C. C. Chandran v Kengrow Industries Ltd (Civil Application No. 22 of 2002) [2003] UGSC 60 (14 April 2003)

I REPUBLIC OF UGANDA IN THE SUPREME COURT OF UGANDA AT MENGO (CORAM: I'SEKOOKO, I{AROKORA AND KATO, JJ.S.C} CTVIL APPLICATION NO. 22 OF 2OO2 BETWEEN C. C. CHANDRAN APPiICANT AND KENGROW TNDUSTRIES LTD RESPONDNNT [Taxation reference Jrom ruling of a single Justice (C, W. Kangeihamba" J.S.C) dated 27i November, 2OO2 in Civil Application No. 77 of 2OO2.l RI]LING OF THE COURT: This is a reference to us from the ruling of Kanyeihamba, J.S.C as a single Justice of this Court on a reference from the Registrar as a taxing officer. The learned Justice reduced the amount au,arded bv the taxing officer. We give a brief background. There was an appeal in this Court in which the present applicant \\'as the respondent rvhile the present respondent u,as the appellant t,ho lost the appeal. The former presented a bilt of costs to the Registrar of this Court. The Registrar. as taxing officer, awarded the applicant shs. 16,000,000 as instruction fees. The respondent q'as unhappl' rvith the arvard. He referred the matter to the single Jusrice. I The single Justice reduced the award from shs. 16,000,000/: to shs. 5,000,0OO./:. The applicant was dissatisfied. He has now referred the matter to us. The reference is made under Rules 105(7),41(1)and 1(3) of the Rules of this Court. The reference is by way of motion. In the motion, the applicant asks the Court to reverse the decision of the single Justice. The motion sets out the follou.ing grounds in support of the reference: - d). The instnz"ction fee of sh.s. 5,OOO,OOO uthich u)a.s autarded bg the learned Justice u)as manifestlg inadequate and an enor in laut. c). The learned Justice of the Supreme Court erred and,/or exercised/applied urong principles in deterrnining/ cssessing the instruction fees, therebg making an elroneous award. d). The learned Justice oJ the Suprerne Court erred at lana and misguided himself, and made an erroneous autard uthen he based his decision ta. reduce the autard oJ the taxing master (sic) on the dirnentional reduction in other d.ecided ccrses b), The learned Justice of the Supreme Court erred both in lana and fact in holding that the subject rnatter of the appea.l wa.s ct sum of shillings slightlg aboae 3O,OOO,OOO. cited bg hirn, other than the autards them.selaes made therein and the principles relied on. Mr. Muziransa, counsel for the applicant, made an affirmation dated of 27'h November, 2OO2 in support of this reference. The contents of the afhrmation are similar to the grounds set ot.t in the motion and reproduced above. Before us, Mr. Muziransa, as counsel for the applicant, first argued grounds (b), (c) and (d) together before he argued ground (a). In respect of the three grounds [(b) (c) and (d)], Mr' Muziransa submitted that the learned Justice did not direct his mind to the principles governing taxation of costs in this Court and especially Paragraphs (2) and (3) of rule 9 of the Third Schedule to the Rules of the Court. He referred to a number of cases decided by this Court including: A.A. Kassam and 2 others vs. Habre International Civil Apptication 16 199 (unreported). Counsel contended that the single ,Justice erred u'hen he held that the subject matter was shs.30,000,000/: rvhich, according to learned counsel, should be shs.64,945,OOOl:. Therefore, contended counsel, the awarci of shs'Sm/: was too low-' Dr. Byamugisha, for the respondent, supported the decision of the single Justice contending, and here we agree with him, that Mr. Muziransa was mistaken in regard to the subject matter of the appeal becarlse Mr. Muziransa considered the award to be the amount appearing in the decree of the Court of Appeal as the subject matter rather that the amount decreed by this Court u,hich rvas relevant for purposes of the taxation of costs in this Court. Dr. Byamugisha submitted that each case must be decided on its own facts. He referred us to General Parts (U) Ltd Vs Non -Performing Assets Recovery Trust - Civil Application 21 I2OOO (unreported) for the view that inflation should be taken into account in awarding