Law Society of Cape of Good Hope v Dippenaar (715/04) [2006] ZAWCHC 51 (31 October 2006)

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[2006] ZAWCHC 51
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Law Society of Cape of Good Hope v Dippenaar (715/04) [2006] ZAWCHC 51 (31 October 2006)

IN THE HIGH COURT OF
SOUTH AFRICA
(CAPE
OF GOODHOPE PROVINCIAL DIVISION)
REPORTABLE
CASE
NO. 715/2004
LAW SOCIETY OF CAPE OF GOOD HOPE APPLICANT
and
ANNELIZE
DIPPENAAR RESPONDENT
JUDGMENT DELIVERED ON 31 OCTOBER 2006
DLODLO, J
INTRODUCTION
(1) On 16 September 2005 this Court gave an order in this matter
without the reasons. The reasons for the order given are set forth
hereunder. At the end hereof and for the sake of completeness, I will
repeat the order given on 16 September 2005.
(2) The
Applicant is a juristic person in terms of the provisions of Section
56(a) of the Attorneys Act, No. 53 of 1979 as amended
(the Act) with
its offices at Waalburg Building, corner of Wale and Burg Streets,
Cape Town. In terms of the Act the Applicant is
vested with
inter
alia
disciplinary jurisdiction of attorneys, notaries and
conveyancers practicing in the area previously known as the Cape of
Good Hope.
The Respondent is Annelize Dippenaar, an attorney who
practised until interdicted from doing so at 4
th
floor,
Hycastle house, corner Loop and Castle streets, Cape Town, Western
Cape. The Respondent was admitted as an attorney and notary
public on
6 August 1992 and as such is a member of the Applicant.
(3) The
Applicant whose duty and function it is, to protect the interests of
the public in their dealings with attorneys (see:
Solomon v Law
Society of the Cape of Good Hope
1934 AD 401
at 409) seeks an
order striking the Respondent’s name from the roll of Attorneys,
Notaries and Conveyancers plus certain other
ancillary reliefs.
FACTUAL BACKGROUND
(4) This
application was preceded by an application to interdict the
Respondent from practice. The interdict application came about
as
result of the following brief facts and circumstances. In early 2000
the Applicant Law Society received a number of complaints
concerning
the Respondent’s handling of trust monies. The Respondent was
afforded an opportunity to provide the Applicant with
a proper
reconciliation of her trust account. When this was not done the
Applicant resolved to instruct Deloitte and Touche accountants
to
conduct an inspection and auditing of the Respondent’s books of
account. The inspection was performed by Steven Powell of the
Forensic Services Division of Deloitte and Touche. Mr. Powell
reported that his inspection had revealed a number of serious
accounting
irregularities and that the Respondent was not “
…capable
of running a trust account in accordance with the ‘Rules of the
Society’…”
On the strength
of Mr. Powell’s findings the Applicant made an urgent application
to this Court on 13 April 2000 under case number
2618/2000 for an
order interdicting the Respondent from practising and from operating
on her trust banking accounts. The Respondent,
via her attorneys,
assured the Applicant that the debit items referred to by Deloitte
and Touche had resulted purely from incorrect
accounting. She offered
to surrender control of her trust banking accounts, to bear the costs
of the postponement of the matter,
immediately to cause her
accounting records to be corrected, to prepare an Answering Affidavit
dealing with the allegations against
her. She asked that the matter
be postponed
sine die
, with the Applicant to have the right to
set the matter down once more on 24 hours notice should it not be
satisfied with the progress
made in her fulfilling her undertakings.
(5) The order of
this Court of 13 April 2000 was made by agreement, the matter being
postponed
sine die
and the Respondent being ordered,
inter
alia
, to file a fresh audit report prepared, at her expense, no
later than noon on Friday 5 May 2000 by an auditor nominated by the
Applicant.
The Applicant nominated Deloitte and Touche and this was
communicated to the Respondent on 26 April 2000. Deloitte and Touche
did
not prepare an audit report as the Respondent failed to comply
with her undertakings to them with regard to payment. At the request
of the Applicant, the accountant tasked with the inspection (one
Jonathan Lizo Jacobs) prepared an affidavit in which he reported
what
he had discovered.
(6) Mr.
Jacobs reported
inter alia
that:
The
Respondent drew cheques on her trust account without any regard to
the account to which they were to be debited, with the allocation
being done later.
Nothing
indicated that these cheques were issued in error.
Some
R96 991.61 worth of trust cheques had been drawn without being
debited to any ledger account.
A
shortage existed in the trust account of R87 950.00.
Mr. Jacobs’
report detailed how the irregularities in Respondent’s books of
account came about and what he reported was done,
was demonstrated in
a number of specific and documented examples. Mr. Jacobs’ account
was confirmed by that of the Respondent’s
erstwhile accountant, one
Mr. Pike. Mr. Pike reported that
‘…trust funds were taken by
the Respondent, ostensibly on account of fees, and the Respondent
only afterwards decided which ledger
accounts were to be debited…
And he had been aware of the existence of a second receipt book which
he was not asked to bring into the Respondent’s books of
account.’
