South African Association of Personal Injury Lawyers v Minister of Justice and Constitutional Development (Road Accident Fund, Intervening Party)

• Jurisdiction: South Africa
• Citation: 2013 (2) SA 583 (GSJ)

South African Association of Personal Injury Lawyers v Minister of Justice and Constitutional Development (Road Accident Fund, Intervening Party)
2013 (2) SA 583 (GSJ)

2013 (2) SA p583

Citation	2013 (2) SA 583 (GSJ)
Case No	32894/12
Court	South Gauteng High Court, Johannesburg
Judge	Mlambo JP, Kathree-Setiloane J and Fabricius J
Heard	November 19, 2012
Judgment	February 11, 2013
Counsel	MSM Brassey SC (with KG Hopkins) for the applicant.; Q Pelser SC for the respondent.; GJ Marcus SC (with S Budlender and N Mayosi) for the intervening party.

Flynote : Sleutelwoorde B

Attorney — Fees — Contingency fees — Contingency-fee agreement — All C contingency fee agreements to comply with Contingency Fees Act — No such thing as valid non-statutory (or common-law) contingency fee agreement — Act complying with Constitution — Not unfairly discriminating against attorneys or unjustifiably limiting their rights — Contingency Fees Act 66 of 1997.

Headnote : Kopnota

The applicant (SAAPIL) claimed that the common law entitled them to claim D greater fees under contingency fee agreements with their clients than what was allowed under the Contingency Fees Act 66 of 1997, which limited contingency fees to double the legal practitioner's normal time-based fees or 25% of the settlement, whichever was lower. SAAPIL argued that the Act did not override the common law and that legal practitioners could E therefore claim more than the Act allowed, provided they acted ethically. In the alternative they argued that the Act was unconstitutional or partially unconstitutional. The respondent minister, who was charged with the administration of the Act, argued that, if SAAPIL's contentions were upheld, then a significant portion of the funds earmarked for road-accident victims would be claimed by their legal representatives instead. F

Held: So-called 'common-law' contingency fee agreements between legal practitioners and their clients, ie agreements that allow legal practitioners to charge fees greater than those allowed by the Contingency Fees Act 66 of 1997, were doubly unlawful, since (1) the common law itself expressly prohibited contingency fee agreements between lawyers and their clients; and (2) the Contingency Fees Act left no room for contingency fee G agreements that did not specifically comply with its requirements. (Paragraphs [11], [18], [26] – [27] and [34] at 588H, 591E, 596B – 597C and 600A – C/D.) There was also no room for the argument that the entire Act (or any part of it) was unconstitutional because it unfairly discriminated against legal practitioners or unjustifiably limited their rights by curbing the fees they were allowed to charge. (Paragraphs [43], [47], [52], [56], [62] and [66] – [68] at 603A – B, 605A – C, 607B – C, 608D – G, 610F – H and 612D – I.) H

Cases Considered

Annotations:

Case law

Affordable Medicines Trust and Others v Minister of Health and Others2006 (3) SA 247 (CC) (2005 (6) BCLR 529; [2005] ZACC 3): referred to I

Bato Star Fishing (Pty) Ltd v Minister of Environmental Affairs and Others2004 (4) SA 490 (CC) (2004 (7) BCLR 687; [2004] ZACC 15): dictum in para [22] applied

Bel Porto School Governing Body and Others v Premier, Western Cape and Another2002 (3) SA 265 (CC) (2002 (9) BCLR 891; [2002] ZACC 2): referred to J

2013 (2) SA p584

Carmichele v Minister of Safety and Security and Another (Centre for Applied Legal Studies Intervening)2001 (4) SA 938 (CC) (2002 (1) SACR 79; 2001 (10) BCLR 995; [2001] ZACC 22): dictum in para [36] applied A

De la Guerre v Ronald Bobroff & Partners Inc and Others (GNP case No 22645/2011, 11 February 2013): approved and applied

Engelbrecht v Road Accident Fund and Another2007 (6) SA 96 (CC) (2007 (5) BCLR 457): referred to B

Ex parte Swain1973 (2) SA 427 (N): referred to

Harksen v Lane NO and Others1998 (1) SA 300 (CC) (1997 (11) BCLR 1489; [1997] ZACC 12): applied

Headleigh Private Hospital (Pty) Ltd t/a Rand Clinic v Soller & Manning Attorneys and Others2001 (4) SA 360 (W): criticised and not followed

Law Society of South Africa and Others v Minister of Transport and Another2011 (1) SA 400 (CC) (2011 (2) BCLR 150): dictum in para [32] applied C

Merafong Demarcation Forum and Others v President of the Republic of South Africa and Others2008 (5) SA 171 (CC) (2008 (10) BCLR 969; [2008] ZACC 10): dictum in para [60] applied

Mnisi v RAF [2010] JOL 25857 (GNP): referred to D

Mofokeng v Road Accident Fund and Two Other Cases [2012] ZAGPJHC 150: approved

Mohlomi v Minister of Defence1997 (1) SA 124 (CC) (1996 (12) BCLR 1559): referred to

