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[2021] ZAGPPHC 147
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Baker & McKenzie Amsterdam N.V. v Gencorp Investments (Pty) Ltd (88431/2016) [2021] ZAGPPHC 147 (12 March 2021)
IN
THE HIGH COURT OF SOUTH
(GAUTENG
DIVISION, PRETORIA)
REPUBLIC
OF SOUTH AFRICA
Case
Number: 88431/2016
REPORTABLE:
NO
OF
INTEREST TO OTHER JUDGES:YES/NO
REVISED
DATE:12
MARCH 2021
In
the matter between:
BAKER
& McKENZIE AMSTERDAM N.V.
Plaintiff
And
GENCORP
INVESTMENTS (PTY) LTD
Defendant
JUDGMENT
JANSE
VAN NIEUWENHUIZEN J
[1]
The plaintiff, Baker &
McKenzie Amsterdam N.V., a private company registered in the Kingdom
of the Netherlands, claims payment
in the amount of EUR 157 422, 00
from the defendant, GenCorp Investment (Pty) Ltd (“GenCorp”),
a private company registered
in South Africa for legal services
rendered to it in terms of a written agreement between the parties.
[2]
The written agreement was
concluded on 27 February 2015 and provided that:
[2.1] the
plaintiff will represent GenCorp in its dispute with KyotoCooling
B.V. and its shareholder Mr Drossos;
[2.2] the
plaintiff’s fees for rendering the legal services would be
based on time spent on the matter, computed
at the plaintiff’s
hourly rates for the persons performing the services as well as a
general 3% overhead surcharge and actual
disbursements made in the
course of the assignment;
[2.3] GenCorp
will be invoiced monthly and payment will be due upon receipt of the
invoice.
Issues common cause
[3]
It is not in dispute that
legal services were rendered by the plaintiff in terms of the
agreement and that GenCorp was invoiced
for such services, to wit:
[3.1] 10
April 2015
EUR 54 408, 72
[3.2] 12 May
2015
EUR 35 394, 41
[3.3] 10 July
2015
EUR 70 844, 98
[3.4] 17
August 2015
EUR 36 329, 13
[3.5] 7
September 2015
EUR 14 853, 71.
[4]
It is, furthermore not in
dispute that the first invoice was, albeit late, paid by GenCorp.
Issues in dispute
[5]
The liability of GenCorp to
pay the remainder of the invoices issued to it in respect of the
services rendered by the plaintiff
is in dispute.
[6]
GenCorp pleaded that it is not
liable to pay the outstanding invoices, because:
[6.1] Reinier
Lehmann, who allegedly represented GenCorp in concluding the
agreement was not authorised to do so; and
[6.2] the
fees claimed by the plaintiff are not fair and reasonable and/or were
not properly calculated at the
hourly rates ordinarily charged
by the plaintiff for the services.
Evidence
[7]
In order to place the evidence
in perspective, it is apposite to identify the following role
players:
[7.1] Itse
Oosterhoff (“Oosterhoff”), the attorney representing the
plaintiff at all relevant times;
[7.2] Reinier
Lehmann (“Reinier”), who, according to the written
agreement, represented GenCorp in his capacity
as Chief Commercial
Officer when the agreement was entered into; and
[7.3] Erwin
Lehmann (“Erwin”), Reinier’s uncle and chief
executive officer and sole shareholder of
GenCorp.
[8]
Oosterhoff testified on behalf
of the plaintiff. He testified that he was a lawyer in the litigation
department of the plaintiff
and that his primary area of expertise is
the settling of disputes in commercial and corporate matters.
[9]
Oosterhoff was contacted by
Reinier in respect of a dispute that had arisen between the defendant
and a certain Mr Drossos (“Drossos”),
the shareholder of
a Dutch firm, KyotoCooling B.V. (“Kyoto”). Reinier
informed Oosterhoff that GenCorp wanted to acquire
Drossos’s
shares in Kyoto, but that the negotiations were not progressing
according to plan.
