Law Society of the Northern Provinces v Nkhwashu and Others (79331/2018) [2019] ZAGPPHC 560 (19 September 2019)

IN THE HIGH COURT OF SOUTH AFRICA

(GAUTENG DIVISION, PRETORIA)

(1) REPORTABLE: YES/NO

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

(3) REVISED

Case number: 79331/2018

Heard on: 3 September 2019

Date of judgment: 19 September 2019

In the matter between:

LAW SOCIETY OF THE NORTHERN PROVINCES

Applicant

and

DINGA RAMMY NKHWASHU

First Respondent

MASEPHULA DINGA INC.

Second Respondent

DINGAMANZI KA DINGA INC.

Third Respondent

JUDGMENT

SWANEPOEL AJ: (Makhubele J concurring)

[1] First respondent is an admitted attorney of the High Court. He is the sole director of second respondent, which is an incorporated firm of attorneys. He is also a director of third respondent, an erstwhile incorporated firm of attorneys that is now in final deregistration. This is an application for the removal of first respondent from the roll of attorneys, for an order that respondents may not operate their trust accounts, for access to the records and files of the respondents, and for further ancillary relief.

[2] The application was served on respondents on 6 November 2018. On the same date respondents delivered a notice to oppose the application. They have not delivered an answering affidavit, and consequently the matter was set down for hearing on 3 September 2019. The notice of set down was served on respondents' attorneys on 29 January 2019. On 3 September 2019 there was no appearance for the respondents and the matter proceeded on an unopposed basis.

[3] Applicant is the predecessor of the Legal Practice Council, and is tasked with the maintenance and promotion of professional and ethical standards attorneys, notaries and conveyancers. It seeks to ensure that legal practitioners act with integrity, and it has disciplinary powers pursuant to the Attorneys' Act, Act 53 of 1979 and the Attorneys Amendment Act, Act 40 of 2014. Respondents are subject to the authority of the applicant, and applicant is authorized to seek the striking of a practitioner from the roll of attorneys when it is of the view that the practitioner is not maintaining proper professional and ethical standards.

[4] Applicant alleges that first respondents is guilty of conduct which renders him unfit to practice, and that he should be struck from the roll of attorneys. The complaints against first respondent are the following:

4.1 The first complaint is that first respondent has been convicted of fraud and contravention of the provisions of section 4 (a) of Act 212 of 1998, (money laundering).

4.2 The second complaint relates to a property transaction in which first respondent was appointed to act as conveyancer, as a result of which he received R 1 515 000.00 into his trust account with the instruction to invest the monies in an interest bearing account. In relation to this transaction first respondent is alleged to have:

4.2.1 Failed to give proper attention to the affairs of his client;

4.2.2 Failed to perform his work with the degree of skill, care and attention as may reasonably be expected from an attorney;

4.2.3 Failed to provide his client with a written statement of account;

4.2.4 Delayed, without lawful excuse, to pay the money to his client after due demand;

4.2.5 Failed to pay the money to the client within a reasonable time.

THE CRIMINAL CONVICTJON

[5] In respect of the criminal conviction, applicant alleges that The National Department of Agriculture created a so-called AgriBEEE Fund ("the Fund") with the aim of developing small and medium enterprises in the agricultural field. It is further alleged that first respondent, acting in concert with his co-accused, misrepresented to the Department that a bona fide application had been made for funding of the Dingwako Agricultural Project. Accused 1 in the criminal matter was one Philemon Mohlahlane, and Accused 2 was Manyaba Mohlaloga. Mohlaloga was a member of parliament and from September 2007 to May 2009 he was the Chairperson of the Portfolio Committee on Agricultural and Land Affairs. Mohlalane was a deputy director in the Department. Their misrepresentation resulted in the Department paying R 6 000 000.00 into third respondent's trust account.

