perusing. 34. Learned counsel submits further that item 22 was erroneously awarded since the court was not sitting on 6th April 2023 and should have been taxed off. This was for the taxing officer to determine and therefore at her discretion. The court may not have been sitting but if the parties attended perhaps because there was no notice to that effect the learned magistrate found it appropriate to award the costs for attendance for the day. This court will not interfere with that assessment. 35. Learned counsel for the applicant submits further that item 29 was erroneously awarded since the hearing date was fixed by the court and KShs. 3,000/= should have been taxed off. However, this submission is contrary to the submission before the learned magistrate on assessment that the date was fixed by consent of the parties in open court. That being the case, it follows that the parties indeed attended court for fixing of the hearing date and so the sum was properly awarded by the learned magistrate. Taxation of costs not being a mathematical exercise, this court will leave the amount as assessed at the discretion of the learned magistrate. 36. Learned counsel submits further that under item No.55, there are 4 folios therefore KShs. 2,600/= should be taxed off. Once again, looking at the Bill of costs, this item as in the preceding paragraphs was for preparing the documents and not perusing. 37. Finally, learned counsel for the applicant submits that under item No.57, VAT is not applicable to party and party costs, and the learned magistrate erred under the Value Added Tax Act (VAT), 2013 particularly Section 5 wherein Value Added Tax (VAT) is chargeable in taxable supply made by any registered person. That there was no taxable supply of either goods or services made to the applicant herein by the respondent as the bill of costs pertains to costs between parties in the suit. Learned counsel has cited section 6(1) of the VAT Act (Cap. 476) Laws of Kenya, 2015 edition which provides that: “ Tax shall be charged on any supply of goods or services made or provided in Kenya where it is a taxable supply made by a taxable person in the course of or in furtherance of any business carried on by him." 38. I have tried to look up for this provision under the current enacted Act of 2013 Act but I am unable to find it in the wording as cited above. The section as cited above is found in the repealed Value Added Tax (Cap. 476) Laws of Kenya, 2012 edition. 39. The current Act in section 5 provides that: https://new.kenyalaw.org/akn/ke/judgment/kehc/2025/19679/eng@2025-10-28 5

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(1) 40. A tax, to be known as value added tax, shall be charged in accordance with the provisions of this Act ona. a taxable supply made by a registered person in Kenya; b. . Section 2 of the Act on interpretation provides for definitions of various terms as follows: "supply" means a supply of goods or services; and “ supply of services" means anything done that is not a supply of goods or money, includinga. the performance of services for another person; b. the grant, assignment, or surrender of any right; c. the making available of any facility or advantage; or d. the toleration of any situation or the refraining from the doing of any act; “ registered person" means any person registered under section 34, but does not include an export processing zone enterprise or a special economic zone; 41. Section 34(1) of the Act in relation to registered person provides that: (1) 42. A person who in the course of a businessa. has made taxable supplies or expects to make taxable supplies, the value of which is five million shillings or more in any period of twelve months; or b. is about to commence making taxable supplies the value of which is reasonably expected to exceed five million shillings in any period of twelve months, The applicant submits that this being a Party and Party Bill of Costs, there were no taxable services rendered by the applicants to the respondent to warrant the same to be subjected to VAT charge. She relies on the authority of Pyramid Motors Limited v Langata Gardens Limited [2015] KEHC 5224 (KLR) where J.L. Onguto stated: “ On the final issue of VAT, I hold the simple view that in allowing the same the Master erred under the Value Added Tax Act, 2013 particularly section 5 thereof. Value Added Tax (VAT) is chargeable in taxable supply made by any registered person. There was no taxable supply of either goods or services made to the Applicant herein by the Respondent herein. The Bills herein concerned Party and Party costs and VAT could then not apply as neither party fetched nor supplied services to the other. True, legal services were rendered but it is not the Advocate who was being compensated herein. The Master could only have awarded VAT if the Bills were Advocate- Client Bills or if there was tendered evidence before the Master that the Plaintiff had paid VAT and was consequently entitled to indemnity. But yet that again is also debatable whether the Plaintiff was a vatable person. I would vacate the award on VAT as the Master erred. In the result, I would not return the Bills to the master for re-assessment but would direct that the item of VAT be completely and wholly taxed off" 43. On the issue of VAT charge not being payable on a Party and Party Bill of costs, the learned magistrate relied on the case of Aoro v Were [2022] KEHC 14628 (KLR) for her finding that VAT was payable. https://new.kenyalaw.org/akn/ke/judgment/kehc/2025/19679/eng@2025-10-28 6

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The learned magistrate was properly guided by the authorities as cited in her decision. If the same is conflicting with what the applicant herein submits is the position, then the taxing officer was entitled to take one view rather than the other. In that case, she did not err in principle and so her assessment on the VAT item stands. I am aware that at the High Court level, opinions are varied as to whether VAT is payable on a Party and Party Bill of costs (see the discussion in the case of Kenya Commercial Bank Limited v Stagecoach Management Limited [2017] KEHC 7336 (KLR) by F. Tuiyot, J. (as he then was)). 44. It has been opined in other decisions that VAT would only be chargeable on party and party bill of costs where there is evidence that the party paid such VAT to the advocate representing them and was seeking a reimbursement. Some courts have gone further to state that the advocate should produce evidence in the form of a VAT certificate to show that they are registered for VAT and charged the client for the same. My view of the matter is that VAT is payable in the Bill of Costs for instruction fees and disbursements because it is chargeable. Fees charged by an advocate for his professional services is subject to VAT. Therefore, the VAT charged is tax due to the government. Where the advocate decides not to charge the same, he is in breach of the law under sections 5(3) and (4) of the VAT Act as read with section 39A of the Tax Procedures Act (Cap. 469B) Laws of Kenya and will be subject to penalties as applicable. When the taxman comes calling, he will have to render an account of the professional fees charged and the VAT payable thereon. Otherwise, in the end, it is the government and eventually the taxpayer who loses if tax is not collected as provided for by the law. 45. It will however not be appropriate for this court to impose its own opinion on the learned magistrate on an issue with varied interpretations. What is required at this point is this court to determine whether the learned magistrate exercised her discretion in the assessment of the costs correctly and on laid down principles which I find that she did by being guided by authorities. 46. In the final analysis I agree with the learned counsel for the respondent that the costs assessed by the learned magistrate in the ruling dated 11th October 2024 are not manifestly excessive as to justify this court to interfere with the said assessment which was fair and based on sound legal principles and that there was no error of law or fact in the said assessment. 47. It is therefore my finding and holding that there is no merit in the applicant's reference, vide the Chamber Summons, dated 25th October 2024. The same is hereby dismissed, with the result that the trial court's order of 11th October 2024, assessing costs at KShs. 196,147.00, is hereby affirmed. 48. Costs of this reference shall be to the respondent. DELIVERED, DATED AND SIGNED AT KWALE ON THE VIRTUAL PLATFORM, TEAMS THIS 28TH DAY OF OCTOBER 2025. ANDAYI W. F. JUDGE In the presence of: N/A for the Applicant. N/A for the Respondent. Ummu (Ms): Court Assistant. DATE: 2025-10-30 16:35:01 https://new.kenyalaw.org/akn/ke/judgment/kehc/2025/19679/eng@2025-10-28 7

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