Mohammad Woodworks v Honest Logistics

1 IN THE HIGH COURT OF THE UNITED REPUBLIC OF TANZANIA COMMERCIAL DIVISION AT DAR ES SALAAM COMMERCIAL REFERENCE NO. 18869 OF 2024 (Arising from Taxation Cause No. 121 of 2023 ) MOHAMMADI WOODWORKS LIMITED…………………………… 1ST APPLICANT MUSTAFA AUNALI ZAVERY…………………………………………. 2ND APPLICANT AUNALI ABDULKADER ZAVERY……………………………….…….3RD APPLICANT VERSUS HONEST LOGISTICS LIMITED……………….………………………. RESPONDENT RULING September 24th, 2024 & November 8th, 2024 Morris, J The applicants have preferred the instant application for reference (reference) challenging the Taxing Officer’s ruling dated 10th May, 2024, in Taxation Cause No. 121 of 2023 (the taxation cause). The chamber summons in respect of this application is made under Orders 7(1) & (2) and 48 of the Advocates R em uneration Order , GN No. 263 of 2015 (the Remuneration Order). In support thereof, is an affidavit of Moiz Zavery, Principal Officer of the applicant. 2 Specifically, through the chamber summons, the applicants have invited this Court to find that the claim presented in the Bill of Costs in the taxation cause was excessive therefore, the respondent was not entitled to such costs. Further, the applicants have invited this Court to grant costs of this reference in their favour. Nonetheless, the respondent has contested this matter via a counter affidavit duly affirmed by Shamsuddin Panjwani, his principal officer. Briefly from the parties’ pleadings, material facts are to the extent that the taxation cause before the Taxing Officer emanated from this Court’s Ruling dated 6th October, 2023 (His Lordship Nangela, J.), in Commercial Case No. 7 of 2023 (the commercial case). Therein, the applicants were the defendants while the respondent was the plaintiff. Also, the 1st applicant filed a counter claim. Further, both the applicants and the respondent raised preliminary objections (POs) respectively. To wit, the applicants’ PO was directed towards the commercial case. On the other hand, the respondent’s PO was against the 1st applicant’s counter claim. As a result, through the above-mentioned Ruling, the respondent emerged victorious as his PO was sustained while that of the applicants was overruled with costs in favour of the former. Consequently, the 3 counter claim was also struck out with costs, leaving the commercial case pending in this court. With the view to recover the costs awarded in the said Ruling, the respondent presented a bill of costs for taxation before the Taxing Officer (Hon. Minde, DR.) via the taxation cause. The bill of costs was taxed and the Ruling was delivered to that effect on 10th May, 2024. Nevertheless, the applicants were dissatisfied with the said Ruling. Hence, they have preferred the present Reference craving for orders of this Court as indicated above. Through the applicant’s affidavit, the Reference is founded on four (4) main grounds as hereunder; 1. The Taxing Officer did not decide all issues raised by the applicant. 2. The Taxing Officer did not state the basis of or schedule under which taxing instruction(sic) for defending counter claim at 14, 780,472.42/= was justifiable. 3. The Taxing Officer awarded costs for bill of costs instead of costs for attending taxation, which made the said cost to be taxed on (sic) 1,000,000/= in the same threshold with applications. 4 4. The certificate of taxation issued was having and error (sic) on the date of the taxation decision. On the other side, the respondent has contested these allegations. Hearing of this matter proceeded by written submissions. Parties filed their respective submissions through their advocates. For the applicant were Messrs. Yohana Julius Ayall and Nixon Tugara. For the respondent was Mr. Franklin Yuredi Chonjo. Submitting in support of the 1st ground, the applicants’ counsel contended that the 2nd and 3rd applicants were not parties in the counter claim that was struck out with costs. As such, they argued that it was improper for them to be impleaded in the taxation cause. Thus, they craved for this Court to order their removal in these proceedings. In terms of the 2nd ground, it was the counsel’s submission that the Taxing Officer taxed off 20,815,632.69/= as instruction fee for defending the PO regarding the commercial case because the said case was pending before this court at the time of taxation. They went on to submit that, the Taxing Officer taxed 14,780,472.42/= (equivalent to 3% of 492,682,414), as instruction fee for appearing and defending the PO against the counter claim. This amount, according to the counsel was 5 excessive in accordance with item (k) of the 11th Schedule to the R em uneration Order . To buttress this position, they cited Order 12(2) (supra) which restricts a taxing officer to allow costs incurred or increased through over-caution, negligence or mistake. They thus suggested that the Taxing Officer ought to have disallowed the stated amount and alternatively, allow 1,000,000/= only, as per item (k) (supra). They further contended that, the rates for instruction fee in the matter at hand is misconceived since the correct authority is the 11th Schedule Rule (k) which prescribes such rate as 1,000,000/=, for any other claim not stated, and not the 9th Schedule (supra). To them, the 9th Schedule deals with cases involving liquidated sums, which