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[2013] ZAFSHC 99
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Law Society of the Free State v Molapo (1030/2013) [2013] ZAFSHC 99 (27 June 2013)
FREE STATE HIGH
COURT, BLOEMFONTEIN
REPUBLIC OF SOUTH
AFRICA
Case No. : 1030/2013
In the matter between:-
THE LAW SOCIETY OF
THE FREE STATE
...............................
Applicant
and
MAHLOMOLA GOODWIN
MOLAPO
......................................
Respondent
____________________________________________________
CORAM:
RAMPAI, AJP
et
LEKALE, J
_____________________________________________________
HEARD
ON:
23 MAY 2013
_____________________________________________________
JUDGMENT
BY:
RAMPAI, J
_____________________________________________________
DELIVERED
ON:
27 JUNE 2013
_____________________________________________________
[1] These were motion
proceedings. The applicant approached the court in order to have the
name of the respondent removed from the
roll of attorneys. The
alternative relief which the applicant sought was to have the
respondent conditionally suspended from practising
as an attorney of
this court. The application was unopposed.
[2] The respondent was
admitted as an attorney on 2 July 1998. Since then he practised as
such in Welkom. During the annual audit
period which commenced on 1
March 2010 and ended on the 28
th
February 2011 the
respondent was still practising as an attorney in Welkom.
[3] The respondent was as
such obliged, by the rules of the applicant, to submit an annual
audit report to the applicant before
or on 31 August 2011 in respect
of the aforesaid audit period. However he failed to do so.
[4] Subsequent to the
expiry date for the submission of the required annual audit report it
came to the attention of the applicant
that the respondent had
abandoned his practice. He was obliged by the rules to inform the
applicant of his intention to cease practising
as an attorney.
However, he failed to do so.
[5] One of the
respondent’s clients was Bokamoso Farmers Trust (“BFT”).
The registration number of the trust was
IT584/1996. It owned a fixed
property. The trust property was known as Ventervlakte Farm 740 in
the Ventersburg district in the
Free State Province. The size of the
property was 431,6388 hectares. It had 41 beneficiaries, and an
undisclosed number of trustees.
Ms Joalane Alina Mafa, Ms Nomvula
Betty Thakamakhoa, Mr Lekhyanya Abel Thakamakhoa and Mr Johannes
Phoshodi were some of them.
[6] On 15 January 2009
the trust sold the aforesaid property to Matjhabeng Local
Municipality for R6 million. The respondent received
the purchase
price from the seller on behalf of the trustees. The respondent
subsequently paid certain sums of money to the beneficiaries
of the
trust. The majority of them were dissatisfied.
[7] They reckoned that
the respondent had overreached them. The applicant investigated the
26 complaints lodged by the aggrieved
beneficiaries. An affidavit
(annexure “A6”) was obtained from the aforesaid trustee
Ms Mafa. According to her the respondent
had failed to properly
account to BFT. The trust deficit complained of was conservatively
estimated to be R859 361.60 at least.
[8] Those then were the
complaints levelled against the respondent. The statutory council of
the applicant held a meeting on 25
October 2010. One of the items on
the agenda concerned was the alleged misconduct of the respondent;
viz. practising without the
requisite fidelity certificate. The
council decided to hold a disciplinary inquiry into the respondent’s
misconduct.
[9] Pursuant to that
decision the chief executive officer of the applicant, Mr M A Mohobo,
addressed a letter to the respondent
on the 1
st
November
2012. The letter reads as follows:
“
Dear Sir
RE: OUTSTANDING TRUST AUDIT
REPORT/PRACTISING WITHOUT A FIDELITY FUND CERTIFICATE FOR THE YEAR
ENDING 31 DECEMBER 2012
We refer to the above.
You
are hereby given a notice to appear before the Council of the Free
State Law Society during its meeting of
23
November 2012
at
10h00
at office of the Free
State Law Society, 139 Zastron Street Bloemfontein to give compelling
reasons why an application of (sic)
the striking (sic) of your name
from the roll of attorneys or suspend (sic) you from practice should
not be made.
Should
you wish to provide written submission, you must ensure that you
submit them to the Law Society on or before
16
November 2012.
Kindly be informed that you are
entitled to be legally presented during the appearance before the
Council of the Law Society.
You must remain in attendance until
you are formally excused by the President of the Law Society.
Yours faithfully
_(signed)____________________
MZWEKHAYA ARNOLD MOHOBO
CHIEF EXECUTIVE
OFFICER
”
[10] The letter (annexure
“A7”) was duly served on the respondent’s human
resources manager at the respondent’s
workplace in Johannesburg
on the 16
th
November 2012 as would fully appear from the
sheriff’s return, annexure “a8”.
[11] Although the
respondent had been called upon to appear before the applicant’s
council, he failed to show up on 23 November
2012 in accordance with
annexure “a7”. Instead he reacted through his lawyer, a
certain Attorney M C Nkomo of Durban.
