Lumweno & Co. Advocates v Transafrica Assurance Company Ltd (Civil Appeal No. 95 of 2004) [2014] UGCA 99 (25 February 2014)

#### THE REPUBLIC OF UGANDA

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

## CIVIL APPEAL NO. 0095 OF 2004

# (ARISING OUT OF MISCELLANEOUS APPLICATION NO. 169 OF 2004, ARISING FROM MISCELLANEOUS APPLICATION NO. 557 OF 2002, AND HCCS No. 866 of 1998)

#### LUMWENO AND COMPANY ADVOCATES

#### **VERSUS**

#### TRANSAFRICA ASSURANCE COMPANY LIMITED

#### **CORAM:**

#### HONORABLE JUSTICE RICHARD BUTEERA, JA

HONORABLE JUSTICE SOLOMY BALUNGI BOSSA, JA

#### HONORABLE JUSTICE KENNETH KAKURU, JA

## JUDGMENT OF THE COURT

This is an appeal from the decision of the Honorable the Principle Judge, Mr. Justice James Ogoola dated October 20, 2004.

The background to the appeal is a follows. The Respondent instructed the Appellant to defend it in High Court Civil Suit No. 566 of 1998. The Respondent filed a defense and made three court appearances in the High Court. The Respondent subsequently withdrew instructions from the Appellant. On August 16, 2002, the Appellant presented to the Respondent a bill of costs in the sum of shs. $63,805,266.67/$ =. In accordance with the section 57 of the Advocates Act and the Advocates (Remuneration and Taxation of Costs (Amendment) Rules 1996, the Appellant through an application by Notice of Motion sought leave from the High Court vide Miscellaneous Application No. 557 of 2002 to tax his bill of

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$\wp \mathcal{V}$

costs. The Assistant Registrar, His Worship John Eudes Keitirima (as he then was) taxed and allowed item 1, entitled "Instructions to defend a suit against TransAfrica Assurance Company Limited..." at shs. $47,135,950/=$ .

The Respondent referred the matter to a single Judge of the High Court under Rule 3 of the *Taxation of Costs (Appeals and References Rules* SI 258-6 and Section 62(1) of the Advocates Act (Cap 267) vide Miscellaneous Application No 169 of 2004. Through this application, the Respondent moved court for orders that the order of the Assistant Registrar taxing and allowing the Appellant/Advocate's Bill of Costs at $48,353,950/$ = be set aside, and that an order to the effect that shs. $27,000,000/$ already paid to the Appellant Advocate be substituted therewith. At the time, the Appellant had been paid shs. $17,000,000/=$ (seventeen million shillings only) and a further $10,000,000/=$ (ten million only), which the Respondent considered as part of the instruction fees while the Appellant stated that it was for different work. The Appellant conceded at the hearing of this appeal that the shs. $10,000,000/=$ was part of his instruction fee.

The learned Principal Judge James Ogoola (as he then was) heard the reference and relying on Regulation 2(2) (b) (now 3(2) (b) of the Laws of Uganda 2000 Edition), held that firstly, it embraced the principle of appropriate refund of an advocate's professional fees upon the withdrawal of the advocate from the conduct of his client's case. Secondly, the refund should be proportionate to the work done by the advocate-i.e., fees that have not been earned by the advocate. Thirdly, the measure by which the proportionality of the fees to be refunded is determined depends on the circumstances of the case. He therefore determined that a proportionate refund of an advocate's instruction fee is envisaged under the Advocates (Remuneration and Taxation of Costs) Rules, 1977. He further held that the taxing officer's discretion was exercised on the wrong principle, namely that the full instruction fee to defend a suit is earned the moment a defense has been filed. The matter was accordingly

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remitted to the learned Registrar for further assessment of the advocate's bill of costs, in accordance with the principle of proportionality. He further relied on the Mayers v. Hamilton (supra) which he considered to be closer to the Ugandan situation than the case of Joreth Limited v Kigano and Associates (supra).

The Appellant was dissatisfied with the decision of the Honorable the Principal Judge and appealed against the whole of the decision. The grounds of appeal are set out in full below;

- 1. The Learned trial Judge erred in law by applying the wrong principles of law when he held that a lawyer is not entitled to the whole of the instruction fee when the matter is withdrawn from him. - 2. The Learned trial Judge erred in law by holding that a lawyer is entitled to refund the instruction fee once the matter has been withdrawn from him. - 3. The Learned trial Judge erred in law by holding that the instruction fee is determined by the subsequent progress of the matter. - 4. The Learned trial Judge erred in law and fact by holding that the Appellant had been paid shs. 27,000,000/= (shs. Twenty seven million only) by the Respondent which evidence was not on record or admitted.

The Appellant asked for orders that;

- the above mentioned decision be set aside $(a)$ - $(b)$ the appeal be allowed - the Appellant be given costs of the appeal and in the lower court $(c)$

At the hearing of this appeal, Counsel Yesse Mugenyi represented the appellant while Counsel Bernard Tumusingize represented the Respondent.

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## Appellant's submissions

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At the hearing, learned Counsel Mugenyi for the Appellant argued ground 3 separately, grounds 1 and 2 together and ground 4 separately and presented them in that order.

Counsel submitted that the learned Principal Judge erred when he determined that upon filing of the pleadings, the subsequent progress of the matter is enormously relevant to the true determination of the appropriate amount of the instruction fee. Relying on the authority of Joreth Limited v Kigano and Associates [2002] 1 EA 92 from the Kenyan Court of Appeal, Counsel argued that an advocate was entitled to full instruction fees on filing the pleadings. He urged this Court to rely on it, describing it as good and persuasive. He submitted that the learned Principle Judge had introduced a new doctrine of proportionality which was He also submitted that the authority of the Kenyan case of wrong. Mayers v. Hamilton [1975] EA 16 relied on by the learned Principal Judge was decided *per incuriam*, was old law and was a hypothetical case as opposed to the former case, where the advocate was claiming for work actually done. He therefore asked court to uphold this ground of appeal.

