[2012] EACJ 1

# IN THE EAST AFRICAN COURT OF JUSTICE AT ARUSHA **TAXATION CAUSE NUMBER 1 OF 2011** (Origininating from Reference No. 1 of 2010)

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Hon. Sitenda Sebalu....................................

#### **Versus**

The Secretary General of the East African Community.................................... The Attorney General of the Republic of Uganda...................................

### **RULING**

## DATE: 20^th JANUARY 2012

### DR. JOHN EUDES RUHANGISA, TAXING OFFICER

In this bill of costs filed by Hon. Sitenda Sebalu the Applicant who was the Applicant in Reference Number 1 of 2010 that was presented by the Applicant in this cause is for a total sum of USD 14.357.669.10 as costs incurred by the Applicant herein for conducting the suit namely Reference Number 1 of 2010. Mr. Chris Bakiza Advocate of Bakiza & Company Advocates and Mr. Justin Semuyaba of M/s Semuyaba, Iga & Company Advocates appeared in Court on behalf of Hon. Sitenda Sebalu, the Applicant while Mr. Wilbert Kaahwa Counsel to the East African Community appeared for The Secretary General of the East African Community the 1^st Respondent. Ms. Christine Kaahwa Principal State Attorney appeared for the Attorney General of the Republic of Uganda the $2^{nd}$ Respondents. The claim against the respondents herein, relates to instruction fee, reimbursement for actual expenses incurred by the Applicant, to wit, costs for filing the bill of costs, costs for stationary, travel and upkeep expenses between Kampala and Arusha where the East African Court of Justice is headquartered. In my ruling I will first consider items 2 to 83 then finally consider item 1 on instruction and getting up fees where submissions were made at length.

Whereas the Respondents counsel conceded to items No 60. 63. 65. and 83in the bill of costs. items No. 61. 66. 67. 70. 73. 74. 78. 79 and 82 lacked supporting documents The applicant wm; not able to produce receipts for these items. Counsel lor the applicant submitled that I exercic;e my discretion and grant what is reasonable m areas \\hen: proof of payment lor air tickets have not been adduced large!) because the) hnd difiiculLics m securing them from the Applicant lumscl r \\ ho incurred the cost.

In Ill) ruling I will deal with item b) item and in items \-\here the applicant was not able produce receipts J will ta" them off accordingly and in arriving at this decision I am guided by the rules or procedure governing litigation in East African Colll1 of Justice, Rule 4 of' the Second Schedule in particular which slates that:

'receipts for disbursements shall be producl!d to the taxing otlicer at the time or taxation ..

This is a mandatory requirement of the Ia'". Counsel for the Applicant produced boarding passes and C\ idencc that they tra\ dkd but these were not receipts as required b~ Rule 4 of the Courts Rules. 1 he documents could not b) themselves be proof of c:\.penditurc on the part of the applicams in the absence of C\ idence showing ho\\ much was paid. Coun::;cl for the Respondents also submitted objecting to the usc of boarding passes m1d invoices as e" idence for disbursements which I agree with entirely.

With regard to item 2 on dra\\ing of reference Rule 3 of the Second Schedule or the Coun Rules provides USD 3.00 for the first four folios and USD 1.00 lor every additional folio. I consl!qucntl) tux the item at USD 29.00.

Item 3 is ta'<ed as prayed at USO 120.00. Rul~.: .. J. provides ror USO 0.5 per lolio. The applicam made 8 copies or 30 folios, which brings it to 240 folios.

Counsel lor the 2nd Respondent asked tor clarification from the Applicant on Item 4 on the dnm ing of documentary proof but no proof was pro' idcd and J there tore tax the item off as the Rull.!s do not pro'. ide Jar drawing of documentary proofs of evidence. I also tax ofT item 5 as it is related to item 4.

Items 6 and 7 which relate to the drawing of a Notice of Motion and making of copies thereof arc also taxed otT since the) arc a repetition of the drawing of Reference m item 2 which was titled Not1cc of Motion.

Item 8 is taxed at **USD 15.00** in accordance with Rule 3 of the second schedule while item number 9 is taxed at **USO 64.00** in accordance with Rule 4(a) of the Second Schedule.

