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[2018] ZAGPJHC 489
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M and Others v Wim Krynauw Incorporated and Others (41450/2017) [2018] ZAGPJHC 489 (19 September 2018)
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REPUBLIC
OF SOUTH AFRICA
IN
THE HIGH COURT OF SOUTH AFRICA
GAUTENG
LOCAL DIVISION, JOHANNESBURG
CASE
NUMBER: 41450/2017
Not
reportable
Of
interest to other judges
Revised
19/9/2018
In
the matter between:
M,
G
First
Applicant
M
A
Second
Applicant
K,
N
Third
Applicant
N,
D
Fourth
Applicant
and
WIM
KRYNAUW
INCORPORATED
First
Respondent
KRYNAUW,
WILHELM
JOHANNES
Second
Respondent
COETZER,
JOHANNES BERNARDUS VAN AARDT
Third
Respondent
NORTJE,
HEIN
Forth
Respondent
BEKKER,
HENDRIK JOHANNES STEPHANUS (NO)
Fifth
Respondent
LAW
SOCIETY OF THE NORTHERN
PROVINCES
Sixth
Respondent
MASTER
OF THE HIGH COURT
–
PRETORA
Seventh
Respondent
THE
MEMBER OF THE EXECUTIVE COUNCIL FOR THE
HEALTH
AND SOCIAL DEVELOPMENT OF THE
GAUTENG
PROVINCIAL
GOVERNMENT
Eighth
Respondent
JUDGMENT
WINDELL,
J:
INTRODUCTION
[1]
This is an application to declare a contingency fee agreement invalid
and ordering the first respondent to account for fees
charged in
respect of professional services rendered to the applicants, by
serving and taxing an attorney and own client bill of
cost.
[2]
The applicants bring this application in their representative
capacities as biological parents and legal guardians of their
minor
children. The minor children suffered profound brain injuries as a
result of birth complications in consequence of which
the applicants
instructed the first respondent, Wim Krynauw Attorneys ("Krynauw
Attorneys"), to institute actions for
damages against the eighth
respondent, the MEC of Health and Social Development of the Gauteng
Provincial Department ("the
MEC"). The actions against the
MEC were finalised successfully.
[4]
The second respondent is Wim Krynauw, an attorney practising
as the sole director of Krynauw Attorneys at its Krugersdorp branch.
The third and fourth respondents are attorneys employed at Krynauw
Attorneys. The third respondent, Mr. Coetzer, mainly dealt with
the
case of K, the first and second applicant's minor child, and the
fourth respondent, Mr. Nortje, mainly dealt with the case
of Z ("Z"),
the third applicant's minor child.
[5]
The first to third respondents consented to the relief sought
by the first and second applicants in relation to the minor child K,
and the consent order was made an order of court. In terms of this
order they consented to re-serve an attorney and client bill
of costs
on the attorney of record, which bill of costs is to be taxed, and to
make payment of the difference, if any, between
the taxed fees and
disbursements and the actual fees and disbursements deducted by
Krynauw Attorneys, into the KR Monnye Trust.
[6]
The fifth respondent is Hendrik Johannes Stephanus Bekker NO
("Bekker"), the first appointed trustee of the Z K Trust
("the trust"), an
inter vivas
trust established in
terms of orders of this court dated 22 October 2015 and 20 October
2016. The relief sought against Bekker is
mainly directed towards the
amendment of certain paragraphs in the Trust Deed. Bekker does not
oppose the application and has filed
a notice indicating his
intention to abide by the decision of this court.
[7]
The sixth respondent is the Law Society of the Northern
Provinces ("the Law Society"). It is cited in these
proceedings
as the governing body responsible for the professional
conduct of attorneys within the area of jurisdiction of this court.
The
seventh respondent is the Master of the High Court, Gauteng
Division and is cited herein by virtue of its interest in respect of
the trust. No relief is sought against the sixth to eighth
respondents.
[8]
The only remaining
/is
in this matter is between
Krynauw Attorneys and the third and fourth applicants. The third and
fourth applicants will collectively
be referred to as 'the
applicants' and the first, second, third and fourth respondents will
be referred to as the 'respondents'.
