FIDELITY GUARANTEE FUND

Transcription

1 FIDELITY GUARANTEE FUND Continued existence and purposes The Attorneys Act, in addition to regulating the admission and practice of attorneys, notaries and conveyancers and the four law societies, reconstitutes the attorneys, notaries and conveyancers fidelity guarantee fund which was originally established by section 8 of the Attorneys Admission Amendment and Legal Practitioners Fidelity Fund Act. 2. Despite the repeal of the latter act, the fund continues to exist under the name the attorneys, notaries, and conveyancers fidelity guarantee fund. 3 Subject to the provisions of the act, the fund must be applied for the purpose of reimbursing persons who suffer pecuniary loss as a result of theft committed by a practising practitioner 4 this clerk or employee, of any money or other property entrusted by or on behalf of such persons to him or to his/her clerk or employee, in the course of his/her practice or while acting as executor or administrator in the estate of a deceased person or as a trustee in an insolvent estate or in any other similar capacity of of Attorneys Act 33 of 1979 s A practitioner is defined as any attorney, notary or conveyancer : Attorneys Act 53 of 1979 s. 1. The term practising practitioner may at first glance appear to be tautologous. However, it relates to a person who, in terms of s. 41 of the Attorneys Act, practises in partnership or on his/her own account and is in possession of a fidelity fund certificate. 5 s. 26. The mere fact that the money was paid into an attorney s trust account does not mean that it was either trust money or money paid to him/her in the course of his/her practice as an attorney: Paramount Supplies (Merchandise,) (Pty) Ltd v Attorneys Notaries and Coveyancers Fidelity Guarantee Fund Board of Control SA 618 (W) 625F G, approved in British Kaffrarian Savings Bank Society v Attorneys Notaries and Conveyancers Fidelity Guarantee Fund Board of Control SA 242 E) 250A. In the Paramount Supplies case money was paid to an attorney on the basis that he was to use his infiuence in order to obtain a benefit which all the persons concerned knew should not be obtained, i e to obtain an import control permit for a dormant company. The Court held that the money had not been entrusted to him in the course of his practice as an attorney and the attorney had not acted in any fiduciary capacity when he received the money. Similarly in the British Kaffiarian case money was paid by the plaintiff into the trust account of the attorney who did agency work for the plaintiff. The attorney embezzled the amounts paid in. The court held that the plaintiff s intention had been to entrust the money to the attorney for his client, who would have left the client with an action against the attorney had the transaction been genuine; and that there was no fiduciary relationship between the plaintiff and the attorney. The plaintiff had never intended to entrust money to the attorney in the sense that he was to hold it to do something with it on plaintiff s behalf; The fact that the money had been paid into the attorney s trust account did not mean that it was either trust money or money paid to him in the course of his practice as an attorney. What entrusted in (s. 78) is intended to mean that, if an attorney holds money in trust for someone and he steals the money, the person for whom he held the money in trust is entitled to recover from the defendant (250B C) and... the words [by or on behalf of such persons] must be interpreted as

2 referring to money paid to an attorney by or on behalf of a person with whom he has an attorney and client relationship or a fiduciary relationship. The meaning of these words must not be extended to cover money paid to an attorney by a third party who thinks that the attorney is acting for a client as in the present case (250C D). For further interpretation of the word entrust, see Provident Fund for the Clothing Industry v Attorneys, Notaries and Conveyancers Fidelity Guarantee Fund SA 539 W). The question arises whether s theft of trust money by an attorney or his/her employee doing estate agency work is a theft committed in the course of practice. The fund, acting on counsel s advice, has for many years regarded itself as bound to provide cover where an attorney or his clerk or his employee in the course of his practice undertakes estate agency or auctioneering work, but as not so bound where an attorney does estate agency work if that business is in fact separate and distinct from his business of practising attorney. The fund has regarded itself as bound if estate agency work is performed by an attorney in the course of his practice, if it is done in the name of his practice as an attorney and from the premises of his firm. Thus the fund has not provided cover for estate agency work where the estate agency work is conducted from different premises, carried on under a different name from the firm s name, in the form of a registered company other than a professional company and in partnership with non-attorneys. This question is important in view of the definition of estate agent in s. 1(d) of the Estate Agents Act 112 of 1976 which exempts an attorney from the definition of estate agent in respect of his activities as a practising attorney. An attorney who is not covered by the fund may, therefore, have to register as an estate agent in terms of the Estate Agents Act. Board of control The fund vests in and is administered by a board of control known as the attorneys, notaries and conveyancers fidelity guarantee fund board of control. The fund is held in trust by the board of control for the purposes mentioned in the act: 2 The board of control may under its name sue and be sued. 3 The board of control consists of the serving presidents of all societies and two members of each society elected annually by the council of the society. 4 The two elected members from each society need not be members of the council of the law society concerned as long as they are practising practitioners. The council of a society may in respect of each member elected by it appoint an alternate member from among the members of the society. 5 An elected member of the board of control holds office until his successor has been elected and, unless another is elected in his place in any year, he is deemed to have been re elected. 6 A member of the board of control vacates his/her office if he/her (a) becomes mentally ill (b) ceases to be a member of the society the council of which elected him/her;

