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[2013] ZASCA 36
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Law Society of the Cape of Good Hope v Randell (341/2012) [2013] ZASCA 36; 2013 (3) SA 437 (SCA); [2013] 3 All SA 10 (SCA) (28 March 2013)
Links to summary
THE
SUPREME COURT OF APPEAL OF SOUTH AFRICA
JUDGMENT
Case No: 341/2012
Reportable
In the matter between:
THE LAW SOCIETY OF THE CAPE
OF GOOD HOPE
......................................................................
APPELLANT
and
MICHAEL WHARTON RANDELL
...................................
RESPONDENT
Neutral citation:
Law
Society of the Cape of Good Hope v MW Randell
(341/2012)
[2013]
ZASCA 36
(28 March 2013)
Coram:
Mthiyane DP,
Majiedt JA and Van der Merwe, Swain and Mbha AJJA
Heard: 21 February 2013
Delivered: 28 March 2013
Summary:
Application for
stay of civil proceedings pending finalisation of criminal
proceedings ─ nature of discretion vesting in the
court to
grant stay ─ accused not compelled to make statement in civil
proceedings ─ right to remain silent not violated
─
prejudice justifying intervention not shown.
_____________________________________________________________________
ORDER
On appeal from:
Eastern
Cape High Court, Grahamstown (Smith J sitting as court of first
instance):
The appeal is upheld with costs
on an attorney and client scale, and the order of the court a quo is
set aside and replaced with
the following.
‘
The
application is dismissed with costs on an attorney and client scale.’
___________________________________________________________
JUDGMENT
MTHIYANE DP (MAJIEDT JA AND
VAN DER MERWE, SWAIN AND MBHA AJJA.CONCURRING)
[1] The respondent, Michael
Wharton Randell, is a duly admitted attorney of the high court
practising as such in Port Elizabeth.
He is currently facing charges
of fraud and theft involving a sum of R2,4 million which he together
with two other persons are
alleged to have misappropriated while they
were trustees of the Greenwood Property Trust (the Trust), the sole
beneficiary of which
was the Greenwood Primary School, Port Elizabeth
(the school). The criminal proceedings against the respondent are
still pending.
[2] Prior to the disposal of the
criminal proceedings of the appellant, the Law Society of the Cape of
Good Hope, launched an application
in the Eastern Cape High Court for
the removal of the respondent’s name from the roll of
attorneys. The application is based
on the same facts which are the
subject of the criminal proceedings pending against the respondent in
the Commercial Crimes Court
in Port Elizabeth. Without filing an
answering affidavit in opposition to the application to strike him
off, the respondent launched
a counter application for a stay of the
striking off application, pending the disposal of the criminal
proceedings.
[3] The question arising in this
appeal is whether the court below was entitled to grant a stay of the
civil proceedings, even though
there was no compulsion on the
respondent to file an answering affidavit in opposition to the
striking off application. There is
a further aspect to be considered
and it is the question whether the respondent proved that he will
suffer prejudice if he made
a sworn statement in opposition to the
striking off application. The appeal is with leave of the court
below.
[4] A brief history of the matter
is necessary to put the legal and factual issues in this case in
proper context. The respondent
was one of the three trustees of the
Trust which was established in 1999. The sole beneficiary of the
trust, was as I have said,
the school.
[5] In 1999 the Trust purchased
land and buildings adjacent to the school (the property) for a
consideration of R500 000. The Trust
in turn leased the property to
the school and the rental was used to cover instalments on the
mortgage bond finance provided by
the Standard Bank.
[6] During the period March 2005
to August 2005 the trustees amended the trust deed and established
themselves as trust beneficiaries.
[7] On 21 April 2006 the trust
sold the property to a developer for R3,5 million, the developer also
agreeing to fund the erection
of a facility on the school’s
grounds to the value of R1,5 million.
[8] On 27 June 2006 the trustees
met and resolved that R2,4 million of the purchase price was to be
distributed to the respondent
and the other trustees.
