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Law Society of the Northern Provinces (Incorporated as the Law Society of the Transvaal) v Mahlangu and Others (20901/2003)  ZAGPHC 343 (22 November 2005)
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IN THE HIGH COURT OF SOUTH AFRICA
(TRANSVAAL PROVINCIAL DIVISION)
CASE NO: 20901/2003
In the matter between:
THE LAW SOCIETY OF THE
NORTHERN PROVINCES APPLICANT
(Incorporated as the Law Society of the Transvaal)
ALFRED SPHUMO MAHLANGU 1ST RESPONDENT
GEORGE EDGAR NTSHAUPE MOKHUSE 2ND RESPONDENT
MADIMETJA CHARLES LAMOLA 3RD RESPONDENT
DE VOS, J
The Law Society of the Northern Provinces (“the Law Society”) launched an urgent application to suspend the three respondents in their practice as attorneys on 25 July 2003. The A part of the notice of motion (the urgent application) was heard on 5 August 2003 and the court granted an order in terms of which the respondents were suspended from practising and the suspension was suspended pending the final determination of the application upon certain conditions.
The application to strike the respondents’ names from the roll of attorneys was enrolled for hearing on 3 September 2004. On that date the court granted an order striking the first and third respondents’ names from the roll of attorneys. The application for striking of the second respondent’s name was postponed sine die and the second respondent was afforded an opportunity to file a further affidavit. The Law Society now proceeds with the application to strike the second respondent’s name from the roll of attorneys in accordance with part B of the notice of motion.
The respondent was admitted as an attorney of this court on 8 October 1996 and practised with the other two respondents in partnership under the name Lamola, Mokhuse & Mahlangu at Pretoria and Groblersdal.
The respondents failed to lodge their rule 70 auditors’ certificate reflecting the state of their accounting records and trust account for the period ending February 2002. They were then called upon to appear before a disciplinary committee of the council of the Law Society during November 2002 to answer to the charge in respect of this failure. The first respondent appeared and pleaded guilty to the charge. As a result of their failure to submit their rule 70 auditors’ certificate, Fidelity Fund certificates for the year 2003 were not issued to them. Notwithstanding this fact the respondents continued to practise as attorneys in contravention of the peremptory provisions of section 41(1) of the Attorneys Act. In view of this contravention by the respondents, the Law Society instructed a management consultant, a certain Van Rooyen to inspect the respondents’ accounting records and to file a report.
When Van Rooyen visited the firm he was informed that the firm kept three different sets of accounting records, one for each of the respondents and that they operated on three different trust accounts. Van Rooyen after extensive investigations compiled a comprehensive report in respect of his analysis of the trust ledgers supplied to him and identified numerous contraventions of the Act and the rules.
The second respondent has readily conceded in his affidavit that:
1. He was a de iure partner of Lamola, Mokhuse & Mahlangu at all relevant times.
2. The partnership failed to submit a rule 70 auditors’ certificate by 31 August 2002 for the financial year ending on 28 August 2002.
3. The partnership in January 2003 continued to practise without a Fidelity Fund certificate in contravention of section 41(1) of the Act.
4. The partnership had a trust deficit of R55 269.57 according to the partnerships’ bookkeeping system.
5. The partnerships’ books were in disarray (and accordingly that the partnership had contravened certain sections of the Act and the rules pertaining to bookkeeping as set out in the report by Mr Van Rooyen; and
6. That the second respondent dealt with and was responsible for the matter of Motaung. Mrs Motaung had complained that there had been no accounting to her in respect of a third party claim. Although the second respondent admitted dealing with the matter, he explained that prior to the launching of the application he had accounted to her new attorney in the matter. He explains that he lost contact with the client and had not been able to account. He, however, promptly accounted with a cheque to Mr Mohabe. when he was made aware of the whereabouts of the client.
In due course the applicant also filed a supplementary affidavit wherein details are given of two further complaints received from clients of the first and third respondents respectively. These complaints are of a serious nature. However, the second respondent deposed to a supplementary affidavit explaining that he was not involved in any of the matters raised in the applicant’s supplementary affidavit.
In regard to the bookkeeping and the trust shortfall the second respondent explained that he did mostly road accident fund work on instruction of the Road Accident Fund. The implication being that there was no trust money to handle and that he had more or less ten matters where his client was the plaintiff in third party matters received from family and friends. He also stated that the Road Accident Fund would on occasion deposit fees to which the partnership was entitled into the trust account since the Road Accident Fund had the account numbers for both the business and trust accounts at First National Bank. The failure to furnish a rule 70 auditors’ certificate is explained in the affidavit as a partnership failure. However, the second respondent states that the failure was “primarily due to lack of information from other sources other than myself”. He attaches an affidavit from Mr Thomo the bookkeeper who explains that there were three trust accounts for trust matters and that the Pretoria account was the easiest and smallest and left until last to be administrated.
Although the second respondent accepts liability for the wrongdoings of the partnership he explains that the partnership had degenerated to the extent that the second respondent had an arrangement with the third respondent to contribute to office expenses whereas the first respondent was already cut off in Kwaggafontein. He therefore submitted that he was not in a real sense practising in partnership with the first and third respondents although he concedes that he was remiss in informally terminating the partnership.
It is clear from the second respondent’s affidavits that he has accounted to all clients and indeed there is no pertinent suggestion by the applicant that the second respondent is responsible for there being a shortfall for any trust creditor other than relying on the argument of “joint and several” responsibility for the shortfall in the accounts controlled by the first and third respondents. The second respondent furthermore admitted as a partner that he did not keep proper books of account but suggested to this court that this transgression can be remedied with guidance from the applicant such as training if that is so wished by this court.
