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[2017] ZASCA 17
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Mothuloe Incorporated Attorneys v Law Society of the Northern Province and Another (213/16) [2017] ZASCA 17 (22 March 2017)
THE
SUPREME COURT OF APPEAL OF SOUTH AFRICA
JUDGMENT
Not
Reportable
Case No: 213/16
In
the matter between:
MOTHULOE
INCORPORATED
ATTORNEYS
APPELLANT
and
THE
LAW SOCIETY OF THE
NORTHERN
PROVINCE
FIRST RESPONDENT
THE
MINISTER OF JUSTICE OF THE
SECOND RESPONDENT
REPUBLIC
OF SOUTH AFRICA
Neutral
citation:
Mothuloe
Incorporated Attorneys v The Law Society of the Northern Provinces &
another
(213/16)
[2017] ZASCA 17
(22 March 2017)
Coram:
Cachalia, Shongwe,
Wallis and Dambuza JJA and Mbatha AJA
Heard:
1 March 2017
Delivered:
22 March 2017
Summary:
Attorneys Act 53 of
1979: complaints having been lodged with the Law Society against a
practitioner for failing to account to trust
creditors: practitioner
admitting having received the money but imposing conditions before
releasing it to trust creditors: Law
Society directing the
practitioner to produce for inspection records and books in his
possession and under his control in terms
of s 70(1) of the Act:
practitioner refusing to comply and challenged the decision of the
Law Society: sought to review and set
aside decision as irrational:
practitioner blatantly disregarding the law and rules: such conduct
cannot be countenanced: conduct
unprofessional.
ORDER
On appeal from:
Gauteng
Division of the High Court, Pretoria (Louw J sitting as court of
first instance)
The appeal is dismissed with costs on
the attorney and client scale.
JUDGMENT
Shongwe
JA (Cachalia, Wallis and Dambuza JJA and Mbatha AJA concurring)
Introduction
[1]
This is an appeal against the judgment and order of the Gauteng
Division of the High Court, Pretoria (Louw J) dismissing the
appellant’s review application with costs on the attorney and
client scale, and ordering the appellant to make documents
and
records available to the first respondent as prayed for in the first
respondent’s counter-application. The appellant
is Mothuloe
Incorporated, a law firm based in Johannesburg. Mr Mothuloe is the
single director of the firm and practises for his
own account. He was
admitted as an attorney, notary and conveyancer in 1996, and is a
member of the first respondent, the
Law Society of the Northern
Provinces, which is incorporated as the Law Society of the Transvaal
(Law Society) in terms of s 56
of the Attorneys Act 53 of 1979 (the
Act). Where I refer to the appellant, it should be understood to
include Mr Mothuloe as well.
[2]
During 2013, the Law Society received several individual complaints
and a complaint from Koikanyang Incorporated Attorneys on
behalf of
the appellant’s trust creditors against the appellant. The
complaint related to the handling of trust funds by
the appellant and
his failure to account and to reimburse moneys that had been paid
into his trust account by the trust creditors
in respect of
conveyancing fees for the transfer of immovable properties –
where such transfer had never occurred. The Law
Society wrote a
letter to the appellant on 22 August 2013 requesting him to comment
on the complaint and also to provide a copy
of his ledger account
relevant to the complaint and/or proof that the amount forming the
subject of the complaint was available
in his trust account.
[3]
The appellant refused to deliver the documents and records, citing
various reasons. Dissatisfied with the appellant’s
response, the Law Society directed him to produce for inspection any
book, document and record in his possession or custody or
under his
control which related to his practice in terms of s 70(1) of the Act.
Despite several letters and requests to meet,
the appellant
refused to comply with this directive. The appellant subsequently
lodged an application to have the Law Society’s
directive
requesting him to act in terms of s 70(1) of the Act reviewed and set
aside. The Law Society opposed that application,
and simultaneously
filed a counter-application wherein it sought an order compelling the
appellant to produce his books of account
and other relevant
documents and record for inspection. It also prayed for costs on the
attorney and client scale. As stated above
the review application was
dismissed and the counter-application granted as prayed. Disgruntled
by the court a quo’s
decision, the appellant approached the
court a quo for leave to appeal, and leave was granted to this court.
I shall return to
this aspect later in the judgment, but first, I
turn to consider the factual background which gave rise to the
appeal.
