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|Case Number:||Civil Case 75 of 2005|
|Parties:||Terra Craft Limited v Kenya Pipeline Company Limited|
|Date Delivered:||07 Aug 2014|
|Court:||High Court at Nairobi (Milimani Commercial Courts Commercial and Tax Division)|
|Judge(s):||Jonathan Bowen Havelock|
|Citation:||Terra Craft Limited v Kenya Pipeline Company Limited  eKLR|
|Court Division:||Commercial Tax & Admiralty|
|Parties Profile:||Corporation v Corporation|
|Case Outcome:||Application allowed.|
|Disclaimer:||The information contained in the above segment is not part of the judicial opinion delivered by the Court. The metadata has been prepared by Kenya Law as a guide in understanding the subject of the judicial opinion. Kenya Law makes no warranties as to the comprehensiveness or accuracy of the information|
REPUBLIC OF KENYA
IN THE HIGH COURT OF KENYA AT NAIROBI
MILIMANI COMMERCIAL & ADMIRALTY DIVISION
CIVIL CASE NO. 75 OF 2005
TERRA CRAFT LIMITED ……………………….…………….PLAINTIFF
KENYA PIPELINE COMPANY LIMITED …….…………. DEFENDANT
R U L I N G
“1.THAT the Taxing Officer acted contrary to the provisions of the Advocates Remuneration Order in assessing instructions costs at Ksh 2,307,608/-.
The Application before Court was supported by the Affidavit of Henry Ndung’u Kinuthia sworn on even date, who described himself as the Managing Director of the Plaintiff Company. The deponent noted that the Taxing Officer had delivered her Ruling on 4th October 2011. On 13th October 2011, the Plaintiff’s advocate on record had written to the Deputy Registrar seeking reasons for the taxation on the instruction fees. Reminders were written to the Deputy Registrar on 24th January 2012, 26th March 2012 and 4th July 2012. He noted that its advocates had been informed that the reasons for the taxation were contained in the said Ruling. This remark was noted on the face of the advocates’ letter dated 4th July 2012. In the deponent’s view, the Taxing Officer had erred in failing to consider the Plaintiff’s submissions when she was taxing the said Bill of Costs. The suit herein had been dismissed for want of prosecution on 30th October 2009.
3. This matter came before Court on 13th February 2014 when the advocate for the Defendant herein detailed that she had filed Grounds of Opposition on 27 August 2012. I noted that such Grounds did not appear on the Court file and requested counsel to provide a copy thereof which she did. Such Grounds detailed that the Application lacked merit, was misconceived, bad in law and an afterthought. Further, it was frivolous and vexatious as well as being an abuse of the Court process. The Defendant detailed that the Taxing Officer had considered the submissions of both parties in relation to the taxation. The suit had been defended and was dismissed not referred to arbitration as the Applicant contended. Moreover, the Defendant filed submissions in relation to the Reference on 20th June 2014 following upon the filing of the Applicant’s submissions on 13th of June 2014.
4. Those submissions of the Applicant set out the orders sought in the Application before Court and detailed that it was the Applicant’s position that the Taxing Officer failed to consider the Applicant’s submissions filed on 6th April 2011. The Applicant noted that the various letters had been written to the Deputy Registrar seeking reasons for the taxation but it was only on 26th July 2012 that the Deputy Registrar indicated that the reasons for the taxation were contained in the said Ruling. The Applicant stated that it had received a copy of the Ruling on 27th July 2012 and filed the Application before Court on 8th August 2012. It was the Applicant’s submission that the Taxing Officer erred in assessing the instruction fees in view of the fact that the suit was dismissed for want of prosecution. A copy of the notice to show cause in that regard had been annexed to the Plaintiff’s submissions to the lower Court as well as letters confirming that the suit was now subject to arbitration.
5. Thereafter, the Applicant referred the Court to the case of Kipkorir, Titoo & Kiara, Advocates (2005) 1 KLR 528 in which the Court of Appeal had declared:
“An example of an error of principle is where the costs allowed are so manifestly excessive as to justify an inference that the taxing officer acted on erroneous principles.”
The Applicant noted that the prayers in the Plaint sought an order of injunction, a declaration that the purported notices of termination of the contract between the parties were unlawful, null and void, costs of the suit and any other relief that the Court may deem fit to grant. In the Applicant’s view such were declaratory orders and, as a result, it was erroneous to base instruction fees on the value of the subject matter. The Taxing officer did not consider the prayers in the Plaint at all but only the subject matter. The Applicant felt that a reasonable instruction fee based on the prayers sought would be Shs. 85,000/-.
“……..where the value of the subject matter can be determined from the pleadings, judgement or settlement between the parties……”.
The subject matter in the suit had been t he phase 1 and II Contract as between the parties and the suit had sought to restrain their termination and to nullify termination notices. The value of the two contracts was spelt out in the Plaint at paragraph 3 thereof. The losses that the Applicant was apprehensive of suffering were set out in paragraph 6 of the Plaint. The Defendant maintained that the decision of the Taxing Officer should not be interfered with, as she had not increased the fee but awarded in accordance with scale. It was not correct that the suit was subject to arbitration. The Court record would confirm that, at no time, did the Applicant indicate to the Court about arbitration except in its submissions as regards the party/party Bill of Costs. The Applicant, in its submissions as regards the taxation proceedings dated 5th April 2011 and filed on 6th April 2011, had detailed that the subject matter was at paragraph 6 of the Plaint being the losses that the Applicant was apprehensive of suffering. The Defendant did not consider that the Applicant was being sincere in now submitting that the Taxing Officer should only have looked at the prayers in the Plaint. It also noted that the Kipkorir Titoo case had been cited before the Taxing Officer. In the Defendant’s view there was no error in principle made in taxing the Bill of Costs and the reasons were given as was evident from the Ruling.
“To sue in any proceedings described in paragraph (a) where a defence or other denial of liability is filed; or to have an issue determined arising out of interpleader or other proceedings before or after suit; or to present or oppose an appeal where the value of the subject matter can be determined from the pleadings, judgement or settlement between the parties…..” (Underlining mine).
I have perused the Ruling of the learned Taxing Officer dated 4th October 2011. She details therein that the parties, by consent agreed to argue the Bill by way of written submissions. As a result, she had considered the Bill of Costs, as well as the parties’ written submissions and compared the Advocates (Remuneration) (Amendment) Orders 1996 and 2006. She noted the Order of the Court dated 20th October 2009 when the Plaintiff’s suit was dismissed with costs to the Defendant. The Taxing Officer further noted that the value of the subject matter was the termination of two contracts worth (together) Shs. 152,507,210/-. She had been pointed to the contents of paragraph 3 of the Plaint in this connection. Based on the above figure, she had proceeded to tax the Bill arriving at the total amount for Item No. 1 at Shs. 2,344,741/-.
“The defendant is asking for 75% of the instruction fees as per the Remuneration Order as the suit did not proceed to full hearing.”
DATED and delivered at Nairobi this 7th day of August, 2014.
J. B. HAVELOCK