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[2016] ZAGPPHC 632
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The Law Society of the Northern Provinces v Smith and Others; Smith and Others v The Law Society of the Northern Provinces and Another (62599/2011) [2016] ZAGPPHC 632 (22 July 2016)
IN
THE HIGH COURT OF SOUTH AFRICA
/ES
(
GAUTENG
DIVISION, PRETORIA
)
CASE
NO: 62599/2011
DATE:
22/7/2016
Reportable
Revised
IN
THE APPLICATION OF
THE
LAW SOCIETY OF THE NORTHERN
PROVINCES APPLICANT
(Incorporated
as the Law Society of the Transvaal)
AND
RAPHAEL
SMITH 1
ST
RESPONDENT
DAVID
ANTHONY
SMITH 2
ND
RESPONDENT
RAPHAEL
& DAVID SMITH
Inc 3
RD
RESPONDENT
AND
IN THE COUNTER-APPLICATION OF
RAPHAEL
SMITH
1
ST
APPLICANT IN RECONVENTION
DAVID
ANTHONY SMITH
2
ND
APPLICANT IN RECONVENTION
RAPHAEL
& DAVID SMITH Inc
3
RD
APPLICANT IN RECONVENTION
AND
THE
LAW SOCIETY OF THE NORTHERN
1
ST
RESPONDENT IN RECONVENTION
PROVINCES
(Incorporated as the Law Society of the Transvaal)
MINISTER
OF JUSTICE
2
ND
RESPONDENT
IN
RECONVENTION
JUDGMENT
PRINSLOO,
J
[1]
The applicant Law Society seeks certain relief against the
respondents in terms of the provisions of the Attorneys Act, Act
no
53 of 1979 ("the Act").
[2]
When the application was launched, the first and second respondents
were directors of the third respondent firm of attorneys.
Sadly, the first respondent, who was the senior partner in the firm,
has since passed away. When the application came before
me,
nothing was made of the fact that the first respondent had not yet,
by then, been replaced by the executor of his estate.
In the
circumstances, and without intending any disrespect, I will prepare
this judgment on the basis of the citation of the parties
as it was
when the matter was heard.
The
same applies to the citation for purposes of the counter-application
which was launched a considerable period of time before
the
unfortunate passing of the first respondent.
The
applicants in reconvention nominally cited the second respondent as
the Minister involved with the administration of the Act.
The
second respondent played no active part in these proceedings.
[3]
Before me Mr Stein SC assisted by Mr Premhid, appeared for the
applicant and Mr Chaskalson SC assisted by Mr Van der Spuy,
appeared for the first, second and third respondents.
[4]
Argument was presented over a period of three days, and the record
runs into more than 800 pages.
Brief
synopsis
[5]
The case, by and large, revolves around the proper interpretation and
application of, in particular, sections 70, 71 and 78
of the Act.
[6] It
is convenient to quote the contents, and in some cases only relevant
extracts, of and from these provisions:
"
70. Council's power of inspection.
–
(1) A council may for the purposes of an enquiry under section 71 of
or in order to enable it to decide whether or not such an
enquiry
should be held, direct any practitioner to produce for inspection,
either by the council itself or by any person authorised
thereto by
the council, any book, document, record or thing which is in the
possession or custody or under the control of such
practitioner and
which relates to his or her practice or former practice.
(2) The refusal or failure by a practitioner to comply with a
direction in terms of subsection (1) shall constitute unprofessional
conduct.
71. Enquiry by council into alleged cases of unprofessional or
dishonourable or unworthy conduct. –
(1) A council may in the prescribed manner inquire into cases of
alleged unprofessional or dishonourable or unworthy conduct on
the
part of any attorney, notary or conveyancer whose name has been
placed on the roll of any court within the province of its
society,
whether or not he or she is a member of such society or of any person
serving articles of clerkship or a contract of service
with a member
of its society, or of any former candidate attorney referred to in
section 8(4). (
My note
: for present purposes I quote
only subsection (1).)
78. Trust accounts. –
(1) Any practising practitioner shall open and keep a separate trust
banking account at a banking institution in the republic and
shall
deposit therein the money held or received by him or her on account
of any person.
(2) ...
(3) ...
(4) Any practising practitioner shall keep proper accounting records
containing particulars and information of any money received,
held or
paid by him or her for or on account of any person, of any money
invested by him or her in a trust, savings or other interest-bearing
account referred to in subsection (2) or (2A) and of any interest on
money so invested which is paid over or credited to him or
her.
(5) The council of the society of the province in which a
practitioner practises may by itself or through its nominee, and at
its own cost, inspect the accounting records of any practitioner in
order to satisfy itself that the provisions of subsections (1),
(2),
(2A), (3) and (4) are being observed, and, if on such inspection it
is found that such practitioner has not complied with
such
provisions, the council may write up the accounting records of such
practitioner and recover the costs of the inspection or
of such
writing up, as the case may be, from the practitioner.
(6) For the purposes of subsections (4) and (5), 'accounting records'
includes any record or document kept by or in the custody
or under
the control of any practitioner which relates to –
(a) money invested in a trust, savings or other interest-bearing
account referred to in subsection (2) or (2A);
(b) interest on money so invested;
(c) any estate of a deceased person or any insolvent estate or any
estate placed under curatorship, in respect of which such
practitioner
is the executor, trustee or curator or which he or she
administers on behalf of the executor, trustee or curator; or
(d) his practice."
(
My
note
: for present purposes I do not quote the remaining eight
subsections.)
[7]
Every attorney, notary and conveyancer duly admitted, enrolled and
practising as such in the Gauteng, Mpumalanga, Limpopo provinces
and
portions of North-West province is,
ipso facto
, a member of
the applicant.
[8]
The affairs of the applicant are managed and controlled by a council
("the council"), consisting of 24 practising
attorneys who
hold office in terms of the provisions of part IV of the rules
of the applicant Law Society.
[9]
The council was established in terms of section 60 of the Act which
provides:
"
60. Council to manage and control affairs of society. –
(1) The affairs of a society shall be managed and controlled by a
council, which may, subject to the provisions of subsection (2),
exercise the powers of the society."
[10]
The objects and powers of the applicant society are set out in
sections 58 and 59 of the Act, and,
inter alia
, the applicant
is empowered to "generally, do anything that is necessary for or
conducive to the attainment of the objects
of the society ..."
and one of the objects is "to provide for the effective control
of the professional conduct of practitioners".
The
applicant has been at it for well over a century since it first came
into existence by Volksraadbesluit 1307, dated 19 October
1892, of
the Zuid-Afrikaansche Republiek.
[11]
On 23 September 2011, the council, at a meeting held at Pretoria,
passed the following resolution:
"1. That the Law Society's attorneys (Rooth & Wessels
Incorporated) be instructed to proceed with an application to compel
Raphael & David Smith Incorporated, Raphael Smith and David Smith
(hereinafter referred to as 'the attorneys') to make the
following
records/data available to the Law Society for investigation:
1.1 the complete accounting records relating to all claims handled on
behalf of clients against the Road Accident Fund containing
particulars and information of any money received, held or paid by
the firm for or on account of any person, of any money invested
by
the firm in a trust, savings or other interest bearing account and of
any interest on money so invested which was paid over
or credited to
the firm as is more fully described in section 78(4) of the Attorneys
Act no 53 of 1979;
1.2 the complete office files relating to all claims handled on
behalf of clients against the Road Accident Fund containing, without
limiting the generality thereof, correspondence, statements of
account, receipts, reports and pleadings; and
1.3 the complete and/or any books, documents, records or things
relating to the practice of the attorneys in relation to all matters
handled by the attorneys on behalf of all clients against the Road
Accident Fund as is more fully described in section 70 of th
Attorneys Act no 53 of 1979;
1.4 the records/data of clients referred to in paragraphs 1.1, 1.2
and 1.3 shall include, but not be limited to all matters in
which the
Law Society has received complaints.
1.5 In the event of further complaints being lodged against the
attorneys with the Law Society, after date of this resolution,
the
Law Society's attorneys are hereby authorised to include reference to
such complaints at the hearing of the application.
2. That the President of the Law Society, be and is hereby authorised
to sign all documents necessary to give effect to this resolution
on
behalf of the council of the Law Society."
[12]
Pursuant to the passing of the resolution on 23 September 2011, the
applicant, on or about 2 November 2011, launched the
application
which came before me. The applicant prays for an order
directing the respondents to make the records/data referred
to in the
resolution available to the applicant for investigation. There
is also a prayer for costs to be paid on the scale
as between
attorney and client.
[13]
In February 2012, the respondents filed a counter-application
accompanied by an answering affidavit and founding affidavit
in the
counter-application.
[14]
The relevant paragraphs of the notice of motion in the
counter-application read as follows:
"(i) Reviewing and setting aside the decision of the Council of
the First Respondent in Reconvention taken 13 September 2011
(
sic
,
should read 23 September) that an inspection of the accounting
records and Road Accident Fund claim files of the practice of the
applicants in reconvention be conducted.
(ii) To the extent that it is necessary for the relief sought in
prayer (i) above, an order declaring that section 70 of the Attorneys
Act 53 of 1979 ('the Act') is inconsistent with the Constitution and
invalid.
(iii) Directing the first respondent in reconvention to pay the
Applicants' in Reconvention costs in the counter-application on
the
attorney and client scale."
[15]
In formulating the defence of the respondents, their counsel
described the situation as follows in their heads of argument:
"The Smith firm has nothing to hide. It has
comprehensively answered the 31 complaints on the papers.
It
has tendered upon production by the Law Society of proof that the
clients in question have waived privilege, to make available to
the
Law Society for inspection all of its existing files and accounts
relating to those 31 complaints. (Some records were
destroyed
because the files had been closed more than five years before the
firm was notified of any complaint.)
The Smith firm is confident that any inspection of its files and
accounting records will show that it is innocent of any wrongdoing
of
which it may be suspected by the Law Society. However, it
cannot consent to the generalised inspection relief sought by
the Law
Society because that relief would, by its very nature, destroy the
Smith firm even if it is ultimately established that
the attorneys in
the Smith firm have been innocent of any misconduct:
1. An attorney is duty bound to protect his or her client's
privileged documents from inspection by a regulatory authority unless
the client has waived privilege in respect of the file.
