Ronald Bobroff & Partners Inc v De La Guerre; South African Association of Personal Injury Lawyers v Minister of Justice and Constitutional Development

Two related applications for leave to appeal were brought to the Constitutional Court. The first involved Ronald Bobroff & Partners Inc, a law firm that charged Ms De La Guerre a 30% contingency fee, exceeding the 25% maximum allowed under the Contingency Fees Act 66 of 1997. Ms De La Guerre challenged this excess charge in the High Court. The second application was brought by the South African Association of Personal Injury Lawyers (SAAPIL), challenging the constitutionality of the entire Contingency Fees Act or specific sections thereof. The uncertainty arose because some Law Societies had made rulings allowing their members to charge contingency fees in excess of the percentages set in the Act. Both cases were heard by the same Full Bench of the North Gauteng High Court, Pretoria, which dismissed the constitutional challenge and found in Ms De La Guerre's favour. Leave to appeal was refused by both the High Court and the Supreme Court of Appeal before the matter reached the Constitutional Court.

• Whether the Contingency Fees Act 66 of 1997 as a whole is unconstitutional
• Whether sections 2 and 4 of the Contingency Fees Act are unconstitutional
• Whether the distinction between regulation of contingency fees for attorneys and champertous agreements for lay persons is rational
• Whether sections 2 and 4 of the Act constitute an unreasonable limitation of fundamental rights
• Whether the Act limits access to justice under section 34 of the Constitution

The applications for leave to appeal in both matters CCT 122/13 and CCT 123/13 were dismissed with costs, including, where applicable, the costs of two counsel.

The binding principles established are: (1) The Contingency Fees Act 66 of 1997 as a whole, and sections 2 and 4 specifically, are constitutional. (2) There is a rational basis for distinguishing between the regulation of contingency fees for legal practitioners and champertous agreements for lay persons, based on: attorneys' responsibility for conducting litigation; their specialized knowledge and training; their ethical duties to clients and courts which may conflict with pecuniary interests; and their powerful position to influence litigation. (3) Under rationality review, courts cannot question the wisdom of legislative choices merely because other regulatory approaches might also be wise. (4) Where an applicant seeks to challenge legislation based on limitation of others' fundamental rights, they must bring a proper representative action under section 38 of the Constitution and provide evidence that those rights have been limited.

The Court made observations distinguishing between rationality review and reasonableness review as standards for testing legislation. Rationality review is a basic threshold enquiry to ensure means chosen are rationally connected to ends sought, and is not grounded in infringement of fundamental rights. It is less stringent than reasonableness review under section 36, which applies when fundamental rights are limited. The Court emphasized the constitutional principle that courts should not unduly interfere with policy formulation by the Legislature, stating: "If more ways than one are available to deal with a problem or achieve an objective through legislation, any preference which a court has is immaterial. There must merely be a rationally objective basis justifying the conduct of the legislature." The Court noted that while the matter was of great public interest, this alone was insufficient to grant leave to appeal where there were no reasonable prospects of success.

This case is significant for clarifying the constitutional validity of the Contingency Fees Act and the regulation of contingency fee arrangements in South African legal practice. It demonstrates the Constitutional Court's approach to distinguishing between rationality review and reasonableness review of legislation, and the limits of judicial interference with legislative policy choices. The judgment confirms that the Legislature may rationally regulate legal practitioners' contingency fees differently from champertous agreements between lay persons. It also establishes important principles regarding standing in constitutional challenges - that attorneys cannot challenge legislation on the basis of their clients' rights without bringing a proper representative application under section 38 of the Constitution. The case ended widespread uncertainty in the legal profession about whether contingency fees could only be charged under the Act or also outside its provisions, confirming that the Act's provisions govern.