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[2016] ZAGPPHC 775
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Law Society of the Northern Provinces v Kubuana (69007/2015) [2016] ZAGPPHC 775 (24 August 2016)
REPUBLIC OF SOUTH
AFRICA
IN
THE HIGH COURT OF SOUTH AFRICA
GAUTENG DIVISION,
PRETORIA
DATE:
24/8/2016
CASE
NO:
69007/2015
Reportable:
No
Of
interest to other judges: No
Revised.
THE
LAW SOCIETY OF THE NORTHERN
PROVINCES
Applicant
and
MAPHUTI
ROSINA
KUBUANA
Respondent
JUDGMENT
AC
BASSON, J
[1]
This
is an application for the removal of the respondent (Ms Maphuti
Rosina Kubyana) from the roll of attorneys of this court in
terms of
section 22 of the Attorneys’ Act
[1]
(Part B) together with further ancillary relief as set out in Part B
of the Notice of Motion. The application was heard by the
urgent
court on 14 October 2015. The court ordered that the respondent be
suspended from practicing as an attorney pending the
relief sought in
Part B of the application for the removal of her name from the roll
of attorneys.
The
Law Society submits that the respondent's name should be struck from
the roll.
Background
[2]
The respondent was admitted as an attorney on 29 July 2013 and her
name still appears on the role. At all relevant times the
respondent
practiced as an attorney for her own account as a single practitioner
under the name and style of Kubyana Attorneys
in Benoni. The
respondent closed down her practice on 12 January 2015.
[3]
It is common cause that the respondent fell pregnant but that due to
complications with her pregnancy she was bedridden during
the period
April 2014 to August 2014. The respondent was therefore absent from
her practice for approximately 5 months.
[4]
During her absence the respondent appointed a so-called manager - a
one Mr Edward Ejere (“Ejere”) - to assist her
in her
practice during her absence. Ejere is not an admitted attorney.
During this 5 month period Ejere had full access to one
of the firm’s
trust banking accounts.
[5]
Upon her return to her office in September 2014, the respondent
discovered that irregular payments and withdrawals had been
made from
her trust banking account. According to the respondent, Ejere had
acknowledged to her that he had misappropriated trust
funds for
personal gain. However, at the time the respondent was unable due to
the disarray of her accounting records to advise
the Law Society of
the exact trust deficit in her bookkeeping but estimated the amount
to be in the region of R 900 000.00.
[6]
The Law Society appointed Ms Geringer (“Geringer”) - a
legal official in the employ of the Law Society’s Monitoring
Unit - to inspect the respondent’s accounting records and
practice affairs as well as to investigate the complaints submitted
to the Law Society.
[7]
The respondent informed Geringer that she was under the impression
that her accounting records were in order but was unable
to provide
Geringer with an indication as to the current status of her
accounting records.
[8]
Geringer reported to the Law Society on 1 June 2015. The following
findings are,
inter alia
, recorded in the report:
[8.1] There was a
substantial trust deficit in the respondent’s trust banking
account in the amount of R 1.2 million.
[8.2] The respondent
appointed a non-attorney to take control and supervise her practice
on her behalf for an extended period of
time. During this time the
respondent, who was a single practitioner, failed to appoint a
practicing attorney to take control of
her practice and to exercise
proper supervision during her absence. The respondent
furthermore placed a non-attorney (Ejere)
in a position where he had
access to the respondent’s trust banking account.
[8.3] Geringer’s
investigations into the practice’s trust account revealed that
various amounts held on trust in respect
of clients were no longer
available in the trust banking account. Trust funds from no less than
7 clients were misappropriated.
[8.4] The accounting
records of the respondent were found to be in such disarray that it
was difficult to establish whether trust
funds were paid in favour of
Ejere or whether irregular transfers were made to the respondent’s
business account or towards
the respondent’s business expenses
as many of the transfers were made randomly and could not be
identified.
[8.5] The trust deficit
were found to be in the region of R 1 285 788.09. However,
due to the unavailability of reliable
accounting records, the exact
trust position could not be established by Geringer.
[8.6] Various irregular
payments (all recorded in Geringer’s report) were made from the
firms’ business banking account.
For example, an irregular
payment was made to a certain Pose Group and on 8 July 2014 an amount
of R23 450.00 was paid to
Kerrs Funeral Services which payment
was made in respect of Ejere’s personal expenses. Ejere also
made several unauthorised
payments in respect of salaries in August
2014. Geringer recorded that it was apparent to her that several of
the transfers made
by Ejere from the trust banking account to the
business banking account were made randomly.
