Brief Summary

Civil Procedure — Summary judgment — Application for summary judgment — Claims for wasted legal costs arising from postponed disciplinary hearings — Appellant challenging the grant of summary judgment on grounds that claims were not for liquidated amounts — Court finding that claims were not liquidated as they involved damages not agreed upon between the parties — Summary judgment not appropriate where claims require assessment of unknown factors and are not capable of simple calculation.

Comprehensive Summary

Summary of Judgment

1. Introduction

These proceedings concerned three civil appeals heard together in the Free State High Court, Bloemfontein, arising from orders of summary judgment granted in the district magistrates’ court, Welkom. The appellant in all three matters was Matjhabeng Local Municipality, and the respondents were Johannes Lodewikus Erasmus (A170/2008), Schandor van Schoor (A171/2008), and Ewart Fredericks Potgieter (A172/2008).

The procedural history was common to all matters. Each respondent, as plaintiff in the magistrates’ court, issued summons on 28 March 2008 claiming payment of amounts said to represent wasted legal costs arising from the postponement of disciplinary enquiries. The Municipality, as defendant, delivered notices of intention to defend on 4 April 2008. The respondents then launched applications for summary judgment, set down for hearing on 29 April 2008, and the Municipality delivered notices of intention to oppose on 24 April 2008.

On 29 April 2008, when the summary judgment applications were argued, the Municipality sought a postponement (or stand-down) to enable it to file opposing affidavits contemplated by the summary judgment rule. The magistrate refused any postponement or stand-down and granted summary judgment in all three cases. The Municipality appealed those orders, and the appeals were heard together because they raised the same central issue.

The general subject-matter of the dispute was whether claims framed as reimbursement of wasted attorney-and-client legal costs incurred by employees in disciplinary proceedings—allegedly wasted due to postponements attributable to the employer—constituted claims for a liquidated amount in money capable of being determined by summary judgment procedure.

2. Material Facts

In each matter, the respondent was an employee of the Municipality who had been suspended pending a disciplinary enquiry. Each respondent appointed an attorney (Ms Juan Adendorff of Peyper Attorneys) to represent him in the disciplinary process under a collective agreement regulating disciplinary proceedings in local government, and each respondent gave the attorney a written mandate recording the basis on which fees would be charged.

The Municipality scheduled the disciplinary enquiry for 5 February 2008. Each respondent alleged that he had consulted with his attorney and prepared for the hearing, but the hearing was postponed at the request of the Municipality. Each respondent then claimed a specified amount from the Municipality said to be the wasted costs incurred as a result of that postponement.

Thereafter, the disciplinary hearing was rescheduled for 18 to 20 February 2008. Each respondent again alleged that he prepared with his attorney for the hearing. On 18 February 2008, the chairperson presiding over the disciplinary hearing postponed the hearing indefinitely (with no reason allegedly given). Each respondent then claimed a further specified amount from the Municipality said to be wasted costs incurred as a result of the second postponement.

The amounts claimed differed across the three matters, but each case consisted of two monetary claims, each presented as an amount expended for legal representation rendered wasted by postponements.

On the procedural facts relevant to the appeals, it was common cause that summary judgment applications were brought and set down for 29 April 2008, that the Municipality requested a postponement/stand-down on the hearing date to file opposing affidavits, and that the magistrate refused that procedural indulgence and granted summary judgment.

3. Legal Issues

The central legal question was whether the respondents’ claims—being claims for amounts said to represent wasted legal fees incurred between attorney and client—were claims for “a liquidated amount in money” as required for summary judgment under Rule 14(1)(b) (as referenced in the judgment), and therefore whether summary judgment was legally competent on the pleaded causes of action.

A related issue concerned the nature of legal fees and costs in litigation and analogous settings, namely whether untaxed attorney-and-client costs (or fees agreed between a client and their attorney) could be treated as liquidated for purposes of a third party’s liability, or whether such claims remained unliquidated damages requiring evidentiary assessment.

A further issue, arising from the procedural handling in the magistrates’ court, was whether the magistrate erred in refusing the Municipality’s request for a postponement or stand-down to file affidavits contemplated by the summary judgment procedure, in circumstances where summary judgment is recognised as an extraordinary and stringent remedy requiring strict compliance with formal prerequisites.

These issues primarily concerned the application of law to fact. The material dispute on appeal was not about whether postponements occurred or whether fees were charged between the respondents and their attorney, but whether those pleaded claims fit within the legal category required for summary judgment.

4. Court’s Reasoning

The High Court approached the matter from the premise that summary judgment is an extraordinary and drastic remedy and, consistently with established authority, requires strict compliance with the rule authorising it. The court treated the competence of summary judgment as turning first on whether the claim itself was of the kind contemplated by the rule, before the court could meaningfully consider whether a defendant had disclosed a bona fide defence on affidavit.

In analysing whether the claims were liquidated, the court applied the accepted test that a claim is “for a liquidated amount in money” only if it is based on an obligation to pay an agreed sum or is expressed in a manner such that the amount claimed can be ascertained by mere calculation. The court emphasised that, although the amounts claimed were fixed by agreement between each respondent and his attorney (as between attorney and client), the Municipality was not a party to that agreement. As a result, the agreement did not liquidate the Municipality’s alleged liability.

The court reasoned that what the respondents claimed from the Municipality was, in substance, damages said to have been suffered through wasted expenditure occasioned by postponed disciplinary hearings. Those damages were not liquidated by any prior agreement between the respondents and the Municipality, nor were they readily ascertainable through a simple mathematical calculation. The court highlighted that legal fees incorporate variables such as consultations, preparation, the nature and duration of appearances, and the professional skill and judgment of the attorney; absent an agreement binding on the defendant, those variables require interrogation and assessment.

