Gold Fields Limited and Others v Motley Rice LLC, In re: Nkala v Harmony Gold Mining Company Limited and Others (48226/12) [2015] ZAGPJHC 62; 2015 (4) SA 299 (GJ); [2015] 2 All SA 686 (GJ) (19 March 2015)

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[2015] ZAGPJHC 62
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Gold Fields Limited and Others v Motley Rice LLC, In re: Nkala v Harmony Gold Mining Company Limited and Others (48226/12) [2015] ZAGPJHC 62; 2015 (4) SA 299 (GJ); [2015] 2 All SA 686 (GJ) (19 March 2015)

REPUBLIC
OF SOUTH AFRICA
HIGH
COURT OF SOUTH AFRICA, GAUTENG LOCAL DIVISION
Case
No.: 48226/12
DATE:
19 MARCH 2015
In
the joinder application between:
GOLD
FIELDS
LIMITED
..............................................................................................
First
Applicant
GOLD
FIELDS OPERATIONS
LIMITED
...............................................................
Second
Applicant
NEWSHELF
899 (PROPRIETARY)
LIMITED
.........................................................
Third
Applicant
BEATRIX
MINES
LIMITED
.....................................................................................
Fourth
Applicant
FARWORKS/682
LIMITED
...........................................................................................
Fifth
Applicant
DRIEFONTEIN
CONSOLIDATED (PROPRIETARY) LIMITED
..........................
Sixth
Applicant
GFI
MINING SOUTH AFRICA (PROPRIETARY)
LIMITED
............................
Seventh
Applicant
GFL
MINING SERVICES
LIMITED
........................................................................
Eighth
Applicant
GFI
JOINT VENTURE HOLDINGS (PROPRIETARY)
LIMITED
........................
Ninth
Applicant
And
MOTLEY
RICE
LLC
............................................................................................................
Respondent
In
re
BONGANI
NKALA
.................................................................................
AND
FIFTY-FIVE OTHERS
(Case
No 48226/12)Applicants in the
Certification
Application
And
HARMONY
GOLD MINING COMPANY LIMITED
AND
THIRTY-ONE
OTHERS
.................................................................................
Respondents
in the
Certification
Application
JUDGMENT
MOJAPELO
DJP
:
Introduction
[1]
This case raises the question as to whether
the court should order the joinder of a non-party litigation funder
as a party to the
application for certification of a class action.
Background
Facts and Issues
[2]
Bongani
Nkala and 55 others intend to institute a class action on behalf of
mineworkers for damages arising from silicosis contracted
by
mineworkers through their employment on the mines. It is a
prerequisite that prior to the institution of a class action, the

intended plaintiffs should obtain an order from the court certifying
a class of litigants on whose behalf the class action may
be
instituted.
[1]
[3]
Bongani Nkala and fifty five others have
therefore instituted an application under case number 2012/48226 for
class certification.
That is the main action. It is still pending and
has not been heard. The intended action for damages has therefore
also not been
instituted.
[4]
In the present application the first to
ninth applicants (“Gold Fields”) seek to join Motley Rice
LLC (“Motley
Rice”) as a respondent in the class
certification application for the purposes of seeking a costs order
against Motley Rice
if the certification application fails. The
applicants in the certification application are hereafter referred to
as the mineworkers.
[5]
The present application has been brought as
an interlocutory, one of many, in the pending class certification
application.
[6]
The mineworkers and their dependants are
represented in the intended action for damages and in the pending
class certification application
by the firm Richard Spoor Inc
(“Spoor”).
[7]
It has been suggested, and there is no
reason to doubt the veracity of this suggestion, that the scope and
magnitude of the proposed
claim in the silicosis litigation is
unprecedented in South African law. Should it proceed, the case will
entail novel and complex
issues of facts and law. However, the
mineworkers and their dependants are themselves largely indigent and
poorly educated and
could not afford to run the litigation on their
own. Spoor can also not afford to fund the proceedings on their
behalf.
[8]
Motley Rice has for this reason been
approached and agreed to assist the mineworkers. Motley Rice is a law
firm in the United States
of America with extensive experience in
personal injury class action litigation. It has agreed and is doing
so in dual capacity.
In the one capacity it acts as a consultant to
Spoor providing advice and professional services. In the second,
Motley Rice is
also the litigation funder. It has the financial
ability to back and fund costly litigation.
[9]
Because of the inability of the mineworkers
to fund their own litigation, Spoor acts for them on a contingency
basis in terms of
an agreement concluded with each mineworker under
the Contingency Fees Act, Act 66 of 1997. For its role in the
litigation Motley
Rice would be compensated by a share in the fees to
be recovered by Spoor. Spoor and Motley Rice have concluded a fee
sharing agreement
for that purpose, which governs the relationship
between the two law firms. I refer later to this agreement in this
judgment.
[10]
Gold Fields seek to join Motley Rice in the
class certification application on the basis that Motley Rice is a
non-party litigation
funder against which the court ought to be in a
position to make a costs order, if the certification application is
unsuccessful.
As I understand the applicants’ case they base
their assertion on two pillars: That as litigation funder Motley Rice
(a)
exercises substantial control over the litigation application and
(b) has a financial interest in the proceedings. The litigation
and
proceedings in this case, as I shall explain, must refer to the
pending certification application and not to the intended damages

action as the latter has not yet been initiated. The applicants
contend further that the joinder is necessary to facilitate the

exercise of the court’s supervision over the litigants before
it. Their argument is that the joinder is necessary to bring
Motley
Rice under the supervisory powers of the court as it is based outside
the Republic of South Africa and its members are not
officers of this
court.
[11]
The respondent, Motley Rice, opposes the
joinder on the basis that none of the factors which a court would
take into account in
the exercise of its discretion to order a
non-party litigation funder liable for costs, are present, and
accordingly, that the
joinder for the purposes of rendering it
(Motley Rice) susceptible to a costs order is not permissible.
[12]
This case raises for consideration, on the
one hand, the joinder of litigation funders to litigation for the
purposes of costs orders,
and on the other, the constitutional right
of access to justice by poor litigants.
Certification
Application and Class Action
[13]
The basis for the class action that the
miners intend to institute is provided for in section 38 of the
Constitution which provides
that anyone listed in the section has the
right to approach a competent court alleging that a right has been
infringed or threatened
and the court may grant appropriate relief
including a declaration of rights. The persons who may approach a
court are, amongst
others: “
anyone
acting as a member of a class, or in the interest of, a group or
class of persons” and “anyone acting in the
public
interest
”.
[14]
The
Supreme Court of Appeal in
Children’s
Resources Centre Trust and Others v Pioneer Food (Pty) Ltd and
Others
[2]
specified the criteria which constitute the core considerations to be
taken into account in a certification inquiry.
[15]
Summons in a class action may be issued
only once the court has granted an order certifying the class. This
has not happened. What
is pending before the court at the moment in
the main application is the certification application. It is not ripe
and has not
yet been heard. There is and there can be no class action
against the applicants until such time as and when the certification
application has been granted. If the certification application is not
granted, the class action will not be instituted.
[16]
The certification application is thus a
jurisdictional hurdle or threshold which mineworker applicants must
overcome before they
may institute the class action.
[17]
The two proceedings, i.e. the class
certification application and the class action proceedings, are
separate, and distinct, although
the one may lead to the other. Each
has its own legal requirements and will lead to its own judgment.
[18]
In the heads of argument, counsel for the
applicants did not make it clear, when referring to control of
litigation or proceedings
as to whether he referred to the
certification application or the intended class action for damages.
In argument before court he
made it clear that he referred to both,
as his argument was that they were in fact one, the certification
being the threshold for
the class action. Counsel for the respondent,
however, argued that the applicants were conveniently conflating the
two proceedings,
i.e. those in the pending application and those in
the damages action that still had to be instituted and would only be
instituted
if and when the class action certification was successful.
He argued that those were two separate legal proceedings though one
was a jurisdictional requirement for the initiation of the other.
What is clear, however, is that it is the certification action
to
which the applicants seek the joinder. The action is not yet a
reality and one cannot refer to it as the proceedings or litigation,

