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[2017] ZAKZPHC 42
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Gounder v KwaZulu-Natal Law Society (271/2016) [2017] ZAKZPHC 42 (27 October 2017)
IN
THE HIGH COURT OF SOUTH AFRICA
KWAZULU-NATAL
DIVISION, PIETERMARITZBURG
CASE
NO: 271//2016
In
the matter between:
KARUNAGARAN
GOUNDER
Appellant/Member
and
KWAZULU-NATAL LAW
SOCIETY
Respondent/Complainant
Coram:
Koen J (Maharaj AJ concurring)
Heard:
20/10/2017
Delivered:
27/10/2017
ORDER
(a)
The appeal succeeds.
(b)
The orders granted by the
disciplinary enquiry of the Respondent are set aside.
(c)
Each party will be liable for
his/its own costs.
JUDGMENT
KOEN
J
Introduction:
[1]
In terms of a summons dated 7 March 2013 issued by the President of
the Respondent the Appellant was advised that:
‘
The
KwaZulu-Natal Law Society Council has, in terms of Rule 15 of the
Society’s Rules, appointed a Committee to enquire into
your
professional conduct arising out of a complaint made by Dr A R
Cassim.
You
are hereby summoned to appear before the Committee sitting at
Society’s Durban Library Conference Centre, 11
th
Floor, Salmon Grove Chamber, 407 Smith Street, Durban on 8 April 2013
and commencing at 9.00 am and on such further dates and times
and at
such other venues as may be determined by the Committee to enable the
Committee to enquire into the charge that –
“
You
are guilty of unprofessional, dishonourable or unworthy conduct in
that –
1.
The member is charged with contravening Rule 14 (b) (ii) in that the
member, without lawful excuse, withheld payment of monies
that were
in trust and which monies were due to the complainant, (alternatively
to which the complainant held an interest in),
such monies being
rentals of Hafiza Gaffoor’s (born Cassim) occupation of a
tearoom situated at 4 Carden Crescent, Parlock,
Durban KwaZulu-Natal.
2.
The member is charged with contravening Rule 14 (b) (iii) in that the
accused failed to respond to the complainant’s attorney
and
acted in contempt of paragraph 14 of a Settlement Agreement under
case numbers 5065/2009 and 5608/2010 which was made an Order
of
Court.
3.
By virtue of the aforegoing in charges (1) – (2), the accused
is charged with contravening Rule 14 (b) (xxv) read with
Schedule 13
– items 2 (relating to independence only), 3 and 5 of the Rules
Please
note that –
(1)
The members of the Enquiry Committee are-
(a)
Mr U Jivan of Jivan & Co (Chairperson)
(b)
Ms Khanyile Kheswa of Ngubane & Partners Inc
(c)
Mr R Badal of Raj Badal & Associates
(d)
Mr Y Hassan of Larson Falconer Hassan Parsee (Evidence Leader)
(2)
You are required to bring to, and to produce at, the Enquiry
your
file and all documents and accounting records
in your possession
or control relating to the complaint.
(3)
You are entitled to be represented at the Enquiry. Please let
me know if you will be presented at the Enquiry and, if
so, the names
of your legal representatives.’
[2]
He was subsequently convicted by a Committee consisting of Mr Badal,
Ms Khanyile Kheswa and a Ms D Takalo of:
(a) ‘The charges contained in
count 1’;
(b) ‘The remainder of the
charges in count 2 in that he was in contempt of not complying with
the court order issued under
Case No. 5056/09 and 5608/10’.
[1]
Taking
the charges convicted of as one, he was fined ‘R20 000 plus the
costs of the enquiry and inspection if any inspection
was carried
out.’ This appeal is against that conviction, and the fine and
the direction to pay costs which followed thereon.
The
complaint giving rise to the charges against the Appellant:
[3]
The complaint by Dr A R Cassim which gave rise to the charges against
the Appellant arose from litigation involving Dr A R Cassim,
some of
his siblings, his mother Mrs Sabira Bee Cassim, in her personal
capacity and in her representative capacity as executrix
to the joint
estate of her late husband Abdul Mazid Cassim (‘the
deceased’
[2]
)
and herself, and the Master of the High Court. This litigation was
conducted under case no. 5056/09 and 5608/10. The Appellant
acted as
the attorney of Mrs Cassim in this litigation.
