Law Society of the Cape of Good Hope v Nompozolo (624/09) [2009] ZAECGHC 60 (3 September 2009)

9

FORM A

FILING SHEET FOR EASTERN CAPE HIGH COURT, GRAHAMSTOWN JUDGMENT

PARTIES:

THE LAW SOCIETY OF THE CAPE OF GOOD HOPE APPLICANT

and

LINDILE BRIAN NOMPOZOLO RESPONDENT

Registrar: CASE NO: 624/09

Magistrate:

High Court: EASTERN CAPE HIGH COURT, GRAHAMSTOW

DATE HEARD: 27/8/09

DATE DELIVERED: 3/09/09

JUDGE(S): Plasket and Froneman JJ

LEGAL REPRESENTATIVES –

Appearances:

for the Appellant(s)/Applicant: Adv R. Brooks

for the Respondent(s): Adv V. Notshe SC

Instructing attorneys:

Appellant(s)/Applicant(s): Borman and Botha Attorneys

Respondent(s): Milli Attorneys

CASE INFORMATION -

Nature of proceedings : Interdict

IN THE HIGH COURT OF SOUTH AFRICA

(EASTERN CAPE – GRAHAMSTOWN)

CASE NO: 624/09

DATE HEARD: 27/8/09

DATE DELIVERED:3/09/09

NOT REPORTABLE

In the matter between:

THE LAW SOCIETY OF THE CAPE OF GOOD HOPE APPLICANT

LINDILE BRIAN NOMPOZOLO RESPONDENT

______________________________________________________________

The applicant sought an interdict to prevent the respondent from practising as an attorney until the conclusion of an application to strike his name from the roll of attorneys. It was held that the applicant had established that the respondent had misappropriated money from his trust account that belonged to three of his clients. It was held further that the interdict sought by the applicant, although temporary in nature, was final in effect and that the applicant had established the requirements for a final interdict. The relief claimed was granted subject to the applicant being directed to launch its application to strike the name of the respondent from the roll of attorneys within two weeks of taking control of his books.

JUDGMENT

PLASKET J

[1] The applicant -- to which I shall refer as the Law Society – seeks an interdict to prevent the respondent from practicing as an attorney pending the conclusion of an application to strike his name from the roll of attorneys. In addition, the Law Society applies for orders in terms of which the respondent is to: surrender his certificate of enrolment to the Registrar of this court; deliver his books of account, records, files and documents containing information on money received, held, paid or invested in the course of his practice to a curator to be appointed by the court; pay the fees and expenses of the curator as well as those of any person consulted or engaged by the curator; and pay the costs of this application on an attorney and client scale.

[2] Three complaints against the respondent are set out in the founding affidavit deposed to on behalf of the Law Society. They involve large sums of money. The first complainant concerns a claim against the Road Accident Fund (the RAF) on behalf of a Ms Silo in her capacity as guardian of a child. Being unhappy with the services of the respondent, Ms Silo instructed another attorney. This attorney, a Mr Niehaus, wrote to the respondent to inform him that his mandate had been terminated and to ask for the file in the matter. These letters where ignored. When the Law Society became involved, the respondent continued to be uncooperative.

[3] It was then established that, about a year earlier, the RAF had paid two amounts of money into the respondent’s trust account in settlement of Ms Silo’s claim. It paid R1 018 722.80 in respect of damages suffered by the child and R119 500.28 in respect of costs.

[4] From 20 February 2008, when the damages where paid, until 27 February 2008 a number of round figure transfers of money totalling R605 000.00 where made from the trust account into an account reflected as ‘Nmp’. This, the Law Society surmises, is probably a contraction of the respondent’s surname. From 3 July 2008 to 31 July 2008, further round figure transfers totalling R317 000.00 were made from the trust account to the account Nmp.

[5] The Law Society concludes from this:

‘Trust to business transfers may legitimately be made only in respect of amounts actually due to the respondent by his clients, and it is hardly ever that the amount due is a round figure amount. In the applicant’s respectful submission, round figure transfers from the trust banking account to the business account of an attorney are generally a cause for concern as they suggest strongly that the person making them is transferring the monies without first determining the exact amount, if any, that ought to be transferred.

In this case the impression is that the funds were simply plundered by the respondent.’