although it is contemplated. It may not even begin. The joinder does
not relate to the intended action. The litigation and proceedings
in
regard to which control and benefit have to be considered must refer
to the litigation to which the joinder is sought, which
is in
existence and pending. It cannot be reference to the intended but not
yet existing litigation. The applicants therefore have
to prove that
the respondent (Motley Rice) substantially controls and/or stands to
benefit from the certification application.
[19]
It is proposed to consider first (a) the
legal basis for joinder of a non-party litigation funder to
proceedings for the purposes
of potential costs orders, and (b) the
need for judicial supervision over legal representatives practising
in this court –
within the ambit of this case. If necessary,
the court will thereafter weigh those considerations against (c) the
constitutional
rights to access to justice and how these should be
balanced against each other.
The
Legal Framework
[20]
The legal framework within which the
decision has to be considered relates to developments around
litigation funding agreements,
joinder of litigation funders, related
costs orders and access to justice facilitated by such agreements.
The legal framework is
set out mainly in the context of particular
cases that the applicants rely upon in their case.
Developments
concerning Funding Agreements
[21]
The
developments of litigation funding agreements, of the nature under
consideration here, were aptly summarised in
Price
Waterhouse Coopers Inc and Others v National Potato Co-operative Ltd
(hereafter referred to as “
PWC
2004
”).
[3]
[22]
Agreements in terms whereof one party (the
funder) undertook to provide funds to enable the other (the litigant)
to enable the latter
to prosecute its case in return for a share in
the proceeds of litigation go back to the Roman and Roman Dutch law
period. Such
agreements were called
pacta
de quota litis
and were looked upon
with disfavour. In South Africa the developments around such
agreements received the influence of the English
law where such
contracts were referred to as “maintenance and champerty”
agreements.
[23]
Prior
to 1994 South African courts took a dim and uncompromising view of
any agreements in terms whereof an outsider provided finance
to
enable a party to litigate in return for a share of the proceeds of
the action, if that party was successful. These were/are
called
champertous agreements deriving the name from English law influence.
The courts viewed such agreements as contrary to public
policy and
void. The courts consequently refused to enforce such agreements or
to entertain litigation that flowed from them.
[4]
[24]
However,
even in those early days, the courts always acknowledged one
exception, namely that “
if
anyone, in good faith, gave financial assistance to a poor suitor and
thereby helped him to prosecute an action in return for
a reasonable
recompense or interest in the suit, the agreement would not be
unlawful or void
.”
[5]
[25]
The exception recognised that injustice
would be done if a poor litigant were not given financial assistance
to conduct his case.
In such circumstances champertous agreements
were not against public policy and were protected and enforced.
[26]
Prior
to 2004 and in 1997, the Legislature of the democratic South Africa
in fact foreshadowed the departure from the uncompromising
view
towards champertous agreements when for the first time it became
possible to enter into a contingency fee agreement under
the
Contingency Fees Act, Act 66 of 1997 in terms of which legal
representatives could validly do work on condition that their
fees
would be paid only if the action succeeds and out of the proceeds. In
2004 the Supreme Court of Appeal in
PWC
2004
reconsidered
the unlawfulness of champertous agreements in the light of “changed
circumstances and, in particular, in the
light of the
Constitution.”
[6]
Having
considered the developments in English law, which increasingly
recognised the important role played by champertous agreements
in
promoting access to justice, the Supreme Court of Appeal concluded
that a clear departure from the past was required.
[27]
The court then concluded that:
“…
upholding
agreements between a litigant and a third party who finances the
litigation for reward is also consistent with the constitutional

values underlining freedom of contract.”
[7]
“
Accordingly
it must be held that an agreement in terms of which a stranger to a
lawsuit advances funds to a litigant on condition
that his
remuneration, in case the litigant wins the action, is to be part of
the proceeds of the suit, is not contrary to public
policy.
”
[8]
[28]
The
court recognised that there may, despite the departure from the past,
still be exceptional circumstances in which champertous
agreements
may in fact constitute an abuse of process, in which case the court
would not countenance them. This will be the case
for instance where
the litigation is frivolous, or vexatious or where litigation is
being pursued for an ulterior motive. These
are exceptions because
“
it
is important to bear in mind that courts of law are open to all and
it is only in exceptional cases that a court will close its
doors to
anyone who wishes to prosecute an action.
”
[9]
Costs
Orders
[29]
The starting point for an analysis of the
South African legal position for legal costs is the general rule that
(a) in ordinary
cases costs should follow the event – the
successful party is ordinarily entitled to costs against the
unsuccessful party;
(b) costs are awarded in the discretion of the
court which may in appropriate cases not award costs to a successful
party or even
award costs against such party.
[30]
In
constitutional cases the general rule is almost the converse: namely
that the unsuccessful litigant should ordinarily not be
ordered to
pay costs. The rule is based on the fact that the Constitution is the
supreme law of the land and that everyone with
a reasonably arguable
point, should be free to invoke it without fear to be mulcted in
costs, if unsuccessful. The discretion of
the court is still not
ousted; for instance, where an unsuccessful party in constitutional
litigation is found to have abused the
process, acted frivolously or
vexatiously or in a manifestly inappropriate manner, the court may
award costs against such party.
Such a party “
should
not expect that the worthiness of its cause will immunise it against
adverse costs order
.”
[10]
[31]
It
has been said that the application of the general rule regarding
costs in constitutional cases applies only “in proceedings

against the State”,
[11]
particularly where the dispute turns on whether a government agency
has fulfilled its constitutional and statutory responsibility.
[12]
The principle does not apply to constitutional litigation between
private parties.
[13]
[32]
The
existence of the discretion of the court in all cases (constitutional
and otherwise) ensures that the court is always in a position
to
balance the interest of the parties and to protect its own process,
if necessary through costs orders. In this context there
is no party
which is
a
priori
immune from the court’s power to protect its process through
costs orders.
[14]
[33]
It
has also been held in the
Biowatch
Trust v Registrar, Genetic Resources
[15]
case
(hereafter referred to as “
Biowatch
”)
that parties who act in public interest or who are indigent are not
to be accorded privileged status when it comes to the
proper approach
to costs. Such parties are to be held to the same standards as any
other party particularly where they are represented.
[16]
[34]
The
following passage in the
Biowatch
case
[17]
, which is approached
and interpreted differently by the applicants and the respondent,
does not alter but rather emphasises the
general approach to costs as
set out above:
“
Conversely,
a party
should not get a privileged status simply because it is acting in the
public interest or happens to be indigent. It should be held
to the
same standards of conduct as any other party, particularly if it has
had legal representation. This means it should not
be immunised from
appropriate sanctions if its conduct has been vexatious, frivolous,
professionally unbecoming or in any other
similar way abusive of the
processes of the court.” [My underlining]
[35]
However,
significantly the judgment and indeed the quotation in
Biowatch
do not say whether a non-party litigation funder ought to be joined
and made a party in a certification application.
Biowatch
does not deal with joinder and does not resolve the real issues in
this case. The case dealt with issues concerning costs awards
in
constitutional litigation.
[18]
It also dealt with entities that were already parties to the
litigation and not those proposed to be joined. When it refers to

costs, therefore, it specifically deals with costs relative to
parties.
[19]
[36]
The decision in
Biowatch
in my respectful view does not help the applicants at all.
[37]
In
the present application it is the applicants (“Gold Fields”)
which should make out a case (whether exceptional circumstances
or
ordinary circumstances) indicating why the court should join Motley
Rice as a party to the certification application. The applicants
have
to bring Motley Rice within the ambit of a funder, which is
potentially liable for costs. As I understand the applicants’

case, it relies not so much on the absence of
a
priori
immunity, but on the assertion that Motley Rice (a) controls the
litigation and (b) stands to benefit financially from it. The

applicants essentially rely on the terms of the association or fee
sharing agreement between Motley Rice and Spoor
[20]
,
to which I shall revert later and which will be analysed in the
context of the legal framework to establish control or benefit
that
the applicants rely upon for this application.
Joinder
of Litigation Funders
[38]
The
judgment in
Price
Waterhouse Coopers Inc and Others v IMF (Australia) Ltd and
Another
[21]
(hereafter referred to as “
PWC
2013
”)
is, as far as I am aware, the first South African case in which the
court ordered the joinder of a litigation funder. The
court in that
case developed the common law and established that a litigation
funder may be directly liable for costs and may be
joined as a
co-litigant to the funded litigation. It established that it is
necessary to join the litigation funder to the proceedings
in order
to enable the courts to exercise its discretion regarding costs
against the funder. I propose, this being the leading
case on this
subject, to deal with it a little closer and in some detail.
[39]
In
PWC 2013
,
the second respondent, an agricultural co-operative, had sued Price
Waterhouse Coopers Inc (the applicant) for R500 million. The
second
respondent was funded in the litigation by IMF (the first
respondent). The second respondent (the co-op) was thus the plaintiff