[10]
In the result, GenCorp sought
legal advice in devising a scheme to put pressure on Drossos in the
hope that mounting pressure might
persuade Drossos to look more
favourably at GenCorp’s offer to acquire Drossos’s shares
in Kyoto.
[11]
Oosterhoff made a few
suggestions, which included filing a bankruptcy application against
Kyoto.
[12]
A consultation was arranged
for 27 February 2015 at the offices of the plaintiff in Amsterdam to
discuss the way forward. In the
email confirming the consultation,
Oosterhoff explained to Reinier that the plaintiff requests a EUR 10
000, 00 deposit from first-time
clients. Significantly and on the day
of the first consultation, Reinier addressed an email to Oosterhoff,
informing Oosterhoff
that he was “
on
his way”
to
the meeting, in which email Erwin was copied in. This was a trend
followed in all further communications from Reinier to Oosterhoff
and
other attorneys working in the plaintiff’s offices.
[13]
It is, therefore, quite clear
that Erwin was, from the word go, fully appraised of the negotiations
between Reinier on behalf of
GenCorp and Oosterhoff on behalf of the
plaintiff. The aim of the mandate to the plaintiff was in any event
to strengthen GenCorp’s
hand in its negotiations with Drossos.
[14]
Erwin represented GenCorp
during the negotiations with Drossos and the work performed by the
plaintiff was in the end result to
place Erwin in a more favourable
position during the negotiations.
[15]
At the consultation on 27
February 2015, it became evident that the work to be done will be
more complex and time-consuming. Oosterhoff
explained that Kyoto had
various creditors who supported GenCorp’s bid to gain control
of Kyoto and who would be willing
to participate in a strategy that
would place pressure on Kyoto and ultimately Drossos.
[16]
Oosterhoff appraised Reinier
of the above in an email dated 4 March 2015 as follows:
“
In
the course of our discussion on the previous Friday at our office, we
made a preliminary estimation of the costs.
We estimated that the
costs for an elementary/ (simple) application for bankruptcy
[insolvency] on EURO 5000. The extent of the
file / (docket) (whereby
in the first place we think about the large number of e-mails with a
large number of documents that were
attached and the entities
involved) and the different strategies that had to be discussed,
require significantly more time. Although
GenCorp realises this fact
I would like to point this out at this stage.
This means that the
costs with regard to the advising of GenCorp will be more than the
estimation of the number of hours with regard
to a simple application
for bankruptcy.”
[17]
Thereafter Oosterhoff sets out
the strategy as follows:
“
As
we have discussed earlier we have to include a summary proceeding in
which we ask that KyotoCooling BV establishes liens to the
possibilities. With the establishment of a lien the control remains
with the creditors in contrast to a bankruptcy procedure where
GenCorp will be dependent on the cooperation of the curator.”
[18]
The email concluded with a
proposal that a telephonic conference be arranged for 5 March 2015 to
discuss the other stakeholders
as well as the scope of Baker &
McKenzie’s mandate. When asked whether he recalled the
telephonic conversation of the
5
th
of March 2015, Oosterhoff responded that there were, especially in
the initial stages of the process, various calls per day with
Reinier,
[19]
Oosterhoff explained that the
process of obtaining pledges was a difficult and complex task due to
the multiple creditors that were
involved and who had different
rights in terms of ranking. The priority ranking had to be determined
which was a huge task involving
a lot of work and hours spent.
[20]
This email was followed by an
email of 11 March 2015 in which Oosterhoff advised Reinier as
follows:
“
Hi
Reinier
This [information]
also for you so that you will stay informed [/to keep your finger on
the pulse].
The number of hours
that we spent on this matter is considerable, but this will be of no
surprise to you. In my experience it is
mainly during the first
period that the complete docket [/file] (that is extensive in this
case) have to be studied, the first
discussions have to be entered
into and the strategy has to be planned for which a lot of time is
necessary. Up to and including
the weekend the counter stands on
about EURO 17 000 with regard to fees (exclusive of VAT and standard
storage [“standaardopslag”].
