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[2020] ZALMPPHC 21
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Savanha Construction and Maintenance CC v Phillips and Another (3803/2019) [2020] ZALMPPHC 21 (13 May 2020)
REPUBLIC
OF SOUTH AFRICA
IN
THE HIGH COURT OF SOUTH AFRICA
LIMPOPO
DIVISION, POLOKWANE
Case No: 3803/2019
13/5/2020
In
the matter between
SAVANHA
CONSTRUCTION AND MAINTENANCE CC
APPLICANT
AND
JOAN
KIM
PHILLIPS
FIRST RESPONDENT
HIPPOPOOLS
INVESTMENTS SHARE BLOCK
SCHEME
LIMITED
SECOND RESPONDENT
REVIEW
JUDGMENT (TAXATION)
Kganyago
J
[1]
On 2
nd
December 2019 the applicant had presented its bill
of costs and that of its correspondent attorneys before the Taxing
Master for
taxation. Both bills were drafted on attorney and own
client scale. The respondents are dissatisfied with the rulings of
the Taxing
Master on certain items that he had allowed on applicant’s
and its correspondent’s attorneys bill of costs. The applicant
on the other hand is dissatisfied with the rulings of the Taxing
Master on certain items that he had disallowed on its bill of
costs.
Both parties are seeking to review the rulings of the Taxing Master
on the specific items that he had allowed and disallowed.
Their
review is brought in terms of Rule 48 of the Uniform Rules of Court
(the Rules)
[2]
On items 2,4 and 72, the respondents are alleging that the Taxing
Master had allowed
perusal of emails at R276.00 per page which is
more than 4.5 times the High Court tariff for perusal at R59.00 per
page. The respondents
are further alleging that on other items for
perusal of emails the Taxing Master had reduced and allowed the fee
to R142.43 per
page. On item 8 the respondents are alleging that the
fee for drawing a letter was allowed at R276.00 per page, whilst
other emails
drawn the fee allowed was R142.43 per page.
[3]
On items 2,12,18 and 72, the respondents are alleging that the Taxing
Master had allowed
the fee for perusal of emails and drawing of
emails at the same rate of R142.43. On items 9,13 and 16 the
respondents are alleging
that the Taxing Master had allowed
pre-litigation correspondence to counsel where the counsel’s
availability was only confirmed
on item 22 and the brief was only
send off to counsel in item 23 of the bill of costs.
[4]
On items 15,18,52 and 66, the respondents are alleging that the
Taxing Master had
allowed perusal of documentation at a higher rate
together with attorney client surcharge of 35% and 70% instead of
21.5% that
was allowed on the other items. On item 18 the respondents
are alleging that the Taxing Master had allowed a fee for perusal
whilst
it was a duplication of items 1,2,3,4,6,10,11 and 12. On item
20 the respondents are alleging that the Taxing Master had allowed
a
fee for both attorney and counsel for drafting of the same founding
affidavit instead of allowing for drafting by attorney and
settling
by counsel.
[5]
On items 26,27,32,36,41,43 and 63, the respondents are alleging that
the Taxing Master
had allowed a fee for drafting of a confirmatory
affidavit and practice note at more than 3 times the High Court
tariff, and on
top of that allowed an attorney client surcharge of
202% whilst on the other items he allowed surcharge of 21,5% and 35%.
[6]
On items 19 and 20 and item 7 of the correspondent bill of costs, the
respondents
are alleging that the Taxing Master had allowed a fee for
copies whilst they are duplicates of item 19. On item 33 the
respondents
are alleging that the Taxing Master had allowed a fee for
a candidate attorney to paginate the court file at a rate more than 3
times the High Court tariff and also allowed a surcharge of 204%. On
items 39,40,35,56 and 67, the respondents are alleging that
the
Taxing Master had allowed a fee for the applicant who resides in
Hoedspruit to appoint an attorney in Sandton.
[7]
On item 47 the respondents are alleging that the Taxing Master had
allowed a fee for
perusal instead of re-perusal as the same documents
have previously been perused. On item 51 the respondents are alleging
that
it is not clear whether the Taxing Master had allowed 3 hours or
deducted 2 hours. On item 65 the respondents are alleging that
the
Taxing Master had allowed a fee at more than double the tariff
including waiting time whilst on the marked bill it looks as
if the
intention was to deduct 4 hours, but none was deducted.
