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Uganda High Court Civil Appeal Judgment

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Uganda High Court Civil Appeal Judgment

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John
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© © All Rights Reserved
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THE REPUBLIC OF UGANDA

IN THE HIGH COURT OF UGANDA SITTING AT ARUA

CIVIL APPEAL No. 0028 OF 2016

(Arising from Taxation in Arua High Court Civil Appeal No. 0031 of 2011)

1. JABER TWALIB }
2. UGANDA ROADS AVIATION BUS COMPANY LTD. } … APPELLANTS

VERSUS

GLOBAL HARDWARES COMPANY LIMITED ………………… RESPONDENTS

Before: Hon Justice Stephen Mubiru.


JUDGMENT

This appeal is filed by way of Chamber Summons under section 62 of the Advocates Act, and
Regulation 3 of the Advocates (Taxation of Costs) (Appeals and References) Regulations,
wherein the appellant seeks to set aside an award of costs of Uganda shillings 9,000,000/= as
instruction fees as being excessive in the circumstances of the case. The taxation Order was
delivered on 25th August 2016.

The appeal is supported by the appellant’s affidavit sworn on 14 th September 2016, stating that
the award is excessive and based on wrong principles of taxation. In an affidavit in reply sworn
by Mr. Abdu Keniga, a director of the respondent company, the appellant’s averments are
refuted on grounds that the amount awarded is reasonable and a reflection of proper exercise of
discretion by the taxing officer, considering that the appeal was complex, and involved a lot of
legal research on matters of Public Procurement and disposal of public assets.

At the hearing of the appeal, Ms. Daisy Patience Bandaru, representing the appellant argued that
the award was excessive and posed a risk of confining access to court to only the wealthy. The
Taxing Officer erred in giving undue emphasis to the need to attract new recruits to the

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profession, at the expense of other considerations stated in Premchand Raichand Ltd and
Another v Quarry Services of East Africa Ltd and others [1972] EA 162. She prayed that the
appeal be allowed and the award be taxed down.

In reply, Mr. Samuel Ondoma, counsel appearing for the respondent, argued that the appeal
should be dismissed since the amount awarded was reasonable considering the circumstances of
the case. The subject matter related to the law on public procurement and disposal of public
assets which was a new law at the time and the appeal involved a lot of legal research. The
taxing Officer in awarding 9,000,000/= from the 30,000,000/= claimed in the bill of costs had
properly exercised his discretion and in accordance with the rules governing taxation of costs.

The circumstances in which a Judge of the High Court may interfere with the Taxing Officer’s
exercise of discretion in awarding costs were restated by the Supreme Court in the case of Bank
of Uganda v Banco Arabe Espanol, S.C. Civil Application No. 23 of 1999 (Mulenga JSC) to be
the following:
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, application of a wrong principle is
capable of being inferred from an award of an amount which is manifestly 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 allowed would cause injustice to one of the
parties.

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Additional principles are further stated in First American Bank of Kenya v Shah and Others
[2002] 1 EA 64, as follows;

1. The Court cannot interfere with the taxing officer’s decision on taxation unless it is
shown that either the decision was based on an error of principle, or the fee
awarded was manifestly excessive as to justify an inference that it was based on an
error of principle;
2. It would be an error of principle to take into account irrelevant factors or to omit to
consider relevant factors and, according to the Remuneration Order itself, some of
the relevant factors to be taken into account include the nature and the importance
of the cause or matter, the amount or value of the subject matter involved, the
interest of the parties, the general conduct of the proceedings and any direction by
the trial judge;
3. If the Court considers that the decision of the Taxing Officer discloses errors of
principle, the normal practice is to remit it back to the taxing officer for
reassessment unless the Judge is satisfied that the error cannot materially have
affected the assessment and the Court is not entitled to upset a taxation because in
its opinion, the amount awarded was high;
4. It is within the discretion of the Taxing Officer to increase or reduce the instruction
fees and the amount of the increase or reduction is discretionary;
5. The Taxing Officer must set out the basic fee before venturing to consider whether
to increase or reduce it;
6. The full instruction fees to defend a suit are earned the moment a defence has been
filed and the subsequent progress of the matter is irrelevant to that item of fees;
7. The mere fact that the defendant does research before filing a defence and then puts
a defence informed of such research is not necessarily indicative of the complexity
of the matter as it may well be indicative of the advocate’s unfamiliarity with basic
principles of law and such unfamiliarity should not be turned into an advantage
against the adversary.