[8.7] One complaint has
been lodged with the Law Society relating to the firms failure to
make payment to a client in the amount
of R 220 000.00. Two
further claims in the amount of R 381 990.06 and R 220 000.00
have been lodged with the Attorneys
Fidelity Fund.
[8.8] The respondent
remained absent from her practice for a period of five months. During
her extended absence the respondent failed
to keep proper accounting
records in respect of her practice. The accounting records were in
such a state of disarray that, at
the time of the investigation, the
respondent was unable to advise Geringer in respect of the status of
her accounting records.
Geringer concluded that the firm’s
accounting records were so unreliable that she was, as already
pointed out, not able to
establish what the true trust position was.
[8.9] The respondent
attended to the registration and transfers of immovable properties
without having being admitted as a conveyancer.
[8.10] Various of the
respondent practice’s expenses were paid from her trust
account. The respondent further effected irregular
transfers from her
trust account to her business banking account.
[8.11] The respondent
admitted that she is unable to rectify the trust deficit in her
account.
[8.12] Two claims lodged
with the Attorneys Fidelity Fund have been founded on the
misappropriation of trust funds.
[8.13] The Law Society
have received several serious complaints against the respondent.
[9]
The respondent admitted most of these facts. More in particular, she
admitted that there was a substantial trust deficit in
her firm’s
bookkeeping; that Ejere had unsupervised access to the firm’s
trust banking account; that Ejere embezzled
substantial amounts of
trust funds during the respondent’s five months’ absence
during which Ejere was not supervised;
that the respondent was
unaware of what the firm’s trust position was during her
absence and that she failed to keep proper
accounting records and
that the accounting records were unreliable; and lastly, the
respondent admitted that she is not in a position
to rectify the
trust deficit.
General
principles
[10]
The principle is trite that the question whether an attorney is a fit
and proper person to practice falls in terms of section
22(1) of the
Act within the discretion of the court. It also falls within the
discretion of the court what an appropriate sanction
should be having
regard to the totality of facts placed before it.
[11]
In deciding matters such as this, the court follows a three staged
inquiry:
(i) During the first part
of the enquiry the court will decide whether or not the alleged
offending conduct has indeed been established
on a preponderance of
probabilities.
(ii) Secondly, once the
court is satisfied that the offending conduct has indeed been
established, the court will consider whether,
in its discretion, the
respondent is a fit and proper person to continue to practice. This
process requires a value judgment and
requires the court to evaluate
and weigh up all the evidence that was placed before it.
(iii)
Once both
questions have been decided the court will consider what, in its
discretion, an appropriate sanction should be. More in
particular,
the court will consider whether a person should be removed from the
roll or whether such a person should merely be
suspended from
practice for a specified period of time. In considering this question
the court will have regard to the nature and
gravity of the conduct
complained of. As already pointed out, the court will consider all of
these factors in their totality and
not in isolation.
[2]
[12]
It is a
cornerstone principle of the attorneys’ profession that
attorneys should at all times keep proper accounting records.
This
means that an attorney is obliged to
keep
proper records and books of account in line with generally accepted
accounting practices and procedures. More in particular,
it is
required that an attorney keep full and accurate record of all
financial transactions.
In
general the courts regard a failure to keep proper accounting records
as a serious contravention warranting an order that an
attorney be
either struck from the role or be suspended. See in this regard:
[zRPz]
Cirota
And Another v Law Society, Transvaal
:
[3]
“
The
failure to keep proper books of account as required by s 33 of Act
23 of 1934 is a serious contravention and our Courts
have
repeatedly warned that an attorney who fails to comply with the
section renders himself liable to be struck off the roll or
to
suspension. (See, in this regard,
Incorporated
Law Society v Benade
1956
(3) SA 15
(C) at 17 - 18,
Incorporated
Law Society, Transvaal v S
1958
(1) SA 669
(T) at 675;
Incorporated
Law society, Transvaal v Goldberg
1964
(4) SA 301
(T) at 303 - 4.) Non-compliance with the rules of the
Law Society relating to the proper keeping of books is, in my view,
also a serious matter.
