The respondents were practicing attorneys who fell under the jurisdiction of the Law Society of the Northern Provinces. Viljoen and Dykes (with his partners) applied for fidelity fund certificates for 2010 as required by section 42(1) of the Attorneys Act 53 of 1979. The Secretary of the Law Society refused to issue the certificates, relying on a council resolution dated 22 June 2009 which provided that where the Council had resolved to proceed with an application for suspension or removal from the roll, a fidelity fund certificate should not be issued unless the Council for good reason decided otherwise. There were pending applications against all respondents for their names to be struck off the roll based on serious allegations of professional misconduct. The resolution had never been made public or communicated to members of the Law Society. Both respondents approached the North Gauteng High Court by way of motion seeking mandamus compelling the Secretary to issue the fidelity fund certificates. Both Tuchten AJ and Sapire AJ granted the orders compelling the issue of certificates.
Both appeals dismissed with costs.
The binding legal principles established are: (1) The authority of the Secretary of a Law Society to issue fidelity fund certificates under section 42(3)(a) of the Attorneys Act 53 of 1979 is circumscribed by the statute and must be exercised in accordance with its terms; (2) A 'lawful requirement of the society' under section 42(3)(a) must: (a) relate to the purpose served by the issue of a fidelity fund certificate, (b) unequivocally inform the practitioner what is required, and (c) be something the practitioner is capable of complying with; (3) The purpose of section 42 and the fidelity fund certificate regime is to assess risk to the Fidelity Fund by examining financial management and trust account compliance, not to determine fitness and propriety to practice; (4) Determinations of ethical fitness to practice are the exclusive preserve of the courts, not Law Societies or their secretaries; (5) A requirement that refuses certificates to practitioners with pending suspension or removal proceedings, without reference to the nature of the complaint or its relation to trust account management, does not constitute a 'lawful requirement' under section 42(3)(a); (6) Once the statutory requirements in section 42(3)(a) are satisfied, the Secretary is compelled to forthwith issue the fidelity fund certificate.
The court made several non-binding observations: (1) That although the allegations against the respondents appeared serious and might justify striking off if proven true, this did not affect the legal analysis; (2) That the resolution of 22 June 2009 was not made public or distributed to members, though the court did not rest its decision primarily on this procedural defect; (3) That counsel for the appellants agreed that while the resolution does not amount to suspension, its practical effect is that a practitioner cannot practice without a fidelity fund certificate, and practicing without one constitutes professional misconduct; (4) That the invitation to make representations to change the Secretary's decision would remain 'an illusion' if the applicant does not know the precise nature of the complaint; (5) On costs, while acknowledging the 'long standing and salutary practice' of not mulcting a Law Society with costs as it is a special litigant acting in the public interest, the court observed it would be unfair in the circumstances not to award costs given the misconceived nature of the decision and zealous pursuit of the appeal.
This case is significant in South African legal practitioners law as it authoritatively defines the scope and limits of a Law Society Secretary's power to refuse fidelity fund certificates under section 42(3)(a) of the Attorneys Act. It establishes that the purpose of the fidelity fund certificate regime is to protect the Fidelity Fund by assessing financial management and trust account compliance, not to make determinations about ethical fitness to practice, which is exclusively a court function. The judgment clarifies that 'lawful requirements' must be specific, relate to the legislative purpose, and be capable of compliance - preventing Law Societies from imposing vague or broad requirements that effectively suspend practitioners without due process. The case also represents a departure from the usual rule protecting Law Societies from adverse costs orders, holding that where a Law Society's decision is fundamentally misconceived and zealously pursued despite clear error, costs may be awarded against it. This provides important protection for practitioners' rights to practice pending determination of disciplinary proceedings.