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[1999] ZAWCHC 8
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HEG Consulting Enterprises (Pty) Ltd and Others v Siegwart and Others (15633/98) [1999] ZAWCHC 8; 2000 (1) SA 507 (C) (21 October 1999)
IN
THE HIGH COURT OF SOUTH AFRICA
(CAPE
OF GOOD HOPE PROVINCIAL DIVISION)
CASE NO.:
15633/98
In
the matter between:
HEG
CONSULTING ENTERPRISES (PTY) LTD
First Applicant
MICHAEL
JOHN LANE N.O.
Second Applicant
EILEEN
MARGARET FEY N.O.
Third Applicant
and
JOHAN
JOSEF SIEGWART
First Respondent
C
& A FRIEDLANDER INCORPORATED
Second Respondent
PAUL
KATZEFF
Third Respondent
THE
REGISTRAR, HIGH COURT, CAPE TOWN
Fourth Respondent
THE
MINISTER OF JUSTICE
Fifth Respondent
JUDGMENT
DELIVERED ON 21 OCTOBER 1999
DESAI,
J
This
is a most unfortunate matter in that it involves unsavoury if not
improper and unethical conduct on the part of a senior legal
practitioner. The applicants essentially seek an order
compelling first, second and third respondents to pay, or rather
repay, the amount of R1 million previously held in the trust account
of second respondent in terms of two orders of this Court and,
in the
event of that not being done, the applicants seek a
rule nisi
directing the said respondents to show cause why they should not be
held in contempt of court.
First
applicant
(“HEG”)
is a property owning company
incorporated in accordance with the laws of South Africa and the
second and third applicants are cited
in their capacities as
provisional trustees in the insolvent estate of
Jürgen
Harksen
. The latter are in fact certain of the said
Harksen's
creditors referred to as “
the five Hamburg
creditors
”.
The
first respondent is
JOHAN JOSEPH SIEGWART (“Siegwart”)
a Swiss citizen who also resides on the Isle of Sark and the
second respondent is C & A Friedlander Inc, first respondent’s
erstwhile attorneys and also the attorneys for
Harksen
.
The third respondent
PAUL KATZEFF
(
"Katzeff”
),
is an attorney and a director of second respondent. The
Registrar of this court and the Minister of Justice have been cited
as the fourth and fifth respondents respectively. No relief is
presently being sought against either of them.
The
facts underpinning this application are largely common cause.
On 23 March 1998
Cleaver J
granted the five Hamburg creditors
under Case No. 4085/98 an order for the arrest of
Siegwart
to
found or confirm the jurisdiction of this court in respect of certain
proceedings to be instituted in terms of
section 31(2)
of the
Insolvency Act, No 24 of 1936
. The next day, on 24 March 1998,
Cleaver J
granted under Case No. 4146/98 a similar order at
the instance of
HEG
.
Siegwart
was arrested
pursuant to these orders. He anticipated the return days and
the matters were jointly argued before me.
On the evening of 7
April 1998 I ordered
Siegwart’s
release from arrest upon
him furnishing security in an amount of R1 million. The R1
million was to serve as security in both
proceedings and was to be
paid to second respondent and held by it in trust in the name of the
Registrar of this Court, pending
the determination of the
contemplated actions against
Siegwart
by the applicants.
Draft orders were prepared and settled by the parties’ legal
representatives and the orders were
issued on 7 and 8 April 1998.
Siegwart
paid the security and shortly thereafter left South
Africa.
The
orders in both Case Nos. 4146/98 and 4085/98 stipulated that the
proceedings by the applicants were to be instituted within
21 days of
the respective orders. There is a difference in the wording of
the two orders. In the order granted under
Case No. 4085/98 it
is expressly stated that if the contemplated proceedings are not
issued within the 21 day period, the order
would lapse. There
is no such provision in the other order. Respondents contend
that there was no conscious intention
to include a “
self-destruct”
clause in the one order and to omit it from the other. I shall
revert to this aspect in due course.
It
is now not in dispute that the five Hamburg creditors in fact
instituted proceedings against
Siegwart
within the 21 day
period.
HEG
failed to issue its summons prior to the
expiry of the 21 day period. It appears though that by
agreement with
Siegwart
reached in other proceedings
HEG
issued summons against
Siegwart
on a later date.
In
any event
Siegwart
, apparently unhappy with his arrest and the
fact that he had been obliged to put up R1 million in order to secure
his release,
had instructed his attorney,
Katzeff
, to procure
the release of the R1 million if the aforementioned proceedings were
not timeously issued.
