Uganda Revenue Authority v Rock Petroleum (U) Ltd (Civil Appeal 199 of 2013) [2016] UGCA 95 (8 November 2016)

Full Case Text

#### 'THE REPUBLIC OF UGANDA

IN THE COURT OF APPEAL OF UGANDA AT KAMPALA

## CIVIL APPEAL NO. 199 OF 2013

UGANDA REVENUE AUTHORITY....................................

VERSUS

ROCK PETROLEUM (U) LTD.................................... 10

### CORAM:

HON. MR. JUSTICE REMMY KASULE, JA HON. LADY. JUSTICE SOLOMY BALUNGI BOSSA, JA. HON. MR. JUSTICE KENNETH KAKURU, JA

(Appeal from the decision of the High Court of Uganda Commercial Division at Kampala before Hon. Justice *Masalu Musene, dated 23rd January 2013)*

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#### JUDGMENT OF THE COURT

This Judgment is in respect of *Civil Appeal No. 199 of 2013* arising from High Court Civil Appeal No. 707 of 2012 itself arising from High Court Taxation Reference 05-No. 009 of 2009. The decision of the High Court appealed from is the Ruling and order of Hon Justice Masalu-Musene, dated 23rd January 2013.

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By the order of this Court dated 4th December 2013, this appeal was consolidated and heard together with *Court of* Appeal Civil Application No.45 of 2013 in which the respondent is seeking orders to strike out the appeal herein on account that it is incompetent and no appeal lies, the appellant having failed to take necessary steps to prosecute the appeal.

This judgment therefore, is in respect of both the appeal and the application mentioned above.

APPEARANCES

When this appeal came up for hearing on 4th February 2015, the appellant was represented by learned counsel George Okello, Abdu Salaamu Waiswa and Fiona Akulu while learned counsel Ebert Byenkya, Oscar Kihika and Ali Siraj appeared for the respondent.

In *Court of Appeal Civil Application No 45 of 2013*, it was contended for the applicant (respondent in the main appeal) that no appeal lies as the appellant had failed to take some essential steps to prosecute it. For the applicant it was argued that the appeal was filed on $31st$ October 2013 out of the time stipulated by Rules of this Court, the decision appealed from having been made on 23rd Jan 2013.

Counsel argued that the time within which the appeal should have been filed started running on 13th March 2013 when the High Court provided the record of appeal to the $\sqrt{111}$

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applicant. The applicant's counsel contended that since the appeal was filed on 31st October 2013 it was well out of time of the sixty (60) days stipulated by Rule 83 of the Rules of this Court, and as such it was incompetent having been filed out of time.

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For the respondent (appellant in the main appeal) it was contended that the appeal was not filed out of time. By the operation of Rule 83(2) of the Rules of this Court time started running when the record of appeal was availed to the respondent. The record of appeal availed to the respondent on 13th March 2013 was incomplete, prompting the respondent to write to the Registrar of the High Court seeking to be availed with the complete record. The appellant contended further that the complete record was not availed until 7th October 2013.

Further, following the receipt of the complete record of proceedings the appellants' counsel prepared a record of appeal which was certified by the High Court Registrar on $31st$ October 2013 and on the same day the appeal was filed at this court following which it was served upon the applicant (respondent in the main appeal) on the $4th$ of November 2013.

The second leg of the preliminary objection was that the 30 appellants have no right of appeal from the order of a Judge of the High Court arising from a reference from a RM Registrar/Taxing master.

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We have carefully listened to the submission of all counsel, we have also perused the court record and the submissions of both parties.

We are satisfied that the appeal was filed within time stipulated by *Rule 83* of the Rules of this Court. Although a copy of the proceedings was ready for collection from the High Court on 13th March 2013, that record was not complete and as such it cannot be said to have been "the proceedings in the High Court" envisaged under the Rule 83 of Rules of this Court. What is envisaged under that Rule is a complete record of proceeding of the High Court. The complete record was availed to the appellant on the $7th$ of October 2013 and it was certified on 31st October 2013. The appeal was filed on that same day.

