Law Society of the City of Good Hope v Mtshabe (743/2007) [2008] ZAECHC 201 (5 December 2008)

FORM A

FILING SHEET FOR SOUTH EASTERN CAPE LOCAL DIVISION JUDGMENT

ECJ:

PARTIES: THE LAW SOCIETY OF THE CAPE OF GOOG HOPE

And

NTSIKANE ZIM MICHAEL MTSHABE

Registrar: 743/07

Magistrate:

High Court: TRANSKEI DIVISION

DATE HEARD: 20/11/08

DATE DELIVERED: 05/12/08

JUDGE(S): JONES J, DAWOOD J

LEGAL REPRESENTATIVES –

Appearances:

for the Applicant(s): Mr.: J. Heunis

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

Instructing attorneys:

Applicant (s): J. HEUNIS ATTORNEYS

Respondent(s): M.Z. NOTSHE ATTORNEYS

CASE INFORMATION -

Nature of proceedings : APPLICATION BY THE LAW SOCIETY OF THE

CAPE OF GOOD HOPE TO STRIKE THE RESPONDENT’S NAME OFF THE ROLL OF ATTORNEYS AND CONVEYANCERS

Not reportable

In the High Court of South Africa

(Transkei Division)

(Mthatha High Court) Case No 743/2007

Delivered:

In the matter between

THE LAW SOCIETY OF THE CAPE OF GOOD HOPE Applicant

and

NTSIKANE ZIM MICHAEL MTSHABE Respondent

SUMMARY: Application to strike the respondent off the roll of attorneys on grounds of misconduct – counter application to review the decision of the applicant to bring striking off proceedings – counter application dismissed – application for striking off based on convictions of fraud – application granted.

CORAM: JONES & DAWOOD JJ

JUDGMENT

JONES J:

[1] This is an application by the Law Society of the Cape of Good Hope to strike the respondent’s name off the roll of attorneys and conveyancers, together with related ancillary relief, on the ground that he committed fraud. It is opposed. In addition, the respondent has raised certain objections to the application in a counter application, which is also opposed.

[2] The respondent was admitted as an attorney in March 1995, and after a short spell as a professional assistant he commenced to practise on his own account in Mthatha in January 1996. The fraud was allegedly committed between March and June 1998. It gave rise to a criminal charge. The striking off application was not brought until the criminal proceedings were concluded. The criminal trial commenced before Chetty J in the Mthatha High Court, Transkei on 18 April 2006. The respondent was convicted on 26 July 2006, and, on 4 December 2006, was sentenced to 8 years’ imprisonment. On that date Chetty J refused an application for leave to appeal against both the conviction and sentence. The Supreme Court of Appeal dismissed a petition for leave to appeal against the conviction, but granted leave to appeal to the Full Bench of this Court on sentence. On 23 September 2008, the majority of the Full Bench (Ebrahim and Plasket JJ) upheld the sentence of 8 years’ imprisonment. The minority judgment (Jansen J) considered that a lesser sentence was warranted, one of imprisonment for a period of 5 years, subject to conversion to correctional supervision at the discretion of the Commissioner of Correctional Services in terms of section 276(1)(i) of the Criminal Procedure Act No 52 of 1977.

[3] The respondent then petitioned the President of the Supreme Court of Appeal for special leave for a further appeal on sentence, and for a reconsideration of that Courts’ refusal of leave to appeal against the conviction. The petition was pending when the striking off application was set down for hearing, initially in October 2008 and then on 20 November 2008. For that reason the applicant brought a substantive application in the Mthatha High Court for an order postponing the striking off application.

Pillay J dismissed this application on the ground that the respondent had exhausted his remedies insofar as his conviction was concerned, and that there was no good reason to delay the striking off proceedings because the issue of sentence was not yet finalized.

[4] That is how matters stood when the striking off application was called before Dawood J and me on 20 November 2008. At the commencement of the hearing Mr Notshe, for the respondent, once again applied for a postponement of the application pending the decision of the Supreme Court of Appeal on the petition. He argued that Pillay J’s refusal of a postponement was a provisional interlocutory order which was open to reconsideration and reversal.

