Vantage Mezzanine Fund II Partnership v Simba Properties Investment Co. Limited & 5 Others (Taxation Appeal 14 of 2024) [2025] UGCommC 23 (13 March 2025)

Full Case Text

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# **IN THE HIGH COURT OF UGANDA SITTING AT KAMPALA COMMERCIAL DIVISION**

Reportable Miscellaneous Taxation Appeal No. 0014 of 2024 (Arising from Civil Suit No. 0201 of 2021)

In the matter between

# **VANTAGE MEZZANINE FUND II PARTNERSHIP APPELLANT**

**And**

# **1. SIMBA PROPERTIES INVESTMENT CO. LTD**

- **2. SIMBA TELECOM LIMITED** - **3. PATRICK BITATURE** - **4. CAROL BITATURE** - **5. ELGON TERRACE HOTEL LIMITED** - **6. LINDA PROPERTIES LIMITED RESPONDENTS**

**Heard: 4th March, 2025. Delivered: 13th March, 2025.**

*Civil Procedure - Pleadings - Alternative claims and case theories - An alternative claim is typically prepared for possibly different interpretations of the same legal facts and legal relationship, rather than for different legal facts or legal relationship - in case of alternative pleading, both the primary claim and the alternative claim should contain the specific claim with supporting facts and causes of action - A pleading must not contain inconsistent allegations of fact or inconsistent grounds or claims except as alternatives - Where the theories are inconsistent or contradictory the pleading should succinctly distinguish between the primary theory or claim and the alternative theory or claim.*

*Taxation of costs - It is the duty of the Taxing Officer to consider each and every item presented to him or her in the bill of costs - The term "subject-matter" refers to the central issue or controversy that forms the basis of a legal dispute - The value of the subject matter* *of a suit, for the purposes of taxation of a bill of costs, ought to be determined from the pleadings, judgment or settlement - It is the value of the claim or question before Court which constitutes the material over which there is litigation which is the determining factor, and not the value of the property to which it relates or from which it springs.*

#### **JUDGMENT**

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#### **STEPHEN MUBIRU, J.**

The background;

- [1] On or about 11th December, 2014 when the respondents executed an agreement (the Mezzanine Term Facility Agreement) with the M/s Vantage Mezzanine Fund II Partnership by which the said applicants borrowed a sum of money, secured by property registered in the names of the respondents. Differences having arisen between the parties regarding the repayment of that loan, the respondents filed Civil Suit No. 988 of 2019 in this Court. The appellant filed a defence to the suit by which it indicated it would contest the propriety of the proceedings and the jurisdiction of the Court. The appellant thereafter filed Miscellaneous Application No. 201 of 2020 by which it sought a stay of the suit on account of the fact that the Mezzanine Term Facility Agreement contained a valid, binding and enforceable arbitration agreement / clause between the parties, by virtue of which the dispute should be referred to and resolved through arbitration. - [2] In a ruling delivered on 16th June 2021, the Court decided that since there existed a "valid, operative arbitration clause capable of being performed, and that there [was] an arbitrable dispute between the parties herein, it [was] ordered that the matter be and [was] accordingly referred to arbitration" in accordance with Section 5 of *The Arbitration and Conciliation Act*. Accordingly, Civil Suit No. 988 of 2019 and all legal proceedings and orders thereunder were dismissed and / or vacated or set aside by the Court. The costs of the application, those of the suit and the proceedings thereunder were awarded to the appellant. On 22nd July, 2021, the appellant filed and served its bill of costs combining the costs due in both HCCS

No. 988 of 2019 and Miscellaneous Application No. 201 of 2020, alongside Misc. Application No. 1106 of 2019 and Misc. Application No. 0548 of 2021 that arose from the same suit.

#### The Ruling of the Learned Deputy Registrar;

[3] In her ruling delivered 17th October, 2024, the learned Deputy Registrar taxed the bill of costs and allowed it a sum of shs. 104,099,300/=. As part of this sum, the learned Deputy Registrar awarded an instruction fee of shs. 90,000,000/= on grounds that;

> The first key determination to be made, therefore, is whether or not the value of the subject matter of Civil Suit No. 0988 of 2019 from which the present bill now sought to be taxed arises is known or ascertainable. In dealing with this question, it is pertinent for me to clarify on what is meant by the phrases "subject matter value of a suit" or "value of the subject matter of a suit." The *Black's Law Dictionary*, 9th Edition, at page 1561, defines the phrase "subject matter" as "the issue presented for consideration". In addition, at page 1690, "value" is defined as "the monetary worth or price of something". In view of these two definitions, I am of the considered opinion that the phrases "subject matter value of a suit" or "value of the subject matter of a suit" refer to the monetary worth of the issue(s) presented for consideration in a suit.

> In determining the value of the subject matter of a suit, the subject matter of the suit should be identified first, and then value thereof would also be determined. In trying to isolate and identify what the subject matter of Civil Suit No. 0988 of 2019 was, I am persuaded by the decision in *Bank of Uganda v. Sudhir Ruparelia & Anor, SC Taxation Reference No. 0001 of 202*3 which challenged the taxation of 2 bills arising from 2 applications in an appeal before the Supreme Court of Uganda. The Registrar of the Supreme Court had awarded instruction fees in the 2 bills on the basis of the value of the claim in the original suit in the High Court which had been UGX 458,606,827,259.

> At the hearing of the Reference, it was contended that the claim in the plaint in the High Court was not the value of the subject matter

of the appeal in the Supreme Court. In resolving that contention, Chibita, JSC. held that:

It is evident from the above extracts, that the taxing master relied on the value of the subject matter to arrive at the quantum of instruction fees. I respectfully disagree with the taxing officer. The amount involved in the appeal or subject matter of a case is indeed one of the factors a taxing officer may rely on to arrive at the quantum of instruction fees. Be that as it may, the value of the subject matter was not the question for determination in this court. The question before this court in Civil Appeal No. 07 of 2020 was mainly the determination of the scope of the powers of a receiver under *The Financial Institutions Act*.

