No full payment of Sh300 million to lawyer

A lawyer’s conveyance services cannot be paid in full if a land transaction deal aborts midway.

This was evident in a case in which a Sacco’s bid to purchase land worth Sh8.8 billion flopped after its lawyer had done due diligence and prepared sale documents.

Magereza Sacco Society had contracted the services of Ratemo Oira and Company Advocates in the purchase of two parcels of land at a cost of Sh300 million.

The law firm then conducted due diligence on behalf of the Sacco and prepared the required documents.

But the Sacco changed its mind in buying the land in Ruai measuring 1,652 acres and thereafter declined to pay the law firm, which filed an advocate-client bill of costs in 2015 on the grounds that the transaction ought to be taxed based on the property value.

The application was first dismissed by then-deputy registrar Sharon Wanyuli on the grounds that there was no sale agreement or transfer to show the transaction took place but was later reinstated for taxation by High Court Judge Mary Gitumbi in April 2016. The judge ordered that the bill of costs be taxed afresh by Deputy Registrar Isabella Barasa.

Ms Barasa taxed the instruction fees at Sh100,000, which she said was fair given that the bill originated from a transaction that was not completed.

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Aggrieved by the decision, the law firm appealed the ruling at the High Court but on May 31, 2017, Lady Justice Kossy Bor ruled that the deputy registrar applied the correct principles in arriving at the figure she awarded.

This prompted the firm to move to the Court of Appeal where it claimed the judge erred by failing to consider that the full instruction fee to transact conveyancing is earned the moment the advocate is engaged and the fee must take into account the value of the property.

The law firm indicated in its suit papers that it did some due diligence on the property including conducting a search, facilitating payment of land rates and corresponding with the office of the Commissioner of Lands and the Sacco, and drafting a transfer instrument.

No loss

However, Sacco told the court that for an advocate to be entitled to instruction fees assessed on the value of the property, the transaction must be carried out to completion.

In the Sacco’s view, conducting due diligence, facilitating payments of rates and rent without evidence of an executed sale agreement and the transfer did not amount to complete conveyance.

Appellate Judges Philip Waki, Mohammed Warsame and Fatuma Sichale said the firm’s scope and nature of work was minimal and they did not think it suffered substantial or any loss in the Sh100,000 determined by the taxing master.

“There was no error or mistake committed by both courts and we entirely agree both courts exercised their discretion properly and appropriately,” read the judgment delivered on October 11.

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Ratemo OiraCompany AdvocatesMagereza Sacco SocietyLawyers