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[2017] ZAGPPHC 874
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Law Society of the Northern Provinces v Osborne and Another (76614/2015) [2017] ZAGPPHC 874 (2 February 2017)
REPUBLIC
OF SOUTH AFRICA
IN
THE HIGH COURT OF SOUTH AFRICA
GAUTENG
DIVISION, PRETORIA
CASE
NO.: 76614/2015
2/2/2017
Not
reportable
Not
of interest to other judges
Revised.
In
the matter between:
THE
LAW SOCIETY OF THE NORTHERN
PROVINCES
Applicant
versus
CARLINE
SUSANNE OSBORNE
(VAN
WYK)
1
st
Respondent
MICHAEL
SELAELO
MATHEKGANA
2
nd
Respondent
JUDGMENT
MPHAHLELE
J
[1]
This is an application by the Law Society of the Northern Provinces
to have the names of the first and second respondents struck
off the
roll of attorneys. The first and second respondents were admitted as
attorneys of this court on 12 March 2007 and 27 January
2004
respectively and practised for their own account under tile style
Osborne attorneys. They practised at Pretoria North and
Modimolle
respectively.
[2]
The transgressions and offences committed by the first and second
respondents are fully set out and summarized in paragraph
9 of the
founding affidavit, read with paragraph 21 thereof. t is alleged that
the first and second respondents failed to submit
their Rule 70
auditor's reports for the 2013 and 2014 years to the Law Society
timeously; practised as attorneys without being
in possession of
fidelity fund certificates during 2013, 2014 and 2015; shared their
offices and also shared fees to which they
were entitled with their
client, a non-attorney to whom they relinquished control over their
firm and their trust banking account.
They further failed to account
to clients in respect of services rendered to them and to keep proper
accounting records in respect
of their practice.
[3]
It is alleged that the first respondent further failed to attend and
satisfactorily complete a practice management course as
prescribed by
the Attorneys' Act; Failed to provide the Law Society with proof that
she had complied with the Financial Intelligence
Center Act; failed
to pay her annual membership fees for the 2014 and 2015 years to the
Law Society; failed to cooperate with the
Law Society in a proposed
inspection of her accounting records and practice affairs; paid her
practice expenses from her trust
l)anking account and made irregular
withdrawals from her trust account in rounded amounts. The second
respondent also failed to
pay his annual membership fees for the 2014
year to the Law Society.
[4]
This application was preceded by a disciplinary enquiry into the
misconduct of the first and second respondents. The first and
second
respondents appeared before a disciplinary committee of the Council
of the Law Society on 27 May 2015.
[5]
During the proceedings before the disciplinary committee, the first
and second respondents pleaded guilty to all chargers (excluding
two
charges relating to a failure to reply to correspondence and a
failure to pay a fine imposed by the Law Society, to which the
second
responded pleaded not guilty).
[6]
The first and second respondents' Rule 70 auditor's reports for the
2013 and 2014 years had to be submitted to the Law Society
on or
before 31 August 2013 and 31 August 2014 respectively, which they
failed to submit timeously. They appeared before a disciplinary
committee of the Council of the Law Society on 13 November 2013 on a
charge relating to their failure to submit their Rule 70 auditor's
report for the 2013 year. They pleaded guilty to this charge and a
fine of R3000.00 was imposed by the Law Society, payable within
30
days.
[7]
The Rule 70 auditor's reports filed by the first and second
respondents, when compared with the trust bank statement previously
submitted to the Law Society by the first respondent revealed that an
amount of R255 495.95 was held in the trust banking account
of the
firm on 31 August 2012 whilst the Rule 70 auditor's report however
reflected that the firm had no trust creditors on 31
August 2012. The
first respondent made several payments in rounded amounts from her
trust banking account to herself, otes and
Leshole, the main client
of the practice. The first respondent paid practice expenses directly
from her trust banking account and
Botes and Leshole channelled
monies through the firm's trust banking account.
