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[2011] ZAKZPHC 7
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KwaZulu-Natal Law Society v Mbanjwa (8306/10) [2011] ZAKZPHC 7 (11 February 2011)
IN
THE KWAZULU-NATAL HIGH COURT, PIETERMARITZBURG
REPUBLIC
OF SOUTH AFRICA
Case
No : 8306/10
In
the matter between :
KwaZulu-Natal
Law Society
…............................................................................
Applicant
and
Mduduzi
Humphrey Mbanjwa
…....................................................................
Respondent
Judgment
Lopes J
[1] On the 19
th
October,
2010 a rule nisi was granted calling upon the respondent to show
cause on or before the 26
th
October, 2010 why an order
should not be made final that he is interdicted from operating any
and all trust accounts currently
in his control and in particular the
Nedbank trust account number 310 5909 615. That order was to operate
as an interim interdict
pending the finalization of this application
and the applicant was granted leave to supplement its papers insofar
as it deemed
necessary for any further relief it may seek against the
respondent.
[2] The rule was extended to the 16
th
November, 2010 with costs to be costs in the cause. On the 8
th
November, 2010 the applicant filed a supplementary affidavit
indicating that it would seek an order in terms of Annexure “AR16”
to its original founding affidavit. That order appears at pages 89 –
96 of the papers and includes :-
(a) that the respondent be struck off
the roll of attorneys of the High Court and that he be interdicted
and restrained from practicing
or holding himself out as an attorney
of this Court whilst his name is struck off the roll;
(b) that he surrender and deliver to
the Registrar his certificate of admission and enrolment as an
attorney of this Court;
(c) alternative relief in the event of
him failing to comply with the above;
(d) that the director of the applicant
be appointed as curator to exercise the powers and duties described
in the remainder of the
order;
(e) that the respondent be directed to
surrender and deliver to the curator all his practice records set out
in the draft order;
and
(f) the remainder of the order
containing what may be described as the usual terms which apply in
striking-out matters.
[3] On the 16
th
November,
2010 the respondent filed an answering affidavit, and the matter was
adjourned
sine die
to enable the applicant to conduct further
enquiries into the respondent’s conduct. Those enquiries are
contained in an affidavit
dated the 8
th
December, 2010
annexed to which is an inspection report carried out by two officers
of the applicant. The applicant seeks a final
order striking the
respondent from the roll of attorneys of this Court together with the
ancillary relief set out in Annexure “AR16”.
[4] The central issue in this matter
arises as follows :-
(a) the respondent was instructed by a
Ms Radebe to lodge a claim with the Road Accident Fund (“
the
RAF
”), which he did on the 5
th
May, 2008;
(b) although it is disputed, the
respondent claims that at the time he was given his original
instructions he discussed the issue
of a contingency fee with Ms
Radebe. He did not reduce the agreement to writing and have it signed
by Ms Radebe;
(c) after rejecting an initial offer,
a further offer was made by the RAF to Ms Radebe on the 28
th
May, 2009 in the sum of R299 492;
(d) acting on the instructions of Ms
Radebe to accept the offer, the respondent did so. He alleges that
during the conversation
when she gave him the instruction to accept
the offer, he again raised with her that she would be liable for 25%
of the capital
payment as a contingency fee. At that stage this
amounted to R74 873;
(e) according to the respondent Ms
Radebe said that she would revert to him on the contingency fee, and
allegedly did so a few hours
later confirming that it was in order;
(f) on the 6
th
July, 2009
and pursuant to Ms Radebe’s acceptance of their offer the RAF
paid into the trust account of the respondent the
sum of R299 492;
(g) despite numerous requests that she
be paid those monies no part thereof has as yet been paid to Ms
Radebe;
(h) Ms Radebe accordingly complained
to the applicant in writing on the 11
th
November, 2009. On
the 8
th
February, 2010 the applicant addressed the
respondent enclosing Ms Radebe’s complaint and requesting a
response. In reply,
and on the 24
th
February, 2010 the
respondent addressed a letter to the applicant containing an
affidavit by him setting out his version of events.
