Law Society of the Cape of Good Hope v Vabaza (259/2007) [2007] ZAECHC 125 (18 October 2007)

IN THE HIGH COURT OF SOUTH AFRICA

(EASTERN CAPE DIVISION)

Case No: 259/2007

In the matter between:

THE LAW SOCIETY OF THE CAPE OF GOOD HOPE Applicant

and

MPUMELELO WILTON VABAZA Respondent

Coram: Pickering and Chetty JJ

Date Heard: 27 September 2007

Date Delivered: 18 October 2007

Summary: Attorney – striking off – misconduct – condonation for delay in bringing application

_______________________________________________________________

JUDGMENT

CHETTY, J

[1] The applicant, the Law Society of the Cape of Good Hope applies in terms of s 22 (1) (d) of the Attorneys Act 53 of 1979 (the Act) for the striking off of the respondent from the roll of attorneys. The application is premised on the misappropriation by the respondent of trust funds and contraventions of various provisions of the Act and the Rules. The application is opposed but before considering its merits, it is prudent to narrate the history of the application for it has a decisive bearing on the issues which fall for determination.

[2] On 27 July 2000 the applicant’s disciplinary department addressed a letter to the respondent enclosing a copy of a complaint lodged by attorneys De Waal – Baxter of Queenstown on behalf of their client, Mr Elias Jola Bekebu (Bekebu). The respondent was inter alia requested to either “. . . reject the allegations contained in the complaint. Alternatively, you may concede that the allegations are correct and establish professional misconduct . . .” The subject matter of the complaint in De Waal-Baxter’s letter dated 11 July 2000 is described as “Deposit of Trust Monies, Elias Jola Bekebu / Vabaza and Company” and reads as follows:

“We refer to the above and advise that we are acting on behalf of Mr E J Bekebu who has advised us that he deposited an amount of R200 000, 00 at the end of September 1999 into the trust account of M W Vabaza & Company by means of a cheque which was drawn from (sic) First National Bank made in favour of himself, which cheque was endorsed to the abovementioned firm. Client never received any receipt and during January 2000 our client approached Mr Vabaza requesting the R200 000, 00 upon which Mr Vabaza informed him that such money would be ready at the end of March 2000.

At the end of March 2000 Mr Vabaza was still unable to produce client’s money and then instructed him further that the money would be ready at the end of May 2000. Client was not satisfied with such arrangement and therefore attended their offices several times in order to obtain the return of his monies however on each occasion our client was unable to meet with Mr Vabaza. During one of client’s attempts to get the money from such offices, he was handed a letter from the clerk of Mr Vabaza in which he indicated that the money would be paid on or before the 30th of April 2000. This letter is in our possession. Our client again went to the offices at the end of April 2000 and during this attempt the clerk of Mr Vabaza was instructed to inform client that he would give half of such money on the 16th of May thereafter the other half on the 31st of May 2000.

We, on our side, have written a letter to Mr Vabaza dated 29 May 2000 requesting the money. We have not received a reply to such letter. We thereafter hand delivered a fax on 19 June 2000 as we were unable to get through on their fax line. We have still not received a response to such a fax. We have also discussed this matter with a Mr Jerome Shaw, the chairman of the Queenstown Law Circle No. 13 who instructed us to report this matter to yourselves.

Kindly look into this matter and provide us with your advices hereto as soon as possible.

Should there be any further information which you will require kindly do not hesitate to contact the writer hereof.

Yours faithfully

MICHELLE BAXTER

DE WAAL – BAXTER”

[3] A further letter dated 19 July 2000 was despatched to the applicant several days later detailing the circumstances under which Bekebu’s money had been deposited into the respondent’s trust account. It reads as follows: -

“We refer to the above and to our telephonic conversation on 17 July 2000 and advise that the reason for Mr Bekebu depositing R 200 000,00 into Vabaza & Company’s trust account was due to the fact that in 1999 Mr Bekebu had requested the above attorneys to defend him in a maintenance matter which maintenance complaint was successfully dismissed. Our client then heard rumours that his wife knew about the money which he had and that she might claim such money from him towards maintenance. He informed his attorneys, Vabaza & Company of this whereafter they suggested to Mr Bekebu that he should place (hide) the money in their trust account in order that the complainant in the maintenance matter may see that he never had the funds to pay towards maintenance.

Upon this request, our client paid such money into Vabaza & Company’s trust account.