BACKGROUND
FACTS
[9]
During March 2012 the third applicant mandated Krynauw
Attorneys to institute action on behalf of Z against the MEC. A
contingency
fee agreement was entered into between the parties and
signed on 29 March 2012. An action for damages was instituted against
the
MEC based on the negligence of the staff of the Chris Hani
Baragwanath Hospital during Z's birth, resulting in Z sustaining
brain
damage causing him to suffer from cerebral palsy.
[10]
The action proceeded to trial on 25 April 2014 for a period of
12 days. Senior and junior counsel were appointed to conduct the
trial. The issues of liability and quantum were separated. The trial
concluded on 20 May 2014. On 6 February 2015 judgment was delivered
in favour of the third applicant in her representative capacity, and
the MEC was ordered to pay all of Z's agreed or proven damages.
[11]
After the successful finalization of the liability-aspect,
Krynauw Attorneys appointed twenty expert witnesses from various
medical
fields to provide it with medico-legal reports in order to
quantify the minor child's claim for future medical and related
expenses,
loss of earnings and general damages. The quantum aspect of
the claim was set down for trial on 12 October 2015, and ran for a
period of 9 days. Senior counsel together with two junior counsel was
instructed to act on behalf of the third applicant. On 22
October
2015 an order was granted in respect of Z's past and future hospital,
medical and related expenses and, in addition thereto,
an order for
the payment of an amount of compensation for the administration of
those funds by means of a trust. Judgment was reserved
in respect of
the issues of general damages and loss of earnings and the costs of
the second junior counsel.
[12]
On 15 January 2016
Krynauw Attorneys received payment in terms of the October 2015 order
from the MEC in an amount of R 15 578 983-93.
At that stage the
registration of the trust was still pending and the capital amount,
after fees and disbursements were deducted,
was kept in a section 78
(2)(A)
[1]
account. On 14 July 2016 Krynauw Attorneys paid an amount of R 8 877
152.12 to the trust.
[13]
On 20 October 2016 judgment was delivered in respect of the
remaining issues, namely general damages and loss of earnings and an
additional amount of R 1460409.67 was ordered to be paid by the MEC
in respect of the two heads of damages. The judgment resulted
in a
total award of R 17 039 393-60. The costs of the second junior
counsel were allowed in respect of the preparation of the schedule
of
future hospital, medical and related expenses.
[14]
An application for leave to appeal was lodged on behalf of the
third applicant only in respect of the award granted for general
damages (R200 000) and the contingency deduction (35%). Leave to
appeal to the Supreme Court of Appeal was granted on 13 February
2017
and the appeal was set down for hearing on 2 March 2018.
[15]
A party-and-party bill of costs was drawn and served on the
State Attorney on 20 April 2017. The State Attorney opposed the bill
and it was set down for taxation on 21 August 2017. The
party-and-party costs were taxed and the allocator therein in the
amount
of R 2 548 279-60 was paid to the trust on 26 October 2017.
[16]
On 15 March 2018 the SCA upheld the appeal resulting in an
additional award of damages in the amount of R 3 469 307.07 (over and
above the amount of R 15 578 983.93 that had already been awarded)
resulting in a total award of R 19 048 291.00. The MEC subsequently
approached the Constitutional Court with an application for leave to
appeal. During the hearing of this application I was informed
that
the Constitutional Court dismissed the application for leave to
appeal.
THE
APPLICATION
[17]
It is important to briefly deal with some aspects of the
applicants' founding affidavit, as well as averments made by the
third
applicant in two urgent applications launched against Krynauw
Attorneys in the Pretoria High Court, both of which have been struck
from the roll with costs. At the same juncture I also deem it
necessary to deal with the allegations raised by the respondents
against the applicants in relation to
lama.
I will firstly
deal with the applicants averments in the founding affidavits.
[18]
In the current application the applicants' attorney, Mr.
