Case Law[2023] ZAGPPHC 218South Africa
Rabalao v Trustees for the time being of the Legal Practitioner's Fidelity Fund: South Africa and Another [2023] ZAGPPHC 218; 2023 (5) SA 563 (GP) (3 April 2023)
High Court of South Africa (Gauteng Division, Pretoria)
3 April 2023
Judgment
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# South Africa: North Gauteng High Court, Pretoria
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## Rabalao v Trustees for the time being of the Legal Practitioner's Fidelity Fund: South Africa and Another [2023] ZAGPPHC 218; 2023 (5) SA 563 (GP) (3 April 2023)
Rabalao v Trustees for the time being of the Legal Practitioner's Fidelity Fund: South Africa and Another [2023] ZAGPPHC 218; 2023 (5) SA 563 (GP) (3 April 2023)
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sino date 3 April 2023
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FLYNOTES:
TRUST ACCOUNT ADVOCATE AND STOLEN MONEY
PROFESSION
– Fidelity Fund – Liability – Trust account
advocate – Claim against Fund for loss after
theft of funds
– In the course of the practice – Scope of legal
services – Extent of protection for public
– Money
paid into trust account for purchase of property – Within
scope of trust account advocate's practice
and received in
capacity as legal practitioner with a trust account –
Legal
Practice Act 28 of 2014
,
s 55.
REPUBLIC OF SOUTH
AFRICA
IN THE HIGH COURT OF
SOUTH AFRICA
GAUTENG DIVISION,
PRETORIA
CASE NO: 63838/2021
(1) REPORTABLE: YES/NO
(2) OF INTEREST TO OTHER
JUDGES: NO
(3) REVISED: NO
DATE: 3 April 2023
E van der Schyff
In
the matter between:
ONOLIA
NGAKO RABALAO
APPLICANT
and
THE
TRUSTEES FOR THE TIME BEING OF THE
LEGAL
PRACTITIONER’S FIDELITY FUND:
SOUTH
AFRICA
FIRST
RESPONDENT
THE
BOARD OF CONTROL OF THE LEGAL
PRACTITIONER’S
FIDELITY FUND SOUTH AFRICA SECOND
RESPONDENT
JUDGMENT
Van
der Schyff J
Introduction
[1]
The applicant in this application, Ms. Rabalao, is self-represented.
Counsel
for the respondents highlighted that the proper respondents
are the Legal Practitioner’s Fidelity Fund (‘the Fund’)
and the Legal Practitioner’s Fidelity Fund Board (‘the
Board’). Although the applicant did not cite the respondents
correctly, the respondents did not, and correctly so, in my view,
place the citations in issue for the purpose of the determination
of
the matter.
[2]
In light of the nature of the legal issue, and the fact that the
applicant,
a lay person, is self-represented, I requested the General
Council of the Bar of South Africa to act as
amicus curiae
.
The
amicus’s
valuable contribution is recognised.
[3]
The applicant seeks to have the decision taken by members of the
Board
on 22 September 2021, that the Fund is not liable to reimburse
the applicant for pecuniary loss suffered as a result of theft of
money paid in trust to a trust account advocate referred to in s
34(2)(b) of the Legal Practice Act 28 of 2014 (‘the LPA’),
reviewed.
Factual
matrix
[4]
Towards the end of September 2020, the applicant saw an advertisement
of a property for sale in L[...] G[...] E[...] [...]. The property
was advertised on Facebook by an estate agency named Baikanyi
Moreneng (‘the estate agent’). The applicant called the
estate agency and spoke to a certain Collen Sithole (‘Mr.
Sithole’). The applicant and Mr. Sithole arranged an
appointment to view the property on 3 October 2020.
[5]
On the day of the viewing, the applicant met Mr. Sithole who was
accompanied
by a female person who introduced herself as a lawyer by
the name of Dora Rambau (‘Ms. Rambau’). Ms. Rambau
informed
the applicant that she was working with Advocate Abram Moela
(‘Adv. Moela’) and that they would ensure the transfer
of
the property in her name as soon as the purchase price of R160
000.00, together with the transfer and registration costs, were
paid.
The applicant signed an offer to purchase with Mr. Sithole and was
furnished with Advocate Moela’s trust account details.
The
applicant paid the required amounts in two payments into Advocate
Moela’s trust account with First National Bank. The
transfer
and registration of the property into the applicant’s name were
not attended to.