Katzeff
was further
instructed not to notify the applicants or their legal
representatives “
if this was possible”
that he was
endeavouring to secure the release of the money.
Siegwart
was of the view that if notice was “
unnecessarily given to
the applicants
” they would prevent him from getting the
money under some pretext or the other.
Katzeff
states
that he indicated to Siegwart that he would seek the advice of
counsel and be guided accordingly.
In
an affidavit filed by
Michael Christopher Cameron-Dow
, a
director of second respondent, he states that the directors of second
respondent had impressed upon
Katzeff
to check every step
taken in relation to any litigation with regard to
Harksen's
affairs with senior counsel in order to ensure that he was not
professionally compromised. It seems that the directors of
second respondent were somewhat sceptical of
Harksen
and his
associates.
Katzeff
was of the view that the proceedings
contemplated in the Court orders had to be issued on or before 13 May
1998 and, on the advice
of counsel, he instructed one
LISA
BELINDA BERRIL
(“
Berril”
),
a candidate attorney, to conduct a search in Room 1 of this Court.
Berril
states that on 14 May 1998 she spent approximately 4 hours in Room 1
checking the files for the period 7 April 1998 to 14 May 1998.
She returned the next day and once again found no file wherein action
had been instituted against
Siegwart
by the applicants. She explains that she did not find the
summons issued by the Hamburg creditors on 12 May 1998 under Case
No.
6417/98 because it was not in its place when she conducted her search
nor was it in a place where she could reasonably have
expected to
find it in the Registrar’s filing system.
Katzeff
contacted
Siegwart
,
informed him of the result of
Berril’s
research and, on being told to secure the release of the R1 million,
indicated that he was going to seek the advice of counsel
He
first raised the matter with junior counsel,
Mr Anton Katz
(“Katz”)
, who was of the view that it would be
inappropriate to approach the Registrar for the release of the R1
million without first informing
the applicants’ legal
representatives.
Katz
also queried the conclusion that
the so-called “
self destruct"
clause expressly
contained in the order obtained by the Hamburg creditors also applied
by implication to the other order.
Katz
further
indicated that the advice of senior counsel should be sought on these
issues.
Later
the same day
Katz
was at the offices of the Registrar on other
business when he raised a “
hypothetical question”
with the Registrar of the circumstances in which he would release
funds held as security in his name in terms of a Court order.
The Registrar replied that he would not release any such money
without a subsequent Court order directing him to do so.
Katz
reported this conversation to
Katzeff
and told him that he was
of the view that the Registrar would not release the funds in this
case.
On
the morning of 15 May 1998
Katzeff
,
Katz
and
Berril
attended a consultation with
Paul
Hoffman SC (“Hoffman”)
.
Hoffman
advised as follows:
(i)
He agreed with
Mr Katz
that the Registrar would not release
the security without a Court order directing him to do so.
However,
Hoffman
was of the view that the Registrar had the
authority to grant the release of the funds without a Court order in
the circumstances
of this case.
(ii)
Siegwart
first had to seek the Registrar’s authority for
the release of the funds. The Registrar's attitude would be
recorded
in an affidavit in support of the application, if any, to
court in which the Registrar would be the only respondent.
(iii)
It was not necessary to give any notice to the applicants or their
legal representatives of the intention
to approach the Registrar for
the release of the R1 million as both orders had “
self-destructed
”
upon the expiry of the 21 day period.
(iv)
Furthermore it would be unethical for
Katzeff
to inform
applicants or their legal representatives of the intention to
approach the Registrar in the light of
Siegwart’s
express instruction that this not be done unnecessarily.
Katzeff
contends that although
Katz
initially had
reservations about the need to give notice to the applicants of the
approach to the Registrar, he eventually agreed
with
Hoffmann’s
advice that the orders had “
self-destructed”
and that there was
no need to give notice to the applicants.
Katzeff
himself adopted a “
neutral
stance”
and
says that he would not have approached the Registrar had he not
received unanimous and unequivocal advice.
Katz
,
it seems, deferred to
Hoffman
not only because he was the senior counsel in the matter “
but
also because of the strong terms in which he expressed the advice”
.
He accepts that
Katzeff’s
perception that he had been persuaded by
Hoffman
was confirmed by his conduct in settling the letter to the Registrar
and in him accompanying Katzeff to the Registrar’s office.
However, he says, he still had reservations about approaching the
Registrar without notice to the applicants. Because of
these
reservations he told the Registrar that he should not rely on
anything said by him in making his decision. These remarks
to
the Registrar were apparently made while
Katzeff
was temporarily absent from the room.
