Law Society of the Northern Provinces v Biyana and Another (75342/17) [2019] ZAGPPHC 444 (23 August 2019)

REPUBLIC OF SOUTH AFRICA

IN THE HIGH COURT OF SOUTH

GAUTENG DIVISION, PRETORIA

Case: 75342/17

In the matter between :

THE LAW SOCIETY OF THE NORTHERN PROVINCES Applicant

And

LUDWE MBASA BIYANA First Respondent

SIBUSISO VUZA

Second Respondent

JUDGMENT

Introduction

1. The Applicant seeks an order for the removal of the names of the Respondents from the roll of attorneys of the High Court following

what it alleges is serious misconduct on the part of the Respondents which no longer render them fit and proper persons to practise as attorneys and which justify the removal of their names from the roll of attorneys. Both respondents oppose the relief sought.

Background

2. The 1st Respondent was admitted as an attorney on the 4 December 1998 while the 2nd Respondent was admitted on the 11 October 2001. They practised together in partnership from about the 14 March 2005 until late in 2017 The 1st Respondent however took up full time employment with the Legal Aid Board in November 2013 but it appears that neither the Applicant nor the 2nd Respondent was made aware of this. The 1st Respondent however remained a partner on the firm he and the 2nd Respondent established during the period of his employment with the Legal Aid Board and worked on some matters of the firm.

3. On the 19 December 2017 this Court, and at the instance of the Applicant made an order interdicting the 1st Respondent from practising on his own account and suspended the 2nd Respondent from practise pending the final determination of these proceedings .

The nature of these proceedings and the approach to be taken

4. Applications of this nature constitute a disciplinary enquiry by the Court into the conduct of the practitioner concerned. The proceedings do not constitute ordinary civil proceedings, but are sui generis in nature. There is thus no lis between the Applicant and the Respondents , rather the Applicant places facts before the Court concerning the practitioners in question and the Court is called upon to determine whether on what is before it the relief sought is appropriate or not.

5. In exercising its powers the Court is faced with a three stage inquiry :-

i. The first enquiry id for the court to decide whether or not the alleged offending conduct has been established on a preponderance of probabilities This is a factual enquiry.

ii. Once the Court is satisfied that the offending conduct has been established. The second enquiry is whether the practitioner concerned is a fit and proper person to continue to practise. This enquiry entails a value judgement, which involves the weighing up of the conduct complained of against the conduct expected of an attorney.

iii. If the court is of the view that the practitioner is not a fit and proper person to practise as an attorney, the third enquiry is whether in all the circumstances the practitioner 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 will depend on factors such 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, the likelihood or otherwise of a repetition of such conduct and the need to protect the public Ultimately this is a question of degree. In deciding whether an attorney ought to be removed from the roll or suspended from practice, the Court is not first and foremost imposing a penalty. The main consideration is the protection of the public.

See : Jasat v Natal Law Society 2000(3) SA 44@51A

The point in limine

6. 1st Respondent on the papers raised a point in limine to the effect that the Applicant came to Court prematurely as it was obliged in terms of its Rules to afford the 1st Respondent the opportunity to formally comment on the investigation by the Applicant in terms of the Comment Procedure set out in Rule 95 of the Applicant's rules.

7. That point was never pursued in argument before this Court but in any event the challenge is misplaced. This Court has the power both in terms of its inherent jurisdiction as well as in terms of Section 22(1)(d) of the Attorneys Act to inquire into the conduct of legal practitioners and that power is not constrained by the requirement that the Applicant must first subject such a process to its internal comment procedure.

See: Prokureursorde van Transvaal v Kleynhans 1995(1) SA 839 (T) @851 E to G

I proceed to now deal with those three stages of the inquiry

The offending conduct

8. Following a complaint it received, the Law Society requested Ms Kaserera a chartered accountant and auditor in its Monitoring Unit to visit the firm of the Respondents to investigate the complaint and conduct an inspection of the Respondents' accounting records and practise affairs. Ms Kaserera attended the firm on 2 occasions in March and April 2017 and found the following :-

a) The cash books of the firm were updated on Microsoft and could be manipulated.

b) The cash books did not contain proper narrations in respect of payments made by the firm

c) Transfers made from the firms trust account to its business account were not identifiable to particular clients

d) Cheques drawn by the Respondents did not bear the name of the beneficiaries

e) The Respondents failed to furnish her with the firm's detailed clients' ledger accounts and it appeared that no such ledgers were kept.

f) As a result of incomplete records and insufficient information she was unable to calculate the firm's accurate trust position.