[5] It is desirable at this juncture to deal briefly not only with the renewed application for a postponement but also with the objections raised by the respondent in his counter application. These are preliminary to the main application, which is for a striking off order.

[6] I can understand why a postponement is being sought. The application to strike the respondent’s name off the roll is based solely on the fraud conviction. The respondent clearly entertains the hope that the Supreme Court of Appeal might re-open the correctness of the conviction, and that he might yet be able to overturn his conviction on appeal. This hope derives from of a recent statement in the judgment of the Supreme Court of Appeal in Vilakazi v The State (Case No 576/2007) [2008] ZASCA 87 (2 September 2008) that it is open to that Court to broaden the issues in an appeal solely on sentence so as to include an appeal on conviction, if upon reflection the Court is of the view that on the evidence the appellant should not have been convicted. The Court’s inherent jurisdiction to prevent an injustice does not, however, give a person in the position of the respondent a procedural right to submit a second or further petition for leave to appeal against his conviction where such a petition has already been considered and turned down. Both applications for a postponement incorrectly presupposed that the respondent has a right to submit a second petition. If he has no such right, the application for a postponement cannot be granted. We therefore dismissed it, and the application and counter application then proceeded. I may mention in parenthesis that we have since been advised that the petition for special leave to appeal was dismissed by the Supreme Court of Appeal on 20 November 2008, the very day when the striking off application was set down before us.

[6] The counter application seeks relief (1) on review and (2) by way of declaratory orders. It raises procedural and constitutional objections to the hearing of the striking off application. None have merit. In the first place, the respondent alleges (a) that the deponent to the founding affidavit in the striking off application did not have the authority of the Law Society to sign the affidavit, and (b) that the meeting at which the Law Society took the resolution to apply for the respondent’s striking off was not quorate. I need say no more than that these points are patently without substance, and they are fully answered in the papers opposing the counter application. Secondly, the respondent argues (i) that his rights have been adversely and irregularly affected by the Law Society’s decision to bring striking off proceedings without first giving him an opportunity to state his case

at a previously held disciplinary inquiry, and (ii) that insofar as certain provisions of the Attorneys Act No 53 of 1979 and the rules promulgated under it purport to permit the Law Society to bring a striking off proceedings without first affording the respondent a hearing, they should be struck down as being unconstitutional. No authority in support of these points was placed before us. No sound reasons of principle or policy make it unconstitutional for the Law Society to refer allegations to the High Court without first holding a disciplinary hearing, particularly where there has already been a criminal hearing. In my opinion, these points are also patently bad. Mr Notshe did not abandon them, but he was not, understandably in my view, in a position to take the arguments which were put up in the respondent’s

affidavit in support thereof any further. Issues of principle and policy apart and purely from a practical point of view, the respondent cannot be heard to submit, after going through the process of a lengthy criminal trial, that he has not been afforded a proper opportunity to explain or excuse his complicity in the charge levelled against him. Even accepting for present purposes the validity, in the circumstances of this case, of some of the arguments on his behalf based on the audi principle, it is difficult to understand, in the light of a prior criminal hearing, in what respects his rights have been violated by not being afforded another disciplinary hearing by the Law Society. Can he possibly be heard to complain that he has not been afforded an opportunity of placing arguments before the Law Society which he did not raise at the trial and which he has not now placed before us? Could the respondent possibly have induced the Law Society, which brings these proceedings not as prosecutor but as guardian of the interests of the legal profession and the public, to overlook his criminal conduct and to impose some lesser sanction instead of referring the matter to the High Court? Because the sanctions for matters of such serious professional misconduct as this are properly within the discretion of the Court and not the Law Society, the answer must be no. In my view, the counter application is entirely devoid of merit. It must be dismissed with costs.

[7] I turn to the main application, which is for an order removing the respondent’s name from the roll of attorneys. This Court derives its authority from section 22(1)(d) of the Attorneys Act 53 of 1979, read with sections 77 and 84,1 and read with the legislation still in force in Transkei. Section 22(1)(d) of the 1979 Act and section 28 bis of the Attorneys, Notaries and Conveyancers Admission Act, 23 of 1934 provide that any person who has been admitted and enrolled as an attorney may on application by the Law Society concerned be struck off the roll or suspended from practice by the Court within the jurisdiction of which he practises if he, in the discretion of the Court, is not a fit and proper person to continue to practise as an attorney. The sole ground advanced by the Law Society in the founding affidavit is that the respondent’s fraud conviction strands, and that by making himself guilty of fraud the respondent

has demonstrated character defects and a lack of integrity;

is guilty of unprofessional, dishonourable and unworthy conduct;

has brought the legal profession into disrepute;

is not a fit and proper person to continue to practise as an attorney.

