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REPORTABLE

1IN THE HIGH COURT OF SOUTH AFRICA

(WITWATERSRAND LOCAL DIVISION)

CASE NO: 26122/05

In the matter between:

TECMED (PTY) LIMITED Applicant

and

JOHN G HUNTER First Respondent

DHIREN METHA Second Respondent

_____________________________________________________________________

JUDGMENT

Van Rooyen AJ

[1]The Applicant instituted proceedings against the First Respondent for, ultimately, the following relief : (1) directing the First Respondent to draw and tax Bills of Costs in respect of all matters handled by him for and on behalf of the Applicant; (2)directing the First Respondent to repay to the Applicant the sum of R350 000.00 alternatively, R287 490.00, together with interest thereon at the rate of 15.5% per annum a tempore morae to date of payment; (3) directing the First Respondent to pay the Costs of this Application, with no costs being sought against the Second Respondent, save in the event of opposition.

[2] The Second Respondent’s counter-application has been referred to trial and no relief is sought against the Second Respondent in these proceedings.

[3] In approximately 2000 the First Respondent, then acting personally and the Applicant, then represented by the Second Respondent, entered into an oral agreement ( “the Initial Mandate”), in terms whereof, the First Respondent undertook to render professional legal services, for and on behalf of the Applicant.

[4] On the 13th of September 2001 the Applicant, again represented by the Second Respondent, and the First Respondent, again acting personally, concluded a partly written and partly oral consultancy agreement. On the 22^nd October 2003 the Applicant gave notice of termination of the Consultancy Agreement, with effect from 1st November 2003.

[5] During May 2001 motion proceedings were instituted against the Applicant by Megafreight (Pty) Ltd ("Megafreight") for inter alia payment of R1.464 305.47 ("the Megafreight Claim").Upon receipt of the Notice of Motion and Founding Affidavit, the Applicant engaged the services of a firm of attorneys, who proceeded to deliver a Notice of Opposition on behalf of the Applicant. Thereafter, an Answering Affidavit deposed to by the Second Respondent was filed and a Replying Affidavit was filed by Megafreight’s Attorneys, who then set the Application down for hearing on 7 August 2001.

[6] On the 26^th July 2001, the Applicant, then represented by the Second Respondent, terminated the mandate of the said firm of attorneys as regards the Megafreight Claim and appointed the First Respondent as its attorney of record in such proceedings. Towards the end of July 2001, the First Respondent advised the Applicant that the Megafreight Claim had been enrolled for hearing on 7 August 2001. However, according to Applicant, he did not specify precisely what had been enrolled. He further advised that having perused the papers, he believed that further affidavits had to be filed.

[7] Before proceeding further with the chronology of events, the Applicant avers that very few of the facts (and particularly the intricacies relating to the aforesaid legal proceedings) detailed both above and hereunder, were known to the Applicant at the time.

[8] On the basis of the First Respondent’s advice that further affidavits had to be signed on 30 July 2001 the Applicant, duly represented by the Second Respondent, and the First Respondent, then acting personally, entered into an oral agreement which constituted a variation of the Initial Mandate ("the Bonus Payment Scheme"). The terms of the Bonus Payment Scheme are recorded in a letter, dated 13 September 2001, which First Respondent wrote to Mr D Mehta, the Second Respondent, who represented the First Respondent. It reads as follows:

We refer to the meeting held between the writer and your Mr Mehta at your offices on 30 July whereat it was agreed that should we deflect the attack by Megafreight on 7 August 2001 on which their claim for payment of R1400 000,00 plus interest and costs was to be heard and you not have to pay anything, we would be entitled, in addition to our normal fees and disbursements, to receive a merit bonus R350 000,00 VAT inclusive.

We refer to the further meeting held between the writer and your Mr Mehta at your offices on Tuesday 11 September 2001 whereat you confirmed the bonus requesting that it be paid in the form of seven post-dated cheques commencing on 30 September 2001 and thereafter dated the last day of each subsequent month. We agreed to accept the manner of payment. It was also agreed that should the matter proceed we would be entitled to continue to debit you with fees and disbursements at the rate agreed for the consultancy. However, that should the proceedings culminate in any amount being paid to Megafreight this year you would be entitled to have your account credited with a proportionate refund of the bonus paid pro rata.

