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[2015] ZAGPJHC 195
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Werksmans Incorporated v Praxley Corporate Solutions (Pty) Ltd (14/05741) [2015] ZAGPJHC 195; [2015] 4 All SA 525 (GJ) (8 September 2015)
REPUBLIC OF SOUTH
AFRICA
IN THE HIGH COURT OF
SOUTH AFRICA
GAUTENG LOCAL DIVISION,
JOHANNESBURG
CASE NO: 14/05741
DATE: 08 SEPTEMBER 2015
In the matter between:
WERKSMANS
INCORPORATED
.........................................................................................
Applicant
And
PRAXLEY CORPORATE SOLUTIONS (PTY)
LTD
.......................................................
Respondent
J U D G M E N T
MAKUME, J:
[1] In this application the Applicant
seeks judgment in the following terms:
1.1 That the Respondent be ordered to
pay to the Applicant an amount of R122 094,00 being in respect of
counsel’s fees alternatively
to 1.1 above that an order be
granted permitting the Applicant to submit counsel’s fees to
taxation by the taxing master.
1.2 That the Respondent be ordered to
pay costs in respect of liquidation proceedings instituted by the
Applicant against the Respondent
in case number 30127/2013.
[2] The Respondent in its
counter-application seeks the following relief:
2.1 That the Applicant be directed to
tax all its fees and disbursements in addition to the taxation as per
the alternative prayer
in 1.1. above.
2.2 That the liquidation proceedings
instituted by the Applicant in case number 30127/2013 be declared
malicious and vexatious as
contemplated in section 347(1A) of the
Companies Act 61 of 1973.
HISTORICAL BACKGROUND
[3] The sequel to this matter
originates from a dispute that arose concerning fees due to Adv Paulo
Beltramo SC (Beltramo) which
were paid by the Applicant. It is when
the Applicant claimed payment of what they had disbursed from the
Respondent that triggered
the episodes leading to this application
and the counter-application.
[4] During or about the year 2009 the
Chief Executive Officer of the Respondent a Mr Greg Els (Els)
concluded a verbal agreement
on behalf of the Respondent with the
Applicant Law Firm Messrs Werksmans Incorporated. Mr Dewald Nel van
der Berg (Dewald) an
attorney in the employment of Werksmans received
the instruction on behalf of the Applicant.
[5] The instructions concerned
arbitration proceedings between the Respondent and a company known as
On Digital Media (Pty) Ltd
(ODM). Els chose Beltramo to handle the
matter on behalf of the Respondent. Applicant duly complied and
briefed Beltramo.
[6] The arbitration was set down for
hearing before retired Judge P Conradie and was to commence on the
5th November 2012 to Friday
the 16th November 2012 a period of 10
days.
[7] On or about Tuesday the 30th
October 2012 the Respondent received a notice from ODM to the effect
that its board of directors
had passed a resolution to place ODM
under business rescue in terms of
section 129
of the
Companies Act No
71 of 2008
. This would by law result in the staying or suspension of
all legal proceedings against ODM in terms of the provisions of
section 133
of the
Companies Act No 71 of 2008
.
[8] When the
section 129
notice was
received Beltramo was already on brief for the period 5th November
2012 to the 16th November 2012. The Respondent did
not instruct its
attorneys the Applicants to stop arbitration proceedings but it was
agreed to await the appointment of a business
rescue practitioner and
only then stop the arbitration.
[9] It is common cause that a business
rescue practitioner was appointed on the 7th November 2012 thus
causing the suspension or
staying of the arbitration proceedings.
[10] On the 30th November 2012 Beltramo
sent to the Applicant his invoice indicating fees due to him for the
period 1 November 2012
to 19 November 2012 in the sum of R176 814,00
including VAT. It is this tax invoice that is the subject of this
litigation.
[11] It appears that all was well for
some time after the 7th November 2012 to the extent that on the 7th
February 2013 the Respondent
paid to the Applicant an amount of R498
113,33. This payment was in respect of Applicant’s tax invoice
number 426565 dated
the 25th October 2012 in the amount of R41 528,06
and tax invoice number 428716 dated the 25th November 2012 for the
amount of
R456 585,27. The payments included fees due to Advocate
Beltramo in the sum of R6 156,00 in respect of his invoice dated 28th
September 2012 as well as the amount of R246 240,00 in respect of his
invoice dated the 31st October 2012.
[12] On the 12th February 2013 Els on
behalf of the Respondent addressed a letter to the Applicant for the
attention of Mr Jonathan
Stockwell the letter reads as follows:
“Dear Jonathan,
ON DIGITAL MEDIA (PROPRIETARY) LIMITED
(IN BUSINESS RESCUE) ODM
We would like to formally advise that
Werksmans are no longer mandated to act for Praxley Corporate
Solutions (Pty) Ltd in respect
of the abovementioned matter given
what we consider to be a material conflict of interest.
We confirm that ODM and their
respective attorneys will be advised of this matter in due course.
Would like to thank you for the time
spent on this matter.
Yours sincerely.
Greg Els
Chief Executive Officer”
[12] On receipt of this letter the
Applicant addressed a letter of demand in terms of section 345(1) of
the Companies Act 61 of
1973 to the Respondent seeking payment of the
sum of R176 896,08 which amount is solely made up of fees paid to
Advocate P Beltramo.
Applicant had forwarded a copy of the invoice to
the Respondent for payment on the 25th January 2013.
[13] It was this last letter that
triggered a series of acrimonious exchange of correspondence between
Els and Dewald eventually
leading to an application for the
liquidation of the Respondent. The first of such letters is dated the
27th February 2013 in which
Els writes to Dewald as follows:
“Dear Dewald,
I confirm that all monies owing to
Werksmans have been paid in full when the payment for R498 113,33 on
25th February. There was
no ‘collapse fee’ discussed or
agreed.
