THE SUPREME COURT OF APPEAL OF SOUTH AFRICA
JUDGMENT

Reportable

Case No: 917/17

In the matter between:

THE ATTORNEYS FIDELITY FUND BOARD OF
CONTROL
APPELLANT

and

PREVANCE CAPITAL (PTY) LTD
RESPONDENT

Neutral Citation:
The Attorneys’ Fidelity Fund v Prevance Capital (Pty) Ltd
(917/17) [2018] ZASCA 135 (28 September 2018)
Coram:
Navsa, Mathopo, Van der Merwe, Mocumie and
Molemela JJA
Heard:
30 August 2018
Delivered:
28 September 2018
Summary:
Attorney – theft of money from trust account – whether
monies ‘entrusted’ to an attorney as contemplated in terms of s 26(a) of the
Attorneys Act 53 of 1979 - Whether instruction simply to invest monies –
whether liability of Attorneys Fidelity Fund Control Board excluded by the
provisions of s 47(1)(g) of the Attorneys Act.

______________________________________________________________

ORDER
______________________________________________________________

On appeal from: The Gauteng Division of the High Court, Pretoria (Vorster
AJ sitting as court of first instance):
The appeal is dismissed with costs.
______________________________________________________________

JUDGMENT
______________________________________________________________

Mathopo JA (Navsa, Van der Merwe, Mocumie and Molemela JJA
concurring):

[1] This appeal is about whether the appellant, the Attorneys Fidelity Fund
Board of Control (the Board), which owes its existence to s 25 read with s 27
of the Attorneys’ Act 53 of 1979 (the Act), holds liability for the loss of monies
deposited by Prevance Capital (Pty) Ltd (Prevance), a bridging finance
company, into the trust account of Mr Robert Victor Weide, an attorney and
conveyancer.

[2] Section 26(a) of the Act sets out, one of the purposes of the Fidelity
Fund, which is controlled by the Board, as follows:
‘[T]he fund shall be applied for the purpose of reimbursing persons who may suffer
pecuniary loss as a result of –
(a)
theft committed by a practising practitioner, his or her candidate attorney or
his or her employee, of any money or other property entrusted by or on behalf of
such persons to him or her or to his or her candidate attorney or employee in the
course of his or her practice or while acting as executor or administrator in the estate
of a deceased person or as a trustee in an insolvent estate or in any other similar
capacity.’ (My emphasis.)

[3] It was common cause that Prevance had suffered pecuniary loss in an
amount of R3 081 926,55 due to theft committed within the offices of Mr
Weide. Prevance sought reimbursement from the Board in terms of the Act.

The Board denied liability on the basis of the provisions of s 47(1)(g) of the
Act, which read as follows:
‘The fund shall not be liable in respect of any loss suffered –
. . .
(g) by any person as a result of theft of money which a practitioner has been
instructed to invest on behalf of such person after the date of commence of this
paragraph.’

[4] In short, the Board’s attitude when it was faced by a claim for
reimbursement by Prevance, was that since the monies were deposited with
Mr Weide in terms of a finance scheme conducted by Prevance, structured as
set out below, it was an investment and because of the statutory provisions
set out in the preceding paragraph, it was not liable. The Board contended
that the monies deposited were not ‘entrusted’ to Mr Weide as envisaged in
s 26(a) of the Act.

[5] The finance scheme conducted by Prevance operated as follows:
‘[Prevance] will enter into an agreement with the attorney (Weide), and the
prospective seller, represented by Weide. [Prevance] agrees and [makes] available
the amount needed by the seller in order to give transfer. A further amount is added
by [Prevance] as a fee which is payable to it by the seller out of the purchase price
on completion of the transaction. That last mentioned amount is the remuneration
[Prevance] for the bridging finance which it supplied to the prospective seller
represented by Weide. Upon completion of the transfer, Weide is obliged to pay to
[Prevance] the remuneration amount from the purchase price paid to the seller.’

[6] It was also common cause that Mr Weide, in soliciting the finance from
Prevance, had presented it with a series of fictitious immovable property
transactions in respect of which he had also offered conveyancing services.
The sale agreements presented to Prevance were bogus and contained
‘signatures’ of non-existent parties. It was all part of a fraudulent scheme to
facilitate the misappropriation of the monies.