costs. karned counsel referred to a number of other decisions illustrating the trend regarding taxation of costs in this Court. In each of these cases the Court reduced the arvards made b1' taxing officers. lrarned counsel asked us to give guidance on taxation of instruction fee. Although arguments on grounds (b), (c) and (d) were general. It is neater for us to consider each. We begin with ground (b). The passage in the ruling from which this reference arose and for u'hich Mr. Muziransa criticised the learned Justice appears at pages 8 and 9 and states: - The record shorus that uthen the respondent's appeal wds allouted in this Court, the Court anparded him a surrt of US$ 72,600 ulhich according to the then applicable rate at shs, 78OO to the dollar is approximatelg same sfts. 73,OOO,OOO. He was also awarded other suzrs amounting to shs. 7,24O,OOO making a total o;;' slightly oaer sh.s. 3O,OOO,OOO. The sum anoarded includes an autard o.;t shs. 5,OOO,OOO a.s general damages for breach of contract. Conseguenttg the clairn the respondent hoped to get from this Court when he ftled the appeal raas in the range of obout shs, 25,OOO,OOO' In the respondent's bill of ..1 costs dated 77h June, 2OO2, Counsel dreut up a bill of shs. 67,582,000 uthich included an instruction fee of shs. 5O,OOO,OOO. In mg tieut, tahere a successJul partg has been claiming shs. 25,OOO,OOO and is anaarded a surn o..f sfts. 3O,OOO,OOO/= to claim the sum of shs 67,582,000 and ask to be autarded the sltm of shs. SO,OOO,OOO costs and instructions fee respectiaelg is outrageous. I Jind it hard to understand minds (5" t.i lY of counsel uho can bgdly present bills of costs tohich are about the same crs or greater than the ualue of the subject matter of the litigation." Obviouslf in the last part of the above passage, the learned Justice expressed himself very strongly to demonstrate his disapproval of the claim for instruction fee in the case. Whiist exaggerated bills of costs must be discouraged by Courts, we ma]' sa]', in passing, that each case must be decided on its own facts. For it is not impossible to find a case where the taxed costs in a case exceed the value of the subject matter. Ivlany factors rvould influence the calculation of costs to be awarded. Such factors may include cost of transport occasioned by many adjournments. With respect to Mr. Muziransa, we can not agree that the learned Justice misdirected himself on the law especially rule 9 of the 3'd Schedule and on the facts. The learned Justice was alive to the facts of the case. We have just reproduced a passage from his ruling showing hou, the Justice computed the figure of shs 30 million. At page 9 of his ruling the Justice stated: - " I note that neither Counsel nor the learned taxing ofJicer shouted keen interest in computing the actual s-utn in shillings uhich utas Jinallg autarded. Mr. MuziransaJigured that the subject matter of the litigation was S*tg nillion shillings. It is a mgstery as to where he got the surn Jrorn. The taxing offt.cer stated boldlg in his ruling that the matter u)cls around shs. 4O,OOO,OOO. M/s Enid Endroma, Counsel for the applicant, seerrts not to haue bothered about the sum of moneg autarded bg this Court in Civil Appeal No. 7 of 2OO1." This certainll'demonstrates that the learned Justice directed his mind to the facts of the case. In his address to us Mr. Muziransa has not shown that in the facts mentioned by the Justice, the Justice quoted \rirong figures. After the Justice noted the deficiencies in submissions before the tadng officer of counsel for both sides, the Justice concluded that the amount of shs. 50,000,000 claimed .rnd the amount of shs. 16,000,000 au'arded b1' the taxing officer was manifestlv excessive. The Justice then referred to the recent decisions by this Court relating to the taxation of costs and wondered wh.v taxing officers do not refer to such decisions. Of course, before us Mr. Muziransa contended that the learned Justice was rvrong in rel.ving on those cases, instead of relying on the cases cited b.v Mr. Muziransa, to decide the reference. Counsel argued that the 6 Justice \\'as wrong to assume that the