Van Der Westhuizen v Road Accident Fund (21947/2022) [2024] ZAGPPHC 742 (29 July 2024)

Van Der Westhuizen v Road Accident Fund (21947/2022) [2024] ZAGPPHC 742 (29 July 2024)

The court held that the statutory cap of 25% under section 2(2) of the Contingency Fee Act 66 of 1997 includes VAT. The Legislature, when enacting the CFA, was aware of the VAT Act and did not specify that the cap excludes VAT. Section 64(1) of the VAT Act deems any price charged by a vendor to include VAT. Allowing VAT to be charged above the cap would disadvantage clients and undermine the purpose of the CFA, which is to enhance access to justice and regulate legal fees. The court followed the principle in Masango v Road Accident Fund and Others, finding that VAT is not recoverable above the 25% cap, and any contingency fee agreement that authorises recovery of VAT above the cap is...

Citation
[2024] ZAGPPHC 742
Parties
Plaintiff: Martin Eddie Van Der Westhuizen; Defendant: Road Accident Fund
Court
North Gauteng High Court, Pretoria
Jurisdiction
South Africa
Judgment Date
29 July 2024
Case Number
21947/2022
Procedural Posture
Civil Trial / Judgment After Trial; Declaratory Relief on Contingency Fee VAT Issue
Outcome
Declaratory order granted: VAT is included in the maximum fees recoverable under section 2 of the Contingency Fee Act 66 of 1997.
Judges
E van der Schyff
Legal Topics
Contingency Fee Agreements, Value Added Tax, Statutory Fee Caps, Contractual Interpretation
Civil Procedure Commercial and Corporate Contingency Fee Agreements Value Added Tax Statutory Fee Caps Contractual Interpretation

Case Brief

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Parties

Martin Eddie Van Der Westhuizen

Plaintiff

Road Accident Fund

Defendant

Procedural Posture

Civil Trial / Judgment After Trial; Declaratory Relief on Contingency Fee VAT Issue

Legal Issues

  1. 1 Whether a plaintiff's attorney may charge VAT over and above the contingency fee as provided for in the contingency fee agreement.
  2. 2 Whether the levying of VAT that causes payment by a client to exceed the statutory 25% cap under section 2(2) of the Contingency Fee Act 66 of 1997 is permissible.

Ratio Decidendi

The court held that the statutory cap of 25% under section 2(2) of the Contingency Fee Act 66 of 1997 includes VAT. The Legislature, when enacting the CFA, was aware of the VAT Act and did not specify that the cap excludes VAT. Section 64(1) of the VAT Act deems any price charged by a vendor to include VAT. Allowing VAT to be charged above the cap would disadvantage clients and undermine the purpose of the CFA, which is to enhance access to justice and regulate legal fees. The court followed the principle in Masango v Road Accident Fund and Others, finding that VAT is not recoverable above the 25% cap, and any contingency fee agreement that authorises recovery of VAT above the cap is...

Court Disposition

Declaratory order granted: VAT is included in the maximum fees recoverable under section 2 of the Contingency Fee Act 66 of 1997.

Orders

  • Value Added Tax is included in the maximum fees that a practitioner is entitled to recover from a client in terms of section 2 of the Contingency Fee Act 66 of 1997.
  • No order as to costs.