Despite
his reservations
Katz
was party to the calculated and
deliberate decision made by the
Siegwart
and his other legal
representatives to approach the Registrar without any notice to the
applicants.
The
letter to the Registrar was drafted by
Hoffman
, typed by his
secretary and settled by Katz and
Katzeff
. It is on the
letterhead of C & A Friedlander Inc and reads as follows:
"
Dear
Sir
RELEASE OF SECURITY
FURNISHED IN CASE NOS. 4146/98 AND 4085/98
We act for Mr J.J.
Siegwart. Our client furnished an amount of R1 million as
security in terms of the Orders of Court in the
above matters, copies
of which are annexed marked "A", "B", "C"
and "D".
In terms of the said Orders
the Applicants were required to institute proceedings (by which
is meant the issue of summons
or the launching of an application),
within 21 days of the grant of the Orders which took place on 7 April
1998. According
to our calculations the period
peremptorily
prescribed in the Orders of Court has elapsed.
Notwithstanding the lapse
of the 21-day period, no process of whatsoever nature has been issued
by your office against Mr. Siegwart.
In this connection we have
conducted a search of your records and would appreciate your
confirmation forthwith that no process
has been issued by your office
at the instance of either of the Applicants against Mr. Siegwart.
In
the circumstances there is
no basis
upon which the sum of R1
million should remain invested as contemplated in paragraph 3 of the
Order of Court dated 24 March 1998
in Case No. 4146/98, as
amended by paragraph 1 of the Order dated 7 April 1998 under Case
No. 3146/98 and as contemplated
by paragraph 1(iv) of the Order
dated 7 April 1998 under Case No. 4085/98.
You
will have noticed that the said sum is invested in your name and
under your control.
We
have accordingly been instructed to request that you forthwith
authorise us to release all monies standing to the credit of the
interest-bearing bank account to our client by reason of the failure
of the Applicants to institute proceedings timeously.
In this
regard we respectfully refer to paragraph 2(e) of the Order of Court
dated 23 March 19998, as amended by paragraph 1 of
the Order of Court
dated 7 April 1998 under Case No. 4085/98 and to paragraph 8 of
the Order of Court dated 24 March 1998
as amended by paragraph 4 of
the Order of Court given on 7 April 1998 under Case No. 4146/98
which prescribed the lapsing
of the Order and accordingly
obligate
you to authorise the release of the aforesaid funds.
Yours
faithfully
C
& A FRIEDLANDER INC
Per
P.
KATZEFF"
There
is some dispute as to what was said at the Registrar’s office
when
Mr Katzeff
handed the letter to him. According to
Mr Hendrik Heyman
, the Registrar:
(i)
Katz
was”
at pains to point out”
that he
wanted nothing to do with the matter and did not want to say
anything.
(ii)
Katzeff
made certain representations,
inter alia
,
that the orders were peremptory and had peremptorily prescribed, and
gave the assurance that he would re-instate the funds should
it
transpire that they should not have been paid out.
(iii)
Had it not been for the representations and undertaking by
Mr
Katzeff
he would not have signed the letter of authorisation for
the release of the funds.
Katzeff
contends that the averments in the
Registrar’s affidavit “
bear
little relation to what in fact transpired”
.
Katzeff
denies that he gave the Registrar any undertaking. He says he
summarized the letter before the Registrar read it himself
and
Katz
,
at
Katzeff’s
instance, took the Registrar through the Court orders and explained
the issues raised by the differences.
Katzeff
then detailed the extent of the search conducted at Room 1. The
Registrar raised the issue of notice to the applicants and
Katzeff
told him what senior counsel’s opinion was in this regard.
Katzeff
drafted a letter which was typed by
the Registrar’s secretary and signed by the Registrar.
The letter authorized the
release of the monies standing to the
credit of an interest-bearing account opened in respect of Case No.
4146/98 and 4085/98.
The letter records that the Registrar has
been advised that a thorough search has been conducted and that no
process pursuant to
the aforesaid orders had been instituted.
The Registrar signed this letter.
It
seems unlikely that the Registrar would readily have agreed to the
release of the funds, especially in view of his earlier attitude
communicated to
Katz
and the private aside to him by
Katz
that he should not rely simply upon what was being said to him.
Katzeff
, however, expressly denies that the Registrar was
pressurized or coerced to furnish the authorisation for the release
of the funds.
