SUPREME COURT OF APPEAL

OF SOUTH AFRICA

Case no: 141/2001
Reportable

In the matter between

LAW SOCIETY OF THE CAPE OF GOOD HOPE
Appellant

and

FRANCOIS JOHANNES BUDRICKS
Respondent

Coram:
HEFER AP,  NIENABER,  HARMS,  CAMERON,
NUGENT JJA

Heard:
2 May 2002

Delivered: 24 May 2002

Summary: Attorney-misappropriation of trust funds-striking from the roll.

____________________________________________________________

JUDGMENT
________________________________________________________

HEFER AP

HEFER AP:

[1] The respondent practised as an attorney in Port Elizabeth until
December 1996 when, by order of the Eastern Cape Division of the High
Court, he was interdicted from doing so pending the decision of an
application for the removal of his name from the roll.  The removal
application was filed not much later in the same court but, for reasons
which are not relevant at present,  three and a half years went by before it
was eventually heard. Instead of striking the respondent’s name from the
roll the court (Jennett and Froneman JJ) ordered his suspension from
practice for two years, which order was itself  conditionally suspended for
three years. The appellant has now appealed to this court. Its contention is
that the respondent was treated too leniently.
[2] In terms of s 22(1)(d)  of the Attorneys Act 53 of 1979 an attorney
may be struck from the roll or suspended from practice “if he, in the
discretion of the Court, is not a fit and proper person to continue to practice
as an attorney.” The practical manner in which the courts exercise their
disciplinary powers is trite. As explained in cases like Jasat v Natal Law
Society 2000(3) SA 44 (SCA) at 51B-I and Law Society of the Cape of
Good Hope v C 1986(1) SA 616 (A) at 637E-G the enquiry is three-fold.
The court first decides as a matter of fact whether the alleged offending
conduct has been established. If the answer is yes, a value judgment is
required to decide  whether the person concerned is not a fit and proper
person as envisaged in s 22(1). And if the answer is again in the
affirmative, the court must decide in the exercise of its discretion whether,
in all the circumstances of the case, the person in question is to be removed
from the roll or merely suspended from practice.  Since the second and
third legs of the enquiry involve the lower court’s discretion the power of a
court of appeal to interfere is not unlimited.

[3] The proceedings against the respondent arose from the way in which
he dealt with funds received from the National Housing Board in terms of
an agreement he had concluded  with the Board as part of the latter’s
implementation of a state-subsidised housing scheme for indigent persons.
The money was received in monthly instalments over a period of thirteen
months and earmarked for the acquisition of land and the provision of
housing for successful applicants for subsidies. The respondent was
expressly instructed to pay the amount due in each case only upon the
registration of transfer. In the meantime he had to invest the money in a
separate interest bearing account and to pay the monthly interest to the
Provincial Board. In return for “attending to the transfer of the property
acquired by any particular applicant, and in return for assisting the National
Housing Board  in the administration of payment  of any particular
subsidy” he was entitled to an inclusive fee of R250 per application.
[4] The court a quo found that the following allegations against the
respondent had been established:
(a)
For about nine months he failed to open a separate investment
account and simply paid the money received monthly from the
Housing Board into his general trust account. Interest from that
source accrues to the Attorneys’ Fidelity Fund but the respondent
paid it the Board.
(b)
He appropriated part of each subsidy towards fees he had debited in
excess of the agreed R250. His modus operandi and the extent of
this practice are described as follows in the court a quo’s judgment:
“... immediately or very shortly after the receipt of subsidy funds substantial fees were debited
and transferred to respondent’s business account ... respondent received 437 subsidy amounts in
respect of which, at the agreed administration fee of R250,00 per transaction, fees totalling R109
250,00 could properly have been debited and transferred when respondent became entitled to do
so, whereas in fact respondent had debited and transferred fees totalling R701 373,17.