[7] The Gauteng Division of the High Court, Pretoria, (L I Vorster AJ), in
adjudicating an application brought by Prevance for reimbursement, rejected

the submissions on behalf of the Board which were in line with what is set out
in para 4 above. The following are the two concluding paragraphs of the
judgment:
‘The [Prevance] submitted that the nature of the aforesaid transaction is that of the
provision of finance by the [Prevance] to the prospective seller at a discounting figure
which is the amount over and above the amount made available by the [Prevance] in
terms of the agreement for benefit of the seller. What is clear to me is that the nature
of that transaction is not an agreement by the [Prevance] with Weide to invest any
money on behalf of the [Prevance] by Weide. Weide is not required to invest any
money on behalf of the [Prevance] as the agreement is that Weide would make that
money available to the prospective seller to enable the transfer to take place. It is not
a loan agreement as no interest rate is stipulated and no time for repayment of the
amount advanced is agreed upon. It is an agreement, the fulfilment of which is
contingent upon the transfer of the property taking place and the purchase price
being paid by the purchaser to Weide, who is then obliged to account to the
[Prevance] in respect of the remuneration stated in the contract.
For the aforesaid reasons I was of the view that the [Prevance] was successful in its
application and I granted the relief claimed for. The transactions in terms of which the
[Prevance] suffered its loss were bogus transactions where Weide falsely
represented that he was acting on behalf of a prospective buyer which was not the
case. The appropriation by Weide of these funds made available by the [Prevance] in
terms of the bogus transactions is clearly theft. Consequently, I was satisfied that the
[Prevance] proved its case and I granted the relief claimed in the notice of motion.’

[8] The following is the order made by the court below:
‘1. Payment of the amount of R3 081 926,55.
2. Interest on the amount of R3 081 926,55 at the rate of 9 % per annum a tempore
morae to date of payment.
3. Costs of suit.’
It is against that order, with the leave of this court, that the Board appeals.

[9] Before us, the principal issue was whether the Board could rely on the
statutory exception provided for in s 47(1)(g). The first formidable obstacle for
the Board is that, objectively observed, there was never any question of an
investment being made. Mr Weide, in soliciting the funds from Prevance and
receiving them into his trust account had but one objective, namely, theft

thereof. The funds were not received as an investment or for any other
legitimate purpose.

[10] In the court below the Board had admitted that monies had been
entrusted to Mr Weide. Before us, because of its persistence in relying on the
provisions of s 47(1)(g), it sought to abandon that admission. For present
purposes, I will accept that it is appropriate for it to do so.

[11] All, but one, of the finance agreements provided (in clause 31 under the
heading ‘undertakings by the attorney’) that ‘all monies paid by Prevance to
the Attorney’s Trust account have been paid by Prevance and entrusted
specifically for the benefit of the Seller’. Significantly, the agreements under
that contain, inter alia, the following ‘warranties’ by Mr Weide to Prevance:
‘4. If the Purchase Price is being utilised by the Attorney to settle all or any transfer
duty costs by the Seller for and on behalf of the purchaser then, the Attorney
warrants that all documentation required and necessary for effecting same has been
duly signed by all relevant parties.
5. The Attorney will not pay out any monies to any party following the registration of
transfer of the Property (or upon a breach of this agreement), until such time as
Prevance has been settled all amounts owing by the Seller to Prevance arising from
this or any other agreement.
6. Prevance’s claim shall be the first to be discharged by the Attorney from the
monies held by such Attorney on behalf of the Seller.
7. The Attorney shall act as Prevance’s agent in obtaining all information and
documentation from the Seller pursuant to the Financial Intelligence Centre Act, No
38 of 2001 (“FICA”) as may be required by Prevance in the execution of this
agreement and further, the Attorney agrees to hold such documents to the order and
for the benefit of Prevance.’ (My emphasis.)
Underneath the undertakings there is, in tabular form, a space in terms of
which Mr Weide would confirm that transfer duty and costs had been paid.
The remaining finance agreement was in substance structured in the same
way as the discounting finance agreements.

1 The numbering of the undertakings (warranties) differed in a few of the discounting finance
agreements but they were in essence the same.

[12] In Industrial and Commercial Factors (Pty) Ltd v Attorneys Fidelity
Fund Board of Control 1997 (1) SA 136 (AD), this court, with reference to the
Afrikaans text in relation to the provisions of s 26(a),2 held that the word
‘entrusted’ was not meant by the legislature to imply that the handing over of
the money or property concerned has to be subject to a trust in the technical
sense of the word.3 It took into account the circumstances of that case,
namely, that it was only the person who had there ‘entrusted the money’ who
would suffer pecuniary loss.4

[13] Mr Weide himself accepted that the funds in question were entrusted to
him. In clause 7 of the undertakings, Mr Weide acknowledged that in relation
to the aspects referred to therein, he would act as Prevance’s agent. The
warranties referred to in paragraph 11 are in respect of work to be done by Mr
Weide in the course of his practice, including work on behalf of Prevance.
Considering that Mr Weide had presented fictitious documentation and
referred to fictitious sellers and purchasers, Prevance was the only entity that
would suffer pecuniary loss. Mr Weide had made professional undertakings to
Prevance. Simply put, he had undertaken to do work for Prevance in the
course of his practise, including ensuring that outstanding rates and taxes
were paid and that he would ensure FICA compliance on behalf of Prevance.
In my view, there can, for the aforesaid reasons, be no question that the funds
involved were entrusted to Mr Weide within the meaning of that expression in
s 26(a).