Norman Berger ("Berger") deposed of the founding affidavit
on
behalf of the applicants. In the founding affidavit it was averred
that the applicants never received an attorney and client bill
of
costs from Krynauw Attorneys, notwithstanding that more than a year
has passed since payment of the capital was made by the
MEG. In their
answering affidavit the respondents disputed this allegation and
averred that two separate bills of costs were drawn
up based on the
fee agreement between the third applicant and Krynauw Attorneys. The
first bill of costs was drawn in respect of
the issue of liability
and the second in respect of the issue of quantum. In the first
urgent application instituted by the applicants
on 6 July 2016, the
third applicant confirmed that she had been handed two sets of
bundles of accounts and/or invoices together
with a distribution
statement and that it was explained to her that they were bills of
costs. She further stated that the one bundle
was a "Bill of
Costs in respect of merits and litigation" and that the other
bundle was a "Bill of Costs in respect
of quantum" and she
attached both bundles to her founding affidavit. The allegation by
the applicants that they never received
any attorney and client bill
of costs from the respondents is clearly false and is misleading. No
explanation was provided by the
applicants for the discrepancy.
[19]
The applicants aver in their founding affidavit that no
written fee agreement was entered into between the applicants and
Krynauw
Attorneys. The respondents disputed this allegation in their
answering affidavit and alleged that the third applicant had signed
a
contingency fee agreement and that fees had been charged in
accordance therewith. A copy of the contingency fee agreement was
attached to the respondents answering affidavit. In a complete
turnaround, the applicants admitted in their replying affidavit
that
a contingency fee agreement had indeed been signed by the third
applicant. Again no explanation had been furnished by the
applicants
for the false statement.
[20]
The two above-mentioned extracts from the third applicant's
affidavits are unfortunately not the only instances where the
applicants
statements are found wanting. It is averred in the
founding affidavit that
"none of the applicants were
consulted in regard to the contents of the Trust Deeds and were not
informed
as
to who is going to be appointed as trustee"
and
"the appointment of the fifth respondent was never
disclosed to the applicants and they were never given an opportunity
to
express an opinion
as
to who should be appointed".
In
the founding affidavit attached to the first urgent application the
third applicant however stated "/
informed the first
respondent that I do not agree to the formation of
a
trust
under Veritas and that I prefer to be nominated the trustee and/or
agent on behalf of my son, but albeit my dissatisfaction,
a
trust
was created known
as
Z K Trust".
At par 64 of the
founding affidavit it is averred that
"No legitimate form of
accounting has ever·been furnished by the first respondent to
the applicants".
In the founding affidavit attached to both
urgent applications the third applicant however stated
"During
2016 the first respondent delivered to me two sets of bundles of
accounts and/or invoices. He informed me that the
bundles were
a
Bill of Cost. He realized that I was not totally convinced and
never satisfied. He then gave me
a
printout statement of
account labelled "Distributions Statement MEG 0003- Client copy
reduced fee".
[21]
But, of even greater concern is the fact that the third
applicant, in both urgent applications, sought payment of an amount
of R
6 648 689-78, and prayed that such payment must be made, not
into the trust account of the trust, but into her personal bank
account.
She also requested the court to order the Master of the High
Court to remove Veritas as the trustees and to appoint her as the
sole trustee of the trust with immediate effect. The respondents
submit that one of the biggest gripes the third applicant had with
Veritas was expressed in her founding affidavit in the first urgent
application and that was the fact that Veritas failed to buy
a house
for the benefit of her son and that they were given "a
slap
in the face"
when they were given R 20 000.00
"to
buy furniture for a six room house. We had no option but to buy very
cheap and/or below standard furniture".
[22]
This brings me to the second important issue, namely the
serious allegations raised against the applicants in regards to Z.
The
respondents contend that the applicants are ma/a
fide
and
have a hidden agenda in launching the proceedings. It is submitted
that in order to view this application in its true and proper
context, the court must have regard to the applicants' general sense
of entitlement to Z's award of damages and their consequent
failure
to act in his best interest. It is submitted that this application is
not brought in Z's best interests and has its origin
in the
applicants desire to gain access to and control of Z's trust funds
and to achieve personal gain from the trust funds to
which they are
not entitled.
[23]
The deponent to the respondents answering affidavit is the
fourth respondent, Mr. Nortje. As previously mentioned he was the
attorney
that directly dealt with Z's matter. In paragraph 58 of his
answering affidavit, Mr. Nortje refers to correspondence which he
received
by e-mail from Melinda Rautenbach from Veritas containing an
e-mail from Kirsten du Toit, the case manager employed by Ophilayo
Case Management. Mr. Nortje states that he was requested to deal with
the information contained in the email on a confidential
basis, as
the case manager and school principal feared the applicants' reaction
to the concerns raised in the correspondence, should
the information
be disclosed to them.
