Brief Summary

Attorneys — Striking off name from roll — Application by Cape Law Society to strike off the name of Jacobus Louis Steyn from the roll of attorneys due to misconduct — Respondent admitted as an attorney in 1998, later interdicted from practice for failing to obtain a fidelity fund certificate and committing fraud — Respondent's conduct included misappropriation of trust funds while not in possession of a fidelity fund certificate — Court must determine whether the respondent is a fit and proper person to remain on the roll — Respondent's undertaking not to practice again considered — Court held that the respondent is not a fit and proper person to continue practicing as an attorney, and his name was struck off the roll.

Comprehensive Summary

Summary of Judgment

1. Introduction

The proceedings were an application by the Cape Law Society (the applicant and statutory regulator) for the striking off of the respondent, Mr Jacobus Louis Steyn, from the roll of attorneys in terms of the Attorneys Act 53 of 1979, principally on the basis that he was allegedly not a fit and proper person to remain enrolled as an attorney due to past misconduct and criminal convictions.

The matter had a procedural history extending over a substantial period. Earlier relief initially sought (relating to the winding-up of the respondent’s practice by a curator) was abandoned because such relief had effectively already been addressed when the respondent had previously been interdicted from practising pending the acquisition of a fidelity fund certificate. The striking-off relief remained for determination.

The general subject-matter concerned the professional consequences of misconduct by an attorney, including practising without a fidelity fund certificate, failure to keep proper accounting records, and fraud involving trust monies, and the court’s assessment—at the time of the hearing—of whether such historical misconduct justified the regulatory sanction of striking off (or suspension), particularly in light of the respondent’s subsequent conduct, the passage of time, and the applicant’s delay in launching the present application.

2. Material Facts

The court treated much of the relevant factual background as common cause. The respondent was admitted as an attorney on 11 December 1998 and commenced practice for his own account on 4 July 2005.

During the financial year March 2006 to February 2007, the respondent contravened section 78(4) of the Attorneys Act 53 of 1979 by failing to keep proper accounting records. In 2008 and 2009, the applicant brought applications to interdict the respondent from practising because he did not have a fidelity fund certificate. The second application resulted in an order on 20 March 2009 interdicting and prohibiting him from practising pending the obtaining of such certificate.

Between January and September 2009, while not holding a fidelity fund certificate and thus prohibited from practising, the respondent nevertheless continued to act in a property transaction and received monies connected to that matter. The court recorded as common cause that the respondent misappropriated money received in trust, and accepted that the misappropriation probably occurred in late 2009, before or when the respondent closed his practice (which occurred in 2009). After closing his practice, the respondent relocated temporarily to KwaZulu-Natal, returned to Kimberley, and later worked as a municipal councillor and in related roles.

On 26 June 2013, after the Fidelity Fund had reimbursed the affected purchaser and seller, the respondent repaid the Fidelity Fund the total of the relevant amounts. On 1 October 2013, the respondent pleaded guilty in the Regional Court to four counts on the factual basis set out in a section 112(2) statement under the Criminal Procedure Act 51 of 1977.

The convictions and their factual foundation, as summarised by the court, were as follows. Count 1 (fraud) related to receipt of R400 000.00 from a purchaser as purchase price for property on the representation that it would be paid to the seller upon transfer, while the respondent did not disclose that he could not lawfully practise or effect transfer due to not having a fidelity fund certificate. Count 2 (fraud) related to receipt of R39 287.76 from the seller for transfer costs, again without disclosing the incapacity to proceed with transfer at that time. Count 3 concerned the earlier failure to keep proper accounting records. Count 4 concerned contravening section 83(10) of the Attorneys Act, read with section 41(1), by purporting to practise as an attorney without a fidelity fund certificate.

A factual nuance treated as material by the court was that, although convicted of fraud, the respondent’s section 112(2) statement did not admit the alternative allegations suggesting that, at the time of receiving the purchase price, he already had a settled intention never to pay the seller. The court considered this omission relevant to the characterisation of the misrepresentation, particularly against the respondent’s asserted belief or hope at the time that he might still obtain the requisite certificate.

As to sentence and subsequent events, on 4 December 2013 the respondent received a sentence of imprisonment which was later altered on appeal. On 11 July 2014, the sentence on counts 1 and 2 was replaced with four years’ imprisonment, of which two years were conditionally suspended, antedated to 4 December 2013. The respondent was released on parole on 14 August 2014. After release he obtained employment in the provincial Department of Health and by May 2016 held the post of Deputy Director: Medico-Legal cases.

The present striking-off application was launched only in October 2016, with the answering affidavit delivered on 15 February 2017, and the replying affidavit on 26 October 2017. The hearing occurred on 10 September 2018.