On grounds 1 and 2, Counsel Mugenyi faulted the learned Principal Judge for relying on *Regulation 2(2)(b)* of the Advocated (Professional *Conduct) Regulations.* According to Counsel, these Regulations deal with a situation where an advocate chooses to withdraw from a matter, and is required to make a refund. The facts in this case were different. In the instant case, it is the client who was withdrawing instructions. The legislature did not intend to provide for a refund in these circumstances, otherwise it would have said so. It was dangerous to allow a client to claim a refund when he has withdrawn instructions from an advocate. It was not an entitlement and was not anticipated by law.

He further submitted that instruction fees were created as a separate item Advocates (Remuneration and Taxation of Costs) in the Amendment Rules. An advocate was entitled to charge for any

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subsequent work. The law intended that other works should be treated separately from instruction fees. $\frac{1}{2}$

Regarding ground 4. Counsel submitted that the learned Principal Judge erred when he held that the appellant had been paid shs. 27,000,000/= (twenty seven million only). At the taxation hearing, the parties had agreed that shs. 17 million (seventeen million shillings only) had been paid to the appellant. There was no evidence led to the effect that shs. $10,000,000/=$ was for instruction fees.

### **Submissions of the Respondent**

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$\big)$

Learned Counsel for the Respondent, Mr. Tumusingize, responded to the issues following the order in which Mr. Mugenyi addressed them. On the Kenvan case of **Joreth Limited v Kigano and Associates (supra)**, he submitted that the quotation relied on by Counsel for the Appellant was an assertion by the Judge reiterating a ground of appeal, which the court did not even pronounce itself on. It was not a finding of the court.

On the Mayers v. Hamilton (supra), he submitted that although the case was old, it was still good law. The judgment was not based on a hypothetical situation. Rather, the hypothetical situation was only used to bolster the facts in the case.

On grounds 1 and 2, he submitted that it is not true that *the Advocates* (Professional Conduct) Regulations 267 (2) applies only where the lawyer has withdrawn from the case himself. It applies to the scenario where Counsel asks the court to permit him to withdraw and where the client himself or itself withdraws instructions. He argued that where an advocate intends to withdraw from the conduct of a case, the advocate shall refund to his or her former client such proportionate professional fees as have not been earned by him or her in the circumstances of the case. Therefore, proportionate refund was not a new and dangerous concept.

On ground 4, he submitted that the learned Judge did not make a ruling that the appellant had been paid shs. 27,000,000/= (twenty seven million

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shillings only). The dates on the cheques for shs.10, 000,000/ $\approx$ (ten million shillings only) show that this money had been received for that case. He cited the case of Patrick Makumbi and another v. Solar Electrics **Uganda** Ltd as laying down the principles that govern taxation of costs and what constitutes instruction fees. He submitted that *the Sixth* **Schedule** talks of instructions to sue or defend and that mere filing of a Written Statement of Defense (WSD) did not amount to defending the suit. He argued that there should be a difference between a person who merely files pleadings and stops there and one who finishes a case. He drew analogies regarding the instructions fees under summary procedure where an advocate gets a certain percentage of the full fee, depending on whether there has been an application for leave to appear and defend, whether it has been refused or if a suit is settled prior to fixing the first hearing date. He argued that this is evidence that the law recognizes that there are situations where a full fee will not be payable because the matter has been concluded early or where the work has not been completed. There was a lacuna in the law. This court was enjoined by the *Judicature Act* to apply rules of equity. This is a proper case to apply the principle a quantum merit. Full instruction fees should be earned when one has completed the case because to decide otherwise would be to get lawyers to be paid for work they have not done. He relied on the case of *Lion* **Assurance v. Kasekende** for the proposition that it is an error of law to award the entire instruction fees where a suit is only partially handled because subsequent Counsel is entitled to the portion of the same instruction fees under the Rules.

$\mathcal{U}$ .

In response, Mr. Mugenyi submitted that Regulation 2(2) (b) talks of professional fees which term was not defined by the Advocates Act. Therefore, there was a lacuna, where professional fees actually include instruction fees. Regulation 27 of the Advocates (Professional *Conduct) Regulations* states that no advocate shall charge a fee which is below the specified fee under *the Advocates (Remuneration and* Taxation of Costs) Rules. In this case the taxing officer carried out the

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taxation and the minimum fee was shs.47, 135,959/=. On filing pleadings, a lawyer becomes entitled to the minimum instruction fees. Any work that s/he does subsequently becomes professional fees. If s/he instructs other lawyers, then s/he will have to pay separate instruction fees to them. He concluded that since a lawyer cannot charge less than the bare minimum, the appellant should be granted the minimum instruction fees. *Regulation* 3 of the Advocates (Professional Conduct) Regulations provides for a scenario where an advocate may withdraw from conducting a matter. When the client withdraws, instruction fees are not mentioned. All it says is that when a client withdraws, then the advocate has to withdraw.

## Principles governing taxation of costs

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In resolving this matter, we have kept in mind the principles of taxation as set down by the defunct East African Court of Appeal in the case of Premachand Raichand Limited and another v Quarry Services of East Africa Limited and another [1972] EA 162 and as reiterated by the Supreme Court in the case *Ebrahim A Kassim and 2 others v* Habre International Limited Reference No. 16 of 1999. They are:

- 1. Costs should not be allowed to rise to such a level as to limit access to the courts to the wealthy only. - 2. A successful litigant ought to be fairly reimbursed for the costs he has to incur and should not be allowed to make a profit out the practice of the advocate. - 3. The general level of remuneration of advocates must be such as to attract recruits to the profession. - 4. So far as practicable there should be consistency in the awards made.

Also, this Court should not interfere with the decision of a taxing officer unless it is shown that either the decision was based on an error of principle, or the fee was awarded so manifestly excessive as to justify interference that it was based on an error of principle. (See Steel

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## Construction Petroleum Engineering (EA) Limited v Uganda Sugar Factory [1970] EA 141).

In addition to the above principles, there are specific provisions governing the remuneration and taxation of costs of advocates that were quoted and relied on by both the learned Taxing Officer and the learned Principal Judge. We have kept them in mind in examining the issues.

