IN THE HIGH COURT OF
PRINCIPAL REGISTRY
Civil case number 238
of 2000
Between
THE PREFERENTIAL TRADE
AREA BANK ……Plaintiff
And
ELECTRICITY SUPPLY
COMMISSION
OF
And
ATTORNEY GENERAL
………………………………2nd Defendant
And
MBENDERA, CHIRAMBO
& ASSOCIATES ……. Applicant
CORAM: D F
MWAUNGULU (JUDGE)
Mbendera and Nkhono,
Legal Practitioners, for the applicant solicitors
Msowoya, Legal
Practitioner, for the 1st Defendant
Chisanga, Legal
Practitioner, for the Plaintiff
Kamanga, Chief
Parliamentary Draftsman, for the Attorney General
Katunga, the official
interpreter
Mwaungulu, J
ORDER
Introduction
The several
applications and counter applications in this matter arise from a loan
agreement between the plaintiff bank, Preferential Trade Area Bank, and two
defendants, the Electricity Supply Commission and the Malawi Government. The
intense legal battle has little to do with the loan. The Preferential Trade
Area Bank, the Electricity Supply Commission and the Government of the
The Preferential Trade
Area Bank, so it seems, agrees the defendants are liable to pay costs to
Mbendera, Chibambo and Associates, its initial legal practitioners. The
Preferential Trade Area Bank does not have to pay these costs. The Government of
the
Background
On
By 13th
December, 1999 when Mbendera, Chibambo & Associates, on instruction by the
Preferential Trade Area Bank, demanded payment, the Electricity Supply
Commission of Malawi had arrears of the equivalent in various currencies of the
Agreement of US$ 2, 394, 748.10, according to the Preferential Trade Area Bank,
and US$ 2, 021, 803.91, according to the Electricity Supply Commission of
Malawi. Up to the Preferential Trade Area Bank’s instructions to Mbendera,
Chibambo & Associates, the Electricity Supply Commission of Malawi defied
many reschedules by the Preferential Trade Area Bank.
On
Mbendera, Chibambo
& Associates thought the Government of the
The compromise
The Government of the
The costs dispute
On
“As for your fees, Mr. Chibambo
indicated that the firm would negotiate the matter with the Malawi Government.
Notwithstanding that you are entitled to charge 15%, we did indicate our
concern about the amount to be charged and the undersigned had pointed out to
Mr. Chibambo that the issue of fees is what made the bank change the last
lawyer who was representing the Bank. We hope that the fees to be negotiated
will be reasonable. We wish to point out that there was no agreement made
between the parties that the fees should be paid by the Bank. It was made very
clear that these were for the account of the Malawi Government.”
Negotiations for costs
and on the court’s order agreed earlier began immediately after this letter.
They did not go very far. Mbendera, Chibambo & Associates decided to go to
court on the aspects where there was no agreement. On
“Gentlemen, while it is conceded that
your firm has provided services to Preferential Trade Area Bank in relation to
the matter herein, for which you deserve to be remunerated, it is the
considered view of these Chambers that, to the extent that your firm has not
collected any money on behalf of PTA Bank, no fees are payable to your firm in
accordance with the Legal Practitioners (Scale and Minimum Charges) Rules (Cap
5:04 sub. leg. p 29). All moneys which have been or will become payable to PTA
Bank are payable in accordance with the arrangements agreed between the Malawi
Government and PTA Bank as evidenced in the letter Reference Number
LEG/MK/02/MPTC & Electricity Supply Commission of Malawi/00218a dated 18th
February issued by the PTA Bank.”
