THE REPUBLIC OF UGAND
IN THE TAX APPEALS TRIBUNAL AT KAMPALA
TAT APPLICATION No.17 OF 2019.
ATC UGANDA LIMITED::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::APPLICANT
VERSUS
UGANDA REVENUE AUTHORITY:::::::::::::::::::::::::::::::::::::::::::::::::RESPONDENT
BEFORE H/W WAMAI SOLOMON DEPUTY REGISTRAR
RULING
This is a ruling in a taxation of a bill of costs filed by the respondent in the above
mentioned matter. The tax dispute was finally resolved in favor of the respondent with
costs hence this bill. The bill was filed under the Advocates (Remuneration and
Taxation of costs) as Amended Regulations 2018.
Mr. Walter Bakalana and Ms. Jemima Mushabe represented the applicant while Mr.
Joshua Ahabwe represented the respondent.
Before the hearing, the parties engaged in a pre-taxation as required under the law. The
report from a pre-taxation was that the total amount agreed in part A of the bill of costs
was Shs. 2,320,000/= and Part B was entirely agreed upon at Shs. 700,000/=.
What is contention before me is item 1 and item 2 of part A of the bill of costs. Both
Counsel made oral submissions.
As regards to item 1 on instruction fees the applicant in its submission argued that the
respondent is not entitled to charge instruction fees because they use in-house
Counsel. They do not instruct any other private Counsel. The applicant cited the case of
Total (Uganda) Ltd v Uganda Revenue Authority Reference No. 26 of 2003 where
Justice G.M Okello JA held that;
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“The respondent incurred no expenses on payment of instruction of fees to its in-
house lawyers to handle the case …….”
The applicant further argued that this item should be struck out of the bill. In the
alternative, if this court is inclined to award instruction fees than one million shillings is
reasonable.
On item 2, the applicant submitted the respondent claimed Shs. 100,000 as perusals for
TAT application No.17 of 2019. The applicant objected to this item and submitted that
the Advocates (Remuneration and Taxation of costs) Regulations 2018 is very
instructive on perusals. The applicant contended that perusals are not covered under
sixth schedule and rules bars charging perusals. The applicant prayed that this item
should be disallowed.
In reply, the respondent submitted that we take cognizant of the authority cited by
Counsel for the applicant. It is that very reason why the amount is not much. Learned
Counsel for the respondent noted that there are other factors to be considered when
handling this case. We consider hardship, complexity involved in handling the matter
and time involved. The respondent cited the case of Akisoferi Micheal Ogola v Akika
Othieno Emmanuel CA No.18/1999) where Court held that;
a) that costs be not allowed to rise to such level as to confine access to courts to
the wealthy;
b) A successful litigant ought to be fairly reimbursed for the costs he has had to
incur;
c) That the general level of remuneration of advocates must be such as to attract
recruits to the profession; and
d) That as far as practicable, there should be consistency in the awards made.
e) That there is no mathematical formula 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.
f) The taxing officer has discretion in the matter of taxation but he must exercise
the discretion judicially, not whimsically
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g) The court will only interfere when the award of the taxing officer is so high or so
low as to amount an injustice to one party.
The respondent argued that if instruction fees are not given it will be unjust to the
respondent. The respondent further submitted that there should be consistency in the
award of costs.
As regards to perusals, the respondent submitted that the regulations must be read as a
whole. Fifth schedule part 5 captures drawings and perusing correspondences and
other documents not expressly provided the amount is Shs. 100,000/= and this should
cover other perusals.
In rejoinder, Counsel for the applicant submitted that on item one; i reiterate my earlier
submissions that the respondent is not entitled to instructions fees. As regards to item
two on perusals, the fifth schedule referred to by the respondent covers transactions like
trademark, inventions and designs. The business prescribed under schedule five of the
rules is not same with transactions covered under 6th schedule.
I have carefully considered the submissions of both parties as well as the authorities
cited and this is the ruling of this court.
The respondent successfully defended this application before the Tax Appeals Tribunal
with costs. In accordance with Rule 47 of the Advocates Regulations, the respondent
prepared this bill of costs. A pre-taxation meeting of advocates was held as required by
the law and the following items were agreed upon; item 3- 11 agreed , item 15 and 16
struck out, item 17 -27 agreed and item 28 and 29 were struck out. The total amount
agreed amount in part A of the bill of costs was Shs. 2,320,000. Part B of the bill was
entirely agreed upon at Shs. 700,000/=. The total amount agreed upon in part A and B
is Shs. 3,020,000/=
What is in contention before me is item 1 and 2 of Part A of the bill which relates to
instruction fees and perusals.
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The applicant submitted that the respondent is not entitled to instruction fees because
they use in-house lawyers. The respondent did not instruct any other private Counsel.
The respondent argued that there are other factors to be considered when handling
cases. We consider hardship, complexity involved in handling the matter and time
involved.
Even though I am in agreement with the submission of Counsel for the respondent that
time and complexity of the case must be considered when handling cases of this nature,
I also note that the mandatory rules of taxation should be followed in taxation
proceedings. Odoki JSC as he then was, in the case of Attorney General vs. Uganda
Blanket Manufactures SC Civil Application 17/1993 observed that,
“the intention of the rules is to strike the right balance between the need to allow
advocates adequate remuneration for their work and the need to reduce the
costs to a reasonable level so as to protect the public from excessive fees…The
spirit behind the rules is to provide some general guidance as to what is a
reasonable level of Advocates’ fees”.
The principle of costs is to fairly reimburse the successful litigant for what he or she had
spent in the case. I agree with Counsel for the applicant that the respondent uses in-
house lawyers to handle cases in courts of law and they are paid a salary and other
wages. The respondent has not incurred any instruction fees in this case. Accordingly,
the item of instruction fees in the bill of costs is disallowed. The respondent had paid no
instruction fees. Even though, the applicant had opted to offer one million shillings as
reasonable for instruction fees in this case. I find that this option has no basis.
As regards to item two, the respondent claimed Shs.100, 000/= for perusal of
application No.17 of 2019. Schedule six of the Advocates Rules provides a guide to
reach a justifiable fee. The rules provides that unless otherwise provided in the sixth
schedule, the scale, instruction fee allowed under item 1 to 10 of this schedule, shall
include all the work necessary and properly done in connection with the case which is
not otherwise chargeable, including perusals.
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Having established that the respondent is not entitled to instruction fees, I find that item
two is covered under item one which is barred by the rules. Perusals under fifth
schedule are different. Fifth schedule deals with different businesses under the rules.
Therefore it is not just to use fifth schedule to justify charging perusals under sixth
schedule. Sixth schedule bars charging perusals.
In conclusion, Items 1 and 2 are disallowed.
Each party to bear its own costs.
Dated at Kampala this 22nd day of March 2021.
______________
Wamai Solomon
DEPUTY REGISTRAR
Delivered in the presence of;
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