[6]
In January 2021, the applicant lodged a complaint with the Legal
Practice
Council. During May 2021, she lodged a claim with the Fund
in order to recover the money. The Fund instituted an investigation
against Advocate Moela. Advocate Moela deposed to an affidavit to the
effect that he transferred the R160 000.00 received from the
applicant to the estate agent as he was also doing debt collections
for the estate agency. Advocate Moela further alleged that
he was
scammed by the estate agency.
[7]
On or about 22 September 2021, the Fund dismissed the applicant’s
claim on the basis that the claim did not comply with the provisions
of section 55 of the LPA, and more particularly because the
money was
not ‘
given in trust to a trust account practice in the
course of the practice of the … advocate referred to in
section 34(2)(b).’
[8]
The crisp issue for determination is whether it can be found that
Advocate
Moela received the purchase price and registration and
transfer costs that were paid into his trust account, in
the
course of his practice
as a trust account advocate.
[9]
Ms. Rabalao stated that she made the payment into Advocate Moela’s
trust account so that he could transfer the property to her name.
Advocate Moela was undoubtedly not in a position to register
the
property in Ms. Rabalao’s name because he is not a conveyancer.
Does this then absolve the Fund of liability in circumstances
where
it is common cause that the money was paid into the advocate’s
trust account, and that he was in possession of a Fidelity
Fund
certificate at the time the money was paid into his trust account?
The
submissions
i.
The applicant’s submissions
[10]
The applicant submits that she is an innocent member of the public
who lost money as a
result of the alleged theft of trust fund monies
by a legal practitioner as defined in s 34(2) of the LPA. She stated
that it is
common cause that Advocate Moela was an advocate admitted
in terms of s 34(2)(b), and as such authorised to render legal
services
upon receipt of a request directly from a member of the
public. She, as a layperson, has limited knowledge regarding, amongst
others,
the ‘types’ of legal practitioners, especially
the requirement that only a legal practitioner who is an admitted
attorney
and conveyancer can affect the transfer and registration of
immovable properties. At the time of the commissioning of the theft
of the trust funds, Advocate Moela was in possession of a valid Legal
Practitioner’s Fidelity Fund Certificate. Since Advocate
Moela
was regulated by the Legal Practice Council in terms of the LPA, the
Fund cannot escape liability by introducing further
requirements of
what services advocates with trust accounts can perform.
ii.
The respondents’ submissions
[11]
The Fund contends that the said money was not paid in trust to the
trust account advocate
in the course and scope of an advocate holding
a Fidelity Fund certificate, and, in consequence, even if there was a
theft of funds,
such theft was not committed in the course and
practice of an advocate holding a Fidelity Fund certificate. An
advocate who is
in possession of a Fidelity Fund certificate is, so
the respondents’ counsel submitted, not lawfully in a position
to take
instructions regarding conveyancing work to be done, and,
accordingly, such work is not work that may be undertaken in the
course
of the practice of such an advocate. The respondents submit
that the matter would have been no different if the applicant had
given
the money to a paralegal, or to someone who does not lawfully
conduct a trust account practice in accordance with the LPA, in the
bona fide
but mistaken belief that the person concerned was a
conveyancer. Such entrustment, the respondents contend, would not
have been
in the course and scope of the practice of a practitioner
holding a fidelity fund certificate, and, in consequence, even if
there
was a theft of funds, such theft would not have been committed
in the course of the practice of a practitioner holding a fidelity
fund certificate.
[12]
The respondents’ counsel submitted that the presumption that
statutes do not contain
invalid or purposeless provisions is well
established in our law, as is the principle that a statutory
provision must be construed
in such a way that effect is given to
every word and phrase in it. Through the provisions of the LPA, the
legislature created a
claim in statute which would not otherwise have
existed, and the terms in which it has done so must be respected and
given effect
to. In this context, the respondents did not exercise a
discretion in the sense of making an election to reject the
applicant’s
claim, but made a determination that the claim did
not meet the requirements of s 55 of the LPA. This determination was
in accordance
with the applicable statutory provisions and is correct
in law. Accordingly, there are no grounds as set out in
s 6
of the
Promotion of Administrative Justice Act 3 of 2000
, to review and / or
set aside the decision of the Board to reject the applicant’s
claim for reimbursement from the Fund.
iii.
The amicus’s submissions
[13]
The
amicus
submitted that on a proper interpretation of
s 34(2)(b)
read with
rule 33
of the rules promulgated under the LPA, it becomes clear that
a trust account advocate is not restricted to do only what his or
her
predecessors did, but may also perform functions ancillary to his or
her instructions. What advocates may do, was not defined
by statute.
