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[2011] ZAFSHC 25
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Law Society of the Free State v Khalaki (3460/2010) [2011] ZAFSHC 25 (10 February 2011)
FREE STATE HIGH
COURT, BLOEMFONTEIN
REPUBLIC OF SOUTH
AFRICA
Case No. : 3460/2010
In
the matter of
LAW
SOCIETY OF THE FREE STATE
….................................
Applicant
and
PHALLANG
MOSES KHALAKI
…........................................
Respondent
_____________________________________________________
CORAM:
H.M. MUSI, JP
et
EBRAHIM, J
_____________________________________________________
JUDGMENT:
THE COURT
_____________________________________________________
HEARD
ON:
9 DECEMBER 2010
_____________________________________________________
DELIVERED
ON:
10 FEBRUARY 2011
_____________________________________________________
[1]
The applicant applies in terms of section 122(d) of the Attorneys
Act, 53 of 1979 (“the Act”) for the striking off
of the
name of the respondent from the Roll of Attorneys.
[2]
The applicant has launched this application in the execution and
achievement of the objectives referred to in section 58 of
the Act,
as amended, against the following common cause factual background.
[3]
During 2009, the respondent, an admitted attorney and member of the
applicant, who practices for his own account under the name
and style
of Khalaki Attorneys, breached Rule 16 of the applicant Law Society’s
Rules, which,
inter alia
, regulates the general accounting
requirements pertaining to attorney’s trust accounts, by
failing to submit an audit report
for the year ending 28 February
2009, which was due on 31 August 2009, despite several requests
therefor from the applicant.
[4]
On 17 September 2009, the applicant, in a faxed letter of demand gave
respondent notice to submit his audit report on or before
12 October
2009, failing which he was summonsed to appear before the Compliance
and Disciplinary Committee (“the Committee”)
on 20
October 2009 to furnish reasons why a recommendation to the Council
should not be made by the Committee for the striking
off of the
respondent’s name from the Roll of Attorneys, alternatively,
for his suspension from practice.
[5]
The respondent appeared before the Committee on 9 December 2009 and
explained that he did not submit the audit report relating
to his
trust account timeously because:
5.1
he was a new practitioner and had expected to be reminded by the
applicant that the report was due, and that, due to constraints,
the
submission of the report had slipped his mind; and
5.2
he had not received the faxed letter dated 17 September 2009 as he
did not possess his own fax machine but received faxes from
another
office and could not access his faxes at the time the applicant’s
letter was faxed.
[6]
The Committee resolved to refer the matter to the council for
appropriate action to be taken and on 29 January 2010, the council
resolved to launch the present application.
[7]
Thus, notwithstanding the respondent’s legal obligation to
submit an annual audit report to the applicant, no such report
was
furnished nor did the respondent apply to the Committee for an
extension of time within which to deliver such a report. This
report
is extremely vital as the accountant employed by an attorney has to
certify in such report that he has inspected the books
and financial
records of the practice concerned and that the attorney has complied
with the provisions of Rule 16 pertaining to
trust account records
and trust account transactions.
[8]
Moreover, in such circumstances it was not possible for the applicant
to issue the respondent with a fidelity fund certificate,
which, in
effect, meant that the clients of the respondent would not have a
right of recourse against the attorney’s fidelity
fund in the
event of misappropriation of monies entrusted to the respondent. In
addition, the applicant carried on practising in
contravention of
section 41 of the Act. The consequences of this conduct are that
clients of the respondent and any potential clients
are exposed to
serious financial risk. The applicant accordingly contends that, on
these grounds, the respondent is not a fit and
proper person to
practise as an attorney of this Honourable Court and should either be
suspended or that his name should be struck
from the Roll of
Attorneys.
[9]
In these proceedings the respondent concedes that his audit report is
outstanding to date but raises the further defence that,
because of
financial constraints, he was unable to pay the rental for his office
premises and as a result, his landlord locked
him out of his office
in which his files and accounting records were kept, until August
2010, when he was able to access them and
submit them to his auditors
for the preparation of the audit report. From his oral submissions,
it was understood by this court
that the audit report has been
prepared but the auditors have refused to release it to the
respondent without payment of their
fee. The respondent has advised
this court that he has no money and is unable to borrow any. He
admits his failure to submit the
audit report for 2009 constitutes
unprofessional conduct but denies that this conduct is wilful or that
the failure to submit the
report is wilful. He also denies that his
clients are exposed to any financial risk as he has referred all of
them to other practitioners
and is no longer practising. He denies
also that he is not a fit and proper person to practise. On that
account, he urges this
court not to strike his name off the Roll of
Attorneys, as a proper case therefor has not been made out by the
applicant.
[10]
In terms of section 22(1)(d) of the Act, an attorney may be struck
from the Roll of Attorneys or suspended from practice
“
if
he, in the discretion of the court, is not a fit and proper person to
continue to practise as an attorney.”
The
practical manner in which the court exercises this power is to hold a
threefold enquiry -
JASAT v NATAL LAW SOCIETY
2000 (3) SA 44
(SCA) at 51 B – I;
LAW SOCIETY OF THE CAPE
OF GOOD HOPE v C
1986 (1) SA 616
(A) at 637 E – G.
