[1995] UGHC 69

# IN THE SUPREME COURT OF UGANDA

# **AT MENGO**

#### CORAM: MANYINDO - DCJ)

### **CIVIL APPLICATION NO. 11/94**

#### **BETWEEN**

## 1. PATRICK MAKUMBI :::::::::::::::::::::::::::::::::::: 2. NAKIBUUKA ENTERPRISES

## AND

#### <table> SOLE ELECTRICS (U) LTD. ::::::::::::::::::::::::::::::::::::

### RULING OF S. T. MANYINDO - DCJ:

This is a reference to me as a single Judge under Rule $109(2)$ of the Rules of this Court from the decision of the Taxing Master in Civil Appeal No. 28 of 1992, in which costs in the sum of Shs. $13,854,000/$ = were awarded to the respondent against the applicants jointly and severally.

The relevant facts of the case as follows.

The respondent company entered into a tenancy agreement with Kampala City Council in respect of the latter's property (the suit premises) situate on Plot No. 5 A Nasser Road, Kampala. That was on 1-1-88. The respondent took possession of the suit premises and are still in occupation of same. On 27-2-1991, Kampala City Council advertised the suit premises for sale to the public by tender. The second applicant and the respondent company were some of the bidders. The second applicant was declared the successful bidder.

The respondent company was not satisfied with the result. They claimed that the first applicant. Mr. Makumbi, who was at the time the Kampala City Council Town Clerk. had colluded with the second applicant, and rigged the sale. But the (Makumbi) was sued in his personal capacity. They complained to the Inspector General of Government, who investigated their complaint and found it to be genuine. He recommended that the tender award be rescinded and the suit property be readvertised for sale. It seems that the recommendation was not accepted because on $23^rd$ -5-92, the respondent was served with a notice to vacate the premises within 48 hours.

The responden immediately filed a suit in the High Court, seeking for a declaration that the purported sale and purchase of the suit property by the applicants was "illegal," null and void," and for an order of rescission. The respondent company also sought a declaration that it was still the lawful tenant in the property and an injuction restraining the second applicant from evicting the respondent company from the suit property.

The second applicant then applied, under order 6 rule 29 of the Civil Procedure Rules, for an order striking out the plaint on the ground that it disclosed no cause of action against them. The application succeeded in part - that part of the plaint relating to the bidding was struck out but the rest of the action remained.

The respondent company appealed to this court against the order striking out part of the action. When the appeal came up for hearing Counsel for the applicants conceded the crucial point that the trial Judge had based his decision on a point not raised by the applicants. The appeal ended there and then, with an order that the matter be taken back to the High Court for the main suit to be heard on its merits.

The respondent company was awarded costs of the appeal. The respondent's Bill of costs was lodged in the Registry for taxation on 30-7-93. The Advocate's fees plus disbursements came to Shs. $34.395.500/$ = plus commercial transaction levy (CTL) of Shs. $5.159.325/$ = (at 15% of the Advocate's taking). The grand total was therefore Shs. $39.554.825/=$ .

After hearing Counsel for the parties the Taxing Master taxed the fees and disbursements including CTL at Shs. 13,854,000/=. Hence this appeal. The Memorandum of the reference was drawn and filed by Mr. Sendege, Counsel for the first applicant. At the hearing of the reference Mr. Womutuba, Counsel for the second applicant adopted the first applicant's Memorandum, with leave of Mr. Sendege.

There are 5 grounds of the reference namely:-

- $"1.$ The instruction fees awarded by the Registrar was manifestly excessive in view of the subject matter of the appeal, the station in life of the 1^st applicant and the fact that the appellants action againt the 1^st applicant had not been struck out. - The Registrar erred in law and principle in awarding the sum of Ug. Shs. $\overline{2}$ . 12.000,000/= as instruction fees in view of the nature of the appeal. - $3.$ The Taxing Master erred in law and principal in awarding a figure of Shs. $1.800,000/$ = as commercial transactions levy to the appellant. - The taxing Master failed to appreciate and give due consideration to the fact $\overline{4}$ . that the 1^st applicant (Patrick Makumbi) is a poor Civil Servant getting a very miserable salary. - $5.$ The Taxing Master failed to appreciate and give us due consideration to the fact that the appeal was against an interlocutory matter which had not disposed of the plaintiff's claim against the applicants.

