Magereza Sacco has has successfully fought a claim for Sh139 million in legal fees from a failed bid to buy land valued at Sh8.8 billion.
The Court of Appeal in Nairobi noted that Ratemo Oira & Co. Advocates only prepared the contract but did not complete the sale transaction.
“The remuneration of an advocate in respect of a sale or a purchase of immovable property or an interest therein under Rule 18 (a), can only occur once property passes to the purchaser upon execution of a valid contract of sale and until the agreed conveyancing formalities which vest the legal title to the purchaser are completed,” a three-judge appeals Bench said.
The law firm claimed that it conducted due diligence for the Kenya Prisons Service’ Sacco on the land it wanted to buy and drew a sale agreement.
The sacco, however, failed to raise the Sh300 million deposit required to secure the property and the deal collapsed.
The lawyers slapped the sacco with a demand for fees despite the fact that the deal had fallen apart.
Magereza went to court to contest the claim and Judge S. Mwayuli dismissed the bill on grounds that there was no sale agreement or executed transfer document to show that the transaction took place and that the appellant failed to attach receipts to prove expenses incurred. The lawyers went back to court and pleaded that some of the issues they raised had not been addressed directly.
The taxing officer taxed off Sh139.1 million from the bill and allowed Sh118,260. Specifically, the officer taxed the instruction fees at Sh100,000 which in her opinion was fair and reasonable, given that the bill originated from a transaction that was not completed.
The lawyers appealed, arguing that the Sh100,000 as instruction fees was an error in principle by the judge and the taxing officer.
The Court of Appeal however threw out the case saying the scope and nature of work was minimal and in the early stages of the transaction.