A large portion thereof is
with regard to the bankruptcy account. The same is valid for the
preparatory work for the interim proceedings.
If you are in
agreement, I will send an update to you in two weeks’ time. In
the first week of April we will send you our
first invoice.
You are welcome to
phone me if you have any queries,...”
[21]
Reinier did not seek any
clarification in respect of the amount of time that had been spent up
until then, nor did he raise any
complaints in respect of the
fairness and reasonableness of the fees. To the contrary, Reinier,
responded to the email as follows:
“
Hi
Itze,
Thank you it is clear.
The money to pay costs is available if the outcome is good, but in
this regard I have all the confidence.
I am looking forward to the
overview and the invoice.
How is the progress
with the bankruptcy application and the preparation for the interim
proceedings. If it is at all possible I
wish that the application for
bankruptcy could be completed by today so that it can (perhaps) be
used as an extra motivation (/pressure),
so that they then could
establish the awarding of the right pledge [/lien] without the
intervention of judge. I assume that we
don’t have to be
worried that in the case of an interim proceeding that the right of
pledge will not be awarded..?”
[22]
On 25 March 2015 Oosterhoff in
an e-mail to Reinier, informed Reinier that a further EUR 22 000’s
work has been done since
11 March 2015. Mr Cross, counsel for the
plaintiff, remarked that it seems to be a lot of money, to which
Oosterhoff answered that
the amount is nothing out of the ordinary
and summary proceedings could easily cost between 100 and 200
thousand euro depending
on the complexity of the matter.
[23]
As proof that the bankruptcy
and summary applications were having the desired effect, Oosterhoff
was referred to an email exchange
between Erwin and Drossos on 27
March 2015, in which Drossos expressed his wish to engage in
settlement discussions on the condition
that all legal actions be
suspended for 45 days. Oosterhoff explained that he received all the
email correspondence between Erwin
and Drossos in order to discuss
the strategy going forward. At that stage, GenCorp did not want to
suspend the legal proceedings
because it was of the view that its
negotiation position would benefit from applying constant pressure on
Kyoto.
[24]
Oosterhoff’s attention
was directed to the first invoice issued to GenCorp dated 10 April
2015. The invoice pertained to professional
services rendered and
disbursement incurred for the period ending 31 March 2015 in a total
of EUR 54 408, 72. Oosterhoff was referred
to a further document that
set out in detail which person performed the work, a detailed
description of the work performed and
the hours spent on the work
done.
[25]
One such entry for work done
by a certain Wouter Seinin on 24 March 2015, reads as follows:
“
Review
response letter Boekel (0.3); e-mail to R Lehman; P Matser and M van
Dijk (0.2); follow-up correspondence P Matser (0.2)
(0.3);
Correspondence Lehmann (0.2); discuss sending modality with I.
Oosterhoff (0.1) send e-mail with draft to R Lehmann (Gencorp);
finalize letter (0.1); prepare e-mails to Boekel (0.2); prepare
e-mails to R Lehman (0.1) (0.7).”
[26]
The time spent on this entry
was recorded as one hour. The same detailed description and time
spent appears in respect of each entry
and the 10 April 2015 invoice
consists of four pages.
[27]
Oosterhoff explained that some
of the items pertained to work done by colleagues in other speciality
fields, for example, the IT
department. Another strategy employed to
put pressure on Kyoto was by filing a complaint with the Dutch data
privacy authority
which was handled by the IT department. Oosterhoff
also pointed out that work that was more simplistic was carried out
by a junior
associate who charged a lower hourly tariff than the
senior associates.
[28]
Oosterhoff received the time
schedules from all the persons involved in the work at the end of the
month and scrutinised what was
done against the time that was
recorded. If seven hours were for instance charged for a specific
task and he was of the opinion
that it is too much, he will deduct an
hour to make sure that the client paid a fair amount for the work
that was performed.