The Registrar was not a true respondent - he
filed two affidavits for the applicants - and the matter has to be
decided on the
facts as stated by the other respondents, and the
facts not in issue, in accordance with the rule in the
Plascon-Evans
case. (See:
Plascon-Evans Paints Ltd v Van Riebeeck
Paints (Pty) Ltd
1984(3) SA 623 (A) at 634 E to 635 C
).
Though
the immediate events leading to release of the security may be in
dispute what happened to the money thereafter is not.
After the
Registrar had authorised the release of the R1 million,
Katzeff
telephoned
Siegwart
from counsel's chambers and
Siegwart
,
it is alleged, instructed
Katzeff
to get second respondent to
draw a cheque in favour of
Harksen's
wife,
Jeanette
,
and to ensure that the R1 million in cash was handed to her for
delivery to a courier,
Wolfgang Ketterer ("Ketterer")
.
The funds were to be handed to
Ketterer
for repatriation to
Switzerland.
Ketterer
was due to leave for Switzerland
later that day and would personally hand over the money to
Siegwart
.
R1
million in cash was paid to
Jeanette Harksen
at the Nedbank,
St George's Mall, Cape Town, in the presence of
Katzeff
and
Jeanette's
attorney.
Jeanette
left the bank on
her own with the cash in a briefcase and headed in the direction of
Greenmarket Square where
Ketterer's
wife,
Ute
, was
apparently waiting in a cafe to receive the money on behalf of her
husband.
The
prompt removal of the money is explained on the basis that
Siegwart
did not want the money to remain in second respondent's bank account
as he was concerned that the applicants might find a way to
attach it
again. Why the R1 million was transferred in cash and not via
swift transfer or in any other similar manner was
not explained to
Katzeff
nor did he query this.
About
ten days later
Katzeff
wrote to the applicants' respective
attorneys informing them of the release of the security and asking
for the payment of his clients'
costs. This was the first
knowledge the applicants had of the Registrar's decision in this
regard. Their attorneys
took up the matter with
Katzeff
and the Registrar and they were,
inter alia
, informed
that the five Hamburg creditors had in fact instituted proceedings
timeously. In the ensuing correspondence second
respondent in
effect acknowledged that no basis existed for the withdrawal of the
R1 million and
Siegwart
gave various undertakings to
re-instate the money. He failed to do so and on or about 5
October 1998 second respondent and
Katzeff
withdrew as his
attorneys of record.
The
Court orders were entirely negated without any notice to the
applicants, without the leave of the court, without the orders
being
varied by the court and, applicants contend, without any valid cause
therefor.
Mr
P.B. Hodes SC
, who
appeared with
Mr AM
Breitenbach
on
behalf of second and third respondents, raised several arguments
in
limine
.
In the first instance he strenuously argued that the application
should be dismissed for want of urgency. It appears
that the
application was launched on 27 November 1998 and set down for hearing
on 14 December 1998 and the material facts and circumstances
were
already known to the applicants some months earlier. While this
is correct it is also apparent from the exchange of
correspondence
attached to the applicants' founding papers that there were attempts
to resolve the matter and
Siegwart
undertook to re-instate the security on a number of occasions.
It is also correct that there were belated attempts to properly
deal
with the question of urgency. On the other hand all matters of
contempt are relatively urgent (See:
Uncedo
Taxi Service Association v Maninjwa & Others
1998(3) SA 417 ECD
429 G-I
).
Furthermore this is a continuing breach and the re-instatement of the
security is necessary for the action against
Siegwart
to proceed. Most importantly, it would hardly be proper to
dismiss the matter for want of urgency after 10 days of argument
for
it to be re-argued before another court in due course.
The
next argument raised is that the prayer in paragraph 2 of the notice
of motion - the order for the payment of the R1 million
within 7 days
- is incompetent because it is an order
ad pecuniam solvendam
.
In support of this argument reference was made to the basic rule
affirmed in
Hofmeyr v Fourie; BJBS Contractors (Pty) Ltd
v Lategan
1975(2) SA 590 (C)
that the courts commit
for contempt only for wilful disobedience of orders
ad
factum praestandum
. The latter case precludes a
court from imprisoning a judgment debtor for contempt of court by
reason of a failure to pay
a judgment debt of a commercial
character.
Mr Hodes
contends that the practice of
committing for contempt has never been applied to a respondent's
failure to comply with a judgment
for the payment of money, except in
matrimonial cases in which there is an order to pay maintenance
and/or a contribution towards
costs, and possibly in certain cases
involving liability to pay costs
de bonis propriis
.
