PROFESSIONAL FEES AND COSTS

Question 1

What is the definition of Legal Costs?

Answer 1

❖ Legal costs refer to the fees and expenses incurred for legal services provided by a legal practitioner.

Question 2

Payment of Costs

Answer 2

❖ Legal costs are payable based on a bill of costs delivered by the legal practitioner and can be determined through either.

Question 3

What do legal costs consist of?

Answer 3

❖ The fees charged by the legal practitioner for their services.
❖ Any expenses incurred during the course of the legal work.

Question 4

General rule on Informing the Client of Legal Costs

Answer 4

❖ The practitioner must inform a client regarding the concept of legal costs.

Question 5

The specifics on Informing the Client of Legal Costs

Answer 5

❖ This must be done during the first consultation
❖ May charge higher fees, but then the liability is also higher
❖ May also say that the firm “prefers to practice in a specific area of the law”
❖ Give a general estimate of fees and disbursements.
❖ DO NOT bind yourself to an all-inclusive fee.
❖ Unforeseen disbursements- Advise client immediately and obtain his consent

Question 6

General rule on The Calculation of
Legal Fees

Answer 6

❖ The calculation of legal costs may involve specific provisions outlined in the relevant legislation such as:
➢ Magistrates’ Court Rules
➢ Uniform Rules of the High Court

Question 7

Magistrates’ Court Rules on The Calculation of
Legal Fees

Answer 7

❖ They are determined on the basis of prescribed tariffs.

Question 8

What do Table A costs consist of ito Magistrate Rules

Answer 8

➢ General provisions
➢ Undefended actions
➢ Defended actions
➢ Interpleader proceedings
➢ Other matters related to taxation of costs and the use of advocates.

Question 9

The Uniform Rules of the High Court

Answer 9

❖ The High Court rules outline the tariffs and rules for determining legal costs in the High Court.
❖ These rules cover various aspects including:
➢ Fees to the court
➢ Tariffs of sheriffs
➢ Fees for advocates on a party-and-party basis
➢ The taxation and tariff of fees.

Question 10

General Rules on Type of Legal
Cost

Answer 10

❖ The Costs follow the event.

Question 11

Meaning of “the costs follow event”

Answer 11

➢ This means that the party that is successful (wins) will also be awarded costs

Question 12

The Different types of costs

Answer 12

➢ Party-and-party costs
➢ Attorney-and-client costs
➢ Attorney and own client costs

Question 13

Party-and-party costs

Answer 13

▪ Determined according to statutory prescribed tariffs.
* Annexure 2 and Rule 33 (Magistrates’ Courts Rules)
* Uniform Rule of the High Court – Rule 70
▪ Costs are taxable by a taxing master.
▪ These costs are generally payable by the losing party to the winning party.
▪ Lowest type of cost.

Question 14

Magistrates’s Court Annexure 2 on party-to-party costs

Answer 14

• Table A Costs
   Part I = General Provisions
   Part II = Undefended Actions
   Part III = Defended Actions and Interpleader
  Proceedings
   Part IV – Other matters inter alia taxation of costs, execution and the use of advocates.
• Table B Costs
   Section 65 Proceedings
   Read with Rule 33: General Provisions

Question 15

High Court on party-to-party costs

Answer 15

• Rule 67 = Fees to Court
• Rule 68 = Tariffs to Sheriffs
• Rule 69 = Expounds maximum fees for advocates on party and party basis in certain civil matters.
• Rule 70 = Fees: Taxation and tariff of fees.

Question 16

Attorney-and-client costs

Answer 16

▪ Not limited to the prescribed tariffs.

▪ Allows more discretion by the tax master, taking into account complexity, nature of the dispute, and other relevant considerations.

▪ Magistrates Court Rules – Annexure 2 and Rule 33
▪ Uniform Rule of High Court – Rule 70

▪ Attorney and client cost order can also be made if determined by the contract,

A contract can state that the **parties agree **should a dispute arise the party in breach will be liable for costs on an attorney and client scale

Question 17

➢ Attorney and own client costs

Answer 17

▪ Based on an agreement with no prescribed tariff.
▪ The attorney sets their own fees, which the client must accept in writing.
▪ The courts will only order this type of fees to be paid under exceptional circumstances which means the taxing master will have to tax on the agreed tariff as set out in the fee agreement.
▪ Magistrates; court may not make such an order.

