On 7th August, 2026, the Supreme Court of Uganda presided over by Justice Monica K Mugenyi, Justice Catherine Bamugemereire, Justice Stephen Musota, Justice Elizabeth Musoke, and Justice Percy Night Tuhaise rendered a crucial judgement that clarifies how legal fees or instruction fees ie money spent on lawyers handling contentious cases should be calculated – especially if the case does not go to a full trial having been solved on a preliminary point of law.
The top Court’s decision arises from an appeal in a long running taxation (of a bill of costs) battle between Western Highland Creameries Ltd and Lee Ngugi (appellants), on the one hand and Stanbic Bank Uganda Limited, (respondents) on the other hand.
Briefly, the facts of the dispute are that:
- In 1995, Stanbic Bank gave a loan of UGX 945,211,000/= to the appellants and as security for the loan, the bank took out a debenture over the assets of Western Highland Creameries together with a mortgage in respect of land comprised in LRV 2398 Folio 3 Plots 4-8 in Mbarara District.
- In 1997, the bank gave the appellants another loan of UGX 1,924,645,000/= secured by a further charge on Western Highland Creameries’ land and a bank guarantee of USD 600,000 from the National Bank of Kenya.
- The appellants failed to pay back the loans prompting Stanbic Bank: to recall on the bank guarantee, to appoint a receiver and ultimately to enforce the debenture and sell the mortgaged property.
- In 2011, the appellants filed a Civil Suit (No.462 of 2011) against the bank, the receiver and the buyer of the mortgaged property alleging fraud and illegality. The suit was dismissed for being filed out of time and for disclosing no cause of action.
- Naturally, following the dismissal of the Civil Suit, Stanbic Bank filed a bill of costs that included a claim for instruction fees/legal fees at the tune of 589,527,646/= based on the value of the land that the appellants sought to recover by their suit (Subject matter value).
- The Registrar (taxing master) awarded UGX 104,867,500/= for instruction fees to the bank which it successfully challenged on appeal, prompting the Judge to order the Registrar to determine the appropriate award for instruction fees basing on the value of the subject matter of the Civil Suit ie $5M and UGX 38, 818, 885,665 as claimed in the plaint.
- Dissatisfied with the Judge’s decision, Western Highland Creameries and Lee Ngugi filed an appeal at the Court of Appeal ( Civil Appeal No. 78 of 2014. However, the in accordance with the Judge’s orders, the Registrar taxed Stanbic Bank’s bill of costs afresh revising the instruction fees to UGX 499,676,356 whereby the Bank successfully made a call on the bank guarantee that had been submitted as “security for costs” by the Appellants.
- Once again, dissatisfied with the new taxed bill of costs, Western Highland Creameries and Lee Ngugi, appealed to the Judge, seeking the reversal of the taxed instruction fees. The Judge set aside the new taxed bill of costs after finding that the Registrar (taxing master) had not heard both parties thereby violating the right to a fair hearing.
- Instead of submitting to fresh taxation proceedings, Western Highland Creameries and Lee Ngugi filed another appeal in the Court of Appeal challenging the Judge’s decision above. Upon consolidation, the Court of Appeal heard both matters and ultimately dismissed them.
Following the decision of the Court of Appeal, Western Highland Creameries and Lee Ngugi appealed to the Supreme Court.
The issues before the Supreme Court were simply:
- Whether the Court of Appeal had ignored the binding precedent in Lumweno and Company Advocates v Transafrica Assurance Company Limited?
- Whether the Registrar/Taxing Master is a “mere calculator” without any discretion to increase or decrease instruction fees?
- Whether a suit dismissed on a preliminary point of law has an ascertainable value of the subject matter capable of computing under Item I(a) (iv) of the Advocates (Remuneration and Taxation of Costs) (Amendment) Rules, 1996?
- Whether the Court of Appeal erred by not ordering a refund of the money paid under the bank guarantee in compliance with an illegal taxation that had been set aside by the High Court Judge?
In a lead Judgement read by Justice Monica K Mugenyi with all the other members of the Court concurring, the Supreme Court upheld the judgement of the Court of Appeal except on one issue (on the discretion of the Registrar) as follows:
- While the Supreme Court agreed with Counsel for the Appellants to the effect that Courts are bound to follow their own previous decisions under the doctrine of Stare Decisis, the Supreme Court agreed with Counsel for the Respondent that the decision in the case of Lumweno & Company Advocates v Transafrica Assurance Company Limited to the effect that “a case that ends on a technicality cannot attract the same fees as the one that proceeds for trial” was distinguishable from the present case in that the present case was dealing with taxation of costs between parties and the former dealt with taxation of costs between a client and their advocate where the client has withdrawn instructions from the lawyer before the matter could proceed to trial.
