A terminated mandate and premature execution: Lessons from the Patel case

April 1st, 2024
Terminated mandates

Clients enjoy the freedom to instruct a legal practitioner of their choice. This is recognised in the Code of Conduct for all Legal Practitioners, Candidate Legal Practitioners and Juristic Entities (the Code of Conduct). Paragraph 3.7 of the Code of Conduct prescribes that legal practitioners, candidate legal practitioners and juristic entities shall ‘respect the freedom of clients to be represented by a legal practitioner of their choice.’ Where a client terminates the mandate of a legal practitioner and instructs another practitioner to continue with the matter, the client’s choice must thus be respected.

It is not uncommon that where a client terminates the mandate of one practitioner and instructs another, the erstwhile legal representative will request that all outstanding fees and disbursements are paid or, alternatively, an undertaking is provided that they will be paid on the finalisation of the matter, before the client’s file is released. The erstwhile attorney will have a lien over the file contents until the outstanding fees and disbursements are either paid in full or, subject to agreement between the parties, until the new attorney provides an undertaking that they will be paid on the occurrence of a future event or an agreed date.

In personal injury matters the legal practitioner whose mandate is terminated, sometimes having acted on a contingency fee basis, may have spent a significant amount of time and expertise on the matter and disbursements may have been incurred. Even where a legal practitioner in that position is disgruntled with the client’s decision, the client’s election to instruct another practitioner to take over the matter must be respected. It is risky for a legal practitioner to hold on to a matter after the client has communicated a decision to end the relationship with the practice. An action undertaken by a legal practitioner in the matter after the client has communicated the decision to terminate the mandate would be without the client’s authority. If the client suffers a loss because of the practitioner’s insistence on holding onto the matter after the mandate has been terminated, that may result in liability on the part of the legal practitioner if such losses were caused by the insistence of the practitioner to hold onto the matter. The client would also be able to dispute having provided authority for (or being bound by) any steps taken by the legal practitioner after the mandate has been terminated.

The judgment in Patel v Netsianda Inc Attorneys and Another (LT) (unreported case no 722/2019, 8-2-2024) (Gededger AJ) provides lessons for legal practitioners on how not to go about recovering outstanding fees and disbursements after the termination of a mandate.

The Patel case

In Patel, the applicant (Mr Patel) had instructed the first respondent (Netsianda Inc Attorneys) to act for him in litigation against the Road Accident Fund (RAF). On 10 February 2020, the Limpopo Local Division of the High Court granted an order in terms of which the RAF had conceded 100% liability in favour of Mr Patel. The merits having been finalised, the next phase of Mr Patel’s action against the RAF would thus relate to the quantum of his claim.

Having struggled to get hold of the first respondent during the merits stage of the action against the RAF, Mr Patel terminated the mandate he had given to that firm and on 24 August 2020 appointed another firm to represent him in the quantum stage of the litigation. An arrangement was reached between the applicant’s current attorneys and his erstwhile attorneys (the first respondent) that the former undertook to pay the latter’s taxed and allowed bill of costs on finalisation of the applicant’s action against the RAF. The letter from the applicant’s current attorneys of record to the first respondent also recorded that:

‘Although we would have admired to put a time period thereof, the recent [RAF] management has made litigation more strenuous and prolonged and as such, it will be unwise of us to furnish you with the exact date on when such payment will be made’ (para 7).

The first respondent had accepted the arrangement with the applicant’s current attorneys (para 9).

Correspondence was exchanged between the applicant’s current attorneys and the first respondent regarding the latter’s outstanding taxed and allowed bill of costs, which the applicant’s current attorneys undertook to pay on finalisation of the applicant’s litigation against the RAF. Unhappy with the delays, the first respondent had a writ of execution issued against the applicant. This was done without the first respondent having instituted action against the applicant and in absence of a judgment or order having been granted in favour of the former against the latter (paras 10, 13, 14, 22, 26, 36 and 37). The first respondent conceded that the judgment debtor in the primary court order was the RAF, as the defendant in those proceedings (paras 16 and 18).

The warrant of execution was set aside (para 31) as the causa giving rise to it had never existed. The court declared the warrant of execution issued on 4 October 2023 irregular and invalid and accordingly set it aside (para 39.1), declared invalid and set aside any sale in execution by the Thohoyandou Sheriff (the second respondent) (para 39.2) and ordered the first respondent to pay the costs of the application.

Lessons from the Patel case

Several lessons can be learned from the Patel case. One is that where the erstwhile legal practitioner has agreed with the current practitioner that outstanding fees and disbursements will be paid on finalisation of the underlying matter, that agreement must be honoured. It is not for the erstwhile legal practitioner to then resort to measures, outside of the procedural rules and substantive law, to recover the outstanding fees and disbursements. An inquiry with the current legal representative, the RAF or even inspecting the court file would have given the erstwhile legal representative (the first respondent) information on the status of the litigation between the applicant and the RAF. The applicant’s current attorneys were also bound by the undertaking they had given to pay the first respondent’s fees on conclusion of the litigation against the RAF. Paragraph 3.4 of the Code of Conduct prescribes that legal practitioners, candidate legal and juristic entities must ‘honour any undertaking given by them in the course of their business or practice, unless prohibited by law.’ The judgment does not record that the applicant, or his current attorneys, breached that undertaking in any way. Execution in anticipation of a breach of the undertaking, if that was the first respondent’s concern, was thus not justifiable.

The first respondent was, with respect, fortunate not to have been saddled with a punitive costs order in this case. The first respondent had not obtained judgment against the applicant and was thus not a judgment creditor against Mr Patel. Only a judgment creditor can issue a warrant of execution against a judgment debtor. Mr Patel was not a judgment debtor as there was no judgment against him in favour of the first respondent (see AC Cilliers, C Loots, and HC Nel Herbstein and Van Winsen: Civil Practice of the High Courts and the Supreme Court of Appeal of South Africa 5ed (Cape Town: Juta 2009) at 1024-1027) and White, Ryan & Co v Hilliard (1903) 20 SC 334). In the agreement between his current attorneys and the first respondent the applicant had tendered to perform when his claim against the RAF was finalised. The writ of execution, had it been correctly issued, could thus have been set aside on that ground as well (Le Roux v Yskor Landgoed (Edms) Bpk en Andere 1984 (4) SA 252 (T)).

Mr Patel’s reason for terminating the first respondent’s mandate was the alleged difficulty in getting feedback from the first respondent (paras 3 and 4). The first respondent’s mandate was terminated on 24 August 2020 (para 5), six months after the order was granted in respect of the RAF’s liability for 100% of the plaintiff’s damages. That risk could have been mitigated by the first respondent providing regular feedback to the applicant and documenting that feedback in correspondence sent to the client (see T Harban ‘Proactive communication as a risk management tool’ 2021 (Sept) DR 5).

A legal practitioner in the position of the first respondent must comply with the payment arrangement agreed to with the client’s new attorney and not ‘jump the gun’ by issuing a writ of execution prematurely. A failure to do so may have more severe consequences than the first respondent suffered in Patel.

Thomas Harban BA LLB (Wits) is the General Manager of the Legal Practitioners Indemnity Insurance Fund NPC in Centurion.

This article was first published in De Rebus in 2024 (April) DR 5.