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Normal practice or flawed routines?

29 October 2015

Normal practice or unsound and flawed routines

In Margalit v Standard Bank of South Africa and Another 2013 (2) SA 466 (SCA) the court stated that, in a claim against a conveyancer based on negligence, it must be shown that the conveyancer’s mistake resulted from failing to exercise a degree of skill and care that would have been exercised by a reasonable conveyancer in the same position.

Many conveyancers operate with a staff complement consisting of secretaries, candidate attorneys and sometimes paralegals (non-qualified staff) to assist them in the drafting of documents and the general running of conveyancing matters and the conveyancing department.

Modern technology, like e-mail communication, has made it much easier for conveyancers and their staff to communicate with their clients and to streamline the running of a usually busy conveyancing department.

However, too much reliance on modern technology and your competent staff – who might indeed have extensive experience in the preparation and registration of conveyancing transactions – may open up your conveyancing department to unnecessary and expensive professional negligence claims.

The duties and responsibilities of the conveyancer
The responsibility for all conveyancing matters, from the date you receive the instruction to the date you finally pay out the proceeds to the seller, always lies with the conveyancer, who needs to properly supervise the registration of all transactions and the correct payment of the proceeds. A conveyancer can never be heard to say that any problem that has arisen is the result of an error or omission on the part of any of his staff members (John Christie Fourie’s Conveyancing Practice Guide 2ed (Durban: LexisNexis/Butterworths 2004)).

It is, however, very clear from numerous professional indemnity claims reported to the Attorneys Insurance Indemnity Fund (AIIF) that conveyancers may have forgotten that certain functions cannot be delegated to non-qualified staff. A quick study of the applicable legislation will show that there are certain responsibilities that must and should always remain in the hands of the conveyancer.

In terms of s 15 of the Deeds Registries Act 47 of 1937 (the Act), certain deeds can only be prepared by a conveyancer. This includes –

  • deeds of transfer; 
  • mortgage bonds;
  • certificates of title; or
  • other certificates of registration.

All powers of attorney to transfer/mortgage, special or general powers of attorney, applications or consents, which are required to be lodged in the Deeds Registry, can be prepared by an attorney, notary public or a conveyancer. However, where such documents are prepared by a notary public or attorney, they must be countersigned by a conveyancer.

If one reads s 15A together with reg 44A of the Act, it is clear that a conveyancer, attorney or notary public who signs the prescribed preparation certificate on any document lodged for registration accepts, in broad terms, the responsibility for the correctness of the information set out in that document, as well as miscellaneous other matters, such as taking the responsibility for verifying that persons acting on behalf of companies, close corporations, trusts and other associations are duly authorised to act and that such institutions have the power and capacity to enter into the transaction concerned.

As Leach AJ stated in Margalit, ‘As I have said, a conveyancer should fastidiously examine all relevant documents’ (at para 29) and: ‘To avoid causing such harm, conveyancers should therefore be fastidious in their work and take great care in the preparation of their documents. Not only is that no more than common sense, but it is the inevitable consequence of the obligations imposed by s 15(A) of the Act as read with reg 44, both of which oblige conveyancers to accept responsibility for the correctness of the facts stated in the deeds or documents prepared by them in connection with any application they file in the deeds office’ (at para 26).

In terms of the Justice of the Peace and Commissioner of Oaths Act 16 of 1963 (the Commissioner of Oaths Act) a Minister may appoint any person or designate the holder of any office as a commissioner of oaths. A list of such persons, which includes an attorney, was published in GN 903 GG 19033/10-7-1998.

Section 7 of the Commissioner of Oaths Act provides:

‘Any commissioner of oaths may, within the area for which he is a commissioner of oaths, administer an oath or affirmation to or take a solemn or attested declaration from any person: Provided that he shall not administer an oath or affirmation or take a solemn or attested declaration in respect of any matter in relation to which he is in terms of any regulation made under section ten prohibited from administering an oath or affirmation or taking a solemn or attested declaration, or if he has reason to believe that the person in question is unwilling to make an oath or affirmation of such declaration.’

In terms of the regulations made under s 10 of the Commissioner of Oaths Act (GN R1258 GG3619/21-7-1972 (Amended by GN 1648 GG 5716/19-8-1977, GN R1428 GG 7119/11-7-1980 and GN R774 GG8169/23-4-1982)), ‘an oath is administered by causing the deponent to utter the following words: “I swear that the contents of this declaration are true, so help me God,” or in the case of an affirmation: “I truly affirm that the contents of this declaration are true.”