In this matter we are quite clearly not dealing with a commercial
debt but with the reinstatement of a Court order - that the second
and third respondents continue to hold the funds as security, as they
had been ordered to do, and for that purpose the R1 million
is to be
re-instated. Contempt proceedings need not necessarily be a
prerequisite for such an order. In appropriate
circumstances
the court has the authority to make an order for the repayment of
money which was removed in defiance of an order
of court (See
Burger
v Fraser
1907 T.S. 318
).
Respondents'
counsel also contended that the orders sought in paragraphs 2 and 3.1
of the notice of motion should be refused as
applicants are seeking
to prosecute what is essentially an illiquid claim for damages by way
of motion proceedings, something which
is not permissible at all.
It was argued that applicants' cause of action is essentially that on
15 May 1998 first, second
and third respondents wrongfully and
intentionally, in breach of the Court orders, procured from the
Registrar the release of the
R1 million paid by
Siegwart
.
In the circumstances respondents' counsel submitted that the
applicants are in essence seeking an award for damages for
a delict.
This submission is devoid of any merit. Applicants are simply
not seeking to recover damages. They
are seeking the
reinstatement of the security from which the claim for damages may be
satisfied. Such contempt proceedings
are an accepted manner of
coercing compliance with a Court order. (See:
Uncedo
,
supra,
at 429 E - F
).
The
next, and final, argument raised
in limine
by
respondents relates to the
locus standi
of the
applicants. According to their counsel none of the applicants
has standing to sue in this matter. With regard
to
HEG
(first applicant) it was contended that it is implicit in paragraph 8
of the Court order that the R1 million security would serve
to found
jurisdiction in proceedings brought by
HEG
against
Siegwart
if, and only if,
HEG
brought these proceedings within the 21
day period. Upon the expiry of the 21 day period
HEG
ceased to have any legally cognisable interest in the R1 million.
This conclusion is incorrect. The order did not automatically
lapse. (See
Himmelsein v Super Rich CC & Another
1998(1) SA
929 WLD 932
E - 933 D
).
Siegwart
in
any event expressly agreed to the late issue of the summons.
This is not in dispute. The fact that second and third
respondents were not party to the agreement cannot, and does not,
affect
HEG's
locus standi
herein. The
agreement with
Siegwart
also did not result in the applicants
abandoning their claims against the other respondents as is suggested
by their counsel.
The
locus standi
of the five Hamburg creditors, who issued
their summons timeously, is challenged on the basis that they failed
to obtain the authority
in terms of
section 18(3)
of the
Insolvency
Act, which
is a prerequisite for proceedings by creditors in terms of
section 32
thereof. It appears that the order of
Cleaver J
in fact authorised the proceedings in terms of
section 18(3).
I
do not, however, have to decide this issue. The respondents
cannot ignore a Court order because the basis upon which
it was
obtained may be open to attack. The order stands. Until
it is set aside or varied upon a proper application
to this court it
remains valid and is enforceable. (See:
In re
Honeyborne
1876 Buchanan 145 at 150
;
Maseko
v Maseko
1992 (3) SA 190
W at 201 D
).
It
is common cause that in procuring from the Registrar the release of
the R1 million security paid by
Siegwart, Katzeff
acted in
breach of the order of this court dated 8 April 1998 in that the five
Hamburg creditors had in fact issued summons on
12 May 1998. As
he was aware of the order and disobeyed it or neglected to comply
with it, the
onus
is on the respondent to rebut the
inference that he wilfully disobeyed or neglected to comply with the
order. (See:
Putco Ltd v TV & Radio Guarantee
Co (Pty) Ltd
and other related cases
1985(4) SA 809 (A) at
836 D - E
).
Mr Hodes
submitted that this
onus
need not be discharged on a balance of probabilities (as was
previously the case) in the light of the fundamental rights in
section
35(h), (i) and (j) of the Constitution of the Republic of
South Africa, 1996. As contempt of court constitutes a criminal
offence the guilt of the offender must be proved beyond a reasonable
doubt (See:
Uncedo
,
supra
,
at 425 D - 428 E
) and a respondent can defend himself by
satisfying the court that there is a
reasonable possibility
that he did not act wilfully or
mala fide
. (See
S
v Fouche
1974(1) SA 96 A at 101H - 102A
).
Though
I have some reservations whether
Mr Hodes
is correct with
regard to the standard of proof to be applied in proceedings of this
nature, I shall adopt the standard he suggests
for the purposes of
this matter.