[9] Mr S C Kapp, a chartered
accountant and partner of Mozars Moores Rowland, the auditors of the
school and the accountants of
the trust, queried this transaction and
when he did not receive what he considered to be a satisfactory
explanation he concluded
that the trustees had misappropriated the
sum of R2,4 million. A further unsatisfactory feature in his view was
the amendment of
the trust deed by the respondent and his
co-trustees, the appointment of themselves as the additional
beneficiaries, the amount
of the purchase consideration and the
distribution of R2,4 million amongst themselves, all of which took
place without the knowledge
of the school’s governing body. Mr
Kapp decided to report the matter to the police and the respondent
was as a consequence
duly charged for fraud and theft.
[10] In the light of the above
facts the appellant concluded that the respondent had made himself
guilty of dishonourable, dishonest
and disgraceful conduct which was
of such a nature that he was not a fit and proper person to continue
practising as an attorney.
In terms of its obligation under s
22(1)
(d)
of the Attorneys Act 53 of 1979, the appellant
launched an application for the removal of the respondent’s
name from the
roll of attorneys.
[11] It is these proceedings that
the respondent sought to have postponed pending the finalisation of
the criminal proceedings against
him. He submitted that by making a
sworn statement in advance of the criminal proceedings he might be
prejudiced and his right
in terms of s 35(1)
(c)
of the
Constitution, not to be compelled to make any confession or admission
that could be used in evidence against him, might
be violated. He
also claimed that he was entitled to remain silent pending the
finalisation of the criminal trial and that his
right to do so under
s 35(1)
(a)
of the Constitution would be compromised.
[12] The respondent’s
contentions found favour with Smith J. In granting a stay of the
application the learned judge cited
the general principle articulated
by Corbett J in
Du Toit v Van Rensburg
1967 (4) SA 433
(C) at
435H, which is to the following effect:
‘
.
. . [W]here civil proceedings and criminal proceedings arising out of
the same circumstances are pending against a person it is
the usual
practice to stay the civil proceedings until the criminal proceedings
have been disposed of.’
In the judge’s view ‘[t]he
principle at the root of this practice is that the accused might be
prejudiced in the criminal
proceedings if the civil proceedings were
heard first’. He disagreed with the approach adopted in
Davis
v Tip NO
1996 (1) SA 1152
(W). After alluding to the principle at
the root of the practice of staying civil proceedings until the
criminal proceedings had
been disposed of in certain circumstances,
the judge said the court has only to be satisfied that there is a
danger that the accused
person might be prejudiced in the conduct of
his defence. He stated that the ‘qualification that there must
be an element
of state compulsion before a court can stay civil
proceedings under these circumstances, was superimposed for the first
time in
the
Davis
case’. I do not agree. In my view the
golden thread that runs through the previous cases that were
considered in
Davis
(
Du Toit
;
Irvin & Johnson
Ltd v Basson
1977 (3) SA 1067
(T);
Kamfer v Millman &
Stein NNO
1993 (1) SA 122
( C)) to mention just a few) is that
they all involved sequestration proceedings, in which the examinee
respondent was required
to subject himself or herself to
interrogation or to answer questions put to him or her by the
provisional trustee. Clearly in
each one of those cases there was an
element of compulsion because s 65 of the Insolvency Act prior to its
amendment provided that
the person concerned was not entitled to
refuse to answer questions. The examinee’s position was only
ameliorated by the
intervention of the court in the exercise of its
discretion which in most cases involved directing that the examinee
should not
be interrogated (
Gratus & Gratus (Prop) Ltd v
Jackelow
1930 WLD 226
at 231). This is how the general principle
was applied long before
Davis
. The element of compulsion is
not something that was introduced or superimposed by the decision in
Davis
.
[13] The approach adopted by the
court below is, with respect, erroneous in two important respects.
The first involves its broad
formulation of the general principle
applied in determining whether a stay should be granted where civil
and criminal proceedings
arising out of the same circumstances are
pending against a person and there is a likelihood of prejudice to
the person concerned
if he or she made a statement prior to the
disposal of the criminal proceedings. On the approach adopted by the
court below, the
power to grant a stay under these circumstances
would be unlimited. One would envisage a situation where a stay will
be refused
because, as Nugent J correctly pointed out in
Davis
,
civil proceedings invariably create the potential for information
damaging to the accused person being disclosed by the accused
person
himself, not least so because it will often serve his or her
interests in the civil proceedings to do so.