in the relevant litigation.
[40]
The co-op (the plaintiff) had, earlier in
the litigation, furnished security for costs for Price Waterhouse
Coopers Inc (“PWC”)
but the company that had furnished
security/finance had withdrawn as funder for the co-op (the
plaintiff) and security was thus
ineffective.
[41]
During the trial, and on the “
eve
of probably the last day that evidence will be heard
”,
PWC applied to join IMF (the litigation funder) as second plaintiff
for the purposes of obtaining a costs order against
it. IMF had in
fact, in its funding agreement with the co-op (first plaintiff)
undertaken to pay any adverse costs order that might
be made against
it (IMF).
[42]
The
High Court per Botha J ordered the joinder of IMF, the funder, as the
second plaintiff with the co-op. The court accepted that,
in
principle, a South African court could and should make costs orders
against a person who funds litigation. It specifically developed
the
common law in terms of section 173 of the Constitution to make a
direct order for costs against a funder possible. To enable
the
applicant (PWC) to join the respondent (IMF), was a natural
progression from the earlier SCA decision in
PWC
2004
that held that champertous agreements were now lawful. The court said
that to allow litigants like the applicant (PWC) to hold
funders
directly liable for costs was one of the ways which courts could
adopt to counter any possible abuses arising from the
recognition of
the validity of champertous contracts.
[22]
[43]
What the court in
PWC
2013
did not specify is: in what
circumstances will a court order the joinder of a litigation funder
as a party. Surely, it is not in
every funded litigation that the
litigation funder must be added. The guidance on this crucial
question emerges from other decisions.
It is a vexed issue in this
litigation. The distinction that emerges is one between “pure
litigation funder” and other
litigation funders. I refer to
this distinction later when I assess available case law on the aspect
of control and benefit. The
enquiry into the distinction is
essentially a fact-specific one and the answer will depend on the
level of control exercised by
the funder or the benefit which the
funder stands to gain.
[44]
In
EP
Property Projects (Pty) Ltd v Registrar of Deeds, Cape Town, and
Another, and Four Related Applications
[23]
(hereafter referred to as “
EP
Property Projects
”)
the court in 2014 reaffirmed the principle that “a non-party
funder such as the first respondent could be ‘potentially

liable’, in the exercise of the court’s discretion, for
an adverse costs order made against the funded party.”
[24]
[45]
The applicants in the present case focus on
the expression “potential liability” and argue that this
is enough for joinder.
The applicants argue that it is enough that
Motley Rice (the respondent) is not immune from costs and that
consequently its joinder
to the certification application ought to be
granted.
[46]
On the other hand, the respondent (Motley
Rice) uses the same authority and quotation from the case to argue
that the case established
that costs orders are often made personally
against non-parties; but that this is done in “exceptional
circumstances”
and in the exercise of the court’s
discretion.
[47]
The facts in
EP
Property Projects
were that one Marais
was a losing party in arbitration proceedings involving the ownership
of land. He then concluded an agreement
with Naidoo under which
Naidoo would fund review or appeal proceedings in return for part
ownership of the property, in the event
of success in the envisaged
litigation. Marais ceded to Naidoo his interest in the litigation so
that the proceedings would be
pursued by Naidoo in the name of
Marais. Naidoo was joined as a party to the resulting proceedings,
and the issue was whether she
would, as funder of the proceedings, be
liable for adverse costs orders.
[48]
The following considerations led to the
conclusions that Naidoo should be held jointly and severally liable
for any adverse costs
order granted against Marais:
1.
Marais had ceded to Naidoo his interest in
the litigation. The litigation was thus pursued by Naidoo in the name
of Marais. Naidoo
was the “real party” to the litigation.
She was not merely a funder, but had acquired a personal interest in
the litigation,
was in full control of it, and stood to benefit
financially if the nominal party (Marais) was ultimately successful.
2.
Naidoo took over the conduct of the
litigation and appointed her own legal team to conduct the litigation
on her and the party’s
behalf.
3.
Since Naidoo was not a mere commercial
funder of litigation, the potential chilling effect of an adverse
costs order in commercial
third party funding would not be a factor.
4.
It was apparent that the funded party had
acted fraudulently and in bad faith and that the funder was aware of
that at the time
of concluding the funding agreement. By funding and
controlling the proceedings, the funder knowingly associated herself
with the
fraudulent and
mala fide
conduct of the funded party;
5.
The
application related to property in which Naidoo stood to acquire a
share if the application was ultimately successful.
[25]
[49]
Naidoo had been joined as party to the
proceedings. Joinder was thus an accomplished fact and not an issue
before court. The issue
before court was whether Naidoo, as funder,
would be liable for costs orders. She was already a party.
[50]
The
next court decision of importance on this topic is
Scholtz
and  Another v Merryweather and Others
[26]
(hereafter referred to as “
Merryweather”
).
This case distinguishes between pure litigation funders and other
types of litigation funders.
[51]
The facts in this case were that
Merryweather and Scholtz were involved in a fight which left
Merryweather paralysed. Merryweather
sued Scholtz for his damages and
Scholtz failed to deliver a notice of intention to defend.
Merryweather then obtained judgments
by default both with regard to
merits as well as quantum. Thereafter Scholtz applied to rescind both
judgments. The court dismissed
the application.
[52]
Of
importance for the present application is that
Merryweather’s
case also concerned a court’s discretion to award costs against
a non-party funder of litigation. The court may, it was held,
make
such an award where the non-party substantially controls the
litigation or is to benefit from it.
[27]
In that case the court ordered that Scholtz’s father was liable
jointly and severally with Scholtz for the costs of the application.

He had funded his son’s litigation and had substantially
controlled the proceedings on his son’s side hindering service

of summons, consulting lawyers, and initiating the rescission
application. He also stood to benefit in that if the judgment could

be rescinded, he would be relieved of his common law obligation to
support his son.
[53]
The attitude of the parties as well as
relevant circumstances are well captured in paragraphs [108] and
[109] of the judgment. From
these it appears that Scholtz, the son,
did not file an affidavit in response to that filed in support of the
application for joinder
while Scholtz, the father, filed a notice to
abide. Counsel were further in agreement with the approach in
principle to the joinder
of Scholtz Snr. It was said that as a person
effectively controlling the litigation or as Mr Whitehead SC put it,
“calling
the shots”, he was liable to be mulcted in costs
attributable to his impecunious son. If on the other hand he was what
has
been termed a “pure funder” of the litigation, he was
generally immune from such an order.
[54]
The
control exercised over the litigation by Scholtz Snr was
unambiguously direct and substantial.
[28]
He
took over the control of litigation and was thus not a pure funder.
Access
to Justice
[55]
The positive impact of litigation funding
agreements that no one can deny is that such agreements promote
access to justice. The
importance is elevated a step higher where the
funded litigant is one who, because of poverty and lack of resources,
would otherwise
not have been able to litigate or access justice.
[56]
Even
prior to 1994 when champertous agreements, or the so-called
pacta
de quota litis
,
were regarded as being against public policy and of no force or
effect, the one exception, as we have seen was that the courts

acknowledged that if anyone, in good faith, gave financial assistance
to a poor litigant and thereby helped him to prosecute an
action in
return for a reasonable compensation or interest in the litigation,
the agreement would not be unlawful or void.
[29]
[57]
Hence the Privy Counsel in
Ram
Coomar Coondoo and Another v Chunder Canto Mookrjee
(1876) 2 APPCAS 186
at 210 stated:
“
A
fair agreement to supply funds to carry on a suit in consideration of
having a share of the property if recovered, ought not to
be regarded
as being per se opposed to public policy. Indeed, cases may be easily
supposed in which it will be in furtherance of
right and justice and
necessary to resist oppression, that a suitor who had a just title to
property, and no means except the property
itself, should be assisted
in this manner.”
[58]
The attitude of the courts has thus, from
time immemorial, always been that courts should go out of their way
to accommodate the
indigent or poor litigant to access justice. This
was done by way of recognising agreements to fund litigation where
this was done
in good faith and in order to assist the poor.
[59]
Post
1994, in a constitutional and democratic South Africa, this important
right of access to justice is entrenched as part of the
Bill of
Rights in section 34 of the Constitution: Everyone has the right to
have any disputes that can be resolved by application
of law decided
in a fair public hearing before a court, or, where appropriate,
another independent and impartial tribunal or forum.
The right is
accorded to “everyone” and not to some, and in
particular, not only those who can afford it. This important
right is
reinforced by another fundamental right, namely that everyone is
equal before the law and has the right to equal protection
and
benefit of the law.
[30]
Equal
protection of the law would be meaningless unless everyone, including
the poor and indigent, can access justice.
[60]
The protection of this right was taken a
step further by the promulgation of the Contingency Fees Act which
made it possible for
litigants to enter into agreements with legal
representatives in terms of which the legal representatives would get
paid out of
the proceeds of the litigation, if successful.
[61]
On
a number of occasions the Constitutional Court has emphasised the
importance of this right. The right is of cardinal importance
and
requires active protection and courts have a duty to protect
bona
fide
litigants.
[31]
The
untrammelled access to courts is a fundamental right of every
individual in an open and democratic society based on human dignity,

