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[2021] ZAWCHC 134
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Fareed Moosa & Associates Inc v Taxing Master, Western Cape High Court and Others (12607/20) [2021] ZAWCHC 134 (12 July 2021)
IN
THE HIGH COURT OF SOUTH AFRICA
(WESTERN
CAPE DIVISION, CAPE TOWN)
Case No:
12607/20
In the
matter between:
FAREED
MOOSA & ASSOCIATES INC
Applicant
And
TAXING
MASTER, WESTERN CAPE HIGH COURT
First
Respondent
ANTHONY
PAUL PETER TEUCHERT
Second
Respondent
KEREN
MACHANIK trading as MACHANIK ATTORNEYS
Third
Respondent
JUDGMENT DELIVERED AND
SUBMITTED ELECTRONICALLY ON 12 JULY 2021
GOLIATH
DJP
[1]
The central question in this matter is whether Uniform Rule 70(3B)
permit any document
or note pertaining to any item appearing on a
bill of costs, be excluded from inspection in taxation proceedings.
Put differently,
may legal professional or litigation privilege be
invoked as a ground to exclude certain documents from inspection by a
costs debtor.
The Taxing Master did not file a Notice of Opposition
nor a Notice to Abide. Second and Third Respondent opposed the
action. In
this judgment, the Second and Third Respondents are
therefore collectively referred to as “
Respondents”
where necessary.
[2]
This matter has its genesis in a matrimonial dispute. Applicant
represents the Plaintiff
in the matrimonial action, in which Second
Respondent is the Defendant. Second Defendant opposes the matrimonial
action and is
represented by the Third Respondent. On 30
October 2019, following proceedings relating to a Rule 43 and Rule 30
application,
Sher J granted the following order:
“
3.
That the applicant’s’ attorneys in the rule 43
application shall be liable
de bonis propriis for the costs of both
the rule 30 application as well as the Rule 43 application, on the
scale as between attorney
and own client.”
[3]
On 5 February 2020 the Third Respondent sent a bill of costs to the
Applicant demanding
payment in the sum of R421 313,00. The Applicant
refused payment on the basis that the quantum was exorbitant and
unreasonable.
Applicant pointed out that considering the papers filed
and submissions made in the relevant matters, it was highly
improbable
that the Second Respondent could have incurred legal costs
in the sum of R 421 313,00.
[4]
On 26 February 2020, and pursuant to Uniform Rule 70(3B), Third
Respondent served
a bill of costs and a Notice of Intention to Tax
the bill on the Applicant, which stated as follows:
“
You
may inspect the documents or notes pertaining to any item on the Bill
of Costs (excluding documents or items which are privileged
and/or
confidential … for a period of ten (10) days after receipt of
this notice”.
[5]
Third Respondent indicated that most of the 387 items “
is
correspondence between client and attorney and/or client and counsel
and as such are privileged and/or confidential.”
On
27 February 2020, Third Respondent requested the Applicant to
indicate which of the 387 items on the bill of costs will be the
subject of their inspection. The Applicant objected to Respondents’
intention to refuse inspection of certain documents and
notes
pertaining to certain items on the bill of costs. They recorded their
view that privilege and confidentiality cannot be asserted
for
purposes of a Rule 70 inspection. The Applicant insisted that the
denial of access to such privileged documents tantamount
to “
a
denial of an effective right of inspection.”
[6]
On 6 March 2020, Third Respondent replied and insisted that the right
of privilege
between attorney and client pending finalization of the
main action is valid and enforceable. They expressed the view that
the
objective of inspection is to determine if a particular item on
the bill exists and whether the item may be allowed, and that the
content and relevance of the item is not open for inspection. Third
Respondent emphasized that Rule 70(2) provides that the Taxing
Master
may call for the relevant supporting documents if necessary. They
accordingly undertook to provide any item to the Taxing
Master for
determination, including items protected by attorney-client
privilege. Third Respondent subsequently provided a list
of 163 items
in respect of which their client invoked litigation privilege.