[8]
On item 69 the respondents are alleging that the Taxing Master had
allowed counsel’s
pre-litigation costs of drawing a letter of
demand, and also VAT on counsel’s account whilst the applicant
is a VAT vendor.
On item 3 of the correspondent bill of costs, the
respondents are alleging that the Taxing Master had allowed a fee at
a whole
hour rate and at the rate of 25% more than the tariff. On
items 5 and 6 of the correspondent’s bill of costs, the
respondents
are alleging that they are duplicates with item 4. On
item 7 of the correspondent bill, the respondents are alleging that
the Taxing
Master had allowed a double tariff even though it was a
duplication of item 19 and 29 of the applicant’s bill of costs
which
fee was already allowed. With regard to VAT, the respondents
are alleging that the Taxing Master has allowed it on the
correspondent
bill of costs despite the fact that the applicant is a
VAT vendor.
[9]
On items
1,3,5,7,9,10,11,12,13,15,16,17,18,21,22,24,26,27,28,29,31,34,35,
37,38,49,50,52,58,60,64,66,68
and 69 the applicant is alleging that
the Taxing Master has erred in reducing its fee as there is no
applicable tariff and the
fee was reasonable on those items. On item
51 the applicant is alleging that the Taxing Master has erred in
disallowing 4 hours
that they actually spent in attending
consultation. On item 61 the applicant is alleging that the Taxing
Master erred in disallowing
the 15 minutes that they have spent in
attending consultation. On item 65 the applicant is alleging that the
Taxing Master erred
in limiting them to 4 hours for attending court
whilst the actual hours that they have spent attending court were 6
hours. On item
69 the applicant is alleging that the Taxing Master
erred in reducing the counsel’s rate from R2600.00 per hour to
R2000.00
per hour whilst the counsel’s rate accords with the
current Bar Council’s Guidelines and the counsel’s
seniority.
[10]
The Taxing Master in his stated case to the respondents’ review
application has stated
that he tried to be as reasonable as possible
in taxing the bill, and has considered the nature of the costs order
in question.
On items 2,4 and 72 of the applicant’s bill, he
conceded that he had erred. On items 15,18,52 and 66 of the
applicant’s
bill, he alleges that he had decided to allow the
fee at that amount as on items 6,25,47 and 59 the applicant had used
a party
and party scale which was a lower fee. On item 52 he applied
the tariff plus 35% as he believed it was exorbitant, and he does not
remember using 21.5%.
[11]
On item 18 of the applicant’s bill, he admits that he should
not have allowed item 18 and
6, and should have taxed off item 18. On
item 33 he alleges that he found it reasonable considering the nature
of the costs order.
On item 51 of the applicant’s bill, he
alleges that he had allowed 3 hours. On item 65 of the applicant’s
bill, he
alleges that he allowed the fee in full as he found it to be
reasonable. On item 69 of the applicant’s bill, he concedes
that he had erred. On VAT he concedes that he had erred as sometimes
back he was successfully reviewed on a similar issue.
[12]
With regard to item 3 of the correspondent bill of costs, the Taxing
Master alleges that he had
allowed it as he found it to be fair and
not exorbitant taking into account the nature of costs awarded. On
item 5 and 6 of the
correspondent bill of costs, the Taxing Master
concedes that he had erred. On VAT charged by the correspondent, he
concedes that
he had erred as sometimes back he was successfully
reviewed on a similar issue.
[13]
In his stated case to the applicant’s review application, the
Taxing Master alleges that
he was aware that he was dealing with
attorney and own client bill of costs and in the same spirit he
understands that he had to
be fair and reasonable in exercising his
discretion. On items 1,3,5,7,10,11,12,13,15,16,17,
18,21,22,24,26,27,28,29,31,34,35,37,38,49,50,52,58,60,64,66,68
and 69
he stated that he had applied his mind properly when exercising his
discretion. On item 51 he alleges that he found the
4 hours to be
exorbitant and unreasonable. On item 61 he alleges that he found the
amount charged on the bill to be unreasonable
in his judgment. He
concluded by stating that he understands that the nature of the costs
awarded, however, he had to be reasonable
in taxing each and every
item. He further stated that he went through counsel’s invoice
and he believe that he has been reasonable.
