[2024] UGCA 3

# THE REPUBLIC OF UGANDA

## IN THE COURT OF APPEAL OF UGANDA AT KAMPALA

### **TAXATION REFERENCE NO. 51 OF 2019**

(Arising from Court of Appeal Civil Appeal No.0067 of 2016)

(*Arising from Court of Appeal Civil Appeal No. 032 of 2016*)

#### **BETWEEN**

# 1. MUDDU AWULIRA ENTERPRISES LIMITED (MAEL) 2. SENTONGO PRODUCE AND COFFEE FARMERS LTD (SPCF) **3. GODFREY SSENTONGO..................................**

## AND

STANBIC BANK UGANDA LIMITED.................................... 15

# RULING BY CHRISTOPHER GASHIRABAKE JA. (SINGLE JUSTICE)

# **Background**

- 1] This reference was brought under Rules 109 and 110 $(1)(3)$ of the Judicature 20 (Court of Appeals) Rules, SI 13-10 from the decision of the Taxing Officer in Court of Appeal Civil Application No. 67 of 2016, wherein the Appellant contends that the bill of costs as taxed, was manifestly inadequate in all circumstances. - 2] The Taxing Officer awarded the Appellants instruction fees of Ugx 25 $6,000,000/$ = (Six million shillings only) in respect of defending an application for security for costs vide Court of Appeal Civil Application No. 67 of 2016. In the Application, the Respondent sought security for past and future costs from the Appellants. The Application was dismissed with costs to the Appellants, hence the Appellants filed a Bill of Costs in which they sought 30

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- exorbitant instruction fees of Ugx 240,000,000/ $=$ (Two hundred and forty million shillings only). The Taxing Officer rightly rejected this item as being exorbitant for a routine application for security for costs and rightly taxed it down to Ugx 6,000,000 /= (Six million shillings only). - 3] The Appellants filed the instant reference contending erroneously that this fee was inadequate. The reference is premised on the grounds that: - 1. The amount of $Ugx$ 6,000,000/= allowed as instructions fees in respect of C. A No. 67 of 2016 is manifestly inadequate in all circumstances of the said application because the Taxing Officer erred in principle when she failed to take the value of the subject matter into consideration. - 2. In assessing and arriving at the quantum of the fee allowed, the Taxing *Officer exercised, or applied, a wrong principle and thereby awarded as costs, instruction fees that were manifestly inadequate.*

### Representation

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4] The first and second Applicants were represented by Mr. Godfrey Sentongo. 20 The third Applicant was self represented. The Respondent was represented by Mr. Bwogi Kalibala.

#### **Submissions for the Applicants.**

- 5] The Applicants submitted on the two grounds jointly. It was submitted that it was wrong for the Taxing Officer to base her taxing decision on the fact that this was a mere application. - 6] It was submitted that at the time the Respondent's bill of costs was taxed, the value of the matter was a sum of Ugx. $2,400,000,000/$ = which was the amount Stanbic Bank Uganda Ltd, the Respondent, required the appellants to deposit before the appellants' appeal could be heard. It was submitted that the application was a complicated one. It was additionally contended that the

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Taxing Officer erred when she failed to apply the proper principle of taxation, by which error she failed to take into account the value of the subject matter, its nature, and its importance; the complexity of the suit and the interest of the parties. It was argued further that in awarding instruction fees the Taxing Officer ought to take into account and be guided by the principles, or indicators, provided in the Judicature (Court of Appeals) Rules, Third Schedule- Taxation of Costs Rules. Counsel cited Para 9(2) provides:

> "*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.*"

7] The Applicant submitted that **Stanbic Bank Uganda Ltd Vs. Muddu** Awulira Enterprises & 2 others C. A No. 67 of 2016, was not just an 20 ordinary application as portrayed by the Taxing Officer, but a complex case that addressed complex issues. Counsel argued that from her ruling, it was apparent that the Taxing Officer did not take into consideration the value of the subject matter and the complicated nature of the case. Counsel submitted that had the Taxing Officer considered the subject matter, she would have 25 awarded an instruction fee of more than Ugx. $6,000,000/$ = (Six million shillings only). For the authority on the principles that govern taxation of costs, Counsel relied on the case of **Bank of Uganda Vs. Banco Arabe** Espanol, Court of Appeal No. 17 of 1999 (Reference). Hon. C. N. B. Kitumba, J. A held. 30