The fax (annexure “a9”),
which was marked urgent and dated 23 November 2012 reads as follows:
“
Dear Sirs,
RE: OUTSTANDING TRUST AND AUDIT
REPORT/ PRACTISING WITHOUTH A FIDELITY FUND CERTIFICATE FOR THE YEAR
ENDING 31 DECEMBER 2012 //
M G MOLAPO
We refer to the above matter and
confirm that we act for the above-named client.
It is our instruction that our client
received the notice in respect of the above on Monday, the 19
th
November 2012 as he was on leave (sic) the 16
th
November
2012 when it was served at his work (sic) of work.
It is our instruction to request an
extension to enable him to properly consult with us and also to
attend to the auditors who could
only see him on Saturday the 24
th
of November 2012. We further do not believe that our client will pose
any threat to the profession should you pend your action,
taking into
account that he no longer practises.
We hope our request will be acceded
to.
Yours Faithfully
M.C. NKOMO
(
signed)
______________
FOR MDU NKOMO & CO
”
[12] At the meeting held
on 23 November 2012 the applicant’s council, rejected the
respondent’s request for an extension
for the submission of the
required annual audit report and resolved to launch the current
application.
[13] The sheriff served
the notice of motion, the founding affidavit and annexures thereto
upon the respondent personally in Johannesburg
on 27 March 2013.
Notwithstanding such service there has been deafening silence on the
part of the respondent.
[14] Those then were the
facts before us. They were all undisputed. There were no disputed
facts. The respondents implicitly decided
to abide.
[15] An overview of the
law appeared to be necessary. Section 58 Attorneys Act 53 of 1979 as
amended outlines, among others, the
prime objectives of the law
society. Amongst them I selected the following few:
15.1. To maintain and
enhance the prestige, status and dignity of the profession;
15.2. To regulate the
exercise of the profession;
15.3. To deal with all
matters relating to the interest of the profession and protect those
interests;
15.4. To provide for the
effective control of the professional conduct of practitioners;
15.5. To promote uniform
practice and discipline among practitioners.
[16] In terms of Section
78 of the same national legislation any practising practitioner shall
open and keep a separate trust banking
account at a banking
institution in the Republic of South Africa and shall deposit therein
the money held or received by him on
account of any person and he
shall keep proper accounting records containing particulars and
information of any money received,
held or paid by him for or on
account of any person.
[17] Rule 16B.4.1 of the
Rules of the Law Society of the Free State reads as follows:
“
Every
accountant who has accepted an appointment in terms of Rule 16B.1
shall within six months after the annual closing of the
accounting
records of the firm concerned, or at such other times as the Council
may require, furnish the Council with a report
which shall be in the
form of schedule C to these rules.”
[18] Rule 16B.3 reads as
follows:
“
A firm shall
ensure that the report to be furnished by an accountant in terms of
Rule 16B.4 is so furnished within the required
time or on the
required date; provided that the Council may in its discretion and on
such conditions as it may stipulate, on written
application by a firm
relating to a particular report, condone a failure by that firm to
comply with requirements.”
[19] Section 22(1)(b) of
the same legislation requires a three stage enquiry:
19.1. First, the Court
must decide whether the alleged offending conduct has been
established on a preponderance of probabilities;
19.2. Second, it must
consider whether the person concerned “in the discretion of the
court” is not a fit and proper
person to continue to practise;
19.3. 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 practise would suffice.
(See
Jasat v Natal
Law Society
2000 (3) SA 44
(SCA).
[20] In terms of Section
78(8) of the aforesaid statute the court may on application made by
the law society of the province concerned
and on good cause shown,
prohibit any practitioner from operating in any way on his trust
account, and may appoint a
curator bonis
to control and
administer such trust account, with such rights, duties and powers in
relation thereto as the court may deem fit.
[21] In deciding
whichever course to follow the prime consideration is the protection
of the public. Logic also dictates that if
a court finds that someone
is not a fit and proper person to continue to practise as an
attorney, then such person has to be removed
from the roll. (See
Malan & Another v Law Society, Northern Provinces
[2008] ZASCA 90
;
2009 (1) SA 216
(SCA).
[22] It is seldom, if
ever, that a mere suspension from practice for a given period in
itself will transform one who is unfit to
practise into one who is
fit to practise. (See
Malan & Another v Law Society,
Northern Provinces
supra.
)
[23] There were three
professional transgressions levelled against the respondent by the
applicant. I proceed to deal with them
one by one.
[24] As regards the first
transgression, the applicant averred that the respondent had failed
to furnish the provincial law society
council with an annual audit
report. The respondent was obliged to submit an annual audit report
to the applicant’s law council
after the annual closing of the
accounting records.
[25] The annual
accounting periods pertaining to the complaint was 28 February 2011.