is not the case in the instant matter. On the definition of the term “liquidated sum”, reliance was placed upon the case of Southern Highland and Earthw orks Com pany Lim ited v. UAP I nsurance Tanzania Lim ited , Taxation Reference No. 1 of 2021 (unreported), whereby, the High Court held that, a “liquidated sum must be agreed in advance by parties and it should be included in a contract.” In the same line, the court went on to quote Black’s Law Dictionary as hereunder; 6 “Black’s Law Dictionary defines liquidated sum as an amount actually stipulated as reasonable estimation of actual damages to be recovered by one party if the other party breaches; also, if the parties to contract have agreed on liquidated damages, the sum fixed is the measure of damages for a breach.” The counsel further argued that there was no viable reason for the Taxing Officer to tax instruction fee at 14,780,472.42/= for appearance and defending preliminary objection in the counter claim because the amount in the said counter claim was not liquidated sum within the interpretation in Southern Highland’s case (supra). Further, it was asserted that preparation for trial, raising and arguing of a preliminary objection is not a special and extraordinary activity requiring charging fees above the prescribed scale. On restriction of excessive fee, reference was made to the cases of National Bank of Com m erce v Kapinga & Co. Advocate , Civil Reference No. 4 of 2003 (unreported) and R epublic v. The M inister for Agriculture Exparte W ’njuguna and Others [2006] 1 EAC 359. Additionally on this ground, the counsel argued that the Taxing Officer taxed 15,910,472/= and disallowed 23,716,633.11. Thus, according to the applicants the disallowed amount exceeded one-sixth 7 (1/6) of the total amount claimed in the bill of costs. As such, they contended that the Taxing Officer ought to have disallowed the entire bill of costs within the ambit of Order 48 of the R em uneration Order . On this stance, reliance was placed on the cases of John M om ose Cheyo v Stanbic Bank Lim ited , Commercial Reference No. 72 of 2018; The R egional Com m issioner of Shinyanga v Benard M songa Sizasiza , Civil Reference No. 1 of 2019 and, Octopus Engineering Lim ited v Spencos Services Lim ited , Civil Reference No. 14 of 2020 (all unreported). Submitting in support of the 3rd ground, it was the applicant’s assertion that there is nothing like instruction fee for filing bill of costs in the law prescribing fees for advocates. To them, the recognised fee on that aspect is attendance fee, in which the same is charged in accordance with Order 55(3) of the R em uneration Order instead of 11th Schedule as it was done by the Taxing Officer in this matter. That being the position, they then argued that the appropriate fee in that respect could be 50,000/= as opposed to 1,000,000/= that was granted by the Taxing Officer. There was no submission in respect of the 4th ground. 8 Conclusively, the applicants’ counsel invited this Court to hold that the instruction fee was supposed to be taxed at 1,000,000/=. It was further maintained that, since more than one-sixth (1/6) of the amount presented in the bill was disallowed by the Taxing Officer, then this Court should be pleased to declare that under Order 48 (supra) and the case laws cited, the respondent is not entitled to any costs because of preferring excessive claims. In reply, the respondent’s counsel was brief. In terms of the 1st ground he argued that it is an afterthought not fit to be raised at this stage. On the 2nd ground it was submitted that the Taxing Officer was correct in awarding 14,780,472.42/= under the 9th Schedule of the R em uneration Order . That the amount was equivalent to 3% of the total amount in the counter claim. The case of First Am erican Bank of Kenya v Shah (2002) 1 EA 64 regarding factors to be considered under the R em uneration Order was cited. On the contention of liquidated sum, the counsel insisted that this issue is misconceived as the applicants have failed to understand the meaning of liquidated sum. That, even the authorities cited by the applicants are irrelevant to this matter since the same are specifically 9 focused on non-liquidated sum, while the amount in the counter claim was liquidated one because it was founded on breach of contract. The case of Tanzania P orts Authority and Attorney General v. JV Tangerm Construction Co. Lim ited & Technocom bine Construction Lim ited (A Joint Venture) , Comm. Ref. No. 26 of 2022 (unreported) was cited to buttress this position. In the referred case, this Court held that; “………..In view thereof, since the respondent in Commercial Case No. 117 of 2015 was claiming for sum which she was entitled by virtue of the contracts, the claims were liquidated sum that is the reason why the court granted interest at the commercial rate from the date of filing the suit to the date of judgment……” Therefore, basing on the above cited decision, the respondent was of the view that the Taxing Officer’s decision was in accordance with the law. On allegations of excessive fee, it was submitted that the same is misconceived because the law provides clearly the manner the bill of costs should be taxed, and that the amount taxed by the Taxing Officer was reasonable. The case of C.B. Ndege v E.W . Aliya & A.G. (1988) TLR.91 