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[2013] ZAFSHC 64
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van der Berg NO and Another v The Attorneys Fidelity Fund and Others (A155/2012) [2013] ZAFSHC 64 (2 May 2013)
FREE STATE HIGH
COURT, BLOEMFONTEIN
REPUBLIC OF SOUTH
AFRICA
Appeal No.: A155/2012
In
the appeal between:
SUNEL VAN DER BERG
N.O.
............................................
1
st
Appellant
JACOBUS PETRUS
ANDRIES DU TOIT N.O.
..................
2
nd
Appellant
and
THE ATTORNEYS
FIDELITY FUND
..............................
1
st
Respondent
ETIENNE HORN N.O.
....................................................
2
nd
Respondent
JOSEPH J MHLAMBI
N.O.
............................................
3
rd
Respondent
_____________________________________________________
CORAM:
RAMPAI, J
et
MOLOI, J
_____________________________________________________
JUDGEMENT:
RAMPAI, J
HEARD ON:
22 APRIL 2013
_____________________________________________________
DELIVERED ON:
2 MAY 2013
_____________________________________________________
[1] These were motion
proceedings. The applicants applied to have the findings of the
committee appointed by the first respondent
reviewed and set aside.
That was the principal relief sought. The review proceedings were
launched in terms of rule 53(1)(a) of
the Uniform Rules of Court. The
application was opposed by the three respondents.
[2] The first applicant
is Ms Sunel van der Berg
nomine officii
. The second applicant
is Mr Jacobus Petrus Andries du Toit
nomine officio
. They act
in their representative capacities as co-trustees of “Dewald
van der Berg Trust – IT1065 (2004)” –
an entity
duly established in accordance with the provisions of the Trust
Property Control Act 57 of 1988.
[3] The first respondent
is “The Attorneys Fidelity Fund”, a statutory entity with
a legal personality established in
terms of section 8 Attorneys
Admission Amendment and Legal Practitioners Fidelity Fund Act 19 of
1941 read with section 25 of the
Attorneys Admissions Act 53 of 1957.
[4] The second respondent
is Mr Ettiene Horn N.O., an attorney by profession who practises as
such under the name and style Van
der Merwe & Sorour Attorneys in
Bloemfontein. The third respondent is MrJoseph Jamela Mhlambi N.O.
also an attorney by profession
who practises law as such under the
name and style of Mhlambi Attorneys in Welkom. Moreover both
attorneys, in other words, the
second and third respondents, were
cited as duly nominated and appointed members of the first
respondent’s board of control.
The two attorneys were also
factually sued in their representative capacities as members of an ad
hoc committee appointed in terms
of regulation 8(bis) of the
Attorneys Fidelity Fund under Act No 19/1941 by the first respondent
for the purpose of examining witnesses
in respect of a claim in terms
of section
26 Act 53
of 1977 relating to the theft of trust money by
a practising attorney.
[5] The first applicant’s
husband is deceased. The couple have a minor child, a boy called
Dewald. It was alleged that the
boy nearly drowned one day. Although
he was rescued, he was seemingly injured in that incident. The
adverse impact of the incident
was so severe that he now suffers from
cerebral palsy. Subsequent to that incident the boy’s mother,
in other words, the
first applicant, appointed Mr S.J. le Roux aka
“Cobus”, an attorney of Bloemfontein, to register and
inter vivos
trust for the benefit of her cerebrally palsic
son. The attorney, Mr Le Roux, duly established a trust in accordance
with the first
applicant’s mandate.
[6] The gentleman, Mr Le
Roux, is not alive anymore. After he had allegedly committed suicide,
it was discovered that the trust
money, which had been entrusted by
“Dewald van der Berg Trust” to Le Roux had been
misappropriated. The trust notified
“The Law Society of the
Free State” in terms of section 23 Attorneys Admission Act of
its intention to institute a
claim against the first respondent for
compensation as a result of the loss suffered through the theft
attributed to Le Roux in
terms of section 26. Notice of the claim was
also given to the first respondent.
