REPUBLIC OF SOUTH AFRICA

THE SUPREME COURT OF APPEAL
OF SOUTH AFRICA

Case number 126/05
Reportable

In the matter between:

THE LAW SOCIETY OF THE CAPE
OF GOOD HOPE                                                   APPELLANT

and

HENRIETTA PETER                                          RESPONDENT

CORAM:
Harms, Scott, Farlam, Nugent et Heher JJA

HEARD:
28 FEBRUARY 2006

DELIVERED: 28 MARCH 2006

SUMMARY:
Attorney – misappropriation of trust moneys – whether court a
quo should have struck the name of the attorney concerned from the roll rather
than suspending her for a period and subjecting her to certain restrictions for a
further period.
Neutral citation: This judgment may be referred to as Law Society, Cape v
Peter [2006] SCA 37 (RSA).

__________________________________________________

JUDGMENT
__________________________________________________

FARLAM JA

INTRODUCTION
[1] The appellant applied to the Cape High Court for, amongst other
things, an order striking the name of the respondent from the roll of attorneys.
Instead of granting that relief the High Court suspended the respondent from
practice for a year and ordered further that she be precluded from practising
for her own account, either as a principal or in partnership or in association or
as a director of a private company conducting an attorneys’ practice for a
period of one year from the expiry of the suspension. It further ordered that
the restrictions applicable after the year of suspension expired  would only fall
away once she had satisfied the appellant, after the restrictions had been in
operation for a year, that she has the necessary skills and expertise to
conduct a conventional legal practice and manage trust accounts. It gave
certain further orders dealing with such matters as the appointment of a
curator to administer and control the respondent’s trust account and to take
possession of her books of account, records, files and other documents
relating to her practice and ordered her to pay the costs of the application on
the attorney and client scale and to pay  the fees and expenses of the curator.
The appellant has appealed, with the leave of this Court, against the High
Court’s decision not to strike the respondent’s name from the roll.

FACTS
[2] The respondent obtained an LLB degree from the University of the
Western Cape at the end of 1999. She sought articles of clerkship from
various firms of attorneys in Cape Town but was unable to obtain them. From
January to July 2000 she attended the University of Cape Town School for
Legal Practice, after which she obtained the Diploma in Legal Practice. From
July 2000 to August 2001 she served under articles for a period of one year at
the Centre for Justice in Athlone. From September 2001 to January 2002 she
was employed as a para-legal, working for an attorney who practises in
Pelican Park. In February 2002 she successfully wrote the attorneys

admission examination and was admitted as an attorney on 2 August 2002.
She was unable to obtain employment as a professional assistant with a firm
of attorneys and had no capital with which to start a practice. Shortly after her
admission she met an executive member of a trade union and became
involved in a relationship with him. He informed her that the union required an
attorney’s assistance with some of its matters and that she would be able to
assist it in this regard.

[3] She decided to set up practice as a sole practitioner in an office in the
building occupied by the union, which lent her a desk and a chair. She used
its computer and paid half the salary of two of its employees who acted as her
typist/secretary and messenger. She borrowed the money to pay the first two
months rental for her office, which was payable in advance.

[4] As I have said, she had no capital at all with which to begin her
practice. She also did not have any clients: those who came to her were
members of the union, sent by it. They were unable to pay any fees or deposit
money in advance for work to be done or in progress. She took work from
them on a contingency basis, hoping to be paid, as she put in her affidavit, if
the matters were successful. In her affidavit she stated that she had believed
that on commencing practice she would earn and be paid sufficient to meet
the basic minimum expenses to keep her office open, particularly in the light
of the promises of the union, but this did not happen. Although she had done
work for a number of clients the fee income actually received was utterly
insufficient to meet the basic monthly expenses needed to keep her office
open. By the end of December 2002 she found herself in a desperate position
unable to pay the expenses of her practice. In addition she was obliged to
leave the place where she was staying and to obtain other accommodation for
which it was necessary for her to pay rental and a deposit in advance.

