THE SUPREME COURT OF APPEAL OF SOUTH AFRICA

JUDGMENT

Case No: 094/2010

In the matter between

LAW SOCIETY OF THE NORTHERN PROVINCES
1st APPELLANT
THE SECRETARY OF THE LAW SOCIETY OF THE
2nd APPELLANT
NORTHERN PROVINCES

and

PETRUS JACOBUS VILJOEN
RESPONDENT

and:  In the matter between
Case No: 648/10

LAW SOCIETY OF THE NORTHERN PROVINCES
1st APPELLANT
THE SECRETARY OF THE LAW SOCIETY OF THE
2nd APPELLANT
NORTHERN PROVINCES

and

PETER ARTHUR DYKES
1st RESPONDENT
CHERYL RAMSAMMY
2nd RESPONDENT
PHASUDI DOCTOR SEGOGOBA
3rd RESPONDENT
JOHAN VAN HEERDEN
4th RESPONDENT

Neutral citation:
Law Society of the Northern Provinces v Viljoen (094/2010); Law
Society of the Northern Provinces v Dykes (648/2010) [2010] ZASCA
176 (02 December 2010)

Coram:

Heher, Bosielo, Shongwe JJA and R Pillay et K Pillay AJJA

Heard:

24 November 2010
Delivered:
02 December 2010
Summary:
Legal practitioners – s 42(3)(a) of the Attorneys Act 53 of 1979
– Interpretation. The powers of a secretary of the Law Society
to refuse to issue a fidelity fund certificate in the prescribed
form to a legal practitioner against whom there are pending
proceedings by the Law Society to have him or her suspended
or his or her name removed from the roll of practising
attorneys.

ORDER

On appeal from: North Gauteng High Court (Pretoria), (in case no 094/10
Tuchten AJ sitting as a court of first instance) and (in case no 648/10 Sapire AJ
sitting as court of first instance)

The following orders are made:

In the Law Society of the Northern Provinces v Viljoen (appeal no. 094/10)
On appeal from the North Gauteng High Court (Tutchten AJ sitting as court of first
instance)

1.  The appeal is dismissed with costs.

In the Law Society of the Northern Provinces v Dykes (appeal no. 648/10)
On appeal from the North Gauteng High Court (Sapire AJ sitting as court of first
instance)

1.  The appeal is dismissed with costs.

_________________________________________________________________

JUDGMENT
__________________________________________________________________

BOSIELO JA (Heher, Shongwe JJA and R Pillay and K Pillay AJJA concurring)

[1] The appeals before us raise the question about the correct interpretation and
scope of s 42(3)(a) of the Attorneys Act 53 of 1979. As both appeals concern the
same legal issue, it is convenient and practical to deal with both at the same time.

[2] The first appellant in both matters is a law society duly incorporated in terms
of s 56 of the Act. One of the first appellant’s responsibilities is to provide for the
regulation and effective control of the professional conduct of attorneys (s 58(g) of
the Act).

[3] The respondents in both matters are attorneys who specialise in
conveyancing. They all fall under the first appellant’s jurisdiction. On 23
December 2009, the first appellant sent a letter to Viljoen (respondent in the first
matter) reminding him to apply for a fidelity fund certificate on the prescribed
form (s 42(1) of the Act). In response to this reminder and on 14 December 2009,
Viljoen applied in the prescribed form for his fidelity fund certificate for the year
2010. On 5 January 2010, the second appellant, relying on a council resolution
dated 22 June 2009, advised Viljoen that he would not be issued with a fidelity
fund certificate ‘in the light of policy considerations as there was a pending

application to have his name removed from the roll of attorneys’. In refusing to
issue the fidelity fund certificate, the second appellant purportedly relied on
s 42(3)(a) of the Act. No mention of the resolution was made in the first
appellant’s invitation to Viljoen to apply for a fidelity fund certificate in terms of s
42 of the Act. Viljoen had never been notified of the existence of the council
resolution.

[4] A similar application by Dykes and his partners (respondents in the second
matter), made on 22 October 2009, suffered the same fate. By a letter dated 14
December 2009, and relying on the same resolution the second appellant advised
Dykes and his partners that no fidelity fund certificates would be issued to them as
there was an application pending for the removal of their names from the roll. In so
refusing the second appellant once again purported to act in terms of s 42(3)(a) of
the Act.

