Fairoak Investments Holdings (Pty) Limited v Chairperson, Attorneys' Fidelity Fund Board of Control

• Jurisdiction: South Africa
• Judge: JW Olivier AJ
• Judgment Date: 01 April 2014
• Docket Number: 5127/2012
• Court: Western Cape High Court, Cape Town
• Hearing Date: 01 March 2014
• Citation: 2014 JDR 0763 (WCC)

Fairoak Investments Holdings (Pty) Limited v Chairperson, Attorneys' Fidelity Fund Board of Control
2014 JDR 0763 (WCC)

2014 JDR 0763 p1

Citation	2014 JDR 0763 (WCC)
Court	Western Cape High Court, Cape Town
Case no	5127/2012
Judge	JW Olivier AJ
Heard	March 1, 2014
Judgment	April 1, 2014
Appellant/; Plaintiff	Fairoak Investments Holdings (Pty) Limited
Respondent/; Defendant	Chairperson, Attorneys' Fidelity Fund Board of Control; Attorneys' Fidelity Fund Board of Control

Summary

Attorneys — Fidelity fund — Liability — Loss resulting from theft of trust moneys — Notice — Failure to lodge timeously — Duties of board of control in assessing claim and its timeousness — Whether proper explanation given — Attorneys Act 53 of 1979, s 48(1)(a).

Judgment

INTRODUCTION

1.

This is an application by Applicant, Fairoak Investments Holdings (Pty) Limited ("Fairoak"), against First Respondent, the Chairperson of the Attorneys' Fidelity Fund Board of Control, and Second Respondent, the Attorneys' Fidelity Fund Board of Control (the "Board of Control"), for an order that:

2014 JDR 0763 p2

"1.

The Respondents' decision rejecting the Applicant's claim of 11 June 2010 against the Attorney's Fidelity Fund, on the ground that it was not lodged timeously, is set aside.

2.

The Respondents are ordered to consider the Applicant's claim against the Attorneys' Fidelity Fund of 11 June 2010 in accordance with this judgement.

3.

The Respondents, opposing this application, are ordered to pay the Applicant's costs.

4.

The Applicant is granted further or alternative relief."

2.

The Board of Control rejected Fairoak's claim in terms of the Attorneys Act, No 53 of 1979 ("the Act"), that was lodged with the Attorneys' Fidelity Fund ("the Fund") on 11 June 2010 for the amount of R1 566 000.00 arising from the theft of its money, held in trust by an attorney, Mr Izak Minnie ("Minnie"), who had been removed from the roll of attorneys by an order of court on 19 October 2010 after being sequestrated on 9 June 2010.

3.

Fairoak's claim was rejected by the Board of Control, because according to the latter written notice of the claim in terms of section 48(1)(a) of the Act was not given to the Board of Control within three months after Fairoak allegedly became aware of the theft or, by the exercise of reasonable care, should have become aware of the theft.

OPPOSED MOTION PROCEEDINGS

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4.

An applicant who seeks final relief on motion must, in the event of conflict, accept the version set up by a respondent, based upon the admitted facts in the applicant's affidavits together with the facts alleged by the respondent, unless the latter's allegations are, in the opinion of the Court, not such as to raise a real, genuine or bona fide dispute of fact or are so far-fetched or clearly untenable that the Court is justified in rejecting them merely on the papers (Plascon-Evans Paints Ltd v Van Riebeeck Paints (Pty) Ltd 1984 (3) SA 623 (A) at 634-635C; Wightman t/a JW Construction v Headfour (Pty) Ltd and Another 2008 (3) SA 371 (SCA) at 375E-F).

5.

The denial by a respondent of a fact alleged by an applicant may not be such as to raise a real, genuine or bona fide dispute of fact. If, in such a case, the respondent has not applied for the deponent concerned to be called for cross-examination in terms of Rule 6(5)(g) of the Uniform Rules of Court, and the Court is satisfied as to the inherent credibility of the applicant's factual averment, it may proceed on the basis of the correctness thereof, and include this fact among those for determination whether the applicant is entitled to the relief sought (Ripoll-Dausa v Middleton NO and Others 2005 (3) SA 141 (CPD) at 151F-152A).

6.

A bare denial can give rise to a real, genuine and bona fide dispute of fact, when there is no other way open to the disputing party and nothing more could be expected of him. When the facts averred are such that the

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disputing party must necessarily possess knowledge of them and be able to provide an answer or evidence, if they not be true or accurate, but rests his case on a bare or ambiguous denial, a finding that the test is satisfied will be problematic. A legal adviser, who settles an answering affidavit, has a serious duty to ascertain and engage with the facts disputed by a respondent, and to reflect such disputes fully and accurately in the answering affidavit, otherwise a Court is justified in taking a robust view of the matter (Wightman supra at 375G – 376A).

