LSSA takes on Proxi Smart model in Gauteng High Court in August

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The Law Society of South Africa (LSSA) filed its answering affidavit in the Proxi Smart matter on 7 June 2017. The matter between Proxi Smart Services (Pty) Ltd v the LSSA and Others is set down for hearing in the Gauteng High Court: Pretoria on 22 to 24 August 2017.

Proxi Smart Services plans to render certain ‘non-reserved’ or ‘administrative’ conveyancing-related services. The LSSA contends that Proxi Smart’s attempt at creating a distinction between ‘reserved work’ and ‘non-reserved work’ has no basis in law, and that the full conveyancing process is regarded as professional work performed by conveyancers – who are regulated by the statutory, provincial law societies. This should remain so in the interest of the public.

The LSSA counter-application seeks orders declaring the Proxi Smart model to be in contravention of various rules, regulations and legislation, and therefore, unlawful.

The other thirteen respondents in the matter are the Chief Registrar of Deeds; Roger Dixon; the Justice Minister; the Attorneys Fidelity Fund; the four statutory provincial law societies; the National Association of Democratic Lawyers; the Back Lawyers Association; the Black Conveyancers Association; the Minister of Rural Development and Land Reform and the National Forum on the Legal Profession.

The LSSA points out the ‘unfortunate timing’ of the application by Proxi Smart which finds the profession in transition due to the impending coming into effect of the Legal Practice Act 28 of 2014 (expected to be in 2018) as well as the changes envisaged in the deeds registration process envisaged in the Electronic Deeds Registration Systems Bill [B-2016] gazetted for public comment on March this year.

A misconceived application
The LSSA contends that Proxi Smarts application is misconceived as the Deeds Registries Act 47 of 1937 (DRA) does not define or even use the words ‘reserved work’. The logical inference is that the legislator never intended to divide the functions performed by a conveyancer, and that the DRA was drafted from the premise that all documents and supporting documents must be submitted to the relevant deeds registry by a conveyancer and had to be drafted, created or secured by a conveyancer or a member of her/his staff working under direct supervision and control of the conveyancer. However, the LSSA adds that, as it is impossible to legislate for every conveyancing procedure, the ‘usage, custom and practice of the conveyancing profession’ cannot be found codified in the DRA.

The LSSA goes on to show that all the steps involved in a typical transfer of immovable property, summarised by Proxi Smart have, by usage, custom and practice over centuries become work that is being performed by conveyancers, and should continue to be performed exclusively by conveyancers. The work defined by Proxi Smart as ‘administrative work’ is impliedly included in the DRA as work that has to be performed by a conveyancer.

The misnomer of the ‘typical’ transfer
The LSSA adds that the ‘typical’ transfer outlined by Proxi Smart is a misnomer as, in the experience of conveyancers, there exists no ‘typical’ transfer of immovable property. Conveyancers are on a daily basis, involved in a great variety of transactions in which a plethora of legal and administrative problems can present themselves.

Protection of the consumer
The protection of the consumer is central to the role of the conveyancer. A number of rules in the Rules of the Attorneys’ Profession demand that the conveyancer must account to all parties. The protection afforded to consumer by the rules require the conveyancer to have full control of the finances and all monies deposited in the attorneys’ trust account. In addition, the public is protected against theft of trust monies deposited with a conveyancer by the Attorneys Fidelity Fund.

The LSSA also outlines a number of rules and regulations which conveyancers participating in the Proxi Smart model would breach. It is dependent on Proxi Smart ‘the estate agent and “their” panel conveyancer hunting as a pack’. The conveyancer would be breaching rule 43.1 (sharing of fees), r 48, r 49.8 as well as r 49.17 (anti-touting) of the rules.

The LSSA points out that Proxi Smart’s model, which is dependent on an estate agent convincing a prospective seller to make use of Proxi Smart’s services (and thus its panel conveyancer) disregards the common law principle that a seller is permitted to nominate her/his own conveyancer. It would also contravene s 11(1) of the Consumer Protection Act 68 of 2008 aimed at prohibiting direct marketing.

In addition, the LSSA submits that the ‘parallel mandate management agreement’ between Proxi Smart and a panel conveyancer would amount to a restrictive horizontal practice, thus contravening s 4(1) of the Competition Act 89 of 1998.

The LSSA concludes that the approval of the Proxi Smart model would result in

  • conveyancing as a profession losing its attraction to new entrants;
  • members of the public losing confidence conveyancers;
  • members of the public being denied the protection of statutory bodies overseeing strict compliance by conveyancers to rules directed at ethical and professional behaviour and conduct; and
  • conveyancing being attended by persons and institutions that do not qualify as officers of the court, with the concomitant dissipation of the safeguards such a system holds.

The LSSA is represented in this matter by Adv Ish Semenya SC and Adv Allen Liversage, instructed by Maponya Attorneys.

►Download the LSSA’s responding affidavit here.
►View the annexures to the LSSA’s affidavit as well as papers by other parties in the matter here.