The South Gauteng High Court in Johannesburg ordered a law firm to repay a widow the R500,000 deposit she and her late husband paid towards the purchase of a family home almost a decade ago, ruling that there was no lawful basis for continuing to withhold the money after the sale collapsed.
Acting Judge Madima ordered Maseko Tilana Inc to pay PS the R500,000 deposit that had remained in the firm’s trust account since 2017. The court also directed the firm to provide proof to both the court and the Legal Practice Council that the funds remained in its trust account and ordered it to pay attorney-and-client costs.
The dispute dates back to June 2017 when PS and her husband, married in community of property, agreed to purchase a property in Randburg for R1.9 million. At the time, the couple and their family were tenants at the property.
They paid a R500,000 deposit into the trust account of the transferring attorneys and secured a mortgage bond for the balance of the purchase price. According to the judgment, the conveyancing file was later transferred to Maseko Tilana Inc, which became responsible for holding the deposit in trust pending transfer.
The transfer, however, never took place.
The court found that after the purchasers demanded that the sale be completed, the seller instead cancelled the agreement in April 2018. The family was subsequently evicted from the property and demanded the return of the deposit together with interest.
Despite repeated demands, including correspondence sent in 2020, the money was never repaid.
Maseko Tilana Inc argued that it retained the funds because the seller had instituted legal proceedings relating to alleged arrear occupational rent and had instructed the attorneys not to release the money. The firm also challenged PS’s legal standing, arguing that because her husband had since died, his estate, executor and beneficiaries should have been joined before any payment could be made.
The court rejected those arguments.
Judge Madima found that Ps had a direct legal interest in recovering the deposit as one of the purchasers under the sale agreement and later as the representative of her late husband’s estate. The judge held that any potential interests of beneficiaries or dependants were indirect and did not prevent her from seeking repayment.
The court also dismissed objections that the seller had been improperly joined in the proceedings, finding that he had a direct and substantial interest because the deposit arose from the failed sale agreement and because he had actively opposed the application.
A significant feature of the judgment was the court’s criticism of the prolonged retention of the trust money. The judge noted that nearly nine years had passed since the deposit was first paid and no court order had ever prohibited the attorneys from releasing it.
During the hearing, counsel for the law firm confirmed that the R500,000 remained available in the trust account.
Judge Madima said the Legal Practice Council should have an interest in the matter given the lengthy period during which the money had been retained. The court ordered the firm to provide proof to both the court and the regulator that the funds remained in its trust account.
The judge also criticised both respondents for relying on procedural objections instead of addressing the substance of the dispute, describing their approach as a “Stalingrad strategy” aimed at frustrating the administration of justice.
The court found there was no valid justification for withholding the deposit while separate litigation over alleged arrear rental had remained dormant for approximately six years.
Although PS had also sought repayment of R81,854.22 in transfer fees, the court found a factual dispute regarding those funds and ruled that this claim would have to be pursued in separate proceedings.
As a result, the final order dismissed all preliminary objections raised by the respondents, upheld PS’s application, and directed Maseko Tilana Inc to pay the R500,000 deposit.
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Sinenhlanhla Masilela
iol.co.za