equality and freedom.
[32]
It
is the foundation for stability for an orderly society and it
“
ensures
the peaceful, regulated and institutionalised mechanism to resolve
disputes, without resorting to self-help
.”
It is a “
bulwark
against vigilantism, and the chaos and anarchy which it causes
.”
It is fundamental to a democratic society that cherishes the rule of
law.
[33]
It is clearly
better in a civilised society that people should be able to take
their disputes to court in this way rather
than not at all, even if
they are poor. Just as access to justice is important, it is in my
respectful view, important that ideally
every party is adequately
represented to articulate or assert his or her rights. No one should
fail to access justice or fail in
the case simply because of poverty.
[62]
Within the context of the present matter,
the right of a successful unfunded party to recover costs must be
counterbalanced against
the right of the funded party to access
justice. These are two important rights. However, only the latter is
a constitutional right
under our law.
[63]
It is common cause (a) that the applicants
in the certification application as well as the class members are
overwhelmingly poor
and cannot contribute towards the costs of
litigation, and (b) the proposed class action litigation is likely to
invoke the determination
of many complex and novel issues of fact and
law and is unlikely to be settled soon. It is thus accepted by Gold
Fields, Spoor
and Motley Rice that, without the support of a large
firm or organisation such as Motley Rice, the mineworkers’
claims would
not get off ground, and the mineworkers would
accordingly be prevented from pursuing the silicosis litigation
against Gold Fields
and other mining companies.
Funder
Control and Benefit under the Agreement
[64]
It is now proposed to examine the extent to
which Motley Rice (the respondent), as funder of the certification
application, controls
and stands to benefit from the litigation. The
relationship between Motley Rice and Spoor as well as the
relationship with mineworker
litigants is key to such control and
benefit.
The
Agreement
[65]
The agreement between Motley Rice and Spoor
essentially comprises two parts:
1.
The first part is the agreement for
consulting services
in which Motley Rice undertakes to provide services including
overseeing case and document management systems to Spoor in order
to
assist in the running of the silicosis litigation in South Africa. In
respect of these consulting services Motley Rice is remunerated
in
terms of the agreement on an hourly rate, if the claim is ultimately
successful.
2.
The second part is a
funding
agreement
in which Motley Rice agrees
to fund the certification application and the proposed silicosis
litigation in exchange for a share
of the ultimate contingency fee
earned by Spoor in the silicosis litigation.
[66]
The parties to the agreement are Motley
Rice and Spoor. The mineworkers are therefore not parties to the
agreement and there is
no contractual nexus between the applicants in
the certification application on the one hand and Motley Rice on the
other. The
actual nexus with mineworkers exists in terms of the
contingency fees agreements which have been signed by Spoor with each
one
of the mineworkers.
[67]
The agreement between Spoor and Motley Rice
appear from pp. 53 – 61 of the record.
[68]
The agreement provides in clause 1 thereof
that it is “
contingent upon the
approval from the South African Law Society for MR (Motley Rice) to
share in fees and to advance the costs and
expenses associated with
the Pursued Claims
.”
[69]
As
contemplated in clause 1 of the agreement, the agreement between
Motley Rice and Spoor was approved by the Law Society by letter
dated
26 April 2013
[34]
which
records that the said agreement “
was
considered by the Law Society and that the terms of such agreement
(e.g. fee sharing) will not constitute a contravention of
the
relevant provisions of the Attorneys Act, 1979 (Refer Section 83(6))
and the Rules of the Law Society and that there is therefore
no
reason why this arrangement can not be concluded by Richard Spoor
Inc
.”
[70]
The responsibilities of Spoor under the
agreement are set out in clause 2(a) while those of Motley Rice are
set out in clause 2(b)
of the agreement.
[71]
The responsibilities of Spoor under the
agreement are:
“
a.
Spoor shall serve as local counsel and shall adequately staff,
actively manage and handle the day-to-day activity in the Pursued

Claims, including, but not limited to:
i.
Immediately incorporating his law
firm and recruiting sufficient personnel to adequately support the
Pursued Claims;
ii.
Servicing Miner Clients, including
formalizing their retention of Spoor and MR by utilizing a written
Retainer Agreement approved
in advance by both Spoor and MR;
iii.
Providing MR with a copy of every
signed Miner Client retention agreement and file closure letter;
iv.
Serving as the primary Miner Client
contact and keeping the Miner Clients appropriately and adequately
informed;
v.
Maintaining individual client files
and records of correspondence with Miner Clients;
vi.
Collecting all damages and standing
information for each Miner Client with MR;
vii.
Investigating the facts and
developing admissible evidence with MR;
viii.
Participating in the formulation of
litigation strategy, resolution strategy and settlement negotiation
strategy;
ix.
Developing and implementing a
supportive public relations campaign in relevant jurisdictions,
calculated to facilitate the successful
resolution of the Pursued
Claims. Notwithstanding the foregoing, Spoor shall not engage in any
advertising or public relations
activities concerning Pursued Claims
or Miner Clients without MR’s express, prior, written approval.
Moreover, all press
conferences and press releases related to Pursued
Claims or Miner Clients must be pre-approved by MR. These terms shall
in no way
require pre-approval for media interviews;
x.
Advising all Miner Clients and
obtaining any required consent to the association of all law firms
and/or individual attorneys, solicitors,
or barristers engaged to
assist Spoor and MR in the representation pursuant to all applicable
rules governing professional conduct;
xi.
Handling all local legal issues;
xii.
Making all necessary court filings;
xiii.
Establishing any necessary local
satellite offices needed to represent Miner Clients (‘Local
Offices’) as determined
by agreement of the Parties;
xiv.
Supervising and liaising with all
Local Offices and co-ordinating all of their activities;
xv.
Propounding and responding to all
written discovery;
xvi.
Assisting with global and
case-specific experts;
xvii.
Assisting with trial preparation;
xviii.
Ensuring compliance with all
applicable statutes and rules governing professional conduct in South
Africa, Lesotho, Mozambique and
any other African country in which
the Miner Clients reside;
xix.
Keeping accurate expense records
relating to the Pursued Claims and each Miner Client;
xx.
Identifying appropriate barristers
to associate on the Pursued Claims after consulting with and approval
by MR;
xxi.
Maintaining appropriate trust
accounts and handling all disbursements to Miner Clients in
accordance with procedures agreed to with
MR;
xxii.
Monitoring the court docket(s) and
ensuring all litigation deadlines are met.
”
[72]
The responsibilities of Motley Rice under
the agreement are spelt out as follows:
“
b.
MR will collaborate as co-counsel and provide the following services:
i.
Participating in the formulation of
litigation strategy, resolution strategy and settlement negotiation
strategy;
ii.
Funding for Spoor to incorporate his
law firm and recruit sufficient personnel to support the Pursued
Claims (‘Incorporation
Expense’);
iii.
Funding to establish necessary local
satellite offices needed to represent Miner Clients (‘Local
Office Expense’);
iv.
Funding necessary to pay Spoor a
monthly advance against his fee interest with respect to the Pursued
Claims in the amount of R50,000
(approximately $7,693.00 U.S.) to
cover his time and office overhead expenses relating exclusively to
the Pursued Claims;
v.
Providing and overseeing case and
document management systems;
vi.
Consulting with Spoor on the damages
and standing information needed for each Miner Client;
vii.
Consulting with Spoor on the
necessary fact investigations;
viii.
Working with Spoor and the
barrister(s) to develop admissible evidence and witness testimony;
ix.
Retaining and working with global
and case-specific experts;
x.
Assisting with trial preparation;
and
xi.
Actively participating in all settlement
and strategic Pursued Claim resolution discussions.
”
Fees
[73]
As has already been stated Spoor has a
separate contingency fees agreement concluded with each of the
mineworkers under the Contingency
Fees Agreement. In terms of the
said agreement his fees are capped at the lesser of 200% of the
attorneys’ normal fee and
15% of the total amount awarded to or
obtained by client in consequence of the proceedings where the client
is successful.
[74]
In terms of the agreement between Motley
Rice and Spoor, the attorneys’ fees so generated are divided
among the attorneys
as follows: 25% to Spoor and 75% to Motley Rice;
provided that all litigation costs (including payment to
barrister(s)) shall be
reimbursed prior to payment of any attorneys’
fees. In other words, Motley stands to gain a maximum success related
fee of
11.25% of the claims, once all other disbursements and costs
have been paid. This is the payment which is to be made to Motley
Rice and which is referred to as the success fee.
[75]
The other payment that may be made to
Motley Rice in terms of the agreement relates to what is termed
“disbursements”
representing work done in respect of
expert consulting services provided to Spoor. This payment or
disbursements, as it is called,
is not success related, although it
will not be paid unless and until there is success in the silicosis
litigation.
[76]
The “
disbursements
representing [Motley Rice] normal hourly rate for work done and which
are not success related
”
constitutes what one may call the normal professional fees for Motley
Rice. They do not come out of a share of fees earned
or generated by
Spoor. This is what counsel for the respondent has referred to as
“consulting fees”. The share in the
fees generated by
Spoor is described by counsel for the respondent as the return on the
investments made by Motley Rice in the
litigation as a funder. This
is the financial return on investment of the funder.
[77]
The consulting fee payable to Motley Rice
clearly does not constitute a financial interest in litigation that
would render Motley
Rice susceptible to a costs order. It is the kind
of fees that attorneys in South Africa who act on behalf of clients
regularly
earn and do not constitute “financial interests”
in the litigation of their clients. It does not, in and of itself,

