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[2016] ZAKZPHC 94
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Cannon South Africa v Commissioner: South Africa Revenue Custom and Excise (2671/2016P) [2016] ZAKZPHC 94 (7 October 2016)
IN HIGH COURT OF SOUTH
AFRICA
KWAZULU-NATAL
DIVISION, PIETERMARITZBURG
CASE
NO: 2671/2016P
DATE:
7
OCTOBER 2016
In the matter between:
CANNON SOUTH
AFRICA
APPLICANT
and
THE COMMISSIONER:
SOUTH AFRICA
REVENUE CUSTOM AND
EXCISE
RESPONDENT
REVIEW OF TAXATION
MBATHA J:
A. INTRODUCTION
[1] This is a review of
taxation in terms of Rule 48 of the Uniform Rules of Court (the
Rules).
[2] The applicant in this
review was the respondent in the main application whereby the
applicant sought out the following order:
(a)
that the applicant’s appeal against the respondent’s
determination of
22 January 2013 (as amended on 20 February
2013) that the applicant’s printer cartridge KP 36iP be
classified under the tariff
code 96.12.10 is upheld and accordingly,
the respondent’s determination is set aside;
(b)
that appropriate classification for the aforesaid cartridge is
8843.99;
(c)
that the respondent is to pay costs of the application, inclusive of
the costs of
two counsel; and
(d)
further, and/or alternative relief.
[3] The respondent
subsequently filed its answering affidavit to oppose the relief
sought by the applicant.
[4] The respondent is
dissatisfied with various rulings of the Taxing Master in respect of
the Bill of Costs presented on behalf
of the State Attorney,
Pretoria, which was faxed on 22 February 2016. The Taxing Master was
invited to state a case for the decision
of the Judge of this court.
The respondent (applicant in the main application) also made
submissions in terms of Rule 48 (5) (a)
of the Rules.
B. PLAINTIFF’S
SUBMISSIONS
[5]
1. That the Taxing
Master in respect of Item 42, being disbursement costs for
counsel’s
fees for perusing and considering the application papers and
consultation with attorney and legal representative
of South African
Revenue Services, misdirected herself in disallowing such fees and
treated them as attorney and client fees and
ruling that counsel
would be entitled to an hourly rate of R1 800 per hour;
2.
that in respect of Item 31, being a disbursement cost for preparing
answering
affidavits, settling affidavits, considering/perusing
various documentation received from the South African Revenue
Services in
order to prepare and preparing the application to strike
out, that she misdirected herself by ruling that:
(a)
counsel would be entitled to draft the Answering Affidavit at R450.00
per page;
(b)
settling affidavits and considering various documentation from
representative and legal
representative of South African Revenue
Services are attorney and client costs; and
(c)
that for preparing and drafting the application to strike out counsel
would be entitled
to a drafting rate of R450 per page.
3.
In this regard it is submitted that her decision is incorrect, it
disregarded
factors or principles which were proper for her to
consider and that she failed to exercise her discretion properly or
at all.
C. STATED CASES BY THE
TAXING MASTER
[6] 1.(a)
In respect of Item 42, in brief, she states that counsel should not
claim a fee for perusal
on an party and party Bill of Costs,
counsel is not allowed to claim a separate fee for perusal and
reading papers, as such
fees form part of his fee on brief on
application.
(b) On the consultation
with attorney and legal representative form the South African Revenue
Services, she states that the fee
was excessive for an hours’
consultation. She considered that counsel was Senior Counsel and
ruled that a fee for R1 800
for an hour’s consultation was
excessive as the initial amount of R3 100 was excessive.
2.(a)
On Item 31 she states that on 13 May 2014 counsel prepared answering
affidavits for six hours and charged
R18 600. On 14 May 2014 he
prepared answering affidavits again for five hours and charged
R15 500. The answering affidavit
word count came to 1½
page with annexures thereto, which were not drafted by counsel.
Counsel was therefore allowed R3 600
which fee was inclusive of
settling papers and disallowed R15 500 which she found to be
unreasonable and highly excessive.
(b)
Counsel also prepared an application to strike out, whereby she
allowed a page at R450 as
the page must consists of a 250 word count.
The application to strike out word count amounted to one page.
Therefore the amount
for drafting was unreasonable and excessive. She
ruled that though the application was drafted by counsel instead of
the attorney,
the word count of 250 words per page should apply.
3.
She cited various authorities in support of her rulings and attached
the relevant
parts of the Bill of Costs that she referred to.
D. THE LAW
[7] 1.
The High Court Rule 70 (3) provides as follows:
‘
With
a view to affording the party who has been awarded an order for costs
a full indemnity for all costs reasonably incurred by
him in relation
to his claim or defence and to ensure that all such costs shall be
borne by the party against whom such order has
been awarded, the
Taxing Master shall, on every taxation, allow all such costs, charges
and expenses as appear to him to have been
necessary or proper for
the attainment of justice or for defending the rights of any party,
but save as against the party who incurred
the same, no costs shall
be allowed which appear to the Taxing Master to have been incurred or
increased through over-caution,
negligence or mistake, or by payment
of a special fee to an advocate, or special charges and expenses to
witnesses or to other
persons or by other unusual expenses.’
