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Court of AppealAllowedCivil Appeal No. 328 of 2017

Peter Muthoka & another v Ochieng & 3 others [2019] KECA 597 (KLR)

Court of Appeal of Kenya
21 June 2019
ASAsike-MakhandiaPKP. O. KiageOOOtieno Odek
4,031 words in judgment
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The bottom line

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When a Kenyan lawsuit is settled, advocates' fees must be calculated from the settlement terms, not the original pleadings, the Court of Appeal has ruled.

What this practically means

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Executive summary

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The Court of Appeal (Asike-Makhandia, Kiage and Odek, JJ.A.) allowed the clients' appeal against the High Court's dismissal of their Chamber Summons seeking to set aside the Deputy Registrar's taxation of an advocate-client bill of costs. The suit in which the advocates had acted was compromised by a Deed of Settlement recorded before Musinga J, yet the taxing master used the pleadings, claiming Kshs.1,563,000,000 as the subject matter value, to arrive at instruction fees. The single issue was whether the basis for determining subject matter value for instruction fees was the pleadings or the Settlement Deed. Holding that paragraph 1(b) of Part A of Schedule VI to the Advocates Remuneration Order is expressly disjunctive and mandatory, the Court ruled that the basis depends on the stage of taxation: pleadings before judgment, judgment after judgment, and the terms of settlement where the suit is settled. The taxing master therefore committed an error of principle in departing from the settlement, and the learned Judge erred in doubting whether the taxing master knew of the Deed, when the bill itself and her ruling showed it had been brought to her attention. Relying on Joreth Ltd v Kigano and Kipkorir Titoo & Kiara Advocates, and on the principle from Mbogo v Shah that discretionary decisions may be interfered with on misdirection or error of principle, the Court set aside the High Court ruling of 31st May, 2017, allowed the Chamber Summons with costs, and remitted the amended bill for taxation before a taxing master other than Sandra Ogot, Deputy Registrar, with the costs of the appeal to the appellants.

Questions the Court framed

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The issues the Court set itself to decide, in its own words.

  1. 1.Whether the applicable basis for determining the subject matter value in arriving at instruction fees was the pleadings or the Settlement Deed
  2. 2.Whether the taxing master committed an error of principle in taxing the advocate-client bill on the basis of the pleadings where the suit had been settled
  3. 3.Whether the learned Judge erred in failing to interfere with the taxing master's decision

Key legal issues

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01

Basis for determining subject matter value for instruction fees where a suit is settled

Holding

Where a suit is settled, the subject matter value must be determined from the terms of the settlement, not the pleadings; the pleading basis applies only where taxation occurs before judgment.

Reasoning

Paragraph 1(b) of Part A of Schedule VI to the Advocates Remuneration Order directs the taxing officer to the pleadings, judgment or settlement depending on the stage at which fees are taxed. Before judgment, pleadings apply; once judgment is entered, the judgment conclusively determines the value; where the suit is settled, the settlement is the mandatory starting point. The provision is expressly disjunctive and mandatory, in harmony with the Joreth Ltd v Kigano formulation, and the taxing officer's discretion is confined to cases where the value is not ascertainable from any of the three.

p. 4
02

Knowledge of the taxing master of the Deed of Settlement

Holding

The learned Judge erred in doubting whether the taxing master knew of the Deed of Settlement; the record showed it had been expressly brought to her attention.

Reasoning

Item 34 of the amended bill of costs particularised an attendance before Musinga J for recording of the settlement, and the taxing master's own ruling referred to the client's submission that the matter was settled by a settlement deed. The Judge's finding of non-knowledge did not accord with the record and, had she appreciated the Deed's existence, she would have concluded that the taxing master committed an error of principle in not making it the starting point of assessment.

p. 5
03

Interference with discretionary decisions of taxing officers

Holding

A taxing officer's discretion on quantum will not be disturbed absent a misdirection or error of principle; where an error of principle is established, the judge is obliged to interfere and remit quantum.

