Attorneys Fidelity Fund Board of Control v Mettle Property Finance (Pty) Ltd

Mettle Property Finance (Pty) Ltd, a factoring company, paid three amounts (R400 000, R560 000 and R600 000) into the trust account of attorney Mr Langerak pursuant to three bridging finance transactions governed by a Master Agreement. The payments represented initial purchase prices for bond proceeds or sellers’ claims. Under the agreements, Langerak undertook to repay Mettle from bond or sale proceeds upon registration. Registration did not occur in two matters, and although a bond was registered in the first, there was no evidence that proceeds were received. Langerak failed to repay Mettle, was later sequestrated, and struck off the roll. Mettle sued the Attorneys Fidelity Fund Board of Control under s 26(a) of the Attorneys Act 53 of 1979, alleging pecuniary loss caused by theft of money entrusted to the attorney. The High Court upheld the claims; the Fidelity Fund appealed.

The appeal was upheld with costs. The High Court’s order was set aside and replaced with an order dismissing the action with costs.

The case clarifies the narrow scope of the Attorneys Fidelity Fund’s liability and reinforces that payment into an attorney’s trust account does not automatically amount to ‘entrustment’. It confirms that the Fidelity Fund is not an insurer against all losses caused by attorney misconduct and draws a clear distinction between contractual risk and statutory protection under s 26(a) of the Attorneys Act.