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by Sarah Robinson / Candidate Attorney / Mooney Ford Attorneys

Most people hold the belief that legal services and procedures are very costly. While this notion is not entirely unfounded, individuals can exert some control over the final costs of litigation.

One of the primary methods by which individuals can manage legal fees is by ensuring that the instructions they provide to their legal representatives are carefully considered and well-informed. This underscores the importance of extensive consultation with one’s legal practitioner to fully grasp the implications of available options before issuing instructions, thereby avoiding the need to withdraw instructions later upon realising that an alternative course of action would have been more prudent.

Whilst in an ideal world, parties would heed the advice of their legal representative and avoid instituting action in situations where they have very little prospects of success, this is not always the case. So, what happens if you find yourself on the receiving end of an action or application that has been brought without adequate consideration by the Plaintiff or Applicant, you have subsequently incurred costs in defending the action, and the Plaintiff or Applicant thereafter serves a notice withdrawing the matter?

There are three main scenarios which you may find yourself in.

Scenario 1: The opposing party serves a notice of withdrawal consenting to pay your costs.

Scenario 2: The opposing party serves a notice of withdrawal but fails to tender your costs.

Scenario 3: The opposing party serves a notice of withdrawal embodying a tender for costs on a specific scale.

To discourage the withdrawal of actions and applications brought without adequate consideration by the Plaintiff or Applicant, the Magistrate’s Court Rules in Rule 27 (3) provide for parties inconvenienced by such withdrawal of actions or applications to recover their costs.

Magistrate’s Court Rule 27 (3) reads as follows: “Any party served with notice of withdrawal may within 20 days thereafter apply to the court for an order that the party so withdrawing shall pay the applicant’s costs of the action or application withdrawn, together with the costs incurred in so applying: Provided that where the plaintiff or applicant in the notice of withdrawal embodies a consent to pay the costs, such consent shall have the force of an order of court and the registrar or clerk of the court shall tax the costs on the request of the defendant.

This rule effectively addresses and resolves issues arising in Scenarios 1 and 2 by providing that, when the withdrawing party tenders costs in the Notice of Withdrawal, it shares the same status as that of a Court order granting costs, and you can proceed with having your costs taxed.  If costs are not tendered in the Notice of Withdrawal, then you can approach the Court for a cost order against the withdrawing party.

But what happens if you find yourself in a situation such as Scenario 3? Fortunately, this issue has already been dealt with in Pierre Pienaar N.O. v Silver Lakes Homeowners Association NPC (2021). The Appeal Court considered the prima facie meaning of Rule 27(3) and highlighted the potential loophole wherein, if the rule were to be interpreted literally, a withdrawing party could evade a punitive cost order by tendering costs to a Defendant on a party-and-party scale in the withdrawal notice.  As the court in Pienaar correctly points out, this could not have been the intention of the legislature and there is no lawful basis substantiating why the withdrawing party should be able to determine the costs tendered.

The literal interpretation and consequent arbitrary application of Rule 27(3) has accordingly been criticised by the High Court before. In Harding & Another v Maclear (2016), it was held that the Magistrate had to consider the background and circumstances giving rise to the application.  Similarly, the court in Pienaar clarified that Rule 27(3) provides for the protection of the right of the party in whose favour the withdrawal operates, by enabling the party to approach the Court for a cost order. While costs are typically tendered on a party-and-party scale, the Court affirmed that parties may invoke Rule 27(3) to seek costs on a higher scale if circumstances warrant.

In the event that you find yourself in a situation where you are the Defendant or Respondent in a frivolous lawsuit, it is important to be aware that there are provisions that not only serve to mitigate the financial burden on parties but also uphold the principles of fairness and justice within the legal system.

Photo by Amol Tyagi on Unsplash