De Villiers and Another v Mcintyre NO

• Jurisdiction: South Africa
• Judge: Innes CJ, Solomon JA, Maasdorp JA, Juta JA and Wessels AJA
• Judgment Date: 27 May 1921
• Citation: 1921 AD 425
• Hearing Date: 09 March 1921
• Court: Appellate Division

Solomon, J.A.:

The appellants, who are attorneys on the roll of the Orange Free State Provincial Division of the Supreme Court of South Africa, appeal against an order made by that Court in the exercise of its disciplinary powers over legal practitioners. These powers are usually exercised in cases where charges of misconduct are brought against practitioners, and where the Court is called upon to decide whether the attorney in question is a fit and proper person to remain a member of the honourable profession to which he belongs. But the jurisdiction of the Court is not limited to such cases, and its interference has been successfully invoked on many occasions where there has been no suggestion of disgraceful or dishonourable conduct. As was observed by the CHIEF JUSTICE in Pienaar's case (1902, T.S. 16), "the Courts of South Africa possess the rights of Roman-Dutch Courts to regulate the conduct of practitioners and to prescribe the general lines on which they shall be permitted to exercise the privileges conferred upon them." This latter right must, however, as pointed out by the JUDGE PRESIDENT in his judgment in the present case be exercised not arbitrarily but on proper and legitimate grounds. Certain regulations on the subject are to be found in the Placaats, but the Court is not limited to enforcing these regulations, but possesses and has in the past exercised its inherent powers in cases not covered by the Placaats. In Van Driel's case (1 O.R. 203), an attorney was prohibited by the Court of the late South African Republic from entering into a contract with the Heidelberg Board of Executors under which he shared his professional fees with it. In Pienaar's case (supra) it was laid down that an attorney is not entitled to enter into

Solomon, J.A.

partnership with an unqualified person in regard to his professional business, and in de Jongh's case (1904, T.S. 285), that he cannot share his fees with a law agent. In Zimmerman's case (1907, T.S. 637), the Court exercised its disciplinary powers in a case where an attorney was in the habit of touting for native clients, and this ruling was approved of in the subsequent case of Stanley v Central News Agency (1909, T.S. 488). In Reuter's case (1913, J.P.D.), it was held that it was unprofessional for an attorney to undertake litigation on the terms that he would charge only his disbursements where nothing was recovered from the defendant. In none of these cases was there any misconduct in the ordinary meaning of that expression, but in each instance the Court interfered in the interests of the legal profession and of suitors. And though in some instances, e.g., as regards touting, regulations on the subject are to be found in the Placaats, yet the Court in exercising its disciplinary authority did not purport merely to give effect to the Placaats but interfered by virtue of the inherent powers which it possesses over its practitioners. Thus in Zimmerman's case no reference was made to the Placaat forbidding touting either in the argument or in the judgment, which proceeded entirely on the ground that touting for native clients was extremely objectionable and must be made to cease. No hard and fast line can therefore, in my opinion, be laid down as regards the circumstances in which the Court is entitled to interfere, it being a matter in its discretion, when now cases arise, whether or not it should exercise its disciplinary powers. The present case is essentially one of first impression; there is no precedent either in the Roman-Dutch or English practice for the guidance of the Court: but its interference is invoked by the Law Society which calls upon it to exercise its inherent powers in the interests of the legal profession as well as of the public.

The appeal raises questions of groat difficulty as well as of vital importance to the profession, and in considering it I propose to deal in the first instance with the case of the second appellant Van Niekerk. The main facts are not in dispute and may be very shortly stated. The two appellants were practising in partnership at Heilbron as attorneys, notaries and conveyancers, and in accordance with the usual custom amongst country attorneys they carried on in conjunction with their legal practice an agency, trust and, auctioneering business. It is common cause that it is

Solomon, J.A.

impossible for an attorney in the country towns and villages to make a living on strictly legal work, and that quite three-fourths of his income is derived from work other than legal. This may not be a very desirable state of things, but in the circumstances of the country it is inevitable, and the practice is tacitly recognised by the Courts.