Most of the above instances constitute a transgression of the Rules of the Attorneys Profession and are not disputed by the Respondents.

9. Further to the above and in respect of the complaint received from Mr M T Tetlalo the investigation by Ms Kaserera and an analysis of the available records reveals the following:

a) That the Road Accident Fund (RAF) matter the firm handled on Mr Letlalo's behalf was settled on the basis that the RAF was ordered to pay Mr Letlalo the sum of R 1 396 589.84 which the firm received.

b) The RAF was also ordered to pay taxed party and party costs which the firm received in the sum of R 278 514.73

c) The Court also ordered that the firm was only entitled to recover from Mr Letlalo such fees as are taxed or assessed on an attorney and own client basis not in excess of 25% of the amount awarded or recovered by Mr Letlalo.

10. The monies in respect of a) and b) above were received by the firm on the 31 July 2014 and the 9 January 2015. In terms of the Court order the fees could not exceed 25% of the award which amount comes to R 349 147.46 to which disbursements of R 177 622 .71 must be added bringing to the total to R 526 770.17 which at best would have been what the Respondents would have been entitled to by way of fees and disbursements. I pause to mention that at no stage did the firm have its attorney and own client fees taxed or assessed as required by the order of Court.

11. On the above scenario what was then due to Mr Letlalo would have been the difference between the amounts received from the RAF which in total was R 1 675 104.57 less the maximum fees and disbursements they were entitled to In the sum of R 526 770.17 leaving a net amount due to client of R 1 148 334. 40

An amount of R 10 000.00 was paid to Mr Letlalo by the firm at some stage and the balance due to him would have been R 1 138 334.40 which should have stood to his credit in the firms records and in the trust account of the firm.

12. This was however not the case. Leaving aside the absence of proper records it appears firstly that the firm prepared an attorney and client bill reflecting fees in the sum of R 449 266.88 (considerably in excess of the limit imposed by the Court) . To this it added disbursements in the sum of R 177 622.71 bringing its

total of fees and disbursements to R 626 889 59 and then proceeded to transfer from the firms trust account an amount of R 627 662.19 In this regard the 2nd Respondent admits that ' the firm is possibly guilty of unprofessional overreaching.

13. More concerning however was that the firms trust account in February 2016 showed a balance of R 668 000.00 and in July 2016 a balance of R 605 000.00 a deficit of between R 450 000.00 and R500 000.00 - a substantial amount of money The 1' 1 Respondent characterises any deficit that may have existed as being minimal - it is inconceivable how such a deficit can under any circumstances be regarded as minimal

14. The Respondents do not dispute the poor state of their records nor do they dispute that a deficit existed as was found. What they say however is that the trust that was to receive the money on behalf of Mr Letlalo was delayed in being established and that in May 2017 the sum of R 959 936. 61 was paid to Grindrod Bank for the benefit of the trust. It appears that the trust account balance was supplemented by fees received by the firm in another matter to bring it up to the amount paid over to Grindrod Bank.

15. From the above it must follow that there was a serious dereliction of duty by the firm towards Mr Letlalo. Monies due to him were not available in the firms trust account. There was no proper accounting to him and even at the time of the hearing of this application neither of the Respondents were willing to undertake a proper exercise in terms of what was due by the firm to Mr Letlalo That there was a misappropriation of funds that were due to him is compellingly clear from the records of the firm and the investigation undertaken.

16. What compounds matters however is that on the calculation I have set out the details of which appear above, there is still no explanation as to why only R 959 936.61 was paid for the benefit of Mr Letlalo when that amount should have been R 1 138 334.40 . a shortfall of some R 180 000.00 which still remains unaccounted for at least from the perspective of Mr Letlalo.