Item LO where Counsel for the Respondent contended that receipts need to be produced to sho\\ that the Commissioning or notarizing of annextures was paid for, the applicant could not produce any. I therefore tax off the item accordingly.

The amount charged in item II is also accordingly taxed off as perusal can only be charged on documents received and not documents drawn by cotmsel himself, which have also been charged lor drawing under Rule 3 of the Second Schedule. This kind of perusal is taken care of under item 1 on instruction fees chargeable under Rule 9(3) or the Second Schedule on instruction Jee to "include all work necessarily and properly done in connection with the suit or reference and not otherwise chargeable including attendances, correspondence. perusals and consulting authorities''.

On items 12 and 13. I have perused the original record and found that no List or Authorities *was* prepared on 25111 June 20 I 0 and that lhe only list of authorities on record is the one attached to the Applicants Submissions dated 21 Sl December 2010. l therelbre tax orr Lhe amount in items 12 and 13.

Items 14 and 15 are also taxed ofT because other than an affidavit in reply there was only one affidavit s"vom by lion. Sitenda Sebalu, which has already been taxed in item 8 of the Bill.

Items 16 and 17 were not disputed and I therefore tax them as prayed by the applicant at **USD 3,450 and USD 150** respectively.

ltem 18 is also ta~ed ofT as it relates to penasal of a response by the 3nJ Respondent who was struck off from the reference wilh costs and is not a party in this cause.

rhe swn of USD 57.00 is taxed off from item 19 on drawing of Af(idavit and taxed at **USD 3.00** because on perusing the original record the affidavit referred to is of four folios and the Scale of Charges of the Second Schedule provide for USD 3.00 ror four folios or less.

The sum of USD 16.00 is taxed off from item 20 on drnwing of the Amended Notice or Motion and taxed at **USD -tOO** for the 1i ve folios and not 20 tblios as alleged.

The sum of USD 60.00 is taxed of from item 21 on making of copies and taxed at **USD 20.00** which is the charge for making of 8 copies of 5 folios of the Amended Notice of Motion.

The sum of USD 2.300.00 is taxed off from item 22 on pemsaJ of lhe I )t Respondents Response to the Amended Reference and is taxed at **USD 1,150.** fhc response was 230 folios and not 690 as claimed by the applicant.

The sum ofUSD 90.00 is taxed off from item 23 on perusal of 2"d and 4¹ h Respondents response to Amended Reference and is taxed at **USD 90.00.** 'l11e response was 12 folios and not 30 as claimed by the applicant.

Item 24 is taxed off accordingly on grounds that there was no response to the amended reference filed by the 3rd Respondent and that the 3rd Respondent was struck otT from the reference with costs.

The sum of USD 78.00 is taxed oiT from item 25 on the drawing of Applicanls Written Submissions and is taxed at **USD 33.00.** The submissions were 34 folios and not Ill as claimed by the applicant.

The smn of USD 308.00 is la..xed off from item 26 on making of copies of the written Submissions and is ta'<cd at USD **136.00.** Eight copies of the 34 folios is 272 copies at USD 0.5 per folio.

Item 27 is taxed off according!} because perusal can only be charged on documents received and not own documents. which have also been charged for drawing under Rule 3 of the Second Schedule. This item is covered under item l on instruction fees as provided for in Rule 9(3) of the Second Schedule which I have quoted above.

Items 28 and 29 on list of authorities which was 2 folios arc taxed al **USD 3.00** and **USD 8.00** respectively.

Item 30 is also ta,'{ed oJr because it is taken care of under item **1** on instruction fees and Rule 9(3) oftbc Second Schedule mentioned above.

The sum of USD 140.00 is taxed off from item 31 on perusal of I st Respondents Written Submissions and taxed at **U '0 70.00.** The submissions were 14 folios and not 42 as claimed by the applicant.

The sum of USD 1.490.00 is taxed off from item 32 on perusal of the 1st Respondents authorities and taxed at **USD 745.00.** The authorities were 149 folios and not 447 as claimed by the applicant.