(8) In the light
of these new findings the Applicant re-enrolled the matter on 48hours
notice. On 12 May 2000 an order was granted
increasing the
restrictions on the Respondent’s handling of trust monies and
postponing the matter to 8 June 2000. On that day
the matter was
postponed again, this time to 26 October 2000, the Respondent having
again replaced her legal representatives and
having made a
substantive application for a postponement. On 26 October 2000 the
Respondent did not appear and an order was granted.
Subsequent to the
granting of the order interdicting the Respondent from practice more
complaints were referred to the Attorney’s
Fidelity Fund. Certain
of these fresh complaints are detailed in the founding affidavit in
this matter. In summary they demonstrate
that on 13 April 2000, when
Deloitte and Touche prepared the initial report, the Respondent ought
to have had an additional R171
670,80 in trust over and above the sum
of the R87 950,00 that was initially mentioned. In total the
Applicant states that a sum of
R255 332,43 had been misappropriated
by the Respondent. The Applicant averred that two facts demonstrated
the Respondent’s unfitness
to remain on the roll of attorneys,
namely, her wilful failure to keep proper accounting records and her
misappropriation of trust
monies.
CONDUCT OF THE RESPONDENT
(9) An investigation undertaken by Jonathan Lizo Jacobs of Deloitte
and Touche mandated by the Applicant on the strength of certain
complaints from members of the public showed further the following
scenario:
The matter of
Mr. G. Wiese
– a debit in the ledger account relating to this
matter had arisen twice in one week. On both occasions the debit had
arisen as
a result of payments from the account to the Respondent’s
business account against money not yet paid into the trust account.
The
Muller/Stoneage account
– funds were journalized from this
account to the Respondent’s business account on a number of
occasions and it gave rise to a
debit balance in the amount of R17
500,00, an amount clearly misappropriated from the funds held on
behalf of the Respondent’s
general body of trust creditors.
The matter of
Graham
– showed a debit of R5 000.00 which was subsequently
made good by means of a deposit to that account – a clear attempt
to conceal
misappropriation of trust money by tendering a false
ledger account.
(10) Almost
similar irregularities affected many other trust creditors of the
Respondent. The accountant brought forth a damning report.
It set out
among many other things:
That
the trust cheques were issued by the Respondent without any regard
being had to the account to which they were to be debited
and that
the allocation of debits was only done later.
The
cheques in the total amount of R96 991.61 had been drawn in the year
2000 without being debited to any account at all.
An
amount of R17 500.00 mentioned supra had been appropriated by the
Respondent before fees were put through and funds had been
transferred from that account for no substantial reason.
Groenewald,
Jordaan and Marais were all professional employees of the
Respondent. They agreed with her to pay her the sum of R100
000.00
in order to be employed as candidate attorneys. The accounting
officer pointed out that in as much as this was not trust
money (it
was the Respondent’s own money) it ought not to have been credited
to the Respondent’s trust account. These funds
were then
transferred from these ledger accounts to other ledger accounts in
the Respondent’s books of account. In the professional
view of the
accounting officer this was done in order to correct or reduce debit
balance that had arisen in those ledger accounts.
(11) The list
annexed by the accounting officer showed that as at 13 April 2000 the
trust creditors totaled R92 238.37 but the Respondent
in her two
trust accounts had only R4 288.37 depicting a shortage of at least
R87 950.00. He referred to unallocated payments from
trust and showed
that unallocated cheques totaled R87 950.00. In the professional view
of the accounting officer the Respondent had
drawn fees without
passing debits in individual ledger accounts. I would pause here and
quote from the portion of Report tabled for
consideration by the
Applicant:
“
I did observe,
when I was working on the Respondent’s accounting system early last
year, that the Respondent would draw trust cheques
in her favour
without having regard to whether or not she was entitled to transfer
from her trust account to her business account.
Trust funds were
taken by the Respondent, ostensibly on account of fees, and the
Respondent only afterwards decided which ledger
accounts were to be
debited. I was aware of the existence of a second receipt book not
forming part of the Respondent’s proper
books of account. I
actually saw the book but I was not asked by the Respondent to
examine it or to bring it into any of her trust
books of account.”
(12) It was
established from an examination of the trust account that there was a
substantial shortage in the trust funds. The Respondent
in an earlier
application explained the shortage as resulting from erroneous
postings and asked for an opportunity to correct the
errors. Although
she was granted such opportunity the situation grew from bad to
worse. Fresh complaints emerged regarding various
trust creditors –
various serious amounts of money belonging to the trust creditors. I
do not intend to mention individual clients
and the extent of their
financial loss in the hands of the Respondent. It suffices in my view
that same is fully documented in the
founding papers. The total sum
of money the trust creditors lost in the hands of the Respondent
amounted to R171 670.80. In total
the Respondent misappropriated the
sum of R255 332.43 as at 13 April 2000. The Applicant in the founding
papers alleged further that
the Respondent had in a number of ways
failed to keep proper books of account and she failed to comply with
Section 78(4) of the
Attorneys Act accordingly. In these
circumstances it is clear that the Respondent had made herself guilty
of unprofessional, dishonourable
and unworthy conduct.
(14) When the
matter came before us in March 2005 the Respondent had filed of
record an Affidavit in terms of which she sought an
order postponing
the hearing of the application brought against her. In that Affidavit
she indicated that she would oppose the application
on basis of the
revelations in the then ongoing criminal proceedings against her,
founded on the merits of this very application.
