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[2016] ZAGPPHC 270
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Law Society of the Northern Provinces v Graham and Others (61790/2012) [2016] ZAGPPHC 270 (14 March 2016)
HIGH
COURT OF SOUTH AFRICA
(GAUTENG
DIVISION,
PRETORIA)
Not
reportable
Not
of interest to other Judges
CASE
NO:
61790/2012
In
the matter between:
LAW
SOCIETY
OF
THE
NORTHERN
PROVINCES
Applicant
and
JENNIFER
GRAHAM
First Applicant in the main application
MATTHEW
GRAHAM
Second Applicant in the main application
RONALD
BOBROFF
&
PARTNERS
INC.
Second
Respondent in the main application
RONALD
BOBROFF
Third Respondent in the main application
DARREN
BOBROFF
Fourth
Respondent in the main application
J
U D G M E N T
MAKGOKA,
J
[1]
This matter arises from, and is a sequel to an order made by this
Court on 15 April 2014. The order followed an application
by the
first and second applicants in the main application (the Grahams) for
certain relief against the second, third and fourth
respondents. The
third and fourth respondents are attorneys and until very recently,
practised as attorneys and directors of the
second respondent, a firm
of attorneys incorporated in terms of the
Attorneys Act 53 of
1979 (the firm). Mr
Graham was a client of the firm in a damages claim, following the
injuries he had sustained in
a motor vehicle collision on 4 September
2006. For the sake of convenience, I shall refer to the third
and fourth respondents
as 'Messrs Ronald and Darren Bobroff”.
Where the context dictates to refer to them jointly with the firm,
shall simply designate
them as 'the respondents'.
[2]
Subsequent to the finalization of Mr Graham's claim, the Grahams
lodged a complaint of overcharging against the respondents
with
the applicant (the Law Society) in June 2011. The Grahams became
dissatisfied with the manner in which the Law Society dealt
with
their complaint against the respondents. They brought an application
to this Court seeking, amongst others, that this Court
should take
over the Law Society's disciplinary enquiry or allow it to
continue under the Court's supervision. That disciplinary
enquiry was
adjourned indefinitely, pending the determination of the application
brought by the Grahams. The respondents made a
counter-application,
seeking an order that the Grahams be interdicted from interfering
with the Law Society's disciplinary processes,
and that the adjourned
disciplinary enquiry be allowed to proceed.
[3]
Among the documents submitted by the Grahams to the Law Society as
part of extensive correspondence between their attorneys
and the Law
Society, following their complaint, was a report compiled by Mr
Vincent Faris, a chartered accountant, which report
is based on an
extract from the accounting records of the firm. In that report, Mr
Faris determined that the financial transactions
recorded in the
ledger accounts did not agree with what was reflected and accounted
for in the accounting statements submitted
to Mr Graham and another
client of the firm. Mr Faris recommended that further investigations
be conducted to establish the true
position relating to the
transactions that were suspect. He further formed an opinion, based
on his observations and findings,
that there was sufficient evidence
of contravention of the Income Tax Act, the VAT Act, the Companies
Act, the Attorneys Act and
the Rules of the Law Society by the
respondents, and that the possibility of contraventions of other
legislation could not be excluded.
[4]
Pursuant to the Graham's application and the respondents' counter
application, this Court (Mathie J) on 15 April
2015, made the order
referred to in para [1] above, in terms of which the Law Society was
to convene a disciplinary hearing against
the third and fourth
respondents within sixty (60) days of the order. The Law Society was
also ordered to inspect the books of
account of the firm, including
its trust accounts, and compile a report within thirty (30) days of
the order. For reasons which
are not relevant for the present
purposes, the deadlines ordered above could not be achieved, and the
Law Society brought an interlocutory
application seeking an extension
of those deadlines. In response to the Law Society's application for
extension, the Grahams launched
a counter-application seeking the
suspension of Messrs Ronald and Darren Bobroff from practising as
attorneys pending the completion
of the investigation and the report
envisaged above, together with certain ancillary relief.