In the answering affidavit, additional facts relied upon by the court (and treated as not materially disputed) included that the applicant had been aware since 2009 that the respondent had ceased practising and, on the respondent’s version, had long been aware of the underlying events leading to the Fidelity Fund reimbursements; the applicant’s response was essentially that it only became aware of the respondent’s convictions in October 2013. The respondent explained his conduct as linked to financial pressures and a desire not to prejudice staff, pleaded guilty with full disclosure, apologised, and repaid the Fidelity Fund. He undertook under oath never to practise again, though the applicant maintained this was irrelevant to the regulatory enquiry.

3. Legal Issues

The central legal questions were whether, in light of the established misconduct and criminal convictions, the respondent was currently (at the time of adjudication) not a fit and proper person to continue to practise as an attorney, as contemplated by section 22(1)(d) of the Attorneys Act 53 of 1979, and if so, what sanction should follow.

The dispute required the court to engage in the well-established three-stage enquiry applicable to striking-off and suspension applications. The first stage involved a factual determination (whether the offending conduct was proved on a balance of probabilities). The second stage required an evaluative determination involving a value judgment (whether the proved conduct demonstrated that the respondent was not fit and proper). The third stage, only reached if unfitness was found, involved a discretionary decision on sanction (striking off versus suspension).

Although a jurisdictional submission was initially raised by the respondent—contending that because he was not practising, the court was not one “within the jurisdiction of which” he practised—the respondent abandoned this in argument, and the court treated the point as without merit.

A further issue bearing materially on the second stage of the enquiry was the relevance of delay and post-offence conduct, including whether the respondent’s subsequent contrition, repayment, and rehabilitation meant that, notwithstanding serious past dishonesty, he could not be said to be presently unfit. This was largely an application-of-law-to-fact assessment, informed by value judgment, rather than a pure question of law.

4. Court’s Reasoning

The court identified section 22(1)(d) of the Attorneys Act 53 of 1979 as the source of its power to strike off or suspend an attorney who, in the court’s discretion, is not a fit and proper person to continue to practise. It applied the threefold enquiry confirmed by the Supreme Court of Appeal, namely proof of offending conduct, an evaluative determination of fitness, and then (if necessary) an appropriate sanction.

On the first stage, the court held that the respondent’s offending conduct was not in dispute. The respondent had been convicted on all four counts, and the factual foundation for the convictions included receipt of trust-related monies and conduct amounting to fraud, together with practising (or purporting to practise) without a fidelity fund certificate and failing to keep proper accounting records. Accordingly, the first leg of the enquiry was readily satisfied.

The decisive reasoning concerned the second stage: whether the respondent was currently not fit and proper. The court observed that the applicant’s founding papers largely relied on the historical offences themselves and did not meaningfully address the respondent’s subsequent conduct or present circumstances. It treated as significant the applicant’s failure to engage, even in reply, with the lapse of time since 2009 and the respondent’s post-offence conduct, despite these having been raised squarely in the answering affidavit.

In evaluating the nature of the fraud, the court drew an important distinction from the criminal record as presented on the papers. It emphasised that the respondent did not admit, in his section 112(2) statement, that he had at the outset intended never to pay over the purchase price to the seller. The court reasoned that, given the respondent’s asserted belief or hope that he might still obtain a fidelity fund certificate, the misrepresentation could not necessarily be characterised as a settled plan from inception to misappropriate the funds; rather, it bore on whether he represented that he was immediately able to carry out the mandate. The court nonetheless accepted that misappropriation occurred, and it treated the misconduct as serious, but considered that these nuances affected the evaluative assessment of the respondent’s character and intent at the time.

The court further considered the respondent’s motivation and subsequent conduct. It accepted, on the papers, that the respondent did not appropriate money out of greed but used it to finance practice expenses, and that he showed loyalty to staff. It regarded as material that the respondent repaid the Fidelity Fund in full prior to the criminal proceedings, pleaded guilty, and made full disclosure. The court viewed these features as strongly indicative of contrition and acceptance of responsibility.

A major component of the court’s value judgment was the respondent’s conduct after conviction and imprisonment. The court emphasised that he commenced serving his sentence immediately, did not seek bail pending appeal, and was released on parole based on good behaviour. It criticised the applicant’s attempt to justify the timing of the application by reference to the “lapsing” of sentence, holding that the applicant’s calculation was wrong because it improperly treated the suspended portion of imprisonment as if it formed part of the effective term. Referring to section 73 of the Correctional Services Act 111 of 1998, the court held that the relevant expiry relates to the term of incarceration imposed (i.e., the unsuspended period), which had long since lapsed.

To guide the assessment of present fitness in circumstances of delay and claimed rehabilitation, the court considered the relevance of readmission jurisprudence, while acknowledging the different onus (a struck-off practitioner seeking readmission bears an onus, whereas the respondent here did not). The court referred to considerations such as genuine, complete, and permanent reformation; whether the character defect that led to misconduct still exists; and whether the person can be trusted in future. It also referred to factors such as the seriousness of the conduct, explanations, subsequent conduct in proceedings, lapse of time, and genuine remorse and efforts to address harm.

