Law Society of the Northern Provinces v Cowling and Another (69300/13) [2016] ZAGPPHC 711 (16 August 2016)

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[2016] ZAGPPHC 711
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Law Society of the Northern Provinces v Cowling and Another (69300/13) [2016] ZAGPPHC 711 (16 August 2016)

REPUBLIC
OF SOUTH AFRICA
IN
THE HIGH COURT OF SOUTH AFRICA
(GAUTENG
DIVISION: PRETORIA)
CASE
NO: 69300/13
DATE:
16 AUGUST 2016
In the matter
between:
THE LAW
SOCIETY OF THE NORTHERN
PROVINCES
.........................................
APPLICANT
And
PETER JOHN
COWLING
......................................................................................
1
st
RESPONDENT
CHRISTIAAN
MAURITZ
JANEKE
.....................................................................
2
nd
RESPONDENT
JUDGMENT
KHUMALO
J (with MOSEAMO J concurring)
INTRODUCTION
[1]
The Applicant is seeking an order for the striking off from the roll
of attorneys of this Honourable Court, the names of Peter
John
Cowling and Christiaan Mauritz Janeke (jointly referred to as “the
Respondents” or respectively as “Cowling"
or “the
First Respondent" and “Janeke" or "the Second
Respondent”), erstwhile partners in a law
practice Trollip,
Cowling & Janeke (“the partnership”).
[2] This is a
continuation of legal proceedings instituted by the Applicant against
the Respondents on an urgent basis on 18 November
2013 that resulted
in the Applicant being granted an interim order on 5 December 2013
suspending Cowling from practice pending
the finalisation of this
application for the striking off of both Respondents from the roll of
attorneys.
[3] At the time
of Cowling's suspension Janeke had already resigned as a partner from
the partnership. No order was made against
him. Both Respondents are
opposing the application.
THE PARTIES
[4] Cowling was
admitted as an attorney of this honourable Court on 14 December 1970.
He practised for his own account in partnership
with Janeke under the
name Trollip, Cowling and Janeke until 12 August 2012. Subsequent
thereto he practised as a single practitioner
under the name of
Trollip Cowling and Associates at First Floor, Libertas Building, No
61 Voortrekker Road, Brakpan, Gauteng until
his suspension.
[5] Janeke was
admitted as an attorney of the High Court in the Orange Free State
Division on 27 October 1977. He was enrolled as
an attorney in the
Gauteng Division on 31 March 1978. He practised for his own account
in partnership with Cowling under the name
Trollip, Cowling and
Janeke Attorneys until August 2012 when he resigned. Until recently
he was practising for his own account
under Janeke Attorneys at no 60
Van Der Walt Street, Dalview, Brakpan.
[6] Following the
suspension of Cowling, the erstwhile partners were finally
sequestrated, individually, Janeke suspension came
sooner on 29
January 2014 and Cowling’s on 12 November 2014.
[7] When Cowling
was suspended, Applicant had alleged that the Respondents were
guilty
of conduct that is unprofessional, dishonourable and unworthy of an
attorney, having deviated from the standard of professional
conduct
that is set out in the rules governing the attorneys profession
embodied in the Act, of such an extent that the respondents
are not
fit and proper persons to remain in the roll of practising attorneys.
[8] Now the
Applicant contends that the Respondents’ conduct constitutes
not only such a deviation that they are not fit and
proper persons to
continue to practice as attorneys, but justifies the order sought
from the Honourable Court that their names
be removed from the roll
of attorneys as indicated in its Founding and Supplementary
Affidavit.
[9] The Applicant
is the professional body that governs the attorney's profession, to
which all attorneys in practice belong. It
is vested with the
authority to monitor the acts of its members. Whilst the practitioner
undertakes to abide by the provisions
of the Attorneys Act 53 of 1979
(“the Acf)_and of the Rules, to remain a member and in
practice.
THE DISCRETION
OF THE COURT
[10] The question
whether an attorney is a fit and proper person in terms of section
22(1)
(d)
of the Act is not dependent upon a factual finding, but lies In the
discretion of the court; see
Law
Society of the Good Hope v
C1986 (1) SA 616 (A) and
Law
Society of the Good Hope v Budricks
2003 (2) SA 11
(SCA),
beign a value judgement.
[11] It is trite
law that applications such as this one are
sui
generis
and of a disciplinary nature. There is no
lis
between the Applicant and the Respondents. The Applicant, as
curatos
morum
of the profession, places facts before the Court for
consideration.
[12] Whilst on
the other hand a Respondent is as such expected to co-operate and
provide, where necessary, information to place
the full facts before
the court to enable the court to make a correct decision. Broad
denials and obstructionism have no place
in these disciplinary
proceedings; see
Prokereursorde van
Transvaal v Kleynhans
1995 (1) SA 839
(T) at 851 E-f.
[13] In
exercising its discretion, the Court is faced with a three stage
inquiry:
(a) The first
inquiry is for the Court to decide whether or not the alleged
offending conduct has been established on preponderance
of
probabilities:
(b) The second
inquiry is whether, as stated in s 22 (1) (d) of the Act, the
practitioner concerned
'in the
discretion of the court"
is not a fit and proper person
to continue to practice. This entails a value judgment;
(c) The third
inquiry is whether in all the circumstances, the practitioner in
question is to be removed from the roll of attorneys
or whether an
order suspending him/her from practice for a specified period will
suffice. Ultimately this is a question of degree;
See
Jasat
v Natal Law Society
2000 (3) SA 44
(SCA)..
[14] The opinion
or conclusion of the Applicant (Law Society) that a practitioner is
no longer a fit and proper person to practise
as an attorney carries
great weight with the court, although the court is not bound by it.
[15] The court's
discretion must be based upon the facts placed before it, proven upon
a balance of probabilities and which it has
considered in their
totality. The Court must not consider each issue in isolation.
OFFENCES
COMMITTED BY RESPONDENTS
[16] The
Applicant alleges that upon its investigation conducted on receipt of
complaints against the partnership, it found the
following facts and
circumstances that prompted it to bring this application against the
Respondents:
16.1
The Respondents misappropriated trust funds;
16.2
A substantial trust deficit in an amount of more than R9 Million in
the firm's bookkeeping;
16.3
Excessive and irregular transfers effected from the practice's trust
banking account to its business banking account; mostly
in rounded
and unidentifiable amounts.
16.4
The Respondents placed the attorneys Fidelity Fund at risk.
16.5
Failure to keep proper books of accounting in respect of bookkeeping
by attorneys.
16.6
Contravention of several provisions of the Attorneys Act and the Law
Society Rules relating to bookkeeping by attorneys;
16.7
Failure to account to clients and delayed payments of trust funds;
and
16.8
Claims in the amount of more than R6 Million that to date been lodged
with the Attorneys Fidelity Fund which claims are founded
on the
misappropriation of trust funds by the first and second Respondents.
LAW
SOCIETY’S INVESTIGATION
[17] The
Applicant initially received complaints relating to the Respondents’
irregular handling of trust funds. It instructed
Mr Vincent Faris, a
chartered accountant, to investigate the complaints and to conduct an
inspection of the firm’s accounting
records and practice
affairs.
[18] Cowling was
advised of Faris’ mandate on 11 June 2013 and of the two
complaints received by the Applicant that precipitated
the
Applicant’s investigation, that of Backo and Badenhorst.
FARIS
INVESTIGATION & REPORT
[19] Faris
executed his instructions and on 30 August 2013 reported to the Law
Society in writing as follows: that,
[19.1] Cowling
had alleged that the one complaint was resolved and the other did not
relate to the handling of the trust funds.