7.

The aforementioned observations are apposite herein:

7.1

In view of Fairoak's allegations inter alia that:

7.1.1

the Board of Control's refusal to consider the claim was premised on the view that Fairoak should have been aware of the theft by Minnie from July 2009 and constitutes a material error of fact;

7.1.2

the director of Fairoak, who dealt with Minnie, was a lay person, who had no reason until 9 November 2009 to believe that anything was amiss or to mistrust Minnie;

7.1.3

the delay after 9 November 2009, in lodging the claim, was attributable to a bona fide attempt by Fairoak to comply with

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a procedural requirement, mentioned by the applicable Law Society, as a requisite for the claim against the Fund;

7.1.4

the Board of Control rigidly applied the three month statutory time limited, without regard to the reasons for Fairoak's failure to comply therewith;

7.1.5

the Board of Control's decision was not related to the information before it, moreover, that it did not take relevant circumstances pertaining to Fairoak's explanation for the delay into account, and it disregarded the purpose of the Fund, resulting in its decision, which does not comply with the scope and purpose of the legislation, establishing the Fund, rejecting a sound claim on technical and formalistic grounds.

7.2

When regard is had to Respondents' response, namely, that Fairoak's abovementioned "allegations constitute legal submissions which are disputed and which would be dealt with in legal argument at the hearing of the application", in particular whether Respondents provided a factual basis for their defence.

THE RELEVANT FACTUAL MATRIX

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8.

The facts, having regard to the approach on the papers, are set out hereunder.

9.

During 2004 Fairoak purchased certain immovable property from Mr S Olivier, ("Olivier"). A director of Fairoak, Mr Stephanus Petrus Hartzer, the deponent to Fairoak's affidavit ("Hartzer"), instructed Minnie, of Izak Minnie Incorporated, a specialist property lawyer, to act on behalf of Fairoak to facilitate the payment of the purchase price by issuing guarantees and liaising with the transferring attorneys appointed by Olivier.

10.

Hartzer, as a director of Fairoak, had many dealings with Minnie and trusted him as an honest and professional attorney, who was engaged in many transactions by Fairoak, which involved the flow of hundreds of millions of Rand through Minnie's trust account, resulting from many property transactions, without any problems.

11.

Fairoak paid an amount of R2 556 000.00 to Minnie. The said amount represented the purchase price of R2 300 000.00, due to Olivier and also transfer duties and legal fees, payable in the amount of R256 000.00.

12.

The monies were paid by Fairoak into the trust account of Izak Minnie Incorporated held with ABSA Bank Limited, to secure transfer of the property bought from Olivier.

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13.

Minnie caused a guarantee to be issued by ABSA Bank Limited on 22 October 2004. That guarantee was delivered by Minnie on 29 October 2004 to Olivier's transferring attorneys, which occurred out of time, having regard to the terms of the deed of sale concluded between Fairoak and Olivier.

14.

Olivier accordingly cancelled the sale, but Minnie assured Hartzer that the cancellation of the sale was unlawful, having regard to the provisions of the deed of sale.

15.

Minnie funded litigation on Fairoak's behalf to compel Olivier to effect transfer of the property concerned to Fairoak.

16.

The litigation against Olivier, including attempts to appeal, failed.

17.

After Hartzer had been informed by Minnie that Fairoak failed to obtain transfer of the property from Olivier, despite litigation, Hartzer requested Minnie to refund the amount paid by Fairoak into the trust account of Izak Minnie Incorporated, as well as any interest earned thereon.

18.

Minnie thereafter continued to give various reasons why payment to Fairoak could not be made, such as that he was waiting for the closing of the investment, and that the investment could not be closed prior to the receipt by ABSA Bank Limited of the original guarantee.

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19.

Hartzer became agitated and frustrated with Minnie, but during approximately July 2009 Minnie made payment of R1 000 000.00 to Fairoak and issued 3 post-dated cheques to Fairoak for the balance of R1 656 000.00 namely in the amounts of R250 000.00, R256 000.00 and R1 150 000.00 respectively, calculated by Minnie to be due and payable to Fairoak in terms of what was held in trust.

20.

The post-dated cheques were issued pursuant to a meeting between Minnie and Hartzer, held on 13 July 2009. Subsequent thereto Minnie sent a letter dated 15 July 2009 to Fairoak and Hartzer, advising as follows:

"1.

Bogemelde en die vergadering te u kantore Maandag 13 Julie verwys.

2.

Soos bespreek onderneem ons hiermee die volgende:

2.1

Ons sal aan Fairoak Investment Holdings voor of op 31 Julie 2009 die bedrag van R1 150 000-00 betaal;

2.2

Daarmee saam sal 'n bedrag van R250 000-00 ten opsigte van die rente op die belegging ook betaal word; en

2.3

Die transportkoste...