[1999] UGSC 30

# IN THE SUPREME COURT OF UGANDA **HOLDEN AT MENGO**

CORAM: J. N. MULENGA JSC

## **CIVIL APPLICATION NO. 13 OF 1999**

#### **BETWEEN**

## DEPARTED ASIANS' PROPERTY CUSTODIAN BOARD ........... APPLICANT

#### AND

**JAFFER BROTHERS LIMITED**

**RESPONDENT**

( $A$ -reference to a single judge from the decision of the taxing officer in Civil Appeal No. 9 of 1998, dated 10. 8.99)

## RULING OF MULENGA JSC.

This is a reference to me under rule 105(1) of the Rules of this Court, from a decision of the Registrar as a taxing officer. In that decision, a bill of costs of the above named respondent (hereinafter referred to as "Jaffer Brothers") was taxed and allowed at the total sum of shs. $16,396,000/$ =. The above named applicant (hereinafter referred to as "the Custodian Board") was dissatisfied with the decision, hence the reference. The costs in issue were awarded by this Court upon dismissing an interlocutory appeal by the Custodian Board against a decision of the Court of Appeal.

It is useful to recall briefly, the background. Jaffer Brothers, a limited liability company whose members and directors are Asians, was registered proprietor of residential

It is useful to recall briefly, the background. Jaffer Brothers, a limited liability company whose members and directors are Asians, was registered proprietor of residential premises known as Plot 9 Hill Lane, on Kololo hill, in Kampala (hereinafter referred to as "the property"). Following the expulsion of Asians from this country in 1972, the property was expropriated under the Assets of Departed Asians Decree, 1973 and vested in the Custodian Board. In 1977 the Custodian Board sold the property to one Francis Nyangweso, who in turn sold it to one Mohammed Magidi Bagalaaliwo in or about 1980. Subsequent to the enactment of the Expropriated Properties Act, 1982, Jaffer Brothers successfully applied for return of the property. On 7.12.93 the Minister of State for Finance issued to the company a letter authorising repossession of the property, and by a letter dated 25.9.94 he reiterated the same with some clarification, which I need not detail here. As the said Bagalaaliwo did not concede that he had lost ownership of the property, Jaffer Brothers filed suit against him in the High Court (hereinafter referred to as "the principal suit"). Bagalaaliwo defended the suit and successfully applied under 0.1 $r.10(2)$ of the Civil Procedure Rules for an order to join the Attorney-General and the Custodian Board as co-defendants. Thereafter the three defendants took out preliminary objections to the suit. The High Court upheld the objections and dismissed the suit. Jaffer Brothers appealed to the Court of Appeal. The appeal was allowed. The suit was reinstated with an order remitting it to the High Court for trial on merit, and awarding costs against the Custodian Board and its co-respondents/defendants. The Custodian Board alone appealed to the Supreme Court against that decision. Its appeal was dismissed with costs to Jaffer Brothers, who then filed the bill of costs that is now subject of this reference.

$\mathcal{L}$

The complaint in this reference relates to item 3 of the said bill of costs under which the sum of shs. $30,000,000/=$ was claimed, but the taxing officer allowed only slis. $16,000,000/$ as instruction fee for opposing the appeal in the Supreme Court. The grounds of reference are centered on the contention that the taxing officer erred in basing his assessment of the instruction fee on wrong principles, on a misinterpretation of the taxation rules and on a misunderstanding of the import of the judgment of the Supreme Court.

Hon. Ssekandi learned counsel for the Custodian Board submitted that the taxing officer had erred on principle in assessing the instruction fee, by taking into consideration, factors which were irrelevant. He pointed out that what was involved in the appeal before the Supreme Court was an interpretation of 0.1 $r.10(2)$ of the Civil Procedure Rules, in order to determine if the Custodian Board was wrongfully joined in the principal suit. He maintained that ownership of the property was not in issue in the appeal and that therefore, though the property was the subject matter in the principal suit, it was not subject matter of the appeal. He also pointed out that even in the bill of costs, the claim for instruction fee was not based on the value of the property, but was justified only on the ground that the appeal involved complicated issues of law entailing excessive research. He submitted that, in the circumstances, the taxing officer erred in basing the assessment of the instruction fee on the alleged value of the property and the fact that the same was situated in a prime area and was occupied by the Kabaka of Buganda. He contended that the error had resulted from a misunderstanding of the judgment of the Supreme Court relating to the subject matter of the appeal, and that this

