Youth Enterprise Development Fund Board v Macharia t/a Platinum Auctioneers (Miscellaneous Civil Application E118 of 2021) [2022] KEHC 9913 (KLR) (8 July 2022) (Ruling)
Neutral citation:
[2022] KEHC 9913 (KLR)
Republic of Kenya
Miscellaneous Civil Application E118 of 2021
TM Matheka, J
July 8, 2022
Between
Youth Enterprise Development Fund Board
Applicant
and
Francis Mwatha Macharia t/a Platinum Auctioneers
Respondent
Ruling
1.On the 9th July 2021 Francis Mwatha Macharia T/A Platinum Auctioneers filed the Bill of Costs dated 11th June 2021 seeking for a total amount of Ksh. 1,175,230.6782/= as shown below: -
| ITEM NO. | PARTICULARS OF CHARGES | AMOUNT CHARGEDKSH. | |
| 1. | Receipt of letter of instruction | 1000.00 | |
| 2. | Filing possession | 4000.00 | |
| 3. | commission based on sale and expensesReserve price of L.R No. Dagoretti/Riruta/1280/Ngando area,dagoretti Nairobi City at Ksh.18,500,000/= | ||
| Ksh.0 to Ksh.600,000 at 10% | 60,000 | ||
| Ksh.600,001 to Ksh.3,000,000 at 5% | 119,99.95 | ||
| Over Ksh.3,000,001 at 2% | 309,99.98489,999.93 | ||
| 4 | Mileage from NakuruTo Karen during services(148*43)2To Karen during services(148*43)2 | 12,298.0012,298.00 | |
| 5.6. | Inspection of the propertyService of the 45 days redemption notice | 3,000.005,000.00 | |
| 7. | Printing and distribution of handbills | 5000.00 | |
| 8. | Advertisement as per the Space Order(Daily Nation) | 48,024.00 | |
| 9. | To court fees on Bills of Costs | 325.00 | |
| 10. | To service of Bill of Costs at Nairobi | 1400.00 | |
| 11. | To court fees on affidavit of service | 75.00 | |
| 12. | To attending court for taxation | 3,000.00 | |
| Subtotal | 585,419.93 | ||
| Advocates instruction fees | 90,000.00 | ||
| V.A.T of 16% of Ksh.675,419.93 | 108,067.1888 | ||
| TOTAL | 783,487.1188 | ||
| Amount payable when a sale has been stayed. Half of the fees is payable to auctioneer | 391,743.5594 | ||
2.The Deputy registrar considered the above Bill of Costs and delivered her Ruling on 2nd November, 2021 stating;
3.The Applicant herein was dissatisfied with the said Ruling and filed an application by way of Chamber Summons on 5th of November, 2021 pursuant to Rule 55(4) (5) of the Auctioneers Rules 1997 seeking for orders that:-(i)The Honourable Court be pleased to set aside the ruling delivered in its entirety and that the Honourable Court do make its own finding.(ii)The Costs of this Appeal be borne by the Respondent.
4.The Application is premised on grounds that:-1.The Honourable Registrar erred in fact and law by failing to find that the Appellant was not the proper party to be subject to the respondent’s taxed bill of costs dated the 11th June, 2021.2.The Honourable Registrar erred in fact and law by taxing the Respondent’s bill of costs dated the 11th June, 2021 without any supporting evidence.3.The Honourable Registrar erred in law and fact by proceeding to tax items and or charges under the respondent’s bill of costs dated the 11th June, 2021 not provided for under the law.4.The registrar erred in law by taxing the respondent’s bill of costs dated the 11th June, 2021 under a repealed regime.5.The Honourable Registrar erred in law and fact by taxing the respondent’s bill of costs dated the 11th June, 2021 without the participation of the appellant or it’s duly appointed representative.
5.The Respondent Francis Mwatha Macharia on 16th February, 2021 swore a Replying Affidavit in opposing the Application.
6.He deponed that there are no merits whatsoever in the grounds of appeal raised and the contention that the appellant was not a proper party is baseless as the respondent annexed materials to the Notice of Motion dated 3rd June 2021 seeking to tax the auctioneer’s costs demonstrating that it was a proper party and that the annexed supporting affidavit to the said application demonstrated how the auctioneer’s fees arose.
