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[2017] ZAWCHC 49
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Du Plessis v Independent Regulatory Board for Auditors and Others (8572/2016) [2017] ZAWCHC 49; [2017] 3 All SA 137 (WCC) (26 April 2017)
Republic
of South Africa
IN THE HIGH COURT OF SOUTH AFRICA
(WESTERN CAPE DIVISION, CAPE TOWN)
Before: The Hon. Mr Justice Binns-Ward
Hearing: 22 March 2017
Judgment: 26 April 2017
Case No. 8572/2016
In the matter between:
FRANCINE ANN DU
PLESSIS
Applicant
and
THE INDEPENDENT REGULATORY BOARD
FOR
AUDITORS
First Respondent
ALAN DODSON SC
N.O.
Second
Respondent
THE DISCIPLINARY COMMITTEE OF THE INDEPENDENT
REGULATORY BOARD FOR
AUDITORS
Third Respondent
JUDGMENT
BINNS-WARD J:
[1]
The applicant, Ms Francine-Ann Du
Plessis, is an auditor registered as such in terms of the Auditing
Profession Act 26 of 2005
(‘the Act’). She
practised her profession as a director of a firm of public
accountants, Loubser Du Plessis Inc.
(‘LDP’), at
Stellenbosch. Together with one of her co-directors, Mr Petrus
Johannes (Pieter-Jan) Bestbier, she
was arraigned, in terms of ss 49
and 50 of the Act, on various charges of misconduct. As the
alleged misconduct predated
1 January 2011, the charges were
framed with reference to rule 2 of the ‘Old Disciplinary Rules’
promulgated under
the Public Accountants and Auditors Act 80 of 1991.
[1]
The practitioners denied that they had misconducted themselves in the
respects alleged. A hearing ensued before a disciplinary
committee. The committee was that established by the
Independent Regulatory Board for Auditors
[2]
(‘the Board’) in terms of ss 20(2)(f) and 24(2) of
the Act.
[3]
[2]
The charges brought against Mr Bestbier
were found by the committee not to have been proven, notwithstanding
the opinion that
it felt constrained to record that ‘the
conduct of LDP as a firm in relation to the audit of [of Ripple
Effect 3 (Pty)
Ltd’s] 2006 annual financial statements
left much to be desired’. The committee considered that
Bestbier, as
the responsible audit partner, had to ‘bear
ultimate responsibility for this’. But it concluded that
‘that
responsibility [did] not align with the particular
complaints that were brought against him’, and held that ‘[o]n
a
proper application of the requirement of procedural fairness, no
finding [could] be made … that any charge [had] been proven
against him’. Those remarks have resonance in the
circumstances of the current case, which, as will appear, is in
essence about the procedural fairness of the proceedings against the
applicant having regard to the findings of the committee measured
against the content of the charge sheet.
[3]
The applicant was found guilty on the
charges listed on the charge sheet as counts two (that she had been
party to a fraud on the
Department of Trade and Industry (‘the
DTI’)) and five (that she had breached her duty in terms of
s 45 of the
Act to report to the Board the occurrence of a
‘reportable irregularity’), and sanctioned accordingly.
She now
applies for the judicial review and setting aside of those
decisions. In attacking the conviction on the second charge,
the
applicant relies on what, in the language of the disciplinary
committee, might be termed a factual ‘non-alignment’
between the charge and the committee’s findings – in
other words, that she was convicted on matter that the charge had
not
called upon her to meet. The sanctions imposed by the committee
are impugned solely on the basis that they fall to be
set aside if
the attack on the convictions is upheld on review.
[4]
The
Board, which was cited as the first respondent, does not resist the
relief sought by the applicant in respect of the committee’s
finding on count five, but it opposes the application concerning the
verdict on the second charge. (The chairman of the committee
was cited as the second respondent and the committee itself as the
third respondent. The chairman and members of the committee
have not participated in the litigation.
[4]
)
The three ‘primary grounds’ upon which the Board opposed
the application were (i) that the applicant’s
alleged
reading of the charge sheet was incompatible with the language used
in it; (ii) that her alleged reading of the charge
sheet was
inconsistent with her own conduct and that of her legal
representatives in the hearing and (iii) that even if the applicant
had been convicted on the basis of facts not specifically referred to
in the charge sheet, the evidence had been before the committee
and
in the peculiar circumstances of the case there had been no prejudice
to her in the committee having taken it into account.
I
understood it to be implicit in the last-mentioned basis of
opposition that were to the court to find that the charge sheet had
been defective to the degree that it failed to comply with the
prescribed formalities, the Board’s position would be that
the
irregularity was not material in circumstances of the case; cf.
Allpay Consolidated Investment Holdings
(Pty) Ltd and Others v Chief Executive Officer, South African Social
Security Agency, And
Others
2014 (1) SA
604
(CC), at paras. 28-30 and 62. In oral argument, the Board’s
counsel submitted that the case raised in essence a single
question:
‘Was the applicant not afforded a fair hearing?’
Does the case
engage PAJA?
[5]
The application was framed in terms of s 6
of the Promotion of Administrative Justice Act 3 of 2000 (‘PAJA’),
it
being accepted by both sides that the decisions of the
disciplinary committee constituted ‘administrative action’
as
defined in that Act. The provisions of s 6 upon which
the applicant founded her application were –
(i)
subsection (2)(b) – that a mandatory and material procedure or
condition
prescribed by an empowering provision was not complied
with;
(ii)
subsection (2)(c) – that the committee’s findings were
procedurally unfair,
(iii)
subsection (2)(d) – that the committee’s findings were
materially influenced
by an error of law;
(iv)
subsection (2)(e)(iii) – that irrelevant considerations were
taken into account by
the committee in making its findings or
relevant considerations were not considered; and
(v)
(2)(f)(ii)(cc) – that the committee’s findings were not
rationally connected
to the information before it.
During
the argument of the case I queried whether the characterisation of
the committee’s decisions as ‘administrative
action’
was necessarily correct.
[6]
Both Mr
Newdigate
SC,
who (together with Mr
Jansen van
Rensburg
) appeared for the applicant
before the disciplinary committee and in these proceedings, and Mr
Marcus
SC,
who (together with Ms
Hofmeyr
)
represented the Board in this forum, supported the characterisation.
They did so on the basis that the decisions in question
were made in
the exercise of a public power under the Act by a statutorily
constituted body that qualified as an organ of state
and had had a
direct and adverse external effect on the applicant rights.
[5]
The decisions also did not fall within the exclusions in the
definition of ‘administrative action’ in s 1
of
PAJA. Those features are indisputable, but they do not end the
enquiry.