[8]
Both the first and second respondents pleaded guilty to a
contravention of the provision of Rule 70 in relation to the
outstanding
auditor's report for the year 2014 during the Law
Society's disciplinary enquiry held on 27 May 2015.
[9]
The purpose of the Rule 70 auditor's report is to satisfy the Council
of the Law Society that a practitioner has complied with
the Rules
relating to proper accounting, especially in respect of trust funds
held by a practitioner on behalf of his clients.
[10]
The first and second respondents were not issued with fidelity fund
certificates for the 2013, 2014 and 2015 years. Both the
first and
second respondents however continued practising from 1January 2013 to
2015 without such certificates. The first respondent
only submitted
her application forms for fidelity funds certificates for the 2013,
2014 and 2015 years to the Law Society on 27
May 2015, the day of the
disciplinary enquiry.
[11]
Both the first and second respondents pleaded guilty to a
contravention of the provisions of Section 41(1) and 41(2) of the
Attorneys' Act during the Law Society's disciplinary enquiry held on
27 May 2015. Section 41(1) of the Attorneys' Act provides
that a
practitioner must be in possession of a fidelity funds certificates
in order to act as a practitioner for his own account
or in
partnership.
[12]
By contravening the provisions of Rule 70 and the peremptory
requirements of Section 41(1) of the Attorneys Act, the first
and
second respondents made themselves guilty of unprofessional,
dishonourable or unworthy conduct in terms of the provisions of
Rule
89.11.
[13]
All practising attorneys are accountable institutions in terms of
Section 1, read with schedule 1, of FICA. Section 43B of
FICA
requires registration by every accountable institution with the
Financial Intelligence Centre. The Law Society is the supervisory
body tasked with supervising and enforcing compliance with the
provisions of F CA by practising attorneys. A failure to register
in
terms of Section 438 of FICA constitutes an
offence.
Despite
numerous enquiries directed at the first respondent from 27 May 2013,
the first respondent only on 27 May 2015 during the
proceedings of a
disciplinary committee satisfied the Law Society that she had in fact
duly registered as required by FICA.
[14]
The first respondent pleaded guilty to a charge of unprofessional,
dishonourable or unworthy conduct relating to her failure
to provide
the Law Society with proof of her F CA registration during the Law
Society's disciplinary enquiry held on 27 May 2015.
[15]
The first respondent was required to complete a practice management
course to the satisfaction of the Law Society and to submit
a
certificate of her compliance to the Law Society by 31 December 2012.
The first respondent was granted an extension to submit
her
certificate to the Law Society by 31 December 2013. The first
respondent however failed to submit the certificate and the
certificate is currently still outstanding.
[16]
During the proceedings of the disciplinary enquiry held on 27 May
2015, the first respondent admitted that she had only submitted
one
of the assignments which she had to complete and conceded that she
was not in possession of any proof that she had attended
and
completed the practice management course. The first respondent also
pleaded guilty to a charge of unprofessional, dishonourable
or
unworthy conduct relating to her failure to complete the prescribed
practice management course. The completion of a practice
management
course is a mandatory requirement for each attorney issued with a
fidelity fund certificate subsequent to 14 August
2009.
[17]
The first respondent failed to pay her membership fees for the year
2014 and the second respondent failed to pay his membership
fees for
the 2014 and 2015 years. Both respondents only paid their arrear
membership fees on 29 April 2015, shortly before the
scheduled
disciplinary proceedings of the Law Society.
[18]
The second respondent pleaded guilty to a charge of unprofessional,
dishonourable or unworthy conduct relating to his failure
to pay his
membership fees for the 2014 year at the disciplinary enquiry held on
27 May 2015.In terms of Rule 104, the first and
second respondents
were obliged to pay their membership fees to the Law Society by 1
September 2014 respectively.
[19]
The Law Society instructed a management consultant and forensic
investigator to conduct an inspection of the first and second
respondents' accounting records and practice affairs due to the first
and second respondents' failure to submit their Rule 70 auditor's
report for the 2013 year.