The proceedings
On
Ex parte application unnecessary for judgment
for costs only
The Preferential Trade
Area Bank’s action was for a liquidated sum. Where a writ is so endorsed, but
the plaintiff has by satisfaction, compliance, payment or any reason obtained
relief, the plaintiff is entitled under Order 13 of the Rules of the Supreme
Court in default of notice of intention to defend to enter judgment for costs without
the leave of the court. Under the Rules of the Supreme Court, leave of the
court is required if the defendant is in default of notice of intention to
defend where leave is necessary for entering judgment in default of notice of
intention to defend. The defendant is still liable for costs on a claim for
liquidated demand where the defendant pays after issue of a writ but before
service: O’Malley v Kilmallock Union (1888)
22 L.R.Ir 326; Wyllie v Phillips (1837)
5 Dowl 644; and Watkins v Nixey
Another’s assumption of debt does not exempt
the debtor
A judgment obtained in
default of notice of intention to defend for costs only is a regular judgment. It
is not irregular: Charvet v Sneyd,
Moreover, the
Government of the
Thirdly, the agreement
between the Malawi Government and the Preferential Trade Area Bank and the
Government of the
In all the cases the
third party paid a lesser sum in satisfaction of the whole debt. The
Preferential Trade Area Bank insisted for the Electricity Supply Commission of
Malawi to pay the whole debt. In any case the Government of the
Of course, a promise,
as opposed to actual payment may be sufficient, Chitty on Contracts,
paragraph 235:
“Alternatively, it can be said that the
court will not help a creditor to break a contract with a third party by
allowing him to obtain a judgment against the debtor. On the contrary, it has
been held that where a (the creditor) expressly contracts with B (the third
party) not to sue C (the debtor) and A nevertheless sues, B can intervene as to
obtain a stay of the action. This possibility would extend to the case where
the consideration provided by B was a promise
by B to pay A …”
The right to intervene based on a promise,
even by this passage, remains the contractor’s, not the debtor’s. The debtor, The
Electricity Supply Commission of Malawi Limited, could not intervene on the
promise by staying proceedings. The Government of the Republic of the
Notice under the Civil Procedure (Suits By and
Against the Government and Public Officers Act unnecessary for breaches of
contract
The Chief
Parliamentary Draftsman’s contention that the Preferential Trade Area Bank
should have given notice under section 4 of the Civil Procedure (Suits by and
Against the Government and Public Officers) Act, on reading the provision, is
not right. Section 4 of the Civil Procedure (Suits by and Against the
Government and Public Officers) Act is a limitation provision. It should be
constructed strictly. Section 4 of the
Civil Procedure (Suits by and Against the Government and Public Officers) Act
provides:
“No suit shall be instituted against
the Government, or against a public officer in respect of any act done in
pursuance, or execution or intended execution of any Act or other law, or of
any public duty or authority, or in respect of any alleged neglect or default
in the execution of any such Act, duty or authority, until the expiration of
two months next after notice in writing has been, in the case of the Government,
delivered to or left at the office of the Attorney General, and, in the case of
a public officer, delivered to him or left at his office, stating the cause of
action, the name, description and place of residence of the plaintiff and the
relief which he claims.”
The section does not,
as it is assumed, apply to all actions against Government. Government or Public
Officers are often required by Acts of Parliament or other law or authority or
under a public duty to perform certain duties. Where citizens complain that Government
or Public Officers have not performed or performed the duties wrongly, section
4 of the Civil Procedure (Suits by or against the Government and Public
Officers) Act requires pretenders to notify Government of pending suits. The
notice, apart from giving notice to a colossal entity, enables the Government
or the Public Officer to remedy the misfeasance or nonfeasance the Act,
authority or duty imposes on Government or a Public Officer. The section, in my
judgment, does not apply where, like here, the Government is in breach of a
contract.
That this is the case
is obvious from the section. The act complained of must be “done in pursuance,
or execution or intended execution of any Act or other law, or of any public
duty or authority.” On the face of it breaching contractual obligations cannot
be an act done “in pursuance, or execution or intended execution of any Act or
any other law, or of any public duty or authority.” Government, like anybody
else, is obliged to respect contractual obligations. Respecting contractual
obligations would be an act done in pursuance, or execution or intended
execution of any other law. Breaching contractual obligations cannot be. More
importantly, when entering into contractual arrangements, and this can range
from buying a needle to complicated international and multinational contracts,
Government is not acting under the pretext of an Act or other law or on any
public duty or authority. Government acts as any legal entity with rights to
enter contractual arrangements. Acts or defaults in those obligations cannot be
said to be in pursuance, or execution or intended execution of an Act of
Parliament or other law, authority or duty. Section 4 of the Civil Procedure
(Suits by and Against Government) Act requires such notice only for acts done
in pursuance, or execution of any Act or other law, or of any public duty or
authority. It does not apply to contractual obligations. It applies to
misfeasance and nonfeasance by Government of statutory, legal or public duties
or authority.
