About SAFLII
Databases
Search
Terms of Use
RSS Feeds
South Africa: South Gauteng High Court, Johannesburg
SAFLII
>>
Databases
>>
South Africa: South Gauteng High Court, Johannesburg
>>
2020
>>
[2020] ZAGPJHC 304
|
|
CJB v Road Accident Fund (03482/2015) [2020] ZAGPJHC 304 (14 September 2020)
SAFLII
Note:
Certain
personal/private details of parties or witnesses have been
redacted from this document in compliance with the law
and
SAFLII
Policy
IN
THE HIGH COURT OF SOUTH AFRICA
GAUTENG
LOCAL DIVISION, JOHANNESBURG
CASE NO: 03482/2015
In
the matter between:
B[…], J[….]
C[….]
Plaintiff
and
ROAD ACCIDENT FUND
Defendant
Claim for past medical expenses of R420.00 not
proven. Impact of contingency fee agreement on taxable costs. Costs
order against
the attorneys considered and granted.
JUDGMENT
DE
VILLIERS, AJ
Introduction
[1]
On 14 May 2013 the plaintiff’s vehicle was hit
from behind when
it was stationary at a robot-controlled intersection. He
suffered the following injuries:
“
Injury to the neck;
Injury to the lower back;
(and)
Significant bruising of the right arm
”.
[2]
When the matter served before me seven years later, the
remaining
issue before me was a claim for past medical expenses of R420.00. The
other disputes had been resolved or were abandoned.
[3]
A chronology is important in this case.
Chronology
[4]
After the collision on 14 May 2013, the plaintiff was
taken by
ambulance to a state hospital, the Kopanong Hospital, from where he
was discharged the next day. The cost of the ambulance
service is
alleged to have been just more than two thousand rand, R2 265.79. No
evidence has been presented that the plaintiff
ever paid the bill.
The plaintiff pursued payment of this expense until shortly before
the trial heard by me, but it seems that
this claim was abandoned by
the plaintiff at the last moment.
[5]
Within weeks after the collision, on 24 May 2020 and
on 30 May 2013,
the plaintiff twice consulted a general practitioner, Dr Teixeira. Dr
Teixeira charged the plaintiff R300.00 for
the first consultation,
and R120.00 for the second. The total cost of R420.00 was in the end
the subject matter of the litigation
that played out before me.
[6]
Subsequent to the trial. I found a contingency fee agreement
in the
court file, dated 27 June 2014. I confirmed that it is the applicable
agreement. Its conclusion is the next determinable
date in the
chronology of events. In the contingency fee agreement, attorneys
Mills & Groenewald agreed to represent the plaintiff
at a normal
fee of R3 500.00. if successful, this fee then could be doubled to R7
000.00 per hour. This was a proverbial sitter
of a case, as the
plaintiff’s vehicle was rear-ended when stationery, and he
suffered injuries. The only issue would have
been the extent of the
liability of the defendant (“the RAF”). Success in the
form of some payment, was as near as
possible, guaranteed.
[7]
On the same date, 27 June 2014, attorneys Mills &
Groenewald
submitted a claim to the RAF for payment of just below R700 000.00,
namely R680 420.00, which included the claim in
issue before me of
R420.00.
[8]
About seven months later, on about 3 February 2015, attorneys
Mills &
Groenewald issued summons against the RAF. The summons was for
payment of an increased amount of damages of almost
three million
rand, R2 852 685.79. The damages claim was
made up of the following heads of damages:
[8.1]
General damages of R800 000.00;
[8.2]
Future medical expenses of R500 000.00;
[8.3]
Past loss of income of R50 000.00;
[8.4]
Future loss of income and/or earning capacity of R1 500 000.00;
and
[8.5]
Past medical expenses as set out above of less than R3 000.00,
namely
R2 685.79, being the R420.00 and the ambulance expense.
[9]
Almost two years and ten months after summons was issued,
on 14
December 2017, the plaintiff served on the RAF two documents
reflecting the alleged past medical expenses: (a) A letter of
demand
by the ambulance service of 23 April 2014 for payment of R2 265.79,
and (b) a handwritten receipt by the practice of Dr
Teixeira dated 30
May 2013 for receipt of R420.00. Still no documents were served that
showed what the services were that Dr Teixeira
had rendered for this
payment.
[10]
Almost three years after the summons was issued, on 8 January 2018,
at
a pre-trial conference, the parties recorded that the claim for
general damages of R800 000.00 would be referred to the HPCSA for
assessment, and that the plaintiff would serve an “
index
”
for past medical and hospital expenses, with annexures. A further
judicial pre-trial conference was held on 23 February
2018 and the
matter was certified trial ready by the presiding judge. Accordingly,
the plaintiff was proceeding to trial without
ever having discovered
proof of his past medical expenses of R420.00.
[11]
On 12 March 2018 a settlement agreement was made an order of
court. The RAF had to pay the plaintiff the R357 162.00 in respect of
future loss of income (R1 500 000.00 was claimed), as well as his
legal costs in instituting the action to date of the order. The
usual
undertaking to pay any future medical expenses was given (R500 000.00
was claimed). Two matters were postponed for later
adjudication, the
claim for general damages (R800 000.00) which had been referred to
the HPCSA, and the claim for past medical
expenses (
R2
685.79
). The claim for past loss of income of R50 000.00
failed.
[12]
I point out that the success that was achieved,
in hard cash, was receipt of R357 162.00. The plaintiff’s
attorneys did this
work at R7 000.00 per hour, subject to the 25%
statutory cap. This cap limited the allowable legal fees to R89
290.50 (excluding
disbursements). In the normal course this would
have been deducted from the payment of R357 162.00. I do not know
when the bill
of costs was taxed or agreed upon, what the amount was,
or when it was paid by the RAF. The proceeds of the taxation belong
to
the client, save for any set-off in respect of fees and
expenses/disbursements incurred. An attorney cannot keep such fees
and
costs as an additional success bonus in contingency fee
matters.