[24]
In summary, the report deals with the school principal's
perception of feeling threatened and concern about Z's health whilst
at
home; the school principal's apprehension that the applicants may
not be equipped to care adequately for Z; as well as a scenario
in
which the school staff are threatened on a regular basis and,
finally, a concern
"that the third and fourth applicants may
remove
Z
from the school and place him at home with the aim of
receiving the increased monthly payment".
[25]
Z is a learner at Minnies Angels. Ms Thandi Mbuku ("Mbuku"),
the school principal, compiled a report which was made available
to
the trustees and subsequently came into the possession of Mr. Nortje.
The report contained the following statements:
[25.1]
"The parents still
continue to come late to fetch him on the last Friday of the month
and the Nurse is forced to work overtime".
[25.2]
"Z
(Z)
was
dropped off on the 8
th
January 2018 by his
parents and he was completely ungroomed with long dirty nails and his
hair was not cuf'.
[25.3]
"The parents never
bothered to leave the diapers for
Z
and said the trust will
take care of it. This despite the arrangement agreed upon that
she
will be responsible for buying the diapers".
[25.4]
"The parents did not
return half of
Z's
clothes. He
has
no toothbrush or
face cloth and toiletries".
[25.5]
"Z's parents are
becoming impossible to deal with because on the day they dropped off
Z,
I was not around and they told my staff the following (and
I think it
was
unnecessary):
[25.1.1]
They want to take
Z
out of the school because him being at the
school fulltime messes up their chance of getting the house they want
from the trust.
[25.1.2]
That they want to take charge of
Z's
money and make sure the
trust gives in to their demands and feel like the trust
is
spending
Z's
money recklessly.
[25.1.3]
That they want
Z's
nurse to stay with him at home with them as
it is the only way the trust can see
a
need for them to have a
house of their own and not
a
rented house.
[25.1.4]
I feel like
Z's
parents have no interest in what is best for
Z
because their main concern is what they want and what they think
they should get from the trust. They cannot even take proper care
of
him for 2
days
in
a
month and now they want to keep him
at home just
so
they can secure
a
house. Nonetheless,
we are unable to continue being undermined and disrespected by these
parents and if they want their child, they
should follow proper
channels of giving
us
2 month prior notice then we will
release their child to whatever care they
see
fit (I strongly
believe that shouldn't be the parents).
[25.1.5] I have made contact with
them and they confirmed that the best way for them to get
a
house
is if Z is with them fulltime but they denied that they said they are
taking him out of our school".
[26]
Mbuku also requested that the information be kept confidential
"as
I feel like Z's parents are dangerous human beings and
will not hesitate to cause harm to anyone that stand in their way of
accumulating
a
house they believe they deserve and that
includes putting
Z's
life in danger".
Mbuku declined
to depose to a confirmatory affidavit purportedly out of fear for the
applicants.
[27]
In the replying affidavit, deposed to by Berger, the parenting
qualities of the applicants were canvassed and an attempt to rebut
the averments made by Mr. Nortje was made in that such averments
impugned the conduct of the third and fourth applicants in an
inappropriate and distasteful manner.
[28]
Mr. Nortje has suggested in his answering affidavit that the
court should consider the appointment of a
Curator ad Litem
to
assist Z in these proceedings and to report back to the court as to,
inter alia,
whether the applicants' own personal interests in
the award of damages are impacting negatively on the ability of the
trustees to
act in Z's best interests.
[29]
The allegations by Mr. Nortje are based on hearsay evidence. I
am however of the view that it would be irresponsible of this court
to ignore the serious allegations directed against the applicants in
relation to Z. The matter is referred to the Regional Director
of the
Department of Social Development to conduct an enquiry into the
allegations made by the case manager and school principal
and to
report back to this court within 60 days.
POINTS
IN LIMINE
[30]
The respondents raise two preliminary points. One: The
application is premature as the main action between the applicants
and the
MEC has not yet been finalized. Two: The applicants
approached the wrong forum.
