t postal authrity vs ms diamond motors ltd 2012 tzhccomd 3 17 may 2012

IN THE HIGH COURT OF TANZANIA (COMMERCIAL DIVISION) AT DAR ES SALAAM COMMERCIAL CASE NO. 23 OF 2010 BETWEEN TANZANIA PORTS AUTHRITY...................................... PLAINTIFF AND M/S DIAMOND MOTORS LTD.......................................DEFENDANT RULING BUKUKU, J. The applicant is before this court armed with a reference made under rule 5(1) of the Advocates Remuneration and Taxation of Costs Rules, G.N. No. 515 of 1991, challenging the Taxing Master (Kahyoza, RCC's) ruling dated 7th December, 2011, regarding the respondent's bill of costs in commercial case No. 23 of 2010. The reference is made with the support of Mr. Odhiabo Kobas' affidavit whose relevant paragraphs reads as under: i "6. That, even before the determination of the main suit on l/h November, 2011, the respondent presented the bill of costs claiming the sum of T.shs. 22.042,400/- inclusive of VAT. 7. The bill of costs was heard on 3Cfh November, 2011 and the ruling thereof was delivered on /h December, 2011 taxing the bill of costs at T.shs. 7,815,000/- inclusive of VAT to be paid after the main suit is determined. 8. That, being aggrieved by the said ruling, the applicant has preferred this reference on the ground that: (i) That, in computation of the instruction fees the taxing officer awarded the respondent over and above the 3% scale. (ii) That taxing officer failed to consider that the costs awarded should not rise to such a level as to deprive litigant access to court, bearing in mind that the case did not proceed to full trial. (Hi) That the taxing officer erred in awarding/allowing costs of this taxation while the amount taxed off exceed one sixth. (iv) The taxing officer erred in taxing the bill of costs over and above the prescribed scale without certification of a high court judge. 2 The applicant is resisted with one Dilip Kesaria's counter affidavit in which he flatly urges:- "2. I have read and understood the affidavit of Odhiambo Kobas dates 28th December, 2011 and state that, it does not declare any, let alone sufficient grounds for this Honourable Court to interfere with the decision of the taxing officer dated 7th December, 2011 3. The taxing officer accepted Mr. Kobas' submission at the taxation hearing that the instructions fees should be T.shs. 5,998,496.37 and proceeded to tax the instruction fee at exactly the same amount as it was submitted by the applicant's counsel. The applicant's alleged grievance is therefore beyond comprehension". From the record, the facts of the matter seem to be as follows: Defendant, who is now the applicant in Commercial Case No. 23 of 2010, issued a third party notice against the respondent herein. In that case, the applicant claimed against the respondent for an order compelling the respondent to re-issue bills of lading and/or release documents, and for an order that in the event the applicant is held liable to pay damages, the respondent be ordered to pay and/or contribute to payment of such damages and costs. 3 A ruling to the application was delivered on 11th November, 2011 and the court rejected the third party notice with costs. The costs were ordered to be in the cause, meaning that, payment of costs shall be made after the main suit has been determined. It is the averment of the applicant that, before determination of the main suit on 17th November, 2011, the respondent presented the bill of costs claiming the sum of T.shs. 22,042,400/- inclusive tax. The application for bill of costs was heard on 30th November, 2011 and the ruling thereof was delivered on 7th December, 2011 taxing the bill of costs at T.shs. 7,815,000/- inclusive VAT, to be paid after the main suit is determined. Submitting in support of the application, Mr. Kobas, Advocate for the applicant argued that, the application seeks to challenge the decision of the taxing master which was delivered on 7th December, 2011, in particular, on the award of instructions fees. He said that, the instruction fees awarded is on the higher side and not in accordance with the prescribed scale. According to Mr. Kobas, the basis of awarding instruction fees emanates from his submissions he made during the hearing of the bill of costs before the taxing master. He surmised that, as is clearly stated on page 2 of the Ruling, the taxing master ought to have taxed the instruction fees from the amount claimed from the plaint. Submitting further, Mr. Kobas said that, looking at the prayers on the plaint, the amount claimed is ¥899,209, under 2.2 is T.shs 20,311,539, under prayer 2.3 T.shs. 1,486,257, under prayer 2.4 T.shs. lO.Omil. The ruling rate used for buying Japanese Yen is 4 T.shs. 18-20 while buying rate is T.shs. 15, thus making an average rate of T.shs. 18. Arguing further, it is the submission of Mr. Kobas that, If one gets a total of T.shs. 16,185,708 for prayer 2.1 plus T.shs. 20,311,539 for prayer 2.2 and T.shs. 1,486,257 for prayer 2.3 plus 10.0ml., it is T.shs. 47,983,504 and if 3% is taken, it is T.shs. 1,439,505.12 that is the amount which should have been awarded on item No. 1 as instruction fees, and not T.shs. 5,998,496 that has been awarded. His second argument is on the inclusion of the costs for the bill of costs which was before the taxing master that is items No. 17, 18, 19 and 21 on the bill of costs. He laments that, the same ought not to have been awarded because they entail costs of