[2024] UGCommC 226


# **IN THE HIGH COURT OF UGANDA SITTING AT KAMPALA**

## **(COMMERCIAL DIVISION)**

Reportable

Misc. Civil Appeal No. 0011 of 2024

(Arising from Civil Suit No. 227 of 2021)

In the matter between

## **CHINA FORESTRY INTERNATIONAL DEVELOPMENT CO. LTD APPELLANT**

**And**

## **CHINA SHANDONG HISPEED UGANDA LTD RESPONDENT**

**Heard: 30 May, 2024.**

**Delivered: 6 June, 2024.**

*Civil Procedure — Appeals — Taxation of costs — Section 62 (1) of The Advocates Act and Order 50 Rule 8 of The Civil Procedure Rules and Rule 3 of The Advocates (Taxation of Costs) (Appeals and References) Regulations, S. I 267-5. — The power exercised in taxation of costs is discretionary— Where the decision challenged involves the exercise of a discretion, broadly described to include states of satisfaction and value judgments, the appellant must identify either specific error of fact or law or inferred error. — Court should not interfere with the exercise of discretion unless it is satisfied that the Registrar in exercising his or her discretion misdirected himself or herself in some matter and as a result has arrived at a wrong decision, or unless it is manifest from the case as a whole that the Registrar has been clearly wrong in the exercise of his discretion and that as a result there has been injustice.*

### **RULING**

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#### **STEPHEN MUBIRU, J**

Introduction:

- [1] Under a contract dated 1st April, 2020 the appellant bought four heavy duty Sino Trucks and their trailers at a total price of US \$ 360,306.98 and made a down payment of US \$ 101,752 and the balance was to be paid in agreed instalments. The trucks and the trailers were then registered as UPH 095 C and UBH 096 C and UBH 101 C and UBH 102 C The trailers as UBH 097 C; UBH 98 C; UBH 099 C and UBH 100 C. Soon after delivery of the trucks they began breaking down causing a series of accidents arising from sudden rapture of the connectors to the trailers which was a latent defect in the manufacture. The respondents were informed and they attempted to correct the said defects but the break downs continued. As a result, the appellant lost cargo and incurred loss in compensating the accident victims. To mitigate the loss the appellant grounded the fleet and demanded a refund from the appellant, which was refused hence, the appellant on 7th April, 2021 filed H. C. Civil Suit no. 227 of 2021 against the respondent for a claim for special damages of USD \$ 126,390 whereupon the respondent instructed M/s Balikuddembe & Co. Advocates who filed its written statement of defence on 15th July, 2021. - [2] In its defence, the respondent contended that the four Sino were manufactured and supplied by M/s Sino Truck International China. The appellant was aware of that fact. The models and specification of the trucks were set out in the contract. The appellant was under the contract required to pay the entire contractual sums of US \$ 360,306.98 within 90 days of clearing from customs. The appellant was required to inspect the packing, quantity and quality to ensure conformity with the terms of the contract. It was to be done within 14 days of arrival at the port. The appellant omitted to carry out the inspection on arrival of the trucks. The appellant opted to have them as delivered. Since the appellant was aware that the trucks were coming from the manufacturer, M/s Sino Trucks International based in China, it was agreed that the respondent, would not either expressly or impliedly warrant

the merchantability or fitness of the trucks to the appellant. It was agreed between the parties that the respondent was also not responsible for any quality issues which would arise due to the improper use or repair of the trucks and the appellant was responsible for repairing all the faulty parts, if any.

- [3] The parties then entered into another contract of purchase of vehicles, in July 2020. Under that contract the appellant was to pay a total of US \$ 144,000 for two additional Sino Trucks. The total to be paid under both contracts was US \$ 468,800. There were several correspondences between the appellant's representatives and the respondent's business manager regarding the payment following the appellant's default. Despite repeated reminders to fulfil its obligations under the contract, the appellant failed or refused to pay the entire contractual sum. The appellant failed to provide on-demand guarantees in accordance with the agreement. The appellant company received the trucks and began using the same without raising any issue of either quality or fitness for purpose from July, 2020 when they received the trucks until December, 2020. - [4] During that time the appellant through its director engaged the respondent's Chairman and requested an extension of time within which to clear the outstanding contractual sums. Sometime in February or March, 2021 the appellant then began raising quality issues regarding the trucks bought from the respondent. The complaints were sent directly to the truck manufacturer based in China. The respondent was not privy to the engagements between the appellant and the truck manufacturer. The appellant began claiming through its representatives that it would not clear the contractual sums since the supplied trucks were of a poor quality and they had been involved in accidents. Any accidents that were caused were a result of their improper use, overloading, overspending, negligent, careless and reckless use of the motor vehicles. - [5] Subsequently on the 19th September, 2022 the respondent withdrew instructions from M/s Balikuddembe & Co. Advocates and instructed M/s Kampala Associated

Advocates its current Advocates to take over and continue conduct of the matter. When the matter eventually came up for hearing before Court on 12th September, 2023 the appellant decided to withdraw the suit with costs, hence bringing the litigation to an end before commencement of the trial.

