[2013] UGSC 26

### THE ELECTRONIC OF FIGANDA

## IN TH SUPREME OF UGANDA, AT KAMPALA

### CIVIL REFERENCE NO. 04 OF 2012

#### CONCORP INTERNATIONAL LTD: :::::::::::::::: APPLICANT

#### **VERSUS**

### EASTERN & SOUTHERN AFRICAN TRADE DEVELOPMENT BANK: :::::::::::::::::::::::::::::::::::

(Reference to a single Judge from a Taxation on Ruling by the Deputy Registrar of the Supreme Court (E. K. Kabanda) dated 9^th May, 2011).

## RULING

This reference is brought under Rule 106 of the Rules of this Court, from a taxation ruling by the Deputy Registrar of this Court as Taxation Officer, allowing the Applicant's Bill of Costs at Shs. 7,624,670/= inclusive of Shs.6,000,000/= allowed as instruction fees. The bone of contention in this reference is the Shs.6,000,000/ $=$ allowed as instruction fees. The applicant contends that the above fees is in all circumstances manifestly too low and therefore amounts to a misdirection by the taxing officer.

The background to this reference lies in a suit filed in the High Court (HCCS No. 48 of 2001) by the applicant against the respondent arising out of a loan agreement between the two parties.

Before the trial could start, the respondent raised a preliminary point of law citing Cap. 53 Laws of Uganda, to the effect that no suit could be maintained against it unless a waiver was first sought and obtained from the President ofthe respondent. The High Court upheld the objection and dismissed the suit. The applicant then appealed unsuccessfully to the Court of Appeal. On appeal to this Court, the applicant's appeal was allowed, and this court decided that the waiver was not necessary and ordered as follows:-

# "(7) remit the cqse to High Court for hearing on the merit." "(2) the respondent to pag the applicant's costs here qnd in the Court oJ Appeal"

"(3/ costs in the High Court to qbide the outcome of the hearing of the case"

At the subsequent taxation proceedings before Taxing officer of this Court, the appellant's instruction fees was allowed at Shs.6,000,000/= plus other items which added up to the figure above indicated. The applicants were dissatisfied with the Ruling of the Taxing officer, hence this reference.

In its Memorandum of Reference, the applicant listed six grounds as follows:-

"7. That the Bill o.,f Costs taxed and allouted at UGX 7,624,670 (Seuen nillion six hundred twentg four thousand si-x. hundred and seventg) is, in all circumstances manifestlg too low and amounts to a misdirection bg the taxing mqster.

2. That the learned Deputy Registrar erred in principle in not taking into account the subject matter of the suit as the preliminary objection disposed of the original suit that has since been amended for the retrial at the Commercial Court.

3. That the learned Deputy Registrar erred in principle when she failed to consider the interpretation of the Eastern & Southern African Trade & Development Bank Act, Cap. 53 and the Respondents Charter as one of the basis of the instruction fee.

4. That the learned Deputy Registrar erred in principle by not considering the findings in MAKULA INTERNATIONAL LTD. --Vs- EMINENCE CARDINAL NSUBUGA & ANOR. CIVIL APPEAL NO. 4 of 1981, and did not take into account the principle of consistency in the award of costs.

5. That the learned Deputy Registrar erred in principle when she held that no greater amount of research was done as per the Court record.

6. That the learned Deputy Registrar erred in principle in assessing the instruction fee and holding that the subject matter of the Appeal as whether the Appellant requires a waiver from the Respondent's President under the Eastern & Southern African Trade & Development Bank Act, Cap. 53 before they could sue."

$\overline{3}$

At the hearing before me, thc applicant was representccl by Mr. Mohammed Kajubi whilc thc respondent was rcprcscnted by Mr. Arthur Sempebwa.

Mr. Kajubi argued ground one alone, and argued the rest together. He contended that the instruction fee of Shs.6,000,000/= allowed by the Taxing officer was manifestly too low and amounted to a misdirection. He accused the Taxing Officer for making no serious attempt to justify as to how she came to that figure and of failing to appreciate and apply Rule 9(2) of the Third schedule to the Rules of this Court on Taxation of Costs. He submitted that as a result of that failure the Taxing officer had allowed an amount that was manifestly unreasonable.

