Unveiling the taxation of attorney and client costs in the absence of a fee agreement

August 1st, 2023
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In JB Scott Attorneys v Tetani (GP) (unreported case no 36381/2019, 26-5-2023) (Francis-Subbiah J), Francis-Subbiah J of the Gauteng Division of the High Court in Pretoria was seized with a taxation review brought by JB Scott Attorneys in Gqeberha, which was formulated by it as follows, ‘whether the Plaintiffs (sic) attorneys were entitled to tax a bill in accordance with a fee mandate entered into by and between the Plaintiff and her attorneys was argued on 28.07.2022.’

The review revolved around two questions, namely:

  • Whether the plaintiff’s attorneys were justified in taxing a bill using a fee mandate between the plaintiff and her legal representatives, despite the court having been informed that no agreement existed.
  • Whether a taxing master has the authority to endorse a surcharge on an attorney-client bill of costs.

The review respondent, Wendy Tetani, had entered into a settlement agreement with the Road Accident Fund (RAF) in her loss of support claim. Potterill J was informed that ‘no contingency fee agreement exists between the plaintiff and the plaintiff’s attorneys.’ The court order reflected it. There are cogent reasons why a judge needs to be satisfied concerning the nature of the fee agreement between an attorney and client in contingency matters, as was explained by Boruchowitz J in Tjatji v Road Accident Fund and Two Similar Cases 2013 (2) SA 632 (GSJ):

‘Section 4 of the Contingency Fees Act 66 of 1997 (the Act) provides that any offer of settlement made to any party who has entered into a contingency fee agreement may be accepted after the legal practitioner has filed an affidavit in which disclosure is made of the matters set out in ss 4(1)(a) – (g). This affidavit must be accompanied by an affidavit by the client deposing to the matters set out in s 4(2).’

Mrs Tetani had signed three agreements with JB Scott Attorneys, two of which were signed on the same day at the same time and were mutually destructive. The third agreement was signed over five years later and more than four months after the summons had been issued and was, on that basis alone, invalid.

The Full Bench in Law Society of the Northern Provinces v Bobroff and Others [2017] 4 All SA 85 (GP) at para 49 grappled with the issue where two or more simultaneously executed fee agreements were concluded. It noted: ‘The firm gained an unfair advantage over its clients by concluding multiple fee agreements, on the basis that it may elect which agreement should be applicable on finalisation of a claim. In smaller claims, a percentage may be less than the fee calculated on an hourly basis. In big claims, it may be considerably more.’

In the context of RAF claims, it is a regrettable feature of RAF settlements that it has become in vogue for plaintiff legal representatives to mislead judges regarding the existence or nature of the fee agreement entered between attorneys and their clients. What Potterill J should have been told was that three fee agreements existed and that all of them were invalid. This would then have been included in the court order.

In TM obo MM v MEC for Health, Mpumalanga 2023 (3) SA 173 (MM), Legodi JP was alive to this course of conduct: ‘The majority of the legal practitioners in RAF and medical-negligence matters seem to take the view that they can do without the provisions of the [Contingency Fees] Act by stating, “no contingency fees agreement has been concluded”. That has to be rooted out. It is also the duty of the Legal Practice Council to do so. Our courts must also be vigilant. Otherwise, the courts may find themselves unintentionally facilitating promotion of wrong things in the form of court orders.’

In her review judgment, Francis-Subbiah J held that the taxing master’s approach was unimpeachable in that he, ‘accepted that his duty is not to ignore or vary the order made by the Judge, but to quantify the costs in accordance with the court order. He further accepted that where a fee agreement does not exist, an attorney can only be entitled to party and party fees in accordance with the court tariff.’ It followed that there could also be no surcharge. It is not within a taxing master’s power to add a surcharge, only to quantify what is in the bill of costs and which accords with the court order.

Citing long standing case law, the judge noted that: ‘Before a court will interfere with the decision of a taxing master it must be clearly satisfied that the taxing master’s ruling was clearly wrong.’

The judge further pointed out that a fee agreement was denied and that it, therefore, did not exist when the court made the order, and pertinently noted that: ‘The sudden and subsequent reliance on a contingency fee agreement at taxation was viewed with concern and disquiet.’

The judgment departed from the general position where there is no costs order in taxation reviews and ordered JB Scott Attorneys to pay Ms Tetani’s costs of the review on an attorney and client scale.

Cora van der Merwe BA (UJ) BA (Hons) (cum laude) (UP) LLB (Unisa) is a candidate legal practitioner at John Walker Attorneys in Pretoria. She is a legal costs expert. John Walker Attorneys represented MSs Tetani in the review.

This article was first published in De Rebus in 2023 (Aug) DR 10.

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