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[2010] ZASCA 176
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Law Society of the Northern Provinces and Another v Viljoen, Law Society of the Northern Provinces and Another v Dykes and Others (2011 (2) SA 327 (SCA); [2011] 3 All SA 133 (SCA)) [2010] ZASCA 176; 094/2010, 648/10 (2 December 2010)
Links to summary
THE SUPREME COURT
OF APPEAL OF SOUTH AFRICA
JUDGMENT
Case No: 094/2010
In
the matter between
LAW
SOCIETY OF THE NORTHERN PROVINCES
.............................
1
st
APPELLANT
THE
SECRETARY OF THE LAW SOCIETY OF THE
NORTHERN
PROVINCES
.........................................................................
2
nd
APPELLANT
and
PETRUS
JACOBUS VILJOEN
......................................................................
RESPONDENT
and:
In the matter between Case No: 648/10
LAW
SOCIETY OF THE NORTHERN PROVINCES
.............................
1
st
APPELLANT
THE
SECRETARY OF THE LAW SOCIETY OF THE
NORTHERN
PROVINCES
..........................................................................
2
nd
APPELLANT
and
PETER
ARTHUR DYKES
.........................................................................
1
st
RESPONDENT
CHERYL
RAMSAMMY
...........................................................................
2
nd
RESPONDENT
PHASUDI
DOCTOR SEGOGOBA
..........................................................
3
rd
RESPONDENT
JOHAN
VAN HEERDEN
..........................................................................
4
th
RESPONDENT
Neutral
citation:
Law Society of the Northern Provinces v Viljoen
(094/2010);
Law Society of the Northern Provinces v Dykes
(648/2010)
[2010] ZASCA 176
(02 December 2010)
Coram:
Heher, Bosielo, Shongwe JJA and R Pillay
et
K Pillay AJJA
Heard: 24
November 2010
Delivered: 02
December 2010
Summary:
Legal
practitioners – s 42(3)(a) of the Attorneys Act 53 of 1979 –
Interpretation. The powers of a secretary of the
Law Society to
refuse to issue a fidelity fund certificate in the prescribed form to
a legal practitioner against whom there are
pending proceedings by
the Law Society to have him or her suspended or his or her name
removed from the roll of practising attorneys.
ORDER
On appeal from
:
North Gauteng High Court (Pretoria), (in case no 094/10 Tuchten AJ
sitting as a court of first instance) and (in case no 648/10
Sapire
AJ sitting as court of first instance)
The
following orders are made:
In the Law Society
of the Northern Provinces v Viljoen (appeal no. 094/10)
On appeal from the
North Gauteng High Court (Tutchten AJ sitting as court of first
instance)
1. The appeal is
dismissed with costs.
In the Law Society
of the Northern Provinces v Dykes (appeal no. 648/10)
On appeal from the
North Gauteng High Court (Sapire AJ sitting as court of first
instance)
1. The appeal is
dismissed with costs.
_________________________________________________________________
JUDGMENT
__________________________________________________________________
BOSIELO JA (Heher,
Shongwe JJA and R Pillay and K Pillay AJJA concurring)
[1] The appeals
before us raise the question about the correct interpretation and
scope of s 42(3)(a) of the Attorneys Act 53 of
1979. As both appeals
concern the same legal issue, it is convenient and practical to deal
with both at the same time.
[2] The first
appellant in both matters is a law society duly incorporated in terms
of s 56 of the Act. One of the first appellant’s
responsibilities is to provide for the regulation and effective
control of the professional conduct of attorneys (s 58(g) of the
Act).
[3] The respondents
in both matters are attorneys who specialise in conveyancing. They
all fall under the first appellant’s
jurisdiction. On 23
December 2009, the first appellant sent a letter to Viljoen
(respondent in the first matter) reminding him
to apply for a
fidelity fund certificate on the prescribed form (s 42(1) of the
Act). In response to this reminder and on 14 December
2009, Viljoen
applied in the prescribed form for his fidelity fund certificate for
the year 2010. On 5 January 2010, the second
appellant, relying on a
council resolution dated 22 June 2009, advised Viljoen that he would
not be issued with a fidelity fund
certificate ‘in the light of
policy considerations as there was a pending application to have his
name removed from the roll
of attorneys’. In refusing to issue
the fidelity fund certificate, the second appellant purportedly
relied on s 42(3)(a)
of the Act. No mention of the resolution
was made in the first appellant’s invitation to Viljoen to
apply for a fidelity
fund certificate in terms of s 42 of the Act.