[7] Pursuant to that
notice of the claim the first respondent appointed a committee
consisting chiefly of the second and the third
respondents to examine
the witnesses on behalf of the first respondent’s board of
control – regulation 8(bis). The
committee, which was seemingly
co-chaired by the second and third respondent, convened in
Bloemfontein on 26 October 2011 to gather
evidence about the
circumstances which gave rise to the claim and to generally
investigate the merits of the claim by examining
the witnesses.
[8] At the end of the
factual examination process the committee found:
that the Dewald Trust
had not complied with the prescripts of section 48(1); and
that the Dewald Trust
had not satisfied the requirements for condonation for such
non-compliance.
[9] Those then were the
findings which were under attack in these proceedings and which we
were urged to review and set aside. Among
others, the relief was
sought on the grounds
that the committee had
adopted and used an adversarial procedure contrary to the real
purpose of the relative regulation;
that the committee had
exceeded the terms of its mandate by making findings and taking
decisions which it was not competent to
make;
that the committee
failed to appreciate that the first applicant appeared before it not
as the claimant but as a witness and a
co-trustee;
that the committee
erroneously found that the Dewald Trust did not give the requisite
notice of the claim within the prescribed
three months period after
becoming aware of the theft;
that the failure
attributed to the Dewald Trust, which the applicants denied, could
not be condoned; and
that the committee had
usurped the powers of the first respondent’s board of control
by making the findings under attack
and perhaps more.
These and some other
irregularities, so the applicants contended, rendered the aforesaid
findings and the ultimate decision of the
board of control
reviewable.
[10] The crisp question
in the matter was whether or not there was a decision before us which
was reviewable in terms of rule 53(1)
or rule 53(4) as regards the
committee or the board of control respectively.
[11] In my view the
answer to that crucial question had to be in the negative, as regards
both the committee and the board of control.
In the first place there
was no administrative action or decision taken by a public
functionary in which the exercise of public
power was reposited in
terms of an empowering statutory provision. In the instant matter the
responsible public functionary,
in
whom the public power was entrusted to make an appropriate
administrative decision with a direct external legal effect, was the
first respondent’s board of control.
1
[12] On the contrary the
committee of examiners was an ad hoc internal structure of the first
respondent. Its limited mandate was
purely to examine the witnesses
on behalf of the first respondent. Its function was nothing more than
the gathering of information
relevant to the alleged claim of
misappropriation of trust funds. First and foremost, the committee
was required in terms of regulation
8(bis) to broadly examine the
witnesses. The underlying idea was that it must assist the first
respondent to determine whether
there were facts to beef up the
allegation that trust funds had been embezzled. Therefore, its
function was investigative in nature.
In the second place one would
have expected the committee to have examined the witness in order to
assist the first respondent
to determine whether the applicants had
followed the correct procedure in terms of section 48(1). In my view
the role of the committee
was facilitative and not decisive in
nature.
[13] It follows, as a
matter of logic, that once the committee had established the relevant
facts relative to the substantive dimension
as well as the procedural
dimension of the claim, it simply had to forward its report to the
board of control with or without findings
and recommendations, but
certainly without a decision.
[14] In my view the
committee could, and not should, make its findings after establishing
the facts. From such findings it could,
if it so wished, make certain
recommendations to the first respondent. I hasten to point out that
neither the making of findings
or recommendation is in terms of the
regulation an obligatory term of the committee’s mandate. Its
sole mandate, as I have
already said, was to do some spade-word, in
other words, elementary investigative work on behalf of the first
respondent, the statutory
structure whose exclusive prerogative or
imperative function it was to meet, to deliberate, to analyse and
digest the facts gathered
by the committee in order to make the
decision to admit or to repudiate the claim.
[15] In my view the
findings of the committee were just that – findings. As a court
of law we had no business to concern ourselves
with the deliberations
of a committee of information gatherers. Whether the findings
complained of were erroneously made, or not,
is of no consequence;
whether the procedures adopted was flawed or not, is of no
consequence. What really mattered was the decision
at the end of the
entire exercise taken by the first respondent’s board of
control. In the absence of an internal record
of that domestic
tribunal relating to what it did or did not do in respect of the
evidence placed before it by the committee, it
was well impossible to
me to determine precisely on what grounds “anx b” could
be attacked, reviewed and nullified
in terms of rule 53(4).
