IN THE HIGH COURT OF SOUTH AFRICA 
(CAPE OF GOOD HOPE PROVINCIAL DIVISION)

CASE NO. 8205/01

In the matter between:

and

JUDGMENT : DELIVERED 6th MAY 2003

Factual Background

The following facts are common cause:
	
	On 20 March 2000, an amount of R1 million was transferred from the trust account of Tatham Wilkes & Company, attorneys of Pietermaritzburg, to a trust account in the name of Akritidis at the Sandton Branch of Nedbank Limited. This transfer took place by means of the deposit of a cheque for the said amount at the Pietermaritzburg Branch of Nedbank Limited.
	Akritidis subsequently absconded from the Republic of South Africa and his estate has been finally sequestrated. The trustees of his insolvent estate have no personal knowledge of his whereabouts. It would appear that there are insufficient unencumbered assets in Akritidis' insolvent estate in the Republic of South Africa to repay the abovementioned amount of R1 million to the Trust. (This last fact was admitted by the defendant subject to the plaintiffs proving that Akritidis stole the abovementioned amount - which is not admitted by the defendant - and subject also to any dividend accruing to the plaintiffs from Akritidis' insolvent estate being deducted from any amount which this Court might order the defendant to pay to the plaintiffs.)
The Trust gave due notice of its alleged claim against the Fund to the Law Society of the Transvaal and to defendant, as it was required to do under section 48 of the Act. However, on or about 27 June 2001, the defendant gave written notice to the Trust that it had rejected the Trust's claim. In terms of section 49 of the Act, the defendant gave leave to the Trust to institute action against the Fund, and such action was instituted within one year of the rejection by the defendant of the Trust's claim.

The defendant does not, however, admit the averment made by the plaintiffs in their particulars of claim to the effect that Akritidis had a reputation for having an expertise in exchange control legislation and investment in foreign companies. The defendant also does not admit the plaintiffs' allegations that, following the transfer of the R1 million to Akritidis' trust account, the trustees of the Trust would have given Akritidis further instructions in respect of this money after receiving and considering Akritidis' advice on the investment of this amount in foreign companies and the implication of exchange control legislation on such investments.

Statutory Background
Section 26(a) of the Act provides that the Fund shall be applied for the purpose of reimbursing persons who may suffer pecuniary loss as a result of-
'theft committed by a practising practitioner, his candidate attorney or his employee, of any money or other property entrusted by or on behalf of such persons to him or to his candidate attorney or employee in the course of his practice

	
	Section 47(4) provides that, subject to section 47(5), a practitioner must be regarded as having been instructed to invest money for the purposes of section 47(1 )(g) where the person who entrusts the money to the practitioner, or for whom the practitioner holds the money,

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"instructs the practitioner to invest all or some of that money in a specified investment or an investment of the practitioner's choice."
	In terms of section 78(1), any practising practitioner is obliged to open and keep a separate trust banking account at a banking institution in the Republic and to deposit therein the money held or received by him on account of any person. This is an attorney's normal trust account and the interest earned on this account is paid to the Fund (section 78(3)).
In terms of section 78(2)(a) a practitioner may invest in a separate trust, savings or other interest-bearing account opened by him with any banking institution or building society any money deposited in his trust banking account which is not immediately required for any particular purpose. Interest earned on any such account is paid to the Fund (section 78(3)) and since the attorney is dealing with trust funds which have been pooled in his trust account, no authority is required from any client to open such an account. The section permits interest to be earned for the benefit of the Fund at a higher rate than would be earned on the nomial trust account and attorneys have over the years been encouraged to make use of this section so as to build up the resources of the Fund.
Section 78(2A) makes provision for specifically identified funds to be invested for the benefit of a client. The section reads:
"(2A) Any separate trust savings or other interest-bearing account -
(a) which is opened by a practitioner for the purpose of investing therein, on the instructions of any person, any money deposited in his trust banking account; and
(b) over which the practitioner exercises exclusive control as trustee, agent or stakeholder or in any other fiduciary capacity,
shall contain a reference to this subsection."