[20]
The Law Society's investigator made several attempts to arrange an
inspection. The first respondent failed to cooperate with
the Law
Society's investigator. During the disciplinary enquiry held on 27
May 2015, respondent pleaded guilty to a charge of unprofessional,
dishonourable or unworthy conduct relating to her failure to
cooperate with the Law Society's proposed inspection.
[21]
By failing to cooperate with the Law Society in proposed inspection
of the first and second respondents' accounting records
and practice
affairs, the first respondents contravened the provisions of Rule
89.25. The first respondent's contravention amounts
to
unprofessional, dishonourable or unworthy conduct in terms of Rule
89.11. The first respondent's failure to cooperate with the
Law
Society further amounts to a contravention of Section 70(1) and 70(2)
of the Attorneys' Act.
[22]
The fine imposed by the disciplinary committee of the Law Society
against the first and second respondents had to be paid within
30
days from 13 November 2013. The first and second respondents only
paid the fine on 29 April 2015. The fine was paid 18 months
late by
the first and second respondents' client, namely Botes of Leshole.
[23]
During the disciplinary enquiry proceedings held on 27 May 2015, the
first respondent admitted that she never kept any accounting
records
in respect of her practice, that she was not involved in her firm's
financial affairs and that she administered clients'
moneys
negligently. The first respondent testified that she was employed by
Leshole, a client of the firm, operated by Botes, a
non-attorney, and
was paid a retainer. Botes appointed the second respondent as her
partner in the firm. Leshole was allowed to
pay all her accounts, her
salary and office expenses; and to handle the administration of her
practice. The first respondent was
only serving Leshole's clients.
The first respondent trusted Botes to attend to her responsibilities
during her absence from the
office and Botes had complete control
over her practice. Botes has access to her trust banking account and
operated on it.
[24]
The first respondent never notified the Law Society that the second
respondent was her partner. The second respondent was in
charge of
the firm's Modimolle branch office. Despite alleging that she did not
utilise a trust banking account and that she never
received monies in
her trust banking account, the first respondent conceded that
payments to Leshole's clients were channelled
through her trust
banking account. The first respondent testified that she did not have
access to her trust banking account, but
that Botes of Leshole
operated on the account.
[25]
The second respondent testified that he was in controf of the firm's
Modimolle branch office and that the head office and the
branch
office did not have separate sets of accounting records. He confirmed
that he was paid a "retainer" by Leshole
and that Leshole
made payment to the firm in respect of the firm's salaries. He
conceded that he received compensation from Leshole
in the form of a
salary and that the firm shared offices with Leshole. He indicated
that Leshole was the firm's only client and
that he appeared in Court
on behalf of Leshole's clients and that the firm was on record for
such clients.
[26]
The manner in which they conducted their firm as well as the
involvement of Bates of Leshole amounts to a contravention of
Section
83(6) of the Attorneys' Act, Rule 71, Rule 72 and Rule 89.2.
[27]
It is expected of an attorney to scrupulously observe and comply with
the provisions of the Attorneys' Act and the Rules promulgated
thereunder. It is required of an attorney to carry out their duties
with a high degree of skill, care and attention and to act
honestly
at all times.
[28]
The Court and the applicant has a duty to act where an attorney's
conduct falls short of what is expected and to curb the erosion
of
values in the profession. The protection of the public against
unscrupulous legal practitioners goes hand in hand with the court's
obligation to protect the integrity of the courts and the legal
profession. Public confidence in the legal profession and in the
courts is undermined when the strict requirements for membership to
the profession are diluted. I agree with the applicant that
the first
and second respondents can no longer be considered fit and proper
persons to practise as attorneys of this court.
[29]
The respondents displayed lack of appropriate training and
supervision to practise as attorneys. From the inception of the
practice the respondents displayed total lack of appreciation of the
Attorneys Act and the rules of the applicant. This is clearly
demonstrated, amongst others, by the first respondent's failure to
attend the practice management course offered by the applicant
as
well as the manner in which Bates of Leshole was involved in the
practice.
