Facts of the Case
In the case of Mashavha v Enaex Africa (Pty) Ltd (2022/18404) [2024] ZAGPJHC 387 (22 April 2024), the applicant, Lucky Ephraim Mashavha, brought an application against several respondents, including Enaex Africa (Pty) Ltd, Sasol Limited, Africa Arising Capital (Pty) Ltd, Enterprise Outsourcing, and EOH Network Solutions. The application was heard in the Gauteng Local Division of the High Court in Johannesburg by Judge Wilson.
The main issues in the case were jurisdiction and standing. Judge Wilson dismissed the application on 16 April 2024, finding that the court lacked jurisdiction to decide the majority of the applicant’s claims, as they fell within the exclusive jurisdiction of the Labour Court. Furthermore, the applicant lacked standing to bring the remaining claim, which concerned the first respondent’s award of a contract to the fourth respondent, Enterprise Outsourcing. The court held that Mr. Mashavha could not demonstrate any legal interest in this decision.
Consequently, the application was dismissed, and the applicant was ordered to pay the costs of the application on a party and party scale. However, before the court called the next case, the issue of the newly implemented Rule 67A of the Uniform Rules of Court was raised by Mr. Coertze, who appeared for the fourth respondent. The court allowed the parties until 19 April 2024 to make written submissions on the applicability of Rule 67A and the appropriate scale of costs to be awarded.
The Purpose and Scope of Rule 67A
Rule 67A of the Uniform Rules of Court, which came into effect on 12 April 2024, addresses the awarding of costs on a party and party scale in the High Court. The rule’s primary purpose is to allow the court to exercise control over the maximum rate at which counsel’s fees can be recovered under a party and party costs order. In this context, “counsel” refers to any legal practitioner, whether a referral advocate, a trust account advocate, or an attorney with higher appearance rights, who performs the work of counsel in presenting the case before the court.
Under Rule 67A, the court sets the maximum recoverable rate for counsel’s work based on the importance, value, and complexity of the matter, as outlined in Rule 67A(3)(b). The court may also consider factors such as non-compliance with certain rules, excessive written or oral arguments, prolonged examination or cross-examination of witnesses, or any misconduct that could warrant a personal costs order against a legal representative or other official.
Additionally, the court may take into account whether the case could have been more appropriately determined in the Magistrate’s Court.
Rule 67A(3) mandates that the court “shall” indicate the scale (“A”, “B”, or “C”) under Rule 69 when making a party and party costs order. These scales set the maximum rate at which counsel’s fees may be recovered, with Scale “A” providing a maximum tariff of R375 per quarter hour, Scale “B” at R750 per quarter hour, and Scale “C” at R1125 per quarter hour. If the court does not specify a scale in its order, the lowest scale, Scale “A”, applies by default.
The approach to setting a scale of costs under Rule 67A(3) involves first identifying the appropriate scale based on the importance, value, and complexity of the case, and then considering whether the scale should be reduced due to any inartful or unethical conduct as identified in Rule 67A(2).
Application of Rule 67A in Mashavha v Enaex Africa (Pty) Ltd
In the case Judge Wilson held that the amendments introduced by Rule 67A on 12 April 2024 should only apply prospectively. This means that for cases instituted before 12 April 2024 but heard thereafter, the scale nominated in the costs order will only apply to work done on the matter after the rule’s implementation date. Fees for work done before 12 April 2024 will be recoverable under the rules applicable to the taxation of counsel’s costs at that time.
Judge Wilson emphasised that Rule 67A, while not directly impacting what counsel can recover from their attorney or client, sends a message to the parties about the importance of their case and how artfully and ethically the winning side’s counsel has presented it. The power to reduce the scale of counsel’s costs should be exercised sparingly and only when a clear case for its exercise has been made out. The default position under Rule 67A is that counsel’s costs will be recovered on Scale “A” unless the application of a higher scale is justified by the case’s unusual complexity, importance, or value.
In the present case, Judge Wilson found that the issues were uncomplicated, and the entire case was determined on the bases of jurisdiction and standing, without the merits becoming relevant. The hearing lasted less than an hour, and all parties competently and ethically pursued the case. Consequently, Scale “A” was deemed plainly applicable.
The court rejected arguments from the first and fourth respondents’ counsel for costs on the “C” scale, noting that the mere fact that punitive costs were sought does not warrant a higher scale under Rule 67A. The focus of the rule is primarily on the nature of the case and secondarily on how the successful party presented it, rather than on the losing party’s conduct. The court also found that the case’s importance to the parties and the potential complexity of the merits were not sufficient to justify a higher scale, as the arguments actually advanced were short and straightforward.
