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2024
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[2024] ZAFSHC 352
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South African Legal Practice Council v Maree and Others (4309/2024) [2024] ZAFSHC 352 (31 October 2024)
IN
THE HIGH COURT OF SOUTH AFRICA
FREE
STATE DIVISION, BLOEMFONTEIN
Reportable:
NO
Of interest to other
Judges: NO
Circulate to
Magistrates:
NO
Case no: 4309/2024
The
ma
tter between:
THE
SOUTH AFRICAN LEGAL PRACTICE COUNCIL
Applicant
and
CHRISTIAAN
GEORGE FREDERICK MAREE
1
st
Respondent
LUKAS
CORNELIS CRONJE
2
nd
Respondent
MAREE
CRONJE INCORPORATED
rd
Respondent
(Previously
KRUGER VENTER MAREE INCORPORATED
)
(Registration
number 2022/884277/21)
Coram:
JP DAFFUE et S CHESIWE JJ
Heard
:
10 OCTOBER 2024
Order
granted
:
31 OCTOBER 2024
REASONS
HANDED DOWN ON 6 NOVEMBER 2024
The
following order was granted and handed down on 31 October 2024:
1.
The rule
nisi
of 16 August 2024 is confirmed, subject to the
amendment of paragraph 4 of the order which should read as follows:
‘
4.
CHRISTIAAN GEORGE FREDERICK MAREE, the first respondent, is suspended
from the roll
and from the practice of legal practitioners of the
High Court of South Africa pending the outcome of the disciplinary
hearing
against him and the finalisation of investigations into his
conduct as director of the third respondent which hearing and
investigations
shall be concluded on/or before 30 May 2025, failing
which the suspension shall lapse.’
2.
The first, second and third respondents shall,
jointly and severally,
the one to pay the others to be absolved, pay the costs of the main
application on an attorney and client
scale.
3.
The counter-application is dismissed with
costs and all three
respondents (the applicants in the counter-application) shall,
jointly and severally, the one to pay the others
to be absolved, pay
such costs on an attorney and client scale.
4.
The reasons for the order shall be sent to
the parties electronically
in due course.
REASONS
DAFFUE
J (CHESIWE J concurring)
Introduction
[1]
The South African Legal Practice Council (the LPC) brought
an urgent
application in terms of s 43 of the Legal Practice Act 28 of 2014
(the Act) to suspend the first respondent, an attorney
practising
under the name and style of Maree Cronje Inc (the legal practice
cited as third respondent), from the roll of practising
legal
practitioners of the High Court pending the outcome of a disciplinary
hearing, alternatively for such period and on such
conditions as the
court may deem fit. Simultaneously, the LPC sought an order in terms
whereof the aforesaid legal practice be
placed under curatorship, a
curator bonis
be appointed and for the customary relief
usually granted in these instances. The LPC did not seek any order
against the second
respondent and no order was granted against him.
It is common cause that he became a director of the legal practice
recently.
[2]
A rule
nisi
was granted on 16 August 2024 with return date 5
September 2024. In terms thereof the court ruled that paragraphs 3 to
17 of the
notice of motion should operate as
interim
orders
with immediate effect. The costs of the application stood over for
later adjudication. On the return date the rule
nisi
was
extended at the request of the respondents and the application
postponed to 10 October 2024. The respondents were granted an
opportunity to file any papers they deemed fit.
[3]
On 26 September 2024 the respondents filed a so-called
notice of
counter-application together with their answering affidavit to which
the LPC responded on 4 October 2024. The respondents
failed to file
any replying affidavits in their counter-application.
[4]
At the heart of the dispute between the parties is the
first and
second respondents’ right to practise under the name and style
of the aforesaid legal practice without being issued
with the
requisite Fidelity Fund Certificates (FFC’s). More about this
later.
The
parties
[5]
As mentioned, the LPC is the applicant in the application
and the
respondent in the counter-application. Adv MS Mazibuko represented
the applicant in the proceedings before us on instructions
of Amade
and Company Incorporated.
[6]
Mr Christiaan George Frederick Maree, a LPC member who
has been
admitted as attorney more than 30 years ago, is cited as the first
respondent. Mr Lukas Cornelius Cronje, an admitted
attorney and
member of the LPC, is cited as the second respondent. He became Mr
Maree’s co-director in the third respondent
in July 2024.
[7]
The legal practice, to wit Maree Cronje Inc, is a personal
liability
company and firm of attorneys with registered address in Welkom. It
is cited as the third respondent. It was previously
known as
Kruger Venter Maree Inc, but the name was changed on 5 July 2024. All
three respondents were represented before us by
Mr CMD Kruger, an
attorney of Kruger Venter Inc. The heads of argument have been
drafted by Adv S Grobler SC.