> The principles governing taxation of costs are well settled in a number *of legal authorities as follows:*

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- *a) While a successful litigant ought to be fairly reimbursed for the cost he* has had to incur, the costs should not be allowed to rise to such a level as to confine access to the Courts only to the wealthy. - b) The general level of remuneration must be such as to attract recruits to the legal profession. - c) Instruction fee should cover the advocate's work including taking instructions and other work necessary for presenting the case or the appeal. - *d) Though there is no mathematical formula that the taxing officer must use* to come to a precise figure, he must use his discretion judiciously depending on the nature, merits, and circumstances of each case. Thus *higher fees must be awarded for a lengthy and complicated case.* - *e) The value of the subject matter involved must also be considered.* - *f) While a small allowance should be made to the appellant for the* responsibility of his undertaking of the appeal, there is no difference between the fee to be allowed to an Appellant as distinguishable from the Respondent. - *g) As far as practicable, there should be consistency between the awards.* - *h) An allowance may be made for the fall in value of money.* - *i) The Court will not interfere with the award of the taxing officer merely* because it would have made a different award, but will only interfere where the award is either so low or so high as to cause injustice between the parties. - 8] Counsel prayed that the instruction fee award of Ugx. 6,000,000/= (Six million shillings only) be set aside and substituted with such an increased award. - **Submissions of counsel for the Respondent.** - 9] Counsel for the Respondent submitted that the Taxing Officer rightly awarded Ugx 6,000,000/= shillings. Counsel argued that the Applicants are in error in equating the Court of Appeal Civil Application No 67 of 2016 to an appeal.

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- 'l'hat this was an intcrlocutory application f'or a routinc ordcr lor sccurity fbr costs. It was no1 thc appeal itsclL 't'hc Applicants cannot apply thc satnc principlcs as govcrn instruction fccs in appcal in ordcr to inflatc lccs in ^a sirnplc application. - l0l Counscl argued that paragraph 9 (2) ol-thc 'l'hird Schcdulc ol'1hc Courl ol- Appcal rulcs, is not applicablc in this rnattcr. 'l'hat this rulc applics to instruction lccs lor appcals or opposing appcals. Counscl argucd that thc appropriatc paragraph applicable lor applications is paragraph 9( I ). Counscl argued that lrorn paragraph 9( I ) thc instruction ['ccs arc at thc discrction ol ^a 'l'axing Ol-ficcr. 'l'hc 'l'axing C)fficcr may grant a sum thcy considcr rcasonablc but it shall not bc lcss than Onc'l'housand shillings. Counscl argucd that thc instruction lccs arc not pcggcd on thc amount involvcd in thc appcal. IIc funhcr submittcd that thc dccision ^o1' thc -l'axing Ol ficer was supportcd by paragraph l2 which authoriscd thc 'l'axing Olllccr to dcduct thc antounl claimcd if it is considcrcd cxccssivc to a rcasonablc amount. 'lb suppo( his argumcnt counsel cited Haruna Mubiru & 3 othcrs Vs. Nakato Busira and anothcr, CACR No. 147 of 2012, whcrc this Court crnphasizcd thc importancc olestablishing il'thc costs arosc fi'om an appcal or an application. In this particular casc, thc Courl rcduccd an award of LJgx. 5,000,000/: (ljivc million shillings only) to tJgx 1,000,000/: (Onc shillings million only) in costs. Counscl cited a Suprcmc Court dccision in Uganda Revcnuc Authority Vs. Shcll (u) Ltd & 9 othcrs Civil Application l7 of 2014.'l'hc Suprcmc Courl statcd that thc'l'axing OI'liccr in intcrlocutory mattcrs should rcstrict thcmsclvcs to paragraph 9( I ) ol'thc Suprcmc Court rulcs which is thc sarnc as paragraph 9( 1) olthc I{ulcs olthis Court. Scc also Gcncral l'arts (U) Ltd Vs. Non -Pcrforming Asscts rccovcry trusts Suprcmc Court Civil Appcal No.2l of2000.

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⁵ lll Counscl concluded that lrom thc abovc authorities, it is clcar that taxation ofthc bill olcosts arising undcr applications, does not depcnd on the valuc olthc subject mattcr olthc appcal, it is what thc'l'axing olficcr considcrs rcasonablc in thc circumslanccs o1' cach casc. Counscl praycd that thc instruction I'cc olLJgx. 6,000,000/: bc nraintaincd.

