The primary purpose of s 41 of the Attorneys Act is to protect the public

December 1st, 2019

NW Civil Contractors CC v Anton Ramaano Inc and Another (SCA) (unreported case no 1076/2018 and 1024/2018, 14-10-2019) (Ponnan JA (Swain, Zondi, and Mocumie JJA and Dolamo AJA concurring))

In the case of NW Civil Contractors CC, the Supreme Court of Appeal (SCA) had to look at two judgments of the Limpopo Local Division of the High Court, Thohoyandou involving the same parties, namely, NW Civil Contractors CC (appellant), Anton Ramaano Inc (first respondent), Sheriff Thohoyandou (second respondent). The first, under case number 1024/2018, was an appeal against a judgment, which set aside three orders previously granted in that division, on the basis that the legal practitioner acting for the appellant in those matters was not in possession of a Fidelity Fund Certificate (FFC). The second, under case number 1076/2018, was an appeal against the dismissal of an application by the appellant for the rescission of a judgment, granted by default against it by Mushasha AJ on 11 August 2016.

The litigation stems from a dispute over legal fees that the first respondent – a practising legal practitioner – maintained was owed to him by the appellant. The first respondent had represented the appellant in litigation against a local municipality. The matter was eventually settled on 7 March 2015, when the municipality agreed to pay the appellant the sum of R 14 million. When the first respondent’s fees for the rendition of those services remained unpaid, it issued summons against the appellant for payment of its taxed cost in the sum of R 1 395 459,06.

After services of the summons, the appellant entered an appearance to defend the action, but failed to timeously file their plea, with the result that it was subsequently ipso facto barred from pleading. On 11 August 2016 default judgment was granted against the appellant. On 30 August 2016 the appellant applied to have the judgment rescinded on the basis that it did not owe any money to the first respondent and that the latter’s bill of costs had been erroneously taxed in the absence of the appellant (the rescission application). In the SCA the court said that the appellant denied being indebted to the first respondent. It asserted that it had an agreement with the first respondent that, in return for the legal services rendered, it would undertake certain construction work at the first respondent’s property.

The SCA said while the rescission application was pending, the parties became embroiled in further litigation in respect of a number of interlocutory matters. First, on 23 August 2016, the second respondent, had attached and removed some of the appellants goods, pursuant to a writ of attachment, which had been obtained by the first respondent some four days earlier. The appellant accordingly sought urgent interim relief pending finalisation of the rescission application (the first application). The first application succeeded before Kganyago AJ on 22 September 2016.

It was ordered that, pending finalisation of the rescission application, the execution of the default judgment be suspended. The warrant of execution against the property of the appellant stayed and the goods of the appellant that had been attached and removed had to be returned to the appellant (the first order). Meanwhile on 14 September 2016, the first respondent brought an application for the recusal of Kganyago AJ (the second application). The application was dismissed (the second order). The SCA added that aggrieved at the failure of the recusal application, the first respondent applied for leave to appeal the dismissal of the recusal application (the third application). This application was also refused on 22 September 2016 (the third order).

The SCA said that on 28 September the first respondent filed what was described as a ‘Notice of application for rescission and/or settings aside of judgment/rulings in terms of the common law and/or appropriate relief in terms of s 38 and/or 173 of the Constitution of the Republic of South Africa Act 108 of 1996’. The basis of the application was that, unbeknown to the parties and the court, the appellant’s attorney of record in all three applications, Vhutshilo Nange, was not in possession of a valid FFC. The first respondent thus contended that, because Mr Nange did not have a valid certificate, the three orders granted were void ab initio or invalid.

It was further contended that each of the orders granted fell to be rescinded on the basis that, in as much as Mr Nange had represented the appellant without being in possession of such a certificate, they were obtained fraudulently or by misrepresentation. The SCA said it was difficult to discern precisely on what case the appellant was being called on to answer. The SCA added that it seemed that what passed for the motion in the matter was so vague as to render any relief sought thereunder incompetent.

The SCA said insofar as prayers were concerned, it was unclear how the mere setting aside of the second and third orders would advantage the first respondent. If those orders were set aside, without more, would it mean that Kganyago AJ was obliged to re-adjudicate the second and third applications and rule on them afresh? In the ordinary course, what avails a litigant, aggrieved by a dismissal of an application for leave to appeal by the High Court was a petition to the SCA in terms of s 17(2)(b) of the Superior Courts Act 10 of 2013, not an application such as the one brought to the SCA, the novelty of which appeared to be surpassed only by its lack of substance.