[6] Following the withdrawal of the suit, on 30th October, 2023 the respondent filed a bill of costs in Taxation Application No. 1442 of 2023. similarly, the respondent's first Advocates, M/s Balikuddembe & Co. Advocates, also filed a bill of costs which is also on record pending taxation. Taxation of the bill of costs filed by the respondent's current advocates, M/s Kampala Associated Advocates, proceeded *inter parties* on the 13th March, 2024 and the ruling reserved to be delivered on notice. Later the taxed bill of costs was delivered electronically on 21st March, 2024.

#### The taxation decision;

[7] In her decision delivered on 21st March, 2024 the learned Assistant Registrar simply uploaded the taxed bill of costs, indicating only the sums taxed off and the final award of shs. 43,260,018/=. She arrived at that sum by taxing off shs. 40,459,050/= from a claim of shs. 80,659,050/= on item I being instruction fees on a subject matter valued at US \$ 205,854. She taxed shs. 50,000/= off a claim of shs. 150,000/= in item 10 being the fee allowed for drawing a notice of change of advocates. Shs. 20,000/= was taxed off a claim of shs. 60,000/= in item 11 being copies made of that notice. Shs. 20,000/= was taxed off a claim of shs. 60,000/= in item 13 being copies made of that extracted order of withdrawal. Shs. 50,000/= was taxed off a claim of shs. 150,000/= in item 15 being copies made of the bill of costs. Shs. 100,000/= was taxed off a claim of shs. 200,000/= in item 16 being a disbursement for the advocate's attendance of Court on 27th November, 2022. Shs. 100,000/= was taxed off a claim of shs. 200,000/= in item 17 being a disbursement for the advocate's attendance of Court on 21st August, 2023. Shs. 100,000/= was taxed off a claim of shs. 200,000/= in item 18 being a disbursement for the advocate's attendance of Court on 12th September, 2023, and shs. 500,000/= was taxed off a claim of shs. 1,000,000/= in item 29 being expenditure incurred on telephone calls, printing, and internet connectivity during the litigation. The learned Assistant Registrar dis not explain how she arrived at any of the specified deductions. She did not upload a reasoned decision behind those figures.

### The grounds of appeal;

- [8] Being dissatisfied with the decision, the appellant appealed to this court on the following grounds, namely; - 1. The Ruling of Her Worship Dorothy Kyampaire, the Registrar/Taxing Officer in High Court Taxation No. 1442 of 2023 in respect of the costs in Civil Suit No. 227 of 2021 be set aside for being erroneous both in law and fact. - 2. The taxation award by the Registrar/Taxing Officer of instruction fees in HCCS No. 227 of 2021 be varied to the proper sums and be awarded as provided for in *The Advocates (Remuneration and Taxation of Costs) (Amendment) Regulations, 2018*. - 3. The respondent be ordered to pay the costs of this appeal. - [9] Consequently, the appellant prays that the amount awarded be set aside, the respondent's bill of costs be taxed afresh and that the costs of the appeal be provided for.

### The submissions of counsel for the appellant;

[10] Counsel for the appellant argued that the Taxing Officer was in error when she awarded shs. 40,459,050/= as instruction fees under Item 1 which was manifestly excessive and amounted to a misdirection of principle. The claimed sum in the plaint was US \$ 126,390.00 and is clearly indicated in the plaint paragraph 11A and the Joint Scheduling Memorandum signed by both parties filed in court on the 24th February, 2022. Therefore, the Taxing Officer erred and misdirected herself when she relied on a sum of US \$ 205,854 conjured up by the respondent's Counsel as the value of the subject matter (claimed sum) without any basis. The matter did not progress to full hearing because it was withdrawn before the first hearing. Therefore, when you consider the work put in, in terms of paper work and research by the advocates, it is not a lot as the matter was neither involving nor full of ambiguities to warrant such an award.

[11] Secondly there was a change of advocates therefore the bill of costs of the first advocate should have been annexed to the one of the current advocates and the total shown as a disbursement and taxed together. Unfortunately, the bill of the first advocates was not considered for taxation by court or annexed by the current advocates for purposes of taxation despite its being on court record. The learned Taxing Officer allowed the current Advocates items for service they never rendered to wit; Items 2,3,4,5,6,7, 19,20,21 & 22 yet the same items are reproduced in the bill of costs for the first Advocates. If the bill for the first advocates is eventually taxed, the appellant will find itself paying twice for the same items since they appear in both bills of costs. For those reasons, the taxing master's award be set aside for being excessive and extravagant, in the alternative but without prejudice to the fore-going, that the taxing master's award be set aside and be substituted with such a sum that the justice of the case requires.

#### The submissions of counsel for the respondent;

[12] Counsel for the respondent submitted that the subject matter of the Civil Suit as can be ascertained from the pleadings of both parties this being the plaint, the amended plaint, the amended written statement of defence, and the application for leave to amend the plaint. This Court granted leave to the appellant to add paragraphs 10, 11A, 11, 12A & 12B to their plaint, specifying the special damages which they suffered as a result of the alleged breach of contract. The appellant has failed to demonstrate where the Learned Registrar erred in law and practice while taxing the bill of costs The contracts which formed the basis of the said suit were valued at t US \$ 468,800 for the 10 (ten) trucks out of which the respondent still demands US \$ 400,000. This forms the subject matter of the current appeal. The amount awarded was reasonable considering the circumstances of the case. The taxing Officer in awarding shs. 43,260,679/= out of shs. 99,740,679/= claimed in the bill of costs shows the Learned Taxing Officer properly exercised her discretion and in accordance with the rules governing taxation of costs.