As a preliminary matter, we note that Regulation 2(2) (b) of the Advocates (Professional Conduct) Regulations was renumbered 3(2) (b) in the Laws of Uganda 2000 Edition. We further note that **Regulation 27** of the same Regulations was renumbered 28. We further note that in the judgment of the learned Principal Judge and that of the Taxing officer, the Regulation is referred to as *Regulation 2(2) (b)*. On our part, we have used the new numbering in this judgment.

We now proceed to resolve the issues in the manner they were argued before us starting with ground 3, which according to the Appellant was that an advocate is entitled to full instruction fees on filing and subsequent progress on a case was not relevant.

The decision in our view hinges on what "defending" a suit means. If a lawyer files a WSD, and does no more or does more but his brief is terminated before the matter goes to full trial, is he deemed to have defended the case?

The Advocates (Remuneration and Taxation of Costs) Amendment Rules, Sixth Schedule Rule 1(a)(i) to (iv) provides as follows;

- $\mathcal{I}.$ "Instructions to sue or defend - Subject as hereafter provided, the fees for instructions shall $(a)$ be as follows - To sue in an ordinary suit in which no appearance is $(i)$ entered under Order XXXVI of the Civil Procedure Rules where no application for leave to appear and defend is made, the fee shall be 65% of the fees chargeable under item 1(a)(iv) of this Schedule;

- (ii) To sue or defend in a suit to which the provisions of Order XXXVI of the Civil Procedure Rules apply in which an application for leave to appear and defend was made and refused, the fee shall be 75% of the fee chargeable under *item 1(a)(iv) of this Schedule* - In a suit where a settlement is reached prior to (iii) confirmation of the first hearing date of the suit, the fee shall be 85% of the fee chargeable under item 1(a)(iv) of this Schedule: - To sue or defend in any other case or to present or oppose $(iv)$ an appeal where the value of the subject matter can be determined from the amount claimed or the judgment\_ - Where the amount does not exceed 500,000/= $(A)$ shillings 121/2 per cent on the amount claimed..."

The Supreme Court has given guidance on what instruction fee should cover. It has stated (Kikonyogo JSC) in the case of *Ebrahim A Kassim* and 2 others v Habre International Limited (supra) that;

"The principles governing taxation of costs by a taxing master are well settled. Firstly the instruction fee should cover the advocates' work including taking instructions and any other work necessary for presenting the case for trial or appeal...."

It has also held that whilst the successful litigant is entitled to a fair reimbursement of the costs he has incurred, the taxing master must take into consideration the public interest.

Therefore, presenting a case for trial i.e. prosecuting it or defending it may be a short or prolonged process, depending on the circumstances of each case. While we accept that there are scales given for suing or defending in contentious matters and appearances and disbursements may be charged for separately under The Advocates (Remuneration and Taxation of Costs) Amendment Rules, we are of the view that defending a case involves more than taking instructions. To quote the Supreme Court in the case of Ebrahim A Kassim and 2 others v Habre International Limited (supra) instruction fee covers "the advocates' work

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## including taking instructions and any other work necessary for presenting the case for trial or appeal".

This would necessarily include industry in presenting a case through the trial phase. It could not have been the intention of the legislature that an advocate who only files pleadings or one who files and appears in court two or three times without the case proceeding on its merits would be remunerated in the same way as one who conducts the case heard on its merits. Logic and equity would dictate against it.

Moreover, if every subsequent advocate instructed by the same party in the same case were to charge the same instruction fee, justice would be out of reach for the majority.

# Therefore, the scales laid down in *The Advocates (Remuneration and Taxation of Costs) Amendment Rules, Sixth Schedule* Rule 1(a) (IV) are applicable to cases where a full defense has been mounted.

The list is therefore not exhaustive. We do not consider that the rules specifically provide for every scenario. Our view is that instruction fee may vary, and that the taxing officer is given the latitude to adjust it to suit the circumstances of a particular case, if there is no specific agreement thereon between the parties. The guide for situations not provided for is to be found in the Advocates (Professional Conduct) Regulations **Regulation 28 (2)** which provides that where fees are not specified, the advocate shall charge such fees as in the opinion of the Disciplinary Committee are not excessive or extortionate.

This Rule has to be read together with *Rule* $3(2)$ of the Advocates (Professional Conduct) Regulations SI 267-2. Regulation 3(1) (a) thereof states that;

"3 (1) An advocate may withdraw from the conduct of a case on behalf of a client where

$(a)$ the client withdraws instructions from the advocate;


$(b)$ $\overline{ }$ $(c)$ $\overline{ }$ $\ldots''$ $(d)$

(2) Whenever an advocate intends to withdraw from the conduct of a case, the advocate shall

(a) Give his or her client, the court and the opposite party sufficient notice of his or her intention to withdraw; and

(b) Refund to his or her former client such proportionate professional fees as have not been earned by him or her in the circumstances of the case."

It would not be logical that when an advocate withdraws from a case on his own volition, he has to refund what he has not worked for but when it is the client who has withdrawn instructions, he would have no obligation to make such refund. A client may withdraw instructions for various reasons. It may be due to the inefficiency of the advocate or the dissatisfaction with the advocate's professional work or even misconduct of the advocate. Why should such a client be treated differently from the one where the advocate chooses to withdraw? In all scenarios, the advocate should not retain what he has not worked for.

**Regulation 3(2) (b)** clearly and fairly addresses this matter. Regardless of whether the advocate has withdrawn on his own volition or at the instance of withdrawal of instructions by a client, an advocate is enjoined by this *Regulation* to refund to his or her former client such proportionate professional fees as have not been earned by him or her in the circumstances of the case. Whatever the circumstances of withdrawal, an advocate is under a duty to refund money that he may not have appropriately earned. It was meant to guard against unjust enrichment.

Our understanding of the circumstances of this case is that the Respondent withdrew instructions from the Appellant and the Appellant in turn withdrew from the conduct of the case and proceeded to file a bill of costs. It was then incumbent on the appellants to refund any moneys that had not been earned. We therefore consider and it is our judgment that the

principle of proportionate refund is applicable where a client chooses to withdraw instructions, and based on that the advocate also decides to withdraw from conducting a case. In the present circumstances though, the appellant considers that he is owed money instead and that the money paid to him was not enough. That an advocate is required to refund money in certain circumstances is recognition that despite the scales, work done is equally important and should be commensurate with remuneration.

