Sebalu v Secretary General of East African Community and Another (Taxation Cause No.1 of 2011) [2012] EACJ 24 (20 January 2012)

# IN **THE EAST AFRICAN COURT OF JUSTICE AT ARUSHA TAXATION CAUSE NUMBER l OF 2011 (Origininating from Reference No.** I **of 2010)**

**lion. itenda ebalu ..... ... ... ...... .. .... . ... ..**..............................**.... Applicant**

#### **Versus**

**The ecretary General of tl1e East African Community ........... 1'~<sup>1</sup>Respondent The Attorney General of the Republic of Uganda ... ............**.... 2m<sup>1</sup>**Respondent**

# **RULING**

## **DATE: 20111 JANUARY 2012**

## **DR. JOHN EUDES RUHANGISA, TAXING OFFICER**

In this bill of costs liJcd by Hon. Silenda Sebalu the Applicant who was the Applicant in Reference Number l of 20 JO that was presenle<. I by Lhe App,licanl in this cause is for a total sum of USO 14.357.669.10 as costs incurred by the Applicant herein for conducting the suit nam..::ly Reference Number I ol'2010. Mr. Chris Bakiza Advocate ofBakiza & Company Advocates and Mr. Justin Semuyaba of Mis Semuyaba. [ga & Company Advocates appeared in Court on behatr of Hon. Sitcnda Scbalu, the Applicant while Mr. Wilbert Kaahwa Counsel to the East African Community appeared for The Secretary General of the East African Community the 1~1 Respondent. Ms. Christine Kaahwa Principal State Attorney appeared for Lhe ALLorncy General of the Republic of Uganda the 2nd Respondents. fhe claim against the respondents herein, relates to instruction fee, reimbursement for actual expenses incurred by the Applicant, to wit. costs for filing the bill or costs. costs for stationary, travel and up~eep expenses between Kampala and Arusha where the East African Court of Justice is headquartered. In my ruling I will first consider items 2 to 83 then finally consider item 1 on instruction and getting up fees where submissions were made at leng1h.

\Vhereas the Respondents counsel conceded to items No. 60. 63. 65. and 83in the bill of costs, items No. 61, 66, 67, 70. 73. 7-l-. 78, 79 and 82 lacked supporting documents. The applicanl was not able to produce receipts for these items. Counsel for the applicant submilled that l exercise rny discretion and grant what is reasonable in areas where proof of payment for air tickets have not been adduced largely because they hnd difficulties iu securing them from the Applicant himsel r who incurred the cost.

In my mling l will deal with item b} item and in items where the applicant was not able produce receipts I will tax them off accordingly and in arriving at this decision I am guided by the rules of procedure governing litigation in East African Court or Justice, Rule 4 of the Second Schedule in particular which states that:

'receipts for disbursemen ts shall be produced to the ta.,-xing officer at the time of taxation·.

This is a mandatory requirement of the law. Counsel for the Applicant produced boarding passes and evidence that they travelled but these were not receipts as required by Rule 4 of the Courts Rules. The documents could not by themselves be proof of expenditure on the part of the applicants in the absence or evidence shov. ing how much was paid. Counsel ror the Respondents also submitted objecting to the use of boarding passes and invoices as evidence for disbursements which I agree with entirely.

With regard to item 2 on drawing of reference Rule 3 of the Second Schedule of the Court Rules provides USD 3.00 for the fast four folios and USD 1.00 for every additional folio. I consequently tax the item at **USO 29.00.**

Item 3 is taxed as prayed at **USO 120.00.** Rule 4 provides for USO 0.5 per lblio. The upplicam made 8 copies of 30 folios, which brings it to 240 folios.

CoLU1sel for the 2nd Respondent asked for clarification from the Applicant on Item 4 on the drav,•ing of documentary proof but no proof was provided and I therefore tax the item off as the Rules do not provide for drawing of documentary proofs of evidence. I also tax off item 5 as it is related to item 4.

Items 6 and 7 which relate to the drawing of a Notice of Motion and making of copies thereof arc also taxed off since they are a repetition of lhe drawing of Reference in item 2 which was titled Notice of Motion.