3 (c) becomes insolvent or makes any arrangement or composition with his creditors; (d) ceases to practise; (e) is convicted of any offence which, in the opinion of the council which elected him/her, debars him/her from serving as a member of the board of control; (f) resigns and his resignation is accepted by his/her society and the board of control. 7 The board of control annually elects a chairman and a vice-chairman. 8 If the chairman and vice-chairman are both absent from Any meeting of the board of control, the board must elect a chairman from among its number for that meeting. 9 The board of control meets at the times and places which it may determine from time to time. 10 Eight members of the board of control constitute a quorum for any of its meetings. 11 A decision of the majority of the members of the board of control present at any of its meetings is the decision of the board of control. 12 If there is an equality of votes at any meeting of the board of control, the chairman has a casting vote in addition to his/her deliberative vote. 13 A resolution of the board of control contained in writing and signed by all members of the board is valid although no meeting was held to pass that resolution Attorneys Act 53 of 1979 s. 27 (1). 2. s. 27 (2) 3 s. 27 (3) 4 s. 28 (1) (a) (b). 5 s. 28 (2). 6 s s. 30 (a) (f). 8 s. 31 (1). 9 s. 31(2). 10 s s s. 34(1). 13 s. 34 (2). 14 s.35. Revenue: Banking account, investment of moneys, audit, insurance The fund consists of (a) the annual contributions by practitioners and interest paid to the fund in terms of the act; 2 (b) the revenue obtained from time to time from the investment of the fund; 3 (c) money given or advanced to the fund by any society; 4

4 (d) money recovered by the fund in terms of the act; 5 (e) money received on behalf of the fund from any insurance company; 6 (J) other money lawfully paid into the fund.7 Money in the fund must, pending its investment or application in terms of the act, be paid into an account at a banking institution or building society to the credit of an account to be known as the attorneys, notaries and conveyancers fidelity guarantee fund account. 8 Before 31 March each year an actuary must be requested by the board of Control to render an estimate of the fund s requirements in terms of section 45 for the next ensuing year ending on 31 December. 9 The estimate must be submitted to the minister within 30 days of its receipt and the minister determines what amount is in his opinion required for the ensuing year for the purposes of section 45, 10 and so much of the amount which is not immediately required for these purposes is, subject to the provisions of section 46, to be invested in government and other securities as may be prescribed. 11 These include deposits with a bank or institution registered under the Banks Act 12 as deposit receiving institutions, building societies or local authorities; in bills, of bonds, certificates, debentures or stock issued or guaranteed by the government of the Republic; in stock of any local authority in the Republic authorised by law to levy rates upon immovable property; in debentures or stock of the reserve bank, the Rand Water Board, the Electricity Supply Commission or any other body constituted or established by or under any law and supported wholly or partly by public funds; or on loans against security of a first mortgage bond on urban immovable property. 13 Such amount as exceeds the estimate for the next ensuing year may be invested 14 in quoted shares or debentures provided this is restricted to not more than 25% of the fund s assets calculated on the date of investment and not more than 5% of the total issued share capital of any company; in urban immovable property provided the investment does not exceed 10% of the fund s assets calculated on the date of investment; or in any of the ways described for the investment of that portion of the fund estimated to be necessary for the next ensuing year and described above. 15 The accounts of the fund must be audited by an accountant appointed by the board of control. 16 The accountant must, at least once in every year and not later than a date to be determined by the board of control, draw up a balance sheet and profit and loss account of the fund and immediately submit certified copies of it and of his report on it to the chairman of the board of control and to each council. 17 The board of control may in its discretion enter into a contract with any person or company carrying on fidelity insurance business in the Republic in terms of which the fund will be indemnified to the extent and in the manner provided in the contract against liability to pay claims under the act 18. The contract must be entered into in respect of practitioners generally. 19 A claimant against the board of control must not have (a) any right of action against any person or company with whom a contract of indemnity has been entered into in respect of the contract; 20 or