According to Third Respondent they had consented to
inspection of the
remaining 224 items without any restrictions.
[7]
Further correspondence was exchanged between the parties. On 16 March
2020, the Applicant
informed Third Respondent that they would attend
to the inspection on 17 March 2020 and included a list of the items
which they
required for inspection. Applicant contended that the list
of 224 items was provided expressly on a without prejudice basis, and
they had reserved their rights in respect of the list of excluded
items. Evidently no limitations were initially enforced by the
Respondents in respect of the supporting paperwork of the 224 items
to be inspected. The Applicant therefore requested that Third
Respondent make available for inspection “
all notes,
documents, accounts, papers and books related thereto”.
Third
Respondent confirmed that the files would be made available on 17
March 2020 on condition that no copies of documentation
would be
permitted.
[8]
On 17 and 18 March 2020, the Applicant’s Dr Moosa attended on
the inspection at the offices of
Machanik Attorneys. According to the
Third Respondent, Dr Moosa removed their timesheets without
permission notwithstanding their
request not to do so. Third
Respondent complaint that copies of the relevant timesheets were
attached to the Applicant’s
Notice of Intention to oppose the
taxation. Applicant conceded that he had requested copies of certain
documentation, and contended
that he was entitled to do so. According
to the Applicant, Third Respondent also imposed restrictions on the
224 items during the
inspection notwithstanding the fact that none of
these items were listed as those over which privilege was claimed.
Applicant recorded
their objections to the limitations placed on
their right of inspection pertaining to the remaining 224 items in
question. The
nature and extent of the limitations were described by
the Applicant as follows:
“
(i)
inspection was granted in relation to some of the Third Respondent’s
time (attendance)
sheets and refused in relation to others;
(ii)
some time (attendance) sheets provided were redacted by Third
Respondent blacking
out some of its content;
(iii)
although inspection was permitted for invoices issued by Advocates,
inspection was refused
in respect of Third Respondent’s
invoices, statements of account, receipts and books of account.”
[9]
On 25 March 2020, the Applicant filed a Notice of Objection to the
bill of costs.
On
18 May 2020, Machanik Attorneys filed a Notice of Taxation with the
Taxing Master. On 9 June 2020, the Notice of Taxation was
issued by
the Court, and thereafter served on the Applicant. The Taxing Master
enrolled the matter on 19 October 2020 for purposes
of the taxation
of the bill.
[10]
The nature and grounds of objections appear from the Notice of
Objection. The Applicant pertinently
objected to the items which were
excluded on the grounds of attorney-client privilege. Applicant
argued that the exclusion
and caveat relating to certain items on the
bill were irregular, impermissible, unlawful, and in violation of the
Rules of Court.
The Applicant referred to the relevant statutory
framework relating to taxations and argued that the Respondents
cannot invoke
attorney-client privilege in respect of a bill of
costs.
[11]
On or about 7 September 2020, the Applicant launched this application
in which they sought an
interim interdict. The application was set
down on an urgent basis two court days before the taxation. Part A of
the application
served before Magona AJ on 15 October 2020, whereupon
an interim order was granted, interdicting the Taxing Master from
proceeding
with the taxation which had been set down for 19 October
2020, pending the determination of this application.
[12]
Third Respondent averred that the Applicant received the Notice of
Intention to Tax (together
with the
caveat
), they attended the
inspection process over two days, and then delivered a Notice of
Opposition in which their objections were
stipulated. Third
Respondents expressed the view that upon service of the Notice of
Opposition, Machanik Attorneys were legally
entitled to set the
matter down for taxation in terms of Rule 70(3B). Third Respondent
emphasized that notwithstanding the Applicant’s
objections,
they effectively took further steps in furtherance of the taxation
process. They therefore argued that by attending
the inspection and
delivering the Notice of Opposition, the Applicant provided an
explicit and, at the very least, an implied indication
to Machanik
Attorneys that they had submitted to the taxation process.
[13]
Third Respondent argued that if a party objects to a procedural step
that is allegedly irregular,
or impermissible, then such a party
would have recourse to the relief afforded in terms of Rule 30 of the
Uniform Rules of Court.
