Law Society of the Northern Province v Reinecke (37823/06) [2008] ZAGPHC 218 (18 July 2008)

IN THE HIGH COURT OF SOUTH AFRICA

(TRANSVAAL PROVINCIAL DIVISION)

CASE NO: 37823/06

DATE: 18/7/2008

In the matter between:

THE LAW SOCIETY OF THE NORTHERN PROVINCE APPLICANT

VS

ALBERT JAN REINECKE RESPONDENT

JUDGMENT

MOLOPA J

The Applicant brought/launched an application against the Respondent in terms of section 22 (1) (d) of the Attorneys Act 53 of 1979, as amended (“The Act”). The Respondent was admitted as an Attorney of this HONOURABLE COURT on 26 June 2003, and thereafter practiced for his own account as a single practitioner under the name and style REINECKE ATTORNEY, at Ground Floor, Block 1A, number 7 Alburypark, Hydepark chambers, Randburg, Gauteng.

In November 2006 the Applicant herein launched these proceedings, seeking an order striking the name of the Respondent from the roll of Attorneys, as well as further ancillary relief.

The applicant approaches this court for purposes of laying evidence before it, which evidence, according to the Applicant demonstrates that the Respondent, as an Attorney is no longer a fit and proper person to practice as such, and that his name should thus be struck from the roll of Attorneys.

Essentially the complaint against the Respondent is that:

The Respondent has practiced as an Attorney without a fidelity fund certificate;

The Respondent failed to submit his rule 70 auditor’s reports for the years ending 29 February 2004 and February 2005, which reports should have been submitted to the Applicant on or before 31 August 2004 and 31 August 2005 respectively.

Rule 70 of the Law Society of the Northern Provinces (“Applicant”) provides as follows:

“70.1 APPOINTMENT OF ACCOUNTANT

A firm shall at its expense once in each calendar year, or such other times as the council may require, appoint an accountant approved by the council to act on behalf of and as the representative of the fund to discharge the duties assigned to him in terms of rule 70.4.

70.2 ACCOUNTANT’S ACCESS TO ACCOUNTING RECORDS AND FIRM’S DUTY TO ASSIST.

A firm shall allow an accountant appointed under Rule 70.1 access to such of its records as he may deem it necessary to examine for the purposes of discharging his duties under Rule 70.4 and shall furnish the accountant with any authority which may be required to enable him to obtain such information, certificates or other evidence as he may reasonably require for such purposes.

70.3 FIRM’S DUTY TO ENSURE REPORT ISSUED

A firm shall ensure that the report to be furnished by an accountant in terms of Rule 70.4 is so furnished within or at the required time; provided that the council may in its discretion and on such conditions as it may stipulate, on written application by a firm relating to a particular report condone a failure by that firm to comply with this requirement.

70.4 DUTIES OF ACCOUNTANT

Every accountant who has accepted appointment in terms of rule 70.1 shall:

70.4.1 Within the six months of the annual closing of the accounting

records of the firm concerned, or at such other times as the council

furnish the council with a report which shall be in a form of the

third schedule to these rules;

70.4.2 Without delay report in writing directly to the council if, at any

time during the discharge of his function and duties under this

rule;

70.4.2.1 It comes to his notice that at any date the total of the balances

shown on trust accounts in the accounting records of the firm

exceeded the total amount of the funds of its trust banking

account, its trust investment account and its trust cash;

70.4.2.2 Any material queries regarding its accounting records which he

has raised with the firm have not been dealt with to his

satisfaction;

70.4.2.3 Any reasonable request made by him for access to its accounting

records and supporting documents or for any authority referred

to in the rule 70.2 has not been met to his satisfaction.

It is clear from the provisions above that Rule 70 of the Applicant requires an accountant specifically approved by the council to examine the accounting records of practitioners falling within the jurisdiction of the Applicant as the Respondent, and to report to the Applicant in that regard.

In failing to submit his Rule 70 auditors reports to the Applicant, the Respondent has thus contravened Rule 70.

As a result of the Respondent’s failure to submit his Rule 70 auditor’s reports aforesaid, the Applicant did not issue him with fidelity fund certificates for the years 2005 and 2006.

Section 41 of the Attorneys Act No. 53 of 1979 (“The Act”) provides as follows:

41(1). A practitioner shall not practice or act as a practitioner on his

own account or in partnership unless he is in possession of a fidelity

fund certificate.

41(2). Any practitioner who practices or acts in contravention of sub

section (1) shall not be entitled to any fee, reward or disbursement

in respect of anything done by him while so practicing or acting.

Despite the fact that the Respondent was not issued with and/or not in possession of fidelity fund certificates for the years 2005 and 2006, he continued to practice without being in possession of such fidelity funds certificates.

The provisions of section 41 of the Act are clearly peremptory, and the Respondent in practicing without the fidelity certificate clearly contravened the provisions of this section.