[6] The second complaint concerns the estate of the late Mr T.T. Somzana. When he died, the respondent was appointed as the representative of the estate by the magistrate, Mdantsane. A total of R254 316.65 was paid into his trust account in May 2002. The complainant, the daughter of the late Mr Somzana, complained that when she demanded payment from the respondent, she received a number of small amounts totalling about R21 000.00. Some of the payments were made by way of cheques drawn on the respondent’s personal bank account. She took the matter up with an attorney, Mr Cocks. In late 2005 the respondent informed Mr Cocks that only R66 000.00 of the capital amount was due to the complainant, the remaining amount of about R188 000.00 being his fees.

[7] When the Law Society was able to inspect the respondent’s books in relation to this complaint, this was the result:

‘On inspection of the ledger it was apparent that the amounts of R23 462.59 and R230 856.65 were received by the respondent during May 2002 and that various round figure debits were reflected. The trust ledger reflected a credit balance of R141 369.24 as at 28 February 2003, whereas his audit report for that period reflected that R7 388.77 was held in his trust account. It was also apparent that the trust ledger reflected a credit balance of R106 733.75 as at 28 February 2004 whereas his audit report for that period reflected that he held R44 967.17 in his trust account. Plainly, a trust shortage existed.’

[8] The third complaint concerned a Ms Bakumeni who had instructed the respondent to act for her in a claim against the RAF. He accepted a settlement of R315 182.00 on 2 October 2006. Despite the amount being paid to the respondent, and despite the respondent undertaking to pay Ms Bakumeni, he never did so. The Law Society, on 5 February 2008, requested information from the respondent’s bank on the balance of his trust account for the period 27 October 2006 (when the RAF transferred the funds to the respondent’s trust account) to 7 November 2006. The result was recorded by the Law Society as follows in the founding affidavit:

’41. On inspection of bank statements of the respondent’s trust account it was apparent that on 2 November 2006 the amount of R315 182.00 was deposited into the trust account with reference “cashfocus 7191728mg/j/03m-7191”. The applicant also noticed that over the period 2 November 2006 to 30 November 2006 the balance in his trust account was reduced to R148 353.41. The applicant was advised that there were no investment accounts held by the respondent. …

42. The applicant was advised telephonically by FNB that the balance in his trust account on 11 February 2008 was a R150 331.31.’

[9] The Law Society concluded that the respondent misappropriated funds of the complainant when her award was deposited in his trust account.

[10] The respondent’s first defence was that the evidence of his misappropriation of the funds that was obtained from back statements

was unlawfully obtained and inadmissible. In addition, he challenged the authority of the deponent to the founding affidavit to institute these proceedings and raised various other allegations of impropriety on the part of the Law Society. When the matter was heard, none of these defences were – wisely, I may add – relied upon.

[11] For the rest, the respondent’s defence is little more than a series of bare denials which do not withstand scrutiny, and which do not in any event raise a genuine dispute of fact.1 It is not necessary for me to deal with the respondent’s denials any further because even on his own version he misappropriated R605 000.00 from his trust account from 20 February to 27 February 2008 in respect of Ms Silo’s complaint, at least two months before he claims to have accounted to her. In any event, he did not and was not able to deny that his bank statements reveal a shortfall in his trust account.

[12] In respect of the Law Society’s conclusion, drawn from the respondent’s bank statements, that there was also a shortfall in

his trust account in respect of the second and third complainants, the respondent simply has no answer: apart from a bald denial of a shortfall in his trust account which flies in the face of the bank statements, he simply offers no explanation.

[13] From the above, I conclude that the Law Society has established that the respondent misappropriated funds from his trust account in all three of the complaints against him. That being so, what remains to be dealt with is the remedy that the Law Society is entitled to.

[14] It was argued by Mr Notshe, who appeared for the respondent, that the interdict sought by the Law Society is an interim interdict and, that being so, the balance of convenience must be considered. Mr Brooks, who appeared for the Law Society, submitted that the interdict was in effect a final, albeit temporary, interdict and that, as a result, the balance of convenience did not have to be considered.

[15] In my view, the interdict sought by the Law Society is a final interdict despite it being temporary in duration: it is final because it is ‘not subject to confirmation or reconsideration by the court’.2 The requirements for a final interdict are well known: an applicant must establish a clear right, an injury that has either been

committed or that is reasonably apprehended and the absence of any other suitable remedy.3

[16] The Law Society acts in the public interest in matters such as this: as the custodian of the ethical standards of the attorneys’ profession, it does not act as a normal litigant but rather places facts before the court when it comes upon unprofessional conduct on the part of an attorney so that the court may exercise its disciplinary powers. The position was set out thus in Solomon v Law Society of Cape of Good Hope:4

‘The Law Society protects the interests of the public in its dealings with attorneys. It does not institute any action or civil suit against the attorney. It merely submits to the court facts which it contends constitutes unprofessional conduct and then leaves the court to determine how it will deal with this officer.’

