Otieno, Ragot & Company Advocates v National Bank of Kenya Limited (Civil Appeal 19 of 2018) [2023] KECA 685 (KLR) (9 June 2023) (Judgment)
Neutral citation:
[2023] KECA 685 (KLR)
Republic of Kenya
Civil Appeal 19 of 2018
PO Kiage, F Tuiyott & JM Ngugi, JJA
June 9, 2023
Between
Otieno, Ragot & Company Advocates
Appellant
and
National Bank of Kenya Limited
Respondent
(An appeal from the judgment of the High Court of Kenya at Busia (Kiarie Waweru Kiarie, J.) dated 18th October, 2017 in Misc. Civil Application. No. 64 of 2015)
Judgment
Judgment Of Tuiyott,JA
1.Pursuant to the provisions of paragraph 11(3) of the Advocates (Remuneration) Order, 1962 (the Remuneration Order, a person aggrieved by the decision of a judge to a reference, may, upon obtaining leave of the judge, appeal to this Court. This is one such appeal.
2.Otieno, Ragot & Company Advocates (the appellant or the Advocates) were retained by National Bank of Kenya Limited (Respondent or Bank) to represent it in Busia High Court Civil Case No 34 of 2005 (the primary suit). As sometimes happens, there was a fallout between advocate and client, and the Advocates initiated Busia High Court Misc. Application No 64 of 2015 against the Bank, being proceedings for a claim of fees for services rendered in the primary suit. The taxing officer determined the Bill by taxing item 1 of the Advocates bill of costs at Kshs 887,938.95 with VAT of 142,070.23. The taxing officer did not address the other 7 items of that short Bill.
3.Both the Advocates and the Bank were dissatisfied with the decision of the taxing officer and filed two separate references which were heard together and determined in a composite ruling whose headlines were:
4.Through a ruling delivered on October 18, 2017, the High court granted leave to the Advocates to bring this appeal. In it the Advocates have raised grounds and made submissions which revolve around the following issues:
5.In an advocate-client taxation of costs, such as the one which is the subject of this appeal, statute empowers a taxing officer to summon and examine witnesses, direct production of books, papers and documents. In this regard are paragraphs 13 and 13A of the Remuneration Order which read:
6.Before the determination of a bill, a party to taxation proceedings may, even without the prompting of the taxing officer, offer the evidence, be it by way of witnesses or documents that could assist the party prosecute or resist the bill. In this case, it was the client who sought to rely on the retainer agreement and the onus was on the Bank to produce it before the taxing officer. On this I readily agree with the submission of Mr Otieno David, counsel who appeared for the Advocates in this appeal.
7.In the written arguments filed before us, there is convergence that a reference to a judge is akin to an appeal and this really is the position. Paragraph 11 of the Remuneration Order encapsulates the reference process to the superior court below and any subsequent appeal to the Court of Appeal. It provides;
8.While the proceedings to the superior court below is christened a reference as opposed to appeal as the one to this Court, a reference is a test of the taxing officer’s reasons on objected items. As to whether the parties to a reference can seek to rely on evidence that was not presented to the taxing officer, the parties to this appeal hold conflicting positions. The appellants cite the decision of this Court in Otieno, Ragot & Company Advocates V National Bank of Kenya Limited [2020] eKLR for the argument that, on a reference, a judge can only deal with what had been produced before the taxing officer.
9.The Bank, on the other hand, argues that as proceedings in taxation are a special type of proceedings, they are not strictly bound by the rules of appeal in civil matters. In respect to this particular matter, the Bank contends that having raised the issue of the retainer agreement in its submission before the taxing officer, the issue of the retainer agreement was a live issue before the officer who had power under the rules to call for any documents that, in her opinion, would assist her decide the bill of costs. A further argument is made that nothing in law prevented the Bank from availing the retainer agreement after the decision of the taxing officer it being asserted that if the costs arrived at by the taxing officer was less than the amount agreed in the retainer agreement then there would be no need to produce the retainer agreement but if, as here, the amount exceeded that in the retainer agreement then the Bank was at liberty to avail it before the learned Judge.
