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[2014] ZAGPJHC 290
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Fluxmans Incorporated v Lithos Corporation of South Africa (Pty) Ltd and Another (2011/10614) [2014] ZAGPJHC 290; 2015 (2) SA 322 (GJ) (25 July 2014)
REPUBLIC OF SOUTH
AFRICA
IN THE HIGH COURT
OF SOUTH AFRICA
GAUTENG LOCAL
DIVISION, JOHANNESBURG
CASE
NO: 11/10614
DATE:
25 JULY 2014
In the matter
between:
FLUXMANS
INCORPORATED
..............................................................
Plaintiff
And
LITHOS
CORPORATION OF SA (PTY) LTD
..............................
First
Defendant
ANDRE
GYENFIE
....................................................................
Second
Defendant
J U
D G M E N T
VICTOR, J:
[1] The plaintiff
sues the first and second defendants for legal fees arising out of
legal services rendered to the first defendant
in litigation against
Kumba Resources Ltd under Case No 35078/2006.
[2] Adv A. Joubert
SC, Adv I. Opperman and Adv Clarke were briefed by the plaintiff to
appear on behalf of the first defendant in
that litigation. The first
defendant terminated the plaintiff’s mandate and thus parted
ways with the advocates. The defendants
now wish to join the
advocates as second, third and fourth defendants in their
counterclaim in this action. The advocates oppose
their joinder.
The second defendant signed a suretyship agreement in favour of the
plaintiff for payment of all the legal fees
incurred by the first
defendant in that action. The defendants refused to pay the balance
of the fees owed to the plaintiff as
well as the fees of the
advocates and in particular a collapse fee charged by them.
[3] The defendants
raise numerous defences and a counterclaim. In this joinder
application they raise defamatory allegations against
the counsel
alleging that they acted fraudulently, immorally and unethically in
inter alia charging a collapse fee at a time when
they knew the
action would be postponed. The defendants claim that the advocates
have a substantial interest in the outcome of
the litigation and
therefore need to be joined in this action.
[4] The joinder of
defendants is defined in Rule 10(3) of the Uniform Rules of Court:
“Several
defendants may be sued in one action… whenever the question
arising between them, or any of them and the plaintiff
or any of the
plaintiffs depends upon the determination of substantially the same
question of law or fact which if such defendants
were sued separately
would arise in each separate action.”
[5] Parties may only
be joined as a matter of necessity and not convenience. It is only
necessary if the parties sought to be joined
would be prejudicially
affected by the judgment of the court in the proceedings. See
Judicial Service Commission and Another v
Cape Bar Council and
another
2013 (1) SA 170
(SCA) at par [12] where the court held that:
‘It has by now
become settled law that the joinder of a party is only required as a
matter of necessity — as opposed
to a matter of convenience —
if that party has a direct and substantial interest which may be
affected prejudicially by the
judgment of the court in the
proceedings concerned (see eg Bowring NO v Vrededorp Properties CC
and Another
2007 (5) SA 391
(SCA) para 21). The mere fact that a
party may have an interest in the outcome of the litigation does not
warrant a non-joinder
plea. The right of a party to validly raise the
objection that other parties should have been joined to the
proceedings, has thus
been held to be a limited one’
Background
History
[6] Upon a proper
application of Rule 10, in order to justify the joinder of the
advocates to the action by the defendants in their
counterclaim, the
right to relief must depend upon the determination of substantially
the same questions of law or fact which if
separate actions were
instituted, the same questions of law or fact would arise. In this
matter the plaintiff has specifically
and expressly waived its rights
to any claim against the advocates. The plaintiff has paid those
advocates in full and has on oath
stated that it would not seek any
relief against them.
[7] According to the
defendants, because the advocates have concluded a collapse fee with
the plaintiff they, the defendants, ultimately
have to pay their fee
and it is for this reason that the advocates have a direct and
substantial interest in the outcome of the
litigation because the
same questions of law and fact would be traversed. This submission
needs to be analysed in the context of
the pleadings and the legal
nexus which may exist, if any, between the advocates and the
defendants.
