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[2020] ZASCA 49
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Hewetson v Law Society of the Free State (948/2018) [2020] ZASCA 49; [2020] 3 All SA 15 (SCA); 2020 (5) SA 86 (SCA) (5 May 2020)
THE
SUPREME COURT OF APPEAL OF SOUTH AFRICA
JUDGMENT
Reportable
Case
No: 948/2018
In
the matter between:
YOLANDI
HEWETSON
APPELLANT
and
THE LAW SOCIETY OF THE
FREE STATE
RESPONDENT
Neutral
citation:
Hewetson v The Law Society
of the Free State
(948/2018)
[2020]
ZASCA 49
(5 May 2020)
Coram:
CACHALIA, LEACH and NICHOLLS JJA and
WEINER and HUGHES AJJA
Heard:
7 November 2019
Delivered:
This judgment was handed down
electronically by circulation to the parties' representatives by
email, publication on the Supreme
Court of Appeal website and release
to SAFLII. The date and time for hand-down is deemed to be 10h00 on 5
May 2020.
Summary
:
Attorney – misconduct – failure of co-director to ensure
accounting records and trust account properly maintained
–
appropriate order – suspension or removal from roll –
matter referred back to the court a quo for oral evidence
on when the
appellant first became aware of the misappropriation of trust funds
by her husband and co-director.
ORDER
On
appeal from:
Free State Division of the
High Court, Bloemfontein (Mathebula J and Chesiwe AJ sitting as court
of first instance):
1 The appeal is upheld to
the extent that the order of the high court of 15 December 2017
is set aside only insofar as it refers
to the appellant.
2 The high court’s
order of 23 June 2016 insofar as it applies to the appellant is
reinstated pending the finalisation in
the high court of the
application to strike her from the roll.
3 The application to
strike the appellant from the roll of attorneys is referred to a
freshly constituted bench of the Free State
High Court for its
determination after hearing such oral evidence as the parties seek to
place before it in regard to the appellant’s
fitness to remain
on the roll, and in particular as to:
(a) when the appellant
first became aware of her husband’s abuse of trust funds;
(b) the extent of her
knowledge;
(c) whether the appellant
agreed to or was in any way a party to the withdrawal of trust funds
from the account of Mr Ahmed Nabil;
(d) the appellant’s
explanation for the delay, if any, in reporting trust fund
deficiencies to the Law Society.
4 In the event of either
party wishing to lead a witness who has not deposed to an affidavit
in these proceedings, a summary of
such witness’s evidence is
to be filed and served on the other side not later than 10 days
before the hearing.
5 The appellant is
suspended from practising as an attorney pending the outcome of the
above hearing.
6 The
appellant is to pay the Law Society’s costs of this appeal on
the scale as between attorney and client.
JUDGMENT
Nicholls
JA (Cachalia JA and Hughes AJA concurring):
[1]
The appellant, Mrs Yolandi Hewetson (Mrs Hewetson), and her husband,
Mr Alexander Fowly Hewetson (Mr Hewetson) practised
as attorneys
in the Free State for many years. They conducted their practice
through a company Hewetson Incorporated (the firm)
of which they were
the sole directors. On 23 June 2016, the Law Society of the Free
State (the Law Society) obtained interim relief
against them from the
Free State high court pending an investigation into the financial
affairs of the firm. Thereafter, on 15
December 2017, pursuant to an
application by the Law Society for such relief, both Mr and Mrs
Hewetson were struck from the roll
of practising attorneys and the
firm was placed into liquidation. Mr Hewetson did not oppose the
application. Only the appellant
had opposed the relief sought against
her. Whilst conceding that relief against her was justified, she
appeals the harshness of
the sanction. The appeal is with the leave
of this Court.
[2]
Such proceedings are of a disciplinary nature and are
sui
generis
.
[1]
Their
primary purpose is to protect the public from malfeasance of
attorneys. As far back as 1934, in
Solomon
v Law Society of the Cape of Good Hope
,
[2]
this
Court described them as follows:
‘
Now
in these proceedings the Law Society claims nothing for itself . . .
. It merely brings the attorney before Court by virtue
of a statutory
right, informs the Court what the attorney has done and asks the
Court to exercise its disciplinary powers over
him . . . . The Law
Society protects the interests of the public in its dealings with
attorneys. It does not institute any action
or civil proceedings
against the attorney. It merely submits to the Court facts which it
contends constitutes unprofessional conduct
and then leaves the Court
to determine how it will deal with this officer [of the court].’
[3]
The application in this matter was brought in terms of s 22(1)
(d)
of the Attorneys Act 53 of 1979 (the Act) which provides that:
‘
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 or she practices–
. . .
(d)
if he or she, in the discretion of the court, is
not a fit and proper person to continue to practise as an attorney.’
[4]
The test to determine whether a person is fit and proper is well
established and needs no further elaboration.
[3]
The
first enquiry is to determine whether the offending conduct has been
proven on a balance of probabilities. Once this is shown,
the second
enquiry is to determine whether the person is fit and proper taking
into account the proven misconduct. The final enquiry
is to determine
whether the person concerned should be suspended from practice for a
fixed period or should be struck off the roll.
The last two enquiries
are matters for the discretion of the court, which involve a value
judgment.
[5]
Only the final stage of the enquiry is relevant in this matter. The
appellant, for the purposes of this appeal, has conceded
that she is
not a fit and proper person to practise and, therefore, the only
question that remains is whether the high court was
correct in
striking her off the roll. The appellant contends that her suspension
from practice would have been sufficient.
[6]
Although every case must be determined in the light of its own facts,
if a court is of the view that after a period of suspension
the
person will be fit and proper, the appropriate order ordinarily would
be one of suspension.
[4]
This
is because the implications of removing an attorney from the roll for
misconduct are serious and far-reaching. It is visualised,
prima
facie at least, that the attorney will never be permitted to practise
again because the misconduct complained of is of such
a serious
nature that it manifests a character defect and a lack of integrity
rendering the person unfit to practise. Any person
applying for
readmission will have to satisfy a court that he or she is a
completely reformed character.
[5]
[7]
It is well established that an appeal court has limited grounds to
interfere with the decision of a high court in matters such
as this.
As stated by this Court in
Malan
v Law Society of South Africa
[6]
at
para [13]:
‘
(T)his
Court has held consistently that the discretion involved is a strict
discretion, which means that a court of appeal may only
interfere if
the discretion was not exercised judicially:
Kekana
v Society of Advocates SA
,
[1998] ZASCA 54
;
1998 (4) SA
649
,
[1998] 3 All SA 577
(SCA);
Vassen v
Law Society of the Cape of Good Hope
[1998] ZASCA 47
;
1998 (4) SA 532
(SCA) 537. This means that a court of appeal is not
entitled to interfere with the exercise by the lower court of its
discretion
unless if failed to bring an unbiased judgment to bear on
the issue; did not act for substantial reasons; exercised its
discretion
capriciously, or exercised its discretion upon a wrong
principle or as a result of a material misdirection. (See also Mabaso
v
Law Society, Northern Provinces
[2004] ZACC 8
;
2005 (2) SA 117
(CC) at para 20;
Giddey NO v JC Barnard & Partners
[2006] ZACC 13
;
2007 (5) SA 525
(CC) at para
20.’
[8]
In the exercise of its discretion, the high court decided to impose
the more stringent sanction of removing the appellant from
the roll
rather than merely suspending her from practice. However, in doing
so, it materially misdirected itself in its finding
that the
appellant had made ‘loans’ totalling R305 489.09 to
herself from trust creditors’ accounts. There was
no proof of
that fact, and the high court conceded in its judgment in the
subsequent application for leave to appeal that it had
erred in that
regard. It went on to record that its decision to strike off did not
‘turn primarily on the error’ but
that matters not. The
high court was clearly influenced by a material and grave error which
by its very nature has a substantial
effect upon the issue at hand.