[4]
See also
:
[zRPz]Holmes v Law Society of the Cape of Good Hope and Another Law
Society of the Cape of Good Hope v Holmes
[5]
“
[28] The failure
to keep proper books is a serious offence. The keeping of proper
books underpins the Legislature's endeavours to
protect the interests
of the public. As succinctly stated by Van Winsen J in
Cape
Law Society v Mda
1971
(2) SA 201
(C)
(at 204H):
'It is not sufficient
that trust moneys should not be misappropriated. It is equally
necessary that an attorney's dealings with
such moneys should be
properly recorded. . . . Failing that, much of the machinery provided
by the Legislature, eg regs 59 and
60, for the protection of clients,
and, indeed, of the Attorneys', Notaries’ and
Conveyancers' Fidelity Guarantee Fund,
is rendered nugatory.'
[13] I am in full
agreement with the remarks of Trollip, J (as he then was) that 'a
contravention of this duty should generally
be regarded in a serious
light'. Likewise, I wholeheartedly agree with the comments of
the same learned Judge in Law
Society, Cape v Marock
(at
206H - 207A) that:
'It cannot be
sufficiently stressed that a careful adherence to the requirements of
the law as to keeping of clients' trust accounts
and the proper
operation of a trust banking account number amongst the most
important of the attorney's duties to his clients.
The lack of strict
compliance with these rules cannot fail to undermine the confidence
of the public in the profession, a
situation which, I hardly need
stress, ensures to the detriment of all the members of the
profession. It is, in my view, the Court's
duty to take such action
as is necessary to maintain, in full, that confidence and to make its
condemnation of a departure from
the requirements of the law, both
with regard to the administration of a trust banking account and
in regard to the proper
keeping of trust accounts, plain for all to
see.’”
[14]
Of specific
importance to the present matter is the principle that, although an
attorney may delegate some of its accounting functions
to staff, it
remains nonetheless the duty and responsibility of the attorney to
oversee that the work is done properly and with
appropriate
diligence. Moreover, in the event that it transpires that the
accounting tasks were not properly executed, the attorney
will
ultimately remain answerable if a member of its staff transgresses
the law or where it is found that the rules of professional
conduct
in relation to the attorney’s practice were transgressed. An
attorney is therefore required to always keep a vigilant
eye on trust
moneys and ensure that the monies are not used improperly and will
ultimately still be liable in the event of a transgression
in respect
of the duty of care regarding trust monies. See in this regard
:
[zRPz]
Incorporated
Law Society, Transvaal v Visse and Others (1) Incorporated Law
Society, Transvaal v Viljoen (2)
:
[6]
“
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. He cannot do this without the
assistance of proper books of account. In
fact, the absence of proper
books of account increases the temptation to deal improperly with
such trust moneys. If there
is a probability that the continued
handling of trust moneys by an attorney would be dangerous for his
clients and the attorneys'
fidelity guarantee fund, the Court should
remove him from the roll of attorneys.”
[15]
It is
furthermore trite that it is an important principle that an attorney
has an absolute duty towards the preservation of trust
funds and that
the failure to keep proper books and accounting records is a serious
offence. To reiterate what the court said in
Homes
:
[7]
“
The keeping of
proper books underpins the Legislature's endeavours to protect the
interests of the public.”
[16]
Without repeating the various transgressions, it is clear that the
respondent’s conduct fell miserably short of what
is expected
of an attorney. Her conduct was further, in my view reckless to the
extreme in failing to supervise her employees;
to leave the practice
in charge of Ejere who had unsupervised access to the trust bank
account over a period of several months;
to completely neglect to
supervise her bank account and to neglect to ensure that proper
accounting records are kept.
[17]
It is of
concern to the court that the respondent appears to be of the view
that she is not to be blamed and that others should
be blamed for the
misappropriation of trust funds from her trust account. Her denial of
any wrong doing is also at odds with what
she herself had stated in
letters to the Law Society in which she admitted that she acted
grossly negligently in allowing Ejere
to manage her practice and
trust account. In these letters the respondent further specifically
accepted responsibility for her
actions. The fact that Ejere who is
not an attorney was appointed by the respondent to manage her firm is
but one factor to be
taken into account. The fact that the respondent
gave Ejere unsupervised access to her trust account considerably
elevates the
degree of her negligence as an attorney. Our courts have
been consistent in its approach that an attorney should always
supervise
those entrusted with trust accounts. See
Visse
[8]
:
“
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.”
[18]
The respondent also blames Ms Coetzee (an
attorney) and alleges that she was tasked to supervise the practise.