10.In Otieno Ragot & Company Advocates (supra) cited by the Advocates, Asike-Makhandia JA observed:
11.Undoubtedly this is the law because once it is accepted that a reference is an appeal from the decision of the taxing officer, then it has to be accepted that the taxing officer’s decision ought to be reviewed only on the material placed before the taxing officer unless there is good reason to allow additional evidence for which leave must be granted by the superior court below. To decide a reference on evidence not before the taxing officer would be to determine the bill on different parameters and would not amount to an appeal.
12.This court in Wanga & Company Advocate v APA Insurance Company Limited [2014] eKLR discusses an additional rationale for the principle that an appeal should only be determined on the evidence presented to the court from which the appeal emanates. This Court approved following passage from the speech of Lord Birkenhead in North Staffordshire Railways Co v Edge (1920) AC 254 cited in Alwi A Saggaf v Abed Algeredi (1961) EA. 767:
13.The contention by the Bank that it was for the taxing officer to call for the retainer agreement is unhelpful because nothing barred it from placing that agreement at the taxation stage as it attempted to do at the reference. The further argument that it only became necessary to present the retainer agreement once the taxing officer taxed the bill for more than the fees agreed in the retainer agreement is as flawed as it is disingenuous. The bill of costs filed by the Advocates was for a sum of Kshs 1, 521,793.88 which was fivefold what the Bank contended to be fees agreed in the retainer agreement and it would have been obvious to Bank that the costs could have possibly have been taxed way beyond the supposedly agreed sum unless the agreement was brought to the attention of the taxing officer. Indeed, in their submissions before the taxing officer the Bank’s lawyers make reference to the retainer agreement but without producing it as follows:
14.Inexorably, none of the parties to the reference could rely on evidence that was not before the taxing officer unless the High Court granted leave for adduction of further or additional evidence, neither sought nor granted in this matter.
15.This is now a good place to consider whether, on the material before the taxing officer, the Bank proved the existence of a retainer agreement. When confronted with the submission that there existed such an agreement, the Advocates filed a further list of documents before the taxing officer which it was used to address the question of the retainer agreement. Notably none of these documents is the retainer agreement nor do they make reference to a retainer agreement. On the basis of these documents, the Advocates answered the issue as follows; the Bank had not availed the retainer agreement; if the agreement ever existed then it could not apply to instructions given two years earlier; as one of the documents, in particular, a letter dated April 1, 2005 makes reference to a fee policy dated July 8, 1999 which was not exhibited, the law envisages an agreement and not a fee policy; there was no evidence that the respondent had signed any such agreement; even if such agreement had been signed it would be unlawful for agreeing on fees that was less than that prescribed under the Remuneration Order; the evidence was that the relationship between the parties and their conduct was inconsistent with any claim of such agreement.
16.The emphatic position taken by the Advocates at that stage was that no retainer agreement existed and that stance was, in my view, insurmountable as the Bank had not produced evidence of that agreement.
17.In clearly a repair exercise, the Bank produced a copy of the said retainer agreement for the first time before the High Court. This would amount to adducting further evidence but without leave of court. And in a further affidavit sworn by counsel David Otieno, the Advocates protested the production of this new evidence. This protest persists when the Advocates made their submissions before the Judge:
18.To be fair to the Advocates, the learned Judge did not address this protest at all and proceeded as though the documents evidencing the retainer contract were properly before the court. To keep fidelity to the law on adduction of additional evidence at an appeal and the laudable objectives and reasons that undergird that principle, it is inevitable to hold that the learned Judge fell into error in deciding the reference on additional evidence that was not properly before the court. The net result of that holding is that the Bank could not prove that there existed a retainer agreement which complied with section 45 of the Advocates Act:
19.On the question whether the proceedings were barred by limitation of time, the learned Judge held:
20.The Advocates fault this finding and submit that learned Judge misunderstood the facts of the case before him and misinterpreted the law.
