Ekeu & Another v Attorney General (Taxation Appeal 1 of 2024) [2024] UGHC 668 (7 May 2024)

Full Case Text

## THE REPUBLIC OF UGANDA

## IN THE HIGH COURT OF UGANDA AT JINJA

## **TAXATION APPEAL NO. 01 OF 2024**

## **ARISING FROM TAXATION APPLICATION NO. 51 OF 2023**

## **ARISING FROM CIVIL SUIT NO. 549 OF 2016**

#### 1. EKEU COSMAS

2. BENADICT OWOT & 3493 OTHERS....................................

#### **VERSUS**

# ATTORNEY GENERAL....................................

## BEFORE: HON. LADY JUSTICE FARIDAH SHAMILAH BUKIRWA NTAMBI

#### **RULING**

#### **Background**

This is an appeal under the provisions of section 62 (1) of *The Advocates Act*, sections 64 and 98 of *The Civil Procedure Act*, and Regulation 3 of *The Advocates (Taxation of Costs) (Appeal* and References) Regulations, seeking orders that;

- That the taxation ruling/orders made by the Assistant Registrar on the 31st October 2023 $i)$ be set aside: - That the Honorable Court proceeds to make appropriate awards in the application and $ii)$

That the costs of the Application be provided for. iii)

The application is supported by the affidavit of Machel Nyambok wherein the grounds are set out but are briefly stated below;

- a) That the learned Assistant Registrar misdirected herself by not following the appropriate law in taxation. - b) The learned Assistant Registrar erred by not following the proper principles of taxation. - c) The learned Assistant Registrar was clearly wrong in the exercise of her discretion and as a result, there has been injustice. - d) That it is just and fitting that the application is allowed.

The background to the appeal is that the Appellants filed a suit HCCS No. 59 of 2009 before the trial court that was decided in their favour and costs were awarded in the Judgement to the plaintiffs/appellants. The appellants lodged Taxation Application No.051 of 2023 which was heard and determined on 31st of October 2023. At the end of the hearing, the applicants/appellants were not satisfied with the decision of the Assistant Registrar regarding that matter and thereby appealed to the Judge of the High Court.

In his submissions on the first ground, counsel for the Appellant argued that the Assistant Registrar applied the now amended (Advocates (Remuneration and Taxation of Costs) Rules S. I 267-4) instead of Advocates (Remuneration and Taxation of Costs) (Amendment) Regulations of 2018 which was erroneous. He argued that since the costs were awarded in the Judgement dated 8th September 2023, the bill of costs should have been taxed

$\mathbf{1}$

in accordance with the 2018 regulations. He relied on the decision in Total (U) Limited Versus Rosebel Twinamasiko Civil Appeal No.29 of 2019 where the Court held;

$\overline{a}$

$\mathcal{L} = \mathcal{L}$

"S. I. 7 of 2018 (The Advocates (Remuneration and Taxation of costs) (Amendment) Regulations, 2018 is deemed to have come into force on the 2nd March 2018 when it was published in the Gazette. Nowhere in those Regulations is it indicated that the old Regulations (S. I. 267-4) shall be applied in matters that were filed in Courts before March 2018.

It follows then that the new Regulations i.e. the Advocates (Remuneration and Taxation of Costs), (Amendment) Regulations, 2018 are applicable to all matters/Bill of costs filed in this court after 2nd March 2018."

He further argued that the Assistant Registrar erred in her ruling when she ruled that since the matter commenced in 2009, it was subject to the old regulations and not the 2018 regulations. He relied on the Uganda Bankers Employers Association Versus the National Union of Clerical Commercial Professionals and Technical Employers where the court held;

"In my view liability to pay costs accrues when the court makes an order for costs to be paid. The process of taxation is only to determine the quantum of the cost paid. Since the order for costs in the instant was made by the learned trial on 17/8/95, the taxation ought to have been based on the 1982 Remuneration Rules and the sixth schedule to those rules."