It appears from the papers filed by the Applicant that as a result of the contraventions by the Respondent aforesaid, the Respondent was called to a disciplinary hearing before a disciplinary committee of the council of the Applicant on 17 May 2006 to answer to the charges that he is guilty of unprofessional, dishonourable and unworthy conduct for his failure to furnish the Applicant with the required Rule 70 auditors reports for the year ending 29 February 2004 and the year ending 28 February 2005 respectively; and also for having practiced for the years 2005 and 2006 without being in possession of the fidelity fund certificate for those years respectively as required by sections 41 (1) and 41 (2) of the Act.

The Respondent duly appeared before the disciplinary committee of the council of the Applicant, and he pleaded guilty to the charges before the council on 17 May 2006. He was thus found guilty as charged by the council.

The disciplinary committee subsequently compiled a report in terms of Rule 101.1.1 of the Law Society rules, dated 25 May 2006, recommending that the council consider applying to court to have the Respondent’s name struck from the roll of Attorneys due to the transgressions committed by the Respondent, the disciplinary committee being of the view that the aforesaid transgressions indicate that the Respondent is not a fit and proper person to remain on the roll of Attorneys.

The report of the disciplinary committee is annexed to the papers as Annexure 2 to the founding affidavit. Apparently the Applicant referred the Rule 101.1.1 report aforesaid to the Respondent in terms of Rule 101.1.2 for his comment and representation. Apparently the Respondent failed to respond thereto.

The council of the Applicant duly considered the facts alluded to above and concluded that on all the facts the Respondent has made himself guilty of unprofessional or dishonourable or unworthy conduct and is no longer a fit and proper person to continue to practice as an Attorney or as an officer of this Honourable Court, alleging that by virtue of his conduct and behaviour the Respondent has damaged and affected the good standing and reputation of the profession as a whole and consequently his name should not be allowed to remain on the roll of Attorneys. It is against this background that the Law society approaches this court.

In addition to seeking an order striking the name of the Respondent off the roll of Attorneys, the Applicant also sought other ancillary relief set out in paragraphs 2 to 12 of the notice of motion.

Apparently this application was previously enrolled for hearing on 23 April 2007. The Respondent had on this day 23 April 2007 not as yet filed his answering affidavit. On this day, 23 April 2007, the Respondent was ordered to file his answering affidavit on or before 28 May 2007 to show cause why his name should not be struck from the roll of Attorneys. In addition an interim order was also granted suspending the Respondent from his practice as an Attorney of this Honourable Court pending finalisation of the application to have his name struck from the roll of Attorneys. Further ancillary relief, (prayers 2 to12 of the notice of motion), was also granted.

As matters stand now, the Respondent has been suspended, and Johan Van Staden, the head: members affairs of the Applicant was appointed as a curator to administer and control the trust accounts of the Respondent, with amongst others the powers and duties set out in paragraph 6 (6.1-6.11) of the court order dated 23 April 2007. Mr Lamey, representing the Applicant, confirmed that to date Mr Johan Van Staden is in control and administers the Respondent’s practice as set out in the court order dated 23 April 2007, and/or the notice of motion.

In his answering affidavit the Respondent is not disputing the facts and allegations set out by the Applicant in the founding affidavit. He confirms that he pleaded guilty to the charges in a disciplinary hearing convened by the Applicant on a previous occasion, which would have been on 17 May 2006.

Basically the issue of contention between the Applicant and the Respondent is the sanction that has to be imposed by this court, i.e. whether the Respondent’s name should be struck off the roll of Attorneys as required by the Applicant in this application, or whether the Respondent should be suspended from practice as contended by the Respondent.

The Respondent contends in his answering affidavit that for over five years of articles and practise there has been no complains lodged against him; that he professionally assisted the public in both remunerated and pro-bono work, with very good results; and that there has been no prejudice suffered from his practice as Attorney, that he has never cheated the public, colleagues, friends and family.

The Respondent alleges that his practice never got off ground, he did his accounts on spreadsheet basis which did not constitute an accounting package that can be audited. Clearly this on its own is a contravention of the rules of the Applicant, and as already stated above, it is not disputed by the Respondent.

Rule 70.1 clearly stipulates that a firm/practitioner shall in each calendar year appoint an accountant approved by the council to act on behalf and as a representative of the fund to discharge the duties assigned to such accountant in terms of Rule 70.4. The provisions of this rule are peremptory and obviously should be adhered to by all practitioners, including the Respondent.

The necessity for such practice in my view, and as contended by Mr Lamey on behalf of the Applicant, is in a way to enable the Applicant to monitor the practitioners falling under its jurisdiction, especially in so far as trust moneys are concerned, which moneys are held on behalf of the public. This is done to protect the public. I believe that the approved accountant appointed in terms of Rule 70.1 would, in exercising their duties and powers in terms of Rule 70.4, keep the Applicant enlightened and updated of the accounting records of the firms/practitioners, more specifically on issues relating to trust accounts.