[7]
In raising the query, my mind was exercised
by the requirement that the decisions in issue – which were
plainly adjudicative
in character – had to be ‘of an
administrative nature’ within the meaning of PAJA. That
follows from the
defined meaning of ‘decision’ in s 1
of PAJA, which, in turn, is a critical component of the statutory
definition
of ‘administrative action’. The
requirement is the first of seven elements of the statutory concept
of ‘administrative
action’ identified by the
Constitutional Court in
Minister of
Defence and Military Veterans v Motau and Others
2014 (5) SA 69
(CC),
2014 (8) BCLR 930
, at para. 33.
[6]
In
Grey's Marine Hout Bay (Pty)
Ltd and Others v Minister of Public Works and Others
[2005] ZASCA 43
;
[2005] 3 All SA 33
(SCA),
2005 (6) SA 313
,
2005 (10) BCLR 931
, at
para 22, Nugent JA held that ‘[a]t the core of the
definition of administrative action is the idea of action (a
decision)
of an administrative nature
taken by a public body or functionary’.
[7]
[8]
Professor
Cora Hoexter has remarked, aptly in my view, that the ‘purport
of the phrase is not entirely clear’.
She discounts the
theory that it ‘could … be regarded as an attempt to
revert to the classification of administrative
functions themselves
as “judicial” and “quasi-judicial”,
“legislative” and “purely administrative”,
[8]
and to exclude those that are not “purely administrative”’.
[9]
The jurisprudential treatment of the statutory definition supports
that view. The judgments of the Constitutional Court
in
Minister of Health and Another NO v New
Clicks South Africa (Pty) Ltd and Others (Treatment Action Campaign
and Another as Amici
Curiae)
2006 (2)
SA 311
(CC) that characterised administrative law-making by way of
statutory regulations as ‘administrative action’ serve as
a prominent example. The diversity of the approaches by the
members of the court in that case to characterisation of the
action
in question in terms of PAJA highlighted, however, the difficulties
to which the statutory definition can give rise.
The division
in opinion between the members of the court in
Sidumo
and Another v Rustenburg Platinum Mines Ltd and Others
2008 (2) SA 24
(CC) as to whether the functions of the CCMA in terms
of the Labour Relations Act
[10]
are judicial or administrative in nature is perhaps an even more
pertinent example.
[9]
It
has been emphasised, with reference to s 33 of the Constitution,
that the object of PAJA is to codify the law of judicial
review in
respect of acts and functions that would have been characterised as
administrative under the common law; the purpose
of s 33 being
to entrench and strengthen the right to lawful, reasonable and
procedurally fair ‘administrative action’
in the sense of
the term as it was generally understood in South African law at the
time when the Constitution was adopted.
[11]
In para. 95 of his judgment in
New
Clicks
,
[12]
Chaskalson CJ remarked that ‘PAJA is the national
legislation that was passed to give effect to the rights contained
in
s 33. It was clearly intended to be, and in substance is, a
codification of these rights. It was required to cover the
field and
purports to do so’. Consistently with this view, the
learned chief justice appears, in para. 128 of
his judgment, to
have regarded the phrase ‘of an administrative nature’ as
pertaining to any function that would have
been characterised as
administrative action susceptible to judicial review under the common
law.
[13]
[10]
But how the statutory concept of
administrative action is to be delineated with regard to the
componential element introduced by
the phrase ‘of an
administrative nature’ remains imprecise. Absent
legislative improvement of the definition
(which seems unlikely after
so long), case law is going to be the main driver towards attaining
the desirable objective of more
certain characterisation.
[14]
The determination that government tender award decisions are
administrative action is a salient example of the heuristic
exposition of ‘administrative action’ within the meaning
of PAJA.
[15]
[11]
That the query to counsel was appropriately
raised finds support in the view expressed by Wallis J in
Sokhela
[16]
as to the ‘two important purposes’ served by the element
‘of an administrative nature’ in the statutory
definition; viz. (i) enjoining a case by case judicial
determination whether the public function entailed does constitute
‘administrative action’, for only if it does, and a
positive finding to that effect is made, is the court’s power
of judicial review under PAJA engaged;
[17]
and (ii) ‘to make it clear that the mere fact that an
exercise of public power or the performance of a public function
does
not fall within one of the exclusions in subparas. (
aa
)-(
ii
)
of the definition of “administrative action” does not
necessarily mean that the exercise of public power or the performance
of a public function in question constitutes administrative
action’.
[18]
[12]
In support of the characterisation of a
decision of the disciplinary committee as administrative action in
terms of PAJA, counsel
cited the recent judgment of Meyer J in
Defries v Independent Regulatory Board
for Auditors and Others
[2016] ZAGPJHC
352 (23 December 2016). The question was not investigated
in that case, however. The learned judge
merely recorded (at
para. 28) that ‘[t]here is no dispute that the committee’s
decision is reviewable under PAJA’.
[13]
Mr
Marcus
also
referred me to the judgment in
Graham
and Another v Law Society, Northern Provinces and Others (Road
Accident Fund Intervening)
2014 (4) SA
229
(GP). That matter concerned an application for remedial
directions by the complainants in a case of alleged misconduct by
two
attorneys. The application had allegedly been necessitated by
the failure of the relevant law society to deal with the
complaint
effectively. A point was taken by the law society that the
proceedings had not been competently instituted because
the
application had not been framed as a review in terms of s 6 of
PAJA.
[19]
Mothle J held (at para. 80) that ‘Where the Law Society
takes disciplinary steps against a legal practitioner,
it does so as
an organ of state in the exercise of a public power and in the
performance of a public function in terms of the Act.
The decision to
institute a disciplinary enquiry on a practitioner constitutes an
administrative action as defined in s 1 of PAJA’
(footnotes
omitted).
[20]
While the analogous import of the learned judge’s finding in
Graham
is
manifest, the approach enunciated in
Sokhela
enjoins a discrete consideration – certainly in the absence of
any pertinent precedent - of the nature of the functions of
the
disciplinary committee in the peculiar context of the different
statute that is applicable in the current case.
[14]
Even in the pre-Constitutional era,
disciplinary proceedings were long accepted to be amenable to
judicial scrutiny on review, especially
in respect of questions
arising out of alleged procedural unfairness and other breaches of
natural justice. This was so irrespective
of whether or not an
organ of state was involved.
[21]
But whether PAJA applies or not now requires a determination of
whether the administrative act concerned is a public law
function
characterised by all seven elements of the statutory definition.
If PAJA does not apply because the act in issue
does not qualify as
‘administrative action’, the review would be a matter to
be brought and determined under the common
law.
[15]
In the now largely disparaged
classificatory system to which resort was frequently had in the
common law administrative law cases
prior to decisions such as that
in
Administrator, Transvaal, and Others
v Traub and Others
1989 (4) SA 731
(A),
[22]
the functions of the disciplinary committee would be called
‘quasi-judicial’ – a description that in itself
served to distinguish the truly judicial functions of the judicature
from the adjudicative functions of tribunals that are not courts.
There are several examples in the case law in which the functions of
such, or comparable, creatures of statute exercising an essentially
‘judicial’ role have been characterised as administrative
in nature.