After Praxley has paid Werksmans in
excess of R1 million in this matter, I see that the firm is now suing
Praxley for R176k. You
must be joking.
As outlined earlier, your firm was
patently conflicted in this matter and we are taking legal advice in
respect of taxing your entire
account, instituting damages claim and
reporting you and the firm to the Law Society.
Please be guided accordingly.
Kind regards
Greg Els
CEO-Praxley”
[14] The battle lines were drawn and in
the process Senior Counsel Beltramo entered the fray and attempted to
cool off the tempers.
The issue was the “collapse fee”
charged by Beltramo. Beltramo addressed an email to Mr Els on the
27th February 2013
which reads as follows:
“Greg
I am something perturbed by your email
sent to Werksmans concerning my fee.
We agreed in my office to the collapse
fee.
Furthermore three of the days concern
the matter standing down, at your instructions and to see whether an
appointment could be
made. If not the arbitration would continue.
Dewald’s correspondence addressed to the arbitrator and on
which you received
will bare.
During those three days pending
appointment you attended consultations at my office with Dewald.
Fees for those three days have been
included in the collapse fee. Perhaps I ought to have described them
on the invoice as On arbitration.
I am happy to amend my invoice to
reflect that but you are well aware of the facts.
Notwithstanding the agreed 5 day
collapse fee I only charged you 2 days as the arbitration collapsed
when the appointment was made
on 7th November.
As you will see from my invoice I also
elected to reduce my fee for that period.
Your threat to Werksmans is entirely
unjustified and should the need arise will testify at any
disciplinary enquiry as threatened
or in any proceedings that have a
bearing on the collapse fee. I trust that sense will prevail and you
will pay the account.
Paolo”
[15] The letter from Beltramo elicited
a rather strange response couched in some unsavoury language the long
and short of that letter
written by Els was that Applicant can do
their damnest he will not pay Beltramo’s fees.
[16] Prior to the letter from Beltramo
there was a series of correspondence relating to the continuation of
the arbitration dispute
and/or an application to uplift the
moratorium brought about by the business rescue process. Dewald and
Els failed to reach an
agreement in respect of fees going forward.
Els indicated that he had now been in discussion with Advocate South
who had referred
him to an attorney who would be prepared to accept
instructions on risk and work on a contingency fee basis. As this was
not acceptable
to the Applicant, Dewald addressed a letter to Els on
the 11th February 2013 accepting termination of their mandate, part
of the
e-mail reads as follows:
“However I take note of your
position and respect your views and hope to be of assistance to you
again in future.
I will nevertheless write-off the
unbilled time on this file and will not invoice you again.
Thank you for payment of our October
and November invoices. I noticed though that payment for our January
invoice has not been
paid (see attached). This invoice is solely made
up of Paolo’s fee. If you have paid it please send me proof so
that I can
allocate it and if not please attend to same.”
[17] On the 12th February 2013 Els
addressed a letter to the Applicant formulating the termination of
mandate and said nothing about
the outstanding invoice referred to in
the letter from Dewald dated the 11th February 2013.
[18] It is common knowledge that
between the 13th and the 26th February 2013 Dewald addressed three
letters to Mr Els requesting
payment of Beltramo’s fees. Els
did not respond to any of those e-mails until Dewald decided to
dispatch to the Respondent
a letter of demand in terms of section
345(1) of the 1973 Companies Act. That letter was delivered to
Respondent’s registered
address on the 27th February 2013.
[19] It was only on the 27th February
2013 that Els decided to respond to a letter addressed to Respondent
dated the 26th February
2013 in that letter Dewald had demanded
payment from the Respondent of the fees due to Beltramo. Els’
response read as follows:
“Dear Dewald,
I confirm that all monies owing to
Werksmans have been paid in full when the payment of R498,113.33 on
25 February 2013.
There was no ‘Collapse Fee’
discussed or agreed.”
[19] The significance of this letter is
that as on the 27th February 2013 the Respondent only objected to the
fees charged by Beltramo
and raised no dispute in respect of the fees
raised by the Applicant.
[20] It is evident from the
correspondence exchanged between Els and Dewald that the whole issue
was about the collapsed fee due
to Beltramo. In response Dewald
wrote to Els in the following words on the 27th February 2013:
“Furthermore, to suggest that the
collapse fee was not agreed is most alarming, considering that you
agreed in Paolo’s
chambers that you will pay the collapse fee.
Paolo expressly informed us in chambers that he will be charging
Praxley for 5 days
and to which you agreed. In fact, when the
resolution placing ODM in business rescue was received you instructed
us (after we deliberated)
to have the matter stand down to see
whether they will appoint a business rescue practitioner. This we
did for 3 days, as the
appointment was only done on 7 November 2012.
If regard is had to Paolo’s invoice it is clear that he has in
fact only charged
you a collapse fee for 2 days and a reduced fee for
the 3 days. Also, I point out that approximately R40 000 of the
invoice is
for work done by Paolo prior to 5 November 2012 i.e. not
part of the collapse fee.”
[21] Having terminated the mandate of
the Applicant Els engaged the services of Dolph Jonker Attorneys who
on the 12th March 2013
addressed a letter to the Applicant responding
in the main to the section 345(1) letter of demand. The contents of
this letter
extended the dispute further than the collapse fee issue.
I deem it appropriate to quote those sections of Dolph Jonker’s
letter that are relevant for purposes of this matter. It reads thus:
“1. Praxley is willing to pay an
amount of R40 014 (forty thousand and fourteen rand), VAT inclusive,
in respect of preparation
and consultation as per the account of
Advocate Beltramo.