subject matter was shs.30,00O,OO0/- lncidentall_r' these same cases relied on by the Justice have been cited to us. They include: Bank of Uganda Vs Banco Arabe Espanol Civil Application 23 if 1999 (unreported), Attorney General Vs Uganda Blankets Manufacturers, Civil Application 17 of 1993 and General parts (U) Ltd Vs Non - Performing Assets Recovery Trust, Jivil Application 27 of 2OOO. We note from his ruling that in fact the learned Judge considered these and other cases before he concluded that the amount au,arded as instruction fees of shs. 16m/= was excessive and therefore he reduced it to shs. 5m/=. We have not been persuaded by Mr. Muziransa that the Justice misdirected himself either on the facts or in law when he concluded that the subject matter of the appeal was shs. 30M/:. That is rvhat the decree of this court realll, reflects, though in dollars and Uganda shillings. The finding was based on the facts of the case. That is a rinding, which we are unable to upset because no error has been pointed out to us. We no$'have to ans\\'er the question: Did the Justice misappll- rule 9(2) and (3) as contended b1,' Mr. Muziransa? These provisions read as follorvs: - "9(2) The fee to be allouted. for instructions to appeal or oppose an appeal shall be a sra'm that the ta-xing olJicer considers reasonable, hauing regard to the ctm9yry.LJ4lolag{ in the appeal" its l rtqtttre, importance and diffi.c.ultg, the interest of the parties, the other costs to be allouted. the general conduct of the proceedings, the fund or person to bear the costs and all other releoant circutnstances, (3) The surn allouted under suh paragraph (2) shalt include all the utork necessarilg and properlg done in connection with the appeal and not otherutise char g e able including attendanc es, correspondence, perusals, and co nsulting authoritie s. " The framers of sub paragraph (2) (quoted above) for some reason did not consider it necessary to set out a scale of instructien fee to be paid in respect of appeals in this Court. As the Rules show-, the assessment of fees is left to the good judgment of the taxing officer u'ho must award a frgure which he/she "considers reasonable". In other words, he exercises judicial discretion. In the case of Premchand Raichand Vs Quarry Senrices (No.3) ll972l EA L62 at page 164, the East African Court of Appeal referred to an English decision regarding assessment of a brief fee which is the same thing as instruction fee and said: - [The correct approach in assessing a brief fee is, rve think, to be found in the case of Simpsons Motor Sales (London) Ltd Vs Hendon Corporation (196a) 3 ALL. E.R.833 in rvhich PtrNNYQUICKS, J., said "One must enuisage a hgpothetical counsel capable of conducting the particttlar case effectivelg but unable I or unuilling to insist on the particularlg high fee' sometimes dernanded bg counsel of preeminett reputation. Then one rnus1. estimate uthat fee this hypothetical character would be content to trrke on the brief'l This approach which we think reflects the correct approach vi'as adopted in the recent decision b_r' this court in the case of Paul Ssemogerere & Olumu Vs Attorney General - Civil Application No.5 of 200 1 [unreported]. Court expanded on the Pennt, L-t 1 qks-Jj Summaryofrvhatthelawyersforeachsidehadsubmittedtohrm. In Ssernogerere case this Court stated: - "lnouruieta,thereisnoformulabgwhichtocalculatethe instnrction fee. The exercise is an inticate balancing act uherebg the ta-ring officer has to mentallg uteigh the diuersegeneralpinciplesapplicable,uthichsometimes'are against one another in ord'er to arriue at the reasonable fee' TLuts uhile the ta-ring officer has to keep in mind that the successful partA must be reimbursed expenses reasonablg incurred due to the litigation, and tllat aduocates' remuneration slauld be at such leuel as to altract recruits into the legat profession, he hr:s to balance tlwt with his dutg to the public not to ctllotu costs to be' so hiked that courtsulould.remainaccessibletoonlgtlrcwealthg.Also u.hile the taxing officer is to maintain consistencg in tle leuel of costs, i/ is settled that lrc has to make allotttance