The SCA said none of this, however, occasioned Phatudi J any difficulty. The courts said he did not content himself with merely setting aside the three orders granted by Kganyago AJ. He went much further and granted an order in the following terms:

‘20.1 The first respondent’s application is upheld.

20.2 The proceedings initiated and executed by Vhutshilo Licollin Nange who practiced or purported to have practiced as such under the name and style Vhutshilo Nange Attorney are declared null and void ab initio and are set aside.

20.3 All rulings and judgments handed down occasioned by the proceedings set aside in the order 20.2 above are declared null and void and set aside.

20.4 The applicant is ordered to pay the costs of this application including all reserved costs.

20.5 The applicant’s legal representatives of record including Counsel are precluded from levying and claiming any fees including Counsel Fees incurred from 24 April 2018 from the applicant.’

The SCA pointed out that self-evidently, the relief granted by Phatudi J was never sought by the first respondent. Nor was it foreshadowed in the papers. The court added what is more, para 20.2, facially at least purports to extend to all ‘the proceedings initiated and executed’ by Mr Nange, not just those that served before Kganyago AJ. The court added ‘precisely what those proceedings are, one does not know’. The SCA added that the same holds true for para 20.3 namely, the declaratory orders granted by Phatudi J were far reaching. They purport to put a red line, not just through all proceedings ‘initiated or executed’ by Mr Nange, but also, and more importantly, ‘all rulings and judgments’. Leaving aside the terminological and conceptual difficulties that the employment of words ‘initiated’ or ‘executed’ engender there remains the scope and extent of the order, namely when Mr Nange ‘practiced’ or ‘purported’ to do so.

The SCA added that assuming that the absence of an FFC, could legitimately ground such far-reaching relief, the orders granted are in no ways defined or limited by the absence of such a certificate. Moreover, interrogating the orders leads one ineluctably to the conclusion that they are indeterminate, open ended and irredeemably vague. The court said it seemed that it would be well-nigh impossible for any litigant to know with any measure of confidence what the order obliges them to do. At the risk of being in contempt of court, litigants are required to comply with court orders and are thus obliged to know, with clarity, what is required of them. It follows that the litigant has to know where its obligation starts and ends.

The SCA further said that the judgment of Phatudi J fails at yet a further leg. He reasoned: ‘Seeing that the attorney in casu confirmed that he practiced as such without the [FFC] notwithstanding being barred as provided for in terms of section 41(1) of the Attorneys Act [53 of 1979], the attorney’s work done in executing or purporting to execute the applicants mandated, was rendered a nullity ab initio. Put differently, all that which was done or performed or executed or purported to have been done or performed or executed by the practitioner is in my view, a nullity. The notice of motion drawn and signed by the attorney (Mr Nange) initiating the proceedings forming the subject matter included the ruling(s) and judgments handed down must, in my view, be regarded as pro non scripto. In short, all that which the attorney did in the execution or performance of the mandate in this matter must be regarded as not having been done. This translates in the notice of motion, the court’s ruling and judgments handed down pursuant thereto being set aside.’

The SCA held that it was not controversial in this case that in terms of s 41(1) of the Attorneys Act. ‘A practitioner shall not practise or act as a practitioner on his [or her] own account or in partnership unless he [or she] is in possession of [an FFC].’ The SCA added that what was controversial is the consequences that flows from such non-compliance. The SCA noted that in one of the earliest cases to consider the consequences for the validity of an act in conflict with statutory prohibition was Schierhout v Minister of Justice 1926 AD 99 at 109 in which Innes CJ said: ‘It is a fundamental principle of our law that a thing done contrary to the direct prohibition of the law is void and of no effect.’ But that will not always be so. Whether that is so, as later cases have made clear, will depend on a proper construction of the legislation in question.

The SCA said as it was explained by Solomon JA is Standard Bank v Estate Van Rhyn 1925 AD 266 at 274: ‘The contention on behalf of the respondent is that when the Legislature penalises an act it impliedly prohibits it, and that the effect of the prohibition is to render the [act] null and void, even if no declaration of nullity is attached to the law. That, as a general proposition, may be accepted, but it is not a hard and fast rule universally applicable. After all, what we have to get at is the intention of the Legislature, and, if we are satisfied in any case that the Legislature did not intend to render the [act] invalid, we should not be justified in holding that it was.’

