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2023
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[2023] ZAFSHC 155
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South African Legal Practice Council v Du Toit [2023] ZAFSHC 155 (2 May 2023)
FLYNOTES:
PROFESSION – Suspension – Pending disciplinary inquiry
– Investigation revealing deceased estates
having been
defrauded – Respondent ceasing to practice for own account
but continuing to act in certain of his matters
– Not
ensuring that files properly secured or that there was proper
accounting for funds held – Necessary to
protect the members
of the public and his clients from further prejudice – Rule
nisi issued.
IN THE HIGH COURT
OF SOUTH AFRICA,
FREE
STATE DIVISION, BLOEMFONTEIN
Case
No: 1381/2023
In
the matter between:
THE
SOUTH AFRICAN LEGAL
PACTICE
COUNCIL
APPLICANT
and
WALTER DU
TOIT
RESPONDENT
JUDGMENT
_
____________________________________________________________
CORAM:
NAIDOO J
______________________________________________________________
HEARD
ON:
31 MARCH 2023
_____________________________________________________________
DELIVERED
ON:
2 MAY 2023
______________________________________________________________
[1]
The applicant (the LPC) moved this application, on an urgent
basis, in which it sought a
rule nisi
, calling upon the
respondent to show cause why a final order should not be granted,
inter alia
, for the suspension of the respondent from
practising as an attorney pending the finalisation of a disciplinary
enquiry to
be instituted against him by the LPC, alternatively,
pending an application to be launched by the LPC to have the name of
the respondent
struck from the roll of Legal Practitioners of South
Africa. The respondent opposed the application but took no issue with
urgency.
Adv (Mr) MS Mazibuko represented the applicant, and Adv (Mr)
MDJ Steenkamp represented the respondent.
[2]
The respondent is a practising attorney and enrolled as such in the
records of the LPC, which reflect
that he practises under the name
and style of Walter du Toit Attorneys Inc at 101A, corner Van Heerder
and Tulbach Streets, Welkom,
Free State Province. In reality however,
it appears that the respondent has ceased to practice for his own
account and is currently
employed as a consultant by a firm of
attorneys, De Wet Wepener Attorneys Inc, in Welkom. It is not in
dispute that the respondent
ceased practice and closed his offices,
without informing the LPC or following the prescribed procedures for
closure of his practice.
[3]
This application was precipitated by an investigation and
recommendations by the LPC’s (Free State)
Provincial
Investigation Committee (the Investigation Committee), who acted upon
a complaint against the respondent from Nedbank
Limited (Nedbank)
regarding serious allegations of misconduct and, in particular,
misappropriation of funds belonging to deceased
estates.
The
respondent was appointed as the executor or agent of a number of
deceased estates and Nedbank complained that he defrauded these
deceased estates of a total amount of Two Million Seven Hundred and
Seventy Five Thousand Two Hundred and Sixty Eight Rand and
Twenty
Cents (R2 775 268.20)
[4]
In summary, the Investigation Committee found that the respondent
opened several banking accounts with
Nedbank for the purposes of
administering the deceased estates I have mentioned. During the
period 16 January 2017 and 28 June
2022, the respondent made several
requests to Nedbank for payment to two entities, R-5 Repairs and
X-Tream Autobody, ostensibly
for repairs to motor vehicles belonging
to the relevant deceased estates. Nedbank made such payments into the
bank accounts of
the two entities, on the strength of the
respondent’s requests. In some instances, the request was for
payment directly into
the respondent’s Trust Account, which was
accordingly done.
[5]
Nedbank’s investigations revealed that the two entities I have
mentioned were not legally incorporated
and the two Capitec bank
accounts into which Nedbank had paid the requested amounts belonged
to a Ms Suzette Greyling. Some of
the vehicles alleged to have been
repaired did not belong to the deceased estates, while those vehicles
belonging to the relevant
deceased estates were never repaired by R-5
Repairs or X-Tream Autobody. Nedbank discovered these fraudulent
transactions in September
2022 and lodged a complaint with the LPC.