for the fall, if ang, in the ualue of moneA' It is because of consideration for tlLis intricate balancing exercise that I taxtng officer's opinion on whnt is tlte reasonable fee, is not to be interfered uith lightlg. There ha,s to be a compelling reason to justifg such interfererlce. See Premchand Raichand Ltd. case (Supra). Attorneg General Vs Uganda Blanket ManuJactures Ltd (Supra); and Departed Asians Propertg Custodirzn Board. Vs Jalfer Brothers (Supra). These consid.erations applg to a taxing officer as utell as to a single 1ud"ge or a court reuietting taxed costs. " Since there is no mathematical formula for calculating instruction fee for prosecuting or defending an appeal, appears to us to be a compromise approach. the this What is required of a ta-xing officer is to exercise his or her discretion judiciousl_v so as to arvard an amount he/she "considers reasonable." That of course is 'uvhere the problem of balancing lies. As stated in Ssemogerere case (supra) \r,e have manv cases of this Court rvhich set out guidance in the taxation of instructions fee: See Makula International Ltd Vs H.E. Cardinal Nsubuga and Another (1982) HCB 11 and The Registered Trustees of Kampala Institute Vs Departed Asians Property of Custodian Board, Civil Application 3 of 1993, among others. Yet in spite of these guidelines, taxing officers continue erring by awarding exhorbitant costs as instruction fee. Rule 101 (1) of the Ruies of this Court gives this court pover to assess costs. It states: - l0 "When rnaking ang decisiort as to pagment of costs, the Court mag assess or direct them to be ta-xed ln vieu' of these provisions and the apparent inability by taxing officer.to follou' guidelines set out by decisions of this Court, it ma-v be time norv for this Court itself to assess costs at the conclusion of each Civil Appeal. At an.v rate taxing officers can be left to tax disbursements '*'hile instruction fee is assessed by the court. Normallv the court would know' the nature of the case The contention of Mr. Muziransa in effect is that the amount on the basis of u'hich taxation should have been made should have been the amount set out in the decree of the Court of Appeal namely shs. 64,945,000/= because that rvas the basis of the appeal. That amount inciudes interest at the rate of 2O"h. tle relied on a number of decisions of this Court. One of the decision is General Parts Vs NPART (supra) which in our view is not quite to the point. In that case a single Justice had ruled, on a reference to him from a tatxing officer, that no amount of money was involved in arguing the appeai from which the taxation arose. Upon his ruling being referred to the Court where he was criticised for that holding, the full court agreed with him that the point argued in that appeal 'rl'as a point of law' No amourtt of mone]' had been involved in the appeal. The Court, horvever increased the a$.ard from 5m/= to 15m/= on grounds rvhich do not arise in the present reference. Mr. Muziransa also relied on Kassam's case (supra). That is a decision of a single Justice of ]l this Court, Mukasa Kikonyogo, JSC, as she then was. It was a reference from a taxation ruling of a Registrar. Mr. Muziransa submitted that in that case the subject matter of litigation was shs. 60m/: and that the single Justice had awarded shs. 15.a/: as instruction fees and a further shs. 5m/: as fees for arguing additional grounds. On the basis of that, counsel argued that in the present case the single Justice's award of shs. 5m/: is too lorv. we think that that Kassam's case is distinguishable from the present case. In the first instance, the original amount which rvas the subject of litigation in Kassam's case was shs. TOm/:. Even if it is assumed that that amount was the issue for the decision and that that was the amount involved in that appeal, that amount is clearl.v more than the amount involved in the present case. Secondl)., and this is the most important distinction, the principal issue argued in Kassam's appeal in this Court involved one main point of lar.r', namely the interpretation of Sections 11 (2) and la (1) of the Expropriated properties