Respondent’s answer to the aforegoing is that the actual implementation of the housing

subsidy scheme was not straight forward and that work extraneous to the actual transfer of title
in property was often and, indeed, usually required by the prospective buyers and sellers ... In
order to cater for this extraneous work respondent would obtain the express instructions of the
prospective purchasers and sellers that respondent’s fees therefor be debited to them and
respondent would debit fees against the subsidies. In other words, despite the terms of
respondent’s mandate from the National Housing Board and in particular clause 6 thereof ...
respondent administered the subsidy funds  on the basis that he was entitled to apply the
subsidies in the manner instructed by his clients which of course he was not entitled to do as the
subsidy funds remained held for the benefit of the National Housing Board until respondent
became entitled to disburse them in terms of his mandate.”

(c)
He credited an amount of R379 000,00 received from the Housing
Board, not to the latter’s account, but to the account of a company in
which he had an interest. His explanation was that undebited  fees
due to him in respect of Housing Board matters more than covered
the amount of the cheque.
(d)
He issued two trust cheques for a total amount of R71 728,97 for
payment of his personal commitments but debited the amounts to the
Housing Board’s  account.  His only explanation was that more than
the amount in question was due to him in respect of undebited fees
in subsidy matters.
(e)
He made further payments totalling R214 397,10 from the Housing
Board’s account to repay loans made to his firm. Again his
explanation was that a larger amount was due to him in respect of
undebited fees.
(f)
In some of the dealings already referred to the respondent committed
breaches of the appellant’s Rules.

[5] The court a quo’s assessment of the irregularities was expressed as
follows in the judgment:
“On what has been placed before us I am not satisfied that any shortfall in any
particular amount has been shown to exist in respondent’s trust banking accounts. I am,

however, satisfied that respondent has committed theft of trust monies, and that to that
extent there must in consequence have been at the time a shortfall in his trust banking
accounts, and that he has administered trust funds in a reckless and cavalier manner and
without any regard for his duties as an attorney ... Respondent, patently, did not
administer trust funds received from the Housing Board in accordance with his
instructions or in accordance with his obligations as an attorney. Apart from what has
already been set out above, section 78(4) of the Attorneys Act No 53 of 1979 requires
the following ... The records kept by respondent fall short of this requirement and the
‘method employed in debiting fees as disbursements’ is more than simply ‘unorthodox’
as euphemistically described by Mr Greeff. (Mr Greeff was a forensic
accountant employed by the respondent).
I am satisfied further that respondent has by his conduct shown himself to be not a fit
and proper person to continue to practise as an attorney.”

[6] The reasons for not striking the respondent off or suspending
him outright appear from the following passages from the court’s
judgment:
“Turning then to the third inquiry ie whether respondent’s name should be removed
from the roll of attorneys or whether an order suspending him from practice for a
specific period will suffice, it is important to note that, whatever suspicions one may
have, the misappropriations which took place and the accounting methods adopted have
not been shown to have caused any actual ultimate loss to clients nor does it appear that
there was a real risk of loss to clients. To quote from a comparable situation which
prevailed in Cape Law Society v Parker [2000 (1) SA 582 (C)] at p 587 I:
“Although respondent must have known that his conduct in
misappropriating trust monies was unlawful, it can be accepted that
he did not harbour the intention of committing theft in its ordinary
common law connotation.”
...  After much consideration we have come to the conclusion that the proved
circumstances do not require of us an order that respondent’s name be struck off the
roll of attorneys and that an order suspending him from practice as an attorney will
suffice. However, respondent has been interdicted from practising as an attorney since
12 December 1996 and for all practical purposes he has thus been suspended from
practice as an attorney for some three and a half years. In these circumstances it is
appropriate that any suspension of respondent from practice as an attorney be itself
suspended for a period.”

