LEGAL COSTS EXPLAINED (ATTORNEY AND CLIENT COSTS)

As previously mentioned, attorney and client costs are generally only awarded where an agreement expressly provides that costs will be payable on such scale should a dispute arise in terms thereof.

For example, A and B enter into a written agreement in terms of which A will render services to B for a fixed price. A renders the services but B fails to make payment. A then cancels the agreement and issues summons for the amount due and payable by B.

In the summons, A claims, in addition to payment and interest, costs on the attorney and client scale. This is because the agreement entered into between the parties contains the following clause:

“In the event of breach as aforesaid, A shall be entitled to recover all legal costs incurred by it, including attorney and client costs, tracing fees and such collection commission as A is obliged to pay to its attorneys, without prejudice to other rights which A may have.”

In such an instance, the court will likely award costs on the attorney and client scale.

As is the case with attorney and own client costs, attorney and client costs may also be awarded for punitive purposes.

For example, even though the parties may not have agreed to attorney and client costs being recoverable, the court may still award costs on such scale if it “strongly disapproves of the conduct of the unsuccessful party.”

Deliberate delay tactics and an abuse of court processes constitutes conduct that may attract a punitive order. 

The Rules in respect of both the Magistrate’s Court and the High Court make specific reference to certain circumstances where the Court may award attorney and client costs. The Court is not however restricted to awarding such costs only in these circumstances, which are as follows:

At the hearing of an application for summary judgment, the court may make such order as to costs as it may seem just, provided that if the plaintiff makes an application for summary judgment, where the case is not within the terms of Rule 32(1) or where the plaintiff, in the opinion of the court, knew that the defendant relied on a contention which would entitle the defendant leave to defend, the court may order that the action be stayed until the plaintiff has paid the defendant's costs, and may further order that such costs be taxed as between attorney and client;

In any case in which summary judgment was refused and in which the court after trial gives judgment for the plaintiff substantially as prayed, and the court finds that summary judgment should have been granted had the defendant not raised a defence which in its opinion was unreasonable, the court may order the plaintiff's costs of the action to be taxed as between attorney and client;

A court shall at the conclusion of a trial of its own accord consider whether a request for further particulars was strictly necessary, and shall disallow all costs of and flowing from any unnecessary request or reply, or both, and may order either party to pay the costs thereby wasted, on an attorney and client basis or otherwise; and

The court may on application order to be struck out from any affidavit any matter which is scandalous, vexatious or irrelevant, with an appropriate order as to costs, incl costs as between attorney and client.

Okay, that’s cool, but what is the difference between party and party and attorney and client costs?

Well, in actual fact, attorney and client costs are pretty similar to party and party costs in that the same tariffs apply (ie – the amounts are the same).

So, if the Rules state that R500.00 may be recovered for the drafting of a summons, this will be the case regardless of whether costs are awarded on the attorney and client or party and party scale.

But then, what’s the point in differentiating between these two scales?

Well, because more is recoverable on the attorney and client scale. Although both scales are governed by the same tariff, the scope of costs recoverable on the attorney and client scale is broader.

Attorney and client costs refer generally to fees and disbursements incurred by a litigant in the performance of a mandate. They need not be specifically limited to a matter at hand. As such, they can refer to a wider range of services.

So, despite being subject to the same tariffs, the taxing master may allow various costs incurred to be recouped that would not be recoverable on the party and party scale.

For example, certain travelling expenses, further consultations and correspondences not allowed under a party and party cost order. All costs expended must still be weighed up against the principle of reasonableness.

Let me explain the difference between the two scales by way of an example: 

The client wishes to sue another party for damages arising from the breach of an agreement, so he sets up a consult with the attorney which lasts an hour.

The attorney then drafts the summons and issues same at court.

He then instructs the sheriff to serve the summons on the defendant.

Between the consult and instructing the sheriff, the client and his attorney exchange three email correspondences.

On the party and party scale: 

The client would be able to recover the costs pertaining to the drafting of the summons.

The fees charged by the attorney for the one-hour consult will not be recoverable.

The attorney’s fees charged for the correspondences exchanged with the client would likely not be recoverable.

On the attorney and client scale:

The client would be able to recover the costs pertaining to the drafting of the summons on the same tariff as the party and party scale.

The fees charged for the consult will be recoverable.

The fees charged for the correspondences will likely be recoverable.

The above clearly illustrates the wider scope of recovery on the attorney and client scale.

In addition to having a wider scope, Rule 70(5)(a) of the Uniform Rules of Court stipulates that a taxing master has the discretion to depart from any of the provisions of the tariff in “extraordinary or exceptional cases”.

That which is considered extraordinary or exceptional is best defined in Aircraft Completion Centre (Pty) Ltd v Rossouw 2003 (3) All SA 617(W), where the court held that:

“On a taxation as between attorney and client, irrespective of whether it is an attorney's own client, or the opposing party, who may be obliged to pay the amount taxed, more is required than the mere fact that it is a taxation as between attorney and client before a departure from the tariff is justified. Rule 70(5)(a) determines what more is required. The Taxing Master is bound to apply the tariff in any taxation as between attorney and client unless, in the exercise of his discretion in terms of Rule 70(5)(a), he comes to the conclusion that the case is 'extraordinary or exceptional' within the meaning of that subrule, and that it would be inequitable to adhere strictly to the tariff … There need not be anything 'extraordinary or exceptional' about a case in which the costs are to be taxed as between attorney and client. When there is nothing extraordinary or exceptional, or if adherence to the tariff would in any event be equitable, the Taxing Master will rightly adhere to the tariff.”

In computing the fee allowed in respect of certain items such as inter alia consultations, inspections, drafting affidavits, and pagination, the taxing master shall take into account the time necessarily taken, the complexity of the matter, the nature of the subject matter in dispute, the amount in dispute and any other factors which he or she considers relevant.

As is the case with party and party costs, no costs shall be allowed which appear to the Taxing Master to have been incurred or increased through over-caution, negligence or mistake, or by payment of a special fee to an advocate, or special charges and expenses to witnesses or to other persons or by other unusual expenses.

So, to conclude, attorney and client costs are subject to the same tariff as party and party costs, however, a broader range of costs may be recovered on this scale.

Next up is the most ideal scale of costs for a successful litigant, namely, that between attorney and own client.

Diskusi