[8]
In order to avoid confusion and without any disrespect,
I shall
hereinafter refer to the parties as Maree, Cronje or MCI when
referring to the individual respondents, whilst the applicant
will be
referred to as the LPC.
The
relief sought and granted in the main application
[9]
I do not intend to quote the rule
nisi
issued on 16 August
2024 as it contains the detailed and usual orders granted in
suspension or striking off applications.
[10]
It is sufficient to state the following:
a.
Maree was suspended from the roll and practice
of legal practitioners
pending the outcome of the disciplinary hearing against him;
b.
contrary to what could have been expected,
the court did not delete
the remainder of paragraph 4, being the alternative prayer, to wit
‘for such period and on such
conditions as the Honourable Court
may deem fit'. This aspect shall be considered again herein later;
c.
Maree was further ordered to immediately surrender
and deliver his
certificate of admission as legal practitioner to the registrar; it
was also ordered that Maree would not be entitled
to any fee, reward
or reimbursement in respect of legal services rendered during his
period of suspension or during any period
whilst not being in
possession of a FFC;
d.
Ms M Kwayke was appointed as
curator bonis
to administer and
control the trust account of Maree and MCI, subject to all the orders
contained in paragraphs 8 to 15 of the
court order;
e.
Maree was ordered to pay the costs mentioned
in paragraph 16 and he
was also removed from all official positions in accordance with
paragraph 17 of the order;
f.
the prayers contained in the order
operated as
interim
orders
with immediate effect;
g.
the costs of the application stood over for
later adjudication.
The
history of the litigation
[11]
I
have briefly mentioned the history of the litigation in the
introductory paragraphs. It is apposite to add that on 15 August
2024, the date on which the main application was set down for
hearing, Maree filed an affidavit in support of an application for
a
two weeks’ postponement. He indicated already then that he was
‘more than willing to accede to certain portions of
the relief
sought by the Applicant on an interim basis pending the provision of
the said audit reports …’.
[1]
He also mentioned that MCI had ‘a co-director [Cronje] who
qualifies to conduct its business pending disciplinary proceedings
against me, or at least until its audit reports are finalized.’
[2]
Apparently the proceedings were adjourned until the next day, to wit
16 August 2024. Messrs Mazibuko and Kruger appeared for the
parties
respectively. After hearing them, the court dismissed the application
for postponement and issued the aforesaid rule
nisi
returnable
on 5 September 2024. The respondents failed to file any
answering affidavits. On the return date of 5 September
2024 the rule
nisi
was
extended to 10 October 2024 in order to allow the respondents a
further opportunity to file the papers they deem fit. On that
day Adv
Hendriks appeared on behalf of the respondents.
[12]
I have referred to the ‘notice of counter-application’
which was
accompanied by an answering affidavit to the main
application. Cronje is the deponent of this affidavit, although Maree
filed a
confirmatory affidavit. The LPC filed a notice to oppose the
counter-application and filed what they called a replying affidavit
dealing with the main application as well as the relief sought in the
counter-application. The respondents failed to file a replying
affidavit in the counter-application. During oral argument Mr Kruger
specifically forfeited the right to apply for a postponement
and to
file such an affidavit. I must say that it was quite disturbing to
receive a so-called supplementary affidavit by one Andrea
Nel after
the roll was already closed and heads of argument had to be filed
already. The respondents failed to apply for consent
to file this
affidavit as well as the confirmatory affidavit of one Heiriss, an
accountant. Although we were entitled to ignore
these documents, it
may be mentioned that Nel tried to persuade us that there was no
trust deficit as found in the auditor’s
report. Let it be said
that there is no reason why the information contained in the two
affidavits should be considered for purposes
of the adjudication of
the present dispute between the parties.
[13]
The respondents sought the following orders in their
counter-application:
‘
1.
That this counter application be enrolled as one that is urgent and
dispensing with
the ordinary rules as to notice, form and service to
allow the matter to be heard urgently in terms of Uniform Rule 6(12)
of the
Rules of Court.
2.
That the Respondent in reconvention’s decision to refuse to
register the
Third Applicant in reconvention as a trust account
practice, taken on 4 September 2024 be reviewed, set aside and
substituted with
the following:
“
The Respondent in
reconvention is directed to register the Third Applicant in
reconvention as trust account practice”.
3.
That the Respondent in reconvention Register the First- and Second-
Applicants
in reconvention as practising legal practitioners under
the Third Applicant in reconvention to enable them to apply for the
issuing
of Fidelity Fund Certificates in the prescribed manner.
4.
That upon receipt of a valid Fidelity Fund Certificate, the Second
Respondent
(sic) in reconvention be directed to administer and
control the trust account of the Third Applicant in reconvention in
terms of
Section 90(2) of the Act 28 of 2014.