Moise v Greater Germiston Transitional Local Council: Minister of Justice and Constitutional Development Intervening (Women's Legal Centre as Amicus Curiae)2001 (4) SA 491 (CC) (2001 (8) BCLR 765): referred to E

Mort NO v Henry Shields-Chiat2001 (1) SA 464 (C) ([2002] 2 All SA 515): discussed

New National Party of South Africa v Government of the Republic of South Africa and Others1999 (3) SA 191 (CC) (1999 (5) BCLR 489; [1999] ZACC 5): F dictum in para [24] applied

Patz v Salzburg 1907 TS 526: referred to

Pharmaceutical Manufacturers Association of SA and Another: In re Ex parte President of the Republic of South Africa and Others2000 (2) SA 674 (CC) (2000 (3) BCLR 241; [2000] ZACC 1): dictum in para [44] applied

Potgieter v Lid van die Uitvoerende Raad: Gesondheid, Provinsiale Regering, Gauteng en Andere 2001 (11) BCLR 1175 (CC): referred to G

Price Waterhouse Coopers Inc and Others v National Potato Co-Operative Ltd2004 (6) SA 66 (SCA) (2004 (9) BCLR 930): dictum in para [41] applied

Price Waterhouse Meyernel v Thoroughbred Breeders' Association of South Africa2003 (3) SA 54 (SCA) ([2002] 4 All SA 723): referred to

S v Hollenbach1971 (4) SA 636 (NC): referred to H

Taylor v Mackay Bros and McMahon Ltd1947 (4) SA 423 (N): referred to

Tecmed (Pty) Ltd v Hunter and Another2008 (6) SA 210 (W): approved

Thulo v Road Accident Fund 2011 (5) SA 446 (GSJ): approved

Thusi v Minister of Home Affairs and Another and 71 Other Cases2011 (2) SA 561 (KZP): discussed

Tjatji and Others v Road Accident Fund2013 (2) SA 632 (GSJ): approved I

Weare and Another v Ndebele NO and Others2009 (1) SA 600 (CC): dicta in paras [46] and [72] applied.

Statutes Considered

Statutes

The Contingency Fees Act 66 of 1997: see Juta's Statutes of South Africa J 2011/12 vol 7 at 5-145.

2013 (2) SA p585

Case Information

Application for declaratory order stating that legal practitioners may A conclude contingency fee agreements with clients, that do not comply with the Contingency Fees Act 66 of 1997. Application refused in para [69].

MSM Brassey SC (with KG Hopkins) for the applicant.

Q Pelser SC for the respondent. B

GJ Marcus SC (with S Budlender and N Mayosi) for the intervening party.

Cur adv vult.

Postea (February 11). C

Judgment

Kathree-Setiloane J (Mlambo JP and Fabricius J concurring):

Introduction

[1] This matter concerns the legality and enforceability of contingency D fee agreements which are concluded without complying with the Contingency Fees Act 66 of 1997 (the Act) and the constitutionality of the Act itself.

[2] A contingency fee agreement is an agreement between a legal practitioner and his or her client where the legal practitioner agrees to E charge no fee if the client's court case is unsuccessful. Prior to the coming into operation of the Act (on 23 April 1999), which provides for contingency fee agreements between legal practitioners and their clients, contingency fee agreements between legal practitioners and their clients were prohibited under the common law. F

[3] The meaning, effect and constitutionality of the Act have generated much controversy and debate in the legal profession since its enactment. In an attempt to put this controversy to rest, the various law societies across the country had considered the contending positions, sought legal advice, and two branches — the Law Society of the Northern Provinces [1] G and of the Free State — made rulings permitting its members to conclude contingency fee agreements outside the prescripts of the Act, provided that certain criteria were met. [2] Until recently legal practitioners, following the rulings of the Law Society of the Northern Provinces and the Free State, have been concluding such agreements without compunction. A spate of recent court decisions on the subject of the legality of H these contingency agreements has, however, generated uncertainty as to whether the 'so-called' common-law contingency fee agreement can coexist with the Act. The South African Association of Personal Injury

2013 (2) SA p586

Kathree-Setiloane J (Mlambo JP and Fabricius J concurring)

A Lawyers (SAAPIL), a voluntary association representing personal-injury lawyers who frequently litigate on contingency, has launched this application in an effort to obtain certainty on the question whether the Act exhaustively regulates the power of legal practitioners to conclude agreements with their clients for recompense by way of contingency fees.

B [4] SAAPIL's case is threefold:

(a)

First, it contends that the Act does not override the common law. Its primary argument is that the legislature could never have intended the Act to be exhaustive and that the common-law right of practitioners to conclude contingency fee agreements is untrammelled. C It therefore contends that legal practitioners can conclude enforceable contingency fee agreements with their clients without complying with the requirements of the Act, provided they observe their ethical duties.

(b)

Secondly, and in the alternative, SAAPIL contends that in the event that the court concludes that the Act is exhaustive, then the entire D Act is unconstitutional on the grounds that it discriminates...