Application
was launched prematurely.
[31]
The respondents' complaint is directed against Prayer 5 of the
Notice of Motion in which the applicants seek the following relief
against Krynauw Attorneys:
"Ordering the first respondent to
serve an attorney and own client bill of cost, in respect of all work
done in the case of
Z, on the third and fourth applicants attorney of
record within 21 days of date hereof which bill of cost is to be
taxed".
The respondents submit that the application is
premature because the principal action between the applicants and the
MEC has not
been finalized as the applicants successful appealed to
the SCA and is now the subject of an appeal to the Constitutional
Court.
The relief prayed for in Prayer 5 namely, accounting for
'all
work done',
is therefore not possible until the matter has been
completely finalized.
[32]
In Prayer 1 in the Notice of Motion an order is sought
declaring that there is no written, alternatively, valid agreement
between
the parties. Prayer 1 is not affected by the point
in
limine
and on that basis alone the application was not launched
prematurely.
[33]
As far as the point
in limine
raised may affect the
relief sought in Prayer 5, the following: The
Rules for the
Attorneys' Profession
(annexed to the applicants' founding
affidavit) states that the duty on an attorney to account to his /
her client only arises within
a reasonable time after the performance
or earlier termination of any mandate. In my view this does not
prevent a disgruntled client
from requesting his attorney to furnish
an attorney and own client bill of cost at any time before the
performance is completed.
A bill of cost would then be presented on
all the work done
up to that stage of the proceedings
(my
emphasis). As soon as Krynauw Attorneys debited fees and
disbursements from the money received in terms of the court order,
they have the obligation to account to the applicants if so
requested. The respondents themselves recognized the necessity to
account before the mandate has been completed, and did in fact
account. It is in respect of that actual accounting that the present
application has been brought. There is no merit in this point
in
limine.
The application has not been brought prematurely.
Incorrect
forum
[34]
Two complete attorney and client bills (applicable to the work
that had been finalized at that point in time) had been provided to
the third applicant. The respondents allege that this court is the
incorrect forum to assess the fees charged in the matter and
that it
should be referred to the Law Society for review. It is submitted
that clause 10 in the contingency fee agreement provides
for a
referral to the Law Society, as well as section 5 of the
Contingencies Fees Act 66 of 1997 ("the Act").
[35]
Clause 10 of the contingency fee agreement states that
"...
the agreement or the fees may be referred for review to the Law
Society..."
The clause does not mandate the applicants to
approach the Law Society to review the fees charged. It clearly
states that the agreement
"may" be referred. Section 5 of
the Act provides for similar terms:
"5(1)A client of
a
legal
practitioner who has entered into
a
contingency fees agreement
and who feels aggrieved by any provision thereof or any fees
chargeable in terms thereof may refer such
agreement or fees to the
professional controlling body......
(2) Such professional body or
designated body or person may review any such agreement and set aside
any provision thereof or any
fees claimable in terms thereof if in
his, her or its opinion the provision of fees are unreasonable or
unjust"
[36]
Although the Act provides for a procedure that may be followed
by an aggrieved client, it does not prohibit such a client from
approaching
the court directly. The applicants could have approached
the Law Society first before launching the proceedings, but in light
of
the relief sought in Prayer 1 of the Notice of Motion, namely
declaring the contingency fee agreement invalid, the applicants
cannot
be faulted for approaching the court instead of the Law
Society. The point
in limine
is dismissed.
VALIDITY
OF THE CONTINGENCY FEE AGREEMENT AND APPLICATION TO STRIKEOUT
[37]
Paragraph 5 of the
contingency fee agreement provides for the levying of VAT in addition
to the success fee instead of including
it in the success fee. It is
trite that a contingency fee agreement which provides for the levying
of VAT in addition to the success
fee is invalid. It is obligatory
that a contingency fee agreement must include VAT (if applicable) in
the success fee. It is well established
through case law that
failure to comply with the provisions of the Act renders any
purported agreement in terms thereof invalid
and unenforceable
[2]
I am satisfied that the contingency fee agreement is invalid for non-
compliance with the Act.