He undertook to furnish
Faris with written explanations regarding the two complaints. He
subsequently in his written explanation
alleged that the Bakco matter
was handled not by him but by Janeke.
[19.2] Since 1
September 2012 Cowling has been practising as a single practitioner.
Prior to that he was in partnership with Janeke.
In early September
2012 Janeke informed Cowling that he was not returning to the
practice. They subsequently during February 2013
concluded a formal
agreement providing for the dissolution of the partnership. Cowling
consequently changed the name of the partnership
from Trollip,
Cowling and Janeke to Troilip, Cowling and Associates ‘(the
firm").
[19.3] The
partnership accounting books were however not closed off as at 31
August 2012 as it would have been expected on the dissolution
of a
partnership. Faris suggested to Cowling that he approaches his
auditors and bookkeeper for purposes of preparing a set of
financial
statements and to close the affairs of the partnership.
[19.4] On 16 July
2013, by the time a subsequent interview was conducted, the Applicant
had received more complaints from M P Badenhorst
that was also
attended by the bookkeeper.
[19.5] Cowling
told Faris that he had met with Badenhorst and advised him of the
misappropriation of the estate funds and a pending
investigation. He
also acknowledged the existence of a substantial deficit in the
partnership's bookkeeping. Faris estimated the
deficit by then to be
more than R6 Million.
[19.6] The
partnership's bookkeeper was an independent contractor who attended
at the firm’s offices from time to time when
called upon to do
so or when the need arises. She took the bookkeeping functions of the
partnership fifteen to eighteen months
prior the investigation.
INTERVIEW WITH
JANEKE
[20] When Faris
interviewed Janeke, he alleged to have terminated the partnership at
the end of August 2012 when he became aware
of a number of matters
which he suspected had resulted in the firm’s financial
constraints.
[21] According to
him the financial management and bookkeeping was left entirely to
Cowling who worked closely with the previous
bookkeeper, Ms Gouws. He
had accepted that everything was in order.
[22] He said one
of the matters that caused concern to him was the financial
transaction conducted by Cowling with SC and M De Beer.
He advised
Faris that he would not be surprised if Cowling was involved in money
laundering activities.
REPORT BY
FARIS
[23] Faris found
that all the transactions relating to the complaints were initiated
prior to 31 August 2013, when the Respondents
practised in
partnership.
The
trust banking accounts were not correctly referenced. They were
described as investment accounts in terms of s 78 (2A) of the
Act
whilst they were in fact in terms of s 78 (1) of the Act and the
trust accounts were on occasion overdrawn.
[24] In
preparation of a summary of the month-end business bank statement
balances for the period February 2012 to August 2013,
the
investigation revealed substantial overdrafts, at times in excess of
the overdraft limits and that payment and cheques were
returned as
unpaid by the firm’s banks as a result thereof.
[25] The ledger
account of the interest payable to the Law Society refer to interest
received and bank charges for the period 29
February 2012 to 28
February 2013. It reflects an opening debit balance of R14 661.78.
Notwithstanding the fact that payments appear
to have been made to
the Law Society from time to time, the balance of tine account
continued to be a debit. No closing entries
have been made as could
have been expected in order to reflect the true position.
[26] The opening
balance as at 29 February 2012 represented a debit in an amount of
R113 084.40. The closing balance as at 28 February
2013 represented a
debit in an amount of R149 946.76. The debit balance therefore
increased by R36 862.36 over a period of twelve
months. This led to
Faris concluding that there was no trust liability for the relevant
period.
[27] All monies
irrespective of whether they were trust or business monies, were
deposited into the trust banking accounts.
[28] The
bookkeeper advised that the firm effected transfers from the trust
banking accounts to the business banking account from
time to time as
instructed by Cowling. He found that amounts transferred were rounded
amounts and therefore not identifiable to
specific client’s
accounts.
[29] He was not
satisfied that the transfer system and procedures utilised comply
with the requirements of the Law Society Rules.
[30] Cowling
confirmed the existence of two trust investments in terms of s 78
(2A) of the Attorneys Act in a total amount of R500
000.00 however
not described as s 78 (2A) investment as they should have been.
Cowling identified one of the investment in an amount
of R250 000 as
that of his spouse and was unable to identify on whose behalf the
other amount of R250 000.00 had been invested.
[31] The listing
of trust and business account balances were as at 28 February 2013
and no such listings were prepared since then.
A failure in
contravention of the provisions of Rule 69.7 of the Law Society
Rules. On perusal, Faris found that they did not reveal
the existence
of any trust client's accounts being in debit. Faris did however
identify an instance of a trust debit balance which
he referred to
later in his report
[32] The trial
balances were also as at 28 February 2013. No financial information
was processed since March 2013 and no private
ledger accounts and
trial balances have been printed since 1 March 2013.
[33] There were
returned trust paid cheques that were issued to specified payees as
'bearer
1
cheques, that being in contravention of the
provisions of Rule 69.6.1 of the Law Society Rules. Cowling said he
was not aware of
the Rule.
[34] Cheques that
were crossed as non-transferable made payable to PJC Janeke were
explained by Cowling to may have been deposited
in Janeke's personal
account. The firm’s bookkeeper confirmed that the cheques have
not been deposited into one or more of
the firm’s business
banking accounts.
[35 There were
client’s business accounts that reflected a credit balance,
which signifies the depositing of trust monies
into the business
banking account and the transfer of monies from the trust account to
the business account in excess of the debit
balance, alternatively
debit on specific client’s business account. The business
credit balances in both instances were irregular.
The bookkeeper told
Faris that most probable the credit balances arose as a result of the
failure to raise and debit fees.
MRS C M NORTJE
COMPLAINT
[36] Mrs Nortje
paid an amount of R645 000 to the partnership on 15 November 2011 and
instructed Janeke to invest the money on her
behalf. Janeke led
Nortje to believe that the amount had been invested. Various payments
were made to Nortje and her attorneys
after pressure was placed on
Cowling to account. The complaint was settled during May
I
June 2013 by Cowling.
[37] Faris
confirmed that the matter was indeed handled by Janeke.
[38] Nortje also
had a claim against the estate of one Groenewald. The firm /
partnership settled the claim for Nortje for an amount
of R645
000.00. The amount was received by Janeke and was supposed to be
invested. Nortje was supposed to be advanced an amount
of R20 000 per
month. There was no opening balance on the ledger account, the amount
of R645 000.00 had been withdrawn and debited
against the credit
received.
[391 Even though
there was a note saying that
,l
We have R645 000.000 of her
money, she needs R20 000.00 per month. We must invest and 29 /2/12.
We have R600 000.00, paid her R45
000.13/12/11 Less R7500.00 = R592
500.00. “Faris found no evidence that the amount was In fact
Invested. He also did not
find evidence of any written consent from
Nortje to invest the amount in a s 78 (2A) trust investment account
in compliance with
the provisions of s 78 (2A) (a) of the Attorneys’
Act and Rule 69.9.2 of the Law Society Rules.
[40] A
reconciliation statement by Faris on the initial amount received and
subsequent payments made to Nortje revealed that what
appears to be a
capital payment was made during November 2011 in an amount of R45
000.00. Apart from that amount certain other
amounts reflected on the
reconciliation statement also appear in the ledger account. Certain
payments reflected on the ledger account
were made from the trust
banking account whilst others were made from the business banking
account.
[41] In all of
the above there were no funds available in order to facilitate the
payments. For payments to be made from the trust
banking account
reverse transfers had to be and were effected. Faris found no
evidence that physical transfers of monies from the
business banking
account to the trust banking account were in fact made.
[42] Fees
totalling R30 314.17 were raised as business debits in the Nortje
file and Faris found no evidence in the file to support
the debits.
