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Relief for Tuju as court chops bank’s legal fee claim by 99pc
Former cabinet secretary Raphael Tuju before addressing journalists at Ethics and Anti-Corruption Commission (EACC) offices in Nairobi on March 25, 2025.
The East African Development Bank (EADB) bid to recover Sh50.4 million from former cabinet secretary Raphael Tuju in the form of legal costs has suffered a blow after the High Court slashed the amount to Sh750,000, marking a 98.5 percent chop.
Justice Josephine Mong'are reversed the decision of the court's deputy registrar to award the bank's advocates fees of Sh50.4 million, stating that the amount was based on wrong calculations and misdirection.
The fees were for the costs incurred by the bank four years ago while defending a claim of Sh3.3 billion in damages by Mr Tuju and the cancellation of a Sh1.1 billion loan.
However, Justice Mong'are said the payment of Sh50.4 million was not worth it because the dispute did not proceed to a full hearing and the value of the subject could not be discerned from the pleadings.
"Noting the court has found that in the present suit, the value of the subject matter is not discernible from the pleadings, the court hereby retaxes the party and party bill on instructions fees and reduces it from Sh50,423,174 to a sum of Sh750,000," said Justice Mong'are.
While allowing an application filed by Mr Tuju seeking reassessment of the bill, the judge said the sum of Sh750,000 as advocate instruction fees were reasonable and adequate compensation in the circumstances.
"The court, being satisfied that the value of the subject matter of the suit is not discernible from the pleadings finds that the said sum of Sh750,000 on instructions fees is reasonable and adequate compensation," she stated.
The fee note involved a case filed in court by Mr Tuju and his trading company, Dari Limited, in 2021 seeking various reliefs against the bank, including an order for rescission of the contract entered between Dari and the bank for the provision of a loan facility in the amount of Sh1.119 billion.
They also sought special damages for $30.9 million plus an unspecified amount of general damages for breach of contract.
In determining the bill of costs, the deputy registrar in the ruling dated September 29, 2023, had found that the value of the dispute was Sh3.3 billion.
The deputy registrar arrived at the figure after picking the sum of $30.9 million and multiplied this with a rate of Sh107, which she argued was the prevailing exchange rate of the US dollar to the Kenya shilling at the time of filing the case, and determined that was the subject value of the suit as discernible from the pleadings.
Justice Mong'are, however, found that the value of the dispute was not discernible from the pleadings.
The bank had been awarded the costs of the case since it was the successful litigant, and according to practice, it had to be fairly reimbursed for the costs incurred.
Justice Mong'are explained that the correct procedure was to have the deputy registrar apply her discretion and return a reasonable amount as instruction fees, especially considering the fact the case did not proceed to trial but was struck out at a preliminary stage by the court and on application by the bank.
"The award of instructions fee at Sh50.4 million arising from a subject matter value of $30.9 million or Sh3.3 billion was, in my view, a misdirection and an error on the part of the taxing master. It is clear from the pleadings that the said sum was not pleaded as liquidated damages and could therefore not be used as the basis for taxation," said the judge.
She added that there was no explanation from the deputy registrar as to why the figure of Sh1.119 billion that was pleaded as the first prayer in the case was not applied as the value of the subject matter for purposes of finding the court fees.
"It is not in dispute that the suit was struck out at the outset on a preliminary application for the being 'res judicata' (relitigation). I find therefore in choosing to rely on the figure of $30.9 million as the value of the subject matter, the taxing master committed an error of principle as she took this to mean that the said claim was a liquidated claim and that the plaintiff would automatically be awarded the same by the court upon proving their case on the standard of proof set out by law, that is on a balance of probabilities," said the judge.
According to the judge, taxation of costs is not a mathematical exercise but entirely a matter of opinion based on experience.
The bank together with its officials Vivienne Yena Apopo, David Odongo, and Jotham Mutoka wanted the court to dismiss the application and uphold the deputy registrar's decision.
