About SAFLII
Databases
Search
Terms of Use
RSS Feeds
South Africa: Free State High Court, Bloemfontein
SAFLII
>>
Databases
>>
South Africa: Free State High Court, Bloemfontein
>>
2023
>>
[2023] ZAFSHC 368
|
|
South African Legal Practice Council v Steenkamp and Others (6176/2022) [2023] ZAFSHC 368 (26 September 2023)
SAFLII
Note:
Certain
personal/private details of parties or witnesses have been
redacted from this document in compliance with the law
and
SAFLII
Policy
FLYNOTES:
PROFESSION – Suspension –
Attorneys
–
Bookkeeper
and professional assistant stole from trust account – Two
attorneys joining another firm while investigations
under way –
LPC receiving numerous complaints – Allegation that they
were appointed as directors of new firm
when not in possession of
valid Fidelity Fund Certificates – Not conducting themselves
in manner that maintains strict
standards of diligence required of
them – Nor have they discharged the duty of care owed to
their clients – Suspended
from practising pending
finalisation of investigation –
Legal Practice Act 28 of
2014
– Attorneys Act 53 of 1979.
IN THE HIGH COURT
OF SOUTH AFRICA,
FREE STATE
DIVISION, BLOEMFONTEIN
Case
No: 6176/2022
Reportable: NO
Of Interest to other
Judges: NO
Circulate to
Magistrates: NO
In
the matter between:
THE
SOUTH AFRICAN LEGAL
PRACTICE
COUNCIL Applicant
And
IZAK
JACOB
STEENKAMP First
Respondent
REHAN
COETZEE Second
Respondent
STEENKAMP
& JANSEN INCORPORATED Third
Respondent
THEUNIS
JANSEN Fourth
Respondent
JUDGMENT
CORAM:
S NAIDOO J
et
E
MAHLANGU AJ
JUDGMENT
BY
:
NAIDOO
J
HEARD
ON:
9 MARCH 2023
DELIVERED
ON:
26 SEPTEMBER
2023
[1]
In this application, the applicant, The South
African Legal Practice Council (the LPC) seeks
an order,
inter
alia
, for the suspension of the first and second respondents from
practising as attorneys pending the finalisation of investigations
against them and any disciplinary proceedings to be instituted
against them in court by the LPC. The first and second respondents
opposed the application. Adv (Mr) N Snellenburg SC represented the
applicant. Mr R Coetzee, the second respondent, represented
the first
respondent and himself. I shall refer to the first respondent as
“Steenkamp” or “the first respondent”,
the
second respondent as “Coetzee” or the “second
respondent” and collectively as ‘the respondents”
[2]
The respondents are both practising attorneys and enrolled as such in
the records
of the LPC. The first respondent was admitted as an
attorney in terms of the Attorneys Act 53 of 1979, on 5 September
2002 and
the second respondent was admitted as an attorney, in terms
of the same Act, on 16 September 1999. They initially practised under
the name and style of Steenkamp De Villiers and Coetzee. Following an
investigation against the first and second respondents as
a result of
a deficit in their Trust banking account, they closed that practice
and joined the third respondent, Steenkamp and
Jansen Incorporated,
taking with them all the files, not subject to the investigations
that I referred to.
[3]
While the first and second respondents were directors of Steenkamp De
Villiers and
Coetzee, there was a deficit in their Trust account in
the amount, alleged by the LPC to be at least Two Million Five
Hundred and
Fifty Six Thousand Nine Hundred and Forty Four Rand and
Sixteen Cents (R2 556 944.16). A
curator
bonis
was appointed to administer the Trust account. An amount of R2
048 925.84 was identified as misappropriated funds and there
was
an unidentified shortage of R508 018.32. The former bookkeeper
employed by the respondents at Steenkamp De Villiers and
Coetzee
stole a large amount of money from the Trust account but repaid an
amount of R840 000.00, meaning that the Trust deficit
prior to
this payment was the amount R3 396 944,16.
[4]
It appears that a professional assistant employed by the firm, one Mr
Fourie, had
also misappropriated Trust funds, which according to the
respondents was an amount of R613 000.00. The respondents also
averred
that the amount stolen by the bookkeeper amounted to
R899 950.00 A forensic audit was conducted by the auditing firm
Newtons,
who established the identified and unidentified shortages in
the amounts I mentioned earlier. The respondents have not indicated
how the shortfall of R59 950.00 was dealt with after the
bookkeeper repaid the amount of R840 000.00. There is no clear
indication of what steps were taken against Mr Fourie to recover the
amount that he misappropriated. It is also undisputed that
no
criminal action was taken by the respondents against Mr Fourie and
the bookkeeper. The respondents also do not deny that the
shortfall
in the Trust account was not repaid by them.