was cited in this respect to the extent that, instruction fees must 10 be commensurate with the amount of time, energy and industry involved in the case.To sum up his submissions, the respondent’s counsel craved for this Court to strike out this application with costs for want of merit. Rejoining on the 1st ground regarding striking out names of the 2nd and 3rd applicants, the applicants’ counsel submitted that, this Court has wide powers in that respect under Order I Rule 10(2) of the Civil P rocedure Code . To the applicants, this Court can exercise such powers at any stage of the proceedings in a suit. That, in the matter at hand, this prayer is relevant since the 2nd and 3rd applicants will be subjected to pay costs of the incompetent counter claim they personally did not raise and were not parties. In terms of the contention that, the counter claim was for a liquidated sum because it was based on breach of contract, it’s was their rejoinder that such reasoning is wanting since not all contracts contain liquidated sum clauses. Upon a careful consideration of the pleadings, the parties’ arguments, and the impugned Ruling, the issue for determination is whether the grounds raised by the applicants have merit. On the 1st ground the applicants were brief that the 2nd and 3rd applicants ought not to have been impleaded in the taxation cause since they were not parties 11 to the counter claim that was dismissed with costs. However, it the respondent’s position that this ground should not be raised at this stage. I have meticulously gone through the Ruling of this court that awarded costs which are the subject of this matter and taken note of key issues therein as follows. One, the Ruling was in respect of the POs raised by both, the applicants jointly and the respondent herein. Two, as aforesaid, while the applicants’ PO was directed towards the commercial case, that of the respondent was against the 1st applicant’s counter claim. Three, the respondent’s PO was sustained. Four, the applicants’ PO was dismissed with costs. Further, the counter claim was also struck out with costs. At this juncture, it suffices to hold that, an order for costs in this matter was in respect of both, the dismissed PO and the struck-out counter claim. Therefore, I hold that even though the 2nd and 3rd applicants were not parties to the counter claim, they were parties to the PO that was dismissed with costs. As such, they are also liable to pay the respondent costs in this matter as far as the dismissed PO is concerned. Thus, I find no substance on the prayer to have their names removed from the proceedings of this matter hence, this ground fails. 12 On the 2nd ground the contention is on the amount of 14,780,472.42/= that was allowed by the Taxing Officer in the taxation cause. According to the applicants, the amount was taxed under a wrong provision of the law. Also, the amount was excessive. It is common ground herein that the costs originated from Ruling of this Court following the PO that led to the 1st applicant’s counter claim to be struck out with costs. The respondent herein was the defendant to the said counter claim. As such, it suffices to state that he was defending the said counter claim. I have gone through the impugned Ruling and found that indeed the Hon. Taxing Officer awarded TZS. 14,780,472.42/= as instruction fee for defending the counter claim. However, I have not found reasons thereto for granting the same. Thus, I decline to subscribe to both parties’ positions that the stated amount was awarded basing on either item (k) of the 11th Schedule or the 9th Schedule to the R em uneration Order . Nonetheless, I have taken consideration of the applicants’ line of argument that the said amount was excessive. Thus, I am obliged to determine this argument accordingly. In so doing, I am fully guided by the principle that, the taxing officer’s powers in taxation cannot be interfered unless it is established that in exercise of such powers, he/she 13 has acted unjudicially by acting upon wrong principles or wrong considerations in coming to his/her decision. See, George M buguzi and Another v A.S M askini [1980] T.L.R. 53 and ZTE Corporation v Benson I nform ation Lim ited , Comm. Ref. No.3 of 2018 (unreported). The applicants contended that the subject instruction fee was supposed to be charged under item (k) of the 11th Schedule to the R em uneration Order because the counter claim was for unliquidated sum. On the other hand, the respondent maintained that the 9th Schedule (supra) was the correct provision for that purpose since the amount in the counter claim was for liquidated sum. The reason behind this assertion according to the respondent is that, the subject claim was based on breach of contract and that, as per the Tanzania P orts Authority’s case (supra), any suit relating to breach of contract falls under liquidated sum. Upon considering the two provisions under contention above, I will start addressing the question of whether or not the counter claim was for a liquidated sum. On this point, I have considered the definition in Southern Highland’s case (supra) and formed an opinion that, the subject counter claim was indeed not for a liquidated sum but for 14 unliquidated one. This is because, there is no proof in this matter that, the amount claimed