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Court of AppealPartially AllowedKisumu Civil Appeal (companion to Kisumu Civil Appeal No. 129 of 2018)

Otieno, Ragot & Company Advocates v Kenindia Assurance Co Ltd (Civil Appeal 165 of 2019) [2023] KECA 1443 (KLR)

Court of Appeal of Kenya
24 November 2023
4,182 words in judgment
View original judgmentRead on Kenya Law Watch case
AI-assisted case brief
·~17 min to read original · ~4 min brief

The bottom line

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Kenya's Court of Appeal confirmed advocates can enforce a 14% yearly interest rate on taxed fees if they claimed it in the Bill of Costs.

What this practically means

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Executive summary

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This Court of Appeal judgment at Kisumu, authored by Joel Ngugi, JA and concurred in by Kiage and Mumbi Ngugi, JJ A, decided a companion dispute to Kisumu Civil Appeal No. 129 of 2018 on the conditions under which an advocate may recover the allowable 14% p.a. interest under Rule 7 of the Advocates Remuneration Order. The appellant had acted for the respondent in Kisii CMCC No. 209 of 2003, delivered a fee note in August 2012, and later lodged an Advocate/Client Bill of Costs in which it itemised a claim for 14% interest; the Taxing Master allowed the claim and issued a Certificate of Costs for Kshs. 216,158.03, which included Kshs. 50,189.03 as interest. In a section 51(2) Advocates Act enforcement application, the High Court entered judgment for the certificate sum but awarded interest only at court rates from the date of its own ruling in March 2019. Allowing the appeal, the Court distinguished the companion case: here the interest had been specifically claimed in the Bill of Costs and awarded during taxation, and the client never filed a Rule 11 reference to challenge it. The High Court was therefore bound to apply the awarded 14% rate, running from 18th November 2014 (when interest was last calculated) until payment in full; a section 51(2) motion cannot reduce the rate or create a reservoir of discretion. Reiterating the rule from the companion appeal, the Court held that a claim not made in the fee note or Bill of Costs must be pursued by a Rule 11 reference, not for the first time at enforcement. Costs were not awarded: each party to bear its own costs. A material internal inconsistency exists: the concurring judgment speaks of the appeal being dismissed, though the lead judgment and the substance of the concurrence show the appeal was allowed.

Questions the Court framed

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

  1. 1.Whether an advocate who claimed and was awarded interest at 14% p.a. under Rule 7 of the Advocates Remuneration Order during taxation is entitled to that same rate in the enforcement proceedings under section 51(2) of the Advocates Act
  2. 2.Whether the fact that this case differed from the companion appeal (the interest having been claimed in the Bill of Costs and awarded by the Taxing Master) yields a different outcome
  3. 3.From what date and at what rate interest on the taxed costs should run

Key legal issues

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01

Effect of an awarded 14% p.a. interest claim under Rule 7 during taxation on subsequent section 51(2) enforcement proceedings

Holding

The High Court was obliged to apply the awarded 14% p.a. rate from 18th November 2014 until full payment; awarding court rates from the date of its own ruling was an error.

Reasoning

The advocate had put the client on notice by itemising the interest claim in the Bill of Costs, which was served and not disputed; the Taxing Master allowed it in the Certificate of Costs. The client did not file a Rule 11 reference to challenge that award. It would be absurd to permit the rate to be changed at the High Court's discretion in enforcement proceedings when the claim had been litigated and awarded in taxation.

p. 6
02

Whether the rule in the companion appeal applied to these facts

Holding

It did not, because unlike the companion case the advocate here included the interest in the Bill of Costs and benefited from a favourable award by the Taxing Master.

Reasoning

The companion case's rule bars surcharging a client with 14% p.a. interest unless the claim was notified in the fee note and Bill of Costs. Here the Bill of Costs contained an itemised claim for 14% interest which was allowed by the Taxing Master and reflected in the Certificate of Costs. The burden then shifted to the client to challenge the award by a Rule 11 reference, which it never filed.

p. 6
03

General framework for claiming Rule 7 interest

Holding

The claim must be made in the fee note and/or Bill of Costs; if not awarded during taxation, the remedy is a Rule 11 reference, not a new claim at enforcement.