Item 8 is taxed at **USO 15.00** in accordance with Rule 3 of the second schedule while item mm1bcr 9 is taxed at **USO 64.00** in accordance with Rule 4(a) of the Second Schedule.

Item IO where Counsel for the Respondent contended that receipts need to be produced to shO\\ that the Commissioning or notarizing of annexlures was paid for, the applicant could not produce any. l therefore tax off the item accordingly.

The amount charged in item 11 is also according!) taxed off as perusal car\ only be charged on documents received and not documents drawn by counsel himselC which have also been charged for drawing under Rule 3 of the Second Schedule. Th.is kind of perusal is taken care of under item l on instruction fees chargeable under Rule 9(3) of the Second Schedule on instruction foe to ''include all work necessarily and properly done in connection with the suit or reference and not otherwise chargeable including attendances, correspondence. perusals and consulting aulhori lies··.

On items 12 and 13. I have perused the original record and found that no List of Aulhorities was prepared on 25th June 20 IO and that the only list of authorities on record is the one attached to the Applicants Submissions dated 21 s\ December 2010. I therefore tax off the amounl in items 12 and 13.

Items 14 and 15 are also taxed off because other than an affidavit in reply there was only one affidavit sworn by l Ion. Sitenda Sebalu, which has already been taxed in item 8 of the Bill.

Items 16 and 17 were not disputed and I therefore lax them as prayed by the applicant al **USD 3,450 and USO 150** respectively.

Item 18 is also taxed oIT as il relates to perusal of a response by the 3rd Respondent who was struck off from the reference with costs and is nol a party in this cause.

fhe sum of USO 57 .00 is taxed off from item 19 on drawing of Affidavit and taxed at **USO 3.00** because on pemsing the original record the affidavit referred lo is of four folios and the Scale of Charges of the Second Schedule provide for USO 3.00 for four folios or less.

The sum of USO 16.00 is taxed off from item 20 on drawing of the Amended Notice or Motion and taxed at **USD -t.00** for the five folios and not 20 folios as alleged.

The sum or USD 60.00 is taxed or from item 2 l on making of copies and taxed at U D 20.00 which is the charge for making of 8 copies of 5 folios of the Amended Notice of Motion.

The sum of USO 2.300.00 is taxed off from item 22 on pemsaJ of the I ~ 1 Respondents Response to the Amended Reference and is taxed at **USO 1,150.** rhc response was 230 folios and not 690 as claimed by lhe appljcant.

The sum ofUSD 90.00 is taxed off from item 23 on perusal or 2nd and 41h Respondents response to Amended Reference and is taxed at **USO 90.00.** The response was 12 folios and not 30 as claimed by the applicant.

Item 24 is taxed off accordingly on grounds that there was no response lo the amended reference filed by the 3rd Respondent and that the 3rd Respondent was struck off from the reference with costs.

The sum of USO 78.00 is taxed olT from item 25 on the drawing of Applicants Written Submissions and is taxed at **USO 33.00.** The submissions were 34 folios and not 111 as claimed by the applicant.

The sum of USD 308.00 is taxed off from item 26 on making of copies of the written Submissions and is taxed at USO **136.00.** Eight copies of the 34 folios is 272 copies at USO 0.5 per folio.

Item 27 is taxed off accordi.ngl} because perusal can onJy be charged on documents received and not own documents. which have also been charged for drawing under Rule 3 of the Second Schedule. This item is covered under item t on instruction lees as provided for in Ruic 9(3) of the Second Schedule which I have quoled above.

Items 28 and 29 on list of authorities which was 2 folios are taxed al **USO 3.00** and **USD 8.00** respectively.

Item 30 is also taxed off because ii is taken care of under item 1 on instruction foes and Rule 9(3} oftbc Second Schedule mentioned above.

The sum of USD 140.00 is taxed off from item 31 on perusal of 1 st Respondents Written Submissions and truced at **U D 70.00.** TI1c submissions were 14 folios and not 42 as claimed by the applicant.