WHERE the applicant prays:-

- That his Lordship be pleased to make such deduction as will be necessary to $(a)$ make the award reasonable and commensurate with the subject matter of the appeal. - That the applicant be allowed to pay off the final figure after reference by $(b)$ instalments of about Shs. $20.000/$ = per month till payment in full. - $(c)$ That the costs of this reference may be paid by the respondent.

Both Counsel abandoned prayer (b) at the hearing of the reference.

The only items questioned before me were the instruction fee of Shs. $12,000,000/=$ and commercial transaction levy of Shs. $1,800,000/$ =. The applicant contended that the instruction fee was grossly excessive given the fact that the appeal was against an interlocutory order which had not disposed of the whole suit and that the appeal rested on a straight forward pointed of law which was easily conceded by the applicants thereby bringing the appeal to an early end. The appeal was disposed of within about thirty minutes - this much was conceded by the parties. This is the complaint in grounds 1, 2 and 5. For the first applicant it was also submitted that the Taxing Master should have taken into account the fact that the man was a poor Civil Servant who depends on a salary of Shs. $15,000/$ = per month.

With regard to CTL, Counsel for the applicants contended that that tax can only be awarded to the Advocate of the successful party as a disbursement or to his client, on proof of payment. It was therefore wrong for the Taxing Master to award the refund of CTL before the tax had been paid.

On the other hand Counsel for the respondent submitted that there was no merit in the application as the applicants had not shown that the instruction fee awarded was manifestly excessive or that the Taxing Master applied wrong principles in terms of Rule 109(2) of the Rules of this Court. He also contended that the appeal was complex and required a lot of research, hence the long list of authorities which counsel prepared and filed in Court. He argued that the appeal was not on an interlocutory order but on a final order. He pointed out the fact that in absence of a scale of costs in the Supreme Court (unlike in the High Court) the Taxing Master has wide discretion in the matter. it had not been shown that he had exercised that discretion wrongly. He pointed out that the value of the property was put differently by the parties, ranging from Sh 70 million to Shs. 439 million.

As for the CTL the learned Counsel argued that it has been the practice of the Taxing Master to allow the statutory 15% levy before the tax is paid because the client usually pays a small deposit on account of instruction fee. The balance is recovered from the losing party at the end of the case. So the requirement for the production of receipts, on taxation cannot be met before the case has been brought to an end.

In his Ruling the Taxing Master observed that the matter o the instruction fee was not easy, adding:-

"In the first place, the nature of the appeal, presents a number of problems." The appeal was on an interlocutory order. It did not in any way dispose of the main suit. In a way these are thrown away costs. But then what is the effect of the order allowing the appeal? The appellants are sitting tenants. The property was advertised for sale. They did but there are apparent anomalies and/or alleged fraud. If this Court had confirmed the decision striking out the action, then the appellant's chances of bidding for the property would be all gone. The appeal therefore was of paramount interest to the appellant.

Counsel for the appellant did tremendous research as demonstrated by the list of authorities. Costs are awarded for preparing and conducting the appeal. All the preparations were done, the appeal cause - listed, the hearing commenced although adjourned to sort out some preliminary issues hearing resumed until Counsel for the respondent conceded to the appeal. If a party wants to save on costs, notice should be given to the other party in time for him not to waste time doing research and preparing. Conceding the appeal saved just a small portion of the costs."

He then went on to state that the value of the property was important and that although the appeal did not dispose of the suit, the respondent would have lost their chance to bid for the second time had their appeal failed. It was for that reason that he thought that an instruction fee of Shs. 12 million was reasonable.