With the promulgation of the LPA, and the creation of ‘Trust
Account Advocates’ the dividing line between
the professions of
attorney and advocate has become less distinct. After considering the
broad scope of legal services, the
amicus
submitted that there is no prohibition against a trust account
advocate receiving instructions to advise a client on the conclusion
of a contract, to draw the contract, and to receive money in trust in
order to execute the contract. With reference to
Tollemache
v Attorneys Fidelity Fund,
[1]
the
amicus
contended that the fact that Advocate Moela could not himself effect
transfer of the property to the applicant, does not render
the
entrustment of the funds an entrustment falling foul of
s 55
of the
LPA. The money was according to the
amicus
,
entrusted to Advocate Moela in the course of his practice, as
required by
s 55(1)
of the LPA.
The
main issue
[14]
This application turns on the interpretation of
s 55
of the LPA and
the determination of the ambit and scope of the practice of trust
account advocates relevant to the factual context
of this
application.
[15]
Section 55
of the LPA provides as follows:
‘
(1) The Fund is
liable to reimburse persons who suffer pecuniary loss, not exceeding
the amount determined by the Minister from
time to time by notice in
the
Gazette
, as a result of theft of money or other property
given in trust to a trust account practice
in the course of the
practice
of the attorney or advocate referred to in
section
34(2)(b)
as such, if the theft is committed –
(a) by an attorney
in that practice or advocate, or any person employed by that practice
or supervised by that attorney or
advocate;
(b) by an attorney
or person acting as executor or administrator in the estate of a
deceased person; or
(c) by an attorney
or person employed by that attorney who is a trustee in an insolvent
estate or in any other similar capacity,
excluding a curator to a
financial institution in terms of the Bank Act, 1990 (Act No. 94 of
1990) or a liquidator of a mutual
bank in terms of the Mutual Bank
Act, 1993 (Act No. 124 of 1993).’
Discussion
Interpretational
paradigm
[16]
Statutory
interpretation is the process by which courts interpret and apply
legislation. Professor Lourens du Plessis aptly stated
that ‘the
realisation of statute law depends decisively on judicial
interpretation.’
[2]
The
interface between ss 2 and 39(2) of the Constitution creates the
foundation of the constitutional matrix within which the
interpretative process should ensue. In giving effect to s 2 of the
Constitution proclaiming that the Constitution is the supreme
law of
the Republic, every court must, when it interprets legislation,
promote the spirit, purport, and objects of the Bill of
Rights. In
Makate v
Vodacom (Pty) Ltd,
[3]
the
Constitutional Court held that the High Court is obliged to follow s
39(2) irrespective of whether or not the parties had asked
for it.
This approach is further entrenched by the Constitutional Court in
Independent
Institute of Education (Pty) Limited v Kwazulu-Natal Law Society and
Others
,
[4]
where the court emphasised that ‘every opportunity courts have
to interpret legislation, must be seen and utilised as a platform
for
the promotion of the Bill of Rights by infusing its central purpose
into the very essence of the legislation itself.’
[17]
The State
has a constitutional mandate to take progressive steps in realising
the rights contained in the Bill of Rights. In facilitating
the
realisation of the right entrenched in s 34 of the Bill of Rights,
the State is obliged to endeavour to eliminate the obstructions
inhibiting access to justice and, in particular, those difficulties
which impede the poor, illiterate, and indigent. Since the
advent of
the constitutional democracy, the executive, the legislature, and the
judiciary have combined their efforts to put in
place measures with
the objective of broadening access to justice.
[5]
[18]
In
Justice
Vision 2000
,
the product of a long process of consultation amongst role players in
the administration of justice,
[6]
it was recognised that the legal profession had to be transformed in
order to be able to respond adequately to the need of all
the people
of South Africa.
[7]
One of the
main challenges identified was to make the legal profession more
accessible to the public:
‘
What
was clear from the outset was that the administration of justice was
in need of change; not change for the sake of it but because
people
want a more effective and open system of
justice
which is within reach of the ordinary person.
Also, the Constitution compels us to develop a system of justice
which is in keeping with democracy and respect for human rights.’
[8]
(My emphasis)
[19]
The
following excerpt from the ensuing
Transformation
of the Legal Profession: Discussion Paper
[9]
(‘the discussion paper’) is relevant to the issue to be
determined:
‘
3.2 Uniform
regulation of the profession
Justice Vision
2000
suggests the possibility of integration of the
profession and the creation of a single controlling body for the
profession.
The inclination of the Ministry of Justice and
Constitutional Development is not to force integration but to
facilitate developments
in this direction. It is therefore necessary
to consider whether the continued regulation of the profession by way
of separate
statutes is justifiable and in the public interest.