5.
That the Respondent in reconvention be ordered to pay the costs of
the Counter
application on the scale as between attorney and own
client.’
The
material common cause facts
[14]
Several facts are common cause, to wit:
a.
Maree is prepared to remain suspended pending
finalisation of the
disciplinary hearing to be instituted against him by the LPC. The
consequence of this concession is that it
is really unnecessary to
deal during the evaluation of the evidence and the submissions in any
detail with the main application,
save for the timeline that should
be addressed. This concession was also made in paragraph 1.2 of the
respondents’ heads
of argument drafted by their counsel, Adv S
Grobler SC;
b.
Mr Grobler also conceded in his heads of argument
that the placement
of MCI under curatorship should remain ‘at least until an FFC
has been issued to the Second Respondent
[Cronje]’;
c.
neither Maree, nor Cronje is in possession
of a FFC and as conceded
by Mr Grobler, MCI is
de facto
not registered and therefore,
trust monies kept by it shall be administered as provided for in the
court order;
d.
the name of the legal practice, Kruger Venter
Maree Inc, was changed
on 5 July 2024 to Maree Cronje Inc (MCI);
e.
Maree was initially and till the end of June
2024 the only director
of the legal practice, but on 12 July 2024 Cronje joined him as
co-director;
f.
Maree opened his legal practice
under the name and style of Kruger
Venter Maree Inc on 1 March 2023 without informing the LPC hereof and
also without complying
with the requisites of the Act;
g.
some nine months later he reported this to
the LPC at which stage he
was still not in possession of an FFC, he having been issued for the
last time with a FFC in November
2016 for the 2017 year;
h.
notwithstanding the non-compliance by Maree
or Kruger Venter Maree
Inc, Cronje decided to join MCI (previously known as Kruger Venter
Maree Inc);
i.
Maree’s legal practice received
considerable trust funds since
opening of the practice on 1 March 2023 and on 8 January 2024 it held
trust funds in excess of R8
million;
j.
Maree already appeared before
the LPC’s investigation committee
– Cronje attended him and is well aware of the investigation -
and no doubt
the matter will be escalated to its disciplinary
committee, bearing in mind the alleged and even admitted
transgressions;
k.
Maree has been practising without a FFC since
March 2023 in
contravention of s 84 of the Act and this contravention of the Act
makes him liable for criminal prosecution in terms
of s 93(8);
l.
it is apparent that fees have
been debited for professional legal
work done since the opening of Maree’s legal practice on 1
March 2023 which neither he,
nor the legal practice was entitled to
do, bearing in mind the provisions of the Act;
m.
an audit report was obtained which expressed a qualified
audit
opinion,
inter alia
that the respondents were not FICA
compliant and that the balances of trust creditors exceeded the funds
held in the trust bank
account;
n.
there were trust debits or trust shortfalls
on at least two
occasions, to wit on 31 May 2023 and 29 February 2024 in the amounts
of R26 435.05 and R53 355.14 respectively;
o.
Mr Cronje has a clear option: if he wants
to practise as an attorney
for his own account, he may register an entirely new legal practice
unrelated to the misconduct under
consideration and apply for a FFC,
but he is apparently not interested to do so;
p.
the
LPC took a decision on 2 September 2024, stating that MCI as a trust
account practice was under curatorship
[3]
and ‘resolved that in order to be issued with a Fidelity Fund
Certificate (FCC) your client [Cronje] must comply with the
registration of his law firm by submitting the following documents on
the proposed letterhead of the firm: …’ It continued:
‘
Please further
note that your client:
·
cannot be issued with
a FFC for the entity currently under
curatorship
·
Nor can he operate
with the trust account with account number ABSA
4107407941 [the MCI trust account]
However, when your client
submits his registration documents as set out above, the Council will
consider his application to issue
an FFC.’
Evaluation
of the evidence and the submissions
[15]
Before embarking on an evaluation of the evidence, it is apposite to
refer
to s 43 of the Act and relevant authority. The section reads as
follows:
‘
Despite
the provisions of this Chapter, if upon considering a complaint, a
disciplinary body is satisfied that a legal practitioner
has
misappropriated trust monies or is guilty of other serious
misconduct, it must inform the Council thereof with the view to
the
Council instituting urgent legal proceedings in the High Court to
suspend the legal practitioner from practice and to obtain
alternative interim relief.’
Obviously,
the LPC will not be entitled to relief in terms of s 43 if it as the
guardian of morals of the legal profession does
not place sufficient
evidence before the court to show that the misappropriation of trust
monies has taken place, or that the practitioner
is guilty of other
serious misconduct.
[16]
I
have taken note of the judgment of the
Supreme
Court of Appeal in
South
African Legal Practice Council v Mokhele (Mokhele).