[5] During December 2002 the respondent received various amounts of

money in trust which she proceeded to transfer to her business account. She
used these amounts to pay her outstanding practice expenses, and the
advance payment for her accommodation. In January and February 2003 she
wrongly transferred further sums from her trust account to her business
account and used them to pay practice expenses and what she called in her
opposing affidavit her essential personal living costs. Initially trust funds owing
to a client named Ajam were misappropriated but these amounts were later
retransferred to Ajam’s account and paid over to him. Further amounts,
including those required for the repayment of Ajam, were misappropriated
from trust funds owed to two other clients of the respondent’s, FJ Solomons
and his brother M Solomons.

[6] The consequence of the respondent’s having paid business expenses
and living costs was that by 28 February 2003 she only had R13 284.36
available in trust, when she ought to have had at least on her own calculations
R22 805.28, the amount then owing to the Solomons brothers. Further sums
totalling R11 437.98 were debited to her trust account in March 2003, with the
result that at the end of March 2003 she only held a total amount of R2 272.22
in trust. She admitted that she continued the practice of paying her expenses
directly from trust during March.

[7] After March 2003, she committed no further irregularities in relation to
money held in trust on behalf of other clients, despite the fact that she had
received moneys on their behalf.

[8] On 27 May 2003 FJ Solomons complained to the appellant that he had
not received a full accounting from the respondent regarding the amounts she
had received on his behalf pursuant to a settlement between the Solomons
brothers and their employer Electrotech Industries (Pty) Ltd. The appellant
sent a copy of the complaint to the respondent on 4 June 2003 and requested
her to provide it with a full report.

[9] In her reply, dated 2 July 2003, the respondent stated that she pleaded
guilty to professional misconduct in that at the end of February and March
2003 she had used the aforementioned balance [ie, the moneys due to the
Solomons brothers] that ought to have remained in trust. She set out certain
factors to be considered by the appellant, as she put it, in ‘mitigation of
sentence’ and submitted that the appellant should impose a warning.

[10] The appellant’s response was to apply to the High Court for an order
interdicting the respondent from practising, pending the decision of the court
in an application to be brought against the respondent for the striking off of
her name from the roll. On 25 November 2003 Thring J granted the
appellant’s application for an interdict and the respondent has in consequence
not practised as an attorney since that date. The reason that the appellant
applied initially for an interdict and did not immediately launch a striking off
application was its belief that a full investigation might disclose further
misappropriations. In the result no further misappropriations were discovered
and the appellant’s president, Mr Taswell Papier, in his replying affidavit,
stated that the appellant did not dispute the respondent’s allegation that apart
from the misappropriations during the period December 2002 to March 2003,
with which the respondent dealt fully in her answering affidavit, she had been
guilty of no other irregularities in respect of trust moneys.

[11] In his founding affidavit Mr Papier submitted that the respondent had
manifested character defects that demonstrated that she is not a fit and
proper person to continue to practise as an attorney.

[12] In her answering affidavit the respondent repeated the admission she
had made in her reply to the complaint received by the appellant. She stated
that it had been her intention at all times to replace the sums she had
misappropriated once the fee income from completed matters became
available. In her affidavit she set out her personal circumstances, which may
be summarized as follows:
(a)
She was 29 years old when she made her affidavit. (In fact she was

born on 8 January 1975 so that the misappropriations took place on either
side of her 28th birthday.)
(b)
She spent seven years studying towards her LLB degree and her
studies were achieved through substantial sacrifice from her parents, both of
whom worked hard to give their children tertiary education, something they
themselves did not have.
(c)
She was never exposed to practice in a conventional law firm and was
not in any way exposed to bookkeeping, management of trust accounts or the
practical business aspects of running an attorney’s practice. (As her counsel
submitted this does not excuse her conduct but does explain how she could
naïvely start up a practice in the way she did, without funds or backing and in
a position where she was unable to pay the basic expenses for the first few
months.)
(d)
She did not make use of the moneys received into trust for personal
luxuries or high living.
(e)
She did not attempt to hide the misappropriations by false book entries
or some elaborate scheme.
(f)
She stated that she deeply regretted what she did.
(g)
In February 2003 she attempted suicide because she was suffering
from depression and stress due, inter alia, to her realisation that she had
misappropriated trust funds, work related stress with which she was unable to
cope and the fact that she was involved in an abusive and physical
relationship with the executive member of the trade union to whom I have
referred earlier.