The following aspects of
professional practice need to regulated in the public interest:
·
Standards of education
and training
·
Qualification for
admission to the profession
·
Licence to practice
·
Discipline in respect
of improper conduct
·
Public indemnity in respect of the misappropriation of funds
All except the last of
these clearly apply to both professions, but even the last will
become necessary with regard to the advocates'
profession if the
prohibition against taking instructions from members of the public
without a brief from an attorney is removed
. Now that attorneys
have right of appearance in the High Court, it seems fair that
advocates should be allowed to take instructions
directly from
clients and in this situation they might well find themselves
handling clients' funds.
It might be appropriate simply to require
any legal practitioner who handles funds on behalf of a client to be
in possession of
a Fidelity Fund certificate
and to restructure
the Board of the Fidelity Fund so that it is representative of all
private legal practitioners and sufficiently
representative of
consumers of legal services.’ (My emphasis).
Legislative framework
[20]
The LPA, its Rules, and the Code of Conduct promulgated in terms of
the Act, provides the
legislative framework for the transformation of
the legal profession. Through its transformational character, the LPA
is ‘umbilically’
bound to the Constitution. The
transformational aim of the LPA, specifically as far as it is aimed
at promoting access to justice
to facilitate a ‘more effective
and open system of justice which is within reach of the ordinary
person’, provides
the constitutional matrix within which the
LPA, and consequently s 55, stand to be interpreted.
[21]
Within the all-encompassing constitutional interpretation matrix, the
preamble to the LPA
sets the tone for its interpretation. The
constitutional imperative of promoting access to justice, and the
concomitant principle
of ensuring accountability to the public, are
emphasised in the preamble to the LPA where the legislature,
inter
alia
, declares:
‘
WHEREAS section
22 of the Bill of Rights of the Constitution establishes
the right to freedom of trade, occupation
and profession, and
provides that the practice of a trade, occupation or profession may
be regulated by law;
AND
BEARING IN MIND THAT—
·
…
·
access to
legal services is not a reality for most South Africans
·
…
AND
IN ORDER TO
·
…
·
ensure that
the values underpinning the Constitution are embraced and that the
rule of law is upheld;
·
ensure that
legal services are accessible;
·
…
;
and
·
ensure the
accountability of the legal profession to the public.
Parliament of the
Republic of South Africa enacts as follows: …’
[22]
The context within which s 55 of the LPA is to be interpreted is
further circumscribed
if it is considered that the legislature
statutorily declared in s 3 of the LPA, that the purpose of the LPA
is, amongst others,
to provide a legislative framework for the
transformation and restructuring of the legal profession that
embraces the values underpinning
the Constitution and ensures that
the rule of law is upheld; and includes broadening access to justice
by putting in place a mechanism
to determine fees chargeable by legal
practitioners for legal services rendered that are within the reach
of the citizenry; and
to protect and promote the public interest.
[23]
In pursuing the transformational objective of facilitating access to
the legal profession
and access to justice, the LPA provides for a
category of legal practitioners generally referred to as trust
account advocates,
in addition to the pre-existing categories of
attorneys and referral-advocates. Trust account advocates can be
approached by members
of the public directly. This means that
attorneys don’t play ‘middle man’ between the
public and trust account
advocates. The reasoning behind providing
for trust account advocates is that it gives the public a choice in
whom to approach
as their legal representative and this direct
approach could save legal fees, as the existing referral system is
costly because
it entails paying two lawyers to assist on one matter.
[24]
Section 34(2) of the LPA provides as follows:
‘
(a) An
advocate may render legal services in expectation of a fee,
commission, gain or reward as contemplated in this
Act or any other
applicable law –
(i)
upon receipt of a brief from an attorney; or
(ii) upon
receipt of a request directly from a member of the public or from a
justice centre for that service,
subject to paragraph (b).
(b) An
advocate contemplated in paragraph (a)(ii)
may only render those
legal services rendered by advocates before the commencement of the
Act as determined by the Council in the
rules
, if he or she-
(i) is
in possession of a Fidelity Fund Certificate and conducts his or her
practice in accordance with the relevant
provisions of Chapter 7,
with particular reference to sections 84, 85, 86 and 87;
(ii)
has notified the Council thereof in terms of section 30(1)(b)(ii).’
[25]
Rule 33 of
the South African Legal Practice Council Rules made under the
authority of s 95(1) of the LPA,
[10]
in turn provides as follows:
‘
An advocate
referred to in section 34(2)(a)(ii) of the Act who is in possession
of a Fidelity Fund certificate may render all those
legal services
which advocates were entitled to render before the commencement of
the Act,
and may perform such functions ancillary to his or her
instructions as are necessary to enable him or her to properly
represent
the client.’