The High Court Civil Suit No. 0493 of 2017, which involved the monetary subject matter was never heard on its merits. The respondents filed HCMA No. 320 of 2019 challenging the *locus standi* and existence of Crane Bank ltd (in receivership). Court held that the plaintiff was non-existent and therefore could not institute any suit. Court further held that there was no cause of action. It is important to note that the appeal in the Court of Appeal and the subsequent appeal to this Court emanated from the above ruling which sprung fresh questions for determination revolving around receivership under the Financial Institutions Act. The aim of the appellant in both appellant courts was for court to set aside the Ruling and order that the case be heard on its merits in the High Court. The monetary value involved in the Principal suit in the High Court could not therefore be a dependable factor in the awarding of instruction fees." Emphasis mine.

In applying *Bank of Uganda v. Sudhir Ruparelia & Anor* (supra) to the facts of the instant case, it is clear that the actual issue(s) presented in Civil Suit No. 0988 of 2019 have to be aptly identified in order to know what the true subject matter of the suit was, notwithstanding the fact that that suit arose out of a loan contract which was claimed to have been breached through non-payment of the same. Many more legal and factual issues can arise out of a loan contract other than the amount due from the borrower in case of breach. As such, it is not that the outstanding loan balance will always be the subject matter value of every suit arising from a loan. I have examined the 13 paragraphs and 14 prayers in the amended plaint in Civil Suit No. 0988 of 2019. The gist of the Plaintiffs' case in the amended plaint, as I have understood it, is that the Plaintiffs believed that the Mezzanine Term Facility Agreement which they had entered into with the 1st Defendant on 11th December 2014, and through which they secured a loan of USD 10,000,000 from the 1st Defendant, was illegal on grounds that it amounted to the 1st Defendant conducting financial institution business in Uganda without being duly licensed, among other grounds.

This was the bedrock of the remainder of the Plaintiffs' claims in the amended plaint. The Plaintiffs believed that, as a result of the alleged illegality of their facility agreement, the arbitration clause therein was void, their commitments to accord the 1st Defendant directorship and shares as a condition for the loan were void and, most notably, the demand for payment of the outstanding loan balance then stated to be USD 26,486,633.78 was null, void and unenforceable. In essence, the Plaintiffs' claim in the suit was that nothing comes of nothing and that the illegality of the credit facility agreement incurably poisoned and infected it. The alleged illegal credit facility agreement lay at the heart of the suit and it was the central question to be determined. The rest of the questions were peripheral and dependent on it……... I acknowledge that, in paragraph 11 and prayer 9 of the amended plaint, the Plaintiff's sought a finding and a declaration that the 1st Defendant's demand for payment of USD 26,486,633.78 was null, void and unenforceable. Alternatively, but without prejudice to that declaration, the Plaintiffs sought a declaration that the said amount was unconscionable, excessive and extortionate. The main part of that contention and prayer was that the demand was null, void and unenforceable. The existence and, or, accuracy of the loan debt claimed was a secondary contention and its consideration by Court was contingent on the findings from the primary contention.

After considering these circumstances and facts, I am convinced that the value of the subject matter of Civil Suit No. 0988 of 2019 was not known and, or, discernible from the face of the amended plaint. I do not agree with counsel for the 1st Defendant that the value of the subject matter of Civil Suit No. 0988 of 2019 was USD 26,486,633.78 as claimed. The suit was not for the recovery of that sum and neither was it drawn primarily for ascertainment of the existence and, or, accuracy of the claim for that sum. As elaborated above, that sum was brought into the suit on the periphery of the claim that the loan agreement from which it arose was illegal and unenforceable. For that reason, the suit primarily called the Court to make a decision on the legality of the entire credit transaction and not the existence and, or, accuracy of any loan debt or whether that loan debt was recoverable at the time.

My considered decision is, therefore, that the subject matter value of Civil Suit No. 0988 of 2019 is not known or determinable from the amended plaint and that the scales for fees set out in the Item 1 of the 6th Schedule to *The Advocates (Remuneration and Taxation of Costs) Regulations* (as amended) are not applicable in this case. Item 1 of the bill as drawn is, thus, rejected and, in assessing and awarding instruction fees for the brief in Civil Suit No. 0988 of 2019, I will resort to the common law principles I outlined earlier in this ruling.

In the alternative, but without prejudice to the foregoing, even if I was to accept that the later parts of paragraph 11 and prayer 9 of the amended plaint which present an alternative assertion that the claim for USD 26,486,633.78 was unconscionable, excessive and extortionate essentially put the existence of the said loan debt into issue in the suit, I am still confident that that alone does not render USD 26,486,633.78 to be the subject matter of that suit.

[4] On that basis, the learned Deputy Registrar was not persuaded by the argument by counsel for the appellant. She awarded instruction fees of shs. 90,000,000/= to counsel for the appellant for their brief to represent the appellant in Civil Suit No. 0988 of 2019.

# The grounds of appeal;

- [5] Being dissatisfied with the decision, the appellant appealed to this court on the following grounds, namely; - 1. The learned Registrar/Taxing Master erred in law and fact when she erroneously awarded the sum of Ug. Shs. 90,000,000 as instruction fees in HCCS No. 988 of 2019. This sum was manifestly low, unfair, and inconsistent with the Advocates

(Remuneration and Taxation of Costs) Regulations and established principles on taxation of costs.