Question 18

Magistrates Court Rule 33(8)

Answer 18

❖ “The court may on request made at or immediately after the giving of judgment in any contested action or application in which:
➢ (a) is involved any difficult question of law or of fact; or
➢ (b) the plaintiff makes two or more claims which are not alternative claims; or
➢ (c) the claim or defence is frivolous or vexatious; or
➢ (d) costs have been reasonably incurred and in respect of which costs there is no specific provision in these rules,** award costs on any scale higher than that on which the costs of the action would otherwise be taxable.**
❖ Provided that the court may give direction as to the manner of taxation of such costs as may be necessary.
❖ MC Tariff has been increased from 8 July 2022 R.2134 in GG of 3 June 2022

Question 19

What does High Court Rule 70 deal with?

Answer 19

Taxing Master has Discretion

Question 20

HC Rule 70(5)(a)

Answer 20

➢ The taxing master shall be entitled, in his discretion, at any time to depart from any of the provisions of this tariff in extraordinary or exceptional cases, where strict adherence to
such provisions would be inequitable.

Question 21

HC Rule Rule 70(5)(b)

Answer 21

➢ In computing the fee to be allowed in respect of items 1, 2, 3, 6, 7 and 8 of Section A; 1, 2 and 6 of Section B and 2, 3, 4 and 7 of Section C,
➢ The taxing master shall take into account:
▪ The time necessarily taken
▪ The complexity of the matter
▪ The nature of the subject matter in dispute
▪ The amount in dispute
▪ And any other factors which he considers

Question 22

General position on Specific Types of
Legal Costs

Answer 22

❖ Specific legal costs can vary depending on jurisdiction and applicable laws and regulations.
❖ It is advisable to consult the relevant legislation and seek professional legal advice.

Question 23

The Specific Costs include:

Answer 23

➢ Cost de Bonis Propriis
➢ Wasted Costs
➢ Costs reserved/to stand over

Question 24

Cost de Bonis Propriis

Answer 24

▪ Means: from your own pocket.
▪ May be awarded by the court where there is substantial
deviation from the responsibilities of a person acting in a
representative capacity such as an attorney or executor.

▪ When the complaint is based on vexatious language used against opponents, it is not a defence to say that the client instructed use of such language.

▪ Practitioners are expected to maintain professional conduct and avoid engaging in behaviour that undermines the integrity of the legal process or needlessly disrupts proceedings.

Question 25

When can Cost de Bonis Propriis be granted?

Answer 25

▪ It can be granted in instances of:
* Mala fides
* Gross Negligence
* Unreasonableness

Question 26

Wasted Costs

Answer 26

▪ Occurs when services for which those costs are charged are no longer useful to the parties involved.
▪ If the trial is postponed after a notice of set-down for trial has been served, the notice becomes irrelevant and any preparation costs for the trial become wasted costs.

Question 27

Costs reserved/to stand over

Answer 27

▪ Refers to a cost order made by the court, indicating a decision on costs will be made at a later stage.
▪ In High Court this may involve hearing arguments on the costs of an earlier application.
▪ In Magistrate’s Court it becomes costs in the cause.

Question 28

Overview of Fair and Reasonable
Attorney’s Bill of Costs

Answer 28

❖ Determining fair & reasonable attorney’s bill of costs occurs after a court case
➢ A court officer known as the “Taxing Master” reviews the attorney’s Bill of Costs in the presence of both parties.
➢ The officer ensures that the account does not contain unnecessary or defective cost items.
➢ Additionally, if a client is not satisfied with the Bill of Costs provided by their attorney, they can submit it to the Provincial LPA for assessment by a Fees Assessment Committee

Question 29

Non-Litigious Matters

Answer 29

❖ Where no statutory tariff exists, a legal practitioner may negotiate a reasonable fee structure with the client.
❖ The LPC may assess fees and disbursements to be paid to its members in such members.

Question 30

What should happen Where no Statutory Tariff is Prescribed?