[4]
The deceased and Mrs Cassim had executed a joint will dated 11 April
1991,
inter alia
appointing her as executrix, providing for a massing of the two
halves of their joint estate, and stipulating that certain immovable
properties were to be left to their three sons subject to a life
usufruct and lifetime rights in her favour. Mrs Cassim initially
adiated,
[3]
but subsequently contending that she had done so in error, commenced
the proceedings under case no. 5065/09 for orders to set aside
her
adiation, declaring her repudiation of the last will and testament
dated 14 April 1991 to be of no force and effect, and directing
her
as executrix to redraw the first and final liquidation and
distribution account in terms of the said will, with the costs of
that application to be borne from the proceeds of the estate of the
deceased. Dr Cassim was the Second Respondent in that
application.
[5]
The immovable properties were in terms of the will of the deceased
and Mrs Cassim to be transferred to Dr Cassim and two other
sons of
the deceased and Mrs Cassim namely Abdool Nubbee and Ibrahim Mazid
Cassim. These properties which were registered
in the name of
the deceased and Mrs Cassim comprised commercial properties rented to
tenants, one tenant being Hafiza Bee Gaffoor
(born Cassim), a
daughter of the deceased and Mrs Cassim who at some stage was paying
rental for her occupation of part of the
property directly to Dr
Cassim. When the Appellant commenced acting as the agent of Mrs
Cassim as executrix of the estate, he wrote
to the all the tenants
including Mrs Gaffoor advising them that all further rentals were to
be paid to his firm. This was
for such rental income to be paid
into an estate account in the name of the estate of the deceased.
This demand provided
the impetus for the application brought under
case no. 5608/2010. In that application Dr Cassim and his brother
Abdool Nubbee Cassim
as applicants applied for an order against Mrs
Cassim, Ibrahim Mazid Cassim, Fathima Khan (born Cassim), Hafiza
Gaffoor (born Cassim)
and the Master of the High Court as
Respondents, that Mrs Cassim in her personal capacity and as
executrix personally or through
any other party, be interdicted and
restrained from collecting rentals from Mrs Gaffoor in respect of 4
Carden Crescent, Parlock,
Durban, and demanding payment of rent from
the tenant occupying the hair dressing salon at 473 Inanda Road,
Durban. In addition
an order was claimed that Mrs Cassim be ordered
to pay to Dr Cassim within 3 days of the service of the order on her,
all rent
which she had collected from Mrs Gaffoor in respect of her
occupation of the tearoom situated at 473 Inanda Road, Durban. An
order
was also sought for costs on the attorney and client scale.
[6]
It is common cause, although the extent of the Appellant’s
participation therein is in dispute, that through the intervention
of
a mediator, a Mr A V Mohamed, settlement negotiations ensued shortly
before the two applications were due to be heard in court
at a
pre-trial conference which was scheduled to have been held on 17
March 2011 which came to be converted into a mediated settlement
process. It was at this pre-trial conference that the mandate held by
the Appellant from Mrs Cassim was terminated ostensibly by
her son.
That notwithstanding, the Appellant and his counsel remained in
attendance until the end of that meeting. The meeting
ended with Mr S
Khan, an advocate at the Durban Bar, assuming the responsibility to
draft a settlement agreement for approval and
signature by the
parties to the litigation.
[7]
A settlement agreement was signed by Mrs Cassim, Dr Cassim and the
other family members who were parties to the litigation on
31 March
2011. The Appellant was not a party to the settlement agreement, nor
did his firm represent the client at that time.
Clause
14 of the settlement agreement records:
‘
The
monies collected by attorneys Gounder and Associates from Hafiza
Gaffoor (born Cassim) in respect of her occupation of the Tearoom
situated at 4 Cardin Cresent, Parlock, Durban, KwaZulu-Natal will be
paid by them to Abdool Rahman Cassim, within 3 days of conclusion
of
this agreement.’