5 (b) any right to any money paid by the insurer in accordance with the contract. 21 Money paid by the insurer in accordance with the contract must be paid into the fund for appropriation by the board of control. 22 The board of control may acquire or form, 23 and administer, a public company, 24 or together with any other person or institution establish a scheme underwritten by a registered insurer, 25 so as to provide, subject to the Insurance Act, 26 professional indemnity insurance cover to practitioners relating to claims arising from their professional conduct. The board may further enter into deeds of suretyship to the satisfaction of the Master of the Supreme Court in order to provide security on behalf of a practitioner in respect of work done as an executor in a deceased estate, a trustee in an insolvent estate, a curator to the person or property of someone unable to manage his or her own affairs, or in any other similar capacity, or otherwise by any other person acting in such a capacity and for whom the practitioner acts as agent 27 The board may levy premiums and fees for providing such insurance cover or bonds of security.28 1 See pats. 298 and 308 n. 11 post. 2 Attorneys Act 53 of 1979 s. 36 (a); par. 309 post. 3 s. 36 (b). 4 s. 36 (c). 5 s. 36 (d). 6 s. 36 (e). 7 s. 36 (f). 8 s s. 38 (1). 10 s. 38 (2). 11 in terms of s. 81(2) (ba): s. 38 (4) of GN 1581 of 7 November 1941 reg. 9; see par. 308 n. 11 post. 14 as prescribed under s. 81(2) (b): s. 38 (3). 15 reg. 10; see par. 308 n. 11 post. 16 s. 39 (1). 17 s. 39 (2). 18 s. 40 (1). 19 s. 40 (2). 20 s. 40 (3) (a) (i). 21 s. 40 (3) (a) (ii). 22 s. 40 (3) (b). 23 The Attorneys Insurance Indemnity Fund, a Section 21 Company limited by guarantee, wholly controlled by the fund, was registered on 30 June 1993 as a special purpose insurer dedicated solely to the provision to practitioners of those insurance requirements as provided for in s. 40A. 24 s.40a (a) (i). 25 s.40a (a) (ii) of s. 40A (b). 28 s. 40A (c).

6 Fidelity fund certificates: Possession, application for and issue A practitioner cannot practise or act as a practitioner on his/her own account or in partnership unless he/she is in possession of a fidelity fund certificate. 1 A practitioner who contravenes this prohibition is not entitled to any fee, reward or disbursement in respect of anything done by him while practising or acting: 2 The provisions relating to the Fidelity guarantee fund do not apply in respect C) of any person admitted and enrolled as a conveyancer under Act 23 of 1904 (Natal). 3 A practitioner practising on his/her own account or in partnership, and any practitioner intending so to practise, must apply in the prescribed form 4 to the secretary of the society concerned 5 for a fidelity fund certificate. 6 The application must be accompanied by the contribution (if any) payable by him/her. 7 Upon receipt of the application the secretary of the society concerned must, if he/she is satisfied that the applicant has discharged all his/her liabilities to the society in respect of his/her contribution and that he/she has complied with any other lawful requirement of the society, immediately issue to the applicant a fidelity fund certificate in the prescribed form. 8 A fidelity fund certificate is valid until 31 December of the year in respect of which it was issued. 9 A document purporting to be a fidelity fund certificate which has been issued contrary to the provisions of the act is null and void and must on demand be returned to the society concerned Attorneys Act 53 of 1979 s. 41 (1) 2. s.41 (2) 3. s. 41 (3) 4. See par. 308 n 11 post 5. Ibid 6. s. 42 (1) 7. In terms of s 43: s 42 (2) 8. s. 42 (3) (a) 9. s (b) 10. s. 42 (4) Contributions to fund by practitioners Subject to the provisions mentioned below, every practitioner practising on his/her own account or in partnership must annually, when he/she applies for a fidelity fund certificate, pay the amount of R20, or a greater amount which may be fixed by the board of control from time to time, to the fund 1. Any practitioner who commences to practise on or after 1 July in any year must in respect of that year pay half of the contribution which is payable for that year. 2 When the board of control or a society on behalf of the board of control gives notice in writing to any practitioner who is liable to pay a contribution, that the amount of the fund, including its investments, and after deduction of the amount of all unpaid claims and other liabilities outstanding against the fund, is R or exceeds that amount, the practitioner is, from a date determined by the board of control and specified in the notice, no longer required to pay the annual contribution. 3

7 When the board of control or a society on behalf of the board of control gives notice in writing to a practitioner who is liable to pay a contribution that the amount of the fund, including its investments, and after deduction of the amount of all unpaid claims and other liabilities outstanding against the fund, is less than RI , he/she will, from a date determined by the board of control and specified in the notice, again be liable to pay an amount of R20 annually or a greater amount determined by the board, and any notice referred to in the preceding paragraph lapses. 4 A practitioner who applies 5 for the first time for a fidelity fund certificate while practitioners are not required to pay an annual contribution, must pay a single contribution of R50 to the fund, but the provisions referred to in the preceding paragraph apply mutatis mutandis in respect of such a practitioner. 6 Even when the amount of the fund is R or exceeds that amount, the board of control may require a practitioner in respect of whom the fund has been applied as a result of any of the circumstances referred to in the act, 7 to pay the annual contribution to the fund for a period which the board of control may determine 8 A practitioner who is not in possession of a fidelity fund certificate and who intends to commence to practice on his/her own account or in partnership must. Before commencing to practise, give notice of his/her intention to the secretary of the society of the province in which he/she intends to practise, and he/she then becomes liable to pay to the fund an annual or a single contribution, as the case may be. 9 Any practitioner who is in possession of a fidelity fund certificate but who intends to commence to practice for his/her own account or in partnership in the area of jurisdiction of any provincial division other than that in which he/she usually practises for his/her own account or in partnership, must give notice of his/her intention to the secretary of the other society concerned. 10 All contributions payable under this section must be paid to the society, and every society must remit the contribution to the board of control within seven days of their receipt. 11 If a practitioner in respect of whom no claim has been made under the act or in respect of whom such a claim has not been sustained dies or ceases to practice the board of control may in its discretion, if it is satisfied that no claim is likely to be made, pay to him/her or his/her estate a sum not exceeding the aggregate amount of his/her contributions to the fund Attorneys Act 53 of 1979 s. 41 (1) (a). 2 s. 43 (1). (b) 3 s. 43 (2) 4 s. 43 (3)11 post. 5 See also par. 308 post 6 s. 43 (4). 7 s s 43 (5) 9 s. 43 (6) (a) 10 s. 43 (6) (b) 11. s. 43 (7) 12. s. 44

