Price Waterhouse Meyernel v The Thoroughbred Breeders' Association of South Africa

Following a successful appeal in the Supreme Court of Appeal in which the Thoroughbred Breeders' Association of South Africa obtained full contractual damages against Price Waterhouse (reported as Thoroughbred Breeders' Association v Price Waterhouse 2001 (4) SA 551 (SCA)), the respondent’s attorneys presented bills of costs for taxation. These bills included substantial fees for senior and junior counsel and included VAT on all fees and disbursements. At taxation, Price Waterhouse objected to (a) the quantum of counsel’s fees and (b) the inclusion of VAT, arguing that VAT was only recoverable if it constituted a true out-of-pocket expense and had not been claimed as input tax. The Taxing Master reduced senior counsel’s fee by 20% but otherwise allowed the fees and VAT, holding that VAT issues were matters between the successful litigant and the Receiver of Revenue. Price Waterhouse brought a review of the taxation under Rule 17 of the SCA Rules.

The review succeeded. The Taxing Master’s allocatur was set aside, and the matter was remitted to him for taxation afresh in light of the judgment. The respondent was ordered to pay the costs of the review application.

This case is important for South African costs jurisprudence as it clarifies that VAT is not automatically recoverable as part of party-and-party costs and that a Taxing Master must determine whether VAT constitutes a real out-of-pocket expense. It also reinforces proper principles for the taxation of counsel’s fees in the SCA, rejecting mechanical reliance on opposing counsel’s fees and reaffirming the Taxing Master’s evaluative role.