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[2015] ZAGPPHC 212
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Law Society of the Northern Provinces v Wilkinson (45601/2014) [2015] ZAGPPHC 212 (20 April 2015)
REPUBLIC
OF SOUTH AFRICA
HIGH COURT OF
SOUTH AFRICA
(GAUTENG
PROVINCIAL DIVISION, PRETORIA)
CASE NO:
45601/2014
NOT
REPORTABLE
NOT
OF INTEREST TO OTHER JUDGES
DATE:
20 APRIL 2015
In the matter
between:
THE
LAW SOCIETY OF THE NORTHERN
PROVINCES
.........................................................
Applicant
and
JOSEPH
JOSHUA
WILKINSON
..................................................................................................
Respondent
JUDGMENT
MAKGOKA. J
[1] This is an
application by the Law Society of the Northern Provinces (the Law
Society) to have the respondent suspended from
practising as an
attorney, as well as related ancillary relief. The respondent was
admitted as an attorney and conveyancer of this
court on 6 June 1996
and 4 December 1997 respectively. He practiced for his own account in
Pretoria under the name of Wilkinson
Attorneys until 4 November 2014
when he was suspended from practice by this court at the instance of
the Law Society, pending an
application by the Law Society for the
removal of the applicant’s name from the roll of attorneys.
[2] The application
by the Law Society was launched on 20 June 2014. The respondent
opposed the application but failed to deliver
his answering affidavit
timeously. The matter served before this court on 15 July 2014, on
which occasion this court extended the
period within which the
respondent was to deliver his answering affidavit to 8 August 2014.
Pending the determination of the application,
respondent was
prohibited from operating his trust account. A curator was appointed
to operate the respondent’s trust account.
The matter was
postponed to 4 November 2014.
[3] On 4 November
2014 the respondent had still not delivered his answering affidavit.
An order was issued suspending the respondent
from practice, with
ancillary orders relating to the management of the respondent’s
practice. The respondent was ordered
to deliver his answering
affidavit on or before 5 January 2015. The matter was postponed to 25
February 2015. Although the respondent
delivered his answering
affidavit later than the date ordered by this court, nothing turns on
this as the Law Society has also
delivered its replying affidavit
without murmur. That, briefly is how we became seized of the matter.
[4] The gravamen of
the Law Society’s application is that the respondent has, in
contravention of the Law Society’s
rules, failed to account to
clients promptly in respect of monies entrusted to him, after being
requested to do so. The genesis
of the complaints is the purchase and
transfer of immovable property between Willbo Investments (Pty) Ltd
(Willbo) as seller, and
the Department of Rural Development and Land
Reform (the department), as purchaser. Both Willbo and the department
have laid complaints
against the respondent with the Law Society. The
complaint by Willbo is subject of a pending judgment before this
court. At the
hearing of this application, the parties’ legal
representatives agreed that we should not concern ourselves with the
Widbo
complaint. Accordingly, we confine ourselves to the complaint
by the department.
[5] The department’s
complaint is that it purchased land from Willbo for R32 000 000 as
part of its land redistribution programme.
The respondent was
appointed as the conveyancer to effect transfer of the property into
the name of the community which had successfully
claimed the land. In
terms of the sale agreement, R28 000 000 was paid into the
respondent’s trust account with specific
instructions to invest
the money in an interest-bearing account in terms of s 78(2A) of the
Attorneys Act 53 of 1979 (the Act),
to accrue for the benefit of the
department, pending the transfer of the property.
[6] On 26 November
2012, and after the transfer had taken place, the department wrote a
letter to the respondent requesting the
following:
(a) a statement of
account reflecting the date of investment of the portion of the
purchase price, interest accrued thereon and
the date on which the
money was withdrawn;
(b) documentary
proof of payment of the interest to the department as stipulated in
the sale agreement.
[7] The respondent
replied to that letter on 28 November 2012, in which he stated that
‘the interest on the 90% deposit purchase
price ‘can be
easily calculated with regards to the date of payment to our trust
account and to the date of registration.
The percentage of interest
is stipulated in the Deed of Sale for your ease of reference.’
With regard to the payment of interest,
the respondent stated that he
referred to Mr Bogatsu for the ‘terms and conditions between
the parties.’
[8] On 7 December
2012 the department wrote to the respondent, in which reference was
made of an unanswered letter from the department
to the respondent,
and giving the respondent 5 days to effect payment of the interest,
failing which the department would report
the matter to the Law
Society. There was no response to that letter, either.
[9] On 11 February
2013 the department wrote another letter to the respondent, again
demanding that the respondent account to the
department within 14
days. On 15 February 2013 the respondent replied to the department as
follows:
‘
Please
be so kind and inform us what is the amount that you are claiming as
requested telephonically and via correspondence on various
occasions.