### The case of *Mayers v. Hamilton* (supra)

We also consider that the case of *Mayers v. Hamilton* (supra) is still good law. We understand that it is an appeal from Kenya to the defunct East African Court of Appeal. At the time it was decided, the applicable scales were contained in Kenyan Schedule VI to the Advocates (Remuneration) Order. However, the judgment was largely based on the rule from England as applied to the facts of that case. It is the principle laid down therein that is of importance to us.

There, it was argued that the instruction fee is one and indivisible and becomes chargeable as from the moment that the instructions are given. Spry Aq. President in the lead judgment stated as follows:

"... I accept that the moment an advocate is instructed to sue or defend a suit, he becomes entitled to an instruction fee but...will not ordinarily become entitled at the moment of instruction to the whole of the fee which he may ultimately claim. ... The advocate would, as I see it, be entitled to claim the minimum instruction fee. But he could not claim in respect of work s/he has not done. The entitlement under instruction fees grows as the *matter proceeds...."*

In our view, there was no hypothesis regarding the decision in the *Mayers* v. Hamilton case. The basis for the decision of their Lordships has to be understood from the unique facts of that case. Two companies filed a suit. After the filing but before service, an order to wind up the first plaintiff company was made and a provisional liquidator was appointed. The appellants, who were the defendants in the suit, thereupon filed an


application asking that the suit against the first plaintiff company be stayed and struck out for lack of authority. They also asked for costs against the advocates for the company, who were the respondent in the appeal. An order was made as prayed. The respondents appealed against the order for costs and lost. The appellants lodged their bill of costs through their advocates. The respondents objected to certain items in the bill of costs, through a reference to a Judge of the High Court. The Judge set aside the decision of the taxing officer and remitted the matter to a different taxing officer for reassessment of those items. The appellants appealed against that decision. The alleged misdirection concerned instruction fees, which the Judge found to be manifestly excessive. The Court of Appeal found that the action of against the first plaintiff company had been discontinued and the costs ordered were those incurred as a result of the unauthorized continuation of the suit in the name of the first plaintiff company. The court also held that the appellants could not receive a full instruction fee, based on the total amount involved in the suit and all the complexities of the suit as a whole, noting that a successful party is to be recompensed for the liability he has reasonably incurred in defending himself. It also held that the taxing officer was under a duty to consider to what extent the instruction fee related to the claim by the first plaintiff company and to allow only such amount as was appropriate to it.

The learned Judge stated;

"The general rule of practice in England should, I think, normally be followed in the courts of East Africa, where one of two plaintiffs or defendants succeeds or fails. It would, in my view, be quite wrong if the appellants were now to receive a full instruction fee, based on the total amount involved in the suit and all the complexities of the suit as a whole, and later, if they succeed against the second plaintiff company, receive a second instruction fee covering largely the same ground. It was said, in Ellingsen v Det Skandinaviske Compani, [1919] 2 K. B. 567, the judgment of the court prepared by Scrutton, L. J., that 'the principle of allowance of costs is that the successful party is to be recompensed the liability he has reasonably incurred in defending himself.'"

We do not understand this case to lay down a rule that an advocate is not entitled to a minimum instruction fee. The full import of that decision is that an advocate will not ordinarily become entitled at the moment of instruction to the whole fee which he may ultimately claim. He is however entitled to a *minimum* instruction fee. We should add that that fee may be subject to adjustments as it may not reflect what the advocate's work in the case wholly. The whole picture of his input only emerges as the case progresses.

We therefore agree that the entitlement under instruction fees grows as the matter proceeds. A case that ends on a technicality cannot attract the same fees as the one that proceeds for trial. By the same logic, an advocate who only files pleadings and makes a few appearances cannot be remunerated the same way as one who takes a case through a full blown trial. At the end of the case, a minimum fee may be reviewed upwards or even downwards, based on the advocate's involvement, complexity and other related matters.

In this case, the learned Principal Judge found that the Respondent's case was not heard on the merits. The reasons this was not done were that first, the parties agreed to reserve the hearing pending completion of an arbitration of a sister case. Second, the Respondent's clients subsequently withdrew their instructions from the Respondent. He decided that the money already earned by the Appellant was sufficient remuneration for the work that he had covered. We see no problem with his findings and decision. We accordingly uphold both.

We now turn to Regulation 28 of the Advocates (Professional Conduct) Regulations SI 267-2) which was relied upon by Counsel Mugenyi to justify the argument that his client was entitled to a minimum instruction fee. It provides;

#### "Excessive fees

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> No advocate shall charge a fee which is below the specified fee under the $(1)$ Advocates (Remuneration and Taxation of Costs) Rules

> > $\overline{14}$

### $(2)$

The learned Principal Judge examined this rule and noted that the Appellant charged an instruction fee purely on the basis of a given specified percentage of the total amount of the subject matter of the suit. By the Appellant's calculation, the base amount for this calculation was shs. 4.6 Billion, to which he applied item number 1(a) (IV) (e) of the *Sixth* Schedule to the Advocates (Remuneration and referred to as Taxation of Costs) (Amendment) Rules 1966.

The learned Principal Judge held that *Regulation 28* (referred to as Regulation 27 in his judgment) of the Advocates (Professional **Conduct) Regulations** that provided that no advocate shall charge a fee which is below the specified fee under *the Advocates (Remuneration* and Taxation of Costs) Rules was not a complete bar to a challenge. He then stated;

"Where there was controversy about the justification for the charging of a given fee, the law provides for an appropriate resolution through the taxation of such fees by the Taxing Officer. To put it differently, in the contentious case now at hand, it would not be the advocate charging below the specified fee. Rather, it would be the Registrar (or this Court) that would be making the appropriate adjustment to the fee already charged by the advocate..."

For the reasons we have given above, we fully agree with his decision. Advocates (Remuneration and Taxation of Costs) Amendment Rules, 1977 acknowledges the right of a client to proportionate refund, thus providing against unjust enrichment.