7.He deposed that the taxing officer’s Ruling was sound as she was satisfied that the appellant had been duly served with the Bill of Costs and Taxation Notices and that the appeal lack merit and ought to be dismissed.
8.The application was canvassed through Written Submissions.
Appellant’s Submissions.
9.The appellant submitted that Farimu Enterprises Limited was a defaulting party and a proper party to meet the respondent’s expenses or charges in this case. That rule 7 of the Auctioneer’s Rules 1997 provides that a debtor shall pay the charges of the auctioneer unless the debtor;a)cannot be found,b)he has no goods upon which execution can be levied or,c)The sale proceeds are insufficient to cover the charges, in which cases the creditor shall pay the charges or the deficiency thereof.
10.The Appellant argued that the debtor is at all times the person or the entity liable to the respondent for their charges and that only when the circumstances under Rule 7 (a)-(c) arise is when the appellant can pay the respondent’s charges or the deficient thereof.
11.He also argued that the Ruling ought to be set aside as it was taxed without their participation.
12.He submitted that items number 4, 5 and 7 of the respondent’s Bill of Costs are not supported by any document and they ought to have been taxed off from the bill of costs for lack of evidentiary proof.
13.With regard to item 8, he submitted that the same is similarly unsubstantiated as there are no attached receipts and or newspaper cutting and or excerpt.
14.The Appellant’s Advocate further submitted that items 5, 6, 7, 8, 9, 10, 11 and 12 are not provided for by the law under the auctioneers charges in the auctioneers rules and that it will be travesty of justice to allow the said Ruling to stand.
15.He argued that the registrar failed to consider the fact that the sale herein which was the basis of appellant instructions to the respondent had been stayed therefore any amounts to be taxed would be halved to give the total sums due and or liable to be paid as provided for under the schedule of auctioneers charges in the auctioneers rules.
16.He stated that the registrar’s taxed figure was exaggerated as it was not halved as required by the law.
17.It was the Applicant’s submissions that Schedule 4 of the Auctioneers Act which was relied on by the Registrar was amended vide Legal Notice No.144 of 2009 dated 18th September, 2009 which amendment put in place a whole new schedule for the auctioneer’s charges and as such the Deputy Registrar relied on a repealed law in her taxation.
18.The appellants therefore proposed the following:-1.Items 1 and 2 to be taxed as drawn.2.Item 3 be taxed at Kshs.370, 000/= in line with paragraph 6 of the schedule for auctioneer’s charges; that the reserve price for the property was Kshs. 18,500,000/= ,that being what could have been the realized sale of property .That the said paragraph stipulates that property whose sale value is in excess of Kshs.3,000,000/- the charges that accrue to the auctioneers is 2% of that sale value therefore 2% of Kshs. 18,500,000/=3.Items number 4, 5, 6,7,8,9,10,11,12 should be taxed off for lack of supporting documents.
19.He stated that the Bill of Costs should be taxed at Kshs.370,000/= plus 16% VAT making it Kshs.429,200/- , halved to give the total sum of Kshs.214,600/- due to the fact that the sale was stayed as provided for under paragraph 7 of the schedule of auctioneers charges.
20.That the sum payable in any event to the respondent is Kshs. 214,600/= as calculated above.
Respondent’s Submissions.
21.The respondent filed his submissions on 4th of April, 2022.
22.He submitted on four issues. Namely;-
1. Whether the appellant was the proper party to the respondent’s bill of costs and whether or not the Appellant was served with the taxation notice.
23.On this issue the counsel submitted in the affirmative. He stated that it is evident from the appellant’s instructions to the respondent vide a letter dated 31st January, 2018 and a letter of instruction to seize, repossess and sell land title no. Dagoretti/Riruta/1280 that the Appellant was a proper party.
24.The respondent submitted that the Appellant was duly served with the taxation notice dated 3rd September 2021 as evidenced by Affidavit of service on record.