8 Payments and grants Payments Payments: Subject to the provisions of the act, the fund must be applied to pay (a) all claims, including costs, payable in terms of the act, and interest as provided in the act; 1 (b) in the discretion of the board of control, a contribution towards expenses incurred by a claimant in establishing his claim; 2 (c) legal expenses incurred in defending any claim made against the fund or otherwise incurred in relation to the fund; 3 (d) premiums payable in respect of contracts of insurance entered into by the board of control: 4 (e) refunds made to any member or to his estate; 5 (f) expenses involved in the administration of the fund, including allowances to members of the board of control in respect of their services or their reasonable travelling expenses incurred in connection with the management of the fund; 6 (g) the discretion of the board of control, the bank charges or any portion of them paid by a practitioner in connection with the keeping of a trust account; 7 (h) in the discretion of the board of control, the premium or any portion of it payable in respect of a professional indemnity group insurance policy taken out in favour of practitioners ; 8 (i) in the discretion of the board of control, the costs or any portion of them incurred by a practitioner in connection with the obtaining of a fidelity fund certificate; 9 (j) in the discretion of the board of control, the expenses wholly or in part incurred by any society for the purposes of or in connection with any steps taken in connection with the trust account of a practitioner; 10 (k) loans and interest on them; 11 (l) other moneys which are payable or may be paid from the fund in accordance with the act or the regulations made under it. The board of control may in its discretion pay an amount out of the fund as interest on the amount of any judgment obtained or of any claim admitted against the fund: provided that 12 The board of control may in its discretion pay an amount out of the fund as interest on the amount of any judgment obtained or of any claim admitted against the fund: provided that-

9 (a) the interest does not run from a date earlier than the date on which the board of control receives notice in writing by or on behalf of a claimant of his claim against the fund; 13 and Grants (b) the rate of interest does not exceed the prevailing rate of interest prescribed under the Prescribed Rate of Interest Act. The board of control may, without derogating from the purposes of the fund 16 and if the amount of the fund 17 exceeds the amount determined by the minister of justice to be required for the next ensuing year, 18 out of the excess make grants with the approval of the minister on the conditions the board of control determines with the minister s approval to (a) any person or university established by an act of parliament or any university college established under the Extension of University Education Act, 19 any university contemplated in section 2 (1) (aa) of the Attorneys Act 20 or section 3 (2) (a) (iii) of the Admission of Advocates Act 21 or a person connected with such a university or university college or to any training centre in the Republic designated by the minister for the purposes of education or research in the science of law or in legal practice, or education or research in any related science or practice in so far as such education is given to a student of a law faculty at such a university or university college or to a student at such a training centre or in so far as such research is done at such a university, university college or training centre, or the furtherance of the administration or dispensation of justice; (b) any association or society of attorneys, notaries or conveyancers in a country which has been designated by the minister by notice in the Gazette after consultation with the presidents of the various societies for the purposes of enabling the association or society to establish or maintain a fund for facilitating the practice of law. 22 The board of control may, with the minister s approval, at any time it deems fit, revoke such a grant or any part of it 23 The board of control may also pay an honorarium or compensation to any person for services rendered at its request with the object of enhancing the professional standards of practitioners: 24 1 Attorneys Act 53 of 1979 s. 45 (1) (a). 2 s. 45 (1) (b). 3 s. 45 (1) (c), 4 in terms of s. 40: s. 45 (1) (d). See par. 296 ante. 5 in terms of s. 44: s. 45 (1) (e). 6 s. 45 (1) (f). 7 referred to in s. 78: s. 45 (1) (g). 8 s. 45 (1) (h). 9 s. 45(1)(i). 10 in terms of s. 22 (1) 78 or 83 (13): s. 45 (1) (i). 11 s.45 (1) (k). 12 s. 45 (1) (l). 13 s. 45 (2) (a) of 1975s. 1(2). 15 Attorneys Act 53 of 1979 s. 45 (2) (b).

