Proxi Smart court case

Often, usually specialist, work is legally reserved to a profession or specially qualified group of persons – in order to protect the public. When it comes to conveyancing, a specialist field within a professional grouping, the factors at work are primarily that a fair amount of additional expertise is required, and probity – conveyancers work with a great deal of money.

The result of such work reservation, in SA, is the maintenance of a world-class land ownership registration system as well as protecting the public from all manner of rogues drawn by a lode of, apparently, easy money.

Conveyancing is a specialist field within the attorney’s profession: it is difficult to become a conveyancer; the pass rate of those attorneys who sit for the conveyancing exams, at least in KZN, in the past year or so, has been some 10% of those who write.

Conveyancers tend, if there is enough work, to earn better than do garden variety attorneys (specialists tend to earn better than generalists): two of the reasons, germane to this discussion, for this are: 

  • much of conveyancing work are routinely done by paralegals whilst the conveyancer guides, solves and signs, thus enabling a competent conveyancer to produce more work than, for instance, a litigant;
  • because of the sums involved, fees are high, usually around 1% of the value of the property involved. 

Great work, if you can get into it: illustrated by a recent case in which the High Court in Pretoria gave judgement. 

A company sought to do what it referred to as the non-reserved work which forms part of the conveyancing procedure.

Proxi Smart argued that conveyancing comprised both reserved and non-reserved work. Think expertise and admin. Proxi Smart would do the non-reserved admin and employ professionals to do the reserved work. On the face of it, a plausible take on getting into a lucrative part of what was/is reserved legal work. Interestingly, this division of legal into reserved and non-reserved work is probably based on a thesis of Dr Bobbert (ex Naudes as they then were) which was published, if my memory serves, in the mid-80s.

The difficulty with the argument is that it artificially compartmentalises work which should be a single process. Further it groups attorneys, estate agents and businessmen into a venture where they are mutually interdependent. This impinges upon the independence of, especially conveyancers and further commercialises bespoke work.

The court was not nearly convinced.

The fact is that conveyancing work, because of it being lucrative, has attracted a lot of attention from those who argue that conveyancing represents a monopoly which cannot be tolerated in our society. There is little doubt that the perceived high cost of conveyancing will continue to attract attention. Current legislation already allows for electronic conveyancing transactions, based on the assumption that the transformation of the deeds registries into record offices will save the public costs.

Yes, there are those who abuse the conveyancing process; I have recently seen one of the big Jhb firms charge a fee of R2m for a conveyancing transaction without turning a hair. Yes, property transactions are expensive. Conveyancers pay multiple costs, of which local authority taxes and transfer duty, a wealth tax, are often substantial; the latter tops out at 13% on the value of the sale. When one sells, the estate agency fees are usually 7.5% on the full price of smaller transactions and less on larger ones. Additionally there is a raft of taxes that may apply, think CGT, income tax, and donations tax.

A part of the perception that conveyancers charge high fees is that a conveyancer’s account is seen as a whole; inclusive of much of the above.

For the time being the profession has warded off the challenge of outright commercialisation.

Think of conveyancing fees as a form of insurance. State enforced public protection.

Read for yourself: http://www.saflii.org.za/za/cases/ZAGPPHC/2018/333.html

Contributed by:
Dr. Daan Steenkamp
Daan Steenkamp Attorneys

LEAVE A REPLY

Please enter your comment!
Please enter your name here

eight − six =