Suffice to say that this year we successfully defended the matter on your behalf and no amount need be paid by you to them this year.

[9] On the 7th of August 2001, the First Respondent orally informed the Applicant that he and/or the Applicant had successfully defended and “deflected” the Megafreight Claim. The Applicant avers that he understood this to mean that the proceedings had come to an end and the Applicant had been successful in defending such claim. On the basis of the foregoing, it was prepared to pay the bonus to the First Respondent, which amounted to 25% of the capital of the Megafreight Claim.

[10] Applicant avers that such advices were patently untrue. The Applicant subsequently established through its present attorneys of record, that what actually transpired, was the following: the First Respondent, acting for and on behalf of the Applicant, launched an interlocutory application on 7 August 2005. In such interlocutory application, the Applicant sought the postponement of the main application and leave to supplement its papers, alternatively, that the matter be referred to trial. This resulted in the postponement of the main application on 7 August 2001, the filing of further affidavits in respect thereof and an order being granted by Horn J, on 28 August 2001.The matter was to be referred to trial, with the Applicant (in this matter) to pay the costs occasioned by the postponement.

[11] Mr Nowitz argued that given the facts detailed above, there was no prospect of the Applicant not having to pay anything, as recorded by the First Respondent. Further, the First Respondent was fully aware of the fact that the Interlocutory Application would not have the effect of disposing of the matter. Accordingly, what the First Respondent clearly envisaged, was that he would be paid a bonus of R350 000.00 merely for succeeding with an Interlocutory Application, to postpone the matter and/or to have the dispute referred to trial.

[12] In September 2001 and contrary to the information received, the Applicant avers that he learnt from the First Respondent that the proceedings were still very much alive. Thereafter and at the instance of the First Respondent, the material terms of the Bonus Payment Scheme were altered on the 11^th September 2001 as per the second paragraph of the above quoted letter. The bonus would be payable in instalments and should the matter proceed (which, Applicant avers, is farcical, since by this stage, the First Respondent knew that the matter was proceeding, as evidenced from the order granted by Horn J) then the First Respondent would be entitled to charge his normal fees, as per the Initial Mandate; and in the event of any amount being paid to Megafreight “this year” (namely 2001, which, as averred by Applicant, as an experienced lawyer, the First Respondent would have known was improbable in a trial action, where pleadings might not yet have closed and a trial date would not have been allocated, let alone the matter coming to trial), the Applicant would be entitled to a proportionate refund of the bonus.

[13]To cover himself and as part of a pattern of “changing the goal posts”, according to Mr Nowitz, the final paragraph refers to successfully having defended the matter “this year”, resulting in no amount having to be paid “this year”.

[14] On the 4th of October 2001, the First Respondent confirmed the terms of the Bonus Payment Scheme in writing. The essence of the letter reads as follows:

“ We confirm that you instructed us to defend these proceedings on your behalf and offered to pay us and the expert Mr P Naike a performance bonus in the sum of R350 000,00 vat included, should we by our efforts avert any judgment against you on the 7^th August 2001 for the amount claimed, or should no settlement be made in terms whereof any payment has to be made by you to Megafreight.... That in the event of you being called upon to make payment to Megafreight... of any lesser amount than the amount claimed we would nevertheless be entitled to receive the performance bonus save that it would be reduced pro rata. That this performance bonus would be in addition to and not a substitute for our fees and disbursement. We confirm that your offer is accepted by both Naike and ourselves. We confirm that the sum of R350 000,00 is to be paid in nine equal instalments commencing on 15^th October 2001.” (emphasis added)

[15] This letter now made reference to a “performance bonus” as opposed to a “merit bonus” and for the first time made reference to an “expert”, Mr P Naike, who was to share in the “performance bonus”. Mr Nowitz pointed out that the time limit of “this year” referred to in the 13 September letter was excluded in the 4 October letter. Also, now, the performance bonus was to be reduced pro rata, in the event of the Applicant having to pay to Megafreight any lesser amount than the amount claimed.

