BACKGROUND AND SUMMARY
The appellant is NW Contractors CC. The first respondent is Anton Romaano Inc, a Law firm and the appellant’s erstwhile attorneys of record. The acrimony between the parties stems from a dispute between the parties over legal fees allegedly owed to the first respondent arising from representing the appellant in litigation against the local municipality. In light thereof, the first respondent issued summons against the appellant in the Limpopo Division of the High Court (“the court a quo”) for payment of its costs and obtained default judgment against the appellant. The appellant applied to have the judgment rescinded on the basis that it did not owe any money to the first respondent (“the rescission application”).
Whilst the rescission application was pending, the parties became embroiled in further litigation in respect of a number of interlocutory matters, the most relevant being the application filed by the first respondent on the basis that the appellant’s current attorney of record, Mr Nange, was not in possession of a fidelity fund certificate. The first respondent thus contended that because Mr Nange did not have a valid certificate, the orders granted in favour of the appellant in the other interlocutory applications wherein it was represented by Mr Nange (“the interlocutory orders”) were void ab initio. The first respondent’s application was upheld by the court a quo and the proceedings and judgments initiated by Mr Nange on behalf of the appellant were declared null and void and set aside by the court. In its reasoning, Judge Phatudi held that “seeing that the attorney in casu confirmed that he practiced as such without the fidelity fund certificate notwithstanding being barred to do so as provided in terms of Section 41 (1) of the Attorneys Act (the “Act”), the attorneys work in executing the [appellant’s] mandate was rendered a nullity ab initio. The notice of motion drawn and signed by the attorney (Mr Nange) initiating the proceedings forming the subject matter including the rulings and judgments handed down must be regarded as pro non scripto.”
The Supreme Court of Appeal (the “SCA”) granted the appellant leave to appeal firstly, against the judgment which set aside the interlocutory orders on the basis that the attorney acting for the appellant in those matters did not possess a fidelity fund certificate and secondly, against the dismissal of the appellant’s rescission of judgment application in the court a quo.
Section 41(1) provides that a practitioner shall not practice or act as a practitioner unless he is in possession of a fidelity fund certificate. As such, an attorney is obliged to apply to the secretary of the relevant law society for a fidelity fund certificate. The primary purpose of the fidelity fund is to reimburse clients of legal practitioners who may suffer pecuniary loss due to the theft of monies entrusted to the attorney. Section 41(1) thus exists in the public interest.
In considering whether a contravention of a statutory provision renders the impugned act null and void, the SCA held that the answer is dependent upon a proper construction of the legislation in question. Section 41(2) of the Act provides that “any 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 while so practicing or acting”. The Act further provides that “any person who directly or indirectly purports to act as a practitioner without being in possession of a fidelity fund certificate, shall be guilty of an offense and on conviction shall be liable to a fine not exceeding R2000 or to imprisonment for a period not exceeding 6 months or both such fine and imprisonment”.
The SCA held that the Act therefore prescribes the consequences for practicing without a fidelity fund certificate, that is to say, a forfeiture of fees and/or a criminal conviction and therefore does not contemplate a finding of nullity. The SCA further held that to uphold the finding of the court a quo would undermine the primary purpose of the 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 order of the court a quo on this issue was for these reasons set aside.
As to the second issue before the SCA, being an appeal against the dismissal of the appellant’s rescission application, the court a quo had found that the appellant failed to advance a reasonable explanation for the delay in filing its plea; the appellant had failed to advance a bona fide defence and also the defences that were raised by the appellant had no prospects of success.
In the SCA, the appellant reiterated that it was not 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. In substantiation of this defense the appellant pointed out that it had never been issued a single invoice for legal fees since first instructing the first respondent in 2009. The SCA held that this amounted to a bona fide defence and that the application for rescission should therefore have succeeded.
By prohibiting legal practitioners from acting unless in possession of a valid fidelity fund certificate, the legislature seeks to ensure that an attorney is not let loose on an unsuspecting member of the public.
Written by Khotso Mmatli Checked by Omphile Boikanyo
7 November 2019