2. Praxley is further willing to pay
the collapse fee for one day of R27 360-00 (twenty seven thousand
three hundred and sixty rand),
VAT inclusive, as per the account of
Advocate Beltramo.
3. At no stage did either Advocate
Beltramo or any representative of Werksmans discuss and or negotiate
a collapse fee with Praxley
and or any of its representatives in
respect of the fees of Advocate Beltramo.
…
5. Praxley is disputing all accounts
received from Werksmans in respect of the On Digital Media matter and
hereby requests that
all your accounts be referred for Taxation.
…
7. Take further note that should you
apply for the winding up of Praxley as per your paragraph 5, such an
application will be vehemently
opposed and Praxley will further seek
punitive damages against you for bringing such application. Such an
application would be
deemed mala fide especially in the light of the
fact that Praxley has paid you in the excess of R1,2 million in fees
in this particular
matter.
8. Should Werksmans not be
satisfied with the amount of R60 374 00 (sixty thousand three
hundred and seventy four rand)
as tendered by our client, we will
have no option but to refer the matter to the Bar Council with
regards to this dispute.”
[22] In response to this letter the
Applicant rejected the offer to pay only an amount of R60 374,00 in
respect of Beltramo’s
fees and made a counter-proposal that the
Respondent should pay an amount of R40 014,00 being fees for
preparation by Beltramo
and a further amount of R72 000,00 being in
respect of counsel’s fees when the arbitration matter stood
down during the period
5 November 2012 to the 7th November 2012
making it a total of R112 014,00.
[23] It appears to me that the amount
of R72 000,00 should actually read R82 080,00 to be in line with the
Applicant’s claim
as articulated in the heads of argument
wherein the total amount being claimed is the sum of R122
094,00. The Applicant
abandoned the claim of R54 720,00 being the
collapse fee for two days charged by Beltramo.
[24] This counter-offer was promptly
rejected by the Respondent who repeated their demand that all the
previous statements of account
submitted and paid by the Respondent
to the Applicant be taxed.
[25] A deadlock was reached solely on
the insistence by the Respondent that the Applicant tax his whole
fees past paid and present.
The Applicant informed the Respondent in
their e-mail addressed to them dated the 22nd March 2013 that if
payment of R122 094,00
was not received by the 27th March 2013 then
the Respondent will be deemed unable to pay its debts which will
result in the Applicant
proceeding to apply for the winding up of the
Respondent in terms of the Companies Act.
[26] Instead of directly replying to
this letter the Respondent’s attorney reacted on the 27th March
2013 by informing the
Applicant that it has lodged a complaint
against the Applicant with the Law Society of the Northern Province
to investigate unprofessional
conduct against Applicant and Dewald by
reason of them failing to have their fees taxed. Secondly, the
Respondent advised the
Applicant that should they proceed with an
application for winding up of the Respondent a punitive costs order
will be sought.
[27] In the letter of complaint to the
Law Society the Respondent repeated that it wants the Law Society to
compel the Applicant
to comply with the provisions of Rule 89.24d of
the Rules of the Law Society by submitting a draft bill of costs for
taxation.
[28] Having failed to make any payment
to the Applicant as claimed in the letter of the 27th February 2013
and the 22nd March 2013
the Applicant issued liquidation proceedings
against the Respondent on the 16th August 2013. The Respondent filed
a notice to
oppose the liquidation.
[29] The Respondent did not file an
opposing affidavit to the liquidation application instead addressed a
letter to the Applicant
dated the 28th August 2013 contents of which
read as follows:
“2. The winding-up application is
based on the assertion that Praxley is indebted to your firm the sum
of R176,896.08. This
amount is disputed by Praxley on a number of
bases, including:
2.1 that the overall fees charged by
your firm are not fair and reasonable and should be taxed;
2.2 that the payment of the final
amount of Praxley was made in full and final settlement of all
amounts owing to your firm;
2.3 that a portion of the fee charged
represents counsel’s collapse fee, where there was no agreement
for the payment of such
fee.
3. Praxley is, in fact, able to pay its
debts. In order to demonstrate this, the capital amount (R176
896-08), together with a provision
for the costs of the winding-up
application to date hereof, in an amount of the sum of R50,000.00
(i.e. R226,896.08) has been paid
into our trust account. We
undertake to hold these monies, pending the institution and
finalisation of an action by your firm
against Praxley for the fees,
which your firm contends are outstanding. Praxley furthermore
reserves the rights afforded to it
in terms of Section 347(1A) of the
Companies Act 61 of 1973 (‘the Old Companies Act’).
4. Please advise us whether you have
drawn a bond of security in terms of Section 346(3) of the Old
Companies Act? If not, and since
our client has paid the sum of
R226,896.08 into our trust account, we require an undertaking, within
24 hours, that no bond of
security will be drawn, as such will have
prejudicial consequences for Praxley. If no bond of security has
been drawn and if no
undertaking is forthcoming, we require an
opportunity until Tuesday, 3 September 2013, to serve an urgent
application interdicting
and restraining your firm from drawing a
bond of security in the aforesaid circumstances.”
[30] In response the Applicant accepted
the Respondent’s undertaking to secure payment of the capital
amount by depositing
it into the Trust Account of its Attorneys Dolph
Jonker pending the outcome of the litigation to be instituted by the
Applicant.
In addition the Applicant proposed that the amount of
R50,00 being the estimated cost of the liquidation application be
paid to
it whereupon the liquidation application must be withdrawn.