[6] It is alleged that no application was made to the Department for funding, no business plan was submitted, and no due diligence process was followed. In short, there was simply no justification for the payment. Instead of the monies being used for its intended purpose, being the upliftment of agricultural enterprises, once he received the money first respondent channelled it into the hands of other entities which were controlled by himself, by his co-accused Mohlaloga, and by one G Tjia. First respondent made the following payments from his trust account:

6.1 4 February 2008: R 80 000.00 was paid to an account controlled by Mohlaloga;

6.2 4 February 2008: R 40 000.00 was paid to an account controlled by Tjia;

6.3 13 March 2008: R 866 150.00 was paid to a motor dealer as payment for a vehicle which Mohlaloga had purchased;

6.4 10 April 2008: R 800 000.00 was paid to an account controlled by Mohlaloga;

6.5 11 April 2008: R 1 000 000.00 was paid into an account controlled by Mohlaloga;

6.6 12 April 2008: R 1 000.000.00 was paid to an account controlled by Mohlaloga;

6.7 19 April 2008: R 1 000 000.00 was paid to an account controlled by first respondent;

6.8 21 April 2008: R 1 000 000.00 was paid to an account controlled by first respondent;

6.9 During the period 4 February 2008 to 30 June 2008, R 233 136.16 was paid in various tranches to an account controlled by first respondent;

6.10 During the period 1 February 2008 to 30 June 2008 R 87 019 80 was paid to an account controlled by first respondent, again in various tranches.

[7] The charge sheet alleges that first respondent conspired with Mohlaloga, and with Mohlahlane to obtain payment of the R 6 000 000.00 without any application or business plan having been submitted to the Department. In essence, they received payment for a project which never existed. Once they had received the monies, they split the proceeds amongst themselves.

THE PROPERTY TRANSACTION

[8] The second complaint finds its origin in a property transaction in which Portions 1, 4 and 5 of the Farm Du Preez Rust was to be transferred to the Makgwarane Communal Property Association. The Department of Rural Development and Land Reform paid the sum of R 1 515 000.00 to first respondent's trust account, which represented 50% of the purchase price of the property, with the instruction that the monies should be invested in an interest bearing account pending the transfer of the property. First respondent failed

to transfer the property and did not repay the monies to the Department. Summons had to be issued against respondents for recovery

of the monies.

THE TEST FOR REMOVAL

[9] The aforesaid facts encapsulate the complaints of the applicant. In considering an application for the removal of an attorney, a three-stage enquiry is required. (See: Law Society, Northern Provinces v Mogami 2010 (1) SA 186 (SCA)) Firstly, the Court has to decide whether the alleged offending conduct has been established on a preponderance of probabilities . The second stage of the enquiry is whether the person concerned is, in the Court's discretion, not a fit and proper person to continue to practice as a legal practitioner. If the aforesaid questions are answered in the affirmative, the final decision to be made is whether the person should be removed from the roll, or whether a period of suspension would be more appropriate.

[10] At the hearing of the matter the applicant's counsel handed up a letter from first respondent dated 13 August 2019. In the letter first respondent states that his conviction on the criminal charge is under appeal. He did not deal with the substance of the allegations against him. As far as the disciplinary complaint relating to the transfer is concerned, first respondent alleges that it "has never been heard". He states that the allegations are untrue and are based on hearsay. Once again, first respondent did not deal with the merits of the case against him. First respondent undertook to file his answering affidavit as soon as he received an answer to an alleged application in terms of the Public Access to Information Act, 2000. The delay in filing an answering affidavit is explained away as the result of first respondent being embroiled in the criminal matter. First respondent sought condonation from applicant for the late filing of his answering affidavit. Applicant took the stance that it could not grant condonation and that an application should be brought before this Court. There is no such application before us.

[11] There is nothing before us to gainsay applicant's allegations. First respondent has had ten months to obtain any documents that he might require put his case before us properly. In our view, the averment that first respondent was so busy defending himself in the criminal matter that he could not attend to this application, is false. First respondent was convicted on 15 January 2018, and this application was only launched ten months later. He has had ample opportunity to put his case. In the absence of any evidence to the contrary, the applicant's version is the only evidence before us, and the application must be considered on that evidence alone. We therefore find that the first leg of the test has been proven, and that first respondent is guilty of the complaints brought against him.