On the 22nd January, 1920, the appellants entered into a contract with the South African Board of Executors and Trust Co. Ltd. under which they sold it their agency, trust and auctioneering business, at the same time retaining their legal practice as attorneys, notaries and conveyancers. In consideration of the foregoing they undertook "not to take part in or be interested directly or indirectly during a term of 25 years in any part of the Union of South Africa in any kind of business which may compete or affect the business carried on or to be carried on by the company." It was a term of the agreement that the appellant van Niekerk should act for a period of five years as the local manager of the branch to be established by the company at Heilbron, but he was entitled at the same time to carry on the legal practice of the firm of de Villiers and van Niekerk. It was also agreed that the said firm should act as the legal advisers of the company and that all its legal work in Heilbron should be given to the firm. The other terms of the contract it is unnecessary to refer to. The other party to the contract, the South African Board of Executors and Trust Co., Ltd., was registered with limited liability first in the Cape Colony and subsequently in the Orange Free State and Transvaal. According to its prospectus its object was to do every sort of business which is done by existing Boards of Executors and for that purpose "to acquire old-established and prosperous trust and general agency businesses and to continue doing so until the company shall possess branch businesses in every town or village in South Africa."

In furtherance of this object it had already at the date of the hearing of this application purchased the auctioneering, general agency and trust businesses of some 30 attorneys or firms of attorneys in the Orange Free State Province, and was still engaged in trying to acquire others. It is this contract entered into between the appellant van Niekerk and the said company to which the Law Society takes exception, and in respect of which

Solomon, J.A.

it invokes the interference of the I Court. The agreement is attacked not only as being in itself open to objection but also on the ground that it is one of a large number of similar contracts entered into between the company and other attorneys in the Province, its avowed object being to obtain as far as possible a monopoly of such work throughout the Union. It is desirable, therefore, to consider the question from these two points of view.

First then as regards the agreement itself it is contended that it is undesirable that an attorney should enter into the service of a Trust Company, and that the Court is entitled to exercise its disciplinary powers to prohibit such a contract. The main ground upon which this contention is based is that in accepting such employment an attorney places himself in such a position that his independence is impaired. We are, however, at once met with this initial difficulty that in a series of decisions the Courts in South Africa have refused to interfere in such circumstances. In Versfeld's case (1909, T.S. 313), the respondent was the manager of the African Board of Executors and Trust Co. Ltd. but the Court held that "there was nothing unprofessional in the mere fact of a professional man, like an attorney, notary and conveyancer, being in the employment of a third person."

A distinction was there drawn between his case and that of an attorney who shares his fees with an unprofessional man, as in van Driel's case and de Jongh's case (supra). That decision was followed in van Woudenberg's case (1910, T.S. 616), where the Law Society unsuccessfully objected to his admission as an attorney on the ground that he was the secretary to the Middelburg Board of Executors. Again in Hedding's case (1910 OPD 190), the applicant was admitted by the Court as attorney, though he was the managing secretary of John Roderick Trust and Estate Co. It is true that the only objection taken by the Law Society to his admission was that as the secretary of that company he touted for work. But the very fact that no objection was taken to his admission on the ground that he was in the employ of a Trust Company would seem to show that the Law Society felt that in view of the previous decisions it would be hopeless to set up such a contention. It was, probably, for the same reason that in the present case no reference is made in the judgment of the learned JUDGE PRESIDENT to this branch of the subject. He seems to have accepted the position that in itself

Solomon, J.A.

there was nothing objectionable in an attorney accepting service with a local Trust Company such as we are accustomed to in this country.

No doubt as a Court of Appeal we are not bound by the decisions of inferior Courts, but in a matter such as this in which 'a practice has been laid down, under which doubtless vested rights have grown up, it would be very unfortunate if this Court we re now to disturb that practice. And although I cannot help thinking that it is undesirable that a professional man, while carrying on his practice, should enter into the employment of a Trust Company doing such work as...