Noble Builders (U) Limited v Sietco (Civil Application 16 of 2000) [2000] UGSC 35 (28 July 2000)

Full Case Text

## THE REPUBLIC OF UGANDA

# IN THE SUPREME COURT OF UGANDA

## AT MENGO

# BEFORE: HON. JUSTICE G. W. KANYEIHAMBA, J. S. C.

CIVIL APPLICATION NO. 16 OF 2000

BETWEEN

# NOBLE BUILDERS (U) LIMITED>>>>>>>>>>APPLICANT

### AND

## SIETCO >>>>>>>>>>>>>>>>>>>>>>>>>>>>>>RESPONDENT

(A reference to a single judge arising from the decision of the Registrar as Taxing Officer, dated $1^{-th}$ , May, 2000) Index locution RULING OF KANYEIHAMBA. J. S. C. Shes bomf reduced to Bus 5.6m/e

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This is a reference to me under rule 105 (1) of the Rules of this court, from a decision of the learned registrar as a taxing officer. Following the judgment of this court in interlocutory matters in Civil Application No. 31 of 1995 and Civil Application No. 34 of 1995, the respondent who was the successful party in both applications but the loser in the main appeal, namely. Civil Appeal No. 31 of 1995, presented a bill of costs which the registrar taxed and allowed in the sum of Shs. 60,607,000. The applicant, being dissatisfied with the orders of the registrar, has applied to this court by way of reference and asked for a variation of the registrar's orders.

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The background to the reference is as follows: In the main appeal and cross-appeal, Civil Appeal No. 31 of 1995, Sietco, the present respondent, was the unsuccessful appellant, while the present applicant was the successful respondent. During the proceedings of the main appeal and cross appeal, it became necessary for the parties to file two separate applications on procedural matters and on both the respondent was successful. At the conclusion of the main appeal and cross appeal, the successful party, now the applicant, presented a bill of costs which was taxed and allowed in the sum of 330,068,500. Thereafter, the respondent in this reference presented a bill for costs in the two applications for the total sum of Shs. 402,360,000 which the learned registrar taxed and allowed in the sum of 60,607,000, and that is what is the subject of this reference.

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The Memorandum of Reference contains two grounds framed as follows:

- That the taxing master, while taxing items: 1 and 23 of the bill of. $1$ costs, committed the following errors in principle, - (a) He considered the value of the subject matter in the appeal in awarding instruction fees for the interlocutory applications. - (b) He considered that the awarding of low sums would be an abuse to the high esteem of the Supreme Court, - (c) He considered that high sums should be awarded in order to keep advocates from prolonging their arguments in the Supreme Court for the sake of it.

- (d) He applied the wrong set of rules in taxing the items on the bill, as the matter was properly governed by the old Supreme Court rules and thus awarded erroneous sums. - That item 1 of the bill of costs as taxed to the tune of $2-$ Shs. 25,000,000/= and item 23 to the tune of Shs, 35,000,000 and the whole bill to the tune of Shs. $60,607,000/$ = were manifestly excessive.

The Memorandum of Reference was supported by an affidavit sworn by one Innocent Kihika of Byenkya, Kihika and Co. Advocates of Kampala. For the applicant, My Byenkya submitted that the current bill of costs which is the subject of the reference arose out of interlocutory proceedings before the main appeal was heard and disposed of. The proceedings to which item I relates was about whether or not the respondent, then appellant, in the main suit, was under an obligation to serve on the then respondent, now the applicant, a record of appeal. The application took about two hours to be heard and the court found in favour of the respondent. The other application from which item 23 in the bill of costs arose was also filed by Noble Builders, the present ... applicant, and they unsuccessfully sought to have the appeal of the present respondent who were the then appellant struck out.

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Mr Byenkya submitted that the hearing of that application was completed in one morning. On the reasons given by the registrar for his orders in this application, it was Mr. Byenkya's contention that the learned registrar took into account matters which he should not have done and consequently erred in law. Counsel contended that the subject matter of the appeal was not in issue in the two interlocutory matters

With regard to ground 2 of the reference, Mr. Byenkya submitted that the sums of Shs. 25,000,000 and Shs. 35,000,000 allowed for relatively simple applications, each of which took some two or three hours a morning to complete were manifestly excessive. Mr. Byenkya cited the cases of Bank of Uganda v. Banco Arabe Espanol, Civil Application No. 23 of 1999 (Mulenga J. S. C.) (unreported), and Civil Application No. 48 of 2000 (Kanveihamba, J. S. C.), (unreported), and Jaffers Brothers Ltd v.

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Departed Asians Property Custodian Board, Civl Application No. 24 of 1999 (S. C.), (unreported), in support of his submissions.

