Law Society for the Northern Provinces v Nxumalo (76753/2017) [2020] ZAGPPHC 530 (28 August 2020)

IN THE HIGH COURT OF SOUTH AFRICA

(GAUTENG DIVISION, PRETORIA)

(1) REPORTABLE: NO

(2) OF INTEREST TO OTHER JUDGES: NO

(3) REVISED: YES

28/8/2020

Case Number: 76753/2017

In the matter between:

The Law Society for the Northern Provinces

Applicant

and

Mandia Harold Nxumalo

First Respondent

JUDGMENT

COETZEE AJ (MOLOPA J CONCURRING):

INTRODUCTION

[1] The applicant is the Law Society of the Northern Provinces. The subject matter of this application arose before the Legal Practice Act 28 of 2014 came into effect on 1 November 2018 and is to be dealt with in terms of the Attorneys Act 53 of 1979 (the Act).

[2] Mr Mandia Harold Nxumalo, the respondent in this matter was admitted as an attorney of this Court on 24 October 2004 and his name is still on the roll of attorneys. He is currently practicing as an attorney for his own account and as a single practitioner under the style of Nxumalo (MH) Attorneys in Boksburg.

[3] The applicant therefore applies for striking off the respondent's name from the roll of attorneys of this Court.

ISSUE

[4] The enquiry which the Court must conduct is threefold, namely:

4.4.1 The court must first decide as a matter of fact whether the alleged offending conduct by the attorney has been established.

4.4.2 If the Court is satisfied that the offending conduct has been established, a value judgement is required to decide whether the respondent is not a fit and proper person to practice as an attorney; and

4.4.3 If the Court decides that the he is not a fit and proper person to practice as an attorney, it must decide in the exercise of its discretion within all the circumstances of the case the attorney in question is to be removed from the roll or merely suspended from practice. Ultimately this is a question of degree.

[5] It is trite law that the Court's discretion is based upon the facts before it and for that reason, the facts in question must be proven upon a balance of probabilities. The facts upon which the court's discretion is based should be considered in their totality and each issue must not be considered in isolation.

FACTUAL BACKGROUND

The Rule 70 auditor's report

[6] It is the common cause that, for a period of four years, the respondent had failed to submit on time the required auditor's reports, namely 2014 to 2017 despite annual calls for submission of those reports.

The Disciplinary Enquiry.

[7] On 2 December 2015, the Law Society called the respondent before a disciplinary enquiry which he failed to attend.

The Fidelity Fund Certificate

[8] The respondent practiced without a Fidelity Fund certificate from 1 January 2015. He did not qualify for a Fidelity Fund certificate as he did not submit the auditor's reports which are a prerequisite for the issuing of a Fidelity Fund certificate. The Law Society has conducted two investigations into the respondent's practice. Both investigators have failed to contact the respondent save for when Ms. P Mapfumo eventually made contact with him when he advised her that the trust account was dormant, that he had settled during the relevant period two third-party matters and that the debit balance on the bank statements that he emailed to her reflected a negative balance due to bank charges only.

[9] She advised him to complete an exemption affidavit explaining the factual situation for purposes of granting him an exemption from the audit reports. He indicated that he would complete the affidavit but that never materialised.

Compliance

[10] After the close of pleadings the respondent allegedly filed all outstanding audit reports and paid his membership fees due to the Law Society. However the audit reports were not available to the court.

[11] It is common cause that the audit reports do not show any misappropriation of trust funds. In addition, no complaint has been raised by any client regarding trust funds.

[12] The respondent in his answering affidavit admitted to the failure to submit the annual auditor's reports for the four years and that he practiced without a Fidelity Fund certificate from 1 January 2015.

[13] He attributed his failures to the fact that he was unacquainted with the specific requirements of the Rules and the Act. He was under the mistaken belief that he had complied with the Rules and the Act.

[14] He denied any knowledge of the notification to attend a disciplinary enquiry. There is a dispute as to whether he in fact received the notification which was sent to the address that he provided to the Law Society.