[16] During the course of 2003, the Sheriff of this Court attended at the Applicant's business premises with the view of executing a writ whereby he intended to attach and execute movables for purposes of satisfying a bill of costs taxed in favour of Megafreight. At this stage, the Applicant realised that all was not well with the Megafreight Claim.

[17]During October 2003, the Applicant terminated the Initial Mandate due to the fact that the Applicant had become increasingly dissatisfied with the First Respondent's services and with what the Applicant considered to be his excessive charges. Pursuant to such termination, the Applicant appointed its current Attorneys of Record. Upon their appointment, the Applicant's present Attorneys of Record established what had actually transpired with the Megafreight Claim. It thus became clear, Mr Nowitz argued, that the First Respondent had misled the Applicant into believing that: (1) he had been successful in having Megafreight's Claim dismissed, this being the basis upon which the Bonus Payment Scheme had come into existence, as also the basis upon which, the bonus had been paid; and he was entitled to payment of the entire bonus when in truth, even on his version, he was not.

[18] In order to prepare for trial in the Megafreight Claim, the Applicant’s attorneys of record required the files, which were still in the First Respondent’s possession. Accordingly, the Applicant instructed its current Attorneys of Record to address a letter to the First Respondent with a view to securing their release. No response was received and again on 9 November 2004, the Applicant’s Attorneys of Record addressed a further letter to the First Respondent in an attempt inter alia to obtain the release of Applicant's files. On the 9th of November 2004, the First Respondent addressed a letter to the Applicant. In this letter, he referred inter alia to the bonus payment scheme and outstanding fees and stated as follows:

"..... We would be entitled to a merit bonus in addition to our normal fees and disbursements should judgment not be given against you in 2001.We regarded the payments received from you in 2001 as payment on account of fees and disbursements and set these off against fees and disbursements for the period 2001, 2002 and 2003, only raising debits against you in 2004. The sum total of our fees, disbursements and Counsel’s fees equates to the amounts received in and during 2001."

[19]The foregoing, argued Mr Nowitz, was yet another version and a transparent attempt to justify the bonus paid, which the First Respondent clearly realised, he was not entitled to. Further, even on his own version in the 4 October 2001 version, he would not be entitled to the full bonus, if the Applicant had to pay Megafreight any portion of its Claim.

[20] Mr Nowitz argued that were this Court to find that the terms of the bonus payment scheme do lend themselves to such interpretation, as contended for by the First Respondent, then the First Respondent would be guilty of gross misconduct, by extracting an exorbitant amount from the Applicant, well-knowing that: the Megafreight Claim would not be finalised on the 7th August 2001, or for that matter, during 2001; and an Attorney is not entitled to obtain payment of such an amount, in such circumstances, from his client; and to treat amounts paid in 2001, as payment on account, namely in advance for the next two years is also highly irregular and the allegation that the sum total of fees, disbursements and counsels fees “equates to the amounts received in and during 2001", clearly justifies a full accounting and the necessity for the First Respondent to tax bills of cost. Within the parameters of the present application I do not express any view on the alleged misconduct. But I do believe that, in the light of the dispute as to fees, the fees should be taxed.

[21] On 16 May 2005, the Megafreight Claim proceeded to trial, culminating in a settlement agreement being concluded between the parties, in terms of which the Applicant consented to pay Megafreight the sum of R1.150 million which was made an order of court and which order, the Applicant has complied with. Accordingly, Mr Nowitz argued, the Applicant is entitled to a refund of the full amount of R350 000.00 and the First Respondent is required to draw and tax a bill of costs, in respect of the work actually done by him in relation to the aforesaid interlocutory application; alternatively, on the First Respondent’s own version, the First Respondent, is liable to refund to the Applicant, an amount of R287 490,00, constituting the pro rata portion of the bonus paid by the Applicant.

