Court name
Commercial Court of Uganda
Judgment date
9 May 2013

Kampala Capital Council Authority v Senabulya (Miscellaneous Application-2012/313) [2013] UGCommC 84 (09 May 2013);

Cite this case
[2013] UGCommC 84

THE REPUBLIC OF UGANDA

 IN THE HIGH COURT OF UGANDA AT KAMPALA

 (COMMERCIAL COURT DIVISION)

 MISCELLANEOUS APPLICATION NO. 313 OF 2012

 (Arising From Misc. Cause No. 3 of 2006)

 

KAMPALA CAPITAL CITY AUTHORITY:::::::::::::::::::APPLICANT

VERSUS

  1. ROBERT SSAWA SENABULYA
  2. SSAWA, MUTAAWE & CO. ADVOCATES:::::::::::RESPONDENTS

BEFORE: HON. LADY JUSTICE HELLEN OBURA

JUDGEMENT

This is an appeal against the taxation ruling of the registrar brought under section 62(1) of the Advocates Act and rule 3 of the Advocates (Taxation of Costs (Appeals and References) Regulations seeking that the taxation ruling in Misc. Cause No. 3 of 2006 be set aside or varied and costs of the appeal be provided for.

The background to this appeal as I understand it is that on 12th December 2001 the respondents were instructed to provide legal services, prepare the necessary documents and to render legal advice to the applicant in respect of the proposed re-development of the Baganda Bus Park on plot 43 – 47 Nakivubo Road, Kampala. There seems to be no dispute that the respondent carried out legal services including the preparation of a property development lease between the City Council of Kampala and Uganda Bus Operations Association Investment Limited. Pursuant to clause 4.15 of the Sub-lease, the fees and costs for the advocate’s negotiation and preparation of the Sub-lease were to be paid by both the Sub-lessor and Sub-lessee in equal proportion.

According to a copy of unsigned minutes on record, a meeting was held on 9th July 2002 between officials of the appellant, the 1st respondent and Director and Legal Advisor of Uganda Bus Operators Association Investments Limited, the sub-lessee. At that meeting the 1st respondent informed the meeting that the legal fees/costs of his firm for preparation of the Sub-lease and attendant legal advice had already been agreed at 1% of the total project costs of US$ 12,580,000. Subsequently, on 1st December 2005 the respondent forwarded a bill of costs to the applicant for the services rendered to it seeking for a sum of Shs. 138,081,780/=. The applicant failed to pay the bill upon which the respondents filed Miscellaneous Cause No. 3 of 2006 seeking for leave to tax the bill of costs. The leave was granted and the taxing master taxed and allowed the bill in the sum of Shs. 136,616,860/=.

The appellant was aggrieved by the award on instruction fees and now appeals to this court against the taxing master’s decision on the following grounds:

  1. The learned taxing master erred in law and fact when she held that there was an agreement between the appellant and the respondent in regard to instruction fees.
  2. The learned taxing master erred in law when she awarded excessive instruction fees in disregard of the scale provided in the 2nd Schedule to the Advocates (Remuneration and Taxation of Costs) Regulations S.I 267-4.
  3. The learned taxing master erred in law and in fact when she failed to properly evaluate the appellant’s case hence arriving at an erroneous decision.

The appeal is supported by the affidavit of Mr. Caleb Mugisha, an advocate of the High Court of Uganda in the employment of the appellant. In his affidavit, he repeats the averments in the chamber summons.

On behalf of the respondents, there is an affidavit in reply deposed by Mr. Robert Ssawa Senabulya, an advocate of the High Court of Uganda. He avers in the affidavit in opposition that it was not necessary at the stage of taxation to exhibit the Sub-lease agreement on which the bill was based. Secondly, he deposed that sections 48, 50 and 51 of the Advocates Act were not applicable to the circumstances of this case because the fee was based on the 5th Schedule to the Advocates (Remuneration and Taxation of Costs) Rules. Thirdly, that the bill as taxed, in view of the work done by the respondents and conduct of the parties is not excessive and that the registrar as taxing master duly exercised her discretion and arrived at the correct decision.

At the hearing Mr. Richard Mubale held brief for Mr. J Sendege for the Appellant while Mr. Sekitoleko held brief for Mr. Peter Walubiri for the respondents. Both counsel agreed to file written submissions which was done hence this ruling.

