King v The Attorneys Fidelity Fund Board of Control

Over 100 plaintiffs paid money between 1997 and 2000 into the trust account of the firm Van Schalkwyk’s Attorneys to participate in a so‑called factoring scheme involving the discounting of estate agents’ commissions and later property sale proceeds. The funds were intended to be used in the scheme and to yield high returns. The attorneys, Aron van Schalkwyk and Charl du Mont, misappropriated and stole the funds, which were paid out to third parties linked to the scheme operator, David Halgryn, and not applied as promised. When the scheme collapsed, the plaintiffs suffered substantial losses and claimed reimbursement from the Attorneys Fidelity Fund under s 26(a) of the Attorneys Act 53 of 1979. The Fund rejected liability, contending that the money had been entrusted for investment purposes and that claims were excluded under s 47(1)(g) of the Act.

The appeal was dismissed with costs, including the costs of three counsel, payable jointly and severally by the appellants.

The case clarifies the scope of the Attorneys Fidelity Fund’s liability and confirms that the Fund does not cover losses where attorneys are instructed to invest money on clients’ behalf. It draws a clear distinction between money held in trust for safekeeping or specific legal purposes and money deposited pursuant to an investment mandate, even if placed in a trust account. The judgment is an important authority on s 47(1)(g) of the Attorneys Act and investor protection limits.