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March
2005 It gives me great pleasure to present to you the launch addition of our monthly newsletter. Here at LBS we believe that our clients are our best assets and that their success is our success. Accordingly we are very passionate about our subject matter and more particularly how we can use it to the best advantage of our clients. At LBS
we know that it is possible to meet the needs of all our individual clients.
One of our core values is flexibility.
We understand that even though there are common needs you as our client
or, potential client run your practice the way you know is best.
That is why the systems we implement compliment your way of doing things. Feel free to contact us if you want to put us to the test on
this. In this monthly newsletter we
will share some aspects on legal costs, legal process and management or soft
skill issues. We hope that you will
find value from this newsletter. Legal
costs payable by the unsuccessful party Legal
cost is an award to a successful party who was engaged in civil litigation in
our Courts. The reward is made to
compensate a party to recover expenses incurred in defending or initiating
litigation. The term costs is the
sum of money the court orders the litigant to pay as compensation for expenses
incurred in litigation. The
said costs have to be taxed to determine an amount so that execution can be
levied and to ensure that the party who is liable to pay the costs does not pay
an excessive amount and that the successful party does not receive an
insufficient amount. See Mouton & Another v Martine 1968 (4) SA. A
bill of costs is therefore the attorney’s account for the necessary and
reasonable work done by him and the expenses incurred by him on behalf of his
successful client, which are recoverable from the unsuccessful party.
This can take on the form of party and party costs or attorney and client
costs In
the recent reported judgment delivered on 29 April 2003 Stegman J in Aircraft
Completions Centre (Pty) Ltd v Rossouw and Others case nr. 23790/01
WLD laid down the principles and the different scale of attorney &
client costs: The
main issue that was investigated was: taxation
on the “intermediate basis” of Nel
v Waterberg Landbouwers Ko-operatiewe Vereeniging 1946 AD 597. In
the Nel case Tindall JA said: “ The
true nature of awards of attorney and
client costs not expressly authorized by the Statute seems to be that, by reason
of special considerations arising either from the circumstances which give rise to the action from
the conduct of the losing party, the court in a particular case considers it
just, by means of such an order, to ensure more effectually than it can do by
means of judgment for party and party costs that the successful party will not
be out of pocket in respect of the expenses caused to him by the
litigation………… And on this taxation charges in the nature of luxuries
incurred with the approval of the client, who may happen to be a rich man, and
may have authorized his attorney to pay exceptional high fees to counsel, would
not be allowed against the losing party. Where attorney and client costs are to be paid by the opposite
party, the taxation should be stricter than in a taxation as between
attorney and client where the costs are to be paid by the client to his
attorney. This distinction was recognized in the English rule applied
in GILES V RANDALL (1915, 1 KB. 290),” where an action was settled on terms
that judgment should be entered for the plaintiff against the defendant or a sum
of money with costs as between solicitor and client to be taxed if necessary”
. But in applying the Rule, the
Judges of the Court of Appeal indicated their view that the Rule applicable went
too far in the extent to which it required the Taxing Master to disallow items
of an attorney and client bill of costs where such costs were payable not by the
client himself to his attorney but by the other party.
We have no Rule of court on the subject but it seems to me that here
also, when the bill is taxed against the losing party, it is essential to apply
a stricter taxation to prevent injustice to the latter as the result of the
award of attorney and client costs against him.
Thus the award of attorney and client costs against the losing party
really demands what may be termed an intermediate basis of taxation.” Stegman
J refers to Roos, relying on English authority, differentiated between three
types of attorney and client taxation: there are various principles of taxation as between
attorney and client which are applicable in the following cases:- 1.
Where the costs are payable by the client to his attorney; or where the
costs are payable out of a fund belonging entirely to the client. 2.
Where the costs are payable out of a general or common fund. 3.
Where the cost are payable out of a fund which belongs to other parties
and which the party has no interest, or where the costs are payable by one party
to another. Taxation
in the cases of (1) is more generous than in the case of (2) and (3) while in
the case of (2) the taxation is not as generous as in (1).
Taxation in the case of (3) is the strictest, and in effect, gives little
more than a taxation between party, except that any necessary letters to and
attendance on the client are allowed.’ According
to Stegman J “…..The
Quotation from Roos does not reflect South
African Law. This is because
they are inconsistent with the decision in Nel. They overlook the fact that in
Nel the appellate division held expressly that South African Law differ in the
relevant respect from what was then the English law on the subject: and that in
South Africa the purpose of an order that one party pay the costs of another,
taxed as between attorney and client, is that-
In other words, in South Africa, when a court makes the ‘extraordinary
or exceptional’ order that one party to pay the costs of his opponent ‘taxed
as between attorney and client’, the court’s aim in not that the costs
debtor (whose reprehensible conduct relating to the litigation may have put the
costs creditor to extra expenses that would not ordinarily be able to recover on
party and party taxation), should not be liable for any more costs than the
costs creditor could recover on a taxation as between party and party (with the
addition of nothing more than the costs of any necessary letters to and
attendances on the costs creditor by his own attorney), as suggested by Roos.