We have at this stage received a reply to the faxes which we have sent to Vabaza & Company, a copy whereof if (sic) enclosed herewith for your record purposes.

DE WAAL - BAXTER”

[4] Several weeks passed. Finally on 18 August 2000 the applicant received a somewhat cryptic response from the respondent that “The matter is receiving our urgent attention but unfortunately our books are still with our auditors. A detailed report will follow very soon by next week.” The promised report never materialised despite the passage of several weeks. On 14 September 2000 the respondent was referred to his earlier undertaking and requested to furnish the required report. Two further weeks elapsed until the applicant received a further letter from the respondent in which the latter profusely apologised for the delay, proffered the excuse that the books were still with the auditors but undertook to furnish the report “before Friday the 6th October 2000”. By 24 November 2000, the anticipated report had once more failed to materialise. The respondent was informed that the report was to be furnished by 1 December 2000 and warned that “Failure to respond to correspondence promptly is a contravention of Rule 14, which is viewed particularly seriously in relation to correspondence from the Disciplinary Department of the Society. Your failure to respond promptly and fully to this letter may be treated as an additional offence (over and above the complaint being enquired into) and an appropriate additional sanction may be imposed.” Once again there was no response. It is not in issue that the promised report was never sent to the applicant.

[5] On 3 May 2001 a further complaint relating to the alleged misappropriation of trust money was received by the applicant. The complainant, Miss T Masiza articulated her grievance to the applicant as follows:-

“On the 9th December 1998 in the case of Miss T. Masiza Vs Provincial Commissioner (Ref 235/97-p4) judgment was granted in my favour i.e. Miss Thembisa Masiza used the services of a well known Queenstown Legal Representative by the name of Mpumelelo Wilton Vabaza, who practice as M. W. Vabaza & Co. In March 2000 an amount of R15 000, 00 was paid in the bank account of M. W. Vabaza & Co as settlement of the dispute by the commissioner office. When I enquired about the money in April 2000 he told me that he had not received the money. I then decided to do the enquiry myself. I was shocked to hear that the money had been paid out in March 2000. I tried to persuade Mr Vabaza to pay the money over to me but he still insisted that he had not received the payment, mind you this was July 2000. I then went to the provincial commissioner’s office for assistance. The secretary of the P.C. phoned Mr Vabaza’s office in my presence, his secretary agreed that yes indeed they received the money in March 2000. After a long struggle and many trips to the P.C.’s office in Queenstown and a verbal confirmation by Miss Tilani S. (State Attorney) and captain Mbiza P.C.’s office it was then that Mr Vabaza promised to pay me at the end of January 2001 up until this day I have not received the money from Mr Vabaza.

After a long struggle and many trips to Mr Vabaza’s office at 55 Prince Alfred Street, Queenstown and various telephone calls, I decided to seek help of Law Society of the Cape of Good Hope to recover my money. The last straw was on 30 April 2001 when I phoned Mr Vabaza who answered the phone but when I introduced myself to him he dropped the phone. I tried again but it was on voice mail.

I am appealing to the Law Society to intervene so as to recover my money from Mr Vabaza

Your co-operation will be highly appreciated.”

[6] The applicant addressed a letter to the respondent on 8 May 2001 enclosing the complaint and invited a response. A month passed sans even the courtesy of an acknowledgement of the letter sent. A further letter was addressed to the respondent on 6 June 2001. Once again, to no avail. Then on 2 July 2001 the respondent was once more placed on terms but this further request too fell on deaf ears. No doubt exasperated at the respondent continuing to cock a snook at the applicant’s disciplinary committee, the applicant’s director requested the respondent to furnish a report. That request met a fate similar to that of its predecessors. It was ignored.

[7] The unwillingness of the respondent to cooperate with the applicant’s repeated requests propelled the applicant to a different course of action. It is not in issue that it appointed attorney Chubb of Elliots attorneys in Cathcart to carry out an inspection of the respondent’s books and report to it. It is unnecessary however for purposes of this judgment to have regard to the report save for certain instances which I will refer to hereinafter. The gravamen of the misconduct relates to the misappropriation of trust money and rests almost exclusively on the letters of complaint addressed to the applicant.