Reasoning

The policy rationale is that the client should be placed on notice of the totality of the claim at the earliest instance, avoiding piecemeal claims. Raising the interest claim late at the enforcement stage exposes the advocate to two perils: interest can only be awarded at earliest from the date of lodging the Bill of Costs, and then only at the court's discretion.

p. 6

Legal principles established

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  • Where an advocate specifically claims interest at 14% p.a. under Rule 7 of the Advocates Remuneration Order in the Bill of Costs and the Taxing Master awards it, that awarded rate binds the High Court in a section 51(2) enforcement proceeding; the judge cannot reduce the rate or replace it with court rates, and interest runs from the date the interest was last calculated until payment in full.
  • An advocate may only recover the 14% p.a. allowable interest under Rule 7 if the claim was included in the fee note and/or Bill of Costs and taxed; if the interest is not claimed or not awarded, the advocate must invoke Rule 11 of the Advocates Remuneration Order by filing a reference and cannot raise it for the first time in section 51(2) enforcement proceedings.

Court orders

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  1. 1.The appeal succeeds
  2. 2.The appellant is awarded interest at 14% p.a. as allowed by Rule 7 of the Advocates Remuneration Order on the taxed amount of Kshs. 216,158.03 from 18th November 2014 (when interest was last calculated) until the amount is fully paid
  3. 3.Each party to bear its own costs

The bench

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

majority

Wrote the judgment

Wrote the lead judgment holding that where an advocate itemised and was awarded the 14% p.a. interest under Rule 7 of the Advocates Remuneration Order in the Bill of Costs, the High Court in a section 51(2) enforcement proceeding is bound by that awarded rate and cannot vary it or award interest at court rates from the date of its ruling.

With respect, in the circumstances of this case, I think the learned Judge was obliged to utilize the awarded interest rate of 14% p.a.p. 6
concurring

Concurred fully with the lead judgment of Joel Ngugi, JA.

I have read in draft the judgment of learned brother Joel Ngugi, JA and am in full concurrence with nothing useful to add.p. 7
concurring

Concurred entirely with the lead judgment of Joel Ngugi, JA.

I have had the benefit of reading in draft the judgment of my brother, Joel Ngugi, JA. which I entirely agree with and have nothing useful to add.p. 7
On appeal from
High Court of Kenya
Kisumu Miscellaneous Civil Case No. 249 of 2014 (ruling delivered 12th March 2019)
Jurisdiction invoked
First appellate jurisdiction over the High Court decision rendered under section 51(2) of the Advocates Act
Consolidated with
Kisumu Civil Appeal No. 129 of 2018 (companion appeal, decided the same day)

Relief refused

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Costs of the High Court proceedings and of the appeal

The Court declined costs in light of the clarifying nature of the controversy, proposing instead that each party bear its own costs

p. 7

Costs

Each party bears its own costs

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.

The upshot is that, in my view, the appeal herein succeeds. The appellant is entitled to interest rate at 14% p.a. as allowed by Rule 7 of the Advocates Remuneration Order on the taxed amount from 18th November, 2014 (when interest was last calculated) until the amount is fully paid.
p. 7Final orders - interest awarded
An application under 51(2) of the Advocates Act will not act to reduce the interest rate or otherwise create a reservoir of discretion for the judge to change the interest rate.
p. 7Limits on judicial discretion in section 51(2) enforcement
However, where the interest of 14% p.a. under Rule 7 of the Advocates Remuneration Order is specifically claimed in the Bill of Costs and awarded during the taxation proceedings, the interest will apply to the taxed amount until it is fully paid.
p. 7Binding effect of an awarded Rule 7 interest
due to the nature of the controversy and the roaring waves of confusion that have attended to this arcane aspect of the law which the appellant, through this judgment, has helped clarify, I would propose that each party bears its own costs.
p. 7Costs order

Issues in the judgment

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material

Internal contradiction on outcome: the concurring judgment of Kiage, JA states the appeal is dismissed, while the lead judgment expressly holds the appeal succeeds and awards the 14% interest; the concurrence was evidently intended to adopt the lead judgment's proposal.

minor

Discrepancy in the relief sought: paragraph 8 of the judgment records the appellant's prayer as a Notice of Motion dated 6th August 2018, while paragraph 5 records the application before the High Court as dated 6th August 2015; the prayer date also appears mis-stated given the memorandum of appeal is dated 6th August 2019.

minor

Discrepancy in filing dates of the Bill of Costs: paragraph 4 states it was filed on 18th November 2014, while paragraph 17 states it was filed on 18th November 2018.

Key timeline

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Practical implications

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Frequently asked questions

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Later judgments citing this (2)

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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, "Otieno, Ragot & Company Advocates v Kenindia Assurance Co Ltd (Civil Appeal 165 of 2019) [2023] KECA 1443 (KLR)", Case Analysis (2023). Kisumu Civil Appeal (companion to Kisumu Civil Appeal No. 129 of 2018). Source: https://new.kenyalaw.org/akn/ke/judgment/keca/2023/1443/eng@2023-11-24

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