Counsel contended that the amount involved in the appeal should have been considered, i.e. the amount of the loan between the parties. In that regard counsel cited the case of J. W. R. ITAZOORA -Vs. M. S. L. RIIKWA, Supreme Court Civil Application No. 16193.

Counsel further contended that the value of the suit was in the region of shillings 8 billion, and the suit involved novel issues of interpretation of Cap. 53 [Eastern and Southern African Trade and Development Bank Act]. There was a lot of importance attached to the point of law involved as all the COMESA Countries would now rely on the principles pronounced by the Supreme Court of Uganda.

Counsel further contended that even where a preliminary objection was raised and determined, costs could be based on the subject matter involved. In that regard he cited the case of MAKULA

## INTERNATIONAL LTD Vs. EMINANCE GARDINAL JVSUBUGA & ANOTHDR, CIVIL APPEAL NO. 4 OF 1981.

With respect to the rest of the grounds which he argued together, counsel contended that the Taxing officer had failed to consider the principles of taxation and the need for consistency in awards made by the Court. He criticized the Taxing Officer for allowing only Shs.6,000,000/= on instruction fees when the applicant had claimed Shs.800 million as instruction fees based on decided cases. In that regard he cited the cases ofi-

l. EBRAHIM A. . IA{SSII14 & OTHDRS -Vs. HABRE INTERNATION LTD - Reference Taxation No. 16 of 1999 ,

## 2. PREMCHARD RAICHARD LTD & AJVOR -Vs- QUARY SERVICES or. EAST AFRTCA LTD & OTTTERS [1972] E. A. 762.

Counsel submitted that given the importance of the point of law involved, which involved a lot of research, and the need for consistency, the reasonable amount should be Shs. 100,000,O00/= (One hundred million). He therefore prayed that the Ruling of the Taxing Officer be set aside and Shs. 1O0,0O0,000/= be allowed plus costs.

In reply, Mr. Sempebwa also started by arguing the first ground. He supported the award of the Taxing officer, submitting that she had taken into consideration all the factors stipulated in Rule 9(2) of the 3'd schedule and applied correct principles, as also pronounced upon in the case of YTSERO MIIGEIIYI -Vs-PHILEMON WANDERA & O?IIERS, Supreme Court Civil Application No. 20 of 2OO4.

Counsel contended that to sct aside the award of the Taxing Officer, it had to be proved that the Taxing Officcr had failed to take into account or ignorcd the principles contained in Rule 9(2). The Judge could not simply ignore the discretion of the Taxing Officer and merely substitute his own opinion.

With respect to the rest of the grounds counsel contended that the matter before the court was the preliminary point of law regarding the interpretation of a section of Cap. 53 of the Laws of Uganda. The appeal succeeded only on this point, and court ordered that the suit remit to the High Court for trial on the merits. Counsel contended, therefore, that it would be wrong to take the value of the subject matter in contention in the High Court to be the basis for calculation of instruction fees when the issue was only on the preliminary point. Counsel distinguished the Makulq Internationcl case from the instant case in that in that case the preliminary point involved the monetary value of the suit and that is why the costs were taxed taking into account that monetary value. This case, counsel argued, did not involve a monetary value. This would be determined in the High Court when the suit is heard on merits.

Counsel argued further that the essence of the applicant's reference was on quantum only, which is not allowed by the Rules. He therefore prayed that the Taxing Officer's award be upheld, and that costs of the reference be awarded to the respondent.

\ I have carefully considered the submissions by both counsel. The first point to note is the provisions of Rule 9(2) of the Third schedule.

This Rule states as follows:-

9(2) "The fee to be allowed for instntctions to appeal or to oppose an dppeal shall be a sum that the taxinq officer considers reasonable, hauing regard, to the amount inaolued in the appeal, its nahtre, importance and difJicultg, the interest of the parties the other costs to be allowed, the general conduct of the proceedings, the fund or person to beq.r the costs and all other releuant circumstances." (emphasis added).

