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[2016] ZAGPPHC 712
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Law Society of the Northern Provinces v Smith, In re: Smith and Others v Law Society of the Northern Provinces and Another (62599/2011) [2016] ZAGPPHC 712 (22 July 2016)
IN THE HIGH COURT OF SOUTH AFRICA
(GAUTENG DIVISION. PRETORIA)
CASE NO: 62599/2011
DATE:
22 JULY 2016
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fact that the first respondent had not yet, by then, been replaced by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
dishonorable
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
)
(3)
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.
(4)
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.
(5)
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." Mv 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 pow'ers 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 tenns:
"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) ofPAJA.
[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 aw'ay 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.
[25J 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
die 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 regal'd 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
lh
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 "LSI 1", 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 "LSI 1" 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 "LSI 1Nevertheless,
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 1 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 Rl,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 Rl,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 R1O 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 w^as 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 Fans 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
noncomplaining
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 noncomplaining 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
Safatsc (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
ow'n alleged criminal conduct. In re Impounded
Case (Law Firm) 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 pi94, 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 pi 94.
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 tw'o "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
1.2
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 counterapplication,
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 (Ply) Ltd
t/a Tricorn 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 aprima 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]Tn 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.
[73J 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 counterapplication 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 Gciertner 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 - Gciertner at 453D-E where the following is
said:
"In Mis try (my note: a reference to
Mistry v Interim Medical and Dental Council of South Afi'ica 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 neccssary 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 w'ell 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 Mdci.
[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 dissiplinere aard ... Uit die aard van
die dissiplinere verrigtinge vloei voort dat van 'n respondent verwag
word
om mee te werk en die nodige toeligting te verskaf waar nodig
ten einde die voile feite voor die hof te plaas sodat 'n korrektc
en
regverdige beoordeling van die geval kan plaasvind. Blote bree
ontkennings, ontwykings en obstruksionisme hoort nie tuis by
dissiplinere 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
houm, 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