in the said counter claim was agreed in advance by the parties in a contract in line with the above cited case of Southern Highland (supra). Besides, I am not in agreement with the respondent that every claim relating to breach of contract falls under liquidated sum. Regarding the case of Tanzania P orts Authority (supra) relied upon by the respondent, I am of the view that the same did not define the term “liquidated sum” but merely gave a considered opinion thereto. Thus, on this aspect, the Southern Highland’s case (supra) remains as the landmark case. That being the position therefore, the paramount question that remains is the applicability of item (k) or 9th Schedule (supra) in this matter. After considering of the arguments of both parties in this regard, I am not in accord with either of them. This is because, after holding that the counter claim was for unliquidated sum, it is my considered view that the applicable provision is item (d) of the 11th Schedule (supra). This is for obvious reason: that the respondent was granted the said costs when defending a counter claim for unliquidated sum. In other words, he was 15 the defendant thereto. Otherwise, the 9th Schedule 9 (supra) is irrelevant because the same is confined to liquidated sums as opposed to unliquidated ones. Also, its applicability is in favour of the plaintiff as opposed to the defendant. Regarding the question as to whether or not the amount taxed by the Taxing Officer was excessive, I am guided by the principles that, instruction fees must be commensurate with the amount of time spent, energy and industry involved in the matter. See, George M buguzi and another v. A.S. M askini [1980] T.L.R.53 and C.B. Ndege’s case (supra). I am also backed up by the principle in item (d) stated above that, costs in defending a suit should be reasonable but not below 1,000,000/=. I have taken into consideration the fact that, the counter claim was struck out in final stages by a PO. Besides, there is no evidence that the matter took long time or there was excessive use of energy and industry to argue the PO that led to demise of the subject counter claim. Upon such consideration, I am of the view that the amount of TZS. 14,780,472.42/= as fee for defending a counter claim that ended up in a preliminary stage was indeed excessive. 16 As to the applicability of Order 48 of the R em uneration Order , it is my considered view that the import of the said provision is not to disallow the entire bill of costs but to deny costs for prosecuting the taxation proceedings. This is for overt reasons. One, the Taxing Officer has no jurisdiction to deny the applicant costs which were awarded by the Court. That is, in the taxation cause, what is before such Officer is not an appeal or revision against the order for costs. The role of the Officer is only that of taxation of the amount of costs according to law. Parties no longer battle over whether or not the applicant is entitled to costs. The Court is already functus officio in such respect. The remaining contention is always on the exact quantum to be paid to the applicant. Two, the rule acts as a deterrent to unscrupulous parties who would, out of their own lust or mala fides, inflate the bills beyond justifiable proportions. Three, the rule complements the professional ethics regime by reminding counsel to act professionally by presenting bills which are within the ambit of the law. Therefore, I have further taken into account the undisputed facts that, the Taxing Officer taxed off amount of 23,716,633.11 which is equivalent to more than one-sixth (1/6) of the total amount presented in 17 the bill of costs; and on the other hand, awarded costs of for the said bill of costs to the tune of 1,000,000/=. Thus, in line with the provision of Order 48 indicated above, I hold that the said 1,000,000/= was erroneously awarded. On the 3rd ground, I have considered the applicant’s argument that the Taxing Officer awarded costs for bill of costs instead of costs for attending taxation. I have as well given this line of argument due consideration in in connection with the impugned Ruling and found that what was awarded by the Taxing Officer was indeed not fee for attending taxation but costs for the bill of costs. I think that was an err too. The appropriate heading could be fee for attending taxation as per Order 55(3) of the R em uneration Order . Consequently, for the foregoing analysis and reasons I find merits on some of the grounds raised to the extent explained hereinabove. Thus, the issue is answered in the affirmative and consequently, the application partly succeeds. For avoidance of doubts, the taxing officer’s ruling is altered only to the extent hereinbelow. The award of Tshs. 14,780,472.42/= as instruction fee for defending the counter claim is hereby outlawed and replaced by Tshs. 5,000,000/=. The award of Tshs. 18 1,000,000/= as costs of the bill of costs is hereby disallowed. The rest of the Ruling remains intact. Under circumstances of this case, each party bears own costs. It is so ordered. C.K.K. Morris Judge November 8th, 2024 Ruling delivered this 8th day of November 2024 in the presence of Messrs. Yohana Ayall and Nixon Tugara, learned counsel for the applicant; and Mr. Franklin Chonjo, the respondent’s advocate. C.K.K. Morris Judge November 8th,2024