Brian Kahn Incorporated v Pereira: Salvador Pais and Others (03/15874) [2007] ZAGPHC 164 (21 August 2007)

IN THE HIGH COURT OF SOUTH AFRICA

(WITWATERSRAND LOCAL DIVISION)

Case number 03/15874

In the matter between:

BRIAN KAHN INCORPORATED ........ APPLICANT

and

PEREIRA : SALVADOR PAIS ........ FIRST RESPONDENT

SP CIVILS (PTY) LTD ........ SECOND RESPONDENT

SP HOMES (PTY) LTD ........ THIRD RESPONDENT

SP & C CATERING INVESTMENTS (PTY) LTD ........ FOURTH RESPONDENT

JUDGEMENT

PIENAAR AJ:

[1.] Applicant, a professional incorporated firm of attorneys, launched an application against Respondents claiming the following relief:

[1.1] That Respondents be directed to mediate the dispute between Applicant and Respondents in regard to Applicant's charges as referred to in various statements of account rendered by Applicant to Respondents.

[1.2] Alternatively, that mediation be dispensed with and Respondents be directed to arbitrate the dispute between Applicant and Respondents in regard to Applicant's charges referred to in various statements of account rendered by Applicant to Respondents.

[1.3] Pending the final resolution of the dispute, First, Second and Fourth Respondent to make payment, jointly and severally, the one paying the others to be absolved, to Applicant in the sum of R162 392,36 together with interest thereon at 24% per annum from 1 October 2003 to date of final payment.

[1.4] Pending the final resolution of the dispute, Third and Fourth Respondent to make payment, jointly and severally, the one paying the other to be absolved, to Applicant in the sum of R23 502,07 together with interest thereon at 24% per annum from 1 October 2003 to date of final payment.

[1.5] Pending the final resolution of the dispute, Fourth Respondent to make payment to Applicant in the sum of R8 289,10 together with interest thereon at 24% per annum from 1 October 2003 to date of final payment.

[1.6] Respondents to pay the costs, jointly and severally, the one paying the others to be absolved.

[2] Respondents gave notice of their intention to oppose the application launched by Applicant and launched a counter-application claiming the following relief:

[2.1] An order ordering Applicant to prepare and submit bills of cost for taxation by the Taxing Master of this Court in respect of all matters referred to by Applicant in the main application in which Applicant alleges that fees and disbursements are owing by Respondents to Applicant.

[2.2] Costs of the counter-application.

[3] Applicant gave notice of its intention to oppose the counter-application and denied that Respondents were entitled to the relief claimed by them.

[4] Before dealing with the merits of the application I deem it apposite to refer to the sequence of events as the case developed and which was common cause between the parties.

[5] Applicant's case was founded on a written agreement entered into during December 2002 between Applicant and First Respondent, in his personal capacity, and in his representative capacity on behalf of Second, Third and Fourth Respondent, which was initially denied by Respondents on the basis that the agreement Applicant was relying on, called to be rectified to reflect certain terms which had been omitted due to a bona fide mistake common to all the parties, alternatively, Respondents alleged that the written agreement Applicant was relying on had been novated by mutual agreement between Applicant and Respondents.

[6] As a result of the real disputes of fact created by the defences raised by Respondents, the matter was by consent referred for the hearing of oral evidence in order to determine what the terms were of the agreement between Applicant and Respondents in terms of which Applicant was entitled to raise fees and disbursements against Respondents' account, and whether Applicant was required to tax its accounts to Respondents in the ordinary way before it was entitled to claim payment of the accounts or any part thereof from Respondents.

[7] The matter was then enrolled for the hearing of oral evidence and set down on the trial roll for 18 September 2006.

[8] Prior to the trial date two interlocutory applications were launched by Applicant against Respondents on 15 August 2006 and 4 September 2006, respectively, but not proceeded with.

[9] Prior to the hearing of oral evidence two pre trial meetings had been conducted on 14 August 2006 and 13 September 2006, respectively, whilst the minutes presented to Court reflected the combined minutes of the first and second pre trial conferences.

[10] It appears from the pre-trial minutes that the issues in dispute were reformulated, which was brought about by Respondents abandoning their claim for rectification, alternatively, novation of the written agreement Applicant was relying on, resulting in the two interlocutory applications launched by Applicant, becoming academic and not being proceeded with.