[4]
The
court failed to provide guidance on the interpretation of s 43 as
requested by the LPC insofar as there are some differences
of opinion
in the various High Courts pertaining to the applicability of the
section
.
Mokhele
was
delivered on 14 December 2023 and therefore five months after
Limpopo
Provincial Council of the South African Legal Practice Council v
Chueu Incorporated Attorneys and Others (Chueu).
[5]
The failure of the court in
Mokhele
to
come to a decision on s 43 is neither here, nor there. In
Chueu
the
same court made it clear that what was required from the LPC in s 43
proceedings is that ‘sufficient facts have been shown
to
justify an
interim
suspension.’
[6]
[17]
An issue that should have been considered upfront was the wording of
paragraph
4 of the order of 16 August 2024. Clearly, the court
followed the wording of the notice of motion and did not consider the
alternative
contained in the paragraph. As the order read,
uncertainty was created. In any event, the LPC should not be allowed
to take years,
or unnecessary time, to finalise the disciplinary
hearing and/or investigations which may eventually be to the
detriment of the
first respondent who has been admitted as an
attorney more than 30 years ago. Save for the present transgressions
dealt with in
the application, there is no averment that Maree has
committed transgressions in the past. If it was the case, I would
have expected
the LPC to inform the court accordingly.
[18]
The LPC has been informed about the irregularities several
months ago
and had an opportunity to conduct a proper investigation.
In any event, a period of two and a half months has passed since the
granting of the order on 16 August 2024 and the appointment of the
curator bonis
. I accepted that we were nearing the festive
season and several activities would be scaled down. Having considered
that, there
was no reason why the LPC should not be required to
finalise the first respondent’s disciplinary hearing and its
investigations
on/or before 30 May 2025. They should not be heard to
say that no time constraints should be placed on them. Time is really
of
the essence, bearing in mind the interests of the public, but also
that of Maree and to a minor extent, that of Cronje and their
company.
[19]
It must be emphasised that the enquiry at this stage of the
proceedings was
not whether Maree was fit and proper to practise.
This will be considered only when final relief might be sought
eventually. All
that was necessary at this stage was whether
sufficient facts had been shown to justify confirmation of the rule
nisi
. Our task was alleviated insofar as Maree did not oppose
his suspension in the
interim
.
[20]
It is apposite to refer to the
following sections of the Act applicable in these instances. Section
84(1), (2) and (3) stipulates
as follows:
‘
(1) Every attorney
or any advocate referred to in section 34 (2)
(b)
,
other than a legal practitioner in the full-time employ of the South
African Human Rights Commission or the State as a state attorney
or
state advocate and who practises or is deemed to practise-
(a)
for
his or her own account either alone or in partnership; or
(b)
as
a director of a practice which is a juristic entity,
must be in possession of
a Fidelity Fund certificate.
(2) No legal practitioner
referred to in subsection (1) or person employed or supervised by
that legal practitioner may receive
or hold funds or property
belonging to any person unless the legal practitioner concerned is in
possession of a Fidelity Fund certificate.
(3) The provisions of
subsections (1) and (2) apply to a deposit taken on account of fees
or disbursements in respect of legal services
to be rendered.’
Section 93(8) is apposite
in casu.
It reads as follows:
‘
(8) Any person who
contravenes section 84 (1) or (2) or section 34, in rendering legal
services-
(a)
commits
an offence and is liable on conviction to a fine or to imprisonment
for a period not exceeding two years
or to both such fine and
imprisonment;
(b)
is
on conviction liable to be struck off the Roll; and
(c)
is
not entitled to any fee, reward or reimbursement in respect of the
legal services rendered.’
[21]
Maree collected over R8 million from clients by January 2024 which
monies were
deposited into the trust account of the legal practice
which practice failed to keep proper accounting records
ex facie
the admitted audit report, but it was not necessary to dwell too much
into this. More importantly, s 93(8) clearly stipulates that
any
person who contravenes s 84(1) or s 84(2) in rendering legal services
commits an offence and is liable on conviction to a fine
or to
imprisonment for a period not exceeding two years, or to both such
fine and imprisonment. Upon conviction the practitioner
is also
liable to be struck off the roll of legal practitioners. It is also
important to appreciate that such practitioner is not
entitled to any
fee, reward or reimbursement in respect of the legal services
rendered.
[22]
LPC rules 54.29 and 54.30 were also considered. Rule 54.29 provides:
‘
In order to
qualify for the issue of a Fidelity Fund certificate, a trust account
practitioner must ensure that an unqualified audit
or inspector’s
report is issued in respect of any firm or firms of which he or she
is or was a partner or director or sole
practitioner during the
financial period under review, and is delivered timeously to the
Society.’