2. The Law Society demands that the Smith firm hand over all its RAF
files and accounts to the Law Society inspectors. These
RAF
files contain privileged documents relating
inter alia
to the
medical conditions and financial affairs of the clients of the Smith
firm.
3. So before releasing such documents to the Law Society inspectors,
the Smith firm would have to contact each one of their more
than
16 000 past and present RAF clients, to inform that client that
the Law Society is conducting an inspection of the Smith
firm on the
basis of a suspicion of generalised professional misconduct and to
ask the client whether s/he is willing to waive
privilege in respect
of the contents of his/her file to facilitate the inspection of the
Law Society. Such a process would
destroy the professional
reputation of the Smith firm in a manner from which it would be
unlikely ever to recover."
[16] I
will deal with the question of privilege later in this judgment, but
at this point I make the observation that it is not
quite clear why
the respondents relied on the argument that it would be incumbent
upon them to contact each of those 16 000
clients. It has
been the approach of the respondents all along, also when similar
proceedings were launched by the applicant
in 2007, that it was the
duty of the applicant Law Society to obtain affidavits from the
clients involved in the complaints to
the effect that they waive
privilege. Indeed, and quite unnecessarily in my view, during
earlier proceedings, the Law Society
went to the trouble of obtaining
such affidavits. This attitude was again expressed in the heads
of argument of counsel for
the respondents where they state:
"It has repeatedly offered to make available to the Law Society
all of its records and accounts in respect of each of those
complaints, provided that the Law Society satisfies it that the
clients in question have waived their privilege over the relevant
documents."
[17]
Counsel for the respondents, in their heads of argument, after
describing the perceived destruction of the professional reputation
of the respondents if they have to contact all the clients, then
motivated the decision to bring the counter-application in the
following terms:
"The Smith firm has accordingly brought a counter-application to
review and set aside the decision of the Law Society to conduct
a
generalised inspection of all the files and accounts of the Smith
firm. It does so on the basis that the inspection decision
of
the Law Society ..."
Then
follows five alleged review grounds based on the provisions of
section 6 of the Promotion of Administrative Justice Act
3 of
2000 ("PAJA"). In summary, it is mentioned in the
heads of argument that the decision was taken by the applicant
without properly applying its mind to the matter, alternatively for
the ulterior purpose of victimising the respondents so that
it is
accordingly inconsistent with the constitutional legality principle
and reviewable in terms of section 6. It was further
argued
that the decision was wholly unjustified and oppressive and
accordingly
ultra vires
section 70 of the Act and
inconsistent with the constitutional legality principle and
reviewable in terms of certain subsections
of section 6.
Another review ground advanced was that the decision was taken by an
unfair procedure which renders it
reviewable and, further, was not
rationally related to the reasons proffered by the applicant for the
inspection decision or to
the information made available to the
applicant in relation to the complaints. Finally, it was
submitted in the heads of
argument that the decision was calculated
to interfere unlawfully with the personal and commercial reputations
of the respondents
so that it is inconsistent with section 6(2)(i)
of PAJA.
[18]
At the commencement of the hearing, counsel for the respondents filed
supplementary heads of argument dealing with the "interpretation
of section 70(1) of the Act and the constitutionality of the
section". I will revert to all these subjects.
[19]
Finally, for purposes of this synopsis, I turn to the procedural
chronology of events leading up to the hearing before me almost
five
years after the application was launched, and almost ten years after
earlier, similar, proceedings were launched in 2007:
• As I have mentioned, the application was launched in November
2011.
• The answering affidavit and counter-application as well as the
founding affidavit in the counter-application saw the light
in
February 2012.
• Then followed a series of interlocutory skirmishes: the
applicant filed the record of proceedings, in terms of rule 53,
on 2
February 2012. On 7 March 2012 the respondents' attorneys
wrote a letter to the applicant's attorneys requesting
proof that the
record had been filed. This was confirmed in writing on 8 March
2012. There were then negotiations to
extend the time within
which the supplementary affidavit, provided for in terms of rule
53(4), could be filed by the respondents.
Thereafter there was
a suggestion on behalf of the respondents that the record filed was
incomplete followed by a threat by the
respondents to launch an
application to compel disclosure of all the documents.
The
matter was further delayed when the first respondent, sadly, was
injured during a robbery and hospitalised. It appears
that he
unfortunately passed away during or about September 2012. When
nothing came of the threatened application to compel
the filing of a
more complete record, the replying affidavit was filed in April 2013.
• In August 2013, respondents filed a replying affidavit to the
answering affidavit to the counter-application.
• In July 2014, the applicant filed a supplementary answering
affidavit dealing with allegations by the respondents that the
applicant had unreasonably delayed the progress of the matter and
secondly, with an indication from the respondents that they were
contemplating an application to refer the matter to oral evidence,
targeting previous Presidents of the Law Society to give such
evidence.
• This inspired the respondents to launch a rule 30 application
aimed at setting aside the supplementary answering affidavit
alternatively seeking leave to supplement the replying affidavit of
August 2013.
• The rule 30 proceedings came before this court on 13 April
2015 when it was recorded that the rule 30 application was withdrawn
and that the respondents could file a response to the supplementary
answering affidavit within ten days of that order, followed
by a time
frame prescribing days for filing heads of argument.
• The opposing affidavit to the supplementary affidavit saw the
light in April 2015.
[20]
The matter came before me in March 2016.
[21]
So much for the "brief" synopsis.
Some
remarks about historical events leading up to the adoption of the
September 2011 resolution, complaints lodged against the
respondents
and related matters
[22]
In 2007 the applicant brought an application against the respondents
for an order to compel them to produce for inspection
their complete
accounting records, office files and all books, documents, records or
things relating to their practice with regard
to complaints lodged
with the applicant regarding claims against the RAF handled by the
respondents ("the 2007 application").
[23]
There were ten complaints at the time.
[24]
The application was opposed and on 15 October 2007 the erstwhile
attorneys of the applicant, in writing, proposed an amicable
settlement on the basis that the accounting records, files and
related documents pertaining to the specific complainants be made
available by a certain date, and that each party bears its own costs.
[25]
On 9 November 2007 the late first respondent wrote to the applicant's
attorneys rejecting the settlement offer in the following
terms (I
only quote extracts from the letter):
"I note that your suggested settlement of this matter, as
contained in your said facsimile, does not mention the aspect of
privilege. In my answering affidavit my tender to make the
relevant files available was conditional upon the complainants
waiving privilege. I remain firmly of the view that there must
be a waiver of privilege before the files in question can
be handed
over to you.
Ordinarily, I would expect your client to act only on the basis of
active complaints by attorneys' clients from whom it had procured
a
waiver of privilege to pursue its investigations ... I cannot
simply assume that there has been a waiver of privilege by
the nine
clients whose files are listed in the notice of motion.
Under the circumstances, I cannot agree to provide your client with
access to the files of my clients unless you can provide me
with
satisfactory proof from the clients whose files your client seeks to
inspect that they had properly waived their privilege
in respect of
their files and consent to your client's inspection.
I await to hear from you."
This
letter set the tone for the attitude adopted by the respondents
towards the applicant throughout the proceedings and right
up to the
time when the matter came before me. I have quoted
extracts from the heads of argument filed on behalf of
the
respondent. I add that, during the hearing, there may have been
a slight change of stance, if I understood counsel correctly,
to the
extent that waiver of privilege with regard to the specific complaint
files was no longer insisted upon. It is also
difficult to
understand on what basis waiver of privilege can be insisted upon in
respect of specific complainants who, in my view,
clearly waived any
privilege they had, if it existed in this context, when they lodged
the complaints. I will revert to this
subject.
[26]
To his credit, and in my view unnecessarily so, the reasonable
attorney of the applicant obtained affidavits from the complainants
and sent them to the respondents on 16 September 2008.
On 17
September 2008 the respondents stated that the relevant files would
be delivered "shortly".
On 19
September 2008 the attorneys of the respondents wrote to the
applicant's attorney stating that the files were placed in the
respondents' company vehicle, which vehicle was broken into when it
was parked outside the Maroela Hotel, and the files were stolen.
It was recorded that the matter was reported to the police.
[27]
After this event, the mandate of the erstwhile attorneys was
terminated and the present attorneys of record were appointed
to deal
with the matter further. These attorneys adopted the view that
even if the files may have been stolen, the accounting
records
relating to all the stolen files could still be made available for
inspection. In September 2010, a letter to
this effect was
addressed to the respondents' attorney. This was pursuant to
the settlement reached to which I have referred.
The
response on behalf of the respondents was that they required
confirmation that the applicant would not proceed with the 2007
application in order to allow
bona fide
settlement
negotiations to proceed. It was acknowledged that the applicant
could then proceed with the 2007 application if
material problems
with the accounting records were detected.
I
again find it convenient to quote extracts from the late first
respondent's letter to the applicant's attorney dated 5 October
2010
(it is noteworthy that the respondents conducted the litigation under
the name of the third respondent and did not, at least
at that stage,
employ separate attorneys for the purpose):
"I have no objection in principle to letting your client have
sight of my accounting records in respect of the files referred
to by
you. ... If the documentation requested by you is in
order for you to prepare for the hearing, then I must
first
check with my counsel whether it will be in order for your client to
have sight of the documentation in question.
It would appear from the import of your letter that you are
requesting the documentation for the purpose of attempting to settle
this matter. Under the circumstances I would suggest in order
for
bona fide
settlement negotiations to proceed without the
threat of litigation hanging over my head that you confirm that your
client will
not be proceeding with this matter on either the 4
th
of March 2011 or the 29
th
of April 2011. Naturally
if your client does find material problems with the accounting
records that I supply then it will
be their prerogative to again
apply for a date for the hearing of this matter ..."
[28]
On 25 October 2010 the applicant's attorneys responded by indicating
that they would not proceed with the 2007 application
under those
circumstances and again called for the delivery of the requested
accounting records.