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We find that the appeal herein was filed within sixty $(60)$ days of completion of preparation of the High Court record of proceedings as required by *Rule 83 (2)* of the Rules of this Court. This answers the third leg of this application as to whether or not the appellant complied with all the steps required to prosecute this appeal. This issue is answered in the affirmative.

Even if we had found that the record of appeal had been filed out of time, we would still have been inclined to extend the time within which to file the appeal and we would have granted consequential extension of time regularizing the late filing of the appeal under *Rule 42(2)* of the Rules of this Court. This is because the justice of this

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case so requires as the appeal raises very important issues of law and involves colossal sums of taxpayers' money and as such it is of great public importance. Justice thus demands that this Court determines it on merit.

The third preliminary issue is:- whether or not the $10$ appellant has a right of appeal to this court." The law governing appeals to this court may be stated and summarized as follows:-

> "Article 134(2) of the Constitution provides for the right of appeal from decisions of the High Court. Its provides;-

"An appeal shall lie to the Court of Appeal from such decisions of the High Court as may be prescribed by law."

Under section 66 of the Civil Procedure Act, Cap 71, it is provided that;-

"Unless otherwise expressly provided in this Act, an Appeal shall lie from the decrees or any part of the decrees and from the orders of the High Court to the Court of Appeal".

And Section 10 of the Judicature Act states as follow;-

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"An appeal shall lie to the Court of Appeal from decisions of the High Court prescribed by the Constitution, this Act or any other law."

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In Makula International vs Cardinal Emmanuel **Nsubuga** case the Court of Appeal at page 3 of the judgment, expressly held inter alia that;

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"3. Under s. 68 (now 66) of the Civil Procedure

Act (Cap.65 now 71) an appeal lies as of right from the orders of the High Court not made under the Civil Procedure Act (as in this case) to the court of appeal. Section 82 (now 81) of the same Act provides that the provisions of part vii of the Act relating to appeals from original decrees shall apply to orders of the High Court made under section 68.

4. Where an order is made by the High Court on a matter brought to it by some statutory provision other than the Civil Procedure Act and Rules, it is appealable unless the appeal is specifically excluded by some special legislation ... This case did not fall in either of the two exceptions and therefore, an appeal lay as of right and this Court had jurisdiction to hear the appeal ..."

- The order of Justice Masalu-Musene J dated 23rd January 30 2013 was made pursuant to the provisions of the Advocates Act and as such the appellant could appeal against it as of right. - We accordingly find no merit in the grounds raised in Civit 35 Application No. 45 of 2013 and we hereby dismiss that,

application with costs to the respondent (appellant in the main appeal).

Court of Appeal Civil Appeal No. 199 of 2013

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- We now turn to the appeal itself. The memorandum of $10$ appeal states as follows;- - 1. The learned High Court Judge erred in law in upholding the decision of the taxing master of increasing the amount of instruction fees awardable to the Respondent under the 6th Schedule of the Advocates (Remuneration and Taxation of costs) Regulations S. I 267-4 by applying 10% of the value of the "subject matter" in the absence of a certificate by the trial Judge in HCCS No.009/2009 allowing a claim of a higher fee. - 2. The learned High Court Judge erred in law in upholding the use of a percentage of the value of a subject matter as a principle governing taxation of costs in the High Court when he allowed 8-9% of the value of the "subject matter".

3. The learned Judge of the High Court erred in fact and law in upholding the decision of the taxing master that the value of the subject matter was UGX. 58,184,191,050/= when the High Court charging order in Miscellaneous **Application** No.622 of 2010 (arising out of civil suit No.009/2009): Muwema & Mugerwa Advocates & Authority WW **Solicitors Uganda** Revenue US.

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confirmed the true value of the subject matter to 48,631,499,082/= for all be $U{\rm GX}.$ the $42$ companies/claimants.

4. The learned Judge of the High Court erred in fact and law in upholding the decision of the taxing master that the value of the subject matter was UGX. 58,184,191,050/= when the subject matter in High Court Civil Suit OS-No.009/2009 Rock Petroleum (U) Ltd vs. Uganda Revenue Authority was determination of whether the Appellant could legally impose and collect the increased Excise duty on diesel and petrol under the Excise Tariff (Amendment) Act No.5 of 2008.