On the first ground, it was submitted for the appellant that the document which the taxing master calls the agreement is an internal memo dated 2nd September 2005. The document was written by the then Town Clerk to the Secretary Finance Committee requesting that the matter be urgently considered by the Executive in order to avoid possible litigation. In that regard it was argued that there was no agreement in the first place.

Counsel for the appellant argued further that even if the said internal memo constituted an agreement between the appellant and the respondents as to the fees of the respondents, the same would have to pass the mandatory tests set out in sections 48 and 51 of the Advocates Act for it to merit consideration by court. The appellant’s alternative argument is that the alleged agreement would fail the test in section 51 abovementioned as it was not signed, it did not contain a certificate of the Notary Public and no copy was sent to the Law Council. Thus such an agreement would be unenforceable in light of section 51(2) of the Advocates Act.

On the other hand, counsel for the respondents submitted that the respondents are not seeking to enforce any agreement under section 48 of the Advocates Act. Rather, their argument is that basing on the discussions and negotiations that had been held with the appellant, they prepared a bill of costs under the 5th Schedule to the Advocates (Remuneration and Taxation of Costs) Regulations which were duly taxed. It was argued that the respondents claimed Shs. 114,478,000/= as instruction fees being the fair and reasonable fees under item 1(a) of the 5th Schedule.

With respect to sections 48 and 51 of the Advocates Act, it was submitted for the respondents that these provisions were quoted out of context and were irrelevant to the case. In addition, it was submitted for the respondents that the taxing master referred to the “fees” that were ideally agreed upon by both parties. It was submitted that although this “agreement” was not signed and notarized as required by the Advocates Act, the conduct of the parties including the undisputed minutes and correspondences are clearly indicative that the parties considered Shs. 114,478,000/= claimed as “fair and reasonable” instruction fees in accordance with item 1(a) of the 5th Schedule cited above. It was argued that the taxing master simply adopted the figure “ideally agreed on” as the fair and reasonable figure.

In rejoinder, the appellant’s counsel submitted that the respondents have not shown court that the agreement existed between themselves and the appellant. The appellant contends that the alleged minutes of the meeting that took place on 9th July 2002 were never signed by any of the persons who purportedly attended the meeting. In essence, the appellants argue that the respondents’ fees were never agreed upon even though negotiations might have taken place. 

I have given due consideration to the arguments made by both parties and analysed the pleadings filed together with their attachments. The dispute appears to be whether there was agreement between the parties as to the respondents’ remuneration. While the appellants allege that there was no agreement between the parties worth enforcing, the respondents contend that they prepared the bill of costs under the 5th Schedule to the Advocates (Remuneration and Taxation of Costs) Rules and the taxing master simply adopted the figure “ideally agreed on” for instruction fees as fair and reasonable. The respondents refer to the conduct of the parties including the minutes and correspondences as indication that the fees were agreed to.

However, I note that in her ruling the learned taxing master did not rely on the minutes of the meeting in reaching her decision. Rather the learned taxing master referred to the letter dated 2nd December 2005 and stated on the basis of that document, and on the nature of the work that was undertaken it was clear the parties did not intend that the fees would be based on the second schedule to the Advocates (Remuneration and Taxation of Costs) Rules. She then stated that the fees were ideally agreed on by both parties and there was no basis for her to tamper with that agreement. She then awarded the sum of 114,478,000/=as instruction fees.”

Section 48(1) of the Advocates Act provides:

“Notwithstanding any rules as to remuneration for the time being in force, an advocate and his or her client may, either before or after or in the course of the transaction of any non contentious business by the advocate, make an agreement as to the remuneration of the advocate in respect of that transaction”.

Section 51of the Advocates Act provides that an agreement under section 48 or 50 shall be in writing; signed by the person to be bound by it; and contain a certificate signed by a notary public (other than a notary public who is a party to the agreement) to the effect that the person bound by the agreement had explained to him or her the nature of the agreement and appeared to understand the agreement. A copy of the certificate is required to be sent to the secretary of the Law Council by prepaid registered post.

 

Section 52 (2) provides that an agreement under section 48 or 50 shall not be enforceable if any of the requirements of subsection (1) have not been satisfied in relation to the agreement, and any advocate who obtains or seeks to obtain any benefit under any agreement which is unenforceable by virtue of the provisions of this section shall be guilty of professional misconduct.

