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Supreme CourtPartially AllowedPetition E011 of 2023

Kenya Airports Authority v Otieno Ragot and Company Advocates

Supreme Court of Kenya
2 August 2024
Martha Karambu KoomeM. K. KoomeMohammed Khadhar IbrahimM. K. IbrahimSmokin Charles WanjalaS. C. WanjalaNjoki Susanna NdunguNjoki NdunguIsaac LenaolaI. Lenaola
12,011 words in judgment
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AI-assisted case brief
·~48 min to read original · ~4 min brief

The bottom line

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Supreme Court: Taxing officers have discretion in advocate-client costs, not just a formula.

What this practically means

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The Supreme Court ruled that when calculating what a client owes their lawyer, the court official (taxing officer) can use judgment, not just a simple formula. In this case, a huge claim was thrown out early, so the pleaded amount wasn't automatically the value. The officer must consider actual work done. A previous cost certificate between parties doesn't bind the officer in lawyer-client billing.

Executive summary

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The Supreme Court allowed the appeal by Kenya Airports Authority against the majority judgment of the Court of Appeal which had increased instruction fees in an Advocate-Client Bill of Costs from Kshs 5,000,000 to Kshs 196,044,750.50. The dispute arose from a primary suit where 54 plaintiffs claimed Kshs 13,932,000,000 in compensation for compulsory acquisition of land, but the suit was struck out at a preliminary stage. The respondent law firm had filed a Party-Party Bill of Costs which was taxed at Kshs 151,650,000, including instruction fees of Kshs 130,704,900 based on the claimed amount. Subsequently, the respondent filed an Advocate-Client Bill of Costs. The Taxing Officer found the value of the subject matter unascertainable and assessed instruction fees at Kshs 5,000,000, which was upheld by the High Court. The Court of Appeal by majority (Ouko (P) and Murgor, JA; Gatembu, JA dissenting) set aside the High Court decision, holding that Part B of Schedule VI of the Advocates Remuneration Order requires a mere arithmetic increase of Party-Party costs by one-half, leaving no discretion to the Taxing Officer. The Supreme Court reversed this, holding that Rule 16 of the Advocates Remuneration Order preserves the Taxing Officer's discretion on every taxation, including Advocate-Client costs. The Court found that where the value of the subject matter cannot be determined from the pleadings, judgment or settlement, the Taxing Officer must exercise discretion to assess reasonable instruction fees. The Court also held that a certificate of taxed Party-Party costs is final as to costs covered therein but is not per se binding on the Taxing Officer when assessing Advocate-Client costs; the Taxing Officer may depart from it with reasons. The Court restored the High Court's ruling and ordered each party to bear their own costs.

Questions the Court framed

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

  1. 1.What is the proper interpretation of the provisions of Schedule VI Part A and B of the Advocates Remuneration Order? In particular, whether the phrase 'fees prescribed in A above increased by one-half' effectively takes away the Taxing Officer's judicial discretion in the taxation of an Advocate-Client Bill of Costs.
  2. 2.What is the proper judicial interpretation of the term 'subject value' in instances where the subject matter of a dispute although pleaded is fictitious and unsubstantiated hence unascertainable from the pleadings?
  3. 3.Whether a certificate of taxation of Party-Party costs is binding per se on the Taxing Officer in the taxation of the Advocate-Client Bill of Costs, and whether such certificate completely fetters discretion in assessing instruction fees in Advocate-Client costs.
  4. 4.Whether costs awarded to an advocate should be allowed to be so punitive (in this case being an increment of instruction fees by the majority of the Court of Appeal from Kshs 5,000,000 to Kshs 196,044,750.50) with the effect of impeding access to justice as guaranteed under article 48 of the Constitution.

Key legal issues

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01

Whether the phrase 'fees prescribed in A above increased by one-half' in Schedule VI Part B removes the Taxing Officer's discretion in taxing Advocate-Client costs.

Holding

The phrase does not remove discretion; Rule 16 of the Advocates Remuneration Order preserves the Taxing Officer's discretion on every taxation to allow costs that appear necessary or proper for the attainment of justice.