It
is settled law that intention in the form of
dolus eventualis
is sufficient for criminal contempt of court. This form of
intention
"is sufficient if the accused subjectively foresaw
the possibility of his act being in contempt of court and he was
reckless
as to the result."
(See:
S v Van
Niekerk
1970(3) SA 657 TPD at 657 G
).
The
subjective state of mind of a party in the position of
Katzeff
is seldom capable of direct proof and subjective foresight, like any
other factual issue, can be proved by inferences drawn from
the
respondents' conduct and from the circumstances in which the breach
of the order was committed. (See:
S v Dladla
1980(1) SA (1) A at 4 A; LAWSA First Re-issue, Vol. 6, para
90
). Once it is demonstrated that the respondent foresaw
the risk of the order being breached
dolus eventualis
applies and the
onus
rests on the respondent to
negative the inference of
dolus eventualis
. (See
Martin v French Hairdressing Saloon Ltd
1950(4) SA
325 - 329 E - F
)
It
can be argued that
Katzeff
clearly intended to breach the
Court order but, as
Mr R.S.Van Riet S.C
, who appeared on
behalf of
HEG
, points out, what is more certain is that it
cannot be said that Katzeff discharged any
onus
of
demonstrating that he did not subjectively foresee the possibility of
a breach of the Court order. Certain of the admitted
facts and
circumstances support this conclusion.
Within
a short period after the strongly fought Court orders were obtained a
line was simply drawn through them without notice to
any of the
applicants or to the Court. No notice was given to the
applicants with the specific intention of precluding them
from using
the due process of law to prevent the payment of the monies to the
first respondent.
Katzeff
resorted to self-help and knew
that if any of the orders had not lapsed for whatever reason, the
result would be irreversible.
Katzeff
made arrangements for the urgent
withdrawal of and the conversion of the monies into cash - R1 million
in R200,00 notes - so that
it could be dissipated easily as a matter
of urgency. He was obviously concerned that the applicants
could employ court process
to prevent the money being paid out.
His conduct indicates foresight that one or both of the orders were
still valid.
Hoffman
had instructed them to go through all
the files opened in the relevant period.
Katzeff
was, in effect, advised by
Berril
that this could not be done as a number of files could not be located
or were missing.
Hoffman
was not told about this and the Registrar was informed that a
thorough search had been conducted.
Katzeff
must necessarily have foreseen the possibility that summons had been
issued as attorneys practising in this Court are aware of
the state
of the Registrar's office. He was invited to deal with this
proposition but failed to so.
The
difference between the two Court orders is self-evident. Clause
2(e) of the order in Case No. 4085/98 contains a self-destruct
clause. The Court order in Case No. 4148/98 does not.
Effect must be given to the clear difference in the wording and
clear
meaning of the clauses. In his letter to the Registrar,
Katzeff
states in terms that the time periods prescribed by the Court order
are peremptory and that the orders prescribe the lapsing of
such
orders obliging the Registrar to authorise the release of the funds.
Both statements are clearly wrong as I have already
indicated.
Katzeff
recognised this and alleges that the position was
corrected by
Katz
who explained to the Registrar the issues
raised by the differences in the Court order. The Registrar, of
course, denies
this was done. Despite being invited to do so,
neither
Katz
nor
Katzeff
have stated what precisely was
said to the Registrar that persuaded him to change his mind.
Katzeff
places considerable reliance upon the
advice of counsel in seeking to justify his course of action.
He told
Siegwart
that he would be guided by the advice of counsel yet does not accept
Katz's
view. The meeting the next morning with
Hoffman
was clearly designed to obtain contrary advice which would suit his
client's purposes. In anticipation of
Hoffman's
favourable advice,
Katzeff
,
it seems, had already made the arrangements for the withdrawal of the
money.
The
latter aspect warrants some consideration. On 14 May 1998
Katzeff
was concerned that
Katz
and
Hoffman
appeared not to be
ad idem
in regard to the issues
raised by
Siegwart's
instructions and a meeting was arranged
with
Hoffman
and
Katz
for the morning of 15 May 1998 in
order to resolve the matter. The meeting took place and
resulted in the visit to the Registrar
who authorised the release of
the security. In his opposing affidavit
Katzeff
describes what happened next as follows:
"After the Registrar
had seized the letter authorising the release of the R1 million, I
telephoned first respondent for instructions
as to the manner in
which I should deal with the money. The first respondent
instructed me to cause the second respondent
to issue a cheque for R1
million in favour of Jeanette and to ensure that the bank had
sufficient cash so that Jeanette could encash
the cheque later that
day."