[1]
[13]
On 10 June 2019 the HPCSA decided that the plaintiff did not
qualify for a claim for general damages, and the claim for R800
000.00
fell away. The only claim that remained in issue, was the
claim for past medical expenses, then still of
R2
685.79
.
[14]
Five years after instituting the action, on 27 February 2020
attorneys
Mills & Groenewald served so-called clinical notes by
Dr Teixeira on the RAF. In reality, these were two sick notes. The
first
one is dated 24 May 2013 and it reflected that Dr Teixeira
booked the plaintiff off work until 31 May 2013. The medical
certificate
noted the nature of the illness as “
motor
vehicle accident, soft tissue injury and whiplash
”. The
second sick note, dated 30 May 2013, reflected that Dr Teixeira
booked the plaintiff off work until 3 June 2013. The
illness
described therein is illegible. These documents still did not address
what services were rendered by Dr Teixeira for the
fee of R420.00.
[15]
A practice note delivered on 27 February 2020, reflected that
the full amount of past medical expenses of
R2
685.79
remained in issue and was being pursued in the High
Court. On 10 March 2020 the plaintiff caused a further pre-trial
conference
to be held, and on 18, 19 and 24 March 2020 the plaintiff
caused judicial case management conferences to be held in the pursuit
of the claim for past medical expenses. The matter was certified
trial ready. At some stage during the judicial case management
conferences, the claim for ambulance costs, was abandoned and the
remaining claim became R420.00.
[16]
The national lockdown due to the Covid-19 pandemic commenced
on 27 March 2020. I am advised that the RAF offices closed on that
day (and remained closed), including importantly the department that
had to evaluate proof of the composition of the remaining claim
for
R420.00. This department, the Bills Review Department, would have
needed proof of the alleged past medical expenses incurred
in order
to approve payment. Although these facts were conveyed from the bar,
they were not in dispute.
[17]
At some stage on or after 27 March 2020, attorneys Mills &
Groenewald
served by e-mail a document dated 27 March 2020. This
document included two computer generated statements by Dr Teixeira.
According
to the date stamp thereon, they were faxed to the recipient
at some time in March 2020, either on 14 or on 24 March 2020. They,
by reference to several lines of unexplained computer code on them,
reflect the composition of the two amounts of R300.00 and R120.00,
and also the payment on 24 May 2013 and on 30 May 2013 respectively.
No lay person could determine what the medical services were
as
reflected by the computer codes. Evidence would have been required
for a court to interpret the statements, but for the first
time,
documentary evidence explaining in part the claim for R420.00 was
produced.
[18]
The matter was referred to me on Wednesday 6 May 2020, with a
suggestion
by the Acting Deputy Judge President that I hear the
matter on Friday 8 May 2020 after completion of my divorce roll. I
contacted
the counsel, expressed astonishment at the matter,
suggested a discussion between them, called for heads of argument,
and made
the arrangements for a hearing of the matter by
video-conferencing on Friday 8 May 2020 (should the matter not be
resolved).
[19]
The matter did not resolve. I gave the plaintiff as much warning that
he was proceeding at his peril as I could have done, without
descending into the arena. On Friday 8 May 2020 I raised during the
opening address the fact that I note that the plaintiff does not
intend to call evidence to prove that the expense of R420.00 was
fair
and reasonable. The plaintiff elected to proceed.
The evidence and assessment
[20]
It is beyond doubt
that the plaintiff consulted Dr Teixeira on 24 May 2013 and on 30 May
2013, and paid him R420.00. The plaintiff
testified that he consulted
the doctor, received tablets and received an injection on each
occasion. It is beyond doubt the plaintiff
incurred the expense of
R420.00. However, these facts are not enough for the plaintiff to
succeed. The plaintiff had to provide
“…
adequate
proof of the need for the item on which the money was spent and of
the fairness of the amount claimed for the item
”
to succeed. See
Revelas
and Another v Tobias
[2]
at 444H. The plaintiff knew that he was unable to prove exactly what
services he had received from Dr Teixeira, and at what cost.
His
affidavit evidence dated 6 May 2020 included this astonishing
statement (underlining added):
“
My legal representatives have been able to
obtain
two invoices but have not been able to get a precise
breakdown to show which payment had been allocated
.”
[21]
Such evidence must have been available.
Someone would have been able to interpret the computer codes, someone
would have been able
to testify about the fees and charges that bulk
purchasers of such services (in the form of medical aid schemes)
accept as fair
and reasonable, or that the fees and charges included
in the R420.00, were within the median of fees charged by private
doctors
in the area. No such evidence was tendered.
[22]
This is not a case
where the best evidence has been produced and I am bound to make an
estimate, as contemplated in
Enslin
v Meyer
[3]
at 523G-524A. Put differently, this is not a case where I was
compelled to make bricks out of straw. If the result of this case
is
unsatisfactory to the plaintiff, it is the consequence of his failure
to put proper evidence before the Court in proof of his
claim. See
too
Esso Standard
SA (Pty) Ltd v Katz
[4]
at 968H-969H.
[23]
Under these circumstances the consequence and only order I
could fairly make, is absolution from the instance. The normal costs
order should follow, the plaintiff should bear the costs of the
failed attempt to claim R420.00. The fruitless attempt will cost
him
a large sum.
The court’s duty to make further enquiries
[24]
I make an order below in terms of which I call upon the attorneys to
provide reasons why they should not be held liable for costs in this
matter. I did not do so easily.
[25]
As would appear from the chronology and my findings, it was an
irresponsible
undertaking to conduct high court litigation for the
recovery of only R420.00, and to do so without proper evidence. In
this regard
I have made factual findings. What I do not know, is if
this outcome is to be put before the door of the attorneys, or before
the
door of the plaintiff.
I have no knowledge
of what advice the plaintiff was given, or what his views were. He at
least would have been advised that litigation
is uncertain and that
he ran the risk of an adverse costs order in pursuing this small
claim in the High Court. He also would have
been advised that he
would need proof to substantiate his claims for past medical
expenses, and that such proof was not at hand.
I do not know if the
plaintiff insisted, contrary to any such advice, to continue with
expensive litigation in recovering only
the
R2
685.79
and later only the
R420.00, or not.
