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[2016] ZASCA 120
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Law Society of the Northern Provinces v Kyle (246/2015) [2016] ZASCA 120 (19 September 2016)
Links to summary
THE
SUPREME COURT OF APPEAL OF SOUTH AFRICA
JUDGMENT
Not
reportable
Case
no: 246/2015
In
the matter between:
THE
LAW SOCIETY OF THE NORTHERN PROVINCES
APPELLANT
and
FREDERICK
KYLE
RESPONDENT
Neutral
citation:
Law
Society of the Northern Provinces v Kyle
(2015)
[2016] ZASCA 120
(19 September 2016)
Bench:
Navsa, Cachalia, Petse, Willis and
Saldulker JJA
Heard:
25 August 2016
Delivered:
19 September 2016
Summary:
Attorney: Section 22(1)
(d)
of Attorneys Act 53 of 1979 : misconduct : appropriate sanction :
court a quo misdirecting itself in the exercise of its discretion
:
attorney suspended from practice until such time as he satisfies the
court that he is a fit and proper person to resume practice
as an
attorney.
ORDER
On
appeal from
:
Gauteng Division of the High Court, Pretoria
(Hughes and Louw JJ sitting as court of first instance).
1.
The appeal is upheld with costs on the attorney and client scale.
2.
The order of the court below is confirmed, save for paragraph 2 of
that order, which is set aside and replaced with the following:
‘
2.
The respondent, Frederick Kyle, is suspended from practising as an
attorney of this
court until such time as he satisfies the Court that
he is a fit and proper person to resume practice as an attorney.’
.
JUDGMENT
Saldulker
JA (Navsa, Cachalia, Willis and Petse JJA concurring):
[1]
This is an appeal by the Law Society of the Northern Provinces (the
Law Society) against a judgment and order of the Gauteng
Division of
the High Court, Pretoria (Hughes J, Louw J concurring), in terms of
which the respondent, Mr Frederick Kyle, was
suspended from
practicing as an attorney for a period of six months. The appeal is
with the leave of the court below. It is necessary
to record that an
application for leave to appeal by Mr Kyle in the court below was
unsuccessful. However, the application by the
Law Society to
cross-appeal was granted, hence the present appeal.
[2]
Mr Kyle did not file heads of argument and was not present at the
hearing of this appeal. I record that the Registrar, after
a notice
of withdrawal by Mr Kyle’s former legal representatives, took
the necessary steps to inform him of the date of the
hearing of the
appeal.
[1]
We were informed from the Bar by counsel on behalf of the Law Society
that their investigations had revealed that he was currently
practicing in the KwaZulu-Natal Province.
[3]
Mr Kyle was admitted as an attorney on 4 September 2006 and initially
practised as a partner and director of Botes, Jafta, Kyle
Incorporated. On 20 February 2008 he left the aforesaid firm and
commenced practicing for his own account from 25 February
2008 under
the name and style of Kyle Attorneys. During July 2012, Mr Kyle
ceased practising as an attorney and established a company
known as
Beryl Holdings, of which he was the managing director. It appears
that the company was unsuccessful and that Mr Kyle considered
returning to practise as an attorney.
[4]
After receiving a complaint to the effect that Mr Kyle had failed to
account to clients in respect of his trust account, the
Law Society
decided to conduct an inspection of his accounting records and
practice. The inspection was due to be conducted by
a chartered
accountant and auditor (Mr Deleeuw Swart). According to the Law
Society, the inspection was not satisfactorily concluded
because of
what is set out hereafter.
[5]
Mr Kyle did not have updated accounting records and requested time to
arrange for this to be done, and undertook to present
them to the Law
Society when they became available. That undertaking was not
honoured. The Law Society took the view that this
clearly
demonstrated that Mr Kyle failed to keep proper accounting and
supporting records and that this constituted a contravention
of its
rules
[2]
and the relevant provisions of the Attorneys Act 53 of 1979 (the
Attorneys Act).
[6]
During his interaction with the Law Society, Mr Kyle undertook to
provide outstanding auditor’s reports and to resolve
the
question of outstanding Fidelity Fund certificates for the period
2009 to 2013. Mr Kyle also failed to furnish the Law Society
with his
practice’s latest trust account bank statement. All of these,
according to the Law Society, constituted transgressions
of its rules
and contraventions of the Attorneys Act.
[7]
During 2011 the Law Society received further written complaints from
Mr Kyle’s former clients. The first complained that
he had
failed to account for monies collected on his behalf. The second
complained that Mr Kyle had defaulted in repaying a loan.
[8]
The Law Society also received complaints from counsel who alleged
that they had not been paid by Mr Kyle, as well as a similar
complaint from an attorney.
