James Mbabazi and Another v Matco Stores Ltd and Another (Reference No 15 of 2004) [2004] UGCA 47 (21 July 2004)

# THE REPUBLIC OF UGANDA IN THE COURT OF APPEAL OF UGANDA **AT KAMPALA**

# CORAM: HON. JUSTICE G. M. OKELLO, JA.

#### **REFERENCE NO 15 OF 2004**

#### **BETWEEN**

# JAMES MBABAZI & ANOR::::::::::::::::::::::::::::::::::::

### **AND**

#### MATCO STORES LTD & ANOR::::::::::::::::::::::::::::::::::::

{Reference from Reference No 60 of 2001 from the decision of a single judge.]

# **RULING**

This Ruling is in respect of a Reference from the decision of Learned Taxing officer arising from Reference No 60 of 2001, whereby the Taxing officer upheld the applicant's preliminary objection, but denied them costs for no reason.

The background facts which gave rise to this Reference are briefly as follows:-

The applicants had instituted Reference No 60 of2001 against the decision ofa single judge. The full bench heard the Reference and dismissed it with costs in favour ofthe respondents. The respondents duly filed a bill ofcosts.

At the commencement of the hearing of the Taxation, counsel for the applicant raised a preliminary objection challenging the competence of the bill of costs. The taxing officer heard the objection and upheld it. He struck out the bill, but "made no ordets as to cos6."

The present Reference is challenging that order.

Counsel for both parties filed written submissions. The thrust of the argument of counsel for the applicant is that while an award of costs is a matter of discretion of the trial judge, such a discretion rnust be exercised judicially. He stated that the established practice under section 27 ofthe Civil Procedure Act is that costs follow the event, unless for good reasons the judge orders otherwise. He cited a number of cases as authorities to support his view that a successful party is entitled to costs and can only be deprived of such costs for good reasons. KANOBLIC GROUP OF COMPANIES (U) LTD VS SUGAR CORPORATION OF UGANDA LTD; Civil Appeal No 15 of 1994,, Supreme Court (unreported) was one of the cases he cited.

Learned counsel criticised the Taxing officer for denying the appellant, the successful party, costs without assigning any reason for it.

Learned counsel for the respondents did not agree. He contended that the Taxing officer exercised his discretion when he ordered that he makes no otder os to costs. According to counsel, that meant that each party had to pay his own costs. He cited BURNE SWAN EDGAR LTD (1993) 1 ch. 211 as his authority for that proposition.

o

I agree that an order that " I make no order as lo costs" is an exercise ofa discretion by the trialjudge, but one whereby he denies the successful party, costs to which he is entitled. The point is for what reason is the successful party denied his costs?

Learned counsel for the respondent submitted that in the instant case, the applicants had raised an unnecessary objection. That was why no costs were awarded to thern. He reasoned that procedural omissions which do not in any way, prejudice the opposite party should not be used to defeat the course of justice. He argued me to dismiss the Reference.

Clearly, the issue discernible in this Reference is whether the Taxing officer was justified to deny the applicants, the successful party, costs without subscribing any reasons for it. Section 27 of the Civil Procedure Act which governs the award of costs provides as follows:-

"(1) Subject to such conditions and limitations as may be prescribed, and to the provisions of any law for the time being in force, the costs of and incidental to all suits shall be in the discretion of the Court or Judge, and the Court or Judge shall have full power to determine by whom and out of what property and to what extent those costs are to be paid, and to give all necessary directions for the purpose aforesaid.

J

(2) The fact that the Court or Judge has no jurisdiction to try the said suit shall be no bar to the exercise of the powers in subsection (l), but the costs of anv action, cause or other matter or issue shall follow the event urrless the court or iudse shall for reason otherwise otder. " (em phasis odded)

o

The above section had been judicially considered before. In Uganda Transport Co Ltd vs Quta (1985) HCB28, it was held that:-

" The award of costs is in the discretion of the judge under section 27 of the Civil Procedure Act. There should be some grounds upon which the trial judge would exercise his discretion-----. The reason given by the trial judge, that counsel for the applicant did not apply for costs did not constitute good reason within the meaning of the rule and could not be regarded as a discretion exercised judicially. There was no justification in depriving the appellant of his costs."

In KANOBLIC Group of Companies (U) Ltd (supra) the Supreme court of Uganda held that a successful party was entitled to costs and can only be deprived ofsuch costs for good reason.

It is now well settled that all judicial discretions must be based on good reasons. In the instant case, the Taxing officer offered no reason at all for depriving the successful party of their costs. Learned counsel for the respondent argued that the trial judge denied the applicants costs because the preliminary objection raised by the applicants was unnecessary. I do not agree. That is speculation because the Taxing officer did not say so. He merely stated thus:-

66 I have no alternative but to strike out the present bill and it is so struck out. I make no order as to costs."

No doubt, the Taxing officer upheld the preliminary objection and struck out the bill of costs. The applicants as the successful party were entitled to their costs. Learned Taxing officer denied them their costs and subscribed no reason for doing so. This was a departure from the established practice under section 27 of the Civil Procedure Act *that a successful party is entitled to costs and can only* be denied such costs for good reasons. Failure to subscribe reason for denying the applicants costs constituted an error which occasioned a miscarriage of justice.

In the result, I allow the Reference and accordingly order that the respondents pay costs here and before the Taxing officer.

Dated at Kampala this ....................................

G. M. OKELLO

JUSTICE OF APPEAL