Law Society of the Cape of Good Hope v Peter (126/05) [2006] ZASCA 37; [2006] SCA 37 (RSA) ; 2009 (2) SA 18 (SCA) (28 March 2006)

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[2006] ZASCA 37
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Law Society of the Cape of Good Hope v Peter (126/05) [2006] ZASCA 37; [2006] SCA 37 (RSA) ; 2009 (2) SA 18 (SCA) (28 March 2006)

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REPUBLIC
OF SOUTH AFRICA
THE SUPREME COURT
OF APPEAL
OF SOUTH AFRICA
Case number 126/05
Reportable
In the matter between:
THE LAW SOCIETY OF THE
CAPE
OF
GOOD HOPE
APPELLANT
and
HENRIETTA
PETER
RESPONDENT
CORAM
:
Harms, Scott, Farlam, Nugent et Heher JJA
HEARD
: 28
FEBRUARY 2006
DELIVERED
: 28
MARCH 2006
SUMMARY:
Attorney
– misappropriation of trust moneys – whether court
a
quo
should
have struck the name of the attorney concerned from the roll rather
than suspending her for a period and subjecting her to
certain
restrictions for a further period.
Neutral
citation: This judgment may be referred to as
Law Society, Cape
v
Peter [2006] SCA 37 (RSA).
___________________________________
_______________
JUDGMENT
__________________________________________________
FARLAM JA
INTRODUCTION
[1] The appellant applied
to the Cape High Court for, amongst other things, an order striking
the name of the respondent from the
roll of attorneys. Instead of
granting that relief the High Court suspended the respondent from
practice for a year and ordered
further that she be precluded from
practising for her own account, either as a principal or in
partnership or in association or
as a director of a private company
conducting an attorneys’ practice for a period of one year from the
expiry of the suspension.
It further ordered that the restrictions
applicable after the year of suspension expired would only fall away
once she had satisfied
the appellant, after the restrictions had been
in operation for a year, that she has the necessary skills and
expertise to conduct
a conventional legal practice and manage trust
accounts. It gave certain further orders dealing with such matters as
the appointment
of a curator to administer and control the
respondent’s trust account and to take possession of her books of
account, records,
files and other documents relating to her practice
and ordered her to pay the costs of the application on the attorney
and client
scale and to pay the fees and expenses of the curator.
The appellant has appealed, with the leave of this Court, against the
High
Court’s decision not to strike the respondent’s name from
the roll.
FACTS
[2] The respondent
obtained an LLB degree from the University of the Western Cape at the
end of 1999. She sought articles of clerkship
from various firms of
attorneys in Cape Town but was unable to obtain them. From January to
July 2000 she attended the University
of Cape Town School for Legal
Practice, after which she obtained the Diploma in Legal Practice.
From July 2000 to August 2001 she
served under articles for a period
of one year at the Centre for Justice in Athlone. From September 2001
to January 2002 she was
employed as a para-legal, working for an
attorney who practises in Pelican Park. In February 2002 she
successfully wrote the attorneys
admission examination and was
admitted as an attorney on 2 August 2002. She was unable to obtain
employment as a professional assistant
with a firm of attorneys and
had no capital with which to start a practice. Shortly after her
admission she met an executive member
of a trade union and became
involved in a relationship with him. He informed her that the union
required an attorney’s assistance
with some of its matters and that
she would be able to assist it in this regard.
[3] She decided to set up
practice as a sole practitioner in an office in the building occupied
by the union, which lent her a desk
and a chair. She used its
computer and paid half the salary of two of its employees who acted
as her typist/secretary and messenger.
She borrowed the money to pay
the first two months rental for her office, which was payable in
advance.
[4] As I have said, she
had no capital at all with which to begin her practice. She also did
not have any clients: those who came
to her were members of the
union, sent by it. They were unable to pay any fees or deposit money
in advance for work to be done
or in progress. She took work from
them on a contingency basis, hoping to be paid, as she put in her
affidavit, if the matters
were successful. In her affidavit she
stated that she had believed that on commencing practice she would
earn and be paid sufficient
to meet the basic minimum expenses to
keep her office open, particularly in the light of the promises of
the union, but this did
not happen. Although she had done work for a
number of clients the fee income actually received was utterly
insufficient to meet
the basic monthly expenses needed to keep her
office open. By the end of December 2002 she found herself in a
desperate position
unable to pay the expenses of her practice. In
addition she was obliged to leave the place where she was staying and
to obtain
other accommodation for which it was necessary for her to
pay rental and a deposit in advance.
