Law Society of the Free State v Grobler (33208/2013) [2019] ZAGPPHC 558 (22 October 2019)

IN THE HIGH COURT OF SOUTH AFRICA

(GAUTENG DIVISION, PRETORIA)

(1) REPORTABLE: YES/NO

(2) OF INTEREST TO OTHER JUDGES: YES/NO

(3) REPORTABLE

Case No: 33208/2013

22/10/2019

In the matter between:

THE LAW SOCIETY OF THE NORTHERN PROVINCES

(Incorporated as the Law Society of Transvaal)

Applicant

And

JAN ADRIAAN PIETER GROBLER

Respondent

JUDGMENT

HF JACOBS, AJ:

(1) The respondent, Mr Jan Adriaan Pieter Grabler, was admitted as an attorney and conveyancer on 18 December 2003 and as a notary on 24 February 2004. He practised for his own account under the name and style of Ebersohn & Grabler Attorneys at 37 Hibiscus Avenue, Lynnwood Ridge, Pretoria from 24 November 2004. This is an application for the removal of Mr Grobler's name from the Roll of Attorneys at the behest of the Law Society of the Northern Provinces ("the Law Society").

(2) The Council of the Law Society considered a number of complaints levelled against Mr Grabler and, after considering all the facts relevant thereto, resolved that Mr Grobler has conducted himself in an unprofessional and dishonourable manner and is guilty of unworthy conduct and no longer a fit and proper person to be enrolled as an attorney or as an officer of this Court. The Law Society further contends that Mr Grobler's exhibits character defects which cannot be tolerated in an officer of the Court and that his conduct does not meet the standard of behaviour and reputation which is required of a practising attorney and, thus, seeks that his name be struck from the Roll of Attorneys. The complaints are:

[2.1] A complaint by Du Plessis & Eskteen Incorporated on behalf of RFS Capital (Pty) Ltd. The complaint relates to bridging finance provided by RFS Capital to P J du Plessis Network CC, Mr P J du Plessis in his personal capacity, Weskop Investments CC and Mr Grabler trading as Ebersohn & Grabler Attorneys. The parties to the bridging finance

agreement entered into the agreement which provided that RFS would provide a loan of R10 million to be secured by mortgaging property

belonging to Weskop Investments CC worth approximately R20 million. The terms of the agreement were that the funds will be paid into the trust account of Mr Grabler and that he would administer the funds.

[2.2] The Law Society appointed Mr Vincent Faris, an independent chartered accountant to investigate the financial affairs of Mr Grobler who produced a forensic report dated 11 October 2009. Mr Faris summarised his findings as follows:

"It is clear from the above that, while the accounting records as presented to us are balanced, they are in some respects incomplete and unreliable. This being the case additional information and explanations relating not only to the complaint matter but to a variety of other transactions as well as relevant client files is required to be able to arrive at more meaningful conclusions."

[2.3] Mr Faris further came to the conclusion that Mr Grobler's firm has contravened the provisions of the Attorneys Act, No 53 of 1979 ("the Attorneys Act") by:

(a) failing to keep sufficient funds in the trust banking account and investment accounts to cover its trust obligations to trust creditors (section 78(1) and Rule 68(1) of the old Rules of the Law Society, namely Rules 69.3.1, 69.6.1 and 69.7);

(b) that Mr Grobler's firm failed to keep proper accounting records as contemplated by the Attorneys Act (section 78(4) read with section 78(6)(d)).

[2.4] The second complaint was received by Dr D S Grieve Bridging Solutions (Pty) Ltd. The complaint was received on 17 December 2008. The complainant in this instance is a finance house which provides bridging finance in property transactions. It provides bridging finance to a purchaser of property and on transfer the purchase price of the property would be

paid to the conveyancing attorney who would then repay the complainant as bridging finance institution. The complaint was that

the complainant provided bridging finance for several purchasers of immovable property but that Mr Grabler failed to pay those amounts to the complainant despite his undertaking and contractual obligation to do so. These complaints were also investigated by Mr Vincent Faris who reported that with reference to the ledger account, annexures in all the matters, entries were not adequately narrated and that Mr Grabler received certain monies as fees and/or commission.s It was suggested by Mr Faris that Mr Grabler should be called upon to furnish the Law Society with a report and an explanation on all matters relating to the complaint of OS Grieve Bridging Solutions (Pty) Ltd.

[2.5] The third complaint was by Ms ML Schreiber. Her complaint was that she wanted to set up a housing project and required financing in order to start and complete that project. She approached the respondent who advised her that he was able to assist her in raising the finance. Mr Grobler required her to provide him with a business plan and advised her that

he would raise the finance against payment of a 5% administration fee if successful. The complainant paid the respondent the sum of R269 000.00 for assisting her in raising the finance. Mr Grobler did not assist her but he embezzled the trust funds entrusted to him in that regard. The inspection of Mr Faris revealed that the transactions resulted in a trust shortage in the practice of Mr Grabler in the sum of R235 000.00 which has not been explained by Mr Grobler.

