LSSA takes on Proxi Smart model in Gauteng High Court

July 1st, 2017
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By Barbara Whittle

The Law Society of South Africa (LSSA) filed its answering affidavit in the Proxi Smart matter on 7 June. The matter between Proxi Smart Services (Pty) Ltd v the LSSA and Others is set down for hearing in the Gauteng Division of the High Court in Pretoria.

Proxi Smart Services plans to render certain ‘non-reserved’ or ‘administrative’ conveyancing-related services. The LSSA contends that Proxi Smart’s attempt at creating a distinction between ‘reserved work’ and ‘non-reserved work’ has no basis in law, and that the full conveyancing process is regarded as professional work performed by conveyancers – who are regulated by the statutory, provincial law societies. This should remain so in the interest of the public.

The LSSA’s counter-application seeks orders declaring the Proxi Smart model to be in contravention of various rules, regulations and legislation, and therefore, unlawful.

The other 13 respondents in the matter are the Chief Registrar of Deeds; Roger Dixon; the Justice Minister; the Attorneys Fidelity Fund (AFF); the four statutory provincial law societies; the National Association of Democratic Lawyers; the Back Lawyers Association; the Black Conveyancers Association; the Minister of Rural Development and Land Reform and the National Forum on the Legal Profession.

The LSSA points out the ‘unfortunate timing of the application by Proxi Smart, which finds the profession in transition due to the impending coming into effect of the Legal Practice Act 28 of 2014 (expected to be in 2018), as well as the changes envisaged in the deeds registration process envisaged in the Electronic Deeds Registration Systems Bill [B-2016] gazetted for public comment in March this year.’

A misconceived application

The LSSA contends that Proxi Smart’s application is misconceived as the Deeds Registries Act 47 of 1937 (the Act) does not define or even use the words ‘reserved work’. The logical inference is that the legislator never intended to divide the functions performed by a conveyancer, and that the Act was drafted from the premise that all documents and supporting documents must be submitted to the relevant deeds registry by a conveyancer and had to be drafted, created or secured by a conveyancer or a member of her or his staff working under direct supervision and control of the conveyancer. However, the LSSA adds that, as it is impossible to legislate for every conveyancing procedure, the ‘usage, custom and practice of the conveyancing profession’ cannot be found codified in the Act.

The LSSA goes on to show that all the steps involved in a typical transfer of immovable property, summarised by Proxi Smart have, by usage, custom and practice over centuries become work that is being performed by conveyancers, and should continue to be performed exclusively by conveyancers. The work defined by Proxi Smart as ‘administrative work’ is impliedly included in the Act as work that has to be performed by a conveyancer.

The misnomer of the ‘typical’ transfer

The LSSA adds that the ‘typical’ transfer outlined by Proxi Smart is a misnomer as, in the experience of conveyancers, there exists no ‘typical’ transfer of immovable property. Conveyancers are on a daily basis, involved in a great variety of transactions in which a plethora of legal and administrative problems can present themselves.

Protection of the consumer

The protection of the consumer is central to the role of the conveyancer. A number of rules in the Rules for the Attorneys’ Profession demand that the conveyancer must account to all parties. The protection afforded to a consumer by the rules require the conveyancer to have full control of the finances and all money deposited in the attorneys’ trust account. In addition, the public is protected against theft of trust money deposited with a conveyancer by the AFF.

The LSSA also outlines a number of rules and regulations, which conveyancers participating in the Proxi Smart model would breach. It is dependent on Proxi Smart ‘the estate agent and “their” panel conveyancer hunting as a pack’. The conveyancer would be breaching r 43.1 (sharing of fees), r 48, r 49.8, as well as r 49.17 (anti-touting) of the rules.

The LSSA points out that Proxi Smart’s model, which is dependent on an estate agent convincing a prospective seller to make use of Proxi Smart’s services (and thus its panel conveyancer) disregards the common law principle that a seller is permitted to nominate his or her own conveyancer. It would also contravene s 11(1) of the Consumer Protection Act 68 of 2008 aimed at prohibiting direct marketing.

In addition, the LSSA submits that the ‘parallel mandate management agreement’ between Proxi Smart and a panel conveyancer would amount to a restrictive horizontal practice, thus contravening s 4(1) of the Competition Act 89 of 1998.

The LSSA concludes that the approval of the Proxi Smart model would result in –

  • conveyancing as a profession losing its attraction to new entrants;
  • members of the public losing confidence conveyancers;
  • members of the public being denied the protection of statutory bodies overseeing strict compliance by conveyancers to rules directed at ethical and professional behaviour and conduct; and
  • conveyancing being attended by persons and institutions that do not qualify as officers of the court, with the concomitant dissipation of the safeguards such a system holds.
  • The LSSA is represented in this matter by advocates Ish Semenya SC and Allen Liversage, instructed by Maponya Attorneys.
  • The LSSA’s full answering affidavit, as well as the papers by other parties in this matter, can be accessed on the LSSA website at LSSA.org.za under the tab ‘About us’ then ‘Matters’.
  • See also editorial ‘Conveyancing work encroached upon’ (2016 (Dec) DR 3).

Barbara Whittle, communication manager, Law Society of South Africa, barbara@lssa.org.za

This article was first published in De Rebus in 2017 (July) DR 14.

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