In the instant case, the order awarding costs to the Appellants was made by this Court in 2023 during the subsistence and operation of the 2018 Regulations. Consequently, Counsel prayed that the court apply the 2018 Regulations.

On the second ground, counsel for the 1st Appellant argued that the Taxation Rules provide for the 6th Schedule Regulation 1 (1) which states that:

"where the claim/Value of the subject matter can be determined from the pleadings, settlement, a valuation or the judgment, the instruction fee shall be in accordance with the following scale, the instruction fee shall be accordance with the rules."

To determine the instruction fees, the value of the subject matter has to be ascertained. The Assistant Registrar under Paragraph 5, on page 3 of the ruling (Annexure A) relied on the old regulations in the determination of the value of the subject matter.

Counsel referred to the Black's law dictionary to define a Judgement as the Court's final determination of the rights and obligations of the parties in a case. He went on and submitted that this Court determined the matter and awarded UGX 6,234,463,628 as terminal benefits, damages of 3 million shillings for each of the plaintiffs and interest. The aggregate of the award is the value of the subject matter and the rules provide for that. Counsel relied on the decision in Green Partners Ltd Versus Cooperative Bank in Liquidation Misc. Application 172/215, where Justice Madrama stated that the expression Judgement includes the award of interest in the Judgement as well as the award of the principal amount. Consequently, in the instant case, all the figures would then amount to 30,474,662,154.7 as the total of the Bill of costs. Therefore, the Assistant Registrar followed the wrong principles when she based the instruction fee on 6,234,463,628 shillings.

The last aspect argued by counsel for the Appellant was concerning the basic fee/instruction fee. He argued that the rules are clear under the 6th Schedule of the 2018 Regulations, particularly Reg. $1(1)$ (g) of the rules provides that the fees where the amount is in excess of 100,000,000 shall be determined according to a prescribed formula. He argued that the Registrar does not have the discretion to increase or decrease an amount contrary to the Regulations. Counsel relied on the decision of Western Highland Creameries Ltd and Lee Ngugi Versus Stanbic Bank Uganda Ltd Consolidated Civil Appeal Nos. 78 of 2014 and 79 of 2014 to buttress his submission.

#### **Determination by court**

In determining the suit before the court, it is only proper that the court raises issues to guide the resolution of the dispute it is presented with.

- 1. Whether the Assistant Registrar erred when she used the Advocates Remuneration and Taxation Regulations S. I 267-4 during the taxation hearing. - 2. Whether the learned Registrar erred when she rejected to consider the damages and interest when assessing the value of the subject matter. - 3. Whether the learned Assistant Registrar applied the wrong principles of taxation in Misc. Application No 51. 2023

#### **Resolution of the Issues**

Before I resolve the issues, firstly, I take note that the Respondent filed written submissions on the 22nd day of March 2024 in total disregard to the Exparte order granted by the Court on the $6th$ day of March 2024.

It is a well-settled principle of law that a court order must be obeyed unless and until it has been set aside and varied by the Court. (Chuck Vs Cremer (1836) 1 Coop Temp Cott 338, 47 ER 884, Ocen Kassim Vs Soroti District Land Board & Anor M. A No. 01 of 2019).

With the order to proceed exparte still in existence, counsel for the Respondent was barred from filing submissions, and if he wished to file as he did, he ought to have sought the court's intervention to set aside the order or vary it before filing. It is on that note that I will not consider the Respondent's submission.

Secondly, this court is cognizant of the fact that this Appeal was lodged out of time by the Appellants much as a point of law was not raised by Appellants or the Respondents. Section 62(1) of the Advocates Act states;

Any person affected by an order or decision of a taxing officer made under this Part of this Act or any regulations made under this Part of this Act may appeal within thirty days to a judge of the High Court who on that appeal may make any order that the taxing officer might have made.

