NDZ’s tobacco battle could cost tax payers more than R7m in legal fees

The ongoing court battles between government and tobacco manufacturers could cost taxpayers more than R7 million in legal fees should the Fair-Trade Independent Tobacco Association (Fita) succeed in their appeal bid.

The High Court in Pretoria is expected to give judgment this week on whether Fita’s leave to appeal, to oppose the previous ruling which stood by government’s tobacco ban, will be granted.

Fita’s bid to have the tobacco ban lifted was dismissed with the cost of three counsel last month, and the association hopes to appeal that ruling in the Supreme Court of Appeal.

Should they be successful, and a cost order is granted against government, the estimated legal bill could add up to R7.5 million.

Cost consultant at VZLR attorneys Annelize Dixon explains that three counsel are usually made up of a senior advocate and two junior advocates. Senior counsel on average charges R6,500 per hour or a day fee of R65,000.

“Counsel charges per hour and then a day-fee which is equal to ten hours. More senior or specialist counsel are more expensive and would charge anything between R6,500 to R8,500 per hour. Junior counsel would charge two-thirds of the senior counsel’s fees,” she said.

Assessing the case, Dixon estimates it could take up to 100 hours for counsel to peruse documents, do research, draft and settle papers, which could total around R1.5 million for the three counsel.

When Cooperative Governance and Traditional Affairs Minister Nkosazana Dlamini-Zuma filed her answering affidavit at the beginning of June, these costs escalated with counsel charging fees for drawing of affidavits, perusal of the application, and documentation in support of the minister’s opposition which could have added at least 100 hours to the advocate’s fees, Dixon said.

As the matter was heard over two days of 9 and 10 June, taking account the estimated R65,000 daily rate by the senior advocate and two-thirds of that fee by the two junior advocates, the state’s lawyers could bill government an estimated R304,200 for attending court.

But the costs of the perusal of the 3,647-page submissions by Dlamini-Zuma of government’s records, which influenced their decision to ban tobacco products, increased costs tremendously. Counsel usually reads about 20 pages per hour, which in this case results in 184 hours of reading.

This means simply reading the submissions could cost taxpayers an estimated R2.8 million should Fita succeed. And even if they do not and the court does not grant a cost order against them, the minister is liable to pay the costs of the advocates appointed by her.

Marumo Moerane SC (R) and Ngwako Maeneje SC (L) prepare to deliver oral arguments at the North Gauteng High Court on June 10, 2020 in Pretoria, South Africa. It is reported that the Fair Trade Independent Tobacco Association (Fita) wants the government’s decision prohibiting the sale of cigarettes and other tobacco products declared invalid and set aside. (Photo by Gallo Images/Phil Magakoe)

Senior Advocate Marumo Moerane is representing Dlamini-Zuma and President Cyril Ramaphosa, who are the first and second respondents respectively on the case.

Moerane is from KwaZulu-Natal, and costs for flights and travel to and from Pretoria are likely to be added to his account, Dixon explained.

“If Fita wins at the end of the day, then they are not going to pay any portion of the costs but the Minister will still be liable to pay an approximate R5 million considering the time spent in preparation of documents for Court and Court attendances.”

If Fita succeeds with their application for leave to appeal and then the appeal, the cost would increase, and an estimated R2.5 million would be added to the legal fees, which is payable by the minister.

Advocate Moerane would not disclose to The Citizen exactly how much he would bill Dlamini-Zuma and the president.

“According to the Rules of Professional Conduct and Etiquette of the Society of Advocates of KwaZulu Natal, I am precluded from giving information to the media in respect of matters in which I am involved,” he said.

Aside from the Fita challenge, Dlamini-Zuma is also embroiled in another cigarette court case, involving British American Tobacco South Africa, which has been delayed by the Western Cape High Court until 5 August.

Unnecessary expenditure

Even though the legal fees for the Fita tobacco case may be considered a drop in the ocean of the vast amounts being spent in the Covid-19 fight, it is unnecessary and wasteful expenditure, said economist Mike Schussler.

He says government is spending money to limit people’s rights, as they had dropped the ball when the chance during the lockdown to improve the healthcare system.

“All these regulations that are looked at in court action are not necessary. Government had a chance to get its hospitals in order, which was the plan. Now we are supposed to be a much freer nation while also socially distancing and wearing masks. Ultimately, government is spending money to limit our rights. That, to me, is wasteful expenditure. They have spent money on legal fees to stop school children, to stop people from smoking and drinking,” he said.

But despite this, cigarettes were still available, and more smokers have turned to purchase illegal cigarettes at exorbitant prices, as noted in a report by the University of Cape Town.

According to the report conducted by UCT’s Research Unit of Economics of Excisable Products, illicit cigarette traders spiked prices by 457% during this lockdown.

This means that those who can afford it are still purchasing cigarettes, although at much higher prices, while government is earning no tax from the sale.

Meanwhile, the ban may also have an ironically counter-effective result, since the report found that more smokers were now five times more likely to share a cigarette, a reason Dlamini-Zuma had initially used to ban the sale of cigarettes.

The number of people who buy illicit cigarettes has also increased.

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