On the contrary, as Nel makes plain, the court’s intentions, when it
makes such special order, is that the costs creditor should receive a fuller
indemnity than on party and party taxation would provide, for all additional
reasonable costs to which the defendants’ conduct that received the court’s
reproaches may have put the cost creditor. ……………If legal advisers of
the costs creditor have charged fees at rates exceeding the tariff in Rule 70,
the taxing master should consider allowing rates exceeding the tariff,
provided that they are not unreasonable in the particular circumstances and
that they so not inflict injustice upon debtors. Where
there is an agreement to pay costs
as between attorney and client Stegman J…….With
regard to category (1), the fact remains that the mere agreement of one party to
pay the costs to the other as between attorney and client does not necessarily
make the case ‘extraordinary or exceptional’ within the meaning of Rule 70
(5) (a). Nor does the mere fact
that the court has made an order that gives effect to such an agreement. That taxation of costs as between attorney and client does
not necessarily justify any departure from the tariff was recognized long before
Rule 70(5) (a) was promulgated………..On taxation as between attorney and
client, irrespective of whether it is an attorney’s own client, or the
opposing party, who may be obliged to pay the amount taxed, more is required
than the mere fact the it is a taxation as between attorney and client before a
departure from the tariff is justified.” Where
attorney and client costs is ordered without an agreement between the parties
Stegman J………”there need not necessarily be anything
extraordinary or exceptional, for the purpose of Rule 70(5)(a), about a case in
which a court has, without agreement between the parties, ordered one of them,
to pay the costs of another, taxed as between attorney and client………..if
in circumstances, the taxing master should adhere to the tariff, the result will
not necessarily be inequitable. Nor
will it necessarily mean that the taxing master taxed the bill as between party
and party when was required to tax it as between attorney and client.” According
to Stegman J the taxing master has a discretion and a judge can give an
indication in his or her judgment the reason why one of the parties has been
awarded to pay the costs on attorney and client………In
terms of Rule 70(5)(a), it is for the taxing mater to decide whether
extraordinary or exceptional circumstances are or are not present whether they
have or have not affected the cost incurred by the costs creditor, and whether
strict adherence to the tariff would or would not be inequitable. Relating
to attorney and own client costs orders: Stegman
J referred to the judgment in the matter of Enslin
v Gallo 1984 (1) PH F 27 D reviewed
by Magid AJ “clearly
intended to order the respondent to pay such costs as would normally have been
payable by the applicant to his own attorney; that is to say type (1) of
Roos’s analysis (supra). But it
seems to me that the apparent breadth of that order must nevertheless be
qualified by the knowledge that the respondent was not a party to the contract
between the applicant and his attorney and according had no say whatever in
relation to the terms of that contract. It
is my view therefore that even where, as here an unsuccessful litigant is
ordered to pay the other party’s costs as between attorney and own client that
order must be subject to the qualification that he is not obliged to pay costs
which are in the nature of luxuries of the type referred to by Tindall JA in
Nell’s case…” According
to Stegman J the result in above judgment are correct and that the conclusions
must be: “when
one party is ordered to pay the costs of another taxed as between attorney and
client. The costs must be taxed with the generosity ;to the costs creditor of
the intermediate basis of taxation as
describe in Nel, Affording him fuller indemnity there allowed ( and not
restricting him to little more than taxation between party and party), whilst
ensuring at the same time that costs not recoverable from the costs debtor in
terms of Nel, such as luxurious expenses, are taxed off to avoid injustice to
the costs debtor, even though the costs creditor may remain obliged to pay
irrecoverable expenses to his own attorney
in terms of an agreement between them; and when one party is ordered to pay the
costs of another taxed as between attorney and own client, the costs must be
taxed on precisely the same intermediate basis describe in Nel,
with the same fuller indemnity to the costs creditor and the same limitation of
recoverable expenses to avoid injustice to the costs debtor”
Stegman J conclusion reached in the last paragraph, is consistent
with the decision made by van Dijkhorst J in Ben
McDonald Inc and another v Rudolph and Another 1997 (4) SA 252 T. In
summary according to Stegman J “Therefore
an order in the hybrid form that one party should pay the costs of another taxed
as between attorney and own client, does not, as a matter of law achieve
anything more than an order in the established form that one party should pay
the costs of another taxed as between attorney and client. Equally,
an agreement in the hybrid form takes the matter no further than an agreement to
pay attorney and client costs For all these reasons, a taxing master is obliged to act on an order that one party is to pay the costs of another taxed as between attorney and own client in exactly the same way as he is obliged to act on an order that one party is to pay the costs of another taxed as between attorney and client. As a matter of law there is no difference between them. Both orders are for taxation on the intermediate basis”. |