[2.6] A fourth complaint by Mr Eugene Naude on behalf of Blue Lounge 72 (Pty) Ltd ("Blue Lounge 72"), a company trading in the field of bridging finance. Blue Lounge 72 collected money from investors for purposes of investment. The money collected from investors was paid by the investors directly into the account of Ebersohn & Grobler. The money collected was supposed to be paid over to the company for investment on behalf of those investors. Mr Grabler received payment through his trust account from those investors in the sum of R685 593.45. He failed to pay over that amount to Blue Lounge 72. Mr Grabler failed to furnish adequate explanations as to what he had done with the money paid over to his firm's trust account.

[2.7] The sixth complaint was Ms Wilma van Vuuren who entered into an investment scheme through Hurter & Spies Attorneys with Mr Eugene Naude where she received the sum of R100 000.00 on 8 March 2007 on which monthly interest of 2.5% was payable. Ms Van Vuuren further invested the sum of RSO 000.00 on 18 August 2008 with Blue Lounge 72. The investment agreement provided that funds would be paid into the trust account of Ebersohn & Grobler Attorneys. The sum of R150 000.00 was paid into Mr Grobler's trust account in terms of the agreement. Mr Eugene Naude of Blue Lounge 72 disappeared and Mr Grobler alleged that he paid over the money he held in trust to Mr Naude before his disappearance. The complaint against Mr Grabler was

that he permitted his trust account to be used for an investment scheme and that he paid trust money to Mr Naude knowing that the

money belong to the unsuspecting investor, Ms Van Vuuren. The complaint remains unexplained on the part of Mr Grobler.

[2.8] The seventh complaint was that of Mr Hendrick Johannes Conroy filed on the 301h of November 2011. It relates to the investment of R220 000.00 with Blue Lounge 72 which was paid into the trust account of Mr Grabler who then lost his entire investment when Blue Lounge 72 was liquidated. The investigation which followed the complaint revealed that Mr Grabler permitted his trust account to be used for investment purposes and failed to ensure that the trust funds were paid to their lawful owners. The complaint remains largely unexplained by Mr Grabler.

[2.9] The eighth complaint is that of Mr Edward Leonard Williamson which was received on the 24th of June 2004. The complaint relates to the investment in the Protown Bridging Finance (Pty) Ltd. Mr Williamson invested R999 999.00 on 30 September 2008 into the Protown Bridging Finance (Pty) Ltd. The amount was payable into the trust account of Mr Grabler. On

20 January 201O Mr Williamson invested a further amount of R200 000.00 on the same terms and conditions and it was similarly paid

into the trust account of Mr Grabler. In terms of the agreement between Mr Williamson and Blue Lounge 72 the Law Society concluded

that Mr Grabler used his trust account for investment purposes and he failed to ensure that the lawful owners of the funds were protected to receive the monies due to them.

[2.10] The ninth complaint is that of Mr Stefanus Sebastian Lombard. The complaint relates to the failure to pay proper attention to a matter of Mr Lombard. Mr Lombard instructed Mr Grobler to attend to the appointment of trustees of a trust and to conduct a divorce case on his behalf. Mr Grabler failed to attend to the mandate as instructed by Mr Lombard notwithstanding

having received payment for the services.

[2.11] The last complaint was that of Mr Daniel S Goosen an attorney, received by the Law Society on 1 November 2011. The complaint relates to the failure of Mr Grabler to pay proper attention to the matter of Mr Goosen when Mr Goosen instructed Mr Grabler to register an antenuptial contract in the Deeds Office on 16 October 2010. Mr Goosen delivered the documents to Mr Grabler personally and paid all the costs of the Deeds Office and the costs of Mr Grabler relating to the registration. The Law Society found that Mr Grabler has failed to pay proper attention to the matter of Mr Goosen in that he failed to register the contract as required by an attorney in the position of Mr Grabler at the time.

(3) On 31 May 2011 the Law Society received a letter from Mr Grabler wherein he informed the Law Society that he is closing his office with effect from 1 June 2011. The Law Society has not received a closing audit of the respondent as required in terms of Rule 76 of the old Rules of the Law Society.

(4) The above summarised facts led the Law Society to conclude, as it did, that Mr Grobler is no longer a fit and proper person to practise as an attorney of this Court. I agree with the Law Society's conclusions. It is clear from the evidence placed before the Law Society and deposed to by Mr Faris and the President of the Law Society that Mr Grabler utilised his practice and trust account to lull would-be investors into believing that the monies paid into his trust account would be treated as trust funds protected by the Attorneys Act and the Rules of the Law Society. Mr Grobler's involvement in the investment scheme, especially that of Blue Lounge 72 was aimed at lending the scheme a modicum of legitimacy as part of a larger scheme to obtain monies from bona fide investors. Under the circumstances Mr Grobler's name should be struck from the Roll of Attorneys.

