T J Louw NO and Others v S J Coetzee and Others

Following the placing of Saambou Bank Limited under curatorship in February 2002, attorneys who had deposited clients’ trust monies into interest-bearing accounts in terms of s 78(2A) of the Attorneys Act 53 of 1979 demanded repayment of those funds. The curator of the bank refused to repay the deposits (except where linked to guarantees), treating them as part of the bank’s assets. The respondent attorneys and their clients successfully approached the Pretoria High Court, which held that, under the Financial Institutions (Protection of Funds) Act 28 of 2001, such deposits constituted ‘trust property’ and therefore did not form part of the bank’s assets. The curator appealed to the Supreme Court of Appeal.

The appeal was upheld. The High Court orders setting aside the curator’s decision and declaring the deposits not to form part of the bank’s assets were overturned. No costs order was sought.

The case clarifies that attorneys’ trust monies deposited with banks under s 78(2A) of the Attorneys Act do not enjoy special protection under the Financial Institutions (Protection of Funds) Act 28 of 2001 in the event of a bank’s insolvency. It reaffirms the common-law banker–customer relationship and limits the scope of statutory ‘trust property’ protections, providing certainty to banks, curators, and the legal profession.