South African Legal Practice Council v Gatoo and Another (43536/18) [2019] ZAGPPHC 1052 (6 December 2019)

IN THE REPUBLIC OF SOUTH AFRICA

IN THE HIGH COURT OF SOUTH AFRICA

(THE GAUTENG DIVISION, PRETORIA)

CASE NO: 43536/18

In the matter between:

THE SOUTH AFRICAN LEGAL PRACTICE COUNCIL

APPLICANT

And

NAUSHAD GATTOO

1ST RESPONDENT

N GATTOO INCORPORATED

2ND RESPONDENT

REG:2009/019143/21

JUDGMENT

KHUMALO J ( with KOLLAPEN concurring )

[1] This is an Application in terms of s 22 (1) (d) of the Attorneys Act. No. 53 of 1979 for the removal of Mr Naushad Gattoo ("Gattoo"}, the First Respondent, from the roll of legal practitioners or alternatively his suspension from practice as a legal practitioner, pending the removal of his name from the roll of the Legal Practice Council.

[2] The Attorney's Act has been repealed in terms of s 119 of the Legal Practice Act, No 28 of 2014 (LPA) with effect from 1 November 2018. In terms of s 116 (2) thereof any proceedings in respect of the suspension or removal of the name of any person from the Roll of Attorneys which has been instituted in terms of the law repealed by this Act, and which has not been concluded at the date when this Act came into operation, is to be continued and concluded as if that law has not been repealed.

[3] Gattoo was admitted as an attorney of this honourable court on 05 November 2007. He with effect from 9 June 2009 commenced acting as a director at N Gattoo Incorporated and his name remains on the roll of attorneys of this Honourable Court. No sanction is sought against N Gattoo Incorporated even though it is cited as the 2nd Respondent.

[4] The Application was launched by the Law Society of the Northern Provinces, the predecessor of the Applicant, on an urgent basis and served on the Respondents on 28 June 2018. The Respondents opposed the Application and filed their Answering Affidavit, upon which the matter was postponed sine die on 17 July 2018. On 12 March 2019 Respondents' attorneys withdrew as attorneys of record. The Applicant's Replying Affidavit and a Notice of Set Down for 26 November 2019 was thereafter by agreement served on the Respondents by e-mail on 24 May 2019.

[5] The Law Society was prompted to institute these proceedings on an urgent basis on an allegation of misappropriation of trust funds by Gattoo in the amount of R5 018 506.78.

[6] The circumstances and the facts of the matter are that an amount of R7 024 206.54 was collected by Gattoo on behalf of a client. The amount was paid into Gattoo's trust account for onward payment to the client. Gattoo utilised the money for his own personal gain without the consent of the client. He could not pay the money on demand by client, as there was a deficit in his account. The Applicant is arguing that taking into account the totality of Gattoo's transgressions, there can be no doubt that his conduct is dishonourable, unprofessional and unworthy of a practitioner and the only appropriate sanction should be one of removal of his name from the roll of attorneys.

Background facts

[7] The complaint was lodged with the Law Society on 8 May 2018 by a firm Shaheed Dollie Incorporated Attorneys ("Dollie") on behalf of Gattoo's erstwhile client, K Carrim Commercial Properties (Pty)Ltd (the Complainant also referred to as "Carrim"). Dollie reported that Gattoo misappropriated a monetary award of R7 042 713.32 he had obtained in arbitration proceedings acting on behalf of Carrim. The money was deposited into Gattoo's trust account on 20 March 2018. Despite Carrim's demand for payment of the money, Gattoo failed to effect any payment to Carrim. Gattoo admitted to have utilised the money for his own personal benefit and undertook to repay it in monthly instalments. On 19 October 2018 Gattoo signed an acknowledgement of debt. He however failed to effect timeous payments.

[8] There has been no response to the complaint.

[9] Gattoo has as a result contravened the following provisions of the Act and the Rules for the Attorney's Profession:

[9.1] Rule 35.11 in that he failed to, within reasonable time after the performance or earlier termination of any mandate, account to his client in writing and retain a copy of such account for not less than five years, each account setting out details of:

[9.1.1] all amounts received by him in connection with the matter concerned, appropriately explained;

[9.1.2] all disbursements and other payments made by him in connection with the matter;

[9.1.3] all fees and other charges charged to or raised against the client and, where any fee represents an agreed fee, a statement that such fee was agreed upon and the amount so agreed;

[9.1.4] the amount owing to or due by the client.

[9.2] Rule 35.12 in that he failed to pay the amount due to client within a reasonable time.