They submitted that the Rule specifically
provides for a situation where proper notice of taxation had not been
given. Third Respondent
averred that the Applicant should have
availed themselves to the mechanism of Rule 30 but failed to do so.
Third Respondent emphasized
that it is well established that a party
who takes a further step with the knowledge of an irregularity, would
effectively have
waived his/her entitlement to the recourse provided
for in terms of Rule 30.
[14]
Consequently, Third Respondent submitted that the Applicant had
acquiesced to the defect and
cannot now reprobate to what they had
already approbated to. Respondents therefore asserted that, viewing
the conduct of the Applicant
objectively, the Applicant had waived
their right to now seek relief setting aside the processes which they
had participated in,
in clear furtherance of the prescripts of Rule
70(3B). According to Third Respondent, it was within the discretion
of the Taxing
Master to decide whether there had been proper notice
in terms of Rule 70(3B). They argued that given the peremptory
provisions
of Rule 70(4) and the clear discretion which it affords to
the Taxing Master, only once the Taxing Master has exercised his/her
discretion with regard to the notice in terms of Rule 70(3B), would
the Applicant (or for that matter the Respondents) be entitled
to
challenge any decision of the Taxing Master by way of review
proceedings.
[15]
Third Respondent expressed the view that the relief sought by the
Applicant would facilitate
a judicial interference with the Taxing
Master’s discretion, even before the exercise of such a
discretion. The Third Respondent
therefore contended that this
application is an attempt by the Applicant to pre-empt and interfere
with the discretion of the Taxing
Master. They contend that the
relief sought by the Applicant casts the net far too wide as to who
will determine whether there
had been proper compliance with Uniform
Rule 70, since this power falls exclusively within the domain of the
Taxing Master.
[16]
Respondents objected to the nature of the relief sought insofar as it
amounts to final interdictory
relief in the sense that the Applicant
seeks the court to interdict its own procedures, by specifically
requesting an order directing
that “
the Attorney-own client
bill of costs … cannot be re-enrolled for taxation until such
time as there has been proper compliance
with Uniform Rule 70.”
Third Respondent pointed out that the Applicant had not dealt
with the requirements of final interdictory relief in this
respect.
[17]
Third Respondent clarified that they do not seek the Taxing Master to
consider whether the documents
in issue are privileged, or not. They
simply proposed to hand such documents to the Taxing Master so that
s/he can exercise the
discretion to decide whether such expenditure
was reasonably and properly incurred, and whether it should be
allowed. They averred
that such an exercise is precisely in
accordance with the powers afforded to the Taxing Master. Third
Respondent argued that the
Applicant, having filed a Notice of
Objection, would have had an opportunity to object to any item at the
taxation, and address
the Taxing Master in this regard.
[18]
They contended that the issue of privilege is of paramount importance
in the inspection process
given that the Applicant, and specifically
Dr Moosa, is the legal representative and uncle of their client’s
wife in the
divorce proceedings. Thus, any incursion into the
realm of privileged information would have a direct bearing on the
main
action. The Third Respondent emphasized that cognizance must be
given to the common law right of privilege and made extensive
submissions
in this regard. Respondents contended that rights of
privilege trump any other rights such as the Applicant’s right
to inspection.
[19]
Uniform Rule 70 places the authority to tax bills in the domain of
the Taxing Master who is empowered
to conduct taxations as an
extension of the Court. The Taxing Master is a creature of Rule 70(1)
of the Rules of Court, which provides:
“
(1)(a)
The taxing Master shall be competent to tax any bill of costs for
services actually rendered by an attorney in his capacity
as such in
connection with litigious work and such bill shall be taxed subject
to the provisions of sub-rule (5), in accordance
with the provisions
appended to the tariff: Provided that the taxing master shall not tax
costs in instances where some other officer
is empowered to do.”