5. The learned High Court Judge erred in law in making a paltry reduction of UGX. 818,419,105/= on the instruction fees of UGX. 5,818,419,105/= awarded by the taxing master in Originating suit No.009/2009 for interpretation of the provision of the Excise Tariff Amendment Act, No.5 of 2008, manifestly excessive the which in is circumstances.

The appellant prayed Court for orders that:-

a) The appeal be allowed.

b) The order of the High Court Reducing the instruction fees of the Respondent to $UGX$ 5, 000,000,000/= and that of the taxing master be, set aside.

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c) The Court substitutes the High Court award of instruction fees with a reasonable amount. in accordance with the scales under the Advocates (Remuneration and Taxation of Costs) Regulations or any other order as Court deems appropriate.

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d) The Respondent pays the costs of the appeal.

Grounds 1 and 2 were argued together. It was submitted for the appellant that the law applicable to taxation of costs at the High Court is Section 77 of the Advocates Act Cap 276 and Regulations 36 and 37 of the Advocates (Remuneration and taxation of costs) Regulations.

Counsel contended that the above regulations require the bill of costs at the High Court to be taxed under the sixth $20$ schedule of those regulations and not by percentages of the value of the subject matter.

Counsel submitted further that both the Taxing Master and the Honourable Judge erred in principle and reached a $25$ wrong conclusion when instead of applying the sixth schedule of the said regulation to the bill of costs they applied a percentage of the value of the subject matter. Makula International Ltd vs Counsel cited His Eminence Emmanuel Cardinal Nsubuga & Anor: 1982 $30$ [HCB] P.11, and Bank of Uganda vs Transroad Ltd Supreme Court Civil Appeal No. 3 of 1997 as authority for his proposition.

On grounds 3, 4 and 5, which were argued together, counsel for the appellant contended that a Taxing Master's decision maybe varied and or interfered with in assessing and arriving at the quantum of the fee allowed if a wrong principle was exercised or applied.

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Counsel contended further that a wrong principle includes an award of an amount that is manifestly excessive or manifestly low. It was further argued for the respondent that the Taxing Master and the learned Judge erred when they considered the value of the subject matter in High Civil Suit $O/S$ No. 009 of 2009 Court be to Ugshs.58, $184, 199, 050/=$ .

Counsel contended that the suit was only for determination of duty whether or not the appellant could legally impose 20 and collect the increased Excise Duty on diesel and petrol under the Excise Duty Tariff (Amendment) Act No. 80 of 2005. The amount set out above came about as a consequence of determination of that issue and it was ascertained only after the suit had been heard and $25$ completed. Counsel argued that the Judge and the Taxing Master erred when they considered the above stated amount to be the subject matter of the suit whereas it was not.

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Counsel also argued that the actual amount due to the respondent as a result of the successful suit was only shs. 3,350,560/= and that it was that amount upon which the instruction fees ought to have been based, without prejudice to the earlier argument.

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It was also submitted for the appellant that the suit for which the taxation bill arose was a simple application that was not complex. Further, that had both the Taxing Master and the learned Judge properly evaluated the evidence on record, they would have found that the application before court instituted by way of originating summons was a simple one which only involved a question of interpretation of the law and in which no witnesses were called.

Counsel asked this court to allow the appeal with costs.

In reply to grounds 1 and 2, the Respondent submitted that the Taxing Master could exercise discretion to reduce $20$ or increase the fees set out under the $6th$ schedule of the Advocates Act (Remuneration and Taxation of costs) Regulations, but must do so judiciously. In this case it was submitted that the Taxing Master had exercised her discretion to increase the instruction fees basing on the $25$ principles of taxation set out in the case of Makula International Ltd vs His Eminence Emmanuel Cardinal Nsubuga (Supra). Counsel also relied on the decision in the matter of Alexander Okello and in the matter of Kayondo & Co. Advocates: Supreme Court Civil Appeal $\mathbf{80}$ No. 8 of 1998. Further, counsel argued that the learned trial Judge correctly refrained from interfering with the discretion of the Taxing Master having been satisfied that no error in principle had been made.

