Brief Summary

Legal Profession — Disciplinary proceedings — Suspension of attorney — Law Society applying for suspension of Janald Scholtemeyer from the roll of attorneys due to unprofessional conduct, including failure to maintain proper accounting records and non-compliance with disciplinary orders — Court's discretion to determine fitness to practice based on established conduct — Respondent found guilty of multiple breaches of professional conduct rules, including failure to submit required reports and account to clients — Court held that the respondent is not a fit and proper person to continue practicing as an attorney, leading to suspension from the roll.

Comprehensive Summary

Summary of Judgment

1. Introduction

These proceedings were a disciplinary application brought in the North Gauteng High Court, Pretoria, concerning the professional standing of an attorney on the roll. The applicant was The Law Society of the Northern Provinces (incorporated as the Law Society of the Transvaal), acting in its capacity as custos morum of the attorneys’ profession. The respondent was Janald Scholtemeyer, an admitted attorney of the High Court practising for his own account as a sole practitioner under the name Scholtemeyer Attorneys in Polokwane, Limpopo Province.

The Law Society sought relief directed at the respondent’s continued entitlement to practise as an attorney, initially framed as an application for suspension. The application was launched in July 2012 and served personally on 3 August 2012. The respondent delivered a notice of intention to oppose on 15 August 2012 but did not file an answering affidavit. A notice of set down was served on the respondent’s correspondent attorneys on 10 November 2012. The matter was heard on 31 May 2013 (with the hearing period reflected as 31 May 2013 to 10 June 2013), and judgment was handed down on 12 June 2013.

The dispute concerned whether the respondent’s conduct—particularly regarding fidelity fund certification, accounting compliance, trust administration, cooperation with regulatory oversight, and complaints from members of the public—demonstrated such a departure from required professional standards that he was not a fit and proper person to remain on the roll of attorneys, and what sanction (removal or suspension) was appropriate.

2. Material Facts

The court proceeded on the factual material placed before it by the Law Society, emphasising that such matters are sui generis and disciplinary in nature, with the Law Society placing relevant facts before the court for consideration. Given that the respondent filed no answering affidavit, the material facts were presented largely as uncontroverted in the founding papers.

A central fact relied upon was that the respondent had practised as an attorney without being in possession of a fidelity fund certificate since 1 January 2012, which was identified as a contravention of section 41(1) of the Attorneys Act 53 of 1979. The respondent also failed to submit a Rule 70 auditor’s report for the period ending 28 February 2011, which should have been submitted by 31 August 2011. The court accepted the Law Society’s description of the purpose of the Rule 70 auditor’s report, namely to enable the Law Society to be satisfied that trust money and accounting records are properly administered in accordance with the Attorneys Act and the applicable rules.

The respondent’s failure to submit the Rule 70 report led to disciplinary steps within the Law Society. He was notified on 20 October 2011 to appear before a disciplinary committee on 17 November 2011. He attended, pleaded guilty to the charge, and the disciplinary committee found him guilty. The committee noted that he had previously been found guilty by disciplinary committees in relation to similar non-compliance in respect of earlier reporting periods. The committee imposed a fine of R20 000.00 and costs of R500.00, which the respondent paid only on 28 February 2012, several months after the order.

The Law Society also acted after receiving a complaint concerning an alleged failure to account to a client in relation to a property transaction associated with Mr Hendrik Van Niekerk and the trustees of the Oubaas Van Niekerk Trust. The complaint, submitted via attorney PG Uys, alleged that the transfer was registered during June 2010 but that the respondent failed to account and pay over the proceeds. During an investigation visit by the Law Society’s representative, Ms Magda Geringer, the respondent stated that he did not attend to the registration of the transfer and was not in possession of the client file, asserting that Rooth & Wessels attended to the transfer and paid proceeds into his trust banking account on Van Niekerk’s instruction. On the version placed before the court, after settlement of amounts due to ABSA Bank from the purchase price, the balance remained in the respondent’s trust account, and the respondent was instructed to pay certain creditors under arrangements entered into for Van Niekerk. The respondent allegedly undertook to prepare and provide a reconciliation between the amount received and payments made, but he failed to provide the promised reconciliation.

A further material feature of the investigation was the condition and availability of the respondent’s accounting records. During Geringer’s visits, the accounting records were not available at the respondent’s offices. This was treated as a contravention of Rule 68.4.2. The records were also not written up and balanced at the time, treated as a contravention of Rule 68.5. No cash books or bank statements were made available for inspection. In the absence of proper records, the Law Society’s representative could not determine the firm’s accurate trust position; although a reconciliation as at 31 October 2011 reflected no trust deficit, the trust position could not be confirmed without the underlying accounting records.