The ledger revealed that two receipts were credited to the account,
the source of which is unknown. The closing business
balance as at 28
February 2013 was a debit of R56 725.00
[43] It appeared
that the capital amount due to Nortje together with interest thereon
had subsequently been repaid.
COMPLAINT: MS
A T HARILAOU
[44] Jari Cemey &
Co, Harilaou’s accountants were in correspondence with the firm
trying to get payment of R 2.9 million,
an amount that was payable to
Harilaou as proceeds of a sale of Harilaou’s immovable property
registered on 28 October 2011.
Harilaou was made to believe that the
money was invested. In correspondence prepared bv Cowling, he
indicated that the proceeds
of the transaction were loaned to him and
that interest at the rate of 12 % would be paid bv him monthly. Faris
concluded that
since the correspondence was prepared on the firm’s
letterhead of the firm, this indicated that the loan was made to the
firm and not to Cowling personally.
[45] It did not
appear like there were fixed terms of repayments of the loan.
Cowlings made several undertakings to make periodic
payments of the
capital, which undertaking he failed to honour. The recent
correspondence where he indicated that he was unable
to pay was June
2013.
[46] A computer
ledger account attached by Faris indicate an amount of R900 000.00
credited to the account during October 2011.
The office file did not
reflect the receipt of the balance of the monies in the amount of R2
million. The beneficiary of the payment
can therefore not be
established without a detailed audit of the whole transaction. The
first entry on the ledger account is a
payment from the trust banking
account to the town treasurer In an amount of R214 087.24. There were
however no funds available
on the account in order to justify the
payment. The payment therefore gave rise to a trust debit balance on
the account The debit
balance on a trust account Is irregular and
constitutes a contravention of the provisions of Rule 69.3.2.of the
Law Society’s
Rules.
[47] It appeared
that regular payments were made to Hariloau that appear to be for
interest at the rate of 12 % on the Capital amount
of R2.9 Million.
Apart from two instances were payments were made from the business
account, interest payments were made from the
trust banking account.
No trust funds were available as credits in order to justify the said
payments. Reverse transfers were accordingly
made.
[48] Fans found
no evidence that physical transfers of monies from the trust banking
account to the business banking account were
effected. The amount of
R900 000.00 was used to make several payments that were unrelated to
Harilaou’s matter. Various fees
were also raised as business
banking account which did not relate to Harilaou’s matter.
[49] Despite
Cowlings allegation that the R2.9 Million represented a personal loan
to him, Faris found no evidence or documentation
that supports this
contention.
DE
BEERS
[50] Faris also
referred to certain payments that were made to the De Beers. He
reports that Janeke furnished him with copies of
what appeared to be
the accounting statements relating to the De Beers’ matters.
Faris says in the absence of evidence to
the contrary, he provided
for the amount of R2.9 million to represent a trust liability in his
calculation of the firm’s
trust position.
BACKO
LEGGINGS (Pty) Ltd COMPLAINT
[51 ] The
partnership registered a property on 23 July 2010 and the proceeds
from the sale in the amount of R1 Million Rand were
deposited into
the partnership’s trust banking account to be held in trust
pending the outcome of a dispute. After bank charges
in the mount of
R450.00 were subtracted an amount of R995 550.00 was to be held in a
trust banking account.
[52] Both
Respondents advised Faris that their files relating to the matter
could not be traced. The account was credited with an
amount of R965
580.00 on 30 July
2010.
On 31 August 2010 a trust cheque in the amount of R900 000.00 in
favour of Absa Bank was debited against the account. It is
not known
for what purpose the cheque was drawn as the documentation indicated
that the amount should have been held in trust
[53] In the
ledger various amounts were debited as fees. An amount of R50 388.85
was received from Stanley Brasg and Associates
that represented
capital and accrued interest in terms of s 78 <2A) of the
Attorneys Act. Faris provided for the two amounts
R965 580.95 and R50
388.85 respectively to present trust liabilities for purposes of
calculating the trust position.
BADENHORST
COMPLAINT
[54] Cowling
advised Faris that the file was handed over to Badenhorst. The
documentation perused indicated numerous amounts that
were credited
and debited against the account over a certain period of time. The
inflow of funds was most probably sourced from
the estate banking
account. Faris was unable to comment further on the movement of the
funds or the nature of the payments made
from the trust banking
accounts in the absence of the office files.
[55] However
Faris stated that attached to the papers was an acknowledgement
signed by both Respondents admitting to the partnership
having
misappropriated an amount of R5 Million. Notwithstanding the
acknowledgement of debt, Cowling denied to Faris that he admitted
to
the misappropriation of trust funds and that the matter was being
investigated.
[56] Without the
relevant files Faris was unable to determine the correct trust
position. He found several reverse transfers that
were made in both
sets of accounting records in order to cover the payments made from
the trust banking account when there were
no or insufficient funds in
order to justify the payments.
TRUST POSITION
[57] Faris
examined the firm’s trust position at several months end based
on the client’s business listings up to February
2013 and found
that there were trust deficits at each of the month end dates.
[58] Faris
determined the firm's position as at 31 August 2012 and 28 February
2013. He found trust deficits in the amounts of R9
198 208.45 and R9
232 366.17 respectively.
[59] Cowling
advised Faris that he had serious concerns about Janeke’s son
who was employed as a professional assistant by
the partnership. He
indicated that he had previously launched an investigation in this
regard and requested Absa to provide information
on all cheques that
were cashed coming from the partnership. Cowling also furnished Faris
with a document from Absa dated 8 August
2013. He informed Faris that
he was not satisfied with the document as it did not provide the
details that he had called for.
[60J Applicant
contends that what is evident is that the firm’s trust and
business accounting were not kept up to date. At
the time of Faris
visit in June 2013 the financial information had only been processed
up to the end of February, with Janeke insisting
that he had left the
financial administration to Cowling and that he had no knowledge of
the financial affairs of the practice.
[61] The
Applicant submits that the Respondents did not give proper care to
the administration of the trust account. Trust bearer
cheques were
issued and Janeke’s explanation that he was not aware of the
Law Society’s Rules relating to cheques cannot
be accepted. It
is more serious that trust payments were made in circumstances when
there were no trust funds available. The payments
gave rise to
reverse transfers that were not isolated incidents. The reverse
transfers indicate the failure to properly administer
the transfer
system of the practice. According to Faris this is further confirmed
by the rounded transfers which were made from
the trust banking
account to the business banking account, which could not be
identified to specific clients’ account.
[62] In that
regard Applicant found the following provisions of the Act to have
been contravened and necessary to take urgent action
against the
Respondents:
[62.1] Section 78
(1) of the Act due to that the practice failed to hold and keep
sufficient monies in the trust banking account
at all times in order
to meet its obligations to trust creditors;
[62.2] Section 78
(4) of the Act read with s 78 (6) (d) of the Act due to the fact that
the practice failed to keep proper accounting
records and that the
trust accounting records did not reflect the trust true position;
[62.3]
Rule 68.1 read with Rule 68.5 of the Law Society's Rules (“Rules"),
due to the fact that the records were not
kept up to date and the
books not balanced in accordance with the requirements of the Law
Society’.
[62.4]
Rule 68.7 of the Law Society Rules due to the fact that the
partnership failed to account to its clients;
[62.5]
Rule 69.3.1 of the Rules due to the fact that the partnership failed
to hold and keep sufficient funds in its trust banking
account in
order to enable the trust to meet its obligations to trust creditors.
[62.6]
Rule 69.3.2 of the Rules due to that the accounts of a trust creditor
was in debit.
[62.7]
Rule 69.6.1 of the Rules due to that fact that the practice issued
trust cheques in contravention of the Rules.