(My emphasis).
[26]
The
relevance and importance of enabling advocates to perform ‘such
functions ancillary to his or her instructions as are
necessary to
enable him or her to properly represent the client’ should, in
the context of the issue that is to be determined,
not be overlooked.
The need for this extension is borne from the historic position where
an attorney whose contract with its clients
is that of mandate,
[11]
which includes the power to do everything that is incidental to the
carrying out of his instruction unless specifically excluded.
[12]
Referral-advocates, on the other hand, were historically, and are
currently,
‘
required
and entitled to act only when specifically and properly briefed
thereto. The brief
will
indicate the particular purpose for which counsel has been briefed
and his [or her] function is limited to his [or her]
instructions.’
[13]
(My emphasis).
The
latter remark is made by the authors while acknowledging that counsel
has ‘a complete discretion in the conduct of a case’
for
which it is briefed,
[14]
and
the explicit provision in the rules that trust account advocates are
entitled to ‘perform such functions ancillary’
to their
instructions. This denotes entitlements that exceed the powers
previously attributed to advocates.
[27]
In the
‘Code of Conduct for all Legal Practitioners, Candidate Legal
Practitioners and Juristic Entities’
[15]
(‘the code’) a distinction is made between the meaning
attributed in the code to the terms ‘advocate’ and
‘counsel’. The term ‘advocate’ is defined to
mean ‘a legal practitioner who is admitted and enrolled
as such
under the Act [LPA]’, while the term ‘counsel’
means ‘an advocate referred to in section 34(2)(a)(i)
of the
Act’. In the preamble to Part IV of the code, it is stated that
‘counsel are independent practitioners of advocacy’.
[16]
The nature of work undertaken by counsel is circumscribed as
follows:
[17]
‘
23.1
Counsel
undertake to perform professional legal services for a reasonable
reward.
23.2
There is no closed list of subject matter about which a brief
may be
accepted by counsel provided the brief does not require counsel to
undertake work which is properly that of an attorney.
In particular,
counsel may accept a brief—
23.2.1
to
give legal advice orally or in a written opinion;
23.2.2
to prepare any documents required for use in any court
or arbitration
or other adjudicative proceedings;
23.2.4
to argue an application;
(Editorial
Note: Numbering as per original
Government Gazette
.)
23.2.5
to argue an appeal;
23.2.6
to move an unopposed matter;
23.2.7
to appear in a trial or in an arbitration or in any
other
decision-making forum;
23.2.8
to negotiate on behalf of a client;
23.2.9
to settle a matter, whether on trial or otherwise;
23.2.10
to argue a matter on taxation before a taxing master;
23.2.11
to make representations to the National Prosecution Authority
about
whether or not to charge a person with a criminal offence;
23.2.12
to undertake a criminal prosecution on behalf of the State or
on
behalf of, or as, a private prosecutor;
23.2.13
to preside as an arbitrator, or as the chair of a disciplinary
enquiry, or as presiding officer in any other adversarial
proceedings, or to conduct any inquisitorial proceedings;
23.2.14
to act as an expert or as a referee;
23.2.15
to act as a mediator, facilitator or adjudicator;
23.2.16
to conduct an investigation and furnish a report with recommendations
as to facts found and to make recommendations as to future action;
23.2.17
to act as a curator
ad litem
;
23.2.18
to make representations to a statutory or voluntary body or any
state
official;
23.2.19
to act as a commissioner in any enquiry.
23.3
Counsel shall comply with these rules of conduct and the rules
of
conduct applicable to prosecutors issued by the National Prosecution
Authority whenever briefed on behalf of the State to conduct
a
prosecution, and in the event that any conflict might arise between
the sets of rules, these rules of conduct shall prevail.’
[28]
As far as
the nature of work undertaken by trust account advocates is
concerned, it is stated in the code that the provisions of
paragraph
23 of the code apply, with the necessary changes required by the
context, to trust account advocates.
[18]
The nature of an advocate’s work is also described as the
performing of ‘legal professional services in court-craft
and
knowledge of the law.’
[19]
[29]
How does the context within which a trust account advocate practices
impact on the scope
of legal services that may be rendered by such an
advocate? The obvious consequence of creating a category of advocates
that may
be approached directly by the public is that a client may,
instead of approaching an attorney for services that may be rendered
by an advocate, directly make use of the services of trust account
advocates. A trust account advocate may be approached directly,
for
example, to provide a legal opinion in the area of law on which a
trust account advocate is knowledgeable. Where a legal
opinion
is, for example, sought on the termination of a contract, a client
who would ordinarily have appointed an attorney who
would in turn,
have appointed an advocate, can now approach a trust account advocate
directly. This will result in the capping
of legal fees and bring
about the desired result pursued by the legislature.