[14] The second important respect
in which the court erred is with regard to the application of the
principle to the facts. In my
view the respondent failed to show that
he would be prejudiced if the application to strike him off the roll
was proceeded with.
I will deal more fully with this aspect later in
the judgment.
[15] I turn now to the general
principle, as it applies where there are both criminal and civil
proceedings pending which are based
on the same facts. The usual
practice is to stay the civil proceedings until the criminal
proceedings have been adjudicated upon,
if the accused person can
show that he or she might be prejudiced in the criminal proceedings
should the civil proceedings be heard
first. (
Du Toit
at
435H-436B;
Irvin & Johnson
at 1072H-1073B;
Kamfer
at 125E-126D;
Davis
at 1157B-E.
[16] A series of previous
decisions in this connection have dealt with applications for a stay
in the context of sequestration proceedings
pending the determination
of the criminal proceedings. In those cases the examinee respondent
was obliged to submit to compulsory
interrogation in terms of s 65 of
the Insolvency Act and to answer questions put to him or her by the
provisional trustee. The
general approach of the courts in this
regard was not to stay the sequestration proceedings, but rather to
ameliorate the potential
prejudice by directing that, pending the
disposal of the criminal proceedings there should be no interrogation
of the insolvent
(see
Gratus
at 231). In
Gratus
the
applicant had applied for sequestration of the estate of the
respondent whom it had formerly employed as a clerk whilst criminal
proceedings on a charge of theft were still pending against him. The
charge related to the money the respondent had allegedly stolen
from
the applicant. The respondent applied for a stay of the sequestration
proceedings pending the finalisation of the criminal
proceedings. He
contended that any statement he made in the sequestration proceedings
would seriously prejudice him in his defence
at the criminal trial.
The court refused to grant a stay of the sequestration proceedings
but to avoid possible prejudice to the
respondent, it ordered that he
not be examined under the Insolvency Act or interrogated by the
provisional trustee. One would then
immediately realise that the
court intervened to ameliorate any state compulsion that existed
arising from the obligation on the
part of the examinee respondent to
answer questions put to him in the interrogation which was sought to
be pursued under the Insolvency
Act. This occurred long before the
decision in
Davis
.
[17] Under s 65(2) of the
Insolvency Act, compulsion flowed from the fact that the examinees
could not decline to answer any question
upon the ground that the
answer would tend to incriminate them, or upon the ground that they
were to be tried on a criminal charge
and might be prejudiced at such
trial by their answers. Their opposition was ameliorated by the
subsequent amendment. Section 65(2A)
now provides for some protection
to persons under interrogation. The new section requires that part of
the proceedings in which
they are required to answer such questions
should be held in camera and further that their answers to such
questions should not
be published. Prior to the amendment the
information elicited at these proceedings had generally been
admissible in subsequent
criminal proceedings. It is for this reason
that a practice developed whereby civil proceedings were stayed until
criminal proceedings
arising from the same facts had been disposed
of. (
Du Toit
at 435H).
[18] In the present matter the
respondent is under no compulsion to respond to the allegations in
the striking off application.
In this appeal we are requested to
consider the question of how the court should deal with the situation
where a party who faces
criminal proceedings is called upon to answer
allegations in related civil or disciplinary proceedings, without
being compelled
to do so. The party concerned may be faced with the
choice of abandoning a defence to the civil or disciplinary
proceedings or
waive his right to remain silent. This is the position
in which the appellant finds himself. In
Davis
the court had
to consider a situation which is not dissimilar to what we are
dealing with in the present matter. In that case there
was no legal
compulsion on the respondent to testify. The court held that the
preservation of his rights lay entirely in his hands.
The court had
to consider an application to review a ruling by a chairperson of a
disciplinary enquiry, refusing an application
by an employee of the
Johannesburg City Council for a stay of the disciplinary proceedings
pending the final determination of the
criminal charges of fraud and
theft. The court upheld the chairperson’s refusal to stay the
disciplinary proceedings pending
the determination of the criminal
proceedings and dismissed the application for review.