[7] Counsel for the appellant submitted, and I agree, that this is a case in
which a reconsideration of the order is justified. Reading the court a quo’s
judgment as a whole leaves one with no doubt that, in considering an
appropriate order, the court was more concerned with the personal
circumstances of the respondent than with the protection of the public. The
suspension of his  suspension from practice is entirely incompatible with
the finding that he was not a fit and proper person to continue practising
and resulted in the anomalous situation that  a person who had explicitly
been pronounced unfit to do so, was allowed to continue his practice.
(Logically, a striking off order or an order of  suspension from practice
should only be suspended if the  court finds that the attorney concerned is a
fit and proper person to continue to practice but still  wishes to penalize
him.)  Moreover, as appears inter alia from the judgment in Jasat’s case at
51H-I, the courts exercise supervisory powers over the conduct of
attorneys,  not only in order to discipline and punish errant practitioners,
but also, and more importantly (particularly in cases like the present one
where trust money was misappropriated),  in order to protect the public.
This is mainly why the possibility of a repetition of the conduct
complained of must be taken into account when it comes to deciding upon
an appropriate penalty for proven misconduct. In the present case the court
found that the respondent had misappropriated  trust moneys and had
administered trust funds in a reckless and cavalier manner without any
regard for his duties as an attorney. The respondent, on the other hand,
insisted all along that he had only done what he was entitled to do. The
nature of his conduct and his protestations of innocence rendered a
repetition a distinct possibility. Yet there is no indication in the judgment
that this and the interests of the public were ever considered. In my
judgment there is ample reason for reconsidering the court’s decision and I
proceed to do so.

[8] In this court the respondent challenged neither the court a quo’s
factual findings nor its assessment of his conduct or its conclusion that he
was not a fit and proper person to continue practising as an attorney. His
counsel submitted, however, that the penalty imposed was quite
appropriate. I do not agree; but before I furnish the reasons for my
disagreement the reasons advanced by the court a quo for not striking the
respondent from the roll or at least suspending him outright  have to be
dealt with. Apart from the fact that he had already been interdicted from
practising for three and a half years (with which I have dealt) those reasons
are (1) that none of his clients had suffered a loss and there was no real risk
of that happening, and (2) that he did not harbour the intention of
committing theft “in its ordinary common law connotation”.
[9] While it is correct that none of the respondent’s clients have been
shown to have  suffered an actual loss, it is patently incorrect to say that
there was no real risk of that occurring. The Housing Board was at risk
from the first day when a debit was passed in respect of work done on
behalf of a subsidy buyer or seller and the amount transferred to the
business account. Each of these debits was passed in the expectation that
the client in question would become entitled to payment of the subsidy on
registration of transfer.  But what if the anticipated transfer did not go
through after the debit had been passed and the amount transferred? And
what if the respondent’s estate had been sequestrated? Cases in which no
fees were actually debited but trust cheques issued and the Housing Board
account debited, and the one instance where money due to the Board was
credited to a private account, were even worse. It is obvious, as the court a
quo itself found,  that there must have been a shortfall in the funds which in
effect belonged to the Board.
[10] The reference to the absence of an intention to commit theft “in the
ordinary common law connotation” was unfortunate, to say the least.  It is

difficult to avoid the impression that the court  in Parker’s case (whence the
notion of this rare species of the intention to steal derived), was at pains to
let the offending attorney off lightly.  None of the factors used in mitigation
in that case can really impress anyone (such as the fact that Parker had
stolen, not for his personal benefit, but rather for the benefit of members of
his family, and that the stolen trust money had been used to finance loans
against post-dated cheques which Parker believed would be met).  And to
construe a less than real intention to steal on the facts of the case was
equally generous. To say that Parker did not strictly commit theft because
he “merely anticipated the time for payment of fees” misses the point: what
was really offensive about Parker’s conduct was that he used  trust money
not authorised for that purpose to pay those fees. As the court itself
observed elsewhere (at 587G-H),
“the principle, as it emerges from the cases, is that the utilisation of the funds in a trust
account without the authority of the person on whose behalf the funds are held for
purposes which do not benefit him and in circumstances where he has not authorised such
use, amounts to misappropriation of trust money, which in turn is a form of theft.”

