Mathenge & another v Belle Holdings Limited & 2 others (Environment and Land Miscellaneous Application 54 of 2022)  KEELC 15942 (KLR) (8 March 2023) (Ruling)
Neutral citation:  KEELC 15942 (KLR)
Republic of Kenya
Environment and Land Miscellaneous Application 54 of 2022
SM Kibunja, J
March 8, 2023
Dominic Mureithi Mathenge
Priscilla Wangeci Njoroge
Belle Holdings Limited
Wireless Cell Connection Limited
Balala and Abed Advocates
[Chamber Summons dated the 11th August 2022]
1.The plaintiffs filed the Reference by way of chamber summons dated the 11th August 2022 seeking inter alia, to set aside, review, reverse, or vary the decision of the taxing master dated 20th July 2022, which taxed the bill of costs dated 28th July 2021 to Kshs 704,026, for among others finding that party to party costs are subject to VAT. The application is based on the four (4) grounds on its face and supported by the affidavits sworn by Hadassah Rimunya, advocate, and Dominic Mureithi Mathenge, 1st plaintiff, on the 17th August 2022 and 15th November 2022 respectively. It is the plaintiff’s case that the taxing master erred in finding that party to party costs are subject to VAT. That further, the taxing master failed to give reasons for taxing each item as he did, which was contrary to the provisions of the Advocates Remuneration Order.
2.The 3rd respondent opposed the reference through the replying affidavit sworn on the 4th October 2022, by Mohamed S. Balala. The 3rd defendant’s case is that the bill of costs taxed through the ruling of 20th July 2022 had been drawn to scale and the taxing master exercised his discretion judicially in taxing the bill. The plaintiffs had not opposed item 28-30 on the bill of costs hence cannot be allowed to do the same on reference. The deponent argued that the VAT was properly included as the 3rd respondent, being a law firm, was subject to taxation. The court was urged to dismiss the reference with costs.
3.The learned counsel or the plaintiffs and the 3rd defendant filed their submissions dated the 30th November 2022 and 30th January 2023 respectively, which the court has considered.
4.The issues before the court for determination are as follows:
5.The court has carefully considered the grounds on the reference, affidavit evidence, submissions by the learned counsel, superior courts decisions relied on therein and come to the following conclusions;a.Where a party is dissatisfied with the decision of the taxing master, they are at liberty to object to the same to this court as provided for by Rule 11 of the Advocates Remuneration Order which provides that:1.“Should any party object to the decision of the taxing officer, he may within fourteen days after the decision give notice in writing to the taxing officer of the items of taxation to which he objects.The plaintiffs objected to the ruling of 20th July 2022 on the taxation of various items on the bill of costs dated the 28th July 2021. However, they have not demonstrated that they first wrote to the taxing master seeking reasons for the decisions on the various assessments as obligated to do by the provision set out above. That had they first sought for the reasons for the items objected to, the taxing master would have given the reasons for his decision to the party dissatisfied with the said decision. Where the reasons sought are not in the taxing master’s ruling, it is up to the parties to request for the said reasons at the earliest possible time within 14 days as stipulated under Rule 11. It should follow therefore that, where the said reasons are not sought, any reference filed thereafter would be premature.b.However, in the interest of justice, and so as to save judicial time as expressed in Section 3A of the Civil Procedure Act, chapter 21 of Laws of Kenya, the court will proceed to consider the merit of the reference filed herein. The position I have taken to proceed to the merit of the reference despite being prematurely filed is based on the Court of Appeal decision in the case of Kipkorir, Titoo & Kiara Advocates v Deposit Protection Fund Board  eKLR where it held that:c.The plaintiffs have objected the taxation of item numbers 2, 3, 8, 9, 12, 13, 14, 15, 16, 17, 18, 19, 22, 23, and 31 on the ground that the taxing master generalized the reasons for taxing the items which they termed as excessive and repetitive. Both parties have submitted on the principles that govern the assessment of costs in the application of the schedules under the Advocates (Remuneration Order). The Court of Appeal in Kipkorir, Titoo & Kiara Advocates v Deposit Protection Fund Board (supra) held that:Though the plaintiffs have opposed the taxation of the bill of costs dated the 28th July 2021, they have failed to provide the court with the said bill of costs. That could have been done by attaching a copy to the supporting or further affidavits. The taxing master’s ruling of 20th July 2022 has however been annexed to the further affidavit sworn on the 15th November 2022, and luckily, the 3rd respondent has attached a copy of the bill of costs dated the 28th July 2021 to their replying affidavit sworn on the 4th October 2022. I have perused all the items on the bill of costs taxed, as well as the impugned items 2, 3, 8, 9, 12, 13, 15, 16, 17, 18, 19, 22, 23 and 31 and it is apparent from paragraph 2 of the ruling that the taxing master applied the provisions of Schedule 6 of the Advocates (Remuneration Order) 2014. The schedule among others makes provision for routine drafting, attendances, registry work as well as copying and making perusals. I am of the view that the taxing master was within his discretion to increase or decrease the amounts stipulated in the schedule, and I do not see where he acted on the wrong principle in making the said awards. The figures are generally consistent with what is provided for in the schedule and I find no basis to disturb the amounts awarded.d.On the issue of Value Added Tax, the plaintiffs argued that a party to party bill of costs does not fall within the taxable income described in Section 5 of VAT. The Section provides,The plaintiffs’ counsel cited in their submissions the decision of the High Court in the case of Pyramid Motors Limited v Langata Gardens Limited (2015) eKLR, where the court was of the view that there was no taxable supply in a party to party bill of costs, and that VAT could not apply since neither of them fetched nor received services from the other. The counsel further submitted that the above decision has been cited with approval in the case of James Nyangiye & Others versus Attorney General  eKLR. A different position was taken in the case of Four Farms Limited v Agricultural Finance Corporation  eKLR, where the High Court held that:The counsel for the 3rd respondent cited in their submissions the Court of Appeal case of E. A. Building Society Ltd versus A. C. A D’Souza & Another C.A. No. 59 of 1995, where the court inter alia held that;Though the above Court of Appeal decision was made years before that of the High Court in Pyramid Motors Ltd versus Langata Gardens Ltd [supra] and James Nyangaiye & Others versus Attorney General [supra], there is no indication whether it was brought to the attention of the courts dealing with those two cases. The decision of the Court of Appeal in the above case on the place of VAT in bill of costs is binding to this court, and I am in agreement with the position taken by the court on a similar issue in the case of the Four Farms Limited v Agricultural Finance Corporation  eKLR.e.The upshot of this ruling is that the reference dated 11th August 2022 has totally failed and under section 27 of the Civil Procedure Act chapter 21 of Laws of Kenya the plaintiffs should pay the costs to the 3rd respondent.1.The court therefore finds and order as follows;a.The reference [chamber summons] dated the 11th August 2022 has no merit and is hereby dismissed.b.The plaintiffs are to pay the 3rd defendant’s costs in the reference.c.The taxing master’s decision in the ruling of 20th July 2022 in respect of the bill of costs dated the 28th July 2021 is hereby upheld.
6It is so ordered.
DATED AND VIRTUALLY DELIVERED THIS 8TH DAY OF MARCH 2023.S. M. KIBUNJA, J.ELC MOMBASA.In The Presence Of:Plaintiffs: Absent.Defendants : AbsentCounsel : M/s Rimunga for Plaintiffs. M/s Osino for 3rd Defendant.Wilson – Court Assistant.S. M. KIBUNJA, J.