21.Although the Advocates, in their last portion of their written submissions, suggest that an advocate/client relationship is a special contract and the law of limitation as we ordinarily understand it does not apply to an action for recovery of an advocates’ fees, there was a convergence between them and the Bank that the High Court decision in Abincha & Co Advocate V Trident Insurance Co Ltd[2013] eKLR provides an answer as to when time should begin to run for the purposes of computation of time. But before commenting on the position in Abincha, it is imperative that the Court interrogates the Advocates’ bold proposition.
22.Mr Otieno argues that our courts should not apply the English position because the relationship between a solicitor and his client in England is a simple straightforward contract in which parties are at liberty to agree on the terms they desire. Counsel submits that in Kenya an advocate/client relationship is not an ordinary contract because it is guided by statute which sets out amounts payable for services rendered by an advocate. For instance, it criminalizes the offering of services for free if not done within the pauper brief arrangement or at rates lower than that prescribed by statute. In building on this argument, counsel contends that,as there is no limitation of time for bringing criminal proceedings, the application of the statute of limitation to an advocate’s claim for fees would mean that while the client would at some stage cease to be under an obligation to pay, the advocate will forever be open to criminal liability for failing to charge fees in accordance with the Remuneration Order.
23.The Bank makes no response to this argument.
24.There can be no doubt that an advocate –client relationship is a contract in which the client hires the advocate to offer professional services, at a fee. The contractual nature of the relationship is evident in the meaning assigned to the word 'client' under the Advocates Act;
25.The statute regulates the conduct and discipline of advocates; remuneration of advocates; an advocates fiduciary responsibility to clients; and provides for some aspects of principal –agency nature of the advocate-client relationship. But so are other professionals regulated. The Architects and Quantity Surveyors Act has similar rules for architects and quantity surveyors. The Medical Practitioners and Dentist Act establishes a council which regulates the conduct of registered medical and dentists’ practitioners and discipline any form of professional misconduct.
26.I see nothing in the Advocates Act that suggests that because the professional is regulated, actions based on the contractual relationship between advocates and their clients are exempted from the provisions of the Limitation of Actions Act. The preamble to this latter Act is indicative of its stature as the primary statute in respect to limitation of time for actions and arbitrations. The Act in section 42 excludes its application to certain proceedings:i.Exclusion of certain proceedings1.This Act does not apply to-a.Criminal proceedings; orb.Matrimonial proceedings; orc.An action to recover possession of Trust land; ord.Proceedings by the Government to recover possession of Government land, or to recover any tax or duty, or the interest on any tax or duty, or any penalty for non-payment or late payment of any tax or duty, or any costs or expense in connection with any such recovery; ore.Proceedings to which the Public Authorities Limitation Act (Cap 39) applies; orf.Forfeiture proceedings under the East African Customs Management Act, 1952 (No 12 of 1952), or the East African Excise Management Act, 1952 (No 13 of 1952), of the High Commission; org.Proceedings in respect of the forfeiture of a ship or an aircraft; orh.Civil proceedings brought under the National Social Security Fund Act (Cap 258.), for the recovery of any contributions or any other sum and any penalty or interest thereon; ori.Civil proceedings brought under the Higher Education Loans Board Act 1995, (No 3 of 1995), for the recovery of any loans owed to the Board including any penalty or interest thereon; orj.A proceeding to recover an amount for which a person is liable under section 51 or 52 of the Anti-Corruption and Economic Crimes Act, 2003 (No 3 of 2003) or a proceeding under section 55 or 56 of that Act;k.Actions, including actions claiming equitable relief, in which recovery or compensation in respect of the loss of or damage to any public property is sought.'
27.It is to this exempting provision that one should look to see whether an action is excused from the rigors of the Act. An action for recovery of an advocates fees is not one such action and does enjoy such privilege.
28.The argument that to provide a limit of time for recovery of an advocates fees would expose the advocate to possible criminal liability of failing to charge fees, liability which it is argued is not limited by time, is weak and unconvincing. An advocate ought to know that his relationship with his client is contractual in nature and governed by the Limitation of Actions Act and would be to blame for any consequences that may arise from his/her failure to take out proceedings to recover fees within the time set by statute.