[5] Aggrieved by the decision of second appellant to refuse to issue the fidelity
funds certificates, respondents in both matters approached the North Gauteng High
Court separately by way of motion for a mandamus compelling the second
appellant to issue fidelity fund certificates to them for the year 2010. The first
application was heard by Tuchten AJ and the second by Sapire AJ. Both judges
granted orders compelling the second appellant to issue fidelity fund certificates
for 2010 to the respondents. The appellants are appealing against those orders with
leave of both the courts below.

[6] As the decision in this appeal hinges on the correct interpretation of
s 42(3)(a) of the Act, I deem it appropriate to quote the provisions which are
relevant to the dispute herein:
‘42 Application for and issue of a fidelity fund certificate
(1)
A practitioner practising on his own account or in partnership, and any practitioner
intending so to practise, shall apply in the prescribed form to the secretary of the
society concerned for a fidelity fund certificate.
(2)
Any application referred to in subsection (1) shall be accompanied by the contribution
(if any) payable in terms of section 43.
(3)
(a)  Upon receipt of the application referred to in subsection (1), the secretary of the
society concerned shall, if he is satisfied that the applicant has discharged all his
liabilities to the society in respect of his contribution and that he has complied with
any lawful requirement of the society, forthwith issue to the applicant a fidelity fund
certificate in the prescribed form.
(b)
A fidelity fund certificate shall be valid until 31 December of the year in respect of
which it was issued.’

[7] I do not think that it will serve any useful purpose to overburden this
judgment with the evidence of the litany of complaints lodged against the
respondents and their responses thereto. It suffices, in my view, to state that the
first appellant had received various complaints against the respondents in both
matters which it regarded as serious. Following thereupon, the first appellant
instituted proceedings in the North Gauteng High Court, Pretoria, for the
respondents’ names to be struck off the roll of attorneys on the basis that they are
no longer fit and proper to continue practising. Having had sight of the appellants’
affidavits, I harbour no doubt that the allegations made against the respondents are

serious and if proven to be true, might justify a striking off of the respondents’
names by the court.

[8] It is trite that the first appellant has a statutory duty, once it has received
information that a member is guilty of unprofessional conduct, to investigate such
information or allegations and to take appropriate action. This is what the first
appellant did in the two matters. The applications are vigorously opposed and the
respondents have filed answering affidavits disputing the allegations contained in
the founding affidavits filed by the appellants. The proceedings for striking off
against the respondents in both matters are still pending.

[9] Central to the second appellant’s refusal to issue the fidelity fund certificates
to the respondents in the two cases is a resolution of 22 June 2009. The resolution
reads thus:
‘Where the Council has resolved to proceed with an application for the suspension of or the
removal of the name of a member from the roll of attorneys a Fidelity Fund Certificate should
not be issued to the member concerned, unless the Council for good reason otherwise decides.’

[10] It is common cause that the resolution was not made public or distributed to
the members of the first appellant. This is notwithstanding the fact that the
resolution was essentially introducing a new element into the concept of ‘any other
lawful requirement of the society’ as it appears in s 42(3)(a) of the Act. Counsel
were agreed that although the resolution does not amount to a suspension from

practice by a legal practitioner, the practical effect thereof is that a practitioner who
has not been issued with a fidelity fund certificate is not allowed to practice on his
own account or in partnership. It is trite that any legal practitioner who practices
without a fidelity fund certificate is committing a professional misconduct.

[11] It was submitted on behalf of the appellants that the courts below erred in
their interpretation of s 42(3)(a). The contention is that the Council of the first
appellant has the authority in terms of s 69 of the Act to set up whatever lawful
requirement it might regard as proper and appropriate to regulate the conduct of
practitioners. It was argued further that the resolution was lawful and necessary as
it enabled the first appellant to be careful regarding the issuing of the fidelity fund
certificates to its members so that it can reduce or minimise the risk to which the
fidelity fund might be exposed in issuing fidelity fund certificates to legal
practitioners who are not fit to practise. Counsel for the appellants submitted
further that the mere fact that the resolution was not communicated to the
respondents, does not necessarily mean that it is invalid. He submitted that it
remained valid, and moreover the respondents had been invited to make
representations to change the second appellant’s decision not to issue the
certificates.

[12] Counsel for Viljoen, launched a two-pronged attack against the resolution.
First, he submitted that the resolution is so vague that it fails to inform Viljoen of
the exact nature of the complaint to which he was required to respond. He

submitted that the lawful requirements contemplated in s 42(3)(a) are the payment
of the required sum of money by an applicant and submission of an audited
financial report. Secondly, he contended that the requirement imposed by the
resolution to the effect that where there are proceedings pending either for the
suspension or removal of a practitioner from the roll, such a practitioner will not be
issued with a certificate unless good cause is shown, is not related to the legislative
purpose of s 42(3)(a). His contention is that the new requirement, if one might call
it that, tilts the scale more towards an enquiry into the ethical fitness of an
applicant to remain a practitioner, which is a function of the courts, rather than an
enquiry into his or her ability to maintain the financial affairs of his or her practice
properly and in terms of the rules.