[5] During December 2002
the respondent received various amounts of money in trust which she
proceeded to transfer to her business
account. She used these amounts
to pay her outstanding practice expenses, and the advance payment for
her accommodation. In January
and February 2003 she wrongly
transferred further sums from her trust account to her business
account and used them to pay practice
expenses and what she called in
her opposing affidavit her essential personal living costs. Initially
trust funds owing to a client
named Ajam were misappropriated but
these amounts were later retransferred to Ajam’s account and paid
over to him. Further amounts,
including those required for the
repayment of Ajam, were misappropriated from trust funds owed to two
other clients of the respondent’s,
FJ Solomons and his brother M
Solomons.
[6] The consequence of
the respondent’s having paid business expenses and living costs was
that by 28 February 2003 she only had
R13 284.36 available in trust,
when she ought to have had at least on her own calculations R22
805.28, the amount then owing to
the Solomons brothers. Further sums
totalling R11 437.98 were debited to her trust account in March 2003,
with the result that
at the end of March 2003 she only held a total
amount of R2 272.22 in trust. She admitted that she continued the
practice of paying
her expenses directly from trust during March.
[7] After March 2003, she
committed no further irregularities in relation to money held in
trust on behalf of other clients, despite
the fact that she had
received moneys on their behalf.
[8] On 27 May 2003 FJ
Solomons complained to the appellant that he had not received a full
accounting from the respondent regarding
the amounts she had received
on his behalf pursuant to a settlement between the Solomons brothers
and their employer Electrotech
Industries (Pty) Ltd. The appellant
sent a copy of the complaint to the respondent on 4 June 2003 and
requested her to provide
it with a full report.
[9] In her reply, dated 2
July 2003, the respondent stated that she pleaded guilty to
professional misconduct in that at the end
of February and March 2003
she had used the aforementioned balance [ie, the moneys due to the
Solomons brothers] that ought to
have remained in trust. She set out
certain factors to be considered by the appellant, as she put it, in
‘mitigation of sentence’
and submitted that the appellant should
impose a warning.
[10] The appellant’s
response was to apply to the High Court for an order interdicting the
respondent from practising, pending
the decision of the court in an
application to be brought against the respondent for the striking off
of her name from the roll.
On 25 November 2003 Thring J granted the
appellant’s application for an interdict and the respondent has in
consequence not practised
as an attorney since that date. The reason
that the appellant applied initially for an interdict and did not
immediately launch
a striking off application was its belief that a
full investigation might disclose further misappropriations. In the
result no
further misappropriations were discovered and the
appellant’s president, Mr Taswell Papier, in his replying
affidavit, stated
that the appellant did not dispute the respondent’s
allegation that apart from the misappropriations during the period
December
2002 to March 2003, with which the respondent dealt fully in
her answering affidavit, she had been guilty of no other
irregularities
in respect of trust moneys.
[11] In his founding
affidavit Mr Papier submitted that the respondent had manifested
character defects that demonstrated that she
is not a fit and proper
person to continue to practise as an attorney.
[12] In her answering
affidavit the respondent repeated the admission she had made in her
reply to the complaint received by the
appellant. She stated that it
had been her intention at all times to replace the sums she had
misappropriated once the fee income
from completed matters became
available. In her affidavit she set out her personal circumstances,
which may be summarized as follows:
(a) She was 29 years old
when she made her affidavit. (In fact she was born on 8 January 1975
so that the misappropriations took
place on either side of her 28
th
birthday.)
(b) She spent seven years
studying towards her LLB degree and her studies were achieved through
substantial sacrifice from her parents,
both of whom worked hard to
give their children tertiary education, something they themselves did
not have.
(c) She was never exposed
to practice in a conventional law firm and was not in any way exposed
to bookkeeping, management of trust
accounts or the practical
business aspects of running an attorney’s practice. (As her counsel
submitted this does not excuse
her conduct but does explain how she
could naïvely start up a practice in the way she did, without funds
or backing and in a position
where she was unable to pay the basic
expenses for the first few months.)
(d) She did not make use
of the moneys received into trust for personal luxuries or high
living.
(e) She did not attempt
to hide the misappropriations by false book entries or some elaborate
scheme.
