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[2021] ZAGPPHC 411
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Liebel v Road Accident Fund and Others (40882/2020) [2021] ZAGPPHC 411 (17 May 2021)
IN THE HIGH COURT OF
SOUTH AFRICA
(GAUTENG DIVISION,
PRETORIA)
Case
Number:
40882/2020
REPORTABLE:NO
OF
INTEREST TO OTHER JUDGES:YES
DATE:17-05-2021
In the matter between:
J.M
LIEBEL
APPLICANT
and
ROAD ACCIDENT FUND
FIRST RESPONDENT
MOLABA INCORPORATED
SECOND RESPONDENT
MOLABA KOTISHI
BERNARD
THIRD RESPONDENT
JUDGMENT
KUBUSHI J,
Delivered
:
This judgment was handed down electronically by circulation to the
parties' legal representatives by e-mail. The date and
time for
hand-down is dee m ed to be 10h00 on 17 May 2021.
INTRODUCTION
[1]
The gravamen of the applicant’s claim is that, as advocate, she
performed certain
services for the benefit of the first respondent
via instructions received from the second respondent alternatively
the third respondent,
and seeks in this application to hold the first
respondent liable for payment of such services
.
[2]
The main question to be determined in these proceeding, is whether,
on the basis of
the facts in this matter, there is a contractual
relationship
(nexus)
between the applicant and the first
respondent that entitles the applicant to claim for the services, she
alleges to have rendered,
directly from the first respondent, instead
of claiming from either the second respondent and/or third respondent
who are the persons
who gave her instruction to act on behalf of the
first respondent.
[3]
As a result, this application raises a complex and controversial
question of the relationship
between counsel, attorney and their
mutual client, the litigant. The question sought to be answered being
who ultimately is responsible
for counsel’s fee: is it the
instructing attorney or the litigant, or both?
[4]
This court has directed that the application be determined on the
papers filed without oral hearing as provided for in this Division’s
Consolidated Directives re Court Operations during the National State
of Disaster issued by the Judge President on 18 September
2020.
[5]
The application is brought by JEANNE-MARIE LIEBEL, a practising
advocate and a member
in good standing at the Pretoria Society of
Advocates who is claiming payment for the services she alleges lo
have rendered to
the first respondent, through the brief she received
from the second respondent, alternatively, the third respondent, the
attorney
of record for the first respondent.
[6]
In essence, what the applicant seeks in these papers is payment in
the amount of R874
631.00 (Eight Hundred and Seventy-Four Thousand
Six Hundred and Thirty-One Rand) for fees rendered for professional
services in
respect of the Road Accident Fund matters. Payment is
sought from the first respondent as the client, alternatively from
the second
respondent as the instructing firm of attorneys and
further alternatively from the third respondent (the sole director of
the second
respondent)as the instructing attorney.
[7] The
application is unopposed and served before me in the unopposed motion
court of 11 March 2021and the judgment
is, therefore, sought in
default. Service has been properly effected on 4 September 2020, upon
the first respondent as
per
the sheriff’s return
of service annexed to the papers and upon the second and third
respondents as
per
electronic mail.
[8]
Although judgment and/or the relief in the notice of motion is sought
against the three respondents
in the alternative, however, in the
heads of argument filed of record, the applicant is contending for
judgment and/or relief against
the first respondent only. The relief
against the other respondents will be sought in the event that the
first respondent already
made payment to the second and/or third
respondent and/or in the event that it is found that there is no
direct relationship between
the applicant and the first respondent.
[9]
The first respondent by virtue of its enabling act. the
Road Accident
Fund Act, No. 56 of 1996
, as amended, is often a litigant in court.
To this end, the first respondent is said to have employed a panel of
attorneys to assist
in the litigation process. This litigation
process also requires the services of counsel in order to finalize
actions instituted
against the first respondent. The second
respondent was appointed by the first respondent as one of the firms
of attorneys on its
panel of attorneys and was, on a regular basis,
instructed to represent the first respondent in some of its
litigation processes.