[31] This proposal to pay the R50,00 to
the Applicant was not acceptable to the Respondent and eventually it
was agreed that:
31.1 Applicant would withdraw the
liquidation application.
31.2 The costs of the liquidation
application would be determined by the trial court that would be
hearing the claim for payment
of the amount claimed by Beltramo fees.
[32] Ultimately in a letter dated the
1st October 2013 Dolph Jonker Respondent’s attorneys addressed
the following letter
to the Applicant:
“Praxley not only requires Adv
Beltramo SC’s fee to be taxed, but also your firm’s fees.
It is trite law that
a client is entitled to taxation of his/her
attorney’s account [See Blakes Maphanga Inc v Outsurance
Insurance Co Ltd
2010 (4) SA 232
(SCA) at para 17]. It is further
trite law that the amount of a disputed bill of costs is not
liquidated until such time it is
taxed [See Blakes Maphanga supra
also at para 17].
Your reluctance to have the
reasonableness of your firm’s fees taxed is noted. There was
certainly never a waiver on the
part of Praxley to contest the fair
and reasonableness of your firm’s accounts simply because
Praxley paid your firm’s
invoices.”
[33] On the 30th October 2013 Applicant
informed the Respondent that the invoice of Advocate Beltramo SC has
been sent to their
cost consultant for purposes of having same taxed
and that as soon as the aforesaid account shall have been taxed they
will proceed
to issue motion proceedings against the Respondent
claiming payment of the taxed amount.
[34] In response to this letter the
Respondent wrote to the Applicant on the 11th November 2013 informing
the Applicant that taxation
of Beltramo’s account in isolation
would be meaningless and accordingly to them such account cannot be
taxed without being
accompanied by the attorneys’ bill of
costs.
[35] On the 4th November 2013 the
Applicant duly issued a notice of taxation in respect of the account
of Beltramo. On the 12th
November 2013 the Respondent filed a notice
of objection to the bill of costs. The reason for objecting to the
bill was given
as that the amount being a disbursement could not be
taxed on its own. This objection simply meant that the paid bills
of the
Applicant also had to form part of the bill to be taxed.
Taxation could not take place and was postponed pending the outcome
of
his application.
[36] On the 19th February 2014 the
Applicant launched these proceedings the Respondent filed its
answering affidavit as well as
a counterclaim in which it seeks a
punitive costs order against the Applicant for having commenced
liquidation proceedings against
the Respondent at a time when there
was evidence that the Respondent is able to pay its debt and was
accordingly not insolvent.
THE ISSUES
[37] In my view the issues that require
determination by this Court are:
37.1 Is a party entitled to demand that
fees and disbursements that had already been paid by it to its
attorneys be subjected to
taxation by the Taxing Master?
37.2 Is there a justification to
proceed with liquidation proceedings against a client who withholds
payment because of a dispute
in respect of the fees and disbursements
of counsel if so under what circumstances, put otherwise when can it
be said that a debtor
is unable to pay its debt and thus falls to be
wound up in terms of the provisions of Item 9 of Schedule 5 of the
Companies Act 7 of 2008
as read with
section 345
and section 344(f)
of the Old
Companies Act.
COMMON
CAUSE ISSUES
[38] The following are common cause
issues between the parties:
38.1 During or about September 2011 the
Respondent duly represented by Mr Els concluded a verbal agreement
with the Applicant to
claim from ODM an amount of R3 million.
38.2 This mandate developed over time
with the institution and prosecution of arbitration proceedings
against ODM.
38.3 With the consent and knowledge of
the Respondent the Applicant briefed Beltramo to represent the
Respondent during the arbitration
proceedings.
38.4 Between the 25th September 2011
and 25th November 2012 the Applicant billed the Respondent for fees
and disbursements which
disbursements included Beltramo’s fees
in the total amount of R1 278 216,57 which amount the Respondent paid
without any
query the last invoice for R456 585,27 was paid on the
7th February 2013.
38.5 The arbitration proceedings were
set down for hearing during the period Monday 5th November 2012 to
Friday 16th November 2012
before retired Judge Conradie.
38.6 On the 30th October 2012 ODM
passed a resolution to place itself under business rescue. As a
result of that resolution the
arbitration proceedings stood down from
Monday 5th November 2012 to Thursday 7th November 2012 pending the
appointment of a business
rescue practitioner.
38.7 A business rescue practitioner was
appointed on the 7th November 2012 thus resulting in a moratorium in
respect of all legal
proceedings against ODM.
38.8 Beltramo as usual sent his invoice
for his fees to the Applicant totalling the sum of R176 814,00 which
amount is made up as
follows:
1/11/2012 On preparation for
arbitration R 30 780,00
2/11/2012 On consultation re business
rescue (09h00-12h00) 3 hrs R 9 234,00
5/11/2012 to On arbitration
9/11/2012 Collapse fee at reduced fee
of R24 000 R136 800,00
TOTAL R176 814,00
38.9 The Respondent initially queried
the “collapse fee” portion of the statement saying that
there was no agreement
to pay the collapse fee.
THE DISPUTE
[39] After the Applicant had sent three
e-mails reminding Els about the outstanding account for fees due to
Beltramo, Els replied
on the 27th February 2013 by saying that when
the Respondent made a payment of R498 113,33 to the Applicant it was
in full payment
and then said that there was no agreement that a
collapse fee would be charged.
