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[2022] ZAECMKHC 52
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Allison v Road Accident Fund (2975/2021) [2022] ZAECMKHC 52 (23 August 2022)
IN
THE HIGH COURT OF SOUTH AFRICA
EASTERN
CAPE DIVISION, MAKHANDA
CASE
NO: 2975/2021
Delivered
on 23 August 2021
In
the matter between:
LYNN
MONIQUE ALLISON (OLIVIER)
Plaintiff
and
ROAD
ACCIDENT
FUND
Defendant
JUDGMENT
Bloem
J
1.
On 20
September 2021 the plaintiff instituted action against the Road
Accident Fund, the defendant, for damages suffered by her
as a result
of bodily injuries she sustained in a motor vehicle collision on 8
September 2017. She alleged that the injuries
were caused by or
arising from the negligent driving of a motor vehicle. The
action was set down for hearing on 28 July 2022.
On the day of
the hearing, counsel for the plaintiff and the defendant’s
attorney attended upon my chambers with a draft
order.
According to that draft order, the defendant conceded that the
insured driver was the sole cause of the collision
and accepted that
it would accordingly pay 100% of the plaintiff’s damages.
The defendant furthermore agreed to make
payment of R250 000.00
to the plaintiff in respect of loss of income, to furnish the
plaintiff with an undertaking in terms
of section 17(4)(1) of the
Road Accident Fund Act
[1]
(the
Act) and to pay the plaintiff’s costs to date.
2.
Counsel for
the plaintiff also furnished me with an affidavit contemplated in
section 4(2) of the Act. Attached to that affidavit
was a copy
of a contingency fees agreement concluded on 17 February 2019 between
Lucille Ronelle Allison on behalf of
Lynn Monique Allison,
and MA Fredericks & Associates.
[2]
That affidavit was not accompanied by an affidavit contemplated in
section 4(1) of the Act.
3.
I was satisfied with the terms of the draft order and made an
order
in accordance therewith. I was concerned about the provisions
of clause 5.1 of the contingency fees agreement and accordingly
issued the following orders, in addition to the terms of the draft
order:
“
IT IS
FURTHERMORE ORDERED THAT:
8.
The plaintiff and her attorney file heads of argument, if they so
wish, on or before 19 August
2022 on the validity of the contingency
fees agreement that they signed on 19 February 2019, regard being had
to the fact that
clause 5 thereof (or the entire contingency fees
agreement) does not set out the attorney’s normal fees, as
required by
section 2(1)(b)
of the
Contingency Fees Act, 66 of 1997
.
9.
Until this court has pronounced on the issue raised in paragraph 8
above, the plaintiff’s
attorney shall be entitled to payment of
his attorney and client fees from the plaintiff
.”
4.
By letter dated 16 August 2022 addressed, not to the registrar
who
issued the order but, directly to me, the plaintiff’s attorney
informed that:
“
1.
Our client and the writer will not be filing heads of argument at
this stage and will deal with paragraphs
8 and 9 of the order dated
28 July 2022 at the conclusion of the matter.
2.
The interim payment of R250 000 will be utilised to pay the
disbursements in respect
of the medical experts and counsel and the
balance will be paid to client.”
5.
It is
unfortunate that the plaintiff and her attorney have declined the
opportunity of being heard on the issue raised in paragraph
8 of the
order prior to this judgment. In my view, there is no
justifiable reason for addressing the issue raised in paragraph
8
only at the conclusion of the action, when an offer in settlement of
a portion of the claim has been accepted.
Section 4(1)
and (2)
of the Act contemplates the acceptance of “
any
offer of settlement”
after the filing of affidavits by a legal practitioner and the
client. It is at that stage that the court is entitled to,
and,
in fact, must, exercise its supervisory role in respect of the
contingency fees agreement to ensure compliance with the Act.
In
Masango
v Road Accident Fund
[3]
it was pointed out by Mojapelo DJP that courts have a duty to ensure
that contingency fees agreements comply with the provisions
of the
Act and that courts should not allow agreements which are invalid to
stand.
6.
In any event, when an officer of the court is ordered by the
court to
do something by a certain date, it is not open to such an officer to
ignore that order and instead elect to do what he
or she has been
ordered to do only when he or she wishes to do so.
7.
Section 2
of the Act provides for the circumstances under which a
legal practitioner, who entered into a contingency fees agreement,
may
be entitled to his or her fees.