*4*

The sum of USD 210.00 is taxed off from item 33 on perusal of 2"11 tuld 41 h Respondents written submissions and taxed at USD 165.00. The submissions wen: 31 folios ami not 75 as claimed b) the Appltcant.

Item 34 is taxed off in *v.* hole as it refers to the Jr. J Respondent who was struck. off the Reference with costs.

The sum of USD 33.00 is taxed off rrom item 35 on drawmg of a 31 folio rejoinder to the Respondents \Hitten submissions and is taxed at USO 30.00.

Item 36 is taxed off as it refers to the pemsal of the Applicants own documcnl. This is taken care of under item I on instruction fees.

The sum or USD 78.00 is taxed off from item 37 on photocopying of n 3 I page rejoinder anc.l is taxed at USD 124.00.

The sum of USD 12.00 is taxed off from item 37 on pcrusnl of I and not 3 folios of a llearing Notice and is taxed at USD 3.00.

On item 39 the Court order drawn was 3 fulios and not 12 folios. 1 thcrdore tax item 39 at USD 3.00 and tax otT item 40 as perusal cannot be done b) counsel on a document drawn by himself.

Item 41 on mak.ing of copies of the order is taxed at USD 12.00. whik ltem 42 on perusal of a 50 page judgment is taxed at USD 250.00

Item 43 on drawing of a 25 folio Bill of Costs is taxed at USD 2-a.oo. Item 44 on perusal of bill of costs is taxed ofr because perusal or own document ""hich is caten:d for under Rule 9(3) cannot be charged again.

Item 45 on perusing of a 1 !olio Notice is taxed at USD 3.00. Item 46 which is a repetition of item 43 is ta,cd olf accordingly, while item 47 on the maki11g or 8 copies or Lhe bjl! of costs is taxed at USI) 100.00.

Except item 54. ltcm 48 to 55 on attendance by advocates in court before the judges are taxed as prayed i.e USD 50.00, U D 100.00, U D 80.00, USO 100.00, USD 100.00, USD 100.00, USD 100.00 respectl"el). Item 54 on perusal of judgment 1s taxed ofT as It is a repetition of item 42.

The supporting document produced by tl1e applicant on Item 56 is dated 21 /07'2011 while the bill shows that the expenditure was incurred on 26/03/2010. Due to th1s discrepanc) item 56 is according!) taxed olT.

Items 57 to 59 on making of copies are also taxed off on grounds that instead of the applicam producing receipts in support of payments made for tbe photocopying he produced invoices. The dates on the invoices did not also tally with the dates in the bill of costs on when the expenditure was incurred. Hem 60 on fees paid upon filing the reference is taxed as prayed at **USD 500.00.**

Item 61 on travel by Precision Air to Arusha is t<L'<Cd olT because the appJicant *v.* as not able to produce a receipt in support of the expenditure. A receipt was produced for Item 62 on vaccination of counsel at the airport and T therefore allow and tax it at **USD 50.00.** Item 63 whose receipt of USD 50.00 was produced and conceded by the respondent is taxed at **USD 50.00.** Item 64 on accommodation and food is taxed oiT as it is not supp01ted by any Jeccipts.

llem 65 was conceded and is therefore allowed and ta..'<cd at **USD 18.20.** Again the applicant did not produce receipts in support of item 66 on travel and I accordingly tax that item off. Proformer invoices instead of receipts were produced in supp011 of item 6 7 on accommodation consequently this item is ta'<ed otT.

On item 68 receipts for Tshs 160.000.00 in support were produced and at the rate of Tshs I ,500.00 to I Dollar. I tax the item at **USD 106.00.** No receipts were produced in support of items 69 to 75 on travel, airport transfer and accommodation. 1 therefore tax items 69 to 75 off accordingly.

The sw11 of USD 50.00 is taxed otT fi·om item 76 on airp011 transfer because the applicant produced only one receipt and the item is taxed at **USD 50.00.** Item 77 which was amended to read Tshs l 02. 000.00 and whose receipts were produced and conceded to by I he applicant is taxed and allowed. and upon conversion the item is taxed at **USD 68.00.**

Items 78 at1d 79 on travel and airport transfer are also taxed otT because no receipts were produced in support of these expenditures.