I would, therefore propose the following order:

(1) that the respondent immediately surrenders and delivers to the Registrar of this honourable Court his certificate of enrolment as an attorney of this honourable Court;

(2) that, should the respondent fail to comply with the provisions of paragraph (1) of this order on service of this Order of Court, the Sheriff for the district in which such certificate of enrolments, is empowered and directed to take possession thereof and deliver it to the Registrar of this honourable Court;

(3) that the respondent is interdicted and prohibited from operating on his trust account(s) as defined in paragraph 4 infra;

(4) that Johan van Staden, the Head: Members Affairs of the applicant, or any person nominated by him, be appointed as curator to administer and control the trust accounts of the respondent, including accounts relating to insolvent and any deceased estate and any estate under curatorship connected with the respondent's practice as an attorney and including, also, the separate banking accounts opened and kept by the respondent at a bank in the Republic of South Africa in terms of section 78(1) of Act 53 of 1979 and/or any separate savings or interest-bearing accounts as contemplated by section 78(2) and/or

section 78(2A) of Act No 53 of 1979, in which monies from such trust banking accounts have been invested by virtue of the provisions of the said sub-sections or in which monies in any manner have been deposited or credited (the said accounts being hereinafter referred to as the trust accounts), with the following powers and duties:

(4.1) immediately to take possession of the respondent's accounting records, records, files and documents as referred to in paragraph 5;

(4.2) subject to the approval of the board of control of the attorneys fidelity fund (hereinafter referred to as "the fund") to sign all forms and generally to operate upon the trust account(s), but only to such extent and for such purpose as may be necessary to bring to completion current transactions in which the respondent was acting at the date of this order;

(4.3) subject to the approval and control of the board of control of the fund, to:

(a) recover and receive such funds which may be due to persons in incomplete transactions and to pay same to the credit of the trust account(s) of the respondent;

(b) if necessary, in the interest of persons having lawful claims upon the trust account(s) and/or against the respondent in respect of monies held, received and/or invested by the respondent in terms of section 78(1) and/or section 78(2) and/or section 78(2A) of Act No 53 of 1979 (hereinafter referred to as "trust monies"), to take any legal proceedings which may be necessary for the recovery of money which may be due to such persons in respect of incomplete transaction, if any, in which the respondent was and may still have been concerned and which may have been wrongfully and unlawfully paid from trust account(s) of the respondent;

(4.4) to ascertain from the respondent's account records the names of all persons on whose account the respondent appears to hold or to have received trust monies (hereinafter referred to as "trust creditors") and to call upon the respondent to furnish him, within 30 (thirty) days of the date of service of this order or such further period as he may agree to in writing with the names, addresses and amounts due to all trust creditors;

(4.5) to call upon such trust creditors to furnish such proof, information and/or affidavits as he may require to enable him, acting in consultation with, and subject to the requirements of the board of control of the fund, to determine whether any such trust creditor has a claim in respect of monies in the trust account(s) of the respondent and if so, the amount of such claim;

(4.6) to admit or reject in whole or in part, subject to the approval of the board of control of the fund, the claims of any such trust creditor or creditors, without prejudice to such trust creditor's or creditors' right of access to the civil courts;

(4.7) having determined the amounts which he consider are lawfully due to trust creditors, to pay such claims in full but subject always to the approval of the board of control of the fund;

(4.8) in the event of there being any surplus in the trust account(s) of the respondent after payment of the admitted claims of all trust creditors in full, to utilise such surplus to settle or reduce (as the case may be), firstly, any claim of the fund in terms of section 78(3) of Act No 53 of 1979 in respect of any interest therein referred to and, secondly, without prejudice to the rights of the creditors of the respondent, the cost, fees and expenses referred to in paragraph 9 of this order, or such portion thereof as has not already been separately paid by the respondent to the applicant, and, if there is any balance left after payment in full of all such claims, costs, fees and expenses, to pay such balance, subject to the approval of the board of control of the fund, to the respondent, if he is solvent, or if the respondent is insolvent, to the trustee(s) of the respondent's insolvent estate;

(4.9) in the event of there being insufficient trust monies in the trust banking account(s) of the respondent to pay in full the claims of trust creditors, to distribute the credit balance(s) in the trust banking account(s) pro rata amongst the trust creditors whose claims have been provided or admitted;

(4.10) subject to the approval of the chairman of the board of control of the fund, to appoint nominees or representatives and/or consult with and/or engage the services of attorneys, counsel, accountants and/or any other person(s), where considered necessary, to assist him in carrying out his duties as curator; and

(4.11) to render from time to time, as curator, returns to the board of control of the fund showing how the trust account(s) of the respondent has/have been dealt with, until such time as the board notifies him that he may regard his duties as curator as terminated.