- [13] The respondent has never instructed Balikuddembe & Co. Advocates (former counsel) to file a bill of costs. Upon withdrawal of the appellant's suit with costs, the respondent filed for taxation of their bill of costs vide Taxation Application No. 1442 of 2023. The respondent (Client), has never instructed any other advocate to file a second bill of costs and as such, it is not true that there were two bills of costs in Taxation Application No. 1442 of 2023 as is being alleged by the appellant. The alleged bill of costs is a party-to-party bill of costs which was filed after the client had withdrawn its instructions from the alleged advocate. Such an Advocate cannot purport to file a bill of costs on behalf of the Client who withdrew instructions from him or a client who in this case has never instructed him to act on their behalf. Former counsel in a matter cannot file a party to a party bill of costs but his only remedy is to attach his/her bill of costs on that of the counsel on court record and will only be heard during the taxation of the bill (see the decision of *Haji Haruna Mulangwa v. Sharif Osman, S. C. Civil Reference No.03 of 2004*). If advocates have been changed during the proceedings, the bill of the first advocate may be annexed to that of the current advocate and its total shown as a disbursement and taxed ordinarily with the current advocate being heard on it. - [14] An advocate who was not paid only has a remedy of filing an advocate-client bill of costs. This is a mode through which costs are the costs that an advocate claims from his client and which the advocate is entitled to recover from a client, for professional services rendered to and disbursements made on behalf of the client.

These costs are payable by the client whatever the outcome of the matter for which the advocates' services were engaged and are not dependent upon any award of costs by the court. Once it is shown that all the items included therein include those which were performed by the advocate presenting the bill. The appellant has not pointed out which of the alleged items were not done by the respondent's lawyer who received instructions, sought to amend the written statement of defence and performed all the tasks and filings in 2, 3, 4, 5, 6, 7, 19, 20, 21 and 22. The current appeal is an abuse of the court process and brought to frustrate the execution process by the respondent.

#### The decision;

- [15] There is no inherent, inferred or assumed right of appeal (see *Mohamed Kalisa v. Gladys Nyangire Karumu and two others, S. C. Civil Reference No. 139 of 2013*). According to section 62 (1) of *The Advocates Act* any person affected by an order or decision of a taxing officer made under that part of the Act or any regulation made under it may appeal within thirty (30) days to a judge of the High Court who on that appeal may make any order that the taxing officer may have made. It is according to Order 50 Rule 8 of *The Civil Procedure Rules* and Rule 3 of *The Advocates (Taxation of Costs) (Appeals and References) Regulations, S. I 267-5* that any person aggrieved by any order of a Registrar may appeal from the order to the High Court. The taxation decision having been delivered on 13th March, 2024; the appeal filed on 22nd March, 2024 within time. - [16] The power exercised in taxation of costs is discretionary. Discretion is the faculty of determining in accordance with the circumstances what seems just, fair, right, equitable and reasonable. "Discretion" cases involve either the management of the trial and the pre-trial process; or where the principle of law governing the case makes many factors relevant, and requires the decision-maker to weigh and balance them. Just as the factors for consideration could never be absolute, there could never be a gauge to measure the accuracy of such decisions. Unless the exercise of discretion is obviously perverse, an appellate court should be slow to set aside discretionary orders of courts below.

- [17] Because these assessments call for value judgments in respect of which there is room for reasonable differences of opinion, no particular opinion being uniquely right, identification of error in the Registrar's exercise of discretion is the basis upon which the court will uphold the appeal. It would be wrong to determine the parties' rights by reference to a mere preference for a different result over that favoured by the Registrar at first instance, in the absence of error on his or her part. If the Registrar acted upon a wrong principle, or allowed extraneous or irrelevant matters to guide or affect him or her, if he or she mistook the facts, if he or she did not take into account some material consideration, or where it not evident how he or she reached the result embodied in his or her order, or where upon the facts the order is unreasonable or plainly unjust, the appellate court may infer that in some way there has been a failure properly to exercise the discretion which the law reposes in the Registrar thus his or her determination should be reviewed. - [18] The general rules governing appeals from such orders seem well settled. Courts in Uganda have, as a matter of judicial policy, exercised considerable restraint in intervening in decisions characterised as involving the exercise of a discretion (see *Banco Arabe Espanol v. Bank of Uganda, S. C. Civil Appeal No. 8 of 1998*). Where the decision challenged involves the exercise of a discretion, broadly described to include states of satisfaction and value judgments, the appellant must identify either specific error of fact or law or inferred error (e.g. where the decision is unreasonable or clearly unjust). The appellate court will not interfere with the exercise of discretion unless there has been a failure to exercise discretion, or failure to take into account a material consideration, or an error in principle. It should not interfere with the exercise of discretion unless it is satisfied that the Registrar in exercising his or her discretion misdirected himself or herself in some matter and as a result has arrived at a wrong decision, or unless it is manifest from the case as a whole that the Registrar has been clearly wrong in the exercise of

his discretion and that as a result there has been injustice (see *Mbogo and another v. Shah [1968] 1 EA 93*).