[6]
The respondent does not deny the fraud but blames
this conduct on a former employee of his, one Mr Patrick
Maleme
(Maleme). He
also
does not deny that the total loss is in the amount of R2 775 268.20,
alleging that he was only able to verify an
amount of approximately
R1.7 million because his bank accounts were frozen by Nedbank,
preventing him from proceeding further with
his investigation. Mr
Maleme was employed by the respondent as a messenger, interpreter and
assistant in the estates department
of his firm. From the
respondent’s exposition of Maleme’s duties and the manner
in which he dealt with deceased estates,
it appears that there was
little or no supervision or oversight by the respondent in respect of
deceased estates to ensure that
all transactions in respect thereof
were legitimate.
[7]
Similarly, the respondent blames another employee, Ms Bosch, for the
manner in which the Liquidation
and Distribution Accounts (L& D
accounts) in respect of the deceased estates was compiled. The
transactions relating to the
repairs of motor vehicles belonging to
the deceased estates was not reflected in the L&D accounts and
the respondent alleges
that he only verified about 40- 50 % of Ms
Bosch’s work. This once again speaks of a lack of oversight and
supervision on
the part of the respondent.
[8]
For the purposes of this application, I do not deem it necessary to
traverse the details surrounding
the various transactions as there is
no real dispute by the respondent as to the manner in which the
fraudulent transactions were
perpetrated, and that the heirs to the
deceased estates are being seriously prejudiced. The conduct of the
respondent in respect
of the closure of his practice is also very
worrisome. He did not seek the assistance and guidance of the LPC in
ensuring that
the files and clients’ interests were properly
secured and that there was a proper accounting for funds he held on
behalf
of clients. There has been no closing audit, as required by
the Rules governing the legal profession. The respondent denied any
wrongdoing on his part, and particularly that he had any involvement
in the fraudulent transactions mentioned herein.
[9]
The court enquired whether the Fidelity Fund would make good any
losses suffered by the deceased estates
and/or heirs thereto. Mr
Mazibuko expressed doubt that they would, as he was of the view that
it was the negligent acts of the
practitioner that were insured and
not acts of third parties. Mr Steenkamp was not able to take that
matter further. Upon a further
enquiry from the court regarding the
fate of all the client files in the respondent’s practice, a
disturbing explanation
was tendered. The respondent apparently took
all the files and advised his clients of the situation. Some clients
terminated his
mandate, while others requested him to keep the files.
With regard to the work in progress, such as trials, applications and
the
like, the respondent continues to act in these matters. This, in
itself, is improper and unprofessional conduct, which warrants
the
intervention of the court and the LPC to protect the public interest,
failing which the integrity of the profession will most
likely be
called sharply into question.
[10]
The LPC seeks an interim order for the suspension of the respondent
from practising as an attorney, as well as
the appointment of a
Curator Bonis
to administer the practice of the respondent, in
order to secure and protect the interests of the members of the
public. The LPC
seeks such suspension as a precautionary measure in
the public interest, and such suspension was considered to be
necessary and
appropriate by the Supreme Court of Appeal. (See
Law
Society of the Northern Provinces v Morobadi
[2018] ZASCA. 185
).
In my view that would be an appropriate course in this matter.
[11]
The respondent simply pleads for the leniency of being allowed to
continue practising as an attorney in order to
earn a living. The
intended investigation by the LPC would not, in all probability, be
able to proceed unhindered if the respondent
were allowed to
practice. More importantly, in the face of such serious allegations,
it is necessary to prevent the respondent
from practising for his own
account in order to protect the members of the public and his clients
from further prejudice. The respondent,
if he is indeed innocent of
wrongdoing, will have the opportunity of presenting the necessary
evidence to prevent a final order
being granted on the return day of
the
Rule Nisi
being sought.
