South Africa: High Courts - Gauteng

(1) REPORT;\3L.E: Y:;:.S/I·X).

(2) OF INn::RE:':ST TO OTi-;r:::n JU

(3) REVISED.

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DATE

In the matter between:

THE LAW SOCIETY OF THE NORTHERN PROVINCES

PLAINTIFF

And

JOSEPHA T MOELETSE MOLE FE

DEFENDANT

JUDGMENT

DU PLESSIS J:

The respondent was admitted as an attorney on 8 July 1999. He

practiced for his own account as a single practitioner in Springs. The applicant

now applies for the respondent's name to be struck from the roll of attorneys. On

23 May 2006 the applicant applied on the same papers for an order suspending

the respondent from practice pending the finalisation of this application. Such an

order was granted.

The applicant received a number of complaints concerning the respondent's conduct, had them investigated and based thereon, brought this application. The respondent filed an answering affidavit in which he dealt with the different complaints. In respect of some of the complaints, the facts are in dispute. I proceed to consider the application on the facts that the respondent does not dispute.

It is common cause that on 1 July 2004 Ms MN Sibiya paid an amount of R40 000 to the respondent, being the deposit on a property that Ms Sibiya had purchased. The respondent should have received the money into his trust account but in fact received it into his business account. When the transaction in respect whereof the money had been paid fell through, Ms Sibiya sought repayment of the R40 00 but the respondent did not pay it back. Ms Sibiya bought another property and requested the respondent to pay the R40 000 in respect of the new transaction. Again the respondent failed to pay and his client lost the transaction. Attorneys acting for Ms Sibiya demanded repayment of the R40 000. On 23 September 2004 the respondent issued a trust cheque for the amount but the cheque was not met by the respondent's bank. Only in November 2005, more than a year after he had received the money, did the respondent repay the R40 000 and he did so by way of a business cheque, not a trust cheque.

The respondent's explanation is as follows. When his client made the deposit, he was, due to ill health, not present at the office. In his absence, the money was received into his business banking account and not the trust account. At the time his practice was in financial difficulty ("was not making a profit") and, for some time, he had not paid his staff their salaries. The "staff" (the respondent does not specify) misrepresented to him that an amount of R40 000 that was due to him in respect of another transaction, was about to be paid. Based on this misrepresentation, the respondent "utilized the money", that is, Ms Sibiya's R40 000, presumably to pay the salaries. The respondent further states that when

the trust cheque was issued some 3 months later, he also was in bed sick. He issued the trust cheque because a staff member informed him that there were sufficient funds in the trust account.

The respondent's explanation shows that he knowingly used money that belonged to a client to pay his staff their salaries. He did so because he was told, incorrectly, that money due to him was about to be paid. While the respondent's mistaken belief that he was about to receive money might be explained by his ill health at the time, the fact remains that he misappropriated money that had to be held in trust for a client, and that he did so knowingly. An attorney may not use trust money in the hope that he will be able to recoup it form other funds. The respondent's conduct resulted in his client losing the second purchase. The fact that he issued a trust cheque while he had no money in trust to meet the cheque is in itself further evidence thereof that he did not

properly conduct his trust account. The latter might, however, be explained by the respondent's ill health at the time.

Mrs LD Sibisi was appointed as the executrix in the estate of her late husband. She instructed the respondent to attend to the liquidation of the deceased estate. Mrs Sibisi complained that an amount of R16 000 due to the estate had been paid to the respondent but that the respondent had not paid the money to the estate nor had he accounted to her in that regard. The applicant requested the respondent to comment on the complaint, but he did not respond.

In his answering affidavit the respondent explains that Mrs Sibisi borrowed R20 000 from him. She instructed him to collect the estate's R16 000 and to utilise it as part payment of the R20 000 she owed him.

In argument the applicant's attorney correctly pointed out that, even accepting that Mrs Sibisi gave him instructions to do so, the respondent was not entitled to set off an amount that he had received in trust for the estate, against moneys that Mrs Sibisi owed him.

The respondent acted for Ms MJ Makgethwa in a third party matter. He settled her claim for R240 307,00 plus R3000 in respect of costs. The Road Accident Fund paid the amount in monthly instalments. On 14 February 2006 the client complained to the applicant that the respondent had only pad R40 000

over to her. By then, the Road Accident Fund had already paid to the respondent an amount of R176 021,04.