[29]
Oosterhoff confirmed that the
work set out in the 10 April 2015 invoice was performed and that
although late, GenCorp paid the invoice
without any problems.
[30]
Oosterhoff and his team
utilised each available legal process to keep the pressure on
Drossos. On 14 April 2015, Oosterhoff informed
Reinier and some of
the other creditors that joined the proceedings against Kyoto of yet
another process:
“
Ladies
and Gentlemen,
Attached herewith you
will find the relevant concept letter. It includes the general claim
of the creditors on the guarantors but
also the specific claims of
Banens and Horos.
I will gladly receive
your eventual remarks. I would like to send it off tomorrow at
approximately the midday hour.”
[31]
Reinier, for one, was
immensely impressed by the move. He responded to the email as
follows:
“
PRIMA!
EXCELLENT! Do we want to send it right away, or do we wait until the
21/22
nd
?”
[32]
On 21 April 2015 judgment was
obtained against Kyoto on the strength of pledges it had provided to
various creditors, which judgment
increased the pressure on Drossos
further.
[33]
The judgment was exactly what
GenCorp wanted to achieve and in Oosterhoff’s words:
“
It
was really a good thing because this would cause a lot of headaches
for Kyoto Cooling, for example, having to take care of all
these
pledges in all these various countries and all these locally
registered IP rights, would mean an enormous task with a high
time
pressure on this and penalties ticking away at the rate of 5000 euros
a day, with a maximum of two and a half million.”
[34]
The judgment had, according to
Oosterhoff, the desired effect as GenCorp (being in a stronger
position) and Kyoto resumed negotiations
with renewed vigour.
[35]
From the correspondence
exchanged between Reinier and Drossos it appears that the pressure
caused by the various court processes
and orders did have an effect.
On 30 April 2015 in an email to Drossos, Reinier stated the
following:
“…
In
a good faith effort to allow for such a deal, the creditors, without
prejudice to any of their rights arising from the court
decision or
otherwise, are willing to cooperate with suspending execution of the
court decision for a period of
seven
days
from
the date of this e-mail…Such suspension is fully subject to
Kyoto Trading Cooperatief continuing its exclusive negotiations
with
Gencorp on a transaction pursuant to which it will sell all its share
in KyotoCooling to Gencorp.”…”
[36]
The work performed during
April 2015 is, once again, set out in detail in the invoice dated 12
May 2015. The invoice was not paid.
[37]
During May 2015 various emails
were exchanged between the plaintiff and GenCorp on the one hand, and
GenCorp and Kyoto on the other
hand, in respect of the negotiations.
The plaintiff continued to provide advice and legal services during
this period.
[38]
Although a letter of intent
and a draft Share Purchase Agreement were prepared and negotiated
between GenCorp and Kyoto during April
and May 2015, the deal turned
sour on or about 10 June 2015 and negotiations collapsed.
[39]
From June 2015 payment of the
outstanding invoices became a problem. A further invoice was sent on
10 July 2015, which also remained
outstanding. According to
Oosterhoff Reinier kept on making promises of payment, which promises
did not materialise.
[40]
On 23 July 2015 Oosterhoff
addressed an email to Erwin informing him of the problem with the
payment of the invoices and advising
him that the plaintiff will not
do any further work for Gencorp as of 23 July 2015.
[41]
In response to a letter of
demand for the payment of the outstanding fees, Erwin in his capacity
as Chief Executive Officer and
sole shareholder of Gencorp bluntly
denied any knowledge of the written agreement with the plaintiff and
denied that it was in
negotiations with Kyoto.
[42]
This denial is disingenuous if
one has regard to an email sent by Erwin on 16 June 2015 to Reinier,
Oosterhoff, Petro Master, Marcel
van Dijk, Wout Schaap and Cees Prins
in which he refers to a consultation earlier that day and sets out a
detailed plan going forward,
namely:
“
1.