On 8
December 2010 the first respondent wrote a letter stating "I now
enclose herewith copies of the relevant accounting records".
Attached to the letter were ledger accounts of 1 (one) page each for
only five of the nine complainants mentioned in the 2007
application. The accounts related to the matters of Marudi,
Molefe, Molekwa, Dyasi and Masoku. There were no records
relating to the matters of Nkosi, Mazibuko, Lamula and Molalogi.
The
applicant, correctly in my view, felt that it had to be placed in
possession of all the source documents over and above the
ledger
accounts. A letter was sent to the first respondent on 22
February 2011 recording this attitude and the fact that
what was
supplied was incomplete. In the letter there was a request for
all books of prime entry and all ledger accounts,
receipts and books,
bank statements, fee notes, fee journals and transfer journals,
invoices, cheque counterfoils or copies of
issued cheques and all
supporting documents in the event of electronic transfers. This
was requested in respect of all nine
the complainants in the 2007
application and not only in respect of some of them. This
comprehensive letter, exhibit "LS11",
was transmitted by
fax to the correct fax number as it appears on the third respondent's
letterhead.
The
applicant alleges that there was no response to "LS11" and
this is what prompted the decision to launch a fresh application
(further complaints were received by then). The result was the
adoption of the September 2011 resolution and the launching
of this
application in November 2011. The allegations about "LS11"
were met with a blanket denial in the answering
affidavit. In
this affidavit, the respondents referred to a lengthy paragraph 26 in
their answer, which does not appear to
deal explicitly with the
allegations around "LS11". Nevertheless, the
respondents, in their opposing affidavit,
adopt the attitude that all
the particulars required were supplied. They also referred to a
fire which allegedly took place
in August 2009 at Docufile where some
of the records stored in that facility by the respondents were
allegedly destroyed.
On this version, the fire took place
after, for example, September 2008, when the requested files
featuring in the 2007 application
were allegedly sent to the
applicant but stolen from the parked vehicle. It is also
noteworthy that the first respondent,
as I mentioned, already in
a letter of 8 December 2010 (after the alleged fire) stated
emphatically that he was attaching
the requested "relevant
accounting records". In the event, as I mentioned, he
failed to do so.
[29] I
turn to briefly consider some details relating to the complaints
received by the applicant against the respondents.
[30]
In the founding affidavit, the deponent on behalf of the applicant
comprehensively deals with thirty one complaints received,
mentioning
the names of the complainants and some relevant particulars.
The deponent states that all the complaints relate
to "third
party matters" handled by the respondents on behalf of clients.
Some features of the complaints include
failure by the respondents to
account properly or pay over the settlement amounts received from the
RAF and, in some instances,
monies invested on behalf of the clients
without the consent of the latter.
[31]
Although I consider this to be strictly unnecessary, I offer, for
illustrative purposes, a trancated overview of some of the
complaints
without mentioning the names of the complainants or too much detail:
• The biological mother of a severely injured child (head
injuries) instructed the respondents to file a claim. The
matter was settled for R1,25 million which was paid to the third
respondent. The respondents paid an amount of R5 000,00
to
the complainant and informed her that she would receive R1 500,00
a month. Details of the actual settlement amount,
and what
appeared to be an investment made on behalf of this complainant were
not supplied. The complainant's affidavit
in support of
these allegations is attached to the founding papers and dated 16
January 2007. Attached to the letter is documentary
proof of
the amount paid to the respondents by the RAF. The amount is
R1 225 135,00.
• The complainant's claim was settled for R445 000,00.
Documentary proof is attached. She only received R292 550,00
by cheque which was attached to the founding affidavit.
It appears that before she got the cheque, she was handed
another
cheque for R30 000,00 and sent to the bank, where she
had to identify a particular teller, one Leah, who would cash the
cheque.
She did so, and brought the money back to the
respondents where one of the attorneys employed by the respondents
told her that
the money would be used to pay the doctor who examined
her. After she reported the matter to the Law Society she
received
a call from the attorney at the third respondent, one Kim,
who invited her to a meeting where she was reprimanded for lodging a
complaint. She was given an amount of R15 000,00 in cash
by the second respondent and informed that she would receive
a call
to collect "the outstanding R15 000,00".
• The mother of a claimant and client of the respondents who had
passed away, became the executrix of the estate of her son
and
established that an Expenditure Authorisation Statement obtained from
the RAF indicated that a net amount of R420 000,00
was paid to
the respondents and thereafter, in terms of a second Expenditure
Authorisation Statement an amount of R157 933,23
was paid in
respect of attorneys' and counsel's fees and medico legal
costs. From the settlement figure of R420 000,00
a fee of
R147 000,00 was deducted but the attorney in the employ of the
respondents never disclosed the fact that, in terms
of a second
Expenditure Authorisation Statement an amount of R157 933,23 was
paid in respect of costs.
• The complainant is the mother of a child injured in 2007.
The RAF paid a settlement amount of R1,2 million which
the
respondents invested without her consent. She reported the
matter to the
Sowetan
newspaper. Newspaper cuttings form
part of the founding papers. She was invited to the offices of
the respondents by
an attorney employed there who asked her to sign a
prepared affidavit contradicting her claims to the newspaper.
In a number
of cases such prepared affidavits, ostensibly withdrawing
complaints, were handed to complainants for signature.
• The complainant is the mother of an injured minor. She
was told by the respondents that the RAF paid a settlement
amount of
R249 338,00. She was given R10 000,00 and informed
that the rest would "go to her son's name".
She was
presented with "Momentum forms" and advised that the money
had been invested. She requested copies of these
papers but the
request was denied. Attached to the founding affidavit is a
notice of offer of settlement from the attorneys,
presumably
representing the Fund, for an amount of R402 611,00.
[32]
For present purposes, I consider it unnecessary to deal with further
examples.
[33]
It should be recorded, in fairness, that the respondents offered
explanations in response to all these complaints in their
answering
papers.
[34]
At the same time, compelling counter-allegations are contained in the
replying affidavit filed by the applicant.
[35]
In many instances, there are mutually destructive versions. In
my view, it is obvious that the records of the respondents
will have
to be inspected by qualified officials of the applicant to determine,
in the spirit of section 70 of the Act, whether
or not a section 71
disciplinary inquiry is indicated.
[36]
So much for the background notes and events leading up to the
launching of the present proceedings.
The
attempted Faris inspection
[37]
In the founding affidavit the following is stated:
"15.1 Prior to instituting the 2007 application the applicant
had mandated Mr Vincent Faris, a chartered accountant and
auditor who has expertise in conducting investigations into attorneys
practices and into the manner in which they keep their accounting
records and maintain their trust banking accounts, to conduct an
inspection of the attorneys' accounting records.
15.2 The attorneys resisted the inspection and held the view that
they were being victimised and harassed and expressed a view
that
section 70 of the Act is unconstitutional.
15.3 The resistance to the proposed inspection was amid serious
allegations of impropriety. These allegations were never
fully
investigated and serious questions remain regarding the conduct of
the attorneys in all the matters in which the applicant
has received
complaints."
[38]
In the answering affidavit, the allegations in 15.1 and 15.2 are
admitted. It is submitted on behalf of the respondents
"that
the mandate purportedly granted to Mr Faris by the applicant in
2007 was unlawful and unconstitutional for the
same reasons that the
inspection decision challenged in the present counter-application is
unlawful and unconstitutional.
[39]
Where the resistance to the proposed inspection is admitted, and
where it is obvious that the inspection was proposed "amid
serious allegations of impropriety" it is difficult to
understand how this allegation can be denied.
[40]
In my view, the conduct of the respondents to refuse Mr Faris entry
and the opportunity to conduct an inspection is totally
unacceptable
and not something which a court should tolerate. The decision
of the applicant to mandate Mr Faris to do
the inspection
clearly falls well inside the applicant's section 58 and 59 objects
and powers.
More
about sections 70, 71 and 78 and the proposed proper approach to be
adopted
[41]
In the founding affidavit, certain submissions are made on this
subject by the deponent for the applicant with which I find
myself in
respectful agreement.
[42]
At the risk of sacrificing a measure of brevity, I consider it
convenient to quote the submissions:
"16.1 The applicant's council has carefully considered the
complaints against the attorneys and has decided that there are
sufficient grounds to warrant a preliminary enquiry into the
attorneys' practice in terms of section 70 of the Attorneys Act in
order to determine whether there are any reasons for the Law Society
to institute a disciplinary enquiry.
16.2 Although the attorneys have commented on some of the allegations
when confronted with complaints, the reasons advanced are
contradictory to the complainants' versions. In the
circumstances, the applicant is faced with two conflicting versions
of what had transpired. The uncertainty created by
contradictory versions necessitates the preliminary enquiry into the
respondents'
practice.
16.3 It is the duty of the Law Society to act in the interests of the
profession and the general public when it receives information
relating to alleged impropriety and it is also the applicant's duty
to investigate all complaints even though there is an allegation
that
the complaint may have been withdrawn and explanations in respect
thereof have been received. This is particularly so
where
complaints are
prima facie
of a serious nature. It is
the Law Society's duty to confirm whether the explanations given are
correct or not.
16.4 The envisaged inspection by the applicant is intended to clarify
the uncertainties created by the two contradicting versions
in each
complaint. If the respondents are confident with their
explanations, where explanations were given, it is submitted
that
allowing the applicant to inspect their records and files will only
serve to exonerate them and bring credible closure to
each complaint.
16.5 The applicant has a duty to inspect the attorneys' accounting
records and files and wishes to do so in order to determine
whether
there are any irregularities in such records or in the manner in
which the respondents have dealt with trust monies under
their
control so that a decision can be taken whether to proceed with
disciplinary steps in terms of section 71 of the Act.
16.6 It is submitted that the purpose of an inspection in terms of
section 70 of the Attorneys Act is at this stage to enable the
applicant to decide whether an enquiry in terms of section 71 should
be held and that the applicant has sufficient information
to warrant
such an inspection.