In the case of S.V Pandit v Willy Mukasa Sekatawa & Others [1964] EA 490 it was held that a valid agreement for professional fees made between an advocate and his client must be in writing signed by the client against whom the agreement is sought to be enforced. At page 497 Sir Udo Udoma, CJ, while dealing with similar provisions stated the rationale for the above provisions as follows:

"The situation, I think, might be different if it was a client who had brought this action seeking to enforce the agreement as against the advocate. In that case, it would be the duty of this court to hold the advocate to his agreement for then the client would not be seeking to derive any benefit from such an agreement. It seems to me that what section 55 has done is to prescribe the formality which must be complied with by an advocate, who has concluded an agreement with his client as to his professional remuneration, if such an agreement is to be enforced by the court as against his client.

And section 56 (2) prohibits the bringing of any action for the enforcement of such an agreement. Which means in fact that any action brought for the purpose of enforcing such an agreement would be misconceived in law, having regard to the special procedure prescribed for that purpose under Section 56 (2) of the ordinance. The protection is for the client and not for the advocate. "

The Supreme Court of Uganda in the case of Kituuma Magala & Co. Advocates v Celtel (U) Ltd Civil Appeal No 9 of 2010 reported in [2001-2005] HCB Vol. 3 72 held that in terms of sections 48 and 50 of the Advocates Act, Advocates are free to enter into an agreement with their clients but section 51, required that such agreement comply with certain conditions or else by law it is unenforceable.

I have carefully perused the letter in question upon which the taxing master based her finding that the fees were ideally agreed. I do not agree that sections 48 and 51 of the Advocates Act are not applicable in this case as argued by counsel for the respondents. As long as the respondents are seeking to enforce the so called agreement for remuneration in court the yard stick for its validity is section 51. The enabling provision for remuneration agreement between an advocate and his client in non-contentious matters is section 48 (1) of the Advocates Act. Unless the respondents cite a different law under which they agreed with the applicant on their fees, it is bound to follow the above provisions.

 

In the premises, I find that the Town Clerk’s letter relied upon by the learned taxing master to conclude that the parties had ideally agreed on the fees does not amount to an agreement in terms of sections 48 and 51 of the Advocates Act. This was merely an internal letter written by the then Town Clerk to the Secretary Finance Committee with a request that the matter be urgently considered by the executive in order to avoid possible legal litigation. In any case, the amount in dispute as stated in that letter is stated to have been arrived at after negotiations held with the former Town Clerk.

 

However, I wish to make the following observations. First of all, in the last paragraph of the letter of instructions dated 12th December 2001 (found at page 112 of the affidavit in reply) that same former Town Clerk had requested the respondent to formally inform him of the projected cost of their services as that may be the subject of further negotiation and approval by Council.  Secondly, according to the unsigned minutes of the meeting of 9th July 2002 (found at page 44 of the affidavit in reply), at page 7 the same former Town Clerk requested an explanation from the City Advocate (who was recorded under members present to be Mr. J. S. B. Karugonjo) regarding the fee note/invoice submitted by the 2nd respondent. Before the City advocate could explain to the meeting as requested, Mr. Ssawa the 1st respondent is recorded to have “interposed to clarify that there was nothing to explain since the legal fees/costs of his firm for preparation of the sub-lease and attendant legal advice had already been agreed at 1% of the total cost of US $ 12,580,000 disclosed in the documents”. According to that unsigned minutes whose authenticity was also challenged, discussion on that item ended with that interposition.

 

The above observations leave two questions lingering in my mind. First, why would the former Town Clerk who is now alleged to have agreed on this fees be asking the City Advocate to explain the fee note if at all he had agreed to it? Secondly, if at all the former Town Clerk had power to conclude the negotiations why did he indicate that the projected cost may be subject to approval of Council? My understanding of this transaction as discerned from the documents is that there was a proposal by the respondent to charge 1% of the total costs as its fees but negotiations were not brought to its logical conclusion by getting it approved by Council as had earlier been stated in the letter of instructions and complying with section 51 of the Advocates Act quoted above. Consequently, there is no written agreement that the taxing master could rely on to conclude that the parties had agreed on the instruction fees she allowed. That conclusion could not be drawn from the alleged conduct of the parties as argued by the respondents. The legal requirements had to be met.

In the result, I find that there is merit in the 1st ground of appeal as the learned taxing master erred in law and fact when she found that the fees were ideally agreed by the parties. That term “ideally agreed” has no place under the relevant law that governs remuneration agreements between an advocate and his/her client. Therefore the 1st ground succeeds.