While we accept that an advocate is not allowed to charge a client below the minimum fee allowed by the Rules, this does not fetter the discretion of the taxing officer to determine whether the amount charged is commensurate with the work done.

The minimum fee laid down in the Advocates (Remuneration and Taxation of Costs) Amendment Rules is for defending a case. If an

advocate does not conduct his client's case to the end, and the situation is not one of those provided for in the rules, then a taxing officer is empowered to determine the appropriate fee.

We are also of the firm view that the principal of proportionality is reflected not only in The Advocates (Professional Conduct) Regulations of 1977 SI 79 of 1977 but also in the Advocates Act. Sections 48 and 50 of the Advocates Act provide for agreements with respect to remuneration for noncontentious business and for contentious business respectively. Even where an advocate and a client agree on remuneration under an agreement in a contentious matter or non contentious matter, under sections 48 and 50 of the Advocates Act, in certain circumstances, the taxing officer or court may reduce the amount paid under an agreement.

We also recall that an agreement between an advocate and a client is It is meant to guard against unjust enrichment. basically a contract. According to Black's Law Dictionary, 6<sup>th</sup> Edition, p. 1243, "quantum meruit as a means of recovery means 'as much as deserved' and measures recovery under implied contract to pay compensation as reasonable value of services rendered. It is an equitable doctrine, based on the concept that no one who benefits by the labor and materials of another should be unjustly enriched thereby; under those circumstances, the law implies a promise to pay a reasonable amount for the labor and materials furnished, even absent a specific contract therefor..."

The term *quantum meruit* is assigned different meanings, depending on the context. In some categories the term covers a quasi-contractual or restitutionary obligation based on incontrovertible benefit. In others the obligation is often capable of analysis as a genuine implied contract based on a request, free acceptance or acquiescence while in others the basis of liability appears to be the protection of the plaintiff's reasonable reliance rather than the unjust enrichment of the defendant (see Chitty on **Contracts General Principals Sweet and Maxwell Number 1 27<sup>th</sup>** edition 29-122 pp. 1483 and 1484) The meaning that concerns us here however relates to Quantum meruit for work done where the contract is terminated by breach. Chitty on Contracts (supra) goes on to state; "According to Winfield there is only one instance of quantum mergit which properly regarded as restitutionary. Alderson B, put it as follows: 'Where one party has absolutely refused to perform, or has rendered himself incapable of performing, his part of the contract, he puts it in the power of the other party either to sue for a breach of it, or to rescind the contract and sue on a quantum meruit for the work actually done (De Bernardy v Harding (1853) 8 Exch. 822, 824). Thus in a leading case, Planche v Colburn (1831) 8 Bing. 14, the defendants engaged the plaintiff to write a volume for publication in the defendant's proposed series of the "Juvenile Library." After the plaintiff had written some of his work, the defendants abandoned the whole publication, and it was held that the plaintiff might, without tendering this completed work sue to recover reasonable remuneration for this work already done. In Prickett v Badger (1856) 1 C. B. (N. S.) *296*, an agent was employed to sell land and wrongfully revoked the agent's authority. The agent successfully sued for reasonable remuneration for his work and labor up to that date...the Privy Council has held that the measure of relief in a *quantum meruit* is the actual value of the work and that the profitability of the contract is irrelevant (Slowey v Lodder [1904] AC 442, (1900) N. Z. L. R. 321).

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$\bigg\rangle$

Although there are specific provisions in *The Advocates (Remuneration* and Taxation of Costs) Amendment Rules and The Advocates (Professional Conduct) Regulations that give guidance regarding the charging of instruction fees, the contractual principle of a quantum *meruit* applies to it.

Regarding the case of Joreth Limited v Kigano and Associates (supra), our understanding is that it approved the principal (obiter) that Instruction fee is an independent and static item, charged once only and is not affected or determined by the stage the case has reached. This implies a fixed unchanging figure, whatever the circumstances. This is an opinion expressed by the Court of Appeal of Kenya, which we do not find persuasive, for the reasons we have given above.

It is therefore our judgment that an advocate is not entitled to full instruction fees on filing and subsequent progress on a case is relevant.

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It is also our judgment that the learned Principal Judge did not err in law and applied the correct principles of law when he held hat a lawyer is not entitled to the whole of the instruction fee when the matter is withdrawn from him.

The Learned Principal Judge did not err in law by holding that a lawyer is entitled to refund an appropriate instruction fee, once the matter has been withdrawn from him.

It is also our finding that the Learned Principal Judge did not err in law by holding that the instruction fee is determined by the subsequent progress of the matter.

Like our learned brother Justice Kakuru, we find that the Appellant accepted shs. $27,000,000/$ = as full and final settlement of his instruction fees as is demonstrated by his letter of November 21, 2002.

It is necessary to reproduce the content of the letter, which was directed to Mr. Ashok K Sharma.

It goes thus;

#### "THE REPUBLIC OF UGANDA

## **MISCELLANEOUS APPLICATION NO. 557 OF 2002**

**COMPANY LUMWENO** AND $OF$ **MATTER IN** THE ................. APPLICANT ADVOCATES..........

#### **VERSUS**

# TRANSAFRICA ASSURANCE COMPANY LIMITED..... RESPONDENT

In view of the fact that we have had a good relationship with you we decided to withdraw the above mentioned matter from court.

We are therefore requesting you to pay us shs. 10,000,000/= on account payment the balance will be paid to us when the case is completed.

We expect payment to be made to us within 3 days or else we shall be constrained to resume the matter in court...."

Up to that point, the Appellant had accepted shs. 27,000,000/=. The balance was to be paid on completion of the case. As the case was not completed, we see no basis for the demand for more money made by the appellant. We thus consider that he is estopped from claiming more money for his services.

This appeal is therefore dismissed. We uphold the decision and orders of the learned Principal Judge. However, because of the importance of this matter to the legal profession, we make no order as to costs.