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 not 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 formular 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. $\lt$ in a $\lt$ Fourth, variable degree. 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: (1) Premchand Raichand Vs. Quarry Services of East Africa Ltd. and Others [1972] E. A 162, (2) Nalumansi vs. Sulaimani Lule, Civil Application No. 12 of 1992, Supreme Court of Uganda (unreported), (3) Khatijabal Jiwa Hashjam Vs. Zenab [1957] E. A 255 and Connie Kabanda Vs. Kananuran Nelvin Consulting Engineers, Civil Application No. 24/1993 Supreme Court, (Unreported).

As far as an appellate court is concerned, the following two principles apply upon a review of taxation. First, an appellate Court will not interfere with an assessment of

$\overline{4}$

costs by a Taxing Master, unless he has misdirected himself in a matter on principle, but if the quantum of an assessment is manifestly extravagant, a misdirection of principle may be a necessary inference. See: Steel Construction and Petroleum Engineering (E. A) Ltd. Vs. Uganda Sugar Factory Ltd. [1970] E. A. 141, Connie Kabanda Vs. Kananura Melvin Consulting Engineers (supra) and Attorney General Vs. Uganda Blanket Manufacturers. Civil Application No. 17 of 1993, Supreme Court (unreported).

In the case before me it is clear that the respondent's appeal was against an interlocutory order and that it succeeded on a point of law, which was easily conceded by the applicants.

With respect to the Taxing Master, I am of the view that the value of the suit property was immaterial since the respondent company was not claiming a proprietary interest but the right to bid again for the property. It was not even certain that their second bid would succeed. I cannot agree that the mere production of a long list of authorities means that there was protracted research by Counsel. It is possible to find many authorities in just one case. Grounds 1, 2 and 5 must succeed.

I agree with Counsel for the applicants that as the appeal was conceded in a matter of minutes, the Taxing Master was not entitled to award the instruction fee of Shs. 12 million. It is manifestly excessive. Clearly there was a misdirection of principles. It should be reduced. I reduce it to Shs. 2,000,000/ $=$ .

I see no merit in the ground that the Taxing Master should have taken into account the financial status of the first applicant since no evidence was led to prove that he was incapable of paying the costs. In any case that would not be a matter for consideration by the Taxing Master. It is trite that a successful party should have the costs of the case. Whether or not the costs will be recovered is another matter. In the instant case the respondent's burden was easy since he could recover the costs from one of the applicants or both. There is no merit in ground four.

There remains the matter of the commercial transaction levy (CTL). This tax is governed by Finance Decree No. 14 of 1972. Section 1(1) of that Decree imposes the levy. Advocates are liable to pay the tax from the professional fees they charge for legal services they render to their clients. Section $2(3)$ of the Decree allows sellers or performers of services to pass the CTL to their customers or clients, provided the amount of the levy charged is recorded on the relevant document - provided by the tax authority.

This tax can only be awarded to the Advocate as disbursement. It can also be awarded to his successful client but only on proof of payment. Paragraph 4 of the Taxation of costs Rules of this Court clearly provides that disbursement shall be shown separately at the foot of the Bill of Costs and that receipts must be tendered at the time of taxation.

In this case the CTL of Shs. $1,800,000/$ = was claimed by the Advocate for the respondent as a disbursement and it was allowed as such by the Taxing Master. That was wrong, for an Advocate should not be reimbursed for what he has not spent. This much was conceded by Counsel for the respondent. In my judgment if the CTL has


not been paid at the time of taxation then taxation of that item should be deferred until the CTL is paid and receipts issued. There is thus merit in ground 3 of the reference.

The award is set aside. The item may be presented again for taxation at an appropriate time.

In the result the reference is allowed to the extent that the instruction fee is reduced to Shs. 9 million and the award of Shs. 1,800,000/ $=$ as CTL is set aside. As the reference has succeeded substantially I award the applicants three quarters of the costs of this reference.

Date at Mengo this ....................................

# S. T. MANYINDO DEPUTY CHIEF JUSTICE.