JUDGMENT IN COURT A QUO
[13] In his judgment in the court a quo Moosa J said that the respondent’s
conduct ‘manifested a character defect that warrants the conclusion that she
is not a fit and proper person to continue to practise’. In deciding whether to
strike her name from the roll or to suspend her from practice the learned judge
stated that he did not think that this case ‘warrants a striking off’. He

continued:
‘In my view there are exceptional circumstances not to impose such a penalty. What counts in
respondent’s favour is her frank and full disclosure, accepting responsibility for her conduct,
the short duration and limited nature of her misconduct, her expression of contrition and her
willingness to effect restitution and her limited exposure to the running of a conventional legal
practice and management of trust accounts’.
He accordingly made the order summarized in para 1 above.

SUBMISSIONS IN THIS COURT
[14] It was argued on behalf of the appellant that the court a quo erred in
not striking the respondent’s name from the roll of attorneys. It was contended
that in view of the court a quo’s finding that the respondent had
misappropriated trust moneys because of a character defect, which it did not
find had been cured, she should not merely have been suspended. In
principle, so it was argued, once a court has found an attorney to have an
unreformed character defect that renders that person not a fit and proper
person to practise, the court should strike his or her name from the roll.

[15] Counsel for the respondent submitted on the other hand that the court
a quo, after considering all the facts, correctly exercised its discretion in
making the order it did.

DISCUSSION
[16] I cannot agree with the court a quo that the respondent’s actions in
stealing trust moneys resulted from a character defect. In my opinion they can
more readily be seen as a moral lapse brought about by the pressure that she
was under at the time. The fact that she succumbed to that pressure in the
way she did leads to the conclusion that she is not a fit and proper person to

continue practising as an attorney but not necessarily to the further conclusion
that her name must be struck from the roll. Because I do not agree with the
court a quo that the respondent suffered from a character defect this court is,
in my view, at large itself to exercise the power conferred on the court by s
22(1)(d) of the Act to decide whether to strike from the roll the name of an
attorney found to be not a fit and proper person to continue to practise or
merely to suspend the attorney concerned from practice.

[17] Section 22(1)(d), which confers on the court the alternative powers of
removal or suspension in the case of attorneys who have been found, in the
court’s discretion, not to be fit and proper to continue practising, does not
provide any guidance as to when the power of suspension rather than the
power of removal should be used. It is clear that a court which is called upon
to decide which of these two powers to use exercises a discretion: see,
Nyembezi v Law Society, Natal 1981 (2) SA 752 (A)  at 758, Law Society of
the Cape of Good Hope v C 1986 (1) SA 616 (A) at 637 and A v Law Society
of the Cape of Good Hope 1989 (1) SA 849 (A) at 851E.

[18] In exercising this discretion the courts have sought, as it was put by
Hefer AP in Law Society of the Cape of Good Hope v Budricks 2003 (2) SA
11 (SCA) at 16E-F, not only ‘to discipline and punish errant practitioners, but
also, and more importantly (particularly in cases … where trust money was
misappropriated), in order to protect the public.’ Hefer AP continued: ‘This is
mainly why the possibility of a repetition of the conduct complained of must be
taken into account when it comes to deciding upon an appropriate penalty for
proven misconduct.’

[19] The approach of the courts down the years has been as a general rule
to remove the names of attorneys guilty of misappropriation of trust funds
from the roll: see, eg, Incorporated Law Society v Salinger and Wolmarans

1917 TPD 660 at 670. But that case itself illustrates that the rule laid down
was not an invariable one: where mitigating factors were present the courts
could and did deviate from the general rule and merely suspended the
delinquent attorney. Thus Salinger, the first respondent, was suspended for
five years and Wolmarans, the second respondent, had his name struck from
the roll. Another case where a suspension was ordered rather than removal is
Law Society of Cape of Good Hope v McLaren 1938 CPD 93.