[11] Thus it was common cause that the engagement letter, annexure "BK4" to Applicant's founding affidavit, and the fees schedule, annexure "SP2" to Respondents' answering affidavit, constituted the written agreement regulating the contractual relationship between Applicant and Respondents.

[12] In the light of these facts the parties determined that the issues calling for adjudication were restricted to the question what the appropriate forum was for the determination of Applicant's fees and disbursements, in other words, was it mediation and arbitration, as contended for by Applicant, or taxation before the Taxing Master and/or the Law Society, as contended for by Respondents.

[13] At the hearing I was informed by counsel from the Bar for both parties that the need for oral evidence had fallen away, that the remaining issues, as formulated by them, could be dispensed with on argument, requesting the Court to dispense with the need to hear oral evidence, whereupon I made an order accordingly.

[14] Respondents also contended that on a proper interpretation of the written agreement Respondents had not waived their right to raise the dilatory plea that taxation could be required before proceedings for recovery could proceed in respect of the relevant accounts, and that it was an implied, alternatively, a tacit term of the written agreement that the fees would always be fair and reasonable and that Applicant would prepare bills of cost and submit same for taxation upon being requested to do so by Respondents.

[15] Suffice it to point out that Applicant strenuously opposed the interpretation of the written agreement contended for by Respondents and vigorously contended that the written agreement Applicant was relying on was not susceptible to such an interpretation.

[16] From the aforesaid it was clear that the crux of the matter related to the interpretation to be accorded to the written agreement regulating the contractual relationship between Applicant and Respondents, and whether the interpretation contended for by Respondents could be deduced therefrom, be it impliedly or tacitly.

[17.] As indicated hereinbefore, Applicant is a professional incorporated firm of attorneys, who had rendered professional services and disbursed monies in terms of a written mandate received from Respondents, in terms of the engagement letter, annexure "BK4" to Applicant's founding affidavit, and the fees schedule, annexure "SP2" to Respondents' answering affidavit, pursuant whereto Applicant was instructed by First Respondent to represent Respondents in a number of matters during the period that Applicant represented Respondents.

[18.] In order to determine the issues in dispute between Applicant and Respondents as formulated in the pre-trial minutes it is necessary to refer to certain clauses as set out in the engagement letter, annexure "BK4", which forms part of the written agreement regulating the contractual relationship between Applicant and Respondents.

[19.] These clauses are:

"5. We confirm having made available to you under cover of our fax dated 2 December 2002, a schedule ("the schedule") which explains matters relating to the computation of, and circumstances in which this firm will charge you for professional services rendered and monies disbursed flowing from the abovementioned matter / mandate / instruction and any other matter / mandate / instruction received by this firm from you in the future.

6. 6.1 6.1.1 The matters referred to in the schedule as read with this letter constitute the basis and terms upon which this firm is prepared to represent you and the cost profile attaching thereto.

We cannot overemphasize the importance of both the schedule and this letter and we urge you to please familiarise yourself with its contents which comprise the only contractual terms regulating our contractual relationship in addition to such terms (if any) as may be implied at law; the importance hereof must please not be underestimated.

6.2 Any amendment to the terms regulating our relationship, or cancellation/termination of our mandate by mutual agreement, as well as any indulgence or accommodation to be granted by us to you, must be in writing and signed by you and one of this firm's partners, in order to be valid, enforceable and binding (this avoids any misunderstanding or uncertainty).

10. 10.2 The Law society has furthermore recommended that we draw to your attention that if you do not object in writing to any account, or should you not request a specified detailed account (see 9.4) within 30 (Thirty) days of receipt by you of any accounts submitted by us to you, you will be deemed to have waived any right which you may have in respect thereof and you will also be deemed to have accepted our account/s as fair and reasonable.

13. 13.1 In accordance with the modern trend throughout the western world to avoid, wherever possible, litigious environments, this firm commits itself to the process of alternate dispute resolution ("ADR") in dealing with you. It is therefore a term of this firm accepting your mandate (and by extension our attorney – client relationship with you) that should there be any dispute of any nature whatsoever between this firm and you, whether in relation to the quantum of our charges or otherwise, such dispute is to be resolved by way of:-

mediation (see 13.2.1); and

if mediation is unsuccessful, arbitration (see 13.2.2).