The postponement was
granted. When the matter once again served before us, her opposition
had not been taken any step further by
herself. We were supplied with
what purports to be a copy of the transcript of the criminal case.
This proved to be of no assistance
to neither the Respondent nor to
the Court. In any event the Respondent did not even appear nor did
she instruct anyone to appear
on her behalf. The Applicant’s case
for striking her name off the Roll of Attorneys, Notaries and
Conveyancers of this Court remained
unanswered and unopposed
accordingly.
THE LAW APPLICABLE
(15) In
terms of Section 22(1)(d) of the Attorneys Act, No. 53 of 1979 (as
amended by Section 9(c) of Act No. 108 of 1984)-
“
22(1) Any
person who has been admitted and enrolled as an attorney may on
application by the Society concerned be struck off the roll
or
suspended from practice by the court within the jurisdiction of which
he practises…
if
he, in the discretion of the court, is not a fit and proper person
to continue to practise as an attorney…
”
The words “in
the discretion of the court” in Section 22(1)(d) of the said Act
were incorporated by way of the amendment referred
to above, and
“…leave no doubt that the question of fitness is now no longer
essentially a finding of fact but an exercise of discretion
”
(per Galgut, AJA in
Law Society of the Cape of Good Hope v C
1986(1) SA at 637 D-E). The aforesaid statutory power supplements the
power which the Court has at common law to exercise discipline
over
attorneys
. (Law Society of the Cape of Good Hope v C supra at
639 D-E
)
(16) The Supreme
Court of Appeal in
Jasat v Natal Law Society
(2002) 2
ALL SA 310
(A) held that a three stage enquiry is contemplated in
applications such as the instant one, namely-
the
first is that the Court must decide whether the alleged offending
conduct has been established on a preponderance of probabilities;
the
second is whether as stated in Section 22(1)(d) the person concerned
“in the discretion of the Court” is not a fit and proper
person
to continue to practice. The exercise of the discretion involves a
weighing up of the conduct complained of against the
conduct
expected of an attorney and to that extent is a value judgment.
The
third is whether in all the circumstances the person in question
should be removed from the roll of attorneys or whether an
order
suspending him from practice for a specified period will suffice.
Whether the Court will adopt the one course or the other
will depend
on whether such factors as the nature of the conduct complained of;
the extent to which it reflects upon the person’s
character or
shows him to be worthy to remain in the ranks of an honourable
profession; the likelihood or otherwise of a repetition
of such
conduct; and the need to protect the public.
(17) Although it
remains the duty and function of the applicant to protect the
interest of the public when dealing with attorneys
and its views are
given due consideration, it ultimately is the court which is the
final repository of disciplinary jurisdiction
over attorneys (see:
Solomon v Law Society of the Cape of Good Hope
supra
)
The highest standard of good faith and integrity is required of
attorneys enrolled to practice as such by this court (see:
Vassewa
v The Law Society of Cape of Good Hope
1998 (H) SA 532 (SCA)
at 538 G-I). It was stated in
The Law Society of the Cape of
Good Hope v Parker
2000(1) SA 582 at 587 D-E that:
“
It is clear on authority that the usual penalty for
misappropriation of trust funds is striking off and this is
understandably so;
the proper administration of monies entrusted to
an attorney by his client is perhaps the most fundamental and
important of the duties
of an attorney and anything less than
complete observance of those duties will not be tolerated by the
Courts.”
Hefer AP in
Law
Society of the Cape of Good Hope v Budricks
2003(2) SA 11
(SCA) at 171 I-J described the misappropriation of trust funds as
“
about the worst professional sin that an attorney can commit
.”
I fully agree
with these sentiments.
THE APPLICATION OF THE ABOVE
LEGAL PRINCIPLES TO THE FACTS IN THE MATTER
The
approach to be followed in matters of this type is to be found in the
following authoritative dictum by Hefer JA (as he then was)
in
Kekana
v Society of Advocates of South Africa
1998(4) SA 649 (SCA):
(18) “In
terms of
section 7(1)
of the
Admission of Advocates Act 74 of 1964
,
as amended, the Court may suspend any person from practice, or order
that the name of any person be struck off the roll, if it is
satisfied that he is not a fit and proper person to continue to
practise as an advocate. The way in which the Court had to deal with
an application for the removal of an attorney’s name from the roll
under a similar provision in the Attorneys, Notaries and Conveyancers
Admission Act 23 of 1934, as amended (before that Act was repealed),
was considered in
Nyembezi v Law Society, Natal
1981
(2) SA 752
A at 756 H to 758 C. It emerges from the judgment that the
Court first has to decide whether the alleged offending conduct has
been
established on a preponderance of probability and, if so,
whether the person in question is a fit and proper person to practise
as
an attorney. Although the last finding to some extent involves a
value judgment, it is in essence one of making an objective finding
of fact and discretion does not enter the picture. But, once there is
a finding that he is not a fit and proper person to practise,
he may
in the Court’s discretion either be suspended or struck off the
roll.