Courts will honour
arbitration agreements
The Government of the
“The courts have increasingly
recognized that where the parties have agreed that a dispute should go to
arbitration, the court should be slow to interfere with that choice, and should
normally grant a stay, unless there are strong grounds for permitting the matter
to proceed in the ordinary courts. That is part and parcel of the increasing
recognition by the courts in this country of the benefits of alternative forms
of dispute resolution, of which arbitration is the classic and historic
example. Thus there is today a more restricted approach to arbitration
applications or appeals from an arbitrator’s ward; and, perhaps significantly
in the
In Channel Tunnel
Group Ltd v Balfour Beatty Construction Ltd [1993] 1 All E.R. 664 the House
of Lords held that there was indeed a jurisdiction to stay where parties to a
contractual arrangement specified some alternative form of dispute resolution other
than arbitration. Lord Mustill said:
“I consider that the action can and
should be stayed pursuant to the inherent jurisdiction of the court to inhibit
proceedings brought in breach of an agreed method of resolving disputes.”
Lord Mustill continued:
“Having made this choice I believe that
it is in accordance, not only with the presumption exemplified in the English
cases cited above that those who make agreements for the resolution of disputes
must show good reasons for departing from them, but also with the interests of
the orderly regulation of international commerce, that having promised to take
their complaints to the experts and if necessary to the arbitrators, that is
where the appellants should go. The fact that the appellants now find their
chosen method too slow to suit their purpose, is to my way of thinking, quite beside
the point.”
Channel Tunnel
Group Ltd v Balfour Beatty Construction Ltd and Cott UK Ltd v Barber Ltd are persuasive in this Court. The Chief
Parliamentary Draftsman referred me only to a decision of this Court in Landell Mills Associates Ltd v
“It is important that courts should
give effect to the contractual choice of forum made by the parties. Parties
must be bound by agreements they have freely made.”
There
are however decisions of this Court and the Supreme Court of Appeal on the
matter, both decisions again emanating from my decision as Registrar. In Chanthunya v Ngwira [1987-89] 12 MLR 133
I refused third party directions
because, having agreed to go to arbitration, the defendant and his insurer were
bound to do so unless the validity of the policy was challenged. Kalaile, J.,
as he then was, reversed my decisions. The Supreme Court in National Insurance Co Ltd v Ngwira [1993]
16(1) MLR 381 took the older view. Tambala, J.A., after referring to a passage
by Lord Atkin in
“The view expressed by Lord Atkinson
seems to be similar to that taken by the District Registrar. It reiterates the
idea of the legal sanctity of a contract.”
The
Supreme Courts view was expressed as follows by Tambala, J.A.:
“We are satisfied that, in the light of
the case of Bristol Corporation v John Aird and Company, supra, and the
Arbitration Act, (Cap.
The Supreme Court of Appeal’s decision is some
what unclear on the approach. The High Court decision is certainly not binding
on me. I can depart from it at the peril of reasons. The justifications are the
courts’ change of attitude to alternative dispute resolution, commercial
interest, the need to give efficacy to contractual arrangements and section 13
(l) of the 1994 Constitution encouraging alternative dispute resolution. More
importantly, there is no doubt that, for international trade and globalization,
jurisdictions stressing juristic interventionist approaches against arbitration
and other
alternative modes of dispute resolution are
pariah.
No arbitration where no dispute
The
question is whether I should exercise the discretion to stay proceedings here.
The onus is obviously on the one opposed to the agreed mode of dispute
resolution. The discretion necessitates answering three questions. Is there a matter
for arbitration? Is the matter one that should, based on the agreement between
the parties, go to arbitration? Are there matters justifying sending parties to
the agreed mode of dispute resolution?
The answer to the
first question is important. It is unnecessary to direct parties to alternative
modes of dispute resolution where really there is no dispute. Here, as I
understand it, there is no dispute that the Electricity Supply Commission of
Malawi, the borrower, is in arrears on the loan. Just as there is no dispute
that the Government of the
A court cannot order a party to pay another
party’s solicitor to that solicitor where there is a court order or judgment
Mbendera, Chibambo
& Associates, having obtained a judgment in default, apply to this Court
for orders that the Government of the Republic of Malawi pay directly to
Mbendera, Chibambo & Associates money payable to the Preferential Trade
Area Bank as shall be sufficient to satisfy the applicant solicitor’s costs as
against the Preferential Trade Area Bank and that the second defendant pay
directly to the applicant solicitors all sums of money payable to the
Preferential Trade Area Bank. Mbendera, Chibambo & Associates apply for
these orders because, they argue, of the lien they, as solicitors, have at
common law after judgment.
