Dealing with taxations and taxing masters

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Having had experience, on both sides of the fence, so to speak, as taxing master of the then Cape of Good Hope Supreme Court between the years 1993 and 1996 and thereafter as a legal costs consultant for twenty one years, I can address the myriad of issues pertaining to taxing masters and taxations with an experienced and objective assessment. Thereby attempting to assist practitioners and candidate attorneys how to approach taxations and taxing masters. The first document to become acquainted with is the tariff, know it well.

Since most taxations take place in the High Court, I shall concentrate on the High Court Tariff and the duties and functions of the taxing master of the High Court, and how to approach the tariff and the taxing master. A very similar approach can be adopted in the Magistrate’s Court with one distinct difference; the Magistrates Court Tariff is a creature of Statute and as such the taxing master (previously called Clerk of the Court) is bound to the tariff and cannot depart therefrom, he / she has no discretion whereas in the High Court as will be explained, the taxing master has a discretion.

Over the years there have been many changes. For many years the Supreme Court Tariff followed a very strict, copious, rigid yet logical approach, there is no need to delve into the format of the old Supreme Court Tariff. This Tariff was repealed twenty years ago in October 1996 where after the current High Court Tariff came into practice. Obviously the hourly rates, drafting, perusal, copies and all other attendances have increased over the twenty year period to keep abreast with inflation. However, over this twenty year period, the format has remained the same. It is the format that poses the difficulty; initially there was a serious attempt to simplify the tariff, making it more “user friendly”. In an attempt to simplify the tariff the Rules Board in effect complicated it.

A few pointed examples, the issue of perusal and the tariff page (dealt with elsewhere); the old Supreme Court Tariff had different rates for perusal of documents depending on their relevance, content and nature removing this logical option and lumping all perusal to comply with the one tariff page (shall contain 250 words) proviso, in my opinion, was a huge error which has led to great confusion. Very often departure from the tariff becomes necessary because to apply the perusal rate prescribed by the tariff would not make monetary sense and defies logic, the loser tends to be on receiving end when strictly applying the tariff in this regard.

Another example of the current tariff’s deficiencies is making a globular rate applicable to drafting letters, affidavits, substantial documents and pleadings to be included in an inclusive tariff – drawing up, checking, typing, printing, copies, delivery and filing thereof, per page of the original only – invariably in practical terms adopting a globular approach leads to money being lost on taxation by the successful party.

The above are just a few examples as to how the current tariff seems to lack balance, because it is so open to interpretation and it is one dimensional. Taxing masters from different Divisions apply totally different approaches, from how a bill of costs must be drafted to the approach to be adopted when taxing the perusal of documents, to how to treat costs on application. Such varying interpretations have led to confusion and inconsistency.

The taxing master is a creature of Rule 70 (1) of the Rules of Court which provides:

“( 1) (a) The taxing master shall be competent to tax any bill of costs for services
actually rendered by an attorney in his capacity as such in connection with litigious
work and such bill shall be taxed subject to the provisions of sub-rule (5), in
accordance with the provisions of the appended tariff: Provided that the taxing master
shall not tax costs in instances where some other officer is empowered so to do.”

[12] This Sub-rule has been interpreted to mean that the Taxing Master’s power to tax “any
bill of costs” includes bills as between adversaries in litigation and as between a litigant and
that litigant’s own attorney: i.e., bills usually described as ” attorney and own client”.
The taxing master of the High Court derives his / her authority to depart from the tariff in terms of Rule 70 (5) (a) The taxing master shall be entitled, in his discretion, at any time to depart from any of the provisions of this tariff in extraordinary or exceptional cases, where strict adherence to such provisions would be inequitable.
As can be gauged from Rule 70 (5) (a) the taxing master is bestowed a discretion to depart from the tariff and in some instances from the hourly rate.
However, the taxing master has to give effect to an Order of Court or agreement between the parties and may not make such an Order by proceeding with taxation without a Court Order.
The principle therefor is the court has to give the taxing master directions (by way of a Court Order) as to what is to happen with the costs. The Taxing Master has no discretion in this regard, neither can the taxing master place his / her own interpretation on the Order of Court.
The taxing master is also bound by the Rules and authority which has become trite law – the taxing master CANNOT depart from the provisions of Rule 69 (2) or an Order in terms of the Rule 43 limitations. The taxing master has no discretion to allow the travelling costs of counsel to the seat of another court; in the case of Windhoek Crushers (Pty) Ltd v Voigts en ‘n ander 1969 (1) 574 (SWA) it was held that the taxing master has no discretion in regard to travelling of expenses.

