Ms. Ferekane’s Legal Position Regarding Failure To Invest Deposited Money

Overview of the Circumstances

This task will provide for the opinion to Ms Ferekane regarding her legal position concerning the fact that she instructed the attorney to invest the deposit that were made by her in terms of Section 78(2A) of the Attorneys Act 53 of 1979. This was done by her by the means of selecting the requisite option on the documentation that she was asked to complete regarding the purchase of a specific property. However, the attorney failed to invest the sum of money and kept the entire money just as a deposit.

Added to that the attorney also asked her to pay the transfer cost a week prior to the registry of the property. Ms Ferekane was absolutely unaware of this expense and expected to pay for the transfer cost from the interest earned by the amount deposited by her to the attorney. So, for that matter, she had to borrow an additional amount of R 40 000 as a personal loan (at 11% interest p.a.) to pay for the transfer cost.

The task is done in a manner that will aid Ms Ferekane to have an enhanced understanding of her present legal position and will also suggest for the course of action that might be taken ahead by Ms Ferekane in response to this occurrence.

1.1 Briefly write an opinion on Ms Ferekane’s legal position with reference to case law.

In regards to this matter, Ms Ferekane is the plaintiff as she has paid an amount of R2.5m to the trust account of the Green Attorneys on dated 1 July 2017 and have also instructed the attorney to invest her deposit by selecting an option on the documentation in in terms of statements that are there in the Section 78(2A) of the Attorneys Act 53 of 1979 that was asked for by the attorney[1].

Ms Ferekane intended to keep the entire amount in the trust account of the Green Attorneys on her behalf for the purpose of reserving a property that she planned to buy within the new developments in the Pro-Properties. Her expectation was that once this amount would be invested by the attorney as asked by her in the documentation, then that would earn back a specific amount of interest and with that she would manage to pay for the transfer cost and the additional conveyancing costs that would required in the near future for the purpose of further proceedings to be made in context of buying the property.

Legal Opinion on Ms. Ferekane’s Position

However, the Green Attorneys did not invest the money that was deposited by Ms Ferekane in their trust account. This fact however came into the knowledge of Ms Ferekane when the attorney asked her to pay for the transfer cost a week prior to the registry of the property so that they could proceed with the formalities of registering gthe property in her name on dated 29^th June 2018. Ms Ferekane was asked to make the payment one week prior to the date[2].

Thus, when she inquired that if the amount that she have earned from the investment of her deposit was enough to make the payment. It was also established that she was expected to earn an interest of 6.5% per annum[3]. But now when she was informed that the amount deposited by her was indeed never invested by them and also she had to make the payment of the the conveyancing costs for proceeding for the legal formalities regarding the purchase, she had to borrow an amount of R 40 000 as a loan and had to repay it at 11% interest rate per annum.

Had this amount been invested by the Green Attorneys as instructed by Ms Ferekane, then this additional amount of R 40,000 would not have to be borrowed by Ms Ferekane and also she would not have to repay for the same at a much higher anual interest rate. Instead there would remain some additional money earned from the deposits after paying for the transfer payments.

In such a situation, it was a major mistake from the end of the Green Attorneys that have failed to invest the money deposited by Ms Ferekane as it was instructed by her in the documentation which she had completed in time. It was also the duty of the Green Attorneys to go through the documentation that is a part of their terms and act accordingly. Had they acted as per the instructions given by Ms Ferekane, then Ms Ferekane would not have to borrow an additional sum and pay that back. Instead she could have paid for the conveyancing costs from the interest earned from the deposits and also there were chances that she would also get some amount back from the that would be left after incurring the conveyancing costs[4].

So, as per the present situation, due to the mistake made from the end of the Geeen Attorneys, Ms Ferekane had to suffer a loss and also borrow an additional amount of R 40,000 at a much higher annual interest rate. So, in such a case Ms Ferekane has the complete right to sue the Green Attorneys for refunding the entire sum that she expected to earn if the money deposited by her had been invested by the attorneys following her instructions[5].

1.2 Draft the Particulars of Claim to institute the action suggested to Ms Ferekane.

Ms Ferekane must claim for the amount that she would have earned by investing the deposited money at 6.5% per annum for 11 months. Approximately that would amount to a sum of around R 1,50,500 which would be sufficient enough for the payment of the conveyancing costs. So, in this case, Ms Ferekane must plan to take for the legal actions and sue the Green Attorneys for their failure to invest the deposits of Ms Ferekane as was instructed her in the documentation at the initial stage of making the entire deposits[6].

Particulars Of Claim

1. The Claimant is the owner of a new development from Pro-Properties. The claim is brought about against the defendant, Green Attorney who was supposed to invest the deposit amount of R2.5m that was made by the claimant at an annual rate of interest of 6.5%.
2. However, the Attorney failed to do so and the claimant had to borrow an additional amount of R 40,000 to pay for the conveyancing costs at 11% interest rate per annum.
3. Hence the claimant demands for the actual amount that would have been actually earned by the claimant if the sum of deposit had been invested by the defendant.

Conclusion

The requisite pieces of information were provided to Ms Ferekane within the entire task.

Reference List

Mark, Elliott, and Jason Varuhas. Administrative law: text and materials. Oxford University Press, 2017.           

Herring, Jonathan. Criminal law: text, cases, and materials. Oxford University Press, USA, 2014.

Andrew, Arthur. “A Good Rule, Poorly Written: How the Financial Crisis Highlighted the Inadequacy of IOLTA Rate Rules.” Cath. UL Rev. 64 (2014): 729.

Philip J, Griffin. “Of Laundering and Legal Fees: The Implications of United States v. Blair for Criminal Defense Attorneys Who Accept Potentially Tainted Funds.” U. Pa. L. Rev. Online 164 (2015): 179.

Ronald, Garfield. “When Homeowner Associations Borrow-What Attorneys and Lenders Should Know.” Colo. Law. 44 (2015): 51.

William D, Elliot. “Miscellaneous Topics concerning Code Sec. 6324 (a)(2) Transferee Liability, Payment vs. Deposits and Reasonable Reliance to Avoid Penalties.” Taxes 92 (2014): 15.

[1]Elliott, Mark, and Jason Varuhas. Administrative law: text and materials. Oxford University Press, 2017.

[2]Herring, Jonathan. Criminal law: text, cases, and materials. Oxford University Press, USA, 2014.

[3]Arthur, Andrew. “A Good Rule, Poorly Written: How the Financial Crisis Highlighted the Inadequacy of IOLTA Rate Rules.” Cath. UL Rev. 64 (2014): 729.

[4]Griffin, Philip J. “Of Laundering and Legal Fees: The Implications of United States v. Blair for Criminal Defense Attorneys Who Accept Potentially Tainted Funds.” U. Pa. L. Rev. Online 164 (2015): 179.

[5]Garfield, Ronald. “When Homeowner Associations Borrow-What Attorneys and Lenders Should Know.” Colo. Law. 44 (2015): 51.

[6]Elliot, William D. “Miscellaneous Topics concerning Code Sec. 6324 (a)(2) Transferee Liability, Payment vs. Deposits and Reasonable Reliance to Avoid Penalties.” Taxes 92 (2014): 15.