Citing this very passage the court a quo said in the present case:

“Until such time as any particular subsidy money was paid over to a seller in terms of
such seller’s entitlement thereto the subsidy remained Housing Board money, ie money
held by the respondent for the benefit of the Housing Board and the respondent was not
entitled to use such money to pay himself fees due to him by either the prospective
purchasers or sellers.”
[11]  Neither of the court’s reasons can accordingly be supported and, in
any event, I take a much more serious view of the respondent’s conduct.
Not only did he treat the Board’s instructions with disdain but in the
process committed about the worst professional sin that an attorney can
commit by misappropriating trust funds. He did so methodically over a

substantial period of time and in respect of large sums of money. It does not
avail him to say that he merely misused the Housing Board’s money to pay
fees he had earned or in anticipation of fees he would still have earned; for
it is quite clear that he regarded his agreement with the Board as a stroke of
good fortune enabling  him to establish a lucrative practice amongst a large
group of people entirely free of risk by using the Board’s money as  a
handy source for the prompt payment of his fees. Moreover, we must not
lose sight of the fact that he misused public money earmarked for the
upliftment of the poor; nor that he maintained all along that he had done no
wrong until he accepted the court a quo’s findings in opposing the
application for leave to appeal , and that there was not a word of contrition
in his opposing affidavit. Bearing in mind further that the possibility of a
repetition of his conduct if he were to be allowed to continue practising has
not been excluded, the only appropriate penalty will in my view be to strike
him from the roll despite the dire consequences of such a step to him.
[12] The appellant’s counsel asked for attorney and client costs if the
appeal were to be upheld.  Since this is the usual order in cases where an
attorney’s name is struck from  the roll and the respondent’s counsel raised
no objection, such an order will be made.  I may mention that the court a
quo made  a similar order against the respondent in respect of the
proceedings in that court.
[13] The appellant has also asked that our order - including the usual
order appointing a curator to administer and control the respondent’s trust
account(s) and listing the curator’s powers and duties - be made applicable
to both the practice he conducted at the time when the interdict was granted
and to any practice conducted by him after the date of the  court a quo’s
suspended order of suspension. The respondent’s contention is that such an
order will be inappropriate since there is no suggestion that there is
anything untoward in his present practice and no reason why his present

clients should  be handled by the curator and not by other attorneys. His
request is that he be allowed to appoint an attorney of his choice to wind up
his present practice. I do not think his request should be granted. The
curator must obviously wind up what may conveniently be called the old
practice and I know of no reason why the winding up of the present practice
should be entrusted to someone else. Present clients’ rights will be
protected in the order proposed by the appellant.

[14]  I accordingly make the following order:
I.
The appeal is upheld with costs on the attorney and client scale.
II.
The court a quo’s order is set aside and replaced with the following
order:
1. The respondent’s name is struck from the roll of attorneys of
the High Court of South Africa (Eastern Cape Division).
2. (a) The respondent is ordered to surrender and deliver to the
Registrar of the High Court of South Africa (Eastern Cape
Division) his certificate of enrolment as an Attorney.
(b) Should the respondent fail to comply with the provisions of the
preceding paragraph of this Order within two weeks from date hereof,
the Sheriff for the district in which such certificate of enrolment is, is
empowered and directed to take possession of and deliver the same to
the Registrar of the High Court of South Africa (Eastern Cape
Division).
3. The respondent is ordered to  deliver his books of account, records,
files and documents containing particulars and information relevant
to-

3.1  any moneys received, held or paid by the respondent for or
onaccount of any person;

3.2
any moneys invested by the respondent in terms of section

78(2) and/or section 78(2A) of Act No 53 of 1979;

3.3
any interest on moneys so invested which was paid over or
credited to the respondent;