Turning to the 2nd ground of appeal, it was submitted that the taxing master erred in law when she disregarded the scale provided in the 2nd Schedule hence awarding excessive instruction fees to the respondents. It was submitted for the appellant that the scale for remuneration of leases is provided for in the 2nd Schedule to the Advocates (Remuneration and Taxation of Costs) Regulations. Further that the scale therein is all exhaustive. It does not even give the learned taxing master room for discretion save for transactions falling under rule 4(b) of the first scale to the 2nd schedule. The appellant contends that this case does not fall under rule 4(b). The appellant’s counsel argued that the annual ground rent which should have been the basis for calculating the respondents’ fees was in the Sub-lease agreement attached to the affidavit sworn by Mr. J. S. B. Karugonjo dated 18th April 2006. The appellant argued that this should have been the basis of the respondents’ fees upon which the taxing master would have awarded them about Ug. Shs 900,000/=.

Counsel for the respondents submitted that the respondents’ bill was not prepared in accordance with the 1st scale of the 2nd Schedule, which governs ordinary remuneration for usual leases, but rather under the 5th Schedule as per regulation 18 of the Advocates (Remuneration and Taxation of Costs) Regulations.  It was further submitted that regulation 18 gives liberty to an advocate to opt out of any prescribed schedule and file his/her bill under the 5th Schedule. It was the contention of the respondents that the fees awarded by the taxing master were not excessive as they reflected the fair and reasonable fees charged under item 1(a) of the 5th Schedule.

 

It appears that the second ground of appeal is two fold, first that the instruction fees were awarded in disregard of the 2nd Schedule to the Advocates (Remuneration and Taxation of Costs) Regulations and secondly that they were excessive.

 

Regarding the 1st leg of this ground, I have analyzed a letter dated 1st December 2005 found at page 40 of the 1st respondent’s affidavit in reply. It was written to the appellant’s Town Clerk by the respondent’s advocates. In the third paragraph of that letter the appellant was notified that the 1st respondent had elected that the remuneration for the services rendered to the applicant in the project shall be according to the 5th Schedule of the Advocates (Remuneration and Taxation of Costs) Rules 1982, S.I. No. 123 of 1982, as amended by the Advocates (Remuneration and Taxation of Costs) (Amendment) Rules 1996 S.I. No. 3 of 1996 and according to the rates negotiated and concluded between the applicant and the 1st respondent as evidenced and confirmed by the numerous documents forwarded to the applicant.

 

Regulation 18 of the Advocates (Remuneration and Taxation of Costs) Regulations provides:

 

“In all cases to which the scales prescribed in the First to Fourth Schedules to these Rules apply, an advocate may, before or contemporaneously with rendering a bill of costs, by writing under his or her hand communicated to the client, elect that his or her remuneration shall be according to the Fifth Schedule to these Rules, but if no such election shall be made, his or her remuneration shall be according to the appropriate scale prescribed in the First to Fourth Schedules to these Rules.”

 

Applying the above regulation to the facts before me, I find that the respondents duly exercised their right to elect to charge the appellant for their services according to the 5th Schedule and most importantly, this was communicated to the appellant as their client as permitted by regulation 18 above quoted. The communication was received by the office of the Town Clerk of the appellant on 7th December 2005. I also agree that the respondents were justified in doing so in view of the fact that they did not merely prepare and register a sub-lease. The scope of their instructions as per the letter of the Town Clerk dated 12th December 2001 was to provide legal services, prepare the necessary documents and to render legal advice with regard to the project. I therefore cannot fault the learned taxing master for proceeding under the 5th Schedule. This leg of the 2nd ground of appeal therefore fails.

