Pyramid Motors Limited v Langata Gardens Limited [2015] eKLR

Kenya Law

Automated Summary

Key Facts

Pyramid Motors Limited sued Langata Gardens Limited for specific performance to complete the sale of Apartment A5 Block 6 (LR No. 18591/9) and registration of a lease. The Plaintiff also sought damages, an injunction, and costs. After a trial spanning 2012, the court granted specific performance and the injunction in November 2013. The Plaintiff filed a party-and-party Bill of costs in December 2013, taxed by the Master in April 2014. The Defendant challenged the taxation of 28 items in ELC 580 of 2010 and 40 items in ELC 581 of 2010, arguing errors in applying the Advocates Remuneration Order, awarding interest, and VAT. The court found the application was filed in time, confirmed the Master applied the correct remuneration principles, corrected the VAT and interest misclassifications, and ordered each party to bear their own costs.

Transaction Type

Property sale and lease agreement dispute

Issues

  • The court considered whether the Defendant's application for reference was filed within the 14-day period stipulated under the Advocates Remuneration Order, which requires parties to challenge a Taxing Master's decision within that timeframe.
  • The court determined if the Taxing Master erred by awarding interest on costs, as the Order does not grant such authority, and whether this was a typographical error for VAT.
  • The court examined whether the Taxing Master made legal errors in the assessment and taxation of various items in the Bill, particularly in the application of the Advocates Remuneration Order schedules.
  • The court reviewed whether the Master erred in awarding VAT, considering that the Party and Party Bill of costs does not involve a taxable supply between the parties as per the VAT Act.

Holdings

  • The court directed that the Bill of costs be taxed at Kshs. 265,440/= for ELC 580 of 2010 and Kshs. 271,249/= for ELC 581 of 2010, with each party bearing their own costs due to partial success.
  • The Taxing Master erred in awarding interest on costs, as Taxing Officers lack jurisdiction to award interest. The court corrected the error, treating the interest amount as Value Added Tax (VAT) instead.
  • The Taxing Master erred in applying VAT to the Party and Party Bill of costs under the Value Added Tax Act, 2013, as there was no taxable supply of goods or services between the parties. The VAT was ordered to be taxed off entirely.
  • The Taxing Master correctly applied Schedule VI of the Advocates Remuneration Order 2009 to assess routine drafting, attendance, and perusal charges for items 1, 2, 7, 8, 17, 21, 22, 23, 24, 26, 27, 28, 32, 35, 36, 37, 38, 40, 42, 43, 44, 45, 46, 47, 48, 51, 52, and 53 in both ELC 580 and 581 of 2010.
  • The court ruled that the Defendant's reference application was filed within the prescribed time period (14 days after receiving the Taxing Master's reasons on 9th May 2014), finding it competent and allowing it to proceed.

Remedies

  • Both parties were partially successful, and the court directed that each party bear their own costs, as neither was ordered to pay the other's expenses.
  • The court directed that the Value Added Tax (VAT) item be completely and wholly taxed off from the costs awarded, correcting an error by the Taxing Master.

Contract Value

5500000.00

Legal Principles

The court outlined principles for assessing legal costs, emphasizing that costs should not prevent access to justice, ensure fair reimbursement for successful litigants, attract legal recruits, and maintain consistency. These principles were applied to review the Taxing Master's assessment of costs in the case.

Precedent Name

  • Joreth Limited -v- Kigano & another
  • Premchand Raichand Ltd -v- Quarry Services of East Africa Ltd (No. 3)
  • Kipkorir, Titoo & Kiara Advocates -v- Deposit Protection Fund Board

Cited Statute

  • Advocates Remuneration Order
  • Value Added Tax Act

Judge Name

J. L. Onguto

Passage Text

  • The court held that the Taxing Master erred in awarding VAT, stating that VAT is chargeable only on taxable supplies. Since the bills were party-and-party costs, neither party supplied or fetched services from the other.
  • The court affirmed the Taxing Master's correct application of the Advocates Remuneration Order 2009 for routine drafting and attendance charges, noting the discretion to adjust amounts was not exercised.
  • The court determined that the Defendant's application was filed within the prescribed period, as the Taxing Master only provided reasons for the decision on 9th May 2014, making the deadline 23rd May 2014. The reference was filed on 15th May 2014.

Damages / Relief Type

  • Permanent Injunction
  • Specific Performance