The Supreme Court of Appeal (SCA) has delivered a scathing judgment against a Pretoria-based attorney, dismissing his bid to overturn his immediate suspension from practice.
The judgment, handed down last week, agrees with a previous Pretoria high court order handed down by judge Norman Davis in August 2023 that barred Mmatlou Matsi and his firm, Matsi Law Chambers Inc, from practising law pending a final application to have his name struck from the roll of legal practitioners.
The SCA said the August 2023 court order shall not be suspended or stayed pending the decision of any application or appeal that Matsi might institute in future.
After Davis refused Matsi’s application for leave to appeal his original court order in November 2023, Matsi then petitioned the SCA for leave to appeal, and two judges of the SCA refused leave to appeal in February 2024. The latest application was for the reconsideration of the SCA’s 2004 decision, which the court on Friday dismissed with costs on an attorney and client scale.
The legal battle began when the Legal Practice Council (LPC) flagged several irregularities in Matsi’s handling of client money before taking him to court to suspend him:
- There are numerous instances identified by the LPC where the Road Accident Fund (RAF) paid Matsi’s firm money from clients’ claims.
- The firm’s trust account frequently held balances as low as R354, despite having received millions in payouts for accident victims. This meant victims were not paid on time and in some cases were paid in “dribs and drabs”.
- Matsi was also found to be practising without a valid Fidelity Fund certificate, a mandatory requirement designed to protect the public from theft by legal professionals.
This situation is clearly indicative of the fact that a substantial portion of the award was no longer held in the trust account despite the fact that no statement of account had been rendered to Ms Msiza
— Judge of appeal Xola Petse
In his defence in the high court, Matsi attempted to shift the blame to a former partner and cited the crippling effect of the Covid-19 lockdown as a reason for accounting delays. He further argued that the LPC had treated him unfairly by not granting him an internal hearing before taking him to court.
In its judgment, the SCA said Matsi failed to provide specific details — such as dates or exact amounts — to prove that his clients had actually been paid.
The SCA said it was satisfied that based on the selected instances that formed the foundation of the interim relief sought by the LPC in the high court, a proper case had been made out to suspend Matsi from practice with immediate effect, in the public interest, pending the final determination of part B of the application.
Judge of appeal Xola Petse cited some of the complaints against Matsi and his firm.
Essie Emma Msiza was awarded damages of R1.9m for general damages and loss of earnings. The RAF electronically paid this amount to Matsi on July 25 2019, but the firm failed to inform Msiza of the payment. Despite the payment, their trust account had a credit balance of only R217,000.
“This situation is clearly indicative of the fact that a substantial portion of the award was no longer held in the trust account despite the fact that no statement of account had been rendered to Ms Msiza,” Petse said.
Tshwene Julia Morifi was awarded damages of R837,000 from the RAF and the fund paid this amount into the firm’ trust account in October 2020. Some four months later, Morifi had not received payment from the firm. Yet three months after receipt of the funds, the trust account had a credit balance of only R354. Morifi ultimately received payment of R400,000 from the firm, a year and nine months after the RAF had paid to the law firm.
“As for Ms [Maditati Merriam] Mogorosi, she was given a runaround by the applicants. In desperation, she approached the RAF where she was told that R300,000 was paid to the applicants on 26 June 2019.”
The deposit of the amount was subsequently verified from the inspection of the firm’s trust bank statements. Nevertheless, the inspection further revealed that as at July 20 2019 the trust account balance was a mere R24,869.
“As can be seen, it took less than one month for the funds to be almost entirely dissipated by the applicants.”
Apart from resorting to their oft-repeated refrain that the clients were ultimately paid what was due to them, they elected not to address the gravamen of the complaints against them, namely that they misappropriated trust funds
— Petse
Petse said in consistently delaying payments to their clients, the firm contravened LPC’s rules that decreed that every firm shall account to its client in writing and pay any amount due to a client within a reasonable time.
Petse said Matsi and the law firm did not make even the slightest attempt to meaningfully proffer a plausible answer to any of these damning allegations against them.
“Apart from resorting to their oft-repeated refrain that the clients were ultimately paid what was due to them, they elected not to address the gravamen of the complaints against them, namely that they misappropriated trust funds.”
Petse said in addition, there was no explanation as to why they failed to keep proper books of account as required by the LPC’s rules. He said their trust account was perpetually in deficit, in breach of statutory prescripts and regulatory framework, and the clients were not paid what was due to them within a reasonable time of receipt of the funds from the RAF.
In dismissing the reconsideration application, Petse said what emerged from the record in this case was that Matsi operated his practice’s trust account as a Ponzi scheme. “And because he habitually rolled over trust funds, he engaged in what can appropriately be described as a proverbial case of ‘robbing Tom in order to pay Harry.’”
Petse said an attorney, as an officer of the court, belonged to an honourable profession, which scrupulously demanded absolute honesty, reliability and integrity from its members. Members of the public who entrusted their affairs to an attorney were entitled to assume that their affairs will be handled honestly, meticulously and with the requisite skill.
“It is totally unacceptable for an attorney to use money received on behalf of a client for his or her personal needs as has been witnessed in this case.”
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