16.7 The complaints against the attorneys are serious. The
attorneys' resistance to the applicant's proposed inspection compels
the applicant to conclude that the attorneys have something to hide.
As such, the applicant cannot discharge its duties diligently
to the
members of the public and the complaints in particular without
satisfying itself that all is well by inspecting the actual
records
which are the bone of contention.
16.8 The applicant has now resolved that the inspection in terms of
section 70(1) of the Act should proceed and it is evident that
the
attorneys will not allow the proposed inspection to proceed without
an order of this Honourable Court. Hence the applicant's
council has resolved to bring this application."
[43]
In dealing with these allegations in praragraph 16 of the founding
affidavit in their answering affidavit, the respondents
deny that the
members of the council applied their mind to the inspection
decision. This is a decision taken by some 24 practising
attorneys at a formal meeting and it is repeatedly stated on behalf
of the applicant that the council members duly applied their
minds
before passing the resolution.
Respondents
deny that the applicant has a duty to investigate a complaint which
had been withdrawn. With this I disagree.
I also pointed
out that some of the complainants indicated that they were presented
with prepared affidavits to sign and that they
do not agree with the
contents thereof.
Importantly,
the respondents unblushingly admit that they will not consent to the
proposed "unlawful inspection" which
supports the attitude
of the applicant that this is so, and that a court order is required
for purposes of obtaining the necessary
relief.
The
respondents then, in rather general terms, deny that the relief
claimed "is lawful or in any way justified".
The
respondents also introduce a rather novel argument that the applicant
had not followed its "normal procedures in respect
of
disciplinary proceedings in terms of part XIII of its Practice Manual
to determine whether there was validity to any of the
complaints it
now invokes against the respondents". In my view, the
relief sought has to do with the preliminary inspection
to decide
whether disciplinary proceedings are to be instituted, and the
section 70 inspection does not constitute disciplinary
proceedings as
such. Moreover, there is no room for analysing, and arguing
about, the merits of the complaints before the
section 70 preliminary
enquiry, designed to get to the bottom of the complaints, has become
a reality. I find nothing
in part XIII of the Practice
Manual to gainsay the aforesaid conclusions.
[44]
In its replying affidavit, the applicant's deponent makes further
submissions to develop what was already stated in paragraph
16 of the
founding affidavit. I offer a brief summary:
• The provisions of section 70(2) are emphasised, namely that
the refusal or failure by a practitioner to comply with a direction
in terms of subsection (1) constitutes unprofessional conduct.
• No formal enquiry in terms of section 71 has been instituted.
It follows that there can be no finding as to unprofessional,
dishonourable or unworthy conduct on the part of the respondents in
these proceedings.
• What the respondents are currently resisting is a preliminary
inspection of their records which is prompted by the existence
of
several serious complaints against them.
• The respondents are members of the Law Society and share an
interest in ensuring that the standards, reputation and integrity
of
the attorneys' profession are maintained. As such the
respondents should subject themselves to the disciplinary powers
and
the regulatory framework of the attorneys' profession. They
should in fact welcome the proposed preliminary inspection.
• The detailed and persistent efforts of the respondents to, at
this stage, insist on ventilating the merits of all the complaints
are premature and simply defeat the very purpose of the preliminary
inspection. By answering to the complaints at this stage
the
respondents are pre-empting the statutory mechanisms by addressing
issues which should be dealt with during an enquiry in terms
of
section 71.
• It is entirely proper for the Law Society, when presented with
information indicating possible unprofessional conduct, to
investigate that information and to take appropriate action. It
is equally important to hold back charges of misconduct,
where
possible, until the Law Society has taken reasonable steps to satisfy
itself about the validity of the complaints levelled
against a
practitioner.
[45]
The main thrust of the case of the respondents, as I understand it,
barring the attack on the constitutionality of section
70 and the
counter-application, is that it is not open to the applicant, on the
strength of the section 70 provisions, to inspect
files other than
those directly related to the complaints lodged with the applicant.
In
this regard, I was referred by the applicant to the case of
Mda v
Law Society of the Cape of Good Hope
2012 1 SA 15
(SCA) where the
appellant raised exactly the same argument. In rejecting this
argument, the learned Judge of Appeal, in the
court's unanimous
judgment, says the following:
"[7] Law Societies have, among their objects, the responsibility
to uphold the integrity of practitioners and ensure that
the
standards and control of their professional conduct are maintained.
This task falls to a council, which runs the affairs
and exercises
the powers of a society. Among the powers given to a council to
achieve these objects is section 71, which
sanctions an enquiry into
allegations of 'unprofessional or dishonourable or unworthy conduct'
on the part of a practitioner.
To decide whether or not an
enquiry should be held a council may use section 70(1) to inspect
'any book, document, record,
or thing' pertaining to a practice.
There is no limit to the ambit of the inspection.
[8] A council may also, under section 78(5), satisfy itself that a
practitioner's trust accounts are in order by inspecting the
'accounting records' of the practice. In this regard it must be
noted that section 78(6)(d) makes clear that 'accounting
records' is
of wide import and includes 'any record or document' under the
custody and control of a practitioner relating to the
practice.
So whether a council is considering a possible professional
misconduct enquiry under section 70(1), or the supervision
of a
practitioner's trust accounts under section 78(5), both provisions
expressly permit the council to inspect all the records
and documents
concerning the practice. It is on this basis that the High
Court found that the Law Society was entitled to
conduct the
envisaged inspection.
[9] In my view the High Court was correct in its conclusion.
Concerning Mr Mda's submission that section 70(1) permits
a
council to inspect documentary material pertaining only to specific
allegations of misconduct, this cannot be so. As I
have
indicated above, the section does not limit a council's authority
when it is deciding whether or not to hold a misconduct
enquiry.
However, once the council has decided to hold an enquiry, sections
71(2)(a)(i) and (ii) require any person who is
summoned to testify to
produce any documentary material that has a bearing on the subject of
the enquiry. Section 71(2) is
concerned only with documentary
material that may be relevant to an enquiry. Section 70(1), on
the other hand, has a specific
purpose, which is to place a council
in a position to decide whether or not to hold an enquiry. This
is why the legislature
permitted a broader inspection under
section 71 than it did under section 71(2).
[10] There is also no merit in Mr Mda's objection to the Law Society
relying on section 78(5), which he maintains may be used only
to
police trust accounts, and not to investigate misconduct. If
this contention were correct it would mean that a council
may not
request documentary material regarding any allegation of misconduct
when it concerns a practitioner's failure to keep proper
accounting
records, which is absurd. This is why section 78(6) in terms
authorises inspection of more than merely the 'accounting
records' of
a practice."
[46]
In my view, this is clear and binding authority for the proposition
that the applicant is entitled to conduct an inspection
which is not
limited to the papers relating to the complaints as such.
[47]
Quite properly, counsel for the respondents, in their heads of
argument, conceded that "the
Mda
decision is clearly
binding authority and it is not open to the respondents to argue in
this Court that section 70 of the Act is
confined to inspections for
the purposes of verifying or refuting specific allegations or
complaints". Counsel then
go on to argue and emphasise
that -
"Any generalised power of inspection under section 70 of the
sort contemplated in the
Mda
decision is not only highly
intrusive, it is inevitably likely to cause commercial harm to the
attorney against whom it is exercised
and may well destroy his or her
practice entirely. This proposition has been illustrated in
paragraph 14 above in relation
to the harm likely to be caused to the
Smith firm if the Law Society's inspection is allowed to proceed to
implementation.
For present purposes we point out that the
extensive nature of the harm likely to be caused by a generalised
inspection must be
borne in mind when deciding to authorise such an
inspection. So if section 70(1) is to be interpreted and
applied in a manner
consistent with the Constitution, it can only
authorise generalised inspections in circumstances where the need for
such a generalised
inspection outweighs the harm that it is
inevitably going to inflict on an attorney."
[48]
It was submitted on behalf of the applicant that in the context of
section 70 the allegations of unprofessional, dishonourable
or
unworthy conduct on the part of the practitioner would trigger the
inspection powers under section 70. Only a reasonable
suspicion
is required of such misconduct for the inspection to be launched.
I agree.
[49]
On the other hand, it was argued on behalf of the respondents that
while a "reasonable suspicion" of unprofessional
or
unworthy conduct was necessary for any exercise of the section 70
inspection power there must be a distinction between exercising
of
the power to investigate specific allegations and exercising of the
power to conduct generalised inspections. In the latter
case,
so it was argued, there are two additional requirements which must be
satisfied before a generalised inspection can legally
be instituted:
(i) "The reasonable suspicion of unprofessional or unworthy
conduct must be reasonable suspicion of such conduct on a widespread
scale."
No authority
is quoted in support of this submission. In any event, in the
present case, there are 31 complaints of serious
misconduct so that
the requirement for the existence of a 'reasonable suspicion' was
clearly met.
Respondents'
counsel argue that "no harm is caused by investigating specific
allegations of misconduct brought by disgruntled
clients".
I have difficulty in accepting this argument. In the first
place, the applicant appears to have every
intention to investigate
the specific allegations of misconduct relating to the 31 complaints
(which investigation, if I understand
the argument correctly, will
not cause any harm to the respondents) and, secondly, such complaints
and allegations of misconduct
by disgruntled clients can be made
public by the latter, like in the present case where it was reported
to the newspapers.
To that extent, the reputation of the
respondents would in any event already have been adversely affected.
The proposition
can be tested by considering an extreme example of a
few hundred disgruntled clients complaining about specific instances
of misconduct
and passing it on to the press as well. Harm to
the practitioner flowing from such a state of affairs would probably
outweigh
the harm complained of on behalf of the respondent namely
that "the harm of a generalised inspection is triggered by the
need
of an attorney to alert non-complaining clients to the fact that
his/her practice is being inspected because of a suspicion of
generalised misconduct". Rather graciously, counsel
qualify this submission by stating that "that harm cannot be
inflicted unless the Law Society has a reasonable suspicion of
unprofessional or unworthy conduct that goes beyond any individual
complaints that it has received from clients". In the
present case, such a suspicion would not be unjustified bearing
in
mind the quantity and nature of the complaints lodged with the
applicant.
