Magellan Kazibwe & Co. Advocates v Yako Bank (U) Limited (Miscellaneous Cause 26 of 2023) [2023] UGCommC 263 (28 September 2023)

Full Case Text

# THE REPUBLIC OF UGANDA IN THE HIGH COURT OF UGANDA AT KAMPALA (COMMERCTAL DTVTSTON) MISC. CAUSE NO. 26 OF 2023 ARISING FROM HCCS NO. 295 OF 2OI7

# MAGELLAN KAZIBWE & CO. ADVOCATES: : : : : : : : : : : : : : : : : : : :APPLICANT VERSUS

#### YAKO BANK (U) LIMITED

#### (FORMERLY YAKO MICROFINANCE LTD): : : : : : : : : : : : : : : : :RESPONDENT

#### BEFORE: HON. LADY JUSTICE ANNA B. MUGENYI

#### RULING

This Application is brought by way of Notice of Motion under sections 57, 58 & 80 of the Advocates Act (Cap 267),, Order 52 rules 1,2 & 3 of the Civil Procedure Rules for orders that the Applicant's Bill of Costs arising out of HCCS NO. 295 of 2017 be taxed and costs of this Application are bome by the Respondent.

The Application was supported by the Affidavit of Mr. Magellan Kazibwe and was opposed by the Affidavit in reply of Ms. Sarah Mushabe.

## BACKGROUND OF THE APPLICATION

The Applicant was instructed by the Respondent to file HCCS NO. 295 of 2017 . The Applicant executed the instructions and obtained a Consent Judgment and Decree in the Respondent's favor and even attempted execution which the Respondent refused to fund. On the 2l't of February 2023,the Applicant served the Respondent with a Demand Notice accompanying the Advocates and Client's Bill of Costs for settlement within the statutory 30 days. The said period lapsed without the settlement of the said Costs by the Respondent hence this Application.

#### REPRESENTATION

The Applicant was represented by IWS Magellan Kazibwe and Co. Advocates and the Respondent was represented by IWS NEWMARK Advocates.

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#### **SUBMISSIONS**

Counsel for the Applicant submitted that they were instructed by the Respondent to institute High Court Civil Suit No. 295 of 2017 and the firm prosecuted the said case until a Consent Judgment and Decree were entered. That the Applicant attempted to execute the Decree but was frustrated by the Respondents failure to fund it after which the Applicant then served the Respondent with a Demand Notice and the Advocates and Clients Bill of Costs under Section 57 of the Advocates Act to be settled within 30 days. The Respondent failed to settle the Bill of Costs within the stipulated time thus they filed this Application to recover the Advocates and Client Bill of Costs under sections 57, 58 and 80 of the Advocates Act.

Counsel for the Applicant submitted further that the Respondent did not produce evidence in their Affidavit to the effect that the Applicant did not represent them in the suit and thus prayed for Court to order that the Bill of Costs filed by the Applicant against the Respondent is taxed. He cited the case of Byenkya, Kihika & Co. Advocates v Gandesha Misc. Appeal No.19 of 2014 where it was held that an Advocate or law firm who has been instructed, instituted and prosecuted a suit is entitled to be paid their costs in case the relationship between the client and the Advocate ceases.

Counsel for the Respondent, in his submission, objected to the Application on two grounds. On the first ground, he stated that the Applicant did not fulfill the requirement under section 57 of the Advocates Act as the Bill of Costs was not duly served on the Respondent. He referred to the case of Peter Jogo Tabu & Co. Advocates v Waco Fred, HCMA No. 30 of 2007 at page 7 where Honorable Justice Mubiru stated that the Applicant had the burden of proving service of the Bill of Costs beyond mere assertion and that where service is properly effected, the return of service should be ordinarily annexed to its original process, all documents served accompanied by an affidavit of service stating the time when and the manner in which the document was served.

Counsel submitted that in this case the Applicant only annexed the Bill of Costs with a stamp and the stamp does not indicate who received the Bill of Costs; and that the Respondent is a Corporation and service on them is well provided for under Order 29 rule 2 of the Civil Procedure Rules. He cited the case of Roko Construction Limited & 2 Others v Musana Gerald Rego, HCMA No.1161 of 2021 wherein it was stated that service ought to be on the principal officer who is the secretary, any director or other principal officer of the Corporation. Counsel submitted that it is the burden of the Applicant to prove that they served court process on those specific

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persons and not just merely assert the same. He prayed that on that ground the Application is premature and ought to be dismissed with Costs.