Essentially it found the appellant had stolen a substantial sum when
there was no evidence that
she did. In the light of the authorities I
have referred to this court is therefore free to exercise its
discretion on the issue
under s 22(1)
(d)
of the Act untrammelled by the decision
of the high court. Thus it is necessary to examine the facts to
consider whether a suspension
would suffice in the circumstances of
this particular case.
[9]
The appellant and her husband were married in 2001 and soon
thereafter set up the law firm of which they were the sole
co-directors.
The firm’s main office was in Welkom with a
branch office in Theunissen. In terms of the Rules of the Law Society
of the
Free State
[7]
directors
in an incorporated company of attorneys are jointly responsible to
keep proper books of account, notwithstanding that
only one of them
may be responsible for the bookkeeping in the firm.
[10]
There is no dispute that the firm failed to keep proper accounting
records. Significant sums of trust monies were misappropriated
over
the period 1 May 2013 to 29 February 2016. Notwithstanding this,
the firm was given an unqualified audit by its own auditors,
Deane &
Thresher, over this period until the 2015/2016 financial year where a
trust deficit of R1 069 119.81 was reflected.
[11]
The appellant’s defence is that her husband controlled the
finances of the firm to her exclusion. Blame for the financial
irregularities and the trust deficit was laid squarely at his door.
From September 2011 until January 2014 she was away from the
practice
on extended maternity leave. On her version, towards the latter part
of 2015 she began to realise that something was amiss
with the trust
account. By that stage, the relationship between Mr Hewetson and the
appellant had reached the point of no return.
[12]
After an informal investigation within the firm in December 2015, the
appellant ascertained that there was a trust shortfall
of
R 1 789 766.56. She approached her attorney and
submitted an affidavit to the Law Society on 15 January 2016,
wherein
these facts are set out, together with affidavits from staff members.
She requested the Law Society to intervene on an
urgent basis,
assuring them of her full co-operation. At the same time, the
appellant instituted divorce proceedings against Mr
Hewetson.
[13]
Various staff members deposed to the financial irregularities and Mr
Hewetson’s utilisation of trust funds for personal
gain. Mr
Andries Knoetze, an attorney in the employ of the firm, confirmed
certain financial irregularities and that the appellant
was excluded
from financial matters over which Mr Hewetson had sole control. He
stated that he overheard a confrontation between
the appellant and
her husband in October 2015 regarding the irregular payments of trust
funds. Ms Jacqui Labuschagne, a candidate
attorney who worked in the
conveyancing department, stated that she became aware of
irregularities on the files assigned to her
in November and December
2015 which compelled her to discuss the matter with the bookkeeper.
Ms Mandie Janse van Rensburg, the
conveyancer at the firm, became
aware of financial irregularities in certain files during December
2015. She immediately approached
the appellant who took steps to
remove Mr Hewetson as the managing partner.
[14]
In February 2016 Mr Ramoro Maleme, a messenger in the firm, submitted
an affidavit to the Law Society. He recorded how he had
deposed to
false statements at the request of Mr Hewetson. He received cash
payments which he did not receipt but handed directly
to Mr Hewetson.
Properties were registered in his name by Mr Hewetson. He was
instructed not to inform the appellant of the
above. Mr Maleme was
given a motor vehicle and cash by Mr Hewetson in return for his
loyalty. In 2015, after a disciplinary hearing,
the appellant
dismissed Mr Maleme from the firm for theft.
[15]
On the strength of the appellant’s affidavit, the Law Society
initiated an investigation into the financial records the
firm.
Reports were prepared by PKF Accountants and by the financial
forensic investigator of the Attorneys Fidelity Fund. The reports
identified weaknesses in the financial controls of the firm,
irregular payments and a misappropriation of trust funds. The PKF
report highlighted the following: monies were paid from the trust
bank account into a personal account of Mr Hewetson; trust
monies were paid to fund a property business owned by Mr Hewetson
and his son (from a previous marriage); unpaid personal
loans to
Mr Hewetson in the sum of R305 489.09 were identified (these
were the funds in respect of which the high court misdirected
itself); transfers were made from one trust creditor to another for
no apparent reason; and interest due to clients on s 78(2A)
[8]
interest
bearing accounts were not paid to the relevant trust creditors but
debited as fees and paid into the business account.
Another PKF
report showed a trust deficit in the amount of R2 132 741.85.
[16]
An interdict was granted on 23 June 2016 restraining and interdicting
the appellant and Mr Hewetson from operating a trust
account. A
curator bonis
was appointed to control and administer the firm’s books of
account, files and documents. The present application to strike
off
the appellant and Mr Hewetson from the roll of attorneys was launched
in April 2017.
[17]
Mr Hewetson did not file any opposing papers but filed an affidavit
in response to the PKF report, which is attached to the
Law Society’s
founding papers. He accused the appellant of attempting to take over
the business for herself and stated that
she had lied to the Law
Society that she first became aware of the trust fund shortages in
December 2015. In support of this, he
referred to three instances
which he alleged were proof of her dishonesty. The first is the
confrontation during October 2015,
overheard by Mr Knoetze, over
trust shortages. The second is a series of SMSs between himself and
the appellant in November 2015
when the marriage was in the throes of
disintegrating. Thirdly, Mr Hewetson attached an affidavit
deposed to in July 2016
from Ms Belinda Petzer (Ms Petzer), who
was employed as a conveyancing secretary at the firm from February
2012 to July 2014.
[18]
Ms Petzer stated under oath that both the appellant and Mr Hewetson
bought houses on public auction utilising trust money.
In the
affidavit she sets out that, in either January or February 2014, Mr
Hewetson was required to make payment in respect of
two properties,
which he had purchased. In the presence of the appellant, he asked Ms
Petzer, to identify a trust creditor from
whom he could borrow money
for a few days. Ms Petzer suggested the trust account of Mr Ahmed
Nabil. When the appellant expressed
concern as to when the money
would be paid back, Mr Hewetson informed her that it would take two
days. This is in fact what occurred,
said Ms Petzer. She added that
there was no room for the appellant to deny her knowledge as Moroka
Attorneys had written to the
firm in early 2015 accusing it of
‘rolling’ trust monies.
[19]
The appellant vehemently denied the allegations contained in Ms
Petzer’s affidavit. On 27 February 2015 once Ms Petzer
left the
firm, and pursuant to an inquiry from a client concerning the refund
of municipal charges, it came to light that these
trust monies had
been paid into the bank account of Ms Petzer’s daughter, Ms
Britney Lee. It was her job to load all internet
payments made on
behalf of the firm which Mr Hewetson would check and approve. Upon
further investigation it became apparent that
Ms Petzer had also
fraudulently deposited money into the bank accounts of other family
members. The appellant laid a charge of
theft against Ms Petzer and
reported her conduct to the Law Society in a detailed complaint dated
4 March 2015.
[20]
From the letter it emerged that Mrs Hewetson contacted Ms Petzer at
her new place of employment on the same day the irregularities
were
uncovered. Immediately thereafter Mr Bertus Maritz of Moroka
Attorneys, apparently acting on the instruction of Ms Petzer,
telephoned the firm and spoke to Mr Hewetson. An undertaking was made
that the trust monies amounting to R10 142.61 paid into
Ms Lee’s
account by Ms Petzer would be refunded at once. The bank accounts of
Ms Petzer’s family members would be made
available to the firm
in order to ascertain what other trust monies had been fraudulently
paid by Ms Petzer.
[21]
This is the background to the letter from Mr Maritz of Moroka
Attorneys dated 5 March 2015, clearly written in response
to the
allegations of theft against Ms Petzer. It was provided by the
appellant in response to Ms Petzer’s allegations that
she had
long been aware of her husband’s conduct. In this letter Mr
Maritz confirmed the re-payment of the R10 142.61 and
stated that he
would get copies of other bank statements of family members. In an
apparent attempt to exonerate her of the theft
and fraud she had
committed, he said that Ms Petzer believed that R29 000 was owed to
her as a performance bonus. He further recorded
the existence of
rumours that she was having an affair with Mr Hewetson. Mr Maritz
stated that, without intending to threaten anyone,
Ms Petzer wanted
it to be known that she had copies of documents from a number of
files that proved Mr Hewetson utilised trust
money to purchase
properties. These were later repaid once a bond was registered or the
said properties were sold
.