The court said the legislature expressly provides for two consequences for the conduct complained of. First, s 41(2) provides that ‘[a]ny practitioner who practices or acts in contravention of subsection (1) shall not be entitled to any fee, reward or disbursement in respect of anything done by him [or her] while so practising or acting’. And s 83(10) of the Act provides: ‘Any person who directly or indirectly purports to act as a practitioner or to practice on his [or her] own account or in partnership without being in possession of [an FFC], shall be guilty of an offence and on conviction liable to a fine not exceeding R 2 000 or to imprisonment for a period not exceeding [six] months or to both such fine and such imprisonment.’

The SCA added that the Act, therefore, prescribed two consequences for practicing without an FFC, namely, disentitlement to a fee for the work done and criminal conviction. It does not contemplate a visitation of nullity. In Oilwell (Pty) Ltd v Protec International Ltd and Others 2011 (4) SA 394 (SCA), Harms DP referred to J Voet Commentarius ad Pandectas 1.3.16 (Gane’s translation), who said: ‘Nay indeed there is no lack of laws which forbid, and yet do not invalidate things to the contrary, nor impose any penalty upon them. Hence came into vogue the famous maxim “Many things are forbidden in law to be done which yet when done hold good.”’

The SCA said it found it difficult to conceive that the legislature had any intention in enacting s 41 other than of punishing the attorney who did not comply therewith. The SCA alluded to the ‘greater inconvenience and impropriety’ that would follow if the setting aside of orders of Kganyago AJ were allowed to stand. The court noted that it does not seem that, in addition, the legislature also intends that nullity should follow. The SCA followed that judgment and order issued by Phatudi J under case number 1024/2018 cannot stand. That to uphold the approach of Phatudi J would undermine the primary purpose of the Attorneys Act, which is to protect the public and would have grave consequences for the administration of justice, the rule of law and legal certainty.

The SCA said in this matter it remains to be said that the Legal Practitioners’ Indemnity Insurance Fund NPC sought and despite opposition from the first respondent, obtained the leave of the court to be admitted as an amicus curiae. The amicus provides professional indemnity insurance cover to all attorneys practising in South Africa. On the second appeal the SCA added that after orders were issued, the subject of the first appeal, Phatudi J heard the appellants application for rescission of the default judgment granted by Mushasha AJ on 11 August 2016 and summarily dismissed it.

The SCA said Phatudi J’s reason to dismiss the appeal was that the appellant failed to give responsible explanation for the delay, did not advance any bona fide defence and that the defences raised enjoyed no prospects of success. The SCA added that in entering into the substantive merits of the rescission application, Phatudi J did not consider himself bound by his reasoning under the case number 1024/2018, that ‘the attorney’s work done in executing or purporting to execute the applicant’s mandate, was rendered a nullity ab initio’ or that ‘[t]he notice of motion drawn and  signed by the attorney (Mr Nange) initiating the proceedings … must … be regarded as pro non scripto’.

The SCA said it is common cause that the appellants plea was filed a day late. The court added that according to the appellant, the notice of the bar in the matter was received by E Munzhedzi, a legal secretary. She, however, did not bring it to the attention of the appellant’s legal practitioner but filed it away. When the notice of bar was fortuitously discovered later, on that very day the appellant’s legal practitioner hastily drafted, served and filed a plea. Thereafter, despite the appellant’s legal practitioner indicating that the application would be launched to uplift the bar, the first respondent proceeded, despite opposition, to obtain a judgment by default. The SCA said there is simply nothing to gainsay the version advanced by the appellant, which must be accepted.

The SCA pointed out that in substantiation of the defence the appellant pointed out that the first respondent had never rendered an invoice for legal fees since first being instructed in 2009. The appellant further asserted that what was owed to it for work done at the first respondent’s property exceeded the amount now claimed by the first respondent as legal fees. It followed on the evidence that not only was there no wilful delay, but also that bona fide defence had been established. The SCA said the application for rescission ought to, therefore, have succeeded. In the result:

‘Both appeals are upheld with costs.

The order of the court a quo in each instance is set aside and substituted with the following:

Under case no 1024/2018 –

“The application is dismissed with costs.”

Under case no 1076/2018 –

The application succeeds with costs.

The judgment of Mushasha AJ granted by default on 11 August 2016 is rescinded.’

 Kgomotso Ramotsho Cert Journ (Boston) Cert Photography (Vega) is the news reporter at De Rebus.

This article was first published in De Rebus in 2019 (Dec) DR 29.

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