[16] The only critique
levelled against the first respondent was that the decision of its
board of control was on all fours identical
to that of its ad hoc
committee. It was contended that that was an indication that the
board of control had done nothing to consider
the claim and that it
apparently repudiated the claim merely on the strength of the
decision already taken by the committee.
[17] The similarity
between the findings of the committee and the decision of the board
of control in itself cannot justify any
inferential conclusion that
the board of control did not properly apply its mind to the evidence
before it. That conclusion requires
careful analysis of the
deliberations of the board of control leading up to the decision we
are now required to set aside. The
first respondent was never asked
to file a record of the deliberations of proceedings before the board
of control relative to the
claim. This was so because according to
the applicants’ papers what was targeted with these review
proceedings was not really
the decision of the board of control but
the findings of the committee. As I have already found, by so-doing
the applicants lamentably
identified the wrong target.
[18] It was the primary
contention of the applicants that they had duly given the requisite
notice of the claim to the first respondent
and the responsible
provincial law society. However, they urged us, in the alternative,
to condone their failure if we accepted
the respondents’
contention that they did not comply with section 48(1).
[19] The discretion to
relax the formal statutory deadlines, as set out in section 48(1),
has been entrusted to the first respondent’s
board of control.
We are not inclined to usurp the exercise of that discretion. To do
so would be tantamount to substituting our
own judicial decision for
that of the responsible administrative functionary – something
the courts are not inclined to readily
do.
[20] But even if we were
inclined to do so, we could not condone the failure. To do so
requires consideration of the circumstances
which led to
non-compliance and impelled the first respondent to refuse extension.
The applicants, as the parties seeking indulgence
would, at least,
have to demonstrate that they have reasonable prospects on the
substantive merits. Before us, there was no substantive
application
in which all the relevant facts were canvassed. In my view, it would
only be proper to approach a trial court instead
of a review court
with such a remedial application.
[21] The applicants are
not remediless. The section allows a claimant to apply, at any time,
to the first respondent’s board
of control to have the lateness
of their notice condoned, if so advised. Should they be unsuccessful,
then, in that event they
would be at liberty and wise to enforce the
claim by way of action instead of motion proceedings.
[22] In the circumstances
I would therefore determine the issue in favour of the respondents.
The “findings” or “recom-mendations”
or
“decision”, call it what you may, jointly made by the
second and the third respondent as members of the committee,
did not
amount to an administrative action. Consequently it was not subject
to review in terms of rule 53. Furthermore the decision
of the first
respondent’s board of control on the facts could not be
reviewed, because firstly, the record of the relevant
tribunal was
not before us and, secondly, because the “Dewald Trust”
has not first applied in terms of section 48(1)
to the first
respondent to condone their belated notice.
[23] There remains the
issue of wasted costs occasioned by the postponement of the
application on 18 February 2013 to deal with.
Counsel for the
applicant urged us to make no order in respect of the costs of that
particular day. However counsel for the respondents
disagreed. He
urged us to saddle the applicants with a costs order for that
particular day as well.
[24] Upon my perusal of
the record I ascertained the following historical facts:
that the application was
launched on 22 June 2012;
that the respondents
signalled their intention to oppose the matter on 6 July 2012;
that the respondents
filed their answering affidavit on 21 August 2012;
that the respondents
withdrew an answering affidavit on 11 September 2012;
that the respondents
again served and refiled the answering affidavit on 4 February 2013;
that the applicants then
enrolled the matter for argument on 18 February 2013; and
that on 18 February 2013
the replying affidavit by the applicants was still outstanding.
[25] It will therefore be
readily appreciated that on Thursday 18 February 2013 the matter was
not ripe for hearing. The replying
affidavit and the heads of
argument still had to be served and filed. The respondent had already
reinstated the answering affidavit
at the time the applicants
enrolled the matter.