[38]
The respondents applied in terms of Rule 6(15) of the Uniform
Rules of Court that certain paragraphs in the applicant's replying
affidavit must be struck out. The nub of the respondents' argument in
the striking out application is that the applicants made
out one
cause of action in the founding affidavit namely that there was no
written fee agreement, but relies on a totally new cause
of action in
the replying affidavit alleging that the contingency fee agreement is
invalid and unenforceable. It is submitted that
the cause of action
should be made out in the founding affidavit and the applicants
should not be allowed to change the cause of
action in the replying
affidavit. It is argued that the respondents have not been given a
fair and reasonable opportunity to deal
with the new case made out in
the replying affidavits which has caused them severe and irreparable
prejudice as they have been
deprived of presenting certain evidence
on which it would premise a legal argument for the validity and
enforceability of the contingency
fee agreement.
[39]
The respondents set out in their supplementary heads of
argument what 'evidence' they would have presented if given the
opportunity
to do so. The argument is as follows: The respondents
concede that the contingency fee agreement does not comply with the
Act in
that the words "and VAT" was included in addition to
the success fee. If the invalidity of the contingency fee agreement
had been raised in the founding affidavit, the respondents would have
raised a defence of severability and would have pleaded for
the
phrase "and VAT" to be severed from the rest of the
agreement. It is submitted that the respondents would in all
likelihood presented evidence that the applicants would have accepted
the terms of the agreement without the phrase "and VAT".
As
the invalidity of the contingency fee agreement was only raised in
reply, the respondents were denied the opportunity to raise
the
severability point.
[40]
In the notice of motion the applicants seek an order declaring
that there was no written, alternatively valid fee agreement. The
starting point is the contingency fee agreement. A court, when faced
with a written fee agreement, may
mero moto
raise the validity
of such an agreement. The fact that the validity issue was not
pertinently raised by the applicants in the founding
affidavit will
not deter this court from investigating the issue.
[41]
The contingency fee agreement signed by the third applicant on
29 March 2012 is identical to the contingency fee agreement signed
by
the first applicant on 28 March 2012. On 31 October 2016 Moshidi J
declared the contingency fee agreement between the first
applicant
and Krynauw Attorneys invalid and ordered Krynauw Attorneys to serve
an attorney and own client bill of costs in respect
of all work done
in respect of K and to make payment of the difference, if any,
between the taxed fees and disbursements and the
actual fees and
disbursements deducted by Krynauw Attorneys in respect of work done
in the case of K into the KR Monnye Trust.
[42]
I agree with counsel for the applicants that since the two fee
agreements are identical, logic dictates that, if the one agreement
is invalid, that the other agreement is also invalid. Once the first
applicant's contingency fee agreement was declared invalid,
the
respondents should have realized that this would affect all other
matters in which contingency fee agreements were concluded
and that
the same directive, to have their fees taxed, would apply to all
those matters. The respondents must have been aware of
the invalidity
of their contingency fee agreement before the hearing of the
application and as they rely on this agreement as the
basis upon
which the applicants were billed, they could have raised the defence
of severability in the answering affidavit.
[43]
The respondents concede that the contingency fee agreement is
not in compliance with the Act and is therefore invalid. This court
has a duty under the Act to ensure that invalid contingency fee
agreements are not enforced. To permit the application to strike
out
the replying affidavit, I would be failing in that duty. The
application to strike out is refused.
THE
TRUST
[44]
In is common cause that a trust was established for
lama
in
terms of a court order. The Trust Deed was drafted and signed by
Veritas Board of Executors with Barnie van Heerden from Veritas
as
the founder. The Trust Deed was accepted by the Master of the High
Court and the Z K Trust was registered under registration
number
IT001373/2016 (T).
[45]
Berger, the attorney acting on behalf of the applicants,
submitted that Krynauw Attorneys failed to properly ensure that the
establishment
of the Trust Deeds complied with the provisions of the
Trust Property Control Act 57 of 1988 and failed to ensure that the
Trust
Deed complied with the respective court orders. It is contended
that the Trust Deed is deficient in the following material respects:
[45.1] the provisions of paragraph 5.1
in terms whereof the trustees shall have the power to deal with the
assets of the trust "as
if they were the absolute beneficial
owners" is in conflict with section 11(1)(a) - (d) of the Trust
Property Control Act.