[5]
While the investigations into the numerous complaints and the Trust
shortfall was
ongoing, the respondents joined the firm Steenkamp &
Jansen Incorporated, of which the fourth respondent is the sole
director.
It is not in dispute that the fourth respondent was
previously employed by Steenkamp, De Villiers & Coetzee. It is
also not
in dispute that the respondents moved the practice of
Steenkamp De Villiers & Coetzee, their infrastructure and
personnel to
Steenkamp & Jansen Inc, including all their files,
except those relevant to the investigations in respect of the Trust
deficit.
[6]
The LPC alleges that
although the respondents purport to practice as consultants
at
Steenkamp & Jansen Inc, the first respondent, Steenkamp,
subsequently deposed to affidavits in other matters in which he
describes himself as a director of Steenkamp & Jansen Inc. The
second respondent, Coetzee, is not mentioned or identified in
the
correspondence of Steenkamp & Jansen Inc, while the first
respondent is reflected in such correspondence as an assistant
to the
director. The LPC further alleges that it as well as its predecessor
received, on a continuous basis, numerous complaints
against the
first, second and fourth respondents, as well the director of the
third respondent (Mr Jansen) and the professional
assistant, Mr
Fourie. Such complaints number approximately 127 in total. The
complaints are of a serious nature and the first respondent
was
called upon to respond to the complaints but failed to do so
timeously
[7]
The majority of these complaints arose during the period that the
respondents practised
as Steenkamp De Villiers and Coetzee. At the
time the Attorneys Act was applicable and subsequent complaints fell
to be dealt with
in terms of the Legal Practice Act 28 of 2014 (the
LPA). The Code of Conduct for Legal Practitioners. Candidate Legal
Practitioners
and Juristic Entities subsequently came into operation
and replaced the rules that existed in respect of the various Law
Societies
in South Africa. Section 119(3) of the LPA provides that
any law repealed or amended by the LPA remains valid if it is
consistent
with the LPA.
[8]
The LPC contends that the investigation into the complaints is a long
process, and
they would need time to do so. They also aver that in
view of the previous Trust account deficit, the clients of the
respondents
and members of the public need protection against a
recurrence of that situation. They, therefore seek the suspension of
the respondents
in order that such investigations may be undertaken
expeditiously. The matter was previously delayed as a result of the
first respondent’s
failure to respond to complaints, and the
subsequent investigations, leading to the disciplinary hearing that
was held in June
2021.
[9]
I pause to mention that the LPC led evidence at the disciplinary
hearing. After it
closed its case, Coetzee, who represented himself
and Steenkamp applied for absolution from the instance on the basis
that the
process for referral of the matter by the Investigating
Committee to the Disciplinary Committee was flawed. The lnvestigating
Committee
failed to conduct its own investigation to establish that
there was
prima facie
evidence of misconduct by him and
Steenkamp, but relied on the report of a third party (the auditing
firm of Newtons) to conclude
that there was
prima facie
evidence of misconduct. The Disciplinary Committee rejected the
application for absolution from the instance, but found that the
Investigating Committee did not in fact follow the correct procedure
in referring the matter to it. Hence the Disciplinary Committee
found
that the matter was not properly before it, and dismissed the
proceedings.
[10]
The defence proferred by the respondents is that the Disciplinary
Committee dealt with the merits
of the matter and dismissed the
proceedings, as no misconduct was established on the part of the
respondents. Hence, the current
application cannot succeed. The
further point raised by the respondents is that the Investigating
Committee, once more, did not
itself conduct the investigations
against the respondents to establish a
prima facie
case of
misconduct, but resolved to move the current application. The
application was therefore irregularly brought and falls to
be
dismissed. The respondents set out a detailed response to some of the
complaints lodged against them and which were mentioned
in the
Founding Affidavit, concluding that most of the complaints have been
dealt with and it was, therefore, not open to the LPC
to use such
complaints as part of its case against the respondents.
[11]
It is common cause or not in dispute that:
11.1
the respondents closed the practice of Steenkamp De Villiers and
Coetzee, without informing the Law Society
of such closure, as was
required of them by the relevant Rules;
11.2
the respondents have not yet submitted a final audit in respect of
the closure of the practice of Steenkamp
De Villiers and Coetzee;
11.3
the respondents allowed their professional assistant and bookkeeper
access to, and gave them authority to
make payments from the firm’s
Trust banking account, which enabled these individuals to
misappropriate funds from the Trust
account;
11.4
there was a deficit in the respondents’ trust account, which
the respondents have not repaid;
11.5
the investigation into the conduct of legal practitioners is
sui
generis
, and is not to be approached as if it were a criminal
trial.