Counsel submitted that it was in the discretion of the Taxing Master to determine, whether or not a matter, the subject of taxation was complex or not and as such a certificate of complexity is not a mandatory requirement as had been argued by the appellant's counsel.

On grounds 3, 4 and 5, counsel submitted that the learned Judge having found that the Taxing Master had applied the correct principles was not justified in reducing the sum awarded to the respondent by shs. $818,419,105$ which sum, counsel argued, was a large sum of money.

Further, counsel submitted that the bill of costs presented to the Taxing Master indicated the value of the subject matter to be shs.58,184,191,050/ $=$ , which value was never 20 challenged by the appellants. Therefore, counsel submitted, the Taxing Master was justified when she applied that value in the taxation of costs. It was further argued that the issue of the value of the subject matter had not been raised at the lower court and was only being raised on appeal, and as such it was ill conceived and ought to be rejected. He cited Mumtaz Kassam vs Ebrahim Kassam Supreme Court Civil Appeal No. 10 of 2006, as his authority for that proposition.

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Counsel maintained that the value of the subject matter was never in issue and as such the Taxing Master had applied the correct value of the subject matter and had $\frac{1}{88}$ $\frac{1}{2}$ come to the right conclusion.

He asked court to dismiss this appeal with costs.

Resolution of the grounds of appeal

We have carefully listened to submissions of all counsel in $10$ this appeal. We have also read the record and the authorities cited to us. We are mindful of the duty of this court as a first appellate court, which is to reappraise the evidence and to come up with our own inferences on all issues of law and fact. See; *Rule* $30(1)$ of the Rules of this $15$ Court and Fr. Narsensio Begumisa Vs Eric Tibebaga: Supreme Court Civil Appeal No. 17 of 2002.

## Ground 1 and 2

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This appeal arises out of a decision and order of Justice $20$ Masalu Musene J dated 29th January 2013 in which he largely upheld and slightly varied the decision of the Registrar of the High Court sitting as a Taxing Master in High Court Originating Summons No. 9 of 2009. The decision of the Taxing Master is dated 9th November 2012. $25$

The brief background to the above two decisions, as far as, we could ascertain from the record is as follows:-

The respondent, a Petroleum Company brought a suit at $\overline{10}$ the High Court on 1st September 2009 by way off Originating Summons seeking for the determination of the following questions;-

- 1. Whether the Defendant could legally impose and collect the increased Excise duty on Diesel and Petrol from 1st November 2007 onwards under the Excise Tariff (Amendment) Act No.5 of 2008. - 2. Whether the Plaintiffs are entitled to a refund of monies collected by the Defendant from the 1st. November 2007 onwards under the Excise Tariff (Amendment) Act No.5 of 2008. - The Originating Summons were accompanied by an 15 affidavit deponed to by one Papoaka Allen Dokoria who is stated to be a director of the plaintiff company and it is dated 28th August 2009. Prior to the filing of the suit the plaintiff had sought and obtained leave of court to file a representative suit on behalf of other petroleum companies, $20$ which were similarly interested in having the question raised in the originating summons answered, by court. The reasons why it was important for the question in the suit to be answered and the nature and complexity of the suit are well set out in the said affidavit as follows; -25

That the plaintiff together with numerous $2.$ beneficiaries of this suit were importers of Diesel and Petrol products in Uganda in the financial year $2007/2008$ . A list of the importers is attached hereto as annexture "B".

3. That during the financial year 2007/2008, the Government of Uganda increased Excise Duty on Diesel from Ushs. 450 to Ushs.530 and on Petrol $\mathcal{R}$

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from Ushs. 720 to Ushs. 850, which the defendant started collecting from 1st July 2007. A copy of the Budget is attached hereto as annexture "C".

4. That according to information received from the plaintiff's lawyers M/S. Muwema & Mugerwa Advocates, which information I verily believe to be true.

5. That the plaintiff together with the other Diesel and Petrol importers in Uganda are therefore interested in the proper construction of the Excise Tariff (Amendment) Act No.5 of 2008 as regards the imposition and collection of Exercise duty there under for the purposes of determining the 23rd January, 2009.

