Saturday, December 9, 2023
HomeMedico-LegalCourt slashes large contingency fees in EC Health and RAF lawsuit

Court slashes large contingency fees in EC Health and RAF lawsuit

Attorney Zuko Nonxuba and advocate Ian Dutton who acted for a severely disabled man in a lawsuit against Eastern CapHealth and the Road Accident Fund have had their large success fees significantly reduced, reports the Daily Dispatch. Nonxuba and KwaZulu-Natal advocate Ian Dutton may find themselves having to pay back a substantial amount to their client Avela Mabuti Mathimba after the Grahamstown High Court set aside a contingency fee agreement which saw the two lawyers net substantially more than the stipulated legal cap of 25%.

Judge Murray Lowe, with judges Thembekile Malusi and Mbulelo Jolwana agreeing, said the 25% cap was a “globular amount” applying to the total fee that all lawyers involved in any matter could charge. The report says the R840,000 charged by Nonxuba, combined with the R1.2m charged by Dutton, exceeded this cap on the R6.9m damages pay-out from the health department in 2013.

According to court papers, Mathimba sued both the Road Accident Fund (RAF) and the Health Department after a terrible accident in the Lusikisiki area in 2004 left him badly disabled when he was just 14 years old. The judges declared the contingency fee agreement drawn up between Nonxuba, Dutton and Mathimba null and void and said Dutton could charge only party-and-party costs. This is the lowest scale of costs that a lawyer may recover.

The report says Nonxuba acted for Mathimba in both his case against the RAF and the Health Department. The RAF finally paid out some R2.5m and the Health Department R6.9m.

Nonxuba, who initially claimed some R5.7m – or 62% of Mathimba’s total R9.1m combined payout – earlier this year finally agreed that the separate contingency fee agreements he negotiated with Mathimba were illegal. He agreed to pay Mathimba a further R3.6m he had initially claimed as fees, and with interest. It took over three years to get Nonxuba to pay Mathimba his due.

But, the report says, while Mathimba may have won on the swings, he lost on the roundabouts. His lawyers dropped the ball when they forgot to include interest in their settlement agreement with Nonxuba in which he had agreed to pay back the exorbitant fees he had charged in terms of the original illicit contingency agreement.

The settlement agreement stipulates that Nonxuba has only to pay over the R3.6m he incorrectly kept back since the massive pay-outs were made into his account on Mathimba’s behalf in 2013. His lawyers attempted to revisit the agreement asking the court to find it was not a full settlement as the leaving out of interest was clearly an oversight on the part of all lawyers involved.

But Lowe found the settlement agreement was cast in stone and made it an order of the court. However, he also issued a further order which may provide a lifeline to Mathimba, allowing him to recover at least some of the interest owed.

Lowe had said that if the R9.1m payout had been placed in an interest-bearing account, that interest by law accrued to Mathimba, regardless of the settlement agreement. However, if it had remained in Nonxuba’s trust account the interest would accrue to the Attorney’s Fidelity Fund.

The report says he gave Nonxuba just 14 days to account to Mathimba for the money he had held in trust and to pay whatever interest was owing within seven days of that accounting.

[link url=""]Daily Dispatch report[/link]

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