NATIOAL INVESTMENT CO

IN THE HIGH COURT OF TANZANIA (COMMERCIAL DIVISION) AT PAR ES SALAAM MISCELLANEOUS COMMERCIAL CAUSE NO. 304 OF 2014 (Arising from Commercial Case No. 85 of 2012) A NATIOAL INVESTMENT COMPANY LIMITED FELIX GAMALIEL MOSHA I ......... APPLICANTS KATHLEEN ARMSTRONG J VERSUS NATIONAL MICROFINANCE BANK P L C .................. RESPONDENT 4th April & 1st June, 2015 RULING MWAMBEGELE, J.: Before me is a Tax Reference preferred by National Investments Company Limited, Felix Gamaliel Mosha and Kathleen Armstrong (henceforth "the applicants") against the National Microfinance Bank PLC (henceforth "the respondent"). The reference is against the decision of the Taxing Master of this court given on the 15.08.2013, in respect of Commercial Case No. 85 of 2012 in which the applicants were defendants and the respondent was the plaintiff. The reference is made under rule 5 of the Advocates' Remuneration and Taxation of Costs Rules, 1991 - G.N. No. 515 of 1991. It is based on a total of seven grounds namely: (i) To interfere and set aside the findings that the suit was not contentious because it was an interpleader suit in which only declaratory orders were sought; (ii) To set aside the finding that item 2 was part and parcel of the instruction fee; (iii) To set aside the finding that the instruction fee is based on the principle laid down in the Court of Appeal case of VIP Engineering and Marketing Ltd Vs IPTL, Taxation Reference No. 15 of 2005 since the VIP Engineering case was a Court of Appeal taxation based on the Tanzania Court of Appeal Rules, 2009 which is different from the Advocates' Remuneration and Taxation of Costs Rules, 1991; (iv) The Taxing Master erred in failing to base the instruction fee based on the amount of the respondent was seeking to protect and basing the decision on the pecuniary jurisdiction of the Commercial Division of the High court; (v) The Taxing Master erred in treating the prayers, namely for declaratory orders, as the subject matter of the suit; (vi) The Taxing Master erred in failing to notice that the prayers sought by the respondent were designed to avoid the 2 correct filing fees on the amount the Respondent was seeking to protect from the Applicants; and (vii) Costs be awarded to the Applicants. Apparently, it is not explicit as to which are the prayers and which are the grounds of the reference, as both are mixed therein. The seasoned advocate has decided to let the court pick and choose for itself. Though not fatal, it is not desirable, more so where justice demands expediency which calls advocates as officers of the court to assist the court to cutting down the time spent in dispensation of justice. That notwithstanding, I will proceed to determine the matter as reference on ground that the applicants are not satisfied with the ruling of the Taxing Master pronounced on the 15.08.2013. The history behind this reference is a bit long. I feel, before I delve further into it, I should explore by way of narration, albeit briefly, that history, as can be deciphered from the bulky court record. It started way back in 2012, when internal turmoil in the first applicant; National Investments Company Limited (NICOL) ensued. The turmoil, as gleaned from the record was related to its management such that the respondent, as her banker had blocked her (NICOL's) accounts. Some facts on this internal tussle may add value in this ruling particularly to bring into picture the genesis of the present reference. 3 The second and third applicants were, respectively, Chairman and Chief Executive Officers of the fist applicant. They (including the first applicant) were suspended or de-listed from the Dar es Salaam Stock Exchange (DSE) by the Capital Markets and Securities Agency (CMSA) for failure to comply with statutory requirements for listing. They successfully challenged this decision before my brother at the Bench Dr. Twaib, J. vide Miscellaneous Civil Cause No. 16 of 2011. From a separate angle of action, however, the shareholders of the first applicant had successfully petitioned to this court before my sister at the Bench Bukuku, J. vide Miscellaneous Civil Application No. 4 of 2012 for appointment of an interim Management to the first applicant and instituting a new management acceptable to them. Executing an order thereof, they had appointed a certain Adam Wamunza as an interim Manager. This move did not please the second and third applicants. They unsuccessfully tried to have the order set aside and or revised both in this court and the Court of Appeal. That failure notwithstanding, the applicants informed the respondent by way of a letter that the Board of the first applicant had mandated them (the second and third applicants) and another person to sign cheques and other bank documents on behalf of the first defendant and further requested the respondent to unblock the accounts of the first defendant. 