Act, 1982 and Regulation 8 of the Regulations made under that Act. Counsel for the appeilant in Kassam's case lodged a bill in u'hich he claimed two sums one as instruction fees to argue the appeal and the second as instructions fees for arguing additional grounds of appeal. The ta-xing officer au.arded to the appellant shs 30m/= in respect of the former and shs 15m/: in respect of the latter. In the reference before the single Justice in that case the complaints about these amounts were grounds 2 and 5. ? t A number of cases of this Court as well as rule 9 (2) and (3) (supra) were cited to the single Justice. She referred to the cases and the laq, and stated that the taxing officer correctly stated the lau' [Rule 9 (2) and (3))] and the principles laid down on taxation. She held that an award of shs 30m/= to argue the appeal was excessive, and therefore she reduced it to 15m/:. She further held that an award of shs 15/= for arguing additional grounds was excessive since the amount involved in the appeal was shs 70rnl: and reduced this last award to shs Sml:. This particular aspect of Kassarn's case is actually against the argument by Mr. Muziransa that the au,ard of shs 5m/= is too lov- in an appeal rvhere the amount involved is say shs 64m/:. Ground [bl must therefore fail. We shall next consider ground (c). With respect to Mr. Muziransa, r,u'e have not been persuaded that the learned Justice erred and I or exercised / applied wrong principles in determining/assessing the instruction fee. In his affirmation in support of the reference, Mr. Muziransa stated: "That in assessing and detertnining the reduction, the Leanted Justice erred and,/or misapplied. the principles oJ tax.ation and misguided himself when he based his decision on quthorities not applicable to the matter at hand. ., 4 That the subject mdtter appeal cornplicated questions oJ laut andJact. inuolaed That the learned Judge erred in principle uthen he failed to properlg take into consid.eration the inflation and the fact that the subject matter appeal (sic) uas a Jinal disposal of all matters and issues at hand as betuteen the parties in the original suit." There are three complaints. The first is that the Justice faile d to appl1, properly the principles of taxation. The second is that the appeal involved complicated questions of law. The last is failure to take inflation into account. We have in a wa-v dealt with these complaints. Mr. Muziransa contended that the learned Justice did not direct his mind to the principles governing taxation of costs in this Court and relied on the Kassam case (supra) Ifabre International Case (Supra) and Rule 9 (2) and (3). We are puzzled b-r, these contentions of Mr. Muziransa. The record before us does not include the address to the single Justice by counsel, but in his ruling, the Justice states that Dr. B,vamugisha had cited a number of cases including premcharnd Richard Vs Quarry Services of East Africa (1922) EA 162, Bank of Uganda Vs Banco Arabe Espanol, and Attorney General Vs- Uganda Blankets, and rule 9 (2). We have mentioned these authorities already. The Justice further states that Mr. Muziransa addressed him on the same Paragraph 9 (2) as weil as on the decision of this Court in General Parts Vs Non performing Assets recovery Trust, (supra) to support the view that the taxing officer had applied proper and relevant principles of taxation in this case and that he had taken inflation into 5 ll The Justice then anal1,-sed the figures in the proceedings and conciuded that he was guided by such decision as Bank of Uganda Vs Banco Arabe Espanol_(Supra), Attorney-General Vs Non - Performing Assets Recovery trust (Supra) and the Registered Trustees of Kampala Institute Vs Departed Asians Property Custodian Board. After alluding to the figures and amounts arvarded, the learned Justice revised the award given by the taxing officer from shs l6rnl: to 5m/:. With respect we do not see the basis on u,hich Mr. Muziransa criticised the learned Justice on grounds that the Justice misguided himself and did rrot properll appl)' the lau-and principles applicable to taxation of costs in this Court. Rule 