[12]
In the circumstances, I make the following order:
12.1
A rule nisi is issued, returnable on 20 July 2023 at 9h30 or so soon
thereafter as the applicant’s legal representatives
may be
heard, why the following orders should not be made final:
12.1.1
WALTER DU TOIT (the Respondent) is
suspended
from practice as a legal practitioner of the High Court of South
Africa pending the finalisation of a disciplinary inquiry
to be
instituted against him by the Applicant,
alternatively
pending an application to be launched by the
Applicant to have the name of the Respondent struck from the roll of
Legal Practitioners
of the High Court of South Africa;
12.1.2
The Respondent is prohibited, with
immediate effect, from operating and dealing with any of the trust
banking accounts of his practice(s),
the banking accounts of any
deceased estates in respect of which the Respondent has been
appointed as executor or Master’s
representative and any
banking accounts of any insolvent estates in respect of which the
Respondent has been appointed as a liquidator;
12.1.3
The Respondent shall immediately surrender
and deliver to the Registrar of this Court his certificate of
admission as a legal practitioner
of this Court.
12.1.4
In the event of the Respondent failing to
comply with paragraph 12.1.3 of this order within two (2) days from
the date of service
of this order on him, the sheriff be and is
authorised and directed to take possession of the certificate and to
hand it to the
Registrar of this Court.
12.2
Margarette van Wyk and her successor(s)
in-title be and is appointed as
curator
bonis
(the Curator) of the practice of
the Respondent and to administer and control the trust accounts
of the Respondent and any
accounts relating to insolvent and deceased
estates and any deceased estate and any estate under Curatorship
connected with the
Respondent’s practice as an attorney and
including the separate banking accounts opened and kept by the
Respondent at a bank
in the Republic of South Africa in terms of
section 86(1) of the Legal Practice Act No 28 of 2014 (the Act)
and/or any separate
savings or interest-bearing accounts as
contemplated by section 86(3) and/or section 86(4) of the Act, in
which monies from such
trust banking accounts have been invested by
virtue of the provisions of the said sub-sections or in which monies
in any manner
have been deposited or credited as set out in paragraph
12.4 hereunder.
12.3
The Applicant and Margarette van Wyk be
exempted from furnishing security for the performance of their
obligations as curator
bonis
.
12.4
The Respondent is ordered to deliver all of
the records relating to his legal practice, which for all the
purposes of this order,
but without limitations, will include all
accompanying records, files, correspondence and documents which are
directly or indirectly
relevant to or which contain particulars of
information relating to:
(a)
any monies received, held or paid by the
Respondent for or on account of any person;
(b)
any monies invested by the Respondent in terms of any provisions of
section 86 of the Act;
(c)
any interest on monies so invested in terms of section 86(3) or
section 86(4) of the Act;
(d)
any estate of a deceased person administered by the Respondent
whether as executor or on behalf of the
executor, in terms of the
provisions of the Administration of Estate Act, Act 66 of 1965;
(e)
any estate in which the Respondent acted as or on behalf of the
Curator to administer the property of
a minor child or any other
person in terms of section 72 of the Administration of Estate Act,
Act 66 of 1965;
(f)
any insolvent estate administered by the Respondent as trustee or on
behalf of the trustee in
a trust in terms of the Insolvency Act, Act
24 of 1936;
(g)
any trust administered by the Respondent as trustee(s), or on behalf
of the trustee in terms of the
Trust Property Act, Act 57 of 1988;
(h)
any company liquidated in terms of the Companies Act, Act 61 of 1973,
administered by the Respondent
as Liquidator(s) or on behalf of the
liquidator;
(i)
any Close Corporation liquidated in terms of the Close Corporation
Act, Act 69 of 1984, administered
by the Respondent as liquidator or
on behalf of the liquidator;
(j)
the Respondent’s practice as an attorney/ legal practitioner of
this Court, and any related files
of any Client.
12.5 Should
the Respondent fail to comply with the provisions of the preceding
paragraph 12.4 of this order on service
thereof upon him or after a
return by the person entrusted with the service thereof that he/she
has been unable to effect service
thereof on the Respondent (as the
case may be), the sheriff for the district in which such accounting
records, records, files and
documents are, be empowered and directed
to search for and to take possession thereof wherever they may be and
to deliver them
to such Curator.