[9]
Furthermore, the Law Society was concerned about Mr Kyle’s
failure to register as an ‘accountable institution’
with
the Financial Intelligence Centre in terms of
s 43B
of the
Financial
Intelligence Centre Act 38 of 2001
.
[3]
This
registration was required to have been completed by 1 March 2011.
[4]
Section
45(1)
of the
Financial Intelligence Centre Act provides
:
‘
Every
supervisory body is responsible for supervising and enforcing
compliance with this Act or any order, determination or directive
made in terms of this Act by all accountable institutions regulated
or supervised by it.’
In
terms of the provisions of section 45(1B)
(a)
of the Act a
supervisory body may:
‘
(a)
In
addition to any powers it has in terms of another Act, exercise any
power afforded to it in this Act.’
The
Attorneys’ Act is such other Act.
[10]
In 2013 the Law Society wrote to Mr Kyle calling upon him to comply
with his undertakings set out above. In his written response
he
accused the Law Society of an abuse of power and of unjustifiably
maligning him.
[11]
Following on the history set out above, the Law Society resolved to
apply to the court below for an order suspending Mr Kyle
from
practice and sought associated orders, including the appointment of a
curator bonis to administer and control his accounts.
[12]
On 22 April 2014 the Gauteng Division of the High Court, Pretoria,
granted an interim order for Mr Kyle’s suspension.
Before the
return day, Mr Kyle filed answering affidavits. It is necessary to
state at the outset, as recorded by the court below,
that Mr Kyle’s
opposition to the application as contained in his answering affidavit
was based mainly on technical points,
namely, the denial of the
existence and status of the Law Society as well as calling into
question the identity and authority of
the principal deponent on its
behalf and questioning the validity of the resolution on which the
application was based.
[13]
Mr Kyle’s answering affidavit contains no substantive answers
to the allegations by the Law Society that he did not keep
proper
books of account and did not account to clients. The complaints
received by the Law Society were not dealt with on their
merits.
[14]
The technical points referred to in para 12 were abandoned by Mr
Kyle, who represented himself, in the court below. The court
below
said the following (para 11):
‘
[I]t
is evident that the points raised by the respondent, were
disingenuous, without merit and would have been rejected by this
court, had the respondent not made the concessions he did which
culminated in the abandonment of these points.’
[15]
In relation to the allegations concerning Mr Kyle’s misconduct,
the court below had regard to s 22(1)
(d)
of the Attorneys Act,
which provides that a person who has been admitted and enrolled as an
attorney may on the application of
the Law Society be struck off the
roll or suspended from practice if he or she, in the discretion of
the court, is not a fit and
proper person to continue to practise as
an attorney. The learned judges correctly stated that applications of
the kind brought
by the Law Society comprised a three-stage enquiry,
namely;
(a)
the court must decide whether the alleged offending conduct has been
established on a preponderance
of probabilities; if so
(b)
it must decide in its discretion whether the person concerned is a
fit and proper person
to practise as an attorney and this requires a
value judgment; and if not
(c)
the court must in its discretion, which involves yet again a value
judgment, determine
whether the attorney should be merely suspended
for a period or whether the attorney should be removed from the
roll.
[5]
[16]
Dealing with the complaint concerning the lack of a Fidelity Fund
certificate, the court below had regard to s 41(1) of the
Attorneys
Act which reads as follows:
‘
A
practitioner shall not practise or act as a practitioner on his or
her own account or in partnership unless he or she is in possession
of a fidelity fund certificate.’
The
court noted that a certificate is obtained after compliance with s
42(3)
(a)
of
the Attorneys Act, which dictates that a practitioner must make an
application, which must be accompanied by a contribution of
the
necessary fee payable.
[17]
Before the court below, Mr Kyle relied on the unreported judgment of
the Gauteng Division, Pretoria in
Law
Society of the Northern Provinces v Frederick Simon Botes and
Frederick Kyle
, case no 70743/0, where
the Law Society’s case in regard to his failure to obtain a
Fidelity Fund certificate was dismissed.
The court below took into
account that the application in that case concerned Mr Kyle whilst he
still practised under the style
Botes, Jafta, Kyle Incorporated, and
that it concerned the periods 2009 and 2010. On the basis of the
findings in that case, the
court below refused to entertain the Law
Society’s complaint in respect of those years.
[18]
The court below then turned to the periods 2011 to 2012. Mr Kyle’s
failure to submit unqualified audit reports in terms
of Rule 70 of
the Law Society’s Rules had resulted in him not being issued
with a Fidelity Fund certificate by the Law Society.