This is plainly how an
application for the removal of a person’s name from the roll of
advocates must also be handled
.” (My emphasis)
Indeed the standard against
which the professional conduct of an attorney falls to be judged is
an exacting one. The following dicta
bear testimony to this:
(a) “It is not necessary to expatiate on the high standard of
integrity and the necessity for avoidance, not only of criminal
conduct,
but of misconduct or unprofessional conduct required of an
advocate”
(per Murray, J in
Johannesburg Bar Council v
Steyn
1946 TPD 115-117)
(b) “
The
advocate’s duty to the Court requires absolute honesty and
integrity.”
(Joubert
Lawsa
1
st
reissue Vol.
14 para 276)
(c) “
The
proper administration of justice could not easily survive if the
professions (ie of advocates and attorneys) were not scrupulous
of
the truth…”
(per James JP in
Ex Parte: Swain
1973 (2) SA 427
(N) at 434H)
(19) The
Attorneys’ Profession has rules in place regulating the keeping of
an attorney’s books of account. It is quite apparent
that the
Respondent did not bother to give due regard to these rules in the
manner she handled her trust account. She was not only
reckless but
she handled her trust account as though same was her own private
savings account wherefrom she could deposit and withdraw
at any given
moment without the need to pass any entry evidencing the transaction.
It remains the duty of this Court to uphold the
rules and ethics
imposed by the Applicant to its members. An application to strike off
an attorney from the roll is ordinarily not
in the nature of ordinary
civil proceedings. It is and remains
sui generis
statutory
process of a disciplinary nature. In the words of Eloff, JP in
Algemene Balieraad van Suid-Afrika v Burger en ‘n Ander
1993
(4) SA 510
(T) at 516 G-H:
“
Daardie
subartikel (Section 7(2) of the Act) gee myns insiens statutêre
beslag aan die behoefte en inherente reg wat die Hof gehad
het om, in
die uitvoering van sy toesig oor regspraktisyns, iemand te hê wat
die gegewens en bewysmateriaal voor hom sal plaas,
ingeval daar ‘n
vraagteken ontstaan oor ‘n regspraktisyn se geskikktheid om langer
op die rol te bly.”
(20) The
above applies with equal force on attorneys as well. The sui generis
nature of these proceedings is well explained in
General
Council of the Bar v Matthys
2002(5) SA 1 (ECD) at 5A-D:
“
B
The nature of the proceedings
(1) The
proceedings are not ordinary civil proceedings, but are sui generis
in nature: they are proceedings of a disciplinary nature,
of the
Court itself, not those of the parties; the Court exercises its
inherent right to control and discipline the practitioners
who
practise within its jurisdiction; the applicant, in bringing the
application, acts pursuant to its duties as custos morum of
the
profession; in the interest of the Court, the public at large and the
profession, its role is to bring evidence of a practitioner’s
misconduct before the Court, for the latter to exercise its
disciplinary powers; the proceedings are not subject to all the
strict
rules of the ordinary adversarial process
. Society of
Advocates of South Africa (Witwatersrand Division v Edeling
1998(2) SA 852(W) at 859 et seq.
Evidence which would have been inadmissable
in ‘civil proceedings may be considered in disciplinary
proceedings against a practitioner
in the High Court.
Incorporated
Law Society, Transvaal v Meyer and Another
1981(3) SA 962 (T) at
968F.”
(21) This
Court should at all times give proper weight to the Applicant’s
view with regard to matters complained of in this case.
(See
Law
Society, Cape v Koch
1985(4) SA 379(C) at 386 G and
authorities there collected). The Applicant approaches the Court as
the custodian of the prestige,
status and dignity of the profession,
and in order to protect the interest of the public in its dealings
with practitioners (cf.
Society of Advocates of South Africa
(Witwatersrand Division v Edeling
1998(2) SA 852 (W) 860). I
am of the view that the offending conduct on the part of the
Respondent has indeed been established on
a preponderance of
probabilities. The conduct proved against the Respondent is certainly
not the kind of conduct that this Court
expects of an attorney.
Accordingly I have no hesitation on the facts of this matter to come
to a finding that the Respondent is
definitely not a fit and proper
person to be allowed to continue to practise. It is common cause that
the Respondent was given an
opportunity to redeem herself when she
was suspended from practice. This, she did not take advantage of. The
Respondent clearly has
a character problem when it comes to the
handling of the public’s funds. There remains no other alternative
remedy in the circumstances
but to remove the name of the Respondent
from the roll of attorneys, notaries and conveyancers. In any event
the usual penalty for
misappropriation of trust funds is the striking
off. One cannot describe any better how important it is that any
attorney must handle
the monies of the public with utmost honesty and
good care. Money has been described as the root of all evil. The
standard of care
which attorneys must display towards such monies
must be such that they do not and should not succumb to temptation. I
fully agree
with Hefer AP when he in
Law Society of the Cape of
Good Hope v Budricks
supra
described the theft of
money by an attorney as “
about the worst professional sin that
an attorney can commit
.”
(22) In
my view an attorney who misappropriates trust monies as the
Respondent clearly did, demonstrates character defects that renders
him or her unfit to practise as an attorney because he or she poses
an unacceptable risk to the members of the public and to the
administration of justice. In my view the Applicant is entitled to an
order removing the Respondent’s name from the roll of attorneys,
notaries and conveyancers plus ancillary reliefs mentioned in the
notice of motion. It is regrettable that the Respondent was so
unscrupulous with regard to money that she even resorted to making
candidate attorneys to pay in order to have their articles of
candidacy served with her. If the Applicant can no longer rely on its
members to provide the necessary practical training to its
prospective members without such prospective members being subjected
to serious financial strains, this, is but a sign that there
will
soon be a marked scarcity of members joining the attorney’s
profession.
