Kenya Airports Authority v Otieno Ragot and Company Advocates (Petition E011 of 2023) [2024] KESC 44 (KLR) (2 August 2024) (Judgment)

Kenya Airports Authority v Otieno Ragot and Company Advocates (Petition E011 of 2023) [2024] KESC 44 (KLR) (2 August 2024) (Judgment) Neutral citation: [2024] KESC 44 (KLR) REPUBLIC OF KENYA IN THE SUPREME COURT OF KENYA PETITION E011 OF 2023 MK KOOME, CJ & P, MK IBRAHIM, SC WANJALA, N NDUNGU & I LENAOLA, SCJJ AUGUST 2, 2024 BETWEEN KENYA AIRPORTS AUTHORITY ....................................................... APPELLANT AND OTIENO RAGOT AND COMPANY ADVOCATES ........................ RESPONDENT (Being an appeal from the Judgment of the Court of Appeal at Nairobi (Ouko (P), Gatembu & Murgor, JJ. A) delivered on 19th May, 2021 in Civil Appeal No. 39 of 2017) Discretion in taxation of instruction fees under the Advocates Remuneration Order Reported by John Ribia Civil Practice and Procedure – appeals – appeals before the Supreme Court – pleadings – where a party raised issues that were not certified as matters of general public importance - whether the Supreme Court could pronounce itself on new issues beyond the parameters which were certified as matters of general public importance – Constitution of Kenya, article 163(4)(b). Advocates – costs – assessment of costs – role of a taxing officer - whether the Taxing Officer, as a judicial officer, performed the mandate of taxation as a procedural technicality - whether failure to evaluate and determine disputed items during taxation contravened rule 16 of the Advocates Remuneration Order, thereby compromising the fairness and justice of the assessment process - Advocates Remuneration Order, 2006 (cap 16, Sub Leg) rule

16. Advocates – costs – assessment of costs – Advocates Remuneration order - what was the purpose of the Advocates Remuneration Order – Advocates Act (cap 16) section 2, 36, 51(2); Advocates Remuneration Order, 2006 (cap 16, Sub Leg) rules 2, 3, and

50. Advocates – costs – assessment of costs – party to party costs - what was the proper basis for determining the value of the subject matter for purposes of calculating instruction fees under Paragraph 1 of Schedule 6A of the Advocates Remuneration Order (ARO), particularly in light of whether the suit was at the pleading stage, had proceeded to judgment, or had been settled - whether the absence of specific particulars or valuation of the subject matter in the pleadings prevents the Taxing Officer from accurately assessing reasonable costs, particularly when the trial had not been concluded to determine the value definitively - whether a claim or amount pleaded in a suit that was struck out at the preliminary stage could be used as the value of the subject matter for purposes of taxation of instruction fees, despite the fact that the claim had not been ascertained or determined - Constitution of Kenya, 2010 article 48 and 50; Advocates Act (cap 16) section 2, 36, 51(2); Advocates Remuneration Order, 2006 (cap 16, Sub Leg) Schedule 6 part A. Advocates – costs – assessment of costs – Advocate to Client costs - whether the instruction fees in Advocate-Client costs should be determined by automatically increasing the Party-Party instruction fees taxed under Shedule6A of the Advocates Remuneration Order by one-half (50%), or whether the Taxing Officer must exercise discretion in assessing such fees - whether the Taxing Officer was required to exercise judicial discretion when assessing Advocate-Client instruction fees under Schedule 6B, guided by Part A, rather than applying a rigid mathematical formula - Constitution of Kenya, 2010 article 48 and 50; Advocates Act (cap 16) section 2, 36, 51(2); Advocates Remuneration Order, 2006 (cap 16, Sub Leg) Schedule 6 part B. Words and Phrases – judicial discretion – definition - The exercise of judgment by a judge or court based on what is fair under the circumstances and guided by the rules and principles of law; a court’s power to act or not act when a litigant is not entitled to demand the act as a matter of right - The Black’s Law Dictionary, 8th Ed. (2004) p. 1406. Brief facts In 2009, 54 plaintis sued Kenya Airports Authority (KAA), claiming compulsory acquisition of their land near Kisumu International Airport without adequate compensation. They claimed Kshs. 13,932,000,000 as special damages. KAA, represented by Otieno Ragot & Co. Advocates, led a defense and sought to strike out the suit. The High Court struck out the suit on June 24, 2010, for procedural non-compliance. The respondent led a Party-Party Bill of Costs, taxing instruction fees based on the unsubstantiated claim of Kshs. 13,932,000,000. The costs were taxed at Kshs. 151,650,000. The respondent then sought Advocate-Client costs, relying on the taxed Party-Party instruction fees. The Taxing Ocer assessed instruction fees at Kshs. 5,000,000, exercising discretion due to the lack of a conclusive subject matter value. The High Court upheld the Taxing Ocer's decision. The Court of Appeal, by majority, ruled that the Taxing Ocer lacked discretion and must increase Party-Party costs by one-half, setting instruction fees at Kshs. 196,044,750.50. KAA appealed to the Supreme Court, arguing that the Taxing Ocer retains discretion under the Advocates Remuneration Order to assess reasonable costs.