[14]
It is trite that a costs order is intended to indemnify the
successful party to the extent that
he/she is not out of pocket as a
result of pursuing the litigation to its successful conclusion. The
Taxing Master has to be satisfied
that indeed the expenses claimed
will not leave the successful party out of pocket.
[15]
In
President
of RSA v Gauteng Lions Rugby Union
[1]
Kriegler
J said:
“
It
is settled law that when a court reviews a taxation it is vested with
the power to exercise the wider degree of supervision identified
in
the time-honoured classification of Innes CJ case. This means:
‘…
that
the court must be satisfied that the Taxing Master was clearly wrong
before it will interfere with the ruling made by him…viz
that
the court will not interfere with a ruling made by the Taxing
Master in every case where its view of the matter in dispute
differs
from that of the Taxing Master, but only when it is satisfied that
the Taxing Master’s view of the matter differs
so materially
from its own that it should be held to vitiate his rulings”
[16]
The applicant’s bill of costs was prepared on the scale as
between attorney and own client.
It is trite that in an attorney and
own client scale, there is no specific tariff that is applicable and
the Taxing Master will
tax the bill on the basis that the fee is not
unreasonable in all the circumstances. The successful party will be
entitled to claim
all the costs which he/she would not be able to
claim under party and party scale and also under attorney and client
scale. The
successful party is indemnified to the fullest to the
costs he/she was supposed to expend in that litigation.
[17]
In
Aircraft
Completions Centre (pty) Ltd v Rossouw and Others
[2]
Stegmann J said:
“
In terms of Rule
70 (5) (a), it is the Taxing Master to decide whether ‘extraordinary
or exceptional’ circumstances
are or are not present, whether
they have or have not affected the costs incurred by the costs
creditor, and whether strict adherence
to the tariff would or would
not be equitable. When a Judge has made a specific finding that the
party ordered to pay costs (the
costs debtor) has conducted his case
in a manner deserving of the court’s censure by means of a
special order for costs to
be taxed as between attorney and client,
it is generally a strong indicator to the Taxing Master that in the
Judge’s view
the costs debtor has conducted his case in such a
way as to likely to have costs the costs creditor to incur costs that
ought to
have been unnecessary and that may not be recoverable on a
taxation as between party and party. Such finding by the Judge would
therefore often lead the Taxing Master to conclude that the case is
indeed an extraordinary or exceptional one for the purposes
of Rule
70 (5) (a), and that a consideration of the bill of costs will show
that strict adherence to the tariff would be inequitable.
If the
Taxing Master finds that the case is an exceptional or extraordinary
one, and that strict adherence to the tariff would
be inequitable,
his finding will both require and justify the application of the
intermediate basis of taxation in the generous
manner contemplated by
Nel. In such a case, the Taxing Master must address his mind to the
question of the extent to which the
extraordinary or exceptional
nature of the case caused the costs creditor reasonably to incur
extra costs that are not recoverable
on a taxation as between party
and party. He will allow those extra costs and will tax them off only
to the extent that there would
otherwise be injustice to the costs
debtor.”
[18]
In taxing an attorney and own client bill, the Taxing Master has
discretion to allow all such
fees and expenses that appears to be
reasonable for the proper attainment of justice or for defending the
rights of any party.
Usually when a client instructs an attorney,
they will have an agreement in relation to the fees payable to the
attorney. The parties
will either agree on an hourly rate or globular
amount. Except where a contingency fee agreement is applicable,
generally the fee
agreed upon is not dependable on the outcome of the
case. Whether the client is successful or not will still be liable to
pay his/her
attorney as per the agreement. If he/she is successful in
his claim or defence, he/she will be entitled to costs on party and
party
scale unless the court in exceptional circumstances award a
punitive costs order against the unsuccessful party.