expose the attorney to potential liability for costs.
[78]
It does appear that Motley Rice does not
stand to earn any success fee at all from the grant of the
certification application or
to receive any return on its funding of
the application upon the grant of the certification application.
Motley Rice is only entitled
to a success fee if the proposed
silicosis litigation is instituted and is ultimately successful in
due course, and then only in
relation to any award made in that
further litigation.
Termination
[79]
The agreement specifically provides that
either Spoor or Motley Rice may terminate same. Motley Rice may do so
at any time and for
any reason and Spoor may do so “for cause”.
I do not believe that much turns on the rights to terminate the
agreement
as spelt out in the agreement itself. Counsel for the
applicants contends that the fact that Motley Rice has the right to
terminate
the agreement “for any reason” while Spoor may
only do so “for cause” demonstrates or denotes that
Motley
Rice has negative control of the litigation. However, it does
not appear to me that Motley Rice has by virtue of its powers to
terminate the agreement the type of control of litigation of the
nature referred to in the case law which is analysed more fully
later
in this judgment. There is nothing extraordinary or exceptional in
the respective rights of the parties to terminate the
agreement.
Assessing
Control and Benefit
[80]
In
three of the South African cases referred to earlier in this judgment
and which are relied upon in this case, the court ordered
the joinder
of the litigation funder.
[35]
It is thus proposed to look closely at the factual matrix of each
case and endeavour to establish or answer the vexed question:
under
what circumstances do courts find the control and benefit of the
funder sufficient to warrant the funder being joined as
a party to
the proceedings?
[81]
In
PWC 2013
the following peculiar facts paint the circumstances:
1.
The furnishing of security had earlier been
compelled, but the company that had furnished security had
subsequently withdrawn and
the security had become ineffective.
2.
IMF, the litigation funder, had in its
agreement undertaken not just to fund the litigation but also to pay
any adverse costs orders
that might be made directly against it.
There was thus already available the relief of direct costs orders
(based on the undertaking)
at a later stage (not through the
joinder).
3.
The co-operative (the funded plaintiff) was
no longer operating its business anymore and was kept alive only for
the purposes of
pursuing the funded claim against PWC;
4.
The
main interest in the case was held, not by the plaintiff, but by the
funder (IMF);
[36]
5.
The co-op (the first plaintiff) was alleged
to have a bad case and was an empty shell;
6.
There
were existing costs orders against the co-op that had not been
met;
[37]
7.
The
funder (IMF) stood to gain the most in an award of damages to the
plaintiff in the action in which it (the funder) was sought
to be
joined;
[38]
8.
The main action was pending and the
applicant also sought an amendment of its plea to include a prayer
for costs against the funder.
9.
The
first respondent (IMF) was “
fully
prepared to be exposed to adverse costs orders in those jurisdictions
where the courts had the powers to grant such orders
.”
[39]
10.
The
court found that the order for joinder, at that stage, even before
the end of litigation, was “apposite” because,
as it
stated, “
after
all, the first respondent (the funder) is a co-owner of the
claim.
”
[40]
11.
The
timing of the joinder was “
most
convenient, now, just before the parties will start to prepare their
heads of argument
.”
[41]
The joinder was thus considered and ordered just before the question
of actual liability for costs was considered and not just
potential
liability.
[82]
Although the order for joinder itself was
made based on the court’s decision to develop the common law in
logical progression
from the recognition of validity of champertous
(funding agreements), the factors listed above and which were present
in the case,
were certainly relevant considerations. These are
commutatively, having regard to the legal developments up to then,
the circumstances
in which the court ordered the joinder of IMF as
the non-party litigation funder.
[83]
None of the circumstances listed above,
which were present in
PWC 2013
,
are present in the case before this court.
[84]
In
EP Property
Projects
the court found that there was
no reason why, in the light of the fact that costs
de
bonis propriis
against non-parties such
as legal representatives and public officials are sometimes made, why
the law should not be that a non-party
funder could be “potentially
liable”, in the court’s discretion, for an adverse costs
order made against the
funded party. Firstly the court equated
potential liability for costs
de bonis
propriis
to the potential liability for
costs against the non-party litigation funders. The potential
liability of legal representatives
and public representatives for
adverse costs orders were placed at the same level with costs against
litigation funders. These
are costs orders which are only granted in
exceptional circumstances and not as a general rule or in the
ordinary course. The judgment
thus confirmed the principle that costs
orders are not ordinarily and often made against a person who is not
a party to the litigation
before court in his personal capacity. Only
in exceptional circumstances, and in the exercise of a court’s
discretion, will
courts consider ordering a non-party to pay costs
de
bonis propriis
. These include attorneys
of a party, liquidators, administrators, municipal councillors and
officials, and employees of government
departments and public
officials. Such potential costs orders are made in the face of some
or other impropriety in the conduct
of those who attract such
liability.
[85]
It is clear from the decision too that the
court considering joinder of a funder needs only concern itself with
whether “potential
liability” for costs exists. It need
not concern itself with actual liability which could arise at the
conclusion of the
proceedings.
[86]
The
facts and peculiar circumstances in the case of
EP
Property Projects
which led to the adverse costs order against the funder were set out
earlier in this judgment.
[42]
[87]
Significantly, and having regard to those
considerations, the facts in
EP Property
Projects
are distinguishable from the
present case and Motley Rice’s funding agreement in that:
1.
Motley Rice is not the owner of any part of
the mineworkers’ claim in terms of the agreement;
2.
Motley Rice does not stand to benefit from
the certification application even if the certification of the class
action is successful;
3.
Motley Rice has not taken over the conduct
of the litigation; and
4.
There is no evidence of any
mala
fide
conduct on the part of the
mineworker claimants, Spoor or Motley Rice in the conduct of the
litigation.
[88]
The peculiar circumstances in the
Merrywheather
case
were,
inter alia
,
that Merryweather’s own legal position “was dire”
and necessitated
pro bono
assistance on a contingency basis. Scholtz’s (the son’s)
financial position was analogous to that of an insolvent.
Scholtz Snr
effectively took the position of the litigant. He did not just fund
but substantially controlled the rescission application.
He was the
litigant in important respects
inter
alia
consulting with lawyers alone,
i.e. initiated the rescission application and kept vital information
away from his son. It may rightly
be said that he was the active
litigant while his son, the funded, was totally inactive and took no
control. Scholtz Snr also behaved
negligently and was responsible for
the protraction of the matter.
[89]
Furthermore as in
EP
Property Projects
, the joinder as such
was not contested in
Merryweather’s
case. Joinder was not an issue in that case.
[90]
It was in these circumstances that Scholtz
snr was found to have exercised control over the litigation and costs
were accordingly
ordered against him and his son jointly and
severally.
[91]
The cases of
PWC
2013
,
EP
Property Projects
and
Merryweather,
relied upon by the applicants, are clearly distinguishable from the
present case. In the last two, joinder was
not
even an issue, as it was in
PWC 2013
and in the present case. The distinguishing features of the last two
cases from the present one are fairly strong and have a compelling