The ruling of the Taxing Master was given on the 31st of October 2023 which by virtue of Section 62 (1) above implied that the Appellants had up to the 30th of November to have filed the Appeal. However, the Appellants filed their Appeal on 19th January 2024, which was out of time. At this point, it was only procedurally proper that the Advocates for the Appellants applied for an extension of time within which to appeal. However, the Appellants did not file that Application.

It should be noted that section $62(1)$ of the Advocates specifies that an appeal has to be made within 30 days, however, it does not give recourse/remedy in cases where the 30 days have elapsed nor does it give consequences for failure to file within 30 days. So, in the current circumstances, the court would have to exercise its inherent powers to ensure that justice prevails by invoking section 98 of the Civil Procedure Act.

#### Section 98 of the Civil Procedure Act says;

## Savings of inherent powers of court

Nothing in this Act shall be deemed to limit or otherwise affect the inherent power of the court to make such orders as may be necessary for the ends of justice or to prevent *abuse of the process of the court.*

Therefore, the failure by the counsel for the Appellants to invoke the court's powers to extend the time to appeal is an error that is directly attributable to the Advocate and not the client. It is trite law that the mistakes, faults, lapses, or dilatory conduct of Counsel should not be visited on the litigant (see the Supreme Court decisions in Andrew Bamanya v. Shamsherali Zaver, S. C. Civil Appln. No. 70 of 2001; Ggoloba Godfrey v. Harriet Kizito S. C. Civil Appeal No.7 of 2006; and Zam Nalumansi v. Sulaiman Bale, S. C. Civil Application No. 2 of 1999).

While a step taken out of time is voidable, it may be validated by extension of time. An extension of time may be granted even where the step has been taken out of time and before the application (see Shanti v. Hindocha and others [1973] 1 EA 207; Mansukhalal Ramji Karia and Crane Finance Co. Ltd. v. Attorney General and two others, S. C. Civil Application No. 1 of 2003; Godfrey Magezi and another v. Sudhir Rupaleria (2), S. C. Civil Application No. 10 of 2002 and Crane Finance Co. Ltd v. Makerere Properties Ltd, S. C. Civil Appeal No. 1 of 2001).

Time may be enlarged by validation of a belated step taken in the proceedings where it does not result in abridging, enlarging, or modifying any substantive right. Enlargement of time in the instant case by way of validation has no discernible substantive impact on the merits of the appeal. The legal effect of extending time to admit an appeal out of time when the appeal has already been heard, albeit out of time, is to validate that appeal and excuse the late filing of the appeal by counsel with a stun caution.

I have found justifiable inconvenience that will be suffered by the Appellants in the event of dismissing this appeal, yet a determination of the dispute on the merits of the appeal would be in the best interests of both parties. Firstly, given the sensitive nature of this suit that involves over 3000 Appellants who suffered an injustice several years ago and have been before this court for several years, it is only incumbent that the Court looks beyond the negligence or mistake of their counsel. Secondly, failure by either party to bring to the attention of the court this point of law leaves it to be determined at the discretion of the court. The court will therefore focus on administering justice instead of further protracting litigation.

In light of Section 98 of the Civil Procedure, and in the interest of dispensing justice, I will admit the Appeal and shall consider it on its merits. This will not only facilitate the fair and accurate performance of the truth-finding function of the Court but also provide a substantive basis on which to resolve the pending litigation. I however will caution M/S Alliance Advocates to honour their obligation as Advocates and give the best legal advice to their clients. Courts

shall not tolerate the continued failure of advocates to effectively advise their clients and observe due diligence when doing their work.

Thirdly, it is important to note that much as the Judge of the High Court shall have the discretion to interfere with the decision of taxing masters, this discretion has to be based on exceptional circumstances concerning the case.