Viljoen had never been notified of the existence of the council
resolution.
[4] A similar
application by Dykes and his partners (respondents in the second
matter), made on 22 October 2009, suffered the same
fate. By a letter
dated 14 December 2009, and relying on the same resolution the second
appellant advised Dykes and his partners
that no fidelity fund
certificates would be issued to them as there was an application
pending for the removal of their names from
the roll. In so refusing
the second appellant once again purported to act in terms of s
42(3)(a) of the Act.
[5] Aggrieved by the
decision of second appellant to refuse to issue the fidelity funds
certificates, respondents in both matters
approached the North
Gauteng High Court separately by way of motion for a mandamus
compelling the second appellant to issue fidelity
fund certificates
to them for the year 2010. The first application was heard by Tuchten
AJ and the second by Sapire AJ. Both judges
granted orders compelling
the second appellant to issue fidelity fund certificates for 2010 to
the respondents. The appellants
are appealing against those orders
with leave of both the courts below.
[6] As the decision
in this appeal hinges on the correct interpretation of s 42(3)(a)
of the Act, I deem it appropriate to
quote the provisions which are
relevant to the dispute herein:
‘
42
Application for and issue of a fidelity fund certificate
A practitioner practising on his
own account or in partnership, and any practitioner intending so to
practise, shall apply in
the prescribed form to the secretary of the
society concerned for a fidelity fund certificate.
Any application referred to in
subsection (1) shall be accompanied by the contribution (if any)
payable in terms of section 43.
(a) Upon receipt of the
application referred to in subsection (1), the secretary of the
society concerned shall, if he is satisfied
that the applicant has
discharged all his liabilities to the society in respect of his
contribution and that he has complied
with any lawful requirement of
the society, forthwith issue to the applicant a fidelity fund
certificate in the prescribed form.
A fidelity fund certificate
shall be valid until 31 December of the year in respect of which it
was issued.’
[7] I do not think
that it will serve any useful purpose to overburden this judgment
with the evidence of the litany of complaints
lodged against the
respondents and their responses thereto. It suffices, in my view, to
state that the first appellant had received
various complaints
against the respondents in both matters which it regarded as serious.
Following thereupon, the first appellant
instituted proceedings in
the North Gauteng High Court, Pretoria, for the respondents’
names to be struck off the roll of
attorneys on the basis that they
are no longer fit and proper to continue practising. Having had sight
of the appellants’
affidavits, I harbour no doubt that the
allegations made against the respondents are serious and if proven to
be true, might justify
a striking off of the respondents’ names
by the court.
[8] It is trite that
the first appellant has a statutory duty, once it has received
information that a member is guilty of unprofessional
conduct, to
investigate such information or allegations and to take appropriate
action. This is what the first appellant did in
the two matters. The
applications are vigorously opposed and the respondents have filed
answering affidavits disputing the allegations
contained in the
founding affidavits filed by the appellants. The proceedings for
striking off against the respondents in both
matters are still
pending.
[9] Central to the
second appellant’s refusal to issue the fidelity fund
certificates to the respondents in the two cases
is a resolution of
22 June 2009. The resolution reads thus:
‘
Where
the Council has resolved to proceed with an application for the
suspension of or the removal of the name of a member from
the roll of
attorneys a Fidelity Fund Certificate should not be issued to the
member concerned, unless the Council for good reason
otherwise
decides.’
[10] It is common
cause that the resolution was not made public or distributed to the
members of the first appellant. This is notwithstanding
the fact that
the resolution was essentially introducing a new element into the
concept of ‘any other lawful requirement
of the society’
as it appears in s 42(3)(a) of the Act. Counsel were agreed that
although the resolution does not amount
to a suspension from practice
by a legal practitioner, the practical effect thereof is that a
practitioner who has not been issued
with a fidelity fund certificate
is not allowed to practice on his own account or in partnership. It
is trite that any legal practitioner
who practices without a fidelity
fund certificate is committing a professional misconduct.