[23]
[16]
The application concerns a review, brought
on the grounds of alleged procedural irregularity and unfairness, of
disciplinary proceedings
before a statutory committee exercising a
public power. The statutory character of the disciplinary
committee is not, by
itself, enough to characterise its acts as
administrative in nature.
[24]
It is the character of the function concerned that is determinative
criterion. The functions of the disciplinary committee
are
amongst the mechanisms of the Act provided in order to obtain the
achievement of some of its objects.
[25]
The relevant objects include the maintenance of ethical standards in
the auditors’ profession, and dealing with infringements
and
other improper conduct by members of the profession. The
functions are an inherent feature of the Act’s regulatory
purposes for the ultimate protection of the public.
[26]
They do not entail policy-making. Their nature and statutory
context, including the provision in the Act for public
funding to the
extent necessary,
[27]
marks their character as unmistakeably those of an administrative
agency.
[17]
However, as O’Regan J emphasised in
Sidumo
supra,
[28]
the assessment of the function must occur cognisant of and sensitive
to its peculiar constitutional context. The disciplinary
committee’s judicial function has an administrative context in
that it is derived from a regulatory statute and is directed
at the
execution of some of the objects of the statute. In that sense
the nature of its functions is materially distinguishable
from that
of the judicial functions of the courts, which are directly and
originally founded in the Constitution and, congruently
with the
doctrine of separation of powers, thereby fundamentally distinguished
from those of the public administration. The
absence in the Act
of any provision for appeals against the decisions of the
disciplinary committee is also a telling factor weighing
in favour of
characterising its functions as administrative within the meaning of
s 33 of the Constitution, rather than judicial.
[29]
[18]
I am therefore satisfied, having considered
the question on the approach discussed above, that the impugned
proceedings in the current
matter were indeed of an administrative
nature and that the application was properly framed in terms of PAJA.
The factual and legal context of the complaint against the
applicant and the consequent charges tried before the disciplinary
committee
[19]
The court is not concerned in this
application for the judicial review of the disciplinary committee’s
findings with the merits
of the decision. This is not an
appeal. It is not the correctness of the conviction that is in
issue, but the legality
of the process in terms of which it was
obtained. The essential basis of the review application –
as mentioned, procedural
unfairness reflected in an alleged
non-alignment between the charge and the factual findings upon which
the conviction was founded
– nevertheless requires that
the factual allegations that formed the basis of the investigation
into the applicant’s
conduct and the evidence adduced at the
hearing be described in some detail.
[20]
The charges were brought against the
applicant and Mr Bestbier consequent upon a so-called whistle-blower
report by a former employee
of LDP, one Garth Muller. The
second charge concerned events that had allegedly occurred while Mr
Muller worked at the firm.
He ceased working for LDP in 2010.
Mr Muller had been unemployed for some considerable time at the
time he made the report.
His action in belatedly making the
report at that stage would appear to have been motivated by festering
personal grievances,
particularly against the applicant.
[21]
The whistle-blower report was not included
in the culled version of the record in the disciplinary proceedings
that was placed before
court in the review application. I have
gathered, however, that the substance of it was set out in the
affidavit deposed
to by Muller in April 2013 that was included in the
evidence. The New Disciplinary Rules of the Board that have
been in force
since 1 January 2011 require that any report or
complaint of improper conduct against a registered auditor shall be
on affidavit,
unless the chief executive officer of the Board or its
Director: Legal otherwise decides.
[30]
Inclusive of the annexures thereto, the affidavit ran to 53 pages.
[22]
The Act provides, in s 48, that the
Board must refer a matter brought against a registered auditor to the
investigating committee
appointed under section 20 if the Board, on
reasonable grounds, suspects that a registered auditor has committed
an act which may
render him or her guilty of improper conduct; or is
of the opinion that a complaint or allegation of improper conduct,
whether
prescribed or not, which has been made against a registered
auditor by any person appears to be justified. Whatever was
done
in compliance with s 48 is not apparent on the record in
the review. What does appear is that the Board put Mr Muller’s
affidavit to Ms Du Plessis and Mr Bestbier and requested
their response within 30 days.
[31]
The Board’s covering letter, dated 28 May 2013, warned
that ‘any explanation, answer or documentation’
furnished
by the practitioners in response might be used in evidence against
them. In their heads of argument before the
disciplinary
committee, the applicant’s counsel appositely referred to this
communication from the Board as the commencement
of ‘the
current disciplinary process’.
[23]
I shall first discuss the relevant content
of Muller’s affidavit and thereafter describe the response to
it that was submitted
on behalf of the practitioners. An
informed appreciation of the facts alleged in Mr Muller’s
affidavit would be assisted
by an understanding of certain of the
Act’s requirements in respect of audit work. I think it
would be fair to accept
that the applicant, as a registered auditor,
would have considered the affidavit, and any charge sheet arising
from the complaints
set out therein, with such an appreciation.
[24]
Section
44 prescribes the duties of registered auditors in relation to
audits. Subsections (1) to (3) thereof provide as follows:
(1)
(a)
Where a registered auditor that is a firm
is appointed by an entity to perform an audit, that firm must
immediately after the appointment
is made, take a decision as to the
individual registered auditor or registered auditors within the firm
that is responsible and
accountable for that audit.
(b)
The
first name and surname of the individual registered auditor referred
to in paragraph
(a)
must be made available to the entity on taking of the decision and to
the Regulatory Board on request.
(2) The registered auditor may not, without such
qualifications as may be appropriate in the circumstances, express an
opinion to
the effect that any financial statement or any
supplementary information attached thereto which relates to the
entity-
(a)
fairly presents in all material
respects the financial position of the entity and the results of its
operations and cash flow; and
(b)
are properly prepared in all material
aspects in accordance with the basis of the accounting and financial
reporting framework as
disclosed in the relevant financial
statements,
unless a registered auditor who is conducting the audit
of an entity is satisfied about the criteria specified in subsection
(3).
(3) The criteria referred to in subsection (2) are-
(a)
that the registered auditor has
carried out the audit free from any restrictions whatsoever and in
compliance, so far as applicable,
with auditing pronouncements
relating to the conduct of the audit;
(b) that the registered auditor has by
means of such methods as are reasonably appropriate having regard to
the
nature of the entity satisfied himself or herself of the
existence of all assets and liabilities shown on the financial
statements;
(c) that proper accounting
records in at least one of the official languages of the Republic
have been kept
in connection with the entity in question so as to
reflect and explain all its transactions and record all its assets
and liabilities
correctly and adequately;
(d) that the registered auditor has
obtained all information, vouchers and other documents which in the
registered
auditor's opinion were necessary for the proper
performance of the registered auditor's duties;
(e) that the registered auditor
has not had occasion, in the course of the audit or otherwise during
the
period to which the auditing services relate, to send a report to
the Regulatory Board under section 45 relating to a reportable
irregularity or that, if such a report was so sent, the registered
auditor has been able, prior to expressing the opinion referred
to in
subsection (1), to send to the Regulatory Board a notification under
section 45 that the registered auditor has become satisfied
that no
reportable irregularity has taken place or is taking place;
(f) that the registered auditor
has complied with all laws relating to the audit of that entity; and
(g) that the registered auditor
is satisfied, as far as is reasonably practicable having regard to
the nature
of the entity and of the audit carried out as to the
fairness or the correctness, as the case may be, of the financial
statements.