(5) that the respondent immediately deliver his account records, records, files and documents containing particulars and information relating to:

(5.1) any monies received, held or paid by the respondent for or on account of any person while practising as an attorney;

(5.2) any monies invested by the respondent in terms of section 78(2) and/or section 78(2A) of Act No 53 of 1979;

(5.3) any interest on monies so invested which was paid over or credited to the respondent;

(5.4) any estate of a deceased person, or any insolvent estate, or any estate placed under curatorship or which the respondent is the executor, trustee or curator or which the respondent is administering on behalf of the executor, trustee or curator of such estate; and

(5.5) the respondent's practice as an attorney of this honourable Court, to the curator appointed in terms of paragraph 4 hereof, provided that, as far as such account records, records, files and documents are concerned, the respondent shall be entitled to have reasonable access to them but always subject to the supervision of such curator or his nominee.

(6) that should the respondent fail to comply with the provisions of the preceding paragraph of this order on service thereof upon him or after a return by the person entrusted with the service thereof that he has been unable to effect service thereof on the respondent (as the case may be), the Sheriff for the district in which such account records, records, files and documents are, be empowered and directed to search for and to take possession thereof wherever they may be and to deliver them to such curator;

(7) that the curator shall be entitled to:

(7.1) hand over to the persons entitled thereto all such records, files and documents as soon as he has satisfied himself that the fees and disbursements in connection therewith have been paid or satisfactorily secured or that same are no longer required, provided that a written and signed undertaking by a trust creditor to pay such amount as may be due to the respondent, either on taxation or by agreement, shall be deemed to be satisfactory security for the purposes of the preceding

paragraph hereof; provided that such written and signed undertaking incorporated as domicilium citandi et executandi of such trust creditors;

(7.2) require that any such file, the contents of which he may consider to be relevant to a claim, or possible or anticipated claim, against him and/or the respondent and/or the respondent's clients and/or fund in respect of money and/or other property entrusted to the respondent be redelivered to him (the curator): provided that any person entitled thereto shall be granted reasonable access thereto and shall be permitted to make copies thereof;

(7.3) publish this order or an abridged version thereof in any newspaper as he considers appropriate'

(8) that the respondent is hereby removed from office as:

(8.1) executor of any estate of which the respondent has been appointed in terms of section 54(1)(a)(v) of the Administration of Estates Act, No 66 of 1965 or the estate of any other person referred to in section 72(1);

(8.2) curator or guardian of any minor or other person's property in terms of section 72(1) read with section 54(1)(a)(v) and section 85 of the Administration of Estates Act, 66 of 1965;

(8.3) trustee of any insolvent estate in terms of section 59 of the Insolvency Act, No 24 of 1936;

(8.4) liquidator of any company in terms of section 379(2) read with 379(e) of the Companies Act, No 61 of 1973;

(8.5) trustee of any trust in terms of section 20(1) of the Trust Property Control Act, No 57 of 1988;

(8.6) liquidator of any close corporation appointed in terms of section 74 of the Close Corporations Act, No 69 of 1984;

(9) that the respondent is hereby directed:

(9.1) to pay, in terms of section 78(5) of Act No 53 of 1979, the reasonable costs of the inspection of the accounting records of the respondent;

(9.2) to pay the reasonable fees of the auditor engaged by the applicant;

(9.3) to pay the reasonable fees and expenses of the curator, including travelling time, at the rate of R300.00 per hour;

(9.4) to pay the reasonable fees and expenses of any person(s) consulted and/or engaged by the curator as aforesaid; and

(9.5) to pay the costs of this application on an attorney and client scale;

(10) that the respondent, within 1 (one) year of his having been requested to do so by the curator, or within such longer period as the curator may agree to in writing, shall satisfy the curator, by means of the submission of taxed bills of costs or otherwise, of the amount of the fees and disbursements due to him (the respondent) in respect of his former practice, and should he fail to do so, he shall not be entitled to recover such fees and disbursements from the curator without prejudice, however, to such rights (if any) as he may have against the trust creditor(s) concerned for payment or recovery thereof;

(11) that a certificate purporting to be signed by the curator specifying the number of hours spent by him, shall constitute prima facie proof of the number of hours spent by him on this matter;

(12) that the respondent be ordered to pay the costs of this application on a scale as between attorney and client;

(13) that a copy of this order and a copy of the record of these proceedings be delivered by the Registrar of this Court to the Director of Public Prosecutions, Pretoria with the request to consider possible prosecution of the respondent for the conduct set out herein.

H F JACOBS

ACTING JUDGE OF THE HIGH COURT

PRETORIA

I agree, and it is so ordered.

J C C SWANEPOEL

ACTING JUDGE OF THE HIGH COURT