In an affidavit attached
to the papers Coetzee denies having been
employed by the respondent in any supervisory capacity and states
that she was only appointed
as an
ad
hoc
conveyancer and not as a
professional assistant. Coetzee also denies that she was given any
authority to operate on the firm’s
trust account and states
that she had no insight into the trust bank statements. No affidavit
was filed by the respondent refuting
these allegations made by
Coetzee.
Conclusion
[19]
The court is satisfied that the alleged
offending conduct has been established on a preponderance of
probabilities. The fact that
the respondent admits to most of the
offences was also taken into account in coming to a conclusion.
[20]
It
is clear from the conduct of the respondent and the investigation
conducted by Geringer that the respondent has transgressed
several of
the provisions of the Attorneys’ Act and the Law Society’s
Rules. By transgressing the provisions of section
78(4)
[9]
of the Attorneys’ Act the respondent has made herself guilty of
unprofessional conduct rendering the practitioner liable
to be struck
off the role or to be suspended from practice.
[21]
In considering an appropriate sanction regard
must be had to the seriousness of the transgressions. There is no
doubt that the transgressions
are extremely serious and that the
respondent’s negligence had resulted in large amounts of trust
funds being misappropriated
from her trust account towards her former
trust creditors.
[22]
As
repeatedly pointed out, the law extracts from an attorney the highest
possible degree of good faith and it is expected from an
attorney to
scrupulously observe and comply with the provisions of the Act in
respect of all practice related matters and especially
pecuniary
matters: [zRPz]
See:
Society,
Transvaal v Matthews
:
[10]
“
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. Where 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 such 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 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 Viljoen
1958
(4) SA 115
(T)
at 118F - H. An attorney's duty in 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:
Incorporated
Law Society, Transvaal v Behrman
1977
(1) SA 904 (T)
at 905H. It is significant that in terms of s 83(13) of the Attorneys
Act a practitioner who contravenes the provisions relating
to his
trust account and investment of trust money will be guilty of
unprofessional conduct and be liable to be struck off
the roll or
suspended from practice.”
[23]
The respondent has failed miserably in her duty of good faith towards
her firm and her clients.
[24]
Taking into account all the relevant facts, I
am of the view that the respondent has ceased to be a fit and proper
person to practice
as an attorney and should no longer be allowed to
be part of the attorney’s profession.
ORDER
In
the event the following order is proposed:
1.1 That the name of
MAPHUTI ROSINA KUBYANA
is struck from the roll of attorneys of
this Court;
1.2 that the relief set
out in Part A paragraphs 1.3 up to and including 1.12 of the order of
this Court dated 14 October 2015 will
remain in force;
1.3 that the respondent
be and is hereby directed:
1.3.1
to pay, in terms of section 78(5) of Act No 53 of 1979, the
reasonable costs of the inspection of the accounting records of
the
respondent;
1.3.2
to pay the reasonable fees and expenses of the curator;
1.3.3
to pay the reasonable fees and expenses of any person(s) consulted
and/or engaged by the curator as aforesaid;
1.3.4
to pay the expenses relating to the publication of this order or an
abbreviated version thereof; and
1.3.5
to pay the costs of this application on an attorney and client scale.
_________________________
AC
BASSON
JUDGE
OF THE HIGH COURT
I
agree and it is so ordered
_________________________
SS
MPHAHLELE
JUDGE
OF THE HIGH COURT
Appearances:
For
the applicant
: Mr PJ Smith
Instructed
by
: Rooth &
Wessels Inc.
For
the Respondent
: Mr TP Moloto
Instructed
by
: TP
Moloto & Co Inc.
[1]
Act 53 of 1979.
[2]
Law
Society, Northern Provinces v Mogami
2010 (1) SA 186
(SCA) at paragraph 4.
[3]
1979 (1) SA 172 (A).
[4]
At 193E – G.
[5]
2006 (2) SA 139
(C) at 152B – F.
[6]
1958 (4) SA 115 (T).
[7]
Supra
.
[8]
Supra
.
[9]
(4) Any practising practitioner shall keep proper accounting records
containing particulars and information of any money received,
held
or paid by him or her for or on account of any person, of any money
invested by him or her in a trust savings or other interest-bearing
account referred to in subsection (2) or (2A) and of any interest on
money so invested which is paid over or credited to him
or her.”
[10]
1989 (4) SA 389
(T).