Wakilii

Mbale Resort Hotel (U) Limited v Babcon (U) Limited (Taxation Civil Reference 18 of 2018)

Supreme Court · [2018] UGSC 60 · 2018 Reference Allowed AI-generated summary ↓ Download Pin to watchlist Add to matter
Jurisdiction
Uganda
Case Type
Reference to a single Judge of the Supreme Court under Rule 106 against the taxing officer's ruling on taxation of costs in Civil Appeal No. 6 of 2016
Decision
Reference allowed; instruction fee increased to UGX 16,000,000 and VAT of UGX 2,880,000 allowed

Observed later treatment

No later-treatment classification is recorded for this judgment.

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Holding

On a reference under Rule 106 from the taxing officer, the Supreme Court held that the value of the subject matter or sums claimed in the principal suit do not constitute the 'amount involved in the appeal' unless they were issues for determination in the appeal; the applicant's UGX 200,000,000 instruction-fee claim, unpleaded in the bill of costs, was exorbitant. However, the UGX 3,000,000 allowed was manifestly inadequate given the work in raising and arguing the preliminary objection and opposing all grounds of appeal. The fee was increased to UGX 16,000,000. The disallowance of VAT was reversed because a valid VAT certificate was on the record, so VAT was allowed at 18% (UGX 2,880,000).

Outcome

Reference allowed; instruction fee increased to UGX 16,000,000 and VAT of UGX 2,880,000 allowed

Facts

The applicant succeeded in Supreme Court Civil Appeal No. 6 of 2016, which arose from arbitration proceedings over a construction contract; that appeal was dismissed with costs to the applicant after a preliminary objection on the respondent's right of appeal was upheld and the grounds were also considered on the merits. On taxation of the applicant's bill of costs (claimed at UGX 245,211,180), the Deputy Registrar, acting as taxing officer, allowed a total of UGX 4,351,000, of which UGX 3,000,000 was the instruction fee for raising the preliminary objection, and disallowed the claim for VAT under item 13. The applicant claimed UGX 200,000,000 as instruction fee based on the value of the subject matter. The applicant referred the taxation to a single Judge, contending the instruction fee was manifestly inadequate and the VAT claim was wrongly disallowed despite a VAT certificate being on the record.

Issues

  1. Whether the taxing officer erred in allowing an instruction fee of UGX 3,000,000 as manifestly inadequate having regard to the proceedings and the value of the subject matter.
  2. Whether the taxing officer erred in disallowing the applicant's claim for Value Added Tax (VAT) under item 13 of the bill of costs.

Orders

  • Reference allowed.
  • Instruction fee increased from UGX 3,000,000 to UGX 16,000,000.
  • VAT allowed at 18% of UGX 16,000,000, that is UGX 2,880,000.
  • No order as to costs of the reference.

Rules and key headnotes

Taxation of Costs — Instruction Fees — Meaning of 'amount involved in the appeal'
The value of the subject matter or the sums claimed in the principal suit do not constitute the 'amount involved in the appeal' for the purpose of assessing an instruction fee unless that amount was itself an issue or question for determination in the appeal.
Taxation of Costs — Bill of Costs — Parties bound by pleadings
Parties are bound by their pleadings, including the bill of costs; a basis for an instruction fee, such as the value of the subject matter, that is not set out as justification in the relevant item of the bill of costs cannot found a claim for that fee even if raised in submissions.
Taxation of Costs — Reference — Interference with the taxing officer's discretion
A judge on a reference may interfere with the taxing officer's award only where there was an error of law or of principle, or where the bill as taxed is, in all the circumstances, manifestly high or manifestly inadequate; the taxing officer's opinion on a reasonable fee is not to be disturbed lightly.
Taxation of Costs — Instruction Fees — Assessment principles
Assessment of an instruction fee is an intricate balancing exercise applying the hypothetical-competent-counsel test, weighing reimbursement of the successful party and adequate remuneration of advocates against the public interest in keeping costs accessible and consistent, with allowance for inflation.
Taxation of Costs — Value Added Tax — VAT certificate on the record
A claim for VAT on taxed costs is allowable where a valid VAT certificate is on the record of the matter, and the taxing officer's disallowance for want of a certificate will be reversed where the certificate was in fact attached but overlooked.

Legislation cited (6)

Cases cited (15)

  • Premchand Raichand Ltd v Quarry Services of East Africa Ltd [1972] EA 162
  • Ebrahim Kassim v Habre International Ltd (2001) 1 EA 98
  • Concorp International Ltd v Eastern & Southern Trade & Development Bank (Civil Reference No. 1 of 2013)
  • Paul K. Ssemogerere v Attorney General (Civil Application No. 5 of 2001)
  • National Insurance Corporation v Pelican Services Ltd (2000) 2 EA 236
  • Punjani Motors v Sam K. Njuba (High Court Miscellaneous Application No. 1144 of 1997)
  • Twinobusingye Severino v Attorney General (Constitutional Reference No. 27 of 2003)
  • Attorney General v Uganda Blanket Manufacturers (1973) Ltd (Civil Application No. 17 of 1993)
  • Bank of Uganda v Banco Arabe Espanol (Civil Application No. 33 of 1999)
  • Nicholas Roussos v Gulamhussein Habib Virani (Civil Appeal No. 6 of 1995)
  • Muwanga Kivumbi v Attorney General (Civil Reference No. 38 of 2017)
  • Attorney General v James Mark Kamoga (Civil Appeal No. 2 of 2008)
  • Interfreight Forwarders (U) Ltd v East African Development Bank (Civil Appeal No. 13 of 1993)
  • Simpsons Motor Sales (London) Ltd v Hendon Corporation [1964] 3 All ER 833
  • Departed Asians Property Custodian Board v Jaffer Brothers Ltd

Full judgment

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Mbale Resort Hotel (U) Limited v Babcon (U) Limited (Taxation Civil Reference 18 of 2018) [2018] UGSC 60 (20 September 2018)
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.