THE
FORM OF ORDER SOUGHT
(23) It
is necessary and helpful to deal briefly with the form of order the
Applicant sought in this matter. My brother presiding
in this matter
was correctly concerned about certain portions of the draft order.
His concerns resulted in a rather stimulating argument.
I deal
infra
with the form of order sought. The power to interdict an attorney
from operating on his trust account, to appoint a curator to control
and administer such trust account/s, and to confer rights, duties and
powers upon such curator, derives from section 78(8) of the
Attorneys
Act, 53 of 1979 which provides as follows:
“
The
court may on application made by the 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.”
(24) Section
78(9) of the Attorneys Act, which gives the Master of the High Court
the power to appoint a curator to the trust account
of an attorney
who is struck off the roll or suspended from practice is of
application.
This
section of the Attorneys Act provides as follows:
“
(9)(a)
If any practitioner –
dies;
becomes insolvent;
in the case of a professional company, is
liquidated or placed under judicial management, whether
provisionally or finally;
is struck off the roll or suspended from
practice;
is declared by a competent court to be
incapable of managing his own affairs; or
abandons his practice or ceases to practice,
the Master of the
Supreme Court may, on application made by the Society of the Province
concerned or by any person having an interest
in the trust account of
that practitioner, appoint a
curator bonis
to control and
administer such account, with such of the rights, duties and powers
as the Master may deem fit”
“
Prescribed
”,
in terms of section 1 of the Attorneys Act, “
means prescribed by
rule of by regulation made in terms of section 74, 81 or 82.
”
Regrettably no rules or regulations have been made which “prescribe”
the rights, duties and powers to be conferred upon a
curator under
section 78(9) of the Attorneys Act.
(25) Regard
being had to the afore-going, it was Mr. Koen’s submission that the
Master cannot therefore appoint a curator in terms
of this section as
such curator would be without the means to fulfil his statutory
functions. He would have no “
rights, duties or powers
”.
In the circumstances I fully agree that it thus must fall to the
court to appoint a curator and to confer “
rights, duties and
powers
” upon him under section 78(8) of the Attorneys Act. If
this is not done the fate of the trust accounts and trust creditors
would
be left entirely unregulated. The court is given the power by
Section 78(8) of the Attorneys Act to confer such powers as it “
may
deem fit
” upon the curator. In any event the power so given to
the court is wide and the Court will grant such powers to a curator
as are
practically required by him to “wind up” the trust account
of an attorney who has been struck off the roll and who may not
lawfully
practise. I would agree with Mr. Koen that the power granted
to the court under section 78(8) of the Attorneys Act supplements the
wide disciplinary discretion conferred by common law upon a court
over its officers. The court should and must be able to make orders
which provide for the orderly and sensible winding up of the practice
of an attorney who is struck off the roll or otherwise prohibited
from practising. It would make no sense that a court have the power
to prohibit an attorney from practising at common law but be
devoid
of the power to make an order regulating the manner in which the
trust funds under his control should be dealt with.
SHOULD
PARAGRAPH 4.2 OF THE ORDER REFER IN ADDITION TO SECTION 78(1)?
As paragraph 4.1 of the draft order under
discussion covers the funds held or received by an attorney in terms
of section 78(1),
or otherwise I find myself in agreement with Mr
Koen’s submission that it would not serve any purpose to include
any reference
to it in paragraph 4.2.
DOES
THE COURT HAVE THE POWER TO GO BEYOND SECTION 78(9) AND CONCERN
ITSELF WITH THE PROVISION OF SECURITY FOR BUSINESS MONIES?
As for the reasons set out in paragraphs 24 and
25 above the provisions of section 78(9) do not find application a
court’s competence
of conferring the necessary powers upon a
curator are not truncated by it.
THE
NECESSITY AND SUFFICIENCY OF THE UNDERTAKINGS
IN
PARAGRAPHS 6 AND 7 OF THE ORDER:
(28) Paragraph
6 is intended, in essence, to confer upon the curator the power to
hand to clients of the attorney in question the
attorney’s files
relating to matters he handled on their behalf in order that they may
obtain the assistance of other attorneys
to take over their matters.
It is important that the curator is entitled to exercise this power
almost immediately upon his appointment
as delays will, for obvious
reasons, prejudice the interests of the clients and may even lead to
claims prescribing, if matters are
not timeously dealt with.
Accordingly, paragraph 6 of the order is formulated in such a manner
so as to give the curator a wide
discretion to decide, before
releasing a file; whether to require payment of any fees
outstanding; whether to require that security
be furnished by a
client; or whether to release the file to the client without either
fees being paid or security being furnished.
The nature of an
attorney’s lien is set out in
Botha NO v EM Mchunu and Co.
1992(4) SA 740 (N) at 743B. An attorney has a lien over every
document in respect of which he/she is entitled to charge his or her
client a fee, not only those actually prepared by the attorney.