- [19] It is trite that an appellate court is not to interfere with the exercise of discretion by a court below unless satisfied that in exercising that discretion, the court below misdirected itself in some matter and as a result came to wrong decision, or unless manifest from case as whole, the court below was clearly wrong in exercise of discretion and injustice resulted (see *National Insurance Corporation v. Mugenyi and Company Advocates [1987] HCB 28; Wasswa J. Hannington and another v. Ochola Maria Onyango and three Others [1992-93] HCB 103; Devji v. Jinabhai (1934) 1 EACA 89; Mbogo and another v. Shah [1968' E. A. 93; H. K. Shah and another v. Osman Allu (1974) 14 EACA 45; Patel v. R. Gottifried (1963) 20 EACA, 81;* and *Haji Nadin Matovu v. Ben Kiwanuka, S. C. Civil Application No. 12 of 1991*). A Court on appeal should not interfere with the exercise of the discretion of a court below merely because of a difference of opinion between it and the court below as to the proper order to make. There must be shown to be an unjudicial exercise of discretion at which no court could reasonably arrive whereby injustice has been done to the party complaining. - [20] The appellate court will intervene where the court below acted un-judicially or on wrong principles; where there has been an error in principle (see *Sheikh Jama v. Dubat Farah [1959] 1 EA 789; Hussein Janmohamed and Sons v. Twentsche Overseas Trading Co Ltd [1967] 1 EA 287; Banco Arabe Espanol v. Bank of Uganda, S. C. Civil Appeal No. 8 of 1998* and *Thomas James Arthur v. Nyeri Electricity Undertaking [1961] 1 EA 492*). As such, the Registrar is entitled to deference in the absence of an error in law or principle, a palpable and overriding error of fact, or unless the decision is so clearly wrong as to amount to an injustice. Generally, appellate courts will only interfere with exercise of discretion by a court below where the court has incorrectly applied a legal principle or the decision is so clearly wrong that it amounts to an injustice. Although there is a presumption in

favour of judicial discretion being rightly exercised, an appellate court may look at the facts to ascertain if discretion has been rightly exercised.

- [21] The formulation and application of the above rule reflects an inherent tension where legislation both confers a power on a judicial officer to make a subjective choice and also provides a right of appeal from that choice. An appeal of this nature requires the appellate court to exercise judgment as to the appropriateness of its intervention, while deferring to the exercise of discretion by the Registrar, in light of the nature of the appeal, the issues of fact and law involved, the primary facts and inferences presented to the Registrar, the level of satisfaction, the value judgments involved, rule-application, reasonableness of the decision, proportionality and rationality of the decision, in particular as to whether its decision will provide a more just outcome. - [22] The circumstances in which a Judge of the High Court may interfere with the Taxing Officer's exercise of discretion in awarding costs have been stated in *Thomas James Arthur v. Nyeri Electricity Undertaking, [1961] EA 492*; *Bank of Uganda v. Banco Arabe Espanol, S. C. Civil Application No. 23 of 1999; [1999] EA 45; Steel construction and Petroleum Engineering (EA) Ltd v. Uganda Sugar Factory Limited [1970] EA 141; Kabanda v. Kananura Melvin Consulting Engineers, S. C. Civil Application No. 24 of 1993 and Makumbi and another v. Sole Electrics (U) Ltd [1990-1994] 1 EA 306,* and generally are that; - i. Where there has been an error in principle the court will interfere, but questions solely of quantum are regarded as matters which taxing Officers are particularly fitted to deal with and the court will intervene only in exceptional circumstances. - ii. Where the fee allowed is higher than seems appropriate, and is so manifestly excessive as to justify treating it as indicative of the exercise of a wrong principle.

- [23] Therefore, allowing an appeal from the discretionary orders made in taxation of costs is predicated on proof of: (i) "specific error," i.e. an error of law (including acting upon a wrong principle), a mistake as to the facts, relying upon an irrelevant consideration or ignoring a relevant consideration, or (exceptionally) giving inappropriate weight to such considerations (relevancy grounds); and (ii) "inferred error," i.e. where, in the absence of identification of specific error, the decision is regarded as unreasonable or clearly unjust. Where inferred error is found, this will have been brought about by some unidentifiable specific error. - [24] Taxation of bills of costs is not an exact science. It is a matter of opinion as to what amount is reasonable, given the particular circumstances of the case, as no two cases are necessarily the same. The power to tax costs is discretionary but the discretion must be exercised judiciously and not capriciously. It must also be based on sound principles and on appeal, the court will interfere with the award if it comes to the conclusion that the Taxing Officer erred in principle, or that the award is so manifestly excessive as to justify treating it as indicative of the exercise of a wrong principle or that there are exceptional circumstances which otherwise justify the court's intervention. Application of a wrong principle is capable of being inferred from an award of an amount which is manifestly excessive or manifestly low (see *Thomas James Arthur v. Nyeri Electricity Undertaking, [1961] EA 492* and *Bank of Uganda v. Banco Arabe Espanol, S. C. Civil Application No. 23 of 1999).* Even when it is shown that the taxing officer erred on principle, the judge should interfere only on being satisfied that the error substantially affected the decision on quantum and that upholding the amount allowed would cause injustice to one of the parties. - [25] "Taxation" generally means the assessment of the amount of legal costs by the court. The fixing of costs is not simply a mathematical exercise where a fixed discount is applied to the actual legal costs incurred for a step in the proceeding. Rather, the discretion of the court must be exercised in light of the specific facts and circumstances of the case. The general principles which guide taxation of bills