The annual accounting of the respondent’s
trust records closed
on that day. The respondent’s accountant, appointed in terms of
rule 16B.1, was supposed to furnish
the applicant’s law council
with the required audit report within six months after the annual
closing of the accounting records.
Such six months period expired on
31 August 2011. The applicant’s law council never received the
required annual audit report
from the respondent’s appointed
accountant in terms of rule 16B.4.
[26] It was the
respondent’s responsibility to see to it that the accounting
records of his law practice were annually audited
by his appointed
accountant. It was also incumbent upon him to ensure that his
appointed accountant furnished the annual audit
report to the
applicant’s law council – rule 16B.3.
[27] When the applicant’s
law council receives a favourable or satisfactory annual audit report
from an attorney’s appointed
accountant it forwards such report
to the Attorney’s Fidelity Fund (“AFF”). The AFF
would then issue the requisite
annual fidelity certificate to the
attorney concerned. By virtue of the fidelity certificate the
attorney is annually licensed
to practise law. The accounting records
of the attorney are thereby publicly confirmed or certified to be in
order. By means of
an annual fidelity certificate the applicant holds
the bearer thereof out as its honourable and trustworthy member to
whom the
members of the public can entrust their affairs.
[28] From the comments I
have made in the preceding paragraphs two things emerge. The first is
the significance of the annual auditing
report of the accounting
records of an attorney. The second is the danger posed to public
interest by an attorney’s neglect
to cause the required annual
audit report to be furnished to the applicant. The essence of rule
16B is the protection of the public
from untrustworthy individuals
who infiltrate the noble vocation and masquerade as honourable
lawyers only to exploit humble, unsuspecting,
unwary and trusting
members of the public.
[29] The respondent was
accused of practising as an attorney without the annual fidelity
certificate. An attorney cannot obtain
an annual fidelity certificate
unless, he, first and foremost, obtains an unqualified annual audit
report. I pause to stress that
such an annual audit report has to be
compiled by an accountant appointed and paid by an attorney and not
the law society. This
was the first charge. The particulars of the
charge were contained in a letter – annexure “A7”.
[30] The sheriff served
the written charge at the respondent’s current workplace. The
charge came to the respondent’s
attention through the human
resources manager of Ernst & Young. The letter from his attorney
(annexure “A9”) and
his own affidavit (annexure “A10”)
showed that he knew about the charge and the date of the hearing. His
knowledge
notwithstanding, he did not attend the hearing in
Bloemfontein on 23 November 2012. He gave some lame excuse.
[31] He and his
accountant were supposed to have met a day after the applicant’s
council meeting. The meeting never materialised.
It was postponed to
1 December 2012. December 2012 came and went. The applicant never
heard again from the respondent, his attorney
or even his accountant
since 23 November 2012.
[32] The current
application was served upon the respondent personally at his place of
residence at Winchester Hills in Johannesburg.
Notwithstanding such
service, the respondent never filed an answering affidavit.
Consequently we have to accept the applicant’s
case that the
respondent failed to submit the outstanding audit report, for an
annual accounting period stretching from 1 March
2010 to 28 February
2011, which he was obliged to have submitted to the applicant on 31
August 2011, at the very latest. The respondent
has given no
reasonably acceptable explanation for his serious contravention of
the rule.
[33] In the circumstances
I would find that, on a balance of probabilities, the respondent has
contravened rule 16 of the applicant’s
rules. Therefore, the
applicant has established the merits of the first misconduct
committed by the respondent in contravention
of the rule as well as
section 41 of the statute. The section not only prohibits an attorney
from practising without a valid fidelity
fund certificate but also
criminalises it.
[34] As regards the
second transgression, the applicant averred that the respondent had
practically abandoned his practice. The
respondent was obliged to
give the applicant prior notice of his intention to voluntarily cease
practising as an attorney –
vide
rule 3B.2.
[35] It was undeniable
that the respondent had practised for his own account, in the Free
State Province, during the accounting
period 1 March 2010 to 28
February 2011. It was also undisputed that he previously practised as
an attorney under the name and
style Molapo-Mofokeng in Welkom; that
the respondent was no longer practising law in the province or
anywhere else in the country,
for that matter; that he unilaterally
closed down his practice on or about 31 January 2012 and that he
presently lives and works
in Johannesburg, where he is in the employ
of Ernst & Young.
[36] On the papers the
following accomplished facts can be accepted: firstly, that the
respondent did not apply to this court, as
he was required to do, to
have his name formally removed from the roll of active attorneys;
secondly, that the respondent did not
furnish the applicant with a
certificate by an accountant, as he was required to do, to verify
that he had made proper provision
for the winding-up of his practice,
for its take-over and for the protection of the trust money of his
clients; and thirdly, that
the respondent did not satisfy the
applicant by way of a sworn statement, as he was required to do, that
he had discharged all
mandatory obligations towards his clients and
that any other specially additional safeguards – which the
applicant invariably
deems necessary where an attorney winds up –
for the adequate protection of the trust money, the final completion
of work
on hand and the orderly winding-up of his practice, have
generally been met –
vide
Rule 3B.1.
