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FORM A

FILING SHEET FOR EASTERN CAPE JUDGMENT

PARTIES:

MARY PATRICIA KING

AND 92 OTHERS APPLICANTS

and

THE ATTORNEYS FIDELITY FUND BOARD

OF CONTROL RESPONDENTS

• Case Number: 878/2002

• High Court: EASTERN CAPE DIVISION

HEARD: 15/10/07

DATE DELIVERED: 18/10/07

JUDGE(S): PLASKET J

LEGAL REPRESENTATIVES -

Appearances

• Applicant(s): M Lowe SC

• Respondent(s): R Buchanan SC

Instructing attorneys:

• Applicant(s): Wheeldon, Rushmere and Cole

• Respondent(s): O Ronaasen and NW Gqamana, instructed by Borman and Botha

CASE INFORMATION -

• Nature of proceedings : Application for Leave to Appeal

IN THE HIGH COURT OF SOUTH AFRICA

(EASTERN CAPE DIVISION)

DATE HEARD: 15/10/07

DATE DELIVERED: 18/10/07

NOT REPORTABLE

CASE NO: 878/2002

In the matter between:

MARY PATRICIA KING

AND 92 OTHERS APPLICANTS

and

THE ATTORNEYS FIDELITY FUND BOARD

OF CONTROL RESPONDENTS

______________________________________________________________

CASE NO: 1376/02

COLLEEN JUDITH VAN STRAATEN

AND SIX OTHERS APPLICANTS

and

THE ATTORNEYS FIDELITY FUND BOARD

OF CONTROL RESPONDENTS

______________________________________________________________

CASE NO: 1377/02

NAMCOAST (PTY) LTD APPLICANT

and

THE ATTORNEYS FIDELITY FUND BOARD

OF CONTROL RESPONDENT

______________________________________________________________

CASE NO: 1523/02

C M TAPSON AND TWO OTHERS APPLICANTS

and

THE ATTORNEYS FIDELITY FUND BOARD

OF CONTROL RESPONDENTS

______________________________________________________________

JUDGMENT

APPLICATION FOR LEAVE TO APPEAL

PLASKET J

[1] This is an application for leave to appeal against a judgment in which I dismissed with costs a claim for compensation instituted by the plaintiffs against the defendant in terms of s 26(a) of the Attorneys Act 53 of 1979.

[2] The essence of the application for leave to appeal is that I erred in my interpretation of the evidence and in its application to the relevant provisions of the Act. The grounds of appeal traverse the same issues that were covered in argument during the trial and amount to the submission that I erred in finding on the evidence adduced by the plaintiffs: (a) that the money that was stolen by members of a firm of attorneys –Van Schalkwyks -- was entrusted to that firm as envisaged by s 26(a) of the Act; (b) that the stolen money had been entrusted in the course of the practice of Van Schalkwyks, also as envisaged by s 26(a); (c) that even if the money was entrusted in the course of the firm’s practice, the defendant escaped liability because the money was invested, as envisaged by s 47(1)(g) of the Act, and was therefore not subject to the protection of the Act; and (d), in respect of certain plaintiffs, that they lacked standing because an entity known as Paragon Asset Management Trust, which placed their money in the trust account of Van Schalkwyks, was not their agent but was itself in contractual privity with Van Schalwyks as a principal.

[3] I do not intend dealing with each of my conclusions in the judgment on these issues. They, and the evidence upon which they are based, are set out in detail in my judgment. Suffice it to say that any one of the first three findings – the entrustment issue, the course of practice issue and the investment issue -- if correctly decided would be fatal to the plaintiffs’ claims. Consequently, if there is no reasonable prospect of success on appeal in respect of any one of these issues, leave to appeal will have to be refused.

[4] Whatever the merits of the submission that there are reasonably prospects of an appeal court arriving at different conclusions to mine in respect of the first two issues – and I make no comment on that – I am of the view that there are no reasonable prospects of success in respect of the s 47 issue at least. My reason for stating this appears from the following paragraphs of my judgment that dealt with the issue on the basis of evidence that was common cause and emanated from the plaintiffs’ own witnesses:

‘[97] It stands out in the evidence of virtually every witness called by the plaintiff that he or she described the placement of money in the scheme as the investing of that money. Indeed, Barnard was assured by Neave that, because an attorney’s trust account was being used in the scheme, “this was the safest way of making money”. The acknowledgments of debt issued by Van Schalkwyks to those who placed money in the scheme stated that the money being received was received “for investment purposes”. The founding affidavit of Thurgood, in the application for the sequestration of Du Mont, makes it clear that the purpose of depositing money into the trust account of Van Schalkwyks was to invest money in the discounting scheme. Thurgood described the funds placed in the scheme as “investment monies”. The very purpose of the scheme was that money would be placed in it so that funds were available for the discounting of estate agents’ commissions and, ten weeks later, those who placed money in the scheme would be credited with a profit on their initial stake – their investment.