[26]
I accept that attorneys are free to carry out
instructions even where they are of the view that the probabilities
of success are
small (and even when they advise against the
litigation). They may make mistakes too, as they may think that there
are good prospects
of success, or that they have sufficient evidence
to prove a claim, and a court may disagree. See the judgment by MT
Steyn J
[5]
Waar v Louw
[6]
at 304G-H, translated in the headnote as:
“…
But too strict action should not be
taken against an erring attorney. The administration of justice is
sometimes an irritating discipline,
and even the most skilful
practitioners can make mistakes which cause unnecessary costs. The
attorneys' profession should not be
moved by too lenient an attitude
to loosen the reins, but should also not be demoralised by too much
cracking of the whip. As usual,
in the affairs of man, the middle
course is the best. The circumstances under which a court can make an
order of costs de bonis
propriis against an attorney should be
reasonably serious, as, e.g., dishonesty, wilfulness or negligence of
a serious degree
.”
[27]
I believe that Fabricius J in
Multi-links
Telecommunications Ltd v Africa Prepaid Services Nigeria Ltd and
Others, Telkom SA Soc Ltd and Another v Blue Label
Telecoms Ltd and
Others
[7]
at Para 34-35 reflects the measured approach I should follow:
“
[34] … Even more exceptional is an
order that a legal representative should be ordered to pay the costs
out of his own pocket
. . . [T]he obvious policy consideration
underlying the court’s reluctance to order costs against legal
representatives personally,
is that attorneys and counsel are
expected to pursue their client’s rights and interests
fearlessly and vigorously without
undue regard for their personal
convenience. In that context they ought not to be intimidated either
by their opponent or even,
I may add, by the court. Legal
practitioners must present their case fearlessly and vigorously, but
always within the context of
set ethical rules that pertain to them,
and which are aimed at preventing practitioners from becoming parties
to deception of the
court. It is in this context that society and the
courts and the professions demand absolute personal integrity and
scrupulous
honesty of each practitioner ...
[35] It is true that legal representatives sometimes
make errors of law, omit to comply fully with the rules of the court
or err
in other ways related to the conduct of the proceedings. This
is an everyday occurrence. This does not, however, per se ordinarily
result in the court showing its displeasure by ordering the
particular legal practitioner to pay the costs from his own pocket.
Such an order is reserved for conduct which substantially and
materially deviates from the standard expected of the legal
practitioner,
such that their clients, the actual parties to the
litigation, cannot be expected to bear the costs, or because the
court feels
compelled to mark its profound displeasure at the conduct
of an attorney in any particular context. Examples are, dishonesty,
obstruction
of the interest of justice, irresponsible and grossly
negligent conduct, litigating in a reckless manner, misleading the
court,
and gross incompetent and a lack of care.
’“
[28]
It is possible that the plaintiff is to blame for his fate, but I
would
be surprised if that is the case. Why would the plaintiff
belligerently pursue R420.00 at great risk? The plaintiff already had
received all his legal costs until the date of the first court order,
12 March 2018. As such there was no real potential benefit
in further
litigation for him.
[29]
I looked through the court file for more background information. The
plaintiff matriculated in 1984 with a practical standard ten
certificate, not the academic Senior Certificate. He completed some
occupational related short courses, and from about 2002 was employed
as a security official. His tax returns for 2012 and 2013
show that
he received a very modest income. Other facts that point to a man of
limited means, are that he did not have a medical
aid at the time of
the collision, and that he was driving a small, well-used Nissan 1400
model bakkie. His circumstances do not
strike one as a litigant
prepared to incur huge risk for little potential reward. He also in
the witness stand seemed to me to
be just the average person who has
suffered misfortune, not a confrontation seeking individual, schooled
in litigation. He probably
would have relied on his attorneys for
their advice before entering into an unfamiliar and confusing arena;
[30]
With regard to the attorneys, m
y concerns in
this matter were at two levels:
[30.1] I
was struck by the alleged normal fee in the contingency fee agreement
of
R3 500.00 per hour, concluded in 2014 and applicable to every
attorney in the firm working on the matter. It seemed high. The claim
was modest, the matter not complex. Added thereto was an advocate’s
(in reality an attorney’s) fee of R2 000.00 per
hour. I should
not on the facts of this matter, say more about the normal fee. It
is, in this matter, a red light and no more;
and
[30.2]
T
he costs sought before me by the plaintiff’s
legal representatives may reflect that the real motivation for the
litigation
was to generate taxable fees, as it included fees for
which the plaintiff was not liable to his attorneys and for which he
could
seek no indemnity from the RAF. They are impermissible costs,
both because they plaintiff was not liable for such costs, and
because
they are precluded by legislation.
[31]
Having said that I
do not enter into this part of my judgment easily, I still have to
regulate the conduct of officers of the court.
In holding the
attorneys personally liable, it is relevant that they impermissibly
sought to profit from the RAF (as addressed
below). The court in
Maswanganyi v
Road Accident Fund
[8]
held at para 32 that:
“
Our
courts have a duty to ensure that they do not grant orders
that are contra bonos mores, or that amount to an abuse
of
process. Section 173 of the Constitution specifically empowers the
court to prevent any such abuses
.
…”
[32]
Later at para 35 it held that:
“
In
cases involving the disbursement of public funds, judicial scrutiny
may be essential.
…”
[33]
The real reason why the litigation was persisted with, may appear
from
the relief claimed before me in prayer 6:
“
6. The Defendant shall pay the Plaintiffs
taxed or agreed party and party costs on the High Court Scale up to
and including the
8
th
of May 2020, as
follows:
6.1 Cost of Counsel for preparation of trial and
attendance on the 6
th
of May 2020, and 8
th
of
May 2020;
6.2 Drafting and preparation of Heads of Argument for
counsel of the Plaintiff;
[9]
6.
(3)
Preparation for Case Management
Conference and Plaintiff's written submissions on the dates of the
18
th
,19
th
and 24
th
of March 2020
.”