Assuming
that the perceived need for the attorney to alert all his
non-complaining clients flows from an acceptance that the question
of
attorney and client privilege comes into the equation, I am of the
view that such privilege does not arise for present purposes,
for the
following reasons:
•
In
Bogoshi v Van Vuuren NO and Others; Bogoshi and Another v
Director, Office for Serious Economic Offences and Others
1996 1
SA 785
(AD) the two appellant attorneys were confronted with a search
and seizure operation in terms of the Investigation of Serious
Economic
Offences Act 117 of 1991 involving certain documents of the
appellants. The main question that arose was whether they were
protected from seizure by reason of legal professional privilege.
The
following is said at 793G-794C:
"It follows from what has been said that the matter must be
approached on the basis that each of the files seized contained
some
privileged documents. But privilege is not cast in stone; it
has its limitations. It may be waived. Or it
may be
destroyed ... There is also the possibility referred to in
Safatsa
(at 8861) (
my note
: a reference to
State
v Safatsa and Others
1988 1 SA 868
(A)) that the court has the
power to relax the rules of privilege. But most important for
our purpose is the principle that
privilege does not arise
automatically. It must be claimed. This may be done not
only by the client but by the attorney.
Indeed, he is under a
duty to claim the privilege. However, because the privilege is
the right of the client, the attorney,
in claiming it, must act not
in his own interests or on his own behalf but for the benefit of the
client. Unless he does
so, his claim to privilege may be
regarded as not genuine. And, in this event, a court would be
entitled to disregard the
claim to privilege and admit the document
in evidence or permit its seizure, as the case may be. This has
occurred where
the attorney has claimed the privilege ostensibly on
behalf of his client but in truth in order to frustrate an
investigation into
his own alleged criminal conduct.
In re
Impounded Case (Law Firm)
[1989] USCA3 780
;
879 F 2d 1211
(3
rd
Cir
1989) was such a case. It involved the seizure of
documents. At 1213-14 the Court said:
'It is not apparent to us what interest is truly served by
permitting an attorney to prevent this type of investigation of
his
own alleged criminal conduct by asserting an innocent client's
privilege with respect to documents tending to show criminal
activity
by the lawyer. On the contrary, the values implicated,
particularly the search for the truth, weigh heavily in favour
of
denying the privilege in these circumstances.'"
In
Bogoshi
, the claim to privilege was rejected and the appeal
was dismissed.
In
this particular case, I am of the view that the respondents are
claiming privilege, not on behalf of their clients, but in truth
in
order to frustrate the investigation into their affairs.
Initially (and throughout, until at a very late stage) the
respondents
even claimed privilege on behalf of the complainants who,
as I indicated, would clearly have waived privilege when they laid
the
complaints insisting on the matter being investigated. To
boot, the respondents, as I illustrated, insisted on the applicant
submitting proof that privilege had been waived. This was the
stance adopted up to the stage when the proceedings came before
me.
Not one of the clients on whose behalf privilege was purportedly
claimed was identified. On a general reading of
the papers, and
without intending to offend the body of clients of these respondents,
it would appear that they are, by and large,
relatively uneducated
and impecunious people interested only in successfully conducting
their claims against the RAF. On
the probabilities, I am of the
view, and I find, that the respondents, in truth, have been claiming
privilege in order to frustrate
the investigation and not for the
benefit of the clients. In the result, I consider that this is
an appropriate case for
the rules in respect of privilege to be
relaxed and for the claim with regard to privilege, offered by the
respondents, to be dismissed.
I rule accordingly.
•
Some reliance was also placed before me on the case of
Sasol III
(Edms) Bpk v Minister van Wet en Orde
1991 3 SA 766
(TPA).
In that case, subsequent to a fire taking place at the applicant's
petrochemical plant, during which twelve people
were killed, the
applicant appointed a panel of experts to compile a report of the
incident, which it then submitted to its attorneys
with the view to
obtaining legal advice in respect of possible civil and criminal
proceedings resulting from the fire. When
the Attorney-General
of the Transvaal requested the applicant to furnish him with the
report, legal professional privilege was
claimed. The
respondent nevertheless went ahead to obtain a search warrant in
terms of certain sections of the
Criminal Procedure Act 51 of 1977
,
and found the report in the possession of the applicant's attorney
and seized the document. In an urgent application the
applicant
was granted the necessary relief and its claim to privilege was
upheld.
In my
view,
Sasol III
is clearly distinguishable from the present
matter where there was no question of an attorney claiming privilege
to protect its
own interests rather than that of the client.
Sasol III
was also referred to in
Bogoshi
and duly
considered.
•
I add that it is noteworthy, in my view, that the question of
privilege is not mentioned in
section 70.
The question of
privilege was also not raised for consideration in
Mda
.
In
striking contradiction thereto, privilege was provided for by the
legislature when enacting
section 71.
The provisions of
section
71(2)(c)
stipulate:
"In connection with the interrogation of any person who has been
summoned under this section or the production by such person
of any
book, document, record or thing, the law relating to privilege as
applicable to a witness summoned to give evidence or to
produce a
book, document, record or thing in a civil trial before a court of
law shall apply."
In my
view, if the legislature intended privilege to be applicable with
regard to a
section 70
preliminary enquiry, it would have said so.
Moreover,
to allow an attorney, in the position of the respondents, to claim
blanket privilege on behalf of thousands of unknown
and
non-participating clients, past and present, would lead to absurd
results: that would mean that either the attorney (or on
the
respondents' version the applicant) would have to communicate with
all his clients before the preliminary enquiry can get under
way.
That would lead to an absurd state of affairs. Such an enquiry
could then be delayed by months or years.
In many cases these
enquiries have to be conducted as a matter of urgency.
One of
the rules and presumptions of statutory interpretation is that it is
presumed that the legislature did not intend unfair,
unjust or
unreasonable results to flow from its enactments – see J R De
Ville
Constitutional and Statutory Interpretation
p67. I
do not quote the footnotes.
At
p194, this author, when dealing with this presumption or rule of
interpretation, and after taking due note of the provisions
of
section 39(2) of the Constitution, states:
"This presumption has also traditionally had more specific
applications in that (in terms of this presumption) onerous
provisions
were restrictively construed, provisions were presumed not
to sanction discrimination, and absurd results and the retrospective
operation of statutes were avoided."
Footnotes
are not referred to but they appear on p194.
Finally,
it seems to me that the legislature, when enacting section 70, and
far from introducing protective measures with regard
to privilege as
it did with section 71(2)(c), placed emphasis on the importance and
urgency of the section 70 preliminary enquiry
by enacting section
70(2) which provides that the refusal or failure by a practitioner to
comply with a direction in terms of subsection
(1) shall constitute
unprofessional conduct.
(ii) I
turn to the second of the two "additional requirements"
which, according to counsel for the respondents, must be
satisfied
before a generalised inspection can legally be instituted: it is this
-
"... If the reasonable suspicion of unprofessional or unworthy
conduct on a wide spread scale is based only on untested allegations
in a series of individual complaints, a generalised inspection cannot
lawfully be authorised prior to the investigation of those
individual
complaints unless there are reasonable grounds for believing that a
delay in authorising a generalised inspection will
cause harm to
clients that outweighs the harm that will inevitably be caused to an
attorney by conducting a generalised inspection."
In my
view, such an approach would defeat the whole purpose of the
preliminary enquiry: as already indicated, the idea of conducting
a
preliminary enquiry is to establish whether or not a section 71
disciplinary procedure should be instituted. There is no
room
for prior ventilation of the allegations by the clients and the
counter-allegations by the attorney. Those issues fall
to be
considered during a section 71 enquiry, if there is one. No
authority is quoted in support of this contention by counsel
for the
respondents. Moreover, I have expressed the view that the
alleged prejudice to be suffered by a preliminary enquiry
is, if
anything, overstated: firstly, I have found that this is not an
appropriate case to entertain reliance on professional privilege
so
that the need to contact 16 000 clients before the preliminary
inspection can get under way does not exist.
If I am wrong
in that respect, it seems to me that more harm has already been
caused by the bad press received by the respondents
following the
complaints and that such harm would outweigh any harm which may
result from communications by the respondents to
their clients to the
effect that the applicant is conducting a preliminary enquiry to
determine whether or not there is a basis
for disciplinary
proceedings.
I add
that counsel for the respondents attempted to distinguish this case
from that of
Mda
. The argument seems to be that the
present respondents have a far better disciplinary record than was
the case with Mr Mda
who, by all accounts, did not distinguish
himself as a model practitioner. In my view this argument is
ill founded:
the court in
Mda
laid down the general
principle that:
"... to decide whether or not an enquiry should be held a
council may use section 70(1) to inspect 'any book, document, record,
or thing' pertaining to a practice. There is no limit to the
ambit of the inspection."
Indeed,
counsel, as I have pointed out, conceded as much in their heads of
argument.
[50] I
turn to the relief sought by the applicant in terms of section 78 of
the Act. This is described in paragraphs 1, read
with 1.1 and
1.4 of the notice of motion:
"1. That (the respondents) make the following records/data
available to the Law Society for investigation:
1.1 the complete accounting records relating to all claims handled on
behalf of clients against the Road Accident Fund containing
particulars and information of any money received, held or paid by
the firm for or on account of any person, of any money invested
by
the firm in a trust, savings or other interest-bearing account and of
any interest on money so invested which was paid over
or credited to
the firm as is more fully described in section 78(4) of the Attorneys
Act no 53 of 1979;
1.2 ...
1.3 ...
1.4 the records/data of clients referred to in paragraphs 1.1, 1.2
and 1.3 to include, but not be limited to all matters in which
the
Law Society has received complaints."
[51]
The section 70 relief (also covered by the blanket prayer 1.4) is to
be found in prayer 1.3 seeking an order directing
the
respondents to make the following available for inspection by the
applicant:
"The complete and/or any books, documents, records or things
relating to the practice of the attorneys in relation to all
matters
handled by the attorneys on behalf of all clients against the Road
Accident Fund as is more fully described in section
70 of the
Attorneys Act No 53 of 1979."