[13] As far as the second leg of the test is concerned, one should consider the facts of this matter against the backdrop of our country's recent history. Over a number of years the Government has attempted to implement much needed policies and programmes that are aimed at uplifting previously disadvantaged persons and communities. The aim is to achieve a more just society in which every person has hope for economic advancement for him or herself, his or her family, and for the broader community. For that reason, public funds have been channelled towards upliftment projects for the benefit of communities that had previously been marginalized.

[14] The Government's good intentions have, however, in numerous instances been stymied by politicians and civil servants who have found themselves in positions where they could siphon off monies from empowerment programmes in order to enrich themselves. As stated in the case of Democratic Alliance v The Public Protector (Gauteng Division case no. 11311/2018), disadvantaged communities had, in some instances had their one and only chance of upliftment taken from them as a result of the greed of well-connected individuals. We must take cognisance of the fact that our society is outraged by the effect that corruption has had on our country's recent past and which it will have on our future.

[15] One should also consider that first respondent has been a practising attorney for some 17 years. He was obviously well-connected, and could not but have been aware of the possible consequences of his actions. The transaction itself was well planned, and was executed over a period of time. First respondent was expected to act with integrity and in the proud tradition of an honourable profession. Instead he conspired with public representatives and public servants to steal from the public purse, to the disadvantage of the poor.

[16] The second complaint, that he failed to repay monies that were due to the State, for the repayment of which he had to be summonsed, solidifies in our minds the view that first respondent is not a fit and proper person to practice as a legal practitioner. When he was told to repay the monies supposedly held in trust, he did not do so. Instead, action had to be instituted against him. Had he made an arrangement to repay the money, it could have been seen as a sign of remorse. Instead, first respondent remains remorseless. He is simply not to be trusted with other peoples' money.

[17] The final question is then, if first respondent is not a fit and proper person to practice as a legal practitioner, whether he should be removed from the roll of attorneys, or whether a period of suspension would be sufficient punishment for his conduct.

[18] In our view first respondent has disqualified himself from being a member of the legal profession. Had first respondent put up some case in his defence, or in mitigation of his punishment, it might have cast a different light on the matter. Unfortunately first respondent dishonestly put forth a false explanation for not filing an answering affidavit. His failure to put any version before Court has, unfortunately, sealed his fate. In our view a suspension would not properly reflect the seriousness of first respondent's conduct, nor would it allay the very real concern that he might repeat his conduct in future.

[19] In the premises we find that first respondent is not a fit and proper person to practice as an attorney, and that he should be struck from the roll of practicing attorneys. Applicant has prepared a draft order that makes provision for the first respondent's striking from the roll, and for the mechanism by which his practices will be wound up.

[20] We therefore make the following order:

20.1 The draft order marked "X" and initialled is made an order of Court.

JJC Swanepoel AJ

Acting Judge of the High Court,

Gauteng Division, Pretoria

I agree:

TAN Makhubele J

Judge of the High Court,

IN THE HIGH COURT OF SOUTH AFRICA

Case No: 79331/2018

In the matter between·

THE SOUTH AFRICAN LEGAL PRACTICE COUNCIL Applicant

DINGA RAMMY NKHWASHU

First Respondent

MASEPHULE DINGA INCORPORATED

REG: 20081020243121 Second Respondent

DINGAMANZI KA DINGA INCORPORATED

REG: 20061034410/21

Third Respondent

ORDER OF COURT

Having read the papers filed of record and having heard the attorney for the Applicant,

IT IS ORDERED

1. That the name of DINGA RAMMY NKHWASHU (hereinafter referred to as the First Respondent) be removed from the roll of legal practitioners of this Honourable Court.

2. The First Respondent immediately surrenders and deliver to the registrar of this Honourable Court his certificate of enrolment as a legal practitioner of this Honourable Court.