It is
apparent from the aforegoing that an auditor cannot lawfully give an
unqualified audit certificate in respect of the financials
of any
entity unless he or she, after obtaining all information, vouchers
and other documents which in his or her [reasonably formed]
opinion
were necessary for the proper performance of his or her duties, has
been satisfied, amongst other matters, that proper
accounting records
have been kept to reflect and explain the entity’s business
transactions. In the current case, Mr
Bestbier would have been
the ‘individual registered auditor’ referred to in
s 44(1)(a).
[25]
In terms of s 41(6)(b) of the Act, a
registered auditor may not ‘sign any account, statement, report
or other document
which purports to represent an audit performed by
that registered auditor, unless the audit were (sic) performed by
that registered
auditor, under the personal supervision or direction
of that registered auditor or by or under the personal supervision or
directions
of that registered auditor and one or more of the
partners, co-directors or co-members of the registered auditor, as
the case may
be, in accordance with prescribed auditing standards’.
Section 41(8) provides ‘Nothing in subsection (6)(b) prevents
any registered auditor from signing the firm name or title under
which the registered auditor practises’.
[26]
It is necessary to treat of Muller’s
affidavit only insofar as it bore on matters concerning the second
charge and the findings
of the disciplinary committee in relation to
that charge, bearing in mind, however, the factual interconnection
between the first
and second charges. I shall deal with the
content of the second charge in detail presently. It suffices
at this stage
to record that it had to do with the treatment of the
reported income of Ripple Effect 3 (Pty) Ltd (‘Ripple
Effect’
or ‘the company’) in the audited financial
statements of that company for its 2006 financial year and the use
thereof
in representations made to the DTI. The period in
question extended over 14 months ending on 30 April 2006.
This
was due to a change during the reporting period of the company’s
financial year-end from 28 February to the end of April.
[27]
Ripple Effect was an applicant for an
incentive grant from the DTI. To qualify for the grant it had
to prove that its business
had generated more than a stipulated
minimum turnover in the 2006 financial year. The application
form contained provision
for an auditor’s certificate
confirming the applicant entity’s reported turnover. The
company was a client of
LDP and the auditing work in respect of its
2006 financial report was undertaken by Mr Muller under the auspices
of Mr Bestbier,
as the responsible engagement partner.
[28]
The moving spirit behind Ripple Effect was
Mr Dennis Tucker, who was the company’s sole director.
Notwithstanding Mr
Bestbier’s role as the audit partner, Ms Du
Plessis was responsible, as director, in respect of managing the
client relationship
between LDP and Mr Tucker. She also dealt
with the tax affairs of Mr Tucker and the company.
[29]
The business of Ripple Effect was the
ownership and operation of a guesthouse in Plettenberg Bay. As
will appear, Mr Tucker
and his friends and business associates
were the main source, by far, of the guesthouse’s business.
They used its facilities
at Mr Tucker’s instance for no cash
consideration. Indeed, the company’s cashbook for the
period under consideration
reflected receipts totalling only R42 892,
which would appear to have been the extent of the company’s
turnover in respect
of transactions with unrelated parties.
[30]
As mentioned, the company had applied for
an incentive grant for small and medium businesses from the DTI.
It had actually
obtained a grant in the amount of R820 750 from the
Department in respect of its 2005 financial year on the basis of a
reported
turnover of only R150 703. It used the services
of a specialist advisor, Formentco Consultants (Pty) Ltd, a company
that appears to have been based in Pretoria, to assist it in respect
of the submission of its application. Formentco initially
advised that, in order to qualify for the further grant in the amount
of R469 000 that Ripple Effect was seeking in respect
of the
2006 financial year, the company’s audited financial statements
would need to reflect turnover for the year in the
amount of at least
R503 000. Mr Muller averred that he had been made aware of
this requirement while he was in the course
of doing the audit work
for the company’s 2006 financials. The requirement was
communicated in an email from Anna-Mart
Geyser of Formentco to Mr
Tucker’s personal assistant, Jacqui Du Triou, dated 23 January
2006, a copy of which was attached
to Muller’s affidavit.
[31]
In his affidavit to the Board, Mr Muller
stated that he had discussed the DTI’s requirements with
Mr Bestbier.
Muller made the following averments in that
respect (at paras. 59-62):
59.
Mr Bestbier and I discussed the fact that, on Ms Du Plessis’
instruction,
LDP had assisted the Company in fabricating fictitious
income in its previous financial year (2005) in order to meet the
minimum
requirements for it’s (sic) 2006 DTI Grant Application.
60.
Mr Bestbier informed me that LDP would again assist the Company in
fabricating
fictitious income for the 2006 financial year in order to
meet the minimum requirements for its 2006 DTI Grant Application.
61.
Mr Bestbier instructed that I amend the draft AFS by writing the
following
adjusting journal:
DT
DENNIS TUCKER LOAN ACCOUNT
R465 000
CR
TURNOVER
R465 000
62.
The Company’s total turnover increased from R42 982 to
R507 892
for the 2006 financial year.
It can
be inferred from Mr Muller’s affidavit that his evidence was
that he had complied with Mr Bestbier’s reported
instruction. In the result, it may also be inferred (and indeed
it was common ground) that Ripple Effect’s draft financials
would have then reflected the increased turnover figure.
[32]
At that time (2006) the annual turnover
threshold before an enterprise was required to register as a vendor
for value-added tax
purposes was R300 000. Ripple Effect
had not been registered as a vendor by 2006.
[33]
Mr Muller attached to his affidavit an
email, dated 7 September 2006, from Ms Du Plessis to Mr
Tucker in which she raised
the VAT registration implications of the
company’s turnover exceeding R300 000. The email
read as follows:
Hi Dennis
We have the signed financials ready for you for 2006 but
before I courier[,] the following:
1. The rental of a
guesthouse is classified as a “rental establishment” in
terms of the
VAT Act – refer my email regarding Tirade Props.
2. As soon as the turnover
of a rental establishment exceeds R300 000 one is required to
register
as a VAT Vendor.
3. Ripple Effect has gone
from a turnover of R150 000 to R500 000 within one year.
4. We are therefore
required to register the Company for Vat purposes with effect from
the 28th February
2006 at the latest.