The
appellant’s response is that she confronted her husband with
these allegations which he denied. Significantly, to date
these
documents have never materialised.
[22]
In respect of Ms Petzer’s allegations that the appellant was
present when a conversation took place between her and Mr
Hewetson in
January or February 2014, regarding the borrowing of trust monies to
pay for the two properties, the appellant conducted
an investigation.
She discovered that the said monies were indeed paid from the firm’s
trust account, not in January or February
2014, but on 13 December
2013 and repaid by Mr Hewetson on 20 December 2013. At this time, she
was still on maternity leave
and had no knowledge of the
transactions.
[23]
Pursuant to Ms Petzer’s allegations that properties bought with
trust monies were transferred into her name, the appellant
conducted
a deeds office search. She found two properties registered in her
name of which she had no knowledge. On drawing the
relevant files,
she saw her signature had been forged. This was confirmed by a
handwriting expert, whose finding was that the disputed
signatures
were not those of the appellant and were written with the same pen as
that of Mr Hewetson, the strong inference being
that it was his
attempt to forge her signature.
[24]
In my view Ms Petzer’s affidavit must be treated with
circumspection. Her motives are dubious. She may well have stolen
trust monies which she had to repay and have harboured a grievance
against the appellant for the charge of theft that was laid
against
her. She was clearly well aware of Mr Hewetson’s misconduct and
on the face of it may have colluded with him to her
own benefit. The
question is whether she has provided reliable evidence to impute
knowledge to Mrs Hewetson.
[25]
A more serious problem for the appellant are the SMS and WhatsApp
exchanges between herself and Mr Hewetson, attached by him
as further
evidence that she had been aware of the misuse of trust funds for a
long period. On 19 November 2015 she wrote (as translated
into
English):
[9]
‘
I
have finally had enough of your use of trust funds for your personal
gain . . . . If you want to cut my throat I will cut yours,
but the
consequences for you will be much worse.’
[26]
Relying on Mr Hewetson’s affidavit, the Law Society submitted
that it was inconceivable that the appellant was not aware
of her
husband’s misappropriation of trust funds and other
transgressions in the handling of the trust account. Moreover,
she
lied under oath when she stated that once she became aware of the
true state of affairs she immediately reported it to the
Law Society.
Having regard to the November WhatsApp messages referred to above, at
best for her, she became aware of trust shortages
in November 2015
but reported these only in January 2016. Thus even on her own
version, she was aware of the trust shortage for
several months prior
to reporting her husband’s misconduct to them. The Law Society
argued that the only reason that the
appellant approached the Law
Society was due to the deterioration of her marriage and the acrimony
that had developed between them.
Had this not happened, suggested the
Law Society, the appellant would not have made the disclosure. In
addition, she must have
known that the accounting records had been
manipulated for a number of years in order to obtain an unqualified
audit. Because she
had conceded that the trust account in the
Theunissen office had never complied with the Act, she should be
struck off the roll
for this reason alone, the Law Society contended.
[27]
This view found favour with the high court. It held, quite correctly,
that the appellant had a duty to ensure that proper books
of account
were kept and that transactions were conducted in accordance with the
rules of the Law Society and with generally accepted
accounting
standards. Because she had not prevented her husband’s
misconduct, she must have acquiesced to it. It was found
that she was
‘also a party to the massive dishonest schemes’
perpetrated by Mr Hewetson. The high court held, incorrectly,
that
she had taken a loan in the amount of R305 489.09 from funds of trust
creditors. The high court decried the flippant manner
in which the
appellant treated the Law Society, refusing to give ‘his’
co-operation. Whether this is, in fact, a reference
to Mr Hewetson is
unclear. The next sentence of the judgment then criticises the
appellant for what it called her ‘flimsy
and unconvincing
defences’ advanced in the face of overwhelming evidence of
mismanagement.
[28]
In the light of the above facts, it is clear that the appellant is
guilty of serious transgressions, and that is not disputed.
The
question is whether she should be removed from the roll of attorneys,
rather than suspended from practising as an attorney
for a
determinate period.
[29]
Notwithstanding that there is no evidence to suggest the appellant in
any way benefitted, a crucial factor in determining whether
the
appellant should be struck from the roll is if she has been
dishonest, and/or lied under oath. Although dishonesty is not the
sine
qua non
for striking off, it is only in exceptional circumstances that a
court will order a suspension instead of striking off where
dishonesty
has been established.
[10]
[30]
It is therefore incumbent upon the appellant to explain any
contradictions as to when she first became aware of the theft of
trust funds by Mr Hewetson and the extent of her knowledge. In her
initial affidavit to the Law Society dated 15 January 2015 the
appellant stated that ‘[d]uring December 2015’ she
started receiving complaints about trust monies being misappropriated
by her husband. In the opposing affidavit to this application dated 8
June 2017 she stated that she did not have any knowledge
of trust
shortages prior to 13 November 2015.
[31]
This was contradicted by the affidavit of Mr Knoetze, dated 7 January
2016 which he stated was made on the instruction of the
appellant
herself, and which was attached as an annexure to the appellant’s
first affidavit. Mr Knoetze mentioned that on
various occasions
during October 2015 he overheard the appellant confront Mr Hewetson
about business and trust monies being
utilised, inter alia, for
RJ Constructions, one of his businesses. She accused him of
using the business card of the firm
for petrol, wages and building
materials. Mr Hewetson chased her out of his office, shouting and
swearing.
[32]
Mr Knoetze further stated the firm did various collections for Nian
Shun Trading. In October 2015 there was a trust credit
of R22 208.83.
On drawing the file on 13 November 2015 he noticed that Mr
Hewetson had paid an amount of R344.10 to Matsepe
Attorneys and an
amount of R20 679.45 to the Matjhabeng Municipality. He did not know
what these payments were for but they were
not made on the
instruction of the client. Mr Knoetze immediately reported this to
the appellant who confronted Mr Hewetson.
In total Mr Knoetze
had personal knowledge of R497 023.53 irregularly transferred
from the trust account.
[33]
No explanation is provided by the appellant for the apparent
contradiction as to whether she became aware of the trust shortages
in October, November or December 2015. Her uncontradicted evidence is
that after the investigation in December 2015 she confiscated
Mr
Hewetson’s bank token used to authorise EFT payments and
changed all the bank passwords and pins. In early January she
suspended him as an employee and director of the firm pending an
investigation into his misappropriation of trust funds.
[34]
The WhatsApp exchanges are indicative of an ugly and acrimonious
breakdown of a relationship. More importantly, on a plain
reading of
these messages there is certainly room to suggest that the appellant
had knowledge of her husband’s misconduct
for some time. It
could be a reference to Mr Hewetson’s previous charge of misuse
of trust monies by the Law Society in 2012,
of which he was
acquitted. But in the absence of an explanation from the appellant it
is impossible for this Court to speculate
on what she meant and
thereby determine the extent, if any, of the appellant’s prior
knowledge of the misappropriation.
[35]
In my view it was not unreasonable for the appellant to take a month
(or even longer as it was over Christmas holiday period)
to consult
her attorneys before reporting the matter to the Law Society. Such a
step had far reaching implications not only for
her husband but also
her family. She would have been well apprised of the professional
consequences it would have for herself.
One is sympathetic to a
spouse who delays in reporting the wrongdoings of her husband for a
month or so when the consequences of
such action go far beyond the
reaches of one’s professional life. However, it is difficult to
exonerate the appellant if
she had been aware of her husband’s
conduct over a long period of many months or even years. By electing
to remain silent
about such conduct over an extended period she would
have known that the public was being put at risk unnecessarily.