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- l2l lt was submittcd that Counscl fbr thc ILcspondcnt misconstrucd thc Applicants' submission. Counscl argucd that the Appcllants'bill of costs was bascd on the value of thc subjcct mattcr ol a sum of Ugx 2,400,000,000/: which was thc amount Stanbic llank (Jganda Ltd, thc Respondent rcquired in C. A No. 67 ol 2016 the Appcllants to dcposit bclbrc thc Appcllants'appcal could bc hcard. - l3l As rcgards costs, Counscl rctailcd thcir praycr lor costs and submittcd that M/s MMAKS Advocatcs, Stanbic Ilank's lawycrs, in the lettcr writtcn to thc Court datcd 281h Irebruary 2019 lbllowing thc dclivcry of thc'l'axation Il.uling, lilcd a Noticc ol'Appcal and rcqucstcd lbr ccrtificd copics ol thc taxation rccord ol'procecdings and thc ltuling in C. A No.67 of 2016, so that thc Ilcspondcnt Bank relcr thc mattcr to a singlc Judge of the Court olAppeal. 'l'hc llcspondcnt Ilank's lctter was rcfbrcnccd C. A 15212019 by the Court. On Monday, Junc 26,2023,at thc close of thc mcntioncd hcaring in C. A No.4l ol' 2019 thc Court Registrar gavc partics timclincs within which to file and scrvc thc wril.tcn submissions. On Monday, July 10, 2023, thc date which was thrcc days aftcr 7'r' July 2023, thc datc whcn Stanbic, the Appcllant in Civil Appcal No. 52 of 2019 was supposcd to filc and scrvc their principal writtcn submissions, the appcllants in CA No. 5 I ol- 2019 wrote a lettcr to thc Courl ³⁰ and inlbrmcd thc Court that Stanbic, thc Appcllant in CA No. 52 ol20l9 had

.tr neithcr filcd nor scrvcd their submissions as thcy had bccn dircctcd by thc Court. In othcr words, Stanbic llank lailcd to cor.nply with thc directivc. Counsel, submittcd that the inl'crcncc to be drawn is that lor Stanbic Ilank to fait to file and servc thc submissions in C. A No. 52 of 2019 upon bcing scrvcd with thc Appcllant's submissions in C. A No. I of 2019 on the 71r' of July 2019, was that Stanbic rcaliscd that thcy had nothing to argue in thcir subrnissions in C. A No. 52 ol 2019. On 2l'' July 2023 during thc hcaring o[- Civil Appeal No. 5l and 52 as thc Court rccord ol that day shows M/s MMAKS Advocatcs, Stanbic llank's lawyers scrvcd thc Ilcspondcnt a lcttcr ILcl I 89/l IDG/M0001 -02 I 3 wriucn ro thc Courr and datcd I 4'r' July 2023 but was not copicd to thc llcspondcnts. tt did not havc thc Court of' Appcal's rcgislry rccciving stamp alfixcd on it to show thc datc whcn it was filcd. In that lcttcr, Stanbic withdrcw thcir C. A. NO. 52 Ol; 2019. Counscl submittcd that Stanbic Bank's withdrawal ol Civil Appcal No. 52 ol'2023, which withdrawal was donc aftcr twcnty-fivc days, countcd lrom l6'l' Junc 2023 thc datc whcn thc Court gavc thc parlics thc dircctivcs to thc datcs within which to lllc and servc thcir rcspcctivc submissions bc disrcgarded by thc Court.

14) Counsel praycd that thc application should bc considcrcd.

# Considcration of Court.

l5l I havc kccnly pcruscd thc rclbrcncc, thc attachmcnts thcrcin, and thc submissions ol both pa(ics. 'l'his rclcrcncc is prcnriscd on thc grounds that thc award of tJgx 6,000,000/: was so low comparcd to the claim made by thc Applicants. Sccondly, that thc Court did not lollow thc principlcs in awarding thc Costs. It is wcll scttlcd law that a rclcrcncc on taxation may bc brought to this Court on 1wo grounds i.c. a mattcr ol law or principlc or on thc ground that thc bill of costs as taxed is manifcstly exccssivc or manilcstly low in thc

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circumstances. This is rooted in Rule $110(1)$ and (3) of the Rules of this Court $\mathsf{S}$ that provides that,

> "(1) *Any person who is dissatisfied with a decision of the registrar in his or her capacity as a taxing officer may require any matter of* law or principle to be referred to a judge for decision, and the judge *shall determine the matter as the justice of the case may require.* (3) *Any person who contends that a bill of costs as taxed is, in all* the circumstances, manifestly excessive or manifestly inadequate may require the bill to be referred to a judge; and the judge may make such deduction or addition as will render the bill reasonable."