3. That in the event of the First Respondent failing to comply with the terms of this order detailed in the previous paragraph within two (2) weeks from the date of this order, the sheriff of the district In which the certificate Is, be authorised and directed to take possession of the certificate and to hSlnd It to the Registrar of this Honourable Court.

4. That the Respondents be prohibited from handling or operating on the list of accounts as detailed In paragraph 5 hereof.

5. That Johan van Staden, the head ; Legal Practitioners' Affairs of the Applicant or any person nominated by him, be appointed as curator bonis (curator) to administer and control the trust accounts of the Respondents, including accounts relating to insolvent and deceased estates and any deceased estate and any estate under cutatorship connected with the Respondents' practice as a legal practitioner and including, also, the separate banking accounts opened and kept by Respondents at a bank in the Republic of South Africa in terms of section 86(1) & (2) of Act No 28 of 2014 and/or any separate savings or interest bearing accounts as contemplated by section 86(3) and/or section 86(4) of Act No. 28 of 2014, 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 hereafter referred to as the trust accounts), with the following powers and duties:

5.1 immediately to take possession of the Respondents accounting records , records, files and documents as referred to in paragraph 6 and subject to the approval of the Legal Practitioners' Fidelity Fund Board of Control

(hereinafter referred to as the fund) to sign all forms and generally to operate upon the trust account(s), but only to such extent end for such purpose as may be necessary to bring to completion current transactions in which the respondents were acting at the date of this order;

5.2 Subject to the approval and control of the Legal Practitioners' Fidelity Fund Board of Control and where monies had been paid incorrectly and unlawfully from the undermentioned trust accounts, to recover and receive and, if necessary in the interests of persons having lawful claims upon the trust account(s) and/or against the Respondents in respect of monies held, received and/or invested by the Respondents in terms of section 86(1) & (2) and/or section 86(3) and/or

section 86(4) of Act No 28 of 2014 (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 transactions, If any, in which the Respondents were and may still have been concerned and to receive such monies and to pay the same to the credit of the trust account(s).

5.3 to ascertain from the Respondents' accounting records the names of all persons on whose account the Respondents appears to hold or to have received trust monies (hereinafter referred to as trust creditors) and to call upon the First 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;

5.4 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 legal Practitioners' Fidelity Fund Board of Control, to determine whether any such trust creditor has a claim in respect of monies in the trust account(s) of the Respondents and, if so, the amount of such claim:

5.5 to admit or reject, in Whole or in part, subject to the approval of the Legal Practitioners' Fidelity Fund Board of Control, 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;

5.6 having determined the amounts which he considers are lawfully due to trust creditors, to pay such claims in full but subject always to the approval of the Legal Practitioners' Fidelity Fund Board of Control;

5.7 in the event of there being any surplus in the trust account(s) of the Respondents after payment of the admitted claims of all trust creditor, 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 86(5) of Act No 28 of 2014 in respect of any interest therein referred to and, secondly, without prejudice to the rights of the creditors of the Respondents , the costs, fees and expenses referred to in paragraph 10 of this order, or such portion thereof as has not already been separately paid by the Respondents 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 Legal Practitioners' Fidelity Fund Board of Control, to the First Respondent, if he is solvent, or, if the First Respondent is insolvent, to the trustee(s) of the First Respondent's insolvent estate;

5.8 in the event of there being insufficient trust monies in the trust banking account(s) of the Respondents, in accordance with the available documentation and information, to pay in full the claims of trust creditors who have lodged claims for repayment and Whose claims have been approved, to distribute the credit balance(s) which may be available in the trust banking account(s) amongst the trust creditors alternatively to pay the balance to the Legal Practitioners' Fidelity Fund;

5.9 subject to the approval of the chairman of the Legal Practitioners' Fidelity Fund Board of Control, to appoint nominees or representatives and/or consult with and/or engage the services of legal practitioners, counsel, accountants and/or any other persons, where considered necessary, to assist him in carrying out his duties as curator ; and

5 10 to render from time to time, as curator. returns to the Legal Practitioners’ Fidelity Fund Board of Control showing how the trust account(s) of the Respondents has/have been dealt with, until such time as the board notifies him that he may regard his duties as curator as terminated.