(f) She stated that she
deeply regretted what she did.
(g) In February 2003 she
attempted suicide because she was suffering from depression and
stress due,
inter
alia,
to
her realisation that she had misappropriated trust funds, work
related stress with which she was unable to cope and the fact
that
she was involved in an abusive and physical relationship with the
executive member of the trade union to whom I have referred
earlier.
JUDGMENT IN COURT
A
QUO
[13] In his judgment in
the court
a
quo
Moosa
J said that the respondent’s conduct ‘manifested a character
defect that warrants the conclusion that she is not a fit
and proper
person to continue to practise’. In deciding whether to strike her
name from the roll or to suspend her from practice
the learned judge
stated that he did not think that this case ‘warrants a striking
off’. He continued:
‘
In my view there are exceptional
circumstances not to impose such a penalty. What counts in
respondent’s favour is her frank and
full disclosure, accepting
responsibility for her conduct, the short duration and limited nature
of her misconduct, her expression
of contrition and her willingness
to effect restitution and her limited exposure to the running of a
conventional legal practice
and management of trust accounts’.
He accordingly made the
order summarized in para 1 above.
SUBMISSIONS IN THIS
COURT
[14] It was argued on
behalf of the appellant that the court
a
quo
erred
in not striking the respondent’s name from the roll of attorneys.
It was contended that in view of the court
a
quo’s
finding
that the respondent had misappropriated trust moneys because of a
character defect, which it did not find had been cured,
she should
not merely have been suspended. In principle, so it was argued, once
a court has found an attorney to have an unreformed
character defect
that renders that person not a fit and proper person to practise, the
court should strike his or her name from
the roll.
[15] Counsel for the
respondent submitted on the other hand that the court
a
quo,
after
considering all the facts, correctly exercised its discretion in
making the order it did.
DISCUSSION
[16] I cannot agree with
the court
a
quo
that
the respondent’s actions in stealing trust moneys resulted from a
character defect. In my opinion they can more readily be
seen as a
moral lapse brought about by the pressure that she was under at the
time. The fact that she succumbed to that pressure
in the way she did
leads to the conclusion that she is not a fit and proper person to
continue practising as an attorney but not
necessarily to the further
conclusion that her name must be struck from the roll. Because I do
not agree with the court
a
quo
that
the respondent suffered from a character defect this court is, in my
view, at large itself to exercise the power conferred
on the court by
s 22(1)(d) of the Act to decide whether to strike from the roll the
name of an attorney found to be not a fit and
proper person to
continue to practise or merely to suspend the attorney concerned from
practice.
[17] Section 22(1)(d),
which confers on the court the alternative powers of removal or
suspension in the case of attorneys who have
been found, in the
court’s discretion, not to be fit and proper to continue
practising, does not provide any guidance as to when
the power of
suspension rather than the power of removal should be used. It is
clear that a court which is called upon to decide
which of these two
powers to use exercises a discretion: see,
Nyembezi
v Law Society, Natal
1981
(2) SA 752
(A) at 758,
Law
Society of the Cape of Good Hope v C
1986
(1) SA 616
(A) at 637 and
A
v Law Society of the Cape of Good Hope
1989
(1) SA 849
(A) at 851E.
[18] In exercising this
discretion the courts have sought, as it was put by Hefer AP in
Law
Society of the Cape of Good Hope v Budricks
2003
(2) SA 11
(SCA) at 16E-F, not only ‘to discipline and punish errant
practitioners, but also, and more importantly (particularly in cases

… where trust money was misappropriated), in order to protect the
public.’ Hefer AP continued: ‘This is mainly why the possibility

of a repetition of the conduct complained of must be taken into
account when it comes to deciding upon an appropriate penalty for

proven misconduct.’
[19] The approach of the
courts down the years has been as a general rule to remove the names
of attorneys guilty of misappropriation
of trust funds from the roll:
see, eg,
Incorporated
Law Society v Salinger and Wolmarans
1917
TPD 660
at 670. But that case itself illustrates that the rule laid
down was not an invariable one: where mitigating factors were present

the courts could and did deviate from the general rule and merely
suspended the delinquent attorney. Thus Salinger, the first
respondent, was suspended for five years and Wolmarans, the second
respondent, had his name struck from the roll. Another case where
a
suspension was ordered rather than removal is
Law
Society of Cape of Good Hope v McLaren
1938
CPD 93.