[8] On 30 August 2001, this court (Kroon J), on application by the applicant, granted an order inter alia interdicting the respondent from practising as an attorney pending an application by the applicant for his striking off from the roll of attorneys. The application was unopposed notwithstanding personal service being effected on the respondent. Various ancillary orders pertaining to the appointment of a curator to administer the trust accounts and the surrender and delivery of his books of account relating to the practice etc were made and in addition thereto the learned judge ordered that the premised application for the striking off of the respondent’s name from the roll of attorneys “shall be instituted within a period of ninety days from the date of this order or within such extended period as this Honourable Court may on application allow”. It is common cause that this application (the main application) was only filed with the registrar of this court on 21 February 2007, i.e. after a lapse of some five and a half years.

[9] In his founding affidavit, the deponent, Kalman Gordon Druker (Druker), a member of the applicant’s council, who by reference sought the incorporation of the founding papers in the interdict application, has reiterated that the respondent has contravened the provisions of s 78 (4) of the Act and several of its rules. He has annexed a copy of a schedule issued by the Attorneys Fidelity Fund reflecting that the Fund paid several claims lodged against it in respect of loss suffered by the respondent’s erstwhile clients in the amount of R260 815, 63. Included in that figure is the sum of R197 907, 27 paid to Bekebu. In this context it is important to note that it is not in dispute that on 7 June 2001 Bekebu issued summons against the respondent for payment of the sum of R200 000, 00 together with interest and costs. Particulars of the claim as formulated were (irrelevant portions omitted):-

“1 . . .

. . .

During 1999 and at Queenstown the Defendant accepted instructions from Plaintiff to represent him in a pending Maintenance enquiry.

Consequent upon advice received by Plaintiff from Defendant agreement was reached between Plaintiff and Defendant that:

The Plaintiff would pay the Defendant the sum of R200 000, 00

The Defendant would deposit same in his Attorneys Trust Account to be invested in an interest bearing Savings Account for and on behalf of the Plaintiff for a period of six (6) months.

On 17th day of September 1999 the Plaintiff paid to Defendant the sum of R200 000, 00 in terms of the agreement aforesaid by way of cheque drawn on First National Bank, a Division of First Rand Bank Limited, which was endorsed in favour of Defendant. A Copy of the face and the reverse of the cheque is annexed “A1 and A2” respectively.

On 30th March 2000 the Defendant confirmed to Plaintiff by way of letter dated 30th March 2000 that payment of all monies due to Plaintiff by Defendant would be made on or before the 30th April 2000.

In breach of the agreement pleaded above and the undertaking of Defendant as conveyed in his letter of the 30th March 2000 the Defendant has failed to make payment of the capital sum and accrued interests to plaintiff despite repeated requests for payment.”

On 18 July 2001, the registrar of this court granted judgment by default against the respondent.

[10] The respondent duly filed a notice of opposition and when the matter was called the parties sought orders (by agreement) postponing the application and directing the respondent to file his opposing papers by 29 March 2007. On 17 April the applicant filed an application for condonation (the condonation application) of its failure to comply with the order to bring the main application within 90 days of the grant of the interdict. I will revert to this aspect in due course, suffice it at this stage to record that no papers in opposition to the condonation application were filed on behalf of the respondent. Instead during May 2007 it brought an application in terms of Rule 35 (12) requiring the applicant to produce various listed documents. By agreement between the parties certain orders relating to the relief sought were made and the matter postponed. Several further postponements then followed until finally the matter was ready to be heard.

The Condonation Application

[11.1] Although I have adverted to the respondent’s omission to file any papers in opposition to the application for condonation it is apparent from his opposing affidavit in the main application that the condonation application is strenuously opposed. Firstly, it is contended that it behoved the applicant to have the condonation application adjudicated upon as a precursor to the main application being heard. The reasoning behind the submission is convoluted and flawed. The simultaneous hearing of both applications is efficacious as the notice of motion in the condonation application clearly spells out. No useful purpose could have been served by a piecemeal hearing of the main application.

[11.2] Secondly, it is submitted that the degree of non compliance with the order of Kroon J that the main application be instituted within a period of 90 days from the date of his order or within such extended period as this court may allow was flagrant and gross. Consequently, irrespective of what the applicant’s prospects of success may be in the relief sought condonation ought to be refused.