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Furthermore, the general principles which guide taxation of bills of costs were stated Premchand
Raichand Ltd and Another v Quarry Services of East Africa Ltd and others [1972] EA 162, as
follows;
1. That costs should not be allowed to rise to such a level as to confine access to the
courts to the wealthy;
2. That a successful litigant ought to be fairly reimbursed for the costs that he has had
to incur;
3. That the general level of remuneration of advocates must be such as to attract
recruits to the profession; and
4. That so far as practicable there should be consistency in the awards made;
5. The court will only interfere when the award of the taxing officer is so high or so
low as to amount to an injustice to one party;
6. In considering bills taxed in comparable cases allowance may be made for the fall
in value of money;
7. Apart from a small allowance to the appellant for the responsibility of advising the
undertaking of the appeal there is no difference between the fee to be allowed to an
appellant as distinguished from a respondent;
8. The fact that counsel from overseas was briefed was irrelevant: the fee of a counsel
capable of taking the appeal and not insisting on the fee of the most expensive
counsel must be estimated

It is evident that every case must be decided on its own merit and in variable degrees, the
instructions fees ought to take into account the amount of work done by the advocate, and where
relevant, the value of the subject matter of the suit as well as the prevailing economic conditions.
The Taxing Officer should envisage a hypothetical counsel capable of conducting the particular
case effectively but unable or unwilling to insist on the particular high fee sometimes demanded
by counsel of pre-eminent reputation, then award a fee this hypothetical character would be
content to take on the brief. Clearly it is important that advocates should be well motivated but it
is also in the public interest that costs be kept to a reasonable level so that justice is not put
beyond the reach of poor litigants.

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The background to this appeal is that on 16 th October 2009, the respondent executed a one year
tenancy agreement with Uganda Railways Corporation by which the latter let out to the former,
premises located at plots 14-18 Go-down Road in Arua Municipality, at the annual rent of Shs.
5,400,000/=. At the time of the transaction, the premises were being occupied by the appellants.
When the appellants refused to vacate the premises to let the respondent occupy them, the
respondent on 30th October 2009 filed a suit in the Chief Magistrates Court at Arua, against the
appellants seeking orders of eviction, vacant possession, a permanent injunction, general
damages and costs. The appellants filed a joint defence asserting that they were the rightful
occupants of the premises under a prior tenancy agreement they had executed with the Uganda
Railways Corporation on 1st April 2005. They counterclaimed seeking an injunction and a
declaration that they were entitled to quiet possession of the premises until the expiry of their
tenancy. In reply, the respondent pleaded that the appellant’s tenancy had been terminated on 17 th
October 2009. On 15th December 2011, the trial court decided the suit in favour of the respondent
but directed that each party was to bear its costs, dismissed the appellants’ counterclaim and
awarded the respondent the costs of the counterclaim. Being dissatisfied with the decision, the
appellants appealed to the High Court which on 3 rd April 2013 dismissed the appeal with costs of
the appeal and of the court below, to the respondent.

The respondent filed bills of costs in respect of the civil suit and the appeal. The costs of the suit
were taxed and allowed at Shs. 17,612,000/= on 27 th July 2015 while those on appeal were taxed
and allowed at shs. 10,878,000/= on 25 th August 2016. The issue for determination in this appeal
is whether the Taxing Officer applied wrong principles in assessing the instructions fees. In
resolving this issue, I am guided further by the decision in Thomas James Arthur v Nyeri
Electricity Undertaking, [1961] EA 492 wherein it was held that:
i. Where there has been an error in principle the court will interfere, but
questions solely of quantum are regarded as matters which taxing Officers are
particularly fitted to deal with and the court will intervene only in exceptional
circumstances.
ii. The fee allowed was higher than seemed appropriate, but in a matter which
must remain essentially one of opinion; it was not so manifestly excessive as
to justify treating it as indicative of the exercise of a wrong principle.

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Taxation of bills of costs is not an exact science. It is a matter of opinion as to what amount is
reasonable, given the particular circumstances of the case, as no two cases are necessarily the
same. The power to tax costs is discretionary but the discretion must be exercised judiciously and
not capriciously. It must also be based on sound principles and on appeal, the court will interfere
with the award if it comes to the conclusion that the Taxing Officer erred in principle, or that the
award is so manifestly excessive as to justify treating it as indicative of the exercise of a wrong
principle or that there are exceptional circumstances which otherwise justify the court’s
intervention.