[20]
In
Berman & Fialkov
v
Lumb
[2002] 4 All SA 432
(C)
at paragraph 20, the Court approved the following dictum from
Martens
v Rand Share and Broking Finance Corporation (Pty) Ltd
1939 WLD
159
at 163 where the general functions of a Taxing Master were
described as follows:
“…
to decide
whether the services have been performed, whether the charges are
reasonable or according to tariff and whether disbursements
properly
allowable as between party and party have been made; his function is
to determine the amount of the liability, assuming
that liability
exists, and the fact that he requires to be satisfied that liability
exists before he will tax does not show that
there is any liability.
…”
[21]
The Taxing Master has a discretion as to whether to allow an item on
the bill as being reasonable
and necessary. To this end, Rule 70(2)
stipulates that:
“
At
the taxation of any bill of costs the taxing master may call for such
books, documents, papers or accounts as in his opinion
are necessary
to enable him properly to determine any matter arising from such
taxation.”
[22]
The Taxing Master has circumscribed powers and has limited powers
such as those prescribed in
rule 70(3). (See:
Grindlays
International Finance (Rhodesia) Ltd v Ballam
1985 (2) SA 636(W)
at 645E). The ultimate objective of Rule 70 is to fix costs at
a reasonable amount in favour of the successful costs creditor,
and
to ensure that the party condemned to pay the costs, is not mulcted
for excessive costs. Before the taxation can take place,
Rule 70(4)
provides that “
the taxing Master shall not proceed with the
taxation of any bill of costs unless he or she is satisfied that the
party liable to
pay costs has received due notice in terms of subrule
3B”.
[23]
Uniform Rule 70(3B) provides as follows:
“
(3B)
(a) Prior to enrolling a matter for taxation, the party who has been
awarded an order for costs shall, by notice as near as
may be in
accordance with Form 26 of the First Schedule-
(i)
Afford
the party liable to pay costs at the time therein stated, and for a
period of ten (10) days thereafter, by prior arrangement,
during
normal business hours and on any one or more such days, the
opportunity to inspect such documents or notes pertaining to
any item
on the bill of costs; and
(ii)
Require
the party to whom notice is given, to deliver to the party giving the
notice within ten (10) days after the expiry of the
period in
subparagraph (i), a written notice of opposition, specifying the
items on the bill of costs objected to, and a brief
summary of the
reason for such objection.”
[24]
Rule 70(3B) makes it clear that no bill of costs may be enrolled for
taxation unless there has
been compliance with the procedural
stipulations in Rule 70(3B)(a) and (b). The obligation
imposed by rule 70(3B) (a)
on a costs creditor to allow a costs
debtor to inspect documents and notes pertaining to a bill of costs
is couched in peremptory
terms. Rule 70(3B) contains no express
limitations on a costs debtor’s right of inspection. Rule 70
does not provide a costs
creditor with an election to make documents
and notes available to a Taxing Master, but not to the costs debtor
from whom payment
is sought.
[25]
The taxation framework envisages a fair and equitable process. It is
incumbent upon a costs creditor to justify
its claims for
reimbursement as contained in the bill of costs. The taxation regime
requires fair treatment of costs debtors who
must, prior to taxation,
be afforded an opportunity to inspect all relevant documents and
notes pertaining to every item on a bill
of costs. A costs
debtor is called upon to pay for items on a bill and is therefore
entitled to undertake a thorough process
of verification in relation
to claims for payment made on a bill of costs.
[26]
I am of the view that a costs debtor may not
be deprived of the opportunity to inspect all the relevant
documentation within the prescribed period. In such circumstances a
costs debtor will be unable to meaningfully assert their right
of
objection or defend their position. It must be borne in mind that a
party is bound by the grounds relied upon in a Notice of
Objection
filed under Rule 70(3B)(b), and cannot introduce new objections not
recorded in the notice. As a result of the
approach adopted by
the Respondents, the Applicant is effectively denied a fair
opportunity to object to at least 163 items on
the disputed bill of
costs, as well as items relating to Third Respondent’s time
sheets, accounts and other undisclosed material.
