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Lerumo Mogobe Legal Practitioners v Fencing Center (Pty) Ltd (Civil Appeal No.29 of 99) [2000] BWCA 10; [2000] 1 B.L.R. 128 (CA) (27 January 2000)

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IN THE COURT OF APPEAL FOR BOTSWANA HELD AT LOBATSE
Civil Appeal No. 29/99 High Court Civil Trial No. 154/97
In the matter between:
LERUMO MOGOBE LEGAL PRACTITIONERS        Appellant
And
FENCING CENTRE (PTY) LTD         Respondent
Advocate R.L. Selvan with Advocate S.T. Pilane for the Appellant Advocate S. Joseph with Attorney Mrs M. Makgalemele-Buzzman for the Respondent.
JUDGMENT
CORAM: AMISSAH, P. STEYN, J.A. LORD WEIR, J.A.
STEYNr LA.
Appellant (Mogobe) was the second respondent in an application before the
High Court in which respondent (Fencing) succeeded in obtaining an order ad
pecuniam solvendam against Mogobe and the first respondent in that application,
i.e. Lancashire Steel (Private) Ltd. (Lancashire) jointly and severally, the one paying
the other being absolved. The order reads as follows:
" 1. The Respondents, jointly and severally, are to effect immediate payment to the Applicant of the sum of P72,126.94.
2. The Respondents, jointly and severally, are to pay interest to the Applicant on the sum of P62, 016.94 at the rate of 10%

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per annum from 1st October 1999 to date of payment a. tempore morae.
3.     
The costs of this application are awarded to the Applicant and are to be paid by the Respondents, jointly and severally, on the scale as between attorney and own client.
4.     
The costs of all interlocutory applications in this matter brought by the Respondent, or either of them, are to be paid by the Respondents to the Applicant on the scale as between attorney and client.
5.     
Should the Respondents (or either of them) fail to make payment of the amounts referred to in 1 and 2 above upon production of this order and the costs orders referred to in 3 and 4 above following taxation, the Applicant is authorised to issue a Writ of Execution.
6.     
The Applicant is to bear its own costs of the application to amend the Notice of Motion."
Lancashire complied with this court order and is not a party to this appeal. The appeal is therefore one which is essentially concerned with the costs order against Mogobe.
Voluminous grounds of appeal were filed. Counsel for appellant confined himself to two arguments. He challenged the finding that Mogobe, who was at all material times Lancashire's attorney, was jointly and severally liable for payment of the capital sum and therefore liable for the costs decreed by the High Court. The punitive costs order was placed in issue for reasons to which I shall refer below. The facts are the following:
Lancashire instituted an action for payment of R396,622.50 being the Pula equivalent of P302,765.27 and filed an application for summary judgment

3
pursuant to an entry of appearance by Fencing. However the dispute was compromised by the parties. An agreement was entered into and a manuscript draft order in Mogobe's handwriting was made an order of court at the request of the parties. This order reads as follows:
" 1. The settlement is the Pula equivalent of P320 000.00
2.       The Defendant shall settle the aforegoing amount without
deduction or demand as follows:
 2.1    
18th December 1997 - Pula equivalent of R80 000.00
 2.2     18th January 1998 - Pula equivalent of R80 000.00
 2.3     16th February 1998 - Pula equivalent of R80 000.00
 2.4     18th March 1998 - Pula equivalent of R80 000.00

3.     
The Defendant shall also make payment of the Plaintiff's legal costs in the sum of P5 000.00
4.     
All payments shall be paid in prevailing the Pula equivalent thereof at the then rate of directly to the Plaintiff prevailing rate of exchange (sic).
5.     
The aforegoing shall constitute full and final settlement between the parties, provided, that in the event of Default by the Defendant the Plaintiff shall be entitled to:

5.1    
Approach the Registrar of this Honourable Court for the insurance (sic) of the writ of execution in the sum of Pula equivalent of R320 000.00
5.2    
Seek Attorney/client costs against the Defendant in enforcing this agreement
5.3    
No writ shall be issued against he (sic) Defendant as long as the Defendant complies with the terms set out above."
In terms of this consent order Fencing was obliged to effect payment of the
first instalment of the Pula equivalent of R80 000.00 by the 1st of December
1997. A cheque to the value of P68,016.94 was drawn in favour of Mogobe by

