Judge Neil Tuchten, of the Gauteng High Court (Pretoria), has handed down an important judgment confirming the basis on which an attorney may bill a client, according to a report by Tony Beamish on the Moneyweb site. The case was brought by Cadac CEO Simon Nash and his company Midmacor Industries (Midmacor) against pension fund curator, Tony Mostert, his law firm AL Mostert & Co, the Financial Services Board (FSB), and the Registrar of Pension Funds.

Mostert, a senior attorney practising in the financial services sector, is the curator of several pension funds whose surpluses had been stripped years ago using the eponymous Ghavalas Option. He has been successful in recovering nearly R1bn for these pension funds.

In August 2006 Mostert and the FSB entered into an agreement in which Mostert, as curator, would instruct his law firm, AL Mostert & Co, to do all the administrative work for a total ‘contingency fee’ of 33.3%. (Mostert and his firm each receiving 16.66%, excluding VAT.)

The report notes the Contingency Fees Act (CFA) provides that when a success fee is charged it may not exceed double the ordinary fee – as taxed or agreed – and that the statutory cap is 25% of the capital (including VAT). Mostert has so far recovered R983m, of which (excluding VAT) at 33.3% is R327m and 25% is R245m – a difference of R82m.

Mostert reportedly told Moneyweb that he and his firm will appeal the judgment. The original court order granted by Judge Ntsikilelo Poswa stated that: ‘The curator (Mostert) shall be entitled to periodical remuneration in accordance with the norms of the attorneys’ profession, as agreed with the FSB.’

The norms of the attorneys’ profession meant that Mostert and his firm would first have to prepare a bill of costs to quantify their ordinary fee, according to legal experts consulted by Moneyweb. Only then, if the agreement with the FSB was held to be a valid agreement in terms of the CFA, could a success fee be claimed. Mostert disagrees with this and reportedly told Moneyweb that there had been an identical remuneration provision in the court order relating to the Datakor Pension Fund and that the FSB had been successful in having the order varied and that the court had ‘approved the contingency arrangement’.

He accused Nash of exploiting a legal technicality.

Moneyweb quotes Nash as saying: I am pleased that the court has intervened and that the rights of the pensioners and employers not to be charged illegal and exorbitant fees by Mostert and his law firm stopped in its tracks. There are several other funds affected by this and action is going to be taken shortly regarding these.’ The FSB has not indicated whether it would support Mostert by appealing the decision.

Full Moneyweb report

Nash and Another v Mostert and Others