force for the decisions made in those cases.
[92]
The
PWC 2013
case is clearly the leading and direct authority for establishing,
for the first time in South Africa, the legal basis for the
joinder
of an outside litigation funder or outside party to the litigation.
However, what the case did not specify are the circumstances
which a
court shall take into consideration in deciding whether or not to
order the joinder of a non-party litigation funder. The
basic
principles indicate that the degree of control of the litigation
and/or the benefit derived by the funder is foundational
to such an
order. But in what circumstances is the degree of control and/or
benefits sufficient for a court to order joinder? The
facts and
circumstances of each and every case will have to be considered with
this question in mind.
Pure
Funder and Other Funder
[93]
Repeated distinction is made in the case
law and was made in the litigation before this court between “pure
funders”
of litigation and other funders. It is important to
examine this: This is done on the basis of the case law dealt with in
this
case.
[94]
Pure
funders have no personal interest in the litigation. They do not
stand to benefit from it and they do not fund litigation as
a matter
of business. They do not seek to control the course of the litigation
that they fund. Common law and English authorities
indicate that the
courts do not exercise their discretion in respect of costs against
such funders.
[43]
One may say
such funders fund litigation as a pure financial investment, and like
any other ordinary investor, do not seek to control
the enterprise in
which they invest.
[95]
The
other type of litigation funder is distinguished from the “pure
funder” described above. I shall call this second
type of
funder the “controlling funder” or
“funder-for-own-interest” to distinguish it from the
“pure
funder” of litigation. The controlling litigation
funder does not merely fund litigation proceedings, but substantially
also
controls the proceedings that it funds, or at any rate stands to
benefit from them. Justice ordinarily requires that, if the
proceedings
fail, this second type of funder will pay the successful
party’s costs. The non-party funder in such a case is not so
much
facilitating access to justice by the funded as himself gaining
access to justice for his own purpose.
[44]
Funders of this latter category are not just funders, they are the
real litigants themselves except in name. The controlling funder
or
funder-for-own-interest funds for his own interest and therefore
seeks to control the litigation which he/she or it funds.
[96]
In
Carborundum
Abrasives Ltd v Bank of New Zealand (No 2)
[45]
,
Tompkins J stated:
“
In
many cases a major consideration will be the reason for the non-party
causing a party, normally but not always an insolvent company,
to
bring or defend the proceedings. If the non-party does so for his own
financial benefit, either to gain the fruits of the litigation
or to
preserve assets in which the person has an interest, it may,
depending upon the circumstances, be appropriate to make an
order for
costs against that person. Relevant factors will include the
financial position of the party through whom these proceedings
are
brought or defended and the likelihood of it being able to meet any
order for costs, the degree of possible benefit to the
non-party and
whether, in all the circumstances, the bringing or defending of the
claim – although in the end unsuccessful
– was a
reasonable course to adopt.”
[97]
In the High Court of New Zealand case of
Arklow Investments Ltd v MacLean
(19 May 2000, then unreported), Fisher J stated:
“
[19]
The guiding principle here is that costs orders against third parties
are exceptional but that they are warranted in cases
where there
would otherwise be a situation in which a person could fund
litigation in order to pursue his or her own interests
and without
risk to himself or herself should the proceedings fail or be
discontinued.
”
[98]
The consideration or distinction as to
whether the funder funds for his interest or the interest of the
funded litigant is of cardinal
importance when it comes to costs
liability and therefore to liability to be joined as a party. The
mere fact that the funder receives
a return for investment or a fee,
is, however, not conclusive of the fact that the funder is himself
the litigator. The funder
operates for his own interest when he takes
an active interest in and substantially controls the litigation. He
does so for himself
though it may in appearance look as if it is the
funded litigant who litigates. In reality it is in fact the funder
who litigates;
and does so for own interest but in the name of the
funded. The funder in such a case litigates for himself with the
funded serving
no more than as the face of litigation.
[99]
In
paragraphs 23 and 24 of the answering affidavit
[46]
the respondent gives an apt description of a litigation funding
industry or business which, I think will fall in the category of

controlling funders of litigation, as opposed to pure funders:
“
23
There are, of course, companies which have been created to fund
litigation. These funding companies typically enter into agreements

with clients to advance all litigation expenses and to insure against
any adverse cost orders. In exchange for such an agreement,

litigation funding companies purchase a share of each client’s
case directly. These contracts typically provide for a 40%
or more
recovery of the settlement or judgment after the return of expenses.
In other cases, funding company returns are negotiated
as a multiple
of the amounts invested. Returns of five to ten times the amounts
invested are typical, after the return of expenses.
The amount
recovered by the funding company is independent of the client’s
attorney fees. The sum paid to the litigation
funder is paid out of
the client’s recovery and not out of the attorney’s
recoverable fee.
24
Litigation funding companies typically do not invest in personal
injury actions, but usually invest only in large commercial
cases
where damages are liquidated or more quantifiable from the outset.
Litigation funding agreements specifically include the
right of the
funder to recover a portion of the corpus of the lawsuit from each
client.
”
[100]
The deponent concludes by stating that no
funding agreement of that nature was entered into by the mineworkers
litigants with Motley
Rice (the respondent). This is common cause.
The mineworkers litigants in this case have not entered into an
agreement with the
respondent and have no contractual nexus with
Motley Rice. Their contracts are with Spoor who is their lawyer and
legal representative.
Motley Rice is a consultant for Spoor which
also funds and supports Spoor in the litigation of the claims of the
mineworkers.
[101]
This court has full supervisory powers over
the professional conduct of Spoor, the legal representative of the
mineworkers. It is
supported and assisted in the exercise of that
power by the statutory law society of which he is a member. He is the
link between
the mineworker litigants and this court, without whom
the case of the mineworkers could not be prosecuted. The agreement
between
him and the respondent was conditional upon the approval of
the statutory law society which has granted such approval.
Furthermore
all counsel who shall appear on behalf of the litigants
are subject to the supervisory powers of this court. No good reason
has
been advanced why the supervisory powers over these legal
representative is not adequate in the context of this case. The legal

representatives are not at liberty to follow the direction of the
respondent contrary to those of their controlling professional
bodies
and of this court. I find accordingly that there is no deficiency
over the supervisory controlling powers of this court
over the legal
representatives that need to be augmented by the joinder of the
litigation funder in the context of this case.
Access
to Justice and Costs for Unfunded Litigants
[102]
In the present case the mineworkers are
funded to proceed with the certification application and damages
claims against Gold Fields
and other mining companies that employed
the mineworkers.
[103]
Litigation funding advances access to
justice. The joinder of the litigation funder in this case is sought
in order to make it possible
for the court to make a costs order.
[104]
Considerations of access to justice come
against those of potential costs in favour of the unfunded litigant
(the mining companies),
if the litigation (certification application)
is unsuccessful.
[105]
The
desperate position of the mineworker litigants is captured in the
following paragraph of the answering affidavit
[47]
,
which is not disputed:
“
25
Gold Fields is well aware that the gold miners it employed live in
rural communities with limited access to health care. Gold
Fields is
also aware that many of these clients are illiterate and extremely
impoverished. Absent legal representatives, such as
Spoor, willing to
pursue litigation on their behalf on a contingency fee basis, these
sick gold miners would not have access to
justice.
”
[106]
At the centre of the enquiry in this case
is whether the respondent litigation funder (Motley Rice), is a “pure
funder”
of litigation which is immune from costs, or is a
controlling litigation funder against whom the court should be in a
position
to order costs and who should be joined to the proceedings
for that purpose.
[107]
In
Dymocks
Franchise Systems (NSW) Pty Ltd v Todd and Others
[48]
(hereafter referred to as “
Dymocks
”)
the Privy Council set out guidelines derived from English and common
law for the exercise of a court’s discretion
to make costs
orders against non-parties to the litigation:
“
(1)
Although costs orders against non-parties are to be regarded as
‘exceptional’, exceptional in this context means
no more
than outside the ordinary run of cases where
parties
pursue or defend
claims for
their own benefit and at their own expense. The ultimate question in
any such ‘exceptional’ case is whether
in all the
circumstances it is just to make the order. It must be recognised
that this is inevitably to some extent a fact-specific
jurisdiction
and that there will often be a number of different considerations in
play, some militating in favour of an order,
some against.
(2)
Generally speaking the discretion will not be exercised against ‘pure
funders’, described in
Hamilton v
Al Fayed (No 2)
[2002] EWCA Civ 665
;
[2002] 3 All ER 641
at
[40]
,
[2003] QB 1175
as –
‘
those
with no personal interest in the litigation, who do not stand to
benefit from it, are not funding it as a matter of business,
and in
no way seek to control its course.’
(3)
Where, however, the non-party not merely funds the proceedings but
substantially also controls or at any rate is to benefit
from them,
justice will ordinarily require that, if the proceedings fail, he
will pay the successful party’s costs. The non-party
in these
cases is not so much facilitating access to justice by the party
funded as himself gaining access to justice for his own
purposes. He
himself is ‘the real party’ to the litigation, a concept
repeatedly invoked throughout the jurisprudence
(see, for example,
the judgments of the High Court of Australia in
Knight
v FP Special Assets Ltd
[1992] HCA 28
;
(1992) 107 ALR
585
,
(1992) 174 CLR 178
and Millett LJ’s judgment in
Metalloy
Supplies Ltd (in liq) v MA (UK) Ltd
[1997]
1 All ER 418
,
[1997] 1 WLR 1613).
Consistently with this approach,
Phillips LJ described the non-party underwriters in
TGA
Chapman Ltd v Christopher
[1997] EWCA Civ 2052
;
[1998] 2 All
ER 873
at 883
[1997] EWCA Civ 2052
; ,
[1998] 1 WLR 12
at 22 as ‘the defendants in all
but name’. Nor, indeed, is it necessary that the non-party be
‘the only real
party’ to the litigation in the sense
explained in
Knight v FP Special Assets
Ltd
, provided that he is ‘a real
party…in very important and critical respects’ (see
Arundel Chiropractic Centre Pty Ltd v
Deputy Comr of Taxation
[2001] HCA 26
at
[37]
,
[2001] HCA 26
;
(2001) 179 ALR 406
, referred to in
Kebaro
Pty Ltd v Saunders
[2003] FCAFC 5
at
32-33, 35, 37). Some reflection of this concept of ‘the real
party’ is to be found in CPR 25.13(2)(f) which allows
a
security for costs order to be made where ‘the claimant is
acting as a nominal claimant.’
”
[My underlining]
[108]
The respondent (Motley Rice) in this case
funds Spoor for the purpose of bringing the certification application
and ultimately the
class action for damages suffered by the
mineworkers, who contracted silicosis in their work. The mineworkers
are clients of Spoor,
who is their legal representative and attorney
of record in the certification application. Both Motley Rice (the
respondent) and
Spoor are legal firms. In addition to providing
funding, the respondent (Motley Rice) also acts as a consultant for
Spoor in the
certification application and the intended class action.
[109]
There is no suggestion of impropriety on
the part of the respondent (Motley Rice) or Spoor.
Conclusion
Financial
Benefit
[110]
One of the important considerations to
determine whether a funder is liable to be joined to proceedings, is
the benefit which the
funder stands to gain from the litigation. Such
benefits were clear in
PWC 2013
,
EP Property Projects
and
Merryweather
.
The litigation and proceedings to which the applicants seek to join
the respondent is the pending certification application.
[111]
In terms of its agreement with Spoor, even
if the certification application is granted, the respondent will not
receive any success
related fee. The respondent will also not benefit
financially from the certification of the class and will in
particular not be
entitled to claim any “disbursements”
as a result of the certification. The respondent will receive a
benefit in relation
to the certification application only if a class
action is instituted and succeeds in due course. Even then, such
benefit will
be limited to the “disbursements” incurred
by the respondent in relation to the certification application. It
will
not include any fee in relation to the success thereof. There is
thus no financial benefit that the respondent will get in the
certification application. The financial benefit to the respondent is
only payable at the end of the damages action, if that action

