Civ Case No 1012 of 2010

<body>INVESTORS CHOICE PTY LTD t/a TRADOR CASH ampamp CARRY v LETAMO AND OTHERS
2012 1 BLR 211 HC Citation: 2012 1 BLR 211 HC Court: High
Court, Lobatse Case No: Civ Case No 1012 of 2010 Judge: Leburu
J Judgement Date: 9 February 2012 Counsel: M Tabengwa for the
plaintiffrnK Mvududu for the second and third defendants Flynote Legal practitioners�Dishonesty�Practitioner's dishonesty occasioning loss
to client�Fidelity Guarantee Fund having discretion whether and in
what amount to compensate client�Legal
Practitioners Act (Cap 61:01), s 44(1).HeadnoteThe defendant sold a plot of land to the plaintiff for P150
000. The purchase price was paid into the trust account of the defendant's
attorneys. Transfer did not take place and the plaintiff repudiated the sale and
demanded a refund of the purchase price. The refund was not forthcoming and the
plaintiff sued the defendant for P150 000. The plaintiff joined the Law
Society of Botswana and the Board of Trustees, Fidelity Guarantee Fund of the Law
Society, as second and third defendants, respectively. Against them it claimed
compensation in the amount of P150 000 alleging that they were liable to compensate
it for it's loss. The second and third defendants contended that they were under no
obligation to compensate the plaintiff, that they enjoyed a discretion to make a
'grant' to it in mitigation of it's loss, in terms of s 44(1) of the Legal
Practitioners Act (Cap 61:01). The parties requested the High Court to determine
the legal question whether the second and third defendants were liable for loss
occasioned to a client by a practitioner's dishonesty.Held: (1) Section 44(1) of the Legal Practitioners Act gave
the Board of Trustees of the Fidelity Guarantee Fund a discretion to make a 'grant'
to a client who had sustained a loss as a result of a practitioner's dishonesty
'for the purpose of relieving or mitigating' his loss.(2) Section 44(1) of the Legal Practitioners Act did not oblige the third
respondent to make full repayment of the plaintiff's loss. It retained a discretion
either to pay the full amount of its loss or a partial amount of its loss or to
make no payment at all.Case InformationCases referred to:Abley v Dale [1851]
EngR 600; (1851) 11 CB 378; 138 ER 519; 21 LJCP 104Classens v Attorneys Fidelity Fund Board of Control [2011]
ZAWCHC 322, unreportedDETERMINATION of stated case. The
facts are sufficiently stated in the judgment.M Tabengwa for the plaintiffK Mvududu for the second and third
defendantsJudgementLEBURU
J:The parties herein, by consent, have submitted a
special stated case of law for <div style="border-style: solid none none; border-top-
color: navy; border-top-width: 1pt; padding: 2pt 0in 0in;">2012 (1) BLR p212</div>LEBURU Jdetermination in terms of Order 35 of the Rules of the High
Court (Cap 04:02) (Sub Leg).The brief facts giving
rise to the present dispute are common cause. On or about 16 October 2002 the
plaintiff entered into a sale agreement in respect of plot no 34253 Gaborone with
the first defendant. The purchase price was agreed as P150 000. The said purchase
price was paid into the trust account of the first defendant's attorneys, namely,
Silas & Associates, whose proprietor was attorney Amogelang Silas, who is
now deceased. At all material times, herein, the said Amogelang Silas was a bona
fide member of the second defendant in terms of s 33(2) and s 56 of the Legal
Practitioners Act (Cap 61:01).The transfer of the
said property to the plaintiff did not materialise and as a result, the plaintiff
repudiated the agreement and sought a refund of the purchase price of P150 000. The
plaintiff was never refunded the said purchase price by the first defendant's
attorney, hence the present dispute.On or about 17
September 2003 the plaintiff lodged a claim with the second and third defendants
for compensation in the sum of P150 000, and no such compensation has been
effected.The fundamental legal question that I have been
asked to answer in clear and unambiguous terms is whether the second and third
defendants are, either of them, under a legal obligation to pay the full value
of the loss to a person who has proved that he has suffered loss or hardship, due
to the dishonesty of a legal practitioner, as envisaged by ss 34 and 44 of the
Legal Practitioners Act. This issue therefore presupposes the existence of
dishonesty on the part of the concerned law firm, that is to say, liability has
been accepted by the second and third defendants but the quantum of compensation is
an issue.The plaintiff's casus belli is that the second and
third defendants are obliged to pay the full amount of the loss sustained by the
plaintiff. The second and third defendants' contention is that they need not pay
the total or full amount of the loss sustained, but some payment, the quantum of
which is dependent upon the third defendant's discretion, towards meeting the
claim.Section 33 of the Legal Practitioners Act
establishes the Fidelity Guarantee Fund in the following terms: '33. (1) There shall be established and