[20] A suspension order
can be for a determinate period or an indeterminate one:
A
v Law Society of Cape of Good Hope, supra,
at
852E-F. Examples of suspension orders operating for indeterminate
periods can be found in cases where the reason that the practitioners

concerned were not fit and proper persons to practise was a condition
such as a personality disorder. The suspension orders in
such cases
were framed so that they operated until such time as the
practitioners concerned satisfied the court that the cause
of
unfitness in question had been removed: see, eg,
A
v Law Society of Cape of Good Hope, supra,
and
Incorporated
Law Society v Zimmerman
1940
TPD 84.
[21] Cases where a
suspension for a determinate period is ordered tend to be more
difficult because before the court can allow the
practitioner
concerned, who
ex
hypothesi
is
not a fit and proper person at the time the suspension is imposed, to
practise again at the expiry of the suspension, it must
be satisfied
on a balance of probabilities that when practice is resumed the
unfitness which led to the order will no longer exist.
This is
because before any person is allowed to practise or resume practice
his or her fitness to practise must be established
to the
satisfaction of the court.
[22] In the present case
I am satisfied that the respondent is not an inherently dishonest
person: her conduct from April 2003 onwards,
particularly after she
received Mr Solomons’s complaint from the appellant, demonstrates
this. She has clearly learnt a hard
and painful lesson. By the time
the court
a
quo’s
order
was delivered she had in effect already been suspended from practice
for almost a year because of the interdict granted by
Thring J on 25
November 2003. I am satisfied that at the expiry of the period of
suspension imposed by the court
a
quo
the
factors rendering her unfit to practise would no longer be operative.
In doing so I have had particular regard to the factor
mentioned in
Budricks’s
case,
supra,
at
16F-G, which I quoted in para 18 above, namely the possibility of a
repetition of the conduct complained of. I am also of the
view that
it was appropriate for the court
a
quo
to
impose a further restriction on the respondent after the expiry of
the period of suspension, namely that for a minimum period
of a year
she should not practise for her own account.
[23] At first blush it
may appear illogical to impose such a restriction on a person as to
whose fitness to practise one is satisfied
but this is in my opinion
a case where it is preferable to err on the side of caution. Although
a repetition is unlikely there
is always, by the very nature of
things, uncertainty. The respondent has shown herself to be naïve
and immature, lacking in experience
and insight. It therefore seems
to have been a wise precaution for the court
a
quo
to
have restricted her from practising for her own account for a further
period after the expiry of her suspension so that she
has the
opportunity to gain the necessary insight and maturity the lack of
which led to her present predicament.
[24] There are, however,
two respects in which I think that the court
a
quo’s
order
on this part of the case should be amended. First I think it more
appropriate that the decision as to whether and when the
restriction
is to be lifted be made by the court and not the appellant. Secondly,
the question for consideration when the respondent
applies for leave
to practise for her own account will not be whether she has the
necessary skills and expertise to conduct a conventional
legal
practice and manage trust accounts but whether in the light of her
past history it is appropriate for the restriction to
fall away. This
she will establish by producing affidavits from those who will have
had sufficient contact with her once she resumes
practice to be able
to satisfy the court that she has the skills and maturity required to
run a practice on her own.
[25] The amendments to
clause 3 of the order of the court
a
quo
are
not of such a nature that one can say that the appellant has enjoyed
substantial success in the appeal. In the result I am satisfied
that
justice would be served in this case if no order were made as to the
costs on appeal.
ORDER
[26] The following order
is made:
1. The appeal is allowed
to the extent that clause 3 of the order of the court
a
quo
is
replaced by the following:
‘
3. Should the
respondent, after the expiry of the period referred to in clause 2
above, elect to practise in the manner set out
in that clause, she
shall satisfy the court that it is appropriate that she be permitted
to practise for her own account.’
Subject to paragraph 1
above, the appeal is dismissed.
………………
IG FARLAM
JUDGE
OF APPEAL
CONCURRING
SCOTT JA
HEHER JA
NUGENT JA
:
[27] I regret that I
cannot agree with the order that is proposed by my colleague Farlam
JA.
