The Legal Entitlement by an Auctioneer to Fees

Summary

In a relatively old case between the National Industrial Credit Bank Ltd (the Bank) and S.K. Ndegwa (the auctioneer) there was a dispute concerning the legal entitlement by the auctioneer to fees for the proclamation and the Court of Appeal decided firstly, that a proclamation amounts to a seizure and secondly that the auctioneer’s charges for attachment should be based on the value of the goods attached and not on the decretal sum.

Background

The Bank was the decree-holder in HCCC No. 1818 of 2000 and applied for execution of the decree by way of attachment and sale of movable properties of Majani Mingi Sisal Estate and two others, the judgment debtors to recover the decretal sum of Kes.75,772,501.20.

The warrant of attachment and sale dated 18th October, 2001 was issued by the Deputy Registrar of the High Court of Kenya (DR) and served on the auctioneer for execution. On 18th May, 2001, the auctioneer issued a proclamation of attachment of the judgment debtors goods showing that he had attached the movable properties described in the schedule thereto.

On 21st May, 2001, the High Court of Kenya granted a temporary injunction restraining the sale of the attached vehicles. Ultimately, the auctioneer filed a schedule of his charges claiming Kes.1,327,337.50 including disbursements. Under item 4 of the Schedule, he claimed Kes.1,139,839.50 being commission charges at 1.5% of the decretal sum of Kes.75,772,501.50. This was under paragraph 4 of Part II of the 4th Schedule to the Auctioneers Rules.

The charges were disputed by the Bank. Thereafter the DR after hearing full submissions, assessed the auctioneer’s fees at Kes.1,146,212. The fees allowed under item 4 was Kes.1,000,000. Pursuant to rule 55 (4) of the Auctioneers Rules, 1997, the Bank filed an appeal against the decision of the DR to a Judge in chambers but the High Court dismissed the appeal. The Bank was granted leave to appeal and being aggrieved by the decision of the High Court of Kenya dismissing its appeal against assessment of auctioneer’s fees by the Deputy Registrar, filed an appeal to the court of appeal.

The only contentious issue as far as the Court of Appeal was concerned was the fees allowed for proclamation of attachment in Item 4. The dispute was about the legal entitlement by the auctioneer to fees for the proclamation, the Bank arguing that the auctioneer was not entitled to fees under paragraph 4 of Part II of the 4th Schedule because there was no attachment as envisaged by Order 21 rule 38 of the Civil Procedure Rules. The Court of Appeal, upholding the decision of the High Court held that a proclamation amounts to a seizure.

The Court of Appeal then went ahead to determine the issue as to which value of the specified percentages comprising the auctioneer’s fees should the auctioneer’s fees be based. The auctioneer based the fee on the decretal sum and the DR in his ruling similarly based the fee on the decretal sum. The Court of Appeal on its part correctly found that the wording of Paragraph 4 of Part II of the 4th Schedule of the Auctioneers Rules does not say that the percentages stated apply to the decretal amount. The Court of Appeal then went on to declare that it would be unjust to base the fee on attachment on the decretal amount. The Court of Appeal then went on to state that it thought that it was reasonable that the auctioneer’s charges for attachment should be based on the value of the goods attached and not on the decretal sum.

Comment

While the decision of the Court of Appeal declaring that a proclamation is a seizure appears correct in law, the court’s decision as to whether the fee should be based on the goods attached by the auctioneer appears to be problematic. There are instances where the auctioneer would attach goods many times the value of the decretal amount. It does not appear reasonable to thus base the auctioneer’s fee on this amount. This area of the law may need better reasoning from the superior courts or thoughtful legislation on the same.