had led the taxing officer to erroneously follow precedents where the value of property in dispute had been taken into consideration because the property was the subject matter, such as UGANDA BLANKET MANUFACTURES (1973) LTD VS ATTORNEY GENERAL Civil Appeal No. 15 of 1992 (unreported), instead of following precedents where assessment of instruction fee was based on subject matter which did not have monetary value, such as PATRICK MAKUMBI & ANOTHER VS SOLE ELECTRICS (U) Ltd, Civil Application No. 11of 1994 (unreported), and THE REGISTERED TRUSTEES OF KAMPALA INSTITUTE VS DEPARTED ASIANS PROPERTY CUSTODIAN BOAD, Civil Application No. 3 if 1995. (unreported) Furthermore learned counsel pointed out that the holding by the taxing officer that the appeal was "very involving" which holding also influenced him in assessing the instruction fee, was based on misconstruing a passage in the leading judgment which was a back reference to proceedings in the Court of Appeal. He stressed that the Supreme Court had not held that the appeal was complicated or involving; and that the taxing officer had mixed up proceedings in the Court of Appeal with those in the Supreme Court. Learned counsel also criticised the taxing officer for distinguishing the precedent in PATRIC MAKUMBI'S case (supra) on the excuse that it had been disposed of "in a matter of minutes", without appreciating that instruction fee is not assessed according to the time taken in court to dispose of a case. He prayed that the instruction fee be reduced to about shs $3,000,000/=$

Mr. Walubiri, learned counsel for Jaffer Brothers, submitted that the appeal in the Supreme Court had not been merely on a procedural question, but had in reality been

directed to the merits of the principal suit. He pointed out that the fourth prayer on appeal had been for reinstatement of the orders of the High Court, and that the grounds of appeal had been consistent with that prayer. He deduced that, the Custodian Board had wanted the Supreme Court to dismiss the principal suit on the grounds that, the suit was time barred, the plaintiff (Jaffer Brothers) had no cause of action, and had no locus *standi* to sue for the property. He submitted that this deduction was similar to the view expressed in the leading judgment that the framing of the grounds of appeal and prayers, was tantamount to appealing against the whole judgment of the Court of Appeal and that, in the circumstances, in opposing the appeal, Jaffer Brothers was defending its right to the property. He elaborated that in the High Court the codefendants, had successfully contended that "the letter of repossession" relied on by Jaffer Brothers, had no legal effect. On appeal the Court of Appeal held that letter was a legally effective document entitling Jaffer Brothers, to claim and repossess the property. In the appeal to the Supreme Court, the Custodian Board was seeking an order reversing that holding, thus re-opening the issue of whether Jaffer Brothers had *locus standi* to sue for the property. In his opinion Jaffer Brothers came to the Supreme Court to defend its proprietary interest in the property, and it followed, therefore, that the value of that property was a relevant factor in assessing the instruction fee. He argued, however, that although the taxing officer had taken that factor into account, he did not base the assessment of the fee on that factor alone, but also took into consideration other factors such on the importance of the case to the parties and the complexity or of the appeal. Learned counsel supported the taxing officer in involvement distinguishing the instant case from **PATRICK MAKUMBI's** case (supra), and

submitted that, at most, it was comparable to the REGISTRED TRUSTEES OF KAMPALA INSTITUTE's case (supra), where the subject matter was interpretation of s. 1 (I) of the Expropriated Properties Act, 1982, and the instruction fee was, on reference to a single judge of the Supreme Court, assessed at shs $7,000,000/$ = which assessment was upheld on reference to the full court with an observation, nevertheless, that the amount was on the low side. Learned counsel argued that due to inflation, the value of shs 16,000,000/= today is far less than that of shs 7,000,000/= in 1994 and that, therefore, there is no justification for reducing the instruction fee assessed by the taxing officer in the exercise of his discretion. According to counsel, the taxing officer did not err in principle, and the amount he allowed, was not so excessive as to justify an inference that a wrong principle was applied.

The basis of the assessment of the instruction fee in the instant case, is apparent from the ruling of the learned taxing officer where he directed himself on the issue in the following passages. He first said :-

> " Unlike in the High Court where instruction fees is assessed according to the scale .......in the Supreme Court, the taxing officer has to take into account the factors emmerated (sic) in paragraph $9(2)$ and $(3)$ of the third schedule to the Supreme Court rules."