[40] The collapse fee was reduced by
Beltramo from 5 days to 3 days being the period 5th, 6th and 7th
November 2012 when the matter
stood down pending the outcome of the
appointment of a business rescue practice. The total amount thus
being claimed being the
sum of R122 094,00 which is arrived at as
follows:
- R 30 780,00 (VAT incl) on
preparation for arbitration
- R 9 234,00 (VAT incl) on
consultation
- R 82 080,00 (VAT incl) on
arbitration hand down
Total R122 094,00 for 5th, 6th and 7th
November 2012
[41] In its counteroffer the Respondent
conceded that the amounts of R30 780,00 and the R9 254,00 was due and
payable to Beltramo
and offered to pay the amount of R40 014,00 to
the Applicant. As far as the balance of the R82 080,00 Respondent
offered to pay
only the amount of R27 360,00 being a fee for one day
of the arbitration standing down instead of three days.
[42] With its counteroffer the
Respondent still insisted that Applicant should refer all its bills
for taxation and further indicated
that if the Applicant was not
prepared to accept payment of the sum of R60 374,00 in full and final
settlement then the account
of Beltramo was to be referred to the Bar
Council. The Respondent did not file a complaint with the Bar
Council instead it referred
the matter to the Law Society of the
Northern Province.
[43] In the complaint to the Law
Society the Respondent does not ask the Law Society to determine the
validity or not of the fee
due to Beltramo. The Respondent asked the
Law Society to compel the Applicant to comply with the provisions of
Rule 89.4A
of the Rules of the Law Society by submitting a bill of
costs or to tax the bills.
[44] It is common cause that on the
10th June 2013 the Applicant in a lengthy letter responded to the
complaint lodged with the
Law Society. Included in the response to
the Law Society are contents of an e-mail addressed to Els by Dewald
portion of which
reads as follows:
“Moreover, no amount is due to
Werksmans for services rendered by Werksmans. Considering that you
have paid our account you
have waived your right to a taxation.
Besides, you paid the amount referred to below on 7 February 2013 and
not 25 February 2013
and did this without demur or objection.
Likewise, when you and I spoke on 4 February 2013 I asked you to
please pay our invoices
and you undertook to do so. In fact this is
why you paid on the 7th. You did not raise your supposed objection
to the collapse
fee during the conversation and neither did you do it
in response to my many emails recently asking for payment of Paolo’s
account. You in fact raised this now for the first time and this
after we delivered a formal letter of demand threatening legal
action. Your contentions are nothing more than a strategy to avoid
paying your debts and quite frankly, astounding.”
[45] It does not seem as if the Law
Society could reach any conclusion whether to charge Dewald or the
Applicant with any professional
misconduct.
[46] It is common cause that it was
only after the Applicant had issued liquidation proceedings that the
Respondent deposited the
amount being claimed into the account of his
attorneys to be held in trust pending the outcome of an action to be
instituted.
[47] In a letter addressed to Applicant
dated the 1st October 2013 Respondent’s attorneys say the
following:
“Praxley not only requires Adv
Beltramo SC’s fee to be taxed, but also your firm’s fees.
It is trite law that
a client is entitled to taxation of his/her
attorneys’ account. [See Blakes Maphanga Inc v Outsurance Co
Ltd
2010 (4) SA 232
(SCA) at para 17.] It is further trite law that
the account of a disputed bill of costs is not liquidated until that
time it is
taxed.”
[48] The Applicant submitted the
account of Beltramo for taxation the Respondent apposed it on the
basis that the whole account
for fees charged since 2011 should also
be taxed. The taxing master postponed the taxation sine die awaiting
the outcome of this
application.
THE RESPONDENT’S COSTS
[49] In its answering affidavit Mr Els
at paragraph 3.3.7 says that the bulk of Beltramo’s accounts
dated the 30th November
2012 consists of a 5 day “collapse fee”
the Respondent refused to pay this account as no collapse fee was
agreed upon.
In paragraph 5.5.7 Mr Els says the following:
“At the commencement of the
arbitration on 5 November 2012 I requested that the arbitration stand
down until Wednesday 7 March
2012 in order to ascertain whether ODM
would comply with certain of the pre-emptory provisions of the New
Companies Act in
particular
section 129(3)(b).
”
[50] It must be recalled that Beltramo
in his letter addressed to Els he indicated that the fees charged
from the 5th to the 7th
November 2012 are not ‘collapse fees”
but should read “on arbitration stand down”. The
Respondent confirms
that he requested that the arbitration stand down
until the 7th November 2012 and if that is the case I find no reason
why the
Respondent should not pay counsel’s fees for the three
days when the matter stood down on his instructions. There is no
claim for a collapse fee because that was abandoned by the Applicant
on the basis that a business rescue practitioner was appointed.
Mr
Els himself says the following at paragraph 5.5.8:
“I have however been advised that
as the matter stood down at my insistence from 5 to 7 November 2012
that Beltramo SC is
entitled to charge a fee for 5, 6 and 7 November
2012.”
[52] It is clear that there is no
dispute concerning the first three items of the account of Beltramo
which total an amount of R122
094,00 and I see no reason why the
Respondent should not have paid this amount to the Respondent instead
of paying same to its
attorneys. The Applicant submitted Beltramo
account’s for taxation that was opposed on the basis that the
Applicant must
now submit its whole file. It also does not seem that
the Respondent is saying that the fees charged by Beltramo are not
fair
and reasonable. What the Respondent says is that the fees
charged by its attorneys the Applicant are not fair and reasonable
hence
he demanded that same be submitted to taxation. At paragraph 1
of his answering affidavit Els says the following:
“I have however been advised that
Beltramo SC is entitled to charge a fee for 5, 6 and 7 November 2012.
I however deny that
the fees charged by the Applicant are fair and
reasonable and require the Applicant to tax its fees. There is in my
view no reason
why the sum of R122 094,00 was not paid because it is
the amount that the Respondent does not dispute.”
