IN THE HIGH COURT OF SOUTH AFRICA 
(WESTERN CAPE HIGH COURT, CAPE TOWN)
CASE NO. 13667/2008

In the matter between:

and

JUDGMENT DELIVERED 20 MARCH 2012

GANGEN. A J:

[2] First Respondent contends that he is entitled to the funds as Applicant's client was indebted to First Respondent and that First Respondent was entitled to apply set-off. Second Respondent is a firm of attorneys who hold the funds in trust pursuant to an agreement between the parties.

[6] The Court accordingly held that "when an attorney draws a cheque on his trust account, he exercises his right to dispose of the amount standing to the credit of that account and does so as principal and not in a representative capacity".

[4] In this case, we are dealing with the situation where the applicant has accepted the payment on behalf of his client and, as attorney, has the obligation to pay his client. There is a distinction between the act of receiving the funds and the act of accounting to his client in respect of the funds. In the latter case, the attorney clearly acts as principal.

[5] First Respondent argues further that once the monies left the trust account, the capacity in which Applicant does so becomes academic and the amount becomes the client's money and therefore set-off can apply. I do not agree.

[6] In the present case the Applicant, as a practising attorney, was intent on making payment to his client pursuant to the completion of a conveyancing transaction whereby his client sold immovable property to one Manyama and with the proceeds of the sale being payable to the client. The Applicant was obliged as a practising attorney to account to his client for the funds and as such did so as principal. It would not be a defence to a claim by the client for the attorney to submit that he had paid the wrong person and therefore he had discharged his duty to the client.

[7] The second aspect is that the Applicant did not intend paying the First Respondent. The funds were paid to the First Respondent in error. The Applicant did not have instructions to pay the First Respondent the proceeds of the sale and the Applicant cannot be said to have made the error on behalf of his client. The First Respondent does not dispute the error and accordingly cannot claim that the Applicant in these circumstances acted as agent for his client.

[13]   The Court in that matter went further to state that-

[14] In the present case, the Applicant intended to effect payment to his client and had no instructions or intention to pay a third party and the First Respondent had no expectation of payment.   There could accordingly have been no meeting of minds. The First Respondent accordingly did not become entitled to the funds credited to its account and was not entitled to appropriate same or to apply set-off against the funds so received.

[15] In any event, the Applicant acted as principal and the Applicant was not indebted to the First Respondent. Set-off could accordingly not apply in these circumstances.

[16] Furthermore, it is clear that the debt was not liquidated as the calculation of the amount owed by Applicant's client to the First Respondent was the subject of a dispute between the parties and that the First Respondent did not agree to the Applicant's client's proposed formula to determine its liability in respect of the water charges.

[17] The First Respondent also contended that there was an agreement between it and the Applicant that the funds would be held in trust pending the settlement of the underlying dispute between the First Respondent and the Applicant's client. The Applicant denies that this is so and submits that if this were so the Applicant would not have made the application and that the agreement to hold the funds in Second Respondent's trust account was to safeguard the funds pending the resolution of the dispute between Applicant and First Respondent. In support of this, the Applicant refers this Court to the fact that the proceedings were instituted in August 2008 and that this would not have been the case if there was the agreement as alleged by the First Respondent.

[18] It appears to me that for such an agreement to have been made, having regard to the authorities referred to above, Applicant's client would have had to consent to the arrangement or be a party to the agreement. There is no evidence that this was in fact so.

[19]   This Court according orders-
1. First and Second Respondents to pay the amount of R451 614.03 to Applicant.
2. First Respondent to pay interest on R451 614.03 at 15.5% per annum from 21 July 2008 to date of payment.