Cockburn, C.J in Mercer v Graves (1872) L.R. 7 Q.B. 409
at 503 describes the nature of the lien:
“. . . there is no such thing as a lien
except upon something for which you have possession . . . Although we talk of
an attorney having a lien upon a judgment, it is in fact only a claim or right
to ask for the intervention of the Court
for his protection, when, having obtained judgment for his client, he finds
there is a probability of the client depriving him of his costs.”
Lynskey, J., in James Bibby, Ltd v Wood [1949] 2 All E.R. 1 at 5 said:
“As my Lord has pointed out, a
solicitor’s lien on money which is not in his own possession but has come into
existence owing to his professional exertions is not strictly a lien at all,
but is merely a right to go to the court and ask the court to charge the money
for the amount of the costs. No such
application had been made in his case . . .”
In Mason
v Mason and Cottrell Lord Harnworth, M.R., referring to Mercer v
“The nature of a solicitor’s lien is
pointed out in the course of that case. It is merely a right to claim the
equitable interference of the court, who may order that the judgment obtained
by the solicitor’s client do stand as security for her costs and that payment
of such an amount as will cover them be made to the solicitor in the first
instance. That lien is one which prevails over a fund which is in sight; the
right is one which, so to speak, cannot prevail at large.”
It is clear from the judgment of Lord Goddard,
C.J., in James Bibby, Ltd v Wood at 4
that the right is no more than a right to go to court to charge the property in
favour of the solicitor, and, until that is done, the solicitor has no right to
the money.
The
solicitor can in
Mbendera, Chibambo
& Associates think they can and apply to this court for such an order. This, however, is contrary to the practice as
I understand it. In Lloyd v Mansell (1853) LJQB 110 the court held that as against an
opposite party ordered to pay a sum to the solicitor’s client, the solicitor is
not entitled to an order to pay the money to the solicitor to satisfy his lien.
In Lloyd v Mansell, on the reference
of an action, the costs to abide by the event, the arbitrator ordered the
defendant to pay the plaintiff a certain sum. Afterwards the plaintiff became
insolvent. His attorney, whose bill of costs exceeded the amount awarded, and
the costs taxed under the award, claimed a lien in respect of his bill on such
amount and taxed costs, and called upon the defendant to pay them to him for
his own use and in satisfaction of his lien. The Court held that the attorney
was not entitled to an order calling upon the defendant to pay him the money.
The court refused a direct payment to the defendant.
As I understand it,
the practice is not to obtain such an order against the defendant. Rather the solicitor should, where the money
is payable to a client either under an order to pay costs, as was the case in Read v Dupper (1795) 6 Term Rep 361: and Ex parte Bryant (1815) 1 Madd 49, or a judgment, as was the
case in Ormerod v Tate (1801) 1 East 464, or compromise, as was the
case in White v Pearce (1849) 7 Hare
276: and Ross v Buxton (1889) 42 Ch D
190 at 202, give notice of the solicitor’s lien to a party liable to pay or her
solicitors who will be liable to pay again to the solicitors if payment is made
initially without regard to the solicitor’s claim: see Welsh v Hole (1779) 1 Doug KB
238: and Read v Dupper (1795) 6 Term
Rep 361.
As I understand it,
Mbendera, Chibambo & Associates gave such notice to the Attorney General
and the Preferential Trade Area Bank. Such notice is, without any order from
this Court, sufficient to make the Electricity Supply Commission of Malawi
(ESCOM) and the Government of the
The rule in Lloyds v Mansell has not occasioned
injustice. The practice rests on the unassailable principle that once a
judgment or order is in place, the other party can enforce it, as happened
here, by execution. I cannot therefore order the Government of the
“There is no doubt at all that where an
attorney has by his labour or his money obtained a judgment for his client, he
has a lien upon the proceeds of such judgment, and is entitled to have its
proceeds pass through his hands. The
lien does not amount to an equitable assignment of the proceeds of the
judgment, but it is yet protected by the Court.