9 of the 3'd Schedule to the Rules of this Court contains the principal provisions of the law rvhich go vern ta-xation of instruction fee b,v taxing ofhcers in this Court. That law' rvas cited to the Justice by counsel and the Justice applied it. The Justice reiied on cases cited to him by counsel for both sides. In these circumstances, we find Mr. Nluziransa's criticism of the l5 account. Mr. Muziransa had also relied on Kassam's case (supra). Then the learned Justice opened his opinion with these u,ords: "Hauing pentsed the record of proceedings and the ruling of the learned taxing officer and hanring heard counsel Jor both parties and revieued the authorities cited, it is ng opinion that the decision of the ta-x.ing officer of this Court is guided bg the prouisions of Rules 9 of the Rules of this Court" Justice both unwarranted and baseless. Ground. (C) must, therefore, fail. Ground (d): has been set out earlier. In the foregoing discussions, we have disposed of this ground. Cases relied on by the learned Justice cited by both sides. In any case, in considering any issue raised before him a Justice is not prohibited from considering authorities not cited by counsel so long as such authorities are relevant to the controvers!- between the parties Ground (d) must fail. We nou' discuss ground (a). Mr. Muziransa's complaint is that the instruction fee of shs 5m/= which w'as awarded by the learned Justice was manifestlrv inadequate and an error in law. Counsel argued that the amount of shs l6ml= awarded by the taxing officer was not manifestly excessive. He criticised the Justice for rel1.ing on cases decided in 1990, contending that because of inflation the Justice should have upheld the award of shs 16m/:. On the other hand Dr. Byamugisha referred to the latest decisions on the subject and these have been cited earlier in this ruling. The case in point is General Parts (U) Ltd (Supra) n,hich case also alludes to inflation. We do not agree that the Justice relied on the decisions of 1990s. General Parts (Supra) rvas decided on 12 / 1 l2O0l by a bench of three. Bank of Uganda (supra) rvas decided on 19m April 2000 and Kassam's case was decided b1. a single Justice on 12 lll2OOO. These are recent decisions. All of them were cited to the Justice for his consideration. In his ruling the Justice states that he review'ed i6 all the cases cited to him. He specifically stated that he was guided b,v trvo of these same cases, among others. Indeed the ruling of the Justice indicates that Mr. Muziransa reled on General Parts case, in his submission before the Justice for the view that General Parts is one of the cases which reflect the general principle that are applied in taxation of costs in this Court. We agree that inflation has to be borne in mind when taxation of costs is done. But we cannot accept that inflation should be a basis for awarding exhorbitant costs. Many other factors set out in paragraph (2) of rule 9 of Schedule 3 must be considered - Moreover,'uve think that under Rule 105 (3) of the Rules, aJustice exercises discretion in deciding whether the bill of costs as taxed is manifestll.' excessive or manifestly inadequate. He makes a decision on the basis of materials before him or her. The Justice in this reference before us demonstrated in his ruling that he reviewed the materials available before him including the Rulcs of Court and the case lau,. We have power to vary, discharge or reverse decision of the single Justice. However u'e have not been persuaded that the learned Justice exercised his discretion injudiciousl-v and or wrongl-v in reducing the award from shs 16ml= to 5m/:. Ground (a) must therefore fail. In the result the reference is unsuccessful. The application rs dismissed. The respondent shall have the costs of this reference and those before the singie Justice. t7 Dated at Mengo the... tt .......day of I i) 15. 2003. i_ I I , [.i-y,1*;, EKOOKO J.W.N. TS JUSTICE OF SUPREME COURT (-\-i I ./. F C.M. KII.TO WSTICE OF SUPREME COURT \ i -l ,..i.r , \ t; ...\,.r,1 ,1r,, AtptL'Cu.-.J Ptc Ae u,-t' In L\-.t1 >^q €l A.N. 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