- 2. The learned Registrar/Taxing Master erred in law and fact when she failed to apply the appropriate scales in assessing and awarding instruction fees under Item 1 (1) (g) of the Sixth schedule of the Advocates (Remuneration and Taxation of Costs) Regulations in taxing the Appellant's Bill of costs in HCTA No. 473 of 2021, and taxing the rest of the items in the Bill of Costs. - 3. The learned Registrar/Taxing Master erred in law and fact in failing to award the Appellants instruction fees based on the ascertained value of the subject matter of USD 26,486,633.78 in HCCS No. 988 of 2019. - 4. The learned Registrar/Taxing Master erred in law and fact when she ignored and failed to apply established taxing principles the court has laid down in numerous decisions to the effect that the scale under Item 1 (1) (g) of the sixth schedule is mandatory and not discretionary. - 5. The award was unreasonable, disproportionate and inconsistent compensation and remuneration for the work that the advocates in the matters did. - 6. The Registrar/Taxing Master misdirected herself, misconstrued and consequently misapplied the principles on which she relied to award the instruction fees and to tax the bill of costs. - 7. It is just, fair, equitable and in the interest of commercial justice that the court enhances the instruction fees due to the Appellant in HCCS No. 0988 of 2019 vide HCTA No. 0473 of 2021l. - [6] On that account, the appellant seeks declarations and orders that; (i) the Deputy Registrar misdirected herself in the taxation of all the items in the bill of costs; (ii) the Court sets aside the learned Deputy Registrar/Taxing Master's award of the sum of shs. 90,000,000/= as instruction fees to the Appellants for being inaccurate, erroneous and manifestly low, unfair, and for violating the law and principles on taxation of costs; (iii) the Court taxes the bill of costs afresh and enhances the award by substituting the instruction fee that the Deputy Registrar awarded with the correct applicable and appropriate scale under Item 1 (1) (g) of the sixth

schedule, of *The Advocates (Remuneration and Taxation of Costs) Regulations*; (iv) the Court substitutes all other items in the bill that the Deputy Registrar erroneously reduced and excluded without just cause; and (v) the Court awards the Appellant costs of this appeal and the impugned taxation proceedings.

# The grounds of cross-appeal;

- [7] Being dissatisfied with the decision, the respondent cross-appealed to this court on the following grounds, namely; - 1. The instruction fees awarded in Taxation Application No.04 73 of 2021 was highly excessive and based on wrong principles of law. - 2. High Court Civil Suit was never heard and/ or determined at all and as such the value of the subject matter was not required. - 3. The taxing master did not use her discretion judiciously and. did not give reasons for the decision for her taxation ruling and the same stands to be challenged. - 4. The costs awarded were meant to punish the Cross-appellants. - [8] On that account, the respondent/ cross-appellant seeks declarations and orders that; - (i) the taxation award of the Deputy Registrar /Taxing Master of instruction fees in Taxation Application No.04 73 of 2021 to the appellant be set aside for being inaccurate, manifestly excessive, unfair, highly unconscionable and penal; (ii) a reduced award of a reasonable, fair and proportionate instruction fees be granted; and (iii) the respondents are awarded costs of this cross-appeal.

# The submissions of counsel for the appellant/cross-respondent;

[9] Counsel for the appellant submitted that the Learned Deputy Registrar misapplied the principles relating to the subject matter of the suit. It was a bill of costs under the suit incorporating the applications arising thereunder. There were two subject maters being the amount claimed in the suit and the procedural ones in the applications. She treated the subject matter of the suit as though it was that in the applications. She disregarded the subject matter of the main suit, which was a liquidated claim stated in the body of the plaint and in the reliefs. Para 3 of the affidavit in support raises the issue of complexity. The submissions involved voluminous documents. The defence included licencing, interest calculations, capital markets, charges on shares and mortgages. Counsel needed to file a defence before objecting. No advocate could have charged such a low fee for such complex work. A number of items were ignored without reason, such as the items on instruction fees on the three applications.

[10] Items, 47, 79 and 141 were not commented on. Paragraph 4 of the Chamber Summons founding the appeal canvassed the rest of the items excluded without just cause. They were twinned claims. The respondents were seeking a discharge from a debt. The causes of action were twinned. It was the first decision in Uganda on mezzanine financing. Practitioners in Uganda are not exposed to this area of financing in their training. The financing issues in the suit were unique such as mezzanine financing. The facts in the *Sudhir Case* are distinguishable. In that case the appeals were related only to applications arising from the suit which was never litigated. The decision was misapplied.

#### The submissions of counsel for the respondents/cross-appellants;

[11] In response, counsel for the respondents/cross-appellants submitted that the appeal before this Court regards instruction fees only, and not any other items in the bill of costs. The Registrar was of the view that the subject value of the suit could not be ascertained. Although the respondent sought relief from a debt, the relief was not quantified. She applied the decision in a reference to the single Justice in *Bank of Uganda v, Sudhir Ruparelia and another, S. C. Civil Reference No. 0001 of 2023* and she came to the conclusion that matter of illegality render the value of the suit unascertainable. The subject value was not liquidated, since it was based on illegalities. In this case the subject of contention was not the amount outstanding but the legality of the contract. The Registrar condes it binding. I support the ruling that the main claim was illegality and the subject value could not be ascertained. The entire fee was not earned. The advocate is not entitled to the full sum. The fee should be scaled according to the stage of the proceedings. In the main suit no steps were taken beyond the pleadings. There was nothing novel and complex. The aspects cited by counsel for the appellant are not novel.

#### The decision;

- [12] There is no inherent, inferred or assumed right of appeal (see *Mohamed Kalisa v. Gladys Nyangire Karumu and two others, S. C. Civil Reference No. 139 of 2013*). According to section 62 (1) of *The Advocates Act*, any person affected by an order or decision of a Taxing Officer may appeal within thirty days to a judge of the High Court. The appeal in the instant case is from a ruling of a Taxing Officer delivered on 17th October, 2024. The time allowed for appeal expired on 17th November, 2024. The appeal was filed on 16th November. 2024, which is within time. The cross-appeal was filed on 27th November, 2024 which is ten days out of time, without the respondents/cross-appellants having sought enlargement of time. - [13] An appeal filed out of time without first obtaining leave to enlarge time is bad in law (see *In the matter of Rev. Fr. Obadia Kabande and five others, [1972] HCB 100; In the matter of Rev. Fr. D. A. Atim and five others [1973] HCB 100*; *Komunda P. and two others v. A. Katuramu [1994-95] HCB 85; Mayanja Grace v. Yusufu Luboyera [1977] HCB 133* and *Sewan Sigh Bahra v. Halling Manzoor [1998-2000] HCB 37*). However, according to Order 51 rule 6 of *The Civil Procedure Rules*, where a limited time has been fixed for doing any act by order of the court, the court has power to enlarge the time upon such terms, if any, as the justice of the case may require, and the enlargement may be ordered although the application for it is not made until after the expiration of the time appointed or allowed. The rule envisages four scenarios in which extension of time for the doing of an act so authorised or required, may he granted, namely; (a) before expiration of the limited time; (b) after expiration of the limited time; (c) before the act is done; (d) after the act is done. Proportionality is key to a proper application of these powers. While the court may properly allow extra time for compliance, there will come in the end a stage where the only order which is fair and which does not infringe the purpose of the original order is that of dismissal of the application. Irrespective of the timing, extension of time will be granted where it is found that the mistake was that of the court (see *Mansukhalal Ramji Karia and Crane Finance Co. Ltd. v. Attorney General and two others, S. C. Civil Application No. 1 of 2003*).