Whether there has been an actual judgment, or whether the fruits of the
litigation have been obtained without a judgment, if an arrangement is made to
prevent the attorney from reaping the benefit of his lien, the Court may set
aside such an arrangement, or may force the parties who have so deprived the
attorney, to pay the costs for which the attorney had the lien. It is not
necessary to define what would be a proper case for the interference of the
Court. These are cases where the fruits
of the litigation have been substantially obtained.”
“I do not think that the fact that
judgment has or has not been signed is conclusive on the point. In Ex
parte Games (1) the plaintiff, after declaration, gave the defendant a
release of the cause of action. The
release was pleaded. The replication
confessed the plea and prayed judgment for costs. Judgment for costs was afterwards signed, and
a writ of execution issues, but the plaintiff, in collusion with the defendant,
refused to allow the execution to be enforced.
The question was whether the Court would compel the defendant to pay the
costs of the plaintiff’s attorney. It
was held that there was a proper case made out for the interference of the
Court, and that an order calling on the plaintiff “or the defendant” to pay the
costs was properly made.
Compromise was a result of Mbendera, Chibambo
& Associates’ exertions
From all there is in the affidavits, the
compromise was because of the effort and exertion of Mbendera, Chibambo &
Associates for which, on all the authorities cited to me, some referred to in
the order, Mbendera, Chibambo & Associates must be compensated. The Chief
Parliamentary Draftsman contends that Mbendera, Chibambo & Associates
should not claim the collection fees under the First Schedule of the Legal
Practitioners (Scale and Minimum Charges) (Amendment) Rules 1999, essentially
because Mbendera, Chibambo & Associates never collected the money. I have
taken the view that the successful arrangements between the Preferential Trade
Area Bank and the Government of the Republic of Malawi was a compromise as a
result of Mbendera, Chibambo & Associates exertion and effort for which
there must be remuneration. The Preferential Trade Area Bank’s recoveries
albeit piecemeal are as a result of that exertion.
The compromise was not to avoid solicitor’s
remuneration
The
compromise between the Preferential Trade Area Bank and the Government of the
The indemnity principle
This Court must
address the Preferential Trade Area Bank’s concerns about the incidence of
costs after the Legal Practitioner (Scale and Minimum Charges) (Amendment)
Rules, 1999. The amendments come for judicial scrutiny for the first time.
Apart from their effect on the cost of litigation, the amendments radically
transform the indemnity rule, the basis of costs in
Under
the indemnity principle, on an action for collection of money, different cost
implications for the collecting and paying party emerge. The paying party pays costs, party to party
costs, the collecting party incurs to prosecute the action and her own
solicitor’s costs, the solicitor client costs.
The paying party does not pay the costs of the collecting party’s
solicitor. Generally the paying party can have the Court tax the party to party
and her solicitor client costs. The paying party has not to pay the full cost
of the collecting party. The collecting
party does not pay the paying party’s costs. The collecting party pays her
solicitor’s costs. The paying party
indemnifies the collecting party the costs of litigation only to the extent of
the party to party costs. The paying
party does not indemnify the collecting party the full cost of her solicitor. Consequently, the collecting party pays her
legal practitioner excess costs beyond party to party costs the paying party
pays the collecting party. The collecting party can have the court tax her solicitor
client costs.
The Legal Practitioner (Scales and Minimum
Charges) Rules
The
solicitor to client costs are more generous than the party to party costs. In
“The Minister, in consultation with the
Chief Justice may make rules for the better carrying out of this Act.”
Section 44 (2) of the Legal Education and
Legal Practitioners Act provides:
“Without derogating from the generality
of subsection (1) such rules may – (a) prescribe both scale charges and minimum
charges that may be levied by legal practitioners; (b) provide for the taxation
of costs and the remuneration of legal practitioners.”
Until the Legal Practitioners (Scale and
Minimum Charges)(Amendment) Rules 1999 the rules applicable were the Legal
Practitioners (Scale and Minimum Charges) Rules made under article 22 of the
British Central Africa Order in Council, 1902. Rule 3 underscores that the
charges are between solicitor and client:
“Where a legal practitioner performs
the services specified in the First Column if the Second Schedule acting for
and on behalf of a client specified in the Second Column of that Schedule in
relation to, or for the purposes of, a project or scheme of national interest
specified in the Third Column of that Schedule, the charges payable to the
legal practitioner shall be the corresponding charges specified in the Fourth
Column of that Schedule.”