13.2 13.2.1 13.2.1.1 The mediation shall be non-binding mediation and the Chairman for the time being of the Johannesburg Bar Council ("the Chairman") shall nominate an attorney who has had at least 20 years' experience to act as a mediator. The mediation shall be unsuccessful if it is not finally resolved in 10 days (which can be extended by written agreement between us) of the appointment of a mediator.

13.2.1.2 The costs of the mediation will be shared equally between you and ourselves irrespective as to the outcome.

13.2.2 In the event that the mediation is unsuccessful, the dispute will be dealt with by arbitration in accordance with the Rules of the Arbitration Foundation of South Africa and the arbitrator shall be a senior commercial attorney or a litigator agreed upon between us, or if no agreement is reached within 3 days, the arbitrator shall be nominated by the Chairman.

13.3 13.3.1 It is our experience that where a dispute relates to this firm's charges, that dispute focuses invariably on the fees (as opposed to disbursements). Should a dispute relate to any of the charges of our statement/s, you shall be obliged to make payment to us of all the disbursements and interests, and an amount equivalent to 80% (Eighty Percent) of the fees charged (including VAT thereon) by way of an interim payment, which payment shall be made by you and received by us without prejudice to your or our rights.

13.3.2 13.3.2.1 Once the matter is resolved, whether by way of mediation (hopefully) or by way of arbitration (finally), an adjustment will be effected and if there is an amount for which you are liable to this firm, you will pay us that amount together with mora interest from inception.

13.3.2.2 If, however, your payment to us as set forth in paragraph 13.3.1 represents an overpayment, we shall immediately refund to you such overpayment, together with mora interest, from the date of such payment until date of refund

15. You are invited, should you so wish, to discuss the matters referred to herein with the secretary of the Law Society of the Northern Province (Telephone No. (012) 323-0400), or any other Attorney, in order that your acceptance of the matters referred to herein as read with the schedule handed to you is not subject to dispute, quarrel or uncertainty, and represents and informed decision by you.

16. 16.1 16.1.1 Should we not hear from you to the contrary in writing by 17h00 on the 7th calendar day following the date of this letter, we shall assume and accept that you are satisfied with the matters referred to herein as read with the schedule and agree to the basis upon which this firm is to represent you in this and any other matter in which we may be instructed."

[20.] These are the salient clauses contained in the engagement letter, annexure "BK4", which together with the fees schedule, annexure "SP2", constitutes the written agreement regulating the contractual relationship between Applicant and Respondents.

[21.] It is common cause that a dispute had arisen between Applicant and Respondents with regard to the quantum of Applicant's charges which Respondents are refusing to pay, unless taxed by the Taxing Master and/or the Law Society.

[22.] Having regard to the provisions of clause 13 of the engagement letter, annexure "BK4", Applicant commenced with the steps provided for in clause 13 in order to resolve the dispute and tendered its co-operation on 16 October 2003 in order to have the dispute mediated.

[23.] Respondents refused to accept the tender to have the dispute mediated, although a mediator had been appointed by the Chairman of the Johannesburg Bar Council.

[24.] Because the mediation had not been successful, Applicant contended that the dispute called to be dealt with by arbitration in accordance with the Rules of the Arbitration Foundation of South Africa as agreed to in the written agreement.

[25.] Notwithstanding the fact that Respondents conceded that the written agreement regulated the contractual position between Applicant and themselves, Respondents nevertheless contended that they were not obliged to comply with the mechanism prescribed by the said written agreement to resolve disputes between them and Applicant, because they were entitled to elect to have Applicant's fees and disbursements determined by means of taxation before the Taxing Master and/or the Law Society due to the fact that it was an implied, alternatively, a tacit term of the written agreement that Applicant would prepare bills of costs and submit same for taxation upon being requested to do so by Respondents. Although being requested to submit bills of costs for taxation, Applicant refused to comply therewith.

[26.] On Applicant's behalf it was submitted that recourse had to be had to the written agreement which provided for an alternate dispute resolution mechanism to be invoked in order to resolve the dispute i.e. mediation, and if such was not successful, then arbitration, which Respondents were obliged to comply with, in as much, as they had expressly accepted the terms of the written agreement and admitted that same regulated the contractual relationship between themselves and Applicant.

