catic international engineering t ltd vs hanspoppe hotels ltd 2023 tzhccomd 301 4 september 2023

IN THE HIGH COURT OF THE UNITED REPUBLIC OF TANZANIA (COMMERCIAL DIVISION) AT PAR ES SALAAM COMMERCIAL REFERENCE NO. 29 OF 2022 (Arising from Taxation Cause No. 147 of2022) CATIC INTERNATIONAL ENGINEERING (T) LIMITED........................................... APPLICANT VERSUS HANSPOPPE HOTELS LIMITED.......... ........................ RESPONDENT RULING A.A. MBAGWA, J. In this reference the applicant, CATIC INTERNATIONAL ENGINEERING (T) LIMITED is seeking to assail the decision of the taxing officer in Taxation Cause No. 147 of 2022. The factual background of the matter may be recounted as follows; The applicant sued the respondent in Commercial Case No. 52 of 2021. However, in the end, the Court dismissed the suit with costs. Consequently, the respondent filed a bill of costs vide Taxation Cause No. 247 of 2022. Upon hearing the parties, the taxing officer awarded the respondent a total sum of TZS 48,862,567/= in the following break down; instruction fee TZS i 44,702,567=, court attendance costs TZS 2,lQQ,00Q/=, disbursements TZS 740,000/=, transport costs TZS 320,000/= and costs for prosecution of taxation proceedings 1,000,000/=. Aggrieved, the applicant has, by way of chamber summons, preferred this reference against the above-named respondent under the provisions of Order 7(1) and (2) of the Advocates Remuneration Order, 2015 and Section 95 of the Civil Procedure Code (Cap 33 R: E 2019) praying this Honourable Court for the following orders; (a) Determine the correctness, legality and validity of the decision of J.M. Minde DR (Taxing Officer) dated 6th December,2022 (b) Costs of this application and (c) Any other order which the Court may deem fit. The application is supported by an affidavit sworn by Mr. Jerry Pasian Msamanga, learned advocate for the applicant. The applicant is faulting the decision of the taxing officer on the following grounds; - (i) That the trial taxing officer had no jurisdiction to determine the taxation cause due to the presence of notice of appeal that was filed 6th October,2022 to the Court of Appeal in respect of Commercial Case No. 52 of 2021 from which the impugned bill of costs emanates. 2 (ii) That the taxing officer erred in law and in fact by using scale of Advocates Renumeration Order, GN No. 264 of 2015 as evidential proof that the respondent incurred costs to a tune of TZS 44,702,567 being of TZS 1,490,085,586. (iii) That the taxing officer erred in law and facts by taxing instruction fees at TZS 44,702,567 while there was no electronic fiscal devices receipt to prove that the respondent was paid such amount of money. (iv) That the taxing officer erred in law and in fact by taxing instructions fees to the tune of TZS 44,702567 without taking into consideration other aligning factors for the grant of instruction fees. (v) That the taxing officer erred in law and fact by awarding unreasonable and high attendance costs of TZS 100,000 differently and without any proof. (vi) That the taxing officer erred in law and fact by awarding transport costs to the tune of TZS 320,000 differently and without any proof. (vii) That taxing officer awarded costs for taxation cause to the tune of TZS. 1,000,000 without any justification and yet the respondent did not pray for the said costs in her bill of costs 3 (viii) That the taxing officer erred in law and fact by awarding the respondent disbursement of TZS 740,000 without any proof of receipts annexed in the bill of costs. (ix) That the taxing officer erred in law and in facts by assuming that the respondent engaged her advocates on commercial terms and proceeded to tax the bill of costs on commercial terms without any supportive evidence that the respondent engaged the advocate on commercial terms. (x) That the taxing officer erred in law and in fact by taxing the bill of costs at TZS 48,862,567. Upon being served, the respondent filed a counter affidavit deponed by Ms. Subira Omary, learned advocate contesting all the allegations by the applicant. The respondent stated that, the amount of TZS 44,702,567 which was awarded as instruction fee is reasonable because the same was taxed according to the law to wit, item 8 of the 9th Schedule to the Advocates Remuneration Order. Further, the respondent stated that production of receipts is not a requirement of law. When the matter was called on, the applicant was represented by Mr. Jerry Msamanga, learned advocate whereas the respondent enjoyed the services of Ms Subira Omary, learned advocate. Upon consensus by the 4 parties, this Court ordered the reference to be disposed by way of written submissions. As such, the Court set the filing schedule which was appreciatively complied with by the parties. In the applicant's submission, Mr. Msamanga informed the Court that, he had abandoned the 1st ground. He also told the Court that he would submit on the 2nd, 3rd, 4th and 9th grounds conjointly. Submitting on the 2nd, 3rd, 4th and 9th grounds, the learned counsel argued that the taxing officer was wrong for taxing the instruction fee without proof of receipts, in particular, EFD receipt. According to Mr. Msamanga, the respondent was obliged to prove through production of receipts that she engaged an advocate and consequently incurred costs. He reasoned that production of receipts is necessary so as to avoid assumption that successful litigant must have incurred costs. Mr. Msamanga further submitted that in taxation proceedings, the successful litigant is required to show that, she engaged the advocate in business terms hence she incurred costs which she is claiming to be reimbursed and the costs incurred are within the prescribed scales in the Advocates Renumeration Order, GN No. 