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Finca Uganda Limited V Birungi (Taxation Appeal 29 of 2022) 2023 UGHCCD 184 (15 February 2023) 12

Finca Uganda v Birungi Tax Appeal

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42 views10 pages

Finca Uganda Limited V Birungi (Taxation Appeal 29 of 2022) 2023 UGHCCD 184 (15 February 2023) 12

Finca Uganda v Birungi Tax Appeal

Uploaded by

walton.kawalta19
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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You are on page 1/ 10

THE REPUBLIC OF UGANDA

IN THE HIGH COURT OF UGANDA AT FORT PORTAL

TAXATION APPEAL NO. 029 OF 2022

Arising out of LD-TAX No. 026 of 2022, Misc. Application No. 028 of
2022 and Civil Suit No. 04 of 2022

FINCA UGANDA LTD ::::::::::::::::::::::::::::::::::::::::::::::::::::APPELLANT

VERSUS

BIRUNGI MALIZA :::::::::::::::::::::::::::::::::::::::::::::::::::::RESPONDENT

BEFORE: HON. JUSTICE VINCENT EMMY MUGABO

JUDGMENT

This appeal is made under section 62 of the Advocates Act and Regulation
3 of The Advocates (Taxation of Costs) (Appeals and References)
Regulations S.I 267-5, wherein the appellant seeks to set aside an award
of UGX 10,490,000/= following the taxation of the bill of costs, as being
manifestly excessive and contrary to the taxation rules in the
circumstances of the case.

The background to the appeal is that the respondent filed Civil Suit No.
04 of 2022 against the appellant claiming that the appellant registered a
mortgage over land in which the respondent is interested as a spouse of
the mortgagor without obtaining her consent. She then filed Misc.
Application No. 028 of 2022 to a temporary injunction to stop the sale of
the mortgage property. The said application was heard and granted by the
registrar of the court with costs. The respondent’s bill of costs was taxed
and allowed at UGX 10,490,000/= and this award is sought to be set
aside. The supporting affidavit of Deogratious Mugenyi brought out the
following grounds;

Decision of Hon. Justice Vincent Emmy Mugabo


Page 1 of 10
i. The learned taxing officer erred in law and in fact when he awarded
instruction fees of UGX 5,000,000/= without any legal justification
ii. The costs allowed in the said suit are high, excessive and
unconscionable in the circumstances of the case.
iii. The costs allowed under items 1, 4, 7-22, 23, 26, 31, 36, 37, 44,
45, 46, 49, 51, 55, 57 and 61 in the respondent’s bill are not in line
with the regulations governing the taxation of costs.

The respondent filed an affidavit in reply to the appeal and contended


among others that Deogratious Mugenyi who deposed the affidavit in
support was not a party to the taxation and as such his evidence is
hearsay. She also states that the instruction fees awarded was reasonable
because the application was contentious. Further that all the disputed
items were taxed and awarded according to the law.

Representation and hearing

At the hearing of this appeal, the appellant’s legal department represented


the appellant while Ngamije Law Consultants & Co. Advocates represented
the respondent. Upon the directions of this Court, counsel for both parties
filed written submissions which are considered in this judgment.

Preliminary matters

In her affidavit in reply, the respondent stated that Deogratious Mugenyi


who deposed the affidavit in support was not a party to the taxation and
as such his evidence is hearsay. No submissions were made on this
assertion.

I need to state that in the case of Bank One Ltd Vs Simbamanyo Estates
Ltd HCMA 645 of 2020, it was stated that Affidavits are a means of
adducing sworn, written evidence and must be used in applications where
Decision of Hon. Justice Vincent Emmy Mugabo
Page 2 of 10
sworn evidence is required by the court. The validity of the affidavit
therefore is subject to the same rule as that which governs oral evidence
under the Evidence Act, to wit; all persons are competent to swear an
affidavit unless the court considers that they are prevented from
understanding the questions put to them, or from giving rational answers
to those questions. Competency to sear an affidavit is pegged to ability “to
depose to the facts of the case,” which in turn is circumscribed by the
deponent’s ability to “swear positively to the facts,” on account of personal
knowledge or disclosure of the source, where that is permitted, not whether
he is a party or not.