[53] In paragraphs 14-17 of the
founding affidavit the Applicant details that since September 2011 it
rendered 15 invoices to the
Respondent in which was set out fees for
work performed including disbursements in respect of Beltramo’s
charges and that
the Respondent paid all the amounts without any
query. In his answer the Respondent avoids to deal with the real
issue which is
why only now raise the dispute that the fees charged
and which he paid are not fair and reasonable. His answer does not
deal with
the central issue made by the Applicant in the founding
affidavit.
[54] The Respondent chose not to deal
with each of the contentions of the Applicant as set out in
paragraphs 18 to 99 and once more
avoided to deal specifically with
the central issues raised in the correspondence that was exchanged.
In dealing with the fact
whether there was a collapse fee agreement
or not the Respondent chose to deal with that aspect in a very
flimsy and unconvincing
manner by saying at paragraph 15.3 that:
“I have consistently denied the
existence of the so-called collapse fee agreement. I simply did not
want to involve Beltramo
SC in this issue. It must be recalled that
Beltramo in his letter to Els specifically said that there was an
agreement about the
collapse fee when he consulted with Els. It is
therefore strange that Els does not challenge what Beltramo said
which was corroborated
by Dewald. The only reason he Els does not
deal with that letter is because he knows of such agreement.”
IS THE RESPONDENT ENTITLED TO DEMAND
THAT APPLICANT SUBMIT ALL ITS PAID BILLS TO TAXATION TOGETHER WITH
THE ACCOUNT OF BELTRAMO
[55]
Rule 69
of the Rules of the High
Court deals specifically with taxation of counsel’s fees.
Although
Rule 69
deals with taxation of such fees on a party and
party bill it is my view that the same principles apply when taxing
an attorney
and client bill. Where counsel fees are referred to
taxation the taxing master has jurisdiction to determine not only
quantum of
counsel’s fees but also whether counsel’s fees
should be allowed at all in a particular case (see Rosenberg v Prima
Toy Holders (Pty) Ltd
1972 (3) SA 791
(C) at 794B-C and Brivik Bros
(Pty) Ltd v Balmoral Sales Corporation (Pty) Ltd
1978 (4) SA 716
(W)
at 723.
[56] In my view there is nothing that
prohibits a taxing master from taxing an account by counsel in the
absence of a bill from
the attorney. After all
Rule 70(2)
empowers
the taxing master to call for such books, documents, papers or
accounts as in his opinion are necessary to enable him
to properly
determine any matter arising from such taxation.
[57] In the present matter the
Applicant insists that Beltramo’s account for the period 1st
November 2012 to 7th November
2012 be taxed in conjunction with bill
of accounts submitted from September 2011 comprising some 14 invoices
which have already
been paid. I see no reason why this should be
done. The Respondent who is in possession of all the invoices since
2011 is free
to indicate to the taxing master what documents should
be called up and submitted to justify the fees due to Beltramo and
not to
ask for a
Submission of bill covering 14
invoices.
[58] The judgment of the SCA in the
Blakes Maphanga Inc v Outsurance Insurance Co Ltd
2010 (4) SA 232
on
which the Respondent relies heavily is in my view distinguishable
and not of application in the present matter. In that matter
the
dispute arose when Attorneys Blakes Maphanga set-off an untaxed bill
of costs due to them against monies that they held in
trust for the
client. The court found that since there was a dispute in connection
with certain amounts charged that it was incumbent
on the attorneys
to submit their attorney and client account to taxation before set
off.
[59] In the present matter there is
firstly no set off. Secondly, there was no dispute raised by the
Respondent in respect of all
the invoices from September 2011 until
October 2012.
[60] The Applicant’s argument
that it should not be compelled to tax bills that have already been
paid is in my view correct.
In Allison v Massel & Massel
1954 (4)
SA 569
(T) Ramsbottom J found in favour of the attorneys in a matter
closely similar to the present matter. In that matter at page 572
the
learned Judge says the following:
“I think it is clear that if
there was an agreed fee, the appellant had no right to sue for an
account of the respondents'
fees and disbursements in the matrimonial
proceedings. It is not necessary to consider whether or not, if there
were no set-off,
he would be entitled to resile from that agreement
and demand that a bill of costs should be taxed; that question does
not arise.
I am clearly of the opinion that a client who has agreed
that there shall be no taxation and who has agreed to pay a fixed sum
cannot thereafter and without demanding taxation sue for an account,
debatement thereof, and payment of what may be found due.”
[61] In the present matter the only
basis that the Respondent raises in demanding that all paid bills and
accounts be taxed is that
they say that the fees charged are not fair
and reasonable this the Respondent says was the advice given to them
after they had
consulted their new attorneys and a cost consultant.
There is no affidavit by the cost consultant pointing out
specifically to
items charged by the Respondent which they say are
not fair and reasonable. It is a bald general statement
unsubstantiated by
any real evidence. Secondly, Mr Els in his
answering affidavit at paragraph 5.5.8 says that he has been involved
in a number of
litigation matters as a previous employee of First
Rand Bank, Standard Bank and whilst a board member of ABN Amco. He
clearly
says that he has previously been involved in briefing both
senior and junior counsel and boasts that he knows about an animal
called
“collapse fee” and how it operates.
[62] I have no doubt that Mr Els indeed
has that experience he is not a layperson when it comes to method of
fees charged on attorney
and client in litigation matters and this
explains why he paid all the invoices as and when he received same
from the Applicant.
He did so because he had satisfied himself that
what the Applicant billed was not only fair but was reasonable taking
into consideration
the complexity of the matter and the time spent
thereon. This argument that the accounts are not fair and reasonable
is a new
thing which he created when the Applicants refused to
continue the arbitration on risk. His new attorneys were prepared to
proceed
with the matter on risk and he therefore had to find a reason
to justify his terminating the mandate of the Applicant.