Reasoning

The Supreme Court held that Rule 16 of the Advocates Remuneration Order, which states 'on every taxation the Taxing Officer may allow all such costs, charges and expenses as authorized in this Order as shall appear to him to have been necessary or proper for the attainment of justice', applies to all taxations including Advocate-Client costs under Part B. The Court found that the majority of the Court of Appeal erred in treating Part B as a mere arithmetic formula. Instead, the Taxing Officer must exercise judicial discretion guided by the prescribed scale, evaluating each item and determining reasonable fees commensurate with work done, not mechanically applying a one-half increase.

p. 23
02

How should the value of the subject matter be determined for taxation where the suit is struck out at a preliminary stage and the pleaded claim is unsubstantiated?

Holding

Where a suit is struck out at a preliminary stage and the pleaded claim is unsubstantiated (e.g., special damages not proved), the pleaded figure does not automatically become the value of the subject matter; the Taxing Officer must exercise discretion to determine reasonable instruction fees.

Reasoning

The Supreme Court noted that the original plaintiffs claimed Kshs 13,932,000,000 as special damages but provided no particulars of the parcels of land or their value, and the suit was struck out before trial. The Court held that a claim struck out at a preliminary stage does not ipso facto render the pleaded amount the value of the subject matter. Since the value could not be determined from the pleadings, judgment or settlement, the Taxing Officer was entitled to exercise discretion under proviso (i) of Schedule VI Part A. The Court approved the reasoning in the Moronge case, finding it indistinguishable.

p. 20
03

Whether a certificate of taxation of Party-Party costs is binding on the Taxing Officer when assessing Advocate-Client costs.

Holding

A certificate of taxed Party-Party costs is final as to the costs covered therein under section 51(2) of the Advocates Act, but it is not per se binding on the Taxing Officer when assessing Advocate-Client costs; the Taxing Officer may depart from it with reasons.

Reasoning

The Supreme Court interpreted section 51(2) of the Advocates Act, which states that a certificate of taxation is 'final as to the amount of the costs covered thereby'. The Court held that this finality applies to the costs covered in the Party-Party certificate, but does not prevent the Taxing Officer from evaluating the instruction fees afresh in the Advocate-Client taxation. Where the instruction fees in the certificate are disputed, the Taxing Officer must subject them to evaluation and may depart from them with reasons. The Court found that the Taxing Officer in this case properly exercised discretion to depart from the certificate because the value of the subject matter was unascertainable.

p. 24

Legal principles established

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  • Taxing officers have discretion under Rule 16 when assessing advocate-client costs; they are not limited to a mathematical formula.
  • When the value of a case cannot be determined from pleadings, judgment, or settlement, the taxing officer must use discretion to assess reasonable instruction fees.
  • A claim struck out at a preliminary stage does not automatically make the pleaded amount the value of the subject matter for taxation.
  • A certificate of taxed party-party costs is final for those costs but not binding on the taxing officer when assessing advocate-client costs; the officer may depart with reasons.

Court orders

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  1. 1.The appeal dated April 17, 2023 and filed on April 25, 2023 is hereby allowed.
  2. 2.The majority judgment of the Court of Appeal dated May 19, 2021 in Civil Appeal No 39 of 2017 is hereby set aside.
  3. 3.The ruling of the High Court dated February 20, 2017 in HC Misc Applic No 95 of 2011 is hereby confirmed.
  4. 4.Each party will bear their own costs of the appeal and cross appeal before this court.
  5. 5.We hereby direct that the sum of Kshs 6,000 deposited as security for costs upon lodging of this appeal be refunded to the appellant.

The bench

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

Martha Karambu Koome
M. K. KoomeCJ
Currently serving
majority

Wrote the judgment

Mohammed Khadhar Ibrahim
majority
Smokin Charles Wanjala
S. C. WanjalaSCJ
Currently serving
majority
Njoki Susanna Ndungu
Njoki NdunguSCJ
Currently serving
majority
Isaac Lenaola
I. LenaolaSCJ
Currently serving
majority
On appeal from
Court of Appeal at Nairobi
Civil Appeal No 39 of 2017
Jurisdiction invoked
Article 163(4)(b) of the Constitution

Relief refused

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Permanent injunction restraining enforcement of the Court of Appeal decision and certificate of costs

The appeal was allowed and the Court of Appeal judgment set aside, rendering the injunction unnecessary.

p. 26

Costs

Each party will bear their own costs of the appeal and cross appeal before this court.

