Wakilii

Western Highland Creameries & Anor v Stanbic Bank Uganda Ltd (Taxation Appeal No. Reference 10 of 2013)

High Court · [2013] UGCOMMC 151 · 2013 Appeal Partly Allowed — Matter Remitted AI-generated summary ↓ Download Pin to watchlist Add to matter
Jurisdiction
Uganda
Case Type
Appeal from registrar's taxation award following referral back by judge in Taxation Appeal No. 5 of 2013
Decision
Taxation award set aside for denial of fair hearing; matter remitted to taxing master for fresh hearing on item 1

Observed later treatment

No later-treatment classification is recorded for this judgment.

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Holding

The court held that the taxing master violated the appellants' right to a fair hearing under article 28(1) of the Constitution by taxing instruction fees without summoning or hearing the appellants. The taxation award was set aside on this ground. However, the court held that where the subject matter value of a suit is ascertainable, item 1(a)(iv) of the Sixth Schedule mandates calculation by formula and confers no discretion to reduce or increase fees absent specific circumstances prescribed by the rules (complexity certificate, wrong court, multiple counsel, senior counsel). The matter was referred back to the taxing master to afford the appellants a hearing and determine the appropriate exchange rate.

Outcome

Taxation award set aside for denial of fair hearing; matter remitted to taxing master for fresh hearing on item 1

Facts

The appellants' plaint in HCCS No. 462 of 2011 was struck out on 25 October 2012 on preliminary objections (no cause of action and statute-barred). The respondent bank presented a bill of costs for taxation. The registrar initially taxed instruction fees at UGX 104,867,500 based on a subject matter value of USD 4 million. The respondent appealed in Taxation Appeal No. 5 of 2013. On 30 April 2013, the judge set aside the instruction fees award and held that the correct subject matter value was USD 5 million plus UGX 38,880,885,665 as stated in paragraph 8 of the plaint. The judge referred item 1 back to the registrar to calculate instruction fees accordingly and issue a revised certificate immediately. On 2 May 2013, the respondent's counsel wrote to the registrar and appeared before her. The registrar proceeded to calculate instruction fees and issued a certificate for UGX 612,123,060 (instruction fees UGX 499,676,356 plus 18% VAT). The appellants were not summoned or present. The bank guarantee securing costs was then called by the respondent. The appellants appealed, arguing denial of fair hearing and that the award was manifestly excessive.

Issues

  1. Whether the taxing master violated the appellants' right to a fair hearing by taxing item 1 (instruction fees) without hearing the appellants.
  2. Whether the taxing master has discretion to increase or decrease instruction fees under item 1(a)(iv) of the Sixth Schedule of the Advocates (Remuneration and Taxation of Costs) Rules where the subject matter of a suit is ascertainable.
  3. Whether the taxation award of UGX 499,676,356 as instruction fees plus VAT of UGX 93,374,704 was manifestly excessive and unconscionable.
  4. Whether the taxing master properly applied the principles of taxation and the doctrine of precedent.
  5. Whether the taxing master exercised her discretion judicially in awarding the whole of the basic fee.

Orders

  • The appeal succeeds on ground 1.
  • The taxation award of the taxing master dated 2 May 2013 is set aside.
  • Item number 1 (instruction fees) is referred back to the taxing master to afford the appellants a hearing before making the award.
  • Ground 2 and related grounds fail and are dismissed.
  • The application for refund of monies paid to the respondent is dismissed.
  • If the taxing master establishes overpayment, only that amount shall be refunded.
  • Costs of the appeal are costs in the cause.