264 of 2015. According to the applicant's counsel, since there was no receipt attached, the taxed amount of TZS 48,862,567 was neither proved nor incurred. He opined that the 5 taxing officer erred in law to grant that amount without sufficient proof. Submitting further, the learned counsel told the Court that the sum of TZS 48,862,567 which was taxed is excessive. According to him, the purpose of awarding costs is to compensate and not to enrich the successful litigant. In support of his stance, the learned advocate cited the cases of Thianmy Entertainment Limited & 2 Others vs Dino Katsapas, Misc. Commercial Cause No. 86 of 2018 HC (Commercial Division) at Dar es Salaam in which the court held that costs awarded to a party in the case are aimed at restituting a party to his original position by compensating him the money he spent in prosecuting or defending a case in accordance with the law. The learned counsel was of the view that, the costs claimed by the respondents in this matter were intended to enrich the respondent than compensating her. Moreso, he contended that apart from being excessive, the taxed amount was not proved to the standard required under Section 110 and 111 of the Evidence Act (Cap 6 R: E 2019). On this, the applicant's counsel placed reliance on the case of Professor Emmanuel A. Jemas vs The Managing Director, Editor Dira ya Mtanzania Newspapers & 2 Others, Civil Reference No.7 of 2017, stating that the Court insisted on the requirement of EFD unless proved otherwise. He lamented that failure to issue receipts amounts to contingent fees which is illegal in our jurisdiction. As such, Mr. Msamanga 6 larged the Court not to condone what he termed as illegal business between the respondent and his advocate. Besides, the learned counsel submitted that failure to issue EFD receipts offends section 39(1) (c) of the Advocates Act and Section 29 (1) (a) and (b) of the Value Added Tax Act. On that note, the learned advocate implored this Court to tax off the whole amount for want of receipts. With regard to the 5th, 6th' 7th and 8th grounds, Mr. Msamanga told the Court that costs for attending court secessions, transport and disbursement are part and parcel of the advocate instructions fees, and for that reasons they ought to have been included in the instruction fees. In support of his position, the learned counsel relied on the decision of this Court in Jubilee Insurance Co. Ltd vs Vodacom Tanzania Public Ltd Company, Consolidated Taxation Reference No. 02 & 03 of 2020, HC (Commercial Division) at Dar es Salaam, in which the Court held that instruction fee should cover the advocate's work as well as other associated duties. He was of the view that drawing the documents for bill of costs and attendance in court, transport and disbursement are part of instruction fee. Besides, the learned counsel for applicant added that, transport cost, disbursement costs and attendance costs were supposed to be proved by receipts as it was held in the case of First World Investment Court 7 Brokers vs Buck Reef Gold Company Limited, Misc. Commercial Reference No. 1 of 2019 (HC) at Arusha. In that regard, the learned advocate for the applicant concluded that the instruction fees and transport costs were not proved due to respondent's failure to produce receipts. He thus urged this Court to tax them off. Consequently, the learned counsel implored the Court to allow the reference, quash and set aside the decision of the taxing officer with costs. In rebuttal, Ms. Subira Omary strongly opposed the applicant's prayers and submission. She told the Court that costs are to be taxed as per the prescribed scale stipulated by law. The respondent's counsel further pointed out that, the taxing officer awarded TZS 44,702,567 being 3% of the liquidated claim to wit, TZS 1,490,085,586 which is provided under Item 8 of 9th Schedule to the Advocates Renumeration Order. To bolster her position, the learned counsel cited Order 46 of GN No. 64 of 2015 which provides that, all bills of costs shall be taxed on the prescribed scale, unless a Judge of the High Court, for special reasons to be certified, allows costs in addition to the costs provided by the scale or refuses to allow costs or allows costs at a lower rate than that provided by the scale. With regard to the allegations that there was no EFD receipts produced for proof of instruction fees, the learned advocate briefly replied that there is no 8 provision in Advocates Renumeration Order that requires production of EFD. In support of her stance, the learned advocate cited the cases of National Oil Tanzania Limited vs Standard Chartered Bank (T), Taxation Cause No. 94 of 2018 and Hotel Travertine LTD vs National Bank of Commerce, Civil Reference No.9 of 2006. She expounded that the Court, in the two cases, held that where receipts are not produced, the taxing officer is enjoined to tax any amount that he deems reasonable. The respondent's counsel also referred to the decision of this Court in the case of Rose Mkeku (the administratrix of the estates of the late Simon Mkeku) vs Parvez Shabbirdin, Land Application No. 89 of 2021, HC at Mwanza where the Court held that there is no requirement to prove instructions fee by tendering receipts. Furthermore, the respondent's counsel submitted that in light of the decisions in Tanzania Rent a Car Limited vs Peter Kimuhu, Civil Reference No. 9 of 2020 CAT at Dar es Salaam and Rose Mkeku (supra), the prpvisions of Section 39 (1) (c) of the Advocates Act and Section 29 (1) (a) and (b) of the Value Added Tax Act are not applicable in the circumstance of this matter. The learned counsel added that attendance costs are different from instructions fee as such, the taxing officer was right to award attendance costs separately