[15] When the investigators appointed by the Law Society attempted to contact him the practice was in-operative at the time.

[16] He has expressed his remorse.

ANALYSIS

[17] The purpose of the Rule 70 auditor's report is to satisfy the law society that an attorney's accounting records are kept in accordance with the provisions of Rule 70 and Rule 39.11 and the Act and further that an attorney handles and administers trust monies entrusted to him by his clients properly and responsibly. A failure to submit these reports therefore constitutes a breach of rule 70 and Rule 39.11.

[18] Having found that the offending conduct has been established the court must make a value judgement to decide whether the respondent is a fit and proper person to practice as an attorney. Furthermore, having regard to all the circumstances of the case, the court proceeds to determine whether the respondent should be removed from the roll or merely suspended from practice for a specified period.

[19] Ultimately this is a question of degree as to whether he should be suspended from practice or removed from the roll[1].

[20] It is helpful to have regard to what the Supreme Court of Appeal held regarding the second and third phases of the enquiry[2]:

"[5] As far as the second leg of the inquiry is concerned, it is well to remember that the Act contemplates that where an attorney is guilty of unprofessional or dishonourable or unworthy conduct different consequences may follow. The nature of the conduct may be such that it establishes that the person is not a fit and proper person to continue to practise. In other instances the conduct may not be that serious and a law society may exercise its disciplinary powers, particularly by imposing a fine or reprimanding the attorney (section 72(2)(a)). This does not, however, mean that a court is powerless if it finds the attorney guilty of unprofessional conduct where such conduct does not make him unfit to continue to practise as an attorney. In such an event the court may discipline the attorney by suspending him from practice with or without

conditions or by reprimanding him: Law Society of the Cape of Good Hope v C 1986 (1J SA 616 (AJ at 638I-639E; Law Society of the Cape of Good Hope v Berrange 2005 (5J SA 160 (C) at 173G-I, [2006] 1 All SA 290 (C) at 302.

[6] As pointed out in Jasat, the third leg is also a matter for the discretion of the court of first instance, and whether a court will adopt the one course or the other depends upon such factors as the nature of the conduct complained of, the extent to which it reflects upon the person'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. It is here where there appears to be some misunderstanding.

[7] First, in deciding on whichever course to follow the court is not first and foremost imposing a penalty. The main consideration is the protection of the public.

[8] Second, logic dictates that if a court finds that someone is not a fit and proper person to continue to practise as an attorney, that person must be removed from the roll. However, the Act contemplates a suspension. This means that removal does not follow as a matter of course. If the court has grounds to assume that after the period of suspension the person will be fit to practise as an attorney in the ordinary course of events it would not remove him from the roll but order an appropriate suspension. In this regard the following must be borne in mind:

"The implications of an unconditional order removing an attorney from the roll for misconduct are serious and far-reaching. Prima facie, the Court which makes such an order visualises that the offender will never again be permitted to practise his profession because ordinarily such an order is not made unless the Court is of the opinion that the misconduct in question is of so serious a nature that it manifests character defects and lack of integrity rendering the person unfit to be on the roll. If such a person should in the years apply for re­ admission, he will be required to satisfy the Court that he is "a completely reformed character" (Ex parte Wilcocks 1920 TPD 243 at 245) and that his "reformation or rehabilitation is, in all the known circumstances, of a permanent nature" (Ex parte Knox 1962(1) SA 778 (N) at 784). The very stringency of the test for re-admission is an index to the degree of gravity of the misconduct which gave rise to disbarment. "