[20] A suspension order can be for a determinate period or an
indeterminate one: A v Law Society of Cape of Good Hope, supra, at 852E-F.
Examples of suspension orders operating for indeterminate periods can be
found in cases where the reason that the practitioners concerned were not fit
and proper persons to practise was a condition such as a personality disorder.
The suspension orders in such cases were framed so that they operated until
such time as the practitioners concerned satisfied the court that the cause of
unfitness in question had been removed: see, eg, A v Law Society of Cape of
Good Hope, supra, and Incorporated Law Society v Zimmerman 1940 TPD
84.

[21] Cases where a suspension for a determinate period is ordered tend to
be more difficult because before the court can allow the practitioner
concerned, who ex hypothesi is not a fit and proper person at the time the
suspension is imposed, to practise again at the expiry of the suspension, it
must be satisfied on a balance of probabilities that when practice is resumed
the unfitness which led to the order will no longer exist. This is because before
any person is allowed to practise or resume practice  his or her fitness to
practise must be established to the satisfaction of the court.

[22] In the present case I am satisfied that the respondent is not an
inherently dishonest person: her conduct from April 2003 onwards, particularly
after she received Mr Solomons’s complaint from the appellant, demonstrates
this. She has clearly learnt a hard and painful lesson. By the time the court a
quo’s order was delivered she had in effect already been suspended from

practice for almost a year because of the interdict granted by Thring J on 25
November 2003. I am satisfied that at the expiry of the period of suspension
imposed by the court a quo the factors rendering her unfit to practise would no
longer be operative. In doing so I have had particular regard to the factor
mentioned in Budricks’s case, supra, at 16F-G, which I quoted in para 18
above, namely the possibility of a repetition of the conduct complained of. I
am also of the view that it was appropriate for the court a quo to impose a
further restriction on the respondent after the expiry of the period of
suspension, namely that for a minimum period of a year she should not
practise for her own account.

[23] At first blush it may appear illogical to impose such a restriction on a
person as to whose fitness to practise one is satisfied but this is in my opinion
a case where it is preferable to err on the side of caution. Although a
repetition is unlikely there is always, by the very nature of things, uncertainty.
The respondent has shown herself to be naïve and immature, lacking in
experience and insight. It therefore seems to have been a wise precaution for
the court a quo to have restricted her from practising for her own account for a
further period after the expiry of her suspension so that she has the
opportunity to gain the necessary insight and maturity the lack of which led to
her present predicament.

[24] There are, however, two respects in which I think that the court a quo’s
order on this part of the case should be amended. First I think it more
appropriate that the decision as to whether and when the restriction is to be
lifted be made by the court and not the appellant. Secondly, the question for
consideration when the respondent applies for leave to practise for her own
account will not be whether she has the necessary skills and expertise to
conduct a conventional legal practice and manage trust accounts but whether
in the light of her past history it is appropriate for the restriction to fall away.
This she will establish by producing affidavits from those who will have had
sufficient contact with her once she resumes practice to be able to satisfy the
court that she has the skills and maturity required to run a practice on her

own.

[25] The amendments to clause 3 of the order of the court a quo are not of
such a nature that one can say that the appellant has enjoyed substantial
success in the appeal. In the result I am satisfied that justice would be served
in this case if no order were made as to the costs on appeal.

ORDER
[26] The following order is made:
1.
The appeal is allowed to the extent that clause 3 of the order of the
court a quo is replaced by the following:
‘3.
Should the respondent, after the expiry of the period referred to
in clause 2 above, elect to practise in the manner set out in that
clause, she shall satisfy the court that it is appropriate that she
be permitted to practise for her own account.’
2.
Subject to paragraph 1 above, the appeal is dismissed.