There
is perhaps some overlapping with the relief sought in 1.2 of the
notice of motion dealing with the delivery of the complete
office
files relating to all the RAF claims.
[52]
The relief sought in 1.1 and based on section 78(4) is, to quote the
word used by counsel for the applicant, "self standing"
from the relief sought in 1.3.
[53] I
have quoted the wording of the relevant subsections of section 78,
but, for easy reference, it is useful to revisit the wording
or part
thereof:
"78(4) Any practising practitioner shall keep proper
accounting records containing particulars and information of any
money received, held or paid by him or her or on account of any
person, of any money invested by him or her in a trust, savings
or
other interest bearing account referred to in subsection (2) or (2A)
and of any interest on money so invested which is paid
over or
credited to him or her. (This is what is stipulated in 1.1 of
the notice of motion.)
(5) The council of the Society of the province in which a
practitioner practises may by itself or though its nominee, and at
its
own cost, inspect the accounting records of any practitioner in
order to satisfy itself that the provisions of subsections (1),
(2),
(2A), (3) and (4) are being observed, and, if on such inspection it
is found that such practitioner has not complied with
such
provisions, the council may write up the accounting records of such
practitioner and recover the costs of the inspection or
of such
writing up, as the case may be, from that practitioner.
(6) For the purposes of subsections (4) and (5), 'accounting records'
include any record or document kept by or in the custody
or under the
control of any practitioner which relates to –
(a) money invested in a trust, savings or other interest-bearing
account, ...
(b) interest on money so invested;
(c) any estate of a deceased person ...
(d) his practice."
[54]
It is useful to revisit the words of the learned Judge of Appeal in
Mda
at 18C-D:
"So whether a council is considering a possible professional
misconduct enquiry under section 70(1), or the supervision of
a
practitioner's trust accounts under section 78(5), both provisions
expressly permit the council to inspect all the records and
documents
concerning the practice. It is on this basis that the High
Court found that the Law Society was entitled to conduct
the
envisaged inspection."
And at
19C-D:
"There is also no merit in Mr Mda's objection to the Law Society
relying on section 78(5), which he maintains may be used
only to
police trust accounts, and not to investigate misconduct. If
this contention were correct it would mean that a council
may not
request documentary material regarding any allegation of misconduct
when it concerns a practitioner's failure to keep proper
accounting
records, which is absurd. This is why section 78(6) in terms
authorises inspection of more than merely the 'accounting
records' of
a practice."
[55]
The constitutionality of section 78 is not attacked in the
counter-application but only that of section 70. However,
the
review application comprising the counter-application, appears to be
aimed at the whole September 2011 resolution which provides
for the
applicant's attorneys to proceed with an application to compel the
respondents to also make the "accounting records"
available
to the applicant for investigation.
[56]
Nevertheless, against this background, and in view of what was held
in
Mda
about section 78, it is difficult to see how the
counter-application can succeed with regard to the "self
standing" relief
sought in terms of section 78.
[57] I
turn to the counter-application.
The
counter-application and the constitutionality of section 70
[58]
The counter-application is based, by and large, on the PAJA section 6
review grounds.
[59]
The first question to determine is whether the applicant's decision
to conduct a section 70 preliminary investigation
amounts to
"administrative action" as defined in PAJA.
[60]
Section 1 of PAJA provides that "administrative action" –
"means any decision taken, or any failure to take a decision, by
–
(a) an organ of state, when –
(i) exercising a power in terms of the Constitution or a provincial
constitution; or
(ii) exercising a public power or performing a public function in
terms of any legislation; or
(b) a natural or juristic person, other than an organ of state, when
exercising a public power or performing a public function
in terms of
an empowering provision,
which adversely affects the rights of any person and which has a
direct, external legal effect."
[61]
In
Viking Pony Africa Pumps (Pty) Ltd t/a Tricom Africa v
Hidro-Tech Systems (Pty) Ltd and Another
2011 1 SA 327
(CC) the
organ of state in a tender process had to investigate a reasonable
suspicion of fraud on the part of a tenderer.
[62]
At 341B-F, the following is said:
"[37] PAJA defines administrative action as a decision or
failure to take a decision that adversely affects the rights of
any
person, which has a direct, external legal effect. This
includes 'action that has the capacity to affect legal rights'.
Whether or not administrative action, which would make PAJA
applicable, has been taken cannot be determined in the abstract.
Regard must always be had to the facts of each case.
[38] Detecting a reasonable possibility of a fraudulent
misrepresentation of facts, as in this case, could hardly be said to
constitute
an administrative action. It is what the organ of
State decides to do and actually does with the information it has
become
aware of which could potentially trigger the applicability of
PAJA.
It is unlikely that a decision to investigate and the
process of investigation, which excludes a determination of
culpability, could
itself adversely affect the rights of any person,
in a manner that has a direct and external legal effect
.
[39] If the City were about to pronounce on the culpability or
otherwise of Viking, Hidro-Tech and Viking would have to be afforded
the opportunity, in terms of PAJA, to make whatever representations
they may wish to make. Similarly, if Viking were found
guilty,
then the relevant provisions of PAJA would have to be invoked before
an appropriate sanction is considered and imposed
by the City.
This case has not, however, reached that stage yet."
(Emphasis added.)
[63] I
have mentioned, also when dealing with the submissions contained in
paragraph 16 of the founding affidavit and paragraph
2 of the
replying affidavit, that the section 70 inspection is not designed to
determine culpability and/or to pronounce thereupon.
As counsel
for the applicant point out:
"Culpability will only be determined at a subsequent section 71
enquiry, if there is one at all. The section 71 decision
is
unquestionably administrative action and the Smith attorneys will be
fully entitled to the protections afforded by PAJA at that
stage.
Furthermore, the affected attorneys can then raise any problems they
have with confidential information being used
against them."
I have
also mentioned that the question of privilege is specifically
mentioned in section 71 but not in section 70.
[64]
See also
Law Society, Northern Provinces (incorporated as the Law
Society of the Transvaal) v Maseka and Another
2005 6 SA 372
(BH)
where the learned Judge, dealing with the same subject, says the
following at 382D:
"Where a functionary merely performs an investigative function
which does not materially and adversely affect the person's
rights,
he or she need not, unless a statute provides otherwise, observe the
principles of natural justice. See
Van der Merwe and
Others v Slabbert NO and others
1998 3 SA 613
(N) at 624D E.
I am satisfied that the NP Law Society was not obliged to afford the
first applicant a hearing before deciding to inspect the first
respondent's books. But to the extent that it might have been
necessary, the NP Law Society has complied with the basic
requirements of the
audi alteram partem
principle.
... in my opinion the NP Law Society has made out a
prima facie
case to hold an inspection as contemplated by section 70 of the
Attorneys Act of 1979 or the equivalent in the Attorneys Act of
1984
(B)."
[65]
In this case, in any event, the respondents, over a number of years,
entertained, and rejected, efforts by the applicant to
hold a
preliminary section 70 investigation. They adopted, in my view,
an obstructive and evasive approach.
[66] I
have also dealt with the alleged prejudice which the respondents
claim will be suffered in the event of the section 70 enquiry
going
ahead. I disagree with those submissions.
[67]
Under these circumstances, I am not persuaded that the decision by
the council to apply for an order facilitating a section
70
inspection amounts to administrative action. I take the
liberty to revisit the words of the Constitutional Court
judgment in
Viking Pony
at 341C-D:
"It
is unlikely that a decision to investigate a process of
investigation, which excludes a determination of culpability, could
itself adversely affect the rights of any person, in a manner that
has a direct and external legal effect."
[68]
In the result, I have come to the conclusion that the purported PAJA
review is ill founded and, for that reason alone,
falls to be
dismissed.
I am
alive to the fact that the respondents, in addition to their reliance
on the PAJA review grounds, also, in the alternative,
offer the
review under the banner of a so called "legality review".
For
example, in the founding papers offered in support of the
counter-application, the following submissions are made:
"27.1 (the inspection decision) was taken by the applicant
without properly applying its mind to the matter, alternatively
for
the ulterior purpose of victimising the respondents and is
accordingly inconsistent with the constitutional legality principle
and section 6(2)(e) of PAJA;
27.2 was wholly unjustified and oppressive and accordingly is
ultra
vires
section 70 of the Act and inconsistent with the
constitutional legality principle and sections 6(2)(e), (f), (h) and
(i) of PAJA."
The
argument that the decision was taken for the ulterior purpose of
victimising the respondents and was "unjustified and oppressive"
appears to be based on allegations by the respondents that the
council was inspired to be biased against the respondents by one
Mr
Ronald Bobroff, a former president of the applicant society, who is
biased against the respondents and also a competitor in
the practice
of conducting these damages actions against the RAF.
These
allegations are expressly denied in the answering papers.
Inasmuch as there may be an
onus
to discharge, that would
rest, in terms of the
Plascon-Evans
principle, on the
respondents. On these papers, I am not persuaded that such an
onus
was discharged or that it was shown on a balance of
probabilities that Mr Bobroff was biased or influenced the
decision.
Moreover,
counsel for the applicant argued that even if one assumes that
Mr Bobroff was not entitled to participate in the
council's
investigation decision, the decision remains valid under section 66
of the Act which stipulates:
"
66. Validity of decisions taken by, or acts performed under
authority of, council
No decision taken by a council or act performed under authority of a
council shall be invalid by reason only of the existence of
a vacancy
on that council or of the fact that a person who was not entitled to
sit as a member of the council, sat as a member
of the council, if
the decision was taken or the act was authorised by the requisite
majority of the members of the council who
were present at the time
and entitled to sit as members."
There
was no evidence of the absence of the required quorum when the
decision was taken.