The Law Society also placed before the court the existence of another complaint, from Mogashoa, who instructed the respondent in August 2005 in a labour matter and paid a deposit of R10 000.00, which the respondent acknowledged receiving. The complaint alleged that the respondent thereafter failed to communicate progress, failed to provide a statement of account after termination of the mandate, and failed to hand over the file despite an undertaking to do so. The Law Society wrote to the respondent in July and August 2011 seeking comment; the respondent did not respond, and the Law Society had received no substantive reply to the complaint by the time of the application.

These facts were relied on collectively to demonstrate persistent non-compliance with statutory and rule-based obligations, failures in professional accountability, and non-cooperation with oversight mechanisms, with the attendant concern that the Attorneys Fidelity Fund may be at risk.

3. Legal Issues

The court identified the enquiry as one directed at whether the respondent remained a fit and proper person to practise as an attorney, within the meaning of section 22(1)(d) of the Attorneys Act 53 of 1979, and what sanction should follow. In line with established authority, the court approached this as a discretionary determination rather than a mechanical consequence of a single factual finding.

The legal questions were therefore framed around the established three-stage enquiry applicable to attorney discipline matters. The first question was whether the alleged offending conduct had been established on a balance of probabilities. The second question was whether, in the discretion of the court, the respondent was not fit and proper to continue to practise, which the court characterised as involving a value judgment. The third question was whether, in all the circumstances, the appropriate outcome was removal from the roll or a suspension for a specified period, which the court treated as a matter of degree and discretion.

The dispute thus concerned a combination of fact (whether the misconduct occurred), the application of law to fact (whether that conduct demonstrated unfitness), and an evaluative, discretionary judgment (the appropriate sanction in the public and professional interest).

4. Court’s Reasoning

The court located the application within the well-established framework that attorney discipline proceedings are sui generis and disciplinary, and that the Law Society acts not as an ordinary litigant but as the body charged with placing relevant facts before the court. The court emphasised that the discretion it exercises must be based on the facts proved on a preponderance of probabilities and that the facts should be considered in their totality, rather than evaluating each item of misconduct in isolation.

Applying the three-stage enquiry, the court first accepted that the conduct alleged by the Law Society had been established on the material placed before it. The judgment identified core forms of non-compliance and misconduct, including practising without a fidelity fund certificate, failing to submit the Rule 70 auditor’s report timeously, failure to keep proper accounting records, failure to account to clients, failure to cooperate with the Law Society in making records available for inspection, failure to honour undertakings, and failure to respond to correspondence. The court treated these matters as contraventions of both the Attorneys Act and the Law Society’s rules, and as indicative of unprofessional conduct.

At the second stage, the court applied the principle that the “fit and proper” assessment under section 22(1)(d) is a discretionary value judgment. On the facts accepted, the court concluded that the respondent’s persistent failures—particularly concerning statutory compliance (including fidelity fund certification) and proper accounting and reporting—reflected conduct inconsistent with the standards expected of practising attorneys. The court also considered the implications of inadequate accounting compliance and the inability to verify the trust position in the absence of proper records, noting the stated risk to the Attorneys Fidelity Fund as part of the overall context.

At the third stage, the court determined that the circumstances justified the most severe sanction, namely removal from the roll, rather than a lesser order of suspension. The reasoning, as reflected in the judgment, proceeded from the cumulative nature of the respondent’s breaches, his prior disciplinary history in relation to similar failures, the ongoing non-compliance, and the professional risks arising from deficient recordkeeping and trust administration. The court accordingly exercised its discretion to grant the substantive relief sought, including ancillary protective measures aimed at securing and administering trust accounts and client-related records through a curator bonis mechanism.

5. Outcome and Relief

The court ordered that the respondent’s name be removed from the roll of attorneys. The respondent was directed to surrender his certificate of enrolment to the Registrar immediately, failing which the sheriff was authorised to take possession of the certificate and deliver it to the Registrar.

The respondent was prohibited from handling or operating on his trust accounts. The court appointed Johan van Staden, the applicant’s head of members affairs (or his nominee), as curator bonis to administer and control the respondent’s trust accounts (including accounts linked to insolvent and deceased estates and other administered estates), with detailed powers to take possession of records, operate trust accounts to complete current transactions, recover monies improperly paid out, identify and assess claims of trust creditors, and distribute funds under the control and approval mechanisms specified in the order.