4 The respondent's dilemma was evident in the circumstances; that there were two managements of the first applicant namely the said Adam Wamunza - a shareholders' appointee and the second, third and another person - Board appointees. It is that dilemma which triggered the respondent to institute an interpleader suit registered as Commercial Case No. 85 of 2013 against the first defendant and the three purported managers, praying for a permanent injunction against the defendants from threatening and harassing her or taking any legal action for blocking the account and determination by this court of the proper management of the first applicant. However, having everything ready and pleadings complete, and on the eve of mediation; that is, on 06.02.2013 to be precise, Ms. Nyiti Neema appearing for the respondent (the plaintiff in that suit) prayed to withdraw the suit on the ground that it was overtaken by events. Her prayer was resisted by Mr. Mhango for the applicants (the defendants in that suit) but ultimately this court ( Nyangarika, J.) allowed them to do so, but ordered them to pay the costs of the first, second and third applicants (then defendants) and further directed that the costs had to be taxed. The beneficiaries dutifully presented their Bill for taxation before the learned Taxing Master who heard them viva voce on 23.07.2013 and 5 ruled thereon on 15.08.2013. He taxed the Bill at Tshs. 12,388,000/= out of Tshs. 384,064,000/= grand total in the Bill. It is this Bill which sparkled off the instant reference. However, this reference does not originate here. It comes from afar as well. Its predecessor that is Miscellaneous Commercial Cause No. 150 of 2013 could not survive a fatal blow upon being attacked for being, inter alia, omnibus. It had contained two applications; namely, for extension of time to file a reference and a reference itself. It was struck out by my brother at the Bench Nyangarika J. on 05.06.2014. A second one, this time christened Miscellaneous Commercial Cause No. 154 of 2014 for extension of time to file this reference was successfully sought on 03.11.2014. It therefore paved way for the present reference. At the hearing of this reference, Mr. Mwezi Mhango, learned advocate appeared for the applicants and I note from the record that he had all along been representing the applicants and is still with them in the present matter. On the other hand, it appears from the record, the respondents have retained the services of Mr. Mshukuma, learned advocate, who has been representing it throughout the history of this matter. He dutifully and zealously stood for them in this matter as well. 6 Mr. Mhango, learned counsel, swore an affidavit in support of this reference. He states in the main that the Taxing Master taxed the Bill of Costs at TShs. 12,388,000/= for both advocates instead of taxing the Bill at 3% of the subject matter for each advocate. He deposes further that the applicants were dissatisfied with the ruling because the subject matter of the suit was the money amounting to Tshs. 1,128,618,042/64 which the respondent was seeking to protect. It is also stated that the Taxing Master erred to rely on the Court of Appeal ruling which based on the Court of Appeal Rules, 2009. He states further that, basing on the said amount, the Taxing Master had taxed the Bill at 38,858,541/27 in Commercial Case No. 119 of 2011. A counter affidavit sworn by Lilian Komwihangiro; the respondent's Company Secretary, controverts all statements in the affidavit. It is refuted and deposed that the Bill was properly taxed because the 3% applies to contentious matters whereas the interpleader suit was not contentious. It is further deposed that the advocates demanded and were paid the Tshs. 12,388,000/= and further that the amount of Tshs. 1,128,618,042/64 was not the subject matter of the suit; Commercial Case No. 85 of 2013 as alleged. It is her contention also that the respondent, having found herself at the centre of competing management of NICOL, was forced to go to court to seek declaratory orders as to which management the respondent should rightfully recognise and duly allow to operate the first applicant's account. 7 Before the oral hearing before me on 04.04.2015, both counsel had earlier filed their skeleton written arguments as required by rule 64 of the High Court (Commercial Division) Procedure Rules, 2012 - GN No. 250 of 2012. Both counsel adopted their skeleton written arguments as their oral arguments. I have had an advantage, therefore, of reading through their contending arguments beforehand. Their arguments in the skeleton written submissions and oral hearing are as contained in the affidavit and counter affidavit whose contents I have summarised above. Having gone through their respective submissions and having heard them viva voce, I gather the following to be undisputed: one, that there was Commercial Case No. 85 of 2013 which was filed as a result of two different managements claiming concurrent authorities to manage and run the affairs of the first