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Fencing and was duly presented for payment by the former but was dishonoured. The amount of P68,016.94 aforesaid was made up of P5,000.00, being the agreed sum in respect of Lancashire's legal costs in accordance with paragraph 3 of the consent order and the balance was to be credited in partial discharge of the capital sum owing.
Upon dishonour, and in accordance with paragraph 5 of the consent order, Lancashire caused a writ of execution to be issued for the total amount outstanding viz. R320,000. The deputy-sheriff accordingly attached certain movable property of Fencing. The latter immediately drew a second cheque in favour of Mogobe for the full amount of its obligations under the consent order. This cheque for P251,968.50 (being the Pula equivalent of R320,000.) was duly met and the principal obligations under the terms of the consent order were accordingly discharged. The deputy-sheriff also demanded payment of his charges as well as commission claimed for executing the writ, which Fencing paid with a cheque to the value of P8,388.97.
Even before the first cheque was presented and dishonoured an attempt was made by Mogobe, allegedly on his client's instructions, for payment of "collection commission" alleged to be due to Mogobe. As no provision had been made for payment of such commission, Fencing refused to pay same. The only outstanding obligation at this point in time was the obligation to pay P5000, being Lancashire's agreed legal costs.
It is what takes place after these events that resulted in the institution of the proceedings which are the subject matter of this appeal. Mogobe now proceeds to

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present the previously dishonoured cheque for payment, the cheque is met and the proceeds are credited to Mogobe's account. Fencing's reaction is to assert that Mogobe and/or Lancashire had no right to present the cheque and save that it was prepared to permit a set-off of the sum of P5000 against the amount of the cheque, it claimed payment of the balance.
Mogobe's response, allegedly on behalf of his client, is not only to refuse to repay the balance of the funds held, but to contend that additional amounts are due and payable by Fencing. The two respondents (Lancashire and Mogobe) whilst admitting the validity of the consent order, alleged that in addition to the discharge of the obligations under the Order, Fencing was also liable for payment of interest as well as collection commission of P25,198.85 being 10% on the capital amount due in terms of the consent order. These claims were made despite the explicit provision in the consent order that the agreement which the parties requested the court to incorporate in the order "shall constitute (a) full and final settlement between the parties..."
The basis for the claim for collection commission which was advanced in the proceedings before the court below, was that it was part and parcel of the attorney and client costs provided for in the proviso to the order, viz. it was an entitlement which arose from the enforcement of the terms of the proviso, such as e.g. the taking of the steps necessary in order to execute against Fencing's property. This was spurious and was correctly held to be so by the court a quo. I say this, because whilst an attorney might be entitled to recover costs incurred from his client when collecting liabilities due by way of instalments, it is difficult to envisage

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how they can be legal costs recoverable from the debtor. Indeed it is quite untenable to claim - in the absence of an explicit agreement to that effect - that such a substantial sum, being 10% levied on a single capital payment can be recoverable by an attorney from his own client, let alone from the other party.
However, even more significant is the fact that it was sought to recover collection commission even before the first cheque was re-presented and dishonoured. It follows that it was patently dishonest to seek to recover it under the guise of legal costs incurred after the cheque was dishonoured. The allegation made was that these were legal costs due in respect of the enforcement of this subsequently arising obligation.
The claim for interest is equally spurious. In the first place there is no provision made for such interest in the consent order. Moreover, when the claim for the payment of any amount over and above that provided for in the agreement prior to default is made, i.e. collection commission and the legal costs, there is no mention of the fact that interest is payable. It should be pointed out that the amount claimed under the heading of interest is alleged to be some P88,000. It is inconceivable that the parties could have forgotten to provide for payment of such a substantial amount in their agreement. Counsel for Fencing contended that both these claims were not only spurious but patently dishonest attempts to obtain a benefit from the re-presentation of a cheque which had been dishonoured. It was a ploy, so he submitted, to seek to apply it in discharge of an obligation for which it had never been issued and which was, except for the legal cost of P5000, not due.

