Melamed & Hurwitz Incorporated v Goldberg

• Jurisdiction: South Africa
• Judge: Streicher, Mthiyane, Lewis, Mhlantla JJA and Leach AJA
• Judgment Date: 19 March 2009
• Docket Number: 686/07
• Court: Witwatersrand Local Division
• Hearing Date: 02 March 2009
• Citation: 2009 JDR 0206 (W)

Lewis JA (Streicher, Mthiyane, Mhlantla JJA and Leach AJA concurring):

[1] Mr Stephen Melamed is an attorney and a director of the appellant, the firm Melamed and Hurwitz Incorporated, Johannesburg. He was approached in October 2004 by Mrs Marlene Goldberg, who was being divorced by her husband. She and her husband had signed an agreement of settlement. Goldberg was unhappy with it. She was not sure whether it had been made an order of court or even whether it was binding: she wished to enter into a different agreement, more favourable to her.

[2] Melamed, over a period of some seven months, advised her on obtaining a better settlement. In April 2005 she and her husband entered into

2009 JDR 0206 p3

Lewis JA (Streicher, Mthiyane, Mhlantla JJA and Leach AJA concurring)

an agreement more beneficial to her and a divorce was subsequently obtained. The appellant claimed R450 000 plus VAT from Goldberg, alleging that this was an agreed fee. She defended the action on the ground that she had not agreed to the fee and in the alternative that the agreement was invalid as the fee was excessive and amounted to an overreaching of her. The high court found that Melamed's fee should be determined by the Law Society of the Northern Provinces, and that once the assessment was made, either party could approach the high court for a determination of costs in the action. The appellant appeals against the order that the fees be assessed by the Law Society on the basis that there was no reason for the high court to interfere with the agreement reached between Melamed and Goldberg. The appeal is with the leave of the high court.

[3] The law is clear: an attorney is entitled to charge for services rendered in an amount agreed by him and the client. But, if the attorney has overreached the client, then a court will not enforce the agreement. In such a case the court may order that the attorney have the bill taxed and suspend the matter pending the determination of the taxing master. See, for example, Cape Law Society v Luyt [1] where an attorney presented an excessive bill to his client and immediately demanded that it be paid and that the client waive any right to a taxed bill: the court held that the attorney had taken undue advantage of his client. And in Law Society of the Cape of Good Hope v Tobias [2] the court stated:

'An attorney is not, however, necessarily guilty of misconduct because he chooses to put an extravagant value on his services. If the prospective client is a free agent, if there is neither fraud nor duress, and no advantage taken of him, then if the client chooses voluntarily to agree to an extravagant fee, the attorney will not be guilty of misconduct. . . .

The word "overreach" is defined, insofar as it is relevant to this matter, as ". . . .circumvent, outwit, cheat in dealing" (The Oxford English Dictionary 1961 vol 7 at 318) or "to outwit or get the better of" (Chambers Twentieth Century Dictionary). Where an attorney and his fees are concerned, the word "overreach" may be taken as conveying the extraction by the attorney from his client, by the taking by the

2009 JDR 0206 p4

Lewis JA (Streicher, Mthiyane, Mhlantla JJA and Leach AJA concurring)

former of undue advantage in any form of the latter, of a fee which is unconscionable, excessive or extortionate, and in so overreaching his client that attorney would be guilty of unprofessional conduct.'

See also Chapman Dyer Miles & Moorhead Inc v Highmark Investment Holdings CC [3] and Mnweba v Maharaj [4] where these principles are restated.

[4] Goldberg pleaded that she had not agreed to pay Melamed R450 000, alternatively that the agreement sought to secure for Melamed a special advantage to which he was not entitled; and again in the alternative that the amount claimed was excessive for the services rendered and thus amounted to...