maintained by the Society a fund to be known as the Fidelity Guarantee Fund (in
this Part referred to as "the Fund") to be administered in accordance with the
provisions of this Part.'The fund in question is
administered by a board of trustees. The said fund is then held in trust for
the following purpose, as encapsulated in s 34 thereof: '34. . for the purpose of reimbursing
any person who has sustained loss or hardship in consequence of dishonesty on the
part of a legal practitioner, or of any employee of a legal practitioner, in
connection with that legal practitioner's practice.'In terms of s 44(1) of the Legal Practitioners Act, whenever a bona fide
and valid claim, arising out of a legal practitioner's dishonesty, has been lodged
with the fund, the board may make a grant to the claimant out of the fund and for
completeness, I will reproduce the relevant provision as it is key to the legal
point raised in casu. It provides as follows: <div
style="border-style: solid none none; border-top-color: navy; border-top-width:
1pt; padding: 2pt 0in 0in;">2012 (1) BLR p213</div>LEBURU J '44. (1) Where it is
proved to the satisfaction of the Board that any person has sustained loss or
hardship in consequence of dishonesty referred to in section 34, the Board may make
a grant to that person out of the Fund for the purpose of relieving or mitigating
that loss or hardship.'Section 44(1) cited above
therefore gives the board discretion to make a 'grant' to the victim of the
loss out of the fund in order to cushion or ameliorate the loss or hardship.According to the plaintiff's interpretation, the board is
obliged, pursuant to s 34 cited above, to reimburse the plaintiff the entire amount
of the loss but the second and third defendants have placed heavy reliance on s
44(1) above, which gives the board discretion to make a 'grant' for purposes of
mitigation of the entire loss.Before I delve in to
the interpretation of the Legal Practitioners Act it is only prudent that I make
some observations about the fund. The membership of this fund is composed of every
practising legal practitioner, other than an advocate and the persons listed in the
First Schedule of the Legal Practitioners Act. To this fund, the said members are
enjoined to pay a prescribed annual contribution and all such contributions
would then be paid into the fund in terms of the Contribution to Fidelity Fund
Regulations (Cap 61:01) (Sub Leg).The board is further
mandated to invest the said contributions in any interest bearing account with any
licenced bank or any building society or in any government securities. Furthermore,
the board may enter into a fidelity insurance contract with an entity carrying on
such insurance business and any payment made to the fund by the said insurance
company would then be paid into the fund's coffers for appropriation by the fund.
See, s 41 of the Legal Practitioners Act. Having outlined the source of funding
thereof, I shall now examine what such funds are used for and reliance thereof
shall be placed on s 43 of the Legal Practitioners Act. The said section lists four
clearly defined usages of the funds except (d) hereunder as
follows: (a) to
payment of any costs, charges and expenses of establishing, maintaining,
administering and operating the fund. These I may term administration costs or
expenses; (b) to
payment of any premiums to insurance companies as envisaged by s 41 of the Legal
Practitioners Act; (c) to
payment of any grant which the board may make under s 44, and (d) to
payment of any other sums properly payable out of the fund.Having outlined how the fund is funded and how the board is to use the
funds received, I shall now endeavor to interpret the Legal Practitioners Act,
particularly ss 34, 43 and 44 of the Legal Practitioners Act. This voyage
of interpretation shall henceforth be founded and anchored around the
Interpretation Act (Cap 01:04), which was created and enacted in recognition of the
inherent problems attendant to interpretation. This problem or difficulty derives
from the fact that statutes ordinarily seek to control the future, or regulate
public relations by using broad terms occasionally not defined in statutes. These
man-made statutes are prone to human error and there are inevitably casus omissi
(omissions and inconsistencies), which can only be filled and cured <div style="border-style:
solid none none; border-top-color: navy; border-top-width: 1pt; padding: 2pt 0in
0in;">2012 (1) BLR p214</div>LEBURU Jby the canons of interpretation, some of which have been
codified in the said Interpretation Act.The starting point on this voyage is s 26 of the Interpretation Act and it
provides as follows: '26. Every enactment
shall be deemed remedial and for the public good and shall receive such fair and
liberal construction as will best attain its object according to its true
intent and spirit.'The above formulation strictly
reflects the public interest theory on enactment and interpretation of statutes.