[30]
Under the circumstances the draft order marked X is made an order of
court,
__________________
S
S M PHAHLELE
JUDGE
OF THE HIGH COURT OF SOUTH AFRICA
GAUTENG
DIVISION, PRETORIA
I
agree,
__________________
A
J BAM
JUDGE
OF THE HIGH COURT OF SOUTH AFRICA
GAUTENG
DIVISION, PRETORIA
IN
THE HIGH COURT OF SOUTH AFRICA
GAUTENG
DIVISION. GAUTENG
Case
number: 76614/2015
PRETORIA
THIS 21
ST
DAY OF APRIL 2016
BEFORE
THE HONOURABLE JUSTICE MPHAHLELE
BEFORE
THE HONOURABLE JUSTICE BAM
In
the matter between:
THE
LAW SOCIETY OF THE NORTHERN
PROVINCES
Applicant
and
CARLINE
SUSANNE OSBORNE (VAN
WYK)
1
st
Respondent
MICHAEL
SELAELO
MATHEKGANA
2
nd
Respondent
DRAFT
ORDER
Having
heard counsel for the applicant and respondents and having read the
papers filed of record
IT
IS ORDERED
1.
That
CARLINE SUSANNE OSBORNE (VAN WYK)
(1
st
respondent) and
MICHAEL SELAELO MATHEKGANA
(2
nd
respondent) be suspended from practise as attorneys of this
Honourable Court, on the following conditions:
1.1 That the suspension of the first
and second respondents shall be for an indefinite period and until
such time as they have satisfied
the Court that they are fit and
proper persons to resume practice as attorneys;
1.2 That the first and second
respondents satisfactorily attend and complete the full time
Practical Legal Training Course offered
by Legal Education and
Development ("LEAD"), the legal education division of the
Law Society of South Africa;
1.3 That the first and second
respondents rewrite and pass all four papers of the Attorneys
Admission Examinations as prescribed
in Section 14(1) of the
Attorneys Act, No. 53 of 1979;
1.4 That the first and second
respondents satisfactorily attend and complete the Legal Practice
Management Course as prescribed
in Section 13A of the Attorneys' Act,
read with Rule 21.16 of the Rules for the Attorneys' Profession.
2.
That first and second respondents immediately surrender and deliver
to the registrar of this Honourable Court their certificates
of
enrolment as attorneys of this Honourable Court.
3.
That in the event of the first and second respondents failing to
comply with the terms of this order detailed in the previous
paragraph within two (2) weeks from the date of this order, the
sheriff of the district in which the certificates are, be authorised
and directed to take possession of the certificates and to hand them
to the Registrar of this Honourable Court.
4.
That first and second respondents be prohibited from handling or
operating on their trust accounts as detailed in paragraph 5
hereof.
5.
That Johan van Staden, the head : members affairs of applicant or any
person nominated by him, be appointed as
curator bonis
(curator)
to administer and control the trust accounts of first and second
respondents, including accounts relating to insolvent
and deceased
estates and any deceased estate and any estate under curatorship
connected with the first and second respondents'
practice as
attorneys and including, also, the separate banking accounts opened
and kept by first and second respondents at a bank
in the Republic of
South Africa in terms of section 78(1) of Act No 53 of 1979 and/or
any separate savings or interest-bearing
accounts as contemplated by
section 78(2) and/or section 78 (2A) of Act No. 53 of 1979, 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 (the said accounts being
hereafter referred to as the trust accounts), with the following
powers and duties:
5.1 immediately to take possession of
the first and second respondents' accounting records, records, files
and documents as referred
to in paragraph 6 and subject to the
approval of the board of control of the attorneys fidelity fund
(hereinafter referred to as
the fund) to sign all forms and generally
to operate upon the trust account(s), but only to such extent and for
such purpose as
may be necessary to bring to completion current
transactions in which the first and second respondents were acting at
the date
of this order;
5.2 subject to the approval and
control of the board of control of the fund and where monies had been
