Kapeeka Coffee Works Limited v Non-Performing Assets Recovery Trust (Reference 21 of 2001) [2001] UGCA 20 (20 September 2001)

# **THE REPUBLIC OF UGANDA**

## **IN THE COURT OF APPEAL OF UGANDA**

### **HOLDEN AT KAMPALA**

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

#### **REFERENCE NO. 21 OF 2001**

#### **BETWEEN**

## **KAPEEKA COFFEE WORKS LTD)::::::::::::::::::::::::::::::::::.. APPLICANTS ABU KASOZI KADJENGO)**

#### **AND**

## **NON-PERFORMING ASSETS RECOVERY TRUST ::::::::. RESPONDENT**

#### (Reference Arising from a Taxation Ruling in Civil Appeal No. 53 of 2000)

#### **RULING OF G. M. OKELLO, JA**

This is a reference under Rule 109 (1) (3) and (5) of the Rules of this Court from the decision of the Taxing Officer dated 12 -4 - 2001 in Civil Appeal No. 53 of 2000 in which he taxed and allowed the Applicant's Bill of Costs at Shs. 8,043,000/=. In the reference, only instruction fee, item 1 was contested.

The summary of the background to the reference is that the respondent sued the Applicants and another who is not a party to this proceeding, before the Non-Performing Assets Recovery (NPART) Tribunal for the recover of Shs. 838,030,582/= being a non-performing asset which was assigned to it by Uganda Commercial Bank under the NPART STATUTE NO. 11 of 1994. When the case came for hearing, the applicants raised a preliminary objection challenging the amended plaint as disclosing no cause of action. The Tribunal overruled the objection. However, on appeal, the Court of Appeal upheld the objection. Following that success, the applicants filed a bill of costs which contained as item 1, instruction fee for Shs. 83,900,000/=. The taxing officer taxed and allowed that item at Shs. 8,000,000/=. That prompted this reference.

There are three grounds of the reference, namely:

- **(1) Item 1 of the applicants' bill of costs taxed to the tune of Shs. 8,000,000/= is in all the circumstances manifestly inadequate,** - **(2) The Registrar in his capacity as taxing master wrongly applied the principles of taxation to the matter before him,**

**(3) The Registrar in his capacity as taxing master failed to take into account the amount of research done by Counsel and the magnitude of responsibility shouldered by Counsel for the Appellants (Applicants) in advising.**

The significant complaint as can be summed up from the above grounds is that the instruction fee that was taxed and allowed as Shs. 8,000,000/= was in all the circumstances manifestly inadequate. Counsel for the Applicant contended that the inadequate award was due to the fact that the taxing officer did not properly apply the principles of taxation to the situation of this case. He submitted that the taxing officer firstly did not consider the amount of research carried out by Counsel for the Applicant in the case. Secondly, that the taxing office did not take into account the value of the subject matter involved in the appeal. He argued that these failures by the taxing officer when assessing the instruction fee in this case, resulted into the inadequate award. He criticised the taxing officer for stating that the striking out order made on appeal was an interlocutory order, yet there was no more pending suit between the parties in respect of the same subject matter.

Counsel for the respondent did not agree with the above submissions. She contended that the instruction fee that was allowed was fair and reasonable. In her view, the taxing officer properly applied the principles of taxation and in his discretion determined the amount which he considered reasonable instruction fee for that appeal.

The law which governs determination of instruction fee by a taxing officer is to be found in paragraph 9(2) of the third schedule to the Rules of this court. It provides:-

"The fee to be allowed for instructions to appeal or to oppose an appeal, shall be a sum that the taxing officer considers reasonable, having regard to the amount involved in the appeal, its nature, importance and difficulty, interest of the parties, the other costs to be allowed, the general conduct of the proceedings, the fund or person to bear the costs and all other relevant circumstances."