Answer 30

❖ Registration of a Company
❖ Appearance before Tribunals
❖ Estate planning
❖ Drafting of Contracts
❖ Agreements for the Transfer of Shares
❖ Other correspondence or negotiations
❖ Interrogations Section 73 of the Insolvency Act
❖ Criminal Court
❖ Maintenance Court
❖ Children’s Court

Question 31

Factors Considered to Determine Legal Costs

Answer 31

❖ The skill, labour, specialised knowledge and responsibility on the part of the member.
❖ Degree of Difficulty of the work.
❖ Seniority of the attorney.
❖ Specialisation.
❖ Value where money or property is involved.
❖ Whether the fees and disbursement have been incurred or increased through:
➢ Over Caution
➢ Negligence
➢ Mistake
❖ The place where and the circumstances in which the services or any part thereof was rendered.
❖ Urgency
❖ Time Spent

Question 32

Costs and Ethics

Answer 32

❖ Ethically, legal practitioners have a duty to balance:
➢ Their responsibilities to their clients
➢ The interests of justice
➢ The legal profession
➢ The public
➢ Their colleagues
➢ Their employees\
❖ They have the right to charge reasonable fees for their professional services

Question 33

Unethical Conduct of Practitioner

Answer 33

❖ Overreaching
❖ Excessively high fees – misconduct
❖ Undercharging
❖ Lowers fees than normal – “touting”
❖ Unnecessary work
❖ Fees should not be charged for this.
❖ Fabrication of costs
❖ Fraud/theft

Question 34

Fee Sharing

Answer 34

❖ Allowance to a correspondent attorney is allowed and is usually one-third of your fee.
❖ It is not compulsory.
❖ No sharing (discounts/allowances) allowed with a non-practitioner.
❖ New Rule 54: Sets out all accounting rules meaning that one must keep accounting records.

Question 35

Overview on Bill of Costs

Answer 35

❖ A normal header like on a court document.
❖ The High Court tariff that is in operation from 8 July 2022 is used here.
❖ It can be delivered by an agreement or by court order.
❖ Legal costs comprise the fees charged for, and the disbursements
incurred during the course of legal work.
❖ See Slide 7 for Anatomy of a Bill of Costs

Question 36

Who determines whether the Bill of Costs is fair and reasonable?

Answer 36

❖ After a court case, an officer of the court known as the “Taxing Master”, will check the account in the presence of both parties in
order to ensure that the account does not contain unnecessary ordefective cost items.
❖ An attorney is allowed to agree with his own client on a tariff that is not based on the Court Rule tariffs.
❖ If the attorney then gives a Bill of Costs to his own client, and the client is not happy with the Bill of costs, this can be submitted to the Provincial Legal Practice Council for “Assessment” by a “Fees
❖ Assessment Committee”.
❖ This procedure also carries the force of law.

Question 37

Overview on Prescribed Tarrifs

Answer 37

❖ Some Acts contain prescribed tariffs for certain types of work done.
❖ If such a statutory tariff is prescribed it is usually subject to taxation by a state official.

Question 38

Statutory Tariffs Include

Answer 38

❖ Deeds Registries Act 47 of 1937
❖ Sectional Titles Act 95 of 1986
❖ Companies Act 61 of 1973
❖ Administration of Estates Act 66 of 1965
❖ Insolvency Act 24 of 1963

Question 39

Case law on def of mandate

Answer 39

❖ Malcolm v Lyons & Munro v Abro and Another

Question 40

Def of mandate

Answer 40

Malcolm v Lyons & Munro v Abro and Another
➢ Preferably written
❖ Written fees agreement
❖ Insert specific higher tariffs for certain items of work done, or raise the party and party tariff by percentage

Question 41

Def of deposit

Answer 41

❖ Cover for fees and disbursements.
❖ A deposit may not exceed reasonable costs for the case.