The respondent filed an Affidavit in Reply sworn by one Fredrick Sentomero on the 20th July, 2000. The Affidavit in Reply simply denied the errors allegedly made by the registrar as deponed in Mr. Kihika's affidavit in support of the application. It supported the orders of the registrar, contending that he based his orders on correct principles and exercised his discretionary powers properly in relation to taxation matters.

Mr. Serwanga represented the respondent. He contended that it was not true that the registrar based his findings and orders on the subject matter in the suit or indeed, on any of the matters complained of in the applicant's Memorandum of Reference, supporting affidavit or submissions on his behalf. He submitted that the registrar founded his taxation orders on paragraph 9 (1) of the $3rd$ Schedule of the Rules of this court and that rule gives a taxing officer very wide and unfettered discretionary powers to tax a bill in a manner he considers reasonable. Counsel contended that the rule does not lay down any conditions which the registrar should follow. He submitted that the only issue which should concern court should be whether or not the registrar had exercised.

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his discretion judiciously and, it was counsel's contention that the learned registrar had done so.

Mr. Serwanga further contended that whereas the matter complained of had been mentioned in the summing up of the registrar, the registrar had not taken them into account when making his final ruling. Counsel contended that the authorities cited by counsel for the applicant, namely Bank of Uganda v. Banco Arabe Espanol, Nes 23 and 48 (supra), and Jaffer Brothers Ltd v. Departed Asians Property Custodian Board, Civil Application No. 24 of 99 (S. C). (unreported), are distinguishable from the present application in that in those other cases, the learned taxing officers took into consideration matters which were outside the principles of taxation in the applications whereas in this case the registrar did not do so

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In my opinion, there are two straightforward issues in this application which need to be resolved. These are, whether or not the taxing officer applied the wrong principles or rules in determining the taxation of the bill presented to him and whether or not the amounts allowed on items 1 and 23 in the bill of costs submitted on behalf of the respondent are manifestly excessive.

The judgment and the ruling for which the bill of costs was presented and taxed, dealt with mere applications and not the merits of the main suit. Consequently, the principles which should have governed the taxation of the costs in the two applications are those found in paragraph 9 of the Third Schedule to the Rules of this court. That paragraph provides as follows :-

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The fee to be allowed for instructions to make, support or $-9(1)$ oppose any application shall be the sum that the taxing officer considers reasonable but shall not be less than Shs. 1000.

The fee to be allowed for instructions to appeal or to oppose $(2)$ 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, the interest of the parties, the other costs to be allowed, the general conduct of the proceedings, the fund or persons to bear the costs and other relevant circumstances11.

### In his ruling, the learned registrar stated.

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"I now turn to the main items, (1) and (23), where a sum of Shs. 200,000,000 is claimed under each. I have carefully followed and considered the arguments of both Mr. Byankya and Mr. Serwanga. I have also read the case of Premchand Raichard v. Quarry Services (1972) E. A. 62, quoted by Mr. Serwanga, and a similar case of Patrick Makumbi And Another v. Sole Electronics. (U) Ltd, Civil Application No. 17 of 1993 (S. C.), (unreported). It has been held and emphasized that a successful litigant should be fairly reimbursed, which remuneration must be such as to attract recruits to the profession... in the circumstances, and considering that each case has to be taken on its own peculiarities in arriving at a reasonable sum to be awarded as costs, I find the sums of Shs. 100,000 and Shs.500,000 proposed as instructions fees under items (1) and (23) by Mr. Byenkya to be miserably low. To award such sums would not in anyway attract recruits to the profession, but would definitely be an abuse of the high esteem in which the Supreme Court is held. This is the final court in the land and so reasonable costs must be awarded so that advocates just do not keep on prolonging arguments in the Supreme Court for the sake of it. At the same time, whereas this court has to be consistent in its awards, one has to take into account inflation which has reduced the value of the shilling. Nevertheless, I equally find and hold that the figures of Ug. Shs. 200,000,000 each, proposed by Mr. Serwanga is on the other hand on a very high scale. In view of what I have outlined, I am inclined to award a sum of shs.

25,000,000, as reasonable costs under item (1), and shs 35,000,000, as reasonable instructions fees under item (23)."

In my opinion, there can be no doubt that the learned taxing officer took into consideration the wrong principles and did not apply the correct rule. Instead of proceeding under paragraph $9(1)$ , he applied paragraph 9 (2) and went beyond it to consider and be guided by extraneous matters such as the prestige of this court and the desire to attract people to the legal profession. It is not unusual for this court to decide a suit or a petition and award no costs. This, in no way, adversely affects the prestige of the court. I would have thought the reverse to be true namely, that where costs are kept low in the courts, litigants and their counsel would be encouraged to come forward and litigate.

I wish to reiterate my view which I expressed in Bank of Uganda v. Banco Arabe Espanol, Civil Application No. 48 of 2000 that.