of costs were stated *Premchand Raichand Ltd and Another v. Quarry Services of East Africa Ltd and others [1972] EA 162*, and applied in *Attorney General v. Uganda blanket Manufacturers S. C. Civil Appeal No. 17 of 1993*; *Bashiri v. Vitafoam (u) Ltd S. C. Civil Application No. 13 of 1995* and *Habre international Ltd [2000] EA 98* as follows;

- 1. That costs should not be allowed to rise to such a level as to confine access to the courts to the wealthy; - 2. That a successful litigant ought to be fairly reimbursed for the costs that he has had to incur; - 3. That the general level of remuneration of advocates must be such as to attract recruits to the profession; and - 4. That so far as practicable there should be consistency in the awards made; - 5. The court will only interfere when the award of the taxing officer is so high or so low as to amount to an injustice to one party; - 6. In considering bills taxed in comparable cases allowance may be made for the fall in value of money; - 7. Apart from a small allowance to the appellant for the responsibility of advising the undertaking of the appeal there is no difference between the fee to be allowed to an appellant as distinguished from a respondent; - 8. The fact that counsel from overseas was briefed was irrelevant: the fee of a counsel capable of taking the appeal and not insisting on the fee of the most expensive counsel must be estimated - [26] The general principles of taxation were further spelt out in the case of *Makumbi and another v Sole Electrics (U) Ltd [1990–1994] 1 EA 306*. At pages 310 – 311 Manyindo DCJ, said:

The principles governing taxation of costs by a Taxing Master are well settled. First, the instruction fee should cover the advocates' work, including taking instructions as well as other work necessary for presenting the case for trial or appeal, as the case may be. Second, there is no legal requirement for awarding the Appellant a higher brief fee than the Respondent, but it would be proper to award the Appellant's Counsel a slightly higher fee since he or she has the responsibility to advise his or her client to challenge the decision. Third, there is no mathematical or magic formula to be used by the Taxing Master to arrive at a precise figure. Each case has to be decided on its own merit and circumstances. For example, a lengthy or complicated case involving lengthy preparations and research will attract high fees. In a fourth, variable decree, the amount of the subject matter involved may have a bearing. Fifth, the Taxing Master has discretion in the matter of taxation but he must exercise the discretion judicially and not whimsically. Sixth, while a successful litigant should be fairly reimbursed the costs he has incurred, the Taxing Master owes it to the public to ensure that costs do not rise above a reasonable level so as to deny the poor access to Court. However, the level of remuneration must be such as to attract recruits to the profession. Seventh, so far as practicable there should be consistency in the awards made (see *Raichand v. Quarry Services of East Africa Limited and others [1972] EA 162*; *Nalumansi v. Lule, S. C. Civil Application No. 12 of 1992*; *Hashjam v. Zanab [1957] 1 EA 255 and Kabanda v Kananura Melvin Consulting Engineers, S. C. Civil Application No. 24 of 1993*)

[27] It is evident that every case must be decided on its own merit and in variable degrees, the instructions fees ought to take into account the amount of work done by the advocate, and where relevant, the value of the subject matter of the suit as well as the prevailing economic conditions. The Taxing Officer should envisage a hypothetical counsel capable of conducting the particular case effectively but unable or unwilling to insist on the particular high fee sometimes demanded by counsel of pre-eminent reputation, then award a fee this hypothetical character would be content to take on the brief. Clearly it is important that advocates should be well motivated but it is also in the public interest that costs be kept to a reasonable level so that justice is not put beyond the reach of poor litigants.

- [28] Instruction fees are governed by the complexity, value and importance to the litigants of the matters in dispute. It follows that where the responsibility entrusted to counsel in the proceedings is quite ordinary and calls for nothing but normal diligence such as must attend the work of a professional in any field; where there is nothing novel in the proceedings on such a level as would justify any special allowance in costs; where there is nothing to indicate any time-consuming, research-involving or skill engaging activities as to justify an enhanced award of instruction fees or where there is also no great volume of crucial documents which counsel has to refer to, to prosecute the cause successfully or where the matter was not urgent, a certificate of complexity will not be granted. The mere fact that counsel does research before filing pleadings and then files pleadings informed of such research is not necessarily indicative of the complexity of the matter as it may well be indicative of the advocate's unfamiliarity with basic principles of law and such unfamiliarity should not be turned into an (see *First American Bank of Kenya v. Shah and others, [2002] 1 EA 64*). - [29] In the instant appeal, while counsel for the appellant contends the award is excessive by reason of the Taxing Officer having misconstrued the value of the subject matter, counsel for the respondent contends that the assessment was in accordance with *The Advocates (Remuneration and Taxation of Costs) (Amendment) Regulations, 2018*. The other contention seems to gravitate around the propriety of having previous counsel presenting a separate bill of costs after instructions were withdrawn from the firm and the inclusion in the current advocates' bill of costs, of items relating to events that occurred before they took up instructions in the matter.