[98] There can, in my view, be no doubt that the sole reason for placing money in the scheme was to earn a return on the initial stake. The conclusion is inescapable that the plaintiffs, when they placed money in the trust account of Van Schalkwyks, intended their money to be invested in the scheme. In this sense, they can be said to have instructed Van Schalkwyks to invest the money on their behalf. Those plaintiffs who placed their money into the trust account after the commencement date of 15 January 1999, are therefore struck by s 47(1)(g).

[99] The plaintiffs attempted to argue that, this notwithstanding, an exception to s 47(1) availed them. Section 47(5)(c) provides that it does not amount to an investment for purposes of s 47(1)(g) if a practitioner is instructed by a person “to utilise the money to give effect to any term of a transaction to which that person is a party, other than a transaction which is a loan or which gives effect to a loan agreement that does not fall within the scope of paragraph (b)”.

[100] Three hurdles confront the plaintiffs. The first is that they never pleaded that their cases fell within the ambit of s 47(5)(c), as they should have had they wished to rely on the section. In other words, it fell to the plaintiffs to plead that “the exception contained in section 47(1)(g) of the Act is not applicable because of the presence of one or other of the qualifications stated in section 47(5)”. The second hurdle, related to the first, is that the plaintiffs led no evidence – and could not have led evidence -- to establish facts to bring them within the terms of s 47(5)(c). The third problem is that there is no evidence to suggest that the plaintiffs were parties to the discounting transactions, as s 47(5)(c) would require, those being the only transactions they could conceivably have instructed Van Schalkwyks “to give effect to” with their money.’

[5] On the basis of these findings, it is my view that there is no reasonable prospect that a court of appeal will make a different finding to mine on the s 47(1)(g) issue. That being so, the application must accordingly be dismissed.

[6] The final issue to be dealt with is that of costs. Mr Lowe, who appeared for the applicants, argued that in the event of leave to appeal being refused, the respondents were not entitled to the costs of three counsel. During the trial, both the plaintiffs and the defendant were represented by three counsel and the parties were agreed that the costs of three counsel were justified. In making a costs order in favour of the defendants, I determined that the costs should include the costs of three counsel.

[7] Mr Buchanan, who appeared for the respondent, together with Mr Ronaasen and Mr Gqamana, argued that if the briefing of three counsel was warranted for the trial, it would also be warranted at this stage. Although he stated that authority supported this proposition, he did not refer me to any case law. It would appear, however, that he had in mind the matter of Davis v Caledon Municipality and another 1960 (4) SA 885 (C), in which Van Wyk J held, concerning the appearance of two counsel for the municipality in an exception taken unsuccessfully by Davis, that even though the exception did not raise any difficult legal issues, ‘inasmuch as this is an interlocutory proceeding in an action which appears to be one of importance and of substance I cannot hold that two counsel were not justified. In my view if the main action justifies two counsel then two counsel must be allowed in all interlocutory applications’ (at 887H).

[8] I am sure that this dictum is not meant to be understood as creating an immutable rule. It is not difficult to conceive of situations in which it should not apply. Purely formal interlocutory applications are an obvious example. It is not necessary for me to consider the limits of the rule: this case is one of substance and of considerable importance to the defendant and the defendant succeeded in a trial in which the utilisation of three counsel was justified. The application for leave to appeal is not a mere formal appearance. It is almost as important for the defendant who, no doubt, would wish to ‘protect’ its victory in the trial and, in so doing, put an end to the matter. In such circumstances the utilisation of the three counsel who appeared in the trial is reasonable.

[9] It is accordingly ordered that the application for leave to appeal is dismissed with costs, such costs to include the costs of three counsel.

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C. PLASKET

JUDGE OF THE HIGH COURT

APPEARANCES

For the applicants: M Lowe SC, instructed by Wheeldon, Rushmere and Cole

For the respondent: R Buchanan SC, O Ronaasen and NW Gqamana, instructed by Borman and Botha

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