The applicant, on the other hand, was one of
the counsel who were briefed on a regular basis by the second
respondent to represent
the first respondent in some of its
litigation processes.
[10]
It is the applicant’s case that a contractual relationship was
created between her and the first respondent through the first
respondent’s agents,
vis
a vis
the second
respondent alternatively the third respondent. The applicant
fortifies her argument in this regard by contending that
she had
previously performed a variety of services for the benefit of the
first respondent via instruction of the second respondent
and the
first respondent had made payment in respect of some of those
matters. Same, according to the applicant, indicates a clear
practice
and contractual relationship in respect of these services
.
[11]
In support of this argument, the applicant refers to a number of
cases which, according to her,
set out the legal relationship between
an attorney and counsel insofar as same relates,
inter
alia,
to counsel’s fees.
[12]
She,
firstly,
refers to
the
dictum
in
Minister
of Finance and Another
v
Law Society, Transvaal
[1]
which
stipulates that an advocate ‘... has
one
client and that
is
the
litigator for whom he
acts
...’ which
dictum
was
tacitly endorsed in both
Bertelsmann
v Per
[2]
and
Serrurier
&
Another
v Korzia
&
Another,
[3]
and
was
further
accepted
by the
Supreme Court
of Appeal
in
General
Council
of the
Bar
of South Africa v Geach and Others,
[4]
as a
principle in our
law.
[13]
When endorsing the principle that an advocate “
...only has
one client
and that
is the
litigant for whom he acts...”
the court in
Bertelsmann,
held that the practice whereby attorneys
impliedly agreed to stand good for the payment of the fee owed by the
client to counsel
“
...did not
mean
that
the attorney
has replaced the client
as
contracting party vis-a-vis the
counsel...”.
[14]
When that principle was endorsed in
General
Council
of the Bar of South
Africa,
that court held that
“...
Attorneys may be obliged to procure services for
their clients, such as the services of the Sheriff, an advocate or an
expert witness.
However, those
services are rendered to
the client, not the attorney.”
[15]
The submission by the applicant is that the principle afore stated,
exposes
the relationship between the attorney and her/his client. In
particular, it references the approach that an attorney is the agent
of her/his client, the litigant. The litigant contracts through
her/his agent, the instructing attorney, with counsel. Such a
relationship, according to the applicant, entitles her to recover
fees for services rendered directly from the client and not from
the
instructing attorney.
[16]
The applicant’s approach that counsel may claim fees for
services rendered directly from
the client, is supported by the
author
Albert
Reinecke.
[5]
In an article filled
The
Attorney’s Liability for Counsel’s Fees,
[6]
when
dealing
with this
approach,
Reinecke
opines
as follows:
“
It is trite that
the type of contract entered into when legal assistance is
required.is one governed by the principles of mandate.
It involves an
instruction by the mandator to the mandatary to carry out a task for
him, and the mandate may or may not confer
authority on the mandatary
to enter into contracts on the mandator’s behalf. However, the
mandate might be influenced by
either agreed (express or tacit) or
implied terms (naturalia), such as the argument that it is a trade
usage that an attorney a
automatically stands in for the fee of
counsel, where It has not been received from client.”
[17]
Reinecke,
in this article, cautions that it is to be noted
that when briefed, the advocate is not mandated in any way to act on
behalf of
the attorney, or his firm, because, ordinarily there is a
contract of mandate between attorney and client in terms whereof
counsel
is briefed.
[18]
According to the author, the trade usage that an attorney
automatically stands in for the fee
of counsel, does not mean that
the attorney has replaced the client as contracting party
vis a
vis
the counsel. According to the author, the trade usage
over the years has been that the advocate is required to make use of
the attorney
as a go-between both where he attends on his brief, and
in resolving his fee. Thus, the attorney acts as the agent for a
disclosed
principa,l, and contracts -
per
brief - with counsel
in terms of the mandate furnished to him by his principal.
Reciprocally, the client is bound to pay counsel
a reasonable fee,
whilst being entitled to proper performance. And, this, as
per
Reinecke, is what entitles counsel to approach client directly for
payment of her/his fees.