[19] As I have said, Nugent J
pointed out that civil proceedings invariably create the potential
for information damaging to an
accused person to be disclosed by the
accused person himself, not least because it will serve his or her
interest in the civil
proceedings. He emphasised that where the
courts have intervened, there has been a further element, which has
been a potential
for state compulsion to divulge information. He
pointed out that even in those cases the courts have not generally
suspended civil
proceedings, but have in appropriate cases ordered
that the element of compulsion should not be implemented. I have
already referred
to how the court in
Gratus
refused to grant a
stay of the sequestration proceedings but ameliorated the prejudice
by directing that the respondent not be
examined under the Insolvency
Act or interrogated by the provisional trustee. (
Gratus
at
231.)
[20] The approach of Nugent J in
Davis
has been followed in a number of subsequent cases, eg
Fourie v Amatola Water Board
(2001) 22 ILJ C94 (LC);
Gilfillan
t/a Grahamstown Veterinary Clinic v Bowker
2012 (4) SA 465
(E);
Seapoint Computer Bureau (Pty) Ltd v McLoughlin & De Wet NNO
1997 (2) SA 636
(W);
Nedcor Bank Ltd v Behardien
2000 (1)
SA 307
(C). In
Seapoint
Navsa J followed and applied the
principle in
Davis
and stressed that in principle a party
should be left to his or her choice as to how he or she conducts the
civil proceedings.
The learned judge pointed out that allegations in
pending criminal investigations or proceedings, without indicators
that state
compulsion or coercive means are to be employed in the
civil proceedings, are not sufficient to prove prejudice of a kind
that
will justify a stay (at 649H-I).
[21] In
Equisec (Pty) Ltd v
Rodriguez & another
1999 (3) SA 113
(W) Nugent J again had
the opportunity to express himself on the subject. He was called upon
to consider an application for a stay
of sequestration proceedings
until such time as the related criminal proceedings had reached
finality. Alluding to the dilemma
in which a party requesting a stay
found himself, he remarked (at 115A-C):
‘
Where
a person is accused of having committed an act which exposes him to
both a civil remedy and a criminal prosecution, he may
often find
himself in a dilemma. While on the one hand he may prefer for the
moment to say nothing at all about the matter so as
not to compromise
the conduct of his defence in the forthcoming prosecution, on the
other hand, to do so may prevent him from fending
off the more
immediate civil remedy which is being sought against us.
When he finds
himself in that dilemma he might appeal to a court to resolve it for
him, which is what has occurred in the case which
is now before us.’
[22] The judge elaborated further
as follows:
‘
There
are two circumstances in which the first respondent will face the
prospect of disclosing information which may be relevant
to whether
he has committed the offence with which he is now charged.
(at
116A-E)
Firstly, he is
called upon in these proceedings to answer the allegations made
against him by the applicant in the founding affidavit
if he is to
avoid his estate being placed under a final sequestration order.
There is, of course, no legal compulsion upon him
to do so. Whether a
court should intervene to relieve a person of the perhaps difficult
choices he faces in that regard was considered
by me in
Davis
v Tip No and Others
1996 (1) SA 1152
(W). . .
. I see no reason to depart from the conclusion which was reached in
those cases. In my view, the choice which the first
respondent may
face between abandoning his defence to the civil proceedings or
waiving his right to remain silent (cf Templeman
LJ in
Rank
Film Distributors Ltd and Others v Video Information Centre and
Others
[1982] AC 381
, especially at 423D-G)
does not constitute prejudice against which he should expect to be
protected by a Court and I would not
exercise my discretion in favour
of the first respondent on those grounds alone.’
[23] In my view the approach in
Davis
is sound and does no more than reiterate the approach of
the previous decisions; namely that a stay will only be granted where
there is an element of state compulsion impacting on the accused
person’s right to silence. It is true that the judges in
those
cases do not specifically refer to compulsion but this is a matter of
deduction made from the way the general principle was
applied in
matters which primarily involved sequestration proceedings. The
development and formulation of the principle occurred
in the context
of sequestration proceedings. There is no authority to support the
proposition that the principle is of application
in ordinary civil
proceedings not involving an element of compelled response on the
part of the party who seeks a stay of civil
proceedings. Our courts
have only granted a stay where there is an element of state
compulsion.