succeeds. In the circumstances, the joinder application is premature.
There are no recognised grounds for the recovery of costs
from the
respondent (the funder) at the certification stage. The joinder of
the respondent, at this stage, to the certification
application, will
not render or make it a defendant or plaintiff in the proposed
silicosis action, if and when it is instituted.
It might well be that
the applicants may desire to join the respondent, or other funder to
the action at that stage. That is, however,
a separate application
which is not before me. I am satisfied that, to the extent that the
application for joinder relies on the
fact that the respondent shall
receive a benefit from this litigation, that there is no financial
benefit due to the respondent
from the certification application, and
accordingly that the applicants fail to establish that requirement.
Control
[112]
As a consultant to Spoor, the respondent
(Motley Rice) provides certain services and charges an hourly fee,
which in the agreement
is termed “disbursements”. As a
funder, Motley Rice shares in the contingency fee that is charged by
Spoor to his clients.
Spoor remains the attorney for all the clients.
The relationship between Spoor and the respondent is one which gives
Spoor the
necessary back-up without displacing him as the attorney
for the mineworkers or applicants in the main action. If anybody
controls
the litigation at a professional level, Spoor exercises that
role. The position of mineworkers as clients and litigants is
unaffected
by the relationship between Spoor and the respondent. They
remain in control of the litigation and have not contracted with
anybody
to share that control. They have also not instructed or
contracted with anybody in a manner that takes away from them the
control
of the litigation as clients in any manner. This is a major
distinguishing factor from the cases of
PWC
2013
,
EP
Property Projects
and
Merryweather
where the funder had displaced the client either completely or in
substantial or material respects. The agreement concluded by
the
respondent does not give the respondent a right to any part of the
mineworkers’ claims.
[113]
Motley Rice charges a professional fee as a
consultant and beyond that it is to be paid a share out of the
contingency fees earned
by Spoor. What is more, Spoor has not
inflated his contingency fees to accommodate what he has to pay to
the respondent. The respondent
can thus not be said to be “the
real party” to the litigation, the “
party
in all but name
”. It can also not
be said that the respondent is “
a
real party in…very important and critical aspects
”.
The respondent is not a party and has no attributes of a party. The
respondent, through its relationship with Spoor, facilitates
access
to justice by the mineworker clients of Spoor. It would be absurd to
suggest that Motley Rice (the respondent) in this case
is “
himself
gaining access to justice for his own purposes
.”
It promotes access to justice and has not taken any interest in the
corpus
of
the litigation.
[114]
The respondent accordingly has the
essential attributes of a “pure funder”. The fact that
the respondent at the same
time consults for the mineworkers’
attorney is irrelevant, because what it receives as a consideration
for that is a professional
fee and not part of the
corpus
of the litigation. The respondent is a United States of America based
law firm which gives their South African counterpart the
technical
and financial back-up to handle a complex and novel litigation on
behalf of those who cannot do so on their own. The
bona
fides
of the funding and consultant
relationship has not been questioned. Nor is there any suggestion
that the dominant motive is anything
but to help the helpless to
access justice. The fact that the respondent facilitates access to
justice by the mineworkers for a
consideration for itself does not
detract from the nature of the relationship. Public interest cries
out for the desperate mineworkers
to be assisted to access justice. I
conclude accordingly that in this case priority must be given to the
public interest in the
funded party getting access to funding over
that of the unfunded party recovering its costs, if it succeeds.
[115]
In my view, the applicants have failed to
prove that the respondent stands to benefit from the certification
application or that
it substantially controls the proceedings in it.
In the premises they have not established a basis for the joinder of
the respondent
to the certification application.
Striking
Out
[116]
The respondent has given notice to the
applicants and applied at the hearing of the application for striking
out portions of the
applicants’ affidavit, mainly in the
replying affidavit, but also some parts in the founding affidavit.
The striking out
is sought on several grounds including the usual
grounds that the impugned parts contain matter which is scandalous,
vexatious
or irrelevant. The respondent contends also that some parts
are argumentative, constitute hearsay and are impermissible and
inadmissible
in application proceedings.
[117]
The application is brought in terms of Rule
6(15) of the Uniform Rules of Court which provides that:
“
(15)
The court may on application order to be struck out from any
affidavit any matter which is scandalous, vexatious or irrelevant,

with an appropriate order as to costs, including costs as between
attorney and client. The court shall not grant the application
unless
it is satisfied that the applicant will be prejudiced in his case if
it be not granted.”
[118]
The respondent also seeks to invoke the
inherent power of the court at common law to strike out matters,
including matters which
ought to have appeared in the founding
affidavit, and which are inappropriately sought to be introduced
through the replying affidavit
and other subsequent affidavits.
[119]
The last sentence in Rule 6(15) is of
importance as it places substance over form.
[120]
The rationale behind the striking out
jurisdiction of the court is sound. It promotes orderly ventilation
of the issues, promotes
focus on the real issues, prevents
proliferation of issues, unnecessary prolix and irrelevancies that
unduly burden records in
application proceedings.
[121]
The
applicant is therefore obliged to make out its case in the founding
affidavit and to stand and fall by it.
[49]
The case in the founding affidavit is the one on which the applicant
brings the respondent to court. That is the case that the
respondent
must respond to; and the applicant must, at the hearing, succeed or
fail on the case in the founding affidavit.
[122]
The respondent is given one opportunity
only, to deal with the applicant’s cause of action and present
evidence in opposition
in the answering affidavit. The applicant is
then afforded an opportunity in the replying affidavit to reply only
to what the respondent
has stated and may not raise new matter or new
issues. The three affidavits, founding affidavit, answering affidavit
and replying
affidavits (with such supporting affidavit as may be
necessary for each) then conclude the essential affidavits, and thus
close
the pleadings and evidence in motion proceedings.
[123]
There is no automatic right to file the
fourth and further affidavits. Additional affidavits should be
allowed only in exceptional
circumstances and only with the leave of
court.
[124]
It is unfortunate that a practice of laxity
and non-adherence to the rules regarding the three essential
affidavits, and the strict
contents of each, has been allowed to
develop in motion court. Parties regularly go beyond the legitimate
scope of their affidavits,
file the fourth and further affidavits
pleading over and over again over issues which are not germane to the
cause of action as
originally pleaded and appropriate response to it.
Voluminous impermissible affidavits are often filed without leave of
the court
raising and debating collateral and non-material issues,
which ultimately make the volume of papers on collateral issues
longer
than the papers dealing with core issues. Motion court papers
are often voluminous, not because of the basic essential affidavits

on core issues, but because of collateral and sometimes irrelevant
issues in a plethora of affidavits exchanged without leave of
court,
often tendered subject to leave of court. In effect leave of the
court is simply assumed.
[125]
The
most important consideration of all, in adhering to the strict rule
concerning affidavits is that adhering to the principles
ensures that
disputes between litigants are resolved in terms of a procedure which
is just, orderly and well recognised.
[50]
[126]
The applicants’ cause of action, in
this interlocutory application for joinder of the respondent, as
appears from the founding
affidavit and as argued before this court,
is fairly straight and focused. The applicants seek the joinder of
the respondent on
the basis that the respondent is a litigation
funder with certain attributes (control and financial benefits) and
that the respondent
is therefore “potentially liable” for
costs. The applicant was able to set out its cause of action with
supporting
evidence in 18 pages with 57 paragraphs – excluding
annexures. The replying affidavit is, however, three times longer
than
the founding affidavit with 157 paragraphs over 51 pages
excluding annexures. Granted, it was not only necessary for the
applicants,
in reply, to deal with the main answering affidavit of 18
pages, but also with further supporting affidavits. However, the
replying
affidavit also contains argumentative material and goes
further than what is strictly necessary. I do not deem it necessary
to
deal with each and every complaint raised or to raise every aspect
of the replying affidavit worthy of a complaint, because of the
view
I take as to the proper outcome of the application to strike out. I
mention only a few points to demonstrate this:
(a)
In paragraphs 70 and 75 of the replying
affidavit, the applicants (Gold Fields) raise the validity of the
agreement(s) and states:
“
The
validity of the ‘fee sharing agreement between Spoor and Motley
Rice’ is an issue for this court’s determination.
”
This is not part of the applicants’ case and raises an entirely
new issue for determination by the court.
(b)
The applicants also raise what is
essentially legal arguments in the replying affidavit with reference,
some time, to decided cases
which are cited with full citation and
for instance:
(i)
In
paragraph 25,
[51]
the
applicants’ state: “
The
locus
classicus
on
costs in this country is the Constitutional Court’s judgment in
Biowatch
Trust v Registrar, Genetic Resources
2009
(6) SA 232
(CC). It holds that irrespective of however praiseworthy
their cause, everyone should be treated equally.
”
(ii)
In
paragraph 70
[52]
the
applicants state again: “
This
court, the Supreme Court of Appeal and the Constitutional Court have
all agreed that some of the Law Society’s past routine