[62.8]
According to Faris the possibility of further contraventions of Rule
69.7 and Rule 69.9 could not be excluded and the Attorneys
Fidelity
Fund was at risk.
CLAIMS LODGED
WITH FIDELITY FUND
[63] Applicant
was informed by the Fund that claims totalling more than R6 Million
have been lodged with the Attorneys Fidelity
Fund (“Fund")
which claims are founded on the misappropriation of trust funds by
Cowling and Janeke and a schedule thereof
provided by the Applicant.
F RAKGABALETSI
COMPLAINT
[64] Rakgabaletsi
and her spouse sold an immovable property and instructed Trollip,
Cowling and Janeke Attorneys to attend to the
registration of the
transfer. The property was sold for an amount of R340 000.00. The
amount was paid into the firm’s tjust
banking account Although
the transfer was registered the partnership failed to pay to
Rakgabaletsi the proceeds of the transaction.
[65] According to
Rakgabaletsi, the partnership made excuses for a period of three
months for the non-payment and explained that
a partner of the firm
had misappropriated the money from the trust banking account. As a
result of such misappropriation the firm
was unable to account for
the monies.
[66] The firm
subsequently furnished Rakgabaletsi with a cheque in respect of the
proceeds of the transaction, but the cheque was
dishonoured by the
firm's bank. The Applicant referred the particulars of the complaint
to Cowling on 9 September 2013 and requested
him to furnish the
Applicant with his comments thereon. He failed to reply to the
Applicant’s letter.
ROUSSEAU
COMPLAINT
[67] The
Applicant filed a supplementary affidavit indicating that they
received more complaints against the Respondents following
the
suspension of Cowling, inter alia, that of Gay Desmond Rousseau
received on 20 November 2013.
[68] Rousseau, a
qualified company secretary and a financial director of two companies
filed a complaint In a written statement
submitted In support of a
claim to the Fidelity Fund. Due to his forensic background and
expertise, he was instructed by Cowling
to assist in the dissolution
of the firm Trollip Cowling and Jeneke. Rousseau had been inspecting
the affairs of the practice for
a few months when he came across what
he refers to as fraudulent transactions relating to trust funds. The
said transactions relate
to instances where trust funds were paid to
the partnership by clients but where the receipt of the monies were
not reflected in
the partnership's accounting records.
[69] During the
investigation Rousseau communicated with certain of the firm's
clients who had deposited cash into the partnership’s
trust
banking account These cash deposits were not reflected in the firm’s
accounting records.
[70] Rousseau
further found that Janeke had irregularly cashed several trust
cheques which were marked not-transferable at various
banking
institutions. Those monies were not deposited into the firm’s
trust banking account where they should have been deposited
and
resulted in trust deficits that Rousseau calculated the total amount
to be R4 295 885.04. The trust cheques were annexed to
his written
statement.
[71] Some of
these trust cheques that were cashed by Janeke, despite the cheques
having been marked not-transferable were from Absa.
The bank
officials from Absa confirmed that both Cowling and Janeke cashed the
trust cheques and did so on numerous occasions,
identifying a total
of 65 cheques which they cashed totalling an amount of R1 302 486.09.
[72] The same
modus operandi
applied at
Absa bank was found to have been applied at FNB with a list of 14
cheques cashed by either of the Respondents at the
bank’s
Voortrekker Road branch in Brakpan. The amount Involved is R97
831.50.
[73] The pattern
was again followed by the Respondents, cashing in another 14 cheques
at Standard Bank totalling an amount of R45
282 at the Voortrekker
Road Standard Bank branch.
[74] There was
another list of 4 cheques that were cashed by the Respondents at
Nedbank Square Central, Brakpan, amounting to R701
900.00.
[75] A schedule
of 5 additional cheques that Rousseau said was still being
investigated by several banking institutions and various
amounts paid
which were reflected in the firm’s accounting records in
respect of monies received from clients, but which
monies were in
fact not received in the firm’s banking accounts.
[76] The total
cash received by the Respondents and not deposited into the firm’s
trust account amount to R381 473.76.
[77] By receiving
trust funds and falling to deposit the said funds into the trust
account Cowling and Janeke contravened, inter
alia, the provisions of
s 78 (1) of the Act The Respondents' conduct and the said
contravention of s 78 (1a) constitute an offence
in terms of s 83 (9)
of the Act
[78] Rousseau
also found that Janeke removed several of the firm’s files when
he left its employ. Janeke’s former secretary
provided Rousseau
with a handwritten list of the files removed by Janeke.
An
amount of R720 603 Is being owed to the firm on the files which had
been removed by Janeke.
[79] The
partnership instructed the firm Silber, Fourie & Nel (“SFN")
in several property transactions. Rousseau
requested SFN to furnish
him with a schedule of payments which had been made to the
partnership in these transactions.
[80] Rousseau
reconciled the amount to the general ledger account of the firm. This
proved to be difficult as Rousseau is in possession
of the firms
entire general ledger account.
SFN
paid a total of R1 762 727.92 to the Third Respondent by way of
non-transferable trust cheques. According to Rousseau an amount
of
R1092 791.08 remains unaccounted for.
The receipt of the
amount is not reflected in the firm’s accounting records.
[81] Rousseau
further explained that he has been unable to finalise the deceased
estate of his late wife due to maladministration
on the part of the
Respondents. He is the executor of his wife’s late estate and
had appointed the Respondents to administer
the estate.
[82] Rousseau
investigated the financial affairs of the firm and explained as
deduced that it was necessary to institute a claim
against the
Attorneys Fidelity Fund, founded on the misappropriation of trust
funds by the Respondents.
He
previously requested Cowling to pay him the proceeds in his late
wife’s estate, and Cowling failed to do so.
The estate
comprised of two investments and one immovable property.
The
total amount due to Rousseau is R1 167 898.91.
[83]  It is
alleged by the Applicant that the above mentioned facts provide
additional evidence that the Respondents have failed
to keep proper
accounting records in respect of their practice and that they have
handled trust funds irregularly and irresponsibly.
The Respondents
contravened the provisions of, inter alia Section 78 (1) of the Act
and Rules 68.1,68.2,68.5,68.62,68.8,69.1,69.3.13
and 69.7.1 of the
Law Society’s Rules.
ELIZABETH
CHRISTINA CILLIERS JANSE VAN RENSBURG (JANSE VAN RENSBURG) COMPLAINT
[84] On 28
November 2013, the Applicant received Janse van Rensburg’s
complaint. The facts appear from the claim she has filed
against the
Fidelity Fund. Cowling attended to the administration of her late
husband’s estate and van Rensburg was the beneficiary
to her
late husband’s pension fund. The estate was not in a position
of sufficient cash in order to cover the costs pertaining
to payment
to creditors and administration fees.
[85] Janse van
Rensburg at the firm's request paid an amount of R544 000.00 into the
firm’s trust banking account She has
annexed proof of payment.
She suspects that the amount is no longer available in the firm’s
trust banking account and most
probably misappropriated.
[86] A firm of
attorneys DLBM Attorneys Inc of Pretoria, who acts on behalf of the
trustees appointed in the insolvent estate of
Cowling reported that
the preliminary investigations showed that there were insufficient
funds available in the estate to pay the
partnership and firm’s
trust creditors.
[87] This
additional facts, argues the Applicant, provide further evidence that
the Respondents have made themselves guilty of conduct
that is very
unprofessional, dishonourable and unworthy and that they are both not
fit and proper persons to remain on the roll
of attorneys.
[88] Even though
the report by Rousseau and van Rensburg came to the attention of the
Applicant on 28 November 2013, and a report
on the initial complaints
was filed by August 2013 and Cowling suspended by 5 December 2013,
Cowling already held a Fidelity Fund
Certificate for the period
ending 30 December 2013.