Reinecke’s
rationale,
therefore, is that counsel’s entitlement to a fee from the
litigant stems from work done for her/his client, not
for the
attorney, and the attorney assists counsel with the collection of his
fee
pro
amico.
[19]
Contrariwise.
the court
in
Advocate
Lindon
Clifford
Leysath
v
The
Legal
Practitioners
Fidelity Fund Board of Control on
[7]
behalf
of The Legal Practitioners Fidelity Fund previously known as The
Attorneys Fidelity Fund Board of Control and The Attorneys
Fidelity
Fund
[8]
,
when dealing with the principle th
a
t
services rendered by
counsel
are
rendered to or on
behalf of
the
attorney’s client, and not
to
or
on
behalf
of
the
attorney,
vis a
vis
counsel’s
entitlement
to
fees for
services rendered, held that
“
[12]...
although counsel renders services on behalf of the attorney’s
client, he does so at the instruction of, and by agreement
with. the
attorney- and not the client”
[20]
In coming to such a conclusion, Van Nieuwenhuizen AJ (as she then
was) reasoned, in that regard,
as follows:
“
[12.1]
In
Serrurier
and Another v
Korzia
and Another
2010 (3)
SA
166
(W)
(“
Korzia
”
)
at 180F - 181A, Jordaan AJ found as follows:
“
My personal view,
is that the defendant is liable to,-the fees of the plaintiffs in
view of thef folllowing:
1. The
obligation to pay fees must flow from an agreement between parties.
2. The
agreement can either be an express agreement or by necessary
implication.
3.
Counsel is not allowed in terms of his ethical rules to receive
instructions or payment from a client
. General Council of the
Bar of South Africa v Van der Spuy (supra): and De Freitas and
Another v Society of advocates of Natal
and Another
2001 (3) SA 750
(SCA)
(2001 (6) BCLR 531).
These two cases illustrate that an
advocate will be suspended from practice even if he is not subject to
the rules of the General
Bar Council and even if the constitution of
his own professional body allows receiving instructions and payment
from members of
the public.
4. If
there is not an express agreement between counsel and attorney the
necessary implication is thereof that
it can never be an implied term
of the agreement that counsel look to the client to pay his fees.
5.
Counsel will not be permitted to conclude an express agreement that
his fees be paid by everyone else than
his attorney.
6. It
therefore in my view follows logically that an attorney will always
in our law liable for counsel’s
fees, even in the event of the
client not paying him…”
[12.2] In
Fluxmans
Incorporated v Lithos Corporation of South Africa Ltd and Another
(
No 1
)
2015 (2) SA 295
(GJ)
at paragraph 35,Sutherland J said that:
“
What
counsel is to change is the subject-matter of an agreement between
counsel and attorney, not between counsel and the client.
The client
does not approve what Counsel changes: that is the function of the
attorney who is liable to pay the fees (See
[13] It follows that
there are two distinct separate legal arrangements in the trinity of
counsel, attorney, and client.
[13.1]
Firstly, there is a contractual relationship between the attorney and
the attorney’s client, which
is wholly separate from counsel.
Secondly, there is a contractual relationship between an attorney and
counsel, which but for the
fact that the services requested by the
attorney are to be rendered on the client’s behalf, has
otherwise no bearing on the
client.
[13.2]
As the authorities demonstrate, the agreement between an attorney and
counsel renders the obligation for
the payment of counsel’s
fees on the attorney. That position cannot in law not be altered by
passing the obligation to the
attorney’s client. Pursuant to
that contractual arrangement, counsel had a right to claim his fees
from the attorney, and
the attorney was obliged to make payment
towards counsel of counsel’s fees. Whether or not the client
had paid the attorney
was irrelevant insofar as that contractual
relationship was concerned, unless their agreement was qualified in
some manner whereby
counsel would not render any work unless
satisfied that counsel’s fees were secured by the attorney in
the form of a deposit,
[13.3]
Irrespective of the agreement between counsel and the attorney, in
contrast, in the contractual relationship
between the attorney and
the attorney’s client places an obligation on the client to pay
the attorney, and thus the attorney
Is vested with the right to claim
from the client payment, in respect of services rendered by the
attorney well as disbursements
for which the attorney would be
Iiable, such as counsel’s fees .
