Omulele & Tollo Advocates v Magnum Properties Limited
The bottom line
#Kenya's Court of Appeal confirmed that lawyers' fees must be based on provable case value, not unproven claims, and retainer payments count.
What this practically means
#Executive summary
#Questions the Court framed
#The issues the Court set itself to decide, in its own words.
- 1.Whether the taxing officer committed any error of principle in exercising his discretion in taxing the Bill of Costs
- 2.Whether the learned Judge had sufficient reason to interfere with the exercise of the taxing officer's discretion
- 3.Whether the respondent could raise issues in the reference that it had not raised before the taxing officer
- 4.Whether the value of the subject matter was properly taken as the alternative prayer of Kshs. 1.2 billion
- 5.Whether failure to take into account payments made under the retainer amounted to an error of principle
Key legal issues
#Error of principle in taxing instruction fees on the alternative prayer
The taxing officer erred by adopting the alternative prayer of Kshs. 1.2 billion as the subject matter without explanation, where the main prayers carried no ascertainable value and the market value was unproven.
Under Schedule 6 of the Advocates Remuneration Order, instruction fees are calculated on the subject matter, which must be ascertained from the pleadings, judgment or settlement. The main prayers (injunction, cancellation, declaration) had no ascertainable value. The alternative Kshs. 1.2 billion figure was a market value subject to proof, so the taxing officer should have exercised his own discretion to assess a just fee rather than adopt that prayer without reasons.
Failure to consider retainer payments as a relevant factor
Failure to take into account payments made under the retainer agreement, which existed when the defence was filed, was an error of principle vitiating the taxation.
Njuguna J had found a retainer agreement with monthly payments of Kshs. 150,000 up to September 2012, and the defence was filed in November 2011 while that retainer subsisted. Payments on account of the retainer were relevant to the instruction fees; ignoring them was taking into account an erroneous basis and constituted an error of principle that vitiated the taxing master's discretion.
Whether the respondent could raise issues not raised before the taxing officer
A party may challenge the taxing officer's exercise of discretion on an item actually decided, even if not specifically raised in submissions before the taxing officer.
The taxing officer had addressed the instruction fees and made a decision on them. The exercise of that discretion depended not merely on parties' submissions but on the taxing officer's judicial discretion anchored in law and facts. The respondent therefore had the right to question that exercise in a reference, and the Judge was right to consider whether the discretion was properly exercised.
Procedural non-compliance with Rule 11 of the Advocates Remuneration Order
Although the respondent did not strictly follow the Rule 11 procedure, the taxing officer's failure to give reasons on request excused the deviation, invoking Article 159(2)(d) of the Constitution.
Rule 11 requires written notice within 14 days, reasons from the taxing officer, and an application to the Judge within 14 days of the reasons. The respondent objected by letter identifying items 1 and 60, but the taxing officer gave no reasons, apparently believing his ruling anticipated the request. The respondent was not entirely to blame for the procedural deviation, and the Court applied the overriding objective under Article 159(2)(d).
Legal principles established
#- A judge will not interfere with a taxing officer's decision unless it is based on an error of principle; manifestly excessive sums permit inference of such error.
- It is an error of principle to take into account irrelevant factors or omit relevant ones in taxation; the normal remedy is remission for reassessment.
- The value of the subject matter for instruction fees must be determined from the pleadings, judgment or settlement; if not ascertainable, the taxing officer must exercise discretion to assess a just fee.
- A party aggrieved by a taxing officer's decision on the exercise of discretion may question it in a reference even if the specific issue was not raised in submissions before the taxing officer.
Court orders
#- 1.Appeal dismissed with costs
The bench
#One judgment of the whole court — no separate or dissenting opinions.
- On appeal from
- High Court of Kenya at Nairobi
- HC Misc. Application No. 590 of 2014
- Jurisdiction invoked
- First appeal from the High Court under the Advocates Act and Rule 11 of the Advocates Remuneration Order procedure (appeal to the Court of Appeal with leave of the Judge)
Relief refused
#Allowance of the appeal in its entirety and restoration of the taxing officer's decision of 19 April 2016
The taxing officer failed to exercise his discretion properly by adopting the unascertained alternative prayer of Kshs. 1.2 billion and ignoring retainer payments
Costs
The appeal was dismissed with costs to the respondent.
Quotable passages
#Verbatim from the judgment, each located to the page it appears on in the official PDF — so these can be cited and checked directly.
For these reasons we nd no merit in this appeal. It is accordingly dismissed with costs.
We come to the conclusion that the learned Judge was right in nding that the taxing ocer did not properly exercise his discretion in taxing the Bill of Costs.
Authorities on taxation show that a judge will normally not interfere with the taxing ocer’s decision on taxation unless it is based on an error of principle.
the value of the subject matter of a suit for the purposes of taxation of a bill of costs ought to be determined from the pleadings, judgment or settlement, (if such be the case).
It would be an error of principle to take into account irrelevant factors or to omit to consider relevant factors.
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.
- JM (Minor Suing through his Next Friend and Father JMT) v Cabinet Secretary, Ministry of Tourism and Wildlife & another[2022] KEELC 15636 (KLR)20 Dec 2022
Cite this brief
#Cite this brief
Caselaw, "Omulele & Tollo Advocates v Magnum Properties Limited", Case Analysis (2022). Civil Appeal 301 of 2018. Source: https://new.kenyalaw.org/akn/ke/judgment/keca/2022/560/eng@2022-04-28
Suggested citation format for research notes or client memos. Always verify the original judgment before relying on any point.