paid incorrectly and unlawfully
from the undermentioned trust
accounts, to recover and receive and, if necessary in the interests
of persons having lawful claims
upon the trust account(s) and/or
against first and second respondents in respect of monies held,
received and/or invested by first
and second respondents in terms of
section 78(1) and/or section 78(2) and/or section 78 (2A) of Act No
53 of 1979 (hereinafter
referred to as 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, if any, in which first and second respondents were and
may still have been
concerned and to receive such monies and to pay
the same to the credit of the trust account(s);
5.3 to ascertain from first and second
respondents' accounting records the names of all persons on whose
account respondents appears
to hold or to have received trust monies
(hereinafter referred to as trust creditors); to call upon first and
second respondents
to furnish him, within 30 (thirty) days of the
date of service of this order or such further period as he may agree
to in writing,
with the names, addresses and amounts due to all trust
creditors;
5.4 to call upon such trust creditors
to furnish such proof, information and/or affidavits as he may
require to enable him, acting
in consultation with, and subject to
the requirements of, the board of control of the fund, to determine
whether any such trust
creditor has a claim in respect of monies in
the trust account(s) of first and second respondents and, if so, the
amount of such
claim;
5.5 to admit or reject, in whole or in
part, subject to the approval of the board of control of the fund,
the claims of any such
trust creditor or creditors, without prejudice
to such trust creditor's or creditors' right of access to the civil
courts;
5.6 having determined the amounts
which he considers are lawfully due to trust creditors, to pay such
claims in full but subject
always to the approval of the board of
control of the fund;
5.7 in the event of there being any
surplus in the trust account(s) of first and second respondents after
payment of the admitted
claims of all trust creditors in full, to
utilise such surplus to settle or reduce (as the case may be),
firstly, any claim of
the fund in terms of section 78(3) of Act No 53
of 1979 in respect of any interest therein referred to and,secondly,
without prejudice
to the rights of the creditors of first and second
respondents, the costs, fees and expenses referred to in paragraph 10
of this
order, or such portion thereof as has not already been
separately paid by first and second respondents to applicant, and, if
there
is any balance left after payment in full of all such claims,
costs, fees and expenses, to pay such balance, subject to the
approval
of the board of control of the fund, to the first and second
respondents, if they are solvent, or, if first and second respondents
are insolvent, to the trustee(s) of the first and second respondents'
insolvent estate;
5.8 in the event of there being
insufficient trust monies in the trust banking account(s) of first
and second respondents, in accordance
with the available
documentation and information, to pay in full the claims of trust
creditors who have lodged claims for repayment
and whose claims have
been approved, to distribute the credit balance(s) which may be
available in the trust banking account(s)
amongst the trust creditors
alternatively to pay the balance to the Attorneys Fidelity Fund;
5.9 subject to the approval of the
chairman of the board of control of the fund, to appoint nominees or
representatives and/or consult
with and/or engage the services of
attorneys, counsel, accountants and/or any other persons, where
considered necessary, to assist
him in carrying out his duties as
curator; and
5.10 to render from time to time, as
curator, returns to the board of control of the fund showing how the
trust account(s) of first
and second respondents' has/have been dealt
with, until such time as the board notifies him that he may regard
his duties as curator
as terminated.
6.