[63] His Lordship Wessels J in the
matter of Ritch v Bhyat
1913 TPD 589
dealt with a claim where the
bill of costs had not been taxed at the date of summons. In such a
case the debt though due, cannot
be recovered in a court of law and
in that sense it is not payable. Nevertheless if the client pays the
debt he cannot claim repayment.
This view was supported by Schreiner
J in the matter of Incorporated Law Society v Lakofski
1939 TPD 289
where he said the following:
“That as far as Supreme Court
costs are concerned while these are not recoverable without taxation
by reason of
Section 2
and although that section was introduced for
reasons of public policy this does not mean that the scope of the
section which in
terms only makes taxation a condition precedent to a
claim for payment of a bill of costs, is to be extended to prohibit
the receipt
by the attorney of sums on account of costs which the
client is prepared to pay without taxation.”
[64] Ramsbottom J in the Allison v
Massel and Massel matter (supra) concluded at page 576 with the
following words:
“Although the debt was one which
could not be recovered by action, payment was not forbidden and if
the money was paid it
could not be recovered by a conditio indebiti.
It was in my opinion a natural obligation.”
[65] I remark unpersuaded that the
Respondent has made out any case to compel the Applicants to submit
their paid invoices for taxation.
The Respondent received the
accounts scrutinised same and was satisfied and proceeded to pay
same without asking for taxation
it cannot now demand that the bills
be taxed.
WAS THE APPLICANT JUSTIFIED IN
LAUNCHING LIQUIDATION PROCEEDINGS IF NOT WAS IT AN ABUSE OF THE LEGAL
PROCESS AS CONTEMPLATED IN
SECTION 347(1A) OF THE COMPANIES ACT 61 OF
1973
[66] The Respondent argues that by
issuing liquidation proceedings against the Respondent at a time when
the Applicant had been
warned not to do so and when in fact the
Applicant knew that the Respondent was in a position to make payment
and was not insolvent
constitutes an abuse of the legal process.
[67] The Respondent points out that it
had already paid in excess of R1 million in fees and disbursements to
the Applicant and there
was accordingly no reason to believe that
Respondent would not be able to pay the sum of R176 814,00.
[68] The Respondent further argues that
the amount claimed in the liquidation application was not liquidated
as there was still
a dispute. The Respondent argues that until such
time that the disputed amount shall have been taxed by the taxing
master it was
not due and could not be used to sue thereon.
[69] The question to be answered
firstly in this instance is whether an untaxed bill can be used to
sue thereon or not. In support
of their argument the Respondent
referred me to the case of Blakes Maphange Inc v Outsurance Co Ltd
(supra) as well as the matter
of Alton Coach Africa CC v Datcentre
Motors t/a CMH Commercial
2007 (6) SA 154
(D) at 164 as well as to
the matter of Marks and Holland v Palmer and Another
1915 TPD 246.
[70] In the Marks and Holland case
(supra) a client had signed an acknowledgement of debt agreeing to
pay Marks and Holland being
his attorneys a specified sum of money in
respect of fees. When the client failed to perform in accordance
with the deed of acknowledgement
Marks and Holland petitioned the
court to sequestrate the estate of their client. In dismissing the
application for sequestration
the court referred to Law No 12 of 1889
which provides that an attorney practising in the lower courts shall
not be entitled to
payment on his bill of costs before it has been
taxed.
[71] The court further held that the
provision of Law 12 were based on public policy and could not be
waived accordingly that an
agreement by the client to pay his
attorney a lump sum for costs instead of having such costs taxed was
not enforceable.
[72] That decision is not relevant in
the present matter. Firstly, that law referred to costs in respect of
civil matters instituted
in the magistrate or lower court. Secondly,
the requirement to tax a bill was in terms of a law passed by
parliament. In the present
matter the costs on which the application
to liquidate were not incurred in the lower court or the magistrate’s
court. Secondly,
there is no Act of Parliament like in the Marks and
Holland case that requires that the bill of costs in respect of
Beltramo fees
should be taxed.
[73] De Villiers JP writing for the
court in the Marks and Holland matter says the following at page 249:
“Law No. 12, 1899, is not an easy
law to construe. The following appears to be clear however: All
bills of costs in lawsuits,
whether in the Supreme Court or in the
magistrate’s court, have to be taxed. The Supreme Court has
the power of dispensing
with the necessity of taxation by the Taxing
Master of the Supreme Court so far as bills of costs in that Court
are concerned.”
[74] The fact that De Villiers JP
concluded that the Supreme Court has the discretion to dispense with
the requirement to that is
in my view supportive of my reasoning that
the Marks and Holland decision is not relevant or applicable to
decide the issue.
[75] The second decision in this is
Alton Coach Africa CC v Datcentre Motors (Pty) Ltd t/a CMH Commercial
2007 (6) SA 154
(D). That case is also distinguishable from the
present matter in that the amount claimed for liquidation purposes
was based on
a claim for loss of profits which still had to be
determined as a damages claim. In the present matter the amount
claimed whilst
not taxed is liquid and was admitted by the
Respondent the only portion of the amount not admitted is the
collapse fee amount
which has been changed. In the matter of Lester
Investments (Pty) Ltd v Narshi
1951 (2) SA 464
(C) at 469F the court
determined that a liquidated debt sounding in money was one which was
either admitted or its money value
has been ascertained or in the
sense that it is capable of prompt ascertainment. (See also
Commercial Bank of Namibia Ltd v Trans
Continental Trading (Namibia)
and Others
1992 (2) SA 66
(Nm) at 72-73.) The amount of R122 074,00
is easily determinable and a substantial portion of it namely the
consultation fee is
not in dispute it amounts to about R40 014,00.