## i. The duty to give reasons for taxation decisions.

[30] I find that there is no taxation ruling and as such it is difficult to discern the principles that guided the Taxing Officer as she went about the taxation. Considering that the process of taxation of costs relies heavily on the discretion of the Taxing Officer, the parties have a right to know the considerations upon which that discretion was exercised, in short, to understand them. At the very least, the Taxing Officer must be able to justify his or her decision. The giving of reasons is one of the cornerstones of the judicial function and a central aspect of the rule of law (see *Breen v. Amalgamated Engineering Union [1971] 2 QB 175 at 191*). In *Stefan v. General Medical Council [1999] 1 WLR 1293*, Lord Clyde stated as follows: "the advantages of the provision of reasons have often been rehearsed. They relate to the decision-making process, in strengthening that process itself, in increasing the public confidence in it and in the desirability of the disclosure of error where error exists. They relate also to the parties immediately affected by the decision, in enabling them to know the strengths and weaknesses of their respective cases and to facilitate appeal where that course is appropriate." Therefore, parties are entitled to know on what grounds the costs have been awarded. An appellate Court is also entitled to the assistance of the Taxing Officer by an explicit statement of the reasons for deciding as he or she did.

[31] The duty imposed on a Taxing Officer to give reasons is a function of the rule of law and therefore of justice. Its rationale has two principal aspects. The first is that fairness surely requires that the parties, especially the judgement debtor, should be left in no doubt why they have to pay the quantum awarded. This is especially so since without reasons the judgement debtor will not know whether the Taxing Officer has misdirected himself or herself and thus whether he or she may have an available appeal on the substance of the award. Where no reasons are given, it is impossible to tell whether the Taxing Officer has gone wrong on the law or the facts, the judgement debtor would be altogether deprived of his or her chance of an appeal unless the appellate Court entertains the appeal based on the lack of reasons itself. The second is that a requirement to give reasons concentrates the mind; the resulting decision is much more likely to be soundly based on the material before the Taxing Officer than if it is not. The Taxing Officer must enter into the issues canvassed before him or her and explain why he or she preferred one case over the other. [32] The extent to which this duty to give reasons applies will vary according to the nature of the bill of costs to be taxed, in the light of the circumstances of the case. The Taxing Officer's reasons need not be extensive if the decision makes sense. The degree of particularity required will depend entirely on the nature of the issues falling for decision. In the instant case though, the most striking feature of the taxation by the Taxing Officer is that the award is unreasoned and unexplained. In light of the duty to give reasons, even when the Taxing Officer chooses to deliver a summarised taxation ruling, he or she should at a minimum by way of reasons provide an outline of the principles that have guided allowing or rejecting items in the bill of costs, a summary of the basic factual conclusions about the items and a statement of the reasons which have led to assessment of the quantum awarded. A decision of a judicial officer without reasons is no decision at all as it deprives both the unsuccessful party and the appellate court of a basis for scrutinising its propriety.

## ii. Ascertainment of the value of the subject matter.

- [33] The recommended practice when a Taxing Officer is to award an unusually high sum as instruction fee on account of novelty, complexity or deployment of a considerable amount of industry on the part of counsel, is found in *Republic v. Minister of Agriculture and 2 others Exparte Samuel Muchiri W'Njuguna and others [2006] 1 E. A.359* where it was held that; - [34] The complex elements in the proceedings which guide the exercise of the taxing officer's discretion must be specified cogently and with conviction. The nature of the forensic responsibility placed upon counsel, when they prosecute, the substantive proceedings, must be described with specificity. If novelty is involved in the main proceedings, the nature of it must be identified and set out in a conscientious mode. If the conduct of the proceedings necessitated the deployment of a considerable amount of industry, and was inordinately time consuming, the details of such a situation must be set out in a clear manner. If

large volumes of documentation had to be clarified, assessed and simplified, the details of such initiative by counsel must be specifically indicated apart of course from the need to show if such works have not already been provided for under a different head of costs.