applicant including the signing of the cheques. Two, that the said suit was withdrawn immediately upon completion of pleadings. Three, that costs were awarded to the defendants, which costs were taxed at Tshs. 12,388,000/= by a ruling of the Taxing Master dated 15.08.2014. Those being undisputed facts, the discontentment arose as to the amount awarded upon taxation. Mr. Mwezi Mhango, learned counsel for the applicants, is of the view that the Taxing Master erred by taxing the matter as non-contentious and hence failing to tax the costs at 3%. According to him, it was wrong for the Taxing Master to base his 8 decision on the case of VIP Engineering and Marketing Limited Vs IPTL, Taxation Reference No. 15 of 2005, since that decision was based on the Court of Appeal Rules which are different from the Advocates Remuneration and Taxation of Costs Rules, 1991. He contends that the same Taxing Master taxed the cost at 3% in Commercial Case No. 119 of 2011 which was the same interpleader suit seeking to protect the same amount of money. In his view, the applicable principle in taxation in the Court of Appeal is based on the complexity of the case and other factors but in the High Court the applicable principle is found in schedule IX to the Advocates' Remuneration and Taxation of Costs Rules, 1991 whereby, if the Written Statement of Defence has been filed the fee chargeable is 3%. He further faults the award made by the taxing master for failure to explain the reasons therefore contrary to a decision in the case of Aiiy Linus and Others Vs Tanzania Harbours Authority [1998] TLR 5 and further that this Court can interfere on the decision of the Taxing Master on the basis of George Mbuguzi Vs A. S. Maskini [1980] TLR 53. On the other hand, Mr. Mshukuma vehemently maintains that the matter was not contentious and therefore the Taxing Master applied the correct principle. He went on to distinguish Commercial Case No. 119 of 2011 from Commercial Case No. 85 of 2013, stating that in the former the subject was a garnishee order attaching the money claimed by two different persons whereas in the latter, there were two competing managements. His argument is that, since there was no specific 9 amount of money pleaded in Commercial Case No. 85 of 2013, it was not contentious and therefore the instruction fee cannot be charged at 3%. He also maintains that this reference has been overtaken by events because the award has been executed as the counsel for the applicants have already received the amount taxed. What I gather here, from both submissions and respective pleadings, is that the point of controversy is on the nature of the interpleader suit; Commercial Case No. 85 of 2013. The applicant maintains that it was contentious whereas the respondent is of the view that it was not. I am therefore called in this reference to determine first the question whether the matter was contentious or otherwise, and upon an answer thereto, to determine whether the taxing master applied a wrong principle of law. Answers to these questions will or will not warrant my interference into the Taxing Master's decision. The principle is that taxation powers are discretional upon the Taxing Officer and a court will not interfere unless it is satisfied that the same was based on a wrong principle - see Pardhan Vs Osman, [1969] 1 EA 528 (HCT) and George Mbuguzi Vs A. S. Maskini [1980] TLR 53 and Tanzindia Assurance Co. Limited Vs RABCO Tanzania Limited, Commercial Case No. 37 of 2006 (unreported). In the Tanzinidia case, my Brother at the Bench; Werema, J. relying on Thomas James Arthur Vs Nyeri Electricity Undertaking [1961] E.A 492; the decision of the defunct Court of Appeal for East of Africa, io which was followed in MGS International (T) Ltd Vs Haiais Pro- Chemie Industries Ltd (Commercial Case No. 3/2003) (unreported), had this to say in reference to the principles applied by judges when interfering with the decision of a Taxing Master: "Where there has been an error in principle the court will interfere, but questions solely of quantum are regarded as matters with which the Taxing Masters are particularly fitted to deal and the court will intervene only in exceptional cases." Perhaps the reason why such powers are left within the empire of the Taxing Master and sparingly interfered with was sufficiently explained by Hamlyn, J. in the Pardhan case (supra) as follows: "... judges, lacking the experience of taxing masters, will not interfere with the quantum allowed as an instruction fee upon taxation, unless it is manifestly so high or so low that it calls for interference by reason of some misdirection having occurred or some wrong principle having been adopted." 