Clearly the Ta-xing Officer has been given a very rvide discretion. This Court has on many occasions pronounced itself on the nature and extent of that discretion and how a decision made by the taxing officer may be altered. Learned counsel on both sides have cited some of the cases to guide the court. In the PREMCHAND case (supra) it was laid down, inter alia, that 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. The court in that case stated thus:-

"The tqsc.ation o.f costs fs not a mathematical exercise; it is entlrelg a matter of opinion based on experience. A cour-t will not, therefore, interJere with the award of a ta-x,ing offtcer, and particularlg where he is an officer of great experience, merelg because it thinks the autard

sornnewhat too high or too low: lt utill onlg interJere if it thinks the autard is so high or so low qs to dmount to an injustice to one pqrtg or the other." (page 164).

The Court then went on to state as follows with regard to instruction fees:-

"The brief fee is based on the amount of work inaolued in preparing for the hearing, the dilJicultg and importance of the case and the amount involued.,,

This case and others were reviewed by this Court in the I{AZOORA case (supra) and the above principles were restated. Odoki, JSC, (as he then was) stated thus:

"It is well settled that the decision of the taxing ofJicer on the question of quantum of the bill oJ costs is Jinal and the Court will not interfere with his decision saue in exceptionq.l circumstances. The Cour-t utill onlg interfere with the quantum allowed as instntctions fee where it is manifestlg high or manifestlg lou as to reflect the application of a urong principle and to amount to an injustice to one partg." (at page 2961.

The issue before this Court is to determine rvhether the taxing officer failed to observe the principtes contained in Rule 9(2) as expounded upon by the Courts.

It rvould appear to me that the applicant would rnish the instruction fee to be based on the size of the loan in contention

between the parties. No doubt this would be thc value of the subject matter whcn thc suit is finally disposed of. Where the decretal amount is known, the assessment of instruction fee would present less difhculty. The difficulty here ariscs from the fact that the issue argued right up to the Supreme Court was on a preliminary point of law, i.e. whether the respondent could be sued without a waiver granted by its President. This was a matter of principle irrespective of the size or value of the subject matter of the suit. Once this point was decided, the suit was remitted to the High Court for hearing on the merits.

I

This means to me that there is still expected a taxation of costs which will consider the value of the subject matter when the suit is finally disposed of. At this point in time neither the taxing officer or this Court would knorv how the merits of the suit u,ill hnally be determined. The Rule requires that the taxing officer must have regard, inter alia, to''the lnterests of the parties, the other costs to be allowed, .....,,,,,qnd all other ^relevant c ircu mstqn ^ce s. t'

This case, as submitted by Mr. Sempebwa, is distinct from the MAKULA INTERNATIONA. L case in that the point of law argued did not involve the value of the subject matter which was the case in the IIIAKULA case.

In her Ruling, the learned taxing officer after hearing counsel for the applicant prayer for an award of Shs.835,552,2OO /: or lOo/o of the loan facilities, stated as follows:-

"On the other hand Mr. Ssempebwa argues tho.t the mqtter being relied on cs the basis of instntction fee is not the basts of the appeal to the Supreme Court. I agree. The appeal to the Supreme Court hcrs its basis in the preliminary objection regarding uhether the appellant/plaintiff require a waiuer Jrom the president oJ the respondent, as under Cap. 53, L. O. U before theg could sue.

i

(

Mr. Ssempebuta proposed instruction fees oJ Shs,3,OOO,OOO/= in the circumstq.nces of the case. !4 mu considered uiew. takinq into q.ccount that the appeal is not based ^on mertts of the case, hence the posstbtlftu of further costsinfuture, and siven that not a oreat arnount of research uas done bu the aopellant basinq on the appeal record. Shs.6. OOO. OOO/= i" sufJicient instruction Jees on appeal to the Supreme Court." (emphasis added).

In my view, the taxing officer properly addressed herself to the right principles and exercised her discretion. It may well be that another taxing officer would have given a little more, but that is not a matter for this Court as long as the proper principles were applied. I do not consider the award of Shs.6,000,000/= in respect of arguing a preliminary point to law to be so manifestly low as to amount to a misdirection or application of a wrong principle.

In the circumstances I would uphold the taxing officer's award and disallow the reference. I would award costs of the reference to the respondent.

Dated at Kampala this ....................................

Millatu-

Bart M. Katureebe JUSTICE OF THE SUPREME COURT