SIMPLE UNDERSTANDING TO LEGAL COSTS IN SOUTH AFRICA
SIMPLE UNDERSTANDING TO LEGAL COSTS IN SOUTH AFRICA
Recovery of legal costs if I win my case?
When engaging in litigation a most common concern are the costs, including whether I will recover my costs if I win. There is a common misperception that if I win my case, I can recover all my costs, unfortunately it is not as simple as this.
When a court rules in favour of one party, the unsuccessful party may be ordered to pay the legal costs of the successful party. However, such costs orders does not necessarily cover the full amount expended., Recoverable costs follow a fixed tariff schedule based on the court that handled the case, such as the Magistrate’s Court or the High Court.
Legal costs awarded by Magistrate’s Courts, costs were previously categorized into four scales: (sliding from) A, B, C, and D depending on the value of the claim. Since 19th June 2023 this has been reduced to three scales.
- Scale B allows for the lowest recoverable costs
- while Scale D permits the highest.
In contrast, legal costs awarded by the High Court typically include advocate fees, whereas costs from the Magistrate’s Court do not include these fees unless specifically granted by the presiding officer. Fees to counsel are determined according to a tariff, depending on the scale of costs awarded.
What are the different types of legal costs?
There are three categories of legal costs, namely:
- Party and Party Costs: These costs are incurred during litigation, whether prosecuting or defending a claim. They usually do not include legal costs incurred before issuing a summons or notice of motion. The court may order the defendant to pay these costs to the plaintiff, and they are subject to court-set tariffs based on specific scales.
- Attorney and Client Costs: This category includes party and party costs along with costs for meetings and communications between the client and attorney. These costs are typically awarded in cases of misconduct during litigation or when a case is deemed to lack merit. They may also be specified in a contract as payable in case of a dispute. Attorney and client costs follow the same tariff structure as party and party costs, although the Taxing Master does have a discretion to award a higher amount.
- Attorney and “Own” Client Costs: These costs are usually not awarded by the courts but are determined by the fee agreement between the client and attorney. They refer to the costs the client must pay to their legal practitioner, regardless of the case’s outcome.
It is important to remember that attorney and “own” client costs are settled according to the payment contract with your attorney, irrespective of the case result. In contrast, party and party costs and attorney and client costs are awarded by the courts and adhere to established tariffs.
What is the applicable rule of law to legal costs?
The Uniform Rules of Court aim to enhance access to justice and streamline the administration of cases across lower courts, High Courts, and the Supreme Court of Appeal. Within this framework, Rule 70 addresses the tariff schedule for legal costs in High Courts, which typically includes counsel’s fees.
The High Court Tariff currently allows an attorney charge of R417 per 15 minutes.
The High Court Tariff in terms of rule 70 applies to all work ordinarily undertaken by an attorney.
A separate rule has been introduced to determine amounts allowable for work usually undertaken by an advocate. The applies to both advocates and attorneys with a right to appear in the Superior Courts.
Rule 67A which came into effect on April 12, 2024, deals with the awarding of these costs and should be read with rules 69, being the tariff of fees for legal practitioners who appear in the Superior Courts. The rule only applies to Party and Party costs and aims to allow the court to control the maximum rate legal practitioners who appear in the Superior Courts may recover. The rule focuses on setting a maximum value that can be recovered for the work done in presenting the case before the court.
Rule 69(7) of the Uniform Rules of Court sets out the maximum fees allowed for legal practitioners appearing in the Superior Courts and the type of work that can be charged under these fees. The scales apply to all legal practitioners, regardless of seniority. The maximum amounts allowed are as follows:
Scale A: R375.00 per quarter of an hour or part thereof.
Scale B: R750.00 per quarter of an hour or part thereof.
Scale C: R1125.00 per quarter of an hour or part thereof
The court will determine which scale to apply based on the complexity of the matter and the value of the claim or importance of the relief sought. If the scale is not indicated in the order, Scale A will apply.
In the case of Mashava v Enaex Africa (Pty) Ltd and Others, the court clarified that the amendments to Rule 67A apply prospectively. This means that cases instituted before 12 April 2024 but heard afterward can utilize the new rule, with the appropriate scale only affecting work done after this date.
Additionally, Rule 67A(1) states that it applies only to cost orders made on the party and party scale. In Phaleng-Podile v Compeg Services (Pty) Ltd and Others, the court found that most work in that case was completed before the rule’s amendment. Consequently, since only simpler tasks remained (preparation of heads of argument and oral argument), the court deemed an award of costs on Scale A appropriate, as the remaining work did not warrant higher scales.
What is the taxation process in respect of legal costs?
Once a judgment is granted and legal costs are awarded, a bill of costs is typically prepared by a cost consultant. This bill is served on both the unsuccessful party and the Taxing Master (Registrar).
The unsuccessful party may then list any items in the bill to which they object with a summary of the reason for their objections.
If the parties cannot agree the costs, the matter will be set down for a Taxation before the Taxing Master.
The Taxing Master is responsible for determining which costs are recoverable and payable by the unsuccessful party.
After reviewing the bill, the Taxing Master will issue a certificate known as an “allocator,” which confirms the amount of legal costs that must be paid. This allocator serves as the formal document to enforce payment of the awarded legal costs by the unsuccessful party.
Legal Costs with Mandy Simpson Attorneys
We recognize that legal costs can be substantial and may be overwhelming for our clients. Our firm is committed to ensuring that clients are fully informed about their financial situation and the prospects of success related to their case. We believe that transparency in these matters is essential for making informed decisions and effectively navigating the legal process.