[14] Before us and in the court below, the Board relied on the provisions of
s 47(5) of the Act, which reads as follows:
‘For the purposes of subsection [47(1)(g)], a practitioner must be regarded as not
having been instructed to invest money if he or she is instructed by a person –
(a) to pay the money into an account contemplated in section 78(2A), if such
payment is for the purpose of investing such money in such account on a

2 Section 26 was substituted by s 3 of Act 60 of 1982 and by s 15.
3 At 144G-I.
4 At 145D-E.

temporary or interim basis only pending the conclusion or implementation
of any particular matter or transaction which is already in existence or
about to come into existence at the time that the investment is made and
over which investment the practitioner exercises exclusive control as
trustee, agent or stakeholder in any fiduciary capacity;
(b) to lend money on behalf of that person to give effect to a loan agreement
where that person, being the lender –
(i) specifies the borrower to whom the money is to be lent;
(ii) has not been introduced to the borrower by the practitioner for the
purpose of making that loan; and
(iii) is advised by the practitioner in respect of the terms and conditions of
the loan agreement; or
(c) 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).
It was submitted that, in the present case, since Prevance was introduced to
the borrower by Mr Weide and that he, and not the former, specified the
borrower, the ‘presumptions’ in s 47(5)(b) and s 47(5)(c) did not apply and
that, therefore, s 47(1)(g) could be relied on by the Board.

[15] For all the reasons stated above, the reliance by the Board on s 47(5)
of the Act is misplaced. The provisions of that subsection are inapplicable. As
stated earlier, this was not simply a case of Mr Weide being instructed to
make an investment and where the attorney was merely a bystander or
conduit.

[16] The facts of this case are different than those that featured in the
decision of this court in King v Attorneys Fidelity Fund 2010 (4) SA 185 (SCA).
That case involved the discounting of estate agents’ commission. In that case
the commission of an estate agent, who did not wish to wait for the ultimate
transfer of fixed property after a concluded sale, would be paid out of those
funds, less a certain percentage, a part of which would be paid to the
participants in the scheme as interest or profit. According to the evidence
presented in that case, the scheme later included also the discounting of net
proceeds on sales of fixed property. In King the attorney involved was a mere

conduit and it was intended that the funds deposited by him would be invested
with a third party. The attorneys there involved acknowledged that the
amounts received were for investment purposes and that their instructions
simply were to invest the monies in the scheme referred to at the
commencement of this paragraph.

[17] In King the attorneys served as a mere conduit with funds destined for
the third party to be paid to that party for investment purposes. It appears that
the funds, instead of being invested as described in the preceding paragraph,
were invested in a pyramid scheme and speculatively on the Johannesburg
Stock Exchange.5 Simply put, it was clear that the money was placed with the
attorneys for investment purposes, which went awry. In King the Fidelity Fund
had proved that the plaintiffs’ claims were excluded by the provisions of
s 47(1)(g) and this court held accordingly.

[18] The decision of the Western Cape Division of the High Court, Cape
Town, in Attorneys Fidelity Fund Board of Control v Mark Andrew Claassens
(A620/2011), was relied upon by the Board. It is true that in that case bridging
finance was to be supplied to an attorney’s clients in relation to the sale of
immovable property and that the loans so provided would have a specified
rate of return. After funds were placed in the attorney’s account, the attorney
misappropriated them and did not pass them on to his clients. There were no
fictitious transactions as in the present case. There were no undertakings of
the kind made by Mr Weide. In that case, too, the loan scheme envisaged that
the attorney would be a mere conduit for the funds that would ultimately be
utilised by the seller of immovable property. See also, in this regard, Attorneys
Fidelity Fund Board of Control v Mettle Property Finance (Pty) Ltd 2012 (3)
SA 611 (SCA), para 15.

[19] In light of the conclusions set out above, it follows that Prevance’s
claim for reimbursement is one rightly within the provisions of s 26(a) and that

5 At 192H-I.

the Board has failed to show that its liability is excluded by the provisions of
s 47(1)(g).

[20] The following order is made:
The appeal is dismissed with costs.

________________________
R S Mathopo
Judge of Appeal

APPEARANCES:

For appellant:
G Oliver

Instructed by:

Brendan Müller Inc, Cape Town

Van der Merwe & Sorour, Bloemfontein

For respondent:
L Hollander

Instructed by:

Swarts Weil Van der Merwe Greenberg Inc,
Johannesburg

Symington & De Kok, Bloemfontein