- [35] Under Item 1 (1) of the *6th Schedule* of *The Advocates (Remuneration and taxation of costs) Rules,* as amended in 2018, instruction fees are calculated on the basis of the value of the "subject matter," where the value can be ascertained from the pleadings. The expression "subject-matter" is neither defined in *The Civil Procedure Act*, nor *The Civil Procedure Rules*, nor *The Advocates (Remuneration and Taxation of Costs) Rules*. It does not necessarily mean physical property. Depending on the context, it may refer to; (a) in a money suit to the amount claimed and (b) in a suit relating to property to the right or title of the appellant alleged to have been infringed. In the latter context, it has reference to a right in the property which the appellant seeks to enforce. - [36] The expression "subject matter" includes the cause of action and the relief claimed. It may mean "the primary right asserted by the appellant," "the legal issue presented for consideration," or "the cause of action." It is frequently defined as "the right which one party claims as against the other," *Black's Law Dictionary* (4th ed. 1968); *The Cyclopedic Law Dictionary* (3d ed. 1940); *Cyclopedia of Law and Procedure* (William Mack, ed. 1911); William C. Anderson, *Anderson's Dictionary of Law* (T. H. Flood & Co., 1895). It is also sometimes defined as the "cause" or "cause of action." *Black's Law Dictionary*; *Cyclopedic Law Dictionary*; *Bouvier's Law Dictionary* (William Edward Baldwin, ed., Banks Baldwin Publishing Co., 1934); 27 American and English *Encyclopedia of Law* (Charles F. Willaims & David S. Garland, eds., Edward Thompson Co., 1896); *Anderson's Dictionary of Law*. - [37] At common law, the "subject matter" of a suit is understood to refer to the primary right or core legal claim of the appellant, as opposed to the underlying facts of a case or the property in relation to which the right springs. Consequently, the value

of the subject-matter of suit is not necessarily the value of the property in respect of which the suit is filed. When the suit is founded on some claim to or question respecting property, it is the value of the claim or question and not the value of the property which is the determining factor. Just as different legal issues may arise from the same underlying facts, so may they arise out of the same physical property. It follows that claims of a different nature based upon the same physical property would not necessarily be the "same subject matter." It is constituted by the appellant's main or primary right which has been broken, and by means of whose breach a remedial right arises. It is the right which one party claims as against the other, and demands the judgment of the court upon. In determining the value of a claim the court should consider what was at stake on the appeal, and not what was at stake on the original suit (see *Cooper and another v. Nevill and another [1959] 1 EA 74 at 76*).

- [38] For example, in *The Registered Trustees of Kampala Institute v. Departed Asians Property Custodian Board, S. C. Civil Application No.3 of 1995*, the appellants instituted a suit in the High Court against the respondent seeking certain declaratory orders, *inter alia*, that *The Expropriated Properties Act, 1982* applied to the suit land. The suit and the appeals therefrom were subsequently dismissed with costs to the respondent, on the ground that the lease under which the appellants had held the property had expired in 1981 and the property had reverted to Kampala City Council, the Controlling Authority. When taxing respondent's bill of costs, the Taxing Officer allowed shs. 70,000,000/= as the instruction fee. The taxing officer arrived at that figure on the basis that the value of the suit property was shs. 2,100,000,000/= as assessed by valuers. - [39] The respondents were dissatisfied with the decision of the taxing officer and therefore referred the matter to a single Justice of the Court who heard the reference and allowed it by reducing the amount of the instruction fee from shs. 70,000,000/= to shs. 7,000,000/= From that decision the appellant made a reference to the full bench. The full bench agreed with the single Justice that the

Taxing Officer erred in his ruling and misdirected himself when he took into account the value of the property, for purposes of taxation of costs, yet the matter before the court had been limited to a declaration regarding entitlement to a repossession certificate. The Court held that "

> Value can be and is often taken into account during taxation but in this case that could not and should not have been the method….. the decision of this Court concerned the correct interpretation of Section 1 (1) (c) of the Act in relation to the suit land. The Court declared the status of the appellant in relation to the suit land. By that decision the appellant became "former owners" with the consequence that the appellants can lodge [an] application for repossession….. the value of the suit property was not a proper basis for taxation of costs….. We have already stated that in appropriate cases value of the subject matter can be a basis for the taxation of a bill of costs. But in our view, we repeat that the decision in this case is such that value cannot nor could it be a basis for taxation of the instruction fee. We think that the learned judge properly applied the relevant principles to the matter before him.

- [40] When the value of the subject matter is neither discernible nor determinable from the pleadings, the judgment or the settlement, as the case may be, the Taxing Officer is permitted to use his or her discretion to assess instructions fees in accordance with what he or she considers just, taking into account, among other matters, the nature and importance of the cause or matter, the interest of the parties, the general conduct of the proceedings, any direction by the trial judge and all other relevant circumstances (see *Joreth Ltd v. Kigano & Associates [2002] 1 E. A. 92*). - [41] The starting point therefore is Item 1 (1) of the *6th Schedule* of *The Advocates (Remuneration and taxation of costs) Rules,* as amended in 2018, in respect of the ascertained value of the subject matter. The general principle is that the instruction fee is an independent and static item, and is charged once only and is not affected or determined by the stage the suit has reached (see *Joreth Ltd v. Kigano &*

*Associates [2002] 1 E. A 92*;). That sum should then be increased taking into account the factors mentioned. The Taxing Officer must envisage a hypothetical counsel capable of conducting the particular case effectively but unable or unwilling to insist on the particularly high fee sometimes demanded by counsel of prominent reputation. Then the Taxing Officer must determine the fee this hypothetical character would be content to take on the brief.