The circumstances under which a Judge may interfere with the Taxing Master's exercise of discretion in awarding costs were restated by the **Supreme Court in Bank of Uganda versus** Banco Arabe Espanal, S. C civil application No. 0023 of 1999 to be the following:

"Save in exceptional cases Judges do not interfere with the assessment of what the taxing officers consider 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 with 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"

It is the submission of Counsel for the Appellant that the taxing officer failed to adhere to the taxation rules on all the items in the bill rendering the exercise meaningless and yet it had been drawn according to the rules governing taxation. I will now focus on the issues to determine whether there are indeed exceptional circumstances that require my interference in the learned Assistant Registrar's taxation decision.

### Issue 1: Whether the Assistant Registrar erred when she used the Advocates (Remuneration and Taxation) Regulations S. I 267-4 during the taxation hearing.

A perusal of the record indicates that the Plaintiff's bill of costs was filed under the Advocates (Remuneration and Taxation of Costs) (Amendment) Regulations, 2018. Counsel for the Applicant referred the Court to the last paragraph on page 3 of the record of proceedings of the taxation hearing where the Taxing Master noted that;

### "Also since instructions were taken before the amendment of the Act, I will consider the old law in calculating the sum."

This clearly shows that the Taxing Master considered the old law (S. I 267-4).

Generally, retrospectivity is not permitted in the application of statutes. Justice Mubiru in The Commissioner General Uganda Revenue Authority versus Edulink Holdings Ltd and 2 others HCCA No. 0178 of 2021 on the concept of retrospectivity, had the following to say:

"It is a well-settled rule of interpretation hallowed by time and sanctified by 25 Judicial decisions that unless the terms of a statute expressly so provide or necessarily require it, retrospective operation should not be given to a statute, so as to take away or impair an existing right, or create a new obligation or impose 5 a new liability otherwise than as regards matters of procedure"

The learned Judge also made reference to the latin maxim "Nova constitution futuris formain imponere bebet non prateristis" (a new law ought to regulate what is to follow, *not the past).*

While Hon Lady Justice Nakachwa in Mayanja Joshua and 70 others versus Wante Samuel and 60 others in HCCS No. 497 of 2018, discussed the effect of an amendment of laws while a matter is pending and held as follows:

"In my Judgment where a statute is amended while a matter is pending the rights of the parties to the action, in the absence of a contrary intention must be decided in accordance with the statutory provisions in force at the time of the institution of the action. Where the legislature intends that a provision should have a retrospective effect it has to state so in clear and unequivocal terms" [emphasis mine]

I have carefully studied the provisions of SI No. 7 of 2018 and it does not in any way imply that its provisions are to have a retrospective application.

The Court of Appeal in Uganda Bankers (Employers Association) versus National Union of clerical commercial professionals and technical employees CACA No. 0051 of 1996. [1998] KALR 388 in considering whether an amended regulation did not have a retrospective application, their lordships observed thus:

"... It is necessary to find out when liability to pay costs arises or accrues. In my view liability to pay costs accrues when the Court makes an order for costs to be paid. The process of taxation is only to determine the quantum of the costs to be paid. Since the order for costs in the instant case was made by the learned trial Judge on 17/08/1995, the taxation ought to have been based on the 1982 remuneration rules and the 6th schedule to those rules.

The learned Judge therefore erred in law when he held that the Advocates (Remuneration and taxation of costs) (Amendment) Rules 1996 applied to the Taxation."

In view of the above, the suit which is subject was filed in 2009 and the Judgement delivered on 8th September, 2023. Therefore, the learned Assistant erred when she used the date the suit was filed to ascertain which law to apply, rather she was supposed to consider the date when the Judgment was given.

Therefore, the law applicable in this case was the Advocates (Remuneration and Taxation of Costs) (Amendment) Rules of 2018.

This ground thus succeeds.

Issue 2: Whether the Assistant Registrar erred when she rejected to consider the damages and interest when assessing the value of the subject matter.

I have analysed the 6th schedule regulation 1(1) of the Advocates (Remuneration &Taxation of costs) (Amendment) Regulations of 2018 as pointed out by counsel for the Applicant. Indeed, the regulation provides that where the claim/value of the subject matter can be determined from the pleadings, settlements, evaluation or judgement, the instruction fees shall be in accordance with the rules.