[11] It was
submitted on behalf of the appellants that the courts below erred in
their interpretation of s 42(3)(a). The contention
is that the
Council of the first appellant has the authority in terms of s 69 of
the Act to set up whatever lawful requirement
it might regard as
proper and appropriate to regulate the conduct of practitioners. It
was argued further that the resolution was
lawful and necessary as it
enabled the first appellant to be careful regarding the issuing of
the fidelity fund certificates to
its members so that it can reduce
or minimise the risk to which the fidelity fund might be exposed in
issuing fidelity fund certificates
to legal practitioners who are not
fit to practise. Counsel for the appellants submitted further that
the mere fact that the resolution
was not communicated to the
respondents, does not necessarily mean that it is invalid. He
submitted that it remained valid, and
moreover the respondents had
been invited to make representations to change the second appellant’s
decision not to issue
the certificates.
[12] Counsel for
Viljoen, launched a two-pronged attack against the resolution. First,
he submitted that the resolution is so vague
that it fails to inform
Viljoen of the exact nature of the complaint to which he was required
to respond. He submitted that the
lawful requirements contemplated in
s 42(3)(a) are the payment of the required sum of money by an
applicant and submission of an
audited financial report. Secondly, he
contended that the requirement imposed by the resolution to the
effect that where there
are proceedings pending either for the
suspension or removal of a practitioner from the roll, such a
practitioner will not be issued
with a certificate unless good cause
is shown, is not related to the legislative purpose of s 42(3)(a).
His contention is that
the new requirement, if one might call it
that, tilts the scale more towards an enquiry into the ethical
fitness of an applicant
to remain a practitioner, which is a function
of the courts, rather than an enquiry into his or her ability to
maintain the financial
affairs of his or her practice properly and in
terms of the rules.
[13] Counsel for
Dykes and his partners, supported the submission by Counsel for
Viljoen that the resolution does not amount to
a requirement as
envisaged by s 42(3)(a). In other words, it falls outside the
ambit of the section.
[14] It is clear
from s 42(3)(a) that the person who has the authority to issue
fidelity fund certificates is the second appellant.
It is neither the
Council nor Management Committee of the first appellant. The
authority of the second appellant to issue fidelity
fund certificates
is clearly circumscribed by s 42(3)(a). This section sets out two
requirements to be met by a legal practitioner
for him or her to
qualify for a fidelity fund certificate. The first requirement is
that such a practitioner must satisfy the secretary
that he or she
has discharged all his or her liabilities to the society in respect
of his or her contribution and, secondly, that
he or she has complied
with any other lawful requirement of the society. Once the two
requirements have been met, s 42(3)(a) compels
the second appellant
to forthwith issue the fidelity fund certificate in the prescribed
form to the applicant.
[15] The first
appellant’s Council purported to introduce an additional lawful
requirement by adopting the resolution on 22
June 2009. In the
context of s 42, a ‘lawful requirement’ means one that:
(i) relates to the
purpose served by the issue of a fidelity fund certificate;
(ii) unequivocally
informs the practitioner what it is that the society requires of him
or her;
(iii) the
practitioner is capable of complying with, since the section is
designed to enable the practitioner to carry on practice
subject to
satisfying the requirement.
For the reasons
which follow I am of the view that the terms of the resolution of
22 June 2009 do not
meet any of the above-stated criteria.
[16] It is important
to bear in mind that a practitioner is enjoined by s 42(1) to apply
for a fidelity fund certificate in the
prescribed form. A perusal of
the prescribed form makes it clear from the questions that such a
practitioner has to answer that
the major focus is on the question
whether the practitioner is managing his trust accounts in strict
compliance with the rules
of the society and not whether he or she is
fit and proper to practice. This is underscored by the request to a
practitioner in
the prescribed form to disclose the balances in his
or her trust account at the end of each quarter of the year.
Furthermore, this
is bolstered by the requirement that such a
practitioner shall submit his or her audited financial statements. It
is clear to me
that this enquiry is intended solely to assess any
risk attendant on the secretary issuing a fidelity fund certificate
so as to
ensure that the Fidelity Fund is not overexposed.
Manifestly, this has nothing to do with issues of ethics or whether
such a practitioner
is fit and proper to continue to practice. The
enquiry regarding the fitness of a practitioner to continue to
practice is the preserve
of the courts.