The sum of USO 1,490.00 is ta.'Xed off from item 32 on perusal of the 1st Respondents authorities and taxed at **USO 745.00.** The authorities were 149 folios and not 447 as claimed by the applicant.

The sum of USO 210.00 is ta,xed off from item 33 on perusal of 2nd and 4th Respondents wrilten submissions and tru<ed at **USO 165.00.** The submissions were 33 folios and not 75 as claimed by the Applicant.

Item 34 is taxed off in whole as it refers to the 3rd Respondent who was struck off *the* Reference with costs.

The sum of USD 33.00 is taxed off from item 35 on drawing of a 31 folio rejoinder to the Respondents written submissions and is taxed al **USO 30.00.**

Item 36 is taxed off as it refers to the perusal of the Applicants own document. This is laken care of under item 1 on instruction fees.

The sum of USD 78.00 is taxed off from item 37 on photocopying of a 31 page rejoinder an<l is ta,xed at **USD 124.00.**

The sum of USO I 2.00 is taxed off from item 37 on perusal of I and not 3 folios or a Hearing Notice and is taxed al **USD 3.00.**

On item 39 the Comt order drawn was 3 folios and not 12 folios. 1 therefore ta,x item 39 at **USO 3.00** and tax off item 40 as perusal cannot be done by counsel on a document drmvn by himself.

lti!m 41 on making of copies of the order is taxed at **USO 12.00.** while item 42 on perusal of a 50 page judgment is taxed at **USD 250.00**

Item 43 on drawing of a 25 folio Bill of Costs is ta-xcd at **USD 24.00.** Item 44 on perusal of bill or costs is caxed off because perusal or own document which is catered for under Ruic 9(3) cannot be charged again.

Item 45 on perusing of a 1 folio Notice is taxed at **USO 3.00.** Item 46 which is u repetition of item 43 is taxed off accordingly, while item 47 on the making of 8 copies or the bill of costs is taxed at **LISD l 00.00.**

Except item 54. item 48 to 55 on attendance by advocates in court before Lhe judges are taxed as prayed i.e **USO 50.00, U D 100.00, U D 80.00, USO 100.00, USD 100.00, USO 100.00, USD 100.00** respectively. Item 54 on perusal of judgment is taxed oITas it is a repetition of item 42. The supporting document produced by the applicant on Item 56 is dated 21 /07 /20 I l while the bill shows that the expenditure was incurred on 26/03/2010. Due to this discrepancy item 56 is accordingly ta'i.ed off.

Items 57 to 59 on making of copies are also taxed off on grounds that instead of the applicant producing receipts in support of payments made for tbe photocopying he produced invoices. The dates on the invoices did not also tally with the dates in the bill of costs on when the expenditure was incurred. Item 60 on fees paid upon filing the reference is taxed as prayed at **USO 500.00.**

ltcm 61 on travel by Precision Air to Arusha is taxed off because the applicant v.as not able to produce a receipt in support of the expenditure. A receipt was produced for Item 62 on vaccination of counsel at the airport and **l** therefore a llow and tax it at **USO 50.00.** Item 63 whose receipt of USD 50.00 was produced and conceded by the respondent is taxed at **USO 50.00.** Item 64 on accommodation and food is taxed off as it is not supported by any 1·eceipts.

Item 65 was conceded and is therefore allowed and taxed at **USO 18.20.** Again the applicant did not produce receipts in support of item 66 on lravel and I accordingly ta,x that item off. Proformer invoices instead of receipts were produced in suppcn1 of item 67 on accommodation consequently this item is taxed olI

On item 68 receipts for Tshs 160.000.00 in support were produced and at the rate of Tshs 1,500.00 to I Dollar. I tax the item at **USD 106.00.** No receipts were produced in support of items 69 to 75 on travel. airport transfer and accommodation. 1 therefore ta,'< items 69 to 75 off accordingly.

The sw11 of USO 50.00 is taxed off from item 76 on airpo11 transfer because the applicant produced only one receipt and the item is taxed at **USD 50.00.** Item 77 which was amended to read Tsbs l 02. 000.00 and whose receipts were produced and conceded to by the applicant is taxed and allowed. and upon conversion the item is taxed at **USO 68.00.**

Items 78 at1d 79 on travel and airport transfer are also taxed off because no receipts were produced in support of these expenditures.