[36]
In her favour the appellant has been an attorney for over 20 years
with an unblemished record until now. She reported the misconduct
to
the Law Society well knowing of the consequences for herself. She
fully co-operated in their subsequent investigation. The
curator
bonis
appointed by the Law Society
observed in November 2016 that the firm was well-managed by the
appellant and that she was doing her
best to make good the shortfall.
The affidavits of the employees at the firm largely absolve the
appellant of any misconduct and
date her knowledge, at least to the
extent of the problem, to late 2015.
[37]
Nonetheless, as set out above there are gaps in the appellant’s
evidence that are cause for concern. If one has regard
to the
apparent contradictions between her own affidavits and the affidavit
of Mr Knoetze there is a discrepancy which requires
an explanation
from the appellant. Likewise the SMS and WhatsApp exchanges between
Mr Hewetson and the appellant require an
explanation insofar as
they are indicative of prior knowledge of her husband’s misuse
of trust funds. Ms Petzer’s allegations,
although not wholly
convincing, also require a response. There may well be satisfactory
explanations for all the apparent contradiction
but, given the nature
of the application, it is in the public interest that a hearing be
conducted an on these narrow issues. In
addition, the appellant is
required to explain her delay, if any, in reporting the matter to the
Law Society.
[38]
A court is loath to impute dishonesty on the basis of untested
allegations in motion court proceedings in the absence of clear
proof
and where these allegations were denied on grounds that cannot be
described as far-fetched.
[11]
But
because of the sui generis nature of these proceedings it is in the
interest of the public and the appellant herself that these
issues be
referred to oral evidence in the high court. Only then can a court
properly exercise its inherent jurisdiction to penalise
the appellant
by either striking her from the roll of practising attorneys or
suspending her from practising for a specific period.
For obvious
reasons any bench constituted should not include those judges who
presided over the original application.
[39]
I have had the
benefit of reading the second judgment of my colleague Leach JA.
He expresses the unequivocal view that the
appellant has been
dishonest. I am not persuaded that such a far-reaching conclusion can
be made on the papers alone. Nor can it
be concluded that she
necessarily poses any risk to the public. To strike the appellant
from the roll of practising attorneys would
have a grave impact on
her career. Rather than imposing the ultimate penalty on what is, in
my view, inadequate evidence, a referral
to oral evidence would serve
the interests of justice and fairness. A court having heard the
relevant evidence will be better placed
to determine whether the
appellant was indeed dishonest and unjustifiably delayed in reporting
the trust fund deficit, thus deserving
of such a sanction.
[40]
In the light of the
sui generis
nature
of these proceedings the appellant, quite correctly, tendered to pay
the Law Society’s costs on the scale of attorney
and client,
whatever the outcome of the appeal. This will be reflected in the
order set out below.
[41]
In the result it is ordered:
1 The appeal is upheld to
the extent that the order of the high court of 15 December 2017
is set aside only insofar as it refers
to the appellant.
2 The high court’s
order of 23 June 2016 insofar as it applies to the appellant is
reinstated pending the finalisation in
the high court of the
application to strike her from the roll.
3 The application to
strike the appellant from the roll of attorneys is referred to a
freshly constituted bench of the Free State
High Court for its
determination after hearing such oral evidence as the parties seek to
place before it in regard to the appellant’s
fitness to remain
on the roll, and in particular as to:
(a) when the appellant
first became aware of her husband’s abuse of trust funds;
(b) the extent of her
knowledge;
(c) whether the appellant
agreed to or was in any way a party to the withdrawal of trust funds
from the account of Mr Ahmed Nabil;
(d) the appellant’s
explanation for the delay, if any, in reporting trust fund
deficiencies to the Law Society.
4 In the event of either
party wishing to lead the evidence of a witness who has not deposed
to an affidavit in these proceedings,
a summary of such witness’s
evidence is to be filed and served on the other side not later than
10 days before the hearing.
5 The appellant is
suspended from practising as an attorney pending the outcome of the
above hearing.
6 The appellant is to pay
the Law Society’s costs of this appeal on the scale as between
attorney and client.
_________________
C H NICHOLLS
JUDGE OF APPEAL
Leach
JA (Weiner AJA concurring)
[42]
I have read the judgment of my colleague Nicholls JA. For the reasons
set out below, I find myself unable to agree with her
decision in
regard to the outcome of this appeal. In my view, the appellant
should be struck from the roll of attorneys and the
appeal ought thus
to be dismissed.
[43]
As set out in the judgment of my colleague, for many years the
appellant and her former husband practised as attorneys in Welkom
as
directors of the company, Hewetson Incorporated (the firm). On
ascertaining that there were serious irregularities in the firm’s
trust accounts, the respondent in these proceedings, the Law Society
of the Free State (the Law Society), applied to the Free State
Division of the High Court, Bloemfontein to strike both the appellant
and her husband from the roll of attorneys and to wind up
the firm.
The appellant alone opposed the application, and only in regard to
the issue of her striking off. In December 2017,
however, the high
court struck both her and her husband off the roll and wound up the
firm. The appellant appeals now solely against
her striking off,
contending that she had not been responsible for the financial
irregularities that had occurred.
[44]
It must throughout be remembered that an application for the striking
off of an attorney is not an ordinary proceeding but
one
sui
generis
,
of a disciplinary nature,
[12]
in which the court has the inherent jurisdiction to penalise errant
attorneys found unfit to practice by either striking them from
the
roll or suspending them from practice for a period.
[13]
There is no room for an attorney to adopt an adversarial position in
regard to the enquiry. Instead, as was stressed, inter alia,
in
Kleynhans
[14]
an attorney is expected to co-operate and to provide all necessary
information so that the full facts are placed before the court
to
enable it to make a correct and just decision.
[45]
It is not suggested on the appellant’s behalf that the high
court erred in finding her to be unfit to practice, and the
appeal
was conducted solely on the basis that, in the exercise of its
disciplinary discretion, the court a quo ought merely to
have
suspended her rather than striking her name from the roll. In
considering this, there are certain general principles
which have
always to be borne in mind.
[46]
First, s 15(1)
(a)
of the Attorneys Act 53 of 1979 (the Act) requires a person who seeks
admission as an attorney to satisfy the court, in its discretion,
that he or she is a fit and proper person to be so admitted and
enrolled. Section 15(3)
(a)
provides that the court may exercise a similar discretion on an
application by a person who was previously admitted and enrolled
as
an attorney, but who has been either removed from or struck off the
roll, to readmit such person. As this court observed in
Malan
,
[15]
it is a matter of simple logic that the combined effect of these two
subsections is that a person who is not fit and proper to
be an
attorney should be removed from the roll. That is in effect what
might be referred to as the default position.
[47]
However, depending on the circumstances, the default position may
operate harshly or unjustly. This was recognised by the legislature
which, under s 22(1)
(d)
of the Act, has provided that a person who has been admitted and
enrolled as an attorney may be struck off the roll or suspended
from
practice by the court if he or she, ‘in the exercise of the
discretion of the court, is not a fit and proper person
to continue
to practice as an attorney’. Accordingly, even where a
practitioner has been shown as not fit and proper to practice,
removal does not necessarily follow and the court has a discretion to
suspend instead. As Harms ADP pointed out in
Malan
,
[16]
in deciding which course to follow the court’s main
consideration is not first and foremost the imposition of a penalty
but, rather, the protection of the public (and in my view that is
especially important where, as here, the offence has resulted
in a
substantial shortage of trust funds).
[17]
The learned judge went on to point out that only ‘(i)f the
court has grounds to assume that after the period of suspension
the
person will be fit to practice as an attorney in the ordinary course
of events it would not remove him from the roll but order
an
appropriate suspension’.
