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2024
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[2024] ZANCHC 33
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Legal Practice Council v Mjila and Another (1635/22) [2024] ZANCHC 33 (1 March 2024)
IN
THE HIGH COURT OF SOUTH AFRICA
NORTHERN
CAPE DIVISION, KIMBERLEY
Case
No: 1635/22
Reportable:
YES/NO
Circulate
to Judges:
YES/NO
Circulate
to Magistrates:
YES/NO
Circulate
to Regional Magistrates:
YES/NO
In
the matter between:
THE
LEGAL PRACTICE
COUNCIL
Applicant
and
ANNA
MJILA (IN HER CAPACITY AS THE
EXECUTRIX
OF THE LATE ESTATE OF
ABEL
VUMILE MJILA)
ESTATE
No:
2501/2022
1
st
Respondent
MASTER
OF THE HIGH COURT,
KIMBERLEY
2
nd
Respondent
Coram: Tlaletsi JP,
Williams J et Lever J
JUDGMENT
Lever
J
1.
After the
passing of the late ABEL VUMILE MJILA (the deceased) the applicant
being the Legal Practice Council of the Northern Cape
(the LPC)
resolved to bring an application that its director in the Northern
Cape be appointed as
curator
bonis
to the legal practice of the deceased, who was an attorney of this
court.
2.
Pursuant to
the said resolution of the LPC an urgent application was filed on the
17 August 2022 and a
Rule
Nisi
was issued by Williams J on the 19 August 2022. In terms of the said
Rule
Nisi
,
the director of the Northern Cape LPC was appointed as
curator
bonis
to the legal practice of the deceased with the usual powers and
obligations as are appropriate in such circumstances.
3.
There were
no less than four postponements where the
Rule
Nisi
was extended.
4.
A full
bench of this division was constituted because it appeared that the
rights of the deceased’s estate, controlled by
the first
respondent, to the practice of the deceased, was in issue, where it
was alleged by the fist respondent that the deceased
ran his practice
as an incorporated professional entity without limited liability, in
the current terminology referred to as a
‘personal liability
company’, in accordance with the company laws of the Republic
of South Africa. Section 19(1)(a)
of the Companies Act
[1]
(the Act) provides that once a company is incorporated and
registered, it exists continuously until its name is removed from the
companies register in the manner provided for in the Act. The rights
of the deceased’s estate in relation to a ‘personal
liability company’ such as an attorney’s incorporated
practice is an area of our law that is not yet settled. Hence
the
full bench set up to hear this matter.
5.
There was
indeed an incorporated professional entity registered in the name of
the deceased. It emerged that the deceased was the
sole director and
shareholder of this entity at the time of his passing. However, no
Legal Practitioners Fidelity Fund Certificate
was ever issued to the
said incorporated professional entity. The relevant Fidelity Fund
Certificate was issued in the name of
the deceased as a sole
practitioner, which certificate was valid at the date of his passing.
6.
As an
attorney whether practicing under a partnership, a ‘personal
liability company’ or a sole practitioner may not
lawfully
practice without a Fidelity Fund Certificate issued to cover the
appropriate entity, it follows that the deceased never
practiced
through the vehicle of the personal liability company that bore his
name.
7.
The first
respondent opposed the confirmation of the
Rule
Nisi
on
several technical grounds. However, the main ground of opposition was
that the deceased practiced under the personal liability
company that
bore his name and that in her position as
executrix
of the deceased’s estate she could nominate a new director who
had his own fidelity fund certificate and transfer the share
in the
company to that person.
8.
In the end
the contention that the deceased practiced in an incorporated
personal liability company could not be sustained and ultimately
the
first respondent consented to the confirmation of the relevant
Rule
Nisi
,
but the question of who should bear the costs of this application was
still in issue.
9.
Consequently,
on the 13 April 2023 the
Rule
Nisi
was confirmed and the judgment on the question of costs was reserved.
10.
The
question of who is awarded the costs of litigation is governed by two
rules. The first rule is sometimes referred to as the
‘basic
rule’, ‘the first rule’ or ‘the primary
rule’. This ‘primary rule’ states
that the award of
costs in litigation is within the discretion of the trial Judge. The
second rule is sometimes referred to as
‘the general rule’
or ‘the secondary rule’. This ‘general rule’
states that costs are awarded
to the successful party.