preparing filing and arguing the bill of costs before the taxing master, and that, in his award on bill of costs, the taxing master has disallowed more than l/6th of the amount of bill of costs as presented Mr. Kobas submitted that, according to Rule 46 of the Advocates Remuneration of Taxation of Costs Rules GN 515, when more than l/6th of total amount of bill of costs exclusive of court fees is disallowed, the party presenting the bill for taxation shall not be entitled to costs of such taxation. Therefore, item 17, 18, 19 and 21 which entails costs which were incurred for such taxation, ought not to have been awarded. With regard to the third point which is on awarding items for attending in court for whatever case over and above the prescribed scale, without first seeking a certification by the judge to that effect, it is Mr. 5 Kobas's submission that, the costs of attendance in court have been provided for under schedule 12 to the bill of costs on heading of "attendances" which ranges from T.shs. 600 to 750 per minute. According to Mr. Kobas, the taxing master awarded T.shs. 20,000 for attendance for hearing as such he awarded over and above the prescribed scale contrary to Rule 15 of Advocates Remuneration of Taxation of Costs Rules GN 515. Accordingly, Mr. Kobas prayed that, this Honourable Court be pleased to revisit the figures and tax them accordingly. In response, Mr. Kasaria strongly resisted the application. He submitted that, it was he who had raised the issue that instruction fees to represent 3rd Party ought to be allowed at 15 million T.shs. having regard to the nature of the case of the third party. He further submitted that it was Mr. Kobas who argued against the amount and was able to successfully challenge his submission. Mr. Kesaria said that it was Mr. Kobas who proposed two alternatives to the Registrar. The first proposal was that, instruction fee should be T.shs. 5,395,252. The second proposal was that, the instruction fee should be T.shs. 5,998,496. Under such circumstances, Mr. Kesaria said that, the taxing officer agreed with the proposal put up by Mr. Kobas and disallowed his proposal. Mr. Kesaria surmised that, it is beyond comprehension and absurd for Mr. Kobas to come before this court and submit that the Registrar was wrong in agreeing with his own submission. 6 Submitting further, Mr. Kesaria said that, taxation is a discretionary proceeding and that, it is a well settled principle that a judge cannot interfere with the exercise of discretion of the Registrar unless there is an error apparent on the face of record. According to Mr. Kesaria, there is no error apparent on the face of this record to justify court's interference with the discretion of the Registrar. Making reference to the case of MGS International v Halal Prochemi Industries, Commercial Case No. 3 of 2003, Mr. Kesaria submitted that, in the exercise of its discretion, the Registrar is permitted to award any amount which may be higher or lower than the amounts prescribed under the rules. He further submitted that, this court has also held that the scales provided under GN 515 are now well outdated and therefore the Registrar in the exercise of his discretion is permitted to award higher amounts than those prescribed under the scale. Coming to the second limb relating to the costs of taxation, Mr. Kesaria submitted that, the costs of taxation is the actual hearing itself which was claimed as item 20 of decree holder's bill of costs and has been disallowed in its entirely by the Registrar in conformity of Rule 46. He submitted that, in the Ruling of the Taxing Master, no amount has been awarded in relation to item 20. With regard to the third limb, Mr. Kesaria made reference to pages 5 and 6 of that Ruling, whereby the Registrar explained why this court has consistently allowed a fixed figure of T.shs. 15,000 for court appearance and a fixed of 20,000 for court appearance involving a hearing. The Registrar also made reference to an extract of Mr. Kalegeya's decision and referred to another authority of this court in the 7 case of Jubilee Insurance V. DHL Commercial Case no. 16 of 2003 where the court awarded a fixed amount for court appearance exceeding the scale. In conclusion, Mr. Kesaria submitted that, this application is plainly frivolous and abuse of the process of the court and should be dismissed with costs. It is in the interest of justice that proceedings are brought in its finality, and that, in order to save the decree holder from filing yet another bill of costs in the event there is an order for costs, then the same should be assessed and be paid upon dismissal of this application without making another application. In rejoinder, Mr. Kobas averred that the taxing master was wrong in basing on his submission to award an amount of instruction fee he awarded. Further Mr. Kobas submitted that the Taxing master ought to have been guided by the law which provide for the 3% of the amount claimable and which respondent ought to have paid in the event the 3rd party notice against current respondent would have been successful. According to Mr. Kobas, the observations made by Justice Kalegeya in the case of MGS (T) Ltd. (supra), did not nullify the law or amend it as to the scales for taxation. Accordingly the taxing master should have followed the prescribed scale. On the inclusion of Item 17, 18, 19 and 21, in this bill of cost, Mr. Kobas submitted that, costs of