- [14] While a step taken out of time is voidable, it may be validated by extension of time. An extension of time may be granted even where the step has been taken out of time and before the application (see *Shanti v. Hindocha and others [1973] 1 EA 207; Mansukhalal Ramji Karia and Crane Finance Co. Ltd. v. Attorney General and two others, S. C. Civil Application No. 1 of 2003; Godfrey Magezi and another v. Sudhir Rupaleria (2), S. C. Civil Application No. 10 of 2002* and *Crane Finance Co. Ltd v. Makerere Properties Ltd, S. C. Civil Appeal No. 1 of 2001*). Time may be enlarged by validation of a belated step taken in the proceedings where it does not result in abridging, enlarging or modifying any substantive right. It will not have such an effect where it only facilitates the fair and accurate performance of the truth-finding function of the court rather than providing a substantive basis on which to resolve the pending litigation. - [15] Enlargement of time in the instant case by way of validation has no discernible substantive impact on the merits of the appeal. The legal effect of extending time to perform an act out of time when the act has already been duly performed, albeit out of time, is to validate that act or to excuse the late performance of the act. In other words, the legal effect of extending time is to validate or excuse the late step taken in the proceedings. The applicant need not take a further step of compliance if that already taken is complete and in proper form (see *The Executrix of the Estate of Christine Mary N. Tebajjukira and another v. Noel Grace Shalita, S. C. Civil Application No.8 of 1988*). In the instant case the respondents/cross-appellants

contended that it is on 21st November, 2024 when the respondents/crossappellants were served with the copies of the appeal, that they got to know about the ruling now appealed. This fact is not contested by the appellant/crossrespondent. This therefore is a proper case in which the court ought to, and does hereby, validate the respondents/cross-appellants' belated filing of their crossappeal.

## i. The general considerations;

- [16] The general rules governing appeals from discretional order of Registrars seem well settled. Discretion is the faculty of determining in accordance with the circumstances what seems just, fair, right, equitable and reasonable. "Discretion" cases involve either the management of the trial and the pre-trial process; or where the principle of law governing the case makes many factors relevant, and requires the decision-maker to weigh and balance them. Just as the factors for consideration could never be absolute, there could never be a gauge to measure the accuracy of such decisions. Unless the exercise of discretion is obviously perverse, an appellate court should be slow to set aside discretionary orders of courts below. - [17] Because these assessments call for value judgments in respect of which there is room for reasonable differences of opinion, no particular opinion being uniquely right, identification of error in the Registrar's exercise of discretion is the basis upon which the court will uphold the appeal. It would be wrong to determine the parties' rights by reference to a mere preference for a different result over that favoured by the Registrar at first instance, in the absence of error on his or her part. If the Registrar acted upon a wrong principle, or allowed extraneous or irrelevant matters to guide or affect him or her, if he or she mistook the facts, if he or she did not take into account some material consideration, or where it not evident how he or she reached the result embodied in his or her order, or where upon the facts the order is unreasonable or plainly unjust, the appellate court may infer that in some way

there has been a failure properly to exercise the discretion which the law reposes in the Registrar thus his or her determination should be reviewed.

- [18] Courts in Uganda have, as a matter of judicial policy, exercised considerable restraint in intervening in decisions characterised as involving the exercise of a discretion (see *Banco Arabe Espanol v. Bank of Uganda, S. C. Civil Appeal No. 8 of 1998*). Where the decision challenged involves the exercise of a discretion, broadly described to include states of satisfaction and value judgments, the appellant must identify either specific error of fact or law or inferred error (e.g. where the decision is unreasonable or clearly unjust). The appellate court will not interfere with the exercise of discretion unless there has been a failure to exercise discretion, or failure to take into account a material consideration, or an error in principle. It should not interfere with the exercise of discretion unless it is satisfied that the Registrar in exercising his or her discretion misdirected himself or herself in some matter and as a result has arrived at a wrong decision, or unless it is manifest from the case as a whole that the Registrar has been clearly wrong in the exercise of his discretion and that as a result there has been injustice (see *Mbogo and another v. Shah [1968] 1 EA 93*). - [19] It is the duty of this court as a first appellate court to re-hear the case by subjecting the evidence presented to the trial court to a fresh and exhaustive scrutiny and reappraisal before coming to its own conclusion (see *Father Nanensio Begumisa and three Others v. Eric Tiberaga SCCA 17of 2000*; *[2004] KALR 236*). In a case of conflicting evidence, the appeal court has to make due allowance for the fact that it has neither seen nor heard the witnesses, it must weigh the conflicting evidence and draw its own inference and conclusions (see *Lovinsa Nankya v. Nsibambi [1980] HCB 81*). - [20] In its appellate jurisdiction, this court may interfere with a finding of fact if the trial court is shown to have overlooked any material feature in the evidence of a witness or if the balance of probabilities as to the credibility of the witness is inclined against

the opinion of the trial court. In particular, this court is not bound necessarily to follow the trial magistrate's findings of fact if it appears either that she has clearly failed on some point to take account of particular circumstances or probabilities materially to estimate the evidence or if the impression based on demeanour of a witness is inconsistent with the evidence in the case generally.