Items 80 and 81 on the bill of costs are a repetition of items 43 and 44 which have already been taxed. No receipts were produced in support of item 82 as well and I therefore tax off items 80 to 82 accordingly. Jtem 83 on travel and airport transfer for the hearing of the taxation whose receipts were produced and conceded is allowed and taxed at **USD 917.00**

Having considered and taxed each item from item 2 to 83 I award the applicant the total stml of USD 9. 193.20 ( United States Dollars Nine Thousand One Hundred Ninety Three Twenty

Cents) only on all the snld items and now go back to item 1 where submissions were made at length.

Item 1 is professional fees USD 10.000,000.00 to instructions to Mr. Chris Bakiza and Justin Semuyaba to fi le the Reference No. 1 of 201 0 against the Respondents in this Taxation Cause.

The Applicants were awarded costs as against the l \t and 2"d Respondents. The Court stuck off the 3rd and 4lh Respondents from lhe Reference and directed that the Applicants shall pay their COSlS.

Counsel f'or the Applicant submitted that the amount of USD \$10 million takes into account a number of factors. One was the two senior lavvyers instructed to underlake the application. the great international and political importance and that it was an intricate matter wit11 novel legal points of the interpretation of the Treaty and the protocols of the EAC. I le further submitted that Lhe instructions included and constituted perusal of voluminous records of pleadings and affidavits including voltuninous minutes of the EAC meetings and Council of tvfinisters plus numerous corresponding records which were exhibited by the partie::i. He also submitted that the matter imposed great professional and legal responsibility on preparation or the case in its conduct, research and examination of complex and important documents and authorities and taking into accmmt that it was a novel matter, a landmark. the first case of its own kind in East Africa creating special and general jurisprudence in the Community laws.

On principles behind the evaluation or the item on insiruction fees, counsel for the applicant cited taxation causes of *Prof. Anya11g' Nyong'o ami Otlter:. Vs Attom ey Generul of the Republic of Ke11ya and Others, Calist Mwate/a and 2 Otlters Vs E11st African Cmmmmity, MorTem Holdings (EA)Limited Vs the Kenya Ports A ulltority* and submitted that all these authorities agree that the Tax Muster is entitled to use his discretion to assess such instruction fee as he considers jusl taking into account among others Lhe nature and importance of the cause or matter. the interest of parties. the general conduct of the proceedings, any discretion by a trial judge or any other relevant circumstances.

In justifying a claim for USD I ,800,000 m item 1 being VAT 18% of the instruction fee, Counsel for the applicant submiucd that the law 1im1s or the counsel are VAT compliant in accordance wilh the laws of Uganda and produced a certificate to that effecl. On the getting up fee Counsel for the Applicant submitted that it was charged in compliance with, Rule 2 under party and party, Part A of the Second Schedule and that part) is entitled to getting up fee when his advocate gets up or prepares a case for trial.

In response to the Applicants submissions on item 1. Ms Christine Kaahwa counsel for the 2"⁰ Respondent strongly opposed the USD \$ l 0 million and submitted that it vvas excessive. obnoxious and that the application was not complex in any way. She also submitted Lhat there were no novel points of law and that the Respondents in this cause won in some of the issues although they were not awarded costs. She submitted that the pronouncement that came out of the Coun was that there was loud silence in the Republic of Uganda not extending the jurisdiction by not making its submissions and the Secretary General not being able to police the Republic of Uganda which is not really a novel issue because if an action is not taken. it is on record that it has not been taken. She submitted Lhat evidence was by way of affidavit, so there was nothing like taking lhe witnesses and preparation where there is oral evidence that is given in cow-t. On VAT she submitted that it be taxed according to v·lhat will have been ta,xed in item ).

On the getting up fee Counsel for the 211d Respondent submitted that Counsel for the Applicant is not entitled to the getting up fee as the case dealt with affidavit evidence and not as a witnessed action.