approvals were clearly wrong.
”
While
it is sometimes necessary to refer to the legal position in order to
make a particular point or factual assertion, a replying
affidavit
should not be used to advance argument which rightfully belongs to
heads of argument.
[127]
As I have stated it is not necessary,
because of the conclusion I reach on the application, to strike out
(itself an interlocutory
within an interlocutory), or to deal with
the entirety of the complaint or exhaustively with its merits and
demerits. I pointed
out also to counsel at the hearing that in my
view both sides have taken too much time dealing with the profile,
history and character
of the respondent. It is in this field also
that reliance was placed on sources from the public media without an
attempt to accredit
the source or confirm the content. Some
information about the identity of parties may be necessary, but not
to the extent that
peripheral untested issues should cloud core
issues.
[128]
The
reason for not going into the details of the complaint appears from
the last sentence of Rule 6(15). Although this court has
read
whatever was placed before it in evidence, the weight to be placed on
what is in the affidavits, depends on relevance and
admissibility.
The decision of this court on the joinder application, is based on an
assessment of the cause of action as set out
in the founding
affidavit and assessment of available evidence in support or against
such case. The court has not allowed collateral,
inadmissible or
irrelevant issues to cloud its view of the real issues. The
respondent has therefore not been prejudiced in this
court’s
consideration of the case,
[53]
and furthermore not much time was taken in argument dealing with the
striking out application. The attitude of this court towards
the
striking out would have been different if that application was moved
prior to the hearing of the joinder application and as
a separate and
in consequence of which further papers might or might not be filed.
[129]
In their heads of argument, the applicants
accuse the respondent for having not pleaded over to the alleged new
matters raised in
the replying affidavit. I do not agree that there
was any impropriety in not pleading over. The raising of the
complaint in the
manner in which it was raised promotes the strict
adherence referred to above and reduces undue prolixity.
[130]
The respondent was not prejudiced in its
case, whatever the merits or demerits of the striking out
application. It is therefore
not necessary to grant any part of the
application to strike out. Justice will further be properly served if
the costs of the strike
out application are part of the costs in the
joinder application.
[131]
Counsel are agreed that whichever way the
costs goes, such costs should include the costs for two counsel. I
agree.
[132]
In the result I make the following order:
1.
The application for the joinder of Motley
Rice LLC in the certification application is dismissed with all the
ancillary relief sought
with such joinder.
2.
The applicants shall pay the costs of the
application, including the costs of two counsel.
P.
M. MOJAPELO
DEPUTY
JUDGE PRESIDENT
HIGH
COURT OF SOUTH AFRICA
GAUTENG
LOCAL DIVISION
Counsel
for the Applicants:
Adv
J. J. Gauntlett SC
Adv
F. B. Pelser
Counsel
for the Respondent: Adv L. N. Harris SC
Adv
J. Wilson
Adv
S. Pudifin-Jones
Attorneys
for the Applicants: Norton Rose Fulbright South Africa
Attorneys
for the Respondent: Read Hope Phillips Attorneys
Argument
took place on 24 February 2015
Date
of judgment: 19 March 2015
[1]
Children’s
Resources Centre Trust and Others v Pioneer Food (Pty) Ltd and
Others
2013 (2) SA 213
(SCA) at paragraph [23]
[2]
2013
(2) SA 213 (SCA)
[3]
2004
(6) SA 66 (SCA)
[4]
See
cases referred to in paragraph [26] of
PWC
2004
supra
[5]
See
Thomas
Hugo and Fred J Möller NO v The Transvaal Loan, Finance and
Mortgage Company
[1894] 1 OR 339
at 340 referred to in
PWC
2004
supra
[6]
See
paragraph [29] at p 75 of
PWC
2004
supra
[7]
See
paragraph [44] of
PWC
2004
supra
[8]
See
paragraph [46] of
PWC
2004
supra
[9]
See
paragraph [50] at p 81F of
PWC
2004
supra
[10]
See
Biowatch
Trust v Registrar, Genetic Resources
2009 (6) SA 232 (CC)
[11]
See
Biowatch
supra
at paragraph [21]
[12]
See
Biowatch
supra
at paragraph [28]
[13]
See
Biowatch
supra
at paragraph [26]
[14]
See
Biowatch
supra
at paragraph [18]
[15]
2009
(6) SA 232
(CC)
[16]
See
Biowatch
supra
at paragraph [18]
[17]
See
Biowatch
supra
at paragraph [18]
[18]
See
Biowatch
supra
at paragraph [14]
[19]
In
order to understand the full context and approach to costs in
constitutional litigation one needs only read paragraph [14],
and
then paragraphs [16] to [18] of
Biowatch
supra
[20]
The
full heading of the agreement is “Co-Counsel Association
Agreement”
[21]
2013
(6) SA 216 (GNP)
[22]
See
PWC
2013
supra
at p 222D – G
[23]
2014
(1) SA 141
(WCC)
[24]
See
EP
Property Projects
supra
at paragraph [79] at p 163
[25]
See
EP
Property Projects
supra
at paragraphs [71], [79] and [82] to [89]
[26]
2014
(6) SA 90 (WCC)
[27]
See
Merryweather
supra
at paragraphs [109] to [111]
[28]
See
Merryweather
supra
at paragraphs [113] to [115]
[29]
Patz
v Salzburg
1907 TS 526
at 527
[30]
Section
9 of the Constitution
[31]
See
Beinash
and Another v Ernst & Young and Others
1999 (2) SA 116
(CC)
[32]
See
Moise
v Greater Germiston TLC: Minister of Justice Intervening
[2001] ZACC 21
;
2001 (4) SA 491
(CC) at paragraph
[23]
[33]
See
PWC
2004
supra
at paragraph [43] and the authorities quoted in the said paragraph
[34]
See
Record p. 62
[35]
The
cases are
PWC
2013
,
EP
Property Projects
and
Merryweather
referred to and discussed in this judgment
[36]
See
PWC
2013
supra
at p 217A – B
[37]
See
PWC
2013
supra
at p 217I – J
[38]
See
PWC
2013
supra
at p218E
[39]
See
PWC
2013
supra
at p 219H – I
[40]
See
PWC
2013
supra
at p 222H
[41]
See
PWC
2013
supra
at p 222H
[42]
See
paragraph [48] of this judgment
[43]
See
Dymocks
Franchise Systems (NSW) Pty Ltd v Todd and Others
[2004] UKPC 39
;
[2005] 4 All ER 195
at 204 paragraph [25];
Hamilton
v Al Fayed (No 2)
[2001] UKHL 70
;
[2002] All ER 641
at paragraph
[40]
,
[2003] QB 1175
; See also
EP
Property Projects
supra
at 162E – F, paragraph [75];
Merryweather
supra
at paragraph [111] at p. 113G
[44]
See
Dymocks
Franchise Systems
supra
at p 204c – d, paragraph [25]; judgment in the High Court of
Australia in
Knight
v FP Special Assets Ltd
[1992] HCA 28
;
(1992) 107 ALR 585
,
(1992) 174 CLR 178
;
EP
Property Projects
supra
at p 162G, paragraph [75]
[45]
[1992]
3 NZLR 757
at 765
[46]
See
Record pp. 116-7
[47]
See
Record p. 117 paragraph 25
[48]
[2004] UKPC 39
;
[2005]
4 All ER 195
at pp. 203-4, paragraph [25]
[49]
See
Director
of Hospital Services v Mistry
1979 (1) SA 626 (A)
[50]
See
Union
Finance Holdings Ltd v I S Mirk Office Machines II (Pty) Ltd
2001 (4) SA 842
(W) at 847J – 848E
[51]
Record,
p. 243
[52]
Record
p. 258
[53]
See
Beinash
v Wixley
[1997] ZASCA 32
;
1997 (3) SA 721
(SCA) at 733J – 734B