[9.3] Section 78 (1) read with Rule 35.13.8 in that he did not ensure that the total amount of money in the firm's account and trust cash at any date shall not be less than the total amount of credit balances of the firm's trust creditors.

[9.4] Rule 35.13.14 in that he did not ensure that withdrawals from the trust account are made as transfers to or for or on behalf of a trust creditor and or as transfers to the business account, provided that such transfers shall be made only in respect of money due to the firm;

[9.5] Rule 47.1 in that he failed, within a reasonable time, to reply to all communications which require an answer unless good cause for refusing to answer exists.

[9.6] Rule 47.2 in that he failed to respond timeously and fully requests from the Applicant for information and/or documentation which he was able to provide; and

[9.7] Rule 47.3 in that he failed to comply timeously with directions from the Applicant.

Legal Framework

[10] In terms of s 22 (1) (d) of the Attorneys Act an attorney may on application by the society concerned be struck off the roll or suspended from practice by the Court if he or she, in the discretion of the court is not a fit and proper person to continue to practice as an attorney. The Act consequently contemplates different consequences to follow when an attorney is guilty of unprofessional or dishonourable or unworthy conduct.1

[11] The exercise of the court's discretion entails a three stage enquiry. The court first decides:

(i) whether the alleged offending conduct has been established on a preponderance of probabilities, which is a factual inquiry;

(ii) if yes, a value judgment is required to decide whether the person concerned is a fit and proper person to continue to practice as envisaged in s 22 (3). The enquiry involves a weigh up of the conduct complained of against the conduct expected of an attorney;

(iii) then if in the circumstances of the case, the person in question is to be removed from the roll or merely to be suspended from practice; Malan and Another v Law Society, Northern Provinces [2008] ZASCA 90; 2009 (1) SA 216 SCA; Law Society of Good Hope v Budricks 2003 (2) SA 11 (SCA). In deciding whichever course to follow, the court is not first and foremost imposing a penalty. The main consideration is the safety of the public.

[12] It is trite that the proceedings are statutory and sui generis, being no more than a request by the Applicant, as custos morum of the profession, for the court to use its disciplinary powers over the officer who has misconducted himself and impose an appropriate sanction within the court's discretion, ranging from striking off, if the court finds that the individual is no longer a fit and proper person to remain on the roll of attorneys, or suspend him from the profession for a particular duration: see Solomon v Law Society of the Goodhope 1934 AD 401 at 407.

[13] In Malan, the court remarked that the nature of the conduct may be such that it establishes that a person is not a fit and proper person to continue to practice but in other instances it may be not that serious, and a law society may in such circumstances exercise its disciplinary powers. But, that, said the court, does not mean that a court is powerless if it finds the attorney guilty of unprofessional conduct where such conduct does not make him unfit to continue to practice as an attorney. The court may in such an instance discipline the attorney by suspending him from practice with or without conditions or by reprimanding him; see law Society Cape of Good Hope v Berrange 2005 (5) SA 160 (C).

[14] The court therefore in exercising its discretion is not bound by rules, and precedents consequently have a limited value. All they do is to indicate how other courts have exercised their discretion in the circumstances of a particular case. The court also remarked that if it were to be bound to follow a precedent in the exercise of its discretion it would mean that the court has no real discretion. (Naylor and Another v Jansen 2007 (1) SA 16 SCA at paragraph 21).

[15] The court's discretion must be based upon the facts before it and facts in question must be proven upon a balance of probabilities. The facts which the Court's discretion is based should be considered in their totality. The court must not consider each issue in isolation; see Olivier v Die Kaapse Balie-Raad 1972 (23) SA 485 (A) at 496 F-G. Malan supra at [9].

Versions of the parties

[16] The Applicant submit that since there is prima fade proof of misappropriation of an amount of R5 018 506.78, the Attorneys Fidelity Fund, other trust creditors and the public are at risk. It therefore argues that such incident of misappropriation require an urgent intervention by the court and therefore desirable that individuals who by their own conduct made themselves unfit to practice law, should be removed from the roll of legal practitioners.

[17] Gattoo in his opposition has indicated, not raising it as an issue, the non- joinder of the Fidelity fund as an interested party in the matter. This has been countered by the Applicant indicating that these are proceedings for his removal from the roll of attorneys not a claim for moneys on behalf of the Attorneys Fidelity Fund. Mere potential prejudice does not result in the requirement for joinder. I agree with the Applicant.

[18] Gattoo has also confirmed that he has used the money that was meant for his client Carrim. He however alleges that the money was loaned to him and he agreed to pay it back within (7) seven days, which he failed to do. He points out to have nevertheless paid when he later received some monies, specifically an amount of R299 000 which he paid to Carrim on 11 April 2018. He although admitted to not being able to make regular payments.