Mr Notshe correctly argued that the mere fact of a criminal conviction is not per se or necessarily a proper or sufficient basis upon which the court will exercise its discretion to hold that an attorney is not a fit and proper person to practise. The correct approach is set out in Jasat v Natal Law Society 2000 (3) SA 44 (SCA) 51C-I where Scott JA said

‘Ultimately, therefore, what is contemplated is a three-staged inquiry. First, the Court must decide whether the alleged offending conduct has been established on a preponderance of probabilities. (See, for example, Nyembezi v Law Society, Natal 1981 (2) SA 752 (A) at 756H - 758A where the Court was concerned with the equivalent section in the now repealed Attorneys, Notaries and Conveyancers Admission Act 23 of 1934; see also Kekana v Society of Advocates of South Africa [1998] ZASCA 54; 1998 (4) SA 649 (SCA) at 654D in relation to s 7 of the Admission of Advocates Act 74 of 1964.) The second inquiry is whether, as stated in s 22(1)(d), the person concerned 'in the discretion of the Court' is not a fit and proper person to continue to practise. The words italicised were inserted in 1984 (see Law Society of the Cape of Good Hope v C 1986 (1) SA 616 (A) at 637B - C). It would seem clear, however, that, in the context of the section, the exercise of the discretion referred to involves in reality a weighing up of the conduct complained of against the conduct expected of an attorney and, to this extent, a value judgment. The discretion is that of the Court of first instance. It is well established that a Court of appeal has a limited power to interfere and will only do so on well recognised grounds, viz where the Court of first instance arrived at its conclusion capriciously, or upon wrong principle, or where it has not brought

its unbiased judgment to bear on the question or where it has not acted for substantial reasons (Law Society of the Cape of Good Hope v C (supra at 637D - H); Reyneke v Wetsgenootskap van die Kaap die Goeie Hoop (supra at 369E - G); Vassen v Law Society of the Cape of Good Hope [1998] ZASCA 47; 1998 (4) SA 532 (SCA) at 537D - G). The third inquiry is whether in all the circumstances the person in question is to be removed from the roll of attorneys or whether an order suspending him from practice for a specified period will suffice. This is similarly a matter for the discretion of the Court of first instance and the power of a Court of appeal to interfere is likewise limited. Whether a Court will adopt the one course or the other will depend 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 (Incorporated Law Society, Transvaal v Mandela 1954 (3) SA 102 (T) at 108D - E), the likelihood or otherwise of a repetition of such conduct and the need to protect the public. Ultimately it is a question of degree’.

See also Malan v The Law Society of the Northern Provinces [2008] ZASCA 60 para 4.

[8] The criminal conviction of fraud was in this case, in the absence of challenge, proper proof on a balance of probabilities of the offending conduct, and satisfied the first inquiry (Hassim v Incorporated Law Society of Natal 1977 (2) 757 (A)). The next enquiry is whether, by reason of the offending conduct, we can properly conclude that the respondent is not a fit and proper person to practise. This is a matter of judicial discretion in the sense explained above. To reach that conclusion involves measuring the respondent’s conduct against the high ethical standards of integrity and honesty expected of attorneys and other professional officers of the court. These standards are described in a large number of authorities. See, for example, the restatement in Law Society, Transvaal v Matthews 1989 (4) SA 389 (T) at 395G-396A:

I refer next to the duty of an attorney in general. The attorney is a person from whom the highest standards are exacted by the profession and this Court. If an attorney wishes to digress from that standard he may do so but he must then first cast aside his profession by resigning and then pursue his chosen course. He cannot serve two masters. In this regard the standards are admirably dealt with in the founding affidavit as follows:

“An attorney is a professional man whose independence and freedom in the conduct of his practise are recognised and preserved. Within the limits of the law and the rules of professional conduct an attorney conducts, and in fact should so conduct, his practice with a high degree of independence. The profession itself is not a mere calling or occupation by which a person earns his living. An attorney is a member of a learned, respected and honourable profession and, by entering it, he pledges himself with total and unquestionable

integrity to society at large, to the courts and to the profession... only the very highest standard of conduct and repute and good faith are consistent with membership of the profession which can indeed only function effectively if it inspires the unconditional confidence and trust of the public. The image and standing of the profession are judged by the conduct and reputation of all its members and, to maintain this confidence and trust, all members of the profession must exhibit the qualities set out above at all times.