17. It is simply not acceptable and constitutes a serious ethical breach and the trust that is owed to client to misappropriate trust monies. It is an act of dishonesty which raises fundamental questions about the character of the Respondents in their practise as legal professionals.

The Respondents seek to blame each other for what has transpired and is a matter I will return to.

18. On what is before me and also taking into consideration the explanation offered by the Respondents I am satisfied that the offending conduct has been established.

Are the Respondents fit and proper persons to continue practise

19. While the Respondents now adopt the position that the monies due to Mr Letlalo has been paid to the trust on his behalf , I have also indicated that making up the shortfall as it were can hardly constitute an act of redemption. If that were the case then attorneys

could with little restraint treat the trust accounts of their clients as their own and make up the difference as they go along .In these proceedings there appears little appreciation by the Respondents of the seriousness of their conduct and even at the conclusion of the hearing there was no attempt on their part to fully explain what had transpired, undertake a proper accounting of what was die the Mr Letlalo and make good the difference as I have demonstrated.

20. In my view their failure to do precisely that must suggest that they are yet to internalise the impact of what they have done and still remain in default of properly accounting to their erstwhile client and making good on what is rightfully due to him.

21. They cannot be said to be fit and proper persons to continue practising. The Respondents have sought to cast blame on each other for what has transpired and placed reliance on the judgment of Law Society v Stuart and others 2019 (3) SA 535 GP where this Court in the context of the particular facts before it found that an attorney could not be found guilty of professional misconduct because a partner had engaged in professional misconduct.

22. In this matter the Respondents were partners of equal standing and engaged in conduct that effectively saw them firm pooling the trust funds available and then using it for their benefit. Whatever their separate roles in the process may have been they both carry the responsibility for what transpired and in my view seeking to create a hierarchy or responsibility, accountability and blameworthiness would not be useful. Both of them have by their conduct and their failure to exercise the degree of care in respect of the affairs of their clients rendered themselves unfit as proper persons to continue practising,

Removal or suspension

23. In General Council of the Bar of South Africa v Geach & Others 2013(2) SA 52 (SCA) the Supreme Court of Appeal said in relation to lawyers:

"After all they are the beneficiaries of a rich heritage and the mantle of responsibilities that they bear as the protectors of our hard won freedoms is without parallel As Officers of our Courts. Lawyers play a vital role in upholding the Constitution and ensuring that our system of justice is both efficient and effective. It therefor stands to reason that absolute personal integrity and scrupulous honesty are demanded of each of them''

24. Also courts are and remain of the view that dishonest conduct exhibited by attorneys in relation to the fees charge a client merits strong censure as was expressed by the Court in Law Society of SA v Road Accident Fund 2009(1) SA 206 (C ) at para 9 :

"There undoubtedly are legal practitioners who exploit the system of contingency fee agreements unreasonably. It is also beyond doubt that there are legal practitioners who commit theft and fraud at the expense of their clients. Such conduct cannot be countenanced, and steps should be taken to eradicate such practitioners from the profession"

25. In the light of the above sentiments and the ongoing failure by the Respondents to properly deal with the complaint of Mr Letlalo I cannot find the existence of any exceptional circumstances to justify any other sanction other than the removal of the Respondents from the roll of attorneys.

26. I propose the following order:-

a) It is ordered that names of the Respondents be struck from the roll of attorneys of this Honourable Court.

b) That the Respondents, jointly and severally pay the costs of this application on .an attorney and client scale.

N KOLLAPEN

JUDGE OF THE HIGH COURT

I agree

L VORSTER

ACTING JUDGE OF THE HIGH COURT

APPEARANCES

DATE OF HEARING:

6 AUGUST 2019

DATE OF JUDGMENT:

23AUGUST 2019

APPLICANTS' ATTORNEYS:

ROOTH AND WESSELS INC

APPLELLANTS COUNSEL:

L GROOME

1ST RESPONDENT'S ATTORNEYS: ZEHIR OMAR ATTORNEYS

RESPONDENTS COUNSEL:

ZOMAR

2nd RESPONDENT'S ATTORNEY:

HR MUNYAI ATIORNEYS

2nd RESPONDENT'S COUNSEL:

V M SELOANE