2. Whether the respondent’s bill of cost was taxed without any supporting evidence.
25.The Respondent’s Advocate submitted that the fourth schedule part II of the Auctioneer’s Rules of 1997 provides for auctioneer charges. He stated that under item 4 is provided for under item 11 which provides for fees “on travelling expenses as published by the Automobile Association from time to time shall be allowed at three times the scale”
26.With regard to items 5,7 & 8 the respondent submitted that they are provided for under item 4 of auctioneers rules 1997 on “transport, storage, advertising, insurance and other disbursements expenses where attachment or repossession is stayed or postponed or money tendered after attachment or repossession but before sale”
3. Whether there was taxation of items or charges not provided under the law.
27.The respondent reiterated that items 5, 6, 7,8,9,10,11 and 12 are impliedly provided for under Fourth Schedule Part II of the Auctioneers Rules 1997 under item 4.
4. Whether the taxation was under a repealed regime.
28.He submitted that the fourth schedule of the Auctioneer’s Rules is applicable law in assessment of Auctioneers fees and charges in this Republic.
29.He argued that the Auctioneers Rules of 1997 were amended vide Legal Notice No.144 of 2009 and established the current Fourth Schedule which the Honorable Deputy Registrar used to tax the respondent’s bill of costs as clearly outlined in her ruling.
30.He contended that the allegation by the appellant that the ruling was founded on a repealed schedule has no basis and ought to be struck out for being a waste of this court’s precious time.
Issues for Determination1.Whether the Applicant was served with the taxation notice and the Respondent’s bill of costs.2.Whether the Applicant was the correct party to taxation herein.3.Whether Auctioneers charges listed under items 5, 6, 7, 8, 9, 10, 11 and 12 are provided for under the law.4.Whether items number 4, 5, 7 & 8, 10 should be taxed off for lack of evidentiary proof.5.Whether the taxed figure ought to have been halved noting that execution was stayed.
Analysis
DATED, SIGNED, AND DELIVERED THROUGH EMAIL THIS 8TH JULY 2022.MUMBUA T MATHEKA,JUDGE.CA EdnaOkwiri & Co. AdvocatesM/S Murimi Ndumia, Mbago & Muchella, Advocates,
Issue No. 1 -Whether the applicant was served with the Taxation Notice and the respondent’s Bill of costs
31.The Respondent attached an email excerpt and a hearing notice showing that the Appellant was duly served with the taxation notice dated 3rd September, 2020.
32.The Appellant did not specifically controvert this position.
Issue No.2 Whether the applicant was the correct party to taxation herein.
33.The appellant submitted that the Deputy Registrar ought not to have taxed the respondent’s bill as against it because Rule 7 of the Auctioneers Rules, 1997 clearly provides that the auctioneer’s charges shall be paid by the debtor the only exceptions being those set out in the rule. The appellant submitted that the respondent did not bring himself within those exceptions and he ought to have pursued the debtor to recover his fees.
34.Rule 7. On Payment of auctioneer’s charges expressly provides as follows:-
35.It is therefore clear that the debtor shall pay the auctioneers charges and the auctioneer can only pursue the Appellant for payment once the above enumerated exceptions are established.
36.In this case it not in dispute that the defaulting party was Farimu Enterprises Limited. The letter dated 31st January, 2018 expressly states so.
37.The Respondent in their application dated 3rd June 2021 before the Lower Court did produce any evidence to show that the debtor could not be found, or that it had no goods upon which execution could be levied or that the sale proceeds were insufficient to cover his charges.
38.However, the Appellant was the instructing party in this case. Vide a letter dated 31st January, 2018 the Appellant instructed the Auctioneers to seize/repossess and sell land title no. Dagoretti/Riruta/1280. It is not in dispute that the auctioneers proceeded to act as instructed.
39.In the case of Kenya Oil Company Limited vs Jovan H. Kariuki t/a Moran Auctioneers [2020] eKLR in an application which only sought leave to appeal out of time against the decision of the taxing master but also addressed the pertinent issue of who is liable to meet the auctioneer’s fees and costs, Onkwany J. held as follows:-
40.Similarly, in Francis Mwatha Macharia t/a Freeman Auctioneers Services vs Tata Africa Holdings (Kenya) Limited [2019] eKLR the court stated;
41.From the foregoing precedents, it is evident that the Appellant was the instructing principal and is bound to meet the costs incurred by the Auctioneers.