The
part that concerns us is Table 6 of the First Schedule to the Rules. The First Column to Table 6 reads:
“Collection of Moneys, Solicitor and own
client charge on collecting moneys to be charged on receipt of moneys: Provided that where proceedings are commenced
the percentage may only be charged on the amount up to the date of commencement
of such proceedings. Where proceedings
are commenced Solicitor may charge Solicitor and own client charged in addition
to party and party but, subject to any special agreement between Solicitor and
client not on a percentage basis.”
The charges part to Table 6 reads:
If the amount collected –
(a) does not exceed
(b) exceeds
(c)
exceeds K10 but does not exceed
K20.. .. K3
(d) exceeds K20 but does not exceed K200 .. 15%
on such amount
(e) exceeds K200 .. .. .. 15% on the first K200 and 10% on the next K800 and 5% on the
balance collected.
A few things can be said about the rule.
First, at that time, the charges were clearly solicitor to client, not party to
party. Secondly, they were charges where the client requested a legal
practitioner to collect money. The paying party is not collecting money. Her
lawyer cannot therefore collect the fees under this rule from her. This is
underscored by the third aspect, the requirement under the rule that the money
is payable on receipt of the money not disbursement of the money.
Thirdly, between
solicitor and client, the solicitor could charge party to party costs against
the client. This in practice never means the collecting party is paid twice.
There are many scenarios. There is where the collecting client already paid her
solicitor costs to cover party to party costs. Where the defendant pays the
party to party costs, the solicitor would be obligated to pay back the client
the recovered costs. Where the defendant fails to pay the costs, a prepayment
is an insurance against such prospect. In both scenarios the solicitor is
entitled to the charges under this section independent of the party to party
costs. Consequently, the only time the collecting client actually pays the
party to party costs to her solicitor is where the defendant fails to pay the
amount in the judgment and costs. In this instance the risk of failure cannot
be the solicitor’s; the risk is the clients and she must pay the costs under
this rule and the party to party costs.
The Legal Practitioner (Scales and Minimum
Charges) (Amendment) Rules
The Legal Practitioner
(Scales and Minimum Charges) Rules, unlike the amended rules, recognizes the
indemnity rule. The only costs the paying party pays to the collecting party
are party to party. The paying party is not responsible for the solicitor to
client costs of the collecting party. The amendment introduces a fundamental
change to the indemnity rule, a change, I must say, that was not thought through
when introducing such a fundamental change to the cost of litigation. The
amendment reads as follows in the First Column:
“Collection of Monies. Solicitor and own client charge on instruction to
collect any sums of money. Where
proceedings are commenced, there shall be additional charge for party and party
costs. Provided that the 15 percent
costs shall also be recoverable from the debtor where proceedings are commenced
or not and where proceedings are commenced, it shall be recoverable as part of
the Judgment debt.”
The charges section to the amended Table 6
reads, “15% of the amount collected.”
There are two difficulties from the amendment.
The amendment’s problems
First,
there is the flat rate for all sorts of amounts collected. At low levels of
collection, there may be no criticism. At a high level of collection, the flat
rate would, for many reasons, border on the side of, excess, unreasonableness
and oppression. First, as in this case, a collecting solicitor can recover huge
costs. Secondly, such sums, apart from the risk factor, would be greatly unrelated
to the quantity and quality of the solicitor’s work. The risk factor allows
examination of the complexity of the matter, the importance of the matter to
the plaintiff and many such considerations. There are instances, like the
present, where these considerations, particularly where the flat rate results
into unreasonable remuneration for solicitors, pale into insignificance.
Thirdly, such sums are unwelcome whether paid by the collecting or paying party.
The
third aspect becomes paramount in two instances. A collecting party will pay
her own solicitor if the paying party fails to pay party to party costs. Before
and after the amendment, the collecting client’s solicitor could claim the fees
under this rule where the paying party pays the amount claimed and cannot pay
both aspects of costs. It is unreasonable and oppressive, subject to the risk
factor, to require the collecting client to pay such huge costs. In this instance,
the matter becomes more pronounced where the solicitor demands the client to
proffer such sums before commencing proceedings. The second instance is where the paying party
can afford to pay. The astronomical figures surprise any sense of justice or
fairness.