As stated by Mulenga, JSC in **Bank of Uganda vs. Banco Arobe Espanol, Civil Application No. 23 of 1999** (scu), that rule permits the taxing officer when determining what in a given appeal is a reasonable sum for instruction fee, to have regard inter alia, to the amount involved in the appeal. I would add that some of the factors which the taxing officer is to have regard to, are the nature of the appeal, its complexity, the general conduct of the proceedings and other relevant circumstances.

In the instant case, the taxing officer directed his mind to paragraph 9 (2) of the Third Schedule to the Rules of this Court. He also directed his mind to the principles set out in **Makula International Ltd. vs. His Eminence Cardinal Nsubuga and Anor (1982) HCB 11 at p. 15** that:

- (a) costs cannot be allowed to rise to such a level as to confine access to court to the wealthy, - (b) a successful litigant ought to be fairly reimbursed for the costs he has incurred,

- (c) the general level of remuneration of advocates must be such as to attract recruits to the profession, and - (d) so far as practicable, there should be consistency in the awards made.

With those guidelines set out in paragraph 9 (2) (supra) and those principles in **Makula International Ltd. (supra)** in mind, the taxing officer considered the question of the value of the subject matter involved in the appeal and found none.

He said:

"It follows that the order to strike out the plaint was merely interlocutory and the value of the subject matter cannot be considered in assessing instruction fee - See **Bank of Uganda vs. Banco Arobe Espanol (supra)**."

The learned taxing officer also considered the research carried out by counsel for the applicant vis-à-vis the complexity of the case and held that the amount of the research was not necessitated by the complexity of the case.

I agree with the taxing officer. The monetary claim was not relevant for the determination of the appeal which arose from a preliminary objection challenging whether or not the plaint disclosed a cause of action. This case, therefore, differs from **Development Finance Company Ltd. and 2 others vs Uganda Polybags, Civil Appeal No. 58 of 1998**, which counsel for the applicant relied on. In that case, the value of the subject matter was Shs. 8m/= while in the instant case, there was no value to the preliminary objection.

Under paragraph 9(2) (supra) the amount allowed by a taxing officer as a reasonable sum for instruction fee in a given appeal is the result of his exercise of a judicial discretion. To that extent, therefore, a Judge on appeal should interfere with the amount only on being satisfied that the taxing officer applied a wrong principle and that the error substantially affected his decision on the quantum and that upholding that amount would cause injustice to one of the parties. That was the view held by the **Supreme Court in Bank of Uganda vs Banco Arabe Espanol (supra)**. I respectfully agree with that view.

In the instant case, I cannot fault the taxing officer on the principles he applied and on their application. He rightly applied the principle of consistency of instruction fee where practicable to avoid confining access to court only to the rich. There is, therefore, no justification to interfere with the amount he allowed as a reasonable sum for instruction fee for that appeal.

Counsel for the applicant criticised the taxing officer for describing the order made on appeal, striking out the plaint, as merely interlocutory, yet, there was no more pending between the parties, any suit in respect of the same subject matter. as to when a judgment or order is interlocutory or final, was considered by Mulenga, JSC in **Bank of Uganda vs Banco Arobe Espanol (supra)** in which he adopted the test from the judgment of Lord Alverstone, CJ in **Bozson vs Altringham Urban District Council (1903) IKB 547 and 548** which reads:

"It seems to me that the real test for determining this question ought to be this: Does the judgment for order, as made, finally dispose of the rights of the parties? If it does, then I think it ought to be treated as a final order, but if it does not, it is then in my opinion an interlocutory order."

I respectfully agree with that test. In the instant case, the respondents had sued the applicant for recovery of a debt of Shs. 839,030,582/=. The order made on the appeal struck out the plaint. It did not dispose of the question of liability of the applicant. Applying the above principle, therefore, the order was interlocutory. The learned taxing officer was, therefore, right.

In the result, the reference is dismissed with costs to the respondent. The amount allowed by the taxing officer as instruction fee is upheld.

Dated at Kampala this……….20th…………day of ……. September, ……….2001.

G. M. Okello JUSTICE OF APPEAL.