The court relied on authority cautioning against treating attorney-and-client costs as patrimonial damage in a manner that introduces uncertainty and variability. It also accepted that, where costs or fees are claimed as damages, the quantum ordinarily requires a determination of what is reasonable, fair, and just, which cannot occur “in a vacuum” and would typically necessitate evidence to justify the reasonableness and necessity of the expenditure. The court endorsed the proposition that such costs become liquidated through taxation, and that until the relevant assessment process occurs, the claim remains unliquidated.

On that reasoning, the court concluded that none of the six claims (two in each matter) fell within the categories of liquidated claims suitable for summary judgment. The court treated the respondents’ claims as “manifestly” unliquidated damages, analogous to claims for expenses incurred (such as towing costs) that require judicial assessment of necessity and reasonableness before quantum can be fixed.

The court also addressed the procedural features of the magistrates’ court hearing. Although it noted uncertainty as to why opposing affidavits had not been filed timeously, it considered that the refusal of any postponement or stand-down and the immediate granting of summary judgment were, in the circumstances, an unduly drastic response. The court expressed the view that, even if the magistrate considered the explanation for default unsatisfactory, a more appropriate course would have been to postpone with a costs sanction, or at minimum to adjourn briefly and require filing later that day.

In addition, the court referred to the principle that a defendant may resist summary judgment in limine by raising preliminary objections without delivering an opposing affidavit, and that summary judgment should not be granted on an excipiable claim. While it recorded that it was contended that the summons was excipiable and otherwise technically defective, the court refrained from expressing any firm view on those additional contentions, deciding the appeals on the central point that the claims were not liquidated.

5. Outcome and Relief

The High Court upheld all three appeals. It set aside the summary judgment orders granted in favour of the respondents in the magistrates’ court and substituted them with orders refusing summary judgment and granting the Municipality leave to defend.

The court ordered that the appeals succeeded with costs. It further directed that the costs relating to the applications for summary judgment in the magistrates’ court were to be costs in the cause. The order was stated to apply to all three appeals identified in the heading.

Cases Cited

Sutter v Brown 1926 AD 155.

Kingswill v Robinson 1913 WLD 152.

Wolhuterskop Beleggings (Edms) Bpk v Bloemfontein Engineering Works (Pty) Ltd 1965 (2) SA 122 (OPD).

Loots v Van Staden 1962 (1) SA 152 (OPD).

National Bank v Mark Aaronson 1923 TPD 69.

Botha v W. Swanson and Co. (Pty) Ltd 1968 (2) P.H. F85.

Leymac Distributors Ltd v Hoosen and Another 1974 (4) SA 524 (D).

Law and Others v Kin and Another 1966 (3) SA 480 (W).

Oos-Randse Bantoesake Administrasie-Raad v Santam Versekeringsmaatskappy Bpk en Andere (2) 1978 (1) SA 164 (W).

Joel’s Bargain Store v Shorkend Bros (Pty) Ltd 1959 (4) SA 263 (E).

Northern Cape Scrap & Metals (Edms) Bpk v Upington Radiators & Motor Graveyard (Edms) Bpk 1974 (3) SA 788 (NC).

Gunn and Another, NNO v Victory Upholsterers (Pty) Ltd 1976 (1) SA 127 (D).

Gulf Steel (Pty) Ltd v Rack-Rite Bop (Pty) Ltd and Another 1998 (1) SA 679 (O).

Legislation Cited

Magistrates’ Courts Act 32 of 1944 (as referenced in the judgment in relation to Rule 14).

Rules of Court Cited

Rule 14 (summary judgment) (as referred to in the judgment, including Rule 14(1)(b), Rule 14(2)(a), and Rule 14(3)(c)).

Held

The court held that the respondents’ claims for amounts said to represent wasted legal fees incurred due to postponed disciplinary hearings were unliquidated damages, not claims for a liquidated amount in money within the meaning of the summary judgment rule. Because the claims were not liquidated, summary judgment was not competent and should not have been granted.

The court further held that, given the stringent and drastic nature of summary judgment and the circumstances in which the Municipality sought a postponement/stand-down to file opposing affidavits, the magistrate’s refusal of any postponement and the granting of summary judgment were not justified on the papers before that court. The summary judgment orders were therefore set aside, summary judgment was refused, and the Municipality was granted leave to defend.

LEGAL PRINCIPLES

A claim qualifies as “a liquidated amount in money” for purposes of summary judgment only where it is founded upon an obligation to pay an agreed sum, or where the amount claimed is expressed so that its ascertainment is a matter of mere calculation; otherwise, the claim is not amenable to summary judgment.

Where a plaintiff seeks to recover, from a third party, amounts charged as attorney-and-client fees under an agreement to which the third party was not a party, the third party’s alleged liability is not thereby liquidated. In such circumstances, the claim is properly treated as one for unliquidated damages requiring evidentiary assessment of factors such as reasonableness and necessity.

Costs and legal fees claimed as damages remain an uncertain factor until subjected to an appropriate process of assessment, and, in the case of legal costs, they become liquidated through taxation rather than by mere assertion of a charged amount.

Summary judgment is an extraordinary and drastic remedy which requires strict compliance with its formal and substantive prerequisites. A court must be satisfied that the plaintiff’s claim is clearly established and compliant with the rule before considering whether the defendant has disclosed a bona fide defence.

A defendant may raise technical or preliminary objections in limine to resist summary judgment without necessarily delivering an opposing affidavit; and summary judgment cannot properly be granted on an excipiable claim, although no final determination on excipiability was made in these appeals.

Matjhabeng Local Municipality v Erasmus and Others [2010] ZAFSHC 27 (4 March 2010)