200605004 TZCA Dar es Salaam

IN THE COURT OF APPEAL OF TANZANIA AT DAR ES SALAAM CIVIL APPEAL NO .. 103 OF 2003 ENGEN PETROLEUM (T) LIMITED ............................... APPELLANT VERSUS TANGANYIKA INVESTIMENT OIL & TRANSPORT LIMITED ......................................... RESPONDENT 16th March, 2006 & 4 th May, 2006 RULING .WAMBURA. SOR-CA/TAXING OFFICER This taxation matter arises from the order of the Court dated 8th September, 2005 dismissing the respondents appeal with costs. When the matter came up for hearing it was agreed that the same be done by way of written submissions in that the applicant files his submissions on or by 30.3.2006, respondents file their reply by 13.4.2006 and rejoinder on or by the 28th of April, 2006. I thank both counsels for having complied with the same by the 20th April, 2006. The bill of costs as filed has sixteen (16) items which have been grouped in four groups (B to E) by the applicants in their submissions. 2 Item 1 in group --s is instruction .fees prayed at Tshs. 50,000,000/- because the applicant's counsel spent ample time and energy in preparation of its defence for the appeal including but not limited to long hours of research and compilation of arguments and authorities for the main appeal. This involved complex matters relating to the terms of a fuel collection and distribution agreement between the parties which was valued in excess of Tshs. 125,323,309.43 and US$ 197,218.85 in the main suit and Tshs. 65,361,737.89 and US$ 553,198.12 in the Counter Claim exclusive of interest and costs; totaling to Tshs. 190,685,047.32 and US$ 730,416.97 respectively. It was the applicants counsel submission therefore that the amount claimed was reasonable, praying that it be taxed as presented. The respondents counsel however bitterly objected to this is his submissions arguing that the amount of Tshs. 50,000,000/- in item 1 is glaringly high by any standards despite its lack of support. He 3 argued that the amount goes against all set principles of law known to taxation of costs in the Court of Appeal citing the case of The Attorney General and Amos Shavu Taxation Reference No. 2 of 2000 at page 7 where the Late Hon. Lugangira J.A. (as he then was) held as follow:- "The Court of Appeal in Premchand Raichand (supra) laid down four principles which have to be considered in this context i.e. that costs be not allowed to rise to such a level as to confine access to the courts to the wealthy; that the successful litigant ought to be fairly reimbursed for the costs he had to incur; that the general level of remuneration of advocates must be such as to attract recruit recruits to the profession, defies all the other principles." In reply to this the applicants counsel alleged that, in the present Application for taxation the amount claimed as instruction fees heeds all the above mentioned requirements and that the same should be taxed as presented. 4 Under part C of the applicant's submissions they are seeking for payment of the sum of Tshs. 10,022,000/- as VAT at 20% on the sub total of 50,110,000/- of item, 1 - 12. Again the respondent challenged this saying Legal fees are subject to stamp duty and so is VAT. The reimbursement is therefore for actual amounts spent and in taxation one determines the reasonable amount for compensation. In the circumstances of the instant case it is alleged that Tshs. 50,000,000/- was paid to counsel for the respondent. They expected that a receipt for that money would be produced indicating which part of the funds went to the Government in form of taxes, and which went to the lawyer. This has not been done and was therefore in violation of R 117 of the Court of Appeal Rules. Responding to that the applicants counsel submitted that, it is prudent to note that instructions fees are paid by a client to his Attorneys, and they form an income base that is subject to VAT. Since the Respondent has been condemned to pay costs of the Appeal and the amount claimed has already been remitted to the 5 • Tanzania Revenue Authority, it is only logical that they be charged to compensate the Applicant herein. The applicants have further claimed Tshs. 90,000/- for attendances and service costs for the nine days at Tshs. 10,000 per day as seen in part C of their submissions. The respondents on the other had have prayed that the amount be reduced to Tshs. 5,000/- per day having the total in this stand at Tshs. 45,000/-. In reply the applicants have prayed that the amount remains at Tshs. 10,000 as their offices are at Masaki and out of the City Centre. In part E we have items 13-16 for disbursements. Which stands at Tshs. 5,500/- which the respondents have not disputed. I once again thank all counsels for submitting their submissions in time and for their challenging arguments. I will start with granting items 13-16 in group E amounting to Tshs. 5,500/- as disbursements because these were not disputed upon. 6 • I also grant Tshs. 90,000/- as prayed for in group D as Tshs. 10,000/- per day is reasonable. As for VAT in group C, I would willingly grant it if the said claim was supported by a receipt from Tanzania Revenue Authority but for want of the receipt I fail to grant the Tshs. 10,022,000/- as prayed. Finally, I come to the most contested issue, that is item 1 being in group B whereby the respondents are willing to pay Tshs. five (5) million only instead of 50,000,000/- as claimed by the applicants. All counsels have gave reasons which I have no reason to repeat here. Whereas I agree that the amount of Tshs. 50,000,000/- is on the high side, believing that another taxation matter will be filed in the High Court Commercial Court, I _find the amount of Tshs. five (5) million slightly fair. However, taking into account the complexity of the matter, research and amount of money involved, 1 grant the applicants Tshs. 10,000,000/- as instructions fees. The total amount granted in this matter at the sum of Tshs. 10,095,500/-. • -~"· ,· ~J·. 7 • DATED at DAR ES SALAAM this 4th day of May, 2006. I' . ' . '. J Y-'·..f.:.h""' . ~~ '-'~_,;'__'l / tt:;1.1J,,: -~--,:t , ~ -{' 'fi;:_~~-::: · S.A.N.~RA ='Wil'QR DEPtrrv REGISTRAR TAXING OFFICER . ~:- ~ ··----- ~' , , -~,.,_,..-c··-.,