[5]
In the meanwhile, two developments overtook the relief sought in the
Law Society's interlocutory application for extension of
the
deadlines. They also affected somehow, the relief sought by the
Grahams seeking the suspension of Messrs Ronald and Darren
Bobroff.
The first development is that, on 11 February 2016, the Law Society
delivered a supplementary affidavit, deposed to by
its
Vice-President, in which it reported to this Court that the
inspection referred to in the court order had been completed. The
Law
Society attached to its affidavit, two reports compiled by its
inspectors. The inspectors had found that Messrs Ronald and
Darren
Bobroff had contravened various provisions of the Law Society's rules
relating, among others, to the keeping of proper accounting
records,
and found that the duo had also overreached their clients.
[6]
The inspectors also made, among others, the following factual
findings:
1.
The respondents retained a substantial amount of their fees in their
trust banking account during the period
prior to 11 December 2012.
They failed to raise fees in several matters upon the finalization of
their mandates. They instead transferred
their fees to a suspense
account by way of journal entries. This practice, the
inspectors opined, defeated the primary purpose
of an attorney's
trust banking account, and caused the firm's trust banking account to
lose its identity;
2.
The respondents invested a substantial amount of the firm's monies in
a Section 78(2A) investment account
which was opened under the name
"Zunelle". "Zunelle" was, however, not reflected
as a trust creditor of the
firm. Monies invested in a Section 78(2A)
investment account must first flow through the firm's Section 78(1)
trust banking account,
on the specific instructions of a trust
creditor, the client of an attorney;
3.
The respondents employed various tactics to unlawfully reduce the
firm's income tax and VAT liabilities;
4.
There was a substantial delay in effecting final payment to clients,
and in some instances, clients complained
that the firm failed to
furnish them with final statements of account;
5.
In one particular matter involving Mr Pombo, the client had alleged
that the firm had failed to issue
him with a final statement
of account. The firm issued a business cheque in his favour. The
cheque was however deposited
into Mr Darren Bobroff's personal
banking account. The report by the firm's former bookkeeper found
that Mr Darren Bobroff had
forged the signature of Mr Ronald Bobroff
on the business cheque that was issued to Mr Pombo and that the said
cheque was then
deposited into Darren Bobroff's personal banking
account. The monies due to Mr Pombo were only repaid to him two years
later. The
inspectors were unable to conduct a full inspection
of Mr Pombo's account as they were advised that the file had been
destroyed
in accordance with the firm's policy relating to the
retention of records. The relevant accounting records were, likewise,
not
available.
[7]
The inspectors formed a view, as a result of the above findings, that
Messrs Ronald and Darren Bobroff posed a risk to their
trust
creditors.
[8]
On 23 February 2016, Mr George Van Niekerk, the attorney acting on
behalf of the Grahams, deposed to an affidavit in response
to the
report of the Law Society referred to above, in which he seeks, among
others, an amendment to the Grahams' notice of motion
in the
counter-application. The amendment sought to introduce a prayer for
the issuing of a rule
nisi
calling upon Messrs Ronald. and
Darren Bobroff to show cause on a later date why their names should
not be struck off the roll of
attorneys. They also sought to
introduce an alternative prayer empowering the curator appointed to
administer the firm to conduct
the inspection originally envisaged in
the counter-application.
[9]
The second
development
is the
resolution by the council of the Law Society, on 3 March 2016, to
apply to this Court for an order striking the names of
Messrs Ronald
and Darren Bobroff, and their co-director, Mr Stephen Bezuidenhout,
from the roll of attorneys.
[1]
In
this
regard, on 11 March
2016, the
Law Society, through its Vice-President,
deposed
to
an
affidavit
in which
the
Law
Society's
decision
was
conveyed to
this Court. The Vice-President of
the Law
Society further states that as a result
·of
that resolution, the amendment sought by the Grahams, relating to the
rule
nisi
referred
to earlier,
was
no longer
necessary.