Items 80 and 81 on the bill of costs are a repetition of items 43 and 44 which have already been taxed. No receipts were produced in support of item 82 as well and I Lhcrcforc tax off items 80 lo 82 accordingly. Hem 83 on travel and airport transfer for the hearing of the taxation whose receipts were produced and conceded is allowed and taxed at **USO 917.00**

Having considered and taxed each item from item 2 to 83 I award the applicant the total sum of USO 9. l 93.20 ( United Stales Dollars Nine Thousand One Hundred Ninety Three Twenty

Cents) only on all the said items and now go back to item 1 where submissions were made at length.

Item 1 is professional fees USD I 0.000.000.00 to instructions to Mr. Chris Bakiza and Justin Semuyabo to file the Reference No. l of 2010 against the Respondents in this Taxation Cause.

The Applicants were awarded costs as against !he 1~ 1 anc.1 2nd Respondents. The Court stuck off the 3rd anc.1 4th Respondents from the Reference and directed that the Applicants shall pay their costs.

Counsel for the Applicant submitted !hat the amount of USD \$10 million takes into account a number of factors. One was the two senior la"vyers instructed to undertake the application. the great international and political importance and that it was an intricate matter with novel legal points of the interpretation of the Treaty anc.l the protocols of the EAC. r le further submitted that the instructions included and constituted perusal of voluminous records of pleadings and affidavits including voluminous minutes of the EAC meetings and Council of Ministers plus numerous corresponding records which were exhibited by the parties. He also submitted that the matter imposed great professional and legal responsibility on preparation or the case in its conduct, research and examination of complex and important documents and authorities and taking into accoLmt that it was a novel matter. a landmark. the first case of its own kind in East Africa creating special ru1d general jurisprudence in the Community laws.

On principles behind the evaluation or the item on ins1mction lees, counsel for the applicant cited taxation causes of *Prof A11ya11g' Nyong'o mu/ Otlters Vs A ttorney Geueml of tlte Republic of Kenya and Others, Calist Mwatela and 2 Others Vs East African Comm1111ity, Modem Holdings (EA)Limited Vs the Kenya Ports Authority* and submitted that all these authorities agree that the Tax Master is entitled to use his discretion to assess such instruction fee as he considers just taking into account among others the nnture and importance of the cause or matter. the interest of parties. the general conduct of the proceedings, any discretion by a trial judge or any other relevant circumstances.

In justifying a claim for USD 1.800.000 in item 1 being VAT 18% of the instruction fee, Counsel for the applicant submitted that the law fim1s of the counsel are VAT compJiant in accordance with the laws of Uganda and produced a certificate to that effect. On the gelling up

fee Counsel for the Applicant submitted that it was charged in compliance with, Rule 2 under party and party, Pan A of lhe Second Schedule and that part) is entitled to getting up fee when his advocate gets up or prepares a case for trial.

In response to the Applicants submissions on item 1. Ms Christine Kaahwa counsel for the 2nd Respondent strongly opposed the USD \$ 10 million and submitted that it was excessive. obnoxious and that the application was not compl.ex in any way. She also submiued U1a1 there were no novel points or law and that the Respondents in this cause won in some of the issues although they were not awarded costs. She submitted that the pronouncement that came out of the Court was that there was loud silence in the Republic of Uganda not extending the jurisdiction by not making its submissions and the Secretary General not being able to police the Republic of Uganda which is not really a novel issue because if an action is not taken. it is on record Lhat it has noL been taken. She submitted Lhat evidence was by way of affidavit, so there was nothing like taking the witnesses and preparation where there is oral evidence tha1 is given in cow·t. On VAT she submitted that it be taxed according to what will have been taxed in item ).

On the getting up foe Counsel for the 2nd Respondent submitted that Counsel for the Applicant is not entitled to the getting up fee as the case dealt with affidavit evidence and not as a witnessed action.