 

With regard to the complaint of excessive instruction fees, I am guided by the principles of taxation of advocates’ bills as laid down in the case of Premchand Raichand Ltd & Another v Quarry Services of East Africa & Others (No. 3) [1972] EA 162 where it was held as follows:

(i)      (a) that costs be not allowed to rise to such a level as to confine access to the courts to the wealthy;

(b) that a successful litigant ought to be fairly reimbursed for the coststhe has had to incur;

(c) that the general level of remuneration of advocates must be such as to attract recruits to the profession; and

(d) that so far as practicable there should be consistency in the awards made;

(ii)     the court will only interfere when the award of the taxing officer is so high or so low as to amount to an injustice to one party;

 In the same way, Mulenga JSC stated some principles on which a Judge should interfere with a taxing officer’s assessment of a bill of costs in the case of Bank of Uganda v Banco Arabe Espaniol Supreme Court Civil Application No. 23 of 1999. The first one is that save in exceptional cases, a judge will not alter a fee allowed by the taxing officer, merely because in his opinion he should have allowed a higher or lower amount. Secondly, an exceptional case is where it is shown expressly or by inference that in assessing and arriving at the quantum of the fee allowed, the taxing officer exercised, or applied a wrong principle. In this regard, application of a wrong principle is capable of being inferred from an award of an amount which is manifestly excessive or manifestly low.  Thirdly, even if it is shown that the taxing officer erred on principle the judge should interfere only on being satisfied that the error substantially affected the decision on quantum and that upholding the amount allowed would cause injustice to one of the parties,

In the case of Alexander Okello v M/s Kayondo & Company Advocates, SC Civil Appeal No. 1 of 1997 it was held that an instruction fee is manifestly excessive if it is out of proportion with the value and importance of the suit and the work involved. In the instant case, the taxing master arrived at the figure she allowed based on the mistaken belief that the fees had been ideally agreed by the parties. Given my finding on the 1st ground, I am of the view that the instruction fees she allowed based on a wrong assumption was manifestly excessive. This 2nd leg of the 2nd ground of appeal therefore succeeds.

 

As regards the third ground of appeal, my findings on the above two grounds have partly addressed some of the arguments. I will therefore deal with those aspects that have not yet been addressed. Counsel for the appellant submitted that the taxing master did not give reasons for disregarding the appellant’s arguments. The other complaint is that no reason was advanced for the excessive and extravagant figure that was awarded by the taxing master to the respondent. It was also argued that there was no legal basis upon which the learned taxing master grounded her ruling.

 

The respondents counsel argued that the taxing master properly evaluated the evidence on record and therefore arrived at the correct decision since there was available evidence on record citing a letter of instructions dated 12th December 2001 from the Town Clerk to the respondents, the letter dated 1st December 2005 forwarding the respondents’ bill to the appellant and the bill of costs detailing work on the project.

In the case of National Housing and Construction Corporation v Lira Municipal Council [1996] HCB 53 Kagaba J. held that a taxing officer must use his discretionary powers judicially and that if a taxing officer exercises his discretion outside the set rules laid down by the law, such officer cannot be said to have used his discretion judicially.

During the taxation hearing, the appellant’s arguments were centered on the internal memo which is the letter dated 2nd September 2005. I have perused the ruling of the learned taxing master.  I note that she disagreed with the appellant that the letter of the Town Clerk was a mere internal memo that should be ignored. She then stated that in that letter the Town Clerk showed that instructions were given to the applicants (current respondents) to do the work and that the work was done entitling them to 1% of the project value that was claimed.

She then observed that indeed the document was addressed to the Secretary Finance Committee, ideally pushing to the relevant authority to clear the claim. She concluded that on the basis of that document, and on the nature of the work that was undertaken as was explained by counsel for the applicant (current respondent), it was clear the parties did not intend that the fees would be based on the 2nd Schedule to the Advocates (Remuneration and Taxation of Costs) Rules.  She found that the fees were “ideally agreed” to by both parties and there was no basis for her to tamper with that agreement. She then awarded the amount in dispute.

In view of the taxing master’s evaluation of arguments as summarized above, I do find that the taxing master gave reasons for disregarding the applicant’s arguments. She also gave reasons for her award which she based on the alleged agreement of 1% of the project value. I cannot therefore fault her on this ground and it must fail as it has no merit.

On the whole, the 1st ground and part of the 2nd ground of this appeal succeed. In the result, the instruction fees awarded to the first respondent is set aside. The taxing master shall re-assess the respondents’ instruction fees with an open mind as there were no agreed fees. Since the appeal succeeded in part, 50% of the costs of this appeal are awarded to the appellant.

I so order.

Dated this 9th day of May 2013.

 

Hellen Obura

JUDGE

Ruling delivered in chambers at 3.00 pm in the presence of:

  1.  Ms. Fiona Kunihira who was holding brief for Mr. Joash Sendege for the applicant
  2.  Mr. Peter Walubiri for the respondents.

 

Both parties were absent.

 

 

JUDGE

09/05/13