5. We are then required to
pay over R70 000 as VAT and as we shall be late in paying it
there
will be R7 000 penalty plus interest on R77 000 for
the 8 months until end of September. We can ask for the penalty
to be waived based on first registration etc and may be successful
but do not bank on it. The interest will be leviable in
any
event. We may of course also claim input Vat on the costs
incurred and if so we should maybe backdate registration, the
penalty
will still be the same but interest will increase.
6. Do you want me to
proceed with the registration or do you want to reduce the 2006
turnover below
R300 000, register now and then increase the
turnover for the 2007 year?
7. I am not sure of what
effect this will have on your DTI claim and that is why I am asking?
(sic)
Please revert asap so that I can finalise the accounts.
Regards
Fran Du Plessis
[34]
Mr Tucker sought Ms Du Plessis’
advice on which of the suggested options Ripple Three should take.
A copy of Ms Du Plessis’
reply by email, also dated 7 September
2006, was attached to Muller’s affidavit. It read:
If
it does not effect (sic) your DTI (sic) I would reduce it to say
R295 000 and then register with effect from 1
st
May
[the beginning of the company’s 2007 financial year]. If,
however, you lose part of your claim I would pay the
Vat and penalty.
[35]
The
chain of email correspondence attached to Muller’s affidavit
reflected that the question concerning the effect of a reduction
in
the company’s reported turnover on the its DTI claim was
referred to Ms Anna-Mart Geyser of Formentco for comment.
Ms
Geyser responded by email on 8 September 2006 as follows:
The
DTI requires a minimum Turnover for each application submitted to
them depending on the investment amount. The minimum
turnover
for year 1 and year 2 always differs a lot according to the DTI’s
guidelines.
The
turnover of R150 000 enabled us to claim for 1 year and 3
quarters which will amount to R820 750 which will be paid
out in
the next 4 weeks. The amount of minimum R503 000 turnover
which is needed in Feb 2006 is required to enable us
to claim for the
next 12 months (Last quarter year 2 and 3 quarters up to Nov 2006)
which will amount to R469 000. (As
per your auditors notes
then you will have to register for VAT to get the R469 000.)
To claim for the last quarter based
on Feb 2007 financials next year,
there is no minimum turnover required as in year 1 and 2.
(It
may be deduced from the content of Ms Geyser’s email that
she must have been under the misapprehension that Ripple
Effect’s
2006 financial year had ended at the end of February 2006.)
[36]
When
Ms Geyser’s email came to Ms Du Plessis’ notice, she
emailed Mr Tucker and his personal assistant on 8 September
2006,
with a copy to Muller, saying:
Hi Jacqui/Dennis quite obviously we should stick with
R503 000 (Where does the R500 000 come from??) and register
for
Vat etc. Please confirm and also whether we should make the
turnover R503 000.
Garth please note.
[37]
It is notable that the content of Ms Du
Plessis’ aforementioned emails shows that a consistent theme is
her concern about
the relationship between the reported turnover of
Ripple Effect and the company’s application for a grant from
the DTI.
[38]
Mr
Tucker thereafter sent an email to Ms Du Plessis, copied to Muller,
instructing them to proceed with the company’s registration
for
VAT purposes. It was common ground that the audited financial
statements of Ripple Effect in respect of the company’s
2006
financial year were signed by LDP on 12 September 2006. In
the absence of Mr Bestbier, Ms Du Plessis signed the
auditor’s
certificate using the firm’s name. In doing so, Ms Du
Plessis purported to act in terms of s 41(8)
of the Act.
[39]
Mr
Muller’s affidavit to the Board continued the narrative by
turning to events in December 2006, when he received the following
email concerning Ripple Effect’s DTI claim from Ms Geyser of
Formentco on the first of that month:
Dear Garth
I received the financials for Ripple Effect yesterday.
As discussed with Jacqui [Mr Tucker’s personal assistant] the
turnover
for 12 months had to be +- R503 000. We also did
not know that the year end changed to April – therefor (sic)
maybe the misunderstanding?? Please advise about a possible
solution.
If the following can also be amended in 2006 financials
it would be great otherwise this requirement must be met in 2007
financials.
HR (salaries, wages and directors emoluments) must be
30% of total operating costs (including water and lights,
depreciation and
rent). There is no mention of any HR expenses
in 2006??
Please
contact me in this regard.
(The committee appears, understandably in my view,
to have considered this request to have been extraordinary. On
the assumption
that it was accepted that the audited financials
signed off by the applicant on 12 September 2006 had been audited in
compliance
with the auditor’s duties in terms of s 44 of
the Act,
[32]
quite how was the auditor now expected to find additional turnover
and previously unreported expenses? It is noteworthy that
there
was no indication that in the discussion that Ms Geyser reported to
have had with Ms Jacqui Du Triou had it been suggested
that the
entity’s reported turnover had been understated or that
expenses actually incurred had been omitted in the company’s
audited income statement.)
[40]
Mr Muller’s affidavit proceeded as
follows (at paras. 97-99):
97. As I was not
authorised to answer any of these questions, I discussed these
matters with
Mr Bestbier.
98. Mr Bestbier
informed me that the Company would simply need to declare director’s
remuneration
to Mr Tucker for the 2006 tax year. LDP would then
be required to amend Mr Tucker’s personal income tax return to
account
for the additional income. In Mr Bestbier’s word
(sic): ‘
This was an easy problem to fix
’.
99. Mr Bestbier was
reluctant to make any decisions regarding the further addition of
fictitious
income. Mr Bestbier instructed me to confirm with Ms
Du Plessis directly whether the turnover should be increased again
and
whether it should be done in the same manner as the turnover was
originally increased from R42 892 to R507 892.
[41]
Mr Muller
averred that he passed on Ms Geyser’s email of 1 December to
Ms Du Plessis under an email dated 4
December 2006.
The covering email from Muller to Du Plessis (a copy of which
was attached to Muller’s affidavit)
went as follows:
Hi Fran
Please see email below [Ms Geyser’s aforementioned
email of 1 December].
Turnover
The turnover is currently R507 892. Should I
increase it to R550 000 against Dennis’ loan account for
debtors?
Salaries & wages
Currently no provision has been made for any salaries,
wages or director’s remuneration. This is solved easily
by declaring
director’s remuneration of R115 000. If
Dennis carries this in his personal capacity, he would have an extra
tax
liability in his own name at 40%. The company would also
save 29% on the same amount. Dennis does not own 100% shares
in
this company. Could you please confirm with him the amounts to
be declared as director’s remuneration and in whose
name. (We
need at least R115 000 in total)
Kind regards
Garth
[42]
Ms
Du Plessis reacted to Muller’s email of 4 December by sending
an email to Muller and Tucker’s personal assistant,
Jacqui Du
Triou, later the same day, in which she said:
Jacqui/Anna Mart we can still change the 2006 AFS as we
have not submitted it anywhere.
Will
you please peruse Garth’s suggestions and get back to us.
Anna Mart will Director’s remuneration suffice
or is the
company expected to employ outside workers.