John’s
(Drossos)
new offer does not
serve the best interests of the creditors, minority shareholders,
Stulz’s not the company and seems to
only be a diversion for
him to get more out of the deal.. .
2.
John terminated the negotiations last week and this new offer does
not remotely come close
to
our
initial agreement and therefore
we
do not consider this as a continuation of the negotiations.
3.
I
am willing to consider a deal with John …..
4.
…
5.
For now
I
suggest that the creditors continue with the path
set out…
I
am still
willing to save the deal… Please keep me informed and let’s
hope that John sees the necessity of agreeing
to the simple deal and
stop wasting time and money.”
(own emphasis)
[43]
When asked what his reaction
to GenCorp’s sudden turn about is, Oosterhoff stated he was, in
view of all the promises to pay,
shocked.
[44]
Oosterhoff was, lastly,
referred to the August 2015 and September 2015 invoices. Oosterhoff
confirmed that the work charged for
was done.
[45]
During cross-examination,
Oosterhoff was requested to explain the process followed in the
Netherlands if a client wants to question
the reasonableness of an
attorney’s bill. Oosterhoff explained that a client will first
contact his firm with the problem.
The firm will bring the problem to
his attention and he will endeavour to resolve the problem. If this
approach does not work,
which according to Oosterhoff is uncommon,
then the matter will be referred to the complaint mechanism that
every firm in the Netherlands
is obliged to have in place.
[46]
Oosterhoff testified that he
is not
au fait
with the process from thereon as the reasonableness of his fees have
never been questioned in the past. He, however, surmised that
a
colleague of his will look at the complaint and the invoice to
determine the reasonableness of his fees. Should a client not
be
satisfied with the outcome of the procedure, a client may file a
complaint with the Dean of the Bar Association.
[47]
Oosterhoff was then asked
whether the Dean or somebody else would look at the bill to see if it
is reasonable. Oosterhoff responded
that he does not know as he has
never been in such a situation. Oosterhoff further explained that the
Netherlands does not have
a system similar to the one in South Africa
for taxing bills.
[48]
It was put to Oosterhoff that
GenCorp questions whether all the work done by Oosterhoff and his
colleagues was reasonable and necessary
in order to fulfil the
plaintiff’s mandate. Oosterhoff explained that he and his
colleagues practised in specialised fields
of the law and have the
necessary skill and experience to know what needs to be done in order
to execute their mandate. Oosterhoff
added that this is the reason
why a client would enlist the services of attorneys with the
necessary legal knowledge.
[49]
Oosterhoff requested Mr
Arnoldi SC, counsel for GenCorp, to refer to the specific items on
the invoices with which GenCorp has a
problem to enable him to answer
the question properly as it is impossible to answer a question
couched in such general terms.
[50]
Oosterhoff was referred to the
invoice of 12 May 2015 and more specifically to the entries that were
made in respect of work that
was done on 10 April 2015. Firstly,
there is an entry in respect of work done by Oosterhoff that reflects
the following:
“
prepare
court hearing / revise pleadings / study file (3,4), meeting with
clients (1.0), attend court case (1.5), e-mail W, Seinen
(0.1).”
The total
time spent was six hours.
[51]
The following entry is in
respect of work done by Liesbeth Maaren, a colleague of Oosterhoff
that formed part of the team working
on the GenCorp matter and reads
as follows:
“
Re
dispute with KC; prepare the hearing finalize pleadings (3.0);
meeting with clients to prepare the hearing with I. Oosterhoff,
R
Lehmann, P Matser, H van Veen, E Erkens and M Cluasing (1.0); court
hearing (1.5); discuss the hearing and further steps with
I.
Oosterhoff , R Lehmann, H van Veen, E Erkens and M Clausing (0.5).”
The total time
spent was also six hours.