Counsel’s charges for travel and subsistence expenses to another Court, other than the one in which he practices are not a Party and Party charge. Minister of Water Affairs v Meyberg 1966(4) SA 51(E).

Counsel’s disbursements for airfare disallowed where local Counsel were available. Groenewald v Selford Motors (Edms) Bpk 1971(3) SA 677 (C).

Thus the litigant cannot claim the travelling expenses of an out of town counsel when the litigant can use the services of counsel practicing at the seat of the court.

Certain positive aspects have been included in the taxation procedure such as the 2010 amendment when sub-rule 70 3 (a) of the High Court Rules was inserted; which states that the party presenting the bill of costs will serve the bill together with the Notice of Intention to Tax the Bill of Costs on the other side who then has ten days to inspect the file and twenty days in which to file their notice to oppose together with their written objections to the bill of costs with reasons clearly stated thereon.
If no opposition and objections are filed within the 20 days, the Taxing Master will still allocate a date for taxation but the opposing side will not be allowed to play a role in the unopposed taxation, condonation would have to be sought from a Court.
The above rule came into operation on 12 March 2010 and has proved to be of great assistance with regard to settling bills of cost, preparing for argument at taxation and affording the taxing master with a written record of what exactly is being objected to and possible written responses thereto, it has expedited the whole procedure.
Be as alert to the dies with regard to service and filing of the above notices as you are with the service and filing of pleadings and notices.

When serving and filing a bill of costs always ensure that the Rule 70 E 3 (a) Certificate has been signed by the attorney dealing with the matter, when the bill of costs has been drafted by a costs consultant not in the direct employee of the attorney. It is also prudent to attach all disbursement vouchers and the Order of Court to the bill of costs when serving and filing. Always make an extra copy of the bill and annexures for taxation, invariably, for whatever reason, the taxing master does not have a copy of the bill of costs. This may be no fault of the taxing master but of the general running of the Registrar’s office. The taxing master is a judicial officer performing a judicial function; the office of the taxing master should be treated with respect and decorum.
A nettlesome problem for cost consultants, in particular, and practitioners, in general, is the issue of the right of appearance at taxation. For many years, including when I was the taxing master at the Cape High Court, unqualified persons including cost consultants were excluded from attending taxations, relying on the Appellate Division decision of Bill of Costs (Pty) Ltd v The Registrar, Cape, NO 1979 (3) SA 923 (A); this case dealt with the question whether a non-qualified person was entitled to represent a litigant at taxation; the Appellate Division ruled that a non-qualified person was NOT entitled to represent a litigant at taxation on the grounds that the taxation of a bill of costs is an integral part of the proceedings before a court and the taxing master performs a judicial and not an administrative function.
As a taxing master I applied the above ruling strictly based on the advices of two Judges at the Cape Supreme Court at that time. The legal costs industry was small when I was a taxing master. The very company which was applicant in the above decision had the monopoly with regard to bills of cost in the Western Cape. At that stage, most practitioners were well versed in costs and attended their own taxations; the need for cost consultants appeared luxurious.
Since leaving the Department of Justice over twenty years ago, the costs industry has grown with many new cost consultants joining the industry. The cost of litigation has burgeoned into a situation that the average middle class citizen cannot afford to litigate in the High Court, leaving the less fortunate without much recourse to Justice. The advent of the amendment to Rule 70 (discussed above) has also increased the need for experts to deal with costs. I have been and remain a strong advocate that the costs industry be regulated to the benefit of all, but that is a whole subject which is deserving of separate attention.
Over the past fifteen years plus, practice has developed at The Cape High Court to allow a cost consultant to represent a litigant at taxation. From time to time this right is revoked by the Registrar of the Cape High Court; the current Registrar applies a strict interpretation of the Bill of Costs (Pty) Ltd v The Registrar, Cape, NO case (supra) and directs attorneys to be in possession of the Certificate as provided for in the Right of Appearance in Courts Act 62 of 1995.
Whilst one can argue in favour of the Registrar’s stance, although I definitely do not see the need for a certificate, I was always in the anomalous situation of having been good enough to be a Senior Registrar and Taxing Master 1992 – 1996 yet there were times, as a cost consultant, when my presence was objected to and the taxing master had to act on that objection. So, my personal experience alone leaves me scratching my head at a situation which needs serious review; only a regulated industry can pressurize the powers that be with serious review and changes to the current system of taxations, the tariff and the structure of the taxing master’s office.

