Bank of Uganda v Banco Arabe Espanol (Civil Application 4 of 2000) [2000] UGSC 30 (4 May 2000)

Ready for delivers 4th May

THE REPUBLIC OF UGANDA IN THE SUPREME COURT OF UGANDA AT MENGO

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

CIVIL APPLICATION NO. 4# OF 2000

BETWEEN

BANK OF UGANDA >>>>>>>>>>>>>>>>>>>>>APPLICANT

AND

BANCO ARABE ESPANOL >>>>>>>>>>>>RESPONDENT

(A reference to a single judge arising from the decision of the Registrar as Taxing Officer dated 24^th February, 2000 in Civil Appeal No. 8 of 1998)

RULING OF KANYEIHAMBA J. S. C.

This is a reference to me under rule 105 (1) of the Rules of this court, from a decision of the Registrar as a taxing officer.

The background to this reference is that following the judgment of this court in Civil Appeal No. 8 of 1998, the respondent was awarded costs in that appeal. The costs were taxed by the learned Registrar on the 9/11/99 in the sum of Uganda Shs. 206,435,550. The applicant referred that decision to a single judge of this court and pending the decision in that application, the appellant made an application for stay of execution of that taxed bill. The application was granted with costs in favour of the respondent. A bill of costs was filed for taxation before his worship, Kisawuzi, who allowed the instruction fee of that stay of execution in the sum of Uganda shs. 10,000,000. It is that item on the taxed costs which is the subject of reference before me.

The Memorandum of Reference contains 6 grounds framed as follows:

That item 1 of the Bill of Costs as taxed to the tune of $Ug$ . $1$ shs 10,000,000 is in all the circumstances manifestly excessive. That the taxing officer erred in law, whilst taxing item 1 $2$ of the Bill of Costs in holding that the value of the subject matter was the amount of the disputed taxed costs being Ug. shs. 206,433,550.

That the taxing officer erred in law, whilst taxing item 1 $3$ of the Bill of Costs, in failing to decide that the stay of execution application was of an interlacutory matter and as such should only carry a minimum instruction fee.

That the taxing officer erred in law, whilst taxing item $l$ $4$ of the Bill of Costs, in failing to take into consideration the fact that application was straight forward and did not involve unusually difficult matters of law.

That the Taxing Officer erred in principle, whilst taxing $5$ item 1 of the Bill of Costs, in not taking into account adequately or at all the public interest principle which requires that costs be kept to a reasonable level so as not to keep poor litigants out of court.

The taxing officer erred in principle, whilst taxing item $1$ $6$ of the Bill of Costs, in failing to take into account the other costs to be allowed being the costs of the reference itself.

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Mr. MasembeKanyerezi,counselfortheapplicant'argued grounds 2,3 ati4 together, gound 5 and 6 together and gound I alone. On grounds 2,3, ud4, counsel submitted that costs in this court should be assessed in accordance with paragraph ⁹(l) of the 3'd schedule to the Rules of this court' He distinguished paragraph 9 (l) from paragraph 9 (2) and submitted that the former excludes the subject matter of the litigation from the items which should guide a taxing officer whereas 9 (2) includes it. He contended that the reason for the difference is because ⁹ (l) is only dealing with applications which are confined to interlocutory matters whereas 9 (2) deals with appeals which go to the substance ofthe litigation'

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Counsel further contended that in this particular case' the Bill of Costs of Ug. shs. 206,433,550 was contested and is in fact the subject of a pending application before another single judge of this court. Ln consequence, counsel submitted that to award costs for a stay ofexecution would be condemning the applicant to pay double costs and conversely, awarding the respondent in costs,twice. Counselcriticisedthelearnedtaxingofficerfor taking into account the wrong principle in determining the quantum of costs when he applied, without discrimination' the rules laid down in the case of ^Prem chand Ltd And Another v. uar Servi ces of Ea t Africa And Others ¹⁹⁷² E. A 162. For these reasons, counsel for the applicant submitted that grounds 2,3, & 4 ofthis reference should succeed'

Mr. Justine Semuyaba, counsel for the respondent, opposed the application. On grounds 1, 2, 3 and 4 of the reference. Mr. Semuyaba submitted that rule 9 (1) of the Rules in the $3^rd$ schedule requires the taxing officer to be fair and reasonable in awarding costs. Learned counsel contended that the award of Ug. Shs. 10,000,000 was fair and reasonable under the background and circumstances of this case. It was counsel's contention that before reaching his decision, the learned taxing officer took into consideration the fact that the respondent was being deprived of the rewards of his success when the stay of execution was granted. Moreover, this was a case in which colossal sums of money were involved and the respondent had already lost much by the applicant's delaying tactics of prolonging litigation in this case. In any event, the respondent had done a lot of work in vigorously opposing the application for stay of execution which was intended to deprive it of its just Now those rewards were being unnecessarily rewards. delayed. Therefore, the respondent ought to be allowed some reasonable costs by way of some insurance and that is the meaning of the taxing officer's award which is quite fair and reasonable. Counsel cited Ambalal N. Patel Ltd v. Marietti (1957) E. A. 194 as authority for his submission that in considering the taxation of costs regarding execution proceedings, the taxing officer has to take into account the value of the subject matter in dispute. Mr. Semuyaba submitted that it was wrong on the part of counsel for the applicant to argue that high costs would discourage poor litigants from