[27.] It was furthermore submitted on Applicant's behalf that the onus was on Respondents to show good cause to be absolved from their undertaking to have their dispute resolved by mediation and/or arbitration, that no compelling reasons had been furnished by Respondents, not to refer the dispute to arbitration, and therefore Respondents had failed to discharge the onus that they bore justifying the Court to exercise its discretion in their favour by granting an order refusing resolution of the dispute by means of arbitration.

[28.] Section 3(2) of the Arbitration Act, 42 of 1965, specifically makes provision therefore that should circumstances justify it, a Court may on good cause shown, set aside the agreement or order that the arbitration must cease to have effect with reference to any dispute referred. See Metallurgical and Commercial Consultants (Pty) Ltd v Metal Sales Co (Pty) Ltd 1971 (2) SA 388 (W) at 391F H; Sera v De Wet 1974 (2) SA 645 (T) at 649D - H; Joubert W A et al, The Law of South Africa, Vol I, Re-issue, 1993, p275 par 421

[29.] In Metallurgical and Commercial Consultants (Pty) Ltd v Metal Sales Co (Pty) Ltd 1971 (2) SA 388 (W) at 391F it was held that the onus a party was burdened with to show good cause justifying a Court to exercise its discretion and ordering that a particular dispute not be referred to arbitration is not easily discharged, since '(T)here are certain advantages, such as finality, which a claimant in an arbitration enjoys over one who has to pursue his rights in the Courts; and one who has contracted to allow his opponent those advantages will not readily be absolved from his undertaking.' See also Rhodesian Railways v Mackintosh 1932 AD 359 at 375.

[30.] This is a discretion seldom exercised and accords with the common law that a party may not, without just cause, cancel the agreement to refer to arbitration. The Arbitration Act provides that an arbitration agreement cannot be terminated except by consent of all the parties, unless it provides otherwise. See Lancaster v Wallace 1975(1) SA 844 (W) at 847A - B; SA. Transport Services v Wilson N.O. and Another 1990(3) SA 333 (W).

[31.] An arbitration agreement is a contract which must be construed according to the ordinary principles governing the interpretation of contracts. Thus it is a self contained contract collateral or ancillary to the main agreement in which it may be contained and remains in esse even where the main agreement is terminated. See Cone Textiles (Pty) Ltd v Ayres 1980 (4) SA 728 (ZA); SA. Transport Services v Wilson N.O. and Another, supra at 340E and 341C.

[32.] Considering the admission made by Respondents that the written agreement regulates the contractual relationship between them and Applicant, I am satisfied that Applicant has complied with the onus to prove that there is a valid arbitration agreement which permits it to make a claim. See Goodwin Stable Trust v Duohex (Pty) Ltd and Another 1998(4) SA 606 (C) at 615 D and 618I J.

[33.] The main thrust of the contentions presented on behalf of Respondents was founded thereon that on a proper interpretation of the written agreement Respondents had not waived or abandoned their rights to raise the dilatory plea that taxation could be required before the dispute resolution mechanism which Respondents had contractually bound themselves to follow, could be invoked.

[34.] Applying the aforesaid principles, I find that Respondents have failed to present any circumstances, amounting to good cause being shown, justifying the Court to judicially exercise its discretion in favour of Respondents by absolving Respondents from being bound to their contractual obligation to have the dispute existing between Applicant and Respondents referred to arbitration, or to order that the dispute must not be referred to arbitration. The fact must also not be lost sight of that First Respondent was not an unprotected suitor and that he had had previous experience of attorneys and their charges.

[35.] Although Respondents' counsel referred to the provisions of Rule 70, certain sections of the Attorneys Act, 53 of 1979, and certain rules of the Law Society of the Transvaal, as representing factors which I need to take into consideration when exercising my discretion, I am no persuaded that such is to be applied by me, as those factors will only come into play once the dispute is being arbitrated.

[36.] Having regard to the fact that Respondents admitted that the written agreement regulated the contractual relationship between them and Applicant, one would have expected that to be the end of the matter – caedit quaestio. The express terms of the written agreement contains no provision entitling Respondents to claim taxation rather than submitting to arbitration, especially if regard is had to clause 10.2 of the written agreement which provides that should Respondents not request a specified detailed account within 30 days of receipt by them, they will be deemed to have waived any right in respect thereof.