6. That this matter is clear and straight forward as it only requires an interpretation of the said Excise Tariff (Amendment) Act No. 5 of 2008 and the attendant corrigenda and will not require adducing other evidence outside this affidavit.

7. That I depone hereto in support of the Originating summons to determine the proper construction of the Excise Tariff (Amendment) Act No. 5 of 2008 and the rights of the plaintiffs and numerous Diesel and Petrol importers to a refund of monies collected under the said Act.

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The Court heard the suit and determined the question, set out therein on 20th July 2010. It issued an order in the following terms:-

1. The Defendant legally assessed and collected Excise Duty at the rates proposed in the budget estimates for the Financial Year 2007/2008 from. 1st July to 1st November 2007 and from 27th June 2008 onwards.

2. The Defendant could not legally impose and collect the increased Excise Duty on Diesel and **Tariff** Petrol imports under the Excise (Amendment) Act No. 5 of 2008 from the 1st November 2007 when the Provisional Collection Order expired up to the 27th June 2008 when the Excise Tariff (Amendment) Act No. 5 of 2008 was published in the Gazette.

3. The Defendant shall within thirty (30) days from the date of this Judgment, file in Court an account of all monies collected from each of the diesel and petrol importers in excess of Ugshs. $450/$ = per litre of Diesel and Ugshs. $720/$ = per litre of Petrol between 1st November 2007 and June 2008.

4. The Defendant shall refund to each of the Diesel and Petrol Importers all the monies so collected in excess.

5. The Defendant doth pay the costs of this suit.

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The above order was extracted by counsel for the plaintiff, now respondent, and approved by the counsel for defendant, now appellant. It is also dated 20th July 2010.

On the same day the appellant furnished Court with an account of the excess collection from 1st November 2007 to $27th$ June 2008. The account revealed that the appellant had collected excess tax from 42 petroleum companies amounting to shs. $58,184,191,050/$ =. This figure being audited and conceded total excise duty refunds due to all the 42 petroleum companies listed in the representative suit. This was down from shs.48,631,499,082/= arrived at before audit.

However, before the final audited figure of shs.48, $631,499,082$ = had been arrived at the respondents' 20 Advocates had on 24th October 2012 filed a bill of costs for taxation under the Advocates Act stating the subject matter of the suit to be shs.58, 184, 191, $050/$ =. The taxation proceeded on that basis.

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The taxing master Margaret Tibulya Deputy Registrar (As she then was) delivered her ruling on 19th November 2012, below are the relevant excerpts.

"In taxing a bill, the court is obliged to first find the appropriate scale fee in the $6^{th}$ scheduled then consider whether to increase or decrease of course giving reasons either way

Under the sliding scale in the $6th$ schedule using the sum of Shs. 58,184,191,050/- as the factor the fee would come to about Shs. 583,029,405/-. Taking into account the nature of the case - a representative action affecting 'an entire industry, the amount of research and industry employed to prosecute it, and the interests involved, in my view that is a matter that deserve increasing the rate beyond the scale in the $6th$ schedule.

I review the authorities that were availed. From the authorities, courts have been awarding fees in percentages of between 8-10% of the value of the subject matter.

Considering the nature of the matter, the interest involved the value of the subject matter and the principles laid down in the authorities that were cited, a 10% of the value is reasonable as instruction fees. I award the sum of Shs. 5,818,419,105/- as fees. The total award include 18% VAT that is Shs.6, 884,319,684/".

The appellant was dissatisfied with the taxation ruling and sought a Reference to the Judge on 13th November 2012. The Reference sought the following orders:-

1. Part of the Taxing Officer's decision in Civil Suit No.9 of 2009, which relates to item 1 of the Respondent's Bill of Costs be set aside and / or reviewed.

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2. Execution on account of the taxed bill of costs in the above Civil Suit be stayed pending the appeal against the Taxing Officer's decision.

3. Costs of this Appeal be provided for.

The Reference was heard by Hon. Justice Masalu-Musene J who delivered his ruling on 23rd January 2013. He made the following orders:-

1. Item 1 of the Respondent's Bill of Costs be and is hereby reduced from Ug.shs. 5,818,419,105/= (Uganda Shillings Five Billion Eight Hundred Eighteen Million Four Hundred Nineteen Thousand **Hundred** One and **Five** onlu) to Ug.shs. $5,000,000,000/=$ (Uganda Shillings Five Billion only).