[8] The Kumba trial
was set down for 8 March 2010 to April 2010. The matter did not
proceed and was postponed. Prior to accepting
his brief, Adv. Joubert
SC recorded his fee terms in writing and in particular incorporated
the collapse fee. Despite the written
fee letter, the defendants
persist that it was unethical for counsel to insist on an onerous
collapse fee before accepting the
brief. Collapse fees are a
perfectly acceptable practice in matters pertaining to the profession
of advocates. The defendants have
not been able to prove the contrary
in this joinder application.
[9] The defendants
also contend that upon accepting the brief Adv Joubert SC knew that
the matter was not going to proceed and in
fact started drawing the
postponement application at the beginning of March 2010. The
defendants contend that the advocates acted
fraudulently, immorally
and unethically in concluding the collapse fee when they knew that
the matter was going to be postponed.
The answering affidavits
demonstrate quite unequivocally that although the postponement
application was being prepared the defendants
insisted that the legal
team be ready to run the trial as they wished a conclusion to the
matter. In any event if the postponement
was not granted counsel
would have had to be ready to run the trial.
[10] When the
plaintiff issued summons for non payment of the balance of its fees,
the defendants for the first time raised a complaint
about the
advocates’ fees with the Bar Council. Of importance is the fact
that the collapse fee was dealt with by the Fees
Committee of the
Johannesburg Bar Council and they found the collapse fee and
counsel’s other fees to have been correctly
charged. The
complaint was dismissed.
[11] In a letter
dated 28 January 2010 Adv Joubert SC made it clear that he would only
act since he was called in late and that
he would accept the
instruction regardless of whether the trial proceeded or not. Both
Adv Opperman SC and Adv Clarke made the
same note in a letter and
they all stipulated a maximum fee of 19 days including a collapse fee
of 18 days. In dismissing the claim
the Fees Committee also raised
the question that the defendants only raised their grievance after
receipt of the summons. The matter
was referred to the Johannesburg
Bar Council some 15 months after the plaintiff had paid the
advocates’ fees. In a ruling
by the Bar Council the
reasonableness of the fees was dealt with and the reasonableness of
counsel concluding the collapse fee
was also considered. The counsel
were completely exonerated by the Bar Council.
[12] In a vitriolic
response, the defendants in the replying affidavit attacked the
recommendation of the Bar Council Fee Panel
by stating that it had
committed a “glaring breach of the hallowed principle of
natural justice”, that they were condemned
without a hearing
and that the recommendation flies in the face of the Bar Council’s
own rulings. It was undisputed that
at some stage during the enquiry
the defendants refused to participate to the end of the enquiry. The
above allegations are puzzling
in the light of the defendants’
own conduct in that enquiry.
[13] There are also
allegations of fraudulent practice on the part of the plaintiff and
the allegation is made that there was connivance
between the
plaintiff and the advocates and this justifies their joinder. There
is also an allegation of fraudulent misrepresentation
and the
defendants contend that the advocates be joined as parties to enable
the defendants to prove their allegations against
the advocates. The
defendants have misconceived the purpose of joinder.
[14] The defendants
also aver that the advocates suggested that the claim against Kumba
of US $428 million should be reduced to
US $2 million. They contend
that it was the amendment that caused the trial not to run. Despite
the amendment being one of the
complaints, the defendants utilised
the amendment in further proceedings after the plaintiff’s
mandate was terminated. The
defendants deny this. That dispute of
fact is not necessary for me to determine in this application.
[15] The plaintiff
points out that the defendants have had various fee disputes not only
with it but with their previous attorneys
of record which has
resulted in this trial not proceeding.
Delay in bringing
Joinder Application
[16] The plaintiff
contends that these joinder proceedings are a further step on the
part of the defendants to delay the conclusion
of this trial. The
defendants have had ample opportunity to bring these joinder
proceedings. The pleadings in this action closed
in early 2012. The
plaintiff applied for a trial date and the matter was set down for
hearing on Friday 19 October 2012 and was
to run for several days.
With the concurrence of the Deputy Judge President it was agreed that
the trial would commence two days
later on 22 October 2012.