I have perused the ruling of the Taxing Officer. He justified the amount awarded as instruction
fees on the following grounds;
I have addressed myself to the law cited, the submissions of both counsel and the law
governing taxation generally and the principles that guide court in such matters. I
consider an award of 15 million to be on the higher side and at the same time the
proposed sum of 1,000,000/= to be too low. Any attempt to award Shs. 1,000,000/=
on such a case would scare away new recruits to the profession. I consider an award of
Shs. 9,000,000/= appropriate fee as instruction fee. In accordance with the
circumstances of this case and work evidenced from the nature of the record. It is a
bulky file with authorities. It reveals extensive research from both counsel for which
remuneration ought to be given.

The Taxing Officer addressed his mind to the principles which guide taxation generally but with
emphasis on the need to attract recruits to the profession and the level of industry required of the
advocates in arguing the appeal. In his view, the file was bulky with authorities and this was
indicative of extensive research having been done.

In re-evaluating the material which was available to the Taxing Officer, I have found that the
appeal was disposed of by way of written submissions. Counsel for the respondent’s written
submissions comprised 12 pages of 1.5 line spacing while those of counsel for the appellants
comprised of 7 pages of 1.5 line spacing. Counsel for the appellant cited five different authorities

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relating to principles such as illegality brought to the attention of court, privity of contract, the
nature of a cause of action and the duty of a first appellate court. A four page photocopied
judgment of one of them was attached to the submissions. They also cited sections of The Civil
Procedure Act. On the other hand, counsel for the respondent cited three decisions relating to
locus standi and the parol evidence rule. None was attached to the submissions. They also cited
provisions of The Evidence Act, The Public Procurement and Disposal of Public Assets Act and
The Civil Procedure Rules. The nature of the record does not support the learned Taxing
Officer’s finding that “it is a bulky file with authorities” revealing extensive research. The
Taxing Officer appears to have misconstrued the other contents of the file, mainly post-judgment
pleadings and correspondences relating to various attempts to execute the decree and
countermeasures by the judgment debtor to prevent or seek relief from execution, as documents
relating to prosecution of the appeal, whereas not.

For this work counsel for the respondent had claimed an instruction fee of Shs. 30,000,000/=
Reading through the submissions which the respondent’s advocate had to deal with, and those
filed by himself, it does appear to me that the claim was justified. I find myself in disagreement
with the Taxing Officer’s finding that the work done by counsel for the respondent involved
extensive research. It appears to me that it did not go beyond the ordinary work of counsel
dealing with ordinary issues of privity of contract, existence of a cause of action and locus standi
and all this within the context of a contested right to occupancy of premises under a tenancy
agreement with an annual rent of shs. 5,400,000/=. Relevance of The Public Procurement and
Disposal of Public Assets Act to the transaction did not introduce an aspect of any considerable
complexity to the suit considering that the scope of argument both at trial and on appeal was
limited to divergent interpretations of only a couple of sections of the Act that the court decided
that aspect in approximately three pages of double spaced print in its 30 page judgment. On
appeal, counsel more or less advanced the same arguments that had been advanced before the
trial court. There is no evidence to suggest that the appeal involved counsel for the respondent in
any new extensive research on this point as submitted before me.

The recommended practice when a Taxing Officer is to award an unusually high sum as
instruction fee on account of novelty, complexity or deployment of a considerable amount of

7
industry on the part of counsel, is found in Republic v. Minister of Agriculture and 2 others
Exparte Samuel Muchiri W’Njuguna and others [2006] 1 E.A.359 where it was held that;
The complex elements in the proceedings which guide the exercise of the taxing
officer’s discretion must be specified cogently and with conviction. The nature of the
forensic responsibility placed upon counsel, when they prosecute, the substantive
proceedings, must be described with specificity. If novelty is involved in the main
proceedings, the nature of it must be identified and set out in a conscientious mode.
If the conduct of the proceedings necessitated the deployment of a considerable
amount of industry, and was inordinately time consuming, the details of such a
situation must be set out in a clear manner. If large volumes of documentation had to
be clarified, assessed and simplified, the details of such initiative by counsel must be
specifically indicated apart of course from the need to show if such works have not
already been provided for under a different head of costs.