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 proper interpretation of Schedule VI Part B is that in assessing fees thereunder, including instruction fees, a Taxing Officer is required to exercise his/her discretion guided by the prescribed scale of fees in Part A. To our minds, that does not mean, as the impugned majority judgment found, that a Taxing Officer is simply to apply the mathematical formula to the instruction fees ascertained in the taxed Party-Party costs.
p. 23 Interpretation of Schedule VI Part B - Taxing Officer's discretion
a claim in a suit which is struck out at the preliminary stage does not ipso facto render that claim or amount pleaded therein without more the value of the subject matter.
p. 20 Value of subject matter where suit struck out
a certificate of taxed Party-Party costs is final on the costs/fees ascertained in the Party-Party costs. While instruction fees ascertained thereunder are not per se binding, when it comes to the assessment of Advocate-Client costs, a Taxing Officer is required to consider the matter and where he/she is satisfied that it is a true representation of the work done by the advocate, it can be applied
p. 24 Binding effect of Party-Party certificate on Advocate-Client taxation
Each party will bear their own costs of the appeal and cross appeal before this court.
p. 26 Costs order

Key timeline

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2017-02-20
High Court ruling in HC Misc Applic No 95 of 2011
2021-05-19
Court of Appeal majority judgment in Civil Appeal No 39 of 2017
2023-04-25
Supreme Court appeal filed by Kenya Airports Authority
2024
Supreme Court delivers judgment allowing appeal, setting aside Court of Appeal majority

Practical implications

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For lawyers

Discretion in advocate-client taxation restored

When taxing advocate-client bills, do not assume a mechanical 50% increase on party-party costs. The Supreme Court confirms you must exercise discretion under Rule 16, evaluating work done. If the value of the subject matter is unascertainable, justify your own assessment. Challenge any certificate that was based on a fictitious pleaded amount.

For businesses

Challenge inflated legal fee claims

If your company faces a large legal bill based on a huge but unproven claim that was dismissed early, you can argue the taxing officer must use discretion. The Supreme Court says the pleaded amount is not automatically the value. Ensure your lawyer challenges any mechanical application of the one-half formula and requests a reasoned assessment.

For individuals

Know your rights on lawyer fees

If you dispute your lawyer's bill, the taxing officer can set a reasonable fee based on actual work, not just a formula. Even if a previous cost certificate exists between the other side and your lawyer, it does not bind the officer. You can ask the officer to explain any departure from that certificate.

Frequently asked questions

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What is the effect of the Kenya Airports Authority v Otieno Ragot case on lawyer fees in Kenya?+

The Supreme Court ruled that taxing officers have discretion when setting advocate-client fees, not just a formula. They must consider actual work done. A huge unproven claim does not automatically set the fee value.

Can a Kenyan lawyer charge 50% more than party-party costs for advocate-client fees?+

Not automatically. The Supreme Court said the one-half increase in Schedule VI Part B is not a mechanical formula. The taxing officer must exercise discretion and justify the fee based on work done, not just apply a percentage.

Is a party-party cost certificate binding in advocate-client taxation in Kenya?+

No, it is not per se binding. The Supreme Court held that while the certificate is final for those costs, the taxing officer can depart from it when assessing what the client owes the lawyer, provided reasons are given.

How is the value of a case determined for lawyer fees in Kenya when the suit is struck out early?+

The Supreme Court said the pleaded amount does not automatically become the value. If the claim is unsubstantiated and struck out early, the taxing officer must use discretion to determine reasonable fees, considering the circumstances.

Later judgments citing this (25)

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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, "Kenya Airports Authority v Otieno Ragot and Company Advocates", Case Analysis (2024). Petition E011 of 2023. Source: https://new.kenyalaw.orghttps://new.kenyalaw.org/akn/ke/judgment/kesc/2024/44/eng@2024-08-02

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