Rule
54.30 reads as follows:
‘
Where the audit or
inspector’s report in respect of the trust account of the firm
is qualified by the auditor or inspector,
as the case may be, the
firm shall provide the Council with such information as the Council
may require to satisfy itself that
the firm’s trust account is
in good order, that the trust account practitioner remains fit and
proper to continue to practise
and that Fidelity Fund certificates
may be issued to the members of the firm.’
The objective facts were
clear. Neither Maree, nor Cronje could be heard to say that MCI had
provided the LPC with an unqualified
audit. However, even in the case
of a qualified audit, a trust account practitioner may be able to
satisfy the LPC that the firm/company’s
trust account is in
good order. MCI is under curatorship and the investigations should be
allowed to continue. Neither of these
two practitioners may claim at
this stage that FFC’s may be issued to them as members of MCI.
It is not for this court to
prescribe or suggest what the LPC may do
if Cronje establishes a new firm and then apply for an FFC.
[23]
I was not prepared to close my eyes for the illegalities committed,
but my
particular concern was the interests of the public who
entrusted monies to MCI or any of the other respondents in the belief
that
they were properly safeguarded. Section 55 of the Act deals with
the liability of the Legal Practitioners’ Fidelity Fund.
It reads as follows:
‘
(1) The Fund is
liable to reimburse persons who suffer pecuniary loss, not exceeding
the amount determined by the Minister
from time to time by
notice in the
Gazette
,
as a result of theft of any money or other property given in trust to
a trust account practice in the course of the practice of
the
attorney or an advocate referred to in section 34 (2)
(b)
as
such, if the theft is committed-
(a)
by
an attorney in that practice or advocate, or any person employed by
that practice or supervised by that attorney
or advocate;
(b)
by
an attorney or person acting as executor or administrator in the
estate of a deceased person; or
(c)
by
an attorney or person employed by that attorney who is a trustee in
an insolvent estate or in any other similar
capacity,
excluding
a curator to a financial institution in terms of the Banks Act, 1990
(
Act
94 of 1990
)
or a liquidator of a mutual bank in terms of the Mutual Banks Act,
1993 (
Act
124 of 1993
).’
[24]
‘Trust account practice’ is defined in s 1 of the Act as
follows:
‘“
trust
account practice”
means
a practice conducted by-
(a)
one
or more attorneys who are; or
(b)
an
advocate referred to in section 34 (2)
(b)
who is,
in terms of this Act, required to hold a Fidelity Fund certificate.’
[25]
The
legislature was fully aware of risks involved in depositing monies
into a legal practitioner’s trust account. Section
55 is an
attempt by the legislature, as was the case with its predecessor, s
26 of the Attorneys Act 53 of 1979, to protect the
persons or
entities on whose behalf monies are entrusted.
[7]
[26]
In
Law
Society of the Northern Provinces v Morobadi
[8]
the
Supreme Court of appeal severely criticised the failure by the High
Court to consider the interests of the public notwithstanding
the
particular legal practitioner’s admitted misconduct. It
inter
alia
held
that the respondent should be suspended from practice as an
interim
measure
pending a disciplinary enquiry concerning his professional conduct
which enquiry had to be instituted and finalised within
three months
from the date of the judgment.
[9]
[27]
The
legal practitioners for the parties made interesting, but irrelevant,
submissions in their heads of argument in respect of the
nature of
the LPC’s decision of 2 September 2024 communicated on 4
September 2024.
[10]
Mr
Mazibuko submitted that this decision did ‘not reflect a
positive decision … regarding the registration of the
Third
Respondent [MCI].’ According to him the respondents’
‘complaint should be centred around the Applicant’s
failure to take a decision.’ This prompted Mr Grobler to submit
that on the LPC’s version it acted unlawfully and that
it was
guilty of unfair administrative action. He submitted furthermore that
if the LPC did not decide upon the application for
registration of
MCI, this amounted to a failure to take a decision which was in any
event reviewable.
[11]
Mr
Mazibuko countered the argument in submitting that the respondents
brought the LPC to court in the counter-application based
on its
alleged decision to refuse to register MCI and not for failing to
take a decision. It was not necessary to enter into this
debate which
might be of academic value only. Firstly, there was no proof that MCI
applied to be registered
ex
facie
the
application papers and that the decision of 2 September 2024 was in
response to such application. Secondly, the LPC was concerned
with
Cronje’s alleged entitlement to an FFC in order to practise
under the name of MCI and thus be allowed to administer
and control
the trust account of MCI whilst it was under curatorship. The relief
claimed in the counter-application could not be
granted for the
reasons advanced herein.