The plain meaning rule, as stated in that section has been a subject of many
judicial pronouncements. Jervis CJ in Abley v Dale (1851) 11 CB
378 at p 391 echoed the following dictum with regard to what is termed liberal
or plain meaning rule: 'If the precise words
used are plain and unambiguous, in our judgment, we are bound to construe them in
their ordinary sense, even though it do lead, in our view of the case, to an
absurdity or manifest injustice.'It is instructive that
courts should, when interpreting an Act, presume what the legislature says in
a statute what it means and means in a statute what it says therein. This cardinal
canon of interpreting statutes is the primary indicator of legislative
intent.The next canon of interpretation relevant to this
case is hermetically captured by s 27 of the Interpretation Act. The said provision
echoes thus: </sp
an>'27. In the construction of an enactment, an interpretation which would render
the enactment ineffective shall be disregarded in favour of an interpretation which
will enable it to have effect.'Section 27 therefore
favours the effective interpretation of a statute, which intrinsically contemplates
inquiry into the policy, object, intent and purpose behind a statute.The next relevant canon of deducing the meaning of an enactment
or provision is s 29. Subsection (1) posits that an Act or statute must be
construed in toto and as a harmonious whole, with its various parts interpreted
within their broader statutory context and in a manner that furthers its statutory
purpose.As it is common cause, language derives its
meaning from context. Furthermore, words may be imperfect symbols of
communicating intent. It is therefore critical that the meaning of words must be
understood or deduced from
words around it, that is to say, the contextual meaning, hence the relevance of
the canon noscitur a sociis, which recognises that a 'man is known by the company
he keeps'.Section 29(2) on the other hand recognises
that where the provisions of an Act are inconsistent and the inconsistency
thereof cannot be resolved by construing the enactment as a whole, a provision
which appears later in the enactment shall prevail over an earlier provision,
otherwise termed leges posteriors priores contrarias abrogant. This canon of
construction shall become relevant in casu.Emboldened by
the aforegoing canon's interpretation, I shall now zero- in on the specific clauses
that require interpretation. Section 34 of the Legal <div style="border-style: solid none none; border-
top-color: navy; border-top-width: 1pt; padding: 2pt 0in 0in;">Practitioners Act as reproduced above envisages 'reimbursing'
and the immediate question that arises is what is the meaning of this word.The plaintiff has stoutly argued that it meant 'full payment of
the loss sustained.' The defendants have argued that the word 'reimburse' has been
qualified by associate words appearing in s 44 particularly the usage of the phrase
'. may make a grant to that person out of the Fund for the purpose
of relieving or mitigating that loss or hardship.'Whenever a court is seized with statutory interpretation, it is the
function of the judicial arm or branch of government to facilitate and promote the
legislature's intent and accomplishment of its purpose by having regard to the
literal and plain meaning of words used in a statute. The literal meaning of the
word 'reimburse' means to repay a sum of money that has been spent or lost.
See the Concise Oxford English Dictionary (10th ed). Did the
legislature envisage that whenever a client has been defrauded by an errant legal
practitioner as envisaged by the Act, then the fund should repay the entire sum?
This question will be answered later in my judgment.Section 44 above envisages the making of a 'grant' to a client for purposes
of relieving or mitigating that loss. This inherently gives the board some
discretion either to pay the full amount, or lesser amount and or not any
payment thereof. If the fund pays the full amount (reimbursement) in the
form of a grant in terms of s 34 (the reimbursement section) then and only then
would that section be in consonance with s 44.If on the other hand the fund makes partial payment for purposes of
ameliorating the loss or does not pay anything both in terms of s 44, then an
inconsistency arises between the two sections, (ss 34 and 44). It is this
inconsistency that has propelled the disputants herein to seek a judicial
pronouncement which I am about to provide. As I have recognised above, the answer
will be provided through usage of canons of construction and deductive
reasoning.The purpose of the Legal Practitioners Act,
as reflected in the long title, is as follows: 'An Act to re-enact with amendments the
law relating to the admission, enrolment and practice of legal practitioners in
Botswana and matters ancillary thereto.'Clearly, this is a
piece of a regulatory legislation designed to regulate the legal profession.