[24] This also appears to be the
approach in certain foreign jurisdictions. In
Jefferson Ltd v
Bhetcha
[1979] 2 All ER 1108
(CA) at 1112-1113 the Court of
Appeal in England dismissed an application by an accused person for
the stay of civil proceedings
for the recovery of moneys pending the
finalisation of the related criminal proceedings. In dismissing the
application the court
emphasised that there was no established
principle of law that if criminal proceedings were pending against a
defendant in respect
of the same subject matter, he or she should be
excused from taking any further steps in the civil proceedings which
might have
the result of disclosing what his defence or is likely to
be, in the criminal proceedings.
[25]
Jefferson
was
followed in
R v BBC, x p Lavelle
[1983] 1 All ER 241
(QBD) at
255 where Woolf J stressed that there should be no automatic
intervention by the court. The learned judge pointed out
that while
the court must have jurisdiction to intervene to prevent serious
injustice occurring, it will only do so in very clear
cases in which
the applicant can show that there is a real danger and not merely
notional danger that there would be a miscarriage
of justice in
criminal proceedings if the court did not intervene.
[26] In
V v C
[2001] EWCA
Civ 1509
, the court of appeal in deciding whether a stay of
proceedings should have been granted because the privilege against
self-incrimination
constrained the defendant from putting forward a
defence, pointed out that there was no absolute right for a defendant
in civil
proceedings not to have judgment entered against him or her
simply because the privilege against self-incrimination was raised.
The court refused the appeal on the basis that there was no need for
the stay. It held that the defendant was entitled to enjoy
the
privilege against self-incrimination but if he was to exercise it he
would have to suffer the consequences in the civil proceedings.
[27] Turning to the facts of this
case the judge in the court below proceeded from the assumption that
prior to
Davis
the applicable legal principle was that where
civil and criminal proceedings arising out of the same circumstances
were pending,
the civil proceedings had to be stayed and that the
question of compellability was a later requirement introduced for the
first
time. He asserted that the element of compulsion was not
required in
Du Toit
and that Corbett J considered the legal
principle to be of application if there was likelihood that the
accused person would be
prejudiced.
[28] The interpretation and the
application of the principle in
Du Toit
as articulated and
applied by the judge a quo is, with respect, not entirely accurate.
The question of compellability has always
been regarded as a relevant
factor in a court’s approach to the determination of whether a
real likelihood of prejudice has
been established. In
Du Toit
,
and so too in
Gratus
and other cases mentioned earlier, there
was an element of compulsion. It is for that reason that Corbett J in
Du Toit
made an order that ‘the examination or
interrogation of the respondent in terms of the Insolvency Act shall
not take place
pending the finalising of the application for
sequestration’. The object of crafting the order in those terms
was to ameliorate
the impact of the compulsion contained in s 65(2)
(prior to its amendment), in terms of which the examinee respondent
was ‘not
entitled at such interrogation to refuse to answer any
questions upon the ground that he is to be tried on a criminal charge
and
maybe prejudiced at such trial by his or her answers’. A
similar example of intervention is also to be found in
Gratus
where in order to avoid possible prejudice to the respondent, the
court ordered that he not be examined under the Insolvency Act
or
interrogated by a provisional trustee. Absent any compulsion under
the relevant provisions of the Insolvency Act the courts
in
Du
Toit
,
Gratus
and the other cases I have referred to above,
would have been slow to grant a stay of the civil proceedings.
[29] If the approach adopted in
the court below is taken to its logical conclusion, in every case
where civil and criminal proceedings
are pending and there is a
likelihood of prejudice, the court will be vested with unlimited
jurisdiction to stay the civil proceedings
until the criminal
proceedings have been finalised, even where there is no compulsion on
the part of the person concerned to disclose
his or her defence ─
where the person concerned is faced with a ‘hard choice’.