SEQUESTRATION
[89] The
Applicant submit that Cowling has been sequestrated and in terms of s
22 (1) (e) of the Attorneys Act provides that any
attorney may on
application by the Applicant be suspended or struck off the roll of
attorneys if his estate has been finally sequestrated
and if he is
unable to satisfy the Court that, despite his sequestration, he is
still a fit and proper person to continue to practice
as an attorney.
COWLING’S
RESPONSE
[90] Cowling is
disputing that he is responsible for all the complaints brought
against the firm. In brief, he states that:-
[90.1
] In the matter of Rousseau he denies that in his affidavit Rousseau
mentioned him and Janeke as the ones that cashed the
non-transferable
cheques at the various banks in Benoni but that Rousseau mentioned
Mauritz and Chris Janeke (Janeke
1
son), who practised as a
professional assistant in the firm until October
2011
.
[90.2]
Cowling also contends that there is a Third Respondent. The sum
referred to was due to the firm.
[90.3]
in as far as the matter of Van Rensburg is concerned, he says he
understood that the complainant was not proceeding.
[90.4]
The person referred to by Rousseau whom he alleges removed the files
that had an amount of R720 603.16 owed to the firm,
is Chris, Mauritz
Janeke’s son.
[90.5]
The amount that is supposedly due to the firm is R1 092 791.08.
[90.6]
Cowling alleges that he discovered theft of trust funds by Janeke on
his departure that has taken place also as long ago
as 2010 and 2011.
For
example
a sum of R30 000.00 was owing to the practice by one Ronel Smit whose
house was subject to attachment for monies owing to
the practice. On
the sale of the house Janeke arranged that payment of the amount of
R30 000.00 by the
transferring
attorneys against the release of the attachment not to be credited to
the firm’s trust but to his personal trust,
namely Wall Trust.
[90.7]
According to him the investments were attended to by the main
bookkeeper on the instruction of a partner concerned, who would
on
receipt of a completed requisition by a partner or his secretary
obtain the necessary authority from the client. He alleges
the same
happened with cheques.
[90.8]
He also indicated that he was incapacitated since he did not have
access to the files that were removed by the provisional
trustee in
October 2013 and as he was also suspended his replies were from
memory. He replied as follows to the claims submitted
to the
Attorneys Fidelity Fund:
[90.8.1]
With regard to estate iate Badenhorst - the sum claimed should be
reduced by (i) an amount of R1 -000 000 for interest
(ii) an
amount
of R 300 000 for administration costs and (iii) an amount of R250 000
for disbursements omitted and (iv) R750 000 repaid,
totalling some of
R2 250 000.00
[90.8.2]
He denied the allegations with reference to Rousseau and alleged that
Rousseau’s report was being read wrongly.
[90.8.3]
In respect of Barbour claim- he said the capital balance excluding
interest claim should be R250 000.00.
[90.8.4]
He denied also knowing anything about a claim relating to a Brisley.
[90.8.5]
He admitted the claim of Beil to be more or less correct;
[90.8.6]
He admitted the claim of Rousseau’ to be more or less correct;
[90.8.7]
He believed that an amount of R250 000.00 was repaid and the amount
outstanding should be R1 030 000.00;
[90.8.8]
Estate late Nolte was handled by Chris as the Executor of the estate
and he resigned in 2011. By that time almost all funds
due to the
estate had been realised. Janeke then attended to the administration
of the estate until his
departure
at end of August 2013. There should not be any money still
outstanding. He says he met Mrs Nolte in early 2013. Nolte
sold a
property so a deposit of R106 000.00 and instalments of R40 000 were
paid to Trollip, Cowling and Associates. She needed
money and the
estate seemed almost wound up. Believing the funds previously paid
during the executorship of Chris to be in trust,
he paid her R200
000.00 which he believed was more than what Trollip and Cowling
received. Faris confirmed that the books were
not in order and the
amount led to an overpayment being made, Cowling says he was then
appointed as an Executor in July 2013 and
contends that the claim
should be filed against the previous executor Chris who remained so
until July 2013, as it was during his
executorship and administration
that the estate funds were realised. He was an executor for only two
months and any shortfall must
be discussed with Chris. Mr Jordaan
from the Applicant was informed of the shortfall in October 2013
however due to the files being
taken by the provisional liquidator he
could not take the matter any further.
[90.8.9] He
further admitted to be aware of a claim of R1 000 000.00 but says to
the best of his recollection an amount of R750
000 was paid and only
an amount of R250 000 remains to be paid.
[90.8.10] He says
according to him then the balance of the claims against the
partnership should be R 6 6000,000.00.
[91 ] Cowling
sees this, in a nutshell, as errors made in the way the books were
kept, cheques and transfer of funds from trust
to business was made
out and effected, arguing that most of them are just contraventions
of the Rules of the Applicant that he
deeply regrets.
[92] What
happened to the partnership during the last quarter of 2011 is what
Cowling apportions the blames to, saying after 42
years of clean
practice the situation caused everything. He says even though the
financial and bookkeeping records were not lost,
the disruption
caused by the collapse of the building made it impossible to manage
the bookkeeping and accounting of the practice.
Matters were not kept
up to date. They never managed to adequately overcome
the
backlog.
It was not only the collapse of their building, but a
fire and a personal experience of crime that resulted in him being
unable
to establish the correct financial situation at the end of
August 2012.
This in turn brought
to light huge thefts of funds that had taken place and been concealed
over a long period of time.
He attributes the problem to the
provisional sequestration order that was brought against him on 7
October 2013, the closure of
his practice and removal of files and
financial records. He also state that it prevented further
investigations which were in progress.
He
alleges not to have been aware of theft of these funds prior to the
investigation by the accountant Rousseau.
[93] He claims to
have realised his personal assets and paid to the partnership’s
business and trust accounts funds exceeding
R4 Million Rand and
accused Janeke of not to have contributed anything.
[94] Janeke’s
sudden departure at the end of 2012 is also alleged by Cowling to
have further complicated the situation. He
says he only then was made
aware
that there were no funds
available to make a payment to the estate late Bardenhorst
in
2013, after Janeke's departure.
[95]
He
confirmed that it was Rousseau who discovered and came to a
conclusion that a major theft of funds from the partnership took

place over a long period of time.
Rousseau identified R2
Million in trust cheques that needed to be investigated and also
obtained letters from Absa that confirmed
that cheques that were not
transferable were cashed and that senior staff at Absa confirmed that
the crossed cheques were cashed
by Chris Janeke (“Chris’)
who had a good relationship with the various tellers at the bank.
Chris was employed by the
partnership as a professional assistant
from 1999 to 31 July 2011.
[96] In addition,
Cowling acknowledges that
Rousseau
confirmed
a
shortfall in the
trust funds of the firm during August/ September 2011 period and
alleges that the situation could not be avoided due to the
fact that all this time they operated in the dark not being aware of
what was going on.
[97]
Cowling
al$o acknowledges
a trust deficit but denies that it was in
the amount of R9 Million saying it was probably more or less than R3
or R4 Million. He
denies that it is his reckless conduct that placed
the Attorneys Fidelity Fund at risk declaring that it was as a result
of trust
theft that was not detected or identified by the auditors
who carried the annual trust audit at the time.
He
alleges to have made periodic transfers to the
business
account of such funds as were
thought to be available.
[98J He denied
that there were any restrictions on Janeke which in any way limited
his participation in the financial management
of the partnership
affairs. He alleged that Janeke was as much aware as he was of the
financial situation of the partnership. He
was aware of all dealings
with clients such as the De Beers. He met the De Beer's at Janeke’s
house.