11 In the case at hand, essentially, the amount awarded by the Taxing Master as instruction fee was Tshs. 6,000,000/= to each of the applicants' counsel. This can be gleaned from the first paragraph of the last page of the impugned ruling. It is apparent that the learned Taxing Master was in agreement with the counsel for the respondent that the matter was not contentious hence the award of the said amount. The term "Interpleader" is not defined in the Civil Procedure Code Cap. 33 of the Revised Edition, 2002 but the procedure thereof is to be found at Order XXXIII. However, Black's Law Dictionary (Abridged Seventh Edition) by Bryan A. Garner, at page 659, defines the term as: "A suit to determine a right to property held by a [usually] disinterested third party (called a stakeholder) who is in doubt about ownership and who therefore deposits the property with the court to permit interested parties to litigate ownership. Typically, a stakeholder initiates an interpleader both to determine who should receive the property and to avoid multiple liability." Perhaps a more elaboration on the origin and nature of an interpleader suit is found in the case of De La Rule Mf Hernu, Peron and 12 Stockw el£ft/[1936] 2 All ER 411. Therein, Greene U , agreeing to the Judgment of Greer LJ, had these to say: "Interpleader proceedings originated in courts of equity, and the appropriate procedure where a person found himself harassed by claims made on behalf of two or more persons was by way of a bill of interpleader". His Lordship went on to quote a passage from Daniell's Chancery Practice (4th Edn), Vol 2, P. 1418, Published in 1867, saying that it is from this practice in equity that the whole modern law of interpleader is ultimately delivered. The author says: "Where two or more persons claim the same thing, by different or separate interests, and another person, not knowing to which of the claimants he ought of right to render a debt or duty, or to deliver property in his custody, fears he may be hurt by some of them, he may exhibit a bill of interpleader against them." In conclusion, His Lordship held in substance that the matter appears to be a mere matter of machinery rather than an action. Thus, this 13 holding was in agreement with Lord Justice Greer who had held that an interpleader is not an action but a proceeding in an action. Apparently, from the foregoing authorities, the purpose of interpleader proceedings is to enable a person in a position of stakeholder to get relief, or get it determined as to which of the two claimants he had to account for the property or money that he held. This proposition is also supported by our CPC at Order XXXIII. If follows, therefore, that, insofar as the plaintiff is concerned, the matter will not be contentious as between him and the claimants, but rather upon him being relieved therefrom by the court, it remains contentious as between the two claimants. These have a duty to establish their position as to who is the rightful owner of the property. It is for this reason, in my considered opinion, that the CPC requires that the plaintiff shall have his costs upon filing the interpleader suit - see Order XXXIII Rule 4(1) (a). In the premises, it is obvious therefore that the nature of interpleader proceedings are not contentious as between the plaintiff and the defendant, since, on the basis of the De La Rue case (supra), it is the only proceedings or process through which actual litigants are compelled to appear to court to express openly and establish the rights over the property held by the Plaintiff. 14 However, it would appear that in the circumstances where the plaintiff is ordered to pay costs to the defendant, for reason of discontinuation of the suit by withdrawal, the same will not be taxed as contentious for the very reasons herein stated. The fact that the nature of interpleader proceedings in so far as the plaintiff or stakeholder and the defendants or claimants are concerned is non-contentious, also is firmly grounded on the fact that an interpleader does not contest against any of the two competing powers, and neither does he claim interest whatsoever in the property claimed by the two parties. This requirement that an interpleader must not claim interest in the subject matter in dispute other than for charges or costs is also provided under rule 1 (a) of Order XXXIII of the CPC. In my considered opinion, there is nothing wrong, therefore, to consider the work done so far in the suit in awarding such costs as was laid down in the VIP engineering case by the Court of Appeal (supra). I deem no cogent reasons to hold otherwise in the circumstances. In fine, therefore, the above goes to answer the question that the interpleader proceedings were non-contentious, and further that the Taxing Master did not apply a wrong principle of law. Regarding the amount awarded, the analysis hitherto goes to show that I have no reason let alone justification for interfering with what was awarded by the Taxing Master. 15 In the end of it all, this reference stands dismissed in its entirety for want of merit. The applicants are condemned to pay costs of the respondents for this reference. Order accordingly. DATED at DAR ES SALAAM this 1st day of June, 2015. 16