[13] Counsel for Dykes and his partners, supported the submission by Counsel
for Viljoen that the resolution does not amount to a requirement as envisaged by
s 42(3)(a). In other words, it falls outside the ambit of the section.

[14] It is clear from s 42(3)(a) that the person who has the authority to issue
fidelity fund certificates is the second appellant. It is neither the Council nor
Management Committee of the first appellant. The authority of the second
appellant to issue fidelity fund certificates is clearly circumscribed by s 42(3)(a).
This section sets out two requirements to be met by a legal practitioner for him or
her to qualify for a fidelity fund certificate. The first requirement is that such a
practitioner must satisfy the secretary that he or she has discharged all his or her

liabilities to the society in respect of his or her contribution and, secondly, that he
or she has complied with any other lawful requirement of the society. Once the two
requirements have been met, s 42(3)(a) compels the second appellant to forthwith
issue the fidelity fund certificate in the prescribed form to the applicant.

[15] The first appellant’s Council purported to introduce an additional lawful
requirement by adopting the resolution on 22 June 2009.  In the context of s 42, a
‘lawful requirement’ means one that:

(i) relates to the purpose served by the issue of a fidelity fund certificate;
(ii) unequivocally informs the practitioner what it is that the society requires
of him or her;
(iii) the practitioner is capable of complying with, since the section is
designed to enable the practitioner to carry on practice subject to satisfying
the requirement.
For the reasons which follow I am of the view that the terms of the resolution of
22 June 2009 do not meet any of the above-stated criteria.

[16] It is important to bear in mind that a practitioner is enjoined by s 42(1) to
apply for a fidelity fund certificate in the prescribed form. A perusal of the
prescribed form makes it clear from the questions that such a practitioner has to
answer that the major focus is on the question whether the practitioner is managing
his trust accounts in strict compliance with the rules of the society and not whether
he or she is fit and proper to practice. This is underscored by the request to a

practitioner in the prescribed form to disclose the balances in his or her trust
account at the end of each quarter of the year. Furthermore, this is bolstered by the
requirement that such a practitioner shall submit his or her audited financial
statements. It is clear to me that this enquiry is intended solely to assess any risk
attendant on the secretary issuing a fidelity fund certificate so as to ensure that the
Fidelity Fund is not overexposed. Manifestly, this has nothing to do with issues of
ethics or whether such a practitioner is fit and proper to continue to practice. The
enquiry regarding the fitness of a practitioner to continue to practice is the preserve
of the courts.

[17] To my mind, the resolution in issue is so vague and broad that it may
encompass even transgressions that have nothing to do with a practitioner’s ability
and competence to manage his or her trust account properly in terms of the rules.
Clearly it has no relation to the legislative purpose contemplated in s 42(3)(a)
regarding the issuing of a fidelity fund certificate to a practitioner. Furthermore, it
is so vague that it fails to inform the applicant in clear and specific terms of what it
is that he or she is alleged to have done which justifies the refusal by the secretary
to issue the fidelity fund certificate. It follows that it will be difficult for the
applicant to respond to the allegations if he or she does not know the precise nature
of the complaint against him or her. The invitation by the Council to such an
applicant to make representations will thus remain an illusion.

[18] Counsel for the appellants had difficulty explaining exactly what the council
resolution is aimed at, because it is couched in very wide and vague terms. It is

clear that the resolution creates a general ban against any practitioner against
whom there are proceedings pending either for suspension or removal from the roll
without reference to the exact nature of the complaint.

[19] The fact that a practitioner may avoid the full force of the resolution by
advancing ‘good reason’ does not change matters. If the general prohibition does
not satisfy the test of ‘a lawful requirement’ it cannot be saved by the opportunity
to provide reasons why it should not operate in any particular case. To my mind
the resolution is fatally flawed. It follows that both appeals must fail.

[20] Both respondents argued for costs against the appellants. The principal
submission is that the appellant’s decision to refuse to issue fidelity fund
certificates was flawed from the beginning as it was based on a bad judgment. It
was argued that it would be wrong and unfair for the respondents to be left out of
pocket in circumstances where the respondents have been put to considerable
financial loss due to some bad judgment on the part of the appellants.