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"Once it is conceded that the disputed costs are in connection with an application, then the reasonableness of the taxing officer in relation to an application must be judged within the confines of paragraph 9 (1). The costs should be determined according to the instructions and the actual work done in order to make support, or . oppose an application."

Any reference to any other matter, whether the subject matter of the litigation, advocates prolonging arguments in the Supreme Court, taking inflation into account, recruits to the profession. esteem of the Supreme Court and the like, become irrelevant and, in so far as the registrar in this application listed them as matters to be considered in taking costs in interlocutory applications. I must agree with the submission of counsel for the applicant that he, the learned registrar, erred in law by failing to confine his findings and orders within the bounds permitted by the rules of taxation.

$7$ I agree with the views of my learned brother, Mulenga J. S. C., which he expressed in Departed Asians Property Custodian Board v. Jaffer Brothers Limited, Civil Application No. 13 of 1999 (S. C), (unreported), thus.

"where a taxing officer expressly bases his opinion on a wrong principle resulting in allowing too high or too low an amount the court will intervene."

I agree with the submissions by Mr. Byenkya, counsel for the applicant, that when Mr. Serwanga, counsel for the respondent, cited Jaffer Brothers Ltd. v. Departed Asians Property Custodian Board, Civil Application No. 24 of 1999, which varied the decision of a single judge on a taxation application, in support of the learned registrar's ruling, he misapplied that authority which is confined to instructions' fees and the actual work done, and does not attempt, in any way, to travel outside the boundaries of the principles and rules of taxation as the ruling in this reference does. In my view therefore, ground 1 (a), (b) and (c) ought to succeed.

On ground 1 (d), counsel for the applicant submitted that, in determining the value of the other items on the bill of costs, the learned registrar applied the current scales instead of those which were applicable at the time the suit was commenced in the courts. For the respondent, Mr. Serwanga contended that this matter had not been raised in the learned registrar's chambers and that, in any event, and I agree, that costs are awarded and taxed for the actual work done and not for the work which ought to have been done. In my opinion, where the work is done today. present scales of fees must be applied even if the proceedings were commenced before revision of those scales. In my view therefore, there is no merit in paragraph (d) of ground 1 of this reference. Therefore this ground ought to be dismissed and it is not necessary for me to say anything more about it.

I now turn to ground 2 in the Memorandum of Reference.

For the applicant, Mr. Byenkya submitted that even if the registrar had applied the correct principles and rules, his awards in the taxation were still manifestly excessive and ought not to be allowed.

Counsel contended that both applications were of a simple nature. The first application which dealt with the record of appeal took about two hours to argue a mere application to strike out the appeal because an essential step in the proceedings had not been taken. Mr. Byenkya contended that whereas the second application appeared novel and complicated, the issues therein were dealt with expeditiously by the court. Counsel cited a number of authorities in which it has been held that where the taxed costs are manifestly excessive, the court will intervene. The cited cases include the two applications already mentioned in **Bank** of Uganda v. Banco Arabe Espanol. (supra), Departed Asians Property Custodian Board v. Jaffer Brothers Ltd. (supra), and the The Registered Trustee of Kampala Institute v. Departed Asians Property Custodian Board, Civil Application No. 3 of 1995 (S. C.), (unreported). Mr. Byenkya finally contended that, considering that the taxed costs in the main appeal, with certified two counsel was only Shs. 330,068,000, the award by the registrar of the sum of Shs. 60,000,000 as instructions fees for mere applications on interlocutory matters was too excessive.

For the respondent, Mr. Serwanga vigorously opposed this ground. He submitted that paragraph 9 (1) of the $3^{1d}$ Schedule to the Rules of this court does not lay down any conditions which the registrar must follow. He contended that on a mere reference, the court's role is only confined

to a consideration of whether or not the registrar exercised his discretionary powers judiciously. Counsel further contended that the applicants' criticism of the award is an attack on the quantum of costs and that unless it can be shown that there was an error in principle, the registrar's orders ought not to be interfered with simply because the applicant does not like them. It was Mr. Serwanga's contention that the proceedings in the two applications were precipitated by the intransigence of the applicant in failing to follow or accept the proper procedures. Counsel submitted that the application to strike out his clients' appeal lasted for about four hours and they had to do a lot of research and cite a number of authorities. Counsel contended that that application contained seventeen grounds each of which had to have special pleadings and submissions, and that since any of them could have been successful and the appeal could have then been struck out, the taxed costs of Shs. 35,000,000 for this particular item were amply justified.