Courts have established the practice of severance when dealing with


affidavits containing possible hearsay and facts based on knowledge. When
considering such type of affidavits courts have followed a liberal approach.
In Col (Rtd) Dr. Kizza Besigye Vs Museveni & anor, Election Petition
No. 1 of 2001 Odoki JSC (as he then was) stated that:

“In the present case the only method of adducing evidence is by affidavit.
Many of them have been drawn in a hurry to comply with the time limits for
filing pleadings and defend the petition. It would cause great injustice to the
parties if all the affidavits which do not conform to all the rules of procedure
were rejected. This is an exceptional case where all the relevant evidence
that is admissible should be received in court. I shall reject those affidavits
which are based on hearsay, and only parts which are based on knowledge
will be relied upon…” (Underling for emphasis)

The respondent’s assertion is overruled.

Consideration of the appeal

The scope of an appeal from a taxation order;


Decision of Hon. Justice Vincent Emmy Mugabo
Page 3 of 10
The circumstances in which a Judge of the High Court may interfere
with the Taxing Officer’s exercise of discretion in awarding costs
generally are;

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. (see Thomas James Arthur v.
Nyeri Electricity Undertaking, [1961] EA 492 and Bank of
Uganda v. Banco Arabe Espanol, S.C. Civil Application No.
23 of 1999).

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.

The fundamental principle of costs as between party and party is that they
are given by the court as an indemnity to the person entitled to them; they
are not imposed as punishment on the person who must pay them. Party-
Decision of Hon. Justice Vincent Emmy Mugabo
Page 4 of 10
and-party costs are in effect damages awarded to the successful litigant as
compensation for the expense to which he has been put by reason of the
litigation (see Malkinson v. Trim [2003] 2 All ER 356). The rationale
for the award was explained by Justice Cumming in Fullerton v.
Matsqui, 74 B.C.L.R. (2d) 311,

Having stated as above, I now delve into the particular grounds upon which
this appeal lies.

Excessive instruction fees:


Counsel for the appellant argued that Regulation 9(1) of The Advocates
(Remuneration and Taxation of Costs) (Amendment) Regulations,
2018 (hereinafter the regulations) provide an amount not less than UGX
300,000/= as instruction fees to make or oppose interlocutory
applications but the learned taxing officer awarded UGX 5,000,000/=
without justification which amount is manifestly excessive when the
application was not a complex one. Counsel argues that much as the
taxing officer has discretion to determine the quantum of fees, such
discretion needs to be checked.

Counsel for the respondent argues that the amount of UGX 5,000,000/=
as instruction fees is reasonable considering the fact that the application
sought to stop a sale of property worth over UGX 800,000,000/=. Counsel
relied on the case of Bank of Uganda (supra) to argue that a judge should
not interfere with the assessment of a taxing master is he or she considers
the same to be reasonable.

I agree with the authority cited by counsel for the respondent. See also
Auditor General vs. Ocip Moses and Others Taxation Reference No.
089 of 2014. It is a well-established guiding principle, that in all taxation
appeals, the Judge ought not to interfere with the assessment of what the
Decision of Hon. Justice Vincent Emmy Mugabo
Page 5 of 10
taxing master considered to be a reasonable fee unless the award is
considered manifestly excessive, exorbitant and without any legal or factual
justification. It is generally accepted that questions which are of quantum
of costs are matters which the taxing master is particularly suited to deal
with and in which he or she has more experience than the Judge. The
Judge will not alter a fee allowed by a taxing master merely because in the
Judge’s opinion he or she should have allowed a higher or lower amount.

I am alive to the fact that Regulation 9(1) of the Regulations provide for
a minimum of UGX 300,000/= as instruction fees to make or oppose
interlocutory applications. In his ruling, no reasons were given to amplify
this amount to more than sixteen fold. It has also not been shown that the
application for a temporary injunction involved any complexity.

In the case of Attorney General Vs Uganda Blanket Manufactures SCCA


No. 17 of 1993, court 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”.

It is my considered opinion that an award of UGX 5,000,000/= on an item


where the rules provide for UGX 300,000/= may be considered excessive
in absence of any justification to the contrary. And I so hold. This court
notes that there is a duty on the taxing master to give substantial reasons
for allowing or disallowing certain items on the bill especially where there
is a deviation from the regulations.

In the circumstances of this appeal, I award the sum of UGX 2,000,000/=


as instruction fees in Misc. Application No. 028 of 2022.
Decision of Hon. Justice Vincent Emmy Mugabo
Page 6 of 10
The costs allowed under items 1, 4, 7-22, 23, 26, 31, 36, 37, 44, 45, 46,
49, 51, 55, 57 and 61 in the respondent’s bill are not in line with the
regulations governing the taxation of costs

Counsel for the appellant submitted that the items listed above were not
taxed in accordance with the regulations. He argued that item 4 should
have been allowed at UGX 200,000/=, that items 7-22, 23, 26 in respect to
supplementary affidavits were wrongly included and taxed since the said
affidavits had no bearing on the outcome of the application and were not
relied on by the registrar. Further that items 31, 37, 45, 46, 51 and 61
referring to the attendances of the clerk are not provided for by the
Regulations.

