Fefelethu Enterprise (Pty) Ltd and Others v Gunter Attorneys Inc and Another (080522/2024) [2026] ZAGPPHC 54 (24 January 2026)

Key Facts

Transaction Type

Issues

• The court examined whether payments made by the Second Respondent from the trust account to third parties were lawful. The key issue involved interpreting the handwritten clause 'access to deposit per mutual consent' in clause 20 of the agreement. The court rejected the Respondents' interpretation that this meant mutual consent for inserting the clause, and held instead that it meant access to funds requires consent from the Applicants after disclosure of purpose and amounts. This constituted a breach of fiduciary duty.
• The court needed to determine whether the Applicants properly disclosed a cause of action in their Founding Affidavit. The Applicants claimed a fiduciary relationship existed between themselves and the Respondents based on the instruction to invest trust monies under Section 86(4) of the Legal Practice Act, which created a fiduciary duty. The court held that the pleadings, properly construed, embodied a claim based on breach of fiduciary relationship, and no specific label was demanded of the pleader.
• The court determined whether the Applicants' claim constituted restitution or damages, and whether damages were properly quantified. The court held that the claim is sui generis, not based on contract or delict, but on breach of fiduciary duty. Once breach is established, the trustee must return whatever was received in that capacity. The Applicants were entitled to judgment for the balance of the deposit paid into trust less amounts already repaid.

Holdings

Remedies

• The court ordered the First and Second Respondents to jointly and severally pay the Applicants R1 105 684.57 (One Million One Hundred and Five Thousand Six Hundred and Eighty Four Rand and Fifty Seven Cents) together with mora-tore interest from the date of this order to the date of payment.
• The court ordered the First and Second Respondents to pay the costs of the application jointly and severally on the scale as between attorney and client taxed on Scale B, excluding any wasted costs from Monday 19 January 2026.
• The Applicants' legal representatives are not entitled to charge any fees in relation to their appearance on Monday 19 January 2026.

Contract Value

Monetary Damages

Legal Principles

• The court awarded costs on an attorney and client scale (Scale B) as a punitive measure due to the Second Respondent's gross dereliction of fiduciary duties by paying approximately 80% of trust monies to third parties without consulting the Applicants. The court disallowed fees for the wasted court day on 19 January 2026, attributing those costs to the Applicants' legal representatives' failure to comply with the Consolidated Practice Directive 1 of 2024.
• The court established that a fiduciary relationship exists between the Applicants and Respondents under Section 86(4) of the Legal Practice Act, 28 of 2014, creating a fiduciary duty for the Respondents to safeguard trust monies. Breach of this fiduciary duty is unlawful and gives rise to a sui generis claim for restitution. The court held that the Respondents' interpretation of 'access to deposit per mutual consent' was absurd and that payments from the trust account without informed consent constituted a breach of fiduciary duty. The court found that the fiduciary duty exists ex lege and need not be specifically pleaded or labelled in affidavits.

Precedent Name

• Volvo (South African) (Pty) Ltd v Yssel
• Philips v Fieldstone Africa (Pty) Ltd & Another
• Natal Joint Municipal Pension Fund v Endumeni Municipality
• Law Society of the Cape of Good Hope v Randall
• Afrisure CC & Another v Watson NO & Another
• Jowell v Bramwell-Jones & Others

Key Disputed Contract Clauses

Cited Statute

• Consolidated Practice Directive 1 of 2024
• Legal Practice Act 28 of 2014

Judge Name

Passage Text

• "By virtue of the provisions of Section 86(4) of LPA read in conjunction with the terms of the instruction to invest trust monies, the Respondents are in a fiduciary relationship vis-a-vis the Applicants and therefore have a fiduciary duty towards Applicants, and that a breach of that duty is unlawful. The breach of a fiduciary duty gives rise to a claim which is sui generis, and not established in terms of contract or delict. Where the affidavit of the Applicants established the facts underlying the existence of such fiduciary duty without specifically labelling the Applicants' cause of action as such, the Applicants have established a cause of action against the Respondents. The Respondents' argument that the Applicants failed to establish a cause of action can therefore not be upheld."
• "The Second Respondent's interpretation of the words 'by mutual consent' as set out above is so absurd that it warrants the inference of malice when it is considered that the Second Respondent is a legal practitioner. In the premises, I make the following order: First Respondent and Second Respondent are ordered, jointly and severally the one paying the other to be absolved, to pay to the Applicants the amount of R1 105 684.57 (One Million One Hundred and Five Thousand Six Hundred and Eighty Four Rand and Fifty Seven Cents) together with mora-tore interest from date of this order to date of payment. First Respondent and Second Respondent are ordered to pay the costs of the application, jointly and severally, the one paying the other to be absolved, on the scale as between attorney and client taxed on Scale B, save and except for any wasted costs occasioned when the matter stood down on Monday, 19 January 2026."
• "The words '...by mutual consent' must be read to have a purpose in the agreement and, considering the aforesaid context and purpose of the document, can only relate to the fact that access to the funds may be obtained by consent of the Applicants. Informed consent clearly implies prior consultation and a disclosure of all relevant facts. In my view the words 'access to deposit per mutual consent' should therefore be interpreted to mean that the Respondents had to obtain consent from the Applicants for each and every transaction in respect of which funds were paid from the trust account, after having disclosed to the Applicants what the purpose of such intended payments were and what the amount of such intended payments were. Absent such consent, the payments constituted a breach of the Respondents' fiduciary duty."

Damages / Relief Type