[18]
[48]
As appears from this, an order of suspension should be made only
where the court is satisfied that after a period of suspension
the
attorney concerned will have reformed and become a fit and proper
person to practice. Unless so satisfied, the only viable
course is to
strike off the attorney who has been shown to be unfit to practice.
The obvious corollary, too, is that the more grievous
the misdeed
committed by the errant attorney, the less appropriate it will be to
merely order a suspension. The authorities are
legion that where
there is dishonesty involved, it will require exceptional
circumstances before suspension will be ordered instead
of a removal.
[49]
Moreover, in order for the court to properly exercise its discretion,
there is an evidential burden at least (for present purposes
I put it
no higher than that) for an attorney shown to be not fit and proper
to practice, to place evidence before court to demonstrate
why it
would be appropriate that he or she be suspended rather than struck
off. By reason of the
sui
generis
nature of the proceedings, this would require a full and frank
disclosure of all material information so as to allow the court
to
make a proper and informed decision. There is no room for an attorney
who wishes to remain on the roll to be coy about material
facts in a
matter of this nature. As officers of the court, attorneys are at all
times expected to be scrupulously honest and observe
the utmost good
faith in their dealings with the court,
[19]
even if it means disclosing information which may be adverse to their
own interests, and this rule applies equally in applications
to
strike them off.
[50]
The appellant argued that she had herself not been guilty of
dishonesty, and relied heavily on the decision of this court in
Summerley
[20]
in support of a proposition that striking off is generally reserved
for attorneys who have acted dishonestly. As a general rule,
dishonesty and remaining on the roll are mutually exclusive. But
striking off is not reserved solely for cases involving dishonesty
and, for example, attorneys have been struck off for not replying to
correspondence, an inaction which not only speaks of a lack
of
courtesy but constitutes a breach of professional integrity. And as
this court pointed out in
Malan
:
[21]
‘
As
mentioned in
Summerley
(at para 15), the fact that a court finds that an attorney is unable
to administer and conduct a trust account does not mean that
striking-off should follow as a matter of course. The converse is,
however, also correct: it does not follow that striking-off
is not an
appropriate order (compare
Prokureursorde
van Transvaal v
Landsaat
1993
(4) SA 807
(T);
Law Society of the
Transvaal v Tloubatla
[1999] 4 All SA
59
(T)).’
[51]
Furthermore, although the court has a discretion under s 22(1)
(d)
,
a suspension holds the potential hazard to the public of errant
attorneys being returned to practice without having to satisfy
either
their professional organisation or the court that they have in fact
reformed and have become fit and proper to practice.
Consequently,
the discretion to suspend must be conservatively exercised. As
Harms ADP went on to state in
Malan
,
[22]
even in cases which do not involve dishonesty, in order to stem an
erosion of professional ethics the court should adopt a conservative
rather than a ‘kid-gloves’ approach. A court should
therefore not be influenced by maudlin sympathy in considering
whether suspension rather than striking off is the appropriate
remedy. After all, its main consideration is to protect the public,
not to feel sorry for a person whose conduct has fallen short of the
mark.
[52]
In the exercise of its discretion, the high court decided to impose
the more stringent sanction of removing the appellant from
the roll
rather than merely suspending her from practice. Generally this
court, on appeal, would not have a free hand to interfere
with the
high court’s decision merely if it would have exercised its
discretion differently, but as Nicholls JA correctly
points out, it
may interfere where there has been a material misdirection or
irregularity. And for the reasons set out by my learned
colleague the
high court in this instance got the facts wrong and materially
misdirected itself in effectively finding that the
appellant had
stolen a substantial amount of trust funds, which she had not done.
That leaves this court free to exercise its discretion
on the issue
at hand.
[53]
Bearing all of this in mind, I turn to consider whether on the facts
of this matter, a striking off or a suspension is the
appropriate
order. Much of the background has been set out in my colleague’s
judgment and I shall attempt insofar as possible
to avoid repetition.
[54]
The appellant is not a young, inexperienced attorney who possibly did
not fully appreciate the scope and ambit of her duties
in regard to
trust funds. As I have said, she is an experienced practitioner who
had practised together with her husband for a
good many years. It is
indeed so, as is set out in the judgment of my colleague, that their
firm’s trust account was used
by the appellant’s husband
for his own purposes. He clearly made himself guilty of the theft of
trust moneys over an extended
period, in particular during the course
of 2015, which resulted in a loss of trust funds in excess of R1.7
million. According to
the appellant’s affidavit of 15 January
2016 used to report the matter to the Law Society, she had been
unaware of any irregularities
until December 2015 when staff rumours
reached her ears and she confronted her husband. In a subsequent
affidavit deposed to on
18 March 2016, filed to oppose the
application for her striking off, her explanation for the dismal
state of the firm’s trust
accounts was that her husband had
been in charge of the financial administration of the firm throughout
its existence, and that
she had to trust him to attend to the
finances as he was the more experienced attorney. In any event, so
she alleged further, he
had insisted upon attending to all financial
affairs at the office and any attempt from her to have a say over the
finances, or
to make any input regarding the financial affairs of the
firm, had been met with his disrespectful and sarcastic response.
[55]
Simply put, then, the appellant’s excuse was that she had
entrusted the handling of the firm’s trust funds to her
husband. But this excuse holds no water. An attorney cannot abdicate
his or her responsibilities in regard to funds held in trust.
Over 60
years ago, in an oft quoted passage that remains as true today as it
did then, the court in
Incorporated
Law Society, Transvaal
v
K
[23]
said:
'It frequently happens in
partnership firms that one or more of the partners is concerned with
court work and that either another
partner or an individual
person is entrusted with the books of account and with seeing that
the trust accounts are properly
kept, and that sufficient trust
moneys are properly held at all times . . . no attorney should be
heard to say that, because of
the arrangement that he would be doing
a particular type of work and therefore was not concerned with the
manner in which the books
of account had been kept, or the trust
account, he should not be blamed. He will not be heard in that
regard.
Every
attorney must realise that it is a fundamental duty on his part,
breach of which may easily lead to his being removed from
the roll,
to ensure that the books of the firm are properly kept . . . .
’
[56]
Nothing has changed since then. On
the
strength of numerous previous decisions in which a similar excuse was
rejected, this court said in
Hepple
:
[24]
‘
Moreover,
that he was not involved with the financial management of the firm,
is no defence at all
.
The duty to comply with the provisions of the Act and the Rules is
imposed upon every practising attorney, whether practising
in
partnership or not, and no attorney can therefore be heard to say
that under an arrangement between him and his partner, the
latter was
not responsible for the keeping of the books and control and
administration of the trust account, and that he was therefore
not
negligent in his failure to ensure compliance with the provisions of
the Act and the Rules.’(My emphasis.)
[57]
Consequently, the appellant failed completely to comply with her
statutory obligations to properly control the administration
of the
funds her firm held in trust. She also conceded that the books of the
firm’s Theunissen branch that was opened for
a time never met
the Law Society’s requirements. As a result of this gross
negligence on her part, there was a trust deficiency
of some R1.7
million by the time the matter was brought to the Law Society’s
attention. This, alone, distinguishes the matter
from the position in
Summerley
in
which no financial loss was suffered. This factor, in itself,
suffices in my view to strike her off in order to protect the public.
There are, however, many other relevant factors which have to be
taken into account.
[58]
First, but most importantly, the appellant’s statement under
oath to the Law Society when reporting the firm’s
trust fund
difficulties in January 2016, that she had been unaware of any trust
account irregularities before December 2015, was
false. As appears
from both her subsequent affidavits, of 18 March 2016 and 8 June
2018, the latter filed in opposing the application
to strike her from
the roll of attorneys, she had learned in mid-November 2015 of the
misappropriation of a substantial sum of
money from the trust account
of a client, Nian Shun. This was confirmed by an affidavit of an
attorney employed by the firm as
a professional assistant, Mr Andries
Knoetze, who stated that on 13 November 2015 he had ascertained
that, on 14 October 2015
and 6 November 2015, the appellant’s
husband had improperly paid two amounts, totalling approximately
R365 000, out
of an amount being held in trust on behalf Nian
Shun. He immediately reported this to the appellant, who promptly
confronted her
husband about the matter. The appellant never disputed
or explained this and we must therefore accept that she learned of
the Nian
Shun affair much earlier than what she told the Law Society.