The email was copied to Ms Geyser.
[43]
Ms
Geyser responded by email (apparently addressed only to Ms Du
Plessis) shortly afterwards, as follows:
Goodday (sic)
Herewith our comments:
Turnover should reflect +- R590 000 as the
financials is (sic) for 14 months and the turnover for 12 months must
be +-R503 000.
Please change the heading in the income statement from
rent received to Revenue.
To meet the HR requirement you can reflect either
salaries and wages / directors emoluments of +-R65 000, but then
the figures
for depreciation and interest received must stay the in
place (sic) and not change.
Thank you for your assistance.
Regards
Anna-mart
(No indication was given of there having been any response from Mr
Tucker or his personal assistant.)
[44]
Ms Du Plessis replied thanking Ms Geyser
for her comments. She forwarded Ms Geyser’s email to
Tucker’s assistant
and to Muller.
[45]
It would be striking to any critical
reader, I think, that none of the emails exchanged concerning
material changes to the company’s
reported turnover and
operating expenses in its already signed audited financial statements
was addressed to Mr Bestbier,
as the engagement partner for the
audit.
[46]
After
treating of the abovementioned email exchanges, Mr Muller’s
affidavit proceeded to set out the following allegations
(in paras.
109, 114, 115, 117-120 and 123):
109. On or
about 4 December 2006 Ms Du Plessis instructed that I amend the
Company’s
2006 AFS with the following adjusting journals:
DT DENNIS TUCKER
LOAN ACCOUNT
R85,000
CR
TURNOVER
R(85,000)
DT DIRECTOR’S
EMOLUMENTS
R70,000
CR DENNIS TUCKER
LOAN ACCOUNT
R(70,000)
… …
114. After the
abovementioned journals were passed, Ms Du Plessis instructed that I
reprint
the 2006 Audited Annual Financial Statements.
115. During
the month of December 2006 Ms Du Plessis personally, and in my
presence, signed
the “REPORT OF THE INDEPENDENT AUDITORS”
to the Audited Financial Statements of Ripple Effect3 (Pty) Ltd for
the 14
months ended 30 April 2006.
… …
117. Ms Du
Plessis was not authorized to sign the abovementioned Auditor’s
Report
on behalf of Loubser Du Plessis Inc ….
118. Ms Du
Plessis took this action as Mr Bestbier was unavailable on the day
the reprinted
AFS needed to be signed.
119. When Ms
Du Plessis signed the Auditor’s Report in December 2006 she
remarked
to me that she might as well sign the report because if the
truth ever came out, it would be the least of her problems.
120. Ms Du
Plessis then personally backdated her signature by completing the
date as “12/09/2006”.
… …
123.
This back-dating was also done in my presence.
[47]
Mr
Muller’s affidavit also dealt with certain events flowing from
an email sent to Ms Du Plessis (and copied to himself)
on 10
January 2007 by Mr Gerrit Potgieter of Formentco. A copy of the
email was attached to the affidavit. It went
as follows:
Dear Mr (sic) Du Plessis
Please find attached the SMEDP claim for your perusal
and signature.
If you are in agreement with our workings, you are
requested to please initial each page (pg.1-9), the asset list and
also to sign
in full on page 10 at the appropriate space.
Annexure B as well as the letter in respect of the
Tucker Boys Trust [a shareholder of Ripple Effect] must be
transferred onto your
letterhead and signed in full.
We trust you will find this in order.
Please do not hesitate to contact me if you have any
queries.
G. Potgieter
[48]
It is evident that the DTI claim form in
respect of Ripple Effect’s grant application was attached to
Potgieter’s aforementioned
email. Page 10 of the claim
form contained a ‘DECLARATION BY THE EXTERNAL AUDITOR /
ACCREDITED PERSON’.
This was the place on the page at
which Potgieter wanted Ms Du Plessis to sign in full. The
declaration read:
I
hereby declare that the information submitted with this claim is true
and fair and I have initialled each page of this form to
this
effect. I declare that the financial statements is (sic) final
and correct and that the financial statements used to
prepare the
claim is (sic) the same as those submitted to South African Revenue
Services.
The
copy of the (unsigned) claim form, attached as annexure N to Mr
Muller’s affidavit, reflected (on page 8 thereof)
that
Ripple Effect’s qualifying revenue was ‘R508 193*’.
The asterisk referred to a note or postscript
that read ‘R592 892
* 12/14 = 508 193’. Mr Muller averred that the
signed claim form and accompanying
documents were couriered later to
an address in Pretoria provided by Mr Potgieter in an email dated
16 January 2007.
[49]
Muller’s affidavit made various other
factual allegations. It is unnecessary to describe them as they
did not in any
way identifiably pertain to the subject matter of what
subsequently became the second charge on the charge sheet put to Ms
Du Plessis
and Mr Bestbier, or the findings that the
disciplinary committee made in respect of that charge. The
clear import of
Mr Muller’s aforementioned allegations was that
Ms Du Plessis had been party to an amendment of Ripple Effect’s
financial statements to misrepresent the company’s financial
results for the purpose of supporting its DTI grant application.
This, by inflating turnover by R85 000 and by reflecting an
expense in respect of director’s emoluments.
The applicant’s response to the content of Muller’s
affidavit
[50]
The practitioners responded through their
attorneys to the allegations of misconduct set out in Mr Muller’s
affidavit.
The response, set out in a 22-page letter dated 31
August 2013, pointed to the time lapse since the alleged events and
highlighted
the prejudicial effects of the delay, most notably the
destruction in the meanwhile of much of the relevant documentary
material,
including the relevant working papers in respect of the
audit. It denied any wrongdoing or improper conduct as alleged
by
Mr Muller.
[51]
The allegation that Ms Du Plessis and Mr
Bestbier had been party to reporting ‘fictitious income’
of Ripple Effect was
expressly denied. It was pointed out that
the guesthouse had been used by Tucker and his family and his friends
and business
associates and asserted that as ‘Tucker should
have paid for the accommodation in the guesthouse … a
reasonable price
for such accommodation had to be declared as part of
Ripple Effect’s turnover’.
[52]
The attorneys’ letter proceeded ‘The
turnover was therefore made up of amounts paid by unrelated third
parties as well
as reasonable amounts that Tucker had to pay for the
use of the guesthouse by his family, friends and business
associates.
The transactions between Ripple Effect and Tucker,
his family, friends and business associates were not fictitious, and
it was
responsibility of Tucker, in his capacity as director of
Ripple Effect, to determine a reasonable amount attributable to those
transactions.’ It was stated that the use of the
guesthouse by Tucker had not been previously accounted for ‘and
this resulted in the low initial turnover reflected in the 2006 draft
financial statements prepared by Muller … An adjustment
was
therefore necessary to account for this use’. (That might
account for the statement of turnover in the amount of
just under
R508 000 in the financial statements signed in September 2006,
but it did not address the amendments effected after
the exchange of
emails in December 2006.)