[30]
It is also
necessary to have regard to the purpose of the Fidelity Fund and the
consequence of a Fidelity Fund certificate being
issued, in the
interpretative process. The Legal Practice Council issues Fidelity
Fund Certificates to legal practitioners. A Fidelity
Fund Certificate
is a certificate that an attorney practising for own account as
director or sole practitioner, and an advocate
operating a trust bank
account and accepting deposits from the public, must hold in terms of
s 84 of the LPA. The Legal Practitioner’s
Fidelity Fund (‘the
Fund’) was previously known as the Attorneys Fidelity Fund. It
is a fidelity guarantee fund which
exists in terms of the LPA. The
primary purpose of the Fund ‘is to reimburse members of the
public who may suffer pecuniary
loss, not exceeding the amount
determined by the Minister from time to time by notice in the
Gazette, as a result of theft of any
money or other property given in
trust to a trust account practice in the course of the practice of a
legal practitioner…’
[20]
The protection provided by the Fund encourages the public to use
services provided by legal practitioners with confidence.
[21]
The mission of the Fund includes the promotion of access to, and
confidence in, the administration of justice by ensuring that
victims
of such theft are promptly and fully compensated for their loss.
[22]
[31]
The respondents correctly submitted that the Fund owes its existence
to the LPA, and that
the Fund’s liability is circumscribed and
pre-determined by the LPA. The liability of the Fund is expressly
limited through
the provisions of s 56 of the LPA. Section 56 lists
certain categories of persons to whom the Fund is not liable in
respect of
any loss suffered. Section 56 of the LPA is not relevant
to the current proceedings, save for the fact that the applicant in
this
application, Ms. Rabalao, does not fall within any of the
categories listed in s 56.
[32]
Section 55 of the LPA mirrors s 26(a) of the now repealed Attorneys
Act 53 of 1997 (‘the
AA’), save that it now includes the
‘trust account advocates’ in its ambit. Guidance might be
provided by case
law where the question as to whether funds were paid
into an attorney’s trust account in the course of the practice
as such,
was considered.
[33]
In
Paramount
Suppliers (Merchandise) (Pty) Ltd v Attorneys, Notaries and
Conveyancers Fidelity Guarantee Fund Board of Control
,
[23]
Kuper J said that:
‘
It
does not follow from the fact that an attorney pays a sum of money
into his trust account that that sum of money is in fact either
trust
money held by that attorney or money paid to that attorney in the
course of his practice as an attorney, or in any other
capacity
provided for in s 26 of Act 19 of 1941.’
This
case, however, dealt with money paid to an attorney on the basis that
he was to use his ‘influence’ in order to
obtain a
benefit that all the persons concerned knew should not be obtained,
i.e. to obtain an import control permit for a dormant
company. The
money had been paid to the attorney for an illegal or immoral
transaction.
[34]
In
Tollemache
v Attorneys Fidelity Fund,
[24]
the
court held that the fact that the attorney who received certain funds
in trust, was not personally able to transfer the money
in terms of
the rules promulgated by Treasury, is not sufficient to justify a
finding that the money was not entrusted to him in
the course of his
practice. The attorney was recognised as an expert in banking law and
foreign exchange and his firm offered exchange
control advice,
including arranging to transfer funds to foreign countries. The fact
that one aspect of the exchange control was
restricted to authorised
dealers was not sufficient to justify a finding that the entrustment
of the funds to the attorney was
not in the course of his practice.
[35]
Cleaver J
dealt with Fund’s submission that since the attorney was not
authorised to submit exchange control applications,
it cannot
generally be regarded as part of an attorney’s work to prepare
and submit such applications, and that the question
as to whether in
any given case money has been paid to an attorney in the course his
practice requires,
inter
alia
an
enquiry into the sort of work which attorneys can and do, as an
objective fact, perform in the course of their practice as an
attorney.
[25]
He stated:
[26]
‘
I
think it fair to say that there has been great change in attorneys'
practices since the time when the judgment in the
Paramount
Suppliers
case was handed down
in 1957. Whereas the work done by attorneys at that time was fairly
narrowly delineated, the type and
range of services offered by
attorneys today is vastly different.’