Issue No.3 - Whether Auctioneers charges listed under items 5, 6, 7,8, 9, 10, 11 and 12 are provided for under the law.
42.It is imperative to note that item No.8 was taxed off by the Deputy Registrar in her ruling. The respondent has not cross-appealed on the same and it is not for dealing with by his court.
43.The Appellant argues that the above items are not provided for under the Auctioneers rules while the Respondent’s position is that they provided by implication under Part II of the Fourth Schedule.
44.Item No. 5 is on inspection of property; item no. 6 is on service of the 45 days redemption notice; item no. 7 item is on printing and distribution of handbills, item no. 9 is to court fees on bill of costs, item no. 10- to service of bill of costs at Nairobi; item no. 11- is to court fees on Affidavit of Service while item no. 12 is to attending court for taxation.
45.Part II of the fourth schedule is on auctioneer’s charges. Under item 4 it provides for “ transport, storage, advertising, insurance and other disbursement expenses where attachment or repossession is stayed or postponed or money tendered after attachment or repossession but before sale” without expressly stating the charges thereof.
46.It is my view therefore that items number 7 is advertisement and would fall under disbursement expenses while item 10 falls under transport as provided for in the above paragraph.
47.However, items number 5, 6,9,11 & 12 are not provided for and they should be completely taxed off.
Issue No. 4 - Whether items number 4, 5, 7, 8 & 10. should be taxed off for lack of evidentiary proof.
48.Items no. 4 – is on transport from Nakuru to Karen.
49.Item 5- is on inspection of property.
50.Item 7- is on printing and distribution of handbills.
51.Item 8 -was addressed by the Deputy Registrar and as discussed above this court should not address it.
52.Item 10 – is on service of bill of costs at Nairobi.
53.The appellant submitted that items number 4, 5, 7 were unsupported and they ought to be taxed off for lack of evidentiary proof and that item number 10 is not provided for under the law.
54.On the part of the respondent, it was their submissions that item 4 is provided for under item 11 which provides for fees “on travelling expenses as published by the Automobile Association from time to time shall be allowed at three times the scale” while items number 5, 7 and 10 are impliedly provided for under Schedule 4 of the Auctioneers Rules of 1997.
55.The Auctioneers charges are provided for at Part II of the Fourth Schedule. That schedule does not provide for inspection of property item 5;
56.Item 7 is on Disbursements while items 4 and 10 are on transport. The Respondent did not provide an evidence on these specific expenses. The above items were therefore unsupported and they should be taxed off.
Issue No.5- Whether the taxed figure ought to have been halved noting that execution was stayed
57.The Appellant contended that the taxed figure ought to have been halved noting the sale was stayed. This position is incontrovertible.
58.Indeed the Auctioneers Regulation 1997 under Part II of the Fourth Schedule at paragraph 7 provides that if sale is stayed the auctioneers are entitled to half of fees plus expenses.
59.The Deputy registrar in her ruling did not halve the final taxed figure as required under the above law.
60.In conclusion, the Applicant’s application by Chamber Summons dated 5th of November, 2021 is allowed in the following terms: -i.The Ruling of the Deputy Registrar be and is hereby set aside and substituted as followsii)Items number 1 and 2 are taxed as drawn.iii)Item 3, the reserved price of Kshs. 18,500,000/= is taxed at 2% at Kshs. 370,000/=iv)Items number 4, 5, 6, 7, 8, 9, 10, 11 and 12 are taxed off as they are either not provided for under the Auctioneers Rules or lack evidentiary proof.v)Item on VAT to remain at 16%vi)The rule say that the auctioneer is entitled to half the fees; i.e. half of Kshs. 370,000/= which is Kshs. 185,000/=vii)Then expenses: 1tem 1 and 2 = Kshs. 5,000/=viii)Total =Kshs. 190,000/= add 16% VAT at Kshs. 30,400/=ix)Total taxed at Kshs. 220,400/=x)Each party to bear its own costs.