$16$ This was explained by the Supreme Court in the case of **Bank of** Uganda Vs. Banco Arabe Espanol, Civil Application No. 23 of 1999 (Mulenga JSC):

"Save in exceptional cases, a judge does not interfere with the assessment of what the taxing officer considers to be a reasonable fee. *This is because it is generally accepted that questions which are solely* of quantum of costs are matters with which the taxing officer is particularly fitted to deal, and in which he has more experience than the Judge. Consequently, a Judge will not alter a fee allowed by the taxing officer, merely because in his opinion he should have allowed a higher or lower amount. Secondly, an exceptional case is where it is shown expressly or by inference that in assessing and arriving at the quantum of the fee allowed, the taxing officer exercised, or applied a *wrong principle. In this regard, the application of a wrong principle is* capable of being inferred from an award of an amount which is excessive or manifestly low. Thirdly, even if 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 would cause injustice to one of the parties."

The law governing the assessment of instruction fees in interlocutory $171$ matters is in Paragraph 9 (1) of the Third Schedule of the Court of Appeal Rules, which provides that:

"*Ouantum of costs.*" 10

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- 1. *The fee to be allowed for instructions to make, support, or oppose any application shall be a sum that the taxing officer considers reasonable* but shall not be less than one thousand shillings. - $18$ In handling a similar matter Justice Chibita JSC, in the case of **Bank of** Uganda Vs. Sudhir Ruparelia & Meera Investments Ltd (Supreme Court **Taxation Reference No. 0001 of 2023**, held that it was clear that it is at the discretion of the Taxing Officer to determine what he or she considers a reasonable sum as instruction fees in interlocutory matters. The justice further noted that however the discretion should be exercised judiciously and not whimsically and based on sound principles. The Taxing Officer while taxing the bill of costs was guided by the principles laid down in **Premchand** Raichand Ltd & Anor Vs. Quarry Services of East Africa (1972) EA 162; which are: - 1. *Costs must not be allowed to rise to such a level so as to confine* access to the Court only to the rich. - 2. A successful litigant ought to be fairly reimbursed for costs he/she has to incur. - 3. The general level of remuneration of Advocates must be such as to attract recruits to the profession. - 4. As far as possible there should be some consistency in the award of costs.

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- ⁵ l9l Considcring that this is an application, thc Court is not guidcd by thc amounl ol moncy clairncd as thc Applicant's counscl wants this Court to bclicvc. Counscl lbr thc Applicants submittcd that thc'l'axing Olllccr erred whcn shc did not considcr thc value of thc subjcct mattcr whilc billing thc costs. 'l.his argumcnt is not supportcd by thc law. According 1o paragraph 9( l), all thc'l'axing Olllccr nccds to considcr is what is rcasonablc and not thc valuc ol thc subjcct rnattcr. Counscl based his argument on paragraph 9(2) of thc Ilulcs ol this Court, which is not applicablc in this mattcr. Paragraph 9(2) applics to inslruction fccs lor an appcal or to opposc an appcal. It is not in conlcntion that this was an application lor sccurity of costs. All interlocutory mattcrs arc dccidcd bascd on what is rcasonablc in thc cycs ol thc 'l'axing 01ficcr. I havc pcruscd thc rccord and I havc Ibund that this application was not unicluc in any way. It did not prescnt any complicatcd issucs to attract LJgx. 240,000,000/: ('l'wo hundrcd and lorty million shillings only) claimcd as instruclion fccs. Ifind that thc 'l'axing Olficcr lbllowcd thc propcr principles in awarding LJgx 6,000,0097= (Six million shitlings only) as instruction lccs.'l'his award was rcasonable in the circumstances of this casc. 201 In the prcmiscs, I am satisfied that thc 'l'axing Officcr cxcrciscd thc - taxing powcrs judiciously. 'l'hc 'l'axation Itclcrcncc is hcrcby dismisscd.

211 Costs olthc'l'axation rclcrcncc arc awardcd to thc Itcspondent.

²⁵ (t Datcd this........ u"ro?.ap\* \q 2024

C. GASIIIIIAI}AKI]

## JUSTICE OF APPEAL