Issues

i. Whether the Supreme Court could pronounce itself on new issues beyond the parameters which were certied as matters of general public importance. ii. What was the purpose of the Advocates Remuneration Order? iii. Whether the Taxing Ocer, as a judicial ocer, performed the mandate of taxation as a procedural technicality. iv. Whether failure to evaluate and determine disputed items during taxation contravened rule 16 of the Advocates Remuneration Order, thereby compromising the fairness and justice of the assessment process. v. What was the proper basis for determining the value of the subject matter for purposes of calculating instruction fees under Paragraph 1 of Schedule 6A of the Advocates Remuneration Order (ARO), particularly in light of whether the suit was at the pleading stage, had proceeded to judgment, or had been settled? vi. Whether the absence of specic particulars or valuation of the subject matter in the pleadings prevents the Taxing Ocer from accurately assessing reasonable costs, particularly when the trial had not been concluded to determine the value denitively. vii. Whether a claim or amount pleaded in a suit that was struck out at the preliminary stage could be used as the value of the subject matter for purposes of taxation of instruction fees, despite the fact that the claim had not been ascertained or determined. viii. Whether the instruction fees in Advocate-Client costs should be determined by automatically increasing the Party-Party instruction fees taxed under Shedule6A of the Advocates Remuneration Order by one-half (50%), or whether the Taxing Ocer must exercise discretion in assessing such fees. ix. Whether the Taxing Ocer was required to exercise judicial discretion when assessing Advocate-Client instruction fees under Schedule 6B, guided by Part A, rather than applying a rigid mathematical formula.

Held

1. When interest on taxed costs accrued was never raised or delineated as a matter of general public importance. A litigant could not expand such an appeal or introduce new issues beyond the parameters pursuant to which it was certied or admitted. The Supreme Court declined the appellant’s invitation to pronounce itself on taxed costs.

2. The Advocates Remuneration Order related to the remuneration of advocates. Rule 2 thereof related to assessment of costs incurred in a contentious matter which could be reimbursed to a successful party/litigant by the other party. It prescribed and regulated the remuneration of advocates in respect of professional business undertaken, and the recompense of costs/expenses incurred by a successful party in a suit. The overall objective was to prevent exploitation of parties to a suit/transaction with regard to remuneration of advocates and compensation of costs or expenses incurred by a successful party as well as maintain the standards of the legal profession. It was to ensure that fees/costs paid to an advocate and a successful party were reasonable. What amounted to reasonable costs could only be determined on a case-by-case basis.

3. Section 36 of the Advocates Act and rule 3 of the Advocates Remuneration Order (ARO)proscribed an advocate from charging or accepting, otherwise than in part payment, any fee or other consideration in respect of professional business which was less than the remuneration prescribed in the Remuneration Order. It sets out standards to regulate the profession from being undermined by undercutting. To ensure the objective of the ARO was met, a Taxing Ocer, who may be the Registrar or Deputy Registrar of the High Court, was tasked with the role of assessing/taxing costs or fees under the Advocates Remuneration Order.

4. Schedule 6A of the ARO provided for Party-Party costs, that was, the manner in which costs awarded to a successful party as against another party should be assessed/computed/taxed. The essence of such costs was to ensure a successful litigant/party received a fair reimbursement/recompense for the costs/ expenses he/she has had to incur on account of a suit.

5. The subject matter of the suit in issue should be identied rst, and then the value thereof determined. Paragraph 1 of Schedule 6A of the ARO stipulated that the value of the subject matter could be determined from the pleading, judgment or settlement of the parties. That meant that the value of the subject matter could be determined from the pleadings or judgment or settlement of the parties. The basis for determining the subject matter value for purposes of instruction fees was wholly dependent on the stage at which the fees were being taxed. Where it happened before judgment, it was the pleadings that formed the basis for determining subject value. Once judgment had been entered, and for what seemed to us to be an obvious reason, recourse would not be had to the pleadings since the judgment determined conclusively the value of the subject matter as a claim, no matter how pleaded, gets its true value as adjudged by the court. Where, however, a suit was settled, then, from a literal and practical reading of the provision, the subject matter value must be sought by reference, in the rst instance, to the terms of the settlement. Just as one would not start with the pleadings in the face of a judgment, it was indubitable that one could not start with the pleadings where there was a settlement.