- [21] It is trite that an appellate court is not to interfere with the exercise of discretion by a court below unless satisfied that in exercising that discretion, the court below misdirected itself in some matter and as a result came to wrong decision, or unless manifest from case as whole, the court below was clearly wrong in exercise of discretion and injustice resulted (see *National Insurance Corporation v. Mugenyi and Company Advocates [1987] HCB 28; Wasswa J. Hannington and another v. Ochola Maria Onyango and three Others [1992-93] HCB 103; Devji v. Jinabhai (1934) 1 EACA 89; Mbogo and another v. Shah [1968' E. A. 93; H. K. Shah and another v. Osman Allu (1974) 14 EACA 45; Patel v. R. Gottifried (1963) 20 EACA, 81;* and *Haji Nadin Matovu v. Ben Kiwanuka, S. C. Civil Application No. 12 of 1991*). An appellate Court should not interfere with the exercise of the discretion of a court below merely because of a difference of opinion between it and the court below as to the proper order to make. There must be shown to be an unjudicial exercise of discretion at which no court could reasonably arrive whereby injustice has been done to the party complaining. - [22] The appellate court will intervene where the court below acted un-judicially or on wrong principles; where there has been an error in principle (see *Sheikh Jama v. Dubat Farah [1959] 1 EA 789; Hussein Janmohamed and Sons v. Twentsche Overseas Trading Co Ltd [1967] 1 EA 287; Banco Arabe Espanol v. Bank of Uganda, S. C. Civil Appeal No. 8 of 1998* and *Thomas James Arthur v. Nyeri Electricity Undertaking [1961] 1 EA 492*). As such, the Registrar is entitled to deference in the absence of an error in law or principle, a palpable and overriding error of fact, or unless the decision is so clearly wrong as to amount to an injustice. Generally, a Judge will only interfere with exercise of discretion by a Registrar

where the latter has incorrectly applied a legal principle or the decision is so clearly wrong that it amounts to an injustice. Although there is a presumption in favour of judicial discretion being rightly exercised, an appellate court may look at the facts to ascertain if discretion has been rightly exercised.

- [23] Therefore, allowing an appeal from a discretionary order is predicated on proof of: (i) "specific error," i.e. an error of law (including acting upon a wrong principle), a mistake as to the facts, relying upon an irrelevant consideration or ignoring a relevant consideration, or (exceptionally) giving inappropriate weight to such considerations (relevancy grounds); and (ii) "inferred error," i.e. where, in the absence of identification of specific error, the decision is regarded as unreasonable or clearly unjust. Where inferred error is found, this will have been brought about by some unidentifiable specific error. The eleven grounds of appeal can be addressed within the scope of three issues which the Court will now proceed to consider. - i. Misdirection as regards the nature of the suit. - [24] In the practice of civil litigation, different causes of action and claims based on the same legal facts and legal relationship, may be set out by parties involved in similar cases, creating the possibly different interpretations of the same legal facts and legal relationship. According to Order 2 rule 4 (1) of *The Civil Procedure Rules*, except as otherwise provided, a plaintiff may unite in the same suit several causes of action against the same defendant or the same defendants jointly; and any plaintiffs having causes of action in which they are jointly interested against the same defendant or the same defendants jointly may unite those causes of action in the same suit. An alternative claim is typically prepared for possibly different interpretations of the same legal facts and legal relationship, rather than for different legal facts or legal relationship. In the event that two or more claims in the same suit tend to be sequentially and mutually exclusive, and therefore cannot be established at the same time, then they have to be pleaded in the alternative.

- [25] Alternative pleading ("pleading in the alternative," or "alternative claims") is a form of pleading that allows a plaintiff in a suit to allege against the same defendant in the same legal relationship, two mutually and sequentially associated claims. If the first claim (the primary claim) is held invalid or insufficient, the court will then decide on the second claim (the alternative claim). Therefore, in case of alternative pleading, both the primary claim and the alternative claim should contain the specific claim with supporting facts and causes of action. A pleading must not contain inconsistent allegations of fact or inconsistent grounds or claims except as alternatives. Order 7 rule 7 of *The Civil Procedure Rules*, requires every plaint to state specifically the relief which the plaintiff claims, either simply or in the alternative. If the primary allegations do not succeed on the evidence (upon the court making a contrary finding of fact at the trial), it is an invitation to the Court to rely on those facts independently for the alternative allegations. - [26] This rule is invoked where the plaintiff wishes to set out more than one claim, so that if the first claim is later held to be invalid or unsuccessful, the court must still decide on the alternative claim(s). Alternative claims are permissible, so long as alternative sets of facts or prayers are clearly and unambiguously presented as such. Pleading styles can vary considerably, and there is no prescribed wording for pleading alternative facts or causes of action. The manner in which alternative facts or causes of action are presented is likely to depend upon the particular circumstances of the case. It may be helpful to signpost the alternative claims as such through the use of appropriate headings in the particulars of claim. - [27] In all cases, it is always important to ensure that an alternative is clearly presented as such. Both the primary claim and the alternative claim should be clear and specific. Possible formulations include the following: - "further or alternatively….."; "further or alternatively, and without prejudice to the matters set out above……"; "alternatively……"; "in the alternative to paragraphs [x] to [y] above, the claimant pleads as follows……"; "if, contrary to the claimant's primary case as set out

above, [set out the facts which are contrary to that case], [set out the claimant's claim on the basis of those facts]…..."; "if, which is denied, [set out the facts which the claimant denies], [set out the claimant's case on the basis of those facts]……," and so on. The alternatives may be in addition to those allegations previously pleaded in the particular statement of case (the further), or alternatives to the allegations preceding the particular allegation already made in the statement of case (the alternative). In the "prayer" section at the end of the plaint, the plaintiff should indicate which remedies or orders are being sought cumulatively, and which are being sought alternatively.

