In this brief discussion, we will attempt to clarify some of the types of legal costs and how they work, as well as certain concepts and general questions regarding legal costs for the benefit of the South Africa public at large.
Legal costs can be roughly divided into three types:
Party-and-Party Costs are clearly stipulated tariffs, as defined and set by legislation, and charged according to fixed scales, which are amended from time to time. Note that the tariffs charged by Magistrate Courts differ quite substantially from those charged by High Courts. Party-and-Party Costs are considered to be all the necessary costs incurred in the course of prosecuting or defending a claim in court, specific to the relevant case. It doesn't include any legal costs incurred before the case commenced, either by way of summons or else by way of issue of a notice of motion (if an application is being launched).
It excludes any costs related to attendances between you and your attorney that is not deemed necessary for pursuing and finalising the matter. Therefore, it will not include all the charges of your attorney for telephone calls, emails, and the time spent to update or to communicate with you. It will, however, include your attorney’s charges for time spent communicating with the other party’s attorney on the relevant case.
Party-and-Party Costs is therefore deemed to be the legal costs that a court may order the Defendant to pay the Plaintiff if the latter was successful in obtaining a judgment against the Defendant, or if the Defendant was successful, the court may award such costs against the Plaintiff. This doesn’t mean that if you win your case, you will be awarded Party-and-Party Costs, as the court may also order each party to pay their own legal costs irrespective of who won.
Attorney-and-Client costs include all the Party-and-Party costs, as well as other legal costs, such as charges for telephone calls, emails, and attendances between you and your attorney, to keep you informed of the progress or to discuss the relevant matter. In other words, it's the costs per tariff relating to all the work done and services performed, regardless of the necessity thereof for prosecuting or defending the matter at hand.
It should be noted that in some matters, subject to special circumstances, a court may award Attorney-and-Client costs, or a portion of these costs, to the successful party. Such an award is very seldom done and usually, it's the result of a specific term in the contract that gave rise to the litigation, i.e. that Attorney-and-Client costs would be payable in the event of a contractual dispute. It may also occur as "punishment" where the court deems that a punitive costs order is warranted as a result of the relevant party's conduct in the course of the litigation.
As already stated, Attorney-and-Client costs are subject to the same court tariffs as Party-and-Party costs, with the exception of being deemed necessary. Usually, the successful party will be liable for their attorney's account (Attorney-and-Client costs) and will only be able to claim a portion thereof (Party-and-Party costs) from the opposition.
Attorney-and-Own-Client costs are the third category of legal costs in South Africa, which are fees payable by a client to an attorney in terms of a specified fee agreement as specifically concluded between them. In such a fee agreement, the hourly rate is not restricted to the statutory Magistrates or High Court tariffs. Usually, an agreed-upon hourly rate is charged per 15 minutes for the actual time spent on the case, regardless of the services performed i.e. time spend actually drafting an application as opposed to the number of pages that were drafted.
It will not be awarded by any court unless quite extreme circumstances exist to justify it.
The jurisdiction of a Magistrate’s Court is limited to R400,000, while a High Court has no such limitation, in addition to which only a High Court may adjudicate certain cases.
Rule 70 of the Rules of Court sets the tariff schedule for South African High Courts and the legal costs awarded by a High Court typically include advocates’ fees. The Rules of Court also set the tariffs applied by Magistrates’ Courts, charged according to one of four scales (A through to D), based on the value of the claim involved. Scale D represents the highest proportion of legal costs to be recovered. In Magistrates’ Courts, advocate fees are not recoverable unless specifically ordered.
If you were successful with your case and have been awarded legal costs, a Bill of Costs is prepared, often by an external service provider known as a cost consultant, and served on the unsuccessful party. It’s also forwarded to an officer of the court known as the Taxing Master. The Taxing Master ensures that the reflected costs are relevant and in accordance with the applicable tariff, recoverable, and payable from the other party. This process is known as “taxation” and concludes when the Taxing Master signs and stamps the last page of the Bill of Costs, which contains a portion known as an “allocator". The taxed Bill of Costs can then be used to enforce the payment of the reflected "taxed" legal costs from the losing party.
Copyright © 2023 Rohan Lamprecht. Disclaimer: The information in this article is of a general nature for educational purposes only, relevant to the publishing date. Any opinions expressed are solely those of the author and do not necessarily reflect the views or opinions of Grobler Malope Inc. The content is not intended to constitute professional or legal advice, and you are encouraged to call and consult with our attorneys to discuss your specific situation before making any decisions. Grobler Malope Inc - 087 057 1790 - info@gmilaw.co.za