In Stanbic Bank Uganda Ltd & 2 Ors v Western Highland Creameries Ltd & Anor (Taxation Appeal No. 5 of 2013) [2013] UGCommC 77 (30 April 2013), the court held;

The taxation is determined according to the scale set out in the sixth schedule. Item number 1 prescribes the fees for instructions to sue or defend. Item 1 (a) (iv) prescribes how to determine fees to sue or defend in any case or to present or oppose an appeal where the value of the subject matter can be determined from the amount claimed or the judgement.

Under the item 1 (a) (iv), there are two ways to determine the value of the subject matter. Either from the amount claimed or the judgement. The amount claimed had to be discerned from the plaint whereas the judgement indicates what amount has been awarded. Where there is a judgement from which an amount can be determined, it can be deduced that the plaintiff would have succeeded in the suit and an award would have been made against the defendant to the plaint or defendant to the counterclaim. In such cases the amount can be determined from the judgment. Where the suit is dismissed, there is no amount determinable from the judgement because the suit was dismissed. Consequently the taxing master will determine the value of the *subject matter from the plaint or counterclaim.*

In the instant case, there is a Judgement from which an amount can be determined, so it is only prudent that it is taken into consideration.

In Misc. Application No.51 of 2023, the Taxing Master/Assistant Registrar took the value of the subject matter to be UGX 6,234,463,628 which was the terminal benefit awarded in the judgment. This implies that she determined the value of the subject matter based on the judgement of the Court. The issue, however, is whether she erred when she did not take into account the damages and the interest that had been awarded by this Court in the Judgement.

To resolve this, I will adopt the definition of a Judgement as per the Black's Law Dictionary 8th Edition which states

"The Court's final determination of the rights and obligations of the parties in a case."

Furthermore, In Green Pastures Ltd Vs Cooperative Bank in liquidation, M. A No. 172 of 2015, Justice Madrama stated that the expression judgment includes the award of interest in the judgement as well as the award of the principal amount. With this in mind, this court issued orders in its Judgement in HCCS No.59 of 2023 which included; 6,234,463,628 as terminal benefits, 3,000,000 to be paid to each Plaintiff, interest of 8% on the terminal benefits among others. All those orders form the judgement and should be added together to establish the judgement sum.

It is on that note that I find that the Taxing master erred in law when she determined the value of the subject matter based on the principal amount (terminal benefits), leaving out the damages awarded therein and the interest.

$\overline{7}$

It should further be noted that due to the ruling in Miscellaneous Application 272/2023, the interest on the terminal benefits was clarified to 8% which had been applied by the Appellants when coming up with the amount to be considered for instruction fees. I therefore agree with Counsel for the Applicant the value of the subject matter that is 30,474,662,154.72.

### Issue 3. Whether the Assistant Registrar applied the wrong principles of law in assessing instruction fees.

Having found earlier that the Assistant Registrar/taxing master misdirected herself on the law applicable and the value of the subject matter, the instruction fees ought to be calculated based on UGX. 30,474,662,154.72 and in accordance with the Advocates (Remuneration & Taxation of costs) (Amendment) Regulations of 2018.

In cases where the value of the subject matter is ascertainable, the taxing officer does not have to exercise any discretion but has to simply apply the arithmetic formula. (See Luweno & Co Advocates Vs Trans Africa Assurance Company Limited CACA No. 95 of 2004).

As a result, the taxation award by the learned Assistant Registrar is hereby set aside.

An order is hereby issued that;

- 1. The bill in Civil Suit No. 051 of 2023 be retaxed before a different Taxing Master. - 2. The value of the subject matter to be used shall be UGX 30,474,662,154.72 - 3. Each party shall bear their costs.

I so order.

HON. LADY JUSTICE FARIDAH SHAMILAH BUKIRWA **JUDGE**

Delivered this 07th day of May 2024