10 16 See par. 294 ante. 17 See par. 298 ante. 18 See par. 296 ante of of of Attorneys Act 53 of 1979s. 46 (a). 23 ibid. 24 s. 46 (6). Limitation of liability of fund The fund is not liable in respect of any loss suffered (a) by any person as a result of theft committed by a practitioner while the practitioner is in the employment of any person who is not a practitioner; 1 (b) by the wife of a practitioner as a result of ant theft committed by that practitioner: 2 (c) by any practitioners as a result of any theft committed by any partner or employee of that practitioner or by any employee of any employee of any partnership in which he/she is a partner: 3 (d) by any practitioner as a result of any theft committed by any partner or employee of a professional company of which he/she is a member; 4 (e) as a result of any theft committed by any practitioner whose fidelity has been guaranteed by any person, either in general or in respect of the particular transactions, to the extent to which it is covered by the guarantee; 5 (f) by any person as a result of any theft committed by any practitioner after that person as received a notificatio9n in writing from the secretary of a society or the board of control warning him/her against the employment or continued employment of that practitioner; 6 A claim for reimburshment 8 is limited, in the case of money entrusted to a practitioner, to the amount actually handed over, without interest, and in the case of securities or other property, to an amount equal to the average market value of the securities or property at the date when written demand is first made for their delivery, or, if there is no average market value, the fair market value of the securities or other property as at the that date, without interest. 9 Only the balance of any loss suffered by any person after deduction from the loss of the amount or value of all money or other benefits received or receivable by him/her from any source other that the fund, may be recovered from the fund. 10 I Attorneys Act 53 of 1979 s. 47 (1) (a) 2 s. 47 (1) (b). 3 s. 47 (1) (c) 4 s. 47 (1) (d) 5 s. 47 (1) (e)

11 6. s. 47 (1) (f) 7. s. 47 (1) (g) 8. as contemplated in s. 26; see par. 294 ante 9 s. 47 (2) 10 s. 47 (3) Claims against fund and actions No person has a claim against the fund in respect of any theft contemplated in the act 1 unless (a) written notice of the claim is given to the council of the society concerned and to the board of control within three months after the claimant became aware of the theft or by the exercise of reasonable care should have become aware of the theft; 2 and (b) within six months after a written demand has been sent to him/her by the board of control, the claimant furnishes the board with the proof which the board may reasonably require. 3 If the board of control is satisfied that, having regard to all the circumstances, a claim or the proof required by the board has been lodged or furnished as soon as practicable, it may in its discretion extend any of the abovementioned periods. 4 No action can without leave of the board of control be instituted against the fund unless the claimant has exhausted all available legal remedies against the practitioner in respect of whom the claim arose or his/her estate, and against all other persons liable in respect of the loss suffered by the claimant. 5 An action against the fund in respect of loss suffered by any person as a result of theft committed by a practitioner, his/her clerk or employee, must be instituted within one year of the date of a notification directed to that person or his/her legal representative by the board of control informing him/her that the board of control rejects the claim to which the action relates. 6 In an action against the fund all defences which would have been available to the person against whom the claim arose, are available to the fund. 7 An action against the fund may, subject to the provisions of the act and the regulations made under it, be brought in any provincial or local division of the supreme court within the jurisdiction of which the cause of action arose. 8 I Attorneys Act 53 of 1979 s. 26; see par. 294 ante. 2 s. 48 (1) (a). 3 s. 48 (1) (b). 4 s. 48 (2). 5 s. 49 (1). In regard to proving a claim against an attorney s insolvent estate and exhausting all available remedies against the attorney or his/her estate, see Basson v Attorneys Notaries and Conveyancers Fidelity Guarantee Fund Board of Control SA 490 (C). The effect of s. 49 (1) is that where, for example, a client suffers pecuniary loss through the theft of trust funds by an attorney acting for him/her, who is practising in partnership with another at the time of the theft, the client (if he/she institutes action against the fund without the leave of the board) will not normally be able to recover anything unless

12 before the institution of action he takes all possible legal steps to recover his/her loss, not only against the erring attorney but also, infer alias, against the person practising in partnership with him/her. However, if the client s loss is due to a theft by the former before the latter entered into partnership with him/her, the client will not normally have to excuss the latter: Peffers v Attorneys Notaries and Conveyancers Fidelity Guarantee Fund Board of Control SA 53 (C). 6 s. 49 (2). 7 s. 49 (3). 8 s. 49 (4). Subrogation On payment out of the fund of money in settlement in whole or in part of any claim under the act, the fund is subrogate 1 to the extent of that payment to all the rights and legal remedies of the claimant against any practitioner or any person in relation to whom the claim arose, or in the event of his/her death or insolvency or other legal disability, against any person having authority to administer his/her estate. 2 1 See title INSURANCE. 2 Attorneys Act 53 of 1979 s. 50. Claims may be charged against future revenue of fund If the fund at any rime has insufficient assets to settle all claims and judgments, those claims and judgments must, to the extent to which they are not settled, be charged against future revenue of the fund. 1 The board of control may in its discretion determine the order in which such claims and judgments must be settled, and may, if the revenue of the fund is not sufficient to settle all claims in full, settle any claim or judgment in whole or in part. 2 Without the discretion of the board of control being limited it must in applying the fund towards settlement of claims and judgments, consider- (a) the relative degrees of hardship suffered or likely to be suffered by the various claimants should their claims against the fund not be settled in whole or in part; 3 (b) subject to paragraph (a) above, the full settlement of claims not exceeding R1 000, except in special circumstances, before claims for amounts exceeding R1 000 are settled to a greater extent than R1 000; 4 (c) in equal circumstances, the priority of claimants according to the dates of the judgments or the dates when the claims were admitted by the board of control, as the case may be; 5 1 Attorneys Act 53 of 1979s. 51 (1). 2 s. 51 (2). 3 s, 51 (3) (a). 4 s. 51 (3) (b). 5 s. 51 (3) (c). Exemption of fund from the provisions of laws The revenue of the fund is exempt from the provisions of any law relating to payment of income tax or any other tax or levy by the state. 1