“Upon careful consideration of both cases, I find that they are indeed distinguishable. Whereas the Lumweno case pertained to an advocate-client bill of costs (the taxation of client-advocate remuneration) following the withdrawal of instructions by the client before the matter could proceed to trial; the bill of costs that is in issue before us presently relates to the taxation of part-to-party costs following the conclusive determination of a contentious matter. The distinction between the two types of bills is highlighted in the scope of the Advocates (Remuneration & Taxation of Costs) Rules 1982, insofar as it delineates two distinct matters for taxation: on the one hand, the taxation of advocates’ remuneration by their clients and, on the other hand, the taxation of costs as between parties…” Justice Monica Mugenyi Wrote.
- Secondly, the Registrar or the taxing master is not a mere calculator with no discretion to increase or decrease instruction fees. According to the Court, the law gives the Registrar such discretion under Section 61(3)(b) of the Advocates Act, cap 295 which provides that the taxing officer “in determininq the remuneration of the advocate, have regard to the skill, labour and responsibility involved in the business done by him or her.” Also see Rule 13 of the Advocates (Remuneration & Taxation of Costs) Rules, 1982 (saved under Rule 1 of the Advocates (Remuneration &Taxation of Costs) (Amendment)Rules, 1996).
“The applicability of rule 13 was saved under rule 1 of the 1996 Rules. ln any case, section 61(3) of the Advocates Act similarly acknowledges the discretion available to a taxing officer in its pronouncement that such officer may in determining the remuneration of an advocate, take into account the skill, labour and responsibility demonstrated by him or her in the matter before the taxing officer. ln the same vein, rule 37 [of the 1982 Rules] would appear to provide some latitude to a taxing officer to go beyond the rates prescribed in the Sixth Schedule in taxing a bill of costs before him or her. To that extent, any insinuation that a taxing master is a mere calculator of the rates set out in item 1 (a)(iv) of the 6th Schedule [of the 1996 Rules] would be untenable.” – Justice Monica K Mugenyi ruled.
- Thirdly, the Supreme Court rejected the appellants’ contention that a suit that is dismissed for being time barred or failure to disclose a cause of action does not indicate an ascertainable subject matter value to which the rates under item 1 (a) (iv) of the 6th Schedule of the Advocates (Remuneration and Taxation of Costs) (Amendment) Rules, 1996 may apply. According to the appellants, the respondent’s bill of costs should have been taxed under item 1 (a) (v) of the 6th schedule of the 1996 Rules. The Court agreed that for the value of a suit’s subject matter to form part of the quantum of the instruction fees awardable that value must clearly be in contention in either the suit of the appeal giving rise to the taxation proceedings.
“More importantly, it matters not whether a suit was determined following a full trial or disposed of on preliminary points of law, provided that the value of the subject matter is discernible from the pleadings. As was appositely observed in Sudhir Ruparelia & Another v Bank of Uqanda (supra), ‘notwithstanding that the suit never went to a full-blown trial, the award of instruction fees would have taken into consideration the monetary value of the suit, owing to the fact that monies and properties with determinable money values were pleaded in the plaint.’ – Justice Monica K Mugenyi wrote.
“The rationale for this can, in my estimation, be traced to the nature of party-to-party costs that seek to indemnify or reimburse a successful party for expenses incurred in the prosecution or defence of a suit. The value of the subject matter in issue would have a significant bearing on the instruction fees payable towards legal representation.” She added.
- Finally, the Supreme Court found that the Court of Appeal did not err by refusing to order Stanbic Bank to refund the money obtained via the bank guarantee as security for costs following the High Court’s order setting aside the taxation. Essentially, the Supreme Court agreed with both the High Court and the Court of Appeal that the monies paid under the bank guarantee to Stanbic could only be refunded if it turned out that there had been overpayment following re taxation as had been ordered by the High Court Judge.
In any case, an order for a refund of the monies obtained via a bank guarantee could attract fresh litigation since being the successful party Stanbic Bank was entitled to the security for its costs.
Lawyers: Mohmed Mbabazi (for the Appellants) and Begumya Rushongoza holding brief for Pope Ahimbisibwe.