Obviously in this way the Applicant in my view would be in a position to protect the public. With the accounting system that the Respondent alleges and/or argued that he had, there is no way that the Applicant could be enlightened or could be updated of the accounting records as stated by the Respondent himself since such accounting package could not be audited. The Respondent contends that he has a comprehensive accounting system which is just not suitable for audit. Surely this system on its own is not good enough, nor is it in accordance with the general accounting practice required by the Applicant.

The cost of accounting books cannot also be used as an excuse by the Respondent in not adhering to the provisions of Rule 70 i.e. having an accountant approved by the council to examine his accounting records and to duly submit same to the Applicant for purposes of Rules 70.

It has been held in various decided cases that such conduct by a practitioner as alluded to above renders him/her not fit and proper to practice as an Attorney. See Law Society, Transvaal vs. Mathews 1989(4) SA 389(T); Law Society of Transvaal vs. Tloubatla [1999] 4 ALL SA 59 (T). Failure to keep proper books of accounts is a serious contravention. See Cirota and another vs. Law Society, Transvaal 1979 (1) SA 172 (A). An Attorney who fails to comply with this requirement is liable to be struck off the roll or to be suspended from practice. Refer Cirota supra.

As already indicated above because of the Respondent’s failure to submit the auditors certificates for the year ending 2004 and 2005, he was not issued with fidelity fund certificates, he however despite being without the fidelity fund certificate continued to practice for the years 2005 and 2006 without such fidelity fund certificate, in contravention of section 41 (1) of the Act and has thus committed an offence in terms of section 83 (10) of the Act.

Section 83 (10) provides as follows “any person who directly or indirectly purports to act as a practitioner or to practice on his own account or in partnership without being in possession of a fidelity fund certificate, (my underlining) shall be guilty of an offence and on conviction liable to a fine not exceeding R2000.00 or to imprisonment to a period not exceeding six months or to both such fine or such imprisonment”. See also in this regard Law society of the Northern Provinces vs. Mmamatho 2003 (6) SA 467 (SCA) where it was stated that, an auditors certificate is a requirement for the issue of a fidelity fund certificate, and practicing without the latter is a serious criminal offence and a serious bridge of an Attorney’s duty.

On all the facts before the court (set out above) can it be said that the Respondent is liable to be struck off the roll of Attorneys for the contraventions he has already admitted? It has not been shown on the papers that the Respondent has committed any act of dishonesty. He has already been suspended since April 2007, Mr Johan Van Staden has been administering and in control of, amongst others, the Respondent’s trust accounts. The proceedings herein were launched and/or issued in November 2006 and to date, as appears in the papers, and in argument by both Mr Lamey and Mr Reinecke there has not been any complaint by any member of the public against the Respondent. As matter stand it cannot be said and/or shown that the Respondent misused trust moneys and/or defrauded the public. As conceded by Mr Lamey there is nothing on the papers to show that the Respondent has been dishonest.

However, it cannot be said that his conduct should not be viewed seriously. The Applicant rightfully has a concern about the conduct of such practitioners as the Respondent not adhering to the provisions of the Act and/or the Rules of the Applicant, thus putting the public at risk.

Mr Lamey for the Applicant argued that the Respondent should be struck off the roll in the light of the contraventions he has committed, on the other hand Mr Reinecke argued that he should be suspended since there was no dishonesty committed on his part. It is trite that in these matters each case should be decided at on its facts. The fact that there was no dishonesty proved against the Respondent weighs heavily in his favour. See Summerley Vs. Law Society, Northern Provinces 2006 (5) SA 613 (SCA).

In the light of all the facts before the court, I am of the view that the Respondent should not be struck off the roll of Attorneys, the penalty of striking off seems in all the circumstances to be too severe. See Summerley. He should however, be visited with a heavy sanction, especially taking into consideration that the Respondent does not seem to appreciate the gravity of his transgressions, especially relating to keeping accounting records in accordance with the general accounting practice required by the Applicant, inter alia the Rules of the Applicant. He seems to believe that the account system which he used was above board although not acceptable to the Applicant, in his own words “a comprehensive accounting System… not just suitable for audit”.

The Respondent should appreciate that all practitioners/firms falling under the jurisdiction of the Applicant are bound and should adhere to the Rules of the Applicant and should therefore keep records in accordance with the general accounting practice required by the Applicant, inter alia the Rules of the Applicant.

In the result I make the following order:

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

There will be further orders in terms of prayers 2, 3, 4, 5 (5.1-5.11), 6 (6.1-6.5), 7, 8, 9(9.1-9.6), 10 (10.1-10.5), 11 and 12 of the notice of motion.

The Respondent is directed to pay the costs of this application on the scale between Attorney and client.

______________________

L M MOLOPA

JUDGE OF THE HIGH COURT

I AGREE

_______________

C PRETORIUS

Case No : 37823/06

Date heard : 06 June 2008

For Applicant : Mr A T Lamey

For Respondent : Mr A J Reinecke

Date of judgement : 18 July 2008