The trustee is acting in a fiduciary capacity
and can never be the beneficial owner of any of the assets of the
Trust or deal with
them as though he were.
[45.2] the provisions of paragraph 9.1
create an unacceptable risk to both the trust and the beneficiaries.
It is wholly undesirable
that any non-South African resident be
appointed as a trustee of these particular trusts. They exist solely
for the benefit Z and
if the trustee is not easily accessible and
available to the applicants, then the purpose for which the trusts
have been established
will not be achieved;
[45.3] the provisions of paragraph 9.2
are clearly unacceptable. The office of trustee is a fiduciary one
and the trustee holds
office, subject to compliance with the Trust
Deed and at the pleasure of the Master of the High Court. The office
of trustee is
not hereditary and transmissible to the heirs of the
trustee for the time being.
[45.4] the provisions of paragraph 9.3
are at odds with the provisions of section 6 and its sub-paragraphs
of the Trust Property
Control Act. It is only the Master of the High
Court that has the power to appoint a trustee and subject to the
conditions set
out in that section.
[45.5] the provisions of paragraph 9.4
are directly in conflict with the provisions of section 6(2)(a) of
the Trust Property Control
Act and the provisions of paragraph 4.3 of
the court order.
[45.6] the provisions of paragraph
15.1 to 15.3 are in conflict with section 9(2) of the Trust Property
Control Act in that such
provisions are as a matter of law void.
[45.7] the provisions of paragraph
19(1)(ii) and paragraph 20 are in conflict with paragraph 5.6 and 5.7
of the court order which
specifically provides that any variation of
the Trust Deed may only be effected with the leave of the Court and
that the Trust
will only terminate on the death of Z.
[46]
The application for the amendment of the Trust Deed is not
opposed and Bekker filed a notice to abide and abandoned any cost
order
to effect the amendments. The Trust Deed is therefore amended.
CONCLUSION
[47]
The applicants submit
that Krynauw Attorneys has failed to properly account to the
applicants and has also failed to comply with
the rules of the Law
Society.
[3]
The complaint, in a nutshell, is that the fee charged by the first
respondent inclusive of VAT, was R3 999 999.98. That is 25.67%
of the
capital and not 25%. The respondents dispute this and aver that
Berger's calculation is based on the amount of R 15 578
983-93 that
was awarded on 20 October 2015 and he had failed to take into account
that the total award is the amount of R 17 039
393-60, which was
awarded on the 20 October 2016. The respondents submit, that if
correctly calculated, the total fee inclusive
of VAT for work done up
until 20 October 2016 was 23,47% of the total award.
[48]
I agree with counsel for the applicants that it is unlikely
that the respondents calculated its fee based on the amount of R 17
039 393.60 as Krynauw Attorneys rendered a distribution statement to
the applicants on 8 June 2016 reflecting the fee of R3 999
999.98,
which was four months prior to the judgment handed down on 20 October
2016. At that stage the respondents could not have
known what the
amount of the final award would have been.
[49]
I find it unnecessary to determine this issue, given that the
contingency fee agreement has been declared invalid and the
respondents
will have to present a new attorney and own client bill
of costs which must be taxed. The respondents have tendered that the
attorney-and-own
client account in respect of all work done to date
hereof be referred to the Law Society for an assessment of their
files and fees
as set out in their bills of cost. I intend to keep
them to that tender.
COSTS
[50]
Counsel for the applicants contends that the conduct of the
first respondent has fallen short of the standard expected of senior
and expert attorneys in representing their client's interests. It is
submitted that the first respondent should be ordered to pay
the
costs of this application on the scale as between attorney and own
client.
[51]
The respondents submit that they were never given an
opportunity of explaining the applicants' perceived misgivings prior
to the
application being launched. It is submitted that had Berger
approached Krynauw Attorneys with a simple request for whatever
explanations
were required, Krynauw Attorneys would not only have
been in a position to provide same, but would have done so without
delay.
It is submitted that the failure by Berger to have followed
this course of action was unreasonable and irresponsible.