2. All the other items will remain as taxed by the Learned Registrar/Taxing Master.

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## 3. Each party will bear their costs of appeal.

This is the order that is the subject of this appeal. We find that the suit at the High court was a contentious matter and therefore falls under Regulation 37 of the Advocates (Remuneration and taxation of costs) Regulations. That regulation stipulates;-

"37 Costs in High Court and Magistrates courts according to $\beta$ 5

Sixth Schedule. A bill of costs incurred in contentious proceedings in the High Court and in the Magistrates courts shall, subject to any order pronounced by the court in regard to any particular case, be taxable according to the rates prescribed in the Sixth Schedule to these Regulations"

Accordingly the Taxing Master should have applied schedule 6 of those regulations in the taxation of the bill of costs. The Taxing Master decided to apply a percentage rate $1.5$ rather than the sliding scale under the 6th schedule, because in her view the suit was complex, required a lot of research work and affected the entire petroleum industry.

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With all due respect to the learned Taxing Master, there 20 was no basis whatsoever upon which such conclusion could have been made. The affidavit in support of the originating summons already set out above clearly stated that "the matter was clear and straight forward as it only requires an interpretation of the said Excise Tariff 25 (Amendment) Act No. 5 of 2008 and will not require adducing of any evidence"

Indeed the pleadings in this case covered just a few pages less than 10 in total. We therefore do not accept the finding 30 of the Taxing Master that this matter was complex. No reasonable tribunal having properly evaluated the evidence on record would have made such a baseless finding as did

the Taxing Master. The learned trial Judge, with all due respect, erred when he upheld it.

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Our own finding is that the suit was a very simple one as all suits brought by way of Originating Summons are required to be and ought to have been treated as such.

Be that is it may, under regulation $6(ix)$ whenever an advocate considers a matter to be complex, the regulation requires that the Advocate applies to the court, which issued the decree for a certificate to allow him or her to claim a higher fee. Upon such an application court must determine and specify the fraction or percentage to be applied. It appears to us clearly that an application brought under this sub-regulation $(6(ix)$ must be made and determined before a bill of costs is presented to court for taxation is taxed.

The learned Taxing Master erred in our view when she applied a percentage rate in absence of a certificate of complexity, which is a mandatory pre-requisite. The word 25 'may' in that sub-regulation refers only to the option of party to apply or not to apply for such a certificate. In this case therefore, even if we had found the matter to be complex, which we have not, we would still have set aside the formula of 10% applied by the taxing master, the same 30 having been applied in absence of a certificate $<$ $\Lambda$ . complexity.

The taxing master therefore erred when, without any justification, she applied a rate of 10% to item one of the bill of costs. The rate was extremely excessive and we set it aside. We find that the bill of costs ought to have been taxed under the 6th schedule of the regulations mentioned above.

Having determined that the bill of costs should have been taxed under the 6th schedule, we now have to find whether or not the provisions of that schedule were complied with specifically as regards the value of the subject matter.

6th Schedule stipulates as follows;-

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"6(i) to sue or defend in any other case or to present or to oppose an appeal where the value of the subject matter can be determined from the amount claimed or the Judgment"

In the Originating Summons reproduced above the plaintiff 25 was only seeking interpretation of the law. The resultant order was only answering the question and as such no monetary award was made. The Taxing Master therefore could neither have ascertained the value of the subject matter from the claim nor from the Judgment. 30

With all due respect to both the learned Taxing Master and the learned Judge, both erred when they found that the subject matter of the suit was shs.58, 184, 191, $050/\blacktriangleright$ There was absolutely no basis for such a finding. That

amount was never pleaded neither was it even awarded. In 5 the event that the suit had been lost, the appellant would not have based instruction fees on that amount and the respondent would never have been required to pay it. The law must be applied equally to all parties. We cannot envisage a situation where the respondent would have been $10$ ordered to pay over 5 billion shillings as instruction fees to the appellant simply because a question of law had not been determined in its favour.