The First Respondent’s Defences

[22] The first defence questions Bergeré’s authority to depose to the founding affidavit. It is clear that ratification took place.The defence is rejected.The second defence raised is one of prescription.Their is no reason not to believe that Applicant only became aware that the Mega- freight proceedings had not been dismissed in or about September 2004. It was only during 2005 that the Applicant was made aware by its present attorneys of record that the legal fees charged by the First Respondent were not justifiable in law. The R350 000 or R287 490.00 became due and payable on or about 16 May 2005, when the Megafreight matter was settled and payment was effected by the Applicant to Megafreight. In the light of these facts, the claim has not become prescribed. The third defence raised, is that the amount claimed in the alternative, namely R287 490.00, is not liquidated. I do not agree: the amount is liquidated according to the ordinary rules applicable. A liquidated amount is either an amount agreed upon, or an amount which is capable of speedy and prompt ascertainment.

[23]The fourth defence raised by the First Respondent is that he is not obliged to refund the amount of R350 000, 00 or any part thereof. As set forth more fully in the Founding Affidavit, argued Mr Nowitz, the basis for the payment of the sum of R350 000.00 kept on changing in the letters and this pattern continues in the First Respondent’s Answering Affidavit. By way of example: the First Respondent alleges that the Second Respondent offered to pay R350 000.00 as an agreed fee to cover fees, disbursements, counsel and Naik and that any surplus could be treated as a bonus. This is to be contrasted, Mr Nowitz pointed out, with the versions set out in the correspondence quoted above. Elsewhere, in his answer, the First Respondent refers to the R350 000.00 as a deposit against which to set off fees and disbursements. In this paragraph, there is no mention of Naik, or of the surplus being used as a bonus; and elsewhere the First Respondent refers to the R350 000.00 as monies paid on account of fees and disbursements to be incurred and to be appropriated accordingly until used up. Further, the First Respondent records that this alleged payment in advance of future fees and disbursements not yet incurred, had to be paid in advance, because of the cash constraints faced by the Applicant. To compound matters further, according to Mr Nowitz, the First Respondent alleges that the Applicant was not invoiced between 2001 and 2004, because of the aforesaid “agreement” being in place; and having conceded no invoicing, the First Respondent, then alleges that R350 000.00 was appropriated “as agreed” to pay Naik (a sum which is not disclosed) and to pay his fees and disbursements (which on his own version he did not invoice the Applicant for). He thereafter alleges that on 30 March 2004, it was agreed that the R350 000.00 had been used up and he could start charging again; and in another paragraph, he alleges that Counsel’s fees amounted to R105 597.77 and further refers to Annexures H1 - H8, which is not an account, but which purports to reflect fees and disbursements totalling R345 699.30

[24] Mr Nowitz also referred to further inconsistencies and inaccuracies : the Applicant received an invoice dated 28 August 2001 in relation to the Megafreight matter, in an amount of R51 300.00 inclusive of VAT (as being the matter in which the R350 000.00 “success fee” has reference). As more fully appears from this invoice there are various captions which culminate in the exact amount of R45 000.00 being claimed. Mr Nowitz submitted that it is highly unlikely that an exact figure of R45 000.00 would emanate from the various debits in accordance with an Annexure to the First Respondent’s Answering Affidavit, more particularly when one has regard to the contents of two other Annexures. Accordingly, the First Respondent did not apply the provisions of the first Annexure to the First Respondent’s Answering Affidavit, but rather came up with what Mr Nowitz called a “thumb-suck” amount which he deemed meet in the circumstances. Most importantly, the First Respondent, Mr Nowitz argues, fails to mention that he receipted an amount of R51 300.00 inclusive of VAT over and above the success fee which he claims to be entitled to in respect of the Megafreight matter.

[25] Mr Bester, for the First Respondent, argued that the First Respondent was entitled to have set-off his fees against the bonus payment; alternatively that the papers disclose a substantial conflict as to facts and that I should refer the matter to trial.