However, even where there is a lien a court has a discretion to order
delivery of objects over which the lien is exercised to their owner
against the provision of adequate security. Each case will depend
on
its particular facts and the Court, in exercising its discretion,
will have regard to what is equitable under all the circumstances,
bearing in mind that the owner should not be left out of his property
unreasonably and on the other hand should not be given possession
if
his object is, after obtaining possession, to delay the claimant’s
recovery of the expenses. (
Spitz v Kesting
1923 WLD 45
at 49, quoted with approval in
Hochmetals Africa (Pty) Ltd v
Otavi Mining Co. (Pty) Ltd
1968(1) SA 571(A) at 582 D-E))
In
my view, the factors, which would weigh with a Court in exercising
its discretion to override a lien would be in cases where
an attorney
has been found to be guilty of grave professional misconduct. It
would not be equitable to insist on the provision of
security for
such fees as are due in these circumstances. Unlike for instance, a
builder’s lien, an attorney’s lien is not one
that relates to
goods with any intrinsic value the only consequence that he loses is
a means of applying court-sanctioned pressure
on his debtor. In my
view this is a form of pressure that he should not be entitled to
exercise in the event of his having his name
struck from the roll.
Provided that a client undertakes to pay the fees due and provides a
domicilium citandi et executandi
the attorney (or the
attorney’s trustee, should the attorney’s estate be sequestrated)
is afforded a significant procedural advantage
in the recovery of
monies due to him. Mr. Koen submitted that this provision of the
draft order should not be changed. I am in full
agreement with him.
(29) On
the question by my brother if a single office bearer should not be
named in the order sought rather than a number of named
office
bearers, Mr. Koen submitted that this should indeed be the case. In
his submission any practical difficulties which may arise
as a result
of the appointed curator being absent for any reason are overcome by
the provision of paragraph 10.9 of the order which
permits the
curator, subject to the approval of the chairman of the Board of
Control of the Fidelity Fund, to appoint nominees.
Mr Koen submitted
that references to the approval of the Board of Control of the
Fidelity Fund should not be removed from the order
sought as the
Board of Control consists of senior practitioners (see section 28 of
the Act) who can be relied upon to oversee the
exercise by the
curator of his/her powers. Another important consideration is that in
practice, it is the Fidelity Fund which pays
the costs incurred by a
society in connection with steps taken by it in terms of sections
22(1) and 78 of the Act (the power to do
this derives from section
45(1)(j) of the Act). It therefore appears to be appropriate that
the Fund’s approval should be sought
and obtained before such costs
are incurred.
PARAGRAPH
10.8 OF THE ORDER – GENERALLY
(30) In
this Division (as well as the Eastern Cape and Natal), until the
judgment in
Pollard
was handed down, this part of the order
entitled the curator, in the event of there being a trust shortage,
to pay whatever trust
funds existed to the Fidelity Fund. Trust
creditors were then to make claims from the Fidelity Fund which were
paid from the funds
received from the attorney in question until
these were exhausted, and then from the funds of the Fidelity Fund.
In the Transvaal,
following the judgment in
Ex Parte Law
Society, Transvaal
: In re
Hoppe v Visser
1987
(2) 773 (TPD), this part of the order obliged the curator to
distribute the (remaining) trust credit balance to trust creditors
who had proved claims. It read:
“
In
the event of there being insufficient trust moneys in the trust
banking accounts(s) of the respondents to pay in full the claims
of
trust creditors, to distribute the credit balance(s) in the trust
banking account(s) amongst the trust creditors whose claims
have been
proved or admitted.”
In
Pollard
(28 October 2003), although the order ultimately issued by the Court
remained as it had been, the Court found the reasoning in
Hoppe
and Visser
“to be most persuasive”.
Oberholzer’s
case (22 October 2004) was the next to deal with this part of the
order. In
Oberholzer
the precise wording used in
Hoppe
and Visser
was not followed. The relevant part of the order
which was made read as follows:
“
In the event of
there being insufficient trust moneys in the trust banking account(s)
opened by the respondent in terms of section
78(1) and (2) of Act 53
of 1979 from which to pay the claims of trust creditors in full, to
distribute pro rata amongst creditors
whose claims have been proved
or admitted, the amount(s) reflected by the credit balance(s) in the
said accounts(s).
”
(31) Paragraph
10.8 of the order was given again amended by my sister, Traverso DJP
sitting with my brother, Moosa J in the unreported
matter of
Law
Society of the Cape of Good Hope v Peter
on 17 November 2004.
In this case funds held by the attorney in terms of section 78(2A) of
the Attorneys Act were dealt with. The
order read:
‘
20.12.8 in
the event of there being insufficient trust moneys in the trust
account(s):
held, in terms of Section 78(1) and/or 78(2)
of Act 53 of 1979, to pay the claims of trust creditors reflected in
the books of account
of the respondent in full, to distribute the
credit balance(s) in the trust banking account(s) pro rata amongst
the trust creditors
whose claims have been proven or admitted; and
held, in terms of Section 2A of Act 53 of
1979, [this is presumably a reference to section 78(2A) to pay the
respective trust creditors
on whose behalf the trust funds are held
provided such claim(s) have been proven and admitted
’.