[37] It follows from
those comments that the respondent flagrantly violated the recognised
code of rules, norms and standards applicable
to the winding-up
procedure pertaining to a law practice. He was obliged to give the
applicant prior notice of his intention to
voluntarily cease
practising and to solicit the co-operation and active participation
of the applicant in the winding-up process
in order to protect the
interests of his clients in a relatively meaningful and effective
manner.
[38] In the
circumstances, I am inclined to find that the respondent, has on a
balance of probabilities, contravened the provisions
of Rule 3B. He
clearly abandoned his practice. There can be no doubt that he
carelessly, if not recklessly, disregarded the interests
of his
clients. He proverbially left all of them in the lurch. In my view
the second conduct complained of also constituted misconduct.
That
the respondent has unprofessionally abandoned his practice has
clearly been established.
[39] As regards the third
complaint, the applicant averred that the respondent had given no
proper account to his client, BFT. The
respondent received a
substantial amount of R6 million for and on behalf of his client.
Moreover, the respondent also received
the additional sum of
R223 732,40 from the purchaser in respect of the three taxed
bills of costs. That sum brought a total
cash received to
R6 223 792,40.
[40] Ms J A Mafa alleged
that the respondent misappropriated trust funds to the tune of
R1 040 155,71. The accusation
was not entirely correct. The
fact of the matter was that 21,51% thereof was his fees. He
deservedly earned it. The thrust of the
third complaint was that the
respondent over-charged the BFT by a substantially excessive amount
of R859 361,60 over and above
the fee he had legitimately
earned. The averment stood undisputed before us –
vide
paragraph 4 annexure “A6”.
[41] This court, per JB
Mthembu AJ, ordered the respondent to render a proper account to the
attorneys of the BFT in respect of
the balance of R859 361,60.
The order was made on 17 June 2010 under case number 1355/2010.
Needless to say that the respondent
never complied with the order.
Instead, he shut down his practice
ex parte,
in haste, in
stealth and then vanished.
[42] I am satisfied
firstly, that the respondent failed to account to his client in the
ordinary course of executing his mandate
as he was ordinarily obliged
by the professional rules of his vocation; secondly, that he
neglected to refund the excessive amount
on demand; and thirdly, that
he disobeyed the court order by Mthembu AJ to justify his retention
of alleged excessive fees as a
legitimate remuneration commensurate
to the magnitude of the services rendered.
[43] In the
circumstances, I am persuaded that the applicant has shown, on a
balance of probabilities, that the respondent has failed
to properly
account to his client. His conduct was not in keeping with the
important obligations imposed on him as an attorney
in terms of
section 78 of Attorneys Act 53 of 1979 as amended.
[44] I have considered
whether each of the alleged transgressions has been established on a
balance of probabilities. Having done
so, I determined that each
alleged offending conduct has been accordingly established. Put
differently, I have come to the conclusion
that the respondent
wrongly practised without the requisite annual fidelity fund
certificate; that he wrongly shut down his practice
and that he
unjustifiably failed to render proper account to his client. This
concludes the merits of the matter, the first leg
of the three stage
inquiry in terms of section 22(1)(b). (See
Jasat v Natal Law
Society
2000 (3) SA 44
(SCA). Here ends the first dimension
of the application before us. I now proceed to consider the question
of a sanction.
[45] The second leg of
the inquiry in terms of section 22(1)(b) is whether the respondent is
no longer a fit and proper person to
continue to practise as an
attorney as the applicant contends. (
JASAT
supra
)
[46] None of the
misconducts committed by the respondent can be reconciled with the
noble objectives, norms and standards the applicant
strives to
cultivate and uphold. An attorney who practices without the annual
fidelity certificate poses a very serious risk to
members of the
public. An appointed accountant can only prepare the required audit
reports, an essential prelude to the issue of
an annual fidelity
certificate, provided an attorney places him or her in actual
possession of the auditable accounting records.
Implicit in this is
the understanding that an accountant’s failure to furnish the
applicant with an attorney’s annual
audit report can almost
invariably be attributed to an attorney’s failure to keep
proper accounting records.
[47] An attorney who
abandons his practice, as the respondent did, poses a very serious
financial risk to members of the public.
In this instance their
claims might have been extinguished by prescription and default
judgments might have been taken without
any fault on their part. The
clandestine and unprofessional decision of the respondent to desert
his clients could have thrown
the affairs of some of them into
disarray. The adverse impact of his misconduct is too numerous to
exhaustively contemplate.
[48] An attorney who
cannot properly account to his client poses a very serious threat to
public interest. All trust money held
by the respondent was at great
risk. He closed down his practice while he was under a dark and heavy
cloud of suspicion. The manner
in which the respondent conducted
himself suggested to me that he probably kept no trust accounting
records or that there were
some serious irregularities in respect of
some or all his accounting records.