taxation before the taxing master would have covered the costs of preparing and filing the bill of costs before the taxing master, the costs of attending in court to file the bill of costs, attendance in court to argue the bill of costs and cost of serving the defendant or judgment debtor with the bill of costs and costs of 8 attending Ruling on bill of costs. To him, all those items are covered under item 17, 18, 19 and 21, and have been awarded by the taxing master. Therefore, awarding them is tantamount to awarding them costs of the taxation before the taxing master and therefore in contravention of Rule 46 of GN 515. As to the issue of court appearance rates, it is Mr. Kobas's submission that the two cases submitted have two different rates for court appearance. While MGS case, provided for USD 9 for appearance, and that of Jubilee, provided for T.shs. 10,000 for appearance. He therefore surmised that, it is not yet settled that the amount for appearance has been fixed by court. According to Mr. Kobas, the amount of T.shs.15,000 awarded is on the higher side taking into consideration the nature of the case. He therefore submitted that the application be allowed with costs. Taxation of costs is the system of scrutinizing of bills of costs. The powers of the court in taxation of costs is three folds: first is the power conferred by statute, the statutory jurisdiction now contained in the Advocate's Remuneration and Taxation of Costs Rules 1991(G.N No. 515 of 1991). Secondly the power to deal with advocate's bill of costs under its inherent jurisdiction over advocates as officers of the court; and thirdly, the normal jurisdiction of the court in dealing with contested claims. It is trite law that, the court's decision in awarding costs to a successful litigant is a discretionary one. The discretion arena in which a taxing master acts is prescribed under section 30 of the CPC and Rule 11 of the Rules (GN No. 515 of 1991). The former provides: 9 "30(1)- subject to the conditions and limitations as may be prescribed and the provision of any law for the time being in force, the costs of and incidental to all suits shall be in the discretion of the court, and the court shall have full power to determine by whom or out of what property and to what extent such costs are to be paid, and to give necessary directions for the purposes aforesaid. The fact that the court has no jurisdiction to try the suit shall be no bar to the exercise of such powers". While the latter states:- "11. Notwithstanding anything contained in the said rules, on every taxation, whether in respect of non-contentious matters or contentious proceedings, the Taxing Officer shall allow all such fees, costs, charges and expenses as shall appear to him to have been necessary and proper, but, save as against the party who incurred the same, no costs shall be allowed which appear to have been incurred or increased through over caution, negligence or mistake, or by payment of special charges or expenses to witnesses or other persons, or by other unusual expenses". And, MULLA, on the code of Civil Procedure, (17th Edition Vol. 1 page 605) comments:­ ".... costs can be awarded only as a matter of right and not by way of discretion. Such discretion must be a judicial discretion to be exercised on legal principles not by chance, medley, not by caprice io nor in temper. In the exercise of the discretion the court is not confined to the consideration of the conduct of the parties in the actual litigation itself, but may also take into consideration matters which led up to, and were the occasion of that litigation. Thus, the court may order the costs to be paid by the parties in definite proportions, or it may order one party to pay the other, a fixed sum, in Heu of taxed costs. Similarly it may disallow costs to a successful plaintiff, as where the rate of interest claimed by the plaintiff". That said, however, the taxing officer should act judicially and with regard to the rules. And once the discretion is so exercised, devoid of applying a wrong principle of law or consideration, rarely would courts interfere with the decision reached. Though the discretion conferred upon the courts by section 30 is wide, it is a judicial discretion, and must be exercised on fixed principles, i.e, according to the rules of reasons and justice, not according to private opinion, or benevolence, or even sympathy, nor arbitrary and capriciously. Where there is no materials before the court on which it can exercise its discretion, it is not justified in depriving a successful party of his costs. The judges will in most cases not interfere with questions of quantum, because these are regarded as matters with which the taxing master is particularly fitted to deal with. But, and that is a big "BUT", the court could interfere if the taxing master clearly acted un-judicially (see the 11 case of Haidan Bin Mohamed Elmandry and others v Khadija Binti Ali Bin Salen (1956) 23 EACA 313). The law provides that, the briefing should be based on the nature of the matter before him, amount of work involved, in preparing for hearing the difficulties and importance of the case, and the amount of money involved. More so, time occupied in the hearing and the amount of research required to examine the issues, is also considered (see George Mbugus and another v A. S. Maskini (1980 TLR 53; Premchant v Quarry Services (1972) EA 1962); and Thomas James