- [28] Facts do not exist in the alternative; it is the arguments relating to those facts that are capable of being presented in the alternative. Situations frequently occur where a party simply cannot be sure, in advance of trial, which of several equally seductive theories of his claim or defence will be supported by the evidence. Where the theories are inconsistent or contradictory the pleading should succinctly distinguish between the primary theory or claim and the alternative theory or claim. Where it does not do so, even when the claims are mutually destructive and cannot exist in unison, except where one or more of them determinable as points of law capable of substantially disposing of the whole suit, or of any distinct cause of action, ground of defence, setoff, counterclaim, or reply therein within the terms of Order 6 rule 29 of *The Civil Procedure Rules*, they will be treated as cumulative claims. It is trite law though that a point of preliminary objection cannot be raised if any fact has to be ascertained in the course of deciding it. It is theories that qualify under that provision that may, by extension of logic, be categorised as primary or alternative by the Court, where the litigant does not specify them as required by the rules governing pleadings. - [29] The essence of H. C. C. No. 988 of 2019 was that the respondents/cross-appellants sought relief from the obligation to pay the then outstanding loan balance in the sum of US \$ 26,486,633.78 claimed by the appellant. They sought relief on three grounds or theories; the illegality of the contract by reason of the fact that the

appellant was not registered as a business entity in Uganda, was not licenced to undertake banking business in Uganda, and that the terms of the contract were unconscionable, and extortionate. Only a single cause of action was pleaded in this case, that the contract was void and thus unenforceable, premised on three possible theories or arguments, all of which attacked the validity and enforceability of the contract. It was a suit directed at one substantive remedy, by three different declarations as avenues leading to that goal. A single remedy was sought by arguing cumulatively rather than in the alternative.

- [30] In paragraph 13 (iv) of the amended plaint the respondents/cross-appellants attempted to plead in the alternative, thus; "Alternatively but without prejudice, a declaration that the business undertaken by the first defendant under the impugned agreement amounts to venture capital business." It was an alternative argument within the main contention that the agreement was void and unenforceable, not an alternative claim. This was premised on the claim articulated in paragraph 10 (xii) of the plaint where the respondents/cross-appellants pleaded as follows; - (xii) The above notwithstanding, the impugned agreement and the securities thereunder which the first defendant intends to execute against them is/are null and void and unenforceable on many grounds, *inter alia*; - [31] Therefore, the respondents/cross-appellants put forward a single or unified claim seeking relief from the intended recovery of the contractual sum by the appellant, which claim contained contradictory reasons or prayers for seeking relief in a cumulative manner rather than in the alternative. Where allegations are made cumulatively or alternatively with previous and later allegations, a party may succeed on both the foregoing allegations and the subsequent allegations, or one of either. A Court may also find that none of the allegations succeed on the evidence. That will be determined upon evidence being led. In circumstances where it was not possible to choose decisively between the rival possibilities without a full trial, a processes of disclosure and cross-examination as to which of

the two claims was the primary argument and the other the alternative argument. As part of her finding, the learned Deputy Registrar came to the right conclusion when she found that "the main part of that contention and prayer was that the demand was null, void and unenforceable." She stated as follows;

In essence, the Plaintiffs' claim in the suit was that nothing comes of nothing and that the illegality of the credit facility agreement incurably poisoned and infected it. The alleged illegal credit facility agreement lay at the heart of the suit and it was the central question to be determined. The rest of the questions were peripheral and dependent on it……... I acknowledge that, in paragraph 11 and prayer 9 of the amended plaint, the Plaintiff's sought a finding and a declaration that the 1st Defendant's demand for payment of USD 26,486,633.78 was null, void and unenforceable. Alternatively, but without prejudice to that declaration, the Plaintiffs sought a declaration that the said amount was unconscionable, excessive and extortionate. The main part of that contention and prayer was that the demand was null, void and unenforceable. The existence and, or, accuracy of the loan debt claimed was a secondary contention and its consideration by Court was contingent on the findings from the primary contention……the suit primarily called the Court to make a decision on the legality of the entire credit transaction and not the existence and, or, accuracy of any loan debt or whether that loan debt was recoverable at the time.

[32] She however erred when she declared the that "the existence and, or, accuracy of the loan debt claimed was a secondary contention and its consideration by Court was contingent on the findings from the primary contention." None of these theories could be argued as a preliminary point of law since they were based on contested facts that had to be proved by evidence. It is only after such evidence would have been led, that the court would be in position to determine whether any of them was capable of substantially disposing of the whole suit, so as to be recognisable as the primary contention by extension of logic. The learned Deputy Registrar proceeded on the assumption that a prayer which seeks both a declaration of illegality and unconscionability must necessarily be seeking them as mutually exclusive alternatives. That was a determination based on a wrong assumption and on incomplete information. Had the learned Deputy Registrar properly directed herself, she would have found that the respondents' three theories or claims advanced as to why the amount claimed by the appellant was not recoverable, were made cumulatively rather than in the alternative. Failure to ascertain the correct subject matter in a suit for the purpose of Taxation is an error of principle, therefore this contention succeeds.

## ii. Misdirection as regards the determinability of the value of the subject matters of the suit

- [33] In her ruling, the learned Deputy Registrar found that "the suit was not for the recovery of that sum and neither was it drawn primarily for ascertainment of the existence and, or, accuracy of the claim for that sum ……. the suit primarily called the Court to make a decision on the legality of the entire credit transaction and not the existence and, or, accuracy of any loan debt or whether that loan debt was recoverable at the time." While it is true that the suit was not for ascertainment of the existence and, or, accuracy of the sum claimed nor for its recovery, it certainly sought relief from the obligation to pay a specified sum of money, on basis of three possible legal theories. - [34] The term "subject-matter" denotes the bundle of legal rights presented for consideration by Court, relating to a specified subject. Sometimes, unfortunately, it is used in another sense, to designate the *res* or tangible object, such as a chattel, or land, with which the law may have some connection or relation. It includes the cause of action and the relief claimed. It may mean "the primary right asserted by the plaintiff," "the legal issue presented for consideration," or "the cause of action." It is frequently defined as "the right which one party claims as against the other," *Black's Law Dictionary* (4th ed. 1968); *The Cyclopedic Law Dictionary* (3d ed. 1940); *Cyclopedia of Law and Procedure* (William Mack, ed. 1911); William C. Anderson, *Anderson's Dictionary of Law* (T. H. Flood & Co., 1895). It is also sometimes defined as the "cause" or "cause of action." *Black's Law* *Dictionary*; *Cyclopedic Law Dictionary*; *Bouvier's Law Dictionary* (William Edward Baldwin, ed., Banks Baldwin Publishing Co., 1934); 27 American and English *Encyclopedia of Law* (Charles F. Willaims & David S. Garland, eds., Edward Thompson Co., 1896); *Anderson's Dictionary of Law*. While the expression "subject-matter" when used in the sense of a *res*, or physical object, sometimes seems appropriate, at other times it does not. Employed in a corporeal sense, the term is often bungling and incorrect. Legal rights may involve a *res*, or corporeal object, but that does not necessarily make the latter the subject-matter of the proceeding. The subject-matter of any litigation is the right or rights actually put in issue by the pleadings.