[37.] Having regard to the manner in which the dispute was set out that was referred to evidence, I find that once Respondents admitted the written agreement regulating the contractual relationship between them and Applicant, their contingent claim for taxation was misguided, ill conceived and without merit.

[38.] Nonetheless I will determine whether Respondents are correct in their contention that notwithstanding the express terms of the written agreement regulating the contractual relationship between them and Applicant, a proper interpretation of the written agreement makes it clear that Respondents had not waived their right to raise the dilatory plea and require taxation before submitting to arbitration.

[39.] In this regard it was contended on Respondents' behalf that waiver is never presumed but required to be strictly proved, with the onus being on the party alleging it, and having regard to the written agreement, same does not expressly provide that Respondents elected to waive or abandon their right to taxation, and therefore their intention to waive or abandon was thus to be inferred. See Road Accident Fund v Mothupi 2000 (4) SA 38 (SCA) at 50G.

[40.] Notwithstanding the vigour with which it was submitted on Respondents' behalf that it was an implied, alternatively, a tacit term of the written agreement that Applicant would prepare bills of costs and submit same for taxation upon being requested to do so by Respondents, and that the written agreement contained various indiciae indicative of Respondents' intention to retain such rights, I am not persuaded that Respondents' contentions are correct. Respondents' case would thus be that the express terms of the written agreement was overtaken by a contrary implied or tacit term. Respondents implied or tacit term cannot co-exist with a contradictory express term. See Group Five Building Ltd v Minister of Community Development [1993] ZASCA 75; 1993 (3) SA 629(AD) at 653F and J.

[41.] This submission was vehemently opposed by Applicant and the correctness of the conclusion arrived at by Respondents was strongly denied.

[42.] If Respondents' contentions were correct, it would invariably mean that an agreement between an attorney and his client regarding his charges would impliedly, alternatively, tacitly contain the term that a client should only pay the costs allowed by the Taxing Master. This does not accord with the common law nor with the practice which has developed with regard to taxation. See Benson and Another v Walters and Others 1984 (1) SA 73 (AD) at 85H-86A; Muller v The Master and Others 1992 (4) SA 277(T) at 283 B and G and 284B-G.

[43.] I am not convinced that these submissions on Respondents' behalf were correct, and I find that clause 6.1.2 of the written agreement, which reads as follows:

'6.1.2 We cannot overemphasize the importance of both the schedule and this letter and we urge you to please familiarise yourself with its contents which comprise the only contractual terms regulating our contractual relationship in addition to such terms (if any) as may be implied at law; the importance hereof must please not be underestimated.'

is clearly indicative thereof that, except for the contractual terms contained in the written agreement regulating Applicant and Respondents contractual relationship, any other implied or tacit term which Respondents may wish to rely on, unless implied by law, is excluded.

[44.] This conclusion also accords with the authorities cited and in Muller v The Master and Others, supra at 285 G the Court per Preiss J, with whom Kirk-Cohen J and Van der Merwe J concurred, concluded that a Taxing Master was obliged to give effect to an agreement where the attorney and client had agreed upon a tariff or scale of fees, provided:

the services claimed have been rendered;

the disbursements claimed have been made; and

the client is not thereby overreached. See Chapman Dyer Miles & Moorhead Inc v Highmark Investment Holdings CC and Others 1998 (3) SA 608 (D&C); Brian Kahn Inc v Dr Colin Nates, 20 March 2006 (W), unreported, par 22 23

[45.] These are clearly factors to be addressed and considered when the dispute is resolved on arbitration. I was not called upon to determine any such issue, and although Respondents contended that the charges were exorbitant, same was advanced solely as a basis to convince the Court to exercise its discretion in terms of section 3(2) of the Arbitration Act, 42 of 1965, in Respondents favour, and not to impute that Applicant had in fact overreached Respondents.

[46.] Having regard to the tenor and terms in which the written agreement has been couched it is clear that there was an earnst endeavour by Applicant and Respondents to manifest their intention to exclusively regulate their contractual relationship and to provide for a mechanism to be invoked in order to resolve any dispute of whatsoever nature, whether in relation to the quantum of Applicant's charges or otherwise, which may arise.