[19] He confirmed that he signed an acknowledgement of debt prepared by Attorney Shaheed Dollie, whereupon he undertook to repay the money (which he continues to refer to as a loan) and failed to comply with the undertaking. It was obvious that he was unable to repay the client's money.

[20] Furthermore, for his woes with Carrim, Gattoo blames the acrimonious relationship he has with Shaheed Dollie. He also alleges that the two are motivated by vengeance. He in addition refers in an accusatorial manner to a transaction between Mr Akoojee and Carrim that is unrelated to his misappropriation of Carrim's funds.

[21] He however fails to respond to a transcript of a recorded conversation that is alleged to have been between him and Dollie whereupon he apologised to Carrim to have misappropriated the money, using it without Carrim's consent. He also admitted to having fabricated a court order that indicated that his bank accounts have been frozen in order to avoid the pressures of a demand for payment. He also in his conversation with Carrim requested that he not let his enemy be his executor when he told him about the matter going to be reported to the Law Society by Dollie.

[22] Furthermore, the allegation of a loan is denied by Carrim. He admits that Gattoo requested him to loan him the money but he told him he cannot assist him.

[23] Trust money does not form part of the assets of a legal practitioner. The very essence of a trust fund is the absence of risk and the confidence created thereby. The unjustifiable handling of trust money is totally untenable and not only frustrates the legal requirements relating to trust money but also undermines the principle that a trust account is completely safe in respect of money held therein by a legal practitioner on behalf of another.

[24] The law also expects from a legal practitioner uberrima fides, the highest possible degree of good faith in his dealings with his client, which implies that at all times his submissions and representations to client must be accurate, honest and frank.

[25] The legal practitioner as an officer of the court is also expected to exercise the highest degree of integrity and trustworthiness in his dealing with the courts. The courts are reliant upon such integrity to ensure the fair and lawful administration of justice and the protection of the significance and reverence of the courts' processes. There can be no doubt that Gattoo's conduct is so such unbecoming of an officer of the court that the court's exigent intervention is required in protection of the public.

[26] The conduct expected of an attorney was succinctly summarised by Eksteen JA in Vassen v law Society of the Cape of Good Hope [1998] ZASCA 47; 1998 (4) SA 532 (SCA) at page 537F-G of the judgment:

"In this regard it must be borne in mind that the profession of an attorney, as of any other officer of the Court, is an honourable profession which demands complete honesty, reliability and integrity from its members; and it is the duty of the respondent Society to ensure, as far as it is able, that its members measure up to the high standards demanded of them. A client who entrusts his affairs to an attorney must be able to rest assured that that attorney is an honourable man who can be trusted to manage his affairs meticulously and honestly. When money is entrusted to an attorney or when money comes to an attorney to be held in trust, the general public is entitled to expect that that money will not be used for any other purpose than that for which it is being held, and that it will be available to be paid to the persons on whose behalf it is held whenever it is required. Here once again the respondent Society has been created to ensure that the reputation of this honourable profession is upheld by all its members so that all members of the public may continue to have every confidence and trust in the profession as a whole."

[27] The disconcerting part of Gattoo's conduct is that he seems not to appreciate the gravity of his offending conduct and thinks that he could just simply explain it away, rendering a repetition a distinct possibility. It baffles my mind why he would introduce the dealings he had with Akoojel and Carrim to explain his failure to pay back the money he misappropriated. He also fabricated a story about the loan. His degree of dishonesty and nature of his conduct instantly disqualifies him from remaining in the roll of legal practitioners as not being a fit and proper person to continue in his practice.

[28] The Applicant has made a proper case for the removal of Gattoo's name from the roll of legal practitioners, his conduct constituting a material deviation from the standards of professional conduct which is expected of an officer of the court and amounted to a huge loss to client.

[29] In the premises, I propose the following order:

1. The name of NAUSHAD GATTOO (the 1st Respondent) is hereby removed from the roll of legal practitioners of this Court.

2. Paragraphs 2 to 12 of the draft court order, dated 6 December 2019 and attached hereto, are incorporated into this order.

N V KHUMALO

JUDGE OF THE HIGH COURT

GAUTENG DIVISION, PRETORIA

It is so ordered

J KOLAPEN

For the Applicant: SL Margadie

Instructed by:

DAMONS MARGADIE RICHARDSON ATTORNEYS

Tel: 012 346 6202

For the Respondent: M Naidoo

Heard on :

26 November 2019

Delivered on:

6 December 2019