The second aspect of
unfairness is the amendment requiring the collecting party to claim the sums
under the schedules from the paying party. The rationale for the amendment is
that it was unreasonable that the rules, up to this point, required the
collecting party to suffer client to solicitor costs when the paying party
caused the collecting party’s recourse to litigation in the first place. We can
look at the justification for the indemnity rule as to costs later. For now, I stress
the unfairness of this lopsided amendment by balancing the effects of the two rules.
Considering the
effects of the amendment, the previous rule, the single criticism
notwithstanding, consonants reasonableness and fairness. The single criticism
against the rule is requiring the collecting party bear such costs. There are
several justifications for the approach. First, there is the contractual
relationship between solicitor and client that requires consideration for the
services rendered. On the face of it, this contractual relationship cannot base
on the precarious result of a trial for remuneration. The remuneration can only
base on the contract itself. The rules discussed are, as part of public policy and
control, to regulate costs in this relationship. It is significant that under
English law this control shifted from legislative control to consultation and
consensus with the bar. Our rules, as seen, base on rules under a received law
of considerable antiquity until, of course, this amendment.
Secondly, the rule
bases on risk considerations. The risk of a debt being bad is part of contracts
involving money. When such risk occurs, the solicitor cannot be a victim of a
client’s decision gone sour. Both client and solicitor know that the money is,
but for litigation, lost. Once the asset is redeemed, the joy and the loss
averted by litigation are reasons justifying requiring the solicitor benefit
from the asset realized. Others, for good reasons too, think the paying party should
bear such a risk.
Comparison between the
indemnity and contingency rules
There could be good
reasons indeed for such a course. The indemnity rule, the rule applicable to us
and the
The indemnity rule
leaves the solicitor and client costs subject to contract and/or regulation.
The contingency rule, as we all know, does not allow the collecting party to
collect costs from the paying party. On the risk principle, the client and
solicitor look to the award for damages and costs. Consequently, a solicitor recovers
no costs from her client if the paying party is of straw.
That a solicitor may
not recover anything from a client even if the client can afford where the paying
party cannot pay and the level of costs cause reluctance in the
The indemnity rule is
the rule of costs in this jurisdiction. The difficulty is that this amendment
seems to affect indirectly and grossly the indemnity rule. There is no reason
in practice, principle or theory why the paying party should pay three regimes
of costs. The extension of the rule to require the paying party to pay the
solicitor client costs of the collecting party in addition to her client and
solicitor costs and party to party costs is curious indeed. This is, of course,
in addition to the other 15% sheriff fees if the matter goes to execution. This
is an oppressive cost structure requiring immediate legislative intervention.
Legislative intervention
The legislative
intervention should not only address the anomaly of overburdening the paying
party with three regimes of costs. It should address injustices that may occur,
even if the intervention removes the novel burden on the paying party, where
the percentage may be burdensome even on the collecting client who has to pay
in advance the sums claimed by the client under the rule or has to bear the
cost once the paying party can only afford to pay the amount claimed and not
the costs. Surely, the collecting client needs such protection where the
percentage, apart from the risk factor, results to awards unrelated to the
quality and quality of the solicitor’s work.
One way was the one
under the previous rule where low percentages were prescribed for larger sums.
Those percentages may also be unrelated to quality or quantity of work where
large sums of money were involved. Definitely, those percentages made a lot of
sense in 1902 when loans were of very low amounts. They are inappropriate today
when, like here, loans involve larger amounts and transnational institutions
lending or borrowing billions of dollars.
Taxation
The rules, before and
after the amendment, provided for a limited check on excesses. Part III, in the General Guidelines on Legal
Costs, of both the original and amended rules, provide:
“(1) Wherever
scale charges are not applicable, the legal practitioner can charge such sum as
may be fair and reasonable having regard to all the circumstances of the case
and in particular to –
(a) the complexity of the matter or the
difficulty or novelty of the questions raised;
(b) where money or property is involved,
its amount or value;
(c) the importance of the matter to the
client;
(d) the skill, labour, specialized
knowledge and responsibility involved therein on the part of the legal
practitioner;
(e) the number and importance of the
documents prepared or perused, without regard to length;
(f) the place where the circumstances in
which the business or any part thereof is transacted and
(g) the tone expended by the legal
practitioner
(2)
The
client may apply to the Taxing Master for taxation of costs.”