13 No provision of any law relating to insurance (other than a law relating to the compulsory insurance of employees) or the provision of security in connection with it, applies to the fund: 2 I Attorneys Act 53 of 1979 s. 51 (1). 2 s. 51 (2). Indemnification in respect of acts in good faith No action for damages can be instituted (a) against the fund, the board of control or any member, official or employee of the board of control in respect of anything done in the bona fide exercise or performance of its or his/her powers or duties in terms of the provisions of the act; 1 or (b) against any society, any council, any member of a council or official or employee of any council, in respect of any notification issued in good faith warning a person against the employment or continued employment of a practitioner: 2 1 Attorneys Act 53 of 1979 s. 53 (a). 2 in terms of s. 47 (1) (f): s. 53 (b). See par ante. Preservation and disposal of records and documents Any record or document in possession of the board of control relating to any claim instituted against the fund must be preserved at the office of the secretary of the board of control; 1 but the chairman of the board of control may, after the lapse of five years from the date on which any claim to which any record or document relates is settled by the board of control or adjudicated upon by the court or rendered unenforceable by lapse of time, direct that that record or document be removed to some other place of custody or be destroyed or otherwise disposed of. 2 1 Attorneys Act 53 of 1979 s. 54 (1). 2 s. 54 (2). Application by persons exercising legal professions in the Transkei For the purposes of the provisions of the act relating to the fidelity guarantee fund (a) Practising practitioner includes any person who exercises a legal profession in Transkei on his own account or in partnership, similar to that of a practitioner, and (i) (ii) who is required by a law of the Transkei, as a prerequisite for exercising that profession, to be in possession of a valid fidelity fund certificate issued to him in terms of the act; 1 who is in possession of such a certificate. The provisions of the act apply mutatis mutandis in respect of any theft committed in the Transkei by such a person, his/her clerk or employee, of any money or other property referred to in the act: 2 provided that every action against the board of control in relation to the

14 fund and emanating from that theft may be instituted in any court prescribed by a law of the Transkei. 3 (b) A person referred to in paragraph (a) above is deemed to be a practitioner who is a member of the society known as the law society of the Cape of Good Hope. 4 1 Attorneys Act 53 of 1979 ss. 42 (3) 55 ( a ) (1). 2 s. 26; see par. 294 ante. 3 s. 55 (a) (ii). 4 s. 55 (b). Regulations The Minister ofjustice may, for the purposes of the provisions of the act relating to the fund, with the concurrence of the chief justice of South Africa and after consultation with the presidents of the several societies, make regulations relating to (a) the method of payment and recovery of any contribution to the fund; 1 (b) the investment of so much of the fund as is not immediately required for its purposes; 2 (c) the form in which and the periods within which notice must be given to a society and the board of control in respect of claims against the fund and their particulars, and the conditions subject to which and the extent to which the board of control may settle claims without recourse to legal proceedings; 3 (d) the form of certificates to be issued to practitioners and of declarations, applications, notices and documents to be used in relation to any application or refusal of any application relating to the fund; 4 (e) the obtaining of evidence for the purposes of the fund that any person has been admitted to practise or is still practising or has ceased to practise, or on the reason why any person has discontinued practice, and generally for the obtaining of information which is considered necessary or desirable for the purposes of determining the merits of applications for fidelity fund certificates or matters related to them; 5 (f) the election of a chairman, vice chairman and other office bearers of the board of control; 6 (g) the appointment, remuneration and dismissal of officers of the board of control; 7 (g) the opening of offices for and the regulation of the management and administration of the board of control, including the manner and forming which all agreements, deeds and documents must be drawn up and executed by, for or on behalf of the board of control; 8 (i) the authorisation of the board of control or any of its committees to subpoena and to examine on oath any person whose evidence is deemed necessary to enable the board or committee to decide on the validity of any claim submitted against the fund; 9