[52]
Mr Arnoldi pointed out that 12
hours have been spent by two people on one matter and furthermore
explained to Oosterhoff that in
South Africa, the Taxing Master will
normally have regard to the documentation referred to in the item and
decide whether the cost
and the application of the tariff is
reasonable in the circumstances.
[53]
Oosterhoff replied that he is
not conversant with the taxing system in South Africa. Oosterhoff
testified that it is normal practice
in the Netherlands to work with
a junior associate on a matter.
[54]
Mr Arnoldi further explained
to Oosterhoff that in terms of South African law, when the fairness
and reasonableness of an attorney’s
fees are in dispute, all
the pleadings and documents relied on to substantiate the fees should
be discovered, alternatively, a
taxing master should have regard to
the documents to make an assessment whether the fees are fair and
reasonable.
[55]
Oosterhoff replied that the
South African taxing system is not utilised in the Netherlands and
because the work was done in the
Netherlands, the system applicable
in the Netherlands should apply.
[56]
Mr Arnoldi proceeded to ask
Oosterhoff whether the plaintiff has discovered the documents
subsisting the work done in the two items
referred to. Oosterhoff
replied that he does not know what had been discovered and that the
question should rather be answered
by the lawyers representing the
plaintiff.
[57]
Mr Arnoldi concluded his
cross-examination by stating that he is not going to question
Oosterhoff on the authority issue.
SUBMISSIONS
Authority issue
[58]
In view of the failure by Mr
Arnoldi to dispute the evidence of Oosterhoff on the authority issue,
Mr Cross, counsel on behalf of
the plaintiff submitted that the
uncontested evidence of Oosterhoff in respect of the authority issue
should be accepted and that
the court should find that Reinier had
the necessary authority to enter into the written agreement on behalf
of GenCorp.
[59]
This submission is in line
with the evidence and I agree.
The fairness and
reasonableness of the fees
[60]
In order to succeed on the
question of whether the fees claimed by the plaintiff are fair and
reasonable, the plaintiff bears the
onus
of proof.
Submissions on behalf
of plaintiff
[61]
In addressing this issue, Mr
Cross submitted that the uncontested evidence of Oosterhoff proved
the following:
61.1 the
plaintiff performed all the services reflected in the invoices
without any complaint from GenCorp and even
praised the plaintiff’s
work as late as 23 June 2015. The submission is based on an e-mail
sent by Reinier to Werner on 23
June 2015, which reads as follows:
“
Can
you please update Itse with the payment status?! Any confirmation or
issuing documentation would be helpful. B & M is performing
good
as valuable council
(sic)
to us and we cannot
afford them to stop assistance.”
61.2 the services were
performed on the instruction or at the request of Gencorp and in
terms of the agreement between the parties;
61.3 the invoices were
all carefully scrutinised by Oosterhoff to ensure their accuracy;
61.4 the April 2015
invoice was paid without complaint;
61.5 after receipt of the
12 May 2015 invoice in the amount of EUR 35 394, 43 GenCorp continued
to instruct the plaintiff to perform
work;
61.6 Reinier made several
promises to pay the invoices;
61.7 Gencorp paid the 10
April 2015 invoice on 25 June 2015 without demur or complaint. At
that stage Gencorp had already received
the 12 May 2015 invoice;
61.8 after receipt of the
10 July 2015 invoice in the amount of EUR 70 844, 98, GenCorp
continued to instruct the plaintiff
to perform further work;
61.9 on 13 July 2015
Reinier unconditionally acknowledged GenCorp’s liability to pay
EUR 106 239, 39, being the amount
outstanding at that stage. The
relevant portion of Reiner’s email dated 13 July 2015 reads as
follows:
“
I
am once again ashamed because of the late payment!!....It will
absolutely be paid; we cannot get away from that.”
61.10 At no stage
did Gencorp complain about the time recorded in the invoices or in
any way raised the fairness and reasonableness
of the plaintiff’s
fees.