[34]
It is difficult to ascertain the
real reason why the matter was proceeded with during a trial, as it
brings into conflict the duty
of an attorney to his/her client,
self-interest, and attorney-client privilege. The attorneys’
have rights to procedural
and substantive fairness. See
Stopforth
Swanepoel and Brewis Incorporated v Royal Anthem Investments 129
(Pty) Ltd
[10]
Para 19-26.
I
give opportunity to respond in this judgment as
no
one should be condemned without a hearing (in some form). See
Member
of the Executive Council for Health, Gauteng v Lushaba
[11]
Para 15 and Para 18-21. I therefore call upon the attorneys in the
order that I make to provide me with such affidavits and written
representations under oath that they may want to make to address any
misconceptions in my reasoning (in as far as their personal
liability
is concerned). I will add an addendum to this judgment to address
further submissions on their personal liability.
Indemnification
principle
[35]
It is trite that the purpose of a costs order is
to indemnify a party who has incurred expenses in instituting (in
this case) or
defending legal proceedings. See
Texas
Co (SA) Ltd v Cape Town Municipality
[12]
at 488-489. Innes CJ
[13]
held:
“
Now costs are awarded to a successful party in
order to indemnify him for the expense to which he has been put
through having been
unjustly compelled either to initiate or to
defend litigation as the case may be. Owing to the necessary
operation of taxation,
such an award is seldom a complete indemnity;
but that does not affect the principle on which it is based. Speaking
generally,
only amounts which the suitor has paid, or becomes liable
to pay, in connection with the due presentment of his case are
recoverable
as costs. But there are exceptions. It has been held by
the English Courts that a solicitor who personally and successfully
conducts
his own case is entitled to be paid the
same costs as if he had employed another solicitor, save costs which
under the circumstances are unnecessary (see London Scottish Benefit
Society v Chorley (13, Q.B.D. p. 872). And that view has been
approved by
South African Courts (see du Plessis v Wilsnach
(1915, C.P.D. p. 539); Webb v Union Government (1917, T.P.D. p.
195);
Lewin v Muller (1914, E.D.L. p. 467 1926 AD at Page 489
etc.).
…
”
[36]
The recovery of legal costs on taxation is exactly that, the recovery
of legal costs. It is an exercise to indemnify the successful party.
It is not a shakedown in terms of a court order of the party
ordered
to pay the legal costs. It is then a matter of logic that an attorney
cannot be limited to a fee of R105.00 by the Contingency
Fees Act 66
of 1997 (“
the
Contingency Fees Act
” or
“
the
Act
”) and still seek to recover thousands of Rands more
from the RAF on taxation, as the indemnification of purported fees
they
are not allowed to charge their client.
[37]
I do not address in this judgment the validity of the agreement, as
it
has not been argued that it was invalid.
[38]
The attorneys probably were limited to a fee of R105.00 in that the
attorneys
would have received the full allowable R89 290.50 in fees
that they became entitled to on 12 March 2018 when the settlement
agreement
was made an order of court, and paid by the RAF. Thereafter
due to the contingency fee agreement and the 25% statutory cap, the
most fees that the plaintiff could be liable for, was 25% of R420.00,
R105.00. The fees sought in prayer 6 were impermissible in
my view.
[39]
There are exceptions to the indemnification
principle. This is not such a case. Wallis J in
Thusi
v Minister of Home Affairs and Another and 71 Other Cases
[14]
dealt with a case where attorneys brought cases on behalf of
applicants, and the fee arrangement was that they would keep what
they could tax and recover from the State. At para 99 the court after
referring to
Texas
held:
“
[99] The indemnity principle is of general
application in the field of costs.
[15]
It has not become outdated. In Price Waterhouse Meyernel v
Thoroughbred Breeders' Association of South Africa
[16]
Howie JA said:
'A costs order - it is trite to say - is intended to
indemnify the winner (subject to the limitation of the party and
party costs
scale) to the extent that it is out of pocket as a result
of pursuing the litigation to a successful conclusion. It follows
that
what the winner has to show — and the Taxing Master has to
be satisfied about - is that the items in the bill are costs in
the
true sense, that is to say, expenses which actually leave
the winner out of pocket.'
…”
[40]
Wallis J held in para 103 that, in principle, a litigant who is not
liable
to his/her attorney for legal costs, is not entitled to tax
legal costs (footnote omitted):
“
It is perfectly clear that Goodway & Buck
undertook this work in the hope (and the reasonable expectation)
that costs orders
would be obtained in sufficient cases to make the
venture worthwhile. In that sense they are acting on a speculative or
contingency
basis although it is not one sanctioned by the
Contingency Fees Act. Applying
the general rule in regard to the
purpose of a costs order set out in the cases I have cited, the fact
that the applicants incur
no liability for costs disentitles them to
orders for costs. As they have incurred no expenses in relation to
the litigation and
no liability for costs, there is no need for an
indemnity and nothing to which a costs order could apply. The
critical issue in
these cases is whether nonetheless a costs order
can be obtained on the basis of an exception to the general rule.
Innes CJ said
that there are exceptions to the rule. Is this one of
them?”
[41]
The exceptions to the general indemnification principle were
discussed
by Wallis J in
Thusi
and the learned judge
identified in para 108 three instances where deemed “costs”
are recoverable: (a) In forma pauperis
proceedings that are
recoverable in terms of Uniform
Rule 40(7)
, (b) section 8A of the
Legal Aid Act 22 of 1969, and (c) section 79A of the Attorneys Act 53
of 1979. The legislation has since
changed, but the changes are not
material to this judgment, as the principle remains. Wallis J
introduced a further exception to
the general indemnification
principle in para 111:
“…
I hold that an order for costs may be
granted in favour of a successful applicant:
(a) Where
the litigant is indigent and is seeking to enforce constitutional
rights against
an organ of State; and
(b) the
legal representative acts on their behalf for no fee and
accepts liability
for all disbursements; and
(c) the
litigant agrees that the legal representative will be entitled to the
benefit
of any costs order made by the court or tribunal in his or
her favour.