In Kaplan v Incorporated Law Society, Transvaal,5 Boshoff JP spoke of the Law Society being ‘in the true sense of the word a guardian of the prestige, status and dignity of the profession and the public interest in so far as they are affected by the conduct of members of the profession …’.6

[17] In this matter the clear right involved is the right of the public to be protected from attorneys who misappropriate their clients’ money. I am satisfied, on the basis of the facts that I have found to be proved, that this requirement of an interdict has been established.

[18] I turn now to the second requirement – that of an injury actually committed or reasonably apprehended. I have found above that the Law Society has established that the respondent misappropriated funds in all three of the complaints that it dealt with. From this course of conduct two inferences can be drawn: first, the funds of clients of the respondent other than the three complainant’s are at risk on an ongoing basis; and secondly, the respondent, by misappropriating the complainant’s money, is not a fit and proper person to practice as an attorney.

[19] The third requirement – the absence of any other suitable remedy – has also been established. The Law Society, litigating as it is in the public interest, cannot sue the respondent for damages. That remedy would, in any event, not have the result of ensuring that the respondent is not able to operate his trust account and so would not be able to protect the public. The Law Society is not able to bring an application to strike the name of the respondent from the roll of attorneys until it has taken control of the respondent’s books, as envisaged by paragraph 2.4 of the Notice of Motion. An application to strike the respondent’s name from the roll of attorneys is not, therefore, at this stage a suitable alternative remedy.

[20] In the result, the Law Society has established that it is entitled to an interdict. In my view, however, when the protracted nature of this matter is considered, it is necessary to make the interdict subject to a time limit for two reasons. The first is to ensure that the Law Society does not drag its heels and the second is to ameliorate the impact of the interdict on the respondent who, after all, is prevented from practicing his chosen profession. The interdict will be made subject to the Law Society launching an application to strike the respondent’s name from the roll within two weeks of the curator who will be appointed taking delivery of the respondent’s books of account, records, files and documents as envisaged in paragraph 2.4 of the Notice of Motion or, in the event of a failure to comply therewith, paragraph 2.5 of the Notice of Motion.

[21] Finally, the cost of the numerous postponements must be dealt with. Mr Notshe argued that the costs of one of the postponements – that of 30 July 2009 – should not be borne by the respondent. There is merit in that submission: the Law Society filed its reply late because, due to an administrative bungle in its attorney’s office, it did not realise that the respondent’s answering affidavit had been served on it. Consequently the matter was not able to proceed on 30 July 2009. For the rest, however, the Law Society’s costs must be paid by the respondent.

[22] For the reasons set out above:

An order is granted in terms of paragraphs 1, 2 and 3 of the Notice of Motion.

The applicant is directed to launch its application to strike off the respondent’s name from the roll of attorneys of this court within two weeks of paragraph 2.4 or paragraph 2.5 of the Notice of Motion (as the case may be) being complied with, failing which the interdict shall lapse.

The respondent is ordered to pay the applicant’s costs on the occasions on which this matter was postponed, with the exception of the costs of the postponement of 30 July 2009.

____________________

C. PLASKET

JUDGE OF THE HIGH COURT

I agree:

_________________

J. C. FRONEMAN

APPEARANCES:

For the applicant: Mr R. Brooks instructed by Borman and Botha, Grahamstown.

For the respondent: Mr V. Notshe SC instructed by Milli Attorneys, Grahamstown.

1 Room Hire Co (Pty) Ltd v Jeppe Street Mansions (Pty) Ltd 1949 (3) SA 1155 (T), 1165.

2 Van Winsen, Cilliers and Loots Herbstein and Van Winsen: The Civil Practice of the Supreme Court of South Africa (4 ed) Cape Town, Juta and Co: 1997, 1064; Prest Interlocutory Interdicts Cape Town, Juta and Co: 1993, 64-65. See too Info DB Computers v Newby and another 1996 (1) SA 105 (W), 107A-B.

3 See Setlogelo v Setlogelo 1914 AD 221, 227.

4 1934 AD 401, 409.

5 1981 (2) SA 764 (T).

6 At 781C.