During
the hearing of this matter counsel for the applicants produced an
affidavit from a bank official to the effect that
Katzeff
had
telephoned Nedbank on 14 May 1998 to make arrangements for the
encashment of the cheque. In other words the arrangements
for
the encashment of the cheque were made before the Registrar consented
to the release of the security and also before the meeting
in
Hoffman's
chambers. This is now common cause.
Katzeff's
explanation is that after
Berril
reported the
results of her search to him, he contacted
Siegwart
who
instructed him that, if the money was to be released, it should be
converted into cash as soon as possible. This instruction
was
given on 14 May 1998.
Katzeff
says in a further
affidavit that he did not deal with
Siegwart's
earlier
instructions in his opposing affidavit because he did not consider it
germane and apologises to the court for creating
"the
impression that the date on which (he) received the instructions from
Siegwart
to pay out the money in cash was 15 May
1998.
"
I
fail to understand how this discrepancy arises. It seems likely
that in describing the events as he did
Katzeff
was
endeavouring to avoid any suggestion that his approach to the
Registrar was a premeditated attempt to subvert the Court order.
Furthermore
Katzeff
declined to indicate whether he had told
counsel about the fact that arrangements had been put in place with
the effect that, should
the Registrar agree to release the funds, the
wife of
Jürgen Harksen
would receive the R1 million in
cash and the money would be irretrievably lost. It must be
accepted that he did not do so.
Katzeff
also fails to
explain why he did not initially disclose to the applicants that the
money was handed to
Jeanette
Harksen
. This
fact only emerged when certain documents were discovered in other
court proceedings. The transfer of the money
by courier to
Switzerland in South African currency also does not make much sense.
There are more efficient methods of transferring
money legitimately.
Katzeff
maintains that the crucial factor in
him deciding to approach the Registrar was the "unanimous and
unequivocal" advice
which he had received from counsel.
Katzeff
is an attorney subject to the ethical code of conduct of his
profession and it is not open to him to simply state that he was
guided by the opinion of counsel.
Katzeff
and his firm, second respondent, were entrusted with the duty imposed
in terms of the Court orders.
Katzeff
,
an obviously experienced attorney, knew that, in terms of the ethical
rules of his profession, the interests of his client were,
inter
alia
, subject
to his duty to the Court and any undertakings given by him in the
course of his professional work.
In
any event the advice given by counsel was not unanimous and
unequivocal.
Katz
was against the approach to the
Registrar without notice to the applicants and, it seems, uncertain
as to the interpretation of
the Court orders. He did not give
the same, or any, subsequent advice. He had previously voiced
his opinion against
it, he later said nothing. It may be that
he carried out certain instructions such as helping to draft the
letter to the
Registrar but this does not mean agreement with the
opinion expressed by
Hoffman
. His conduct thereafter in
fact indicates the contrary.
Mr
T.A. Barnard
, who
appeared on behalf of second and third applicants, argued that
Katzeff's
actions constituted a carefully orchestrated plan to bypass, in an
improper and unethical manner, the factual and legal obstacles
in the
way of the funds being released. It is perhaps an unduly harsh
view of
Katzeff's
conduct but it is not without merit, especially if one looks at the
decision not to give notice to any of the other parties to
the Court
orders of the approach to the Registrar and the decision not to go to
Court. As
Mr
Barnard
correctly
points out a phone call to any of the applicants' attorneys or
counsel would have alerted
Katzeff
to the fact that summons had been timeously issued. He elected
not to make the phone call because of
Siegwart's
instructions. Quite clearly
Katzeff
was concerned about the legal and ethical implications of
Siegwart's
instructions. In the circumstances he should have foreseen the
real possibility that he should give notice. His actions
in
seeking counsel's opinion indicates that he believed that his
client's instructions ran contrary to his obligations and ethics.
When
Katzeff
initially discussed his instructions with senior and junior counsel,
we are not told what advice was given. The advice of
the same
counsel was sought for a second time on the same issue.
Katz
then advised that notice should be given to the applicants. The
advice of senior counsel,
Hoffman
,
was thereafter sought and
Hoffman
expressed a contrary opinion based on his view that the orders had
"
self-destructed"
and the ethical implications of not carrying out
Siegwart's
instructions.
Counsel's
opinion, it appears, was being sought in a search for ways of
escaping the effect of the Court orders. It is not
open to a
party, in interpreting a Court order, to do so. (See:
In
re Comions & Another
1911 (RD at 468 - 471
).
Hoffman's
opinion, in any event was surprising, and wrong,
especially with regard to the approach to the Registrar in the
absence of other
interested parties.