[53]
The attorneys’ letter argued that
there were a number of ways in which the adjustment in respect of
turnover could be effected.
One of them was by debiting
Tucker’s loan account in the company and crediting the
company’s turnover commensurately.
Insofar as this was
how the required adjustment was effected, it was suggested that the
email correspondence attached to Muller’s
affidavit showed that
it had been done on Tucker’s instructions. (This appears
to have been a reference to the email
from Tucker described in
para. [38]
above.) It was
contended that it was reasonable for LDP to have received these
instructions bearing in mind that Tucker, as
sole director, had been
‘responsible for maintaining adequate financial records and for
the internal financial control of
the company’. The
attorneys’ letter noted that the financial statements were ‘the
responsibility and prerogative
of its directors’. It was
stated that there could be ‘no notion of fictitious income as
the income was clearly
derived by Ripple Effect’.
[54]
The applicant’s attorneys pointed out
that the company had declared the amount ‘received’ from
Tucker on the basis
of the debiting of his loan account as part of
its gross income and paid income tax thereon. (According to the
finally adjusted
financials, the income tax paid was in the amount of
R11 529.) The reported turnover had also resulted in the
company
complying with the resultant obligation to register as a
vendor in terms of the VAT Act. It was stated that the company
had
been subject to two VAT audits by the tax authority, in which
everything had been found to be in order.
[55]
Dealing with the aforementioned email
correspondence in September 2006 between Ms Du Plessis and Tucker in
respect of the registration
of the company as a vendor, the attorneys
contended that ‘[i]t is clear from the email that Du Plessis
does not know specifically
how the turnover of Ripple Effect affects
the DTI claim’. The attorneys’ letter proceeded in
this respect (at
para. 5.3):
Ripple
Effect’s turnover in relation to the transactions with Tucker
and his associates was determined by three factors: (a)
the number of
guests, (b) the number of nights and (c) the rates charged per guest
per night. The number of guests and the
number of nights are
facts that cannot be changed. The rates per guest per night,
however, were determined in his discretion
by Tucker – provided
the rates appeared to fall within a reasonable range. It was on
this basis that Du Plessis asked
Tucker in this email if he wanted to
reduce the turnover of Ripple Effect. Ultimately this did not
happen and Ripple Effect
registered for VAT with retrospective effect
and all amounts due to SARS in this regard were duly paid.
(In
her evidence before the disciplinary committee, Ms Du Plessis
asserted that this part of her attorneys’ response to the
Board
had been incorrect. The question was really, she asserted, a
question of deciding whether part of the value received
by Tucker
from his personal use of the guesthouse should not be reflected as a
fringe benefit provided by Ripple Effect taxable
in his hands.
The value of the fringe benefit given would not be reflected as part
of the company’s turnover.
The applicant’s email,
however, made no reference to the fringe benefit alternative –
which, as she acknowledged in
her oral testimony, would have had
income tax implications for Tucker personally and PAYE-penalty-and-
interest implications for
the company – it referred only to the
possible effect of a reduction in turnover below the VAT registration
threshold on
the company’s application for a DTI grant.)
[56]
Dealing with the aforementioned exchanges
of emails between Formentco, Muller, Tucker’s personal
assistant and Ms Du
Plessis in early December 2006, the
applicant’s attorneys stated (at paras. 3.1.24 –
3.1.26 of the letter):
3.1.24
As Tucker was the director of Ripple Effect, he was responsible for
maintaining adequate accounting
records and for the internal
financial control of the company. It was therefore reasonable
for our clients to have received
instructions from him via Ms Jacqui
Du Triou, Tucker’s personal assistant (“Du Triou”)
and Anna-Mart Geyser (“Geyser”),
an employee of
Formentco. In email 018, Annexure J to the Affidavit, on 4
December 2006, Geyser requested that the turnover,
the heading in the
income statement, and remuneration in the 2006 financial statements
be amended. On the same day, Du Plessis
responded that the
financials have not been submitted anywhere and therefore could be
changed. At no point in time did Du
Plessis and/or Bestbier
instruct Muller and/or any employee of LDP to pass journal entries in
respect of Ripple Effect without
the requisite instruction and/or
consent from Tucker or his agents. Du Plessis only deemed the
passing of the journal entries
aforementioned as being appropriate in
light of the fact that the guesthouse in question was indeed used by
Tucker, his friends,
family and associates.
3.1.25
In addition to the above, our clients submit that it was Muller
himself that amended the 2006 financial
statements before same were
issued. In email 014 on page 26 of the Affidavit, Muller
proposes the idea of amending the 2006
financial statements of Ripple
Effect as per paragraph 3.1.20. Therefore the allegation that
our clients proposed the passing
of the journal entries in order to
create “
fictitious income”
is denied. To
illustrate this point, and to support the notion that Muller has
conveniently appended certain correspondence
to reflect badly on our
client, we hereby attach a thread of emails, attached hereto, marked
“l”, pages 138 to 140
between Muller, Geyser and Du
Plessis. The thread of emails clearly indicates that Du Plessis
was, insofar as the turnover
of Ripple Effect is concerned, guided by
Muller and Geyser.
3.1.26
Our clients therefore submit that there was no improper conduct by Du
Plessis, Bestbier and/or LDP
in recording the journals in their audit
software in order to amend the financial statements in accordance
with Tucker’s
instructions as in 3.1.11 above as this was
simply done to reflect the correct positions.
[57]
As to the signature of the auditor’s
report in respect of the company’s 2006 annual financial
statements, it was stated
that Ms Du Plessis had in fact signed the
report, not in her own name but in that of the firm, LDP. It
was contended that
that was permissible in terms of s 41(8) of
the Act read with section 150.5 of the Code of Professional Conduct
issued under
the Act.
[33]
The allegation at para. 119 of Muller’s affidavit (quoted
in paragraph [46]
above) was ‘vehemently
denied’.
[58]
The alleged backdating of the auditor’s
report, and Muller’s allegations concerning the circumstances
in which that
happened, were also denied.
[59]
The attorneys’ letter recorded (with
reference to annexure N to Muller’s affidavit, which, it will
be recalled, was
an unsigned copy of the DTI claim form couriered to
Formentco in February 2007) that they had been unable to obtain a
signed copy
of the DTI claim form from Formentco. In addition,
it was pointed out that, as the complaint had been made more than
five
years after the events, the audit file was no longer available.
(It was common ground that LDP had not been required to preserve
the
audit file beyond five years.)
[60]
The letter, having noted that Muller was
attempting to implicate Du Plessis and/or Bestbier and/or LDP as
having individually or
collectively ‘conspired to defraud the
DTI insofar as Ripple Effect’s claim for the DTI grants are
concerned’
placed on record (in para. 6.1.3) that:
Du
Plessis had no knowledge of DTI’s requirements insofar as the
grant was concerned. Her only involvement with Ripple
Effect
subsequent to having signed the Auditor’s report [i.e. on 12
September 2006] was to register Ripple Effect for VAT
purposes as is
evident in her email to Tucker of 7 September 2006 (refer to Annexure
F of [Muller’s affidavit] as well as
the email to [Jacqui] Du
Triou on 8 September 2006 where she questions where the R500 000
comes from (refer to Annexure G
of the Affidavit).