[76] The court in the Alton Coach
matter (supra) found that the Respondent’s claim is clearly an
illiquid claim for damages
as a result of the cancellation of order
resulting in the Respondent suffering damages being for loss of
profits. This is not
the case in the present matter.
[77] In my view at the least the sum of
R40 014,00 was not only liquid but had been admitted but not paid
despite a letter of demand
in terms of section 345 of the Old
Companies Act. The reasons for not paying were an afterthought and
not genuine. The Respondent
commenced by saying there was no
agreement to pay a collapse fee it then changed its stance and says
the attorneys’ fees
which had been paid were not fair and
reasonable and when the Applicant submitted Beltramo’s account
for taxation this was
opposed.
[78] Section 347(A) of the Old
Companies Act reads as follows:
“Whenever the court is satisfied
that an application for the winding up of a company is an abuse of
the court’s procedure
or is malicious or vexatious the court
may allow the company forthwith to prove any damages which it may
have sustained by reason
of the application and award it such
compensation as the court may deem fit.”
[79] The court’s power to grant a
winding up order is a discretionary power irrespective of the ground
upon which the order
is made. Similarly the granting of an order
declaring winding up proceedings as being vexatious and frivolous and
thus amounting
to an abuse of the court’s procedure is
discretionary. The discretion must be exercised on judicial grounds.
[80] The Respondent contends that since
it has been able to pay more than R1 million in fees and
disbursements this indicates that
the Respondent is solvent and able
to pay its debts which are due. In the result I have come to the
conclusion that the dispute
raised by the Respondent regarding the
amount claimed is not genuine. The question is therefore was the
Applicant abusive of the
process of court in filing liquidation
proceedings.
[81] It is common cause that prior to
forwarding the section 345 letter of demand to the Respondent the
Applicant had sent three
e-mails calling for payment which e-mails
were ignored. A period of 5 months went by since the Respondent
received the letter of
demand warning it of the consequences in
failing to pay.
[82] In the English case of Cornhill
Insurance plc v Improvement Services Ltd
[1986] 1 WLR 114
(Ch)
Hartman J in dealing with the effect of a section that corresponds
with section 345(1)(a) of an Old Companies Act held that
the taking
up of winding up proceedings was not an abuse of process since the
company had failed to pay the claim and that the
creditor could
properly aver that the company was unable to pay its debts despite
the patent ability to do so. The court held further
that where the
creditor debt is clearly established the court will not in general
interfere even though the company appears to
be solvent for the
creditor as such is entitled to apply for winding-up and the company
has its own remedy i.e. to pay the debt
and if it persist in the
non-payment it may suggest inability to pay. The learned judge
further referred to other English decisions
where a company is well
known and wealthy it is the more likely that delay in settlement of
its obligations will create some suspicion
of financial embarrassment
and that such company only has itself to blame if such suspicion is
created.
[83] In the matter of Ebrahim (Pty) Ltd
v Pakistan Bus Services (Pty) Ltd
1964 (4) SA 146
(NPD) Miller J held
that an applicant was entitled to a provisional sequestration order
against a company which averred in its
answering affidavit that its
assets exceeded its liabilities. Miller J quoted with approval the
dicta by Caney J in the matter
of Rosenbach & Co (Pty) Ltd v
Singh Bazaars (Pty) Ltd 1961 (4) SA at page 623 wherein he ruled as
follows:
“If the company is in fact
solvent in the sense of its assets exceeding its liabilities, this
may or may not, depending upon
the circumstances, lead to a refusal
of a winding-up order. The circumstances particularly to be taken
into consideration against
the making of an order are such as show
that there are liquid assets or readily realisable assets available
out of which or the
proceeds of which the company is in fact able to
pay its debts.”
[84] I am not persuaded that in
launching the liquidation proceedings the Applicant acted maliciously
or vexatiously. The Applicant
had established a debt which was due
and payable and the Respondent resisted payment on unreasonable
grounds and under circumstances
that raised a suspicion that the
Respondent was unable to pay its debts. I can accordingly not find
that this amounts to an abuse
of the process.
[85] I accordingly make the following
order:
In the main application
1.The Respondent is ordered to pay to
the Applicant the amount of R122 094,00.
2.The Respondent shall pay interest on
the amount in 1 above at the rate of 15,5% per annum from the 31st
January 2013 until date
of payment.
3.The Respondent is ordered to pay the
Applicant’s wasted costs occasioned by the liquidation
proceedings instituted under
case number 30127/2013 in the South
Gauteng High Court.
4.The Respondent is ordered to pay cost
of this application.
In the counter-application
1.The Respondent’s
counter-application is dismissed.
2.The Respondent is ordered to pay
Applicant’s wasted costs of the counter-application.
DATED at JOHANNESBURG on this the
8th day of SEPTEMBER 2015.
M A MAKUME
JUDGE OF THE HIGH COURT OF SOUTH
AFRICA
GAUTENG LOCAL DIVISION, JOHANNESBURG
APPLICANT’S COUNSEL C ELOFF SC
INSTRUCTED BY WERKSMANS ATTORNEYS
Sandton
Ref: Mr D Hertz
Tel: (011) 535-8287
RESPONDENT’S COUNSEL A G SOUTH
INSTRUCTED BY DOLPH JONKER ATTORNEYS
Bryanstan
Ref: P118/W/S
Tel: (011) 875-4340
DATE OF HEARING 1st APRIL 2015
DATE OF JUDGMENT 8th SEPTEMBER 2015