I am not inclined to
conclude that the Applicant had unequivocally acquiesced to the
taxation proceedings by filing a Notice of
Objection. Applicant was
consistent throughout by objecting to the caveat and reserving their
rights in respect thereof.
[27]
When issues are raised which falls outside the scope of the Taxing
Master’s authority,
those issues must first be referred to a
Court of law for adjudication. (See:
Berman & Fialkov v Lumb
(supra)
at paragraph 23).
Third Respondent conceded that the Taxing Master lacks jurisdiction
to decide whether attorney-client privilege
exists in relation to any
item on the bill. Consequently, it is common cause that the
determination of issues relating to attorney-client
privilege does
not fall within the scope and powers of the Taxing Master. In
Competition Commission
v Arcelormittal SA (Ltd) and Others
2013 (5) SA 538
(SCA) at paragraph 21 the Supreme Court of Appeal
held that litigation privilege has two components. First, the
document must have
been obtained or brought into existence for the
purposes of a litigant’s submission to a legal advisor for
legal advice;
and second, that the litigation was pending or
contemplated as likely at the time. Litigation privilege protects
communication
between a litigant or his/her legal adviser and third
parties if such communications are made for the purpose of pending or
contemplated
litigation.
[28]
In
Zuma v National Director of Public
Prosecutions
2009
(1) CC at [184] the Constitutional Court stated that “…
It
is now generally accepted that these communications should be
protected in order to facilitate the proper functioning of an
adversarial system of justice, because it encourages full and frank
disclosure between advisors and clients. This in turn promotes
fairness in litigation …” The
privilege belongs to a
litigant, not the legal advisor, and may be waived only by the
litigant. In
A Company and Others v Commission, South African
Revenue Service
2014 (4) SA 549
(WCC) the Court held that fee
notes are not ordinarily of such a nature that it would be directly
related to the performance of
an attorney’s professional duties
as legal advisor to a client, but it is conceivable that attorneys
fee notes might contain
references to legal advice sought. The test
was whether upon an objective assessment, the references disclose the
content, and
not just the existence of privileged material.
[29]
The grounds of privilege must be stated with
sufficient clarity for a Court to determine whether the
document
falls within the grounds of privilege. In this matter the list of
items over which the client invoked his right of privilege
have not
been contextualized. Consequently, the Court is not in the position
to apply the test as enunciated in
A Company and Others v
Commission, South African Revenue Service (supra),
to determine
whether any of the undisclosed documents and notes are entitled to be
protected by the shield of privilege. Third Respondent
also failed to
justify the redaction of the remaining items in terms of which no
privilege was initially claimed. It appears that
the caveat in
respect of 163 items on the bill is incompatible with the clear and
unambiguous language of Rule 70, having regard
to the contextual and
purposive interpretation thereof. The Taxation regime envisages a
transparent process, and Rule 70 does not
provide any mechanisms to
shield any bill from scrutiny or to conduct a taxation under the veil
of secrecy.
[30]
In my view, the Third Respondent should not have requested the Taxing
Master to enroll the matter
in circumstances where they invoked
attorney-client privilege in respect of 163 items. They indicated
that they did not require
the Taxing Master to determine whether the
items were privileged, but merely to assess whether the costs
incurred were necessary
or proper. However, the crux of this matter
does not concern the Taxing Master’s discretion to tax a bill
of costs in terms
of the provisions of Rule 70, but rather, whether
any item on the bill should be protected by privilege. The inference
is incontrovertible
that at all material times the Third Respondent
was alive to the fact that the Taxing Master was not empowered to
determine the
legal question of attorney-client privilege, and a
legal dispute regarding privilege and the confidentiality of
documents were
likely to arise. Consequently, Third Respondent must
have been aware that the Taxing Master was legally handicapped to
determine
163 items on the bill of costs because it triggered the
legal question of privilege. However, the Court will accept the
reasoning
and approach adopted by the Respondents were
bona fide
,
in order to preserve and protect the interests of Second Respondent.