Rules and key headnotes

Fair Hearing — Right to be Heard — Taxation of Costs
The right to a fair hearing under article 28(1) of the Constitution applies to taxation proceedings. Where a judge refers an item back to the registrar for calculation of instruction fees, the parties are entitled to be summoned and heard before the registrar makes the award, even if the calculation is based on a prescribed formula. The right to be heard is so fundamental that no derogation is permitted under article 44 of the Constitution.
Taxation of Costs — Instruction Fees — Discretion of Taxing Master
Where the subject matter of a suit is ascertainable from the plaint or judgment, item 1(a)(iv) of the Sixth Schedule to the Advocates (Remuneration and Taxation of Costs) Rules, 1996 prescribes a mandatory formula for calculating instruction fees. The taxing master has no discretion to reduce or increase the basic fee except in circumstances expressly prescribed by items 1(a)(ix)-(xiii): complexity certificate from presiding judge, case should have been in magistrate's court, certificate for multiple counsel, or certificate for senior counsel.
Taxation of Costs — Statutory Interpretation — Advocates (Remuneration and Taxation of Costs) Rules
The use of the word 'shall' in item 1(a) of the Sixth Schedule ('the fees for instructions shall be as follows') makes the application of the prescribed formula mandatory. Where statutory language is clear and unambiguous, a court must interpret the provision as it is and cannot legislate judicial discretion into it through construction. Section 55(3)(b) of the Advocates Act confers discretion subject to regulations, and thus does not override the express mandatory provisions of the Sixth Schedule.
Taxation of Costs — Precedent — Revoked Rules
Judicial precedents interpreting revoked or substantially different taxation rules are distinguishable and not binding when the current rules contain materially different provisions. The Advocates (Remuneration and Taxation of Costs) Rules S.I. 258-6, which expressly conferred discretion on the taxing officer through a proviso allowing consideration of nature, importance, amount involved and other circumstances, were revoked in 1982. That proviso was omitted in the 1982 and subsequent 1996 rules. Decisions based on the revoked proviso (including Makula International v Cardinal Nsubuga [1982] HCB 11) are not binding authority for interpreting the current rules.
Taxation of Costs — Appellate Court Rules Distinguished
Decisions of the Supreme Court on taxation of costs under the third schedule to the Rules of the Supreme Court (which contain different discretionary provisions) are not binding precedents on the interpretation of the Sixth Schedule to the Advocates (Remuneration and Taxation of Costs) Rules applicable to the High Court. General principles of taxation apply only where there is no specific statutory provision covering the issue. Where a clear statutory formula exists, the formula must be applied.
Appeals — Remand — Right to Hearing
Where an appellate court remands a specific issue to a lower court or registrar for determination, the parties are entitled to be heard upon the remanded issue even if the appellate court has given directions on applicable law or procedure. In the absence of a specific provision excluding a hearing, any remand of an issue requests the issue to be tried according to the direction of the court with parties given the opportunity to address the tribunal.

Legislation cited (19)

Cases cited (17)

  • Carolyn Turyatemba and 4 Others v Attorney General and Another (Constitutional Petition No. 15 of 2006)
  • Bakaluba Peter Mukasa v Nambooze Betty Bakireke (Supreme Court Election Petition Appeal No. 04 of 2009)
  • Shumuk Investments Ltd v Noble Builders (U) Ltd and 2 Others (Civil Appeal No. 24 of 2012)
  • Premchand Raichand and Another v Quarry Services of East Africa Ltd and Others (No. 3) [1972] 1 EA 162
  • In the Matter of Alexander Joe Okello and in the Matter of Messieurs Kayondo and Company Advocates (Supreme Court Civil Application No. 1 of 1997)
  • Attorney General versus Uganda Blanket Manufacturers (1973) Ltd
  • Departed Asians Property Custodian Board v Jaffer Brothers Ltd (Civil Appeal No. 8 of 1998)
  • Attorney General v Uganda Law Society (Constitutional Appeal No. 1 of 2006)
  • Republic v Minister of Agriculture Ex Parte W'Njuguna and Others [2006] 1 EA 359
  • Kenya Ports Authority v Modern Holdings Limited (EACJ Taxation Reference No. 4 of 2010)
  • Bank of Uganda v Banco Arabe Espanol (Supreme Court Civil Appeal No. 23 of 1999)
  • Yahaya Kiriisa v Attorney General (High Court Civil Appeal No. 315 of 2002)
  • Shumuk Springs Development Ltd and Three Others v Mwebesa Katatumba and Six Others (High Court Taxation Appeal No. 21 of 2012)
  • Makula International Ltd v Cardinal Nsubuga [1982] HCB 11
  • Attorney-General v Prince Ernest Augustus of Hanover [1957] AC 436
  • Lall v Jeypee Investments Ltd [1972] 1 EA 512
  • Bank of Uganda v Banco Arabe Espanol [2000] EA 297

Full judgment

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Western Highland Creameries & Anor v Stanbic Bank Uganda Ltd (Taxation Appeal No. Reference 10 of 2013) [2013] UGCommC 151 (30 August 2013)
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