[49] In
Chetty v
The Law Society, Transvaal
1985 (2) 756 AD at 768E-H Miller
AJ said the following:
“
The
allegations and findings of misappropriation stemmed from inferences
drawn from the state of the appellant's books of account.
It was
clear that the appellant had failed to keep proper books of
account as he was required to do and that there appeared
to be
deficiencies in his trust account which at times was overdrawn. The
trust account, moreover, was not used solely for trust
monies, which
were often mixed with funds other than trust funds.
It
now appears, however, that despite irregularities and impropriety in
the keeping and administration of the accounts, there was
in the
final result no misappropriation of trust funds by the
appellant. It may be that even if this had been shown on the
return
date of the rule
nisi
,
the Court would have ordered the removal of the appellant's name from
the roll, for it has frequently been held that failure by
an attorney
to keep proper books of account in compliance with the provisions of
Act 23 of 1934 is a "serious contravention"
which
exposes the offender to the real risk of suspension or removal from
the roll. (
Cirota
and Another v Law Society, Transvaal
1979
(1) SA 172
(A)
at
193E - F.) And, of course, the Court would have considered the other
four complaints in conjunction with contraventions relating
to the
books of account.
”
[50] In the instant
matter we have to take into account two other transgressions in
conjunction with the respondent’s contraventions
relating to
his dismal neglect to have the trust books of account audited -
Chetty
supra.
And attorney’s failure to
cause trust accounting records to be audited creates a dark avenue of
opportunistic misappropriation
of trust money. Besides these
additional transgressions, the respondent also disobeyed a court
order. All these were serious aggravating
factors.
[50] In my view an
attorney whose conduct was so glaringly inimical to the prestige,
status and dignity of the profession cannot
be any more regarded as
fit and proper person to continue practising as a trusted provider of
legal services. As was stated in
Jasat
case
supra,
in deciding whether a person is still a fit and proper person to
continue practice as an attorney involves a weighing up of the
conduct complained of against the conduct one would ordinarily come
to expect of a diligent, trustworthy and ethical attorney.
When I
comparatively weighed up the respondent’s conduct as against
that of an average attorney with those attributes, I
found that the
scales weighed heavily against the respondent. In my view his conduct
was disturbingly far below the acceptable
ethical benchmark. The
gradient negatively widened every time he committed each of the three
misconducts. The comparative balancing
exercise resoundingly
disqualified him.
[51] The conduct
complaint of in general and the misappropriation of funds in
particular were ethically deplorable. Certainly it
was not expected
of an attorney worth his salt to behave in such an unethical fashion.
The conduct is one which is highly deplorable
and frowned upon by
upright members of the profession.
[52] The third leg of the
inquiry in terms of section 22(1)(b) is whether, in the light of all
the peculiar circumstances of the
particular case, the name of the
person concerned is to be removed from the roll of attorneys or
whether suspension from practice
would suffice.
Jasat
supra.
Here the focus of the inquiry shifts to the question of
an appropriate form of punishment or sanction.
[53] It was submitted on
behalf of the applicant that the mere suspension from practice would
not be an appropriate sanction to
the respondent for the very serious
acts of misconduct he committed. It was forcefully contended that the
gravity of the transgressions
demanded that his name be permanently
removed from the roll of attorneys. I have to say, and I say it
without any reservation at
all, that the respondent’s conduct
was very shameful indeed. The force of the submission made by counsel
cannot be seriously
questioned.
[54] It was stated, in
Malan
case
supra
that if the court finds
dishonesty, in any facet of the conduct complained of, then, in that
event, the circumstances must be exceptional
before a court would
order a suspension instead of a removal. In the instant matter there
was virtually no argument advanced and
I could find no evidence to
support any conclusion that there were exceptional circumstances
which substantially compelled the
suspension of the respondent
instead of his removal from the roll of attorneys.
[55] Apart from the
misappropriation of funds, itself a very serious misconduct, the
respondent also failed to submit his annual
audit certificate and has
also abandoned his practice without informing the applicant and
without conforming to important obligations
in terms of the
applicable professional rules relating to the winding-up of an
attorneys practice. The blatant disregard of the
rules of the society
and the provisions of the statute also justifies, in my view, an
order for the imposition of the ultimate
punitive measure.
[56] The protection of
the public is always of paramount importance in matters such as this.
In my view the public has to be protected
against the respondent. The
most effective and meaningful way of protecting the public against
the danger posed by the respondent
as an attorney is to have the
respondent’s name removed from the roll. Such a sanction would
prevent him from endangering
public interests. It appears from the
papers filed on behalf of the applicant that the respondent is, in
any event, not practising
as an attorney anymore and, as such, he
would merely be disgraced but not necessarily be prejudiced by the
principal order sought
by the applicant. By his very own stance, he
has demonstrated that he was no longer interested to practise law any
more.