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going to court since the principle to be applied was that each case should be decided on its owu merits Counsel submitted that it was quite right and legitimate for the taxing offrcer to take into account the amount of money involved in the principal suit. He contended that Rule 105 (4) of the rules of this court was relevant to this application in that it provides that there shallbenoreferenceonaquestionofquantumonlyandyet, this is precisely what the application is about' He contended that there was no merit in the application and therefore grounds 1,2,3 and 4 ofthe reference should be dismissed'

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On gtounds 5 and 6 counsel for the applicant contended that the application for stay of execution was a straightforward application which was disposed of in under 45 minutes and did not involve any complicated points of law' He therefore submitted that this is an application which should not atfact anything more than between Ug' Shs' 700'000 and 800'000 in instruction fees. He referred to a number of decided cases including Departed Asians Property Custodian Board v' Jaffer Brothers Ltd, Civil Application No 13 of 1999 (S'C') (unreported). The Registered Trustees of Kampala Institute v. Departed Asians Property Board, Civil Application No ³ of 1995 (S. C.), (unreported), in support of his submissions for reducing awards ofcosts. Counsel further contended that costs should not be too high as to deter potential litigants and a taxing offrcershouldbasethequantumofcostsonahypothetical 5

counsel who would be contended to prosecute a case on modest fees.

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Lastly, Mr. Masembe Kanyerezi made submissions on ground l. He contended that the award of Ug. Shs. 10,000,000 was manifestly excessive. While conceding that courts may not interfere with awards of costs except where wrong principles have been applied or the amounts allowed are excessive, it was nevertheless his submission in this particular case that the amount awarded was excessive. Counsel prayed that the award of Ug. Shs 10,000,000 be set aside and the court decide what is reasonable and fair.

Mr. Semuyaba made submissions on grounds 5 and 6 and observed that the authorities cited by counsel for the applicant only dealt with substantive issues in appeals and not interlocutory matters. He contended that the accepted principle was that a successful litigant should get his costs regardless of wealth or status. Counsel, citing the view of the single judge, Mulenga, J. S. C. in the Jaffers Brothers case, (supra), said that there was no mathematical formula for determining the correct quantum of costs. Each case must be decided on its own facts and circumstances. Counsel contended that there were no compelling reasons to justify any interference with the decision of the learned taxing officer. He further contended that the submissions by Mr. Masembe Kanyerezi that other costs in the suit should be taken into account when taxing costs are erroneous. In any event, counsel for the applicant having contended that in assessing costs in applications, the subject matter should not count, he was now saying that in this case it should. Since other costs in the cause are a subject matter, Counsel for the applicant should be estopped from making that submission as was held in the case of Alexander J. Okello v, M/s Kayondo & Co. Advocates, in Civil Appeal No. 1 of 1992 (C. A.), (unreported). Counsel prayed that all in all, the application for reference should be dismissed.

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Mr. Masembe Kanyerezi, by way of clarification, contended that courts should operate through precedents and not personalities or status. He submitted that his clients had not been, as claimed on behalf of the respondents, indulging in delaying tactics, but had vigorously and expeditiously pursued their interests in accordance with the law.

In my opinion, this application raises two pertinent matters, namely, whether the learned taxing officer applied the wrong principle or principles when determining costs to be paid following the stay of execution and whether, the quantum of costs which he eventually decided to award was manifestly The law prescribes the guidelines for a taxing excessive. officer which must be followed. Once these guidelines have been adhered to, the quantum of costs is largely left to the discretion of the taxing officer and this court will not normally interfere with the exercise of that discretion unless the amount allowed are manifestly excessive.

Thus, in The Registered Trustee of Kampala Institute v. Departed Asians Property Custodian Board, Civil. Application No. 3 of 1995 (S. C.) this court held,

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"We have already stated that in appropriate cases the value of the subject matter can be a basis for the taxation of a bill of costs. But in our view, we repeat that the decision in this case is such that value cannot nor could it be a basis for taxation of the instruction fee."