Dated this ...day of February, 2014 anthites Justice of Appeal Richard Buteera BBBoard Justice of Appeal Solomy Balungi Bossa

#### **THE REPUBLIC OF UGANDA**

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

#### **CIVIL APPEAL NO. 95 OF 2004**

#### **LUMWENO & CO. ADVOCATES ===================== APPELLANT**

#### **VERSUS**

#### **TRANSAFRICA ASSURANCE COMPANY LTD======== RESPONDENT**

### **CORAM: HON. MR. JUSTICE RICHARD BUTEERA, JA HON. LADY JUSTICE SOLOMY BALUNGI BOSSA, JA HON. MR. JUSTICE KENNETH KAKURU, JA**

#### **JUDGMENT OF HON. KENNETH KAKURU, JA (Dissenting)**

The issue before us in this appeal as I understand it is whether or not an advocate is entitled to full instruction fees upon receipt of instructions, and whether the subsequent progress of the matter is irrelevant. 15

Mr. Hatim Lumweno an advocate practicing in the name and style of M/s Lumweno and Company Advocates had been instructed by the respondent to defend them in a contentious matter, a suit at the High Court in which the value of the subject was stated to be Shs. 4,594,845,060/=. There seems to be no contention on that.

Apparently the respondent drew and filed a written statement of defence and made two or three appearances in Court. Subsequent to that the respondent withdrew instructions from him and instructed another advocate to complete the case. 20

There upon the appellant filed an advocate/client bill of costs which the taxing master taxed and allowed as instruction fees of Shs. 47,135,950/= based on the value of the subject matter.

The respondent being dissatisfied with the ruling of the Registrar appealed against the said ruling by way of references to the Hon. Principal Judge, The Hon. Mr. Justice James M. Ogoola, PJ. 25

The Principal Judge set aside the ruling of the taxing master and remitted the matter for taxation to be based on the principle of proportionality. The appellant appealed to this Court.

I have listened to the arguments of both counsel in this matter. I have also perused the court record and the authorities submitted by both parties.

The learned Principal Judge set out the issue before him in the following terms:- 5

> *"Whether an advocates instruction fees stipulated under the sixth schedule of the Advocates (Remuneration and Taxation of Costs) (amendment) Rules 1986 are adjustable proportionately in line with the quantity of work done by an advocate for his client or whether such fees are chargeable simply on a sliding scale in accordance with the quantum of the subject matter of the suit or dispute"*

The learned Principal Judge at page 3 of his Judgment again rephrased the issue as follows:-

*"Is an advocate's instruction fees pro-ratable to match the amount of work actually performed by the advocate in his/her client's case or is it a static figure which has reference only to the quantum of the underlying claim in the suit"*

The learned Principal Judge then concluded at P.7 of his judgment as follows:- 15

> *"I find that in the instant case, the taxing officer's discretion was exercised on a wrong principle, namely, that the full instruction fee to defend a suit is earned the moment a defence has been filed.*

The learned Principal Judge came to the above conclusion following the decision of the **East African Court of Appeal** in the case of **Mayers vs. Hamilton [1975] E. A page 16** in which **SPRY Ag V P** held that:- 20

> *".....an advocate will not ordinarily become entitled at the moment of instruction the whole fee which he may ultimately claim"*

And he also relied on **Regulation 2 (2) (b)** which is now **3 (2)** of the **Advocates (Professional Conduct) Regulations** which reads as follows:- 25

*3(2) whenever an advocate intends to withdraw from the conduct of a case such an advocate shall;*

- *(a) Give...... sufficient notice* - *(b) Refund to his former client such proportionate professional fees as has not been earned by him in the circumstances of the case.*

The **Mayers case (supra**) was decided in 1975. First and foremost the facts of that case are different from the one at hand.

Secondly the appeal was decided upon the interpretation of Schedule vi of the Advocates (Remuneration) Order which has since been repealed (Statutory Instrument No. 258-5 Volume xiii P.3620 (Laws of Uganda 1964 subsidiary legislation). It provides as follows:-

#### **"SCHEDULE VI**

#### **COSTS IN THE HIGH COURT**

Subject as herein provided the fee for instructions shall be as follows:-......

Provided that:-

- *(1) The taxing officer may at his discretion take into consideration the other fees and allowances (if any) to the Advocate in respect of the work which any such allowances.....the nature and importance of the cause or matter, the amount involved, the interest of the parties, the general conduct of the proceedings and all other relevant circumstances"* 15 - As already noted above these rules which date as far back as 1959 were revoked by Rule 57 of Statutory Instrument No. 123 of 1982 which brought into force the 'The Advocates (Remuneration and Taxation of Costs) Rules 1982'. 20

Schedule six of the new rules differs in a fundamental way from the same schedule of the old rules. Because of the prevailing inflation at the time, i suppose, costs were to be determined by

percentages and not on specific amounts. 25

Whereas for example under the old rules (258-5) 1(c) provided in part in respect of the maximum fees chargeable as follows:-

**(c)** "To sue or defend in any other case present or oppose an appeal where the value of the subject matter can be determined from the pleadings or the judgment"

| Where such value exceeds (Shs) | But does not exceed (Shs) | Shs. | |--------------------------------|---------------------------|-------| | 2,000 | 3,000 | 300 | | 3,000 | 5,000 | 500 | | 5,000 | 10,000 | 750 | | 10,000 | 20,000 | 1,000 | | 20,000 | 100,000 | 2,000 | | 100,000 | 200,000 | 4,000 | | 200,000 | | 5,000 |

The maximum fees chargeable in any case the value of which exceeded 200,000/= was fixed by the rules as Shs. 5,000/=

In the sixth Schedule of 1992 Rules percentages were applied. **Rule 9(c)** of that schedule provides that where the value of the subject matter exceeds 20,000,000/= one percent is chargeable on any every amount in excess of 20,000,000/=.

A glance at the fees chargeable under the old rules and those chargeable under the 1992 clearly indicates in my view that the latter rules were addressing inflation that had at the time eroded the value of the Uganda shilling. The introduction of the percentages was to address this mischief.