[13.4]
Put differently, in the contractual relationship between counsel and
attorney, counsel is the creditor , and the attorney
the debtor. In
the contractual relationship between the attorney and client,. the
attorney is the creditor. and the client the
debtor.”
[21]
Iam inclined to agree with the conclusion of Van Nieuwenhuizen AJ
that
the agreement between an attorney and counsel bestows the
obligation for payment of counsel's fees on the attorney. The Judges’
reasoning that there are two distinct separate legal arrangements in
the trinity of counsel, attorney. and client: the contractual
relationship between the attorney and the attorney’s client,
which is wholly separate from counsel and the contractual
relationship
between an attorney and counsel, which but for the fact
that the services requested by the attorney are to be rendered on the
client’s
behalf, has otherwise no bearing on the client, is
well-made.
[22]
My inclination in this regard is fortified by the decisions taken
firstly
in
Serrurier
and
secondly
in
Fluxmans
Incorporated
v Lithos
Corporation
of
South
Africa
(Pty)
Ltd
and
Another
(No
2).
[9]
[23]
In
Serrurier,
even
though the court endorsed the
dictum
in
Minister
of Finance,
it’s
view was
that the
defendant
(the
client) is
liable for
the fees
of
the
plaintiffs
(counsel) in view of, amongst others, the obligation to pay fees must
flow from an agreement between parties. And in
Fluxmans
(No 2),
the
court opined that “
What
counsel is to charge,
Is
the
subject-matter of an agreement
between
counsel and attorney, not between
counsel
and the
client. The client does not approve what
Counsel
charges;
that
is
the
function
of
the
attorney
who is
liable
to pay the fees.
”
[10]
[24]
Therefore, the applicant’s reliance on
Bertelsmann
for its
approach, is totally misplaced. Although
Bertelsmann,
a
decision of the Full Court (Full Bench
as
it
then
was),
endorsed
the
dictum
in
Minister
of
Finance,
Bertelsmann
is,
however,
no
authority that an instructing attorney is not
liable to
pay
counsel
where
she/he has
not
received
payment from
client
.
[11]
[25]
In
Bertelsmann ,
counsel sued his instructing attorney for
unpaid fees for professional services rendered. The attorney pleaded
that he acted as
an agent for a disclosed principal, that he engaged
counsel on behalf of his client, and that he could not be
(personally) sued
on the principal obligation between principal and
plaintiff. Plaintiff excepted that once briefed:
•
“
...
the
attorney
was as
a matter of law
responsible for payment of
counsel’s
fees.”
[26]
This exception was dismissed - with costs- in the Magistrate’s
Court, as
[a]
there was no authority for this ‘rule of law’, and
[b]
no evidence could be led in hearing an exception to establish such a
practice.
[27]
On appeal (noted against the costs order only) the exception’s
dismissal was upheld. Southwood J pointed
out as significant that
Messrs Bertelsmann could not refer to any rule of law or any judgment
stating that an attorney was liable
for counsel’s fees. As no
evidence could be led in hearing an exception. the appeal court
concluded that the magistrate
was quite right to dismiss the
exception.
[28]
Thus, the issue that came to be decided in
Bertelsmann
was not
based on whether an instructing attorney was liable to pay counsel's
fees. but on whether the trade usage of attorneys standing
for the
fees of counsel. can be accepted as a rule of law. Both courts, in
the court
a quo
and on appeal, held that there was no
authority for such rule. The plaintiff (appellant) having failed to
refer the court to any
such rule or judgment stating that an attorney
was liable for counsel's fees, the court held that the trade usage
that was relied
on had not yet been established, and that no judicial
notice had been taken of it. Both courts held further that evidence
has to
be led in order to establish the practice as a rule of law.
[29]
The applicant referred to other cases which I am afraid do not, also,
assist in taking her case any further.