If a client instructs his attorney to deposit monies to a section 78(2A) account, this would in ordinary parlance he an instruction to invest the money for the client's benefit. It follows that if the stolen money is money which the client instructed the attorney to invest in a section 78(2A) account, the Fund's liability would normally be excluded. However, liability will not be excluded if the provisions of section 47(5) apply.
•  Section 47(5) reads as follows:
"(5) For the purposes of subsection (1)(g), a practitioner must be regarded as not having been instructed to invest money if he or she is instructed by a person -

R1 million was paid to Akritidis with an instruction that it be invested on behalf of the Trust in an account contemplated by section 78(2A) of the Act, on a temporary or interim basis pending legal advice on investment in foreign companies and the implication of exchange control legislation on such investments.

The Evidence before this Court

Yeats is a building project manager and also a property developer. After completing a building management degree at the University of Cape Town, he worked for three years in the building industry before going into business (a wholesale cash and carry business) with three colleagues in 1983. While his colleagues were responsible for the trading side of the business, Yeats was responsible for finding appropriate premises in various urban centres and, having done so, setting the business up at such premises. Until 1989, Yeats managed the business in Pietermaritzburg. From that year, he dedicated about 50% of his working time to the business, doing freelance property management work for the rest of his time.

R2 500 000.00 of the price of R14 million was paid out in June 1999, the balance being paid out somewhat later. As the Trust did not have a bank account in its name at that time, the R2,5 million was deposited into the trust account of Tatham Wilkes & Company. Part of this amount was utilised to pay off the mortgage bonds on the Yeats family residence and holiday homes, as well as the balance owing to Stannic in respect of certain motor vehicles, leaving an amount of between R1,7 million and R1.8 million in the Tatham Wilkes trust account. A bank account in the name of the Trust was subsequently opened at Standard Bank (Pietermaritzburg Branch) and the balance of the purchase price paid by Massmart was deposited into this account.

It is interesting to note that, under cross-examination, Yeats stated that, in April 2001, he and his wife each invested a further amount of R250 000.00 offshore (thereby bringing their personal offshore investments up to the limit of R750

On Yeats' version, he simply informed Tingle at their meeting on 17 March 2000 that the Trust was seeking advice on the lawful investment of R1 million in foreign companies. Tingle's only role was to provide Yeats with an introduction to Akritidis. This Tingle would apparently have done by contacting Akritidis and communicating the Trust's requirements to Akritidis. Yeats expected that Akritidis would thereafter contact him (Yeats) to take the matter further.

'Hi Mike

Name of Trust Account    :       SPYRIDON AKRITIDIS Attorneys

As was submitted by Mr Rogers, this letter dated 18 March 2000. in at least four respects, bears no relation to what Yeats testified was discussed between himself and Tingle at their meeting on the previous day:

Trust to any investment, and he expected that this information would in due course be furnished to him by Akritidis.

Finally. Yeats testified that, as far as he was concerned, Akritidis would not only advise him on the investment of the Trust's money in foreign companies and the implication of exchange control legislation on such investments. In addition, if Akritidis' advice was to the effect that it was possible legally to make such investments in foreign companies, and if the trustees of the Trust accepted his advice in this regard, Akritidis would have been asked by the trustees to take whatever steps were necessary in order legally to arrange the investment transaction(s) decided upon by the trustees.

According to Anticevich, many of the clients who had advanced monies to Akritidis claim to have dealt with Akritidis on the basis that he would obtain the necessary SARB approval on their behalf legally to remit such monies offshore. However, in Anticevich's view, some of the persons who advanced monies to Akritidis for transfer offshore knew that these funds were being remitted illegally.

Discussion

(2)    by reason of theft committed by a practising attorney:
3)	
4)	

Order

In the circumstances, the plaintiff's claim is dismissed with cost

B J VAN HEERDEN