”
[42]
This is not such a case. In
South
African Association of Personal Injury Lawyers v Minister of Justice
and Constitutional Development (Road Accident Fund, Intervening
Party)
[17]
the full court held in para 16 that
Thusi
was
a narrow exception to the indemnity principle (and in para 18 and 19
that a contingency fee agreement outside the prescripts
of the Act is
not allowed).
[43]
The indemnity principle and the wording of the
Contingency Fees Act (to
which I revert) form the basis why the
finding in this court in
Thulo v Road Accident
Fund
[18]
para 52 that an attorney could recover the contingency fees plus the
taxed costs, with respect is wrong. I agree with the criticism
thereof by Mojapelo DJP in
Mofokeng v Road
Accident Fund, Makhuvele v Road Accident Fund, Mokatse v Road
Accident Fund, Komme v Road Accident Fund
[19]
para 49, as supported by the full court
[20]
in
Mathimba and Others v Nonxuba and
Others
[21]
para 104-105:
“…
I do not share the view that an
attorney may legally enter into an agreement with his client to
charge the maximum permissible under
the
Contingency Fees Act plus
taxed costs to be paid by the other side. A maximum of the attorney’s
fees is what it says. It is the maximum and no fees
above that
maximum may lawfully be recovered. What is recovered as party and
party costs are the costs recovered by the successful
party from the
unsuccessful party. It is what the client recovers and is therefore
due to the client. The attorney may recover
from party and party
costs, once he or she has recovered the full attorney and client
fees, only the reimbursement of his out-of-pocket
expenses and not
fees. The attorney does not recover additional fees (over and above
the maximum) from party and party costs. To
do so would deprive the
successful litigant of his/her recovered costs and thus overreach the
client. An increase of “normal
fee” chargeable by a legal
practitioner up to 100% is more than adequate compensation for the
legal practitioner. To add
party and party fees to the already
doubled fees of the legal practitioner would be extortionate and
unconscionable
.”
[44]
Accordingly, the first reason why the costs sought before me was
impermissible,
was due to the indemnification principle. The deemed
costs of counsel sought before me were also impermissible in terms of
the
Contingency Fees Act.
The
Contingency Fees Act
[45
]
In order to illustrate the impermissible fees, I
need to address the
Contingency Fees Act.
Price
Waterhouse Coopers Inc and Others v National Potato Co-Operative
Ltd
[22]
held in para 41:
“…
The clear intention is that
contingency fees be carefully controlled. The Act was enacted to
legitimise contingency fee agreements
between legal practitioners and
their clients which would otherwise be prohibited by the common law.
Any contingency fee agreement
between such parties which is not
covered by the Act is therefore illegal
. …”
[46]
The
Contingency Fees Act stipulates
that an
attorney in the event of success may recover his/her “
normal
fees
” (a defined term), plus a “
success
fee
” of up to 100% of the “
normal
fees
”. See section 2 of the Act.
[23]
Where an attorney seeks to recover an increased fee upon success,
section 2(1)(b) applies.
[47]
The
Contingency Fees Act uses
the concept of “
normal fees
”
as the starting point to limit the attorney’s fees. “
Normal
fees
” are limited in the definition in section 1 of the Act
first to “
reasonable fees
”, the normal public
Common Law policy limitation on attorneys’ fees, as well as,
second, a stipulation that such fees
must taxable in the normal
course (underlining added):
“
1 Definitions
In this Act, unless the context otherwise indicates-
'normal fees'
, in relation to work
performed by a legal practitioner in connection with proceedings,
means the reasonable fees which may be charged by such
practitioner for such work, if such fees are taxed or assessed on an
attorney
and own client basis, in the absence of a contingency fees
agreement
”.
[48]
Accordingly, the control against exploitation of the litigant is
aimed
at two steps: The first question is if the fees are reasonable,
and the second if the fees would have been taxable if there was
no
contingency fees agreement. The intent of the Act is that “
normal
fees
” must be “
usual fees
”. On a proper
interpretation of the Act, the fees to be inserted in contingency fee
agreement as “
normal fees
”, must be justifiable as
usual, normal fees. This appears from a reading of section 2 of the
Act.
[49]
First, section 2(1)(b), which enables an attorney to charge increased
fees, uses the words “
normal fees
” in this
context:
“…
that the legal practitioner shall be entitled to fees
equal to or, subject to subsection (2),
higher than his or
her
norma
l fees, set out in such
agreement
..”
[50]
Please note the reference to the possessive words used: “
his
or her
” and the addition of the word “
normal
”.
The reasoning that any fee could be included in the agreement,
provided that it could be taxed (with no reference to the
attorneys’
actual usual fees), would have required a much simpler wording of the
section.
[51]
Second, this interpretation that “
normal fees
”,
must be justifiable as usual, normal fees, is also supported by the
wording of section 2(2) of the Act:
“
Any fees referred to in subsection
(1) (b) which are higher than
the normal fees
of
the legal practitioner
concerned
…
”.
[52]
Please note again the link to the
normal fees
of the attorney
to the fees
of
the attorney
concerned
. The intent
clearly was to limit the normal fees to the attorneys’
usual/normal fees. An alleged usual/normal rate as a base
rate cannot
take into account the risk of a no-win-no-fee. That risk is included
in the potential doubling up of the stipulated
fee in terms of
section 2(2) of the Act.
[53]
Our courts have accepted that the normal fees are the attorney’s
usual fee. The full court in
Mathimba
in para 101 held:
“
In eloquent terms, in Erasmus v Williams,
[24]
Plasket J said the following of the meaning of s 2(2) in
circumstances in which an attorney had claimed to be entitled to 25%
of the damages awarded to his client:
'It is clear that the respondent's understanding of s
2 of the Act is erroneous. It is not intended to be a licence to
plunder up
to 25 percent of any award paid to a client who has
entered a contingency fee agreement (and who is usually indigent).
All that
s 2 does is to allow an attorney who is party to a
contingency fee agreement to recover from an award to his or her
client a success
fee based on the work done at a maximum of twice his
or her usual fee. That amount may not, however, exceed 25 percent of
the award,
no matter how much work the attorney has done. What an
attorney is certainly not entitled to is 25 percent of the client's
award.'