v Nyeri Electric; 1938 TLR (R) 676 With the above principles, let us now delve into the controversies. Mr. Kobas, in his affidavit in support of the reference, advanced four grounds as the basis for this court to interfere with the taxing officer's ruling. (i) That, in computation of the instruction fees the Taxing Officer awarded the respondent over and above the 3% scale; (ii) The Taxing Officer failed to consider that the costs awarded should not raise to such a level as to deprive litigant access to court, bearing in mind that the case did not proceed to full trial; 12 (Hi) That the Taxing Officer erred in awarding/ allowing costs of this taxation while the amount taxed off exceed one sixth; and (iv) The Taxing Officer erred in taxing the bill of costs over and above the prescribed scale without certification of a high court judge. I will start with the first ground of the reference, which is to the effect that, the taxing officer erred in awarding instruction fees of T.shs. 5,998,948,879.00 which is over and above the 3% scale. Perusal of the taxing officer's ruling, makes it clear that, the applicant in this application (judgment debtor's advocate) Mr. Kobas, was the one who moved the Taxing officer to accept T.shs. 5,949,879 being 3% of the amount claimed to be the instruction fees. Indeed, when submitting in that application, Mr. Kobus claimed that, the decree holder was entitled to the 3% of the subject matter. In computing the 3%, Mr. Kobas first used the amount claimed in the plaint under this opinion, he submitted that, the valve of the subject matter was Tshs.47,084,348/- plus Japanese Yen 899,209 and therefore the 3% instruction fee was Tshs. 5395,252. Mr. Kobas then referred to the amount indicated in the bills of lading, and having converted in the same (Japanes Yen) into Tanzania shillings and adding the value of the subject matter, i.e 47,084,348 which, according to him was claimable, he found that the value of the subject matter was T.shs. 199,949,879. Having calculated, he submitted that 3% 13 of the amount claimed was T.shs. 5,998,496.37. In his ruling, the taxing master clearly indicated that, after scrutinizing the applicant's contention (judgment debtors advocate at that time), he found that the amount stated in the second approach of Mr. Kobas was higher than that claimed in the plaint and therefore, he taxed item 1 at 3% of the amount claimed which is the amount stated by Mr. Kobas ie T.shs. 199,948,879 therefore T.shs. 5,998,496 was taxed. The taxing officer went further and said: "Had the judgment debtors advocate not submitted that the decree holder is entitled to 3% of the value of the claim, I was inclined to award an amount less than 3% of the claim". All this goes to show how the applicant was involved in arriving at the figure of instruction fees. I am at one with Mr. Kesaria, learned counsel for respondent. The same Mr. Kobas cannot be heard before this court now making a reference on the ground that in computation of the instruction fees, the taxing officer awarded the respondent over and above the 3% scale. Indeed, it is beyond comprehension that, Mr. Kobas is asking this court to interfere with the decision of the taxing master, a decision which has been arrived at, after taking into consideration his own submission. With due respect, Mr. Kobas, this court is not prepared to do that. What the taxing officer did was to exercise his discretion. He even went further to state in detail the reasons which led him to come to the conclusion to which he did come. There is a wealth of decisions to the effect that the high court on reference, can only interfere with the taxing 14 Officers' decision on taxation if it is shown that an error of principle has been committed or that the award is manifestly excessive or inordinately low in the circumstances of each case. It is trite that, the value of the subject matter for the purposes of taxation of a bill of costs ought to be determined from the pleadings, judgment or settlement. But if the same is not so ascertainable, the taxing officer is entitled to use his discretion to assess such instruction fees as he considers just. In this particular case, the taxing officer did rely on the amount cited in the pleading which Mr. Kobas himself volunteered to submit. By so doing, the taxing officer complied with the direction provided by the law and therefore, he cannot be said to have erred in principle or at all, in calculating 3% of the instruction fees based on the principle sum claimed. Under such circumstances, and as rightly submitted by Mr. Kesaria, this ground is frivolous and devoid of merit. It need not retain me further. Therefore, I will not disturb the taxing officer's ruling on item 1. With regard to the second ground of reference, Mr. Kobas has submitted that, the taxing officer failed to consider that the costs awarded should not rise to such a level as to deprive litigant access to court, bearing in mind that the case did not proceed to full trial. Unfortunately, in his submission, Mr. Kobas seems to have abandoned this point. In turn, even Mr. Kesaria did not make a submission as well. I will however mention this issue in passing. One of the principles governing taxation of costs by a taxing officer is such that, while the successful litigant is entitled to a fair 15 reimbursement of the costs he has incurred, the taxing master must take into consideration the public interest