By Sanette Viljoen

In the past several cases occurred where an attorney vanished with the money in his trust account. Fortunately, there is a loyalty fund for attorneys known as the Legal Practice Fidelity Fund, which in such cases comes to the rescue of people whose money was embezzled or stolen in this manner.

Anyone who has ever bought fixed property, such as a house, will agree that it is a fairly distressing experience to entrust so much money to an attorney’s account. What happens if the money paid for your house is deposited with the attorney and that money is embezzled or stolen? Should the transfer of the property then still go ahead?

In die Western Cape High Court this question was asked in the case of Agu v Krige and Others [2019] ZAWCHC 46. Here the deed of sale stipulated that the purchase price be paid to the conveyance attorney. However, after the buyer paid the purchase price, the attorney vanished with the trust money. The court also had to decide if due payment of the purchase price did take place. The buyer did after all perform and deposited the money with the conveyance attorney. However, the seller did not receive the purchase price and therefore would not relinquish the property.

The buyer argued that she had duly met her contractual obligations as set out in the deed of sale, therefore she demander transfer of the property from the seller. The seller on his part argued that the deed of sale only prescribed the manner of payment whereby the purchase price first had to be paid into the conveyance attorney’s account and later, after the property was registered, be paid over to the seller. The seller furthermore argued that, because he did not receive the purchase price from the attorney, he could not be forced to transfer the property.

The court was convinced that the conveyance attorney had been duly authorised to act on behalf of the seller and to receive the purchase price. During the hearing it also came to light that the seller insisted, as was his right, that his conveyance attorney be used and the deed of sale also stipulated it accordingly.

The court consequently came to the conclusion that the conveyance attorneys had, firstly, been appointed as the seller’s agent, and secondly, had been authorised to receive the purchase price on behalf of the seller. The seller therefore had to transfer his property to the buyer, without receipt of the purchase price. In this case the court warned that this ruling should not create a precedent that payment to a conveyance attorney should always be seen as payment to the seller. First it had to be established whether or not the attorney had acted as the seller’s agent. If the buyer had chosen the conveyance attorney, it would have been very difficult to argue that the attorney acted as the seller’s agent.

The seller may however claim from the Loyalty Fund for the losses that he suffered. The claimant must however first utilise all his other remedies and try to retrieve the money from the guilty attorney. Only after he can prove that this was not possible, will he be compensated by the Loyalty Fund.