[30] It seems to me that the
nature of the discretion to be exercised by courts in cases such as
this is very limited in scope and
ambit. In
Davis
the
discretion was described by Nugent J as follows (at 1157D-E):
‘
Although
the principle has been articulated in the language of a discretion,
this may be misleading. I do not understand the decided
cases to have
held that a Court may direct the civil proceedings to continue even
where it has been found that they may prejudice
an accused person. On
the contrary, it is clear that once the potential for prejudice has
been established the Courts have always
intervened to avoid it
occurring. In that sense then it has no discretion.’
The judge pointed out further
that the potential for prejudice is limited to cases where there is a
further element present, namely
‘the potential for State
compulsion to divulge information’. (at 1157F-G)
[31] I agree with the approach in
Davis
. I also think that to extend the court’s
intervention to cases where an applicant for a stay of the civil
proceedings has
a ‘hard choice’ to make, would bring the
right to remain silent into disrepute. The ratio for the discretion
being
narrowly circumscribed is that a distinction must be maintained
between the situation where an individual has the choice whether
to
testify (even though the alternatives over which he has a choice are
equally unattractive) and where he is compelled to because
a failure
to do so attracts a penalty. (at 1158H-J). According to the decision
in
Davis
this is necessary to ensure that the ‘salutary
principle’, enshrined in the right to silence is not to be
extended
beyond its true province and thereby risk falling into
disrepute (at 1158I-J).
[32] The respondent in this case
falls outside the category of parties who are subject to compulsion
to testify or to disclose their
defence. He has a ‘hard choice’
to make as to whether he should respond to the allegations in the
striking off application
or face the consequences of not responding.
In my view, the learned judge’s broad formulation of the
general principle applicable
to applications for a stay was
erroneous. The only prejudice the court below referred to was that
‘making a sworn statement
in opposition to the main application
might serve to prejudice the respondent in the conduct of his defence
in the criminal matter’.
The respondent however denies any
wrongdoing and if he were to respond, would in any event probably
file an exculpatory statement.
Any claim to violation of the
respondent’s right to silence appears to be illusory. On the
papers the respondent has already
disclosed essentials of his defence
when he filed a plea in a related civil matter. Significantly he has
not sought to stay those
proceedings. I do not see how he could claim
that filing an answering affidavit in the striking off application
would prejudice
him.
[33] The matter is of huge public
importance. The respondent is an officer of the court whose position
requires scrupulous integrity
and honour. He is facing grave
allegations of dishonesty and impropriety. In assessing prejudice
generally the judge a quo regrettably
appears to have focused solely
on the respondent’s practice. He pointed out that there was no
evidence of wrongdoing in the
respondent’s trust account. This
appears to avoid the issue because probity and fitness to remain in
office of an attorney
does not depend solely on whether the
attorney’s trust account is intact. These are factors which the
judge a quo should
also have taken into consideration in the overall
consideration of the question of prejudice. It was prejudice not only
to the
respondent that he had to consider but also the protection of
the public interest. In failing to consider the above factors, the
judge erred.
[34] Before concluding, I would
like to refer to a further point made by the respondent’s
counsel during argument. Counsel
submitted that the application for a
stay of the striking off proceedings was interlocutory and therefore
not appealable. The argument
is without merit. The order by Smith J
to stay the application to strike off was final in effect, in that it
disposed of all the
issues relevant to the said application. In any
event, the contention advanced on the respondent’s behalf is in
conflict
the decision of this court in
Clipsal Australia (Pty) Ltd
v GAP Distributors
2012 (2) SA 289
(SCA), in which an application
to stay contempt proceedings was held to be appealable.
[35] In the result the appeal is
upheld with costs on an attorney and client scale, and the order of
the court a quo is set aside
and replaced with the following.
‘
The
application is dismissed with costs on an attorney and client scale.’
______________________
K K MTHIYANE
DEPUTY PRESIDENT
APPEARANCES
For Appellant: S Rosenberg SC
Instructed by:
Bisset Boehmke McBlain, Cape Town
Webbers, Bloemfontein
For Respondent: M Osborne
Instructed by:
Nettletons, Grahamstown
Claude Reid Inc, Bloemfontein