Pay back the money: High Court finds Hlophe lawyer personally liable for R20 million in legal fees

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Barnabas Xulu is seen during the Judicial Service Commission tribunal which is investigating a complaint of judicial misconduct against him.
Barnabas Xulu is seen during the Judicial Service Commission tribunal which is investigating a complaint of judicial misconduct against him.
Nelius Rademan, Gallo Images, Foto24
  • Western Cape Judge President John Hlophe's attorney, Barnabas Xulu, has been involved in a long-running battle with the Department of Environment, Forestry and Fisheries over R20 million in legal fees unlawfully paid to his firm.
  • Judge Phillip Zilwa has now found that Xulu should be held personally liable for the repayment of that money – and has slammed him for flouting the law in spending money he knew had been unlawfully obtained.
  • Zilwa's ruling also enables the department to permanently seize funds and assets belonging to Xulu, which it had successfully applied to be frozen, as part of its efforts to ensure that it got its money back.

Attorney Barnabas Xulu will have to pay back more than R20 million in legal fees unlawfully paid to his firm, following a scathing High Court ruling that found that the lawyer for Western Cape Judge President John Hlophe had "flouted the law".

Eastern Cape Judge Phillip Zilwa's ruling now gives the Department of Environment, Forestry and Fisheries the power to sell assets it had seized from Xulu, including his luxury holiday home on the Dolphin Coast, to recover the over R20 million in legal fees it had unlawfully paid to his firm.

READ | State is extravagant in its pursuit for R20m from lawyer Barnabas Xulu, court hears

Moegamat Abader, the department's then acting director-general, successfully argued last year that Xulu's assets should be frozen because of the way in which he had "simply dissipated - and appropriated - funds" from his law firm's bank accounts without regard for its debts and obligations or the multiple court orders made against it.

While the department had attempted to seize Xulu's Porsche 911 Carrera as part of its efforts to recover the legal fees, he has so far refused to hand it over - and was recently found guilty of contempt of court over that refusal.

While Xulu is now attempting to appeal that ruling in the Supreme Court of Appeal, Zilwa has found that the Porsche, if and when it is eventually recovered, can be sold by the department.

READ | Xulu fees battle has nothing to do with targeting a black law firm, says fisheries dept

In an embarrassing development for Hlophe, who is currently awaiting a Judicial Service Commission vote on whether he could be impeached for gross misconduct, Western Cape Acting Judge Mas-Udah Pangarker's contempt ruling against Xulu has revealed that the attorney had sought the judge president's intervention in the case.

Xulu did so by writing to Hlophe and asking him to refer all the cases linked to his fees battle with the department to the Judicial Service Commission.

Rulings against him

Hlophe refused to intervene, but Xulu has already repeatedly used his association with the judge president to argue that he has been unfairly treated by the multiple judges who have ruled against him.

Xulu's fees saga had its genesis in a January 2020 ruling delivered by Western Cape High Court Judge Owen Rogers, who found that the service level agreement and subsequent R20 million legal fees settlement agreement between Xulu's BXI law firm and the department were both unlawful.

Rogers ordered Xulu's firm to pay back the R20 million and ruled that Xulu must be called upon to explain why he should not be held personally liable for that money.

In a ruling delivered on Thursday, Judge Zilwa has now found that the department had "succeeded in making a proper case for holding [Xulu] jointly and severally liable" for the fees. 

Zilwa was also scathing of Xulu's conduct in spending the money that his firm had obtained from the department by seizing its bank accounts, despite being informed that this execution process was unlawful.

The judge pointed out that Xulu was made aware in June 2019 that his firm's legal fees settlement agreement with the department did not appear to be lawful and, further, that his efforts to recover the money he claimed his firm was owed was not in compliance with the State Liability Act.

Despite this, Xulu transferred that money from his firm's trust account and disbursed it with what Rogers would later describe as "undue haste".

Zilwa agreed with the department's argument that Xulu's "clear disregard of the law in following lawful execution proceedings renders his conduct as an attorney wrongful and negligent".

"[Xulu] has stated under oath that he was aware that there was no compliance with the law but nonetheless held the view that [his firm] BXI was entitled to utilise the unlawfully obtained monies to discharge its liabilities and even if his conduct was unlawful, a court may nonetheless decline to order the repayment of such monies," Zilwa stated.

"As the controlling mind of BXI, [Xulu] elected to disburse the money and flout the law," he said, adding that the "greatest part of the money" had been spent after Xulu's firm was notified that its attachment of the department's bank accounts was invalid and violated the State Liability Act.

Zilwa also rejected Xulu's argument that the department's application against him and his firm was based on politics and innuendo and not law.

He said that claim was "devoid of basis".

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