[58] Having considered
all the peculiar facts of this particular matter, including but not
limited to the gravity of each transgression,
the cumulative impact
of the three misconducts, the magnitude of the embezzled trust funds
and the plight of the victims, I am
persuaded that it will only be in
extremely unusual circumstances that a striking-off order would be
inappropriate where, as in
this instant matter, there was a
substantial measure of dishonesty. Twenty six members of the public
consider him to be an untrustworthy
lawyer. In my view, and it is a
very firm view, there are no unusually compelling circumstances to
justify any sanction other than
the permanent removal of the name of
the respondent from the roll.
[59] Nothing but
permanent striking-off would be an appropriate sanction in this
matter. Should we merely suspend the respondent,
our decision would
not be compatible with the proper exercise of judicial discretion
entrusted to us. (See
Melani v Santam Insurance Limited
1962 (4) SA 531
(A).)
[60] Consequently I am
inclined to impose the ultimate sanction of striking off in this
matter. On that note I wrap up the last
dimension of the application
before us.
[61] There remains one
aspect to deal with. The question of the furnishing of security by
the proposed
curator bonis.
The proposed
curator bonis
is Attorney M A Mohobo, the chief executive officer of the Free State
Law Society. His primary responsibilities would entail administering
and controlling the accounting records relating to the respondent’s
practice. He is obliged in terms of
section 77(1)
of the
Administration of Estates Act 66 of 1965
to furnish security to the
Master of the High Court, Free State Province. The Master is unable
to issue a certificate of appointment
until the required security is
furnished by the proposed
curator bonis
.
[62] Section 5 of the
Attorneys Admission Amendment and Legal Practitioners Fidelity Fund
Act (Act 19 of 1949 as amended by section
26 of the Trust Property
Act (Act 57 of 1988) empowers the court to exempt a
curator bonis
from the statutory obligation of furnishing security. The section
reads as follows:
“
The
obligation to provide security imposed by any law upon executors,
tutors, curators and trustees in insolvency, shall not be
capable of
being waived unless the instrument by which they are nominated
expressly directs that such security shall be dispensed
with or
unless a provincial or local division of the High Court of competent
jurisdiction, on application, grants special exemption
there from.”
[63] The applicant has
not specifically requested that the proposed
curator bonis
be
exempted from the obligation to furnish security. However, the master
has no objection if I
mero motu
exempt the proposed
curator
bonis
from furnishing security. The master considers him a
suitable candidate for the statutory office. I share the sentiments.
Therefore,
I would exempt the proposed
curator bonis
from the
furnishing of security. I do this in terms of section 65.
[64] The master made the
following request at paragraph 7 of his report:
“
I will
require the
Curator
Bonis
to comply with
section 75
of the
Administration of Estates Act, 66 of
1965
, but since he has to report to the Board of Control of the
Fidelity Fund [in terms of prayer 7(n)] there is no need for the
Curator
Bonis
to comply with the provisions of
sections 78
and
83
of the said act.
I therefore humbly request the Honourable Court to specifically
exclude the application of
sections 78
and
83
of the said Act in this
matter.”
I accede to that request
this way.
[65] In the circumstances
I make the following order:
65.1. That the
respondent’s name be removed from the roll of attorneys;
65.2. That the respondent
surrender and deliver to the Registrar of this Court his Certificate
of Enrolment as an attorney of this
Court;
65.3. That should
respondent fail to comply with paragraph 2 within FOURTEEN (14) DAYS
of this order, the sheriff of the High Court
for the relevant
district, be empowered and directed to take possession of such
certificate(s) and deliver it/them to the said
Registrar;
65.4. That the Chief
Executive Officer of the applicant for the time being be appointed as
Curator Bonis
to exercise the powers and to discharge the
duties described in paragraph 7 hereof;
65.5. That the respondent
is directed to surrender and deliver to the
Curator Bonis
all
the respondent’s records relating to his practice which, for
the purpose of this order, but without limitation, shall
include all
accounting records, files, correspondence, documents and the like
which are directly or indirectly relevant to or which
contain
particulars and information relating to:
a) Any monies received,
held or paid by the respondent for or on account of any person;
b) Any monies invested by
the respondent in terms of any provision of Section 78 of the
Attorneys Act, No. 53 of 1979 (hereinafter
referred to as “the
Act”);
c) Any interest on monies
so invested in terms of Section 78(2) or 78(2A) of the Act;
d) Any estate of deceased
person administrated by the respondent, whether as executor or on
behalf of the executor, in terms of
the provisions of the
Administration of Estates Act, Act
66 of 1965;
e) Any estate in which
the respondent acted as or on behalf of the Curator to administer the
property of a minor child or any other
person in terms of
Section 72
of the
Administration of Estates Act, Act
66 of 1965;
f) Any insolvent estate
administrated by the respondent as trustee or on behalf of the
trustee in terms of the Insolvency Act, Act
66 of 1936;
g) Any trust
administrated by the respondent as trustee, of on behalf of the
trustee in terms of the Trust Properties Act, Act 57
of 1968;
h) Any company liquidated
in terms of the Companies Act, Act 61 of 1973, administrated by the
respondent as liquidator or on behalf
of the liquidator;
i) Any close corporation
liquidated in terms of the Close Corporation Act, Act 69 of 1964,
administrated by the respondent as liquidator
or on behalf of the
liquidator; or
j) The respondent’s
practice as an attorney of this Court.