On the second ground, counsel for the Respondent submitted that the Applicant consented to Costs of Ugx 6,000,000/= payable to the Applicant by the Defendants under paragraph I ofthe Consent Judgment and Decree (Annexure C); and that the Applicant now tuming around to try to recover costs from the Respondent would be unjust enrichment. He prayed that the Application be dismissed with Costs.

In rejoinder, Counsel for the Applicant submitted that there was effective service of both the Bill of Costs and the Demand Notice upon the Respondent. He invited the Court to examine the official receiving stamp of the Respondent bank and stated that the Respondent had not denied that it is their stamp and that they do not have a head office. Counsel submitted that it is the Applicant's contention that the only persons with authority to emboss the stamp are the principal officers of the bank and that the bank at the head office through their officers duly received the bill and the notice.

In response to the second ground, Counsel for the Applicant submitted that the Costs indicated in the Consent Judgment were to be paid by the Defendants in the Civil Suit No. 297 of 2017 which never occurred as the Respondent frustrated the execution process of the Consent Judgement and Decree. As a result of the said lrustration by the Respondent when it did not execute and recover the Costs against the Judgement debtor, the Applicant had no other alternative but to recover their Costs against their client which was done in line with sections 57 and 58 of the Advocates Act. Counsel stated that there is no unjust enrichment as the Applicant is seeking to recover Costs for services they rendered in a suit that was concluded in the Respondent's favor.

#### RULING

I have read the pleadings and listened to the submissions of the parties and the main issues raised therein are:

#### l. Whether there was effective service of the Applicants Bill of Costs and notice

## 2. Whether the Applicant is entitled to recover the Costs from the Respondent.

# Issue I

# Whether there was effective service of the Applicants Bill of Costs and Demand Notice to the Respondent

An action to recover Advocates' Costs is provided for under section 57 of the Advocates Act.

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# Section 57 (1) of the Advocates Act provides that:

"Subject to this Act, no suit shall be brought to recover any costs due to an advocate until one month after a bill of costs has been delivered in accordance with the requirements of this section; except that if there is probable cause for believing that the party chargeable with the costs is about to quit Uganda, or to become a bankrupt, or to compound with his or her creditors, or to do any other act which would tend to prevent or delay the advocate obtaining payment, the court may, notwithstanding that one month has not expired from the delivery of the bill, order that the advocate be at liberty to commence a suit to recover his or her costs and may order those costs to be taxed $"$ .

As established by case law, therefore, if a dispute arises between an advocate and a client regarding the amount of fees payable such that the costs have to be taxed, the client is provided with a special protection under the taxation process to the effect that no suit can be commenced to recover any costs due to the advocate until one month after a bill of costs has been delivered in accordance with the requirements of section 57 of The Advocates Act.

Under section 57(2) of the Advocates Act, the requirements referred to in subsection $1$ are:

"(a) The bill must be signed by the Advocate, or if the costs are due to a firm, one partner of that firm, either in his or her own name or in the name of the firm, or be enclosed in, or accompanied by, a letter which is so signed and refers to the bill; and

(b) The bill must be delivered to the party to be charged with it, either personally or by being sent to him or her by registered post to, or left for him or her at, his or her place of business, dwelling house, or last known place of abode.

And where a bill is proved to have been delivered in compliance with these requirements, it shall not be necessary in the first instance for the Advocate to prove the contents of the bill (which shall be presumed until the contrary is shown) to be a bona fide bill complying with this Act".

In paragraph 5 of the Applicant's affidavit in support, it is stated that a demand notice together with the Advocate's and client's bill of costs was prepared on the 21st of February 2023 and formally served upon the Respondent and photocopies of the documents were attached to the said affidavit as annexures G and H both of which bear the Respondent's stamp.

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Counsel for the Respondent, on the other hand, submitted that the bill of costs was not duly served on the Respondent and thus the Applicant did not fulfill the requirements under Section 57 of the Advocates Act.

