Nash and Another v Mostert and Others

JurisdictionSouth Africa
Citation2017 (4) SA 80 (GP)

Nash and Another v Mostert and Others
2017 (4) SA 80 (GP)

2017 (4) SA p80


Citation

2017 (4) SA 80 (GP)

Case No

43195/2013

Court

Gauteng Division, Pretoria

Judge

Tuchten J

Heard

April 5, 2017

Judgment

April 6, 2017

Counsel

A Subel SC (with W de Bruyn) for the applicants.
CDA Loxton SC
(with A Milovanovic) for the first and fourth respondents.
J Dreyer SC (with J Bleazard) for the second and third respondents.
Q Pelser SC (with EL Theron SC) for the fifth, sixth and seventh respondents.

Flynote : Sleutelwoorde B

Attorney — Fees — Contingency fees — Contingency fee agreement — In respect of non-litigious matters — Common law — For same reasons contingency fee agreements in respect of litigious matters prohibited by common law, so too are those in respect of non-litigious matters — Agreements contrary C to public policy and invalid.

Headnote : Kopnota

Contingency fee agreements are regulated by the Contingency Fees Act 66 of 1997 (the CFA), and in terms thereof they will be allowed if certain specified requirements are met. Legal practitioners have in the past sought to rely on agreements falling short of the CFA on the basis of their permissibility in D terms of the common law. Courts have now authoritatively stated that contingency fee agreements are prohibited by the common law. In this matter reliance was placed on a contingency fee agreement in non-compliance with the CFA, in respect of non-litigious matters. The argument was that, to the effect that courts had previously made judicial pronouncements that common-law contingency fee agreements were not allowed, they E had had in mind agreements in respect of litigious matters; and not those in respect of non-litigious matters, which were still permitted. This issue formed the focus of the present matter.

Mr Mostert had been appointed, at the instance of the Financial Services Board (FSB), in terms of s 5 of the Financial Institutions (Protection of Funds) Act 28 of 2001 as the curator to take control of, and to manage the business of, F the Sable Industries Pension Fund, which had been left with no assets as a result of theft committed against it. The High Court order giving effect to the appointment set out the scope of the curator's powers. They included the powers to recover the assets illegally removed and amounts owed to the Sable Fund; to incur reasonable and necessary expenses; and to employ the services of lawyers and other professional persons and to institute, prosecute G or defend proceedings on behalf of the Sable Fund. It was a term of the order that —

'(t)he curator shall be entitled to periodical remuneration in accordance with the norms of the attorneys profession, as agreed with the [FSB]'.

As constituted by various documents, a remuneration agreement was entered into between the FSB and the curator Mostert. The critical term provided H that —

'(i)n the circumstances recovery of assets . . . shall be subject to the curators' remuneration of 16,33 % (exclusive of VAT) of such assets recovered'.

In other words, in the event of a failure to retrieve the funds lost through theft, the curator would not receive remuneration.

The I interpretation of the above clauses formed the subject-matter of the present dispute. Mr Nash — who had been a member of the Sable Fund, and had been accused of being guilty of the theft — and the company Midmacor — of which Mr Nash was the primary controller, and which company had been the Sable Fund's principal employer — instituted an application in the High Court against inter alia the curator Mostert and the FSB. They argued that J the remuneration agreement was invalid and void ab initio by virtue of its

2017 (4) SA p81

being a contingency fee agreement non-compliant with the CFA, and hence A contrary to the norms of the attorneys' profession.

Various special defences were raised. It was submitted that the applicants had no standing. The court disagreed; the applicants had standing by virtue of their relationship with the Sable Fund, as well as s 5(8)(a) of the FIA, which provided that '(a)ny person, on good cause shown, may make application to the court to set aside or alter any decision made, or any action taken, by the B curator . . . with regard to any matter arising out of, or in connection with, the control and management of the business of an institution which has been placed under curatorship'. It was further argued that the applicants had approached the court with 'unclean hands', in the sense that Mr Nash hoped through success in this case to frustrate the curator's right to compensation and ultimately his attempt to bring him to justice. While C accepting the presence of an improper motive on the part of Mr Nash in bringing the case, the court felt that the importance of the issue — which involved the exercise of public power, namely a constitutional issue — demanded that the case be heard.

Moving on to the primary issue — the interpretation of the previous order and the remuneration agreement.

Held D

The previous court order meant that the character of the curator's remuneration had to be in accordance with the norms of the attorneys' profession (the respondents had sought to argue that the order only governed the periodicity of the remuneration). (Paragraphs [63] – [64] at 97D – G.)

The respondents were incorrect in their assertion that there was case authority to E the effect that the common law allowed contingency fee agreements in respect of non-litigious matters. Rather, the issue had not yet been expressly resolved. (Paragraph [71] at 99C – D.)

Contingency fee agreements in respect of non-litigious matters were against public policy, and for broadly the same reasons that agreements in relation to litigious work were, namely: the undertaking of speculative actions for F clients could give rise to conflicts of interest between the duty and the interests of legal practitioners. The remuneration agreement under consideration was hence not in accordance with the norms of the attorneys' profession and thus invalid. (Paragraphs [72] – [80] and [93] at 99E – 101A and 103E.)