since costs must not be allowed to rise to such a level as to confine access to the courts to the wealthy, although the general level of remuneration of advocates must be such as to attract recruits to the profession. Turning to the third and fourth points, Mr. Kobas argued that, the taxing officer erred in awarding costs of the taxation while the amount taxed off exceeded one sixth. He based his argument on Rule 45 of the Advocates Remuneration of Taxation of Costs Rules, G.N 515. The question now is whether this rule fetters the otherwise wide discretional powers provided by section 30 of the CPC and rule 11 of the rules. Rule 45 provides:- "45- AH bills of costs shall be taxed on the prescribed scale, unless a judge of the high court certifies on special grounds arising out of the nature and importance, or the difficulty, or urgency of the case that they are to be taxed on the higher scale". Other provisions of the law which requires the bills of costs to be drawn accordance with the scales provided include rules 38 and 40 respectively. Canvassing through the wording of rule 45 as it stands and reading it together with rules 38 and 40 one can easily understand Mr. Kobas's argument that, unless a judge so certifies, the taxing officer cannot award a higher or lower amount than the one prescribed by the scales. But then, what about rule 11 which give wide discretion to the taxing officer? 16 In my opinion, it seems there is a contradiction and under such circumstances, it has always been held that, in giving effect to the provisions of the same legislation which stand in contradictory stance of each other, then the court will have to look at the spirit of the relevant law and any other law related to the issue and then choose the provision which most encompasses that spirit in preference to the other provisions seemingly harboring astray element. In this particular case, I am convinced that, rule 11 which is more liberal speaks the actual position of G.N 515 as opposed to the other rules, as such I will be guided by it. Understandably, there is no mathematical or magical formula for calculating awards in taxation but there are accepted principles. The correct approach to be adopted by the taxing officer would be the exercise of an intricable balancing act whereby the taxing officer has to mentally weigh the diverse general principles applicable, which sometimes are against one another, like the case at hand and arrive at the reasonable fees. The fee scale had not set a maximum to the instruction fees to be taxed off by the taxing officer. Under such circumstances, it is my considered opinion that, every case can be decided on its own merit as there is no exact similarity in one case against the other. However, if there is any similarity, if the nature of the claim, issues and the judgment are relevant, comparable or similar than they can be considered. The instruction fee ought to take into account the amount of work done by the advocate, and where relevant, the subject matter of the suit 17 and most important the prevailing economic conditions (emphasis mine). It is an open secret that, the aspect of inflation has played a major part in our payment systems. It is a fact needing no proof that the value of our shilling has been going down very fast. Among the factors that the taxing officer has to put into consideration is giving allowance for the devaluation of our currency, taking into account that the scales (if any) were fixed way back in 1991. It will definitely be absurd for one to apply such rates now in this changed inflationary atmosphere. I subscribe to the submission of Mr. Kesaria in that, this court has held that the scales prescribed under G.N 515 are outdated and thus the taxing officer, in exercise of his discretion can award higher amounts, provided he is guided by the principles already summarized and decides judiciously. It is therefore my considered opinion that, the taxing officer acted judiciously by awarding the fees. In conclusion, I should add in passing that, the court does not as a general rule, interfere with the decision of the taxing officer on a question of fact or amount. The certificate of the taxing officer will not be reviewed on a mere question of quantum save in exceptional circumstances, (see: Thomas James Arthur v Nyeri Electricity Undertaking (1961) EA 492; Ali Nyanganda v Emilian Kihwili (1967) HCD N. 177). But, where the taxing officer has taken into account matters which he should not have considered, or has not taken into account matters that he should have considered, or has given reasons that are incorrect or where he has acted upon among principle, the court may order a review. 18 Having reviewed the issues at hand, I am satisfied that, in calculating the bills of cost, the taxing master observed the established principles of the law, and gave an award which is reasonable. In the circumstances, I do not find any sufficient reason to interfere and vary the reasoning of the taxing officer in arriving at the figure he arrived at as bills of costs. In the upshot and for the foregoing reasons, I find the application/reference to be unmeritorious and it therefore stands dismissed with costs. It is accordingly ordered. 17th MAY, 2012 Ruling delivered this 17th day of May, 2012 in the presence of Mr. Magusso, Counsel for the Decree Holder and in the absence of the Judgment Debtor. JUDGE 17th MAY, 2012 Word Count: 4,681. 19