The respondent was directed to deliver accounting records, files, and documents relevant to monies received, held, paid, or invested in terms of section 78 of the Attorneys Act, and to estates and fiduciary capacities associated with his practice. In default, the sheriff was authorised to search for and seize such records for delivery to the curator. The order further removed the respondent from various fiduciary and statutory offices, including as executor, curator or guardian, trustee of insolvent estates, company liquidator, trustee of trusts, and close corporation liquidator, with reference to the relevant statutory provisions.

The respondent was directed to pay the reasonable costs of inspection of his accounting records, the auditor’s reasonable fees, the curator’s reasonable fees and expenses (including travel time), expenses of any persons engaged by the curator, publication expenses, and the costs of the application on the attorney-and-client scale.

Cases Cited

Hassim v Incorporated Law Society of Natal 1977 (2) SA 757 (A); Law Society, Transvaal v Matthews 1989 (4) SA 389 (T); Cirota & Another v Law Society, Transvaal 1979 (1) SA 172 (A); Prokureursorde van Transvaal v Kleynhans 1995 (1) SA 839 (T); Law Society of the Cape of Good Hope v C 1986 (1) SA 616 (A); A v Law Society of the Cape of Good Hope 1989 (1) SA 849 (A); Jasat v Natal Law Society 2000 (3) SA 44 (SCA); Law Society of the Cape of Good Hope v Budricks 2003 (2) SA 11 (SCA); Olivier v Die Kaapse Balie-Raad 1972 (3) SA 485 (A); Summerley v Law Society, Northern Provinces 2006 (5) SA 613 (SCA); Law Society, Cape of Good Hope v Segall 1975 (1) SA 95 (C); Beyers v Pretoria Balie Raad 1966 (2) SA 593 (A); Malan and Another v The Law Society, Northern Provinces [2008] ZASCA 90; [2009] 1 All SA 133 (SCA); Law Society of the Northern Provinces v Morket [2003] FOL 10868 (T); Botha & Others v The Law Society of the Northern Province [2009] 3 All SA 293 (SCA); Law Society of the Northern Provinces v Setshogoe [2009] JOL 2307 (T).

Legislation Cited

Attorneys Act 53 of 1979 (including sections 22(1)(d), 41(1), 78(1), 78(2), 78(2A), 78(3), and 78(5)); Administration of Estates Act 66 of 1965 (including sections 54(1)(a)(v), 72(1), and 85); Insolvency Act 24 of 1936 (section 59); Companies Act 61 of 1973 (including section 379(2) read with section 379(e)); Trust Property Control Act 57 of 1988 (section 20(1)); Close Corporations Act 69 of 1984 (section 74).

Rules of Court Cited

No rules of court were cited in the judgment. The judgment instead relied on the Law Society’s rules applicable to attorneys’ accounting and reporting obligations.

Held

The court held that the respondent’s conduct, viewed in its totality and established on the papers before the court, constituted serious non-compliance with the Attorneys Act and the Law Society’s rules. The court concluded that the respondent was not a fit and proper person to continue to practise as an attorney and that the appropriate sanction, in the exercise of the court’s discretion, was removal from the roll rather than suspension.

The court further held that protective and administrative measures were necessary to secure the respondent’s trust accounts and practice records, resulting in the appointment of a curator bonis with extensive powers to take control of trust monies, assess and satisfy trust creditors’ claims, and administer related documentation and processes under the oversight mechanisms described in the order.

LEGAL PRINCIPLES

The judgment applied the principle that proceedings for the striking off or suspension of an attorney are sui generis and disciplinary in nature, in which the Law Society places relevant facts before the court as custos morum of the profession, rather than litigating a conventional dispute inter partes.

It reaffirmed that whether an attorney is a fit and proper person for purposes of section 22(1)(d) of the Attorneys Act 53 of 1979 is a matter for the discretion of the court and entails a value judgment, not merely a factual determination.

The judgment applied the established three-stage enquiry in attorney discipline matters: first, proof of the offending conduct on a balance of probabilities; second, a discretionary value judgment whether the practitioner is not fit and proper; and third, a discretionary determination of the appropriate sanction, namely whether removal or suspension is warranted in the circumstances.

The court applied the principle that the practitioner’s conduct must be evaluated holistically, considering the facts in their totality, and that failures in accounting compliance, reporting, and cooperation with regulatory oversight are treated with seriousness given their implications for trust administration and the protection of the public and the Attorneys Fidelity Fund.

Law Society of the Northern Provinces v Scholtemeyer (44079/2012) [2013] ZAGPPHC 150 (12 June 2013)