Page 5 of [2007] JOL 22426 (SCA) (lncorporated Law Society, Natal v Roux 1972 (3) SA 146 (N) at 1508-E quoted with approval in Cirota v Law Society Transvaal 1979 (1) SA 172 (A) at 1948-D.) It is seldom, if ever, that a mere suspension from practice for a given period in itself will transform a person who is unfit to practise into one who is fit to practise. Accordingly, as was noted in A v Law Society of the Cape of Good Hope 1989 (1) SA 849 (A) at 852E-G, it is implicit in the Act that any order of suspension must be conditional upon the cause of unfitness being removed. For example, if an attorney is found to be unfit of continuing to practise because of an inability to keep proper books, the conditions of suspension must be such as to deal with the inability. Otherwise the unfit person will return to practice after the period of suspension with the same inability or disability. In other words, the fact that a period of suspension of say 5 years would be a sufficient penalty for the misconduct does not mean that the order of suspension should be 5 years. It could be more to cater for rehabilitation or, if the court is not satisfied that the suspension will rehabilitate the attorney, the court ought to strike him from the roll. An attorney who is the subject of striking application and who wishes a court to consider this lesser option, ought to place the court in the position of formulating appropriate conditions of suspension.

[9] Third, the exercise of this discretion is not bound by rules, and precedents consequently have a limited value. All they do is to indicate how other courts have exercised their discretion in the circumstances of a particular case. Facts are never identical, and the exercise of a discretion need not be the same in similar cases. If a court were bound to follow a precedent in the exercise of its discretion it would mean that the court has no real discretion. (See Naylor v Jansen 2007 (1) SA 16 (SCA) at paragraph21.)"

[21] The respondent by not complying with the Rules and the Act was acting unprofessional. He failed in good time to submit the reports and pay his dues to the applicant. He practiced for four years without a Fidelity Fund Certificate.

[22] The third enquiry is into an appropriate disciplinary outcome. The mere fact that he acted unprofessionally does not mean that removal follows as a matter of course.

[23] The court in KwaZulu-Natal Law Society v Myeza[3] summarised a number of authorities on whether suspension is the appropriate sanction:

"In Moodley's case, in imposing the suspension the court remarked as follows: "The first respondent has demonstrated that he was not fit and proper to practise as an attorney. However, I think too that the facts demonstrate that he has learnt a hard lesson and that there is no reasonable danger of the events recurring. The ultimate professional penalty would, in my view, be too harsh in all the circumstances of the case. A suspension from practice, itself suspended for a period upon appropriate conditions uncoupled with an Order for the repayment tendered, would, in my view constitute sufficient punishment ... "

[30] The decision in Moodley's case did not involve theft. It involved unprofessional conduct in the form of over-reaching in respect of the fee charged. The fee involved was the sum of R150 000 which the attorney in question had undertaken to repay and did in fact repay. In addition, in Moodley's case, despite initially challenging the strike-off application, at the hearing of the matter, the approach of the attorney in question "focused on an acceptance of his wrong doing".

[31] In Botha v Law Society, Northern Provinces the attorney's unprofessional conduct related to contraventions of the Act and the rules made under the Act relating to books of account and trust monies and a failure to give proper attention to his clients' matters. The court endorsed a conservative approach to the sanction, however, emphasised that it was significant that the practitioner had not been found guilty of any conduct involving dishonesty. This led to the conclusion that the conduct was not likely to recur and consequently a suspension was a more appropriate sanction. The court also took into account that the attorney had not practised for his own account for three years prior to the hearing of the appeal.

[32] In Holmes v Law Society of the Cape of Good Hope and another; Law Society of the Cape of Good Hope v Holmes, NC Erasmus J was of the view that the only appropriate sanction was a strike-off. Apart from the practitioner's failure to properly administer trust funds, the court was of the view that the fact that the practitioner had failed to be frank and open in her dealings with the Society and with the court, and deceived the Society and court, was inexcusable and warranted a strike-off. The practitioner had misappropriated funds and used this to pay for personal expenses as well. Similarly in Law

Society, Cape v Peter the court ordered a suspension from practice rather than a strike-off of the practitioner concerned.