(32) This
form of order treats monies held in section 78(2A) accounts in a
separate manner. Mr. Koen,however, was critical of the
aforementioned
order in that, in his view, the order was framed such that payment to
section 78(2A) trust creditors is premised on
the assumption that
there is no shortage in funds separately invested in terms of this
section. It is, in any event trite that identifiable
funds held
separately in terms of section 78(2A) should be paid to the trust
creditors whose funds they are, provided that the curator
is
satisfied that they indeed belong to those trust creditors. A
further concern expressed by Mr Koen about the order set out above,
is that no mechanism or rules exist by which claims of trust
creditors should be proved or admitted. In truth, in order to
calculate
a
pro rata
distribution to trust creditors the
curator must be able to calculate the extent of the trust liability.
Invariably in matters such
as the instant one, the extent of an
attorney’s trust liabilities cannot be ascertained from his/her
accounting records, because
these may not have been properly kept.
Obviously a difficulty could arise if after a pro rata distribution
is effected another trust
creditor proves a claim. Notably in order
to cater for the issues canvassed supra the draft order proposed by
the Applicant now provides
for the payment of a pro rata distribution
to trust creditors whose identity and entitlement has been
established by the curator
after having taken reasonable steps to do
this, and for the payment directly to trust creditors of section
78(2A) monies, provided
that the curator is satisfied of such trust
creditors’ entitlement to such funds.
THE
NEED FOR THE INCLUSION OF PARAGRAPH 11.4 ?
(33) In
an endeavour to explain the above Mr. Koen pointed out that it may
happen that an attorney is also a creditor in his own trust
account
even if a shortage exists. The attorney may hold a deposit on account
of fees in respect of which he has done work and is
entitled to
charge a fee. Paragraph 11.4 of the original order is in Mr. Koen’s
submission, intended to limit to one year the time
within which the
attorney has to establish his claim. Mr. Koen, however, conceded that
if the attorney has one (1) year to establish
his entitlement to
funds held in his trust account, it will readily be seen that he is,
in a sense, his own creditor, and that the
calculation of a
pro
rata
payment to other trust creditors will be held up for at
least a year. That, this will not be in the interests of the other
trust
creditors, is obvious. In this regard it is once more
noteworthy that the Applicant has now amended the original paragraph
11.4 and
in the proposed draft order it provided that the attorney
proves his entitlement to such funds as are held in trust within a
reasonable
period after having been required to do so by the curator.
That amendment was found to be acceptable.
ORDER
(36) Accordingly the following order was granted by this Court on 16
September 2006:
THAT the respondent’s name be and is hereby
struck off the roll of attorneys and notaries of this Court.
THAT the respondent surrender and deliver to
the registrar of this Court her certificates of enrolment as an
attorney and notary.
THAT should the respondent fail to comply with
the provisions of the preceding paragraph of the Order within two
(2) weeks from
date hereof, the sheriff for the District in which
such certificates of enrolment are, be and is hereby empowered and
directed
to take possession of and deliver the same to the Registrar
of this Court.
THAT the respondent deliver her books of
account, records, files and documents containing particulars and
information relevant to:
4.1
any moneys received, held or paid by the respondent for or on
account of any person;
4.2
any moneys invested by the respondent in terms of Section 78(2)
and/or Section 78(2A) of Act No. 53 of 1979 of the Republic of
South
Africa;
4.3
any interest on moneys so invested which was paid over or credited
to the respondent;
4.4
any estate of a deceased person, or any insolvent estate, or any
estate placed under curatorship of which the respondent is the
executor, trustee or curator or which the respondent is administering
on behalf of the executor, trustee or curator of such estate;
and
the respondent’s practice as an attorney and
notary; to the curator appointed in terms of paragraph 10 hereof,
provided that
as far as such books of account, records, files and
documents are concerned the respondent shall be entitled to have
access to
them, but always subject to the supervision of such
curator or a nominee of such curator.
THAT should the respondent fail to comply with
the provisions of the preceding paragraph of this Order within one
(1) week after
service thereof upon her or after a return by the
person entrusted with the service thereof that he has been unable to
effect service
thereof on the respondent, as the case may be, the
sheriff for the district in which such books of account, records,
files and
documents are, be and is empowered to take possession of
and deliver them to such curator.
THAT such curator shall be entitled:
6.1 to hand over to the persons entitled thereto all
such records, files and documents;
6.2 to hand over all such records, files and documents
over which the Respondent exercised a lien to the persons
entitled
thereto as soon as he has satisfied himself that the fees and
disbursements in connection therewith, if any, have been paid,
or
secured as contemplated in paragraph 7 below, or, in the event of any
dispute as to the provision of security, in his discretion.
THAT a written undertaking by a person to whom
the records, files and documents referred to in the preceding
paragraph are handed
to pay such amount as may be due to the
respondent, either on taxation or by agreement, shall be deemed to
be satisfactory security
for the purposes of the preceding paragraph
hereof provided that such written undertaking incorporates a
domicilium citandi et executandi
of such person.
THAT such curator be empowered to require that
any such file, the contents of which he may consider to be relevant
to a claim, or
possible or anticipated claim, against him and/or the
respondent and/or the respondent’s clients and/or the Attorney’s
Fidelity
Fund (herein referred to as “
the Fund
”) in
respect of money and/or other property entrusted to the respondent,
be re-delivered to such curator.