Mr. Wilbe1t Kaahwa Counsel for the 1st Respondents added onto Counsel for the 2m1 Respondents submissions on item 1 by submitting that the amount is obnoxious and can have dire consequences for the development of our jurisprudence and organs and institutions. He also submitted that principles which guide the discretion of the Court on matters of award of costs and t..'Lxation of costs require that an award must be reasonable. a1Tordable and should not have effect or deterring litigants from seeking remedy in this court.

Mr. Kaahwa f'mthcr distinguished the *Prof. Anyang' Nyoug'o* case from lhc applicants case and submitted that in the applicants case the main point which was not a novel point of law was determining whether or not the 1 51 and 2"d Respondent had delayed in implementing Article 27(2) of the Treaty and was nol interpreting a point of law but a question of interpreting a fact. lIe also submitted that the taxation in *Nyongo•s* case which was more complex was not even as mucl1 as it is sought in this cause yet it was more complex with ten applicants. f1ve respondents and !bur

interveners. It was a case that went through many interlocutory applications and therefore became complex and required a lot of research. He also cited the *James Katahazi's* case where the cow1 found it necessary to have the costs awarded taking into account that lhe case was not as complicated as the case of *Anyang* · *Nyong 'o* which the applicant had sought to rely on.

Counsel for the I 51 Respondent concluded on item l by submitting that the USD \$ 10 million is not by any stretch of imagination a tair and reasonable amount in costs given the relative simplicity of the case in Reference No. I or 20 I 0.

Mr. Kaahwa Cotmsel for the 1 51 Respondent responded to my question on what he thought would be the appropriate claim for cost on this item by saying:

··Your worship, having gone through previous decisions and taxation of costs b) this court. having read the celebr~ted decision in *Premclumd Limited and Another.* 1972 East Africa page 162. I am sony *I* have not availed a copy of the decision. Taking into account all circumstances of this case. considering the nature of the case, its relevance lo the Treaty, considering its relevance to tbc development of the Community, I would think that a sum between USD \$50.000.00 and USD \$100, 000.00 would be just and reasonable".

ln his rejoinder counsel for the applicant submitted that the reference was to assist the court extend its jurisdiction and thal 1hc laxing master in exercising his discretion he oughL to be guided by the previous a\\ ards. He submitted that the swn of USD \$50,000.00 stated by counsel for the l st Respondent is too low for a matter of this nature and that the sw11 of USD \$ 10 million be a·warded as prayed. He further submitted that getting up fees is awarded where a matter which \\Ould have been setlled went ahead for trial.

I have considered submissions by counsels for the Applicant and Respondents on item 1 above, l' agree with the Respondents submission that the amount of USD \$ 10 million for instruction fee in this matter is excessive and unreasonable. The matter was not very complex and is distinguishable from the *A11ytmR* · *Nyong* 'o case which was more complex with many interlocutory applications and more parties than the Applicants cnsc herein. The Applicant<; case was alrnost similar in its complexity and arnoum or work involved lo the case or *Co list Andrew* lvfwatela and the case of. James *Kawbuzi* where lhe sum of USD \$ 12,000.00 and USD 50,000 00 for instmclion fees was awarded respectively.

In view of the above and what counsel for the 1 Respondent considered lo be a reasonable amount. 1 find that the sum reasonable in Item 1. having taken into account the subject matter, its nature. importance and complexity is USD \$ 65. 000.00. 1 also award getting up lee at one quarter of the instruction fee as per Rule 2(1) of the Second Schedule Scale of Charges, that is. USD \$ 16,250.00 making a total of USD 81 , 250.00 taxable amount plus 18% VAT USD I 4.625.00, plus reimbursable USD 9,193.00 making a total sum of USD \$ l 05.068.20 which I tax according!).

ln total tlus bill is taxed at USD \$ I 05,068.20 (United States Dollars One Hundred Five Thousand Sixty Eight and 1 wenty Cents) only to be shared equally between the 1 51 Respondent and 2110 Respondent

I so tax.

Dated at Arusha this 20111 day of January 2012

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DR. JOJ IN EUDES RUH/\NGISA TAXING OFFICER