[99] He also
regarded what happened to be just errors in bookkeeping methods and
failure to ensure tighter control over the finances,
where certain
sanctions may be applicable.
He
says they however do not justify the conclusion that he is not
a
fit and proper person to practise
as an attorney.
He denied being a party or being aware of the
theft of trust funds which he argues to be an entirely different
matter.
He says as soon as he
became aware of the theft he reported that to the Law Society in July
2013
JANEKE’S
RESPONSE
[100] Janeke in
his response is dismissive of the allegations made by the Applicant
and Cowling against him and also of the claims
that are based on a
report attributable to Rousseau, bar to allege that:
[100.1] Ali the
allegations made by Rousseau and various unnamed persons that
Rousseau refers to in his affidavit are denied and
nobody ever sought
from him an explanation regarding Rousseau’s complaint as
expounded in his statement totheAFF.
[100.2]
Rousseau’s claims pertains to the administration of estates
that was handled by Cowling. The Applicant conflates the

partnership’s trust account with estate account.
[100.3]
Rousseau’s allegation that monies were paid into the
partnership’s business account and not deposited in the
trust
account are unsupported by any primary facts and constitute hearsay.
[100.4]Rousseau’s
allegations on the irregular cashing of cheques are not levelled at
him but his son. Rousseau makes it clear
that the majority of the
cheques where cashed by his son Chris and not him. At the same time
he denies the allegation by Rousseau
that The main culprit is Mr
Christiaan Janeke.’
1
[100.5] He does
not have the recollection of a cheque of R36 021.00 he received as
from Rousseau and deny having received any monies
that he failed to
deposit into the trust account as alleged by Rousseau.
[100.6] he denied
cashing cheques that amount to R1 302 486.09 or any of the cheques
mentioned by Rousseau, stating that Applicant’s
mentioning
Cowling and him is not borne out by Rousseau’s affidavit Most
of the monies he mentions were allegedly taken by
Chris.
[100.7]He denied
that he removed any files from the partnership offices when he left
its employ and allege that he is being confused
with his son Chris.
He alleges that his former secretary actually provided a list of
files on which an amount of R720 603.16 was
owed to the firm that
were removed by his son Chris not him.
[100.8]He could
not deal with the allegation that Silber, Fourie and Nel paid a total
amount of R1 762 727.92 that is unaccounted
for in the partnership’s
accounting books as the accounts were managed by Cowling.
[100.9] Cowling
was the only one appointed as the administrator of Rousseau’s
late wife's estate not him therefore Rousseau
requested payment from
him. According to him the money should have been deposited in the
estate's account anyway, not in the trust
account.
[101] He stated
that the failure to keep accounting records and all the
irregularities and irresponsible handling of trust funds
as set out
in Rousseau’s affidavit were perpetrated by Cowling. He also
denies misappropriating any trust funds.
JANEKE
ON COWLINGS RESPONSES
On Cowling’s
replies his response was that:
[102] Cowling
never alleged that he misappropriated any of the funds missing from
the trust account or that he dealt with the financial
administration
of the accounting records.
[103] Cowling
admitted to funds missing when the estate was administered by him
supported by all the cheques that were issued by
him except for one
as indicated in Rousseau's affidavit.
[104] When he
joined Trollip Cowling and Brocker, Cowling was already the office
manager and the financial manager of the firm which
he continued to
do later in the partnership for a period of 34 years without a
qualified audit report Cowling also attended to
the administration of
estates and other commercial transactions. He had no reason to
suspect Cowling’s nefarious activities.
[105] Presently,
he is practising as a consultant in the employ C J Janeke, his wife
and is not operating a trust account He has
no other professional
training and would be placed in a position where he is not earning a
living if he is struck off from the
roll of attorneys.
[106] He
therefore pleads with the court to impose such sanction as it deems
fit other than the striking off.
ANALYSIS
AND WEIGHING OF ARGUMENTS
[107] The court
is duty bound to consider all arguments presented to it with an
objective eye. It is not in contention that in the
partnership of the
Respondents there was a deficit of trust funds. The parties may not
be in agreement as to the exact amount of
the deficit It is agreed
that the amount exceeded an amount of R9 Million at the time of
Cowling suspension.
[108] The claims
that were lodged with the Attorneys Fidelity Fund amounted to +- R9
Million Rands. Cowling alleges to have paid
an amount of R4 million
to reduce the liability.
[109] It is also
common cause that there were serious irregularities in the manner in
which the financial affairs of the partnership
were conducted and
managed with Cowling admitting his role in some of the instances and
in others blaming his erstwhile partner
or his son Chris, whilst
Janeke is alleging Cowling to be responsible or his son to be
involved. Ail the same, it is of significance
that the existence of
irregularities perse is not denied.
[110] There were
returned trust paid cheques that were issued to specified payees as
'bearer
1
cheques, that being in contravention of the
provisions of Rule 69.6.1 of the Law Society Rules, with Cowling
pleading ignorance.
He did not know how it came about that a cheque
that was crossed as non-transferable was made payable to Chris.
[111] The
Respondents failed to properly monitor how the financial affairs of
the partnership are conducted and to make sure that
the partnership
keeps proper accounting records, which is a serious contravention of
the duties of an attorney. An attorney who
fails to comply with this
obligation is liable to be struck off the roll or to be suspended
from practice; see
Cirata and
Another v Law Society, Transvaal
1979 (1) SA 172
(A) at 193
and
Holmes v Law Society of the Cape
of Goodhope and Another
2006 (2) SA 139
(C) at 152 B-F. In
this instance, the magnitude of Respondents transgressions is such
that it is all mind-blowing.
[112] Janeke
pleads not to have been involved in the financial affairs or
management of the partnership for 34 years, having left
it to.Cowling
to deal with financial issues of the partnership. He therefore urges
the court to instead hold Cowling accountable
for all the
irregularities. His declaration amounts to the highest degree of
imprudence and breach of his duties as an owner and
partner who is
supposed to be responsible for his practice. So even if it is correct
that he was not involved in the everyday running
of the financial
affairs of the partnership, besides being grossly in breach of his
duties, he would still be 100% accountable
for any mismanagement of
the company, financially or otherwise.
[113] Chris was
employed by the partnership as a professional assistant and both
Respondents allude to his involvement, shadily,
in the cashing in of
the partnership’s non-transferable cheques at various financial
institutions that led to the misappropriation
of the partnership
trust funds. Janeke confirms that it was Chris who was involved in
the cashing of the cheques which happened
under both partners' watch.
Janeke, still does not consider himself accountable as a partner,
even for Chris’ conduct perpetrated
against his own practice
and clients.
[114] Chris
Janeke was not a partner and yet he had access to cheques and trust
accounts apparently with signing powers and was
allowed to operate or
to have control and leeway in the partnership’s finances
without being monitored, which amounts to
a dereliction of duty and
serious reckless conduct by both Respondents.
[115] The fact
that Cowling initiated an investigation into the cashing of the
cheques and his suspicion of irregularities on the
part of Chris
provides evidence of both Respondent’s failure to dedicate
sufficient attention to the administration of trust
client's accounts
as they were supposed to have signed the issued cheques or authorised
the requisitioning of cheques by non-partners.
[116] The
Applicant's attorney has argued that where an attorney consents to a
partner or a member of his staff dealing with trust
moneys, the
failure to keep proper books of account becomes all the more
reprehensible. It is his duty to keep a vigilant eye on
such trust
moneys and to see that they are paid into the trust account and not
used improperly. In that regard, for the sake of
the public and the
profession it is of utmost importance to enforce on all attorneys the
high standard of duty which rest upon
them and to demand the great
integrity that is expected of them; see Incorporated
Law
Society, Transvaal v Visse and Others
1958 (4) SA 115
(T)..