12.6
The said Curator shall have the following
powers:
(a)
to hand over any of said records to any person entitled thereto, as
soon as she has satisfied herself
that the fees and disbursements in
connection thereof have been paid or satisfactorily secured, or that
same are no longer required;
(b)
to accept a written undertaking by a trust creditor to pay such
amount as may be due to the Respondent,
either on taxation,
assessment or by agreement, as satisfactory security for the purpose
of paragraph 12.6(a) above, provided that
such written undertaking
incorporates a
domicilium citandi et executandi
of such
creditor;
(c)
to require that any records so handed over, be delivered back to her
if in her sole and absolute opinion,
she considers them to be
relevant to and (including any possible anticipated or threatened
claim against her as
curator bonis
and/or the Respondent’s
clients and/or the Legal Practitioners Fidelity Fund (the Fund);
(d)
to administer and control all of the Respondent trust account(s)
which for the purpose of this Order
shall include:
(i)
the accounts relating to any estate, curatorship, trust or company,
referred to in paragraph 2.6
hereof;
(ii)
any and all banking accounts opened and kept by the Respondent (or on
the Respondent’s behalf)
in terms of any provision contained in
the Act or any of the Acts referred to in paragraph 12.4 above.
(e)
Subject to the approval of the Board of Control of the Fund (the
Board), to sign and endorse cheques,
and/or I withdrawal forms and
generally to operate upon the said trust accounts, but only to such
extent and for such purposes
as may be necessary to bring completion
to current instructions in which the Respondent was acting as at the
date of his suspension;
(f)
Subject to the approval of the Board,
to recover and
receive and, if necessary in the
interest of persons having lawful claims upon the said trust accounts
and/or invested by the Respondent
in respect of monies held, received
and/or invested by the Respondent in terms of section 86(2) and 86(3)
of the Act (trust monies)
to take any legal proceedings which may be
necessary for the recovery of money which may be due to such persons
in respect of incomplete
transactions in which the Respondent may
have been concerned and which may have been wrongfully and unlawfully
paid from the said
trust accounts and to receive such monies and to
pay same to the credit of the said trust accounts;
(g)
To ascertain from the Respondent’s records the names of all
persons on whose account the Respondent
appears to hold or to have
received trust monies (trust creditors);
(h)
To call upon such trust creditors to furnish proof, information
and/or affidavits as she may require
to enable her, acting in
consultation with and subject to the requirements of the board, to
determine whether any such trust creditors
have a claim in respect of
money in the said accounts, and if so, the amount of such claim;
(i)
Subject to the approval of the Board, to admit or reject in whole or
in part, the claims of any
such trust creditors without prejudice to
such trust creditor's right to access to the civil courts;
(j)
Subject to the approval of the Board, to pay
such claims as she may consider lawfully due;
(k)
In the event of there being any surplus in the said trust accounts
after payment of such claims, to
utilise such surplus to settle or
reduce as the case may be, firstly any claim of the Fund in terms of
section 86(5) of the Act
in respect of any interest therein referred
to and, secondly without prejudice to the rights of the Respondent’s
creditors,
the costs, fees and expenses, or such portion thereof as
has not already been separately paid by the Respondent to the
Applicant
and, if there is any balance left after payment in full of
all such claims, costs, fees and expenses, to pay such balance to the
Fund;
(l)
In the event of there being insufficient trust monies in the said
accounts to pay in full the
claims the claims of the trust creditors
as reflected in the records of the Respondent:
(i)
Subject to the approval of the Board, to close the said accounts and
to pay the credit balances therein
to the Fund and to require such
credit balances therein to be placed to the credit of a special
suspense account in the name of
the Respondent in the Fund's books;
(ii)
To refer the claims of all trust creditors to the
Board
to be dealt with in terms of the provisions of the Act;
(iii)
To authorise the Board to credit the credit balances referred to
above to its "
paid claims account
" when the Funds
has paid, in terms of Section 55 of the Act, admitted claims of the
trust creditors of the Respondent in excess
of such credit balances,
provided that, notwithstanding the foregoing, the Board in its
discretion shall be entitled to transfer
to its "
paid claims
account
" the amounts of any claims as and when admitted and
paid by it.