[62]
In view of the aforesaid
uncontested evidence, Mr Cross, submitted that the plaintiff has
successfully established, at the very
least on a balance of
probabilities, that the invoices were fair and reasonable in the
circumstances.
[63]
In response, GenCorp did not
present any evidence to challenge the fairness and reasonableness of
the plaintiff’s invoices.
[64]
In respect of the taxation of
the bill, Mr Cross pointed out that the Taxing Master only has
authority to tax bills of costs of
attorneys in South Africa.
Submissions on behalf
of GenCorp
[65]
Mr Arnoldi submitted that when
considering Oosterhoff’s evidence, one should bear in mind that
he was not qualified as an
expert on legal costs and was not called
as an expert witness. In order for the plaintiff to prove that the
fees were fair and
reasonable it should have:
65.1
followed the internal
process at its firm and in addition should have considered a possible
reference to the Dean of the Bar Association
in the Netherlands; or
65.2
suggested a taxation of
its bill of costs by the Legal Practice Council; or
65.3
called an expert on
legal costs.
[66]
The fact that the plaintiff
did, furthermore, not discover the pleadings, e-mails and other
documentation on which time was spent,
to make up the hours reflected
in the invoices, is according to Mr Arnoldi fatal to the plaintiff’s
claim.
[67]
In the result, the plaintiff
did not prove that the fees were fair and reasonable.
Legal principles and
discussion
[68]
Should a defendant wish to
question the fairness and reasonableness of legal fees claimed by an
attorney, the defendant may file
a dilatory plea requiring the
taxation of the bill of costs. The matter will then only proceed,
once the bill has been taxed. [See:
Benson
v Walters
1984 (1)
SA 73
A]
[69]
In this matter and due to lack
of jurisdiction of the Taxing Master, it is clearly not an option.
[70]
In
Melamed
& Hurwitz Inc v Blank
2004
CLR 217
C, the court was faced with a bill of costs that was not
taxed. At paragraph [39] Van Zyl J stated the following:
“
[39]
A contract between attorney and client for payment of an agreed fee
is not illegal or contrary to public policy (Nicholls
v MacMuldraw
1923 CPD 401
at 404-405; Law Society of South 1923 SWA 47 at 52).
This is so even if the attorney chooses to place an extravagant value
on his
work and services (Cape Law Society v Luyt
1929 CPD 281
at
287). A court may, however, interfere with an agreement as to costs
if it should appear to be unjust, unfair or unreasonable,
or if the
client should allege that he has been overreached, in the sense that
the attorney has taken undue advantage of him by
charging
unconscionable, excessive or extortionate fees, or has induced him to
agree to payment of the fees in question as a result
of duress,
fraud, misrepresentation or mistake. The court may remedy the
situation by ordering the costs to be taxed, in which
event the
matter will be suspended pending the determination of the taxing
master. …”
[71]
In the
Melamed
matter
supra
,
the defendant was being sued by her husband for a divorce. The
defendant, Mrs Blank enlisted the services of Mr Melamed (“Melamed”),
an attorney to provide her with legal advice and assistance. In the
execution of his mandate, Melamed consulted with Mrs Blank,
perused
certain documents, including a settlement agreement and provided
legal advice to her.
[72]
Mrs Blank initially did not
have a problem with Melamed’s bill. It was only when she learnt
that she and not her husband must
pay the bill that she suggested for
the first time that Melamed’s fee was unreasonable. Melamed
instituted an action for
payment of his bill and during the trial,
Mrs Blank, although the issue was not raised on the pleadings,
disputed the amount of
hours spent by Melamed on the matter. Mrs
Blank was of the opinion that, in view of the limited amount of work
Melamed had according
to her, done he was not entitled to the fees
claimed by him.
[73]
Melamed during his evidence
explained what work he had done and stated that the hours spent
accords with the work that was involved
in providing legal advice in
a divorce action. Mrs Blank in her evidence denied Melamed’s
assertion without tendering any
evidence to support her allegation
that the fees were unreasonable.