[28] The power that is
given to a court to remove or suspend an attorney from the roll is
aimed at protecting the public from being
led to believe erroneously
that the attorney concerned has the attributes for the proper
performance of that function. The enquiry
before a court that is
called upon to exercise that power is not what constitutes an
appropriate punishment for a past transgression
but rather what is
required for the protection of the public in the future. Some cases
will require nothing less than the removal
of the attorney from the
roll forthwith. In other cases, where a court is satisfied that a
period of suspension will be sufficiently
corrective to avoid a
recurrence of the offensive conduct, an order of suspension might
suffice. But the proper approach in each
case is not to weigh the
various factors for the purpose of finding an appropriate punishment
– as a criminal court would do
when sentencing an offender – but
to determine whether, or if appropriate when, an attorney should be
permitted to continue in
practice.
[29] The court below
approached the matter by weighing various factors against one
another, as a criminal court would do when imposing
a sentence, and
then determining what it referred to as an appropriate penalty, and
in my view that approach was misdirected. (A
similar misdirection is
also to be found in some of the decided cases.) Furthermore, the
terms upon which it suspended the respondent
– in particular those
contained in paragraph 3 of the order – were also misdirected
because the complaint was not that the
respondent lacks the skills
and expertise to conduct a legal practice and to manage trust
accounts. The sole complaint was that
she has shown herself to be
dishonest.
[30] By being placed on
the roll of attorneys a person is held out to the public as being
worthy of their trust. It hardly needs
saying that the theft of
trust moneys, in whatever circumstances, is altogether inconsistent
with that trust, and will usually
justify the removal of the attorney
from the roll forthwith lest others might also be exposed to the same
abuse.
[31] If by a ‘character
defect’ the court below meant to convey that the respondent lacked
the strength of character to resist
the temptation to steal moneys
that had been entrusted to her then I agree. But I do not think the
evidence goes so far as to
show that her character is so inherently
flawed that she will necessarily continue to succumb if she returns
to practice. Like
my colleague I see her conduct rather as a lapse
that will not necessarily recur. I am by no means sure – her
expressions of
contrition notwithstanding – that the respondent
fully understands the extent to which her conduct fell short of the
high standards
that are expected of an attorney. But I am of the
view that, with a period of suspension that is sufficient to drive
that point
home, it is likely that there will be no recurrence, and
in those circumstances it is not necessary that she be struck from
the
roll.
[32] Where I part company
with my colleague – apart from on the question of the period of
suspension – is in relation to the
terms that he proposes to attach
once the period of suspension expires. The order proposed by my
colleague will permit the respondent
to return to practice as an
attorney but not for her own account until she satisfies a court that
it is appropriate to lift that
restriction.
[33] The affidavits that
my colleague envisages as being required to satisfy a court in the
future that it is appropriate to lift
the restriction – affidavits
attesting to her skill and maturity – do not seem to me to meet the
point of the complaint. I
see no purpose in a future enquiry as to
her skills and maturity when in truth the problem lies elsewhere.
Perhaps those were
factors that led her to succumb to temptation but
no doubt there will be other temptations during the remainder of her
career.
The solution does not lie in removing the causes for
temptation but rather in being satisfied that she will act honestly
in whatever
circumstances.
[34] Honesty and
integrity are so fundamental to the functions of an attorney –
whether the attorney practises on his or her account
or under
supervision – that where a court is not satisfied that the attorney
is possessed of them in sufficient measure in my
view the attorney
ought not to be permitted to practise in any form at all. I do not
think a court should invite the public to
again place their trust in
an attorney on the basis that they will be protected by some
unspecific form of supervision. I am alive
to the fact that a court
can never be sure that an attorney will indeed act honestly in the
future. But where there is lingering
doubt on that score in my view
the attorney should not be permitted to return to practice until the
doubt is removed.
[35] The conclusion I
have reached after considering the nature of the respondent’s
conduct, and her explanations, is that after
a period of suspension
that is sufficient to bring home to the respondent the seriousness of
her lapse, it is unlikely that the
lapse will recur. In those
circumstances I see no basis for imposing a restriction on the form
in which she may practise when
the period of the suspension expires.
Had I retained sufficient doubt concerning her future honesty as to
warrant extra caution
I would have required that doubt to be removed
before permitting her to return to practice at all. For those
reasons I would substitute
for paragraphs 1, 2 and 3 of the order of
the court below an order suspending the respondent from practice for
a period of three
years.
__________________
R W NUGENT
JUDGE OF APPEAL
HARMS JA : CONCURS