Contributor
Stan Horowitz
November 2016

Issue of Perusal – First Edition

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The current High Court tariff, which has been amended and came into force 24 February 2015, with respect, has a number of weaknesses. Attention is drawn to High Court Rule 70 (C) – Attendance and perusal as from 24 February 2015 will be allowed at R 53.00 perusal rate of one tariff page; this creates great confusion with each division and taxing masters adopting a different approach as how to assess and quantify perusal particularly with regard to second of third time perusal such as discovery. When dealing with perusal it is imperative to discuss Rule 70(9) which states “Save for the forms set out in the First Schedule to these Rules, a page shall contain at least 250 words and four figures shall be counted as a word.”

The tariff page is peremptory; a page shall contain at least 250 words. The difficulty which is created, for example, a lease agreement had to be perused as it formed the crux or central point of the plaintiff’s case, a document such as a lease agreement or intricate contract can amount to three tariff pages per physical page, due to small print and lengthy paragraphs; assuming the agreement amounted to 40 tariff pages, applying the R 53.00 per tariff page rule this amounts to R 2,120.00. The current hourly rate as prescribed by the tariff amounts to R 1,052.00, thus extrapolated to the hourly rate it would have taken a practitioner in the region of two hours to apply a legal mind to the agreement. On the face of it, using this example, it would appear the tariff is accurate and reasonable, the problems arise when large numbers of documents have to be perused, discovery, transcripts, trial bundles and other documentation directly related to the trial, it is not uncommon for the tariff pages to amount to 3000+ pages, applying the R 53.00 per tariff page rule this amounts to R159, 000.00 invariably the perusal on one or two attendances can constitute 80% of the fee component pertaining to litigation which spanned a number of years and in in one fell swoop the value of the fee component has been inflated by 70% – 80%. This is clearly a problem; it sometimes does not make sense relative to the other work done by the practitioner over a number of years, which the fee component is dominated by two perusal attendances, it is not always a fair reflection of the work done. The nature of the documentation perused plays a prominent role in determining fair and reasonable costs.

Many attempts have been made throughout South Africa by taxing masters and legal costs consultants to address this problem of perusal, with the effect that different approaches have been adopted by different Divisions.

The bottom line, without an amended tariff, as it pertains to perusal, the current inconsistency and lack of a logical uniform approach will persist and mire the waters of what is fair and reasonable. The current perusal rate as prescribed by the tariff creates a situation that is wholly out of proportion to the value of the services rendered.

The most common approach when departing from the tariff in terms of Rule 70(5)     is to adopt the approach enunciated in the Review Judgment of Van der Byl AJ – in the case of Juanita Van Rooyen v Road Accident Fund where it was held that a time spent basis of 40 pages per hour was acceptable and was applied in the Review Judgment. It is submitted, that this is not a clear cut solution – There is opinion, that the taxing master is not obliged to tax the costs of perusal on a time basis, see East London Municipality v SAR&H 1953(1) SA 433 (E). Where a file note has been kept, cannot allow perusal on a time basis at 40 pages per hour. It is work actually done that is allowed. Doveton & 15 others v Richards Bay Transitional Local Council & 9 others unreported NPD 3328/2000. Is only in regard to unimportant documents, relevant but not individually important that the Taxing Master can deal with them as a batch and allowed a fee for perusal for purposes of discovery on a time basis. Oshry & Lazar v Taxing Master 1947(1) SA 657 T.

The difficulties the writer has with the forty pages per hour approach and generally with applying an hourly rate attached to perusal are as follows;

Firstly, applying the forty pages per hour approach does not take into account the complexity of the document(s) perused, often a practitioner has to apply his mind to ancillary documentation (not debited) in order to understand and consider the nature and content of that which is being perused and claimed for, very often in such an instance applying the forty pages per hour approach will leave the successful party out of pocket. Furthermore, the difficulty that then arises that the taxing master cannot correlate the complexity and the time necessarily spent on the perusal.

Secondly, the writer agrees with the view held in the case of KwaZulu-Natal Bookmakers Society v KwaZulu-Natal Gaming And Betting Board and Another (11034/14) [2015] ZAKZPHC 33 (17 June 2015) the court held, that “the principle flowing from this is that time charged is not decisive. An objective assessment of the features of the case in primary, and time actually spent in preparing an appeal cannot be decisive in determining the reasonableness, between party and party, of a fee for that work. The reason is that time alone would put a premium on slow and inefficient work and would conduce to the charging of fees wholly out of proportion to the value of the services rendered.’ 

Each case has to be treated on its merits – in the opinion of the writer, the current High Court tariff, which has been amended and came into force 24 February 2015, is in need of amendment in respect of perusal, and proposes a three tier perusal rate; similar to the Supreme Court Tariff which was repealed in 1996. (A) Highest (B) Intermediary and (C) Lesser; such an amendment will greatly assist taxing masters and legal costs consultants alike and lead to a conclusion necessary or proper for the attainment of justice .

Contributor

Stan Horowitz