[26] The notice of
setdown was served and filed two weeks after the answering affidavit
had been reinstated. In the light of this,
it was difficult for me to
understand why the notice of setdown was filed before the replying
affidavit. Instead of filing the
required replying affidavit, the
applicants set the matter down. On 18 February 2013 the m atter had
to be postponed to 22 April
2013 in order to afford the applicants an
opportunity of replying. The replying affidavit was eventually filed
on 4 March 2013.
[27] In the light of the
aforegoing historical background, it is clear and obvious firstly,
that the matter was recklessly placed
on the roll on behalf of the
applicants when it was clearly foreseeable that it would not be ripe
for hearing on 18 February 2013.
According to the comments made from
the bar by the counsels before us, it appeared that prior to 18
February 2013 but after the
reinstatement of the answering affidavit
on 4 February 2013, the applicants unsuccessfully tried to persuade
the respondents to
agree to a postponement. When the request was
precisely made and when it was precisely rejected, did not appear on
the record.
The impression I gained was that the acrimony between the
legal representatives of the parties made it difficult to reach an
agreement
whereby the matter could have been postponed in a less
expensive manner. The costs of that particular day were consequently
reserved
for later adjudication.
[28] On the facts I am
satisfied that the conduct of the applicants was the primary cause of
the wasted costs incurred on that particular
day. The circumstances
which prevailed before 18 February 2013 suggested that the attorney
for the applicants carelessly enrolled
the matter in the
circumstances where a diligent attorney would have foreseen the
danger of setting the matter down before the
exchange of the papers
had been completed. That being the case, I would therefore hold the
applicants liable for the wasted costs
of the particular day. As
regards the rest, there was no dispute. Therefore the costs have to
follow the result as usual.
[29] I have a few remarks
to make in passing. Everywhere members of the public entrust their
affairs to the lawyers because the
honourable vocation of lawyers is
built on the foundation of trust. This is the one important
consideration – trust. Breach
of that trust by an attorney can
have catastrophic impact on the life of a client. However, the public
is not naïve to think
that every lawyer is trustworthy. The
public is ever mindful that some attorneys do betray their clients at
times.
[30] Everywhere members
of the public continue to entrust their affairs to the lawyers
notwithstanding that potential risk of breach
of trust. The question
may be asked as to why they keep on doing so. I venture to say that
they take that risk knowing that, in
the rare event of an attorney
succumbing to the temptation of embezzling trust money, the general
body of attorneys of integrity
would honourably come to their rescue
to honourably make good their loss occasioned by their disgraced
peer, a dishonourable member
of the honourable profession. This is
the other important consideration. The unshakable belief that
attorneys of integrity do not
want firstly, to see members of the
public cheated and, secondly, to see their proud image tainted by
dishonest members of their
own profession.
[31] The first respondent
is the public face of that body in the eyes of the general public.
The esteemed public image of attorneys
as a whole gets enormously
damaged every time an attorney steals money from an unsuspecting
client. That image gets almost absolutely
devastated when “The
Attorneys Fidelity Fund” shifts its focus from a dishonourable
misdeed of thieving committed by
its delinquent member to
insignificant omissions committed by an innocent member of the public
and a victim of an unscrupulous
attorney.
[32] The Attorneys
Fidelity Fund was created for the prime and exclusive purpose of
protecting innocent members of the public from
abusive and thieving
attorneys. Once it has been ascertained by the first respondent that
the evidence gathered establishes that
the money has indeed been
stolen by an attorney or his aides, then dictates of justice demand
that the victim be compensated. To
repudiate a clearly proven claim
merely because the requisite notice in terms of section 48(1) was
belated seems to be repulsive
and inimical to the ethical norms which
are deeply rooted in the moral and philosophical foundation of the
relevant legislation.