[11] The first is a
factual enquiry into whether the alleged offending conduct has been
established. In the present matter this
is common cause. Consequently
the next enquiry is one where this court has to make a value judgment
in deciding whether or not
the respondent is a fit and proper person
to continue practising as an attorney. Thirdly, and if the answer to
the second enquiry
is in the affirmative, this court must, in the
exercise of its discretion, decide, on the totality of the
circumstances of the
case, whether the respondent is to be removed
from the Roll of Attorneys or merely suspended from practice. The
second and third
leg of the enquiry involves the exercise of this
court’s discretion.
[12] We deal first with
the question of whether or not the respondent is a fit and proper
person to continue to practise as an attorney.
It was stated in
JASAT
v NATAL LAW SOCIETY
,
supra
, at 51 E that the enquiry
in this regard involves weighing up the offending conduct against
conduct expected of an attorney. In
our view, the respondent’s
conduct falls far short of conduct expected of an attorney. In the
first place, he exhibits complete
lack of knowledge of the running of
an attorney’s practice. This is typified by his defence that he
did not know that he
has to submit an audit report and that the
applicant should have alerted him to it. This is an admission that he
simply does not
know the relevant provisions of the Attorneys Act as
well as the rules of his own Law Society. This clearly marks him out
as unfit
to run an attorney’s practice; certainly not for his
own account. His failure to submit audit reports to the applicant and
consequently to secure a f
idelity fund
certificate is attributable to the fact that he did not appreciate
that these were essential for the running of an
attorney’s
practice. Nor does he seem to appreciate the serious consequences of
failure to comply with the provisions of
the Attorneys Act and the
rules, in particular, the seriousness of practising without a
fidelity fund certificate and that his
default would open him up to a
charge of unprofessional conduct.
[13]
The respondent also displays a deplorable lack of knowledge of and
experience in the conduct of civil proceedings. For example,
his
answering affidavit in the instant matter was served and filed way
out of time, yet he did not apply for condonation. He applied
for
condonation only after an objection had been raised about the out of
time answering affidavit and he did not even file a proper
application for condonation. Also his condonation papers were not
served on the other side before being filed at court. We had
to grant
him an indulgence at every turn and even postponed the matter on
several occasions because we wanted to give him the opportunity
to
put his full version before court.
[14]
The respondent’s disclosure that he had failed to pay his rent
leading to his landlord locking him out of his offices,
is a matter
whose seriousness eluded him. The closure of his office meant that he
could not access his files and consequently the
affairs of his
clients were neglected for a considerable period. Failure on the part
of an attorney to meet his/her financial obligations
amounts to
unprofessional conduct that would also bring the attorneys’
profession into disrepute.
[15]
In a nutshell, the respondent’s conduct falls far short of
conduct expected of an attorney and he is not a fit and proper
person
to continue to practise as an attorney; at any rate, not for his own
account.
[16]
The final question is whether the respondent should be struck off the
roll or merely suspended from practice. In our view,
the respondent’s
offending conduct is not such that he should be struck off the roll.
The most important consideration in
this regard is that he has not
rendered himself guilty of dishonesty. His default is basically a
combination of lack of knowledge
and experience in the running of an
attorney’s practice and naivety resulting probably from lack of
maturity. He was still
too young and inexperienced to stand on his
own and, most importantly, he appears not to have been properly
trained, if trained
at all, in the running of an attorney’s
practice and indeed in the work of an attorney generally. He displays
a deplorable
lack of the skills expected of an attorney. Whoever was
his principal as a candidate attorney, must take part of the blame in
this
regard. Furthermore, the respondent clearly lacks the financial
resources to run his own practice and he blundered by trying to
do
so. During the hearing we impressed on him that he needs to work in
an established firm to gain the necessary practical experience,
whilst at the same time building up some capital to enable him to
stand on his own, should he in future want to again practise
for his
own account.
[17]
In our view, the appropriate sanction in this matter is suspension
from practice on appropriate terms and conditions. Compare
A
v LAW SOCIETY OF THE CAPE OF GOOD HOPE
1989 (1) SA 849
(A);
REYNEKE v WETSGENOOTSKAP VAN DIE KAAP DIE GOEIE HOOP
[1993] ZASCA 161
;
1994 (1) SA 359
(A);
LAW SOCIETY OF THE CAPE OF GOOD HOPE v
PETER
2009 (2) SA 18
(SCA).
[18] The following orders
are granted:
18.1 The respondent is
suspended from practice as an attorney for a period of twelve months
from date of this order, subject to
the following conditions:
18.1.1 That he shall
within 90 (ninety) days of this order, submit to the applicant the
trust audit report in terms of Rule 16 of
the applicant’s rules
for the 2009 financial year of his attorney’s practice under
the name and style Khalaki Attorneys,
failing which the applicant
shall reinstate the application on any Thursday for reconsideration
thereof, upon twenty days service
of the notice of set down on the
respondent.
18.1.2 Should the
respondent submit an audit report as stipulated above, the applicant
shall issue and file with this court a certificate
confirming that a
valid audit report has been submitted.
18.1.3 Upon compliance
with the immediately preceding paragraph, the respondent’s
suspension shall lapse; provided that the
respondent shall not be
issued with a fidelity fund certificate and shall not practise for
his own account for a period of 12 (twelve)
months from date of the
lifting of the suspension.
18.2 The issue of costs
is held over for consideration should the matter be reinstated on the
roll as provided for in paragraph
18.1.1.
____________
H.M. MUSI, JP
I concur.
_____________
S. EBRAHIM, J
On
behalf of applicant: Adv. A. Bester
Instructed
by:
Matsepes
Inc
BLOEMFONTEIN
On
behalf of respondent: In person
/sp