[52]
It is further submitted that the applicants have brought this
application relying on a litany of untruths in the founding affidavit
for which they have not given any explanation and is not even
addressed in the heads of argument. In the circumstances it is
submitted
that this matter warrants a punitive cost order and an
order including that the costs be paid by the attorney of record
de
bonis propriis
jointly and severally with the applicants.
[53]
The general rule is that the costs follow the event. A court may
deviate from the general rule and deprive a successful party
of his
costs if it is found for instance that the successful party gave
false evidence or attempted to mislead the court. The conduct
of the
applicants is unacceptable and improper. They gave false evidence and
mislead the court and when confronted, they did not
bother to give
any explanation for it. I agree with counsel for the respondents that
Berger, at the very least, should have enquired
from the applicants
why these untruths are contained in the founding affidavit and, as an
officer of the court, explain this. In
the circumstances, and as a
mark of my disapproval, I am of the considerate view that the
applicants should be deprived of their
costs.
[54]
In the result the following order is made:
[54.1] The contingency fee agreement
entered into between the third applicant and the first respondent is
declared invalid.
[54.2] The first respondent is ordered
to serve an attorney and own client Bill of Costs in respect of all
work done in respect
of Z and to make payment of the difference, if
any, between the taxed fees and disbursements and the actual fees and
disbursements
deducted by Krynauw Attorneys in respect of work done
in the case of Z into the Z K Trust.
[54.3] The first respondent is ordered
to make payment of interest at the rate of 10.25% per annum on any
amount found to be payable
in terms of paragraph 50.2 above from 29
January 2016 to date of payment, both days inclusive.
[54.4] The first respondent's
attorney-and-own client accounts in respect of work done up to
October 2016 is referred to the Law
Society for an assessment of the
first respondent's files and fees as set out in their Bills of Cost.
[54.5] A copy of the judgment, with
specific reference to paragraphs 17-29 is referred to the Department
of Social Development and
the Department is ordered to investigate
the allegations contained therein and to report back to this court in
writing within 6_0
days.
[54.6] That the Trust Deeds of the Z K
Trust be amended in the following respects and directing the fifth
respondent to take such
steps forthwith as may be necessary to
procure the amendments and registration thereof in the offices of the
seventh respondent
in accordance with the provisions of section 4(2)
read together with section 13 of the Trust Property Control Act 57 of
1988 as
follow:-
[54.6.1]
By deleting paragraph 5.1 inclusive of the Trust Deed.
[54.6.2]
By deleting paragraphs 9.1 to 9.4 inclusive of the Trust Deed.
[54.6.3]
By deleting paragraph 15.1 to 15.3 inclusive of the Trust Deed.
[54.6.4]
By deleting paragraph 19.1(ii) of the Trust Deed.
[54.6.5]
By deleting paragraph 20 of the Trust Deed.
[54.7] No order as to costs.
____________________
L
WINDELL
JUDGE
OF THE HIGH COURT OF THE REPUBLIC OF SOUTH AFRICA
Attorney
for applicant: Norman Berger and Partners Inc
Counsel
for applicant: Advocate D.J. Erasmus
Attorney
for respondent: Wim Krynauw Incorporated
Counsel
for respondent: Advocate N. van der Walt SC
Advocate
M. Coetzer
Date
matter heard: 14 June 2018
Judgment
date: 19 September 2018
[1]
Section 78{2)(A) of the Attorneys Act 53 of 1979
[2]
Price Waterhouse Coopers Inc and Others v National Potato
Co-Operative Ltd
2004 (6) SA 66
(SCA) AT [41], De La Guerre v Ronald
Bobroff & Partners Inc and Others (22645/2011) [2013] ZAGPPHC 33
(13 February 2013),
Mofokeng v Road Accident Fund, Makhuvele v Road
Accident Fund, Mokatse v Road Accident Fund, Komme v Road Accident
Fund [2012]
ZAGPJHC 150 (Mofokeng) para [38] and [41], and Tjatji v
Road Accident Fund and Two Similar Cases 2013 (2) SA 632 (GSJ).
[3]
Rule 68.7 and 68.7.1 to 68.7.4 which applied until 29 February 2016
when they were replaced by rules 35.11 and 35.11.1 to 35.11.4.