[74]
Having summarised the
evidence, Van Zyl J remarked as follows in paragraph [46]:
“…
In
any event, even if there had been advance notice of this special
plea, I am quite satisfied that, on Mr Melamed’s evidence,
there is no question of unreasonableness of the fee and even less of
overreaching. A defendant relying on such serious allegations
should
at least tender some evidence in support thereof.”
[75]
GenCorp agreed to pay the
hourly tariff of the attorneys involved in the execution of its
mandate. The only issue in dispute is
therefore whether the amount of
time that was spent in the execution of the mandate was fair and
reasonable.
[76]
The evidence of Oosterhoff
clearly and precisely explained the nature and complexity of the work
involved in the execution of the
mandate given by GenCorp.
Oosterhoff, furthermore, testified that he scrutinised each item on
the bill to make sure it is reasonable.
Should he be of the opinion
that the amount of hours charged were not reasonable, he would amend
the bill to reflect fewer hours
spent on the work.
[77]
Each invoice presented to
GenCorp meticulously recorded the work that was performed and the
time that was spent on the work. Save
for the entries of 10 April
2015, none of the other entries were questioned or disputed.
[78]
Mr Arnoldi did submit that the
plaintiff should have discovered all the documents perused and
prepared, to substantiate the amount
of time spent on the work. The
fact that the plaintiff chose not to discover the documentation and
to present the evidence of Oosterhoff
in explaining the extent of the
work that was done, is not necessarily fatal to the plaintiff’s
claim.
[79]
The evidence presented by
Oosterhoff established at least
prima
facie
that the
hours spent was justified. The invoices were at all relevant times in
GenCorp’s possession and GenCorp was at liberty
to request
discovery of the documents referred to in the invoices.
[80]
One should also bear in mind
that GenCorp actively participated in the litigation process, was
kept up to date with what the strategy
entailed and received
correspondence and agreements drafted by the attorneys working on the
mandate.
[81]
It is telling that no
complaint was ever raised in respect of the invoices that were
presented to GenCorp. The first invoice was
paid without problems.
Reinier praised the work performed by the plaintiff and went so far
as to state: “
!!....It
will absolutely be paid; we cannot get away from that”
and
“
B & M is
performing good as valuable council
(sic)
to us and we cannot
afford them to stop assistance”.
[82]
Significantly, the fairness
and reasonableness of the fees were raised for the first time in
GenCorp’s plea. One would have
expected Erwin or Reinier to
have objected to the hours spent upon receipt of the first invoice.
This they did not do.
[83]
In presenting its defence it
was up to GenCorp to challenge the evidence presented by Oosterhoff.
This it did not do. In the result,
there is no basis to find that the
fees charged by the plaintiff in executing its mandate are unfair and
unreasonable.
[84]
In having had regard to the
evidence as a whole, I am satisfied that the plaintiff established on
a balance of probabilities that
the fees charged for the work
performed by it is fair and reasonable.
ORDER
[85]
In the premises, the defendant
is ordered to pay to the plaintiff:
1.
The amount of EUR 157
422, 23;
2.
Interest on the
aforesaid amount
a
temporae morae
from
date of each invoice to date of payment;
3.
Costs of suit.
______________________________________________
N. JANSE VAN
NIEUWENHUIZEN
JUDGE OF THE HIGH
COURT OF SOUTH AFRICA
GAUTENG DIVISION,
PRETORIA
DATE
HEARD PER COVID19 DIRECTIVES:
25 January 2021
(Virtual
hearing.)
DATE
DELIVERED PER COVID19 DIRECTIVES:
12 March 2021
APPEARANCES
Counsel
for the Plaintiff:
Advocate G. Cross
Instructed
by:
Baker & McKenzie
Counsel
for the Defendant:
Advocate F. Arnoldi SC
Instructed
by:
MJ
Lombard Incorporated