Factual
background
[4]
The facts in this case are largely common cause. During 2012,
Koikanyang Incorporated were instructed, by the appellant’s
trust creditors, to demand payment of trust deposits held by the
appellant. The total amount was in the region of R 409 000.
The
trust deposits were made pursuant to the purchase, by the trust
creditors, of residential properties from the North West Housing
Corporation (the Corporation). The Corporation had appointed
Microzone Close Corporation (Microzone) to facilitate the sale of
the
immovable properties. Mr Seriba, the agent who represented Microzone,
instructed the purchasers to deposit the purchase price
into the
appellant’s trust account, as the appellant had been appointed
as the conveyancer to attend to the registration
and transfer of the
properties. The trust creditors deposited money into the appellant’s
trust account but the immovable
properties were never transferred as
agreed.
[5]
When the purchasers subsequently complained to Mr Seriba about the
properties not having been transferred, they were told that
Microzone
no longer had any relationship with the appellant. They also
complained to the Corporation, which assisted them by attempting
in
vain, to contact the appellant. Some of the trust creditors wrote
letters to the appellant requesting their moneys but their
efforts
drew no positive response. As a result, the trust creditors appointed
Koikanyang Inc. Numerous letters were written by
the Law Society to
the appellant to account to the trust creditors, but the appellant
insisted that Koikanyang Incorporated produce
written proof that they
were instructed to act for the trust creditors and also demanded that
the trust creditors produce the original
deposit slips as proof that
they deposited the moneys into his account. The Law Society called
the appellant to a meeting which
he refused to attend. A
representative of the Law Society was sent to the appellant’s
offices but he refused to have a meeting
with the representative, and
demanded a court order before he would allow the representative to
have access to his books of accounts.
[6]
As alluded to earlier, in the court a quo the appellant sought an
order declaring s 70 of the Act invalid and of no force and
effect to
the extent that it was inconsistent with the provisions of the Bill
of Rights in terms of s 172(2)
(a)
of the Constitution. He also requested the review and setting aside
of the decision of the Law Society in terms of s 70 of the
Act. The
declaration of invalidity of s 70 was later abandoned by the
appellant – which resulted in the second respondent,
the
Minister of Justice, playing no part in the litigation and
subsequently refraining from forming part of this appeal. The Law
Society opposed this application on the ground inter alia, that s
70(1) of the Act entitled the Law Society to access the requested
documents and records. The appellant claimed that the requested
documents were protected by legal privilege, and also that Koikanyang
Inc had to prove its mandate
[7]
In the counter-application the Law Society sought an order to compel
the appellant to make certain records and documents available
to it
for inspection in terms of s 70(1). It will not be necessary in this
judgment to tabulate all the books and records required
by the Law
Society. In opposing that application, the appellant claimed that the
Law Society was not entitled to access the requested
documents.
[8]
The purpose of the provisions of s 70 is to enable the Law Society to
decide whether an inquiry in terms of s 71(1) of the Act
should be
held. Subsection 70(2) of the Act provides that: ‘The refusal
or failure by a practitioner to comply with a direction
in terms of
ss (1) shall constitute unprofessional conduct’. It is common
cause that the appellant refused and failed to
comply with directive
of the Law Society. Clearly the appellant is guilty of an
unprofessional conduct.
[9]
The court a quo found that the appellant had failed to make out a
proper case for the review and setting aside of the decision
of the
Law Society and ordered that the appellant must produce the required
records and documents in his possession. It rejected
the appellant’s
assertion that attorney and client privilege prohibited him from
discovering the documents and records as
such privilege is open to
the client and not the attorney himself.
Statutory
framework
[10]
The legal framework concerning the attorney’s profession is not
complex. Section 58 of the Act deals with the objects
of the Law
Society,
inter alia
that it shall
‘maintain and enhance the prestige, status and dignity of the
profession’ (58
(a)
);
‘uphold the integrity of practitioners’ (58
(e)
);
‘provide for the effective control of the professional conduct
of practitioners’ (58
(g)
)
and ‘promote uniform practice and discipline among
practitioners’ (58
(h)
).
Section 59 of the Act deals with the powers of the Law Society being
amongst others, ‘generally, [to] do anything that
is necessary
for or conducive to the attainment of the objects of the society’
(59
(k)
).
Section 60(1) of the Act deals with the council being a body, which
manages and upholds the affairs of the Law Society. Sections
68 and
69 deal with the duties and powers of the council. Section 70, which
is implicated in this case, deals with the council’s
powers to
direct a practitioner to produce books and records for purposes of an
enquiry under s 71 in order to enable it to decide
whether such an
enquiry should be held. The council is also empowered to make rules
which are binding on practitioners (s 74(1)).