Reasoning

Matters of quantum belong to the province of taxing masters and the High Court on reference will be slow to interfere. But the discretion is judicial, exercised on settled principles. Following Mbogo v Shah and Arthur v Nyeri Electricity, interference is warranted on misdirection or improper exercise; where the complaint is an error of principle, as here, the judge is obligated to interfere as a matter of law and remit for re-taxation.

Legal principles established

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  • The basis for determining subject matter value for instruction fees depends on the stage of taxation: pleadings before judgment, judgment after judgment, and the terms of settlement where the suit is settled.
  • The three bases - pleadings, judgment or settlement - are disjunctive and mandatory; the taxing officer may not choose among them or combine them.
  • The taxing officer's discretion to assess instruction fees as he considers just arises only after engaging the proper statutory basis.
  • Failure to apply the Schedule VI formula or to consider relevant circumstances is an error in principle, and the general practice on such error is to remit quantum to the taxing officer.

Court orders

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  1. 1.The ruling and order of the High Court dated 31st May, 2017, is set aside
  2. 2.The Chamber Summons dated 7th October, 2015, is allowed with costs
  3. 3.The amended Advocate-Client Bill of Costs filed on 14th January, 2015, is remitted for taxation before a taxing master other than Sandra Ogot, Deputy Registrar
  4. 4.The appellants shall have the costs of this appeal

The bench

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One judgment of the whole court — no separate or dissenting opinions.

AS
majority
PK
majority
OO
majority
On appeal from
High Court of Kenya at Nairobi
Misc. Appl. Nos. 130 & 190 of 2014
Jurisdiction invoked
First appellate jurisdiction under the Civil Procedure Act (appeal from High Court ruling on a reference under Rule 11 of the Advocates Remuneration Order)

Quotable passages

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Verbatim from the judgment, each located to the page it appears on in the official PDF — so these can be cited and checked directly.

It is not open to the taxing officer to choose one or the other or to use them in combination, the provision being expressly disjunctive as opposed to conjunctive. It is also mandatory and not permissive.
p. 4Construction of Schedule VI Part A of the Advocates Remuneration Order
Just as one would not start with the pleadings in the face of a judgment, it is indubitable that one cannot start with the pleadings where there is a settlement.
p. 4Settlement as the basis for instruction fees
if a Judge on reference from a taxing officer finds that the taxing officer has committed an error of principle the general practice is to remit the question of quantum for the decision of taxing officer.
p. 5Remittal on error of principle
The ruling and order of the High Court dated 31st May, 2017, is set aside. We substitute therefor an order that the Chamber Summons dated 7th October, 2015, is allowed with costs. The amended Advocate-Client Bill of Costs filed on 14th January, 2015, is remitted for taxation before a taxing master other than Sandra Ogot, Deputy Registrar.
p. 5Final orders and disposition

Issues in the judgment

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minor

Internal inconsistencies in dates: the Deed of Settlement is described as dated '8th February' in the narrative but the memorandum of appeal and the Judge's ruling refer to '7th February, 2013', and counsel's consent letter refers to '8th February, 2013' while the narrative places filing on 9th September, 2013 for a consent recorded 11th September, 2013.

minor

The quantum in the Chamber Summons order quoted in the judgment (Kshs.19,226,451.22) does not match the taxation figures earlier recorded (Kshs.29,226,451.22 for Muthoka).

minor

The judgment states the Deputy Registrar's directions were given on '2nd December, 2017', which post-dates the taxing ruling of 22nd September, 2015 and the High Court ruling of 31st May, 2017, and appears to be a typographical error for 2014.

Key timeline

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Practical implications

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Frequently asked questions

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Later judgments citing this (14)

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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, "Peter Muthoka & another v Ochieng & 3 others [2019] KECA 597 (KLR)", Case Analysis (2019). Civil Appeal No. 328 of 2017. Source: https://new.kenyalaw.org/akn/ke/judgment/keca/2019/597/eng@2019-06-21

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