[117] Claims
lodged with the Attorneys Fidelity Fund exceeding an amount of R9
Million Rand is
prima facie
proof of also misappropriation of trust money and its extent, which
inference is strengthened by the fact that most of the files
in these
matters as well as accounting records could not be found, such
unfortunate state attributable to the Respondents who could
not say
where the files were.
[118] The
Fidelity Fund was put on such immense risk without any possibility to
limit the exposure, the Respondents have been sequestrated.
[119] Payments
were made to trust clients when there was not enough money in their
trust accounts resulting in a lot of trust reversal
transactions. The
money having been misappropriated by the partners..
It
is significant that in terms of Section 83
(13)
of the Attorneys Act a practitioner who contravenes the
provisions relation to his trust account and investment of the trust
money
will be guilty of unprofessional conduct and be liable to be
struck off the roil or suspended from practice; see
Incorporated
Law Society. Transvaal v Behnman.
1977(1) SA 904 (T) at 905 H.
[120] The
pleading by Janeke that the court should take into consideration that
notwithstanding him not being involved in the financial
management of
the partnership, it had an impeccable auditing record spanning a
period of 34 years and Cowling's assertion that
it was a faultless 40
years for him is negated by Cowling statement repeated in his
affidavit that Rousseau discovered and came
to a conclusion that
there has been a major theft of funds from the partnership over a
long period of time albeit undetected.
[121] Cowling
also confirmed that the turn of events in 2012 brought to light huge
thefts of funds that had taken place and been
concealed over a long
period of time. Further he claimed that the Attorneys Fidelity Fund
was placed at risk as a result of trust
theft not realised or
detected at the time by the auditors who carried the annual trust
audit So it cannot be true that the partnership's
record of handling
its affairs was for all that long impeccable. The transgressions were
just not discovered due to the Respondents’
failure to exercise
proper control on the financial affairs of the partnership and their
personal involvement in the mismanagement
and misappropriation. The
accounting records as investigated by Faris and Rousseau bear
testimony to that, going back to misappropriation
in 2010. In
Law
Society. Transvaal v Matthews,
the following was said by the
Court regarding the failure of keeping of proper accounting records
by a practitioner:
"
failure to keep proper books of account is a serious
contravention and renders an attorney liable to be struck off the
roll of practitioners
or liable to suspension; and the Courts have
repeatedly warned practitioners of the seriousness of such a
contravention.
See
Cirota and Another v Law Society. Transvaal
(Supra at
193 F- G). The seriousness is again underlined in rule 89 read with
rule 89(11) of the applicant’s rules which
provides that it is
unprofessional or dishonourable or unworthy conduct on the part of
the practitioner to contravene the provisions
of the Attorneys Act or
the applicant’s rules. ”
[122] Cowling
seems not to appreciate the seriousness of their transgressions. He
alleges that their transgressions only amount
to errors not theft,
committed in bookkeeping and therefore should not lead to their
striking off. Notwithstanding the fact that
they were involved in
substantial misappropriation of trust monies. Cowling has agreed in
the Bademhost matter that he informed
the latter about the
misappropriation of funds by the partnership and also even queried
the amount outstanding alleging that it
was R2 250 000.00. He never
pleaded consent by Bademhost for the partnership to use the money or
that it was loaned to the partnership.
He denied that he and Janeke
signed an acknowledgement of misappropriation of R6 Million Rands.
Janeke on the other hand did not
address the non-availability of
Badernhost’s money, which makes the Respondents guilty of theft
[123] The
Respondents also failed to contradict the evidence indicating the
unscrupulous handling by the partnership of the funds
in the Nortje
matter that Janeke failed to invest as instructed or to deposit into
the partnership’s trust account and for
which the partnership
could not account It also came to light that there was no consent to
either Janeke or the partnership to
use the money for any other
purpose other than investment. Cowling paid most of the money owing
to Nortje from his pocket when
the money was supposed to be in the
trust account. The matter was not reported to the Applicant. On
investigation there was no
evidence of any written consent from
Nortje to invest the amount in a s 78 (2A) trust investment account
in compliance with the
provisions of s 78 (2A) (a) of the Attorneys'
Act and Rule 69.9.2 of the Law Society Rules.
[124] In respect
of the De Beer matter, Janeke furnished statements that purportedly
indicated a payment of R2 900,000.00 to the
partnership whilst the
trust account was reflecting a deficit for which Janeke could not
provide evidence proving otherwise. He
has not submitted anything of
substance to refute the prima facie inference of having
misappropriated the money.
[125] The nature
and extent of Janeke’s involvement in the disappearance of
monies in the Backo matter was also not rebutted.
It was indicated
that the proceeds were paid to the partnership after the sale of an
immovable property but only an amount of R35
000, in interest was
paid to the client and the balance of R965 000.00 was not there.
[126] Facts were
established and unchallenged that Cowling misappropriated R2,900
000.00 in the Hariloau matter which on receipt
was supposed to be
invested. Cowling’s justification for his personal use of the
money that it was a loan did not absolve
him because the letter he
submitted indicated a loan to the partnership not to him personally.
Also money was disbursed on behalf
of client when there were no funds
to justify the payment giving rise to a trust debit balance on the
account. The debit balance
on a trust account is irregular and
constitutes a contravention of the provisions of Rule 69.3.2.of the
Law Society's Rules.
[127] Also
regular payments were made to Hariloau of interest on his Capital
amount of R2.9 Million on two instances from the business
account,
and all other times from the trust banking account whilst there were
no trust funds available as credits to justify the
said payments.
Necessitating reverse transfers which were accordingly made, causing
a debit balance in the trust account.
[128] In the case
of monies received in the matter of Rakgabeletsi, Rousseau's mother’s
estate and Van Rensburg, it was a
case of straight theft. Cowling
could not explain the deficit in the trust accounts of the clients
when money was received by the
partnership on behalf of the client.
The approach of the Court in relation to trust shortages and the duty
of an attorney with
regard to trust money was stated in
Law
Society, Transvaal v Matthews
1989 (4) SA 389
(T) on 394 as
follows:
’’
I
deal now with the duty of an attorney in regard to trust money.
Section 78(1) of the Attorneys Act obliges an attorney to maintain
a
separate trust account and to deposit therein money held or received
by him on account of any
person.
Wflere
trust money is paid to an attorney it is his
duty to keep it in his possession and to use it for no other purpose
than that of the
trust. It is inherent in
sucft
a
trust that the
attorney
should at all times have available liquid funds in an equivalent
amount The very essence of a trust is the absence of risk. It
is
imperative that trust money have available liquid funds in an
equivalent amount It is imperative that trust money in the possession

of an attorney should be available to his client the instant it
becomes payable. Trust money is generally payable before and not

after demand.
See
Incorporated Law Society.
Transvaal
v Visse and Others: incorporated Law Society Transvaal v Viliioen.
1958
(4)
SA 115
(T) at 118 F-H. An
attorney's duty with regard to the preservation of trust money is a
fundamental, positive and unqualified duty.
Thus neither negligence
nor wilfulness is an element of a breach of such duty:
[129] Taking into
consideration all these matters, the Applicant has succeeded to
establish on a preponderance of probabilities
the offending conduct
of the Respondents, which conduct amounts to several serious
offences, by which, as correctly argued by Plaintiff’s
counsel,
whether each is considered alone or cumulatively, the Respondents
have made themselves guilty of unprofessional, dishonourable
and
unworthy conduct of an attorney. See
Malan
v The Law Society of the Northern Provinces
120081ZASCA
90:1200911 All SA 133 (SCA).