That first and second respondents immediately deliver their
accounting records, records, files and documents containing
particulars
and information relating to:
6.1 any monies received, held or paid
by first and second respondents for or on account of any person while
practising as an attorney;
6.2 any monies invested by first and
second respondents in terms of section 78(2) and/or section 78 (2A)
of Act No 53 of 1979;
6.3 any interest on monies so invested
which was paid over or credited to the first and second respondents;
6.4 any estate of a deceased person or
an insolvent estate or an estate under curatorship administered by
the first and second respondents,
whether as executor or trustee or
curator or on behalf of the executor, trustee or curator;
6.5 any insolvent estate administered
by the first and second respondents as trustee or on behalf of the
trustee in terms of theInsolvency
Act, No 24 of 1936;
6.6 any trust administered by the
first and second respondents as trustees or on behalf of the trustee
in terms of the Trust Properties
Control Act, No 57 of 1988;
6.7 any company liquidated in terms of
the Companies Act, No 61 of 1973, administered by first and second
respondents as or on behalf
of the liquidator;
6.8 any close corporation liquidated
in terms of the
Close Corporations Act, 69 of 1984
, administered by
first and second respondents as or on behalf of the liquidator; and
6.9 first and second respondents'
practice as an attorney of this Honourable Court, to the curator
appointed in terms of paragraph
5 hereof, provided that, as far as
such accounting records, records, files and documents are concerned,
first and second respondents
shall be entitled to have reasonable
access to them but always subject to the supervision of such curator
or his nominee.
7.
That should first and second respondents fail to comply with the
provisions of the preceding paragraph of this order on service
thereof upon them or after a return by the person entrusted with the
service thereof that he has been unable to effect service
thereof on
first respondent or second respondent or both (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.
8.
That the curator shall be entitled to:
8.1. hand over to the persons entitled
thereto all such records, files and documents provided that a
satisfactory written undertaking
has been received from such persons
to pay any amount, either determined on taxation or by agreement, in
respect of fees and disbursements
due to the firm;
8.2. require from the persons referred
to in paragraph 8. 1 to provide any such documentation or information
which he may consider
relevant in respect of a claim or possible or
anticipated claim, against him and/or the first and second
respondents and/or first
and respondents' clients and/or fund in
respect of money and/or other property entrusted to first and second
respondents provided
that any person entitled thereto shall be
granted reasonable access thereto and shall be permitted to make
copies thereof;
8.3. publish this order or an abridged
version thereof in any newspaper he considers appropriate; and
8.4. wind-up of the first and second
respondents' practice.
9.
That first and second respondents be and are hereby removed from
office as-
9.1 executor of any estate of which
first and second respondents have been appointed in terms of
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)
;
1.2
5cm; margin-bottom: 0cm; line-height: 150%">
9.2 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
;
9.3 trustee of any insolvent estate in
terms of
section 59
of theInsolvency Act, No 24 of 1936;
9.4 liquidator of any company in terms
of section 379(2) read with 379(e) of the Companies Act, No 61of
1973;
9.5 trustee of any trust in terms of
section 20(1) of the Trust Property Control Act, No 57 of 1988;
9.6 liquidator of any close
corporation appointed in terms of section 74 of the Close Corporation
Act, No 69 of 1984; and
9.7 administrator appointed in terms
of Section 74 of the Magistrates Court Act, No 32 of 1944.
10.
That first and second respondents be and are hereby directed:
10.1 to pay, in terms of section 78(5)
of Act No. 53 of 1979, the reasonable costs of the inspection of the
accounting records of
first and second respondent;
10.2 to pay the reasonable fees of the
auditor engaged by applicant;
10.3 to pay the reasonable fees and
expenses of the curator, including travelling time;
10.4 to pay the reasonable fees and
expenses of any person(s) consulted and/or engaged by the curator as
aforesaid;
10.5 to pay the expenses relating to
the publication of this order or an abbreviated version thereof; and
10.6 to pay the costs of this
application jointly and severally on an attorney-and- client scale.
11.
That if there are any trust funds available the first and second
respondents 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, shall 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 them (first and second
respondent) in
respect of their former practice, and should they fail to do so, they
shall not be entitled to recover such fees
and disbursements from the
curator without prejudice, however, to such rights (if any) as they
may have against the trust creditor(s)
concerned for payment or
recovery thereof;
12.
That a certificate issued by a director of the Attorneys Fidelity
Fund shall constitute
prima facie
proof of the curator's costs
and that the Registrar be authorised to issue a writ of execution on
the strength of such certificate
in order to collect the curator's
costs.
13.
That the first and second respondents pay the costs of this
application on an attorney and client scale.
_______________
BY
ORDER OF COURT
REGISTRAR