- [35] At common law, the "subject matter" of a suit is understood to refer to the primary right or core legal claim of the plaintiff for which protection is sought, as opposed to the underlying facts of a case or the property in relation to which the right springs. Consequently, the value of the subject-matter of suit is not necessarily the value of the property in respect of which the suit is filed. When the suit is founded on some claim to or question respecting property, it is the value of the claim or question and not the value of the property which is the determining factor. Just as different legal issues may arise from the same underlying facts, so may they arise out of a contract. It follows that claims of a different nature based upon the same contract would not necessarily be the "same subject matter." It is constituted by the plaintiff's main or primary right which has been broken, and by means of whose breach a remedial right arises. It is the right which one party claims as against the other, and demands the judgment of the court upon. In determining the value of a claim the court should consider what was at stake on the appeal, and not what was at stake on the original suit (see *Cooper and another v. Nevill and another [1959] 1 EA 74 at 76*). - [36] Where the dispute concerns rights in corporeal items, the market value of such items will usually form the subject matter value. In the case of intangible rights, the subject matter value would be the market value of the said rights as estimated by

the Court. Such estimate should not be arbitrary, whimsical and wholly unreasonable. The amount at which the relief sought is valued in the plaint may be very different from the value that the Court may itself put upon the subject-matter of the suit; the real value may not be ascertainable at the time the plaint is presented; it may alter from day to day, and may become definite and fixed at a later stage of the suit.

- [37] It remains trite that it is the nature of relief claimed in the proceedings which is decisive of the question of suit valuation. As a necessary corollary, the market value does not become decisive of suit valuation merely because an immovable property or a contract is the subject-matter of litigation. The market value of the immovable property or contract involved in the litigation might have its relevance depending on the nature of relief claimed but, ultimately, the valuation of any particular suit has to be decided primarily with reference to the relief/reliefs claimed. - [38] At its core, "subject matter" refers to the central issue or controversy that forms the basis of a legal dispute. As regards the issues submitted for the Court's determination in High Court Civil Suit No. 988 of 2019, they revolved around the respondents' attempt to secure relief from the obligation to pay the sum of US \$ 26,486,633.78 claimed by the appellant. The disputed subject matter was payment of money. While the respondents contended they were not obliged to pay it on account of illegality and unconscionability of the contrcat, the appellant contended it was recoverable. That sum was not pleaded as a peripheral fact, as found by the learned Deputy Registrar, but rather in was at the heart of the dispute between the parties. Its value is determined by the amount claimed by the appellant and from which the respondents sought relief by filing the suit. - [39] As regards Misc. Application No. 201 of 2020 seeking a stay of the suit on account of an arbitration agreement, the nature of an application under section 5 of *The Arbitration and Conciliation Act* is based on the fact that the proceedings brought

before the Court relate to a matter which is the subject of an arbitration agreement. It is the value of the claim or question before Court which constitutes the material over which there is litigation, and not the value of the property to which it relates or from which it springs, which is the determining factor. The subject matter of Misc. Application No. 201 of 2020 was whether the arbitration agreement was valid, operative and enforceable. It was a contest between the right to have the dispute arbitrated rather than adjudicated. It was essentially the value of the choice of forum for the dispute that was at stake, and not actual determination of the dispute over the respective contractual obligations. It was neither a liquidated claim nor was its pecuniary value ascertainable.

- [40] The same applies to Misc. Application No. 1106 of 2019 and Misc. Application No. 0548 of 2021 which arose under the suit. The subject-matter of both applications was the legal right, the violation of which was put in issue; in one a temporary injunction was sought while the other sought leave to appeal out of time. Both of them were of a procedural nature whose value was not constituted by the subjectmatter of the contract, which the appellant claimed to have been violated by the respondents' breach. The value of the claim to or question respecting the pecuniary value of the underlying dispute, was not the subject of either motion. Their exact financial worth is not readily apparent from the available legal documents. - [41] The value of the subject matter of a suit, for the purposes of taxation of a bill of costs, ought to be determined from the pleadings, judgment or settlement (if such be the case). But if the same is not so ascertainable, the Taxing Officer is entitled to use his or her discretion to assess such instruction fee as he or she considers just, taking into account, amongst other matters, the nature and the importance of the cause or the matter, the interest of the parties, general conduct of the proceedings, any direction by the trial judge and all other relevant circumstances (see *Joreth Limited v. Kigano & Associates [2002] 1 EA 92*).

- [42] In the instant case, value of the subject matter of High Court Civil Suit No. 988 of 2019 was ascertainable from the pleadings as being a sum of US \$ 26,486,633.78. The starting point therefore is Item 1 (1) of the *6th Schedule* of *The Advocates (Remuneration and taxation of costs) Rules, as amended in 2018*, in respect of the ascertained value of the subject matter. The general principle is that the instruction fee is an independent and static item, and is charged once only and is not affected or determined by the stage the suit has reached (see *Joreth Ltd v. Kigano & Associates [2002] 1 E. A 92*;). That sum should then be increased taking into account the factors mentioned. The Taxing Officer must envisage a hypothetical counsel capable of conducting the particular case effectively but unable or unwilling to insist on the particularly high fee sometimes demanded by counsel of prominent reputation. Then the Taxing Officer must determine the fee this hypothetical character would be content to take on the brief. In doing that, the Taxing Officer is expected to take into account the importance to the litigants, of the matters in dispute, as well the complexity or the extent to which the matter at hand required deployment of a considerable amount of industry on the part of counsel. - [43] On the other hand, the value of the subject matter of Misc. Application No. 1106 of 2019; Misc. Application No. 201 of 2020 and Misc. Application No. 0548 of 2021 was unascertainable from the pleadings nor any judgment or settlement. The applications being interlocutory in character to the extent that they were not determinative of rights in the underlying dispute, the starting point is item 1 (e) vii (b) of the 6th schedule of *The Advocates (Remuneration and Taxation of Costs) Rules*, as amended, which provides that the instruction fee should not be less than shs. 300,000/= That sum should then be increased taking into account, amongst other matters, the nature and the importance of the cause or the matter, the interest of the parties, general conduct of the proceedings, any direction by the trial judge and all other relevant circumstances. The Taxing Officer must envisage a hypothetical counsel capable of conducting the particular case effectively but unable or unwilling to insist on the particularly high fee sometimes demanded by

counsel of prominent reputation. Then the Taxing Officer must determine the fee this hypothetical character would be content to take on the brief.