[28]
As was the case in
Chueu
and pointed out in paragraph 33 of
that judgment, the LPC with its far-reaching powers in taking control
of MCI’s trust account
and all accounting records should have
done most of its investigative work by now. It has already taken over
all the files and
should have investigated most of them by now. The
matter cannot be allowed to carry on indefinitely. Therefore, an
amendment of
the rule
nisi
in respect of paragraph 4 was
called for as suggested herein. It is expected that experienced and
properly trained personnel had
been appointed by the
curator bonis
to ensure that the curatorship is terminated sooner than later.
[29]
The
following should be born in mind. It is no defence at all for an
attorney to explain trust deficits or any other irregularities
on the
grounds that they had no involvement in the financial affairs of the
firm or company as clearly enunciated in
Hepple
v Law Society of the Northern Provinces (Hepple).
[12]
A
legal practitioner should not be heard to say that they have
abdicated their responsibilities in favour of their co-directors
or
co-partners. More recently, the Supreme Court of Appeal put the
record straight in
Chueu
[13]
in
the following words, also relying on
Hepple
:
‘
Every
director has a fiduciary duty towards the company of which it is a
director. To plead ignorance of financial matters, when
faced with
allegations of misappropriation, does not absolve a director. It has
been emphasised over the years that legal practitioners
cannot escape
liability by contending that they had no responsibility for the
keeping of the books of account or the control and
administration of
the trust account. …’
(footnotes
omitted)
[30]
Having
referred to the liability of all partners or directors in a legal
practice, Cronje, and to a lesser extent Maree, should
be warned to
heed the following two
dicta
of
the Supreme Court of Appeal that have been cited with approval
several times. In
Hepple
[14]
the
court pointed out that these kinds of proceedings are
sui
generis
and
are of a disciplinary nature. The duty resting on an attorney is the
following:
‘
It
follows therefore that where allegations and evidence are presented
against an attorney they cannot be met with mere denials
by the
attorney concerned. If allegations are made by the law society and
underlying documents are provided which form the basis
of the
allegations, they cannot simply be brushed aside; the attorneys are
expected to respond meaningfully to them and to furnish
a proper
explanation of the financial discrepancies as their failure to do so
may count against them.’
[31]
It
was my firm view that the LPC ought to be kept to its task to act
speedily as confirmed in
Chueu.
I
quote:
[15]
‘
Interim
applications for the suspension of a legal practitioner pending an
investigation are generally undesirable if the suspension
sought is
for a lengthy period. Such applications should be launched only where
there is no other means of safeguarding the public
from the alleged
malfeasance of a legal practitioner. An interim order for suspension
has a very grave impact on the professional
life of a legal
practitioner, who would nonetheless be severely prejudiced if
exonerated at the end of an investigation by the
LPC.’
[32]
I
would have failed in my duty if I did not mention the respondents’
attitude. They attacked the LPC and its officials in
numerous letters
serving before the court as well as in the answering affidavit. Mr
Kruger on their behalf even submitted during
oral argument that the
LPC ‘had hijacked’ the legal practice in having it placed
under curatorship. In acting as they
did, the respondent failed to
heed the warnings of the Supreme Court of Appeal. In
Malan
and Another v Law Society of the Northern Provinces
(
Malan)
[16]
Harms
ADP remarked as follows:
‘…
Furthermore,
instead of dealing with the merits of the allegations, the appellants
conducted a paper war and they attacked the Society
and its officers,
they attacked the Fidelity Fund and they attacked the attorneys who
had to take over their files – in short,
their approach on the
papers was obstructionist.
[28] These factors are
‘aggravating’ and not extenuating because they manifest
character defects, a lack of integrity,
a lack of judgment and a lack
of insight. …’
[33]
Harms
ADP went further and observed in
Law
Society of the Northern Provinces v Mogami
[17]
that it had become a common occurrence for persons accused of
wrongdoing to accuse the accuser and seek to break down the
institution
involved instead of properly confronting their
allegations. He emphasised that courts should not
countenance
such a strategy.
[34]
No doubt, the respondents embarked
upon a paper war as is apparent from the application papers by
writing the one detailed letter
after the other, whilst there was no
substance in their allegations. They are wrong and they should know
that. The Act prohibits
them from practising without FFCs and
furthermore, in doing so they may be convicted of crimes. The
interests of the community
at large and their clients in particular
are to be considered. Members of the public entrusting their monies
to an attorney practising
without a FFC are not safeguarded in the
event of misappropriation of those monies. They will not be refunded
by the Legal Practitioners’
Fidelity Fund in the case of theft
and/or misappropriation of the monies so entrusted.
[35]
Cronje was of the view that he ought to be allowed to practise as a
legal practitioner
of MCI, which is under curatorship, to enable him
to apply for the issuing of a FFC. Therefore, so he submitted, on
receipt of
a FFC he would be entitled to administer and control the
trust account of MCI, apparently not understanding that it is still
under
curatorship. He believes that s 90(2) of the Act provides the
mechanism for him to act accordingly. He is totally misguided.
