The lure of a multi-million Rand commission for minimal effort made a Johannesburg attorney Julian Bartlett, the victim of an elaborate confidence trick. The sequel was a damages claim by him in the Johannesburg High Court against fellow attorneys Hirschowitz and Flionis.
Evidence at the trial was that an acquanintance of Bartlett’s, Karen Hardaker, told him she was due to earn a large commission as an intermediary in a offshore gold bullion sale in which the eventual buyers would be the Swiss Government refinery. She persuaded hem that if he could raise a ‘goodwill’ deposit of US$500 000 he would earn a commission of up to US$8m on the transaction which they would then share. The ‘goodwill’ deposit was meant to signify the buyer’s serious intention to clinch the sale. Bartlett believed this. As he did not have the necessary sum himself, he borrowed it. When he informed Hardaker she told him to deposit it in the trust account of Hirschowitz and Flionis, but not to communicate with them in any way. Bartlett wanted them to know the purpose of the deposit and that he was the depositor but she undertook to convey that on his behalf. Again he trusted her. He deposited the money in Rands, being R3.1m. The next day Hirschowitz and Flionis received a fax, apparently from Zurich, from a person signing himself Charlie F Gambino.
The fax instructed Alex Flionis to pay Karen Hardaker, Gambino’s ‘intermediary’, R310 000, and after deducting R5 000 for its fees to buy Kruger Rands with the balance which Gambino would personally come to collect. The fax was hand-printed in a very studied style, misspelt and in broken English. Despite that, Flionis carried out the Gambino instructions to the letter.
Meanwhile Bartlett awaited news of the gold sale. The bubble burst when Hardaker phoned him from overseas to say there was no gold sale after all. He contacted Flionis and received the inevitable news that the money had gone. Bartlett was sued by his lender and was obliged to concede to judgment. In turn he sued Flionis’s firm, alleging they were negligent in dealing with the money in their trust account without being reasonably satisfied as to the identity of the depositor and the purpose of the deposit. Bartlett told the story outlined above. Flionis did not give evidence. Whether Gambino existed was never proved.
The High Court found for Bartlett and awarded him damages of R3.1m Flionis’s firm appealed to the Supreme Court of Appeal. In the Supreme Court of Appeal Flionis’s negligence was conceded. What his counsel argued was that Bartlett had been negligent in a much greater degree and that in any case Flionis had not been told by Bartlett of the deposit when or just after he made it and there was therefore no legal duty owed to Bartlett such as made Flionis legally liable to him despite Flionis’s negligence.
The SCA found that Flionis was under such legal duty and that the firm was therefore liable to Bartlett in damages. However Bartlett was found contributorily negligent and his damages were reduced by 40 percent.