29.With that settled, I turn to the Abincha case where Waweru, J famously held:
30.I am happy to endorse this holding as a correct statement of the law and both sides agree. What is not agreed is how that formula should apply to the facts here.
31.The Advocates argue that because costs in the primary suit had not been recovered, the assignment it had been retained to undertake was not complete and it was for that reason the Bank appointed M/s Otieno Yogo, Ojuro and Co Advocates to take over the conduct of the primary suit. Applying the alternative formula in Abincha, the appellants contend that they were the advocates for the Bank until the Notice of Change of Advocates was filed on September 22, 2015 and the clock, for purposes of limitation, could only begin to tick from that date. In support of this position the Advocates point to the Bank’s letter of May 11, 2015 as a concession and recognition by the Bank that they were their advocates and even appears to issue fresh instructions for recovery of taxed costs in the primary suit.
32.The Bank supports the holding of High court and submits that the Advocates completed their work under the retainer on July 9, 2008 when costs in the primary suit were taxed and any action for recovery of the Advocates cost ought to have been filed before 2014.
33.From the certificate of costs placed before the taxing master, party and party costs in the primary suit was taxed on July 9, 2008. While the Advocates now state that they understood their assignment to the Bank as only ending after recovery of the party and party costs in the primary suit, the manner in which they conducted the brief is not consistent with that position. The advocate/ client bill of costs filed by the Advocates reveals that, after travelling to Busia on 2October 4, 2017 for taxation of the party/party Bill of costs, there was a period of extensive lull until February 25, 2015 when the Advocates drew and formally extracted the certificate of costs. This inaction betrays the Advocates current posturing that they understood their brief to have ended only upon successful recovery of costs because it is clear, at least from their bill of costs, that they did take any action towards recovery of their client’s costs. And it is easy to read the motivation behind the Advocates obtaining the certificate of costs seven (7) years after inaction. It was useful for mounting and supporting their bill of costs filed just a few months later on May 19, 2015! It was not inspired by a desire to recover fees on behalf of the client or to carry out a remaining assignment.
34.Further, the contents of the Bank’s letter of May 11, 2015 does not change the fact that the Advocates, through their own conduct, understood that they had successfully completed their assignment on July 9, 2008 after taxing the party and party costs in the primary suit. In that letter the Bank complains that the Advocates purported to send a 'Final Bill' through a letter of May 5, 2015 when they had much earlier sent a 'Final fee note' dated June 18, 2007 for a sum of Kshs 373,949.00 and which was settled through payment of Kshs 371, 544 on June 29, 2007. The Bank further complains:
35.This Court is unable to construe the letter as instructions to the Advocates to recover the taxed costs in the primary suit. The client is simply complaining about the advocates’ failure to render anaccount of any party and party costs recovered or steps taken towards execution for the costs. A duty to account by the advocate remains even after the contract between advocate and client has come to any end or after completion of the assignment. It is a duly imposed on an advocate by common law and statute.
36.In the end the learned Judge cannot be faulted for holding that the taxation proceedings were time barred.
37.I would propose that the appeal be dismissed with costs to the Respondents.
JUDGMENT OF KIAGE, JA
38.I have had the benefit of reading in draft the judgment of Tuiyott,JA and I am in full agreement with his reasoning, the conclusion he reaches, and the order he proposes.
39.As Joel Ngugi, JA is in agreement, the appeal is dismissed with costs to the respondents.
JUDGMENT OF JOEL NGUGI, JA
40.I concur with the Judgment of my learned brother Tuiyott, JA which I considered in draft, and have nothing useful to add.
DATED AND DELIVERED AT KISUMU THIS 9TH DAY OF JUNE, 2023.F. TUIYOTT…………………………JUDGE OF APPEALP. O. KIAGE…………………………JUDGE OF APPEALJOEL NGUGI…………………………JUDGE OF APPEALI certify that this is a true copy of the original.SignedDEPUTY REGISTRAR.