Section
90(2) reads as follows:
‘
Where the legal
practitioner contemplated in subsection (1) is an attorney and was
practising in partnership or as a member of a
company with another
attorney or attorneys, the court must allow the trust account to
remain under the control of the remaining
partners or members, unless
there is good reason not to do so.’
Clearly, s 90(1) is
applicable. Maree has been suspended from practice temporarily and a
curator bonis
has been appointed to control and administer
MCI’s trust account. This is clearly not a case where, for
example, the one partner
of a firm, or director of a company,
misappropriated money and is then immediately caught out by the other
partners or directors
who then put the evidence before the LPC to
enable them to either apply for the striking off or suspension of the
guilty partner/director.
In such an instance, the remaining
partners/directors may be allowed to continue with the management of
the trust account in appropriate
circumstance.
[36]
Cronje’s affidavit in support of the counter-application is
devoid of
the correct facts. The correspondence clearly indicated
that Maree never informed the LPC in January 2024 of MCI’s
existence
as alleged. The name change occurred in July 2024 only. It
is also not correct that Maree paid fees to the LPC to support the
registration
of MCI as stated. Clearly, Maree paid his own arrear
membership fees due and payable as legal practitioner which had
nothing to
do with MCI. Furthermore, Cronje accompanied Maree to the
meeting with the Investigation Committee of the LPC on 27 June 2024.
He was well aware of the investigations, but decided to become a
director in July 2024 when the name change of the legal practice
was
effected.
[37]
Cronje
was of the opinion that he might obtain a FFC by operating MCI. This
he made clear during his conversations with officials
of the LPC.
[18]
One Christelle of the LPC made it clear, as indicated in the
transcription placed before us,
[19]
that MCI could not be registered if the director (Maree) was
suspended, but that it would be a different scenario if the legal
practice had already been registered and one of its directors was
suspended which may allow the remaining director to continue
(probably referring to the provisions of s 90(2) of the Act). Cronje
conceded that the LPC conveyed a decision to him on 4 September
2024
(on his version without reasons) to the effect that ‘I can only
obtain an FFC, if I establish a new legal entity, the
reason now
being that MCI is under curatorship.’ The LPC’s letter of
4 September 2024 is clear and unambiguous. I quoted
it above.
[20]
Surely, Cronje cannot be allowed to take over the management of MCI
and the control of its trust account when investigations are
being
conducted whilst the practice is under curatorship.
[38]
On
6 August 2024 Cronje went so far to inform the LPC as follows:
[21]
‘
It also only came
to my attention today that there is an application to suspend my
partner, Mr Maree, for alleged misconduct. It
is then a matter of
utmost importance that I, myself, obtain a Fidelity Fund Certificate
so that I can continue to operate the
firm
while
my partner deals with the above-mentioned application
.’
[39]
Cronje
at all costs wants to get his hands on the trust account of MCI which
is under curatorship and does not want to understand
that he is not
legally entitled thereto, at least until termination of the
curatorship as provided for in paragraph 15 of the court
order. It is
apparent that the LPC provided reasons in their letter and this was
again emphasised in the replying affidavit.
[22]
[40]
Mr
Cronje’s
bona
fides
should
be questioned as clearly indicated by the LPC. On his version there
is ‘absolutely no allegation of misconduct in the
form of
misappropriation of trust funds, professional negligence or the like
against the respondents.’ This is false. The
qualified audit
report is damming.
[23]
It is
confirmed that the legal practice was not registered in terms of the
Financial Intelligence Centre Act 38 of 2001 (it was
not FICA
compliant), that it did not maintain the necessary accounting records
as required by the Act and its rules,
inter
alia
,
also insofar as trust accounts have not been updated and balanced
monthly. Several transactions could not be supported by adequate
supporting documentation and as mentioned earlier, trust deficits
were found on 31 May 2023 and 29 February 2024. Furthermore,
fees
were charged and debited whilst Maree as sole director was not in
possession of a FFC.
[41]
The LPC acted appropriately. Its decision is not open to any attack
whatsoever.
No case whatsoever has been made out in the
counter-application for review in terms of the
Promotion
of Administrative Justice Act
3 of 2000
, or on any other
basis. There is just no justifiable reason why Cronje should be
allowed to control and manage MCI’s trust
account while it is
under curatorship, and more importantly, to rely on MCI’s
existence to obtain a FFC. The counter-application
is indeed
stillborn and should be dismissed with costs.
[42]
Mr
Grobler attached the recent judgment of Cloete J, concurred in by
Binns-Ward J, in
SA
Legal Practice Council v Louw (Louw)
[24]
to his heads of argument in support of his submission that the rule
nisi
might
be confirmed as Maree needed to be subjected to a disciplinary
hearing, but that nothing stood in the way of the LPC issuing
a FFC
to Cronje as it only needed to perform a mere ‘mechanical
administrative act.’