[11.3] Thirdly, condonation is resisted on the grounds of an alleged insufficiency of acceptable reasons for the delay. Whilst the argument advanced might at first blush appear attractive I am satisfied that it would be inimical to the proper administration of justice to refuse condonation notwithstanding the paucity of the applicant’s explanation for the delay. Mr Bloem has referred to a number of cases in which the principles to be considered in applications for condonation of infringement of the Rules of Court are canvassed and the approach to be adopted spelt out. This case however stands on an altogether different footing from the long line of authorities referred to by counsel. This case is concerned with an attorney’s misconduct and the duty imposed by law on the applicant. In Law Society of the Cape of Good Hope v King 1995 (2) SA 889 (C) Berman, J, at 898D-F stated as follows:-

“Applicant is the statutory custos morum of the legal profession practicing at the side Bar,

‘the guardian of the prestige, status and dignity of the profession and the public interest insofar as members of the public are affected by the conduct of members of the profession to whom they . . . (stand) . . . in a professional relationship’

words used by Boshoff JP in Veriava and Others v President, SA Medical and Dental Council, and Others 1985 (2) SA 293 (T) at 307B, which were held applicable, with appropriate alteration in the identification of the statutory body, in J Pintusewitz (Pty) Ltd v South African Pharmacy Council 1994 (2) SA 68 (C) at 79G-80A, and which are equally appropriate here in respect of the applicant.”

I endorse the remarks of the learned judge and am of the view that there is consequently an obligation placed on the applicant to ensure that in cases where an attorney has consciously and deliberately stolen his client’s money, appropriate steps be taken against the felon to not only safeguard the public interest but to protect the integrity of the profession. Where the evidence conclusively establishes misappropriation of trust funds by an attorney the prospects of success may well be of decisive importance and a court would ordinarily be in favour of granting condonation.

The Main Application

[12] The respondent’s opposition to his striking off is two-fold. Firstly, he alleges that since all his clients’ files were removed from his office at the instance of the applicant and are not available for him to formulate a meaningful response to the imputation of misconduct levelled against him it is impossible for him to properly prepare his answering affidavit. Secondly, and somewhat incongruously vis a vis the first, he alleges that from the documentary evidence available to him no misconduct such as to warrant his removal from the roll of attorneys has been established. Consequently, so his counsel proposed, the application ought to be dismissed.

[13] The application to have the respondent struck from the roll of attorneys is predicated upon various allegations made by Messrs Druker and MacDonald in their affidavits and not the Chubb report. Thus the application to strike out is directed at paragraphs 10, 11, 13, 14 and 15 of Druker’s affidavit and paragraphs 10 to 21 (inclusive) of MacDonald’s affidavit. There is no merit in the application to strike out Druker’s affidavit nor paragraphs 10 to 18 of MacDonald’s affidavit. The alleged offending paragraphs in MacDonald’s affidavit chronologically detail the factual background to the application and the steps taken by the applicant to obtain the respondent’s response to the allegations of apparent dishonesty levelled against him by his erstwhile clients. In similar vein, Druker’s affidavit contains statements of fact. The Chubb report however is referred to in paragraphs 19 and 20 of MacDonald’s report and without deciding whether the Chubb report is admissible as evidence or not it is entirely unnecessary to have any regard to these paragraphs for, as adumbrated hereinbefore, the gravamen of the misconduct charges are the Bekebu and Masiza complaints which clearly required a response from the respondent. The proffered excuse to each of the repeated requests was that the “Books” were with his auditors. Even assuming in favour of the respondent that initially the “Books” may have been in his auditor’s possession it would have been a simple matter to have obtained same. From the time the first letter was written to him by the applicant until the last by its director, almost a year had passed without any report or explanation being tendered. Instead, a deafening silence endured.

[14] Although the respondent has not pertinently denied misappropriating Bekebu’s money he seems to suggest that by reason of the divers number of matters his firm had attended to on the latter’s behalf, he was entitled thereto as and for legal services rendered. That explanation is absurd and patently untrue. In March 2000 the respondent, no doubt because of pressure being brought to bear upon him by Bekebu undertook to repay him “your money”. There is no suggestion in the letter sent to Bekebu that part of the money would be retained as costs for legal services rendered. If that was the case it was a simple explanation to have furnished to the applicant. Furthermore there would have been no need for him to examine books which were allegedly with his auditors. In addition, when he was sued by Bekebu, he permitted a judgment by default to be entered against him. His explanation why he did not defend the action instituted against him is, to say the least, nonsensical. According to him he referred (whatever that may mean) the “matter to the Fund (as) a standard procedure to be followed by any attorney when he or she is sued in connection with his or her legal practice.” In argument before us Mr Bloem adopted this approach in submitting that it was perfectly permissible for the respondent to have acted as he did in as much as the Fund was in effect the respondent’s insurer. The submission is untenable and the respondent’s averments hereanent clearly untruthful. The purpose of the Attorneys Fidelity Fund is stated in the Act as:-

