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Byenkya Kihika and Company Advocates v Fang min (Misc Cause 52 of 2022)

High Court · [2022] UGCOMMC 154 · 2022 Application Dismissed AI-generated summary ↓ Download Pin to watchlist Add to matter
Jurisdiction
Uganda
Case Type
Application under sections 50(3) and (4) of The Advocates Act seeking to set aside remuneration agreements and for leave to file and tax an advocate-client bill of costs
Decision
Application dismissed with costs to the respondent

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Holding

The Court dismissed the application by advocates seeking to set aside remuneration agreements and obtain leave to tax an advocate-client bill of costs. The Court held that the fee agreements were unenforceable for non-compliance with section 51 of The Advocates Act (lack of notarisation and registration) and for champerty (containing a 10% success fee prohibited by regulation 26 of The Advocates (Professional Conduct) Regulations). The Court further held that the agreements were unfair and unreasonable due to mid-trial upward fee revision and duplicative charging. Following the Supreme Court precedent in Kituuma Magala v Celtel, the Court ruled that advocates who enter illegal fee agreements cannot subsequently seek taxation under The Advocates (Remuneration and Taxation of Costs) Rules, as this would be contrary to public policy.

Outcome

Application dismissed with costs to the respondent

Facts

The applicant law firm represented the respondent, a Chinese investor and minority shareholder, in High Court Civil Suit No. 318 of 2016 concerning an illegal takeover of a mining company. The parties entered into a fee agreement on 22 April 2016 fixing remuneration at US$15,000 plus a 10% success fee on any recovery and entitlement to retain all taxed party-party costs. In March 2018, mid-trial, the applicants required an additional US$10,000 fee via an addendum. Judgment was entered for the respondent on 13 February 2020, and party-party costs were taxed at UGX 1,228,123,628. The respondent paid US$65,000 in total fees but changed advocates in March 2022. The applicants then sought to set aside the fee agreements and tax an advocate-client bill of costs for UGX 5,198,377,909. The Taxing Officer had previously dismissed an application for leave to tax, holding that binding remuneration agreements existed.

Issues

  1. Whether the application concerns matters that are res judicata.
  2. Whether the fee agreements are unenforceable for non-registration.
  3. Whether the fee agreements are unenforceable for champerty.
  4. Whether the fee agreements should be set aside for being unfair or unreasonable.
  5. Whether the applicants are entitled to have their advocate-client bill of costs taxed.

Orders

  • Application dismissed.
  • Costs awarded to the respondent.

Rules and key headnotes

Jurisdiction of Taxing Officer — Determination of Validity of Fee Agreements
The jurisdiction to decide whether a binding remuneration agreement exists under section 50 of The Advocates Act is vested in a Judge of the High Court, not the Taxing Officer. The Taxing Officer's jurisdiction is limited to taxing costs where there is no dispute as to retainer or where costs have been duly awarded. When issues arise as to the existence or validity of an advocate-client relationship or fee agreement, the Taxing Officer must refer the matter to a Judge under Order 50 rule 7 of The Civil Procedure Rules or section 62(2) of The Advocates Act.
Advocates' Fee Agreements — Requirements for Enforceability
A fee agreement under section 50 of The Advocates Act is unenforceable if it fails to comply with section 51(1) requirements: (a) being in writing; (b) being signed by the person bound; and (c) containing a certificate signed by a notary public (other than a party to the agreement) certifying that the nature of the agreement was explained to the person bound and that they appeared to understand it, with a copy sent to the Law Council. Non-compliance renders the agreement unenforceable, and any advocate who obtains or seeks to obtain benefit under such an agreement is guilty of professional misconduct under section 51(2).
Champerty — Contingency Fees and Success Fees
A remuneration agreement providing for payment of a percentage of the proceeds of litigation as a success fee is champertous and illegal under Ugandan law. Regulation 26 of The Advocates (Professional Conduct) Regulations prohibits advocates from entering into any agreement for sharing a proportion of the proceeds of a judgment, whether as part of or the entire amount of professional fees. Section 55(1)(b) of The Advocates Act invalidates any agreement stipulating for payment only in the event of success. Such agreements are unenforceable regardless of the advocate's motives or the justice produced.
Advocates' Fee Agreements — Unfairness and Unreasonableness — Mid-Trial Fee Revision
A fee agreement may be set aside as unfair or unreasonable under section 50(3) of The Advocates Act where an advocate revises fees upward mid-trial after initially representing the fee as final, particularly where this is coupled with duplicative charging for the same service. The potential for overreaching is heightened when fees are revised mid-trial, as the client may find it difficult to evaluate alternatives with reasoned judgment in the face of the advocate's presence and insistence. The advocate bears the burden of proving that any revised fee agreement was fairly negotiated and that no undue advantage was taken of the confidential relationship.
Advocates' Fee Agreements — Fiduciary Duty and Overreaching
Advocates stand in a fiduciary relationship to their clients and cannot bind clients to pay greater compensation than the advocate would have the right to demand if no contract had been made. Overreaching may be inferred from an advocate's failure to give a clear and accurate explanation of how fees are to be calculated at the outset, coupled with subsequent charging for services not rendered or overcharging. Charging illegal or excessive fees, or duplicative fees for the same service, constitutes a breach of fiduciary duty and may amount to professional misconduct.
Taxation of Costs — Bar to Taxation Following Illegal Fee Agreement
An advocate who enters into an illegal and unenforceable fee agreement cannot subsequently seek to have an advocate-client bill of costs taxed under The Advocates (Remuneration and Taxation of Costs) Rules. To allow an advocate to walk away from clear provisions of The Advocates Act and seek refuge in the Remuneration Rules, which were not opted for in the first place, would be contrary to the letter and spirit of the Act and against public policy. Section 69 of The Advocates Act provides that no costs are recoverable in respect of anything done which constituted an offence under the Act.
Professional Misconduct — Excessive and Duplicative Fees
Charging fees that are so exorbitant and wholly disproportionate to services performed as to shock the conscience, or charging duplicative fees for the same service, constitutes professional misconduct warranting discipline. The test for excessive fees emphasises comparison between the fee charged and services performed. While an excessive fee alone may be insufficient for discipline, where coupled with fraud, misrepresentation, overreaching, or failure to disclose true facts, disciplinary action is warranted. The integrity of the legal profession requires that advocates not view their abilities as representing avaricious efforts to obtain wealth.