3.4
any estate of a deceased person, or any insolvent estate, or any
estate placed under curatorship of which the respondent is the
executor, trustee or curator or which the respondent is
administering on behalf of the executor, trustee or curator of
such estate; and
3.5
the respondent’s practice as an Attorney,
to the curator appointed in terms of paragraph 9 hereof, provided that
as far as such books of account, records, files and documents are
concerned the respondent shall be entitled to have access to them, but
always subject to the supervision of such curator or a nominee of such
curator.
4. Should the respondent fail to comply with the provisions of the
preceding paragraph of this Order within  one week after service
thereof upon him or after a return by the person entrusted with the
service thereof that he has been unable to effect service thereof on
the respondent, as the case may be, the sheriff for the district in
which such books of account, records, files and documents are, is
empowered to take possession of and deliver them to such curator.
5.
Such curator shall be entitled to hand over to the persons entitled
thereto all such records, files and documents as soon as he has
satisfied himself that the fees and disbursements in connection
therewith have been paid or satisfactorily secured or that same are no
longer required by the curator.
6.
A written undertaking by a person to whom the records, files and
documents referred to in paragraph 5 above are handed to pay such
amount as may be due to the respondent, either on taxation or by

agreement, shall be deemed to be satisfactory security for the
purposes of the preceding paragraph hereof provided that such written
undertaking incorporates a domicilium citandi et executandi of such
person.
7.
Such curator is empowered to require that any such file, the contents
of which he may consider to be relevant to a claim, or possible  or
anticipated claim, against him and/or the respondent and/or the
respondent’s clients and/or the Attorneys’ Fidelity Fund (herein
referred to as “the Fund”) in respect of money and/or other property
entrusted to the respondent, be re-delivered to such curator.
8.
The respondent is interdicted and prohibited from operating on his
trust account(s) as defined in paragraph 9 hereof.
9.
The Director, failing whom the Deputy Director, for the time being
of the Applicant, is appointed as curator to administer and control the
trust accounts of the respondent comprising the separate banking
accounts opened and kept by the respondent at a bank in terms of
section 78(1) of the said Act No 53 of 1979 and/or any separate
savings or interest-bearing accounts as contemplated by section  78(2)
and/or section 78(2A) of the said Act No 53 of 1979, in which
moneys from such trust banking accounts have been invested by
virtue of the provisions of the said sub-section or in which moneys in
any manner have been deposited or credited (the said account(s)
being herein referred to as “trust accounts”) with the following
powers and duties:

9.1 subject to the approval of the Board of Control of the Fund, to
sign and endorse cheques and/or withdrawal forms and
generally to operate upon the trust account(s), but only to such
extent and for such purpose as may be necessary to bring to
completion current transactions in which the respondent was

acting at the date of this Order;
9.2
subject to the approval and control of the Board of Control of
the Fund to recover and receive and, if necessary in the
interests of persons having lawful claims upon the trust
accounts(s) and/or against the respondent in respect of money
held, received and/or invested by the respondent in terms of
section 78(1) and/or 78(2) and/or section 78(2A) of the said
Act No 53 of 1979 (hereinafter referred to as “trust moneys”),
to take legal proceedings which may be necessary for the
recovery of money which may be due to such persons in
respect of incomplete transactions in which the respondent may
have been concerned and which may have been wrongfully and
unlawfully paid from the trust account(s) and to receive such
moneys and to pay the same to the credit of the trust
account(s);
9.3
to ascertain from the respondent’s books of account the names
of all persons on whose account the respondent appears to hold
or to have received trust moneys (hereinafter referred to as
“trust creditors”) and to call upon the respondent to furnish
him, within thirty days of the date of this Order or such further
period as he may agree to in writing, with the names, addresses
of and amounts due to all trust creditors;
9.4
to call upon such trust creditors to furnish such proof,
information and affidavits as he may require to enable him,
acting in consultation with, and subject to the requirements of
the Board of Control of the Fund, to determine whether any
such trust creditor has a claim in respect of money in the trust
account(s) and, if so, the amount of such claim;
9.5
to admit or reject, in whole or in part, subject to the approval of