In the case of Peter Jogo Tabu & Co. Advocates v Waco Fred, HCMA NO. 30 of 2009, Honorable Justice Mubiru cited the case of Jovelyn Barugahare v Attorney General S. C. C. A. No 28 of 1993, where it was decided that he who asserts must affirm. The onus is on a party to prove a positive assertion and not a negative assertion. It therefore means that, the burden of proof lies upon him who asserts the affirmative of an issue, and not upon him who denies, since from the nature of things he who denies a fact can hardly produce any proof. The burden on this issue lay on the respondent to adduce such evidence as would satisfy court that the respondent was indeed served with the bill of costs on 10th June 2009.

In this matter, therefore, the burden of proof lies on the Applicant to prove the Respondent was served with the Bill of Costs in issue as claimed.

I have looked at the annexures to the Applicant's affidavit in support i.e. 'G' and 'H' and observed that the two documents clearly bear an official stamp of the Respondent indicating "YAKO BANK (U) LTD HEAD OFFICE" received on 21st February 2023 with a signature endorsed therein. The Respondent has not disputed that this is indeed their official stamp and neither have they indicated that the said stamp and signature therein were false or forged nor adduced any evidence to that effect. The Respondent's counsel only argued, in his submissions, that the service has to be made on the principal officer who is the secretary, director or other principal officer of the corporation which is true, but the Respondent did not illustrate or dispute in the evidence or submission that the signature on the stamp was not that of a principal officer of the Respondent company. In the absence of that, I am inclined to believe that the service was made and received by a principal officer of the Respondent.

In conclusion, therefore, I find that there was effective service of the Applicant's Bill of Costs and Demand Notice to the Respondent on 21st of February 2023. This Issue is accordingly resolved in the affirmative.

#### Issue 2

# Whether the Applicant is entitled to recover the Costs from the Respondent

The Respondent submitted that the Applicant consented in the Consent Judgment and Decree (annexure C) attached to the application that costs worth six million would be paid to the Applicant by the Defendants and the same should not be

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recovered from the Respondent. Further that payment of the costs to the Applicant will amount to unjust enrichment since they will be paid twice.

The Applicant submitted that the costs indicated in the Consent Judgment were to be paid by the Defendants in the civil suit and this never took place as the Respondent frustrated the execution process of the said Consent Judgement and Decree. Further that this frustration left the Applicant with no choice than to claim from the Respondent. Counsel stated that there is no basis for the Respondent to argue unjust enrichment as the Applicant is seeking to recover the costs for services they rendered.

In the case of Ondoma v Kana HCMA NO. 0016 of 2018, Honorable Justice Stephen Mubiru noted as follows:

" ... Advocate / Client costs are the costs that an Advocate claimsfrom his own Client and which the Advocate is entitled to recover from a Client, for professional semices rendered to and disbursements made on behalf of the Client. These costs are payable by the Client whatever the outcome of the matter for which the Advocate's services were engaged and are not dependent upon any award of costs by the Court. In the wide sense, they include all the costs that the Advocate is entitled to recover against the Client on taxation of the Bill of Costs. The term is also used in a narrower sense as applying to those charges and expenses as between Advocate and Client that a Client is obliged to pay his or her Advocate which are not recoverable party and party costs, or costs which ordinarily the Client cannot recoverfrom the other party. These costs can arise either in contentious or non-contentious matters... "

In the instant case, the Applicant contends that they have not been paid for legal services rendered to the Respondent which the Respondent does not deny. Although the Respondent submitted that the Applicant should claim their costs from the Defendants in the main suit as indicated in the Consent Judgement, I do not think this can be a ground for denying this Application since the Respondent frustrated the execution process which has not been denied either.

In other words, in the absence of execution, the Applicant cannot be paid costs and it is indeed unfair and an injustice to the Applicant to be denied costs for duly executed services for which they received instructions to carry out by the Respondent.

From the fore going the Applicant, having prepared an itemized bill of costs for work done for the Respondent and having served the same on the Respondent, is entitled to recover its costs from the Respondent upon taxation of the same by the Taxing Officer.

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In the final result, this Application is allowed with orders that the Applicant's Bill of Costs between them and the Respondent formerly Yako Microfinance Ltd arising out of HCCS No. 295 of 2017 be taxed.

The costs of the Application shall be borne by the Respondent.

Ombitative.

HON. LADY JUSTICE ANNA B. MUGENYI DATED...................................