………………
IG FARLAM
JUDGE OF APPEAL
CONCURRING
SCOTT
JA
HEHER
JA

NUGENT JA:
[27] I regret that I cannot agree with the order that is proposed by my
colleague Farlam JA.
[28] The power that is given to a court to remove or suspend an attorney
from the roll is aimed at protecting the public from being led to believe
erroneously that the attorney concerned has the attributes for the proper
performance of that function. The enquiry before a court that is called upon to
exercise that power is not what constitutes an appropriate punishment for a
past transgression but rather what is required for the protection of the public in
the future.  Some cases will require nothing less than the removal of the
attorney from the roll forthwith.  In other cases, where a court is satisfied that
a period of suspension will be sufficiently corrective to avoid a recurrence of
the offensive conduct, an order of suspension might suffice.  But the proper
approach in each case is not to weigh the various factors for the purpose of
finding an appropriate punishment – as a criminal court would do when
sentencing an offender – but to determine whether, or if appropriate when, an
attorney should be permitted to continue in practice.
[29] The court below approached the matter by weighing various factors
against one another, as a criminal court would do when imposing a sentence,
and then determining what it referred to as an appropriate penalty, and in my
view that approach was misdirected. (A similar misdirection is also to be
found in some of the decided cases.)  Furthermore, the terms upon which it
suspended the respondent – in particular those contained in paragraph 3 of
the order – were also misdirected because the complaint was not that the
respondent lacks the skills and expertise to conduct a legal practice and to
manage trust accounts. The sole complaint was that she has shown herself to
be dishonest.
[30] By being placed on the roll of attorneys a person is held out to the
public as being worthy of their trust.  It hardly needs saying that the theft of
trust moneys, in whatever circumstances, is altogether inconsistent with that
trust, and will usually justify the removal of the attorney from the roll forthwith
lest others might also be exposed to the same abuse.
[31] If by a ‘character defect’ the court below meant to convey that the

respondent lacked the strength of character to resist the temptation to steal
moneys that had been entrusted to her then I agree.  But I do not think the
evidence goes so far as to show that her character is so inherently flawed that
she will necessarily continue to succumb if she returns to practice.  Like my
colleague I see her conduct rather as a lapse that will not necessarily recur.  I
am by no means sure – her expressions of contrition notwithstanding – that
the respondent fully understands the extent to which her conduct fell short of
the high standards that are expected of an attorney.  But I am of the view that,
with a period of suspension that is sufficient to drive that point home, it is
likely that there will be no recurrence, and in those circumstances it is not
necessary that she be struck from the roll.
[32] Where I part company with my colleague  – apart from on the question
of the period of suspension – is in relation to the terms that he proposes to
attach once the period of suspension expires. The order proposed by my
colleague will permit the respondent to return to practice as an attorney but
not for her own account until she satisfies a court that it is appropriate to lift
that restriction.
[33] The affidavits that my colleague envisages as being required to satisfy
a court in the future that it is appropriate to lift the restriction – affidavits
attesting to her skill and maturity – do not seem to me to meet the point of the
complaint. I see no purpose in a future enquiry as to her skills and maturity
when in truth the problem lies elsewhere.  Perhaps those were factors that led
her to succumb to temptation but no doubt there will be other temptations
during the remainder of her career.  The solution does not lie in removing the
causes for temptation but rather in being satisfied that she will act honestly in
whatever circumstances.
[34] Honesty and integrity are so fundamental to the functions of an
attorney – whether the attorney practises on his or her account or under
supervision – that where a court is not satisfied that the attorney is possessed
of them in sufficient measure in my view the attorney ought not to be
permitted to practise in any form at all.  I do not think a court should invite the
public to again place their trust in an attorney on the basis that they will be
protected by some unspecific form of supervision.  I am alive to the fact that a
court can never be sure that an attorney will indeed act honestly in the future.

But where there is lingering doubt on that score in my view the attorney
should not be permitted to return to practice until the doubt is removed.
[35] The conclusion I have reached after considering the nature of the
respondent’s conduct, and her explanations, is that after a period of
suspension that is sufficient to bring home to the respondent the seriousness
of her lapse, it is unlikely that the lapse will recur.  In those circumstances I
see no basis for imposing a restriction on the form in which she may practise
when the period of the suspension expires. Had I retained sufficient doubt
concerning her future honesty as to warrant extra caution I would have
required that doubt to be removed before permitting her to return to practice
at all.  For those reasons I would substitute for paragraphs 1, 2 and 3 of the
order of the court below an order suspending the respondent from practice for
a period of three years.

__________________
R W NUGENT
JUDGE OF APPEAL

HARMS JA :  CONCURS