Before a commissioner of oaths administers to any person the oath or affirmation prescribed by the regulation he or she shall ask the deponent –

  • whether he or she knows and understands the contents of the declaration;
  • whether he or she has any objection to taking the prescribed oath; and
  • whether he or she considers the prescribed oath or affirmation to be binding on his or her conscience’.

Once the deponent acknowledges and confirms the above, the commissioner will administer the oath or affirmation, and the deponent will sign the declaration in the presence of the commissioner of oaths.

When certifying documents, a copy of a document, which must be certified as a true copy of the original, must be compared with the original document and the commissioner of oaths must make sure that the two documents are, in fact, the same. If the commissioner of oaths is sure that the copy is in fact a true copy of the original document and no unauthorised amendments have been made, he or she must stamp that he or she certifies that the document is a true copy of the original document and that there are no indications that the original document has been altered by unauthorised persons. Thereafter, the commissioner of oaths must append a signature together with his or her name and designation.

Normal conveyancing practice
In order to establish the correct information relating to the parties involved in a conveyancing transaction (e.g. the correct names, identity number, marital status, authority), which needs to be correctly reflected in any deed, conveyancers have developed several practices to source and verify this information. This includes, making certified copies of the parties’ identity documents and requesting the parties to sign various affidavits confirming their marital status, insolvency status, identity number and various other information.

This practice has also developed around the additional requirements stipulated in the Financial Intelligence Centre Act 38 of 2001 (FICA). In terms of FICA, firms of attorneys are accountable institutions and must, therefore, comply with all the legal requirements of FICA. A conveyancer needs to take all appropriate steps to properly identify and verify all natural and artificial or juristic persons involved in the firm’s conveyancing transactions. Such proof of identity and other information, which is required in terms of FICA, must be retained by the conveyancer for a period of five years.

Unsound and flawed routines
It is in the sourcing and verification of this information that numerous conveyancing departments appear to have lost the plot. This may consequently result in a professional negligence claim.

When perusing conveyancing files relating to professional negligence claims reported to the AIIF, it is clear that conveyancers and/or attorneys have forgotten their duties when commissioning documents. Often this is all too evident from the prominent e-mails sent to clients, found in the conveyancing files and attaching the relevant documents and affidavits with a request to sign and return same to the conveyancer’s office with copies of the client’s identity document and other relevant documents.

Alternatively the client does indeed come to the conveyancer’s office, but instead of meeting with the conveyancer, is greeted by the non-qualified staff member, who simply points out the places where the client needs to append his signature. Copies of identity and other relevant documents are accepted or made by the non-qualified staff member. The commissioning and certification of these documents are then done after the fact, which is in contradiction with the clear regulations made under the Commissioner of Oaths Act.

If the documents on which a conveyancer relies to ensure that the information in the deed is correct, are not properly commissioned or certified, then he can certainly not take responsibility for the correctness of the information in the deed when signing the preparation certificate in terms of s 15A of the Act.

The accounting and payment of the proceeds is often also left to non-qualified staff and payment authorisations are not properly checked. This has often led to incorrect payments, payments to incorrect parties, fraud and falling prey to scams. The over-reliance on electronic communication has also opened conveyancers up to being scammed.

These unsound and flawed routines, some of which are common practice within the majority of conveyancing departments, have resulted in numerous professional negligence claims against conveyancers. In many cases, immovable property has been transferred without the proper authority or even without the knowledge of the true owner of such immovable property.

The practice of these unsound and flawed routines amounts to a failure to exercise that degree of skill and care that would have been exercised by a reasonable conveyancer in the same position.

Zelda Olivier LLM (NWU) is a senior legal adviser for the Attorneys Insurance Indemnity Fund in Centurion.

Original article published in October 2015 De Rebus

Reader Comments: 2
Chris 31/10/2015:

Thank you Zelda, it is very important that these functions and responsibilities be highlighted regularly. This article should be compulsory reading for everyone involved with conveyancing, secretaries, estate agents, candidate attorneys and attorneys alike.

Andre 16/11/2015:

Good evening Zelda. Interesting article - and I am sure it caused some serious concerns in the conveyancing profession. My son recently gave his house for surety - all documents were signed in Klerksdorp, yet he is based in Cape Town. Sworn affidavits, no problem, witnesses, easy to solve - all signed by the conveyancer, under oath, without him being present. Trust money paid out to settle debt without authority - also no problem. Makes it hard to trust an attorney, but it must also be hard on the honest and hard-working professional attorney. Regards Andre

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