“Subject to the provisions of this Act, the fund shall be applied for the purpose of reimbursing persons who suffer pecuniary loss as a result of-

theft committed by a practicing practitioner, his candidate attorney or his employee, of any money or other property entrusted by or on behalf of such persons to him or to his candidate attorney or employee in the course of his practice or while acting as executor or administrator in the estate or in any other similar capacity; . . . (s 26 (a))”

The Fund clearly does not litigate on behalf of an attorney sued for having misappropriated trust funds. The aforegoing facts demonstrate quite unequivocally that his version of the circumstances under which the money was deposited into his trust account is contrived. The respondent’s suggestion that he was entitled to retain the R200 000, 00 as professional fees for legal services rendered to Bekebu is again shown to be false when regard is had to what transpired when his present attorney “off the record” made an offer to Bekebu’s attorney to repay the money at the rate of R20 000, 00 per month. It is inconceivable that such an “enquiry” would have been made by his attorney if the money was not owing and demonstrates the falsity of the respondent’s assertion that he was entitled to retain the money.

[15] I am satisfied that the papers clearly establish that he misappropriated Bekebu’s money. Similarly his explanation concerning Ms Masiza’s money does not pass muster. Had the respondent in fact paid her, a simple admission that he had done so would have sufficed. It is apparent from Ms Masiza’s letter that it was only after 30 April 2001, when all her efforts to recover her money had proved futile, that she sought the applicant’s help. To now suggest that he may have overpaid her, by relying on the Chubb report, is not only opportunistic but demonstrably false. That report indicates that on 29 January 2001 a trust cheque dated 15 January 2000 in favour of Thembisa Masiza in an amount of R29 000, 00 was cashed by someone. It clearly could not have been Ms Masiza because by 30 April 2001, when she could not recover her money from the respondent, she approached the applicant as a last resort. In her case too I am satisfied that the respondent misappropriated the money deposited into his trust account. In other words he stole both Bekebu and Ms Masiza’s money.

[16] In Cape Law Society v Parker 2000 (1) SA 582 (C) King, JP, with reference to a number of cases dealing with the misappropriation of trust moneys by an attorney stated at 586I-J

“. . . there is high authority for the proposition that utilisation of trust moneys without the authority of the person entitled thereto constitutes misappropriation, which amounts to and is treated as theft.”

The penalty for such misconduct is usually striking off unless circumstances warrant a less onerous punishment. This is pre-eminently a case where a striking off is fully justified.

[17] The second leg of the application rests largely on the enquiry conducted and subsequent report completed by Mr Chubb. He found the books he discovered to be in a chaotic state. It is trite, as remarked upon by Banks, J, in Law Society, Cape v Segall 1975 (1) SA 95 (C) at 98C that:-

“Proper compliance with the requirements of law with regard to keeping proper records by an attorney relative to his dealing with trust monies is fundamental to the Legislature’s endeavours to protect the interests of the public.”

However the paucity of the information relative hereto in the founding papers precludes a finding that the chaotic state of his books warrant the respondent’s removal from the roll on that score.

[18] Nonetheless, I am satisfied that on the first leg of the application the applicant has made out a proper case for the relief sought. In so far as the costs are concerned Mr Bloem conceded that the costs of the 15th March 2007 and 30th August 2007 should properly be costs in the cause. As regards the costs reserved on 19 April 2007 however, he submitted that these costs should be paid by the applicant. In the exercise of my discretion I am satisfied that the applicant should bear these costs. In the result the following orders will issue:-

The respondent’s name is struck from the roll of attorneys of this Court.

Respondent is to pay the costs of the applicant in this application including those costs reserved on 15 March 2007 and 30 August 2007 on an attorney and client scale.

The applicant is ordered to pay the costs reserved on 19 April 2007.

________________________

D. CHETTY

JUDGE OF THE HIGH COURT

Pickering, J

I agree.

_____________________

J. D PICKERING

Obo the Applicant: Adv Brooks

(instructed by Neville Borman & Botha: Mr Borman)

Obo the Respondent: Adv Bloem/ Adv Sandi

(instructed by Dold Stone: Mr C Stone)