[47.] As such it is clear that the terms and the tenor of the language used clearly manifests an intention that militates against the interpretation Respondents is seeking to ascribe to the written agreement.

[48.] The written agreement regulating the contractual relationship between Applicant and Respondents contains no ambiguity, nor were Respondents able to refer to any such ambiguity, and as such the contra proferentem rule is not applicable, being a rule of construction only coming into play where the difficulty lies in resolving an ambiguity. The express terms of the written agreement are clear. See Consol Ltd t/a Consol Glass v Twee Jonge Gezellen (Pty) Ltd and Another 2005(6) SA 1(SCA) at 18H-I.

[49.] As indicated hereinbefore Respondents contended that their right to claim taxation was an implied, alternatively, a tacit term of the written agreement. In this regard Respondents submitted that the answer elicited by the so-called bystander test conclusively supports the existence of the said implied or tacit terms.

[50.] I do not agree. Applying the said test as applied and refined by our Courts to the facts of this case, I am satisfied that it would not evoke the prompt and unanimous assertion of the terms from both the contracting parties contended for by Respondents. See Consol Ltd t/a Consol Glass v Twee Jonge Gezellen (Pty) Ltd, supra at 18J - 19A – F.

[51.] Much was made by Respondents of the fact that Applicant had allegedly reserved for itself the right to tax a bill of costs with reference to a notice appearing on Applicant's debit notes.

[52.] Although it was contended on Applicant's behalf, that, notwithstanding the express terms of the written agreement, Applicant had reserved for itself the right to have a bill of costs taxed, and therefore Applicant had the right to elect whether to invoke the alternate dispute resolution mechanism contained in the written agreement, or to have a bill of costs taxed should a dispute arise with regard to the quantum of Applicant's charges, I find that the said contention is without merit, and cannot therefore serve as justification for Respondents to contend that should such a right still exist in favour of Applicant, the same applies to Respondents.

[53.] As indicated, clause 6.1.2 clearly stipulates that the only contractual terms regulating the contractual relationship between Applicant and Respondents are those contained in the written agreement, which not only applies to Respondents, but also to Applicant.

[54.] In this regard it is also apposite to refer to clause 6.2 which provides that any amendment to the terms regulating the contractual relationship between Applicant and Respondents, as well as any indulgence or accommodation to be granted by Applicant to Respondents, must be in writing and signed on behalf of Applicant and Respondents in order to be valid, enforceable and binding.

[55.] Clearly the aforesaid clauses are not susceptible to an interpretation allowing Applicant or Respondents the privilege of electing whether to have a dispute regarding the quantum of charges resolved by mediation or arbitration on the one hand, and by means of taxation by the Taxing Master, on the other hand.

[56.] All of the issues raised on Respondents' behalf, such as the fact that Respondents had allegedly overpaid Applicant; that whosoever taxes the bills is to blindly apply the written agreement, or whether the agreed rate for the charging of a fee may only be adjusted if overreaching has been established, as well as the question whether there must be strict adherence to the agreed rate as set out in the written agreement, except where overreaching has been established, without applying the test of reasonableness, falls within the ambit of the dispute that calls to be resolved by means of mediation or arbitration. This is part and parcel of the contractual relationship regulated by the written agreement which expressly provides that disputes be resolved by means of mediation or arbitration.

[57.] Although Respondents contended that the aforesaid issues were in dispute and of such a nature that the Taxing Master or Law Society would be the only appropriate functionary to evaluate and adjudicate these issues, I am not convinced that the said contentions on behalf of Respondents, are founded and with merit. No authority was presented in support of this contention. As indicated hereinbefore this is not in conformance with our law. See Muller v The Master and Others, supra; Chapman Dyer Miles & Moorhead Inc v Highmark Investment Holdings CC and Others, supra.

[58.] In this regard it seems to me that Applicant is correct when contending that all of these issues form an integral part of the dispute calling to be resolved by mediation or arbitration as provided for in the written agreement.