the Board of Control of the Fund, the claims of any such trust
creditor, without prejudice to such trust creditor’s right to
access to the civil courts;
9.6
having determined the amounts which he considers are lawfully
due to trust creditors, to pay such claims in full, but subject
always to the approval of the Board of Control of the Fund;
9.7
in the event of there being any surplus in the trust account(s)
after payment of the admitted claims of all trust creditors in
full, to utilise such surplus to settle or reduce, as the case may
be firstly, any claim of the Fund in terms of section 78(3) of the
said Act No 53 of 1979, in respect of any interest therein
referred to and, secondly, without prejudice to the rights of the
creditors of the respondent, the costs, fees and expenses
referred to in paragraphs I, 10 and 12 of this Order, or such
portion thereof as has not already been separately paid by the
respondent to the applicant, and, if there is any balance left
after payment in full of all such claims, costs, fees and
expenses, to pay such balance, subject to the approval of the
Board of Control of the Fund, to the respondent, if he is
solvent, or, if the respondent is insolvent, to the trustee(s) of
the respondent’s estate;
9.8
in the event of there being insufficient trust moneys in the trust
account(s) to pay the claims of trust creditors reflected in the
books of account of the respondent in full;
9.8.1 subject to the approval of the Board of Control of the Fund, to
close the trust account(s) and pay the credit balance(s) to the
Fund and to require the credit balance(s) to be placed to the
credit of a special trust suspense account in the name of the
respondent in the Fund’s books;

9.8.2  to refer the claims of all trust creditors to the Board of Control
of the Fund to be dealt with in terms of the provisions of the
said Act No  53 of 1979; and

9.8.3 to authorise the Board of Control of the Fund to credit the
credit balance(s) referred to in 9.8.1 above to its “Paid Claims
Account” when the Fund has paid, in terms of section 26 of the
said Act No 53 of 1979, admitted claims of the trust creditors
in excess of such credit balance(s), provided that,
notwithstanding the aforegoing, the said Board shall be
entitled, in its discretion, to transfer to its “Paid Claims
Account” the amount or amounts of any claim or claims as and
when admitted and paid by it;
9.9
subject to the approval of the Chairman of the Board of Control
of the Fund, to appoint nominees or representatives and/or
consult with and/or engage the services of attorneys and/or
counsel, and/or accountants and/or other persons, where
considered necessary, to assist such curator in carrying out the
duties of curator; and
9.10 to render from time to time, as curator, returns to the Board of
Control of the Fund showing how the trust account(s) has
(have) been dealt with, until such time as the said Board
notifies him that he may regard his duties as terminated.
10.
The respondent  is hereby directed-
10.1 to pay the fees and expenses of the curator, such fees to be
assessed at the rate of R300 per hour, including travelling time;
10.2 to pay the reasonable fees and expenses charged by any
person(s) consulted and/or engaged by the curator as aforesaid;
10.3 within one year of him having been requested to do so by the
curator, or within such longer period as the curator may agree

to in writing, to satisfy the curator, by means of the submission
of taxed bills of costs, or otherwise, of the amount of the fees
and disbursements due (to the respondent) in respect of his
former practice, and should he fail to do so, he shall not be
entitled to recover such fees and disbursements from the
curator without prejudice, however, to such rights, if any, as he
may have against the trust creditor(s) concerned for payment or
recovery thereof.
11.
The respondent is ordered to pay the costs of the application on the
attorney and client scale.
III.   The terms of this order shall apply both to the practice conducted by
the respondent at the time of his being interdicted from practice,
namely 12 December 1996, and any practice conducted by him
subsequently to the date of the judgment of the court a quo, namely
20 June 2000.

_________________
JJF HEFER

Acting President
Concur:
Nienaber JA
Harms JA
Cameron JA
Nugent JA