Proxi Smart loses conveyancing battle against the LSSA

June 1st, 2018
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In the editorial ‘Conveyancing work encroached upon’ (2016 (Dec) DR 3) Editor, Mapula Sedutla, wrote about the proposed business model by Proxi Smart Services (Pty) Ltd (Proxi Smart).

Proxi Smart sought to render certain conveyancing-related services, which are exclusively performed by conveyancers, who are regulated by the statutory provincial law societies.

The Law Society of South Africa (the LSSA), its constituents and the Attorneys Fidelity Fund (AFF) were of the view that the proposal by Proxi Smart could not be supported, as the full conveyancing process is regarded as work exclusively performed by attorneys and should remain so in the interest of the public.

The LSSA prioritised the matter and attorneys were cautioned against participating in the Proxi Smart initiative. The LSSA’s concerns included:

  • members of the public being denied the protection of statutory bodies overseeing strict compliance by conveyancers of rules directed at the ethical and professional conduct of conveyancers;
  • members of the public losing confidence in conveyancers;
  • conveyancing as a profession losing its attraction to new entrants; 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’ (see ‘LSSA takes on Proxi Smart model in the Gauteng High Court’ 2017 (July) DR 14).

Proxi Smart brought an application for declaratory relief concerning the lawfulness of its business model for performing the administrative and related services pertaining to property transfers that it contended was not by law reserved to conveyancers or legal practitioners.

The matter of Proxi Smart Services (Pty) Ltd v the Law Society of South Africa and Others (GP) (unreported case no 74313/16, 16-5-2018) (Matojane J) (Van der Westhuizen J and Strijdom AJ concurring) was heard in the Gauteng Division of the High Court in Pretoria (GP) on 6 and 7 February, where judgment was reserved.

Judgment was delivered in favour of the respondents on 16 May 2018. Although the application was dismissed on technical grounds, the judges set out their views on the merits clearly.

The proposed model, according to the court, was based on supporting documents that may be required to be lodged in a ‘typical transfer of immovable property’ involving the sale by private treaty of a freehold property. ‘This ignores the fundamental reality that every property transaction is unique and is not typical’ (para 17).

In para 5 of the judgment the court stated: ‘The opposing respondents contend that all work, of whatever nature associated with immovable property transactions and transfers indivisibly and inseparably forms part of conveyancing practice, which has, by usage, custom and practice over centuries, became work that is performed, and ought to continue to be performed, exclusively by conveyancers.’

In considering the financial aspects of the proposed scheme, the court referred to the AFF, whose purpose is to reimburse persons who suffer pecuniary loss as a result of the misappropriation of trust money by a practitioner or their subordinates.

At para 50 Matojane J stated: ‘The highest standard of professionalism and honesty are fundamental to conveyancing transactions which involve large sums of money represented by undertakings exchanged on trust. The public derives comfort from the fact that attorneys and conveyancers are regulated by statutory law societies, the Attorneys Fidelity Fund and a Code of Conduct that prescribes high ethical standards which they must adhere to ensure that the public is protected.’

The court held that the applicant did not make a case for the relief it sought and dismissed the application with costs.

In a press release, the LSSA Co-chairpersons, Ettienne Barnard and Mvuzo Notyesi, welcomed the judgment and noted that specialised skills of conveyancers have been acknowledged.

  • The full judgment can be found on the LSSA website at lssa.org.za.
  • Upcoming deadlines for article submissions: 18 June and 23 July 2018.

This article was first published in De Rebus in 2018 (June) DR 3.

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