[19]
In the case at hand the court has awarded a punitive costs order of
attorney and own client against
the respondents. The applicant is
therefore entitled to claim even the costs which it would not have
claimed under party and pay
scale or under attorney and client scale.
However, that will not be free for all where the applicant will
inflate its costs. The
Taxing Master is still having a discretion to
determine whether the costs are not unreasonable, and would allow
costs to the extent
that there would not be any injustice to the
unsuccessful party.
[20]
The applicant’s attorneys had a fee agreement with the
applicant in terms of which their
fees were to be charged on an
hourly rate of R2400.00 standard rate and R2600.00 higher rate for
directors; R1600.00 standard rate
and R1800.00 higher rate for
associates and; R1100.00 standard rate and R1300.00 high rate for
candidate attorneys.
[21]
The applicant’s attorneys opted to draft their bill of costs on
the standard rate for directors
and candidate attorneys. Since the
costs awarded to the applicant is on attorney and own client scale,
the applicant is entitled
to all the costs it was liable to pay its
attorneys Truter and Jones as per the fee agreement to the extent
that they are not unreasonable.
The mere fact that there is a fee
agreement between the applicant and its attorneys which regulate how
the fees are payable, is
not a bar to the Taxing Master to exercise
his discretion and determine whether the fees claimed are not
unreasonable.
[22]
The Taxing Master in his stated case has stated that he had taxed off
the items on the applicant’s
bill of costs as he found them to
be exorbitant and unreasonable. Rule 48 (3) (b) requires the Taxing
Master in his stated case
to set out any finding of fact. The Taxing
Master in his stated case has failed to state any finding of fact.
The applicant’s
bill was based on the agreement they had with
Truter Jones, and its validity was not challenged. For the Taxing
Master to deviate
from the agreement the parties had, there must be
sound reasons and those reasons must clearly appear in the stated
case. It is
not sufficient to merely state that they are exorbitant
and unreasonable. He must lay out the basis for arriving at that
conclusion.
That decision must not just be a thumb suck, it must be
based on facts. It is also not for this court to second guess why the
Taxing
Master had arrived at such a decision.
[23]
Usually factors that will assist the Taxing Master in exercising his
discretion when taxing an
attorney and own client bill are the
seniority of the attorney concerned, complexity of the matter,
speciality in that field, the
duration of the matter, etc and the
list is endless. The Taxing Master’s stated case is not helpful
as it did not set out
the finding of facts and the approach which he
had followed in taxing off the items concerned on the applicant’s
bill of
costs. In my view, in taxing off the items on the applicant’s
bill of costs, the Taxing Master did not exercise his discretion
properly, and therefore his rulings were clearly wrong.
[24]
Turning to the items which the Taxing Master has allowed and which
the respondents are seeking
them to be reviewed. The Taxing Master in
his stated case has conceded that on items 2,4,18,72 and VAT of the
applicant’s
bill, he had erred. He has also conceded that on
items 5,6 and VAT of the applicant’s correspondent attorneys
(DDKK) bill
of costs he had erred. With that concession, there will
therefore be no need for me take any issues on these items any
further.
[25]
On items 15,18,52 and 66, the Taxing Master has stated that the
applicant had decided to charge
items 6,25,47 and 59 on party and
party scale as per the tariffs. Based on the fact that the party and
party tariff is a lower
scale, he decided not interfere with them
considering the court order. He has further stated that on item 52 he
applied the tariff
plus 35% as he believed it was exorbitant, and
does not remember using 21.5% on any of the items.
[26]
On items 15,18,52 and 66, the test used by the Taxing Master is
confusing and not the correct
test for taxing an attorney and own
client bill. It does not appear whether the Taxing Master had
determined whether the fee charged
by the applicant was not
unreasonable and by allowing them will not cause injustice to the
respondents, but used his discretion
on the basis that he believed
they were exorbitant. The test is not whether he believed them to be
exorbitant, but whether the
fees charged were not unreasonable. By
arriving at the conclusion whether they are reasonable or not must be
based on facts and
not what he believed in. The basis of the Taxing
Master to allow similar items on different tariffs does not make
sense at all,
and that in itself shows that he did not exercise his
discretion properly.