The respondent's reaction to this complaint is that, when the application was launched, he had already paid an amount of R103 000 to his client and that it was paid in full and final settlement. The respondent states that he was entitled to retain the balance (R140 307 or 57,7%) as fees in accordance with a fee agreement. To prove his contentions, the respondent annexed to the answering affidavit two almost illegible deposit slips showing deposits of a total of R63 000 into what appears to be the client's account. The respondent does not explicitly say so, but it must be accepted that these deposits were paid in addition to the R40 000 and that he did therefore pay the client a total of R103 000. The two deposit slips are respectively dated March and April 2006, showing that the respondent made the deposits after the client had complained. As for the fee agreement, the respondent annexed a power of attorney that, so he contends, is evidence of the agreement. As regards a fee agreement, the power of attorney reads that fees shall be charged "at hourly rate of R50, 00 which rate shall escalate annually at 10% of party and pay (sic, probably "party") tariff plus 25".

The "fee agreement' that the respondent seeks to rely on does not comply with the provisions of the Contingency Fees Act, 66 of 1997 and does not entitle the respondent to charge anything but a reasonable fee. In any event, the agreement certainly did not entitle the respondent to retain more than half of

the settlement figure as fees. In his answer, the respondent does not even attempt to account for the money that he retained. One can infer from the papers that the matter was settled before summons had been issued, but apart from

that, the respondent simply gives the court no facts upon which to determine what a reasonable fee would have been. It is abundantly clear, however, that the respondent grossly overreached his client.

The respondent did not cause his auditors for the financial year ending February 2004 to file a report as required by the applicant's Rule 70. In the result the respondent was not issued with a Fidelity Fund certificate for the year commencing January 2005. The respondent's explanation is that, due to his ill health, his books of account were not properly kept and that he could not obtain the necessary certificate. In any event, due to his ill health, he did not actually practice.

The next question is whether, in view of the facts found above, the respondent is "a fit and proper person to continue to practise as an attorney" (Sect. 22(1 )(d) of the Attorneys Act, 53 of 1979).

The respondent's failure to cause a certificate in terms of Rule 70 to be issued and presented to the applicant is serious. It shows a lack of appreciation for the need to comply with the professional rules and the importance of transparency in accounting for other people's money that is entrusted to an

attorney. It must be borne in mind, however, that the respondent was suffering from ill health and that he did not actively practice throughout. In a sense, therefore, the transgression is technical.

The case of Mrs Sibisi shows that the respondent does not appreciate the importance for an attorney to distinguish between what he is instructed to do and what he can and may in law do. The Sibisi matter shows ineptness but not necessarily dishonesty on the respondent's part.

The misuse of Ms Sibiya's money is serious. First, it caused the respondent's client prejudice. Second, it evinces willingness on the part of the respondent to misuse trust money if he believes that he can recoup it. Inherent in the use of trust money for an improper purpose is a measure of diShonesty or lack of integrity. The respondent's ill health at the time accounts for his financial difficulties and even his lack of knowledge of what is going on in his practice. It cannot account for his willingness to use a client's money to pay his staff, albeit that he thought he could repay it.

The respondent's conduct in the case of Ms Makgethwa is disconcerting.

He grossly overcharged a client, appropriated her money to pay his exorbitant fees and, judged by his explanation, does not have the insight to appreciate that his conduct is not what can be expected of an attorney. To overcharge clients

who come to an attorney for help and to misappropriate trust money to fund the exorbitant fees shows a serious lack of integrity.

Honesty, integrity, a full appreciation of the importance of keeping trust money separate from other money and a full appreciation of the need meticulously to keep account of trust moneys are important attributes in the make of an attorney. The respondent lacks those and is not a fit and proper person to continue to practice as an attorney.

What must now be decided is whether the respondent must be struck from the roll of whether he must be suspended from practice. The respondent's deviations from what is expected of an attorney are serious. While the case of Mrs Sibisi may be one of lack of knowledge and appreciation on the respondent's part, the other two incidents involve various degrees of dishonesty. In the case of Ms Makgethwa the respondent's dishonesty had the effect of depriving a woman of a substantial portion of money that she needed in order to support herself in the future. Self evidently, it is the duty of this court to ensure that the conduct of its officers do not so impact on members of the public who, in many, if not most, cases are poor people who can ill-afford such losses. The respondent's answering affidavit does not in any way show that he has insight into the error of his ways. On the contrary, the respondent sought to justify his conduct. The respondent has given this court no indication whatsoever that he is

now or will in the foreseeable future be capable of understanding in what respects his conduct fell short of what is expected of an attorney.

In the result, an order is made in terms of the draft order annexed hereto marked "A".

B. R. DU PLESSIS Judge of the High Court

I Agree

L. M. MOLOPA Judge of the High Court

ON BEHALF OF THE APPELLANT:

MESSRS STEGMANNS INC. Ref: Mr.Petty

ON BEHALF OF THE RESPONDENT:

MESSRS VILAKAZI TAU Sutherland, S.

Ref: MGM 2006/ COM1

Adv. VAN KERKEN