Mostert and Others v Nash and Another

The Sable Industries Pension Fund was placed under curatorship in 2006 in terms of s 5(2) of the Financial Institutions (Protection of Funds) Act 28 of 2001. Mr A L Mostert, an attorney, was appointed as curator. The court order provided that the curator would be entitled to "periodical remuneration in accordance with the norms of the attorneys' profession" as agreed with the Executive Officer of the Financial Services Board (FSB). The pension fund lacked assets to pay fees as its surplus had been allegedly stripped through unlawful transactions (the "Ghavalas scheme"). Mostert agreed with the FSB to be remunerated at 16.66% of amounts recovered on behalf of the fund. Mr Nash and Midmacor, alleged participants in the surplus stripping, challenged this fee agreement more than two years after learning of it, claiming it was unlawful and did not comply with the norms of the attorneys' profession.

• Whether the fee agreement complied with the requirement in the court order that fees be 'in accordance with the norms of the attorneys' profession'
• Whether contingency fee agreements for non-litigious work by attorneys are unlawful and contrary to public policy
• Whether the Contingency Fees Act 66 of 1997 applies to curator's fees
• Whether the conclusion of the fee agreement constituted administrative action reviewable under PAJA
• Whether the 180-day time limit in PAJA applied and whether it should be extended
• Whether Nash and Midmacor had locus standi to challenge the fee agreement
• Whether the application constituted an abuse of process

Appeal partly upheld. The declarations that the fee agreement was invalid were confirmed. However, the orders directing the curator to account and repay fees were set aside as premature. Mostert remains entitled to reasonable remuneration in accordance with the norms of the attorneys' profession, to be determined through agreement with the FSB (subject to court approval) or by court order. Each party to pay own costs of the appeal.

The phrase "periodical remuneration in accordance with the norms of the attorneys' profession" in a court order appointing a curator means remuneration calculated at an hourly rate for services rendered, not remuneration calculated as a percentage of amounts recovered. This is the conventional and normative basis upon which attorneys charge fees. While contingency fee arrangements based on a percentage of recovery may be lawful and appropriate in curatorship circumstances where the fund lacks resources, such arrangements constitute a departure from the norms of the attorneys' profession and require specific court authorization under s 5(5)(c) of the Financial Institutions (Protection of Funds) Act 28 of 2001, not merely agreement with the FSB under a general provision referring to professional norms. The curator remains entitled to reasonable remuneration for services rendered; setting aside an unlawful fee agreement does not deprive the curator of all remuneration.

Wallis JA observed that the relationship between a curator and the FSB in agreeing fees pursuant to a court order is not a contract and does not constitute administrative action in the conventional sense under PAJA, as the curator's appointment and entitlement to remuneration derive from the court order, not from an agreement with an organ of state. The court also noted concerns about the lack of transparency in the original fee agreement and emphasized the need for court oversight of curator remuneration. Willis JA in dissent expressed detailed views that: (1) PAJA applies to agreements between curators and the FSB; (2) contingency fees for non-litigious work by attorneys are not per se unlawful; (3) the common law prohibition on champerty was historically confined to litigation; (4) the court a quo erred in extending public policy prohibitions to all contingency arrangements; and (5) the 180-day time limit should have barred the application. The majority did not need to decide these issues given their conclusion on the interpretation of the court order.

This case clarifies important principles regarding curator remuneration in pension fund curatorships and the interpretation of "norms of the attorneys' profession." It confirms that while contingency fee arrangements may be lawful and appropriate in certain curatorship contexts where funds lack resources, they require specific court authorization and cannot be concluded merely under a general provision for fees "in accordance with the norms of the attorneys' profession," which ordinarily means hourly rates. The judgment addresses the tension between the need for flexible fee arrangements to enable recovery of pension fund assets and the need to ensure curator remuneration complies with professional norms and court orders. It also considers (in the majority judgment) that administrative action principles do not always apply to curator fee agreements concluded pursuant to court orders.