He also
points out
that the amendment is
opposed on
the
basis
that
the Grahams
have
no
standing
to
commence
disciplinary
proceedings. However,
the
Law
Society
does
not
oppose
the
amendments relating to the suspension of Messrs Ronald and Darren
Bobroff and
the
appointment
of
a
curator,
pending
the
determination
of
its
striking-off
application.
[10]
When the matter was called for argument before us on Monday, 14 March
2016, it was brought to our attention that on the Friday
preceding
the date of hearing, 11 March 2016, a letter was sent to the Law
Society's attorneys by the respondent's attorneys, Taitz
& Skikne
Attorneys (Taitz & Skikne), in which the Law Society was informed
that Taitz & Skikne had acquired the business
of the firm (Ronald
Bobroff & Partners Incorporated) and that a sale agreement was
finalised on 11 March 2016. As a result
of that, the Grahams brought
an application to interdict the implementation of the sale agreement,
to be determined with these
applications. However, Taitz & Skikne
indicated that they had not had an opportunity to consider the
application. However,
subsequent to the hearing, Taitz &
Skikne Attorneys directed a letter to us, undertaking not to
implement the sale agreement
pending the determination of the
Graham's application.
[11]
Back to the Grahams' application. Despite their earlier differences
as to how the complaints against the respondents should
be dealt
with, the Law Society and the Grahams' have narrowed their
differences significantly. Thus is mainly due to the Law Society's
resolution to apply for the removal of the respondents from the roll
of attorneys. The Law Society and the Grahams now share a
view that
the respondents are no longer fit to remain on the roll of attorneys,
and should be removed from that roll. It is only
with regard to the
procedure for such removal that their paths part. The Grahams seek an
outright, summary removal of Messrs Ronald
and Darren Bobroff from
the roll of attorneys. The Law Society says that the removal should
be at its instance in the pending application.
Below is a brief
exposition of the parties' position on the matter.
[12]
Mr
Unterhalter
SC, counsel for the Grahams, persisted
with the prayer that Messrs Ronald and Darren Bobroff be struck off
the roll of attorneys,
alternatively a
rule nisi
be issued,
calling them to show cause why that order should not be made. In the
further alternative, counsel suggested that the
respondents be
suspended, with a preservatory order regarding the firm's trust
account, pending the determination of the applications
by the Grahams
and the Law Society to strike them from the roll of attorneys. As to
the main relief, counsel contended that a separate
application by the
Law Society to remove the respondents' names from the roll is not
necessary, and that its purpose is already
catered for by the
amendments sought to be effected to the Grahams' notice of
counter-application. A separate application would
require a different
court to become seized of the matter, leading, in turn, to a
duplication of work and a waste of judicial resources.
[13]
Counsel further contended that the Law Society's application contains
no new evidence, but simply repeats the evidence
that is
already before Court, which comprises, among others, the
following: the Faris report referred to
earlier; the
judgment of the Law Society's Investigating Committee, which
recommended that the respondents should face ten (10)
charges of
unprofessional and dishonourable conduct arising from various
complaints laid against the respondents with the Law Society;
the
inspectors' reports, whose findings are referred to above; two
judgments of this court in terms of which Messrs Ronald and
Darren
Bobroff were: (a) found guilty by Matojane J of contempt of court;
(b) found by Murphy J to have been obstructionist in
the
implementation of the order of Mathie J; the Grahams counter
application; as well as the Law Society's application for
the
striking off
[14]
Mr
Unterhalter was
keenly aware of the potential prejudice to
the respondents as a result of the amendment to bring into
consideration, a prayer to
have their names removed from the roll of
attorneys. This is so because the respondents have not, before 23
February 2016, been
confronted with such a case. To counter this
argument, counsel contended that such prejudice does not arise
because the respondents
have been afforded exhaustive opportunities
to answer to the allegations levelled against them, despite which,
they had deliberately
elected to remain silent.