6. That the Respondents immediately delivers the accounting records, records, files and documents containing particulars and information relating to·

6.1 any monies received. held or paid by the Respondents for or on account of any person while practising as a legal practitioner;

6.2 any monies invested by the Respondents in terms of section 86(3) and/or section 86(4) of Act No 28 of 2014,

6.3 any interest on monies so invested which was paid over or credited to the Respondents ;

6.4 any estate of a deceased person or an insolvent estate or an estate under curatorship administered by the Respondents. whether as executor or trustee or curator or on behalf of the executor, trustee or curator;

6.5 any insolvent estate administered by the Respondents as trustee or on behalf of the trustee in terms of the Insolvency Act No 24 of 1936;

6.6 any trust administered by the Respondents as trustee or on behalf of the trustee in terms of the Trust Properties Control Act, No 57 of 1988;

6.7 any company liquidated in terms of the provisions of the Companies Act, No 61 of 1973 read together with the provisions of the Companies Act, No 71 of 2008, administered by the Respondents as or on behalf of the liquidator;

6.8 any close corporation liquidated in terms of the Close Corporations Act, 69 of 1984, administered by the Respondents as or on behalf of the liquidator, and

6.9 the First Respondent's practice as a legal practitioner of this Honourable Court, to the curator appointed in terms of paragraph 5 hereof, provided that, as far as such accounting records records, files and documents are concerned, the Respondents shall be entitled to have reasonable access to them but always subject to the supervision of such curator or his nominee.

7. That should the Respondents 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 Respondents (as the case may be), the sheriff for the district in which such accounting 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.

8. That the curator shall be entitled to.

8.1 hand over to the persons entitled thereto all such records, files and documents provide d that a satisfactory written undertaking has been received from such persons to pay any amount, either determined on taxation or by agreement, in respect of fees and disbursements due to the firm:

8.2 Require from the persons referred to in paragraph 8.1 to provide any such documentation or information which he may consider relevant in respect of a claim or possible or anticipated claim, against him and/or the Respondents and/or the Respondents ' clients and/or fund in respect of money and/or other property entrusted to the Respondents provided that any person entitled thereto shall be

granted reasonable access thereto and shall be permitted to make copies thereof

8.3 publish this order or an abridged version thereof in any newspaper he considers appropriate: and

8.4 wind-up of the Respondents' practice.

9, That the First Respondent be and is hereby removed from office as:

9.1 executor of any estate of which the First 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);

1.25cm; text-indent: -1.28cm; margin-bottom: 0cm; line-height: 150%"> 9.2 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. No 66 of 1965;

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

9.4 liquidator of any company in terms of section 379(2) read with 379(a) of the Companies Act, No 61 of 1973 and read together with the provisions of the companies Act! No 71 of 2008,

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

9.6 liquidator of any close corporation appointed in terms of section 74 of the Close Corporation Act, No 69 of 1984; and

9.7 administrator appointed in terms of Section 74 of the Magistrates Court Act, No 32 of 1944.

10, 1hat the Respondents be and is hereby directed .

10.1 to pay, in terms of section 87(2) of Act No 28 of 2014, the reasonable costs of the Inspection of the accounting records of the Respondents,

10.2 to pay the reasonable fees of the auditor engaged by applicant;

10.3 to pay the reasonable fees and expenses of the curator, including travelling time;

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

10.5 to pay the expenses relating to the publication of this order or an abbreviated version thereof; and

10.6 to pay the costs of this application on an attorney-and-client scale

11. That if there are any trust funds available the Respondents shall within 6 (six) months after 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 the First 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 an y} as he may have against the trust creditor(s) concerned for payment or recovery thereof;

12. That a certificate issued by a director of the Legal Practitioners' Fidelity Fund shall constitute prima facie proof of the curator's costs and that the Registrar be authorised to issue a writ of execution on the strength of such certificate in order to collect the curator's costs.

BY ORDER OF THE COURT

REGISTRAR