[33] In the case of
Northern Province Development Corporation v Attorneys Fidelity
Fund Board of Control
2003 (2) SA 284
(T) at par [40]
Moseneke J said the following about the ambit of the respondents’
discretion:
“
Lastly,
Mr
Delport
referred me to the provisions of s 48(2) of the Act and these read as
follows:
'(2) If a board of
control is satisfied that, having regard to all the circumstances, a
claim or the proof required by the board
has been lodged or
furnished as soon as practicable, it may in its discretion extend any
of the periods referred to in ss
(1).'
Clearly the board of control has a
dispensatory power to be found in ss (2).
In its discretion, the
board of control may condone any late filing of a claim or extend any
relevant time limits prescribed by
ss (1).
What is more, there is
no time limit within which such power may be exercised. It is
clear from ss (2) that such extension
is in the discretion of the
board of control. The board is obliged, however, to have regard to
all the circumstances
and may call for such proof as it may
consider necessary. Such proof must be furnished as soon as
practicable.”
I am in respectful
agreement.
[34] Where theft is
proven, the dominant inclination of the first respondent’s
board of control should, in my view, be the
admission rather than the
repudiation of the claim. If, on the substantive merits of a claim, a
case has been made out that the
Attorneys Fidelity Fund is factually
liable, then the purpose of the law should not be frustrated by
insensitive repudiation of
a claim on account of minor procedural
defects. The first respondent has to appreciate its dispensatory
power conferred on it in
terms of subsection (2). Such power gives
immense discretion to the first respondent to condone the victim’s
procedural missteps.
The board of control can, on its own accord,
discretionarily extend any statutory periodic deadline missed by a
victim without
the victim’s own initiative to apply for it in a
deserving case.
[35] Moreover, the board
of control must appreciate that the relatively short period of three
months, as contemplated in ss (1),
was primarily inserted for the
purpose of enabling the first respondent to speedily take appropriate
steps to prevent further thieving,
to retrieve, where possible, the
proceeds of thieving and to prevent an incriminated attorney from
dissipating misappropriated
funds or concealing such funds or assets
acquired by means of such funds. This then is the evil the measure is
designed to cure.
In my view ss (1) was designed to serve as a damage
control measure and not as an outright punitive measure for the
slightest procedural
neglect by a victim of an attorney’s
dishonest practice. As I see it, the indiscriminate, speedy and
punitive invocation
of that subsection against each and every victim
of attorneys’ theft, lacks moral, ethical and legal foundation.
However,
it would not be wrong, in my view, to invoke ss (1) against
a grossly negligent and grossly uncooperative victim.
[36] These remarks are
obita dicta
. I refrain from expressing any view at all on the
substantive merits of this particular matter. I believe though, that
every time
the first respondent considers a claim lodged by a victim
of an attorney’s dishonourable actions, it will constantly keep
in mind the restorative and curative purpose of the legislative
measure concerned.
[37] I also hasten to add
that I found it unnecessary to critically, analytically and
comparatively deal with the conflicting factual
averments. For the
sole purpose of the
ratio decidendi
in this matter I assumed
the averments set out in the founding affidavit to be correct. Of
course, I did so without definitely
deciding one way or the other on
the correctness of the factual matrix of the matter as a whole.
[38] Now the final
remark. The real claimant in this matter is not the first or the
second applicant but Dewald, a cerebrally palsic
little boy. The
unfortunate incident has shattered his life. For him the future is
very bleak. In the light of these tragic circumstances
of the child,
I urge the respondents, on compassionate grounds, to forego the costs
awarded to them in this matter.
[39] According I make the
following order:
The review application
is dismissed.
38.2 The applicants are
directed to pay the costs.
______________
M. H. RAMPAI, J
I concur.
____________
K. J. MOLOI, J
On behalf of the
applicants: Adv M.C.
Louw
Instructed by:
Du Toit Attorney
BLOEMFONTEIN
On behalf of the
respondents: Adv H.J.
Benade
Instructed by:
Cengcani & Associates
BLOEMFONTEIN
/spieterse
1
Registrar
of Banks v Legal Treasury Private Bank
2004
(3) SA 560
(w) at 567H.
Ian
Currie:
The Promotion of
Administrative Act: Commentary
(2007
Siberink) 84-7.