Section 2(1)
reads as
follows:
“
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.”
8.
What is apparent from
section 2(1)(b)
is that in the contingency fees
agreement, the legal practitioner and the client must agree that the
legal practitioner shall,
in the event of the client being successful
in such proceedings to the extent set out in such agreement, be
entitled to fees, either
equal to or higher than his or her normal
fees. Either way, those normal fees must be set out in such
agreement.
9.
The
provisions of the Act must be complied with strictly. A contingency
fees agreement that does not comply with the Act is invalid
and
unenforceable.
[4]
In
Mkuyana
v Road Accident Fund
[5]
van Zyl DJP set out the reason for demanding strict compliance with
the provisions of the Act as follows:
“
The reason for
demanding strict compliance with the provisions of the Act is that a
contingency fees agreement is otherwise unlawful
as it is prohibited
at common law. Another reason, according to Plasket J in
Mfengwana v Road Accident Fund,
[6]
is that it is –
‘
necessary to
prevent abuses on the part of unscrupulous legal practitioners
willing to take advantage of their clients – a
phenomenon that
is in my experience, unfortunately all too common’.”
10.
Against the above background it is appropriate to look at clause 5 of
the contingency
fees agreement in this case, which reads as follows:
“
5.1
The attorney shall be entitled to an amount equal to the normal fees
of the attorney on attorney and own client
scale prevailing from time
to time plus all disbursements plus an additional success fee equal
to 100% of the normal fees of the
attorney prevailing from time to
time, conditional to the success fee portion not exceeding 25% of the
full enforceable value,
excluding the client’s entitlement to
recover costs from any counterparty.
5.2
The parties agree that, if the client is successful or partially
successful in the aforementioned proceedings,
the attorney shall be
entitled to its normal fee.
5.3 All
such fees are inclusive of Value-Added Tax.
5.4
The attorneys and advocate shall be entitled to raise interest on any
outstanding debt at the legal rate from
the date of such debit to the
date of final payment.”
11.
Nowhere in the contingency fees agreement is the attorney’s
normal fee
set out. The agreement refers simply to “
the
normal fees of the attorney on an attorney and own client scale
prevailing from time to time”
. It is clear from the
definition of “normal fees” in
section 1
of the Act, that
a distinction is drawn between reasonable fees charged by a legal
practitioner, being the normal fee, and fees
charged by such a
practitioner in terms of a contingency fees agreement. That
definition reads as follows:
“‛
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;”
12.
As the fees, to which the attorney would be entitled for services
rendered,
have not been set out in the contingency fees agreement, as
required by
section 2(1)(b)
of the Act, that agreement is invalid and
accordingly unenforceable.
13.
In the result, it is ordered that:
1.
The contingency fees agreement concluded on 19 February 2019 between
Lucille
Ronelle Allison, on behalf of Lynn Monique Allison, and
MA Fredericks & Associates be and is hereby declared invalid
and
accordingly unenforceable.
2.
The plaintiff’s attorney is entitled, in relation to services
rendered
by him to the plaintiff in connection with proceedings under
the above case number, to fees on an attorney and own client basis.
GH
BLOEM
Judge
of the High Court
[1]
Road Accident Fund Act, 1996 (Act 56 of 1996).
[2]
It
is unclear from the contingency fees agreement and the plaintiff’s
particulars of claim who Lucille Ronelle Allison
is and why she
concluded the contingency fees agreement on behalf of the plaintiff
with a firm of attorneys. In paragraph
1 of the particulars of
claim the plaintiff is described as a major female who was born on 3
July 2001. She was an adult
when the action was instituted on
20 September 2021. The plaintiff’s attorney was not
invited to address the
issue of whether a firm of attorneys, as
opposed to a legal practitioner, can enter into a contingency fees
agreement with a
client. No comment shall accordingly be made
in that regard.
[3]
Masango
v Road Accident Fund
2016
(6) SA 508
(GJ) at par 54.
[4]
Tjatji
v Road Accident Fund and two similar cases
2013
(2) SA 632
(GSJ) at paras 21 and 22.
[5]
Mkuyana
v Road Accident Fund
2020
(6) SA 405
(ECG) at 414G – 415B.
[6]
Mfengwana
v Road Accident Fund
2017
(5) SA 445
(ECG) at par 12.