These new rules did not reproduce the proviso in the old rules upon which the **Mayers case**

(**supra)** had been decided. The learned trial judge therefore applied a wrong principle when he decided the reference based on that case. I find that, for the above reason the **Mayers case** is no longer good law. 15

With all due respect I do not agree with **His Lordship Justice Madrama, J** who while considering a case similar to this appeal **(Lion Assurance Company Ltd versus Kasekende Kyeyune and Lutaaya Advocates); High Court Misc. Application No. 358 of 2013** in respect of the Mayers case (supra) he stated as follows:-

- *"The decision of the East African Court of Appeal sitting as Nairobi in the above case was clearly based on the discretionary powers of a Taxing Master confirmed by the revoked proviso quoted above. There is clearly a lacuna in the law in so far as the current regulations do not deal with the situation in an advocate/client bill of costs where the advocate does not pursue the suit to its logical conclusion"* 5 - I do not agree that there is a lacuna in the law. Even if it were, it would not be the duty of any court of law to substitute itself for the legislature and fill in the lacuna. 10

Again with respect I do not agree with **Hon. Madrama, J** when in **The Lion Assurance (supra)** he held as follows:-

*"In the circumstances where the advocate has not completed instructions i.e. by completing handling of the suit he or she was instructed to file, the logical thing to do would be to establish the actual instruction fees according to the scale where the subject matter of the suit is ascertained.*

*Secondly because the appellant subsequently instructed other counsel while the same suit is pending the duty is on the counsel (sic) to negotiate the question of fees because the client cannot be charged twice".*

I think the intention of the legislature has to be ascertained from the statute. It cannot be inferred from what court considers to be logical. It is too subjective a test. Judges are not called up to apply their opinions of sound policy so as to modify the plain meaning of statutory words unless of course doing otherwise would result into an absurdity or would lead to manifest injustice. (See

#### **Nokes vs. Doncaster Amalgamated Colieries [1940] AC 1014** and **Mattison versus Hert [1854] 23 LJ CP 108**. 25

I would borrow the words of **Lord Loreburn L. C in Vickers versus Evans [1910] AC** at P.444 where he states that;

*"It is a strong thing to read into an act of Parliament words which are not there and in absence of clear necessity, it is a wrong thing* to do"

In this particular case the law granting discretionary power to the taxing master to award costs taking into consideration "all other relevant circumstances" was repealed.

It means in my humble view that the taxing master is restricted now only to apply schedule six of the current regulations and award costs only as set out under those regulations. Nothing more nothing less. 5

Regulation 28 of Statutory Instrument 267-2 cited by the learned Principal Judge read together with Regulation 4 of Statutory Instrument No. 267- 4 is to the effect that "No advocate shall

charge a fee which is below the specified fee under the Advocates (Remuneration and Taxation of Costs) Regulations. I fact it is a disciplinary offence to do so. In my view a taxing master cannot award costs less than what is stipulated under the rules. What has to be ascertained therefore is the fee chargeable in contentious matters in High Court under the current rules. 10

For clarity I have reproduced the sixth schedule in part.

## *Sixth Schedule.* 15

## *Costs in the High Court and Magistrates Courts.*

- *1. Instruction to sue or defend* - *(a) Subject as hereafter provided, the fees for instructions shall be as follows:-* - *(i) To sue in an ordinary suit in which no appearance is entered under Order XXXVI of the Civil Procedure Rules where no application for leave to appear and defend is made, the fee shall be 65 percent of the fees chargeable under item 1(a) (iv) of this Schedule;* - *(ii) To sue or defend in a suit to which the provisions of Order XXXVI of the Civil Procedure Rules apply in which an application for leave to appear and defend was made and refused, the fee shall be 75 percent of the fee chargeable under item 1(a)(iv) of the Schedule;*

- *(iii) In a suit where settlement is reached prior to confirmation of the first hearing date of the suit the fee shall be 85 percent of the fee chargeable under item 1(a) (iv) of this Schedule;* - *(iv) Tom sue or defend in any other case or to present or oppose an appeal where the value of the subject matter can be determined from the amount claimed or the judgment-* - *(A) Where the amount does not exceed 500,000 shillings 12 ½ percent on the amount claimed;* - *(B) Where the amount exceeds 500,000 shillings but does not exceed 5,000,000 shillings - 12 ½ on the first 500,000 shillings and 10 percent on the next 4,500,000 shillings;* - *(C) Where the amount exceeds 5,000,000 shillings but does not exceed 10,000,000 shillings – 12 ½ percent on the first 500,000 shillings and 10 percent on the next 5,000,000 shillings;* - *(D) where the amount exceeds 10,000,000 shillings but does not exceed 20,000,000 shillings – 12 ½ percent on the first 500,000 shillings and 10 percent on the next 4,500,000 shillings, 7 ½ percent on the next 5,000,000 shillings and 5 percent on the next 10,000,000 shillings;* 15

*(E) Where the amount exceeds 20,000,000 shillings – 1 percent on the excess of 20,000,000 shillings;*

The wording of the law is very clear. It clearly stipulates the fees chargeable in all instances.

Under 1 a (i), (ii) & (iii) the law clearly set out circumstances under which less than the full fees may be charged and even then the law specifies the percentages to be applied in each case.

The scale for instruction fees to sue or defend in any other case or to present or oppose an appeal where the value of the subject matter can be determined from the amount claimed or judgment is set out under 1(a) IV A-E (above). 25

Nowhere in schedule six does the law give power to the taxing master to award less for any reason or to compute fees on pro-rata basis.

I think the question here is not whether or not instruction fees are earned by an advocate upon receipt of instructions. It is whether or not an advocate is entitled to the full instruction fees upon

receipt of instructions. 5

I have found nowhere in the law any proposition that an advocate cannot be paid full instruction fees upon receipt of instructions, save as set out in Rule 1(a) (i), (ii) (iii) of Schedule Six (set out above).

I do not accept the argument of Mr. Tumusingize learned counsel for the respondent that where a client withdraws instructions from an advocate before the determination of the suit such an advocate is not entitled to full instruction fees. This argument is not supported by any law. It seems to revolve around a notion that paying full instruction fees in such circumstances would amount to unjust enrichment and is unfair. 10

This is a very subjective test. Unfair to who? The terms of payment in respect of Advocate client

fees are determined by law. The law stipulates the amount of instruction fees payable upon instructions. One party who decides to withdraw from the contract, which is in effect a breach, cannot turn around and demand for a refund that is not provided for in the law that sets out the contract terms. 15

This kind of transaction is by no means unique, in fact it is common place in contemporary commercial transactions.