The amount of shs. $48,631,499,082$ was only arrived at $15$ after the suit had been concluded and in answer to the question that had already been determined by the Court. That figure was the consequence of the determination of the suit and not its subject matter. Even then it was the total sum of all the amounts payable to all the 42 $20$ claimants. Each claimant had a separate and distinct respondent The only claim. was entitled to $3,350,560/=$ . The other beneficiaries had shs. not instructed the respondent's counsel to bring that suit on their behalf. They were not party to the suit and as such $25$ could not have been condemned to pay costs. They were "free riders". See:-Supreme Court Civil Appeal No. 02 of 2013, SHELL (u) LTD and 9 Others vs Muwema and Mugerwa Advocates and Solicitors and Uganda Revenue Authority. 30

In that case *Kitumba Ag. JSC* while considering the cross appeal the stated as follows;-

"I agree with counsel for the appellants. The that was obtained to order represent the appellants was specifically to represent them in court to have their money refunded by URA. It did

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not authorize Rock Petroleum (U) Ltd at any one time to enter into a remuneration agreement that was to charge 16% of their money without their consent. Rock Petroleum (U) Ltd and the 1st respondent should have consulted the appellants **before** entering into such an agreement. I do not, therefore, accept counsel for the $1st$ respondent's submission that the representative order gave Rock Petroleum (U) Ltd power to enter into a **remuneration agreement."**

Further on at page 57 of her Judgment the learned Judge states as follows;-

"The appellants being innocent parties here should not be left to suffer the loss caused by Rock Petroleum (U) Ltd and the $1^{st}$ respondent. This is because the representative order obtained was to represent the 10 oil companies in court and not to enter into a remuneration agreement which turned out to be unenforceable. The said never even brought to the agreement was Appellant's notice even when the $1st$ respondent knew it would bind them in future.

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The appellants should not be made to pay costs incurred by the $3rd$ respondent as stipulated in the fee agreement which they were never party to. Mulyagonja, J. referred to the case of Moon v Atherton [1972]2 Q. B 435 per Lord Denning in Market v Knight Steamship Co. Ltd [1910]2 QB 435 1021, where it was held that the other represented parties are not liable for costs, but will be bound by the estoppels created by the decision. They are "free riders" on the suit and are under no obligation under the law to pay fees or costs unless ordered to do so by court.

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The 10 oil companies being beneficiaries in the representative action were "free riders" on the suit which was brought by Rock Petroleum on their behalf. They were under no obligation to meet the costs of the suit incurred by the $3^{rd}$ respondent unless court so ordered."

From the above decision of the Supreme Court we find that even if Court had held that the value of the suit could be ascertained from the amount refundable to the respondent the value of which is $shs.3,350,560/$ = the amount that was due to the respondent, applying a sliding scale set out

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in schedule 6 (a), would be shs. $475,500/$ as instruction fee.

However, we have already rejected the above argument, having found that the value of the suit could be ascertained from both the pleadings and the judgment. Taking into account all the circumstances of this Court, we would award the respondent shs. 3,000,000/ $=$ as instruction fees on item one of the bill of costs.

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We would accordingly set aside the order of Justice Masalu $15$ Musene and substitute it with the following orders under Section 11 of Judicature Act.

> 1) This appeal is hereby allowed and the Judgment of the High Court in High Court Taxation Reference No. 009 of 2009 is hereby set aside and substituted with the Judgment of this Court.

2) The instruction fee payable to the respondent on item one of the bill of costs is determined by this court to be shs. $3,000,000/=$ .

3) All the money paid to the respondent and or his advocates as legal costs in High Court Taxation Reference O/S-No. 009 of 2009 is to be refunded less the taxed costs with the instruction fee therein being shs.3,000,000/= as determined in this Judgment within 30% (thirty) days from date hereof.

4) The money deposited in Court as security for due performance of the decree by the appellant be refunded forthwith.

5) The respondent pays the costs of this appeal.

Dated at Kampala this....................................

HON. REMMY KASULE

JUSTICE OF APPEAL

$PMG$ HON. SOLOMY BALUNGI BOSSA

JUSTICE OF APPEAL

HON. KENNETH KAKURU JUSTICE OF APPEAL

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