[59]
This is not the only reason why the appellant’s statement that
she had no reason to suspect any wrongdoing in respect
of trust funds
until December 2015 cannot be believed. When the Nian Shun matter
came to her knowledge there was, as Mr Knoetze
confirms, a
confrontation between her and her husband. This led to an exchange of
WhatsApp messages between them, during the course
of which the
appellant berated her husband, at times using language which would
have made a sailor blush. In the process, on 19
November 2015, the
appellant stated ‘I have finally had enough of your use of
trust money for your personal gain’ (my
translation of the
original Afrikaans). In my view this admits of only one inference,
namely, that the appellant was at that time
already aware that her
husband had used trust money for his personal benefit on previous
occasions. The use of the word ‘finally’
in this context
excludes any other connotation.
[60]
It is suggested by my colleague that the appellant may possibly have
been referring to either a 2012 incident, when her husband
had been
charged before the Law Society for the misuse of trust funds, or to a
letter from Moroka Attorneys earlier in 2015 in
which a similar
allegation was made. With respect, in my view, that amounts to
impermissible speculation, particularly as the appellant,
herself,
does not state that to be the case. And therein lies the rub. It
should not be necessary for a court to indulge in speculation
as to
what the appellant may have had in mind when she said what she did.
She was obliged to fully explain her outburst, but failed
to do so.
[61]
Consequently, although the appellant insisted that she had no
knowledge of her husband’s misappropriations prior to the
Nian
Shun incident on 13 November 2015 (without explaining why she
initially told the Law Society that he was oblivious to his
misconduct until December 2015) the only reasonable inference that
may be drawn from the words she used in her WhatsApp message
when she
learned of the Nian Shun incident, leaves no doubt that this is not
true. The clear inference of her message is that,
prior to that
incident, the appellant was aware of at least certain of her
husband’s abuse of the firm’s trust funds
and that the
Nian Shun incident was, in effect, the last straw that broke the
camel’s back. If there was any other explanation,
it was
incumbent upon the appellant to provide it. She did not, and one must
infer that she meant what she said. What she said
can only mean that
she knew, before the Nian Shun incident, that her husband had
previously used trust money for his personal benefit.
[62]
Any doubt about this is removed by Mr Knoetze’s undisputed
evidence. He placed on record that the appellant had on a
number of
previous occasions attempted to obtain clarity from her husband
regarding various payments he had made from both the
firm’s
trust and business accounts, but that her husband had repeatedly
chased her out of his office, swearing and shouting
at her. In
particular he stated that during October 2015 the appellant and her
husband had a serious confrontation in respect of
trust or business
funds paid out to another business conducted by her husband under the
name of RJ Construction. All of this,
he says, he had heard
clearly as his office was immediately adjacent to that of the
appellant’s husband. None of this has
been disputed by the
appellant and must therefore be accepted. This clearly establishes
that the misuse of trust funds was an issue
between the appellant and
her husband long before the time she attempted to persuade the Law
Society had been the case.
[63]
The appellant was not open and frank about this as was to be expected
from an officer of the court. Her failure to properly
deal with the
matter is telling. It must be accepted that she knew of her husband’s
abuse of trust funds months before the
date she attempted to make out
to the Law Society and the court as being when she first learned of
his mischief. She therefore
lied under oath to both the high court
and to the Law Society on this issue, and persisted in advancing such
untruth in this court.
This is inherently dishonest and is deserving
of the severest stricture. The cases are legion that a lack of
scrupulous honesty
and truthfulness constitute a ‘fatal
barrier’ to practice as an attorney.
[25]
In my view, lies under oath and her attempt to mislead the high court
(and this court on appeal), renders a mere suspension from
practise
wholly inappropriate. The only way to protect the public from
dishonest attorneys who are prepared to lie to a court is
to remove
them from the roll.
[64]
That brings me to a chapter of the events involving Ms Belinda
Petzer, who had formerly been employed by the firm as a conveyancing
secretary. In an affidavit deposed to on 31 January 2016, she alleged
that the appellant had occasionally also purchased houses
which were
funded from trust money. She also attested to an incident in January
or February 2014 when, for purposes of speculation,
the appellant’s
husband had purchased two houses at an auction in execution. In
response to a question from the appellant’s
husband, but in the
presence of the appellant, she identified a client, Mr Ahmed
Nabil, out of whose trust money the amount
needed to pay for the two
houses could be taken. This was done and the houses were paid for.
They were resold shortly thereafter
and, within days, the money was
repaid to trust. All this she says was done with the appellant’s
knowledge and consent.
[65]
Although the appellant denied these allegations, and alleged that Ms
Petzer had perjured herself, they were supported to an
extent by the
firm’s records which indicate that the two properties were,
indeed, purchased and resold, albeit in December
2013 not early in
2014 (but nothing turns on that discrepancy). Furthermore, it would
seem at first blush to be wholly improbable
that a third party,
having no interest in the matter, would make such an incriminating
statement if it were not true. However,
the appellant points out that
she had laid a charge of theft of some R 30 000 against Ms Petzer
after she had left the firm’s
employ in 2014, and suggests
that, in all probability, Ms Petzer had been influenced to make a
false statement by her husband,
who may have been helping her in her
defence in the criminal proceedings.
[66]
Leaving aside for the moment the truth or otherwise of Ms Petzer’s
version of events, there are important ancillary matters
which arise
out of this episode. First, it appears that on 4 March 2015 the
appellant wrote to Ms Petzer’s new employer,
Moroka-Attorneys
of Welkom, informing them that she had discovered that Ms Petzer had
stolen money (the precise terms of this communication
do not form
part of the record). Moroka-Attorneys replied the same day, stating
that Ms Petzer denied stealing the money and alleged
that although
the amount had in fact been paid to her as part of her performance
bonus, she was prepared to repay it. However,
they went on to record
that although Ms Petzer was making no threats, she had informed
the writer of the letter that she was
in possession of documentation
relating to a number of files in which trust funds had been used to
purchase properties in the name
of the appellant’s husband,
after which the money had been returned once bonds had been
registered over such properties.
(I should mention that the appellant
went on to lay charges of theft against Ms Petzer but it seems
nothing came of any prosecution.)
[67]
In her opposing affidavit, the appellant stated the following in
regard to this incident:
‘
I
did confront [my husband] regarding the allegations by Petzer of him
misappropriating trust money and [he] denied these allegations.
It
was hardly possible for me to magically be aware which monies Petzer
was referring to which were, according to her, misappropriated.’
This
sarcastic response was of a tone totally uncalled for in responding
to her professional organisation attempting to comply with
its duty
to place facts before court. Her sarcasm in itself shows a lack of
professional integrity on her behalf. The Law Society
is the watchdog
of the profession, obliged to investigate complaints laid against
practitioners. A practitioner has a concomitant
duty to fully
participate in any enquiry conducted by the Law Society, and a
failure to do so serves to undermine public trust
in the profession
as a whole. Consequently, and as this court pointed out in
Kudo
v Cape Law Society
,
[26]
not only integrity but also loyalty to the Law Society is expected
from an attorney, and a practitioner who does not honour and
appreciate his or her professional organisation is truly a fly in the
ointment. Sarcasm of this nature should never have formed
part of the
appellant’s response.