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Two arguments were raised in response to these submissions. Counsel for Mogobe, conceded that the re-presentation of the cheque was what he referred to as "opportunistic." However he urged us to find that his client was not liable jointly and severally with Lancashire for payment of the amount generated by the re-presention of the cheque, because he was at all times acting merely as Lancashire's agent. Whatever he did, he did on the instructions of his client. In the second place, he urged us to find that because the legal costs of P5000 had not been paid, it was not improper for Mogobe to present the cheque for P68,000 in order to seek to recover the agreed legal costs of P5000.
In regard to the latter argument, had Mogobe and/or Lancashire immediately after presenting the cheque and receiving the funds repaid the balance of P63,000 ( having deducted the P5000 legal costs due in terms of the agreement) their conduct would have been less reprehensible, even if unlawful. However that this was never the intention is demonstrated by their subsequent behaviour. In this regard I refer to their unconscienable conduct in seeking to recover via a set off against their illegally obtained gains, amounts which they both knew were not due in terms of the agreement. Not only do they resist Fencing's attempts to recover the funds unlawfully obtained, but they take every conceivable step to avoid or to delay repayment.
I come to deal with the principal defence raised by Mogobe's counsel; i.e. that he did not incur any personal liability but was merely carrying out the instructions of his client.

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In this regard counsel relied on the following evidence. The "financial accountant" of Lancashire, one Kurehwatra, who deposed to the opposing affidavit filed on its behalf, stated that Fencing's previously dishonoured cheque was re-deposited "upon our instructions." He also alleges that Lancashire was "the recipiens" of all payments made by Fencing and that the attorneys were "merely agents acting on behalf of 1st Respondent (Lancashire) and in accordance with its instructions."
In a confirmatory affidavit Mr. Mogobe says that he had read the affidavit of
Mr Kurehwatra and he confirms the correctness of the allegations insofar as they
relate to him and to his practice. He goes on to say:
"I would add that at all material times all actions carried out by my firm were in accordance with instructions received from the 1st Respondent and that the recipients of all payments received from the Applicant was not the firm but the 1st Respondent. The payments were received from the Applicant by my firm for the firm was nominated as the 1st Respondent's agent to receive payment as a matter of convenience."
It should be noted that Fencing had joined Mogobe in the proceedings in which it sought recovery of the funds generated by the re-deposit of the dishonoured cheque. In doing so it alleged that Lancashire was a peregrinus and that if the money had already been disbursed, Fencing would have to follow it to Zimbabwe in order to recover what was due. In all the circumstances one would have expected Mogobe to have alleged a misjoinder and to have himself filed an affidavit to explain his conduct. Fencing had alleged not only that the representation of the cheque was unlawful, but that Mogobe had acted unprofessionally in doing so. In a letter dated the 12 February 1998, Fencing's

9
attorneys had in fact threatened to report Mogobe to the Law Society in respect of his conduct. It would have been relatively easy for Mogobe and his client to disclose their dealings with the funds generated by the cashing of the cheque. Had no benefit accrued to Mogobe, it would have been a very simple matter to have alleged and to have proved this. Instead, Mogobe sought to rely on an affidavit confirming the ipse dixit of his client and by making the bald statement referred to above. It must be borne in mind that Mogobe is the person who was not only the payee but who had himself deposited the cheque into his firm's account. Indeed he was an essential cog in the wheel. Without his participation the unlawful transfer of funds could not have taken place for these reasons. I am satisfied that the parties concerned have been less than candid with the court.
This is the more so in view of the fact that the causa of two of the claims for money related to legal costs allegedly due to Mogobe. It would obviously be to Mogobe's advantage if he could have cash in hand in discharge of his claim for fees rather than to rely on his client who was a peregrinus. The extraordinary claim for collection commission of P25,198.85 would, more particularly, have been difficult to recover from Lancashire - especially in the absence of a specific argument to that effect. In the event no such agreement was alleged or proved in the proceedings in casu.
For these reasons I am satisfied that the court a quo was correct in its finding that, particularly in view of the "collection commission interest" of Mogobe he was the "recipiens" of the funds generated by the deposit of the previously dishonoured cheque. In this regard the court relied on a judgment of this court in which Mr.

