Johannesburg - The Constitutional Court on Thursday set aside an order of the Supreme Court of Appeal (SCA) that held attorneys liable in a lawsuit involving the purchase of a property.
Yuen Fan Lau and Shun Cheng Liang initially tried to purchase immovable property from Royal Anthem Investments. Attorneys from Stopforth Swanepoel & Brewis Incorporated acted as conveyancers for the transaction.
Lau and Liang later sued Royal and the attorneys to recover funds they had paid to Royal for the sale and transfer, but which remained held in trust by the attorneys.
The two subsequently withdrew the action against the attorneys and proceeded against Royal only. The high court ordered Royal to repay the funds plus interest.
Royal then appealed to the SCA.
Although the attorneys were not cited as a party on appeal, the SCA amended the high court order, and ordered the attorneys to repay the funds plus interest.
The interest was calculated at a rate higher than that which applied to the interest-bearing trust account holding the funds.
After the attorneys failed to have the SCA reconsider the order, they appealed to the Constitutional Court.
The attorneys contended that because the SCA granted the order in proceedings to which they were not a party, their right to access to courts under section 34 of the Constitution had been violated.
They also maintained that they were prejudiced by the excess interest the order required them to pay.
The Constitutional Court held that the dispute before the SCA did not extend to the attorneys' liability.
It was undisputed that the attorneys kept the funds in trust on Royal’s instructions. However, the attorneys were not party to the appeal and did not have an opportunity to place evidence before the SCA.
The Constitutional Court held that the order of the SCA violated the notions of procedural and substantive fairness.
Based on the attorneys’ undertaking that they were in the
process of releasing the funds to Lau and Liang, the Constitutional Court
concluded that Royal - rather than the attorneys - must pay the excess