Katz
did not share
his view and
Katzeff
should have foreseen the possibility that
it might not be correct. The inference is irresistible that in
the facts and circumstances
of this matter that any senior attorney
in the position of
Katzeff
must have foreseen that his actions
may possibly result in the breach of the Court orders.
Katzeff
accordingly foresaw the possibility of the consequence and was
reconciled to it.
Katzeff
,
as indicated above, relies upon a defence of "
legal
advice"
to
disprove "
wilfulness
"
on his part. This defence requires a proper setting out of the
circumstances under which the advice was given.
It is incumbent
upon a party relying upon such defence to "
.
. . testify in regard to all the circumstances relevant to the giving
of such advice."
(See:
S v
Abrahams
1983(1)
SA 139 A at 146 H
).
In motion proceedings this means that all the relevant circumstances
have to be set out on affidavit.
Hoffman's
advice was predicated on certain
incorrect facts, for instance he did not know that the visit to the
Registrar was not a mere precursor
to a Court application. He
did not know that a thorough search could not be conducted in Room 1
as a number of the files
were missing. He did not know that the
monies would be irretrievably lost within hours of the Registrar's
consent, that the Registrar
would authorise payment without recourse
to a Court and that the money would be handed to
Jeanette
Harksen
in cash.
In the absence of any indication that
Hoffman
was aware of the aforementioned facts,
Katzeff
has not discharged
the
onus
of showing that he was entitled, if at all, to take the advice at
face value. The respondents have simply failed to properly
explain the circumstances relevant to the giving of the legal advice.
At
the commencement of these proceedings counsel for the applicants
offered to have the matter referred to oral evidence without
the
necessity for argument. This offer was rejected by the
respondents. At a very late stage
Mr Hodes
asked, in the
alternative, that this Court direct that
Katzeff
,
Hoffman
and
Katz
be called to testify. I do not think it
necessary and appropriate to do so.
The
applicants have successfully demonstrated that
Katzeff
wilfully breached a Court order. Insofar as second respondent
is concerned there is no suggestion that any other director
or
employee acted improperly. There liability arises vicariously.
Katzeff
is an officer of this Court and as such he is obliged
to maintain the highest standards of honesty and integrity. His
role
in this matter, especially the manner and haste in which the
R1 million was encashed and dissipated thereby rendering the
Court
orders completely and irreversibly nugatory appears to fall short of
that standard. I intend to reflect my disapproval
with an
appropriate costs order. The circumstances of this matter are
in any event such that a special costs order is warranted.
In
any event I make the following order:
1.
First, second and third respondents, jointly and severally,
alternatively one or more of them severally,
are ordered, within 30
days of the date of this order, to pay the amount of R1 million into
the trust account of the second respondent,
previously held in the
name of the fourth respondent in terms of and for the purpose set
out in paragraph 3.2 of this Court's
order dated 7 April 1998 in Case
No. 4146/1998 and paragraph 2(iv) of this Court's order in Case No.
4085/1998 dated 8 April 1998;
2.
Failing compliance with the above order, the first, second and third
respondents jointly and severally,
alternatively one or more of them
severally, are ordered to show cause at 10h00 on 8 December 1999 why:
2.1
The Sheriff of this Court should not be authorised and directed to:
(a)
Attach property of either or all of such respondents sufficient in
value to, upon a sale thereof, generate
sufficient funds to give
effect to the order in paragraph 1 hereof;
(b)
Sell, where necessary, such property in terms of the applicable
provisions of rules 45 and/or 46 of
the Uniform Rules of Court;
(c)
From the proceeds of such sale, and/or from any funds attached or
paid to him, pay into the trust account
as envisaged by paragraph 2
above, the amount of R1 million, and deal with the balance of the
funds remaining after payment of
R1 million (if any) in the manner as
this Court may direct;
2.2
Each of first, second and third respondents should not be held guilty
of contempt of court and why this Court
should not impose an
appropriate sanction upon each and/or all of them.
3.
Upon the payment of the said R1 million to the said trust account of
second respondent in terms
of this order no party to this order, or
any other person, shall be entitled to deal with such funds, in any
manner whatsoever,
save in terms of an Order of this Court obtained
on prior written notice to all parties hereto.
4.
First, second and third respondents, jointly and severally, are
ordered to pay the costs of this
application on the attorney and
client scale.
5.
The Registrar of this Court is directed to forward a copy of this
judgment to the Law Society of
the Cape of Good Hope.
DESAI,
J