[25]
Louw
must
be considered in perspective. It is totally distinguishable on the
facts. Mr Louw was a sole practitioner. His bookkeeper stole
trust
monies in excess of R4 million which he detected and reported to the
LPC. He was cleared of dishonesty by an Investigating
Committee of
the LPC, but was nonetheless suspended from practice pending
disciplinary proceedings against him arising from the
same facts. The
LPC declined to issue a FFC to Louw until he has paid into trust the
monies stolen by his dishonest former employee.
Having acknowledged
the statutory requirement prescribed by s 84 of the Act, the court
ordered Louw to apply in terms of s 85 for
a FFC. Leave was also
granted to him to apply to the High Court for an order compelling the
LPC to issue a FFC in the event of
the LPC failing to comply.
Conclusion
[43]
I concluded that the rule
nisi
ought to be confirmed, subject
to the amendment of paragraph 4 thereof as is reflected in the order.
The costs of the main application
stood over for later adjudication.
There was no reason why the respondents should not pay the costs of
the main application, jointly
and severally, the one to pay the
others to be absolved, on the scale as between attorney and client.
As mentioned, there was no
merit in the counter-application which was
dismissed with costs on the same basis as above. Consequently, the
order as set out
above has been issued and handed down.
JP
DAFFUE J
I
concur
S
CHESIWE J
Appearances
For
appellant:
Adv
MS Mazibuko
Instructed
by:
Amade
& Company Inc
Bloemfontein
For
respondent:
Mr
CDM Kruger (the heads of argument were drafted by Adv S
Grobler
SC)
Instructed
by:
Kruger
Venter Inc
Bloemfontein
[1]
Record: p 344 par 9.4 of his affidavit.
[2]
Record: p 344 para 9.6 of his affidavit.
[3]
Counter-application: annexure RA5 p 198-199.
[4]
(1138/2022)
[2023]
ZASCA 177
(14
December 2023).
[5]
(459/22)
[2023] ZASCA 112
(26 July 2023).
[6]
Ibid
para
29.
[7]
Legal
Practitioners’ Fidelity Fund v
Guilherme
(702/2022)
[2023] ZASCA 96
(13 June 2023); 2023 (5) (SA) 409 (SCA).
[8]
(1151/2017)
[2018]
ZASCA 185
(11
December 2018) paras 36&38.
[9]
Ibid
para
43.
[10]
Counter-application: annexure RA5 pp 198 & 199.
[11]
Reliance was placed on
s 6(2)(g)
of the
Promotion of Administrative
Justice Act 3 of 2000
, read with
s 6(3).
[12]
[2014] ZASCA 75
[2014] 3 All SA 408
SCA para 21; see also
Law
Society of the Northern Provinces v Viljoen
2011
(2) SA 327
(SCA) para 10 where the court confirmed that any legal
practitioner who practises on his own account or in partnership (or
in
a company) without a FFC is committing professional misconduct.
[13]
Chueu
loc
cit
para
26.
[14]
Hepple
l
oc
cit
para
9.
[15]
Ibid
para
32.
[16]
[2008]
ZASCA 90
;
2009
(1) SA 216
(SCA)
[2008] ZASCA 90
; ;
[2009]
1 All SA 133
(SCA)
paras
27-28.
[17]
2010 (1) SA 186
(SCA) at para 26.
[18]
Counter-application: p 20, para 29 read with annexures LC28 &
LC29.
[19]
Counter-application:
annexure WC 27 to the answering affidavit, p 106.
[20]
Counter-application: p 198, annexure RA5.
[21]
Counter-application: p 200, annexure RA6.
[22]
Counter-application: p 170, paras 26-35.
[23]
Counter-application: annexure LC30, pp 112-132, being the letter of
Kruger Venter Maree Inc to the LPC, indicating the trust
shortages
on p 116 and attached thereto the qualified audit report with
particular reference to the transgressions referred to
on p 120.
[24]
(10606/2023)
[2024] ZAWCHC 80
(20 March 2024).
[25]
Footnote 16 of Mr Grobler’s heads of argument. For the record,
Mr Grobler made the following submissions in his heads of
argument
to conclude his submissions: ‘Conclusion: 4.1 The rule nisi
concerning Mr Maree can be confirmed. He needs to
be subjected to a
disciplinary hearing. 4.2 The Third Respondent is to be put under
curatorship, with the proviso that the LPC
must be ordered to within
10 days from the date of this order, either register the Third
Respondent as a new practice (as substitutory
relief), or it must be
finally decided on the application for registration. The application
for FFC’s may follow from there.’