Clause
15 provided that:
‘
In
the event of any breach of this agreement, the aggrieved
party/parties will not be obliged to give any notice to remedy such
breach prior to instituting legal proceedings.’
[8]
The agreement was sent by Dr Cassim’s attorneys to the
Appellant on 4 April 2011 requesting ‘implementation of Clause
14’ of the agreement. On 5 April 2011 the Appellant replied to
the complainant’s attorneys advising that client’s
instructions were awaited. Unbeknown to the Appellant who was
awaiting instructions, and without the Appellant being joined in
the
proceedings, on 6 April 2011 an order was taken, purporting
ex
facie
the contents thereof to be by consent,
inter alia
providing in paragraph 9 thereof that:
‘
The
money collected by Attorneys Gounder and Associates from Hafiza
Gaffoor (born Cassim) in respect of her occupation of the Tearoom
situated at 4 Cardin Crescent, Parlock, Durban, KwaZulu-Natal will be
paid by them to Abdool Rahman Cassim.’
[9]
No moneys were paid by the Appellant to Dr Cassim.
[10]
Instead, relying on a written authority to pay signed by Mrs Cassim
in her capacity as executrix on 3 February 2011 authorising
the
Appellant to deduct all costs including disbursements in respect of
the matters under case No. 5065/2009 and 5608/2010 ‘from
the
proceeds of the rental paid into the current account of the estate
late Abdool Mazid Cassim’, the Appellant deducted
fees and
disbursements from the rental held which depleted those funds
entirely and in fact leaving an amount due by Mrs Cassim
in respect
of legal fees and disbursements to the Appellant.
[11]
In pursuing the complaint before the committee of the Respondent Dr
Cassim stated, as much as he is a lay person in legal matters,
that:
‘…
I
would have no authority to enforce anything without a court order. I
am dependant on the court order, on the settlement agreement
being
made an order of court, and … I am enforcing my rights as per
the court order…’
Some
aspects of the law relating to the administration of deceased estates
as they operated in respect of the Appellant:
[12]
Only Mrs Cassim, as the duly appointed executrix acting under letters
of executorship is entitled in law, in terms of section
13(1) of the
Administration of Estates Act No. 66 of 1965 (herein after referred
to as ‘the Act’) to deal with and
liquidate or distribute
the estate. She, (or her agent, the Appellant) was the only
person entitled to collect rentals due
to the deceased estate and to
deal with the assets of the deceased estate.
[4]
[13]
In terms of section 28(1)(a) of the Act an executrix is enjoined by
law to open an account in the name of the estate and deposit
into
that account moneys in hand and moneys received from time to time for
the estate. In the event of a marriage-in-community
of property
the whole estate falls under the administration of the executrix who
is the only person with
locus
standi
to sue or be sued in
regard to assets of the deceased estate. An executrix cannot
substitute another to act in her place,
but she can appoint an agent
to administer the estate on her behalf and in her name.
[5]
The executrix must recover all assets that belong to the estate if in
the hands of or owed by third parties. Rental received
in respect of
a deceased estate after the death of the deceased, should be paid
into the income account. That is because upon the
death of the
deceased the assets of the deceased estate do not vest in the heirs
and legatees. What ‘is vested in the heirs
is the right to
claim from the deceased executor at some future time, after
confirmation of the liquidation and distribution account,
satisfaction of their claims under the account.’
[6]
Only once the liquidation and distribution account has lain for
inspection without objection, and the executrix had completed the
liquidation and distribution of the estate to the satisfaction of the
Master and estate duty has been paid, may an executrix obtain
her
discharge from the Master. Such discharge from office be applied for
and does not follow automatically.
[7]
[14]
The Appellant, as agent of Mrs Cassim, was simply collecting the
rentals, as he was required in law to do, in respect of immovable
properties of the deceased estate, for payment into the estate
account.
[15]
Although an estate liquidation and distribution account had
previously lain for inspection in 1995, no distribution of the
estate
in accordance with that account had occurred. Indeed that
account had been prepared on the basis that the client had
adiated.