In that affidavit
a number of issues are raised by the respondent but he does not at
any stage reveal what he did with Ms Radebe’s
money. In
conclusion in his affidavit he states that from the 9
th
June, 2009 he had not received any correspondence or communication
from Ms Radebe or the attorney appointed by her to terminate
the
respondent’s mandate. As annexures to that affidavit he puts up
the letter of offer from the RAF dated the 28
th
May, 2009,
a letter from him dated the 29
th
May, 2009 addressed to Ms
Radebe regarding the 25% contingency fee, and a document dated the
4
th
June, 2009 purporting to terminate his mandate. He
also encloses a letter dated the 9
th
June, 2009 addressed
to the attorneys purporting to represent Ms Radebe stating that the
matter had been settled and that he would
not release the file of Ms
Radebe because the matter has been finalized;
(i) a further letter was addressed by
the applicant to the respondent on the 25
th
March, 2010
requesting to know,
inter alia
, whether or not he had received
the payment of the settlement amount and whether he had accounted to
Ms Radebe for those funds.
They also requested a copy of his ledger
card relating to Ms Radebe. The respondent replied to this letter of
the 8
th
April, 2010 advising that the monies had been paid
into his trust account but that she had never reverted to him (and
presumably
that is why he had not paid her) and notifying the
applicant that he had no ledger card relating to Ms Radebe, also
apparently
because she had not reverted to him;
(j) on the 14
th
May, 2010
Ms Radebe again addressed the applicant
inter alia
saying that
she had not received her monies. That letter was forwarded to the
respondent on the 29
th
June, 2010 and the respondent
replied that he had consulted with Ms Radebe on the 15
th
June, 2010 regarding the settlement of her matter “
of which
we were proposing settlement and payment of her claim”
. She
had indicated to him that she wanted him to prepare a bill of costs.
He was accordingly proceeding with her instructions to
appoint a
costs consultant to draw a bill.
(k) on the 16
th
August,
2010 the applicant notified the respondent that it had appointed an
inspection committee who would communicate with the
respondent. The
inspection which was carried out by two officers appointed by the
applicant appears at pages 45 – 49 of the
papers. The
inspection report concludes that it is clear that Ms Radebe’s
money was received in July 2009 and inappropriately
used by the
respondent, and that it was no longer in his trust account. It
further records that the money standing to the credit
of the trust
account relates to other clients. It recommended that the Law Society
Council act urgently to prevent a further loss
of trust monies;
(l) on the 10
th
September,
2010 the applicant notified the respondent that he would be visited
by the members of the Inspection Committee on the
28
th
September, 2010 at 11am when the respondent would be required to make
available to the inspectors his file, the ledger account
and trust
bank statements from the 1
st
July, 2009 to date; and
(m) on the 14
th
September,
2010 Mr Ngubane, one of the inspectors, recorded in a letter to the
respondent that his employee Ms Shangase had advised
him that the
respondent had telephoned and left a message saying that his office
had been broken into, and that some of his office
items had been
stolen. A full written report of the break-in was requested.
[5] Significant aspects of the
affidavit deposed to by the respondent in answer to the applicant’s
allegations are the following
:
(a) at paragraph 18 he stated that
after receiving payment from the RAF he had kept the monies in trust
without investing them,
pending the resolution of the dispute (a
reference apparently to the complaint lodged against him). As appears
later, that allegation
is simply untrue because by the 1
st
February, 2010 the respondent’s trust account had a balance of
R96,78;
(b) at paragraph 19 he stated that he
holds business and trust accounts at Nedbank in Smith Street and that
in respect of his business
account he created a beneficiary profile
for the majority of his trust creditors, and that, after transferring
amounts from his
trust account to his business account, he paid his
trust creditors either by cheque or electronic payment. He stated
that (for
some unexplained reason) it was impossible to do direct
transfers from his trust account to a beneficiary. (This was later
denied
by the respondent’s Small Business Manager and the
manager of Electronic Banking at Nedbank.) In any event it is clear
from
a perusal of the profile of the respondent’s business
account that his so-called trust creditors consisted of approximately
15 creditors, some of which are clearly personal creditors;
(c) in paragraph 36 he admits that Ms
Radebe’s funds are no longer in his trust account as he
transferred those funds into
his business account “about”
July of 2010, after he and Ms Radebe had negotiated settlement of the
dispute wherein
she indicated that she would accept R250 000, which
money the respondent allegedly kept available in his business account
for transfer
in anticipation of the settlement of the dispute. There
is a suggestion in the papers that this amount was the R255 000,00
transfer
from the respondent’s trust account to his business
account reflected on the 7
th
July, 2010. (Not only do the
amounts not co-incide, but according to the uncontradicted Inspection
Report, there was thereafter
a transfer of those moneys from the
respondent’s business account to his savings account!); and
(d) in paragraph 38 he admitted that
Ms Radebe’s funds have never been paid to her and he alleges
that it is because of the
ongoing fee dispute between him and herself
(including her attorneys).