[17] On 18 October
2012 the defendant’s attorneys, C & A Friedlander of Cape
Town, withdrew as attorneys of record. The
defendants arrived at
court represented by new attorneys, Martin Smith Inc, and a new
counsel. On the strength of an unsigned
affidavit a postponement was
sought based on the fee dispute that had arisen between the
defendants and C & A Friedlander.
The defendants obtained a
postponement. A new trial date was subsequently allocated a year
later on 8 October 2013 and again
a day or two before the hearing the
new attorney of record withdrew based on a fee dispute.
[18] The second
defendant without any papers made application for a postponement
which was granted and they were ordered to pay
the wasted costs.
There have been several postponements of this trial and the
defendants have not taken any steps to join the
advocates. Instead
they chose to do so just days before the trial. During extensive case
management by this court from 13 June
2014 the defendants have not
taken any steps to join any parties.
[19] I also take
into account that the claim that the first defendant could have
against the advocates has in any event become prescribed
if indeed
such a claim ever existed. The fee dispute arose in 2010 and it was
only on 4 August 2014 that the defendants chose to
join the
advocates.
Analysis of
Pleadings
[20] It is
necessary to analyse the cause of action set out in the counterclaim
and to see whether that claim justifies the joinder
of the advocates
to these proceedings. An analysis of the first and second
defendants’ counterclaim reveals the following:
In claim A the
defendants allege that on or about February 2008 the first defendant
and the plaintiff concluded an agreement in
terms of which the
plaintiff was mandated to act as the first defendant’s attorney
in the action instituted by the defendants
against Khumba Pty Ltd.
Claim A is clearly a claim against the plaintiff. The defendant
alleges that fair and reasonable fees
would be rendered and in this
case it is the defendant’s claim that those fees were not
reasonable. In para 7.1 of the
counterclaim the defendants make the
allegation again that the plaintiff incurred unnecessary
disbursements which were not in
accordance with the mandate.
[21] Claim B is a
claim for damages, again this relates to counsels’ fees and the
defendants contend that these collapse fees
should not have been
concluded with counsel on behalf of the first defendant. The
allegation is made specifically that the plaintiff
was not authorised
to conclude such agreements on the defendants’ behalf.
Clearly, the claim is against the plaintiff for
damages from
concluding these fees.
[22] In Claim C the
defendants submit that the documents pertaining to the suretyship and
power of attorney in terms of which the
second defendant signed a
power of attorney putting up his house as security for the legal fees
was executed and concluded under
duress, in particular under threat
of the postponement of trial as described in their plea and under the
influence of a misrepresentation
on the part of the plaintiff.
Clearly the party against whom the defendants seek to claim
recompense is the plaintiff and not the
said advocates.
[23] Claim D is a
claim for defamation and again the allegation is that the plaintiffs’
director, Mr Collin Strime made defamatory
statements against the
defendants. This is clearly a claim against the plaintiff.
[24] A new claim E
was inserted in the counterclaim of fraudulent misrepresentation
where the defendants contend that the plaintiff
concealed the
material fact that the trial scheduled for 8 March 2010 would never
proceed and would not be heard. This again is
a claim against the
plaintiff.
[25] Clearly each
and every claim in the counterclaim is against the plaintiff and not
the advocates. The advocates have been paid
their fees and also
waived their rights to make any claim against the plaintiff.
Similarly the plaintiff has waived its right to
make any claim
against the advocates. The defendants do not have a basis in law to
join the advocates as a matter of necessity
as set out in the case
already referred to.
Joinder of
Advocates
[26] It is clear
that counsel cannot contract with the members of the public directly.
It is a referral profession and it is a professional
practice or
trade usage that the legal nexus between counsel for their fees is
with that of the attorney and not with the members
of the public.
See General Council of The Bar of South Africa v Geach and Others
2013 (2) SA 52
(SCA), Minister of Finance and Another v Law Society,
Transvaal
[1991] ZASCA 88
;
1991 (4) SA 544
(A) and Serrurier and Another v Korzia and
Another
2010 (3) SA 166
(W).