When that adiation was set aside, a fresh account would be required
to be drawn. No such fresh account had yet been
prepared nor
lain for inspection and accordingly no distribution was possible. Nor
was there any suggestion that the settlement
agreement amounted to a
Redistribution agreement. The estate was still under administration.
[16]
In these circumstances, I have some difficulty to determine on what
basis the ‘consent’ order taken would be competent
providing for the transfer of some of the properties into the name of
Dr Cassim and providing for the payment of income of the
estate
(which might conceivably be required for other purposes) to be paid
over to Dr Cassim before the estate was finalised.
This aspect
was however not addressed in the disciplinary inquiry and will not be
considered further.
[17]
Whatever knowledge the Appellant might have obtained about the
settlement agreement signed by his former client, he wished
to
confirm the contents with his client, accordingly seeking an
indulgence from Dr Cassim’s attorney to obtain instructions
in
regard thereto.
[18]
The simple reality is that the Appellant was never a party to the
litigation, nor cited as a party to the ‘consent order’
which was granted.
Did
the Appellant act in contempt of the court order?
[19]
In
Sliom v Wallach’s
Printing and Publishing Company Limited
[8]
it was said that (at page
656):
‘
A
judgment was thereby obtained against a person who had not been
legally cited before the Court, and the effect of that judgment
is
that it is a nullity; it is invalid and of no effect
…’
This
was also subsequently approved by the Appellant Division in
S
v Absalom
[9]
which held that ‘die uitspraak van ‘n hof wat nie
regsbevoegheid het nie, [het] geen regskrag nie en, kan dit eenvoudig
geignoreer word’. Also in
The
Master of the High Court (North Gauteng High Court, Pretoria) v
Motala N.O. and others
2012 (3) SA 325
(SCA) para 12E at 332E-G held that a judgment given
against a person not duly cited before the Court was of no force and
effect
whatsoever and was to be disregarded and accordingly where not
complied with, and would constitute no basis to find that the party
not cited had acted in contempt of the court order.
[20]
There was no basis for the committee to have found that the Appellant
had acted ‘in contempt of not complying with the
Court order
issued under case no. 5056/09 and 5608/10.’ The Appellant
was not a party, cited as such, to that order.
Mr Flemming, who
appeared for the Respondent, fairly accepted that the Appellant could
not have been in contempt of a court order
to which he or his firm
had not been cited as a party. It follows therefore that the
Appellants conviction on Count 2 was wrong.
Was
the Appellant rightly convicted on count 1?
[21]
As regards the Appellant’s conviction on count 1, the basis of
that conviction is sought to be found in a contravention
of Rule
14(b)(ii) of the Rules of the Respondent.
[22]
The relevant parts of that Rule provide:
‘
(b)
Unprofessional, dishonourable or unworthy conduct on the part of a
member shall, without restricting the generality of those
terms,
include:
(i)
…
(ii)
Withholding the payment of trust monies without lawful excuse.
(iii)
…’
[23]
The elements of the conduct in that category appear to include at
least:
(a) That the moneys concerned must be
trust moneys;
(b) That the attorney must have
withheld the payment of such moneys from the person on whose behalf
they were held in trust;
(c) That such withholding of payment
must be without lawful excuse.
[24]
In
casu
,
the rental payments received into the estate account do not appear to
qualify as trust money.
[10]
[25]
But in any event I have considerable difficulty with the proposition,
even assuming the monies, being rentals, paid into an
estate account
to be ‘trust moneys’, that not paying such moneys to a
third party (except on an express instruction
of the client who
entrusted such moneys to an attorney) could ever amount to
withholding payment other than for a lawful excuse.
[26]
However even if I was wrong in the above regards and assuming that Dr
Cassim could establish some legal entitlement to payment
directly
from the Appellant (as opposed to the Appellant being directed by his
client to make payment to Dr Cassim), then ultimately
the issue also
remains one of the terms of mandate given to the Appellant by Mrs
Cassim as the client. In
Joubert
Scholtz Incorporated
(
supra
)
after an analysis of the evidence and documentation, the Supreme
Court of Appeal held that there was no duty to return the surplus
funds to the Plaintiff (the client in that matter) if payments were
made in accordance with the mandate granted by it. In the present
matter such mandate included the authority to pay granted by Mrs
Cassim to the Appellant on 3 February 2011. There was no
evidence given that such authority had been revoked or would
terminate at a time other than after the full discharge of payment
of
fees and disbursements occurred by the Appellant.