Question 42

Def of Contingency Fees

Answer 42

❖ Common law agreement is never allowed.
❖ Fees only if the case is successful and part of the amount recovered in the case.
❖ Pactum de quota litis (A creditor in respect of a difficult to recover sum offers a portion of the amount recoverable to the person who is to recover it).
❖ Now a contingency fees agreement in terms of the Contingency Fees Act 66 of 1997 is allowed

Question 43

Case law on Contingency fees

Answer 43

Tjatji and others v RAF

Question 44

Tjatji and others v RAF

Answer 44

➢ Contingency fee agreement that does not comply with the Act is invalid

Question 45

CONTINGENCY FEES ACT, 66 of 1997

Answer 45

❖ Prescribed agreement is published in GG in terms of this act.
❖ Fees only recoverable if the case is finalised successfully.
❖ Criminal Law and Family Law cases are excluded.
❖ Normal attorney and own client tariff is placed on record and the higher tariff is also recorded in writing.
❖ This normal fee would be the normal attorney and own client fee that could be taxed in the absence of a contingency fee agreement.
❖ Higher fee may not exceed the attorney’s normal fees by 100%.
❖ Higher fee may not exceed more than 25% of the total capitalobtained with the claim.
❖ Advocates if used, must also sign and become party to theagreement.
❖ Copy of the agreement must be delivered to the client on the date of signing.
❖ Legal Practice Council promulgated a specific set of rules
❖ Rules by the LPC in terms of section 6 of the Contingency Fee Act Into operation 4 October 2019
❖ The agreement may not provide for an alternative fees
agreement in the event that the main agreement is found to be
invalid: Such an agreement is not authorised under the CFA. The
alternative agreement in itself is based on an inflated fee because
the quoted fee is R 2 000.00 per hour, regardless of whether the work is performed by an attorney or any other staff member.
❖ There is no basis in law for services of people who are not legal practitioners to be charged for as if they were qualified legal practitioners.
➢ The provision is unreasonable and depart from an importantprinciple that applies to the professional fees of attorneys described as the age old approach of reasonableness assessing chargeable fees.

Question 46

Overreaching

Answer 46

❖ Excessively High Fees
❖ Misconduct
❖ Code of Conduct Rule 18.7

Question 47

Undercharging

Answer 47

❖ Lower fees than normal = “touting”
❖ This is only applicable where a prescribed fee exists.
❖ Code of Conduct Rule 18.2 – 18.9

Question 48

Qualifying (Fees) Expenses

Answer 48

❖ Expert witnesses
❖ Make it part of your court order if you want to enforce it.
❖ Expenses incurred by a witness who has to qualify himself to be able to give evidence
➢ Expert witness that has to make experiments, investigations or research or observation of persons and places.
➢ Refers to evidence of a technical nature.

Question 49

Office Administration

Answer 49

❖ File notes
➢ Consultations
➢ Meetings
➢ Phone Calls
❖ Date
❖ Duration
❖ Nature of Attendance
❖ Summary of issues dealt with
❖ Telefax receipts
❖ E-mail confirmations

Question 50

Taxation

Answer 50

❖ Bill of costs on the appropriate High Court or Magistrate’s court tariff.
❖ Obtain a date for taxation from the Court.
❖ Give notice to the opposition.
❖ Taxing master persuses the bill in the presence of both parties.
❖ Party opposing the bill may object against items or the calculation thereof.

Question 51

Example of taxation

Answer 51

❖ For example: Annexure 2 to the Magistrates’ Court Rules
➢ Folio is considered 100 words or figures. The drawing of documents (not pleadings) shall be allowed at R27,00 for each folio.
❖ It is therefore important that an attorney keeps record meticulously of all work they do on a file.
❖ When the taxation of the bill is finalised the taxing master allocates the amount that is payable in terms of the taxed bill of costs puts his/her stamp on it and signs it – this “endorsement” is known as the taxing masters Allocator
❖ Such taxed bill then has the effect of a court order

Question 52

Who may appear at taxation?

Answer 52

❖ The party in person; or
❖ The practicing attorney or practicing advocate representingthat party.

Question 53

JJVR case on taxation

Answer 53

➢ A costs consultant that is not a practicing attorney or advocate may not appear or speak at a taxation, even when a practicing
legal practitioner is present.
➢ The legal practitioner may also not pay that costs consultant, who is not an admitted legal practitioner, for attending taxation
and seeking to recover the fee from the client, constituted a prohibited fee-sharing arrangement. Only attorneys are
entitled to claim fees specified in the tariff of fees under R 70 of the Uniform Rules of Court.
➢ However, attorneys are allowed to delegate the task of drafting a bill of costs to a third party, including a costs consultant, who is not an admitted legal practitioner, provided the attorney certifies the accuracy of the bill of costs. This delegation is not
considered fee-sharing but underscores the trust and professional responsibility placed in legal practitioners