Evaluation

[26] The papers, no doubt, contain several disputes as to facts. In Fakie v CCII Systems (Pty) Ltd 2006(4) SA 326(SCA) Cameron JA states as follows in this regard:

[55] That conflicting affidavits are not a suitable means for determining disputes of fact has been doctrine in this court for more than 80 years. Yet motion proceedings are quicker and cheaper than trial proceedings and, in the interests of justice, courts have been at pains not to permit unvirtuous respondents to shelter behind patently implausible affidavit versions or bald denials. More than 60 years ago, this Court determined that a Judge should not allow a respondent to raise 'fictitious' disputes of fact to delay the hearing of the matter or to deny the applicant its order. There had to be 'a bona fide dispute of fact on a material matter'. This means that an uncreditworthy denial, or a palpably implausible version, can be rejected out of hand, without recourse to oral evidence. In Plascon-Evans Paints Ltd v Van Riebeeck Paints (Pty) Ltd 1984(3) SA 623(A) at 634-5 per Corbett JA, this Court extended the ambit of uncreditworthy denials. They now encompassed not merely those that fail to raise a real, genuine or bona fide dispute of fact but also allegations or denials that are so far-fetched or clearly untenable that the Court is justified in rejecting them merely on the papers.

[56] Practice in this regard has become considerably more robust, and rightly so. If it were otherwise, most of the busy motion courts in the country might cease functioning. But the limits remain, and however robust a court may be inclined to be, a respondent's version can be rejected in motion proceedings only if it is 'fictitious' or so far-fetched and clearly untenable that it can confidently be said, on the papers alone, that it is demonstrably and clearly unworthy of credence. (footnotes omitted)

Also see Rosen v Ekon 2001(1) SA 199(W) at 215 B-D, where Wunsh J stated as follows:

Bearing in mind the approach to contradictory affidavits mandated by Plascon-Evans Paints Ltd v Van Riebeeck Paints (Pty) Ltd 1984(3) SA 623 (A) at 635H - 636C, but agreeing with the statement in Truth Verification Testing Centre v PSE Truth Detection CC and others 1998 (2) SA 689 (W) at 698 I-J, referred to by the applicant’s counsel, that the so called ‘robust, common sense approach’ which was adopted in cases such as Soffiantini v Mould 1956 (4) SA 150 (E) in relation to disputed issues on paper ‘should also be applied in assessing a detailed version which is wholly fanciful and untenable’, I consider the respondent’s defence to be unsustainable.

[27] When one compares the letters of the First Respondent to the Applicant ( as quoted above) the bonus is clearly stated to be a “merit bonus” or a “performance bonus”. The bonus is clearly contrasted with fees: “That this performance bonus would be in addition to and not a substitute for our fees and disbursement.” In his answer First Respondent, however, as appears from paragraphs [23] and [24] above, gives a new meaning to the bonus which integrates fees with it: the bonus was simply a deposit against which fees would be debited. If there were to be a balance, First Respondent would keep the balance as a bonus. I need not repeat the detail referred to by Mr Nowitz. Ultimately, First Respondent claims that ordinary fees were set-off against the bonus. He encloses a list, although not exhaustive, of work done to the amount of R345 699, 30 (inclusive of VAT). On the list the hand-written heading “advocate’s fees” is left open as well as the “grand total.” The list is disputed by the Applicant.

[28] It was agued by Mr Bester, for the First Respondent, with reference to Allison v Massel and Massel 1954(4) SA 569(T) that although untaxed costs could not be sued for, it could be set-off against an amount owed by the attorney to the client.