10
Mogobe's previous firm was also involved. The judgment was delivered by
Schreiner LA. in this court in Segopolo and Mogobe v. J.V. Condotte (Pty)
Ltd Civ. App. No. 8/95. The learned judge says the following in this regard:
"But where the duty of the intermediary is something more than the transmitter of the over-payment and he has some interest in the money itself either because it is wholly or partly due beneficially due to him or because he is obliged to take certain action in respect of it he is the recipiens. What he does with the money thereafter would be irrelevant to the question of whether or not he is the recipiens and also liable to return any over-payment to the claimant. I think that the cases where a person who actually received possession of money from the payer can successfully plead that he is not the recipiens must fall within a narrow complex."(compass)
In this case also Mogobe's firm had sought to recover "collection commission" via a not dissimilar strategy and pursued this claim through both the High Court and the Court of Appeal when the legitimacy of its claim was challenged.
Counsel for Lancashire submitted that the judgment was distinguishable or alternatively wrongly decided. Whilst obviously each case must be decided on the proven facts before a court, the principle enunciated by Schreiner J.A. is in my view correct. See in this regard Johnson v. lainodien 1982(4) SA 599 at 605-606, and the other authorities cited below.
In the present case the attempt by the attorney to distance himself as a potential beneficiary from the unlawful conduct is rejected. The nature of his interest is obvious. His attempt to benefit himself after the consent order was made by the court by claiming "collection commission" on a once off payment of capital which had never formed part of the agreement was not only spurious, but

11
was in the view of this court dishonourable and unprofessional. The presiding judge in the court below referred to Mogobe's conduct as "a stain on the legal profession" and he was right to say so.
The defence that Mogobe was not the recipiens of the funds in question must therefore fail. I should add however, as counsel for bmcaahiwr pointed out, that the re-presentation of the cheque was a wrongful act and that Mogobe was liable in delict. Mogobe knew what the terms of the agreement and the subsequent consent order were. It must be remembered that the original agreement was in his handwriting. He was therefore a joint tortfeaser when he presented the cheque and he was obliged as such to compensate Fencing for any loss it sustained.
A delict is defined in the First Reissue of the Law of South Africa as follows:
"2 Delict: general nature Like a crime and a breach of contract, a delict is a form of unlawful conduct. In general terms a delict can be defined as a civil wrong. Such a definition encompasses all instances, excluding contractual obligations, which give rise to compensation for harm wrongfully caused, irrespective of whether liability is strict or based upon fault. A more narrow definition considers a delict to be wrongful and blameworthy conduct which causes harm to a person. This view equates delictual liability with fault liability.
These definitions cover the main forms of delictual conduct which are recognised in South African law, namely the wrongful causing of patrimonial or pecuniary loss (damnum iniuria datum), the wrongful infliction of pain and suffering associated with bodily injury to the plaintiff and the wrongful infringement of interests of personality (iniuria). In the first instance damages are recovered by means of the actio legis Aquiliae, in the second by means of the Germanic remedy for the recovery of compensation as solatium for the injury to the plaintiff's personality. For all practical purposes the general principles underlying these remedies comprehensively cover the whole field of delictual liability.

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The wrongful infliction of pecuniary loss (or damnum iniuri datum) as a form of delictual conduct can therefore generally be defined as wrongful and culpable conduct which causes patrimonial damage to the plaintiff. The plaintiff's remedy for the recovery of damages is the actio legis Aquiliae. For the purpose of founding Aquilian liability, the plaintiff can prove either negligence (culpa) or intent (dolus) on the part of the defendant. The plaintiff must also be able to prove a calculable pecuniary loss (damnum)."
This citation fully supports counsel's argument.
Counsel for Mogobe was heard to complain that this was not the case his
client was called upon to meet. I do not agree. It is true that a different legal label
was attached to the cause of action when presenting Fencing's case. However, the
facts alleging wrongful conduct was clearly set out in the affidavit and accepted by
the court a quo. The fact that improper, indeed fraudulent conduct by Mogobe
was alleged and so found to have occurred is a proper basis in law for holding him
personally liable. See in this regard the judgment of the Court of Appeal in D.
Owen and Co. v. Cronk 1895(1) Q.B.D. 265 at 274 where Lopes L.J. says
the following:
"I think the law is clearly settled that if an agent has received for his principal money the payment of which has been wrongly obtained, and he pays it over to the principal before he has any notice of the wrong, he is protected from any liability to the person who paid the money. But if, on the other hand, the agent, with notice of the wrong, pays the money to his principal he will nevertheless be personally liable to the person who made the payment. Here the defendant, being an agent, paid the cheque to the account of his principals before he had had any notice that it had been improperly obtained from the plaintiffs. He had complied with the requirements of the law, and, therefore, the action cannot be maintained against him, and the decision of the learned judge was right."