15 (i) generally, other matters which are considered necessary for the implementation of the intention of the act in respect of the fund. 10 Reu1ations made by the minister under section 81(2) must be published in the Gazette and upon publication have the same force as if they were enacted in the Act. 11 The regulations also apply to South West Africa/Namibia including the Caprivi Zipfel. 12 I Attorneys Act 53 of 1979 s. 81(2) (a). 2 s. 81(2) (b)-(ba). 3 s. 81(2) (c). 4 s. 81(2) (d). 5 s. 81(2) (e). 6 s. 81(2) (f). 7 s. 81(2) (g). See n. 11 infra. 8 s. 81(2) (h). 9 s. 81 (2) (i). 10 s. 81 (2) (j). 11 s. 81 (5). The regulations made under the Attorneys Admission Amendment and Legal Practitioners Fidelity Fund Act 19 of 1941 still apply (GNs 1581 of 7 November 1941; 1476 of 16 July 1948: 354 of 25 February 1955; 1785 of 9 September 1955; 731 of 24 May 1957: R.508 of 30 March 1972; R.1458 of 13 July 1984; R.47 of 2 January 1987, R of 18 November 1994, R.354 of 20 April 2001). The regulations, as amended, read as follows: 2. Each secretary shall not later than the fifteenth day of November in every year post to the address of every practitioner practising in his Province, or deliver or cause to be delivered to him at such address an application form for a fidelity fund certificate in respect of the year following and every practitioner shall return to the secretary such form duly completed not later than the first day of December of the same year in which it was so posted or delivered. The secretary shall enclose with such application form a statement setting forth the liability, if any, of the practitioner concerned in respect of his subscription for membership of the society. The failure to give or receive an application form and such statement shall not relieve any practitioner of his obligation to make an application as required by section forty-two of the act. 3. Any application shall be signed by the applicant and shall, as nearly as circumstances will permit, be in the form set out in Annexure A hereto, and shall truly, accurately and completely Set forth the information and particulars provided for therein. 4. A secretary may accept an application made on behalf of an applicant by another person who is himself entitled to obtain a fidelity fund certificate. 5. A secretary may from time to time require an applicant to furnish him with further and additional information and particulars in respect of any application before he issues a fidelity fund certificate and neither he, the society nor the Board shall incur any liability in respect of any penalty incurred or loss sustained by the applicant due to any delay in issuing such a certificate if such delay was caused by the applicant s failure to furnish such information or particulars. 6. A fidelity fund certificate shall be in the form set forth in Annexure B hereto, and shall be signed by the secretary of the society issuing such certificate,

16 and the production of such a certificate purporting to be so signed shall be prima facie evidence of its contents. 7. A secretary, on payment of a fee of twenty five cents, may at any time and from time to time, on the application of any practitioner issue to him a duplicate of his current fidelity fund certificate on being satisfied as to the purpose for which such duplicate certificate is required. CLAIMS 8. The Board may, as a condition on which it may settle any claim under section forty-time of the Act, require affidavits sworn to by the claimant or other persons in support of such claim, and the production for inspection of all documents in the possession or power of the claimant relating to the claim. Failure by the claimant to comply with any of the requirements of the Board under this regulation shall he ground upon which a stay of proceedings to enforce such claim in any court of law may be granted. 8bis (a) The Board may require any person (including any person who has made a claim against the Fund), whose evidence the Board deems necessary before arriving at a decision whether to admit or reject any claim, to appear before the Board or any committee, consisting of not less than two persona appointed by the Board, and there to be examined under oath or affirmation on any matter relevant to such claim. (b) The Board may under the hand of any two members of the Board issue a subpoena for the attendance of any person to be examined as provided in paragraph (a). Such subpoena shall as nearly as is applicable be in the form prescribed for the attendance of a witness in the Division of the Supreme Court of South Africa having jurisdiction in the area where the witness is required to give evidence and upon service of any such subpoena the person concerned shall be subject to all the duties and obligations and entitled to all the rights of any person who has been duly subpoenaed to give evidence in such Division of the Supreme Court. Such subpoena may be served at the expense of the Board by any person competent to serve a subpoena in such Division of the Supreme Court. The Board shall also be liable for travelling and subsistence charges of such witnesses. (c) The oath to be administered to such witness shall be administered by the presiding member of the Board or Committee. (d) Any person subpoenaed as aforesaid may be examined by the members of the Board or Committee and/or by such advocate or attorney as the Board or Committee shall appoint for that purpose. (e) The evidence by such witness shall be recorded in writing, typescript or shorthand or by mechanical means and the person recording such evidence shall, before doing so, make oath that he/she will truly and faithfully record such evidence.

