National Insurance Corporation V Pelican Services Limited (Civil Ref.No. 13 of 2005)

Court of Appeal · [2006] UGCA 35 · 2006 Reference Allowed ✦ AI-generated summary ↓ Download

Jurisdiction

Uganda

Case Type

Reference to a single judge from the taxing officer's decision on taxation of costs

Decision

Reference allowed; instruction fee reduced to shs 7,500,000 and VAT to shs 1,275,000, totalling shs 8,775,000

The full judgment

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Cited — treatment unverified cited in 1 (treatment unverified) Derived from citing cases in the Wakilii corpus — not an assertion that this case is good law.

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Holding

On a reference from the taxing officer, the single judge held that the instruction fee of shs 13,000,000, representing about 18–20% of the shs 75,000,000 subject matter, was excessive. Applying the principle of consistency and a preferred benchmark of approximately 10% of the subject matter, the court reduced the instruction fee to shs 7,500,000. VAT was conceded by the respondent to have been miscalculated and was correspondingly reduced to 17% of the reduced fee, being shs 1,275,000, making a total of shs 8,775,000. The reference succeeded on both grounds and the respondent was ordered to pay costs of the application.

Facts

The applicant, National Insurance Corporation, lost Civil Appeal No. 15 of 2002 to the respondent, Pelican Services Ltd. The respondent's counsel filed a bill of costs, on which the taxing officer allowed an instruction fee of shs 13,000,000 and VAT of shs 4,515,358, totalling shs 17,910,758. The value of the subject matter of the appeal was shs 75,000,000. Aggrieved, the applicant sought a reference to a single judge, contending that both the instruction fee and the VAT were manifestly excessive. The respondent's counsel did not attend the hearing despite service, and the matter proceeded ex parte. Through conferencing notes the respondent's counsel had defended the instruction fee but conceded the VAT had been calculated on a wrong figure and should be recalculated with the taxed-off sums.

Issues

Whether the instruction fee of shs 13,000,000 allowed by the taxing officer was manifestly excessive and contrary to law and principle.
Whether the VAT of shs 4,515,358 allowed in the bill of costs was manifestly excessive and contrary to law and principle.

Orders

Reference allowed.
Instruction fee reduced to shs 7,500,000.
VAT reduced to 17% of shs 7,500,000, being shs 1,275,000, totalling shs 8,775,000.
Respondent to pay costs of the application.

Key headnotes

Costs — Taxation — Principles Governing Assessment of Instruction Fees

In taxing costs a taxing officer must perform a balancing exercise, reimbursing the successful party for reasonable expenses and setting remuneration high enough to attract recruits into the profession, while ensuring costs are not so high as to render courts accessible only to the wealthy.

Costs — Taxation — Interference with Taxing Officer's Discretion

A court will interfere with a taxing officer's award only where the award is so high or so low as to cause injustice to the parties; the award must be unreasonable and excessive to justify interference.

Costs — Taxation — Instruction Fee Relative to Value of Subject Matter

While there is no fixed mathematical formula for taxation, consistency requires that an instruction fee bear a reasonable proportion to the value of the subject matter, with approximately 10% being a preferable benchmark; a fee of 18–20% of the subject matter is excessive.

Costs — Taxation — VAT on Advocate's Fees

A VAT-registered advocate is entitled to claim VAT on taxed fees, but where the instruction fee is reduced the VAT must be recalculated proportionately on the reduced figure.

Legislation cited (2)

Court of Appeal Rules, Third Schedule paragraph 4
Court of Appeal Rules Rule 109

Cases cited (8)

CC Chandran v Kengrow Industries Ltd (Civil Application No. 22 of 2002)
A. Kassam and 2 Others v Habre International (Civil Appeal No. 16 of 1999)
Bank of Uganda v Banco Arabe Espanol (Civil Appeal No. 23 of 1999)
Attorney General v Uganda Blanket (Civil Appeal No. 17 of 1993)
General Parts (U) Ltd v Non Performing Assets Trust (Civil Application No. 21 of 2000)
Pramchand Raichand Ltd. vs. Quarry Services 1972 E.A 162
Bank of Uganda v Trespert Ltd (Civil Appeal No. 3 of 1997)
Sietco v Noble Builders (Civil Application No. 31 of 1993)

Source: this page presents Wakilii’s issue analysis and metadata for a publicly reported Ugandan judgment. Any AI-generated summary is marked as such. Judgment text is sourced from the Uganda Legal Information Institute (ulii.org). Wakilii is not affiliated with ULII.