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See also Bowstcad on Agency 15th Ed. 482 - 483 where the learned authors say:
"Rule 2(b). If any person gets money into his hands illegally, he cannot discharge himself by paying it over to another. Therefore, where the agent is a party or privy to a wrong in respect of which money is paid to him, the action lies against him and it is no defence to allege that he has paid the money over to his principal. This applies whether he receives the money on his own account or on behalf of the principal. But where he is not a party to the wrong, and pays the money over before he has knowledge of the plaintiff's claim, he can rely on the principle set out in Rule 2(c) below and is not liable. In Snowdown v. Davis, Mansfield CJ. said that the reason that the agent was liable in that case (a case of duress of goods) was that the third party did not pay the money for the purpose, to redeem his goods. But this would be so in a case where the agent was innocent, yet in such cases recovery Is barred where the agent has paid the money over. The true explanation is therefore that quoted at the beginning of this paragraph, that the agent as a party to the wrong is himself liable."
It should be noted that neither Mogobe nor Lancashire has ever alleged in casu that the funds were paid over by the agent (Mogobe) to his principal (Lancashire).
In the present case Mogobe also knew that the transaction he performed by the presentation of the dishonoured cheque was tainted and he Is therefore personally liable for repayment.
I come to deal with the question of costs and for these purposes refer to the parties as Appellant and Respondent. As can be seen from the court order cited above, the court below ordered appellant to pay the punitive costs. Indeed the order made is the most punitive costs order that a court can make. In view of the findings made in this judgment, it is clear that not only are there no grounds upon

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which this court should interfere with the orders granted in this regard, but that we fully support the reasoning and the decision made by the judge a quo. Counsel did contend also that such punitive orders should not have been extended to cover the various interlocutory applications because some of them may have had merit. I do not agree. Appellant orchestrated and conducted a determined, protracted legalistic campaign to deny the respondent access to money which he knew was due to it. I see no reason why we should question the finding of the Judge a quo when he says he regarded the opposition to respondent's claim for repayment as "bogus as well as fanciful and vexatious." The costs order made by the High Court is accordingly confirmed.
I come to deal with the question of the costs of this appeal. Counsel submitted that the appeal was not without merit and that there was therefore no reason to depart from the conventional costs order on appeal. There are two considerations that militate against such an approach.
In the first place, appellant has in fact only brought this appeal against a costs order. This court must not be seen to encourage parties to appeal only against costs orders, save when they are clearly wrong. Secondly, and more importantly, appellant's conduct as an officer of the court was most reprehensible and deserving of censure. The court in demonstrating its disaffection concerning such conduct, should not be confined to expressions of disapproval only but also, in proper cases, by way of appropriate orders as to costs. For these reasons we propose to order that the costs of appeal should also be paid on an attorney and own client scale.

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Clearly the professional behaviour of the appellant is deserving of censure. We believe that his conduct in this case is a matter which requires an investigation by his peers. As officers of the court and servants of justice the legal profession needs to guard jealously the standards of honesty of those who practice our profession. As the Law Society of Botswana is the guardian of the proper professional conduct of its members, and in view of the findings made and the opinions expressed by the Judge a quo and ourselves concerning Mr. Mogobe's unprofessional behaviour, we refer this matter to the Law Society for its investigation^ and such action as it deems appropriate.
For these reasons the appeal is dismissed with costs on an attorney and own client scale.
Delivered in open court at Lobatse on 27 January 2000.
J.H.STEYN
[JUDGE OF APPEAL]
I agree:
A.N.E. AMISSAH [PRESIDENT]
1 agree:        
LORD WEIR [JUDGE OF APPEAL]

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