6. Whilst the determination of the value of subject matter from a judgment and settlement of the parties was quite straight forward, the determination from pleadings was not. The determination of the value of the subject matter, could be dicult, for instance, where the pleadings/suit was struck out at a preliminary stage, such as in the instant case, and the value could only be determined/ascertained upon the conclusion of a trial.

7. The original plaintis did not provide any particulars or the value of the parcels that were allegedly compulsorily acquired by the appellant. That information was necessary as a guide to the Taxing Ocer in the assessment of reasonable costs. The original plaintis simply pleaded or claimed a sum of Kshs.13,932,000,000 as special damages and indicated that the particulars thereto would be availed during the hearing. Therefore, the value of the subject matter could only be determined upon the conclusion of the trial which never happened.

8. A claim in a suit which was struck out at the preliminary stage did not ipso facto render that claim or amount pleaded therein without more the value of the subject matter. The position still remained that the amount therein had not been ascertained or determined, and as such, it could not be applied as the value of a subject matter in a disputed taxation. The application of such a claim or amount as the value of the subject matter would go against the rationale that the fees/costs paid to an advocate and a successful party should be reasonable. Consequently, even where the amount claimed in a pleading which was struck out by a court, as in the instant appeal, the said amount would not act as the value of the subject matter when it came to taxation of instruction fees.

9. Where the value of the subject matter could be determined, the Taxing Ocer was required to set out the basic fees prescribed under Schedule 6 Part A. Similarly, where the Taxing Ocer assessed instruction fees based on the nature of a matter as stipulated in Paragraph 1, for instance like, bankruptcy proceedings or matrimonial causes she/he was required to set out the basic fees prescribed thereunder. It was after setting out the basic fees that the Taxing Ocer could exercise his/her discretion to increase or (unless otherwise provided, like in matrimonial causes) reduce the said basic fees. In exercising such unfettered discretion, the Taxing Ocer was required to do so judiciously and not whimsically.

10. In the event that value of the subject matter of a suit could not be determined from either the pleadings, judgment or settlement by the parties, and the nature of the said suit was not provided for in Paragraph 1 of Schedule 6 A, proviso thereunder empowered a Taxing Ofcer to exercise his/her discretion in assessing instruction fees for such a suit.

11. Schedule 6 Part B relates to Advocate-Client costs, it provided for the manner in which advocates costs/fees should be assessed/taxed. Once instruction fees in Party- Party costs in a particular suit were assessed/taxed under Part A, and a certicate of costs to that eect was issued, the assessment of instruction fees in Advocate-Client costs in the same suit simply required the application of the formula stipulated under Part B, that was, the fees, the instruction fees, taxed or ascertained under Part A increased by one-half. Besides, the impugned majority judgment found that where Party-Party costs were taxed under Part A, the Taxing Ocer was devoid of any discretionary power when it came to the assessment of instruction fees in Advocate-Client Bill of Costs.

12. The Taxing Ocer was required to take into account Part A. That did not mean that such a Taxing Ocer was simply to increase the instruction fees determined/ascertained in Part A by one-half or 50%. That was because rule 16 of the Advocates Remuneration Order provided that notwithstanding anything contained in the Order, on every taxation the Taxing Ocer may allow all such costs, charges and expenses as authorized in the Order as shall appear to him to have been necessary or proper for the attainment of justice or for defending the rights of any party. Rule 16 should be read together with section 2 of the Advocates Act, which interpreted the word costs as including fees, charges, disbursements, expenses and remuneration.

13. Judicial discretion was the exercise of judgment by a judge or court based on what was fair under the circumstances and guided by the rules and principles of law; a court’s power to act or not act when a litigant was not entitled to demand the act as a matter of right.

14. The proper interpretation of Schedule 6B was that in assessing fees thereunder, including instruction fees, a Taxing Ocer was required to exercise his/her discretion guided by the prescribed scale of fees in Part A. That did not mean, as the impugned majority judgment found, that a Taxing Ocer was simply to apply the mathematical formula to the instruction fees ascertained in the taxed Party-Party