[12]
The issues before us are, in my view, whether:
12.1
the respondents acted contrary to the provisions of the LPA and its
predecessor, the Attorneys Act, and the
Rules promulgated in terms of
each, which were applicable at the material times;
12.2
the respondents failed to conduct themselves with the diligence and
care required of them in terms of the
Act and Rules, and
12.3
the LPC is entitled to the relief it seeks
[13]
As I intimated earlier, a number of specific complaints and the
history relevant thereto was
mentioned in the Founding papers and
responded to in Answer. In my view, it is not necessary and may be
inappropriate to deal with
these in any detail, as many of the
complaints appear to still be under investigation. If necessary, I
will refer to them in relation
only to their relevance in deciding
the issues before us.
[14]
Section 78(1) and (4) of the Attorneys Act provide that
(1)
Any practising practitioner shall open and keep a separate trust
account at a banking institution in the Republic and shall
deposit
therein the money held or received by him on account of any person.
(2)
….
(3)
….
(4)
Any practising practitioner shall keep proper books of account
containing particulars and information of any money received,
held or
paid by him for or on account of any person, of any money invested by
him in terms of subsection (2) and of any interest
on money so
invested which is paid over or credited to him.
Section
83 of the Attorneys Act provides as follows:
Any
practitioner who contravenes subsection (1), (3) or (4) of section
78… shall also be guilty of unprofessional conduct
and be
liable to be struck off the roll or suspended from practice.
[15]
The former Attorneys’ Act and the then applicable Rules of the
Free State Law Society,
as well as the successor thereto, being the
LPA and the current Code of Conduct provide in clear terms the duties
and obligations
of legal practitioners. The common thread that is to
be found in both the former Act and Rules as well as the current LPA
and Code
of Conduct is that the highest standards of integrity,
competence and diligence are expected of an attorney. He is required
to
maintain the reputation and good standing of the legal profession
in order to gain the complete trust and confidence of his clients
and
members of society at large. It is well established in our case law
that such duties and standards of conduct are non-negotiable,
and a
failure to adhere thereto attracts severe penalties.
[16]
From what I have tabulated above, it is evident that the respondents
do not deny that a large
amount of money, which the firm of Newtons
found to be in excess of Two Million Rand, was stolen from their
Trust account by their
employees over a period of many months. They
placed their bookkeeper in a position of full control, without
supervision or oversight,
which enabled her to steal almost One
Million Rand. This was many months after they discovered the theft of
over R600 000.00
by Mr Fourie. In my view, this speaks of an
abrogation of their duties and strict responsibility in relation to
their Trust account.
It is of concern to this court that the
respondents do not appear to take responsibility for their failure to
guard their trust
account and for the consequent loss of Trust money,
choosing instead to blame the craftiness of their employees in
manipulating
the accounting system, and avoiding any explanation
regarding what control they exercised over the Trust account. They
also seem
to hold the misguided view that the LPC condoned the
non-repayment by them of the Trust shortfall. It is not becoming of
attorneys
with many years of experience to feign ignorance of what is
expected of them, or to hold the view that the LPC has the authority
to condone a shortfall in a Trust account.
[17]
I pause to mention that the first respondent,
Steenkamp, simply deposed to a Confirmatory Affidavit attached
to the
Answering Affidavit deposed to by the second respondent. From the
explanation by the second respondent, it is evident that
he was
unable to explain exactly how the first respondent conducted his
interactions with Fourie, what oversight, if any, he exercised
to
ensure that the payments he authorised at the request of Mr Fourie,
were in fact properly requested and properly authorised.
In the
circumstances the court can only conclude that the first respondent
was negligent in the manner in which he dealt with the
firm’s
Trust account and exercised no oversight or supervision of their
employees in relation to the Trust account. The Act
and Rules provide
that each director is jointly and personally liable for the acts of
his co-directors and all other acts and omissions
performed on behalf
of the company. It, therefore, does not avail the second respondent
to distance himself and the first respondent
from the malfeasance
perpetrated by the firm’s employees.
[18]
The other area of concern for this court is what appears to be the
summary closure of the firm
of Steenkamp De Villiers and Coetzee,
without following the process and procedures stipulated in the
Attorneys’ Act and Rules
applicable at the time. The
respondents who are seasoned attorneys and ought to have known the
requirements of the Act and Rules
at the time, did not even inform
the Law Society that the practice was closed. They merely took the
files, staff and infrastructure
of the firm over to Steenkamp and
Jansen Inc and continued to practice there, alleging to do so as
professional assistants to that
firm. The allegations by the LPC that
the respondents were appointed as directors of the third respondent,
at a time when they
were not in possession of valid Fidelity Fund
Certificates, and that they appear to be acting as directors of the
third respondent,
creates a sense of unease and disquiet that
requires investigation. If such allegations are true, it would amount
to serious misconduct
on the part of the first and second respondents
[19]
The conduct of the first and second respondents was in contravention
of the relevant provisions
of Rule 3B of the Rules for the Orange
Free State. Rule 3B.2 is relevant, and provides as follows:
“
2.