[36]
In
Westley
and Others v Attorneys Fidelity Fund,
[27]
the court held that the funds in question were not entrusted to the
practitioner in the course of his practice, because:
[28]
‘
There
was no suggestion on the papers that the funds had been entrusted to
Akritidis to enable him to employ them in the putative
future
transactions for a purpose which by its very nature was properly
performed by an attorney…’
[37]
In
Provident
Fund for the Clothing Industry v Attorneys, Notaries and Conveyancers
Fidelity Guarantee Fund,
[29]
Nicholas J stated that it is not ‘infrequently a provision in a
deed of sale of fixed property that the purchaser should
pay an
amount by way of deposit in trust to the seller’s attorney.’
The fact that there is no pre-existing fiduciary
relationship between
the purchaser of immovable property and the attorney in whose trust
account the purchase price is to be deposited
does not mean that the
money was not entrusted to the attorney or that the Fidelity Fund
would be absolved of the liability to
reimburse the purchaser if the
other requirements for the Fund’s liability were to be
established.
[38]
In
Attorneys
Fidelity Fund Board of Control v Mettle Property Finance (Pty)
Ltd,
[30]
the Supreme Court of Appeal endorsed the view expressed by Marais JA
in
Industrial
and Commercial Factors (Pty) Ltd v Attorneys Fidelity Fund,
[31]
when it held that:
‘
It
must be remembered that ‘the indemnity against loss for which
the Act provides is not unlimited in its scope. It does not
provide
indemnification against any kind of loss suffered as a consequence of
any conceivable kind of knavery in which an attorney
might indulge in
the course of his or her practice.’ It is not an insurance
policy against all ills that may befall
money paid to an attorney.’
The
facts in this case, lead the Supreme Court of Appeal to find that
there was ‘no entrustment’ of the money paid by
Mettle to
the attorney in question –
‘
Suffice
it to say that, in the case where Langerak in his personal capacity
was the mortgagor, the initial purchase price paid by
Mettle into
Langerak's trust account belonged to Langerak as the client. He
could hardly be said to steal his own money.’
Conclusion
[39]
The money was paid over to Advocate Moela because Ms. Rabalao was
under the impression
that he would render legal services to her. Ms.
Rabalao was informed that Ms. Rambau and Advocate Moela would attend
to the transfer
of the property. The money was not paid over to
Advocate Moela’s trust account because he was a friend or
because, for instance,
she wanted to keep money separate from the
funds in her own account for a specific purpose or invest it
otherwise, or for an immoral
transaction. Had Advocate Moela not been
identified as the legal practitioner in whose trust account the
purchase price and transfer-
and registration fees had to be paid,
the money would not have been paid into his trust account. The fact
that Advocate Moela practised
as a legal practitioner with a trust
account was a
sine qua non
for the money being paid into his
trust account.
[40]
The LPA changed the landscape within which legal practitioners
function. With the creation
of a category of trust account advocates,
and by granting attorneys the right to appear in the High Court, the
divide between the
functions of attorneys and advocates became less
distinct. The purpose of this development was, however, to facilitate
access to
the legal profession and access to justice.
[41]
The respondents are correct in holding that the Fidelity Fund is a
creature of statute
and that its liability can only be determined
within the provisions of the LPA. When the relevant provisions of the
LPA are, however,
interpreted against the constitutional imperative
of facilitating access to justice and within the legislative
framework through
which access to justice is enhanced by providing a
category of trust account advocates, the protection afforded to
members of the
public, often members of vulnerable communities whom
the legislature wanted to benefit from having direct access to trust
account
advocates, cannot unduly be limited. The scope of protection
provided to members of society who entrust money to the trust
accounts
of trust account advocates, must correlate with the extent
to which the legal services that may be rendered by trust account
advocates
have been extended to the public. The legislature and the
Council refrained from limiting the legal services that can be
rendered
by trust account advocates by providing a closed, or clearly
delineated list of legal services that may be rendered by trust
account
advocates, save for stipulating that trust account advocates
may only render those legal services rendered by advocates before the
commencement of the Act as determined by the Council in the rules. In
addition, the Council specifically provided that trust account
advocates may perform such functions ancillary to their instructions
as are necessary to properly represent the client. In this
context,
the principle, as applied in
Tollemache,
is equally applicable
to trust account advocates.