Paragraph 9 of the Third Schedule to the Rules of this court provides:

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

(2) The fee to be allowed for instructions to appeal or to oppose an appeal shall be a sum of that the taxing officer considers reasonable, having regard to the amount involved in the appeal, its nature, importance and difficulty, the interest of the parties, the other costs to be allowed, the general conduct of the proceedings, the fund or persons to bear the costs and all other *relevant circumstances.*"

The subject matter of this application is what is prescribed in paragraph 9 (1), and not 9 (2), of the schedule. Once it is conceded that the disputed costs are in connection with an application, then the reasonableness of the taxing officer in relation to the application must be judged within the confines of paragraph 9 (1). The costs should be determined according to the instructions and the actual work done in order to "make, support, or oppose an application". In my view, any reference to the subject matter, other costs, poor litigants, hypothetical counsel, appellant's tactics in causing delays in the prosecution of the suit, colossal sums involved and costs for stay of execution being some form of insurance for the respondent, which both counsel paraded around either in the pleadings or submissions, are all irrelevant. In my opinion, therefore, grounds 5 and 6 of this application in so far as they criticise the learned taxing officer for not taking into account matters which are confined to paragraph 9 (2) of the third Schedule to the Rules of this court, have no merit in them and ought to be dismissed.

I will now consider grounds 2 and 3 of the application. There is no doubt in my mind that the learned taxing officer applied the wrong principle before coming to his decision. He stated that the principles governing taxation and which a taxing officer should take into account were laid down in Premchand Ltd. and Another v. Quarry Services of East Africa And Others (supra). Having enumerated those principles, he said,

> "In the instant case, bearing in mind the foregoing, I am of the considered opinion that the value of the subject matter must be taken into account in the assessment of the instruction fee. It is quite evident that in essence, it was the threatened execution of an award of shs. 206,433,550 which the applicant feared to lose that they filed for stay of execution. I therefore disagree with the learned counsel for the applicant that the value of the subject matter should not be considered at this stage simply because the reference is still pending."

It is clear that the learned taxing officer treated the matter before him which was based on an application as if it was an appeal. I $\overline{9}$

therefore agree with leamed counsel for the applicant that the learned taxing officer applied the wrong principle which is prescribed in paragraph 9 (2) instead of the correct one which is enskined in paragraph 9 (l ). In the Derlarted Asians Pronertv Custodian Board v. Jaffe r Brothers Limited , (supra),

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Mulenga , J. S. C., said that where a taxing offrcer expressly bases his opinion on a wrong principle resulting in allowing too high or too low an amount, the court will intervene. I agree. tn my opinion therefore, grounds 2 and 3 of this application ought to succeed.

I will now consider grounds I and 4 of the application. The reasonableness and quantum of costs awarded or to be awarded in connection with an application must depend on the instructions thernselves and the amount of work done to make, support or oppose the application. Mr. Masembe Kanyerezi, submitted that the proceedings for stay of execution took less than forty five minutes to complete. Counsel for the respondent did not oppose or comment upon this duration of the hearing. Mr. Semuyaba, learned counsel for the respondent submitted that ttrough him the respondent vigorously opposed the application for stay of execution. Counsel for the applicant did not oppose or comment upon this submission. It can be surmised that both the presentation and opposition of the application for stay of execution were done within less than forty five minutes. Nevertheless, in my opinion, this was an application which should have taken a much shorter time than what is roughly

indicated by submissions of counsel. In the Patrick Makumbi Civil Anplication No. I l/94 (supra), in which taxed costs had been allowed by the taxing officer at Ug. Shs. 12 million in an application which took minutes to complete, the learned Manyindo, D. C. J., observed that the award was manifestly excessive and reduced it to a mere Ug. Shs. 2,000,000, and this was in 1994. In Attorney General v. Uganda Blanket Manufacturers (1973) Ltd, Civil Application No. 17 of 1993, Odoki, J. S. C., said that allowance must be made for the fall in the value of money. This principle was also stated and applied in Prechmand Richard v. Quarry Seruices (No.3) (supra). In the Attorney General v. Uganda Blankets Manufacturers (1973), (supra), the learnedjustice ofthe Supreme Court reduced an award of 230,092,100 to a mere 57,092,100. ln each case, the learned justices were of the opinions, that the awards had been manifestly excessive.

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> In my view, an award of Ug. Shs 10,000,000 in a simple application ofstay ofexecution ofanother award ofcosts which is pending a review of a single justice of the same cout and where the main suit between the parties is still to be resolved, is manifestly excessive. Grounds 1 and 4 ofthis application ought to succeed. All in all, this appeal succeeds. Consequently, the taxing officer award of Ug. Shs. 10,000,000 is reduced to 3,000,000. In light of what I have stated relating to the grounds of reference before me and the length it took to prosecute the

application for stay of execution in Civil Application No. 20 of 1999, each party is to pay its own costs.

DATED AT MENGO THIS. 4 DAY OF May. 2000

All any il<br>Hon justice G. W $-1$ AMBA

JUSTICE OF THE SUPREME COURT