65.6. That should the
respondent fail immediately to surrender or deliver the items
referred to in paragraph 5 after service of
this order upon the
respondent by the
Curator Bonis
, or after a return by the
person entrusted with such service that such a person has been unable
to effect service of this order
upon the respondent, as the case may
be, the sheriff of the High Court for the district in which such
records are, be empowered
and directed to take possession and deliver
them to the said
Curator Bonis
;
65.7. That the said
Curator Bonis
shall have the following rights and powers:
a) to hand over any said
records to any person entitled thereto, as soon as he has satisfied
himself that the fees and disbursements
in connection therewith have
been paid or satisfactorily security, or that same are no longer
required;
b) to accept a written
undertaking by a trust creditor to pay such amount as may be due to
the respondent, either on taxation, assessment
or by agreement, as
satisfactory security for the purpose paragraph 7(a), provided that
such written undertaking incorporates a
domicilium citandi et
executandi
of such creditor;
c) to require that any
records, so handed over, be delivered back to him if, in his sole and
absolute opinion, he considers them
to be relevant to and, (including
any possible anticipated or threatened) claim against him as
Curator
Bonis
and/or the respondent’s clients and/or the Attorney
Fidelity Fund (hereinafter referred to as “the Fund”);
d) to administer and
control all the respondent’s trust account which for the
purpose of this order shall include:
i) the accounts relating
to any estate, curatorship, trust or company, referred to in
paragraph 5 hereof;
ii) any and all banking
accounts opened and/or kept by the respondent (or on the respondent’s
behalf) in terms of any provision
contained in the Act or any of the
Acts referred to in paragraph 5.
e) Subject to approval of
the Board of Control of the Fund (hereinafter referred to as “the
Board”), to sign and endorse
cheques and/or withdrawal forms
and generally to operate upon the said trust accounts, but only to
such extent and for such purposes
as may be necessary to bring to
completion current transactions in which the respondent was acting as
at the date of this order;
f) Subject to the
approval of the Board, to recover and receive and, if necessary in
the interest of persons having lawful claims
upon the said trust
accounts and/or against the respondent in respect of monies held,
received an/or invested by the respondent
in terms of Section 78(1)
and/or 78(2) and/or 78(2A) of the Act (hereinafter referred to as the
“trust monies”) to
take any legal proceedings which may
be necessary for the recovery of money which may be due to such
persons in respect of incomplete
transactions in which the respondent
may have been concerned and which may have been wrongfully and
unlawfully paid from the said
trust accounts and to receive such
monies and to pay the same to the credit of the said trust accounts.
g) To ascertain from the
respondent’s records the names of all persons on whose account
the respondent appears to hold or
to have received trust monies
(hereinafter referred to as “trust creditors”) and to
call upon the respondent to furnish
him within 30 (THIRTY) days of
the date of this order or within such further period as he may agree
to in writing with the names
and addresses of, and amounts due to,
all trust creditors.
h) To call upon such
trust creditors to furnish such proof, information and/or affidavits
as he may require to enable him, acting
in consultation with and
subject to the requirements of the Board, to determine whether any
such trust creditors has a claim in
respect of money in the said
accounts and, if so, the amount of such claim;
i) Subject to the
approval of the Board, to admit or reject in whole or in part, the
claims of any such trust creditor without prejudice
to such trust
creditor’s right of access to the Civil Courts;
j) Subject to the
approval of the Board, to pay such claims as he may consider lawfully
due;
k) In the event of there
being any surplus in the said trust accounts after payment of any
such claims, to utilise such surplus
to settle or reduce, as the case
may be, firstly any claim of the Fund in terms of Section 78(3) of
the Act in respect of any interest
therein referred to and, secondly
without prejudice to the rights of the respondent’s creditors,
the costs, fees and expenses
referred to in paragraph 11 hereof, or
such portion thereof as has not already been separately paid by the
respondent to the applicant
and, if there is any balance left after
payment in full of all such claims, costs, fees and expenses, to pay
such balance to the
fund;
l) In the event of there
being insufficient trust monies in the said accounts to pay in full
the claims of trust creditors as reflected
in the records of the
respondent:
i) subject to the
approval of the Board, to close the said accounts and to pay the
credit balances therein to the Fund and require
such credit balances
therein to be placed to the credit of a special trust suspense
account in the name of the respondent in the
Fund’s books;
ii) to refer to the
claims of all trust creditors to the Board to be dealt with in terms
of the provisions of the Act;
iii) to authorise the
Board to credit the credit balances referred to above to its “paid
claims account” when the Fund
has paid, in terms of Section 26
of the Act, admitted claims of the trust creditors of the respondent
in excess of such credit
balances, provided that, notwithstanding the
a foregoing, the Board in its discretion shall be entitled to
transfer to its “paid
claims account” the amounts of any
claim as and when admitted and paid by it.