(m)
Subject to the approval of the chairperson of the Fund, to appoint
nominees or representatives and/or consult
with and/or engage the
services of attorneys, counsel, accountants and and/or any such other
person where considered necessary
to assist her in carrying out of
her duties as
curator bonis
;
(n)
To render from time to time returns to the Board showing how the said
accounts have been dealt with
until such time
as the Board notifies her
that she may regard her duties as
curator bonis
as discharged.
12.7
The Respondent shall within 6 (six)
months after having been requested to do so by the Curator, or within
such longer period
as the Curator may agree to in writing, satisfy
the Curator, by means of the submission of taxed bills of costs or
otherwise, of
the amount of the fees and disbursements due to the
Respondent in respect of his practice, and should he fail to do
so, he
shall not be entitled to recover such fees and disbursements
from the Curator without prejudice, however, to such rights (if any)
as he may have against the trust creditor(s) concerned for payment or
recovery thereof;
12.8
A bill of costs drawn on the High Court
scale of attorney and client costs taxed by the Registrar of this
Court (who is authorised
to do so)
mutatis
mutandis
as if the Curator and the
responsible officials of the Applicant in discharging their duties as
contemplated in this order had
acted as attorneys, shall constitute
proof of their reasonable fees and disbursements ("the
Curatorship fees and disbursements")
and that the
Registrar be authorised to issue a writ of execution for payment
thereof by the Respondent;
12.9
The Curatorship will terminate when the
Curator receives a final written discharge from such duties from the
Board consequent upon
the Curator filing with the Board a final
report and account, together with supporting vouchers, in respect of
the execution of
the Curator’s duties in terms of this Order.
12.10
The Respondent be and is hereby directed:
(a)
to pay, in terms of section 87(2) of the
LPA, the reasonable costs of the inspection of the accounting records
of the Respondents;
(b)
to pay the Curatorship fees and
disbursements;
(c)
to pay the expenses relating to the
publication of this order or an abbreviated version thereof.
12.11
The Respondent be and is hereby removed
from office as –
(a)
Executor of any estate of which Respondent
has been appointed in terms of section 14(1) read with
section
54(1)(a)(v)
of the
Administration of Estates Act, No 66 of 1965
or
the estate of any other person referred to in
section 72(1)
thereof;
(b)
Curator or guardian of any minor or other
person’s property in terms of
Section 72(1)
read with
section
54(1)(a)(v)
and section 85 of the Administration of Estates Act, No
66 of 1965;
(c)
trustee of any insolvent estate in terms of
section 59 of the Insolvency Act, No 24 of 1936;
(d)
liquidator of any company in terms of
section 379(2) read with 379(e) of the Companies Act, No 71 of 2008;
(e)
trustee of any trust in terms of section
20(1) of the Trust Property Control Act, No 57 of 1988;
(f)
liquidator of any close corporation
appointed in terms of section 74 of the Close Corporations Act, No 69
of 1984;
(g)
administrator appointed in terms of section
74 of the Magistrates’ Court Act, No 32 of 1944.
12.12
That the Respondent is ordered to pay
the costs of this application, including the costs occasioned by the
employment of Counsel.
12.13
The Respondent shall not be entitled
to any fee, reward or reimbursement in respect of legal
services rendered during his
period of suspension in terms of section
93(8)(c) of the Act.
12.14
The orders in paragraphs 12.1 to
12.9, 12.11 and 12.13
above shall operate as interim
orders with immediate effect, pending the
return date.
S. NAIDOO, J
On
behalf of Plaintiff:
Adv.
MS Mazibuko
Instructed
by:
Amade
& Company Inc
56
President Steyn Avenue
Westdene
Bloemfontein
(Ref:23/0220/LPC/FM/Ddu
Toit)
On
behalf of Defendant:
Adv
MDJ Steenkamp
Instructed
by:
De
Wet Wepener Attorneys Inc
Unipark
Building
082
Vodacom Lane
Noble
Street
Bloemfontein