After reproducing the provisions of those sub-paragraphs he went on to say:-

"*The rule clearly talks of the amount involved in the appeal*, which refers to the subject matter. So taxation cannot be based on the air without reference to the amount involved in the appeal (subject matter) among other factors. I am therefore unable to agree with Mr. Ssekandi that the subject matter is *irrelevant....................................* subject matter is said to be one billion shillings. But what is important in the present case is the importance and interest of the parties. The fact that the house in question is situated in *Kololo, which is a prime area in Kampala is not in dispute.* Secondly the fact that it houses the Kabaka of Buganda a great public figure especially in Buganda Kingdom and Uganda as a whole was not disputed by Mr. Ssekandi. Furthermore it is the finding of this court that the appeal was involving."

The learned taxing officer then referred to PATRICK MAKUMBI's case (supra), noting the holdings therein that a successful litigant should be fairly reimbursed and that advocates' remuneration must be such as to attract recruits to the profession; but observing that the appeal in that case was conceded in a matter of minutes hence the award of shs 2,000,000/= which nevertheless, in 1994 was a lot of money. In conclusion he held:-

> "So, in view of the fact that the present appeal did not take, or was not conceded to, in a matter of minutes like the Makumbi

case, and taking into account the nature of the subject matter and its importance in so far as it was housing a king of 6,000,000 people ....and taking into account its complexity as out lined plus inflation, I find and hold that a sum of shs $3,000,000/=$ proposed by Mr. Ssekandi is miserably too low. On the other hand l find the figure of shs $30,000,000/=$ proposed by Mr. Walubiri a bit high. In the final analysis and in the circumstances and in view of what $l$ have outlined, $l$ find and hold that the sum of shs $16,000,000/=$ is reasonable and the same is hereby awarded as instructions fees under item $(3)$ "

From the foregoing, it is quite evident that the learned taxing officer took several factors into account in assessing the instruction fee. The issue, however, is whether it was correct to take all those factors into account. Two of the factors relate to the property which, the learned taxing officer took to be "the subject matter of the appeal," namely, the value thereof, and its "*importance and the interest of the parties*" for purposes of paragraph 9 (2) of the third schedule to the Rules of this Court. In supporting the view that the said property was subject matter of the appeal, Mr. Walubiri pursuasively argued that, in the appeal, Jaffer Brothers was defending its proprietary interest in the property because the appeal was a threat to that interest. He sought support for that view from the first observation in the following passage in the leading judgment, where Kanveihamba JSC said :- "I will make three preliminary observations at this stage. In my opinion, the nature and manner in which the grounds of appeal have been framed coupled with the orders prayed for are *tantamount to appealing against the whole judgment and orders* of the Court of Appeal with the purpose of hoping to reverse all the decisions of that court. Secondly it is apparent from the memorandum of appeal and the written submissions that all the parties in this case have been full participants in the arguments and submissions on merits of this case from the beginning to the end. Thirdly, it is to be appreciated that the Court of Appeal merely ordered that the case be remitted to the High Court for $a$ *trial and did not finally dispose of it on merits'' (empasis added)*

With due respect, I think that learned counsel misconstrued the import of the observation. By the expression "*tantamount to appealing against the whole judgment* and orders of the Court of Appeal " the learned Justice of the Supreme Court did not find or hold that the appeal by the Custodian Board could have had the effect of determining the issue of Jaffer Brothers' claim to the property. This is made clear in the third observation, in the same passage, that the Court of Appeal merely ordered that the case be remitted to the High Court for a trial. An appeal against that order could not go to the merits of Jaffer Brothers' claim of the right to the property. The most that the Custodian Board could have achieved from the appeal, if it had succeeded, was a holding that its joinder to the principal suit was an error, and an order to strike it out of the suit with an award of costs. In actual fact, the grounds of appeal and the prayers in

the appeal did not, in substance, seek any more than that, since they were directed against the judgment of the Court of Appeal, only in so far as it affected the Custodian Board. Taken in its proper context therefore, it becomes clear that the said observation by the learned Justice of the Supreme Court, was intended as a criticism of the manner in which the grounds of appeal and the prayers were framed, rather than as a holding on what constituted the subject matter of the appeal.