[29] The deponent for the Applicant states that “an Attorney is not entitled to obtain payment of such an amount, in such circumstances, from his client”. Although he bases this conclusion on the wide concept of “gross misconduct in extracting an exorbitant amount from the applicant” (on which I refrain from expressing a view), he has touched upon a matter which does relate to the conduct which is expected from practitioners in their relationship to clients. In essence the agreement to pay a bonus, even on the interpretation placed on it by the First Respondent, is a pactum de quota litis. This is so since, even on the version of the First Respondent, the balance could be kept as a success fee. To be valid, such an agreement must comply with the Contingency Fees Act 66 of 1997, which became operational on the 23^rd April 1999. From the First Respondent’s letters quoted above, it is clear that they simply recorded what had been agreed upon. According to the Act, such an agreement must be in writing and in the form prescribed by the Minister of Justice. It must also be signed by the client. The contract must contain certain details according to section 3(3). I need not repeat these requirements, since it is abundantly clear that the records of what had orally been agreed upon do not amount to a signed agreement. The pactum de quota litis is, accordingly, unlawful and void. Whatever was paid in accordance with the pactum is recoverable by the Applicant by way of the condictio ob turpem vel iniustam causam.Given the position of a lay client vis-à-vis an attorney, I have no doubt that public policy dictates an exception to the rule in pari delicto potior est conditio defendentis. In Jajbhay v Cassim 1939 AD 537(A) Stratford CJ stated as follows:

With this brief survey of the law as hitherto developed in this country (and with grateful acknowledgment of my brother's researches) I am now in a position to formulate some conclusions. The first is that we must definitely reject the English law as expounded in the English decided cases. In my humble view many of them do not rest on any sound principle nor are they harmonious (see Street's Law of Gaming, Ch. 6). The second is that the rule expressed in the maxim in pari delicto potior conditio defendentis is not one that can or ought to be applied in all cases, that it is subject to exceptions which in each case must be found to exist only by regard to the principle of public policy. Thirdly, I have considered the desirability of expressing in the form of a general rule all possible exceptions to the application of the rule itself. It cannot, of course, be said (as Lord THURLOW said) that a restitutio in integrum should always be allowed, for this, as Story points out, nullifies the maxim. Following Hailsham's statement of the law one might say, speaking generally, that restitution will be granted in cases where the illegal contract has not been substantially carried out, and not in those cases where the contract has been substantially performed. But such a rule, though affording us some guidance, must be subordinated to the overriding consideration of public policy (which I repeat does not disregard the claims of justice between man and man). Thus I reach my third conclusion, which is that Courts of law are free to reject or grant a prayer for restoration of something given under an illegal contract, being guided in each case by the principle which underlies and inspired the maxim. And in this last connection I think a Court should not disregard the various degrees of turpitude in delictual contracts. And when the delict falls within the category of crimes, a civil court can reasonably suppose that the criminal law has provided an adequate deterring punishment find therefore, ordinarily speaking, should not by its

order increase the punishment of the one delinquent and lessen it of the other by enriching one to the detriment of the other. And it follows from what I have said above, in cases where public policy is not forseeably affected by a grant or a refusal of the relief claimed, that a Court of law might well decide in favour of doing justice between the individuals concerned and so prevent unjust enrichment.

I, accordingly, conclude that the First Respondent owes the Applicant the R350 000 paid in terms of the pactum de quota litis. The pro rata amount would only have been applicable if the pactum had been validly concluded.

[30] For purposes hereof I shall accept, without deciding, that the First Respondent debited his fees against the bonus. His averments in this regard are not, even on a robust approach, so far-fetched that I may reject them on the papers in the light of the Plascon Evans Rule, as read with Fakie. However, I am not convinced that First Respondent has proved, on the papers before us, that the amounts set-off are not subject to considerable debate, as well-illustrated by Mr Nowitz. Set-off is, accordingly, not permissible in these proceedings. To refer this aspect to trial would not be appropriate. The First Respondent must have his fees taxed. The dispute should then be resolved in the ordinary course.

Order

1. The First Respondent must draw and tax Bills of Costs in respect of all matters handled by him for and on behalf of the Applicant;

2. The First Respondent must pay Applicant the sum of R350 000.00 with interest at 15,5% per annum, a tempore morae until date of payment; and

3. First Respondent is to pay the Applicant’s Costs.

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JCW van Rooyen 18 February 2008

Acting Judge of the High Court

For the Applicant, M Nowitz, instructed by Schindlers Attorneys, Johannesburg

For the First Respondent, A Bester, instructed by Simpson Van Niekerk, c/o Bregman Mitchley Attorneys, Killarney

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