In assessing costs under paragraph 9 (1) of the $3^{rd}$ Schedule to the Rules of this court, there are two items to consider, besides reimbursements for expenses and incidentals such as transport and court fee charges. In my ... opinion, the two items are instructions fees and the actual amount of work done by counsel. In Jaffer Brothers Limited v. Departed Asians Property Custodian Board, Application No. 21 of 99 (supra), we said.

"In our opinion the taxing officer's assessment of shs. 16,000,000 as instruction fees appears to be on the high side." However, we further observed.

"We think that the Registered Trustee of Kampala Institute v. Departed Asians Property Custodian Board (supra), which set a precedent on the interpretation of section $1$ (c) of the Expropriated Properties Act. No. 9 of 1987 was more comparable to the Jaffer Brothers v. The Departed Asians Property Custodian Board Civil Appeal No. 9 of 1998 before the Supreme Court, which set a

precedent as to the interpretation of the legal provisions of the law which had not been interpreted before in our jurisdiction. Although the research carried out in the Jaffer Brothers' case concerned an interlocutory matter, there is no doubt that it involved complex and involving issues which were raised by counsel for respondent. In the Registered Trustees of Kampala Institute case (supra), the award of Shs. 7,000,000 by Platt, J. S. C., was considered to be on the lower side. However, the Supreme Court did not interfere with n because the award had not been based on wrong principles."

In the Jaffer Brothers' case we allowed a sum of Shs. 10,000,000 in costs. I have already stated in this judgment that the learned registrar based his ruling on wrong principles and therefore cannot stand. Be that as it may, it is still necessary to assess the amount of work which would be expected to be done before the two decisions which gave rise to this reference were reached. In my view, it is not enough for counsel to claim that a lot of research or work was done without showing some proof of that research or work. Nor is it enough, in my opinion, for counsel to claim that submissions before court took so many hours in a day or several days. Each case must be judged according to its merits. One counsel may deliberately or otherwise prolong arguments where another may do the task in half or less the time Some litigants and counsel are by nature, by inclination or by competence, fast or slow on the uptake and it would be wrong, in my view when assessing costs, not to take an objective view of the professional work, and how it was done. The conduct of the parties and their counsel need to be taken into account when determining what costs to award

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According to the submissions of counsel and the record of proceedings. the two matters which were of an interlocutory nature involved the questions of whether a necessary step in the appeal proceedings had been

taken so as to compel a party to serve appropriate documents and, the other concerned an application to strike out the appeal. These are not uncommon occurrences in our courts but even if they were, that would not be the reason for awarding high instructions fees, because even a novel legal point can be disposed of in minutes rather than hours or days.

In his ruling, the learned registrar remarked.

"I find the sum of Shs. 100,000 and Shs. 500,000 proposed as instructions fees under items (1) and (23) by Mr. Byenkya to be miserably too low. I equally find and hold that the figures of Shs. 200,000,000 each, proposed by Mr. Serwanga is, on the other hand, on a very high scale."

With respect, I entirely disagree with the view expressed by the learned registrar. All things being equal, I would have found the figures of Shs. 100,000 and Shs. 500,000 to be within the acceptable boundaries of costs for interlocutory or application matters. On the other hand, sums of Shs. 200,000,000 are ridiculously high and, certainly very astronomical. as far as instructions fees and the work which was to be and was done are concerned. My reaction to the figures proposed by counsel is quite the opposite of that of the learned registrar. I would have found Sha. 500,000 normal and Shs.200,000,000, extraordinarily high and unacceptable.

Time and time again, this court has criticised the claims and awards of high costs in our courts. I have already referred to some of our decisions on the subject in this ruling. The following cases are also relevant in considering awards of costs: Patrick Makumbi And Another v. Sole Electronics, Civil Application No. 11 of 1994, and the Attorney General v. Uganda Blanket Manufacturers (1975) Limited, Civil Application No. 17 of 1993

Considering that the costs in the main appeal from which the interlocutory applications in this reference arose were taxed and allowed in the sum of Shs. 330,068,500 against the unsuccessful appellant who is now the respondent in this reference, the bill of costs submitted by the party's counsel for taxation in the staggering sum of Shs. same 402,360,000 is extraordinarily colossal and professionally unjustified.

In my view, the taxed costs awarded to the respondent in the sum of Shs. $60,607,000/=$ are manifestly excessive. Therefore, ground 2 of this reference ought to succeed.

For the reasons I have given, this reference ought to succeed. I set aside the orders of the taxing officer and substitute the same with my own in favour of the respondent and order that the sums of Shs. 2,000,000 (two million) for item (1) on the bill of costs and Shs. 3,000,000 (three million) for item (23) on the bill of costs, be awarded to the respondent so that, all in all, the total consolidated awarded costs become Shs. 5,607,000. The applicant shall have costs of this reference

DATED at MENGO this DAY of JULY, 2000

G W KANYEIHA JUSTICE OF THE SUPREME COURT

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