”
[54]
See too
Masango and
Another v Road Accident Fund and Others
[25]
para 12 where Mojapelo DJP said:
“…
What is important is that there is a base (the normal
fee) from which a percentage increase is permissible. This is the
ordinary
and only basis on which the practitioner may increase fees.
The legal practitioner first determines his normal fee, which he
would
have been entitled to charge without a contingency fee
agreement, and then increases it in terms of the contingency fee
agreement.
…”
[55]
I am not suggesting that an attorney must have one fixed usual fee,
applicable
in all matters, but the normal fee in the agreement must
be the normal fee for matters of such size and complexity paid by
fee-paying
clients.
[56]
The statutory cap on the fees applies in respect of all attorneys in
the firm, and all counsel employed. An additional fee is
impermissible. The full court in
Mathimba
held made this point
in para 106 where an opinion by MJD Wallis SC et al is quoted with
approval. Relevant to this case is:
“
'At
least three contentious issues have arisen in the interpretation of
the above section (Section 2), namely:
(a) whether the cap of 25% of the
amount awarded in sub-section (2) is a global cap applicable to
all the
lawyers involved in a case so that jointly their fees cannot
amount to more than 25% of the amount awarded or an individual cap
applicable to each lawyer involved in the case, so that notionally if
there are four lawyers involved their fees could cumulatively
consume
the entire award;
(b) …
…
It also follows that what is contemplated by section
2 is a single contingency fee agreement for a single matter to which
all the
relevant legal practitioners will be parties, not separate
agreements for each legal practitioner. In other words where more
than
one legal practitioner is engaged in the matter and is party to
the contingency fee agreement one reads the expression legal
practitioner
in section 2(1) as legal practitioners. It is the
agreement with all the legal practitioners involved that is subject
to the constraints
set out in section 2 and particularly the
limitation that the amount of the success fee, as defined, in a case
where one or more
of the practitioners proposes to charge more than
his or her normal fees, shall not exceed 25% of the total amount
awarded. In
our view that is a global limitation applied to the
entire body of costs that the client will be liable for in the event
of the
claim succeeding.
This interpretation is we think supported by
the overall purpose of these provisions, which it to protect the
client against exploitation
by the lawyers who act for him, her or it
on a contingency basis. We have already noted that the purpose of
this legislation is
to enhance access to justice. It is not intended
as it has become in the USA as a means of ensuring colossal wealth to
lawyers
who very often in effect run cases for their own rather than
the litigants' benefit. All that this Act aimed at doing was enabling
litigants to make use of such agreements where they would not
otherwise be able to afford a lawyer to handle a case on their behalf
and to provide some incentive to lawyers to take such cases. Section
2(2) aims to prevent this from being abused by excessive claims
by
the lawyers in respect of contingency fees. That being so we cannot
think that in setting a limit on the fees recoverable and
saying that
it would not in total exceed 25% of the amount awarded the
legislature meant that in some cases it could be 50% and
in others
75%. That is inconsistent with the language of section 2(2). We lay
stress on the reference in sub-section (2) to the
reference to total
of such success fee. That seems to support the interpretation we
favour that one is concerned so far as this
cap is concerned with the
overall impact of all the fees chargeable to the client.
For those reasons we think that it must be
accepted that the intention of the legislature was to provide that
higher fees in terms
of Section 2 of the Act, be consolidated between
counsel and the attorney and then assessed to see whether they comply
with the
statutory cap. The fees payable by the client, and subject
to the statutory limitations would be the total fees payable to both
the attorney and the advocate. Accordingly in our view the circular
issued by the KwaZulu-Natal Law Society is incorrect and this
needs
to be discussed and resolved at the liaison committee meeting between
Consultant and the Law Society
.'”
[57]
The attorneys in this matter sought to recover more than R7 000.00
per
hour in fees. The contingency fee agreement in this case further
contained a clause that in addition to the agreed fee, the plaintiff
would be liable for payment to the attorney as “
advocates
fees
” of a further R2 000.00 per hour, or
R20
000.00 per day. These additional payments were not meant as
disbursements to an advocate, but as additional attorneys’
fees,
an impermissible arrangement in terms of
sections 2(1)
and (2)
of the
Contingency Fees Act.
In
conclusion
[58]
Awarding costs
de
bonis propriis
against the
plaintiff’s attorneys should only be done in rare cases. Still,
the facts of this matter are so stark, that I
must seriously consider
doing so in this matter.
If there was a failure by the
attorneys to carry out their duties, then the persons to be saddled
with the costs order that I make
against the plaintiff, should be
them and not the plaintiff. I fully accept that my instincts
about a failure in the carrying
out of the duties of the attorneys
may be wrong. As addressed earlier, I should not deprive them of an
opportunity to defend themselves.
Still, the indications before me
are that this matter was a commercial enterprise for the attorneys,
who sought to profit from
an impermissible costs order.
[59]
I make the following order:
1. Absolution from the instance is
ordered on the issue of past medical expenses in the form of a
payment of R420.00
to Dr Teixeira;
2. The plaintiff is ordered to pay the
costs pertaining to the hearing, including all costs pertaining to
the
pre-trial and case management conferences held pertaining
thereto;
3. Attorneys Mills & Groenewald
are ordered to show cause by no later than 21 August 2020 at 16H00
why they
should not be ordered to pay such costs
de bonis
propriiis
, jointly and severally with the plaintiff, the one
paying the others to be absolved;
4. The documents contemplated in
prayer three must be filed with my registrar by e-mail and uploaded
on CaseLines.
_____________
DP
de Villiers AJ
Heard
on: 8
May 2020
Delivered
on: 24
July 2020 electronically, by e-mail and by uploading on CaseLines
On behalf of the Plaintiff:
Mr. A Bothma, Mills & Groenewald
On
behalf of the Respondents: Adv T Moloi
Instructed
by:
Diale Attorneys
___________________________________________________________________
ADDENDUM TO JUDGMENT
___________________________________________________________________
DE
VILLIERS, AJ
[1]
After delivering the above judgment and as contemplated
in my order,
I was provided with an affidavit by Mr Andre van Zyl. The affidavit
inter alia
sets out more background facts on the lodging of
the claim, the persistent (and not unusual) lack of reaction by the
RAF, and the
unsuccessful attempts by the attorneys to obtain a
reaction from the RAF. The point is again made in the affidavit that
the RAF
never took issue with the claim for past medical expenses at
any one of several interactions the parties had.