[27]
I am very mindful of the
dicta
in
inter
alia Blakes Maphanga Inc v Outsurance Insurance Company Limited
[11]
which reiterated that it followed from a client’s entitlement
to taxation of legal costs and disbursements that the amount
of an
untaxed disputed bill of costs was not a liquidated debt, but one yet
to be ascertained by the taxing master, and hence not
capable of
setoff against funds held. That principle however is confined
to the situation where a client disputed the quantum
of the fees. The
SCA in
Blakes Maphanga
quoted
inter alia
with
approval from
Benson and
another v Walters and others
[12]
that’
‘…
there
was no reason why a judgment could not be given for an attorney if
the client was satisfied with the quantum of the bill but
defended
the action on some other ground.’
[28]
In the present matter, much of the enquiry’s time was spent
dealing with the reasonableness of charges and counsel’s
disbursements. However no evidence was led that Mrs Cassim, the
client, was dissatisfied or in any way objected to these fees and
disbursements. The party who would be a true complainant and objector
to the fees and disbursements namely Mrs Cassim, was never
called as
a witness. Nor was there ever any suggestion that she was
dissatisfied with the amount of the fees and disbursements.
Indeed her silence and acquiescence would appear to suggest the
contrary.
[29]
Mr Flemming on behalf of the Respondent nevertheless contended that
the terms of the court order (assuming its validity) referring
to the
Appellant (who was not a party thereto) nevertheless gave the
obligation to pay the rentals received by the Appellant on
behalf of
the estate to Dr Cassim some imprimatur from a court which would give
it standing above the mere contractual entitlement
to set off fees in
terms of the ‘authority to pay’. He was however
unable to point to any authority in this regard.
[30]
I have difficulty with the suggestion that what purports to be a
provision in an court order against a person not a party to
that
litigation could take precedence over a client’s direct
undisputed mandate to an attorney to deduct his fees and
disbursements from funds received. If the terms of the settlement
agreement and court order were not complied with, then in terms
of
clause 15 of the settlement agreement the appropriate remedy for Dr
Cassim was to sue his mother (no demand to place her in
mora
being required). The
present is not a situation where recognising her legal obligations in
terms of the settlement agreement
and/or court order, Mrs Cassim had
directed or mandated the Appellant to pay whatever funds were held in
the estate account to
Dr Cassim. Non-compliance with such a
direction or part of the mandate if granted would obviously afford
certain remedies
to Mrs Cassim not only contractually in law, but
potentially also as the basis of a complaint for unprofessional
conduct by her
against the Appellant. That is however not the
situation arising in the enquiry.
[31]
In my view, the Appellant was also entitled to have been discharged
on the first count.
A
peripheral issue:
[32]
The Appellant also raised as a complaint that the enquiry had not
been properly constituted pursuant to a report to the council
of the
Respondent, as any such report was never produced. That issue was
however not persisted with as it was never pertinently
raised before
the enquiry.
[33]
I also pointed out to counsel, that the enquiry committee might not
have been properly constituted, as the original decision
as conveyed
in the summons had been that the three members of the committee would
include Mr Jivan as chairperson, and did not
appoint Ms D Takalo to
the committee. This aspect had however also never been raised,
whether at the enquiry stage or thereafter
and it might be that
whatever shortcomings might appear had subsequently been remedied by
an appropriate resolution and/or the
necessary reports having been
made to the council. In the light of the conclusion reached the issue
has no further relevance. No
decision is accordingly made in respect
thereof.