[59.] It also needs to be pointed out that the written agreement regulating the contractual relationship between Applicant and Respondents refer to disbursements and fees as between attorney and client which were expressly agreed upon, and as such, leaves little room for the application of principles which find application where such an express agreement does not exist, and therefore clearly restricts the Taxing Master's ability to disallow or interfere with a fee charged, that had been agreed upon, unless it resulted in such an exorbitant fee being charged that it was tantamount to the client being overreached. See Muller v The Master and Others, supra at 284B – G and 285D; Chapman Dyer Miles & Moorhead Inc v Highmark Investment Holdings CC and Others 1998 (3) SA 608 (D&C) at 612 B - F.

[60.] It is trite law that the Court will not countenance and sanction an agreement resulting in a client being charged such exorbitant fees that it would be tantamount to the Court sanctioning a client being overreached, which would clearly be against public policy and therefore contra bonos mores. See Law Society of South West Africa v Steyn 1923 WAS 47 at 52; Law Society of the Cape of Good Hope v Tobias and Another 1991 (1) SA 430 (C) at 435B – C; Chapman Dyer Miles & Moorhead Inc v Highmark Investment Holdings CC and Others, supra at 612 E - F.

[61.] No case was made out by Respondents, nor was it contended for on behalf of Respondents, that the written agreement provided for such exorbitant fees that it per se resulted in overreaching, that, should the Court refuse to exercise its discretion in favour of Respondents and refer the said dispute to arbitration, it would be tantamount to this Court sanctioning a written agreement which was against pubic policy allowing Respondents to be overreached by Applicant.

[62.] In law and in principle I find no justification to exercise the Court's discretion in favour of Respondents and thereby absolve them from their express undertaking to be bound by the terms of the written agreement, and thus depriving Applicant of having the dispute relating to its charges resolved by mediation or arbitration.

[63.] It follows therefore that I am satisfied that Applicant is entitled to the relief claimed and that Respondents' opposition thereto, as well as the counter-application launched by Respondents, is without merit and should be dismissed.

[64.] It was common cause between counsel that should I find in favour of Applicant, it would serve no purpose to order the dispute to be mediated, as there had been an attempt at mediation, which had not been successful, and therefore it would be proper to order that the dispute be referred to arbitration.

[65.] Having regard to the fact that costs were incurred when the matter was referred to oral evidence on 4 June 2005, and the interlocutory applications were launched by Applicant and set down for hearing on 15 August 2006 and 4 September 2006, respectively, due to the defences raised by Respondents, which were not continued with due to the fact that Respondents changed tack and abandoned their defences of rectification and novation, I am satisfied that had it not been for the conduct of Respondents the referral to evidence and the launching of the said applications would not have occurred, and therefore it would not be equitable for Applicant to be mulcted with those costs.

[66.] It was pointed out by Applicant's counsel that although interest was claimed from 1 October 2003, the application was only served on 8 December 2003 and thus it was requested that interest runs from 8 December 2003. I intend granting an order accordingly.

[67.] It follows therefore that I am prepared to grant the application as prayed for, to dismiss the counter-application, and make the following order:

Respondents are directed to arbitrate the dispute between Applicant and Respondents in regard to Applicant's charges referred to in various statements of account rendered by Applicant to Respondents.

Pending the final resolution of the dispute First, Second and Fourth Respondent to make payment, jointly and severally, the one paying the others to be absolved, to Applicant in the sum of R91 571,62, in lieu of fees, and R41 927,84, in lieu of disbursements, together with interest thereon at 24% per annum from 8 December 2003 to date of final payment.

Pending the final resolution of the dispute, Third and Fourth Respondent to make payment, jointly and severally, the one paying the other to be absolved, to Applicant in the sum of R10 126,14, in lieu of fees, and R14 223,93, in lieu of disbursements, together with interest thereon at 24% per annum from 8 December 2003 to date of final payment.

Pending the final resolution of the dispute, Fourth Respondent to make payment to Applicant in the sum of R5 599,62, in lieu of fees, and R948,74, in lieu of disbursements, together with interest thereon at 24% per annum from 8 December 2003 to date of final payment.

Respondents to pay the costs, jointly and severally, the one paying the others to be absolved, whereby is included the costs reserved on 4 June 2005, when the matter was referred to oral evidence and the costs incurred relating to the interlocutory applications launched on 15 August 2006 and 4 September 2006, respectively.

The counter-application is dismissed with costs.

________________________________

W.F. PIENAAR

ACTING JUDGE OF THE HIGH COURT