The rules, therefore, in
a sense address concerns, legitimate ones, in my judgment, expressed by the
Preferential Trade Area Bank
that the
costs Mbendera, Chibambo & Associates claim against the defendants and them
are very high. Rule 2 just quoted provides for taxation of legal costs. Of
course, the Preferential Trade Area Bank, under the contracts, does not have to
pay the costs. The contractual arrangements could not stop Mbendera, Chibambo
& Associates demanding these costs from them before commencing action. In
that case the Preferential Trade Area Bank would, as costs between client and
solicitor, question the claim for costs. The Preferential Trade Area Bank would
question the cost under this rule. What exercised my mind is whether rule 2
refers only to instances in rule 1, namely, where the fees are not fixed by
some rule. Rule 2 is an independent rule and requires taxation of ‘legal
costs,’ including those under the schedule. Surely the requirement for taxation
in rule (2) must relate to the costs claimed under and in the schedule. If
there is any justification for the rule, it is what I have repeated many times
in the course of this judgment that, depending on the size of the claim, awards
under the rule can, subject to the risk factor, be disproportionate to the
quality and quantity of the solicitors work. As I understand it, in the
The order dealing with
sheriff fees in England and Wales is the schedule to an Order dated July 8
1920, under the Sheriffs Act 1887, s.20(2), fixing the fees to be taken by
sheriffs or sheriffs’ officers concerned in the execution of writs of fieri facias. In its body it provides:
“The following fees, numbers 1, 2 and 3,
shall be paid by the execution creditor, and shall not be recoverable by him
although the execution proves abortive.”
Another provision states:
“Except where the judgment or order
sought to be enforced is for less than £600 and does not entitle the plaintiff
to costs against the persons against whom the execution is issued, the
foregoing fees numbered 1, 2, 3, 4, 5, 6, 7, 8(1), 9 and 10, shall be levied in
every case in which an execution is completed by sale, as fees payable to
sheriffs were levied before the making of this Order.”
There is a paragraph worded just like part 2
of the schedule:
“The amount of any fees and charges
payable under this table shall be taxed by Master of the Supreme Court or a
district Judge of the High Court, as the case may be, in the case the sheriff
and the party liable to pay such fees and charges differ as to the amount
thereof.”
This order is not ultra vires: Union Bank of
Manchester Ltd v Grundy [1924] 1 KB 833. In Union Bank of
“This method of fixing within limits the
fees and charges, providing for a taxation if the parties differ, must of
necessity confer on the taxing Master or District Registrar a certain
discretion in fixing the actual fee to be paid provided it does not exceed the
maximum. It was contended, as it was in Townend v Sheriff of
Costs under this schedule can be taxed by the Court.
Conclusion
In
this matter, Mbendera Chibambo & Associates are entitled to costs. Having
obtained a judgment in default for costs, this Court cannot order the
Government of the
As
I see this is a judgment for costs only. The Preferential Trade Area Bank, the
Attorney General and the Electricity Supply Commission dispute the quantum. The
judgment can only be for costs to be taxed. The costs should, if not agreed, be
taxed.
The
defendants suggest that they are not liable under the Legal Practitioners
(Scales and Minimum Charges) (Amendment) rules because the law governing the
contract is English law. The suggestion, coming clearly in the argument, is
that the costs should be paid under English law. I should reproduce the actual
provision:
“This Loan Agreement shall be construed
and governed in accordance with the Laws of England.”
The provision relates to the construction and
law governing the contract. The contract does not prescribe on forum. Neither
is the choice of English law indicative of the English forum. This Court,
because of the close connection with the place of performance of the contract
and the two defendants, is the forum
conveniens. The costs of litigation are not part of the contract; they are
subject to the rule of the court. They are governed by the rule of the court
seized with the matter. Without express provision and in the absence of any
authority, I find no reason in principle why lawyers litigating in our forums
should be remunerated on scales and principles other than ours.
Subject to what I have
said about the costs being taxable, I dismiss all the applications with costs.
Made in open court
this 23rd Day of October 2003.
D F Mwaungulu
JUDGE