Costs:
[34]
Finally, as regards costs, the Appellant requested that the appeal be
upheld with costs. Although ordinarily costs are
not ordered in
matters of this nature in recognition of the role played by the
Respondent and that it should not be discouraged
to bring matters of
this nature as the custodian of the
mores
of the profession before court, the Appellant’s submission was
that there was not even a
prima
facie
case made out against
him, that he should not be mulcted in having to pay his own costs,
that the costs should follow the result,
and that such costs should
include the costs of senior counsel, and two counsel where so
employed. Mr Flemming on behalf of the
Respondent stressed that the
Respondent was simply performing its duty in opposing the appeal, but
that in any event the complexity
of the matter was not such as to
warrant senior counsel and certainly not two counsel where employed.
[35]
The fact that this appeal has been upheld obviously results in the
conviction of the Appellant on the two counts now being
set aside,
which will also include the ancillary directions relating to the
payment of the fine of R20 000.00 and that the
Appellant pay the
costs of the enquiry and inspection. That follows axiomatically.
[36]
The costs in issue are therefore only the costs of the present
appeal.
[37]
There is no doubt that the matter was one of considerable importance
to the Appellant as it affects his professional reputation
and
integrity. To that extent he was justified in employing
counsel. The complexity, or more correctly lack of complexity,
however did not justify the employment of two counsel and indeed made
it a matter which should never have been pursued to this
level of an
appeal. At best if any cost order in favour of the Appellant
was considered then I would have directed that the
costs of counsel
be included in such costs but I would have left it to the taxing
master as to whether it would include the costs
of senior counsel.
[38]
I am however of the view that although the Respondent’s
prospects of successfully resisting the appeal were limited,
and
although such opposition should possibly not have been persisted
with, that it cannot be said that the opposition to
the appeal
was other than
bona fide,
or
otherwise motivated. I would be loathe in those circumstances
to grant an order for costs in favour of the Appellant against
the
Respondent having regard to the important function which Law
Societies play, and from which they should not be discouraged,
to
bring potential unprofessional or otherwise unworthy conduct before
this court. It seems to me appropriate in the exercise of
my
discretion on costs that no order as to costs be made. To the extent
that this may impact negatively on the Appellant, it is
regrettably a
consequence in the larger exercise of this court’s discretion
in matters of this nature that a Law Society
should not be
discouraged from pursuing a full ventilation before the court of its
member’s conduct.
[39]
The following order is therefore granted:
(a)
The appeal succeeds.
(b)
The orders granted by the
disciplinary enquiry of the Respondent are set aside.
(c)
Each party will be liable for
his/its own costs.
___________________________________
KOEN
J
___________________________________
MAHARAJ
AJ
Appearances
For
the Appellant/Member: Ms. J Julyan SC
Instructed
by: Zayeed Paruk Incorporated
c/o
Essack, A K Morgan
Naidoo
& Company
Tel.:
033 387 7090
Ref.:
Mr Gounder/E701/NM
For
the Respondent/Complainant: Mr. A G Flemming
Instructed
by: Messrs Siva Chetty & Company
Tel.:
033-342 9636
Ref.:
Mr S N Chetty/Genevieve/KZN311
[1]
The findings of the Committee
recorded further that ‘this report must be read together with
the report already submitted
to Council’, and confirmed that
the Appellant was found ‘Not guilty of the charge that he
failed to respond to the
complainant’s attorney’.
[2]
The deceased died on 12 August 1993.
[3]
On
24
October 1995.
[4]
Asmall v Asmall and others
1991 (4) SA 262 (N).
[5]
Bramwell and Lazar, NNO v Laub
1978 (1) SA 380 (W).
[6]
Commissioner for Inland Revenue v
Estate Crewe and another
1943
AD 656
at 656 and 692.
[7]
Section 56(1) of the Act
and Meyerowitz on
Administration
of Estates and Estate Duty
para. 11.10.
[8]
1925 TPD 650.
[9]
1989 (3) SA 154
(A) at 164F-G.
[10]
The position was different in
Joubert
Scholtz Incorporated and others v Elandsfontein Beverage Marketing
(Pty) Limited
[2012] 3 All
SA 124
(SCA) where the client was claiming the money.
[11]
2010 (4) SA 232
(SCA).
[12]
1984 (1) SA 73
A at 85C – D.