[15]
On the other hand, Mr
Trengove
SC, for the Law Society,
opposed the amendments sought by the Grahams, and in particular, that
the respondents be struck off the
roll summarily. He contended that
deference should be accorded to the Law Society's separate
application, which, according to him,
was a more comprehensive one.
Furthermore, it would be more efficient to have a separate
application, rather than amending the
existing application of the
Grahams, which is beset with onerous procedural considerations
relating to objections and opportunity
to reply, which could lead to
substantial delays. Substantively, Mr
Trengove
argued that the
procedure for the summary removal of the respondents from the roll,
as proposed on behalf of the Grahams, would
infringe the trite
audi
alteram
principle. Counsel reiterated that the
respondents had been confronted with that possibility only on 23
February 2016, to which
they are entitled to respond. Mr Cass m SC,
for the respondents, largely aligned himself with Mr
Trengove'
s
submissions and opposed the amendments sought by
the Grahams to introduce a prayer for the summary removal of the
respondents' names
from the roll of attorneys.
[16]
The transgressions which the respondents are accused of are of
a very serious nature, indeed. I have already sketched
a summary of
the alleged transgressions. For the very reason that the allegations
are so serious, and the repercussions for the
respondents so
far-reaching in the event they are found guilty of such
transgressions, the respondents should be afforded a fair
and
adequate opportunity to respond to those allegations. They should be
able to state their case in the normal manner. My view
is informed by
the simple dictate that even one against whom the evidence of
wrong-doing seems overwhelming, there should be a
fair and reasonable
opportunity for them to meet those allegations in the ordinary
manner.
[17]
There is a further, more practical reason why the summary removal of
Messrs Ronald and Darren Bobroff is inappropriate at this
stage.
Their co-director, Mr Stephen Bezuidenhout, is not part of the
counter-application by the Grahams, i.e. the Grahams have
not sought
to have his name removed from the roll. He is, however, a respondent
in the application by the Law Society, which seeks
to have his name
removed from the roll of attorneys, together with Messrs Ronald and
Darren Bobroff. If the latter's names are
removed from the roll on
the Grahams' counter-application, the Law Society's application in
respect of Mr Bezuidenhout would still
have to proceed, resulting in
a piece-meal disposal of the matter. I therefore take a view that the
Law Society's application,
to the extent Mr Bezuidenhout is a
respondent in it, offers a more convenient avenue to deal
comprehensively with all allegations
pertaining to the firm and its
directors. For the above reasons, I am not inclined to accede to the
Grahams' request for summary
removal of Messrs Ronald and Darren
Bobroff from the roll of attorneys, or to issue a
rule nisi
against them.
[18]
There was a general consensus among all counsel that in the light of
the finding by the Law Society's inspectors that the trust
creditors
of the firm were at risk, Messrs Ronald and Darren Bobroff have to be
suspended from practice pending the determination
of the relief
sought to have their names removed from the roll at the instance of
the Grahams and the Law Society. That is the
order I am inclined to
make. However, the nature and extent of that order has been affected
by yet another development in the matter.
Shortly after we heard the
matter and reserved judgment, media reports surfaced, suggesting that
Messrs Ronald and Darren Bobroff
had left the country for Australia,
allegedly in order td evade arrest by the Directorate For Priority
Crime Investigation (the
Hawks) in connection with alleged fraud
involving the Road Accident Fund claims previously handled by them.
[19]
That development, together with the alleged sale of the business of
the firm referred to earlier, prompted the Law Society
to conduct an
investigation into the accounting records and practice of the firm.
As a result of the findings pursuant to that
investigation, the Law
Society sought, on an
ex parte
and urgent basis, an order
appointing its head: members affairs, as
curator bonis
to
administer and control the accounts of the firm. The relief sought by
the Law Society was granted by this Court (Mabuse J) on
24 March
2016. It is a detailed order, making provision for the appointment
of a curator, vested with extensive powers associated
with such
appointment. It, in a way, takes care of part of what I would have
ordered, in the event of suspension of the respondents.