[69]
In their heads of argument, counsel for the respondents appear to
identify the first ground of review (that the Law Society
applicant
acted
ultra vires
in taking its inspection decision, and
thereby, presumably, offended the legality principle) on an argument
which I have already
dealt with, namely that there are "two
additional requirements" which must be satisfied before a
genaralised inspection
can legally be instituted. As far as I
could make out, and as I have mentioned, no authority was quoted in
support of this
argument but the first of these "additional
requirements" was said to be the need for a reasonable suspicion
of unprofessional
or unworthy conduct on a wide spread scale.
The second, linked to the first, is if the reasonable suspicion of
unprofessional
or unworthy conduct on a wide spread scale is based
only on untested allegations in a series of individual complaints, a
generalised
inspection cannot lawfully be authorised prior to the
investigation of those individual complaints unless there are
reasonable
grounds for believing that a delay in authorising a
generalised inspection will cause harm to clients that outweighs the
harm that
will inevitably be caused to an attorney by conducting a
generalised inspection. I have fully dealt with these
arguments,
and rejected them. I do not propose embarking upon
unnecessary repetition.
[70]
The second ground of review mentioned in counsel's heads of argument
is the one I have mentioned by quoting from the founding
papers,
namely that the applicant took its inspection decision without
properly applying its mind (this was specifically denied
in the
applicant's papers) alternatively for the ulterior purpose of
victimising the respondents and that the inspection decision
is
accordingly inconsistent with the constitutional legality principle
and also reviewable under section 6 of PAJA. This
is where
Mr Bobroff enters the equation and also the argument that it was
only necessary to inspect the 31 files and
not to embark upon a
generalised inspection. These submissions I have fully dealt
with, also with reference to
Mda
, and I have rejected them.
[71]
The third ground of review is linked to the second ground and,
essentially, based on a complaint that the respondents' submissions
with regard to the merits of the complaints were not properly taken
into account. There was also a submission that some of
the
complaints were not brought to the attention of the respondents
before the decision was taken. It appears, on the argument
on
behalf of the applicant, that there were only four such complaints
which are insignificant and irrelevant in the general scheme
of
things bearing in mind the number of complaints and the provisions of
section 70.
[72]
The fourth ground of review is that the inspection decision is not
rationally related to the reasons proffered by the applicant
for the
inspection decision or the information made available to the
applicant in relation to all the complaints. The respondents
rely on the exhaustive and detailed analysis offered of all the
complaints. This I have dealt with. I have mentioned
that, on my understanding of section 70, a full ventilation of the
complaints, bearing in mind the mutually destructive versions,
is not
indicated for purposes of a section 70 inspection.
[73]
The final ground of review is that the inspection decision was
calculated to interfere unlawfully with the personal and commercial
reputations of the respondents, and is accordingly inconsistent with
section 6(2)(i) of PAJA. Reliance is also placed on
the alleged
extensive harm that the generalised nature of the inspection decision
is calculated to cause to the respondents and
the reputations of the
attorneys practising there. I have dealt with these
issues.
Inasmuch
as this ground is also based on the argument offered that "the
Law Society also appears not to have applied its mind
to the
unnecessarily intrusive nature of the inspection decision in so far
as it sought a generalised inspection", counsel
for the
respondents, if I understand their argument correctly, appear to
differ from the approach that the section 70 inspection
is only a
preliminary one and a process by which a decision will be taken on
whether or not to institute disciplinary enquiries
in relation to
specific complaints that have been made. This has been dealt
with, and the fact that it is only a preliminary
process where
culpability will not be pronounced upon appears to be trite for all
the reasons mentioned. Similarly, counsel
for the respondents
insist, as I have mentioned, that only the "complaint
files" ought to have been inspected.
They state in their
heads of argument: "moreover, the Smith firm has always
made clear that it will willingly hand over
the file of any
complainant who waives privilege in respect of his/her file" and
they base the alleged victimisation (which
is explicitly denied) on,
inter alia
, "the continued inexplicable refusal of
the Law Society to accept the respondents' tender of inspection of
all of the 31 files
relevant to the complaints against proof of a
waiver of privilege from the clients concerned". I have
dealt expressly
with these arguments.
[74]
Against this background, and even if I am wrong in finding that the
decision taken by the applicant's council did not amount
to
administrative action, I have come to the conclusion, and I find,
that the respondents failed to make out a proper case for
adequate
review grounds, either in terms of PAJA or based on the legality
principle, to set aside the decision of the council as
adopted in the
23 September 2011 resolution.
I
turn to the constitutionality of section 70
.
This
argument is contained in prayer (ii) of the notice of motion in the
counter-application which reads as follows:
"(ii) To the extent that it is necessary for the relief sought
in prayer (i) above (the review application of the decision)
an order
declaring that section 70 of the Attorneys Act 53 of 1979 ('the Act')
is inconsistent with the Constitution and invalid."
[75]
In supplementary heads of argument handed up by counsel for the
respondents during the hearing, they appear to capture their
argument
on the constitutionality of section 70 in the following
paragraph of the heads:
"8. On a proper interpretation of the Act, the suspicion
contemplated by section 70(1) must be a reasonable suspicion.
This was common cause between the parties before the Law Society
withdrew the concession of law it had made on the papers and repeated
in its heads. The original concession was well made by the Law
Society. In the
Gaertner
case (
my note
: this is a
reference to what is said in paragraph 71 of the judgment in
Gaertner
v Minister of Finance
2014 1 SA 442
(CC)) correctly cited by the
Law Society in this regard, the Constitutional Court stated:
'When legislation authorises warrantless regulatory inspections,
provision must be made for a constitutionally adequate substitute
to ensure certainty in the conduct of the inspections and
limit
the discretion of the inspectors
.' (The emphasis is that of
counsel for the respondents.) (
my note
: see
Gaertner
at 461B.)
9. A mere suspicion of unprofessional or dishonourable or unworthy
conduct can never be a constitutionally adequate standard to
authorise a warrantless regulatory inspection unless the suspicion is
a reasonable suspicion. Thus unless, the requirement
of a
reasonable suspicion is held to be a tacit requirement for the second
category of inspections under section 70(1) the section
would be
unconstitutional. In such circumstances, section 39(2) of the
Constitution demands that the section be interpreted
in a manner that
would avoid its unconstitutionality by making it subject to an
implied requirement that the suspicion triggering
the inspection is a
reasonable suspicion."
I have
already dealt with the approach of the applicant as set out in its
papers, where the existence of a reasonable suspicion
is recognised.
I do not pronounce on the correctness or lack thereof of this
argument advanced on behalf of the respondents,
namely the tacit
recognition that there must be a reasonable suspicion, but I have in
any event found that there was a reasonable
suspicion, particularly
when dealing with the submissions in paragraph 16 of the founding
affidavit and paragraph 2 of the replying
affidavit. I am also
not aware of a withdrawal of such a concession by counsel for the
applicant, but, nevertheless, treated
the matter on the strength of
the applicant's submissions,
supra
, that a reasonable
suspicion was required.
[76]
In their founding papers offered in support of the
counter-application, the respondents formulate their stance about the
constitutionality,
or lack thereof, of section 70 in the
following terms:
"Accordingly, the respondents respectfully submit that section
70 of the Act does not authorise an oppressive and untargeted
fishing
expedition of the sort pursued by the applicant against the Smith
firm. In view of the applicant's apparent contentions
to the
contrary in relation to the ambit of section 70 of the Act, the
respondents conditionally, and in the alternative to the
primary
review relief sought in the counter-application, seek an order
declaring section 70 of the Act to be unconstitutional and
invalid.
In this regard, the respondents respectfully submit that if section
70 is to be interpreted along the lines apparently
suggested by the
applicant, it is inconsistent with the following fundamental rights:
(1) the fundamental rights of clients under section 14 of the
Constitution to the privacy of their confidential communications
with
their attorneys;
(2) the fundamental rights of attorneys to human dignity under
section 10 of the Constitution and to freedom of trade, occupation
and profession under section 22 of the Constitution; and
(3) the fundamental rights of attorneys to reasonable and
procedurally fair administrative action under section 33 of the
Constitution."
[77]
These contentions were not argued with any force during the
proceedings before me. In any event, the ambit of a section
70
inspection has been clearly formulated in
Mda
.
[78]
As far as the section 14 argument is concerned, I have dealt with the
question of privilege by reference to
Bogoshi
and
Sasol
III
.
[79] I
consider it doubtful whether sections 10, 22 and 33 come into the
equation at all: we are dealing with clear statutory
powers of
inspection ordained by the legislature for the watch-dog of the legal
profession.
[80]
Returning to
Gaertner
, it deals with the reading in by the
High Court and later the Constitutional Court of certain moderating
provisions into section
4 of the Customs and Excise Act 91 of 1964.
Before the reading in, these sections authorised warrantless searches
"at
any time", and "at any premises whatsoever"
by Customs and Excise officers. It authorised the demanding of
books, documents or things from any person believed to have it in his
or her possession "at any time" and "at any
place".
It authorised the breaking-open of any door or window or
breaking through any wall of "any premises"
and "at
any time" and the breaking up "at any time" of any
ground or flooring on "any premises" for
the purpose of a
search and the opening, in any manner, of any room, place, safe,
chest, box or package at any premises if it is
locked and the keys
are not produced on demand.
[81]
It is clear that section 70 is not that intrusive. Section 70
does not provide for search and seizure, neither does it
provide for
visits to "any premises" such as the residence of the
practitioner. It simply provides for the council
directing the
practitioner to produce for inspection the books, documents, records
or things in the possession or custody or under
the control of the
practitioner and which relates to his or her practice or former
practice. Where the practitioner adopts
a recalcitrant
attitude, as is the case at present, the council may approach the
court for the necessary relief.
[82]
Nevertheless, counsel for the applicant, in their heads of argument,
point out that the Constitutional Court has indicated
that regulatory
inspections, properly constrained in scope, are constitutionally
permissible particularly when the industry in
question is public,
extensively regulated and potentially hazardous to the public –
Gaertner
at 453D E where the following is said:
"In
Mistry
(
my note
: a reference to
Mistry v
Interim Medical and Dental Council of South Africa and Others
1998 4 SA 112
(CC)) this court considered the right to privacy in the
context of regulatory inspections. Relying on
Bernstein
(
my note
: a reference to
Bernstein and Others v Bester and
Others NNO
[1996] ZACC 2
;
1996 2 SA 751
(CC)) it stated that regulated
businesses possess a more attenuated right to privacy, more so if the
business is public, closely
regulated and potentially hazardous to
the public."
