Stopforth Swanepoel & Brewis Incorporated v Royal Anthem Investments 129 (Pty) Ltd and Others

The second and third respondents (Lau and Liang) agreed to purchase immovable property from the first respondent (Royal Anthem Investments). The applicant attorneys were the conveyancers. The respondents paid a deposit of R720 000 and R264 723 for transfer duty to the attorneys' trust account. The sale agreement provided that the deposit would be invested in an interest-bearing trust account in terms of section 78(2A) of the Attorneys Act and paid over to Royal upon registration of transfer. The sale fell through due to non-fulfillment of a condition. Royal refused to refund the money, and the respondents sued both Royal and the attorneys in the High Court. The respondents withdrew their claim against the attorneys, who filed a notice to abide by the court's decision. The High Court ordered Royal to repay the funds with interest at 15.5% per annum. Royal appealed to the Supreme Court of Appeal. The attorneys were not a party to the appeal. The Supreme Court of Appeal, despite finding the attorneys had acted on Royal's instructions, varied the High Court order to make the attorneys liable to repay the funds plus interest at the legal rate of 15.5% per annum (exceeding the interest accrued in the trust account). The attorneys were never heard in the Supreme Court of Appeal proceedings.

• Whether the Supreme Court of Appeal violated the attorneys' right to a fair public hearing under section 34 of the Constitution by making an adverse order against them without hearing them and when they were not a party to the appeal
• Whether leave to appeal should be granted
• Whether the Supreme Court of Appeal was functus officio in relation to its order
• What relief is appropriate in the circumstances

1. Leave to appeal is granted. 2. The appeal is upheld. 3. The order of the Supreme Court of Appeal in paragraphs 1 and 2 is set aside and replaced with an order that Royal Anthem Investments 129 (Pty) Ltd pay to Yeun Fan Lau and Shun Cheng Liang: (a) R720 000; (b) the interest accrued on R720 000 in the interest-bearing account up to 9 December 2009; (c) interest on R720 000 at 15.5% per annum from 10 December 2009 to date of payment; and (d) R264 723 together with interest at 15.5% per annum from 29 June 2011 to date of payment.

A court cannot make an adverse order imposing liability on a party who is not a participant in the proceedings and who has not been afforded an opportunity to be heard. To do so violates the constitutional right to a fair public hearing under section 34 of the Constitution. The right to a fair public hearing requires both procedural and substantive fairness, including adherence to the audi alteram partem principle. Where attorneys hold funds in trust pursuant to their statutory obligations under section 78(2A) of the Attorneys Act and act on instructions of a party to a sale agreement, payment into the attorneys' trust account should be regarded as payment to that party, and that party (not the attorneys) should bear liability for repayment of those funds when the agreement fails.

The Court found it unnecessary to determine whether the Supreme Court of Appeal was functus officio (having discharged its duties and thus lacking power to vary, correct or amend its decision). The Court also did not pronounce on whether the attorneys' approach to the Supreme Court of Appeal by way of letter (rather than a substantive application) was the correct procedure. The Court noted that the order had implications not only for the attorneys but potentially for conveyancing attorneys acting as agents in sale agreements for immovable property in general.

This case is significant in South African constitutional and procedural law because it emphasizes the fundamental importance of the section 34 constitutional right to a fair public hearing. It reinforces the core principles of natural justice, particularly the audi alteram partem rule (the right to be heard). The judgment makes clear that courts cannot make adverse orders against non-parties who have not been heard, even when addressing "ancillary issues". The case protects legal practitioners acting in their fiduciary capacity from having liability imposed on them without due process. It serves as an important reminder that procedural fairness requirements apply even in appellate proceedings and cannot be bypassed simply because a court believes an issue needs to be addressed. The judgment demonstrates that the Constitutional Court will intervene to protect constitutional rights even where the matter involves what might be characterized as procedural irregularities at the Supreme Court of Appeal level.