As soon as we receive the amount claimed, we will get instructions
and report back to you as possible.’
[10] On 25 February
2013 the department lodged a complaint against the respondent with
the Law Society. The department complained
that the respondent had
failed to account to it in respect of the interest earned on the
purchase price. As a result of this complaint,
the Law Society
instituted an investigation by a chartered account, Mr De Leeuw Swart
(Swart). Swart inspected the respondent’s
accounting records on
18 and 19 March 2014, and on 4 April 2014, in the presence of the
respondent’s bookkeeper. In his report
to the Law Society,
Swart reported, among others, that the respondent’s trust
accounting records as at 14 October 2013 reflected
a trust shortage
of R5 322 027.
[11] As to how the
respondent dealt with the purchase price, Swart reported that within
two weeks of receiving the money, the respondent
withdrew R10 000 000
of that money, for his direct and indirect benefit. Before the
transfer of the property, the respondent withdrew
a further R10 000
000 of the purchase price, and paid it one of the directors of
Willbo. It is worth mentioning that the respondent
is a shareholder
and director of Willbo.
[12] In his
answering affidavit, the respondent puts forth as the thrust of his
defence, an oral agreement purportedly concluded
with a Mr Lengane
Bogatsu, a chief director in the department. The agreement, so it is
suggested, was that the respondent would
retain the interest earned
on the investment account as payment for further legal services that
the responded would have rendered
to the department. With regard to
the trust account shortage, the respondent disputes the extent of
such shortage.
[13] From the above,
three questions can be distilled, albeit arising from the same
complaint by the department. First, whether
or not the respondent has
failed to account to the department for the money entrusted to him
for investment. Second, and linked
to the first, is whether there was
an agreement between the respondent and the department to off-set his
fees against the interest
earned. Third, whether there was shortage
in the respondent’s trust account at any given period. The
determination of each
of these issues is necessary before an enquiry
is undertaken on the relief sought by the Law Society. I proceed to
consider the
questions, in turn.
Failure to
account for the money entrusted for investment
[14] It is clear
that the respondent conflates two distinct issues-accounting and a
set-off. When one talks about an attorney accounting
to his client,
it means that the attorney should, in writing, inform the client of
how the client’s funds were disbursed.
In the present case,
what was called for was simply a statement reflecting the date on
which the investment was made, the duration
of the investment and the
amount of interest earned for the duration for that period. Whether
or not there was an agreement of
setoff, that exercise must still be
undertaken. In other words, set-off has nothing to do with that
process of accounting. Put
differently, the alleged agreement to
set-off the amount supposedly owed by the department, does not
relieve the respondent of
his duty to account to his trust creditor,
the department.
[15] What is more, a
set-off cannot take place unless the two amounts to be set-off
against each other, are known. In the present
case, the respondent
has to date, not stated what the amount of interest earned on the
investment was. The respondent is content
with stating baldly that
the amount of his alleged fees exceeds the amount of interest earned
on the trust account. The immediate
question is: how does he know
that if he does not state (or know) what the amount of interest is?
[16] The respondent
clearly misconstrues his duties with regard to accounting. This is
further demonstrated by his response in the
answering affidavit that
the letters he sent to the department, referred to in paras [7] [8]
and [9] above, constituted accounting
to the department. Just to
recap on the contents of those letters, the respondent was responding
to the department’s request
for him to account to it and pay
over the interest earned on the purchase price. In the first letter,
the respondent stated that
the interest can be easily calculated,
thereby suggesting that the department should calculate the interest.
This view is confirmed
in his letter dated 15 February 2013 in which
he ‘enquired’ from the department as to the amount of
interest it was
claiming from him. How the respondent can boldly
assert that these responses amount to accounting, is startling,
indeed.
[17] What remains is
that, to date, the respondent has not informed the department of the
particulars of the investment: the date
on which the money was
deposited in an interest-bearing account in terms of s 78(2A); the
amount of interest earned on that account
pending the transfer of the
property. This should be fairly easy, and should take a simple
statement from the bank with all the
necessary details such as the
duration of the investment and the amount of interest earned on the
account for such period.
[18] Nowhere in his
answering affidavit does the respondent state for a fact, that the
money was invested as instructed. Perhaps
the clearest indication
that the money was not so invested, lies in the respondent’s
answer to the pertinent allegation by
the department that the money
was to be invested in an interest-bearing account. In his answer, the
respondent merely states that
he ‘notes the applicant’s
contention that the amount ...was to be invested by me in an
interest-bearing account ...for
the benefit of the department’.
[19] This money was
entrusted to him, and he should be able to inform his trust creditor,
the department, what he did with the money.