Cases cited G

Bothma-Batho Transport (Edms) Bpk v S Bothma & Seun Transport (Edms) Bpk 2014 (2) SA 494 (SCA) ([2013] ZASCA 176): dictum in para [12] applied

Cape Metropolitan Council v Metro Inspection Services (Western Cape) CC and Others 2001 (3) SA 1013 (SCA) (2001 (10) BCLR 1026): compared H

Christian Education South Africa v Minister of Education 2000 (4) SA 757 (CC) (2000 (10) BCLR 1051): compared

Commissioner, South African Revenue Service v Bosch and Another 2015 (2) SA 174 (SCA): dictum in para [9] applied

Electoral Commission v Mhlope and Others 2016 (5) SA 1 (CC) (2016 (8) BCLR 978; [2016] ZACC 15): dictum in para [33] applied I

Harris and Others v Rees and Others 2011 (2) SA 294 (GSJ): compared

Jajbhay v Cassim 1939 AD 537: referred to

Klokow v Sullivan 2006 (1) SA 259 (SCA): referred to

Mgoqi v City of Cape Town and Another; City of Cape Town v Mgoqi and Another 2006 (4) SA 355 (C): compared

Mulligan v Mulligan 1925 WLD 164: referred to J

2017 (4) SA p82

Police A and Prisons Civil Rights Union and Others v Minister of Correctional Services and Others (No 1) 2008 (3) SA 91 (E): dicta in paras [81] – [83] approved

Price Waterhouse Coopers Inc and Others v National Potato Co-Operative Ltd 2004 (6) SA 66 (SCA) (2004 (9) BCLR 930; [2004] 3 All SA 20; [2004] ZASCA 64): discussed and applied

Prince B v President, Cape Law Society, and Others 2002 (2) SA 794 (CC) (2002 (1) SACR 431; 2002 (3) BCLR 231; [2002] ZACC 1): compared

Ronald Bobroff & Partners Inc v De La Guerre 2014 (3) SA 134 (CC) ([2014] ZACC 2): referred to

South African Association of Personal Injury Lawyers v Minister of Justice and Constitutional Development (Road Accident Fund, Intervening C Party) 2013 (2) SA 583 (GSJ) ([2013] 2 All SA 96; [2013] ZAGPPHC 34): approved

State Information Technology Agency Soc Ltd v Gijima Holdings (Pty) Ltd 2017 (2) SA 63 (SCA): referred to

Thunder Cats Investments 92 (Pty) Ltd and Another v Nkonjane Economic Prospecting & Investment (Pty) Ltd and Others 2014 (5) SA 1 (SCA): D compared

Treatment Action Campaign v Rath and Others 2007 (4) SA 563 (C): compared.

Case Information

A Subel SC (with W de Bruyn) for the applicants.

CDA E Loxton SC (with A Milovanovic) for the first and fourth respondents.

J Dreyer SC (with J Bleazard) for the second and third respondents.

Q Pelser SC (with EL Theron SC) for the fifth, sixth and seventh respondents.

An F application for an order declaring as null and void, and to be set aside, a remuneration agreement determining the fees to be paid to a curator appointed in terms of s 5 of the Financial Institutions (Protection of Funds) Act 28 of 2001.

Order G

1.

To the extent necessary, the applicants are granted leave to institute these proceedings pursuant to para 4 of the order of this court granted on 20 April 2006 under case No 10545/2006, forming annexure SJN1 to the main founding affidavit of the applicants (the Poswa order).

2.

H The remuneration agreements between the fifth and/or sixth respondents and the second respondent (the curator) recorded in annexures SJN11 and SJN13 to the main founding affidavit of the applicants are hereby declared null and void ab initio and are set aside.

3.

Nothing in this order contained shall affect the rights of any party to I any agreement reflected in SJN13 or the validity of any agreement recorded in SJN13 other than as provided in para 2 above.

4.

The curator is directed to render, within three months of the date on which this order is made, an account supported by vouchers of all curator's fees debited or received on behalf of the third respondent from the date upon which the curator was appointed under the J Poswa...

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1 practice notes
  • Mostert and Others v Nash and Another
    • South Africa
    • Invalid date
    ...Company (South Africa) Ltd and Others 2017 (6) SA 90 (SCA) ([2017] ZASCA 88): referred to C Nash and Another v Mostert and Others 2017 (4) SA 80 (GP): confirmed in part on National Director of Public Prosecutions v Zuma 2009 (2) SA 277 (SCA) (2009 (1) SACR 361; 2009 (4) BCLR 393; [2009] 2 A......
1 cases
  • Mostert and Others v Nash and Another
    • South Africa
    • Invalid date
    ...Company (South Africa) Ltd and Others 2017 (6) SA 90 (SCA) ([2017] ZASCA 88): referred to C Nash and Another v Mostert and Others 2017 (4) SA 80 (GP): confirmed in part on National Director of Public Prosecutions v Zuma 2009 (2) SA 277 (SCA) (2009 (1) SACR 361; 2009 (4) BCLR 393; [2009] 2 A......

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