The court below
rightly rejected the submission by Mr Kyle that the Law Society did
not have the necessary authority to seek compliance
from him by
requesting that he submit accounting reports in terms of Rule 70. In
this regard it considered the provisions of s
42(1) of the Attorneys
Act, which are clear and read as follows:
‘
A
practitioner practising on his or her own account or in partnership,
and any practitioner intending so to practise, shall apply
in the
prescribed form to the secretary of the [law] society concerned for a
fidelity fund certificate.’
[19]
The court below also took into account s 59
(k)
of the Attorneys Act, which gives the Law Society the power to do
anything necessary for or conducive to the attainment of its
objects.
It had regard to the criminal sanction provided for in s 83(10)
of the Attorneys Act, where an attorney practises
without a Fidelity
Fund certificate.
[6]
[20]
The following part of the court’s judgment is of relevance in
the present appeal (para 33):
‘
On
the facts, set out above it is not even necessary to deal with the
other complaints advanced by the applicant. The facts clearly
illustrate that the respondent did not practise with a certificate in
2011 and 2012. The gravity of this deviation in terms of
the statutes
is sufficient for this court to confirm the
rule
nisi
issued on 22 April 2014.’
It
went on to make the following order:
‘
1.
THAT the Rule Nisi granted on 22 April 2014 is hereby confirmed.
2.
THAT the respondent, Frederick Kyle, is suspended from practising as
an attorney
of this court for a period of six months from 10 October
2014.
3.
THAT prayers 2 to 12, inclusive of their sub paragraphs, as is set
out in the
notice of motion dated 17 October 2013 (Annexed as A) are
hereby granted.
[7]
4.
THAT the respondent is ordered to pay the costs on an attorney and
client scale.’
[21]
Before us, it was contended on behalf of the Law Society that the
court below erred in not considering:
(a)
Mr Kyle’s failure to supply auditor’s reports for the
periods ending 28 February 2011 and 29 February 2012;
(b)
his failure to comply with Financial Intelligence Centre Act
requirements;
(c)
his contravention of several requirements of the Attorneys Act
and the Law Society’s Rules, and
(d)
the unanswered complaints against Mr Kyle to the effect that he had
failed to account to clients, delayed the payment of trust
finds,
failed to give proper attention to the affairs of clients and failed
to pay the fees of advocates and legal practitioners
within a
reasonable time. It cannot be emphasised enough that the complaints
were not responded to by Mr Kyle. Thus, they remain
unchallenged.
It
was correctly contended by the Law Society that what is set out
above, was not in dispute as they were either common cause or
not
addressed at all by Mr Kyle in his answering affidavit.
[22]
It is necessary to consider briefly the relevant rules of the Law
Society (as they applied at the time) and the relevant provisions
of
the Attorneys Act. Rule 68 deals with accounting matters, and, inter
alia, required that proper accounting records be kept.
It also
required an attorney to account to his client within a reasonable
time after the performance of his or her mandate, and
pay any amount
due within a reasonable time. Rule 89 dealt with the required
standard of conduct of an attorney, and, inter alia,
required an
attorney to give proper attention to the affairs of his clients and
to comply with a lawful requirement or request
from the council of
the Law Society. Section 70 of the Attorneys Act empowers a Law
Society to direct any practitioner to produce
any book, document or
records in his or her possession and the refusal to comply with such
a direction constitutes unprofessional
conduct. Section 78(1) of the
Attorneys Act requires an attorney to keep a separate trust banking
account into which shall be deposited
money held or received on
account of any person. Section 78(4) provides that a practitioner
shall keep proper accounting records
of a trust account. The Law
Society is empowered in terms of s 78(5) to inspect the accounting
records to satisfy itself that the
provisions of ss 78(1) to (4) are
being observed.
[23]
It was submitted on behalf of the Law Society that, in addition to
the transgressions referred to above, the manner in which
Mr Kyle
conducted himself in relation to the proceedings in the court below
was reprehensible and deserving of sanction. In this
regard, the
technical points raised in relation to the Law Society and its office
bearers were referred to. Counsel on behalf of
the Law Society relied
on a judgment of this court in
Law Society, Northern Provinces v
Mogami & others
[2009] ZASCA 107
;
2010 (1) SA 186
(SCA), para
26:
‘
It
has become a common occurrence for persons accused of a wrong doing,
instead of confronting the allegation, to accuse the accuser
and seek
to break down the institution involved. This judgment must serve as a
warning to legal practitioners that courts cannot
countenance this
strategy. In itself it is unprofessional.’