THAT the respondent be interdicted and
prohibited from operating on her trust account(s) as defined in the
following paragraph.
THAT the Director for the time being of the
applicant be appointed as curator to administer and control the
trust accounts of the
respondent comprising the separate banking
accounts opened and kept by the respondent at a bank in terms of
section 78(1) of the
said Act No. 53 of 1979 and/or any separate
savings or interest-bearing accounts as contemplated by section
78(2) and/or section
78(2A) of the said Act No. 53 of 1979, in which
moneys from such trust banking accounts have been invested by virtue
of the provisions
of the said sub-section or in which moneys in any
manner have been deposited or credited (the said account(s) being
herein referred
to as “
trust account(s)
”) with the
following powers and duties:
10.1
subject to the approval of the Board of Control of the Fund, to sign
and endorse cheques and/or withdrawal forms and generally
to operate
upon the trust account(s), but only to such an extent and for such
purpose as may be necessary to bring to completion
current
transactions in which the respondent was acting at the date of this
order.
10.2
subject to the approval and control of the board of Control of the
Fund, to recover and receive and, if necessary in the interests
of
persons having lawful claims upon the trust account(s) and/or against
the respondent in respect of money held, received and/or
invested by
the respondent in terms of Section 78(1) and/or 78(2) and/or Section
78(2A) of the said Act No. 53 of 1979 (hereinafter
referred to as
“
trust moneys
”), to take 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 trust
account(s) and to receive such moneys and to pay
the same to the credit of the trust account(s).
10.3
to ascertain from the respondent’s books of account the names of
all persons on whose account the respondent appears to hold
or to
have received trust moneys (hereinafter referred to as “
trust
creditors
”) and to call upon the respondent to furnish him,
within thirty (30) days of the date to this order or such further
period as he
may agree to in writing, with the names, addresses of
and amounts due to all trust creditors;
10.4
to call upon such trust creditors to furnish such proof, information
and affidavits as he may require to enable him to determine
whether
any such trust creditor has a claim in respect of money in the trust
account(s) and, if so, the amount of such claim;
10.5
to admit or reject, in whole or part, subject to the approval of the
Board of Control of the Fund, the claims of any such trust
creditor,
without prejudice to such trust creditor’s right to access the
civil courts;
10.6
having determined the amounts which he considers are lawfully due to
the trust creditors, pay such claims in full, but subject
always to
the approval of the board of Control of the Fund;
10.7
in the event of there being a surplus in the trust account(s) after
payment of the admitted claims of all trust creditors in
full, 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 said
Act No. 53 of 1979, in respect of any interest therein referred to
and, secondly, without prejudice to the rights of the
creditors of
the respondent, the costs, fees and expenses referred to in paragraph
11 of this Order, 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, subject to the approval of
the Board of Control of the Fund, to the respondent,
if she is
solvent, or, if the respondent is insolvent, to the trustee(s) of the
respondent’s insolvent estate;
10.8
in the event of there being insufficient monies in the trust banking
accounts(s) opened by the Respondent in terms of section
78(1) and
(2) of Act 53 of 1979 from which to pay the claims of trust creditors
in full, and after having taken reasonable steps
to ascertain the
identity of such creditors and the amounts due to them, to distribute
pro rata amongst creditors whose claims have
been proved or admitted,
the amount(s) reflected by the credit balance(s) in the said
account(s), provided that the curator shall
pay to trust creditors
whose funds are held in separate accounts in terms of section 78(2A)
of Act 53 of 1979, who satisfy him that
they are entitled to such
funds, the amounts due to such creditors;
subject to the approval of the Chairman of the
Board of Control of the Fund, to appoint nominees or
representatives and/or consult
with and/or engage the services of
attorneys and/or counsel, and/or accountants and/or other persons,
where considered necessary
to assist such curator in carrying out
the duties of curator, and
10.10
to render from time to time, as curator, returns to the board of
Control of the fund showing how the trust account(s) has
(have) been
dealt with, until such time as the said Board notifies him that he
may regard his duties as terminated.
THAT respondent be and is hereby directed:
11.1
to pay the fees and expenses of the curator, such fees to be
assessed at the rate of R300,00 per hour, including travelling
time;
11.2
to pay the reasonable fees and expenses charged by any person(s)
consulted and/or engaged by the curator as aforesaid;
11.3
to pay the costs of and incidental to this application on a scale as
between an attorney and client;
within a reasonable period after having been
requested to do so by the curator, or within such longer period as
the curator may
agree to in writing, to satisfy the curator, by
means of the submission of taxed bills of cost, or otherwise, of
the amount of
the fees and disbursements due (to the respondent) in
respect of her former practice, and should she fail to do so, she
shall
not be entitled to recover such fees and disbursements from
the curator without prejudice, however, to such rights, if any, as
she may have against the trust creditor(s) concerned for payment or
recovery thereof.
THAT this Order be served on the respondent
within 14 days of the grant thereof.
Any person whose rights are affected by the
terms of this order shall be entitled, on notice to the respondent,
to make application
to this Court for a variation of the terms of
this order on good cause shown.
____________________
DLODLO, J
VAN REENEN, J:
I agree and it is so ordered.
___________________
D. VAN REENEN