Blakes Maphanga Inc v Outsurance Insurance Co Ltd

• Jurisdiction: South Africa
• Judge: Navsa JA, Malan JA, Shongwe JA, Tshiqi JA and Majiedt AJA
• Judgment Date: 19 March 2010
• Citation: 2010 (4) SA 232 (SCA)
• Docket Number: 144/2009
• Hearing Date: 05 March 2010
• Counsel: DC Fisher SC (with CS von Castricum) for the appellant. PJ Vorster SC (with WW Geyser) for respondent.
• Court: Supreme Court of Appeal

Malan JA:

[1] This is an appeal, with the leave of this court, against a judgment of D the full court of the North Gauteng High Court upholding the decision of Van Rooyen AJ in the High Court ordering the appellant, Blakes Maphanga Incorporated, a firm of attorneys, to pay to the respondent, their client, a certain amount of moneys collected on its behalf together with interest and costs.

E [2] This case concerns the question whether an attorney may set off against a claim by the client for payment of moneys, collected on its behalf, fees owing by the client that were disputed and not taxed. The appellant represented the respondent in close to 400 litigious matters. On 4 March 2005 the respondent terminated the appellant's mandate and demanded, pursuant to the mandate given to the appellant, that F moneys collected on its behalf be paid over. The appellant sought to 'invoke' set-off. It asserted that it was entitled to set off against the fees owing to it the moneys so collected. The question for decision is whether the fees claimed are liquidated amounts capable of being set off. This, in turn, depends on whether taxation is required to render the fees, which G were disputed, liquidated.

[3] The respondent is a short-term insurance company. It instructed the appellant to represent it. Their relationship was governed by an oral agreement which provided for the remuneration of the appellant in accordance with a fee structure and tariff. According to the respondent, H all moneys collected by the appellant on behalf of the respondent had to be paid over without any deduction or set-off. Separate monthly accounts in respect of all work done and disbursements made had to be rendered to the respondent and payment had to be made within 30 days of delivery of the accounts.

I [4] It is in dispute whether the mandate in terms of which the appellant was appointed included a proviso, as alleged by the appellant, that set-off of the appellant's fees, against moneys collected for the respondent, would be excluded only where the respondent paid the appellant's monthly accounts timeously. Nor is it clear what the terms of any ad hoc arrangement were. Also disputed is whether the terms of the mandate J would endure after its termination.

Malan JA

[5] When the respondent cancelled the appellant's mandate it requested A the appellant to hand over all the relevant files to its new attorneys. Negotiations between the parties followed, leading to the appellant's message to the respondent of 7 March 2005, that the appellant was engaged in closing the files and that it would attend to forthcoming trials during March and April. It stated further: B

'We have commenced the necessary administration and wish to advise you that due to the enormous amount of administration involved in closure of the files, that we will be debiting a closure fee of R 150 excluding Vat. The amount includes the courtesy of making your attorneys a complete duplicate file for collection upon final payment of your account.' C

[6] The respondent replied on 10 March 2005 by calling into question the necessity of making duplicate files, undertaking to pay disbursements made by the appellant on behalf of the respondent, but disputing the R150 closing fee per file charged by the appellant, and reserving the right D to refer any fees that may be disputed to the relevant Law Society. In addition the respondent called for delivery of the files by no later than 16 March 2005. In a subsequent letter of 23 March 2005 the respondent intimated that the reason for the termination of the appellant's mandate was, inter alia, that its fees were no longer competitive.

[7] The appellant alleged that during the first half of 2005 the respondent E was in arrears with the payment of fees and imposed a moratorium on new work to be given to the appellant. According to the appellant, by February 2005, the respondent's accounts were in arrears for a period of 180 days. The respondent was thus not meeting its obligation to make payment within 30 days of receipt of statements of account. The F appellant thereupon resolved, in January 2005, to set off the amounts owing for fees against amounts collected on behalf of the appellant. The appellant asserted that it was entitled not only to invoke set-off, but also to enforce its lien to retain the files until it was paid. The appellant rendered its final accounts to the respondent under cover of a letter dated 18 April 2005 which was received on 21 April 2005. In this letter G the appellant stated:

'We further confirm that the balance of the remaining files which have not been handed over either to your offices or to TP Mabasa Attorneys will be available for collection against settlement of our accounts. Please note that should you have any queries and/or disputes with H respect to our accounts or any charges levied, we are happy to proceed to have the same taxed and undertake in this respect to refund any differences which may accrue in your favour. The converse obviously applies, in that should we for any reason tax any amount in excess of accounts rendered, we reserve the right to recover same from you.'

[8] The number of accounts received by the respondent amounted to I 389 and the amount claimed by the appellant to R300 471,34. The respondent, on the other hand, alleged that the agreed fee structure and tariff had not been adhered to and that, if the fee structure and tariff had been followed, only an amount of R66 794,78 would have been owing to the appellant. The latter amount was paid to the appellant and the J

Malan JA

A balance, an amount of R233 676,56, was paid into the trust account of the respondent's attorneys pending the establishment of the appellant's entitlement to the amounts claimed. In its letter of 26 April 2005 the respondent's attorneys wrote:

'It would appear that you have, in all matters, charged for making copies B of the files for withdrawing as attorneys of record and debited an amount which we presume to be a closing fee, which you describe as to future correspondence and telephone calls. Our clients deny that you are entitled to payment of these amounts and denied liability therefor as far back as their letter of 10 March 2005.

C We attach hereto a detailed spreadsheet detailing the payments made into your account and the outstanding balance in each matter, which our clients are not prepared to pay. It must be pointed out that in certain instances, there is a balance brought forward which is not adequately explained or substantiated and our client is not prepared to pay these amounts before they are able to evaluate them. You will note from the spreadsheet that there is an amount of R 233 676,56 that our D clients believe they are not liable for. . . .

Our client is accordingly not prepared to pay the balance of R 233 676,56 that you claim and have paid this amount into our trust account, pending the establishment of your entitlement to the amounts you claim, either by way of agreement or taxation. Once the amounts E payable to you have been agreed or taxed, we undertake to forthwith make payment to you. . . .

We note your intention to do a set-off, but record that our client's express agreement with you was that no set-off would be done and that you would account to our clients for...