Given that the application of Scale “A” was the default position under Rule 67A(3)(c), Judge Wilson declined to make any further order regarding the scale of costs. The judgment also highlighted the need for judges to exercise their powers under Rule 67A in a manner that does not further inflate legal fees and push the cost of legal services beyond the means of the vast majority of South Africans, emphasising the importance of equal access to justice for all.
Questions and Answers
Q: What is the primary purpose of Rule 67A of the Uniform Rules of Court? A: The primary purpose of Rule 67A is to allow the court to exercise control over the maximum rate at which counsel’s fees can be recovered under a party and party costs order.
Q: When did Rule 67A come into effect? A: Rule 67A came into effect on 12 April 2024.
Q: What factors does the court consider when setting the maximum recoverable rate for counsel’s work under Rule 67A(3)(b)? A: Under Rule 67A(3)(b), the court considers the importance, value, and complexity of the matter when setting the maximum recoverable rate for counsel’s work.
Q: What are the three scales provided under Rule 67A(3) for the maximum rate at which counsel’s fees may be recovered? A: The three scales provided under Rule 67A(3) are Scale “A” (maximum tariff of R375 per quarter hour), Scale “B” (maximum tariff of R750 per quarter hour), and Scale “C” (maximum tariff of R1125 per quarter hour).
Q: If the court does not specify a scale in its costs order, which scale applies by default? A: If the court does not specify a scale in its costs order, the lowest scale, Scale “A”, applies by default.
Q: How should the amendments introduced by Rule 67A on 12 April 2024 apply to cases instituted before that date but heard thereafter? A: The amendments introduced by Rule 67A should apply prospectively, meaning that for cases instituted before 12 April 2024 but heard thereafter, the scale nominated in the costs order will only apply to work done on the matter after the rule’s implementation date.
Q: What did Judge Wilson emphasise about the power to reduce the scale of counsel’s costs under Rule 67A? A: Judge Wilson emphasized that the power to reduce the scale of counsel’s costs should be exercised sparingly and only when a clear case for its exercise has been made out.
Q: What scale did Judge Wilson deem applicable in the case of Mashavha v Enaex Africa (Pty) Ltd, and why? A: Judge Wilson deemed Scale “A” plainly applicable in the case of Mashavha v Enaex Africa (Pty) Ltd because the issues were uncomplicated, the entire case was determined on the bases of jurisdiction and standing, and all parties competently and ethically pursued the case.
Q: Why did Judge Wilson reject arguments from the first and fourth respondents’ counsel for costs on the “C” scale? A: Judge Wilson rejected arguments for costs on the “C” scale because the mere fact that punitive costs were sought does not warrant a higher scale under Rule 67A, and the case’s importance to the parties and potential complexity of the merits were not sufficient to justify a higher scale.
Q: What did Judge Wilson highlight about the need for judges to exercise their powers under Rule 67A in relation to legal fees and access to justice? A: Judge Wilson highlighted the need for judges to exercise their powers under Rule 67A in a manner that does not further inflate legal fees and push the cost of legal services beyond the means of the vast majority of South Africans, emphasising the importance of equal access to justice for all.
Summary
Based on the judgment, for a court to award costs on Scale “C” under Rule 67A, the party seeking such an order would need to demonstrate that the case is truly important, complex, or valuable. This assessment should be made objectively, rather than based on the subjective beliefs of the parties involved.
To justify costs on Scale “C”, the following arguments may be persuasive:
The case involves highly complex legal issues that required extensive research, preparation, and skill to argue effectively. This complexity should be evident from the nature of the arguments actually presented in court, rather than potential complexities that were not addressed.
The matter is of significant public importance or has far-reaching implications beyond the immediate parties involved. This could include cases that set important precedents, affect a large number of people, or involve substantial public interest.
The value of the claim or the financial implications of the case are exceptionally high, making it stand out from typical cases in that court. However, the value of the claim should be relevant to the specific parties against whom costs are being sought.
The case required the coordination of multiple expert witnesses or the analysis of highly technical evidence, necessitating significant preparation and skill from counsel.
It is important to note that these factors should be considered in light of the arguments actually presented in court and the specific work undertaken by counsel in the case. The mere potential for complexity or importance is not sufficient; the court will assess the actual work performed and the skill required to present the case effectively.
Additionally, as emphasised by Judge Wilson, the power to award costs on a higher scale should be exercised sparingly, and the default position is that costs will be awarded on Scale “A” unless a clear case for a higher scale has been made out. The court will also be mindful of the need to avoid further inflating legal fees and maintain access to justice for all members of society.
Written by Bertus Preller, a Family Law and Divorce Law attorney and Mediator at Maurice Phillips Wisenberg in Cape Town and founder of DivorceOnline. A blog, managed by SplashLaw, for more information on Family Law read more here.
Download the case here: