Kwazulu-Natal Law Society v Nxumalo (4494/05) [2009] ZAKZDHC 74 (10 December 2009)

IN THE KWAZULU-NATAL HIGH COURT

PIETERMARITZBURG

REPUBLIC OF SOUTH AFRICA CASE NO.4494/05

In the matter between

KWAZULU NATAL LAW SOCIETY Applicant

and

MBONGENI SYDNEY NXUMALO Respondent

J U D G M E N T

Delivered: 10 December 2009

STEWART AJ.

[1] The applicant, which I shall refer to as the Society, seeks an order that the respondent’s name is struck-off the roll of attorneys of this court as well as the usual ancillary relief related thereto. It is no longer in dispute that the respondent is guilty of the misconduct with which he was initially charged. By the time the matter was argued the only issue remaining between the parties was what relief should be granted. In that regard, the respondent contends that it is not appropriate that his name be struck from the roll of attorneys but that after a period of suspension he should be allowed to practise as an attorney but not for his own account until such time as he has satisfied a court that it is appropriate that he be permitted to practise for his own account. He relies on a trilogy of cases, it having been argued on his behalf that his circumstances are similar to the circumstances of the attorneys in each of those cases, namely (in the order in which they were decided): Law Society of the Cape Good Hope v Peter 2009 (2) SA 18 (SCA), Summerley v Law Society, Northern Provinces 2006 (5) SA 613 (SCA) and KwaZulu-Natal Law Society v Mashaba, unreported judgment of this court under case No. 4071/06 delivered on 22 May 2007.

[2] Before dealing with the details of those cases and the extent to which the respondent’s case is similar it is convenient to set out the facts of the present case. The respondent was born in August 1970, which means that he is now 39 years of age. He matriculated at age 18 but due largely to financial difficulties and his home circumstances did not complete his B.Proc until seven years later. He then enrolled for an LLB but was unable to complete that degree due to financial difficulties. In 1998 he commenced looking for employment but without success. Then in 1999 he registered articles of clerkship with his father’s firm in Durban, Sipho Nxumalo & Company.

[3] The respondent completed his articles in 2000 and was admitted as an attorney in March 2001. From then until July 2001 he was employed by the same firm as a professional assistant and from August 2001 he became a director of that firm. From that time the only other director, the respondent’s father, left full-time practice and came into the office only occasionally. Then from the beginning of 2002 Mr Nxumalo, senior, left the practice to take up a full-time position as a magistrate. That left the respondent as the only director of the firm, then called Sipho H. Nxumalo & Son.

[4] The practice that the respondent inherited was almost exclusively a criminal practice. Being the only professional in the practice, the respondent was usually out of the office attending to matters in the various magistrates’ courts in and around the greater Durban area. There were nevertheless the occasional civil matters, and it was one of these in respect of which the respondent’s present troubles arose.

[5] At some time which is not clear from the papers the respondent, or possibly his father before him, was instructed to lodge a claim with the Road Accident Fund on behalf of Ntombizethu Gusta Mlambo. I shall refer to her as the complainant. That matter was ultimately settled with the RAF which agreed to pay R27,000.00 plus a further R2,000.00 as a contribution towards costs. The records show that the amount of R29,000.00 was transferred by the RAF into the firm’s trust account on 30 September 2003. In the days thereafter that amount was used by the respondent for various purposes other than to pay the complainant.

[6] It was common cause that the complainant was assisted in her dealings with the respondent by her daughter, Nozipho Pretty Mlambo. I shall refer to her as Ms Mlambo. In March 2004 she wrote a letter on behalf of the complainant to the Society complaining that the respondent had received a settlement from the RAF and had not paid that to her mother. In an enquiry that was subsequently held by the Society, and to which I shall return, Ms Mlambo explained that over the preceding year or so she had regularly tried to make contact with the respondent and ask him what had become of the claim against the RAF. When she had managed to speak to him she had been told that it was still pending but eventually in frustration she and her mother visited the RAF itself. They were told that a settlement had long since been reached and that the RAF had paid the respondent. It was that information that prompted the complaint to the Society.

[7] In response to the letter of complaint the Society, in accordance with its usual procedure, asked the respondent for an explanation. On 1 June 2004 it received a fax from the respondent’s office which stated that ‘the money has been given to the client and deposited into the client’s account’. The letter was signed on behalf of the respondent by his secretary, Thandeka Mkhize. However, on 17 June 2004 Ms Mlambo deposed to an affidavit in which she stated that the money had not been paid to her mother and that the information received from the respondent’s office was false.

[8] The Society then designated two of its members to investigate. After being put off on a few occasions because of the respondent being ill, they were eventually able to interview him on 7 October 2004. It is worth mentioning that just two weeks before that interview the respondent was suspended from practising as an attorney because he had failed to lodge an audit certificate in respect of his trust account for the 2003/2004 accounting year. When the Society’s investigators interviewed the respondent he told them that the complainant had lent him the money that he had received for her from the RAF. He was unable to produce a written agreement of loan and he was ignorant of the requirement that his client be legally represented in concluding any such transaction with him.

[9] On being confronted with the false letter of 1 June 2004 the respondent said that he had been expecting money from a relative and his secretary had reported to him that the money had been deposited into the complainant’s account. He accepted that the money had not then, or at the time of the interview, been paid to the complainant.

[10] Being unhappy with the respondent’s answers, the Society commenced the present proceedings for the striking-off of the respondent’s name from the roll of attorneys. Three principal complaints against the respondent were relied on. The first was that he had misappropriated the monies for his own purposes without being authorised to do so. The second was that in attending to the complainant’s third party claim he failed to perform his mandate to account to the complainant in writing and was thereby in contravention of one of the Society’s rules. The third was that in response to the complainant’s complaint he had made a false statement, knowing it to be false, to the Society in the letter of 1 June 2004. A rule nisi with interim relief suspending the respondent from practice was issued by the court on 31 August 2005.

[11] In his answering affidavit the respondent stated that he had established a good relationship with Ms Mlambo emanating from the fact that both their fathers’ maternal and paternal families bore the same surname so they took each other to be cousins. He stated that when the RAF deposited the complainant’s compensation into his trust account he phoned Ms Mlambo and informed her that the money had been deposited. He then said that he explained to her that he was seriously ill, was unable to meet his medical bills, needed further treatment but had no money and therefore asked that she lend him money which he would repay when he had fully recovered and was able to work meaningfully. He stated that Ms Mlambo agreed to this but that he did not know that he was supposed to follow certain procedures with regard to borrowing money from a client. He also stated that he had no intention of stealing the complainant’s money which was why he had voluntarily divulged to her that her money had been received from the RAF.

[12] In relation to the letter of 1 June 2004 the respondent stated that when he realised that he was unable to refund the complainant he borrowed money from relatives. One of his relatives agreed to deposit the required sum into his personal account in two days’ time. He then telephoned his secretary and dictated the letter to her telephonically and explained to her that it should be faxed to the Society immediately after the money had been deposited into the complainant’s account. He blamed his secretary for not complying with his instructions and having faxed the letter when the money had not yet been paid.

[13] Moreover, as part of his answering papers the respondent put up an affidavit from his secretary in which she stated that she had received instructions from him telephonically with regard to the letter. She confirmed that the respondent did not instruct her to fax the letter to the Society and she said that the ‘premature faxing of the letter’ was a mistake on her part due to confusion caused by many telephonic instructions all at once.

[14] Before the matter was heard the respondent put up a supplementary affidavit in which he explained that he had repaid the complainant the amount that was owed to her. He also put up an affidavit by Ms Mlambo in which she confirmed that her mother had received payment of R21,000.00 from the respondent and that she no longer had any complaints against him. She said that she supported, if it was possible, that the respondent be disallowed from practising for his own account but that he be allowed to work under another attorney as a professional assistant. It was explained, and was common cause, that the proper amount that had to be paid to the complainant was R21,000.00 after an agreed contingency fee of 25% had been deducted from the amount received from the RAF.

[15] The matter was subsequently adjourned to enable the Society to hold an enquiry to investigate the circumstances of the alleged ‘loan’ from the complainant and to establish the truth or otherwise of the respondent’s version. At the enquiry, which heard evidence on 20 April 2007, the complainant gave evidence. She said that she had not lent the respondent any money and he had never asked to borrow any money from her. She also said that she had never spoken to the respondent and that it was her daughter, Ms Mlambo, who had the discussions with the respondent on her behalf. Her daughter had not made any arrangements with the respondent to lend him money. The complainant however explained that she had subsequently received the money that was due to her from the respondent, although she described it as R11,000.00 and not R21,000.00.

[16] Ms Mlambo also gave evidence at the enquiry. She explained how she had assisted her mother following her mother’s involvement in a motor vehicle accident in 1999 by asking the respondent to represent her in claiming from the RAF. She explained how after having not had a satisfactory answer from the respondent she and her mother eventually decided to go to the RAF and it was then that they learnt that the respondent had already been paid even though he had insisted to her that he had not been paid. She also explained that there was no discussion between her and the respondent in which she had agreed to lend the respondent the money.

[17] Ms Mlambo explained in her evidence the circumstances in which she had come to depose to the affidavit in which she had confirmed receipt of the money from the respondent and in which she had said that she no longer wished that his name be struck from the roll of attorneys. She said that the respondent had asked her to ‘put it on record that we had actually given him authority to use the money’ and that ‘we had actually given him the money’. She had, however, refused to do that. Under pressure she had eventually agreed to sign the affidavit referred to in paragraph 14 above, namely the one in which she confirmed receipt of the money and that she did not ask that his name be struck from the roll of attorneys.

[18] Ms Mlambo explained that the respondent had never contacted her to tell her that money had been received from the RAF. After getting unsatisfactory answers from him she had had to go to the RAF to get that information.

[19] Ms Mkhize, the respondent’s former secretary, also testified. She explained that she had typed the letter of 1 June 2004 on the respondent’s instructions. He had been in the office and had given those instructions to her directly. He said that he was going to go and look for money to pay to the complainant but that in the meanwhile she must send the letter by fax. She said that the affidavit that she had signed in which she had taken responsibility for the letter having been sent in error had been presented to her by the respondent already drafted. She felt that she had to sign the affidavit. The respondent had told her that the falsity in the affidavit was not important, that it was merely to ‘keep up with procedure’ and that if she did not sign it he would never be able to be an attorney again. She felt sorry for him and signed it in response to him pleading to her.

[20] In his evidence the respondent confirmed the written explanation to his plea which he had put up at the outset. That included that there was an agreement between himself and the complainant that he could utilise the money from the RAF and repay it later. He pleaded guilty to the charge that he had failed to account to the complainant. In relation to the letter of 1 June 2004, he said that it was not written by him but by his secretary and he attached the affidavit of Ms Mkhize which he had previously put up in response to the striking-off application. In his oral evidence he said that the agreement with regard to the loan was concluded between him and the complainant herself without Ms Mlambo whom he said was not present. This evidence, of course, is in conflict with his affidavit in the striking-off application.

[21] Between him and his counsel (not the same as counsel who appeared before us) at the enquiry he also tried to drive a wedge between the complainant and her daughter by suggesting that the complainant was the person with whom he usually dealt and that it was the daughter who was causing the trouble. He went so far as to suggest that the daughter had stolen the unaccounted for R10,000.00 from the complainant when it appears that that arose merely from a misunderstanding by the complainant; there was no issue between the complainant and Ms Mlambo about the money and the complainant said that she had been paid everything that was owed to her. The respondent tried to explain away his affidavit in which he had said that his dealings were with Ms Mlambo as a mistake.

[22] It was only after the full transcript of the enquiry was put before the court in the striking-off application that the respondent eventually, and only one month before the matter was to be argued, delivered the supplementary affidavit in which he conceded to the charges against him by the Society. That affidavit raises the following matters which the respondent says are relevant in explaining his offences and in mitigating any order that the court might make:

(1) He stated that at the time of the commission of the ‘misdemeanours’ he was 34 years of age;

(2) He lives with his mother who is a pensioner and who on her pension supports both of them;

(3) He had been left alone to run and manage a very busy criminal practice with practically no experience or knowledge of practice management except for the scanty knowledge that he had acquired during the period in which he was doing his articles of clerkship;

(4) He has been suspended from practice from September 2004 to date (ie more than five years);

(5) It was his naivety and immaturity as an individual and the type, depth, quality and duration of his training and experience that led to the ‘misdemeanours’;

(6) He had also been ill, having suffered from hypertension, which had led to medical bills that had had to be paid and which had led to him being in financially difficult circumstances;

(7) He explained that in 2007 during two separate court sessions he had been invited by his father, then an acting judge, to serve as an assessor in the High Court and he had thereafter served as an assessor for four other judges in six different criminal sessions from which he had learnt ‘a different perspective, not only of life, but of how I viewed the practice of law and how a court official observes, not only the High Court precision, but the integrity and respect officials ought to have and are expected to have in the performance of their duties’.

[23] The members of the Society’s enquiry committee produced a majority and a minority report. It would appear that the minority report disagrees with the majority report only in respect of sanction. The majority report recommends that the respondent’s name be struck off the roll of attorneys whereas the minority report suggests that a recommendation is made that the respondent be suspended from practice for one year and thereafter he be allowed to practise as a professional assistant for two years and should during that time attend a practice management course. The minority report specifically refers to the cases of Peter and Mashaba referred to in the first paragraph of this judgment.

[24] With regard to the evidence the enquiry concluded that the respondent did not give answers in a straightforward manner. He appeared to be tailoring his evidence to suit the facts as he went along, that he was untruthful and that he did not come across as an honest and reliable witness. On the strength of the record of the enquiry all those conclusions appear to be entirely justified and none was attacked before us.

[25] It is now well-settled that in a case such as this the court must embark upon a three-stage enquiry (Jasat v Natal Law Society 2000 (3) SA 44 (SCA) at 51B-I). In the first stage the court must decide whether the alleged offending conduct has been established on a preponderance of probabilities. The second enquiry is whether, as stated in s 22(1)(d) of the Attorneys Act 53 of 1979, the respondent ‘in the discretion of the court’ is not a fit and proper person to continue to practise. The exercise of this discretion involves a weighing up of the conduct complained of against the conduct expected of an attorney and, to this extent, is a value judgment. The third enquiry is whether in all the circumstances the respondent is to be removed from the roll of attorneys or whether an order suspending him from practice for a specified period will suffice. This will depend upon such factors as the nature of the conduct complained of, the extent to which it reflects upon the respondent’s character or shows him to be unworthy to remain in the ranks of an honourable profession, the likelihood or otherwise of a repetition of such conduct and the need to protect the public. Ultimately it is a question of degree.

[26] In this case the respondent has now admitted the offending conduct. It was specifically asked of his counsel whether the consequence of his latest affidavit is that the court must accept that there was no agreement of loan with the complainant or Ms Mlambo and that his evidence on affidavit and to the enquiry was untruthful. His counsel confirmed that we must accept that. Counsel was asked whether we must accept that the letter of 1 June 2004 was a lie for which the respondent was responsible. He said that we must accept that. Counsel was asked whether the result of that is that Ms Mkhize, the secretary, was suborned by the respondent to perjure herself. We were told that we must accept that too.

[27] Indeed, counsel for the respondent had no other choice. It is clear from the record that the complainant, Ms Mlambo and Ms Mkhize had no reason to mislead the enquiry. Their evidence is entirely believable and, making a small allowance for some confusion on the part of the complainant arising from her age and partial literacy, was clear and consistent. The respondent on the other hand was dishonest to the Society when first confronted with the complaint. He was thereafter dishonest in his first two affidavits in response to the application. Moreover, he procured a false affidavit from Ms Mkhize and he endeavoured to procure a false affidavit from Ms Mlambo. Then in the enquiry he was dishonest and he was unfair to the witnesses. His own testimony was inconsistent with what he had stated on previous occasions. That inconsistency clearly arose from his dishonest efforts to exculpate himself. In respect of the first stage of the enquiry, then, there is no doubt that the offending conduct was established on a preponderance of probabilities.

[28] Equally, there is no doubt that the respondent is not a fit and proper person to continue to practise as an attorney. As identified at the outset, the focus of this case is on the third stage of the enquiry, namely what order is most appropriate in the circumstances. In that regard, it was pressed on us in argument that the respondent’s circumstances are similar to those of the attorneys in each of the Peter, Summerley and Mashaba cases. Each of those cases concerned trust account misappropriations. In Peter the offending conduct took place during the first month of the respondent’s practice. In response to the complaint the respondent immediately admitted the problem and asked for leniency. Her approach to the striking-off application that followed was the same.

The majority of the court found that the misappropriation was not as a result of a character defect, but a moral lapse brought about by the pressures on the respondent. The court was satisfied that she was not inherently dishonest, but that she was ‘naïve and immature, lacking in experience and insight’. She was accordingly suspended from practice for one year and prohibited from practising for her own account for a year and thereafter only on satisfying the court that it was appropriate that she be allowed to do so.

[29] In Summerley the appellant had used his trust account for both trust and business purposes, he kept no accounting records or list of creditors, his trust account was often in overdraft and he appropriated trust funds for purposes other than what they were intended for. On the facts of that case the court held that it could not be said that the appellant had acted dishonestly. The general approach, it was said, is that striking-off is reserved for attorneys who have acted dishonestly while transgressions not involving dishonesty are usually visited with a lesser penalty of suspension. The consequence was that the appellant was suspended for one year and thereafter prohibited from practising for his own account for two years, and thereafter only on satisfying the court that it was appropriate for him to do so.

[30] In Mashaba, on being confronted with the complaint the respondent acknowledged the problem and said that it was due to financial mismanagement and she did not intend to deprive the trust creditors of what was theirs. The court was not satisfied that it had been shown that the attorney was not an inherently dishonest person in that she had ‘robbed’ one trust creditor to pay another. However, the court concluded that the case was not markedly different from Peter’s and Summerley’s and therefore ‘reluctantly’ concluded that she should not be struck from the roll. She was suspended for one year and prohibited from practising for her own account for two years and thereafter only on satisfying the court that it was appropriate that she be allowed to do so.

[31] Although the present case has in common with the three cases referred to that the respondent was under pressure, he lacked experience and insight and his bookkeeping was in chaos, the similarities end there. The present case is very far removed from those cases particularly having regard to the respondent’s continued denial, obfuscation and dishonesty in the face of the complaint against him. Indeed, the case is much closer to the case of Jasat (above) where the appellant had not only responded dishonestly to the complaint; he put up several versions to try to avoid the inevitable. He had also suborned another to tell lies to exculpate himself. The appellant in Jasat was struck from the roll of attorneys.

[32] The court exercises supervisory powers over the conduct of attorneys not only in order to discipline and punish errant practitioners but also and, more importantly (particularly in cases like the present one where trust money was misappropriated), in order to protect the public. This is why the possibility of a repetition of the conduct complained of must be taken into account when it comes to deciding upon an appropriate penalty for proven misconduct (The Law Society of the Cape of Good Hope v Budricks 2003 (2) SA 11 (SCA) at 16E-F and Summerley para 19 at 620E-F).

[33] There is no evidence that the respondent properly appreciates the severity of the charges against him and of his misconduct. Indeed, his description of that conduct as ‘misdemeanours’ in his latest affidavit demonstrates that; it comes across as an effort on his part to downplay the severity of the offences rather than to honestly face up to what he has done. But so too does his reliance on the trilogy of cases discussed above. It is a very serious thing to perjure oneself. It is just as serious, if not more so, to suborn another to perjure themselves for one’s own benefit. Those acts are even less forgivable than what they might otherwise be when committed by an attorney who is an officer of the court and a member of an honourable profession which demands ‘complete honesty, reliability and integrity from its members’ (Vassen v Law Society of the Cape of Good Hope [1998] ZASCA 47; 1998 (4) SA 532 (SCA) at 538G). Moreover, it is expected that an attorney will be frank and open in his dealings with the Society and the court in answering the complaints against him (Law Society of the Cape of Good Hope v Holmes 2006 (2) SA 139 (C) at para 149I). Certainly the respondent fails to appreciate that misappropriation of trust monies for his own purposes constitutes theft (Law Society of the Cape of Good Hope v Budricks (above) para 10 at 17D-H).

[34] In those circumstances, this court cannot be assured that the respondent will not commit the same or similar offensive conduct in the future. Indeed, the public and the administration of justice need to be protected from the respondent. It is cold comfort that under the order that he asks for he will be under the supervision of someone else and will not be able to run his own trust account. The court has no way of ensuring that that supervision is proper or adequate and inevitably opportunities, and temptations, for dishonesty will present themselves. The respondent’s pleas of hardship and misfortune do not address or ameliorate the severity of his misconduct. Neither are they proof of his rehabilitation. There is therefore no alternative to the conclusion that the respondent’s name must be struck off the roll of attorneys. I would accordingly confirm the rule nisi issued on 31 August 2005 (which is at pages 80-95 of the papers) save that the third word in paragraph 1.10 thereof should be ‘applicant’ and not ‘respondent’. The respondent should also pay the applicant’s costs on the attorney and client scale including the costs of the enquiry on 20 April 2007.

[35] There is a further aspect to the matter which requires to be mentioned. It is the manner in which the complaint against the respondent was handled by the Society. Although the Society acted about as quickly as might be expected in the initial stages, more than eight months passed from when the Society’s investigators interviewed the respondent and the launch of the present application. Then, it took nearly 17 months from the time that the application was adjourned for an enquiry to be convened to the day when the enquiry heard evidence. It took another 15 months before the enquiry committee’s nine page report was finalised. The transcript of the enquiry and the committee’s report was not sought to be put before the court for another eight months and another seven months passed before the matter came before us.

[36] The result of the delays in the process is that the respondent was under suspension for five years before the matter ultimately came to be argued and, now, decided. That delay was inevitably prejudicial to the respondent because of the continuing uncertainty of his position, and it cannot give the public any confidence that complaints against attorneys are being properly dealt with. In short, the Society needs to find ways to deal with matters such as this with greater expedition and purpose.

[37] Something should also be said about the enquiry itself. The three-person committee did not use a pro-forma prosecutor but instead conducted a part-inquisitorial and part-adversarial procedure whereby the committee members themselves led the evidence of the witnesses who were called to support the charges that were put to the respondent and they cross-examined the respondent after his evidence was led by his counsel. This procedure might have led to the impression that the committee was both prosecutor and fact-finder. Moreover, one is left with the impression from the often long-winded and confusing questions that were asked of the witnesses that members of the enquiry committee had expertise in areas of legal practice other than in examining and cross-examining witnesses. Far clearer and more useful evidence would probably have been elicited if a pro-forma prosecutor, or evidence leader, with experience of court craft had been used. That would also have enabled the members of the committee to retain necessary distance to ensure both the reality and appearance of being dispassionate fact-finders rather than leaving the possible impression that they were prosecutors.

[38] That said, and to recapitulate, I would make the order referred to in paragraph 34 above.

VAN DER REYDEN J: I agree and it is so ordered.

DATE OF HEARING 4 DECEMBER 2009

DATE OF JUDGMENT 10 DECEMBER 2009

APPLICANT’S COUNSEL MR S.M. SHEPSTONE

APPLICANT’S ATTORNEYS JOHN MAJOLA, NXASANA & PARTNERS

c/o NGCOBO POYO INC

RESPONDENT’S COUNSEL MR M.M. MTHEMBU

RESPONDENT’S ATTORNEYS M.B. GUMEDE & ASSOCIATES