For example a person who purchases a train ticket from Kampala to Mombasa via Nairobi has to pay the full fare before boarding. If he or she opts to remain in Nairobi then he or she is not entitled to a refund of the fare from Nairobi to Mombasa. Similarly a student who accepts admission at a University and pays full tuition may not be entitled to refund if he or she decides

to abandon the University in the middle of the Semester, and if he or she enrolls at another University in the middle of a semester he or she may have to pay the full fees. 25

Again most hotels would not refund a guest who has booked the full fare and paid but has not shown up. This cannot be considered to be paid unjust enrichment or unfair. Parties must be prepared to face the consequences of their decisions and actions. They must also comply with terms of their contracts.

The principle of unjust enrichment as set out in the case of **Fibrosa spolka Akcyjana versus Fairbaim Lawson Combe Barbour Ltd [1943] AC 32** is based on refund of consideration upon

frustration of a contract. It is therefore not applicable in this case. Here there is no failure of consideration. 5

I do not agree that the case of **Foreth Ltd vs. Kigano and Associates [2002] 1 EA 92** applies here as submitted by Mr. Mugenyi counsel for the appellant. The observations made at page 100 and 101 of that judgment in respect of instructions were made *obiter*.

The learned Principal Judge cited Regulation 2(2) which is now 3(2) of the Advocates Professional Conduct Regulations as a basis for his holding. 10

The learned Principal Judge in that aspect held as follows:-

*"The above quoted Regulation 2 (2) (b) is pivotal. First, it embraces the principle of appropriate refund of an advocate's professional fees upon the withdrawal of the advocate from the conduct of his client's case. Second, the refund is to be proportionate to the work done by the advocate – i.e. fees that have "not been earned" by the advocate. Third, the measure by which the proportionality of the fees to be refunded is determined is stated to be the "circumstances of the case". In other words, the amount of the refund is not to be determined by any standard or mechanical or magical formula – that somehow fits all situations. Rather, it is to be determined by reference to the circumstances of each case".* 15 20

With utmost respect to the learned Principal Judge, i respectfully disagree. The above regulation now 3(2) applies, in my view, in instances in which an advocate decides to withdraw from the conduct of a case and not in circumstances in which a client withdraws instructions from an advocate. The wording of that regulation is clear;

*"Whenever an advocate intends to withdraw....*"

If the legislature had intended the same position to apply *"whenever a client withdraws instructions from an advocate"* it would have clearly stated so, in the Regulations. It did not. This cannot in my view be inferred from the above rule.

**Rule 3 (2)** a clearly excludes instances in which a client withdraws instruction from an advocates as it provides that:- 5

> **3(2)** *whenever an advocate intends to withdraw from the conduct of case, the advocate shall -*

- *1) Give his or her client, the court and the opposite party sufficient notice or his or her intention to withdraw.* - This regulations clearly could not apply in instances in which a client is the one withdrawing instructions, as in such case an advocate would not be required to give the same client a notice of withdrawal. It would have to be the client giving the advocate notice instead. 10

Secondly the regulation refers to professional fees and not instruction fees. I do not agree that professional fees compasses all fees including instruction fees. I have found no legal basis for

that proposition. 15

> I am inclined to think that the law makers found it important and necessary to have a uniform formula for computing of instruction fees to protect the legal professional from unhealthy competition resulting from market forces and all the vices that go with it. Uniform fees shield the legal profession from clients who hop from one advocate to the other, by making it unfavourable

for them to do so. If the reason for withdrawal of instructions is as a result of professional misconduct or incompetence of an advocate, clients have recourse to the disciplinary measures set out in the law in which refund of fees may be an available remedy. 20

I would also like to clarify that in this particular case the bill of costs was between an advocate and his client, which is commonly referred to as Advocate/Client bill of costs.

This bill of costs differs from one between opposing parties is contentious matters, which is referred to as inter party bill of costs. 25

Where a court for example condemns a party to pay costs, to another, the decree holder is required to file a bill of costs under schedule six (above). The party paying costs will only pay the instruction fee once in respect of that particular case irrespective of the number of advocates who would have handled the matter on behalf of the decree holder, unless of course court by a

certificate permits costs for more than one counsel. 5

However each of the advocates who were instructed by the decree holder have a right to file their individual advocate/client bill of costs and each of them in my view would be entitled to full instruction fees.

This is because each of them was instructed differently. The same principle applies where the decree holder instructs jointly at the commencement of the suit two or more advocates and where a certificate of more than one counsel has not been granted by court. 10

Be that as it may, in this particular case, I find that the taxing master applied the correct principle. Since the bill of costs was between a client and his advocate the rules require that the actual instruction fee allowed be increased by one third.

However, in this case the appellant had clearly accepted 27,000,000/= as full and final settlement of his instruction fees. This is contained in the letter to the respondent dated 21st November 2002. That amount was duly paid. The appellant is thus estopped by record and conduct from claiming anything more than that. See **Section 114** of the **Evidence Act (CAP 29).** 15

I accordingly find and hold as follows:

- **1) An advocate in any contentious matter before the High Court or a Magistrates Court is entitled to full instruction fees as set out in Schedule Six of Statutory of the Advocates (Remuneration and Taxation of Costs) Regulations Statutory Instrument No. 267-4 at the time of receipt of instructions and the subsequent progress of the matter is irrelevant.** 20 - 25

**2) An advocate is not required to refund instruction fees where a client withdraws instructions from an advocate, who has acted upon such instructions.**

**3) The appellant demanded and accepted 27,000,000/= as full final payment of his instruction fees and is stopped from claiming and or demanding anything more than that from the respondent.**

In the result I would allow this appeal in part. I would set aside the judgment of the High Court and substitute it with this judgment. I would order the respondent to pay costs at the High Court and meet two thirds of the costs of this appeal. 5

It is so ordered.

Dated at Kampala this 25th day of February 2014.

**.............................. HON. KENNETH KAKURU**

## **JUSTICE OF APPEAL.**