[68]
Furthermore, but most importantly, the appellant’s failure to
take further steps to investigate a very serious allegation
of abuse
of trust funds was just not good enough. It was not the first
occasion that, to her knowledge, her husband had been accused
of
misappropriating trust funds. In 2012 he had been charged before the
Law Society with abusing trust funds and, although he was
not
convicted on that charge, that incident constituted a clear warning
that he was possibly not to be trusted and the administration
of the
firm’s trust funds might not be in reliable hands. Trust funds
are sacrosanct, and even if she had not had this warning,
on learning
of Ms Petzer’s allegations it was wholly insufficient for the
appellant to merely accept her husband’s
denial of any
wrongdoing. Instead, in the light of the statutory obligations she
bore as a director of the firm it was incumbent
upon her to
immediately make full enquiries in regard to the trust funds with
which her husband had been dealing, especially those
with which Ms
Petzer had been associated (which required no magic on her part).
That was her clear and obvious obligation. Had
she done so, the loss
of more than R1.7 million out of trust may well have been
avoided.
[69]
In the light of the previous charges against him, her meek acceptance
of her husband’s denial of wrongdoing, and her
failure to take
any steps to investigate the matter further or to report the
allegation to the Law Society (and, significantly,
she made no
mention of this when she wrote to inform the Law Society that Ms
Petzer had apparently stolen what appears to have
been funds held in
trust), was not only reckless but constituted a cavalier attitude
towards her trust fund obligations. Not only
was this a gross breach
of the obligations as an attorney to ensure that her trust accounts
were in order, but her failure to appreciate
the seriousness of the
matter in the present proceedings is, to me, a cause of great
concern. It speaks volumes for her lack of
appreciation of her duties
as an attorney and the rules of the Law Society, all of which in my
view renders her mere suspension
from practice wholly inappropriate.
[70]
The appellant’s hesitation in reporting her husband’s
theft of trust moneys is also a cause for concern. I accept
that the
existence of a marriage relationship between directors of a law firm
may make it awkward for one to report the other to
the Law Society,
but it does not permit greater leeway than would otherwise be the
case. With great respect, I am unable to agree
with my learned
colleague’s statement that it was not unreasonable for the
appellant to delay reporting her husband for a
month or more. Her
duty as an attorney was paramount. The protection of the public was
at stake. She was obliged in the interests
of both the public and her
chosen profession to report the matter ‘immediately’, as
is enshrined in the rules of South
African Legal Practice
[27]
(and a delay of months can by no stretch of the imagination be
regarded as compliant with this). She did not do so. In any event,
as
I’ve set out above, it is clear from the undisputed evidence
that she had been aware of the abuse of trust funds for several
months before December 2015 and that by then the marriage
relationship had effectively ended. The WhatsApp tirade in November
2015, which contains threats of reporting the matter, clearly proves
that to have been the case. Surprisingly it was only after
the
appellant had consulted with legal representatives that she made her
report to the Law Society. That consultation, during which
she must
presumably have been reminded of her duty as an attorney, should not
have been necessary at all. On the undisputed evidence,
there was a
wholly unreasonable delay before the matter was reported.
[71]
The Law Society points out that when the appellant realised that her
husband had made himself guilty of the Nian Shun abuse,
it was
unnecessary to do anything more than report the matter to it.
Instead, the appellant initially accepted her husband’s
undertaking to rectify the matter, which the Law Society stated it
understood to mean that he would repay the money and, if he
had, the
appellant would not have reported the misconduct. This the appellant
does not deny. Accordingly, it is only because her
husband had not
repaid the debt that she reported him to the Law Society. Not only
does it explain her delay but it shows an unwillingness
to do the
right thing, and that must count heavily against her in considering
whether she should be removed from the roll or merely
suspended.
Whether the trust funds were repaid or not, there was an obligation
to report the matter to the Law Society. Of that
there can be no
doubt. I therefore see no point in referring the matter for oral
evidence in regard to the delay which on the undisputed
facts was
wholly unreasonable.
[72]
As detailed above, even if the appellant was not herself guilty of
any abuse of trust funds, she has been neither open nor
frank with
the Law Society, the high court or this court in regard to the
material events. In fact, in certain respects she has
shown to have
been untruthful. Her statements under oath that she first learned of
trust fund irregularities in December 2015,
which later changed to
November 2015, were simply false. Not only does this untruthfulness
show a lack of the necessary qualities
required of an attorney, it is
a weighty consideration militating against any lesser stricture than
removal from the roll (as emphasised
by this court in
Vassen
).
[28]
Further, the manner in which an attorney conducts proceedings to
strike him or her from the roll may in itself be relevant to the
sanction to be imposed and, should the attorney not have been frank
and open with the Law Society, this, too, is a pertinent factor
to be
taken into account. After all, as an attorney the appellant was under
an obligation to assist the court in its search for
the truth. As
mentioned at the outset, the attorney is expected to co-operate and
to provide all necessary information so that
the full facts are
placed before the court to enable it to make a correct and just
decision. In contradistinction, as already mentioned,
the appellant’s
conduct of her case in various respects is hallmarked by her lack of
candour and truth.
[73]
Furthermore, the appellant approached her responsibilities in regard
to the firm’s trust funds in a cavalier fashion.
That is all
the more so given the fact that she was aware of alleged
irregularities, certain of which she has declined to disclose,
for
months before she ultimately brought the matter to the Law Society’s
attention. This brings the element of protection
of the public to the
fore.
[74]
In
Kekana
,
[29]
Hefer JA stated that absolute integrity and scrupulous honesty are
demanded from legal practitioners and that those who have
demonstrated
a lack of those qualities cannot be expected to play
their part. In the present case, the conduct of the appellant
detailed above
demonstrates a lack of these necessary qualities. As
detailed above, she failed to treat the firm’s trust funds with
the
necessary care and attention; she knew of reports that her
husband was abusing the firm’s trust moneys and failed to make
the necessary enquiries in regard thereto; she in fact had learned of
certain of his abuses before the Nian Shun incident was brought
to
her attention but, apart from arguing with her husband, she did
nothing to prevent such abuses continuing and failed to report
his
indiscretions to the Law Society; and, even once the marriage had
broken down, it took her two months to report the Nian Shun
episode
to the Law Society, notwithstanding her threat to do so immediately
(which she should have done). And in what is in my
view the final
nail in the coffin of her argument, it has been shown that she has
been untruthful, not only in her reporting of
abuse of trust funds to
the Law Society, but by not making a full and frank disclosure to
both it and the court as she was obliged
to do. Indeed, she has been
a stranger to the truth, displaying an inherent dishonesty against
which the public needs to be protected
[75]
It must also be stressed that although the final decision of course
lies in the hands of the court, due to the special position
the Law
Society holds in relation to its members, its views are of great
importance in a case such as this: see eg
Prokureursorde,
Transvaal v Van der Merwe.
[30]
Counsel for the appellant correctly conceded that the Law Society had
a measure of sympathy for the appellant who appears to have
been
abused by her husband, but nevertheless felt that the severity of the
matter was such that striking off was necessary. This
is a weighty
consideration to be placed in the scales in deciding whether
suspension would be an adequate order to make. In the
light of the
appellant’s dishonesty and the other factors that I mentioned
above, in my opinion the only appropriate sanction
is to strike the
appellant’s name from the roll of attorneys. It has certainly
not been shown to me that suspension for a
couple of years will
ensure that the appellant will thereafter be a fit and proper person
to practice as an attorney. If she is
struck from the roll, and
subsequently wishes to be re-enrolled, it will be incumbent upon her
to prove that she has in fact reformed.
Striking from the roll will
therefore provide a greater degree of protection for the public than
a mere suspension.
[76]
My learned colleague expresses the view that there are gaps and
contradictions in the appellant’s evidence which is a
cause for
concern. I agree wholeheartedly with her. Where I disagree, however,
is whether the matter should be referred for the
hearing of oral
evidence to deal with these gaps and contradictions as she suggests.
In my respectful opinion, it was incumbent
upon the appellant, in
seeking to persuade the court to exercise its discretion in her
favour, to fully explain what her case is
in regard to these issues.