Before or as soon as may be after voluntarily ceasing to practise for
any reason…a practitioner, who practises or has
practised for
his own account in the Province,
shall
comply with the provisions of rule 3B.1 other than those in paragraph
4 thereof and
shall
thereafter
inform the Secretary in writing of any changes in his business,
postal and residential addresses for a period of three
years from the
date of his ceasing to practise or for as long as his name remains on
the Roll of the Court, whichever period is
the shorter.” [my
underlinig]
[20]
The respondents further do not appear to have taken the necessary
steps to protect the interests
or property of their clients.
Disturbingly, the second respondent alleges in Answer that he and the
first respondent kept
all the files not related to the
misappropriation of Trust monies by Mr Fourie and the bookkeeper, and
as clients enquired about
their files, the respondents would advise
them of the situation and give the clients the opportunity to either
remove their files
or extend the mandate of the respondents to
continue acting for those clients.
This
again is in conflict with how such files ought to have been dealt
with. No mention was made of how the respondents dealt with
the Trust
account of their practice. They were requested in 2017 by the Law
society to render a final audit in respect of their
former practice.
The respondents complain that this was two days before the scheduled
date for the disciplinary hearing and it
was impossible to do so in
that time. They say nothing further about the matter or why they did
not render such an audit as soon
as possible after they were
requested to submit it. To date, there is no indication of what
became of such Trust account or the
clients on whose behalf such
monies were held.
[21]
In my view, the various complaints which were lodged against the
respondents and which are still
under investigation, merely highlight
the need for the LPC to conduct proper investigations into those
complaints, and to do so
unhindered. The respondents’ conduct
has fallen far short of the high standards required by the relevant
Act and Rules for
the regulation of the legal profession. The
complaints, as I indicated, are of a serious nature, and flout many
of the provisions
of the Attorneys’ Act, the LPA as well as the
Rules and Code of Conduct. In summary, therefore, my view is that the
defences
proffered by the respondents do not address the heart of the
issues to be decided in this matter. It is clear therefore that they
have contravened the provisions of the Attorneys’ Act and Rules
relevant thereto, as well as the LPA and Code of Conduct.
Their
actions further demonstrate that they have not conducted themselves
in a manner that maintains the strict standards of diligence
required
of them, nor have they discharged the duty of care owed to their
clients. In addition, their argument that the Disciplinary
Committee
of the LPC dismissed the merits of the matter, cannot be sustained,
as that Committee was specific in finding that due
to the
investigations not being properly undertaken, the matter was
dismissed. It did not deal with the merits in relation to the
finding
it made, and most certainly did not exonerate the respondents of
wrongdoing and misconduct. I am of the view that the LPC
is therefore
entitled to the relief it seeks.
[22]
In the circumstances, I make the following order:
22.1
IZAK JACOB STEENKAMP, Identity Number 7[…]4 (the First
Respondent) is
suspended
from practising as a legal practitioner of the High Court of South
Africa pending the finalisation of the investigation
against him by
the Applicant, and any subsequent disciplinary proceedings which may
be instituted in Court;
22.2
The First Respondent shall immediately surrender and deliver to the
Registrar of this Court his certificate
of admission and/or enrolment
as an attorney and/or legal practitioner of this Court;
22.3
In the event of the
First Respondent failing to comply with paragraph 22.2 of this order
within two (2) weeks from the date of service
of this order on him,
the Sheriff is authorised and directed to take possession of the
certificate and to hand it to the Registrar
of this Court;
22.4
REHAN COETZEE
,
Identity Number 7[…]2 (the Second Respondent) is
suspended from practising as a legal
practitioner of the High Court of South Africa pending the
finalisation of the investigation
against him by the Applicant, and
any subsequent disciplinary proceedings which may be instituted in
Court;
22.5
The Second Respondent
shall immediately surrender and deliver to the Registrar of this
Court his certificate of admission and/or
enrolment as an attorney
and/or legal practitioner of this Court;
22.6
In the event of the
Second Respondent failing to comply with paragraph 22.5 of this order
within two (2) weeks from the date of
service of this order on him,
the Sheriff is authorised and directed to take possession of the
certificate and to hand it to the
Registrar of this Court;
22.7
The First and Second
Respondents are directed to pay the costs of this application jointly
and severally, the one paying the other
to be absolved.
S.
NAIDOO, J
I
concur
E
MAHLANGU AJ
On
behalf of Applicant:
Adv. N Snellenburg SC
Instructed
by:
Symington De Kok Inc
169B Nelson Mandela Drive
Westdene
Bloemfontein
(Ref:FXS2802/T
O’Reilly/ja)
On
behalf of 1
st
&
2
nd
Respondents:
Mr R Coetzee
Instructed
by:
Steenkamp & Jansen Inc
5 Barnes Street
Bloemfontein
(Ref: R
Coetzee/S&J1/0052)