29.1
Cedric
Eldrid
Puckrin
&
Another
v
HAG
J
Accounting
Software
Services
(Pty)
Ltd
and
Another
,
[12]
in
my
view
was
wrongly
decided as it was decided on the basis of the wrong interpretation
of the
decision in
Bertelsmann
as
already indicated in paragraph [27] of this judgement. The case was.
also decided, on the decision in
Serrurier,
which
decision was misconstrued by that
court.
As
already
stated,
although
the
court in
Serrurier
endorsed
the
dictum
in
Minister
of Finance,
it,
however, did not follow its conclusion
but
held
that the
client
is
liable for
the
fees
of counsel
in view of, amongst others, that the obligation to pay fees must flow
from an
agreement between parties.
29.2
The passage
the
applicant refers to in
Fluxmans
(No 1)
as
to the question of reasonableness of counsel’s fees and how
same is to
be
determined, is definitely of no assistance to her case. I have, in
this judgment referred to two passages from
Fluxmans
(No- 1)
and
Fluxmans
(No
2)
which
supports the
notion that
counsel’s fees
must be
recovered
from the
instructing attorney.
[13]
29.3
The two
judgments that were recently decided in this Division, namely, C
P
J Strydom v The Road Accident Fund,
[14]
and
S
Meyer
v
Road
Accident
Fund
,
[15]
are of no
assistance
as they are merely orders granted in the unopposed motion court
without reasons
provided
for
such
orders.
[30]
The argument by the applicant that she has previously performed work,
for the first respondent
via instruction from the second respondent,
and was paid for such work, is not sustainable, as such performance
and payment does
not establish a contractual relationship between the
applicant and the first respondent.
[32]
I am, thus, persuaded to follow the approach taken by Van
Nieuwenhuizen AJ
in
Leysath
and
cases cited
therein. That court’s
reasoning
is,
further, sustained in
Fluxmans
Incorporated v Lithos Corporation of South Africa {Ply)
Ltd
and Another
(No 2),
[16]
wherein the
court
stated
that:
“
It
is clear that counsel cannot contract with the members of the public
directly. It is a referral profession and it is a professional
practice or trade usage that the legal nexus between counsel and
their fees is the attorney and not the member of the public”.
[32]
I am, thus, satisfied that the applicant has not been able to
establish the relationship between
her and the first respondent,
entitling her to claim her fees for services rendered on the
instruction of second respondent.
[33]
Consequently, I make the following order
1.
The application against the first respondent is dismissed.
2.
The application against the second respondent and third respondent
is
postponed
sine
die.
3.
No order for costs is made.
EM
KUBUSHI
JUDGE
OF THE HIGH COURT
Appearance:
Applicant’s
Counsel
: Adv. J Van Wyk
Applicant’s
Attorneys
: Shane White Inc
First
to
Fourth
Respondent’s Counsel
:
None
First to
Fourth
Respondents
: None
Date of hearing
: 11 March 2021
Date of
judgment
: 17 May 2021
[1]
1991 (4) SA544 (A).
[2]
1996
(2)
SA375 (1).
[3]
2010 13) SA 166
(W).
[4]
2013 (2)SA 52
(SCA)
para
144.
[5]
Albert Reinecke is the author of The Legal Practitioner’s
Handbook on Costs Second Edition (2011).
[6]
The
article is dated 24 January 2011 contained in Tech4Life Practical
Practical Guide Journal. The article was printed again in
The Forum
Access to Justice: Fees Journal titled Standing in for Counsel’s
Fees: Fact or Fiction?
[8]
Leysath v Legal Practitioner fidelity fund Board of Control
(51027/19) [2021] ZAGPPHC 7 (14 January 2021
[9]
2015 (2)
SA
322
(GJ)a
t
para
26
[10]
.
At para 35.
[11]
See Fn.2 at 380-381.
[12]
(40439/2021) [2021] ZAGPPHC 292 (16 November 2012)
[13]
See paras 20.
[14]
Case number: 40881/2020, decided on 11 March 2021
[15]
Case number: 40880/2020, decided on 11 March 2021
[16]
2015 (2) SA 322
(GJ), Victor J at paragraph 26.