[31]
The Respondents contended that the Applicant
should have brought an application in terms of Rule 30 if they
considered the setting down of the taxation as an irregular step,
instead of launching interdict proceedings. In my view
it is
highly probable that such an application would also have been opposed
by the Respondents. In any event, even
if the Respondents
are correct in invoking the provisions of Rule 30, it does not bar
the Applicant from utilizing a different
remedy at their disposal.
I do not
deem the remedy and approach adopted
by the Applicants as
extraordinary. The Taxing Master had already enrolled the matter.
Consequently, an application for an interim
interdict to prevent the
Taxing Master from proceeding with the taxation does not seem
inappropriate or unreasonable in the circumstances.
[32]
The aim of an interim interdict is essentially to preserve or restore
the status
quo
ante
pending the final determination of
the rights of the parties. The Applicant was granted such relief in
Part A, and I am satisfied
that the Applicant had made out a proper
case for the granting of an interdict. Therefore, the order granted
by Magona
AJ
was justified. Both Respondents opposed the application in Part A.
Applicant enjoyed a measure of success in this regard
and is
accordingly entitled to the costs thereof.
[33]
I am satisfied that the Applicant will be severely prejudiced should
the bill of costs be taxed
in circumstances where they are denied a
fair opportunity to inspect certain items in respect of the bill as
contended for by the
Respondents. Allowing the taxation of a
bill of costs under these circumstances would be oppressive, render
the statutory
protected right to inspection nugatory and purely
cosmetic, and undermine the objectives of inspection of a bill of
costs as envisaged
in Rule 70. The Respondents had expressed their
intention to make available a copy of all the relevant documentation
at the hearing
of the matter for purposes of a “
judicial
peek”.
However, such an undertaking does not nullify on the
Applicant’s procedural right to inspection in terms of Uniform
Rule
70(3B).
[34]
At the hearing of this matter, it was evident that the parties
are embroiled in extremely acrimonious divorce proceedings.
The bill
of costs in interlocutory Rule 43 and Rule 30 proceedings amounts to
the sum of R421 313, 00. Apparently, the
Plaintiff in the
divorce action currently has an outstanding amount of R400 000, 00 in
respect of legal fees. The record also refers
to a costs estimation
of legal fees in the sum of R946 000, 00. The parties would be
well advised to settle their disputes
amicably in order to preserve
their estate for the benefit of both parties.
[35]
In respect of the merits of this matter, both parties have invoked
important legal rights in justifying the
position that they contend
for. Notwithstanding any criticisms in respect of the
litigation privilege defense raised by the
Respondents, it evident
that in the final analysis, the Court must strike a balance between
the Second Respondent’s purported
right to privilege and the
Applicant’s right of inspection. I am accordingly of the view
that the interests of justice dictate
that the only manner to protect
the interests of both parties, is to direct that the taxation of the
bill of costs be deferred
until conclusion of the main hearing.
With regard to costs, after careful consideration of all the relevant
facts of this
matter, I am satisfied that it would be just and
equitable if no costs order is granted in this matter.
[36]
In the result, the following order is made:
(a)
The
Taxation of the Bill of Costs arising from the Order granted by Sher
J on 30 October 2019 is hereby stayed pending final determination
of
all legal proceedings relating to the main action issued under case
number 1215/2019;
(b)
In
the alternative to paragraph (a), the Taxation of the Bill of Costs
arising from the Order granted by Sher J on 30 October 2019
is stayed
until such time as and when the Third Respondent had waived his right
to privilege in respect of all the items as set
out in the relevant
Bill of Costs to be submitted for taxation;
(c)
The
inspection held in terms of Uniform Rule 70(3) (B) (a) on 17 and 18
March 2020 in relation to the relevant Bill of Costs is
set aside;
(d)
The
enrolment of the relevant Bill of Costs for taxation is set aside;
(e)
The
interim interdict granted on 12 October 2020 is discharged;
(f)
Second
and Third Respondent shall pay the Applicant’s costs in respect
of Part A of this application jointly and severally,
the one paying,
the other to be absolved;
(g)
There
shall be no order as to costs.
DEPUTY
JUDGE PRESIDENT GOLIATH