[27] The defendants
rely on various English authorities. Again these authories are in
line with the South African practice; joinder
is required if the
third party has a direct and substantial interest in the outcome of
the proceedings and must of necessity be
joined.
Issue Estoppel
and Joinder
[28] Advocate Peter
SC submitted on behalf of the plaintiff that if there is to be a
joinder of necessity the mischief that it seeks
to deal with is to
prevent a defence of res judicata in the form of what has become
known as issue estoppel. The question of issue
estoppel must be that
the court must determine the identical issue between the identical
parties. In the light of an unequivocal
waiver by the advocates of
the right to be joined they have waived the opportunity to protect
their interests by being made parties
to the counter claim. That
unequivocal waiver is on affidavit and this takes away the need for
the advocates to be joined as parties
to this litigation.
[29] A further case
quoted in support of whether a party has a direct and substantial
interest that justifies the joinder is the
element of prejudice. In
Amalgamated Engineer Union v Minister Of Labour
1949 (3) SA 637
(A)
at 661 Fagan AJA stated ‘if I may again adopt words used by the
Court in Bekker v Meyring – “cannot be sustained
and
carried into effect without necessarily prejudicing the interest”
of the Council’. See also Ex parte Body Corporate
of Caroline
Court
2001 (4) SA 1230
(SCA). There is no question of prejudice to
the advocates.
[30] In summary,
where a party has a direct and substantial interest in litigation and
has been given formal notice of such litigation
and waives the right
to be joined in the circumstances amounting to a consent to be bound
by the judgment, such joinder would no
longer be necessary as the
principle of res judicata would operate to permit the judgment to be
maintained and carried into execution
notwithstanding the prejudice
having so been waived.
[31] In the result
there is no basis in law based on the principles of joinder where a
party seeking to join another party in the
face of a clear and
unequivocal waiver. There is no necessity for the advocates to be
joined in these proceedings.
Costs
[32] On the question
of costs, the plaintiff and counsel on behalf of the advocates have
asked for costs on the basis of the attorney/client
scale by virtue
of the defamatory allegations made in the papers against them. It was
undisputed by the defendants when the plaintiff
and the advocates
stated that it was the defendants who were very keen to continue with
the trial and that the advocates had to
prepare for a postponement or
alternatively if the trial was to run they had to be ready to do so.
This is a critical feature in
assessing the nature of the scurrilous
allegations made by the defendants.
[33] The allegations
concerning the advocates refer to fraud and other negative
allegations. For example, the defendants say that
the plaintiff under
the coloured pretext of professional practice connived with counsel
with the intent and indeed fraudulently
misrepresenting to the
defendants that the trial will run. The demand that the advocates be
joined to prove this material allegation
of fraudulent
misrepresentation is bad in law. The alleged fraudulent
misrepresentation in the form of concealement of a material
fact by
the advocates does not justify joining the advocates. Parties are not
joined for the purpose of merely obtaining their
evidence or for
cross examining them. The advocates could have been subpoened by the
defendents The further allegation is made
that this fraud is really
of a criminal nature and that these advocates must be called to
answer the case. Joinder is not a process
necessary to follow that
course.
[34] The allegations
against the advocates have been made in a manner which has not been
fully explained. The allegations are simply
made without a full and
detailed exposition as to why their conduct is fraudulent, why there
was concealment by omission and why
their conduct is of a criminal
nature. These are scurrilous allegations and should not be made
lightly. The defendants will be
aware of the laws of defamation in
South Africa and must be cautioned that they should not lightly make
these allegations as there
will be consequences. In my view the
allegations are of such a scurrilous nature that they do justify an
attorney/client cost order.
In the result I make
the following order:
The application is
dismissed with costs and the defendants are to pay the costs of the
joinder application on the attorney and client
scale.
JUDGE VICTOR
Counsel for
Plaintiff: Adv J Peter SC
Counsel for
Advocates: Adv W Van Der Linde
Attorney for
Plaintiff and Counsel: Mr C Strime of Fluxmans Attorneys
Appearance for
Defendants: Mr A. Gyenfie in person
Date of hearing:
24 July 2014
Judgment handed
down: 25 July 2014