- The High Court in Johannesburg ordered a law firm to repay a R500 000 property deposit that it had held in trust since a property sale failed in 2017.
- The court rejected arguments that the purchaser did not have legal standing and allowed her to join her late husband's estate to the application.
- Judge Madima also directed the law firm to show both the court and the Legal Practice Council that the trust money is still available.
A law firm has been ordered to repay a R500 000 property deposit it has held in trust since a residential property sale collapsed almost nine years ago, with the High Court in Johannesburg finding there was no lawful basis for continuing to withhold the money.
Acting Judge Professor T Madima SC ruled in favour of Nomakhosazana Pama-Sihunu in her dispute with Maseko Tilana Inc and Bright Mbusiseni Tholithemba Shabalala, ordering the attorneys to return the deposit by 24 July 2026 and to provide proof to both the court and the Legal Practice Council that the funds remain in the firm's trust account.
Sale collapsed despite buyers meeting their obligations
The dispute dates back to June 2017 when Pama-Sihunu and her late husband agreed to purchase a property from Shabalala for R1.9 million. They paid a R500 000 deposit, secured finance for the balance of the purchase price and, according to the applicant, fulfilled all of their obligations under the agreement.
The transfer never took place after the seller allegedly failed to perform his obligations. Following the collapse of the transaction, the applicant demanded repayment of the deposit, but despite repeated requests over several years, the money remained in the trust account of Maseko Tilana Inc.
Respondents raised technical objections
Instead of addressing the merits of the claim, the respondents argued that Pama-Sihunu lacked legal standing because her late husband's estate had not been joined. They also contended that the second respondent had been wrongly cited in the proceedings.
During the litigation, Pama-Sihunu applied to join the estate of her late husband in her capacity as the representative appointed by the Master. Judge Madima rejected the objections.
The court held that the seller had a direct and substantial interest in the dispute because the deposit arose from the sale agreement and the conveyancing attorneys had retained the money on his instructions.
Court found purchaser had standing
Judge Madima found the applicant clearly had standing to demand repayment of the deposit because she was one of the purchasers under the sale agreement. The judge said, "The applicant has the standing to enforce the restitutionary rights arising from the failed sale and transfer of the property."
The court also concluded that any interest held by beneficiaries of the deceased estate was indirect and did not require them to be joined to the proceedings.
No justification for withholding trust money
The court found there was no court order preventing the attorneys from releasing the deposit.
Evidence showed that the applicant and her late husband repeatedly requested proof of any interdict authorising the continued retention of the money, but none existed. Judge Madima observed that the law firm had been unable to produce such an order.
The judgment states, "The first respondent has not been in a position to provide the court order. This is simply because there is no such order granted by the court."
The judge further noted that counsel for the attorneys confirmed during the hearing that the full deposit remained available in the firm's trust account.
Legal Practice Council drawn into dispute
Judge Madima expressed concern that the deposit had remained in trust for almost nine years after the property transaction failed. The judge said, "The first respondent should have no difficulty opening up its books to the Legal Practice Council to allay all doubts of the existence of the deposit in the first respondent's trust account."
The court also found that the attorneys had advanced no substantive defence explaining why they continued to withhold the money.
Judge criticises litigation strategy
In strong remarks, Judge Madima criticised the respondents for relying on preliminary objections instead of addressing the real dispute.
The judge described the approach as a "Stalingrad strategy" intended to frustrate the administration of justice and said the objections to the applicant's standing lacked merit. The court concluded that the applicant had been forced into lengthy litigation to recover money that should have been returned years earlier.
Court orders repayment
The High Court upheld the applicant's joinder application, dismissed the respondents' objections relating to misjoinder, non-joinder and legal standing, and ordered Maseko Tilana Inc to pay R500 000 to Pama-Sihunu by 24 July 2026.
The firm must also provide proof to both the court and the Legal Practice Council that the money remains in its trust account, regardless of any application for leave to appeal.
The first and second respondents were ordered to pay the legal costs jointly and severally on the attorney-and-client scale.
Get your news on the go. Click here to follow the Conviction WhatsApp channel.