The money was either
invested or it was not. There is no room for ‘noting’
such a pertinent allegation, which is the
substratum of the complaint
against him. It must be dealt with directly and clearly. These are
all matters within his peculiar
knowledge. It should be borne in mind
that Swart reported that within two weeks of the money being paid
into the respondent’s
trust account, the respondent withdrew
R10 000 000 thereof for his benefit, and a further R10 000 000 was
withdrawn before registration
for the benefit of the respondent’s
co-director at Willbo. These were irregular and unauthorized
withdrawals.
[20] The respondent
has failed to deal directly and pertinently with these very serious
allegations. All he is prepared to say is
that Swart was given
insufficient information by his then employee, Ms Nel. But he does
not say in his answering affidavit what
further information he would
have given to Swart. Swart noted that because of the two unauthorised
withdrawals referred to above,
the purchase price would have earned
very little interest.
On the above
considerations, I am satisfied that the respondent has failed to
account to the department with regard to the 90% purchase
price.
Agreement to
set-off interest against fees
[21] The respondent
alleges that there was an oral agreement between him and the chief
commissioner of the department in terms of
which he was entitled to
set-off his fees for additional work he performed for the department,
against the interest earned on the
purchase price. As proof of the
existence of such agreement, the respondent attached to his answering
affidavit, a copy of a purported
transcript of a conversation that he
secretly recorded in a meeting he had with a functionary of the
department, Ms Kgomotso Sefolo.
Before considering the contents of
the transcript, an ethical aspect thereof should be addressed. I find
it extremely reprehensible
that an attorney secretly recorded a
conversation of a meeting with a representative of his client,
clearly with the intention
of using that in subsequent proceedings.
That, in my view, is decidedly unethical, dishonourable and
unbecoming of an officer of
this court. Most disconcerting, the
respondent in fact, puts forth the transcript of such conversation as
a basis for his defence.
I take a very dim
view of the respondent’s conduct in this regard.
[22] Back to the
contents of the transcript. The respondent’s insurmountable
difficulty is that he seeks to use some impermissible
form of
self-corroboration to bolster his assertion of an agreement. How a
conversation with anyone other than Mr Bogatsu could
confirm the
existence of an agreement, escapes me. The conversation was not
between him and Mr Bogasu. It is not suggested that
Ms Sefolo was
party to the alleged agreement between the respondent and Mr Bogatsu,
or that she was even aware of it. But in any
event, on a plain
reading of the transcript, there is nothing remotely indicative of
the agreement contended for by the respondent.
There is nowhere in
the transcript where the respondent refers pertinently to the alleged
agreement, or reminds Ms Sefolo of the
existence of such agreement.
[23] In my view,
therefore, the transcript proves nothing. It confirms nothing. The
respondent’s assertion in this regard
is contrived, and falls
to be rejected. It has no probative value whatsoever, and we are
entitled to simply ignore it. I therefore
find that there was no
agreement between the respondent and the department for him to
set-off the interest earned on the investment
of the purchase price.
[24]
If this conclusion is wrong, there is another basis on which the
respondent would be non-suited. In terms of s 36(2)(a) read
together
with s 38(1 )(f) of the Public Finance Management Act (PFMA) only the
head of the department, as the accounting officer,
is empowered to
settle all contractual obligations such as the agreement alleged by
the respondent. This is public knowledge, and
the respondent, as an
attorney, is expected to know this. Mr Bogatsu was not the accounting
officer of the department. The respondent’s
reliance on the
so-called
Turquand
rule
1
is therefore totally misplaced.
Trust account
shortage
[25] I turn now to
the allegation that there were trust account shortages. It is not in
dispute that there was a deficit in the
respondent’s trust
account. The dispute concerns the extent of that deficit. Swart puts
it as high as over R10 000 000. An
independent auditor appointed by
the respondent indicated a shortage of just over R30 000. The
respondent says that he has since
paid over this amount into the
trust account. Once more, the respondent displays lack of insight
into how an attorney’s trust
account should be maintained. It
is not the extent of the trust account deficit that attracts
sanction, but the mere existence
of trust account deficit. The
respondent does not take this court into his confidence as to how
this deficit occurred, and the
source of the funds he used to repay
the shortage.
Is
the respondent fit to be on the roll of attorneys
?
[26]
The question whether an attorney is no longer a fit and proper person
to practice as such lies, in terms of section 22 (1)
(d) of the Act,
in the discretion of the court. See
Law
Society of the Good Hope v Budricks
2
In
the present case, it is clear, on a broad conspectus that the
respondent has failed to account to the department as to how he
deaft
with the purchase price entrusted to him with specific instructions
to invest. There is direct evidence that he has utilized
the bulk of
the money entrusted to him, in an unauthorized manner, as more fully
explained in para [11] above.