Furthermore, with due respect to the learned taxing officer, it appears to me that he misconstrued the provisions of paragraph $9(2)$ of the third schedule to this Court's rules. He appears to have been of the view that in every assessment of instruction fee regard must be had to an " amount involved in the appeal", which amount is the value of the subject matter. It appears that because of that view he considered it necessary to find a subject matter with a monetary value, hence his ready conclusion that the subject matter of the appeal was the property whose value was "*said to be one billion shillings*" Paragraph 9(2) of the third schedule to the Rules of this Court reads thus :-

$(2)$ the fee to be allowed for instructions to appeal or to oppose an appeal shall be a sum that the taxing officer considers reasonable, having regard to the amount involved in the appeal its nature, importance and difficulty, the interest of the parties, the other costs to be allowed, the general conduct of the proceedings, the fund or person to bear the costs and all other relevant circumstances."

The provision lists factors or circumstances which the taxing officer may take into account, in assessing a reasonable instruction fee. It is obvious, however, that where in an appeal any of those factors is not relevant or applicable, the taxing officer does not have to take such factor into account, but takes into account only those factors which are relevant. Thus in an appeal which does not involve any amount of money, the instruction fee has to be assessed having regard to other factors, such as the importance or difficulty of the appeal. The assessment would not for that reason, be said to be "based in the air" as feared by the taxing officer in the instant case. It would be based on a subject matter involving no amount of money but involving importance or difficulty or both as the case may be. Thus, in the appeal by the Custodian Board to the Supreme Court, no amount of money was involved. Its subject matter was the joinder of the Custodian Board to the principal suit, and what the Court had to determine was whether the joinder was in conformity with the law. The appeal had no bearing on the question of ownership of the property. I therefore find and hold that the learned taxing officer misdirected himself by taking the property to be the subject matter of the appeal, and erred in principle in having regard to the value thereof in assessing the instruction fee. He similarly erred in having regard to the facts that the property was situate at Kololo, a prime area, and was occupied by the Kabaka of Buganda, a great public figure. Those facts were not of any relevance or consequence to the appeal.

The next complaint in this reference is that the taxing officer's holding that the appeal was involving was based on a misunderstanding of the judgments of the Court. To illustrate

his holding that the appeal was involving the learned taxing officer paraphrased a passage in the leading judgment thus :-

> "The judgment of the Honourable Justice Kanyeihamba JSC at p.11 illustrates the fact that the case was involving. Justice Kanyeihamba therein observed that on 1.6.99 counsel for the appellant filed written submissions. And that from page 146 paragraph 22 to page 151 para one, it was learned counsel for the appellant who was taking the court through case law and arguments on the merits of the case. He further observed on the same page 11 of the judgment (Justice Kanyeihamba), that "the record of proceedings show that Mr. Ssekandi on 2.6.99 was still addressing court on the merits of the case and citing cases such as Civil Appeal No. 16 of 1996: Makerere Properties Ltd Vs. Attorney -General and Civil Appeal No. 49 of 1993: Victoria Tea Estate Ltd Vs James Bemba and another." In view of what is stated above, among other details reasoning of their Lordships in their various judgments, I am inclined to agree with Mr. Walubiri for the *respondent that the appeal was very involving ...*"

It is obvious from this passage that the taxing officer took the observations in the leading judgment out of context. The observation of the learned Justice of the Supreme Court was

a reference to what transpired in the Court of Appeal, highlighting the fact that counsel for the Custodian Board had, in the Court of Appeal, fully participated in resisting Jaffer Brothers' appeal in its entirity, instead of restricting argument to the joinder of Custodian Board to the principal suit. The observation was not in reference to the appeal before the Supreme Court. Needless to say that factors pertaining to proceedings in the Court of Appeal would be taken into account in assessing fees in that Court, and cannot be taken into account in assessing fees for the appeal in the Supreme Court. To that extent, therefore, I hold that the learned taxing officer misdirected himself. The involvement or complexity of proceedings in the Court of Appeal was not relevant to the taxation before him. The proceedings in the Supreme Court were not involving or complex. That notwithstanding, however, I hasten to add that the importance of the appeal, not so much to the parties, but rather generally to the law, is a relevant factor to take into account. The appeal led to an authoritative precedent on the interpretation of $0.1$ $r$ .10 (2) of the Civil Procedure Rules, where there was a pausity of case law on the subject.