Obviously,
that order does not address other pertinent issues raised in the
present application, such as the sale agreement in
respect of the
firm, referred to earlier, in respect of which there is still a need
to make an order.
[20]
To sum up. Messrs Ronald and Darren Bobroff must be suspended from
practising as attorneys, pending the determination of the
applications to remove their names
off
the roll of attorneys.
Most of the orders which would ordinarily have been made ancillary to
the suspension, are catered for in
the order of this Court made on 24
March 2014, referred to above. As a result, it is not necessary to
include them in the order
I am about to make. The Grahams'
applications to amend their counter application in order to
introduce a prayer for the removal
of the respondents from the roll
of attorneys, should be granted, and the amended counter-application
should be postponed, to be
heard simultaneously with the Law
Society's application for the same relief.
[21]
What remains to briefly comment on is the urgent interdict
application by the Grahams concerning the agreement selling the
business of the second respondent to Taitz & Skikne. The latter
had initially indicated that they needed an opportunity to
file an
answering affidavit thereto. On 6 April 2016 the said attorneys wrote
a letter to us, indicating that in the light of the
recent
developments, an in particular the fact that Messrs Ronald and Darren
Bobroff had left the country, and the Law Society's
urgent
application culminating in the appointment of a curator, it was no
longer necessary to file an answering affidavit to that
application,
as Taitz & Skikne are 'directly dealing with the appointed
curator...' That might be the
de
facto
situation, but the fact is that there is an application before
us, which we must dispose of.
[22]
The upshot of Taitz & Skikne's stance in electing not to file an
answering affidavit, is that the application by the Grahams
for an
interdict in respect of the business sale agreement is unopposed. In
my view, a proper case has been made for the relief
sought. If not
granted, the agreement has the potential to render any order of
suspension nugatory. It might well be that the curator
and Taitz &
Skikne have come to some arrangement regarding client files, but a
court order is necessary to give effect to the
regulation of the
client records purportedly sold to Taitz & Skikne.
[23]
What is more, a careful regard to the order granted at the instance
of the Law Society on 24 March 2016 shows that no specific
mention is
made of the business sale agreement and its implications. For the
above reasons, and for completeness' sake, I deem
it prudent to make
an order in that regard. Accordingly, the application must be
granted. The Grahams had initially sought an interim
interdict with a
rule nisi
calling upon interested parties to show cause on a
return date, why the sale agreement should not be declared unlawful
and set aside.
In light of the developments referred to above, it is
no longer necessary to first issue a
rule nisi.
A permanent
interdict is called for under the circumstances.
[24]
With regard to the further conduct of the application by the Law
Society, I do not deem it necessary to give directives in
that
regard. The normal time periods in terms of the Uniform Rules of
Court would have applied. Should a need arise for case management
of
the application, the parties may approach the office of the Deputy
Judge President for further directives. With regard to the
hearing of
the two applications (by the Grahams and the Law Society) a
suggestion was made during the hearing of the present applications
that this Court as presently constituted should be seized of the
applications, since the same issues arise in those applications
as
they presently are before us. The allocation of special motions is
the prerogative of the Judge President and the Deputy Judge
President, to whom we shall convey the proposition.
[25]
Finally, the issue of costs. In my view, costs should be
reserved for determination with the Graham's and Law Society's
respective applications referred to above. The Court seized of that
application would be best placed to make a costs order, having
had
regard to all the factors. One of the key points of disagreement
between the Grahams and the Law Society (supported by the
respondents) is that the Grahams have no
locus
standi
to apply for the removal of the respondents' names from the roll
of attorneys, except in the narrow circumstances referred to by
Mothle J in paras 79 - 82 of his judgment. The Court seized of the
applications would have to pronounce itself, among others, on
whether
those circumstances are present in this case, and even, whether the
remarks by Mothle J represent the correct approach.