m) Subject to the
approval of the Chairman of the Fund, to appoint nominees or
representatives and/or consult with and/or engage
the services of
attorneys, counsel, accountants and/or any such other persons where
considered necessary, to assist him in the
carrying out of his duties
as
Curator Bonis
.
n) To render from time to
time returns to the Board showing how the said accounts have been
dealt with until such time as the Board
notifies him that he may
regard his duties as
Curator Bonis
as terminated.
65.8. That the respondent
be interdicted and prohibited from operating the accounts referred to
in paragraph 7(d).
65.9. The respondent is
hereby removed from the office as:
a) Executor of any estate
in respect of which he has been appointed in terms of
Section
51(1)(a)(v)
of the
Administration of Estates Act, Act
66 of 1965 or
the estate of any other person referred to in
Section 72(1)
; and
b) Curator or guardian of
any minor or other person’s property in terms of
Section 72(1)
,
read with
Sections 54(1)(a)(v)
and
85
of the
Administration of
Estates Act, Act
66 of 1965, or the estate of any other person
referred to in
Section 72(1)
; and
c) Trustee of any
insolvent estate in terms of Section 59 of the Insolvency Act, Act 24
of 1934; and
d) Liquidator of any
company in terms of Section 379(2) read with Section 379(e) of the
Companies Act, Act 61 of 1973; and
e) Trustee of any trust
in terms of Section 20(1) of the Trust Property Control Act, Act 57
of 1988; and
f) Liquidator of any
Close Corporation appointed in terms of Section 74 of the Close
Corporations Act, act 69 of 1984.
65.10. That the applicant
be and is hereby authorised, should it consider it necessary, to
engage the services of accountants of
its choice, who are registered
in terms of the
Auditing Profession Act 26 of 2005
, to conduct an
examination and audit of the respondent’s accounting records
and to report to applicant in respect of such
an examination and
audit insofar as such accountants, and/or applicant, may consider it
necessary.
65.11. That the
respondent be and is hereby directed to pay:
a) Applicant’s
costs of the inspections which may have been carried out of the
respondent’s records in terms of Section
70(1) and 78(5) of the
Act at the rate of R600,00 per hour;
b) The costs of the said
accountants in respect of any examination audit or report made by
them in terms of this order;
c) The costs of the
sheriff, employed in terms of paragraph 3 and 6 above;
d) The fees and expenses
of the
Curator Bonis
, such fees to be assessed at the rate of
R600,00 per hour (including travelling time) and
prima facie
proof whereof shall be sufficiently constituted by way of certificate
purporting to be signed by the
Curator Bonis
and specifying
the expenses and the length of time during which he was engaged in
the performance of his duties as
Curator Bonis
;
e) The fees and expenses
of any person consulted and/or engaged by the
Curator Bonis
in
terms of paragraph 7(m) above, at such person’s prescribed
tariff rate save where such person is an attorney, at the rate
as
between attorney and client;
f) The costs of and
incidental to this application on an attorney and client scale.
65.12. That the
respondent be and is hereby directed to satisfy the
Curator Bonis
,
within one year of the respondent having been requested to do so by
the Curator, or within such shorter period as the
Curator Bonis
may agree to in writing, by means of submission of taxed bills of
costs or otherwise, of the amount of fees and disbursements due
to
the respondent in respect of the respondent’s said practice
and, should the respondent fail to do so, the respondent shall
not be
entitled to recover such fees and disbursements from the
Curator
Bonis
, but without prejudice to any such rights, if any, as the
respondent may have against the trust creditors concerned for payment
or recovery thereof.
65.13. That the applicant
be and is hereby directed to cause a copy of this order to be served
upon the Master of this court;
65.14. The proposed
curator bonis,
Attorney Mzwekhaya Arnold Mohobo, the Chief
Executor Officer of the Free State Law Society, is in terms of
section
5, Act 19
of 1941 exempted from furnishing security to the
Master of the Free State High Court.
65.15. The provisions of
section 78 and 83 of Act 66 of 1965 shall not apply to the
curator
bonis
but he shall be obliged to report to the board of control
of the Attorney’s Fidelity Fund in terms of paragraph 63.7(n)
hereof.
_________________
M. H. RAMPAI, AJP
I concur.
______________
L. J. LEKALE, J
On
behalf of applicant: Adv. J. Els
Instructed
by:
Symington
& De Kok
BLOEMFONTEIN
On
behalf of respondent: No appearance
/eb