In response, counsel for the respondent argued that for items 7-22, 23, 26
in respect to supplementary affidavits, it would be baseless for the
appellant to claim that the registrar did not rely on the supplementary
affidavits. Costs for the same are provided for under Regulation 10(2) of
the Regulations. Counsel further submitted that attendances by clerks
are provided for under Rule 12 in the 6th Schedule to the Regulations. For
items 31, 45, 46, 51, 55 and 61, counsel argued that the costs were
reasonably awarded because the clerk travelled from Fort Portal to serve
the documents in Kampala.

I will consider each item as disputed by the appellant to confirm whether


they were taxed in accordance with the Regulations. I need to re-emphasise
that the Regulations provide a guide to be followed by the taxing officer but
the officer still retains the discretion to award amounts that he considers
reasonable.

- Item 4 – this item was not allowed by the taxing officer

Decision of Hon. Justice Vincent Emmy Mugabo


Page 7 of 10
- Items 7-22 – I note that these items relate to the preparation of the
supporting affidavit and supplementary affidavit in support of Misc.
Application No. 028 of 2022. Regulation 10(2) in the 6th Schedule
of the Regulations provides for UGX 200,000/= as the cost for
preparation of court papers including a motion and affidavits. I find
that with respect to these items, the bill was drawn and taxed to scale.
The appellant’s argument that the registrar did not rely on the
supplementary affidavits when making his decision in Misc.
Application No. 028 of 2022 is only speculative.
- Item 31 – the taxing officer awarded UGX 300,000/= for a clerk’s
facilitation to serve court process in Kampala from Fort Portal. I find
this reasonable.
- Item 37 is disallowed. Fees for perusals are catered for in instruction
fees
- Item 45 - the taxing officer awarded UGX 300,000/= for a clerk’s
facilitation to serve court process in Kampala from Fort Portal. I find
this reasonable
- Item 46 is disallowed. Counsel ought to have arranged to serve the
court process served under item 45 together with that in 46.
- Item 51 is disallowed for the same reason as item 46
- Item 55 - the taxing officer awarded UGX 300,000/= for a clerk’s
facilitation to serve court orders in Kampala from Fort Portal. I find
this reasonable
- Item 61 - the taxing officer awarded UGX 300,000/= for a clerk’s
facilitation to serve the bill of costs in Kampala from Fort Portal. I find
this reasonable

Decision of Hon. Justice Vincent Emmy Mugabo


Page 8 of 10
I find that most of the items on the respondent’s bill of costs drawn and
taxed to scale and I have no reason to interfere with the taxing officer’s
award of the same save for those on which I have commented.

Before I take leave of this matter, I need to state that it is inconvenient to


tax multiple bills arising from interlocutory matters in the same suit when
the suit is still proceeding unless it is required that costs be taxed and paid
before further proceedings. It is understood that much as it is not legally
wrong to tax the multiple bills, it is usually prudent that the courts differ
the taxation of the bills of costs arising out of a suit to the conclusion of
the said suit. Refer to High Court of Tanzania case of Homi Dara
Adrinwala Vs Jeanne Hogan & another [1966] 1 EA 290. In
interlocutory applications like Misc. Application No. 028 of 2022 which are
to the convenience of one party to the suit should ordinarily differ costs to
the conclusion of the suit. A case in point would be to obtain a temporary
injunction with costs and then you lose in the main suit and you have to
pay costs.

In the final result, this appeal succeeds. The award of the taxing officer is
altered to provide for the following;

a. Instruction fees are revised from UGX 5,000,000/= to UGX


2,000,000/=
b. The rest of the bill is allowed save for items 37, 46 and 51. This would
translate the amount allowed for the entire bill to UGX 6,865,000/=.
This is inclusive of the amount in a. above.
c. Each party shall bear its own costs

It is so ordered

Dated at Fort Portal this 15th day of February 2023

Decision of Hon. Justice Vincent Emmy Mugabo


Page 9 of 10
Vincent Emmy Mugabo
Judge.
Court: The Assistant Registrar shall deliver the judgment to the parties.

Vincent Emmy Mugabo


Judge
15th February 2023

Decision of Hon. Justice Vincent Emmy Mugabo


Page 10 of 10

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