from instructions fee. On the transport costs, it was the counsel's 9 argument that, the taxing officer was right to award transport fee independent from instructions fee. She elaborated that the same does not necessarily require proof because item 3(a) of the 8th Schedule to the Advocates Remuneration Order provides TZS 50,000.00 but the respondent just claimed TZS 10,000.00 which is far below the prescribed rate. The counsel opined that the awarded amount was fair and reasonable in the circumstances. Ms Subira refuted the argument that the taxing officer used wrong principle in charging transport costs stating that the complaint was unfounded. Submitting on costs for taxation cause, the respondent's counsel had it that the costs for taxation cause to the tune of TZS 1,000,000 was reasonable. In the end, the learned advocate prayed that this reference be dismissed with costs. In a brief rejoinder, the applicant's counsel reiterated his submission in chief and added that the Advocates Renumeration Order is not evidence that the respondent incurred costs. Further, he submitted that the cases cited by the respondent's counsel are distinguishable from the instant matter because advocates are required to comply with the laws of the land. Having canvassed the depositions and rival submissions, the issue for termination is whether the applicant's grounds are meritorious. Although A ’ yy io the applicant raised several grounds, upon critical appraisal, it is common cause that the applicant is, in essence, faulting the taxing officer on three grounds, one, that the taxing officer applied wrong principle in taxing the instruction fees, two, that the costs were awarded without EFD receipts, and three, that the taxing officer wrongly interpreted the Advocates Renumeration Order, GN No. 264 of 2015. Starting with the 1st issue that the taxing officer applied wrong principle in taxing instruction fee, it t should be noted that the award of instruction fee is peculiarly within the discretion of the taxing officer and the Court would hardly interfere with his decision, unless it is proved, that the taxing officer exercised his discretion injudiciously or acted upon a wrong principle or applied wrong consideration. See the case of Ramani Consultants Ltd vs the Board of Trustees of the National Social Security Fund & Another, Civil Application No. 184 of 2014, CAT at Dar es Salaam. Applying the foregoing position to the instant matter, it is on record that the suit, subject of this reference was contentious for liquidated sum of TZS 1,490,085,586. It is therefore common cause that the applicable scale was the one provided under item 8 of 9th Schedule which is 3% of the liquidated claim. At page 7 of the ruling, the taxing officer clearly indicated that she applied 3% of the liquidated claim. I thus ii do not see any fault on the part of the taxing officer hence I find no justification to interfere with the decision reached by the taxing officer. The 2nd issue is whether the taxing officer erred in law by taxing the attendance fee and transport costs separately from the instruction fee. In this matter the taxing officer awarded attendance costs to a tune of TZS 2,100,000. Item 3 of the 8th Schedule to the Advocates Remuneration Order, entitles a party to claim TZS 50,000/= for every court attendance when he spends fifteen (15) minutes or less. This is charged based on the number of court attendances made and the time spent. It is different from the instruction fee which is basically predicated on the amount claimed in the plaint and complexity of the case, among other factors. I therefore agree with the respondent's counsel that court attendance fee is different from instruction fee and the same was properly taxed on different scale. With regard to transport costs, the taxing officer awarded 320,000 which is in accordance with Item 8 of 11th Schedule. Therefore, the applicant's argument that the taxing officer was supposed to tax transport costs within the instructions fee is misconceived. It is noteworthy that according to order 46 of the Advocates Remuneration Order, all bills of costs must mandatorily be taxed on the prescribed scales as 12 provided in the Schedules by taking into account the nature of the services or work done. For clarity, the order provides; 'AH bill of costs shall be taxed on the prescribed scale,, unless a Judge of the High Court, for special reasons to be certified, allows costs in addition to the costs provided by the scale or refuses to allow costs or allows costs at a lower rate than that provided by the scale.' In light of the above provision, it is my considered opinion that, the taxing officer was in all fours of the law in that she taxed the costs according to the prescribed scales. As such, her decision cannot be faulted. The 3rd issue is whether the taxing officer was justified to tax the item on instruction fees, transport costs and attendance costs without production of EFD receipts. As rightly submitted by respondent's counsel, there is no requirement to prove payments of instructions fee by tendering receipts. The case of Tanzania Rent a Car (supra) underscores the point. In addition, there was no dispute before the taxing officer that the respondent attended in court on the dates indicated in the bill of costs. As such, it naturally follows that she incurred costs for transport to and from the court. In the circumstances of this matter, it is my considered view that the taxing officer was reasonably justified to award the costs even in absence of receipts. 13 That all said and done, the application for reference is without merits and for that reason, I hereby dismiss it. However, I make no order as to costs in order to bring the dispute to an end. It is so ordered. 14