[24]
I agree with counsel on behalf of the Law Society that a more serious
sanction than that imposed by the court below was called
for. The
court below erred materially by not taking into account all of the
other transgressions referred to above. The statement
by the court
that it is not even necessary to deal with the other complaints is a
serious misdirection. It is the compounding effect
of all the
transgressions that play a material part in the sanction that should
be imposed. Mr Kyle acted in disregard of his clients’
best
interests, failed to observe the most fundamental rules relating to
the keeping of accounting records, did not heed the regulatory
directions of the Law Society, did not pay counsel and an attorney,
failed to comply with
Financial Intelligence Centre Act requirements
and behaved deplorably when faced with his own bad behaviour. I also
agree that what was called for was a clear finding that Mr
Kyle was
not a fit and proper person to continue practice. In
Malan &
another v Law Society, Northern Provinces
[2008] ZASCA 90
;
2009
(1) SA 216
(SCA) the following was said (para 8):
‘
It
is seldom, if ever, that a mere suspension from practice for a given
period in itself will transform a person who is unfit to
practise
into one who is fit to practise. Accordingly, as was noted in
A
v Law Society of the Cape of Good Hope
1989 (1) SA 849
(A) at 852E-G, it is implicit in the Act that any
order of suspension must be conditional upon the cause of unfitness
being removed.
For example, if an attorney is found to be unfit of
continuing to practice because of an inability to keep proper books,
the conditions
of suspension must be such as to deal with the
inability. Otherwise the unfit person will return to practice after
the period of
suspension with the same inability or disability.’
Because
of the material misdirections referred to above we are at large to
interfere with the sanction imposed by the court below.
In light of
all of the serious transgressions by Mr Kyle, an appropriate sanction
is for him to be suspended from practice until
such a time as he
satisfies the court that he is once again fit and proper to resume
practice.
[25]
Given that Mr Kyle is reportedly currently practising as an attorney
in Kwazulu-Natal, the Registrar of this court will be
instructed to
serve a copy of this judgment on the KwaZulu-Natal Law Society.
[26]
For the reasons aforesaid, the following order is made:
1.
The appeal is upheld with costs on the attorney and client scale.
2.
The order of the court below is confirmed, save for paragraph 2 of
that order, which is set aside and replaced with the following:
‘
2.
The respondent, Frederick Kyle, is suspended from practising as an
attorney of this
court until such time as he satisfies the Court that
he is a fit and proper person to resume practice as an attorney.’
______________________
HK
Saldulker
Judge
of Appeal
APPEARANCES:
Counsel
for the Appellant:
P J Smith
Instructed by Rooth
& Wessels Inc, Pretoria
Phatsoane Henney,
Bloemfontein
Counsel
for the Respondent: No
appearance
[1]
On 27 May
2016 the Registrar of this court received a Notice of Withdrawal as
attorneys of record from Mr Kyle’s erstwhile
attorney. On 28
May 2016 the Registrar informed Mr Kyle (via e-mail) that this
appeal was set down for hearing on 25 August 2016.
Thereafter, the
Registrar attempted to contact Mr Kyle at his last known e-mail
address and telephonically in order to inform
him of the date of the
hearing of this appeal, but to no avail.
[2]
The Rules
applicable at the time were the Rules of the Law Society of the
Northern Provinces,
GG
7164, 1 August 1980, as amended. It must be noted, however, that
these Rules have as from 1 March 2016 been repealed and replaced
with a standardised set of rules for all the law societies. See
Rules for the Attorneys’ Profession, GN 2 of 2016,
GG
39740, 26 February 2016.
[3]
Section
43B(1) reads:
‘
(1)
Every accountable institution referred to in Schedule 1 and every
reporting institution referred to in Schedule 3 must, within
the
prescribed period and in the prescribed manner, register with the
Centre.’
[4]
In terms of
reg 27A of the Money Laundering and Terrorist Financing Control
Regulations, GN R1595 of 2002,
GG
24176, 20 Dec 2002.
[5]
See in this
regard
Malan
& another v Law Society, Northern Provinces
[2008] ZASCA 90
;
2009 (1) SA 216
(SCA), para 4.
[6]
Section
83(10) provides:
‘
Any
person who directly or indirectly purports to act as a practitioner
or to practise on his or her own account or in partnership
without
being in possession of a fidelity fund certificate, shall be guilty
of an offence and on conviction liable to a fine
not exceeding
R2 000 or to imprisonment for a period not exceeding six months
or to both such fine and such imprisonment.’
[7]
Prayers 2
to 12 related inter alia to a curator bonis being appointed, Mr Kyle
surrendering his certificate of enrolment as an
attorney, being
prohibited from handling or operating his trust accounts, being
required to deliver his accounting records and
files to the curator,
and being removed from office as executor of any estate or trustee
of any insolvent estate.