Whereas the Taxing Officer was alive the principles and factors which guide taxation of costs, he
had undue regard to the need to attract new recruits to the profession, at the expense of other
considerations and thereby made an award that is manifestly excessive as to justify interference.
The award was based on an error of principle in failing to balance all the considerations that go
into the taxation of costs and also in the assumption that the large volume of documentation on
the file all related to the appeal and was representative of the deployment of a considerable
amount of industry on the part of counsel for the respondent in opposing the appeal, whereas not.

I have neither found anything on the record to support the Taxing Officer’s finding of time-
consuming research, nor have I found that the nature of the appeal required any specialized skill-
engaging activities as to justify an enhanced award of instruction fees. The responsibility
entrusted to counsel for the respondent in the proceedings was quite ordinary and called for
nothing but normal diligence such as must attend the work of counsel capable of conducting this
case effectively but unable or unwilling to insist on the particular high fee sometimes demanded
by counsel of pre-eminent reputation. There was nothing novel in the proceedings of such a level
as would justify any consideration of unusual industry or complexity as a factor in the
assessment of instruction fees.

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In the circumstances, while as a general principle I ought not to interfere with the quantum
generally, the amount awarded herein in the instant case was outside reasonable limits so as to be
manifestly excessive to such an extent that it should be deemed an erroneous estimate of the
forensic responsibility and industry placed upon counsel for the respondent. As a result, the
claimed fee as per the bill of Costs as well as the amount subsequently awarded is exorbitant for
the work actually carried out. I find the award of the Taxing Officer of Shs.9,000,000/= to be
inordinately high and it must necessarily be adjusted. Keeping in mind that the successful party
must be reimbursed expenses reasonably incurred due to the litigation, and that advocates’
remuneration should be at such level as to attract recruits into the legal profession, but at the
same time balancing that with the duty owed to the public not to allow costs to be so hiked that
courts would remain accessible to only the wealthy, also while maintaining consistency in the
level of costs, but allowing for the fall in the value of money, I consider that the reasonable
instruction fee for the legal services rendered by the respondents’ advocates in the appeal would
be shs.3,000,000/=, in comparative terms with the volume of work done during trial where the
instruction fee was allowed at shs 12,000,000/=.

Before taking leave of this appeal, I observe that this was a suit by two prospective tenants
contesting the right to occupy commercial premises that attracted an annual rent of only shs.
5,400,000/=. The controversy between the parties rotated around very mundane legal issues
within the context of more or less straight forward facts relating to the commencement and
termination of rival tenancies. That counsel for the respondent claimed shs.30,000,000/= (nearly
six years’ rent for the premises) as instruction fees in an appeal arising out of litigation of this
nature was, to say the least, unnecessary exaggeration. Neither the value of the subject matter nor
its relative importance to the parties can justify a fee of that magnitude. Whereas advocates are
entitled to reasonable remuneration for work done and are free to take a business approach to
legal practice by which they identify profit maximisation as the dominant, though not professed
value of their practice, but they also ought to be mindful of the wider social implications of their
role in access to justice in a country of mainly impoverished citizens struggling to get to middle
income status. The noble profession should not be allowed to lose its soul. It is incumbent upon
a Taxing Officer to remind business minded practitioners of their wider obligations and to

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balance those obligations with the need to keep practitioners afloat and thriving in their legal
practice by awarding reasonable instruction fees, not debilitating of litigants’ access to justice.
Courts should always be mindful of the chilling effect of excessive costs in matters of access to
justice (see Lanyero and Anor v. Lanyero, C.A. Taxation Civil Reference No. 225 of 2013).

That aside, according to Regulation 56 (1) of The Advocates (Remuneration and Taxation of
Costs) Rules, where more than one-sixth of the total amount of a bill of costs, exclusive of court
fees, is disallowed on taxation, the party presenting the bill for taxation may, in the discretion of
the taxing officer, be disallowed the costs of the taxation. For that reason, the Taxing Officer
ought to have expressly considered whether or not to allow items 23 – 29 and 69 – 72 which
related to presentation of this bill of costs. However, since the appellants did not contest these
items before the Taxing Officer, they will not be disturbed on appeal.

In the final result, I hereby set aside the award of the Taxing Officer and substitute therefore an
award of a sum of Shs.3,000,000/= as instruction fees. The rest of the sums in the bill of costs
remain as taxed by the Taxing Officer. The costs of this appeal are to the appellant.

Dated at Arua this 10th day of November, 2016. …………………………………..


Stephen Mubiru
Judge.

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