[42]
Having regard to the applicable constitutional principles, the
legislative framework and
existing caselaw, the
amicus curiae
,
correctly in my view, contended that where a trust account advocate
is briefed to negotiate on behalf of a client, or advise a
client,
regarding a sale of immovable property, one of the ‘functions
ancillary to his or her instructions as are necessary
to enable him
or her to properly represent the client’ can include receiving
the purchase price and registration and transfer
fees into his trust
account. The fact that a trust account advocate is not a conveyancer
is of no consequence. It is trite that
attorneys, who are not
conveyancers, often receive the purchase price and transfer and
registration fees relating to a sale of
immovable property in their
trust accounts, only to pay it out to the seller on registration of
the property in the name of the
purchaser, or to pay it over to the
trust account of the conveyancer instructed by the client, on the
client’s instruction.
[43]
No reason exists that would justify a finding that providing clients
with advice, or assistance
during negotiations regarding the sale of
immovable property is a function that is ‘properly that of an
attorney’,
and thus reserved for attorneys only. Where a
purchaser pays the purchase price and transfer and registration fees
into a trust
account advocate’s trust account, it is paid in
the trust account within the scope of the trust account advocate’s
practice and received by him in his capacity as a legal practioner
with a trust account.
[44]
In light of the fact that the applicant is self-represented, no costs
order is made.
ORDER
In
the result, the following order is granted:
1.
The decision of the second respondent to disallow the
applicant’s claim arising out of monies deposited by her into
the trust
account of Advocate Moela, is hereby reviewed and set
aside, and referred back to the second respondent for consideration.
E
van der Schyff
Judge
of the High Court
Delivered:
This judgement is handed down electronically by uploading it to the
electronic file of this matter on CaseLines.
As a courtesy gesture,
it will be sent to the parties/their legal representatives by email.
For
the applicant:
In
person
For
the respondents:
Adv.
G. Oliver
Instructed
by:
Brendan
Muller Inc.
For
the
amicus curiae:
Adv.
P Ellis SC
With:
Adv.
B Yawa
Date
of the hearing:
16
March 2023
Date
of judgment:
3
April 2023
[1]
2003
(6) SA 664 (C).
[2]
LM
du Plessis ‘Statute law and interpretation’ in WA
Joubert, JA Faris and LTC Harms (eds)
The
Law of South Africa
vol 25 2 ed (2001) para 291.
[3]
2016
(4) SA 121
(CC) at para [90].
[4]
2020
(2) SA 325
(CC) at para [2].
[5]
See,
amongst other, J Halbert ‘The link between the Legal Practice
Bill and access to justice’ De Rebus October 2014
[6]
https://www.gov.za/documents/justice-vision-2000-executive-summary
accessed on 21 March 2023.
[7]
C
Loots Transformation of the Legal Profession: Discussion Paper
https://www.gov.za/documents/transformation-legal-profession-discussion-paper
accessed on 21 March 2023.
[8]
Justice
Vision 2000: Executive Summary, supra n 6.
[9]
Supra
n 7.
[10]
NG
401 of 20 July 2018 GG No 41781, as amended.
[11]
Goodricke
& Son v Auto Protection Insurance Co
1968
(1) SA 717
(A) at 722 H,
Eksteen
v Van Schalkwyk en ‘n Ander
1991 (2) SA 39 (T) 42-43.
[12]
Mullins
J and Da Silva C
Morris
Technique in Litigation
6
th
ed JUTA 5.
[13]
Supra
,
13.
[14]
Supra
,
9.
[15]
GN
168 of 29 March 2019 GG No. 42337.
[16]
Para.
22.3.1.
[17]
Para
23.
[18]
Para
39.
[19]
Paras
27.1 and 43.1.
[20]
‘Legal Practitioner’s Fidelity Fund’
https://www.fidfund.co.za/#:~:text=The%20primary%20purpose%20of%20the,executor%20or%20administrator%2
0in%20a accessed on 21 March
2023.
[21]
https://www.fidfund.co.za/about-lpff/ accessed on 21 March 2023.
[22]
Ibid.
see also ‘The Legal Practitioners Fidelity Fund –
empowering South Africans to use legal services with confidence’
-
https://www.iol.co.za/business-report/partnered/the-legal-practitioners-fidelity-fund-empowering-south-africans-to-use-legal-services-with-confidence-d88b7f62-80ad-422b-bb6f-f8e064780a33
accessed on 21 March 2023.
[23]
1957
(4) SA 618
(W).
[24]
2003
(6) SA 664 (C).
[25]
Supra
,
at para [13].
[26]
Supra
,
at para [16].
[27]
2004
(3) SA 31 (C).
[28]
Supra,
at
para [42].
[29]
1981
(3) SA 539
(W) at 542G-H.
[30]
2012
(3) SA 611
(SCA) at para [17].
[31]
[1996] ZASCA 84
;
1997
(1) SA 136
(A).
sino noindex
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