[27]
On item 33 the Taxing Master was called upon to give reasons why he
allowed the candidate attorney
to paginate at the rate which is more
than 3 times the high court tariff. The Taxing Master in his stated
case has merely stated
that he found the fee to be reasonable
considering the nature of the costs. He does not give the basis upon
which he arrived at
that conclusion. He was supposed to state the
facts which made him to have arrived at that conclusion. Failure to
do so shows that
he did not apply his discretion properly.
[28]
On item 51 the respondents are alleging that it is not clear whether
the Taxing Master has allowed
3 hours or 2 hours. The applicant’s
attorneys on the other hand alleges that their notes shows that they
have consulted with
the applicant for 4 hours and 3 minutes. The
Taxing Master in his stated case has stated that he had allowed 3
hours. The Taxing
Master did provide facts that made him to come to
the conclusion that 3 hours was the reasonable time which the
applicant’s
attorneys have spent in consultation. It is not for
this court to speculate what would have made the Taxing Master to
arrive at
the conclusion that 3 hours was the reasonable time. Those
facts which the Taxing Master has used in applying his discretion
must
be clearly set out in his stated case.
[29]
On item 65 the respondents are alleging that it seems that the
intention of the Taxing Master
was to deduct 4 hours whilst in actual
fact he did not deduct anything. The applicant’s attorneys on
the other hand alleges
that they have attended court for more than 6
hours. The Taxing Master in his stated case has stated that nothing
was deducted
as he found it to be fair and reasonable. However, on
perusal of the bill itself, it shows that the Taxing Master has
allowed 4
hours and not 6 hours that was claimed by the applicant. It
seems that the manner in which the Taxing Master has taxed the bill
is even confusing him as he could not tell whether he allowed the fee
as it stand. Even if he had allowed the fee as it stand,
he was
supposed to state the facts which made him to arrive at that
conclusion in his stated case, but has failed to do so.
[30]
On item 69 of the applicant’s bill, even though the Taxing
Master has conceded that he
had erred, it is in the public interest
that it be dealt with. The applicant’s attorneys are stating
that the counsel’s
rate of R2600.00 per hour accords with the
current Bar Council’s Guidelines and counsel’s seniority.
If indeed the
Bar Council has guidelines is far as the tariffs are
concerned, that in itself will prevent competition. A party who seeks
the
services of a counsel must be able to shop around comparing rates
and not be limited by rates that have been fixed. The issue of
the
Bar Council’s guidelines in relation to counsel’s fees
should not be a determining factor as to what is reasonable.
Seniority and other relevant factors are the ones which should be
taken into consideration in determining whether the counsel’s
fee is not unreasonable.
[31]
The Taxing Master’s stated case did not comply with Rule
48(3)(b) and was therefore of
no assistance to the court. The Taxing
Master has failed to set out the approach which he had followed in
Taxing the bill except
to say that he found the fees that he had
allowed to be reasonable, and those he disallowed to be unreasonable,
without setting
out the facts which he relied on in arriving at that
conclusion. Without those facts been set out, it is difficult for
this court
to determine whether the Taxing Master has exercised his
discretion properly. I am therefore satisfied that the Taxing
Master’s
rulings were clearly wrong and needs to be interfered
with. Both parties have successfully challenged the rulings made by
the Taxing
Master which affect almost the entire bill. It will
therefore, be fair to both parties if the entire allocation by the
Taxing Master
is set aside.
[32]
In the result the following order is made:
32.1 The review by both
applicant and respondents is upheld.
32.2 The Taxing Master’s
allocation is set aside in its entirety.
32.3 The matter is
referred back to taxed afresh before another Taxing Master.
32.4 There is no order as
to costs.
MF
KGANYAGO J
JUDGE OF THE HIGH
COURT OF
SOUTH AFRICA, LIMPOPO
DIVISION,
POLOKWANE
DATE
DELIVERED: 13
TH
MAY 2020
[1]
2002 (2) SA 64
(CC) at 73C-D
[2]
2004 (1) SA 123
(W) at para 92