[130] The court
has now to decide on the basis of that conclusion whether, as stated
in section 22(1 )(d) of the Attorneys Act,
in its discretion the
Respondents are after all, still tit and proper to continue to
practise. At this stage the court must decide,
in the exercise of its
discretion, whether the person who has been found not to be fit and
proper person to practice as an attorney
deserves the ultimate
penalty of being struck from the roll or whether an order of
suspension from practice will suffice.
[131] Counsel on
behalf of the Applicant submitted that the conduct of the Respondents
reveal character defects which cannot be
tolerated in a practitioner
or officer of the Honourable Court and does not meet the standard of
behaviour and conduct and reputation
which is required of an attorney
and of an officer of the Honourable Court. He argues that by virtue
of their conduct and behaviour
the Respondents have damaged and
affected the good standing and reputation of the profession as a
whole. Consequently, their names
should not be allowed to remain on
the roil of attorneys, as they have made themselves to worthy are no
longer fit and proper persons
to continue to practise as attorneys or
officers of the Honourable Court.
[132] Janeke
persisted in his argument that he is not to be punished to the extent
of a striking off due to his backdrop of 30 years
of unqualified
audits and trust built up in his partner for all those years plus his
involvement in the transgressions of the rules.
It was argued on his
behalf that he was not involved in the books of the partnership
entirely. This was disputed by the Applicant
referring to another
analogy on partnership practices. That on proper attendance to
matters of trust, a partner is held to be both
jointly and severally
liable as partners or directors.
[133] It is trite
law that there is no exemption to liability on matters of this
nature. Both partners are liable for each other's
conduct on
transactions made from the trust account. It is also settled law that
attorneys must always be vigilant on matters of
trust otherwise they
will be equally liable.
[134] Based on
the above, the court is satisfied that Respondents made themselves in
all respects equally guilty, both carrying
accountability of the
partnership, each other's offending conduct and any other person
acting under their authority. Being less
involved in the running of
the practice and or preparation for payments from trust is no defence
at all. The duty of compliance
with the Act and the Rules is expected
of any attorney in practice, whether on his own or in partnership.
Non- compliance with
that does not automatically result in a
diminished morai blameworthiness.
[135] The
transgressions of the Respondents are very serious and involves
substantial misappropriation of trust funds, trust deficit
by
concealment, conducting investment practice in which interest was
paid out of trust account in contravention of the Act amongst
other
things, failing to account to his clients in respect of trust funds,
delayed or non-payment of trust funds.
[136] In other
instances the Respondent’s conduct is tantamount to mere
stealing, especially in instances where money was
paid to Respondents
without fulfilling the purpose for which it was received in their
trust account. The fact that they cannot
pay the money back
aggravates the situation. They opened the Fidelity Fund to such
considerable risk.
[137] The
seemingly failure by the Respondents to understand the magnitude or
gravity of their transgressions, pleading that they
are not guilty of
serious misconduct, with Cowling equating these transgressions to
just errors in books of accounting and Janeke
wanting to be
exonerated for dereliction of his duties, indicates that they are
beyond redemption. They are apparently not troubled
or perturbed by
their deeds making any rehabilitative prospects seem far-fetched, in
the protection of the public and the legal
profession the court bears
the duty to carefully mete out or issue appropriate orders and have
to make a value judgment on the
rehabilitative prospects of the
Respondents. This does not, however, make the court not to consider
alf factors presented but be
mindful that it’s reigns supreme.
This view was confirmed in the Supreme Court of Appeal case of the
Law Society of the
Northern
Provinces v/s Dube
unreoorted case number 874/2011.
(2012)
ZASCA 137.
[138] The
requirement of an auditor's report and the prerequisite for an
attorney to be issued with a fidelity fund certificate
annually in
order to continue practising is supposed to serve as a safety
mechanism for the public and the client's money. In the
Respondents'
case those measures have failed, misappropriation had occurred whilst
the Respondents were in possession of the fidelity
fund certificate
and the unqualified audits, a manifestation that undoubtedly put the
profession into disrepute. This signals the
magnitude of the risk if
the Respondents are left to be in the roll of attorneys. Consequently
their removal from the roll of attorneys
would save the profession
from further embarrassment and disrepute and restore the dignity and
the trust of the profession that
is slowly eroded by the unbecoming
behaviour of such attorneys and also circumvent exposing the public
to any further risk; see
Jasat v
Natal Law Society,
2000 (3) SA 44
(SCA).
[139] The fact
that the Respondents are insolvent exacerbates their situation. They
have exhibited an inability to conduct their
lives within their means
and not afraid or deterred to expend monies they are entrusted with
by the public. It would be precarious
to leave them open to a
possibility of being in a position of trust again within the
profession whilst they have been proven by
the court not to be able
to manage even their own affairs and to pay their debts. The onus
being upon them to convince the court
otherwise, which they have
failed to do.
[140] The
Applicant has made a proper case for the order which it seeks against
the two Respondents. It was Applicant's submission
that the
seriousness of the allegations render both of them not fit and proper
and that their names deserve to be removed from
the roll of
attorneys..
[141] The
Applicant submitted further that the Respondents should pay the costs
of this application on an attorney and client scale
as the Applicant
approaches this court not as an ordinary litigant. It submitted with
reference to
The Law Society of the
Northern Provinces v Mogami
&
Others
and Law Society of the Northern Provinces vRF Sonntag
2011
ZASCA 204
( 25 November 2011) that the general rule is that the
Applicant is entitled to its cost, even if unsuccessful, and usually
on an
attorney and client scale.
[142] As
indicated the Applicant is vested with the power to launch an
application to strike the name of a member from the roll
of attorneys
or to suspend him from practise should it find that such member has
acted in dishonourable, unworthy or unprofessional
manner.
[143] It is
therefore reasonable that in these circumstances the Applicant should
not be burdened with legal costs when launching
an application to
discipline a member, and that an attorney who has made himself guilty
of dishonourable, unworthy or unprofessional
conduct should pay all
of Applicants fees so that the Applicant does not find itself out of
pocket. The nature of the offences
committed warrants an order of
costs on this basis; see
Botha v Law
Society of the Northern Provinces
r20081
ZASCA
106: 2009
(PSA
227
(SCA) at236F-G.
[144] The parties
referred the court to various decided cases from the Supreme Court of
Appeal. They all dealt with almost similar
cases where the court had
to decide on whether the attorneys charged were fit and proper to
continue practising as attorneys. Various
factors were taken into
account in considering suitable orders. What is almost important is
that the court has to use its own discretion
on each case. Now having
heard all parties to the hearing and after consideration of all
submissions on the appropriate sanction
to be meted out and as a
consequence of all the raised factors in the conduct of the
Respondents.
[145] It is
ordered:
[145.1]
That the Respondents’ names be struck off the roll of
practicing attorneys;
[145.2]
That both Respondents be ordered to pay the costs of this application
on attorney and client scale jointly and severally
liable each one
paying the other to be absolved.
[145.3]
All the ancillary relief constituted in the draft order that is
annexed hereto marked “X” are incorporated into
this
order.
N
V KHUMALO
Judge
of the High Court of South Africa;
Gauteng
Division, Pretoria
P
D MOSEAMO
Acting
Judge of the High Court of South Africa
Gauteng
Division, Pretoria
For
the Applicant: P J SMITH Attorneys
Instructed
by: Rooth Wessels Inc
For
the 1
st
Respondents: Adv Quinton Pelser (SC)
Instructed
by: Juan Kotze Attorneys
(011)8921018
For
the 2
nd
Respondent: E L THERON
Instructed
by: C J Janeke Attorneys