[27]
On each of the above, the respondent has failed to come clean before
this court and give frank, direct and pertinent answers
to the issues
raised in the complaint by the department. Instead, the respondent
adopted a technical approach to the issues. It
must be borne in mind
that the proceedings such as the present are
sui
generis
and
of a disciplinary nature. There is no
lis
between
the Law Society and the respondent. The Law Society, as a
custos
morum
of
the attorneys’ profession, places before court facts for
consideration and an exercise of a discretion.
3
For that reason, it is expected of a respondent against whom
allegations of impropriety are made, to co-operate and provide, where
necessary, information, to place the full facts before the Court to
enable it to make a correct decision. Broad denials and
obstructionism
have no place in such proceedings.
4
[28] Regrettably, in
this case, the respondent persisted with a contrived version of an
agreement to set-off the interest to be
earned on the purchase price.
What is more, there was undeniably a trust shortage in his trust
account. From the above, I am satisfied
that the respondent has shown
himself not to be a fit and proper person to be on the roll of
attorneys.
The appropriate
sanction
[29]
Once a court has determined that an attorney is no longer fit to
remain on the roll of attorneys, the court must determine
an
appropriate sanction, namely a suspension from practice or striking
from the roll. This determination also lies within the discretion
of
the court. The opinion or conclusion of the 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:
Kaplan
v Incorporated Law Society
;
Transvaal.
5
[30]
The application requires a three-stage enquiry. First, the court must
decide whether the alleged offending conduct has been
established on
a preponderance of probabilities, which is factual enquiry. Second,
it must consider whether the person concerned
is ‘in the
discretion of the court’ not a fit and proper person to
continue to practice. This involves a weighing-up
of the conduct
complained of against the conduct expected of an attorney and, to
this extent, is a value judgment. And third, the
court must enquire
whether in all the circumstances the person in question is to be
removed from the roll of attorneys or whether
an order of suspension
from practice would suffice. See
Law
Society, Northern Provinces v Mogami and Others
6
[31]
In
Summerley
v Law Society, Northern Provinces
7
the
court explained the test to be applied during the third stage of the
enquiry as follows:
'The third enquiry
again requires the Court to exercise a discretion. At this stage the
Court must decide, in the exercise of its
discretion, whether the
person who has been found not to be a 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.’
Conclusion
[32] In my view, the
respondent’s transgressions are very serious indeed. This is
exacerbated by the respondent’s apparent
lack of insight into
the seriousness of his shortcomings, and the fact that he did not
take this court into his confidence. In
my view, the only sanction I
deem suitable under the circumstances, is the striking of
respondent’s name from the roll of
attorneys.
Costs
[33]
Finally, the issue of costs. In matters such as these, policy
considerations are that the Law Society, as the
custos
morum
of
the attorneys’ profession, should not be burdened with legal
costs when launching applications against attorneys who have
made
themselves guilty of dishonourable, unworthy or professional conduct.
A practice has therefore developed that costs are granted
on an
attorney and client scale. We have no reason, and none has been
proffered, to depart from that practice. An order of costs
on an
attorney and client scale is therefore justified.
Order
[34] In the result I
make the following order:
1. The name of
JOSHUA WILKINSON (the respondent) is struck from the roll of
attorneys and of conveyancers of this court.
2. Paragraphs 2-12,
all inclusive, of the draft order attached hereto and marked “A"
are made part of the order of this
court.
TM MAKGOKA J
UDGE OF THE HIGH
COURT
I agree
M.G. PHATUDI
ACTING JUDGE OF
THE HIGH COURT
DATE HEARD: 25
FEBRUARY 2015
JUDGMENT
DELIVERED : 20 APRIL 2015
FOR THE APPLICANT
: MS. S.L. MAGARDIE
INSTRUCTED BY:
DAMONS MAGARDIE RICHARDSON, PRETORIA
FOR THE
RESPONDENT : ADV. J.C. SWANEPOEL
INSTRUCTED BY :
SPIES BESTER POTGIETER, PRETORIA
1
The
rule has its genesis in
Royal
British Bank
v
Turquand
(1856)
6 E&B 327 where the harshness of the constructive notice doctrine
was mitigated.
2
2003
(2) SA 11
(SCA).
3
See
generally:
Hassim
v
Incorporated
Law Society of Natal
1977
(2) SA 757
(A) at 767 C-G;
Law
Society
,
Transvaal
v
Matthews
1989
(4) SA 389
(T) at 393E;
Cirota
& Another
v
Law
Society, Transvaal
1979
(1) SA 172
(A) at 187 H and
Prokureursorde
van Transvaal v Kleynhans
1995 (1) SA 839
(T) at 851E-F.
4
See
Prokureursorde
van Transvaal v Kleynhans
1995
(1) SA 839
(T) at 851E-F.
5
1981
(1) SA 762
(T) at 781H.
6
[2
010]
1 All 315 (SCA) para 14.
7
[2006]
SCA 59 (RSA) para 2