[2]
Nothing in my judgment is intended to excuse the RAF’s
failure
to carry out its duties. It is disturbing how uncaringly the RAF
approaches its duty to compensate victims in motor collisions.
I have
presided over many of these matters in one form or another over the
last four years. Instead of dealing with obviously valid
claims, the
RAF causes matters to proceed unnecessarily to court, at great wasted
expense to the public. This is also evident from
its failure to make
secret tenders. Not once have I seen a secret tender made by the RAF
to compensate a victim, fairly or not.
A fair, secret tender is a
sign of a litigant seeking to avoid unnecessary litigation.
[3]
The affidavit
inter alia
contained allegations that:
[3.1]
The attorney who dealt with the matter, handed (what I referred
to in
paragraph 17 as) computer generated statements by Dr Teixeira, to Mr
Molefe representing the RAF on 10 March 2020, and on
18 March 2020.
In other words, that these were given to the RAF before 27 March
2020, the earliest date I have found that it could
have been served.
I still have difficulty reading the date stamp of the telefax
machine. I read it as 14 or 24 March 2020, but
perhaps it was 4 March
2020. Although the averment is hearsay and has not been put to Mr
Molefe for comment, I will accept the
averment for the purposes of
this judgment;
[3.2]
The judge who certified the matter as trial ready, did not
have an
issue with the amount of the claim, and certified it trial ready
because the RAF failed to instruct its attorneys regarding
the claim
for R420.00. Again, I will accept the averment for the purposes of
this judgment; and
[3.3]
On 14 April 2020 the plaintiff wrote to the RAF and offered
to settle
the matter against payment of R420.00 plus costs on the High Court
scale. The letter was attached to the affidavit. I
believe that, in
as far as costs are concerned, this letter has been placed before me
properly. After the matter was placed before
me, the plaintiff sought
a postponement, costs to be costs in the cause, but the request was
declined. I will accept the averment
for the purposes of this
judgment.
[4]
These facts do not materially impact on my findings that
the
plaintiff only at the last minute produced proper evidence of his
treatment. Perhaps someone at the RAF should have taken a
pragmatic
view that a claim for R420.00 need not be itemised to be settled. The
RAF would know what two doctor’s visits should
have costed. But
on these facts, the RAF attorneys had documentary proof of the
composition of the claim for a few days before
the country came to a
standstill. In a normal case, with a substantial quantum, a claim for
R420.00 would have been resolved, probably
by the parties limiting
issues. If still disputed, a judge would have leant on the RAF to
state a version, to state why the amount
is not due, and not to waste
time (and cost). But this clam was for R420.00. It had to be proven
once it was the only issue before
me.
[5]
The affidavit contains
inter alia
the following further
submissions:
[5.1]
The one submission is that R420.00 seems reasonable, and
the services
rendered were in the view of the attorneys, sufficiently described in
evidence;
[5.2]
A further submission seems to be that I erred in requiring
proof that
the fees were reasonable, due to an unidentified judgment of the
Constitutional Court involving Mr Bobroff. I am not
alive to any such
judgment, and could not find it after a brief search; and
[5.3]
After the order of 12 March 2018, the matter could not be
transferred
to the Magistrate’s Court (to pursue the claim for R420.00). I
am not alive to any such prohibition, and was
not referred to
authority.
[6]
As would have been clear from my judgment, I had questions
about how
it came about that the claim was pursued, and what the benefit to the
plaintiff’s attorneys could have been. I
did not want to draw
negative inferences without giving the attorneys the opportunity to
explain. It is clear from the affidavit
that they feel aggrieved.
They state that
did not act dishonestly, or
negligently to a serious degree.
[7]
They could have embarked on the pursuit of the
R420.00 believing that they could get a High Court costs order. The
affidavit does
not address the central finding that I made,
that
the indications are that this matter was a commercial enterprise for
the attorneys, who sought to profit from (what I have
found to be) an
impermissible costs order. I accept that they did not do so with a
dishonest intent, but the affidavit:
[7.1]
Does not contain answers to the questions raised in paragraphs
25 and
28 of my judgment about how it came about that the litigation
claiming R420.00 was persisted with, including what the advice
to the
plaintiff was, and what his instructions were (or that he was asked
to waive attorney-client privilege, but refused to do
so). I could
see no benefit to him to seek payment of R420.00 at huge risk and
still cannot see why he would have authorised the
litigation, if he
did;
[7.2]
Does not contain answers to my recording of the law and my
findings
why the costs order sought would be impermissible as the plaintiff
was not liable to pay the costs his attorneys sought.
See in this
regard paragraphs 30.2, 34 to 36, and 38 of my judgment. I quote
below from the affidavit, but the attorneys with respect
did not
understand my reasoning that they could not claim costs from the RAF
that were
impermissible costs, both because they
plaintiff was not liable for such costs (and hence indemnification
does not arise), and because
they are precluded by legislation (the
Contingency Fees Act) from
raising the fees they claimed;
[7.3]
Does not contain answers to my findings that the purported
agreed
counsel’s fees were precluded by law. See in this regard
paragraphs 56 to 58 of my judgment.
[8]
It seems to me that that the attorneys still believe
that the only
limitation on recoverable fees, is the discretion of the taxing
master. I reflect a few extracts from the affidavit
from which this
appears:
“
14.
What is of importance is that Plaintiff's attorneys did not ask a
cost order against the RAF on
an inappropriate basis. The normal
Party and Party high court cost order was sought and should plaintiff
be successful the Plaintiff
will only be entitled to taxed party and
party cost subject to the discretion of the taxing master which is
limited by prescribed
party and party tariffs”;
and
18.3
The court's conclusion in paragraph 38 is also
incorrect for the reason that whatever the attorney and client
fee
agreement is between Plaintiff and Plaintiff Attorneys of record, if
Plaintiff is successful against Defendant then the Defendant
is
liable for at least party and party high court cost. The Plaintiff
personally is entitled to this cost order. The party and
party cost
order sought was therefore permissible.