Costs should
therefore be reserved.
[26]
In the result I make the following order:
1.
The third respondent (Ronald Bobroff) and the fourth respondent
(Darren Bobroff) are suspended from practising
as attorneys and
conveyancers of this Court pending the determination of the
applications of the Law Society and of the first and
second
applicants in the main application (the Grahams) to strike their
names from the roll of attorneys;
2.
The order of suspension of the third and fourth respondents is
subject to, and in conjunction with, the
order of this Court granted
under case number 24456/2016;
3.
The third and fourth respondents are ordered to immediately surrender
and deliver to the Registrar of
this Court, their certificates of
enrolment as attorneys and conveyancers;
4.
In the event that the third and fourth respondents fail to comply
with the preceding paragraph within
two weeks from the date of this
order, the sheriff of the district in which the certificates are
located, is authorised and directed
to take possession of the
certificates and to hand them to the Registrar;
5.
The second, third and fourth respondents, together with Taitz &
Skikne Attorneys and Rael Zimerman
are interdicted and prevented from
implementing or effecting any transfers and deliveries (including but
not limited to, transfers
of moneys held by the second respondent in
its business and trust accounts, and deliveries of client files and
documents) pursuant
to the sale of business agreement referred to
above;
6.
The second, third and fourth respondents, together with Taitz &
Skikne Attorneys and Rael Zimerman,
are ordered, within 24 hours of
this order, to reverse any transfers and deliveries effected pursuant
to the sale of business agreement
referred to above;
7.
All moneys, files and documents that were transferred and delivered
to Taitz & Skikne Attorneys and/or
Rael Zimerman, must be placed
under the control of the curator appointed in terms of the order of
this Court issued under case
number 24456/2016;
8.
The Sheriff of this Court with the necessary jurisdiction is
authorised and directed to do all things
necessary to reverse any
transfers and deliveries effected pursuant to the sale of business
agreement referred to above, if the
second, third and fourth
respondents and/or Taitz & Skikne Attorneys or Rael Zimerman,
should fail to do so within 24 hours
of this order.
9.
The application for the amendment of the Graham's counter-application
dated 23 February 2016 in terms
of which the Grahams seek to
introduce a prayer for the removal of Messrs Ronald and Darren
Bobroff from the roll of attorneys,
is granted;
10.The
counter-application launched by the Grahams (as amended) for the
removal of the third and fourth respondents from the roll
of
attorneys, and the Law Society's application for the removal of the
third respondent, the fourth respondent and Mr Stephen Bezuidenhout,
from the roll of attorneys, are postponed
sine die,
subject to
the directives by the Deputy Judge President with regard to the
allocation of a date of hearing;
11.
The applications referred to in para 10 above, shall be heard
simultaneously on a date to be determined by the Deputy Judge
President;
12.The
costs of the applications are reserved for determination with the
applications referred to in para 10 above.
_____________________
T.
M. Makgoka
Judge
of the High Court
I
agree
_____________________
M.
Ismail
Judge
of the High Court
Date
of hearing:
14 March 2016
Date
of judgment:
26 April 2016
For
the applicant:
Adv. W Trengove SC
Adv.
HJ
L
Vorster
Instructed
by:
Rooth & Wessels Inc., Pretoria
For
the first and second applicant:
Adv. DN Unterhalter SC
Adv. M Du Plessis
Adv. J Mitchell
Instructed
by:
Edward Nathan Sonnenbergs, Cape Town c/o Weavind & Weavind Inc,
Pretoria
For
the respondent:
Adv. NA Cassim SC
Adv.
H
Khan
Adv. V September
Instructed
by:
Taitz & Skikne Attorneys, Johannesburg c/o Rontgen & Rontgen
Inc., Pretoria
[1]
During argument,
the
application
by the
Law
Society
in
this regard, duly
issued in
this
Court
under
case
number 20066/2016, was handed to us.