Lastly, I turn to consider if I should interfere with the taxing officer's assessment of the instruction fee. In PREMCHAND RAICHAND vs QUARRY SERVICES (No. 3) (1972) EA 162, at p.164 the Court of Appeal for East Africa said:

> "The taxation of costs is not a mathematical exercise; it is entirely a matter of opinion based on experience. A court will not therefore, interfere with the award of a taxing officer, and particularly where he is an officer of great merely because it thinks the award somewhat experience,

> > 13

too high or too low: it will only interfere if it thinks the award so high or so low as to amount to an injustice to one party or the other "

I respectifully agree that taxation of costs is not a mathematical exercise. Under the rules governing taxation of costs in the Supreme Court there is no formula by which to calculate the instruction fee. The exercise is an intricate balancing act whereby the taxing officer has to mentally weigh the diverse general principles applicable, sometimes one against another, in order to arrive at the reasonable fee. Thus, while the taxing officer has to keep in mind that the successful party must be reimbursed expenses reasonably incurred due to the litigation, and that advocates' remunaration should be at such level as to attract recruits into the legal profession, he has to balance that with his duty to the public not to allow costs to be so hiked that courts would remain accessible to only the wealthy. Also, while the taxing officer has to endevour to maintain consistency in the level of costs, it is settled that he has to make allowance for the fall, if any, in the value of money. It is because of consideration for this intricate balancing, that taxing officer's opinion on what is the reasonable fee, is not to be interfered with lightly. There has to be a compelling reason to justify such interference. In my view, such compelling reason occurs where the taxing officer expressly bases his opinion on wrong principle resulting in allowing too high or too low an amount. Such assessment amounts to injustice to one or the other party.

In the instant case I have found that the taxing officer erred in principle in the manner he assessed the instruction fee. I have the option to remit the case to him for reassessment of the instruction fee, in accordance with my finding. However considering that there is only one contentious item, and that there is need to prevent protracted court proceedings, I have opted to review the assessment as was done by Odoki JSC in ATTORNEY GENERAL VS UGANDA MANUFACTURES (1973) LTD: Civil Application No. 17of 1993, (unreported), by Manyindo DCJ in PATRICK MAKUMBI AND ANOTHER VS SOLE ELECTRICS (U) LTD (supra), and by Tsekooko JSC in GOLD TRUST BANK LTD VS BANAX LTD: Civil Application No. 32of 1995 (unreported)

It is quite evident that the first two factors which influenced the taxing officer in the instant case, in allowing the instruction fee at shs $16.000,000$ /= were the substantial value of the property and its occupancy by the Kabaka of Buganda. The third was the assumed complexity of the appeal. I have held that the first two were irrelevant and that the third resulted from misconstruing an observation in the leading judgment. There is no doubt that, if those factors had not been taken into consideration, a much lower fee would have been assessed. In my view the factors to take into consideration are not many. The first is that the appeal, though important as I have already noted, was not a final resolution of the dispute between the parties, but a decision of an interlocutory nature. Secondly, by virtue of the provisions of paragraph $9(2)$ of the third schedule, reproduced earlier, regard must also be had of the costs already, and yet to be, allowed. It is counsel's submissions before the taxing officer that shs $36,000,000/=$ has been allowed to Jaffer Brothers as costs in the lower court. With regard to precedent, for purposes of maintaining consistency, I agree with counsel for the Custodian Board that

PATRICK MAKUMBI's case is a better comparison to the instant case, particularly as to the nature of the appeal, than the KAMPALA REGISTRED TRUSTEES' case (supra). In the former, as in the instant case, the appeal was of an interlocutory nature. Upon reference to a single judge Manyindo DCJ held that the sum of shs $12,000,000/$ = allowed by the taxing officer for instruction fee, was too excessive. He reduced it to shs $2,000,000/$ = noting, inter alia, that the appeal had been conceded in a matter of minutes presumably when it was called for hearing. In my view that should not make too much difference with the instant case where argument was by written submissions. Taking all 1 have said into account and giving allowance for the fall of money value between 1994 and now, (which is a notorious fact) I consider that a reasonable instruction fee for opposing the appeal in the Supreme Court in the instant case, to be shs $4,000,000/$ =. In the result, I allow the reference to the extent that the instruction fee is reduced from shs 16,000,000/= to shs 4,000, 000/= with costs of this reference to the Custodian Board.

DATED at Mengo this....................................

J. N. Mulenga

Justice of the Supreme Court.