However in terms of
Government Gazette, 26/2/16, No. 39740 it was notified that the Rules
of the Law Society of the Northern Provinces
made under s 74(1) of
the Act ‘are hereby repealed in toto to be replaced by the
Rules of the Attorneys Profession’.
The Rules of the Law
Society were still applicable to the appellant as they were repealed
only after the commencement of this case.
Discussion
[11]
Before us, the appellant raised three issues, namely: (a) ‘the
fairness and reasonableness and therefore the rationality’
of
the decision of the Law Society to issue a directive in terms of s 70
of the Act; (b) the validity of the appellant’s
conditional
demand that Koikanyang Inc. produce written proof of its mandate to
represent the trust creditors and also that the
trust creditors
produce proof of their identity entitling them to the moneys and (c)
the applicability of attorney and client privilege
in respect of the
documents and records in possession and control of the appellant in
the absence of a waiver by the relevant trust
creditors. Four days
before the appeal was heard the appellant filed supplementary
submissions seeking to expand his grounds of
appeal. No prior
permission had been requested to file these further submissions. The
submissions introducing, for the first time,
the applicability of the
Promotion of Administrative Justice Act 3 of 2000 (PAJA) and s 33 of
the Constitution. This was clearly
not in line with court rules. I
shall deal with the issue of PAJA later in the judgment.
[12]
Counsel for the appellant submitted that the Law Society’s
directive was over broad and that there was no limit to what
the
appellant had to produce. He criticised this alleged broadness,
stating that the Law Society may as well have requested the
appellant
to close shop. It is clear that counsel was perhaps not mindful of
what this court had said in
Mda v Law Society of the Cape of Good
Hope
[2012] ZASCA 145
;
2012 (1) SA 15
(SCA) regarding the extent
of the Council’s powers to inspect records and documents. In
that case, paras 7 and 9, this court
stated:
‘
Concerning
Mr Mda’s submission that s 70(1) permits a council to
inspect documentary material pertaining only to
specific allegations
of misconduct, this cannot be so. As I have indicated above, the
section does not limit a council’s
authority when it is
deciding whether or not to hold a misconduct enquiry. However, once
the council has decided to hold an enquiry,
ss 71(2)
(a)
(i)
and (ii) require any person who is summoned to testify to produce any
documentary material that has a bearing on the subject
matter of the
enquiry. Section 71(2) is concerned only with documentary
material that may be relevant to an enquiry. Section
70(1), on the
other hand, has a specific purpose, which is to place a council in a
position to decide whether or not to hold an
enquiry. This is why the
legislature permitted a broader inspection under s 70(1) than it did
under s 71(2)’.
(See
also
Law Society of
Northern Provinces v Smith
2016 JDR 1422 (GP) para 45 unreported case no 62599/2011 (22 July
2016).
[13]
It is common cause that the appellant received money from the trust
creditors. The appellant contends that because he was prepared
to pay
back the money on certain conditions, the Law Society was thus
unreasonable and unjustified in issuing the directive in
terms of s
70(1) of the Act. In my view this is a spurious excuse and it raises
suspicions about whether the money had always been
held in his trust
account. However, counsel for the appellant, rightly so, conceded
that the Law Society was justified in invoking
the provisions of s
70(1) of the Act. In my view that put paid to the question whether or
not it was reasonable and therefor rational
for the Law Society to
issue the directive. It stands to reason that the appellant’s
conditional demand was unjustified.
[14]
On the question of whether the appellant was justified in raising
attorney and client privilege under the circumstances, I
disagree
that he was justified. I agree with the court a quo that ‘the
privilege is, in any event, the client’s privilege
and cannot
be invoked by the attorney to prevent an inspection of his or her
records’. Generally, communications between
a professional
legal and his client are in certain circumstances, inviolate. The
circumstances under which privilege may obtain
may be summarised as
follows: (a) the attorney must be an advisor in a professional
capacity: (b) the communication has to have
been made in confidence:
(c) it has to be made for the purposes of advice or litigation. The
position is that the client must claim
the privilege, and the
attorney may claim the privilege on behalf of his or her client after
the client has made an informed decision.