Rule 70 (3) clearly
expresses the intention of the Legislature by protecting the
interests of the successful litigant in that expenditure
reasonably
incurred should be reimbursed to him, without overburdening the
unsuccessful litigant with unreasonably incurred expenditure.
2.
The Taxing Master is vested with a discretion to allow costs
necessarily incurred
in the litigation. However, a court of law can
still interfere with the exercise of the Master’s discretion
even where exercised
properly, where a misrepresentation of the law
or a misconception as to the facts and circumstances or as to the
practice of the
court. See
Wholesalers
Limited v Natal Pharmaceutical Society and The Taxing Master
.
[1]
3.
In a party and party Bill of Costs the Taxing Master should apply the
tariff.
However, Rule 70 (5) provides for a departure from the tariff
in the exercise of his discretion in extraordinary or exceptional
circumstances where adherence to the tariff would be inequitable.
This discretion is not only limited to items on the tariff, but
also
where there is a
lacuna
in the tariff.
4.
In general, fees allowed to counsel are often left at the discretion
of the Master.
It is trite that the court will not interfere with
such exercise of discretion, unless the Taxing Master has acted upon
a wrong
principle or exercised his discretion in a wrong manner.
E. APPLICATION OF THE
LAW TO THE FACTS
[8]
1. The applicant’s
submission
is that the applicant in the main application set out its
case in a founding affidavit with annexures consisting of 4 104
words or 16 statutory pages of 250 words each, plus 36 pages of
annexures, totalling 76 A4 pages.
The application was
brought to uphold the appeal against the respondent’s
determination that the applicant’s printer
cartridge KP 361 iP
be classified under Tariff Code 96.12.10 and that the respondent’s
determination be set aside. It also
prayed for an order for the costs
of two counsel.
The application was
opposed by the respondent. The answering affidavit was drafted by
Senior Counsel, consisting of 2 441 words
or 9 statutory pages
with 8 pages of annexures, in total 27 A4 pages.
The applicant did not
file any replying affidavit, it indicated that it wished to withdraw
its application. The parties subsequently
agreed that the applicant
would be liable for counsel’s fees only.
2.
It is clear from the submissions made by the applicant herein that
the litigation
involved customs and excise matters and that it dealt
with international trade agreements and the determination of duties.
This
kind of litigation according to the applicant requires expert
evidence and is of a technical nature. A Customs Tariff
Classification
Specialist had to set out how the applicant failed to
introduce expert evidence of an extreme technical nature. In light of
these
submissions this court accepts that the matter was complex to
warrant the employment of Senior Counsel.
3.
It is trite that in general the discretion of the Taxing Master will
not be disturbed
unless it is found that he or she did not exercise a
proper discretion, for example, by disregarding factors which were
proper
for him or her to consider or by considering matters which it
was improper for him or her to consider, or if he or she has
disregarded
relevant factors or has had regard to improper factors or
by giving a ruling which the court can see no reasonable person would
have given. (
Wellworths
Bazaars Ltd v Chandler’s LTD
[2]
).
The courts have also recognised the principle that the court may
interfere in those classes of cases where the court is able
to form
as good an opinion as the Taxing Master and perhaps even a better
opinion. (See
Wellworths
above)
4.
Having carefully considered all the relevant facts in this review, I
have
come to the conclusion that, though I have been furnished
with the reasons for the exercise of her discretion, it is evident
that
this was an exceptional case.
5.
In the light thereof, I find that an exception should be made in
respect of this
matter for a reconsideration by the Taxing Master due
to its complexity, the nature of the litigation and that it was
necessary
to engage Senior Counsel at an early stage for the
attainment of justice. Without usurping the discretion of the Taxing
Master
I am of the view that the disbursements and the fees were
reasonably incurred and she can still exercise the Master’s
discretion
in that regard when she re-taxes the Bill of Costs.
[9]
Accordingly, I make the following order:
(a)
The
taxation of a Bill of Costs on 22 February 2016 under case no
4449/2014 be and is hereby set aside;
(b)
The
Bill of Costs is referred back to the Taxing Master who must tax the
Bill
of Costs
de
novo
on
the basis that I have alluded to in the review judgment; and
(c)
Each
party to pay its own costs.
_________________
MBATHA
J
Applicant’s
Attorneys:
NAIDOO MAHARAJ INC.
141
Problem Mkhize (Cowey) Road
Morningside
Durban
C/O
SIVA CHETTY AND COMPANY
378
Langalibalele Street
Pietermaritzburg
Respondent’s
Attorneys:
STATE ATTORNEY – PRETORIA
391
Anton Lembede Steet
6
th
Floor
Metropolitan
Building
Durban
[1]
1937 NPD 418
at
page 425
[2]
1947 (4) SA 453
(T) 457 to 458