The attorneys' profession can only fulfil its obligations to the community and comply with its role in the administration of justice

in the land if it inspires and maintains the unconditional confidence of the community and if its members devote their absolute integrity to the conduct of their profession and to the fulfilment of all the requirements demanded of the profession and its members”.’

[9] The respondent’s conduct in committing this fraud must be examined to see the extent to which it departs from these high standards. Our examination of the facts should be objective and dispassionate, and we must do our best to exclude extrinsic influences which might arise from the terms of the criminal judgment on points which are not relevant to the enquiry before us. The discretion to decide whether or not the respondent is a fit and proper person is to be exercised solely by us. In order to exercise it properly, it is, of course, necessary to determine precisely what the respondent did in committing the fraud, and for that purpose the facts found proved by Chetty J are relevant.

[10] I turn, then, to the facts. Some of the background to the fraud was common cause at the trial, and also the modus operandi. It was not disputed that the respondent’s firm, represented by the respondent himself, was given instructions by an attorney, one Mr Mnyamana, of the State Attorney’s office in Mthatha, to represent the Minister of Safety and Security in six different claims for damages against the State for wrongful arrest and detention. These claims all arose out of the same incident and were apparently in all material respects identical. The respondent accepted the instructions and set about carrying them out in the ordinary course of litigation – taking instructions on the facts, seeing to the pleadings, instructing counsel, consulting with counsel, taking advice on evidence, and the like. During the period March 1998 to June 1998, the respondent’s firm prepared and submitted fifteen different statements of account to the State Attorney for payment of fees and disbursement arising out of the alleged carrying out of these instructions. Mr Mnyamana certified on behalf of the State Attorney’s office that the work reflected in the statements had been done, and that the amounts shown in the statements were properly charged, were due, owing and payable, and should be paid. The amount of each statement was then paid into the respondent’s firm’s banking account in the form of warrant vouchers issued by the Registrar of the High Court, which was the standard method of payment used in such cases. They came to a total of R458 406-75. None of this was in dispute. The chief areas of dispute were the authorship of the statements and Mr Mnyamana’s complicity in the scheme. Chetty J found as a fact that the statements were all part of a fraudulent

scheme perpetrated by the respondent with Mr Mnyamana’s connivance. He found that despite the respondent’s denials, the statements were drafted by the respondent himself and not by another member of his firm, that they were clearly to his knowledge false, and that they amounted to gross misrepresentations to the fiscus which caused prejudice. Mr Mnyamana’s cooperation made the scheme difficult to detect. Mr Mnyamana has since died. Both he and the respondent had the intention to defraud. The accounts falsely included charges for work which had not been done; or charges for work which had been duplicated in the sense that more than one claim for payment was made for same work; charges which were in excess of the applicable tariff, which was in itself unprofessional; and charges which were so excessively exorbitant as to amount to fraudulent overreaching. This was not an isolated incident. Fifteen

statements were submitted over a period of three months. They were submitted as part of the respondent’s conduct of six different

trial actions. They constituted fraud. In its very nature, fraud is the kind of offence whose seriousness is beyond question. This fraud was no exception. The important point must be made that it was committed by an attorney acting professionally as an attorney in the conduct of litigation on behalf of his client, and that his client was the victim of his fraud. In all the circumstances, I am compelled to the conclusion that the respondent has shown himself by his conduct not to be a fit and proper person to practise.