[21] The appellants argued against any costs being awarded against them. It was
contended that a law society is a special litigant in the sense that it does not come
to court for its own interests. As a body with statutory powers to administer the
affairs of its members, it has a statutory duty to approach a court in any matter
where it is of the opinion that a practitioner is guilty of conduct which impugns his

or her fitness to continue to practise. It was argued further that it does this in the
public interest as well as that of the court. We were further urged to consider the
fact that there are conflicting judgments on this aspect by the North Gauteng High
Court and that the appellants were justified to approach this court for clarity.

[22] I have no doubt that in the circumstances of both cases, the appellants were
not entitled to refuse to issue fidelity fund certificates to the respondents. It is clear
to me that the second appellant’s decision was indeed misconceived. Furthermore,
even after the appellants had lost both cases in the high court, they still zealously
pursued the appeal in this court, thus exposing the respondents to substantial legal
costs. Notwithstanding the long standing and salutary practice of not mulcting a
Law Society with an adverse order of costs as it is a special litigant acting in the
public interest, I am of the view that it would be unfair, given the facts of this case,
not to award costs to the respondents.

[23] Contrary to the appellants’ submission, I do not perceive any conflict
between these two matters and the two unreported judgments of the North Gauteng
High Court involving a Mr Setshogoe to which we were referred. The facts were
different. The Law Society had obtained an interdict from the high court,
restraining Mr Setshogoe from practising at the time when he applied for a fidelity
fund certificate. It was in these circumstances that the secretary refused to issue the
fidelity fund certificate. That is not the case here.

[24] In the result, the following orders are made:
In Law Society of the Northern Provinces v Viljoen (appeal no. 094/10)
On appeal from the High Court, North Gauteng (Tutchten AJ sitting as court of
first instance)

1.  The appeal is dismissed with costs.

In Law Society of the Northern Provinces v Dykes (appeal no. 648/10)
On appeal from the High Court, North Gauteng (Sapire AJ sitting as court of first
instance)

1.  The appeal is dismissed with costs.

________________
L O Bosielo
Judge of Appeal

APPEARANCES:

For Appellant:

E C Labuschagne SC

Instructed by:

Rooth & Wessels Inc.:
Pretoria

Naudes Attorneys:
Bloemfontein

For Respondent: (Viljoen)
I M Bredenkamp SC

Instructed by:

P Viljoen Inc.:  Pretoria

Hugo & Bruwer Inc.: Bloemfontein

For Respondent:

Q Pelser SC
(Dykes and Partners)

Instructed by:

Maponya Attorneys:  Pretoria

Vermaak & Dennis:  Bloemfontein

THE SUPREME COURT OF APPEAL
REPUBLIC OF SOUTH AFRICA

MEDIA SUMMARY – JUDGMENT DELIVERED IN THE SUPREME COURT OF APPEAL

FROM

The Registrar, Supreme Court of Appeal

DATE

02 December 2010

STATUS

Immediate

Please note that the media summary is intended for the benefit of the media and does
not form part of the judgment of the Supreme Court of Appeal.

Law Society of the Northern Provinces v Viljoen (094/2010) and Law Society of the
Northern Provinces v Dykes (648/2010) [2010] ZASCA 176 (02 December 2010)

The Supreme Court of Appeal today dismissed two appeals brought by the Law Society of the
Northern Provinces against two judgments by two judges in two separate matters heard at the
North Gauteng High Court.

These matters involved two firms of attorneys practising as conveyancers under the
appellant’s jurisdiction who had applied for fidelity fund certificates for 2010 in terms of s 42
(3) (a) of the Attorneys Act 53 of 1979.  Relying on a Council Resolution dated 22 June 2009,
second respondent (the secretary) refused to issue the fidelity fund certificate.  The reason
proffered is that both respondents had cases pending against them either for their suspension
or removal of their names from the roll of attorneys.

The Council Resolution provided that where the Council had resolved to proceed with an
application for the suspension or removal of an attorney from the roll of attorneys, a fidelity
fund certificate should not be issued to the applicant, unless the Council for good reason
decided otherwise.

Both courts below had found that s 42 (3) (a) cannot be interpreted to be so broad as to
encompass the issue of pending proceedings to, either suspend or have the attorney’s name
from the roll.  The SCA found that the Council Resolution was vague and so unclear that an
applicant would not know exactly what it is that the society required him or her to do as a
requirement to qualify for a fidelity fund certificate.  The SCA found further that the Council

Resolution is not related to the legislative purpose served by the issue of a fidelity fund
certificate.  The SCA confirmed the findings of the courts below.