It was argued on behalf of the Law Society that the facts placed before the court and in particular the transgressions committed by the respondents collectively and the second respondent specifically in failing to adhere to the rules of the Law Society and the provisions of the Act relating to the proper keeping of books of account warrants an order for the striking of his name from the roll of attorneys. It is said that in the absence of an explanation by the first and third respondents that it has been established on a balance of probabilities that the respondents have made themselves guilty of misappropriation or theft of trust funds. Although it was conceded by the Law Society that it is clear from the papers before the court that the second respondent has not made himself so guilty the argument is that the second respondent is liable with the first and third respondents as a partner of that firm. It was further argued that irrespective of the second respondent’s version as to whether he was still practicing in partnership with the first and third respondents, his failure to keep proper books of account is, on its own, is sufficient reason to warrant an order for the striking of his name from the roll of attorneys.
It is trite law that applications such as this one are sui generis and of a disciplinary nature. There is no lis between the Law Society and the respondent but the Law Society as custos morum of the profession places facts before the court for consideration. See Hassim v Incorporated Law Society of Natal 1977 2 SA 757 (A) 767C-G. The court then has a discretion. In the exercising of this discretion, the court is faced with a three stage enquiry. Firstly, it is for the court to decide whether or not the alleged offending conduct has been established on a preponderance of probabilities. Secondly, the court should enquire whether the person is a fit and proper person to continue to practice. This obviously entails a value judgment. Thirdly, the question is whether in all the circumstances the practitioner in question is to be removed from roll of attorneys or whether an order suspending him from practise for a specified period will suffice. This naturally is a question of degree. See Law Society of Cape of Good Hope v Budricks 2003 2 SA 11 (HHA) 13E-14B.
It should be noted at this stage that the second respondent, under voluntary suspension, has practised for some time under authorised supervision. It seems to me if regard is had to the three stage enquiry there can be no doubt as to the outcome of the questions posed in points 1 and 2. As far as I am concerned the crux of the matter lies in the question whether in all the circumstances of this case the second respondent should be removed from the roll of attorneys or merely suspended from practise.
There is a joint responsibility on the partners to keep proper books of account for the partnership. Generally it would not avail one partner to adopt the attitude that he was not the partner who was in charge of the finances and bookkeeping of the firm or that he left it to another partner. See Incorporated Law Society Transvaal v Visser and Others Incorporate Law Society Tansvaal v Viljoen 1958 4 SA 115 (T) 121H-122A. It is also true that a failure to keep proper accounting records is a serious contravention and an attorney is liable to be struck off the roll or be suspended for this alone. See Cirota and Another v Law Society Transvaal 1979 1 SA 172 (A) 193. It is also trite that the mere fact that there is a shortfall in the trust account is sufficient ground for a finding that a practitioner is not fit and proper to continue practising. It is in this regard that the second respondent concedes that for the purposes of section 22(1)(d) of the Attorneys Act 53 of 1979 he is not a fit and proper person to continue practising as an attorney. This concession is, however, made on the basis that in the exercise of the court’s discretion it should be ordered that he be suspended for a period of six months under certain conditions.
There is authority for the proposition that one partner can be treated more leniently than other partners. See Incorporated Law Society (OFS) v V 1960 3 SA 887 (OPD) and Incorporated Law Society Transvaal v W and Another 1962 4 SA 559 (TPD).
It seems to me if regard is had to the circumstances of this particular case and the second respondent’s actions and attitude after he had been suspended that this may be a prime case in which the court should exercise its discretion in favour of a suspension rather than a striking off. A question was posed to the Law Society as to the nature of the conditions which could be imposed as part of the order. It was submitted that before the second respondent be allowed to practise as an attorney after a period of suspension that he should attend the attorney’s accounting course presented by the School for Legal Practice conducted under the auspices of Legal Education and Development of the Law Society of South Africa. Furthermore that he pass the practical examination envisaged by section 14(1)(b) of the Attorneys Act 53 of 1979 for attorneys in respect of practical bookkeeping and for the keeping of accounting records which is conducted under the auspices of the Law Society of the Northern Provinces. In view of the above the following order should be made:
1. That the second respondent is suspended from practising as an attorney for a period of six months from the date of this order.
2. The second respondent may only commence practising as an attorney after the period of suspension on condition that he attended the attorney’s accounting course presented by the School for Legal Practice conducted under the auspices of Legal Education and Development of the Law Society of South Africa and that he pass the practical examination envisaged by section 14(1)(b) of the Attorneys Act 53 of 1979 for attorneys in respect of practical bookkeeping and for the keeping of accounting records which is conducted under the auspices of the Law Society of the Northern Provinces.
3. Pending compliance with the conditions set out above paragraphs 1.4.1 and 1.4.2 of the order of 5 August 2003 shall be applicable to the respondent subsequent to the expiration of the period of suspension and pending the fulfilment of the conditions referred to in paragraph (2) above; and
4. Paragraphs 1.2 and 1.3 of the order of court dated 3 September 2004 shall apply mutatis mutandis to the second respondent.
5. The second respondent is ordered to pay the costs of this application.
A DE VOS
JUDGE OF THE HIGH COURT
P M MABUSE
ACTING JUDGE OF THE HIGH COURT
HEARD ON: 10/10/2005
FOR THE APPLICANT: ADV S R ROSSOUW
INSTRUCTED BY: ROOTH & WESSELS INC, PRETORIA
FOR THE 2ND RESPONDENT: ADV D VILLIAMS
INSTRUCTED BY: MAFA ATTORNEYS
DATE OF JUDGMENT: 22/11/2005