17 INVESTMENT OF FUND 9. So much of the money as may be determined by the Minister in terms of section 38 (2) of the Act which is not immediately required for the purposes of the thud s obligations in terms of section 45 of the Act, shall be invested by the Board in terms of section 38 (4) of the Act in any one or more of the following forms of security (a) on deposit with a bank, institution registered under the Banks Act, 1965 (Act 23 of 1965), as deposit receiving institution, building society or local authority; (b) in bib, bonds, certificates, debentures or stock issued or guaranteed by the Government of the Republic; (c) in stock of any local authority in the Republic authorised by law to levy rates upon immovable property; (d) in debentures or stock of the Reserve Bank, the Rand Water Board, Escom or any other body constituted or established by or under any law and supported wholly or partly by public funds; (e) in loans against security of a first mortgage bond on urban immovable property. 10. (1) Subject to the provisions of sub regulation (2), sub regulation (2), such amount of money as may be available for investment in terms of section 38 (3) of the Act may be invested by the Board as follows: (a) Not more than 50% of the thud s assets, calculated on the date of investment, in quoted shares and debentures Provided that this is restricted to 10% of the total issued share capital of any company. (b) Not more than 10% of the fund s assets calculated on the date of investment in urban immovable property. (2) So much of the money as may be available for investment in terms of section 38 (3) of the Act which is not invested in terms of sub regulation (1) shall be invested in those forms of securities prescribed by regulation The Board may appoint and remove a Secretary and Treasurer, who may be the same person as the Secretary, and such other officers and servants of the Board as it may from time to time think necessary 12. The Board may establish offices ar such place or places as it may from time to time deter 13. The Board may pay to the Secretary, Treasurer and other officers and servants of the Board, Q such salaries or wages or remuneration as it may from time to time think advisable, and fix the terms of their employment. 14. The office of the Secretary for the time being of the Board shall he the office of the Board.

18 15. Save as may otherwise be determined by the Board from time to time, all contracts, deeds, instruments and documents, including documents requiring signature in legal action or proceedings by or against the Board, and all drafts, cheques or orders drawn on banks or building societies against any account of the Board in any bank or building society shall be signed by the Chairman or Vice-Chairman and the Secretary or Treasurer of the Board, and all cheques, drafts or orders made payable to the Board may be endorsed by the Secretary or Treasurer of the Board for credit of a banking account of the Board ANNEXURE A APPLICATION FOR A FIDELITY FUND CERTIFICATE IN TERMS OF THE ATTORNEYS ACT, 1979 (ACT No.53 OF 1979), FOR THE YEAR ENDING 31 DECEMBER 2 I. Full names of the applicant.. Identity number. 2. Name under which practice will be carried on ( the firm ). If the practice is incorporated give the first name and registration number Physical address at which practice will be carried on (i.e. your principal place of practice):. Province 5. Contact details: Postal address:. Residential address: Docex address (if any): Telephone (business):.. Telephone (home): Fax:. (if any):. 5 (a) Any other physical address at which practice will be carried on [also indicate province(s)]:. (b). Names of persons in control at such place or places:. 6. Full names of partners or co-directors, if any:..

19 If no Fidelity Fund Certificate was obtained for the current year, state date on which the applicant will begin to practise for own account or in partnership or as a member of an incorporated practice: Name of Law Society of which applicant is a member (Section 57 of Act No. 53 of 1979): If applicant ceased to practice for own account or in partnership or as a member of an incorporated practice and intends to resume practice, state: (a) name and address of former practice (indicate province):.... (b) when applicant ceased to practise: 10. (a) State the amount (as per bank statement) standing to the credit of the firm s trust banking account and the amount of trust money s invested by the applicant s firm in terms of section 78 (2) (a) and section 78 (2A) of the said Act at the end of each of the twelve months prior to 30 September of this year: 31 OCTOBER NOVEMBER DECEMBER JANUARY FEBRUARY MARCH 2 30 APRIL MAY JUNE JULY AUGUST 2 30 SEPTEMBER 2.. A B C TRUST MONEYS INVESTED IN TERMS OF SECTION 78 (2) (a) BALANCE ON TRUST BANKING ACCOUNT TRUST MONEYS INVESTED IN TERMS OF SECTION 78 (2A) NB: THE INTEREST EARNED ANNUALLY UP TO THE LAST DAY OF FEBRUARY IN EACH YEAR ON AMOUNTS MENTIONED IN COLUMNS A AND B IN 10(a) ABOVE SHOULD BE PAIL) TO THE LAW SOCIETY BEFORE 31 MAY OF THAT YEAR. (b) Trust banking account details (use annexures if there is more than one account):

20 (i) (ii) (iii) (iv) (v) Bank: Branch. Branch codes. Account number. Credit interest rate on trust banking account as at:.. (a) 31 March 2. (b) 30 September 2. (vi) Bank service fee formula. I hereby give authority to the above bank to update the Fidelity Fund concerning changes in the above information, from time to time, as requested by the Fund. Signed on this day of at in the day of. at. in the presence of the undersigned witnesses. AS WITNESSES: Signature of applicant ANNEXURE B (Insert here name of Law Society).. FIDELITY FUND CERTIFICATE for the year ending 31st December Pursuant to the provisions of c II of the Attorney s Act, Act 53 of 1979, I hereby certify that..of. has complied with the provisions of sections 43 and 42 of the said Act in respect of the year ending 31st December, 20 Dated at this

21 Day.. of Attorneys Act 53 of 1979 s. 85 (1)... Secretary