[42] In doing that, the Taxing Officer is expected to take into account the importance to the litigants, of the matters in dispute, as well the complexity or the extent to which the matter at hand required deployment of a considerable amount of industry on the part of counsel. In the instant case, when taxing off shs. 40,459,050/= from a claim of shs. 80,659,050/= on item 1, being instruction fees in respect of a subject matter valued by the respondent at US \$ 205,854, the Taxing Officer did not pronounce herself on the issue as to whether or not she established that to be the true value of the subject matter, and on what basis she arrived at that conclusion. This Court therefore is unable to determine whether or not she properly directed herself in the determination of the value of the subject matter or the taxation proceedings. Questions solely of quantum are regarded as matters which Taxing Officers are particularly fitted to deal with and a Judge will intervene only in exceptional circumstances. Without any reasons for that determination having been given, the appellate process is disabled.

## iii. The capacity to file a party and party bill of costs.

[43] "Party and party" costs is the descriptor of that class of costs which arise as between parties to litigation. They are costs which one party recovers from another party in litigation. The object of party and party costs is to indemnify the successful party for having to pursue or defend their rights in court ("the indemnity principle" i.e. all costs other than those which appear to have been unreasonably incurred or are unreasonable in amount). "Party and party" costs being a generic term for costs payable by one litigant to an opposing litigant, a litigant appearing in person without counsel may by way of party and party costs recover only reasonably incurred disbursements, witness and travel expenses, excluding legal fees (see *Malkinson v. Trim [2003] 2 All ER 356*),

- [44] On the other hand, independent of any costs orders, the parties to litigation have contracted with their respective legal representatives to pay litigation costs on "advocate / client" basis and this constitutes the costs that the advocate charges the client. Legal costs may only be claimed by legal practitioners. Advocate / client costs are governed by the law of contract, subject to legislative intervention and the inherent supervisory jurisdiction of the courts. While party and party costs are sourced from a court order, in that they are only payable if an order is made to that effect and only "necessary costs" are recoverable as party and party costs, all costs "reasonably incurred" fall under the description of Advocate / client costs. Advocate / client costs are the costs an advocate is entitled to recover from a client for the disbursements made on behalf of the client, and for professional services rendered. A client who chooses to withdraw instructions from his or her advocate without any payment, undertaking or any other appropriate arrangement regarding the advocate's fees must be prepared to pay to the advocate such sum as may be found due and payable upon taxation of advocate/client bill of costs. It would be oppressive to require that advocate to wait until the matter is finalized by other advocates for him to recover his fees. - [45] While either current or previous advocate might be able to sue the client for the value of his or her services rendered to that client, it is only the advocate with current instructions, not the one from whom instructions were withdrawn, that has the capacity to file a party and party bill of costs. In the Court of Appeal, item 2 (1) of the Third Schedule of *The Judicature (Court of Appeal Rules) Directions* is explicit in this regard when it provides that; "where costs are to be taxed, the advocate for the party to whom the costs were awarded shall lodge his or her bill with the taxing officer…" It does not provide for a "previous advocate." A bill of

costs may not be lodged by an advocate who is not on record (see *Haji Haruna Mulangwa v. Sharif Osman, S. C. Civil Reference No.03 of 2004*).

- [46] While party and party costs are awarded to the successful litigant, they are taxed on the basis of and represent the cost of professional services rendered by the law firm that represents him or her. A successful party should file a bill of costs immediately or within a reasonable time after the judgment is delivered, setting out the costs incurred during the litigation which are allowable under the rules or as may have been directed by the court as costs. Where costs are awarded to a party in any proceeding, the amount to be taxed in the bill of costs is recoverable by such party from the adversary and is to be computed in accordance with the rules unless such fee has been settled. - [47] In absence of a certificate of two counsel, a successful party is not to be indemnified more than once over the same work irrespective of the fact that he or she engaged more than one law firm to defend him or her. A single award of legal fees had to be made to be apportioned between the law firms which provided joint or successive legal representation. By convention and judicial practice, the law firms providing joint or successive legal services to the successful party are not entitled to file separate and individual bills of costs, but rather one itemized bill comprising all the items, with the bill of costs of previous counsel attached as disbursements (see *Haji Haruna Mulangwa v. Sharif Osman, S. C. Civil Reference No.03 of 2004*). It follows that the bill of costs filed by M/s Balikuddembe & Co. Advocates is superfluous and ought instead to be attached as disbursements to the bill of costs filed by M/s Kampala Associated Advocates. - [48] In the final result, I hereby set aside the costs award of the Assistant Registrar and direct that the bill of costs be amended, taxed afresh and reasons for the resultant award be given to the parties in a taxation ruling. Each party is to bear their own costs of this appeal.

Delivered electronically this 6th day of June, 2024 ……Stephen Mubiru………….. Stephen Mubiru Judge, 6th June, 2024.

## Appearances

For the appellant : M/s Kamugisha & Co. Advocates together with M/s Tumwesigye Louis & Co. Advocates.

For the respondent : M/s Kampala Associated Advocates.