Legislation cited (29)

Cases cited (30)

  • In re Levinson, 197 App. Div. 46, 188 N.Y. Supp. 730 at 732
  • In re Burns, 55 Idaho 190 (Idaho 1935) 40 P.2d 105
  • Medcalf v. Mardell, Weatherill and another [2002] 3 All ER 731; [2003] 1 AC 120; [2002] 3 WLR 172
  • Khan & Katiku Advocate v. Central Electrical International Ltd, Misc. Application No. 41 of 2004; [2005] eKLR
  • Ratemo Oira & Company Advocates v Kenya Steel Fabricators Limited, H.C Misc. Civil Application No. 78 of 2008; [2014] eKLR
  • Fides Legal Advocates v. Kampala Capital City Authority, H. C. Taxation Appeal No. 40 of 2015
  • S. V. Pandit v. Willy Mukasa Sekatawa and others [1964] 1 EA 490 at 497
  • Shell (U) Limited and others v. Muwema, Mugerwa and Company Advocates and another, S. C. Civil Appeal No. 2 of 2013
  • Anderson v. Daniel [I924] I KB 138
  • James Mutoigo t/a Juris Law Office v. Shell (U) Ltd, H. C. Misc. Application No. 0068 of 2007
  • Wild v. Simpson [1919] 2 KB 544 at 563
  • Re Trepca Mines (No 2) [1963] Ch 199
  • Campbells Cash and Carry Pty Ltd v. Fostif Pty Ltd (2006) 229 CLR 386; 229 ALR 58; [2006] HCA 41
  • Mobil Oil Australia Pty Ltd v. Trendlen Pty Ltd [2006] HCA 42
  • Mkono and Co Advocate v. J.W. Ladwa (1977) Ltd [2002] 1 EA 145
  • In Re: K.L. Gauba, (1954) CriLJ 1531
  • South African Association of Personal Injury Lawyers v Minister of Justice and Constitutional Development, (Road Accident Fund, Intervening Party) 2013 (2) SA 583 (GNP) at 587 H-I
  • Law Society of the Cape of Good Hope v Tobias and Another 1991 (I) SA 430 (C) at 435
  • Goldstone v. State Bar (1931) 214 Cal. 490 at 498; 6 P.2d 513, 80 A.L.R. 701
  • In re Richards, 202 Or. 262, 274 P.2d 797 (Sup. Ct. 1954)
  • Bushman v. State Bar (1974) 11 Cal.3d 558, 563 [113 Cal. Rptr. 904; 522 P.2d 312)
  • In re Backes, 22 N.J. 212, 215 (1956)
  • In re Myrland, 54 Ariz. 284, 95 P.2d 56, 60 (Sup. Ct. 1939)
  • In re Cary, 146 Minn. 80, 177 N.W. 801, 804, 9 A.L.R. 1272 (Sup. Ct. 1920)
  • In Re Swartz (1984) 141 Ariz. 266, 271; 686 P.2d 1236
  • People ex rel. Chicago Bar Ass'n v. Pio, 308 Ill. 128, 139 N.E. 45, 47 (Sup. Ct. 1923)
  • Ex parte Goodman, 377 Ill. 578, 37 N.E.2d 345, 349 (Sup. Ct. 1941)
  • Herrscher v. State Bar of California, 4 Cal. 2d 399, 49 P.2d 832, 834 (Sup. Ct. 1935)
  • Masango and another v. Road Accident Fund and others (2012/21359) [2016] ZAGPJHC 227
  • Kituuma Magala and Co. Advocates v. Celtel (U) Ltd, S. C. Civil Appeal No. 09 of 2010

Full judgment

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Byenkya Kihika and Company Advocates v Fang min (Misc Cause 52 of 2022) [2022] UGCommC 154 (3 November 2022)
Source: this page presents Wakilii’s issue analysis and metadata for a publicly reported Ugandan judgment. Any AI-generated summary is marked as such. Judgment text is sourced from the Uganda Legal Information Institute (ulii.org). Wakilii is not affiliated with ULII.