[33] In Summerley v Law Society, Northern Provinces there was a shortfall in the attorney's trust account in the sum of R50 000. A trust cheque had also been dishonoured on presentation. The explanation provided by the practitioner was that the cheque was issued on the basis that he had received an assurance from the client that the monies had been transferred into the trust account. The difference in Summerley's decision was that the practitioner had not used the money for himself. In the Peter decision the practitioner was frank and honest and made a full disclosure accepting responsibility for her conduct. The court was of the view that what counted in the practitioners favour was this disclosure, the fact that the transgression occurred in a short period of time and she accepted full responsibility for such conduct, which was limited. The monies had been used to pay for practice expenses. In Law Society of the Northern Provinces v Mabaso the practitioner did not provide a full and frank explanation for the misappropriation of funds and attempted to lay the blame at someone else's door. The court was of the view that as the practitioner failed to take responsibility for his conduct and levelled false accusations against others to mislead the court, such was inconsistent with his duties as an officer of the court and ought to be viewed in an extremely serious light, and consequently, was not a fit and proper person to practise and ordered a strike-off.

[34] Nugent JA in Law Society of Cape of Good Hope v Peter indicated that in deciding on a sanction, the court must consider the character of the practitioner, and the fact that the applicant has a duty to protect the public. In Malan and another v Law Society, Northern Provinces the court was of the view that a practitioner would have to show exceptional circumstances warranting the imposition of a suspension as opposed to a strike-off in matters involving dishonesty." (Footnotes omitted)

[24] The court has regard to the primary purpose to protect the public. The court is not first and foremost there to impose a penalty.

[25] It is evident from the facts of this matter that the respondent's practice was of such a nature that the public theoretically was exposed to risk but in fact such a risk became almost academic as during the related four years, the respondent dealt with two matters wherein trust monies were involved. The respondent has materially complied with Rule 70 that he had failed to follow. In the circumstances there is no indication of any dishonesty on his part.

[26] In light of the above, there is no evidence to suggest that he should never again be permitted to practice his profession because of a character defect and lack of integrity. He appreciates and admits that he neglected his duties towards the Law Society. He is not guilty of dishonesty

[27] A suspension coupled to remedial action should adequately protect the public in future. The respondent pleaded ignorance of the Rules. The Law Society requires of practitioners who wish to practice for their own account to successfully complete a legal practice management course, or such part thereof, as the Law Society may determine[4]. It is appropriate that the respondent must again complete such legal practice management or other course or part thereof as the Law Society may determine for the respondent to be made aware of the provisions of the Act and the Rules that he neglected to comply with.

[28] It is appropriate to suspend the respondent from practice for a period of four months.

COSTS

[29] There is no reason why the respondent should not pay the costs of the application on the tariff as between attorney and client.

ORDER

[30] In the result I make the following order:

1. The respondent is suspended from practicing as an Attorney for his own account, or as a director of a professional company contemplated in Section 23 of the Attorneys Act 53 of 1979, as amended, or as a professional assistant in the employ of an Attorney, or otherwise as a practitioner, for a period of four (4) months from the date of the granting of this order.

2. The respondent must immediately again enroll for and complete such legal practice management or other course, or part thereof, as the Law Society may determine for the respondent to be made aware of the Rules that he neglected to comply with.

3. The respondent is prohibited for the duration of his suspension and such further period as the curator bonis referred to below may determine, to handle or operate his existing trust accounts.

4. There will be further orders in terms of prayers 5, 6, 7, 8, 9 and 10 (10.1- 10.5) of the notice of motion.

5. The respondent is directed to pay the costs of this application on the scale between attorney and client.

HS COETZEE

Acting Judge, Gauteng Division of the High Court of South Africa, Pretoria

I agree

L M MOLOPA-SETHOSA

Judge, Gauteng Division of the High Court of South Africa, Pretoria

Heard on:

7 May 2019

Date of Judgment:

APPEARANCES

On behalf of Applicant:

C Jooste

of Iqbal Mahomed Attorneys

On behalf of Respondent:

Counsel:

Adv. S Nkuna

Instructed by:

Mkhabela Incorporated

[1] Malan & another v Law Society of the Northern Provinces [2008] JOL 22426 (SCA)

[2] Supra paras 5-9

[3] 2016 4 All SA 548 (KZP)

[4] Attorneys Act, No 53 of 1979 section 138 (1) and (2)