Mr. Wilbert Kaahwa Counsel for the 1 st Respondents added onto Counsel for the 2 11 u Respondents submissions on item l by submitting that the amount is obnoxious and can have dire consequences for the development of our jurisprudence and organs and institutions. lie also submitted that principles which guide the discretion or the Court on matters of award of costs and taxation of costs require that an award must be reasonable. affordable and should not have effect or deterring litigants from seeking remedy in this court.

Mr. Kaahwa funhcr distinguished the *Prof. A,1\_w111g' Nyoug'o* case from the applicants case and submitted that in the applicants case the main point which was not a novel point of law was determining whether or not the 1 st nnd 2nd Respondent had delayed in implementing Article 27(2) of the Treaty and was not interpreting a poim or law but a question of interpreting a fact. He also submitted that the taxation in *Nyo11go 's* case which was more complex was not even as much as it is sought in this cause yet it was more complex with ten applicants, five respondents and four

interveners. ll was a case that went through many interlocutory applications and therefore became complex and required a lot of research. He also cited the *James Kotabazi's* case where the court found it necessary to have the costs awarded taking into account that the case was not as complicated as the case of *Anyang* · *Nyong ·o* which the applicant had sought to rely on.

Counsel for the l st Respondent concluded on item l by submitting that the USD \$ 10 million is not by any stretch of imagination a fair and reasonable amount in costs given the relative simplicity of Lhe case in Reference No. I of 20 I 0.

Mr. Kaahwa Collnsel for the l st Respondent responded to my question on what he thought would be the appropriate claim for cost on this item by saying:

··Your worship, having gone through previous decisions and taxation of costs b) this court, having read the celebrated decision in *Premclwnd Limited* mu/ *Another,* 1972 East Afri.ca page 162. I am sony I have not availed a copy of the decision. Taking into account all circumstances of this case. considering the nature of the case. its rckvancc to the Treaty. considering its relevance to tbc developmenL of the Community, I would think that a sum between USD \$50.000.00 and USO \$100. 000.00 would be just and reasonable".

1n his rejoinder counsel for the applicant submitted that the reference was to assist the court extend i1s jurisdiction and that Lhc taxing master in exercising his discretion he ough:L to be guiJed by the previous awards. 1--le submitted that the sum of USO \$50,000.00 stated by counsel for U1e l 51 Respondent is too low for a matter of this nature n.ntl that the sw11 of USD \$ l 0 million be awarded as prayed. He further submitted that getting up fees is awarded where a matter which \'\ ould have been settled went ahead for trial.

l have considered submissions by counsels for the Applicant and Respondents on item 1 above, I agree with the Respondents submission that the amount of USO \$ 10 million for instruction fee in this matter is excessive and unreasonable. The matter was not very complex and is distinguishable from the *AnyanR* · *Nyong'o* case which was more complex with many interlocutory applications and more parties than the Applictmts case herein. The Applicants case was almost similar in its complexity and amoum or work involved lo the case or *Ca/isl Andrew Mwatela* and the case of *James Katabazi* where lhe sum of USO\$ 12,000.00 and USD 50,000.00 for instruction foes was awarded respectively.

In view of the above and what counsel for the J s ' Respondent considered lo be a reasonable amount. l find that the sum reasonable in Item 1. having taken into account the subject matter. its nature. importance and complexity is USO \$ 65. 000.00. I also award getting up fee at one quarter of the instruction fee as per Rule 2( l) of the Second Schedule Scale of Charges, that is. USD \$ 16,250.00 making a total of USD 81, 250.00 taxable arnount plus 18% VAT USD 14.625.00. plus reimbursable USO 9. I 93.00 making a total sum of USO \$ 105.068.20 which I tax according!).

In total this bill is truced at USD \$ I 05,068.20 (United States Dollars One Hundred Five Thousand Sixty Eight and ·1 wenty Cents) only to be shared equally between the l st Respondent and 2nd Respondent

I so tax.

Dated at Arusha this 20111 day of January 2012

DR. JOI IN EUDES RUH/\NGfSA TAXING OFFICER