[6] The respondent’s trust
account appears from pages 52 – 71 of the record and covers the
period from the 10
th
June, 2009 to the 27
th
September, 2010. It is significant that as at the 6
th
July, 2009 when the RAF paid over the proceeds of Ms Radebe’s
claim the balance was R45 196,82. Thereafter there are a significant
number of small withdrawals or transfers from the trust account to
the respondent’s business account. Those amounts are almost
all
in round figures such as R2 000, R4 000, R5 000, R8 000, R10 000, R20
000. On the 29
th
September, 2009 there is a transfer to
his business account of R200 000. Another significant aspect of the
respondent’s trust
account is that after the 6
th
July, 2009 the balance in the trust account continuously diminishes
until the 4
th
August, 2009. At that stage the balance was
R245 293,82. Thereafter a further payment was received from the RAF
of R183 348, and
then the balance reduced with smaller payments being
received from the RAF until a position was reached on the 1
st
February, 2010 when the trust account contained a total of R96, 78.
[7] It is thus clear that at that
stage Ms Radebe’s monies were not in his trust account. There
is no indication anywhere
in his trust account of a transfer of Ms
Radebe’s monies to his business account. There is no logical
reason why he should
have done so in bits and pieces over an extended
period of time. The evidence revealed by the trust account is in
clear contradiction
to what the respondent states in paragraph 18 of
his answering affidavit
[8] The evidence disclosed by his
trust account is also in contradiction to his statement in paragraph
36 of his answering affidavit
that he had transferred the funds into
his business account about July 2010 after a settlement of the
dispute had been negotiated.
Whilst various monies were transferred
from the respondent’s trust account to his business account
during July of 2010, there
is no amount, or even a combination of
amounts, which could correspond either to the amount of Ms Radebe’s
settlement figure,
or to that amount less an allowance for costs.
[9] In addition to the aforegoing the
reasons which have been tendered by the respondent for not paying
over the funds to Ms Radebe
are unacceptable. He has no right
whatsoever to accept instructions from any other person with regard
to the disbursement of those
funds, and any suggestion that he may
not have paid her because of the interference of her relatives is not
an acceptable excuse.
In addition, his suggestion that he did not pay
the monies over to her because of the fee dispute is unacceptable.
There is no
acceptable reason given by the respondent why he could
not have paid over to her the undisputed monies – i.e. the
amount
paid over by the RAF less, on the respondent’s own
version, the maximum which he could have claimed for fees being 25%
of
that amount. In addition to the aforegoing it is disquieting that
the respondent at no stage proffered an acceptable explanation
of why
he did not pay over Ms Radebe’s funds. The conclusion seems
inescapable that he did not do so because he was unable
to pay over
the funds, having spent them.
[10] It is also disquieting that the
respondent did not comply with the requests of the applicant to
provide ledger records of Ms
Radebe’s account. His explanations
for not being able to do so seem contrived and unacceptable. His
refusal to hand over
the file to new attorneys acting for Ms Radebe
because the matter had been finalized was both untrue and
unacceptable.
[11] In all the circumstances it is
clear from a perusal of the papers that the respondent unlawfully
misappropriated the amounts
paid to him by the RAF on behalf of Ms
Radebe. His offence in so doing is compounded by his patently
disingenuous efforts to explain
his conduct in his affidavits and
correspondence.
[12] In all the circumstances there is
no reason why an order should not be granted as sought by the
applicant.
[13] I accordingly grant a final order
in terms of paragraphs 1.1 – 1.12 of the draft order prayed
contained at pages 89 –
96 of the indexed papers.
_______________________
Seegobin J : I agree.
Counsel for the Applicant : R M van
Rooyen (instructed by Venn Nemeth & Hart Inc)
Counsel for the Respondent : S
Madikizela (instructed by M M Fobo & Associates)
Date of hearing : 11
th
February 2011
Date of judgment :