18.4
Therefore I deny the court's conclusion that this
matter was a commercial enterprise for Mills & Groenewald
Attorneys, who sought to profit form an impermissible cost order. My
reasons for denial are set out in detail in this affidavit.
Taking
into account the history of the case Mills & Groenewald Attorneys
would not have tried to settle the case on 11 opportunities,
thereby
decreasing and avoiding legal cost, if we were driven to get a cost
order with a trial
.”
[9]
Having considered the matter again, including again considering
the
guidance in
Waar v Louw
and in
Multi-links
Telecommunications Ltd v Africa Prepaid Services Nigeria Ltd and
Others, Telkom SA Soc Ltd and Another v Blue Label
Telecoms Ltd and
Others
, I cannot in this matter order the plaintiff to bear the
costs of the matter. No evidence has been placed before me that the
wasteful
litigation was at his insistence. I repeat, I fully accept
that the attorneys did not act dishonestly. Still, the facts of this
matter are so stark that the attorneys must bear the costs. It is not
an order that I make lightly, legal practice is hard as it
is,
without such orders added thereto.
[60]
I make the following order:
1. Attorneys Mills & Groenewald
are ordered to pay the costs set out in paragraph 2 of the judgment
herein
delivered on 24 July 2020
de bonis propriiis
, jointly
and severally with the plaintiff, the one paying the others to be
absolved;
_____________
DP
de Villiers AJ
Heard
on:
8 May 2020
Delivered
on:
24 July 2020 electronically, by e-mail and by uploading on CaseLines
Revised
on:
14 September 2020
On
behalf of the Plaintiff:
Mr. A Bothma, Mills & Groenewald
On
behalf of the Respondents: Adv T Moloi
Instructed
by:
Diale Attorneys
[1]
I revert to
Thulo
v Road Accident Fund
2011 (5) SA 446 (GSJ).
[2]
Revelas and Another v Tobias
1999 (2) SA 440
(W) at 444H.
[3]
Enslin v Meyer
1960
(4) SA 520
(T) at 523G-524A.
[4]
Esso Standard SA (Pty) Ltd v Katz
1981 (1) SA 964
(A) at 968H-969H.
[5]
LC Steyn J concurring.
[6]
Waar v Louw
1977 (3)
SA 297
(O) at 304G-H.
[7]
Multi-links Telecommunications Ltd v Africa
Prepaid Services Nigeria Ltd and Others, Telkom SA Soc Ltd and
Another v Blue Label
Telecoms Ltd and Others
2014 (3) SA 265
(GP) at Para 34-35.
[8]
Maswanganyi v Road Accident Fund
2019 (5) SA 407
(SCA) para 32.
[9]
I assume these were the heads
that I called for in an effort to force the plaintiff to reconsider
his position.
[10]
Stopforth Swanepoel and Brewis Incorporated v
Royal Anthem Investments 129 (Pty) Ltd
2015
(2) SA 539
(CC) Para 19-26.
[11]
Member of the Executive Council for Health,
Gauteng v Lushaba
2017 (1) SA 106
(CC) Para
15 and Para 18-21.
[12]
Texas Co (SA) Ltd v Cape Town Municipality
1926 AD 467
at 488-489.
[13]
Wessels JA and de Villliers
JA agreeing on this point at 504.
[14]
Thusi v Minister of Home Affairs and Another
and 71 Other Cases
2011 (2) SA 561 (KZP).
[15]
“
78. Taylor v Mackay Bros and McMahon
Ltd
1947 (4) SA 423
(N) at 431.
”
[16]
“
79.
2003 (3) SA 54
(SCA) ([2002]
4 All
SA 723)
para 18
.”
[17]
South African Association of Personal Injury
Lawyers v Minister of Justice and Constitutional Development (Road
Accident Fund,
Intervening Party)
2013 (2)
SA 583 (GSJ).
[18]
Thulo v Road Accident Fund
2011 (5) SA 446
(GSJ) para 52.
[19]
Mofokeng v Road Accident Fund, Makhuvele v
Road Accident Fund, Mokatse v Road Accident Fund, Komme v Road
Accident Fund
[2012] ZAGPJHC 150.
[20]
Lowe J (Malusi J and Jolwana J concurring).
[21]
Mathimba and Others v Nonxuba and Others
2019 (1) SA 550
(ECG) para 104-105.
[22]
Price Waterhouse Coopers Inc and Others v
National Potato Co-Operative Ltd
2004 (6) SA
66
(SCA) para 41.
[23]
“
2 Contingency fees agreements
(1)
Notwithstanding anything to the contrary in any law or the common
law, a legal practitioner may, if in his or her opinion
there are
reasonable prospects
that his or her client may be successful in
any proceedings, enter into an agreement with such client in which
it is agreed-
(a)
that the legal practitioner shall not be entitled to any fees for
services rendered in respect of such proceedings
unless such client
is successful in such proceedings
to the extent set out in such
agreement
;
(b)
that the legal practitioner shall be entitled to fees
equal to
or, subject to subsection (2), higher than his or her normal fees,
set out in such agreement,
for any such services rendered, if
such client is successful in such proceedings to the extent set out
in such agreement.
(2)
Any fees referred to in subsection (1) (b) which are higher than the
normal fees of the legal practitioner concerned (hereinafter
referred to as
the 'success fee'), shall not exceed such
normal fees by more than 100 per cent
: Provided that, in
the case of claims sounding in money, the total of any such success
fee payable by the client to the legal
practitioner,
shall
not exceed 25 per cent of the total amount awarded or any amount
obtained by the client in consequence of the proceedings
concerned
,
which amount shall not, for purposes of calculating such
excess, include any costs
.”
(Underlining added)
[24]
Erasmus v Williams
2016 JDR 2007 (ECG) para 13
[25]
Masango and Another v Road Accident Fund and
Others
2016 (6) SA 508
(GJ) para