R10 million gone: SCA rejects man's bid to recover money stolen from attorney's trust account

SCA says High Court could not reopen late R10 million theft claim.

The Supreme Court of Appeal (SCA) has dismissed a man's bid to recover R10 million from the Legal Practitioners’ Fidelity Fund after finding that his claim was lodged too late and that a lower court had improperly reopened an issue already settled by the appeal court.

RL had deposited R10 million into the trust account of attorneys Turnbull and Associates in April 2011 for the proposed purchase of shares in Sword Fern Trading. The transaction did not materialise, and the money was subsequently stolen.

The Fidelity Fund rejected RL’s claim in 2014, saying he had failed to give written notice within the three-month period required by the former Attorneys Act after becoming aware of the theft.

The dispute centred on when RL knew that his money had been misappropriated.

RL argued that he only became aware of the theft on September 2, 2013, when he obtained copies of Turnbull and Associates’ business-account statements. The Fund, however, maintained that he knew substantially earlier.

The case had already reached the SCA in earlier litigation. In April 2021, the appeal court found that RL had not submitted his claim within the prescribed three-month period.

It held that he knew by no later than November 28, 2012, that the R10 million had been misappropriated and that he did not need to wait for the business-account statements before notifying the Fund.

RL subsequently pursued a review application, arguing that the Fund had failed to properly exercise its discretion to extend the deadline for lodging his claim.

In January 2024, the South Gauteng High Court in Johannesburg accepted that argument and extended the period for RL to lodge his claim to 7 October 2013.

The High Court found that RL could only submit the claim once he subjectively believed that his funds had been stolen, which it said occurred when he received the business-account statements in September 2013.

In a recent judgment, the SCA found that the High Court had no power to make the order extending the deadline because it directly contradicted the appeal court’s earlier factual finding about when RL knew the money had been stolen.

The SCA said the earlier finding was binding on the High Court under the doctrine of precedent.

It found that the High Court had effectively rejected the SCA’s conclusion by finding that RL did not know before September 2, 2013, that the R10 million had been stolen.

“This is not a consideration of proven facts ‘through a different lens’,” the SCA said. Rather, the High Court had made a contrary finding about what RL knew and when he knew it.

The appeal court also found that RL’s review application was barred by the common-law “once-and-for-all” rule.

The rule requires a litigant with a single cause of action to claim all the remedies available to him in the same proceedings. The SCA said RL’s claim against the Fund constituted a single cause of action: a claim for reimbursement of the R10 million lost through theft.

When RL brought his action against the Fund, he already knew that the Fund had rejected his claim and that there was a dispute over when he had become aware of the theft. He also knew that he could seek an extension of the deadline under section 48(2) of the Act.

“Both the action and the review were based on the same facts,” the SCA said, finding that RL should have sought the extension as part of his original action.

The court concluded that he could not pursue a different remedy in successive proceedings arising from the same cause of action.

The SCA therefore upheld the Fidelity Fund’s appeal with costs and set aside the High Court’s order.