[11] The third question is whether or not a removal order is the appropriate and proper order to be made in the light of the respondent’s conduct. This is, once again, a matter of discretion. The criteria remain the seriousness of his conduct viewed against the interests of the administration of justice, the interests of the legal profession, and the public interest. The alternative to removal from the roll under section 28 bis of the 1934 Act and section 22 of the 1979 Act is an order suspending the respondent from practice. In some circumstances, the courts have considered it appropriate even to suspend the operation of a suspension order on certain conditions. But that is not the ordinary

course. In Malan’s case, supra, para 10 Harms JA commented:

‘Obviously, if a court finds dishonesty, the circumstances must be exceptional before a court will order suspension instead of a removal’.

The question is: are there exceptional circumstances present in this case which warrant an order other than the removal of the respondent from the roll of attorneys? Mr Notshe addressed a number of arguments at this question. He stressed the respondent’s inexperience at the time of the commission of the fraud. The respondent was admitted as an attorney on 15 June 1995. He practised as a professional assistant in Mthatha from the date of his admission to 7 January 1996. He began to practise in Mthatha on his own account under the name of NZ Mtshabe Incorporated on 8 January 1996. The first fraudulent account was dated 3 March 1998, a little more than two years later, and was followed in the next three months by the remaining accounts. The final fraudulent account is dated 19 May 1998. This was just under three years since the date of his admission. Mr Notshe is correct. The respondent was indeed inexperienced. But he is not correct that this is excuse. Inexperience may sometimes excuse lack of skill in advocacy, for example, or in commercial work, or lack of legal background knowledge in a specialized area, or even, perhaps, lack of judgment by following an undesirable practice because ‘every body does it’. But it can but rarely operate as an excuse for deliberate dishonesty, or lack of integrity, or the kind of character defect which causes an attorney to turn his back on the entrenched ethical standards of an honourable profession. Next, Mr Notshe suggested that the total amount of R458 406-75 may be an overstatement because the respondent was entitled to some fee for some of the work for which he charged, albeit considerably less. This argument is nothing more than makeweight. So was the argument that

while the fraud cannot be regarded as an isolated incident where the respondent succumbed to sudden temptation, it was only a single

charge of fraud committed over a relatively short period of time. The period of three months is aggravating, not mitigating. There was plenty of time for the respondent to reflect and put an end to what he was doing; plenty of time for him to have withdrawn the fraudulent statements before payment, and to replace them with proper statements. Perhaps of greater weight was the submission that the respondent undertook to repay the amount involved, and has indeed repaid a large part of it. Even if this is taken as a demonstration of genuine remorse, it seems to me to be insufficient to warrant suspension rather than removal.

[13] Perhaps Mr Notshe’s strongest point was the argument based on the excellent character references which the respondent was able to provide at the sentence stage of his criminal trial. To this should be added the argument that he has demonstrated by his practice as an attorney since the commission of this fraud in 1998 (he was never suspended from practice pending the outcome of the criminal trial) that he has not made himself guilty of further acts of criminal conduct. He has a proven track record of honesty since then, and the nature of the professional work done in the meantime and the manner of his doing it, so the argument went, is indicative of the fact that he is fully reformed and should on that account not be struck off the roll. I accept that an attorney may in appropriate circumstances be allowed to remain on the roll even after the commission of fraud (Incorporated Law Society, Natal v Roux 1972 (3) SA 146 (N)). Furthermore, proof of rehabilitation has in the past been regarded as a requirement for the re-admission of an attorney who has been struck off for unprofessional or dishonest conduct. But in those cases there was the clearest evidence to prove a complete and genuine transformation, so that the court was able to accept with confidence that an attorney with a blemished past may safely be re-admitted without risk to the legal profession or the public who will have to rely on his integrity in the future. A long list of witnesses to good character is ordinarily not enough for this purpose, even if they establish that the attorney has outwardly become a pillar of society. In addition, there should be credible and convincing evidence of (a) a full realisation by the miscreant attorney of the enormity of his fraudulent conduct, particularly because it was in breach of the attorneys’ code of conduct; (b) the effect of this actions upon the legal profession as a whole; and (c) a recognition of the defects in his