- [44] In doing that, sill the Taxing Officer is expected to take into account the importance to the litigants, of the matters in dispute, as well the complexity or the extent to which the matter at hand required deployment of a considerable amount of industry on the part of counsel. In this regard these were ordinary, routine appeals and an application that did not involve matters of novelty or extraordinary complexity, or a considerable amount of industry. - [45] It is evident that every case must be decided on its own merit and in variable degrees, the instructions fees ought to take into account the amount of work done by the advocate, and where relevant, the value of the subject matter of the suit as well as the prevailing economic conditions. The Taxing Officer should envisage a hypothetical counsel capable of conducting the particular case effectively but unable or unwilling to insist on the particular high fee sometimes demanded by counsel of pre-eminent reputation, then award a fee this hypothetical character would be content to take on the brief. Clearly it is important that advocates should be well motivated but it is also in the public interest that costs be kept to a reasonable level so that justice is not put beyond the reach of poor litigants. - [46] Counsel fees are governed by the complexity, value and importance to the litigants of the matters in dispute. It follows that where the responsibility entrusted to counsel in the proceedings is quite ordinary and calls for nothing but normal diligence such as must attend the work of a professional in any field; where there is nothing novel in the proceedings on such a level as would justify any special allowance in costs; where there is nothing to indicate any timeconsuming, research-involving or skill engaging activities as to justify an enhanced award of instruction fees or where there is also no great volume of crucial documents which counsel has to refer to, to prosecute the cause successfully or where the matter was not urgent, a certificate of complexity will

not be granted. The mere fact that counsel does research before filing pleadings and then files pleadings informed of such research is not necessarily indicative of the complexity of the matter as it may well be indicative of the advocate's unfamiliarity with basic principles of law and such unfamiliarity should not be turned into an (see *First American Bank of Kenya v. Shah and others, [2002] 1 EA 64*).

[47] The recommended practice when a Taxing Officer is to award an unusually high sum as instruction fee on account of novelty, complexity or deployment of a considerable amount of industry on the part of counsel, is found in *Republic v. Minister of Agriculture and 2 others Exparte Samuel Muchiri W'Njuguna and others [2006] 1 E. A.359* where it was held that;

> The complex elements in the proceedings which guide the exercise of the taxing officer's discretion must be specified cogently and with conviction. The nature of the forensic responsibility placed upon counsel, when they prosecute, the substantive proceedings, must be described with specificity. If novelty is involved in the main proceedings, the nature of it must be identified and set out in a conscientious mode. If the conduct of the proceedings necessitated the deployment of a considerable amount of industry, and was inordinately time consuming, the details of such a situation must be set out in a clear manner. If large volumes of documentation had to be clarified, assessed and simplified, the details of such initiative by counsel must be specifically indicated apart of course from the need to show if such works have not already been provided for under a different head of costs.

[48] The Taxing Officer is expected, in addition, to take into account the importance to the client of the matters in dispute. It was thus a misdirection on the part of the learned Deputy Registrar when she declared all aspects of the underlying litigation as having a subject matter whose value was unascertainable. Had she properly directed herself, she would have found that the subject matter of the suit was ascertainable from the pleadings while that of the applications was not. Failure to ascribe the correct value to the subject matter is an error of principle, and therefore this contention succeeds as well.

## iii. Failure to consider some of the items in the bill of costs.

- [49] It is the duty of the Taxing Officer to consider each and every item presented to him or her in the bill of costs (see *Joseph Byamugisha t/a J, B Byamugisha Advocates v. National Social Security Fund, H. C. Civil Appeal No. 0016 of 203*). Considering that the process of taxation of costs relies heavily on the discretion of the Taxing Officer, the parties have a right to know the considerations upon which that discretion was exercised, in short, to understand them. At the very least, the Taxing Officer must be able to justify his or her decision. The giving of reasons is one of the cornerstones of the judicial function and a central aspect of the rule of law (see *Breen v. Amalgamated Engineering Union [1971] 2 QB 175 at 191*). Therefore, parties are entitled to know on what grounds the costs have been awarded or rejected. An appellate Court is also entitled to the assistance of the Taxing Officer by an explicit statement of the reasons for deciding as he or she did. The learned Deputy Registrar failed in that duty when she left items in the bill untaxed. - [50] When the amount awarded is found to have been excessive or inordinately low as a consequence of the Taxing Officer having proceeded on a basis of a fundamental misapplication of the law to the facts, taxation *de novo* will be ordered by an appellate court. A taxation *de novo* should not be ordered unless the following conditions are met; (i) that the original taxation was null or defective; (ii) that the interests of justice require it; and (iv) no injustice will be occasioned to the other party if an order for taxation *de novo* is made. These conditions are conjunctive and not disjunctive*.*

The Final Orders;

[51] I find that the conditions are met in this case and therefore it is proper that the appellant's bill of costs should be remitted to the Taxing Officer for taxation *de novo. In the final result,* the appeal succeeds and the cross-appeal fails. The award is set aside, and the bill of costs is hereby remitted back to the Deputy Registrar for taxation *de novo*. This being essentially an error of the part of the Taxing Officer to which none of the parties is a contributory, each party is to bear their costs of this appeal and of the impugned taxation proceedings.

Delivered electronically this 13th day of March, 2025 …Stephen Mubiru……..

Stephen Mubiru Judge, 13th March, 2025

Appearances;

For the applicant : M/s Kirunda & Co. Advocates. For the respondents : M/s Moogi Brian & Co. Advocates.