[17] To my mind, the
resolution in issue is so vague and broad that it may encompass even
transgressions that have nothing to do
with a practitioner’s
ability and competence to manage his or her trust account properly in
terms of the rules. Clearly it
has no relation to the legislative
purpose contemplated in s 42(3)(a) regarding the issuing of a
fidelity fund certificate
to a practitioner. Furthermore, it is so
vague that it fails to inform the applicant in clear and specific
terms of what it is
that he or she is alleged to have done which
justifies the refusal by the secretary to issue the fidelity fund
certificate. It
follows that it will be difficult for the applicant
to respond to the allegations if he or she does not know the precise
nature
of the complaint against him or her. The invitation by the
Council to such an applicant to make representations will thus remain
an illusion.
[18] Counsel for the
appellants had difficulty explaining exactly what the council
resolution is aimed at, because it is couched
in very wide and vague
terms. It is clear that the resolution creates a general ban against
any practitioner against whom there
are proceedings pending either
for suspension or removal from the roll without reference to the
exact nature of the complaint.
[19] The fact that a
practitioner may avoid the full force of the resolution by advancing
‘good reason’ does not change
matters. If the general
prohibition does not satisfy the test of ‘a lawful requirement’
it cannot be saved by the opportunity
to provide reasons why it
should not operate in any particular case. To my mind the resolution
is fatally flawed. It follows that
both appeals must fail.
[20] Both
respondents argued for costs against the appellants. The principal
submission is that the appellant’s decision to
refuse to issue
fidelity fund certificates was flawed from the beginning as it was
based on a bad judgment. It was argued that
it would be wrong and
unfair for the respondents to be left out of pocket in circumstances
where the respondents have been put
to considerable financial loss
due to some bad judgment on the part of the appellants.
[21] The appellants
argued against any costs being awarded against them. It was contended
that a law society is a special litigant
in the sense that it does
not come to court for its own interests. As a body with statutory
powers to administer the affairs of
its members, it has a statutory
duty to approach a court in any matter where it is of the opinion
that a practitioner is guilty
of conduct which impugns his or her
fitness to continue to practise. It was argued further that it does
this in the public interest
as well as that of the court. We were
further urged to consider the fact that there are conflicting
judgments on this aspect by
the North Gauteng High Court and that the
appellants were justified to approach this court for clarity.
[22] I have no doubt
that in the circumstances of both cases, the appellants were not
entitled to refuse to issue fidelity fund
certificates to the
respondents. It is clear to me that the second appellant’s
decision was indeed misconceived. Furthermore,
even after the
appellants had lost both cases in the high court, they still
zealously pursued the appeal in this court, thus exposing
the
respondents to substantial legal costs. Notwithstanding the long
standing and salutary practice of not mulcting a Law Society
with an
adverse order of costs as it is a special litigant acting in the
public interest, I am of the view that it would be unfair,
given the
facts of this case, not to award costs to the respondents.
[23] Contrary to the
appellants’ submission, I do not perceive any conflict between
these two matters and the two unreported
judgments of the North
Gauteng High Court involving a Mr Setshogoe to which we were
referred. The facts were different. The Law
Society had obtained an
interdict from the high court, restraining Mr Setshogoe from
practising at the time when he applied for
a fidelity fund
certificate. It was in these circumstances that the secretary refused
to issue the fidelity fund certificate. That
is not the case here.
[24] In the result,
the following orders are made:
In Law Society of
the Northern Provinces v Viljoen (appeal no. 094/10)
On appeal from the
High Court, North Gauteng (Tutchten AJ sitting as court of first
instance)
1. The appeal is
dismissed with costs.
In Law Society of
the Northern Provinces v Dykes (appeal no. 648/10)
On appeal from the
High Court, North Gauteng (Sapire AJ sitting as court of first
instance)
1. The appeal is
dismissed with costs.
________________
L O Bosielo
Judge of Appeal
APPEARANCES:
For
Appellant: E C Labuschagne SC
Instructed
by:
Rooth
& Wessels Inc.: Pretoria
Naudes
Attorneys: Bloemfontein
For
Respondent: (Viljoen) I M Bredenkamp SC
Instructed by:
P
Viljoen Inc.: Pretoria
Hugo
& Bruwer Inc.: Bloemfontein
For
Respondent: Q Pelser SC
(Dykes
and Partners)
Instructed
by:
Maponya
Attorneys: Pretoria
Vermaak
& Dennis: Bloemfontein