Applying those considerations, the court distinguished the respondent’s case from a matter involving repeated dishonest acts motivated by greed, coupled with dishonesty during later proceedings. It reasoned that the respondent’s misconduct was tied to a single transaction (albeit giving rise to two fraud counts), was not shown to be greed-driven, and was followed by repayment, guilty pleas, and sustained evidence of rehabilitation through employment in a responsible position after disclosure of his convictions. The court stated that, on the facts before it, there was no indication that the respondent was likely to commit dishonesty in future in his capacity as an admitted attorney.

The court also considered the consequences of a finding of unfitness and the available sanctions. It reasoned that a finding under section 22(1) would lead to either striking off or suspension, and accepted that either could adversely affect the respondent’s continued employment and prospects. It treated these consequences as relevant to the discretionary assessment, particularly where the papers supported a finding of rehabilitation. While the applicant argued that suspension was effectively moot because the respondent was not practising, the court noted that suspension could still have serious consequences because the respondent’s employment duties involved litigation management requiring persons who qualify to practise.

In light of all these circumstances, the court concluded that, notwithstanding the seriousness of the historical transgressions, the papers did not justify a finding that the respondent was presently not fit and proper to practise. Because the applicant failed at the second stage of the enquiry, the application could not succeed, and the question of sanction (striking off versus suspension) did not arise for determination on the merits.

On costs, the court acknowledged that costs ordinarily follow the result and noted that the applicant appeared blameworthy for the unexplained delay. However, it also took into account the applicant’s regulatory role in approaching the court to protect the public and the profession rather than for private gain. Balancing these considerations, it considered it fair that each party bear its own costs.

5. Outcome and Relief

The court dismissed the application for the respondent’s name to be struck off the roll of attorneys.

No costs order was made; in effect, each party was left to bear its own costs.

Cases Cited

Vassen v Law Society of the Cape of Good Hope [1998] ZASCA 47; 1998 (4) SA 532 (SCA) (also reported at [1998] 3 All SA 358 (SCA)).

Hepple and Others v Law Society of the Northern Provinces [2014] 3 All SA 408 (SCA).

Summerley v Law Society, Northern Provinces 2006 (5) SA 613 (SCA) (see also [2006] JOL 17431 (SCA)).

Jasat v Natal Law Society 2000 (3) SA 44 (SCA).

Law Society, Transvaal v Behrman 1981 (4) SA 538 (A) (also reported at [1981] 2 All SA 470).

Nathan v Natal Law Society and Another 1999 (1) SA 706 (C).

Kudo v Cape Law Society 1972 (4) SA 342 (C).

Mtshabe v Law Society of the Cape of Good Hope 2014 (5) SA 376 (ECM).

General Council of the Bar of South Africa v Matthys 2002 (5) SA 1 (E).

Legislation Cited

Attorneys Act 53 of 1979, including sections 22(1)(d), 41(1), 42(1), 78(4), 83(10), and 25, and the definition of “fidelity fund certificate” in section 1, as referenced in the judgment.

Criminal Procedure Act 51 of 1977, section 112(2).

Correctional Services Act 111 of 1998, section 73.

Act 108 of 1985, section 9(c) (as amending section 22(1)(d) of the Attorneys Act 53 of 1979, as referenced).

Rules of Court Cited

No rules of court were cited in the judgment.

Held

The court held that, although the respondent’s past offending conduct (including fraud, misappropriation of trust money, practising without a fidelity fund certificate, and failure to keep proper accounting records) was established and undisputed, the applicant did not show on the papers that the respondent was presently not a fit and proper person to continue to practise as an attorney.

The court held that the respondent’s post-offence conduct, including repayment, guilty pleas with disclosure, service of sentence, parole based on good behaviour, sustained employment after disclosure of convictions, and the lapse of a significant period since the misconduct, supported a conclusion of rehabilitation and contrition. Consequently, the application to strike his name from the roll was dismissed.

On costs, the court held that fairness required no costs order, given the applicant’s public-interest regulatory role, notwithstanding the applicant’s unexplained delay.

LEGAL PRINCIPLES

The judgment applied the principle that applications to strike an attorney from the roll (or to suspend) proceed under section 22(1)(d) of the Attorneys Act 53 of 1979 through a threefold enquiry: first, proof of the offending conduct on a balance of probabilities; second, an evaluative determination (a value judgment) whether the practitioner is not fit and proper in light of that conduct; and third, if unfitness is found, a further discretionary choice between striking off and suspension.

It reaffirmed that the “fit and proper” determination is not purely historical and may require assessment of the practitioner’s present fitness, which can be informed by the passage of time, post-misconduct behaviour, contrition, repayment or efforts to remedy harm, and evidence bearing on rehabilitation, even though the case is not a readmission application.

The judgment further applied the principle that cost orders in regulatory proceedings may depart from the ordinary rule that costs follow the result, because a law society approaches the court in its protective capacity to safeguard the public and the integrity of the profession; nevertheless, the court may take account of delay and overall fairness in determining whether to award costs.

Cape Law Society v Steyn (2322/2016) [2018] ZANCHC 70 (21 September 2018)