Lawyers’ fidelity fund ordered to pay woman R800K after her lawyer stole funds

Pretoria - The Supreme Court of Appeal has dismissed an appeal by the Legal Practitioners Fidelity Fund after it was found the entity should reimburse a woman almost R800 000 plus interest, after her attorney misappropriated funds.

Carla Marshall Guilherme was married to Bradley Clem Bartie who died by suicide on May 10, 2012. Bartie’s attorney, known only as Spencer, was appointed executor of the estate.

Guilherme became the sole beneficiary of a life insurance policy worth R5 million and received an immediate payment of R50 000 from the policy.

A balance of R4.9m was eventually paid into Guilherme’s bank account, however, Spencer advised her to deposit the money into his trust account as these funds were at risk due to her husband’s liabilities to his creditors.

Guilherme did as Spencer advised.

She withdrew R1.4m over a period of time from Spencer’s trust account.

On December 2016, Spencer transferred R2m into her account, believing it was the full amount owed to her.

She eventually terminated Spencer’s mandate as she was unhappy with his services.

She appointed another attorney who later discovered that an amount of R799 967.24 was still due to her.

The newly appointed attorney further discovered that Spencer was suspended from practice in April 2017 and was subsequently struck from the roll in November 2017.

When approached, Spencer denied that any amount was still outstanding.

Through her attorney, Guilherme submitted a claim with the LPFF in September 2018, however, the claim was rejected in July 2019 because there was no entrustment, but rather a deposit for safekeeping because she was running away from creditors.

She approached the Western Cape High Court which ruled in her favour and ordered the LPFF to pay the misappropriated funds plus interest, and the costs of the application.

The LPFF appealed the decision, however, the high court dismissed the application. Eager to win the case, the entity approached the SCA, which also dismissed the matter.

During submissions, the LPFF argued that Guilherme made the deposit to Spencer to hide the money from her late husband’s creditors.

According to the LPFF, hiding money did not constitute an entrustment, and therefore, there was no protection for her money.

Acting Judge JP Daffue said Spencer received the money as a trustee and him being a trustee, was subject to a fiduciary obligation.

“Every trust imports the element of holding or administering property in part for a person or object other than the trustee. Nothing prevented Guilherme as the founder and depositor from being a beneficiary, or indeed the sole beneficiary.

“Therefore, there is no legal basis on which it can be argued that Guilherme as the depositor of the money to be kept in trust may not benefit. The submission made on behalf of the appellant to the contrary has no legal foundation,” said Daffue.

Daffue added that Guilherme’s money was entrusted to Mr Spencer in accordance with the law.

“She is entitled to be reimbursed for the loss suffered consequent upon the misappropriation of the funds by the attorney,” he said.

The appeal was dismissed with costs.

IOL

Mon, 19 Jun 2023 19:33:01 GMTBrenda Masilela

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