In my view had the
appellant responded positively to the letter dated 22 August 2013
wherein the Law Society requested a copy of
the appellant’s
ledger account in connection with this particular matter, in
all probabilities the Law Society would
not have directed in terms of
s 70(1) of the Act. The question of attorney and client privilege
would also not have been an issue.
The trust creditors would have
welcomed the idea of the appellant producing his books for inspection
by the Law Society because
that would clearly prove their complaint
as being legitimate. At the stage of implementing s 70(1) the
question of attorney and
client privilege does not arise.
[15]
I now deal with the applicability of PAJA. The issue of PAJA raised
in the supplementary submissions was not raised in the
founding
papers. It is settled law that the purpose of pleadings is to define
the issues for the parties and the court. Affidavits
do not only
constitute evidence, but they also fulfil the purpose of pleadings.
Once an applicant has pinned his or her colours
to the mast, he or
she is not permitted to change same and plead a new cause of action.
(See
Diggers Development (Pty) Ltd v City of Matlosana &
another
[2011] ZASCA 247
;
[2012] 1 All SA 428
(SCA) para 18. In
Minister of Safety & Security v Slabbert
[2009] ZASCA163;
[2010] 2 All SA 474
(SCA) para 11, Mhlantla JA observed that:
‘
It
is impermissible for a plaintiff to
plead a particular
case and seek to establish a different case at the trial. It is
equally not permissible for the trial court to
have recourse to
issues falling outside the pleadings when deciding a case’.
A
trial by ambush is not countenanced because the opponent must be
given an opportunity to comment on the issue or issues raised.
In
this case the Law Society was not given an opportunity to deal with
the provisions of PAJA and/or the provisions of s 33 of
the
Constitution. Counsel for the appellant readily conceded that PAJA
was not mentioned in the founding affidavit.
[16]
The appellant voluntarily became a legal practitioner and thus became
a member of the Law Society. He was free to choose a
profession, but
could notopt out of the consequences of his choice. Every institution
has rules and such rules must be observed
at all times. The Law
Society is empowered by law to direct that a practitioner produce for
inspection records and books in pursuance
of its duty to protect the
interests of the public. On the undisputed facts of this case the
appellant was not justified to respond
to the request by imposing
conditions before complying with the directive. It may be so that the
appellant had issues with Koikanyang
attorneys, – but those
issues cannot provide him with a free pass to the directive and may
not prejudice the trust creditors
who
bona
fide
paid money for
purposes of purchasing property.
[17]
Accordingly, the court a quo was correct in dismissing the
application to review the decision of the Law Society. The court
a
quo was also correct in granting the counter-application. On the
above reasons the appeal must fail.
[18]
I now turn to the question of leave to appeal – the appellant
admitted having received money from the trust creditors
and he
admitted having kept the money over a long period and failing to
account to the trust creditors, which conduct constitutes
unprofessional conduct and moreover it contravenes the rules of the
Law Society. Section 70(1) is a preliminary procedure where
the guilt
or lack thereof is irrelevant at that stage – therefore it
would always be advisable, when dealing with an application
for leave
to appeal to look at the enabling statute to find guidance. It is
important to mention my dissatisfaction with the court
a quo’s
granting of leave to appeal to this court. The test is simply whether
there are any reasonable prospects of success
in an appeal. It is not
whether a litigant has an arguable case or a mere possibility of
success.
Section 17(1)
of the
Superior Courts Act 10 of 2013
provides
that:
‘
Leave
to appeal may only be given where the Judge or Judges concerned are
of the opinion that–
(a)
(i) the appeal would have a reasonable
prospect of success; or
(ii) there is
some other compelling reason why the appeal should be heard,
including conflicting judgments on the matter under consideration’;
This
court has in the past bemoaned the regularity with which leave is
granted to this court in respect of matters not deserving
its
attention. (See
Shoprite
Checkers (Pty) Ltd v Bumpers Schwarmas CC & others
2003
(5) SA 354
(SCA) para 23.) This is one case where leave to appeal
should have been refused for lack of reasonable prospects of success.
[19]
The following order is made:
The
appeal is dismissed with costs on the attorney and client scale.
________________
J
B Z Shongwe
Judge of Appeal
Appearances
For
the Appellant: D P J Rossouw SC
Instructed by:
Friedland Hart Solomon &
Nicholson, Pretoria;
Rosendorff Reitz Barry Attorneys,
Bloemfontein.
For
the Respondent: P J Smith
Instructed by:
Rooth & Wessels Inc., Pretoria;
Phatsoane Henney, Bloemfontein.