On the 22nd of May, the Law Society of South Africa (LSSA) released a statement welcoming the Supreme Court of Appeal’s (SCA) dismissal of the application for leave to appeal in the matter of Proxi Smart Services (Pty) Ltd v LSSA et al. The SCA dismissed the application for leave to appeal on 7 May on the basis that there is no reasonable prospect of success and that there is no other compelling reason why an appeal should be heard.
Proxi Smart has now turned to the Constitutional Court for leave to appeal the judgment by the High Court and the subsequent dismissal of its application for leave to appeal by the SCA.
Proxi Smart applied to the Gauteng Division of the High Court in February 2018 for declaratory relief regarding the lawfulness of its business model for performing “administrative and related services” pertaining to property transfer. It contended that these services were not by law reserved for conveyancers or legal practitioners. The LSSA, its constituents, the Attorneys Fidelity Fund (AFF) and others contended that Proxi Smart’s attempt at creating a distinction between “non-reserved” and “reserved” work had no basis in law, and that the full conveyancing process is regarded as professional work by conveyancers.
Although the application was dismissed by the High Court on technical grounds, the judges set out their views on the merits clearly. Two points specifically dealt with the merits of the case.
Firstly, Proxi Smart argued that they intend to perform steps involved in the process of transfer of immovable property (via an online platform) for administrative and related services that is not by law reserved for practitioners. Their model is based on preparing “supporting documents” that may be required to be lodged in a typical transfer.
The Court stated in para 17 that this position ignores the fundamental reality that every property transaction is unique and is not typical. Further, the Court, in para 14, referred to section 83(8)(a)(i) of the Attorneys Act, together with section 15 of the Deeds Registries Act that reserves not only the “preparing” but also the “drawing up” of reserved documents for practitioners. The sections also prohibit any person other than a practitioner from causing such a document to be drawn up or prepared. The Court stated in para 30 that “related and administrative services” does amount to “drawing up” or “preparing” documentation. The court further stated in para 18 that supporting documents to be lodged with a deed of transfer requires the exercise of professional discretion and legal knowledge.
What is more, the Court highlighted the second important point, namely, the difficulty with the protections that the applicant offers to put in place for clients’ funds. These protections, which includes insurance cover, director’s liability and its status as a financial services provider, will remain within the discretion and capacity of the applicant to maintain. There is no statutory scheme, such as the Attorneys Fidelity Fund provided for in the Attorneys Act, to regulate the guarantees that the applicant undertakes to put in place.
Ultimately, the ConCourt ought to uphold the dismissal of leave to appeal as it is and remains in the interest of the public that this work is regulated by regulatory and legislative frameworks. As contended by the LSSA, members of the public should not be denied the protection of statutory bodies overseeing strict compliance by conveyancers of rules directed at the ethical and professional conduct of conveyancers.
All work, of whatever nature, associated with immovable property transfer should be regarded as inseparable from conveyancing practice.