The said Act embodies the custos murom and prestige of the legal profession.
Embedded within this profession is the Fidelity Guarantee Fund established in terms
of s 33 of the Legal Practitioners Act. The objectives of the fund is to protect
the public against loss arising out of theft, amongst others, of trust funds by
legal practitioners. Mia AJ in the case of Classens v Attorneys Fidelity
Fund Board of Control [2011] ZAWCHC 322, unreported a decision
of the Western Cape High Court, South Africa, succinctly echoed the objectives
of their fund, which is analogous to ours, as follows: 'The Attorneys Fidelity Fund Board of
Control administers the Fund which reimburses persons for monies stolen as provided
in terms of section 26 of the Act.'The protection afforded
by this fund is designed to encourage the public to <div style="border-style: solid none none; border-
top-color: navy; border-top-width: 1pt; padding: 2pt 0in 0in;">use the services provided by legal practitioners with some
degree of confidence. The fund is therefore a statutory client protection fund
or a client safety-net which seeks to assist clients who have suffered a loss
arising out of theft of trust funds by legal practitioners. Such assistance would
come in the form of payment as envisaged by s 43(c) which spells out usage
of the funds held by the fund. Such usage of the funds is described as being,
'(c) to payment of any grant which the Board may make ...' This usage of
funds is clearly consistent with the words used in s 44 which also recognises
that the board 'may make a grant.'Reading the said Act as
a harmonious whole and having regard to the various sections or parts of the Act
within their narrower and broader context and in a manner that furthers the
statutory purpose of the Legal Practitioners Act, it is my consideration that the
fund is not enjoined or obliged, in the event of liability arising out of theft by
a legal practitioner of trust funds, to make full repayment of the loss
sustained. The meaning of the word 'reimburse', when read and juxtaposed with
associated phrase '. may make a grant' in my contextual view, envisages some form
of payment or not to a client who has suffered such a hardship and not full
repayment, hence the relevance of the noscitur a sociis canon which literally
posits that the meaning of words or phrases may be ascertained by having regard to
other words or phrases associated with it.In any event,
even if I am wrong in my holding above, (which is not conceded), the fact that ss
43 and 44 which envisage 'the making of a grant', appears subsequent to s 34, such
provisions take precedence in terms of s 29(2) of the Interpretation Act, which
forms a bastion of my reasoning. The said s 29(2) gives primacy to subsequent
sections of an enactment in the event that any reconciliation of two inconsistent
provisions (s 34 and s 44) cannot be achieved, hence the maxim leges
postereriores priores, cited supra.In the final analysis,
the fund has a discretion either to pay the full extent of the loss, or partial
payment and or lastly no payment, depending of course on the liquidity or cash
outflows of the fund, the quantum of the claim and all such other relevant
regulatory indices that may be considered by the board for purposes of cushioning
the loss. When exercising such a discretion, the quasi judicial authority (the
board) must therefore exercise such a discretion judiciously and reasonably,
and not according to the whims and caprices of any stakeholder.In the final analysis, the answer to the stated legal question
is as advanced by the defendants in casu; namely that in the event of loss or
hardship arising out of theft of trust funds by a legal practitioner, the
defendants, jointly or severally, may make payment or none to the person who
has suffered such a loss. If any payment is to be made, the board has a discretion
as to the quantum thereof; and such quantum must be geared towards mitigating the
loss suffered.In conclusion, the plaintiff's
interpretation of s 34 and s 44 of the Legal Practitioners Act is hereby dismissed
with costs.Judgment
for the defendants. <div
style="border-style: solid none none; border-top-color: navy; border-top-width:
1pt; padding: 2pt 0in 0in;">2012 (1) BLR p217</div></body>

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<body><b>INVESTORS CHOICE PTY LTD t/a TRADOR CASH ampamp CARRY v LETAMO AND OTHERS

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