character which caused his transgression. The last mentioned point will involve genuine soul-searching and self-analysis, from which can be inferred a fundamental reformation which ensures that the defects of character of the past have been eliminated. See, for example, Kudo v Cape Law Society 1972 (4) SA 342 (C) at 345H - 346A); Law Society, Transvaal v Behrman 1981 (4) SA 538 (A) 557A-C; and both judgments in Swartzberg v Law Society of the Northern Provinces [2008] ZASCA 36), which emphasise some of the hurdles in the way of acceptable proof of rehabilitation.2 While the evidence on behalf of the respondent establishes that he is highly regarded, and that he has enjoyed the confidence of some of his colleagues since 1998, it falls far short of the exacting requirements referred to above. Most important is the respondent’s

attitude to the charge of unprofessional conduct levelled against him. Chetty J remarked that the respondent protested his innocence

throughout the trial. A reading of the respondent’s papers in this application reveals anything but recognition of the seriousness

of the fraud which he committed, anything but a need for a complete change of character. His attitude, and that of some of his character witnesses, is that he is guilty of no more than ‘a blunder’; or ‘making a mistake’; or merely overcharging his clients; or an error of judgment for which he requires no more than a rap over the knuckles by way of a sanction. He was even so misguided as to suggest that the Law Society is somehow to blame for his default: the notion is, apparently, that he should have been taught to submit proper accounts to his clients. Is he really saying that the Law Society should train candidate attorneys how not to draw up fraudulent accounts? He refers in his documents to cases where forgiveness has publicly been given to prominent political personalities for serious offences, including offences of dishonesty. The terms in which he does so give rise to an inference that he does not appreciate that what he did is particularly offensive because he is an attorney and not a member of some other profession or organization. There is no evidence of soul-searching or of coming to terms over the past ten years with the seriousness of what he did. There is no factual basis upon which we can with conviction hold that what he did in the past should not preclude him from practice in the future. The features which commended themselves to the Court in Botha v Law Society, Northern Provinces (446/2007) [2008] ZASCA 106 (23 September 2008) do not arise in this case. My conclusion on the third leg of the inquiry is that the only acceptable course is to remove the respondent’s name from the roll of attorneys.

[14] There is no merit in the argument made in the papers that the respondent should not pay the costs of the application on the scale as between attorney and client. The applicant was obliged to bring the application by reason of a public duty, and was justified throughout in doing so because of the respondent’s dishonest and unprofessional conduct and the nature of his defence.

[15] There will be the following order:

The application for the removal of the respondent’s name from the roll of attorneys and conveyancers succeeds, and there will be an order in terms of prayers 1, 2, 3, 4, 5, 6, 7, 8, 9, 10, 11, 12, and 13 of the Notice of Motion dated 5 June 2007.

The counter application is dismissed with costs which shall be on the scale as between attorney and client.

RJW JONES

Judge of the High Court

29 April 2008

DAWOOD J I agree.

F DAWOOD

1The Attorneys, Notaries and Conveyancers Admission Act, 23 of 1934, and the Law Societies Act, 41 of 1975 remain in force in Transkei, where the respondent was admitted and where he practiced. They give the Law Society of the Cape of Good Hope locus standi to bring an application for the removal of an attorney from the roll in terms of s 28 bis of the 1934 Act. Read with s 77 and s 84 of the Attorneys Act, 53 of 1979 these Acts in effect make the provisions of Chapter 1 of the Attorneys Act, 1959, applicable in Transkei. Chapter 1 authorizes, inter alia, applications for the removal of attorneys from the roll. In terms of the legislation read together, the Law Society has locus standi in this case to bring proceedings similar to those under s 22 because proceedings similar to s 22 are authorized by s 28 bis of the 1934 Act. As far as I can make out, the 1984 amendment to the 1979 Act, which introduces the concept of a judicial discretion into s 22(1)(d), is not part of the 1934 Act, but it is applicable as part of s 22 of the 1979 Act. The issue involves a value judgment under both sections, and the issue of discretion is probably only of significance where there is an appeal against a striking off order.

2 These three cases were for re-instatement of an attorney who had been struck off. In such cases there is a heavy onus on the

applicant to show that he has undergone a complete reformation. Here the enquiry is different and there is no similar onus on a respondent. But the situation is analogous because the argument is that the respondent should not be struck off but should be permitted to continue to practice because he has reformed. If that argument is to succeed, the evidence to back it up must be convincing, even if it must be viewed differently from the case where there is an onus to discharge.