She declined the opportunity and I see no reason for this court to
refer the matter back to the high
court to investigate, by way of
oral evidence issues, which the appellant has declined to either
raise or dispute. I see no reason
for the high court to take evidence
when the matter can readily be decided on the undisputed evidence on
record.
[77]
Accordingly, although the court of first instance seriously
misdirected itself, by reason of the other factors that I have
mentioned and which are not in dispute, in my judgment an order
striking the appellant from the roll is the only appropriate order
to
be made.
[78]
I have reached this conclusion without reaching a decision on whether
the appellant knew of or gave her approval to the misuse
of Mr Ahmed
Nabil’s trust fund, as alleged by Ms Petzer. If the allegations
made against the appellant in that regard were
to be established, the
appellant would have made herself guilty of what has been described
by this court
[31]
as ‘about
the worst professional sin that an attorney can commit by
misappropriating trust funds’. As this is a matter
which by a
majority is to be referred for the hearing of evidence, it would be
wrong for me at this stage to possibly influence
the court which is
to hear that evidence by expressing any opinion on the papers in
regard to the inherent probabilities, one way
or the other.
[79]
I mention this last aspect merely as an aside. In my view, despite
the misdirection of the court of first instance, an order
striking
the appellant from the roll was correctly made. In my judgment, the
appeal should therefore be dismissed with costs on
the scale as
between attorney and client, such costs having been correctly
tendered by the appellant.
_________________
L E
LEACH
JUDGE
OF APPEAL
APPEARANCES:
For
appellant:
S J Reinders
Instructed
by:
Symington & De Kok, Bloemfontein
For
respondent:
N Snellenberg SC
Instructed
by:
Hill, McHardy & Herbst Inc, Bloemfontein
[1]
Hepple
and Others v Law Society of the Northern Provinces
[2014]
ZASCA 75
;
[2014] 3 All SA 408
(SCA) para 9;
Cirota
and Another v Law Society, Transvaal
[1979] 1 All SA 179
(A);
1979 (1) SA 172
(A) at 187.
[2]
1934
AD 401
at 408-409.
[3]
General
Council of the Bar of South Africa v Jiba and Others
[2019]
ZACC 23
;
2019 (8) BCLR 919
(CC) para 20.
Jiba
and Another v General Council of the Bar of South Africa and
Another, Mrwebi v General Council of the Bar of South Africa
[2018]
ZASCA 103
;
[2018] 3 All SA 622
(SCA);
2019 (1) SA 130
(SCA);
2019
(1) SACR 154
(SCA) para 6.
Malan
and Another v Law Society of the Northern Provinces
[2008]
ZASCA 90
;
2009 (1) SA 216
(SCA);
[2009] 1 All SA 133
(SCA) para 4.
General
Council of the Bar of South Africa v Geach and Others,
Pillay and Others v Pretoria Society of Advocates and
Another,
Bezuidenhout v Pretoria Society of Advocates
[2012]
ZASCA 175
;
[2013] 1 All SA 393
(SCA);
2013 (2) SA 52
(SCA) para 50.
Jasat
v Natal Law Society
2000
(3) SA 44
(SCA);
[2000]
2 All SA 310
(SCA) para 10
.
[4]
Malan
and Another v Law Society of the Northern Provinces
[2008]
ZASCA 90
;
2009 (1) SA 216
(SCA);
[2009] 1 All SA 133
(SCA) para 8.
[5]
Incorporated
Law Society, Natal v Roux
1972
(3) SA 146
(N) quoted with approval in
Cirota
v Law Society, Transvaal
1979
(1) SA 172
at 194B-D.
[6]
Malan
and Another v Law Society of the Northern Provinces
[2008]
ZASCA 90
;
2009 (1) SA 216
(SCA);
[2009] 1 All SA 133
(SCA) para 13.
[7]
Prior to 1 March 2016 the Rules of the Free State Law Society were
operative. On 1 March 2016 the Rules for the Attorneys' Profession
came into operation and replaced the Rules of the Free State Law
Society. Where reference is made to rules pertaining to conduct
or
obligations that occurred or are binding prior to 1 March 2016,
reference is made to the Rules of the Free State Law Society.
Where
reference is made to rules pertaining to conduct or obligations that
occurred or are binding after 1 March 2016, reference
is made to the
Rules for the Attorneys’ Profession.
[8]
Section
78(2A) of the Act provides as follows:
‘
(2A)
Any separate trust savings or other interest-bearing account
—
(a)
which is opened by a practitioner for the
purpose of investing therein, on the instructions of any person, any
money deposited
in his or her trust banking account; and
(b)
over which the practitioner exercises
exclusive control as trustee, agent or stakeholder or in any other
fiduciary capacity, shall
contain a reference to this subsection.’
[9]
The
Afrikaans
version reads: ‘Ek het nou finaal genoeg gehad van jou
aanwending van trustgeld vir persoonlike gewin . . . .
As jy my keel
wil afsny deur my deur die ore te werk, gaan ek jou bedank deur
presies dieselfde vir jou te doen. Jou konsekwensies
gaan net erger
wees.’
[10]
Malan
para
10.
Summerly
v Law Society, Northern Provinces
2006 (5) SA 613 (SCA) para 21.
[11]
Prinsloo
NO and Others v Goldex
[2012]
ZASCA 28
;
2014
(5) SA 297
(SCA) para 19.
[12]
Law
Society of the Northern Provinces v Morobadi
[2018] ZASCA 185
;
[2019] JOL 40677
(SCA) para 4;
Summerley
v Law Society, Northern Provinces
[2006] ZASCA 59
;
2006 (5) SA 613
(SCA) para 2 and the cases
there cited.
[13]
Malan
& another v Law Society, Northern Provinces
[2008]
ZASCA 90
;
2009 (1) SA 216
(SCA) para 23.
[14]
Prokureursorde
van Transvaal v Kleynhans
1995
(1) SA839 (T) at 853.
[15]
Para
8.
[16]
Paras
3-4.
[17]
See
eg
Law
Society of the Cape of Good Hope v Budricks
2003
(2) SA 11
(SCA);
[2002] 4 All SA 441
(SCA) para 7.
[18]
Para
8.
[19]
Eg
Incorporated
Law Society, Transvaal v Meyer
1981
(3) SA 962
(T) at 970F and
Society
of Advocates, Natal v Merret
1997 (4) SA 374
(N) at 382J – 383H.
[20]
Summerley
v Law Society, Northern Provinces
[2006]
ZASCA 59
;
2006 (5) SA 613
(SCA) para 20.
[21]
Para
11.
[22]
Para
11.
[23]
Incorporated
Law Society, Transvaal
v
K and others
1959
(2) SA 386
(T) at 391C-E
.
[24]
Hepple
& others v Law Society of the Northern Provinces
[2014]
ZASCA 75
;
[2014] All SA 408
(SCA) para 21. (Citation omitted.)
[25]
See eg
Merret
at
382J–383H and the cases there cited.
[26]
Kudo v
Cape Law Society
1977 (4) SA 659
(A) at 668E-F.
[27]
Rule 54.14.10 of the South African Legal Practice Rules, promulgated
under the
Legal Practice Act 28 of 2014
, and which reflect what has
always been the position for attorneys, provides :
‘
A firm shall
immediately report in writing to the Council should the total amount
of money in its trust bank accounts and money
held as trust cash be
less than the total amount of credit balances of the trust creditors
shown in its accounting records,
together with a written
explanation of the reason for the debit and proof of rectification.
A firm shall immediately
report in writing to the Council should an account of any trust
creditor be in debit, together with a
written explanation of the
reason for the debit and proof of rectification.’
[28]
At
539B-C.
[29]
Kekana
v Society of Advocates of South Africa
[1998] ZASCA 54
;
1998 (4) SA 649
(SCA);
[1998] 3 All SA 577
(A) at 656A-B.
[30]
Prokureursorde,
Transvaal v Van der Merwe
1985 (2) SA 208
(T) at 213A-B.
[31]
Budricks
para 11.