[83]
Mistry
dealt with the powers of entry, search and seizure of
inspectors of medicines in terms of section 28(1) of the Medicines
and Related
Substances Control Act no 101 of 1965. At
1144B-1145D the following is said (only extracts are quoted):
"[27] For the purpose of the present case it has not been
necessary to determine whether or not regulatory inspections should
be regarded as searches and seizures as contemplated by section 13.
Yet, even if one were to accept in favour of applicant
that there
were situations where they did so qualify, it would be necessary to
decide on a case by case basis how invasive any
such regulatory
inspections would be. The more public the undertaking and the
more closely regulated, the more attenuated
would the right to
privacy be and the less intense any possible invasion ... In
the case of any regulated enterprise, the
proprietor's expectation of
privacy with respect to the premises, equipment, materials and
records must be attenuated by the obligation
to comply with
reasonable regulations and to tolerate the administrative inspections
that are an inseparable part of an effective
regime of regulation.
The greater the potential hazards to the public, the less invasive
the inspection. People involved
in such undertakings must be
taken to know from the outset that their activities will be
monitored. If they are licensed
to function in a
competitive environment, they accept as a condition of their licence
that they will adhere to the same reasonable
controls as are
applicable to their competitors. Members of professional
bodies, for example, share an interest in seeing
to it that the
standards, reputation and integrity of their professions are
maintained. In
Almeida-Sanchez v United States
...
Stewart J ... highlighted well the expectations of privacy involved
in the modern world of closely regulated enterprises:
'The businessman in a regulated industry in effect consents to the
restrictions placed upon him. As the court stated in
Biswell
:
"... when a dealer chooses to engage in this pervasively
regulated business and to accept a federal licence, it does so with
the knowledge that his business records, firearms and ammunition will
be subject to effective inspection ... The dealer is
not left
to wonder about the purposes of the inspector or the limits of his
task."' "
[84]
In all the circumstances, and for the reasons mentioned, I have come
to the conclusion, and I find, that the respondents failed
to make
out a case that section 70 is unconstitutional and invalid and
inconsistent with the fundamental rights mentioned.
Section 70
is not intrusive and its scope of application is now well settled
following the judgment in
Mda
.
[85]
In the result, I have come to the conclusion, and I find, that the
application ought to be upheld and the counter-claim falls
to be
dismissed.
The
costs
[86]
The Law Society acts in the public interest and should, in the
ordinary course, be awarded costs on the scale as between attorney
and client if successful. As was stated in
Botha v Law
Society, Northern Provinces
2009 1 SA 227
(SCA) at 236F:
"... the respondent was obliged to approach the court to obtain
the order which this court has held was appropriate.
The
respondent is not an ordinary litigant and in bringing proceedings of
this nature, it performs a public duty. In the
circumstances
the order of the court
a quo
directing the appellant to pay
the respondent's costs on the scale as between attorney and client
should remain."
[87]
Regrettably, I find it necessary to make a few remarks about the
conduct of the respondents in this matter, quite apart from
what I
consider to be obstructive behaviour.
Counsel
for the applicant submitted, correctly in my view, that the
respondents, to a significant extent, launched an attack on
the Law
Society and its officials. Some of the respondents' allegations
included that:
• the Law Society seeks far-reaching, disruptive and punitive
relief against the respondents;
• the Law Society harasses the respondents;
• the Law Society's conduct is oppressive;
• the respondents have been targeted by the Law Society;
• the Law Society is conducting a fishing expedition;
• the Law Society's founding affidavit is misleading in several
respects or, put differently, the Law Society attempts to
mislead the
court; and
• the Law Society decided to conduct the inspection for the
ulterior purpose of causing harm to the respondents.
[88]
In
Law Society, Northern Provinces v Mogami
2010 1 SA 186
(SCA) the learned Deputy President, although also criticising the Law
Society in that case, said the following at 195H J:
"Very serious, however, is the respondents' dishonest conduct of
the proceedings. Instead of dealing with the issues
they
launched an unbridled attack on the appellant. It has become a
common occurrence for persons accused of a wrongdoing,
instead of
confronting the allegation, to accuse the accuser and seek to break
down the institution involved. This judgment
must serve as a
warning to legal practitioners that courts cannot countenance this
strategy. In itself it is unprofessional
..."
See
also
Prokureursorde van Transvaal v Kleynhans
1995 1 SA 839
(TPA) where the following is said at 853E-H (only extracts are
quoted):
"Die respondent het die onderhawige verrigtinge benader soos 'n
strafsaak. Dikwels is feitelike stellings breedweg ontken
sonder verdere verduideliking en is van die applikant geverg dat hy
dit moet bewys. Hierdie benadering is verkeerd.
Die hof
is besig met 'n ondersoek van dissiplinêre aard ... Uit
die aard van die dissiplinêre verrigtinge vloei
voort dat van
'n respondent verwag word om mee te werk en die nodige toeligting te
verskaf waar nodig ten einde die volle feite
voor die hof te plaas
sodat 'n korrekte en regverdige beoordeling van die geval kan
plaasvind. Blote breë ontkennings,
ontwykings en
obstruksionisme hoort nie tuis by dissiplinêre verrigtinge
nie."
[89]
Counsel also addressed me with regard to the costs flowing from the
respondents' rule 30 interlocutory application.
I have
dealt, at some length, with the chronological sequence of events and
also, for example, objections by the respondents about
the rule 53
record that was filed by the applicant.
On a
general reading of the papers I am of the view that the "inordinate
delay" complained of can largely be laid at the
door of the
respondents.
Moreover,
as I mentioned, the rule 30 application was withdrawn, and the threat
to refer the matter to oral evidence never became
a reality.
In all
the circumstances, I am of the view that the costs of the
interlocutory proceedings should also be borne by the respondents
on
the same punitive scale.
The
order
[90]
Towards the end of the proceedings before me, I debated with counsel
the possibility of both sides submitting draft proposals
aimed at
refining the logistical aspects of conducting the inspection in terms
of section 70 if I were to decide to uphold the
application.
I
received proposals from both sides. The suggestions made on
behalf of the applicant appear to me to be the more acceptable
and
realistic. It proposes the introduction of a new paragraph 2
following prayer 1 (including subparagraphs 1.1 to 1.4)
of the notice
of motion.
This
proposal appears to me to be designed to facilitate matters from the
point of view of the respondents,
inter alia
in the conduct of
their practice while the inspection is under way. The suggested
proposals will be incorporated in the order.
[91] I
make the following order:
1. The respondents are ordered to make the following records/data
available to the Law Society for investigation:
1.1 the complete accounting records relating to all claims handled on
behalf of clients against the Road Accident Fund containing
particulars and information of any money received, held or paid by
the firm for or on account of any person, of any money invested
by
the firm in a trust, savings or other interest-bearing account and of
any interest on money so invested which was paid over
or credited to
the firm as is more fully described in section 78(4) of the Attorneys
Act no 53 of 1979;
1.2 the complete office files relating to all claims handled on
behalf of clients against the Road Accident Fund containing, without
limiting the generality thereof, correspondence, statements of
account, receipts, reports and pleadings; and
1.3 the complete and/or any books, documents, records or things
relating to the practice of the attorneys in relation to all matters
handled by the attorneys on behalf of all clients against the Road
Accident Fund as is more fully described in section 70 of the
Attorneys Act no 53 of 1979;
1.4 the records/data of clients referred to in paragraphs 1.1, 1.2
and 1.3 to include, but not to be limited to all matters in
which the
Law Society has received complaints.
2. The inspection of the records/data referred to in paragraph 1 of
the order above (including paragraphs 1.1 to 1.4):
2.1 will be conducted at the offices of the attorneys and/or any
storage facility at which the records/data may be stored (in which
event, if necessary, the attorneys will procure access to such
storage facility for the purposes of the inspection);
2.2 will be commenced on a date mutually agreed upon between the
attorneys and the Law Society, but not later than one calendar
month
from the date of this order;
2.3 will be conducted during normal office hours (ie between the
hours of 08:00 and 17:00) unless by prior arrangement with the
attorneys which will not be unreasonably withheld;
2.4 where the Law Society wishes to inspect any file on which the
attorneys, at that particular time, are working, the attorneys
will
make suitable arrangements for the file to be inspected at the
earliest opportunity thereafter, including, if necessary, after
hours, so as to ensure minimal disruption to the conduct of that
client's case;
2.5 the Law Society will be entiled, at its own expense, to make
copies of any records/data, electronic or otherwise, which is
the
subject of this order;
2.6 any and all records/data and/or other information which is
obtained in the course of the inspection under this order, as
provided
for in paragraphs 1 and 2 of this order, will be used by the
Law Society
only
in the exercise of its powers and obligations
under the Attorneys Act, no 53 of 1979. For the avoidance of
any doubt, no
records/data or information procured in terms of this
order may be utilised by the Law Society or any other person or
agency in
any proceedings against any client of the attorneys.
3. The counter-application is dismissed.
4. The attorneys (respondents), jointly and severally, are ordered to
pay the costs of this application and the counter-application,
which
will include the costs flowing from the rule 30 interlocutory
proceedings, on the scale as between attorney and client
and will
include the costs flowing from the employment of two counsel.
W R C
PRINSLOO
JUDGE
OF THE GAUTENG DIVISION, PRETORIA
HEARD
ON: 8, 9 AND 10 MARCH 2016
FOR
THE APPLICANTS: A STEIN SC ASSISTED BY D WATSON
INSTRUCTED
BY: ROOTH & WESSELS
FOR
THE RESPONDENTS: M CHASKALSON SC ASSISTED BY C VAN DER SPUY
INSTRUCTED
BY: RAPHAEL & DAVID SMITH INCORPORATED
c/o LOUBSER VAN DER WALT INCORPORATED