11.
Innes CJ in
the case of KRUGER BROS. & WASSERMAN v RUSKIN set out
the ‘primary rule’ in the following
terms:
“
As
already pointed out, the rule of our law is that all costs –
unless expressly otherwise enacted – are in the discretion
of
the Judge. His discretion must be judicially exercised; but it cannot
be challenged taken alone and apart from the main order,
without his
permission.”
[2]
12.
The two
rules relating to costs do not exist in isolation to each other,
there is an interplay between these two rules relating
to the award
of costs. This interplay is illustrated by Boshoff J in the
matter of LETSITELE STORES (PTY) LTD v ROETS,
where he states:
“
In an appeal of
this nature two general principles should be observed. The first is
that the Court of first instance has a judicial
discretion in regard
to costs and this Court cannot interfere unless it is satisfied that
the discretion is not exercised judicially.
The second is that the
successful party should as a general rule, have his costs. This is a
rule that should not be departed from
without the existence of good
grounds for doing so. Where a successful party has been deprived of
his costs, an appeal Court will
enquire whether there were any
grounds for this departure from the general rule, and if there are no
such grounds, then ordinarily
it will interfere. Any grounds here
mean any grounds upon which a reasonable person could come to the
conclusion arrived at.”
[3]
(references omitted)
13.
From this
it emerges that it is possible to depart from the general rule.
However, there must be a substantial reasonable basis
for doing so,
which must emerge from the facts of the case before the court. The
grounds for departing from the general rule can
thus never be a
closed list. In these circumstances, it will also be extremely
difficult to systematise when a court will depart
from the general
rule. At best we will be able to point to examples of when and in
what circumstances a court departed from the
general rule, that costs
follow the event.
14.
Mr
Mthombeni who appeared on behalf of the first respondent submitted
that the first respondent acted reasonably in opposing the
confirmation of the
Rule
Nisi
and that at least to some extent the applicant was responsible for
the confusion that the first respondent laboured under in relation
to
the legal vehicle in which the deceased practiced as an attorney. If
the facts as they emerge from the papers support these
submissions,
this would probably constitute a sufficient basis to depart from the
general rule that costs follow the event.
15.
Mr
Groenewaldt, who appeared for the applicant, contended that: the
first respondent was not reasonable in her opposition to confirmation
of the
Rule
Nisi
;
it had always been the applicant’s case that the deceased had
been a sole practitioner; there was no confusion on this issue
and
certainly not on the part of the applicant; and first respondent had
clung to the contention that the deceased practised through
the
vehicle of an incorporated professional entity long after it was
established even by her own attorney that the deceased practiced
as a
sole practitioner.
16.
The
applicant made the positive assertion that the deceased practiced as
a sole practitioner within the jurisdiction of this court
in its
founding affidavit.
17.
In her
answering affidavit the first respondent denies the contention that
the deceased practiced as a sole practitioner and asserts
that he
practiced as an attorney through the vehicle of an incorporated
professional entity, being a personal liability company.
The first
respondent further asserts that on the 14 July 2022 she sent one
Sanele Mjila to the office of the applicant to enquire
as to the
status of Mjila and Partners Inc and that the Director of the
Northern Cape LPC told him that it was a special case.
The
confirmatory affidavit of the said Sanele Mjila was attached to the
first respondent’s answering affidavit.
18.
In
responding to this contention, the deponent to the applicant’s
replying affidavit states that she told Sanele Mjila that
“…the
practice is a special case because the Applicant was under the
impression that the firm of the deceased was
a sole proprietor and
not an incorporated company.”
19.
Given the
fact that the applicant was always in possession of a copy of the
fidelity fund certificate issued to the deceased, that
a copy of the
said certificate was annexed to the replying affidavit, that it is
self-evident from the said Fidelity Fund certificate
that the
deceased was a sole practitioner, the facts overwhelmingly support
her version of this exchange between herself and Sanele
Mjila. In
these circumstances the contention that the applicant was at least
partially responsible for any confusion relating to
the legal vehicle
the deceased used in his practice as an attorney cannot be sustained.
20.
It
subsequently came to light that a letter was written by a Mr B.A.
Mahlabeni on the letterhead of Mjila & Partners Inc dated
13
September 2022 to the Northern Cape LPC. This letter revealed that Mr
Mahlabeni who was to take over the company Mjila &
Partners Inc
knew from the trust account the deceased ran for his practice that
the deceased practiced as a sole proprietor and
not as an
incorporated professional entity.
21.
The
applicant sought to place this letter before this court in a
supplementary affidavit. The first respondent fought the admission
of
this letter quite vehemently. Be that as it may, the important
consideration here is that she had direct knowledge of this letter
and its import. That is quite clear from her affidavit opposing the
admission of the supplementary affidavit.
22.
These facts
indicate that at least from 13 September 2022 the first respondent
had direct knowledge of the true facts relating to
her late husband’s
legal practice as an attorney. She continued to oppose the
confirmation of the
Rule
Nisi
until April 2023. Such continued opposition, cannot, in those
circumstances be considered reasonable.
23.
In all of
these circumstances I cannot find that the first respondent acted
reasonably in opposing the confirmation of the
Rule
Nisi
.
Nor can I find in these circumstances that the applicant is partially
responsible for causing confusion relating to the vehicle
used by the
deceased in his legal practice as an attorney.
24.
Further, in
considering the exercise of this court’s discretion, it is
necessary to look to the nature and function of the
LPC. The LPC is a
body created by statute
[4]
. It
has a number of objectives and functions set out in the relevant
statute. Amongst those functions the LPC is to protect the
public
interest and regulate the profession
[5]
.
Although certain allegations were made and aspersions cast against
both the Director and Mr Groenewaldt, there was no evidence
to
substantiate these. On the contrary, the evidence shows that the
application before us was brought in the public interest to
protect
the litigating public in the form of the clients of the deceased’s
firm, the profession and the deceased’s
firm.
25.
There were
times when the first respondent had legal representation but there
were also times when she stood alone as a lay person.
Allegations
were made by the first respondent against Mr Groenewaldt that he was
conflicted in this matter as he had acted for
the deceased in at
least two matters. It is clear from the first respondent who was not
represented at that time that she regarded
Mr Groenewaldt’s
taking of this case on behalf of the LPC as a personal betrayal by Mr
Groenewaldt.
26.
Mr
Groenewaldt dealt with this contention comprehensively and showed
that the two matters concerned were so far removed from the
facts of
the present case that there could be no question of confidences
entrusted to him being used to the disadvantage of the
first
respondent. Therefore, there was no conflict of interest.
27.
I can
understand that a lay person in these circumstances would feel
personally betrayed and injured. However, on the facts there
is no
basis for me to exercise my discretion to depart from the general
rule on the question of costs.
28.
There were
four postponements in this matter for the most part costs relating to
these postponements were reserved. Having regard
to the order I
intend making on the costs generally, the record of who requested
these postponements and the reasons for such postponements,
there
would be no prejudice to either party if they were simply made costs
in the cause.
29.
In all of
these circumstances, the applicant was substantially successful and
there are no reasonable grounds to depart from the
general rule that
costs should follow the result.
Accordingly,
the following order is made:
1)
The
applicant is awarded costs against the first respondent on the
ordinary party and party scale.
2)
The costs
of the postponements are to be costs in the cause.
Lawrence
Lever
Judge
Northern
Cape Division, Kimberley
I
agree,
P
Tlaletsi
Judge
President
Northern
Cape Division, Kimberley
I
agree,
C
Williams
Judge
Northern
Cape Division, Kimberley
Representation:
For
The Applicant:
Mr
SJ Groenewaldt
Instructed
by:
Towell
and Groenewaldt Attorneys
For
The 1
st
Respondents:
Adv
XP Mthombeni
Instructed
by:
L-M
Attorneys & Partners Inc.
Date
of Hearing:
15
September 2022; 16 November 2022; 08 February 2023; 01 March 2023;
13 April 2023.
Date
of Judgment:
01
March 2024
[1]
Act 71 of 2008.
[2]
1918 AD 63
at 69.
[3]
1959 (4) SA 579
(T) at 579H to 580B.
[4]
Legal Practice Act 28 of 2014
.
[5]
Section 5
of the above Act.