(This
was plainly incorrect, for Ms Du Plessis’ advice in
September 2006 that the company should register as a vendor
for VAT
purposes with effect from 28 February 2006 had been expressly
predicated on the information provided to her by Formentco
concerning
the DTI’s turnover requirements for the incentive grant.
She was similarly informed in December 2006 of
the amendments
required to the company’s (signed) 2006 financials if the
qualifications for the DTI grant were to be satisfied.)
The second charge
[61]
At the end of October 2014, the Board
formally notified the applicant and Mr Bestbier that a disciplinary
hearing would be convened.
The hearing commenced on 20 April
2015. The Board’s notification of the hearing had
attached to it, amongst other
things, a charge sheet. Section
49 of the Act prescribes that a charge sheet must inform the subject
of the disciplinary
proceedings of various things. Of relevance
in the current case is the requirement, in terms of s 49(3)(a),
that the
charge sheet ‘must inform the registered auditor
charged of the details and nature of the charge’. The
requirement
in s 49(3)(a) is echoed in subrules 4.10.1 and
4.10.2 of the New Disciplinary Rules.
[34]
[62]
Although only the second charge is germane
to the current case, it reads sensibly only if construed together
with the first charge
– as the applicant indeed acknowledged in
her founding affidavit. Those charges, which were set out in
paragraphs 4
to 7 of the charge sheet, read as follows (Ms Du
Plessis was ‘the First Respondent’ and Mr Bestbier, ‘the
Second Respondent’):
4.
The First Charge
4.1
The First Respondent and the Second Respondent are guilty of improper
conduct within the meaning of rule 2.1.3 of the old disciplinary
rules in that they committed any offence involving dishonesty,
and in
particular (but without prejudice to the generality of the foregoing)
theft, fraud, forgery or uttering a forged document,
perjury, bribery
or corruption; and/or;
4.2
The First Respondent and the Second Respondent are guilty of improper
conduct within the meaning of rule 2.1.4 of the old disciplinary
rules in that they were dishonest in the performance of any work
or
duties devolving upon them in relation to any work of a type commonly
performed by a practitioner or any office of trust which
they have
undertaken or accepted, and/or;
4.3
The First Respondent and the Second Respondent are guilty of improper
conduct within the meaning of rule 2.1.5 of the old disciplinary
rules in that they without reasonable cause or excuse failed to
perform the work or duties commonly performed by a practitioner with
such a degree of care and skill as in the opinion of the Regulatory
Board may reasonably be expected, or failed to perform the work or
duties at all, and/or;
4.4
The First Respondent and the Second Respondent are guilty of improper
conduct within the meaning of rule 2.1.20 of the old disciplinary
rules in that they without reasonable cause or excuse, contravened
or
failed to observe paragraph 4.4 of the Code by failing to perform
their services with professional competence and due care,
and/or;
4.5
The First Respondent and the Second Respondent are guilty of improper
conduct within the meaning of rule 2.1.21 of the old disciplinary
rules in that they conducted themselves in a manner which is improper
or discreditable or unprofessional or dishonourable or unworthy on
the part of a practitioner or which tends to bring the profession
of
accounting into disrepute.
5.
Facts giving rise to the First Charge
5.1
Ripple Effect trades as a guest house in Plettenberg Bay.
5.2
Tucker is a director of Ripple Effect.
5.3
Loubser du Plessis Incorporated (“LDP”), provided tax and
auditing services to Ripple Effect.
5.4
Ripple Effect applied for a grant from the DTI based on its 2006
audited
annual financial statements, in the amount of R469 000.
5.5
In order to qualify to obtain the DTI grant, Ripple Effect was
required
to have a turnover of at least R503 000 per annum.
5.6
At the time of preparing the annual financial statements of Ripple
Effect
for the 14 month period ended 30 April 2006 the cash book of
Ripple Effect reflected that its turnover for the period March 2005
to 30 April 2006 was R42 892.
5.7
Mr Garth Muller (“Muller”), who was at all material times
an employee of LDP, compiled the draft annual financial statements
for Ripple Effect for the 14 months ended 30 April 2006.
5.8
The First Respondent indicated in email correspondence dated 7
September
2006 to Tucker that she was willing to adjust the turnover
amounted reflected in the annual financial statements of Ripple
Effect
for the period ended 30 April 2006, either upwards or
downwards in order to achieve the best net result for Ripple Effect
insofar
as the VAT liability and DTI grant were concerned. This
was irrespective of whether there was in fact any audit evidence to
justify the increase or decrease in Ripple Effect turnover.
5.9
The First Respondent was willing to assist and/or facilitate that the
annual financial statements of Ripple Effect did not reflect the true
income position of Ripple Effect but that it reflected a misstated
financial position instead in order to deceive the DTI and/or the
Commissioner of Revenue.
5.10 The
Second Respondent instructed Muller to amend the draft annual
financial statements
by including an adjusting journal entry which
debited Tucker’s loan account in the amount of R465 000
(four hundred
and sixty five thousand rand) and credited turnover in
the amount of R465 000 (four hundred and sixty five thousand
rand).
This resulted in the turnover of Ripple Effect for the
14 months ended 30 April 2006 being inflated to an amount of R507 892
(five hundred and seven thousand eight hundred and ninety two rand).
Accordingly, Ripple Effect’s annual financial
statements were
materially misleading insofar as it did not reflect the actual
turnover that was generated by the company for the
period in
question.
5.11
Fictitious income in the amount of R465 000 (four hundred and
sixty five thousand
rand) was added to the original turnover figure
in order to increase Ripple Effect’s turnover to over R503 000
(five
hundred and three thousand rand) in order for it to qualify for
the DTI grant.
5.12 The
Second Respondent instructed Muller not to perform any audit
procedures on the
additional income of R465 000 (four hundred
and sixty five thousand rand) and on Ripple Effect’s
application to the
DTI for a grant.
5.13 The DTI
granted Ripple Effect a grant in the amount of R469 000 (four
hundred
and sixty nine thousand rand) based on its turnover as
reflected in the annual financial statements for the 14 month period
ended
30 April 2006.
5.14 The
increase in turnover resulted in Ripple Effected being required to
register as
a VAT vendor in terms of the VAT Act. The First
Respondent advised Tucker pertaining to the registration of Ripple
Effect
for VAT as a result of the increased turnover.
5.15 The First
Respondent was therefore aware, alternatively should have reasonably
been
aware of the fictitious income and the fraud that was being
perpetrated relative to the DTI grant.
5.16 The First
and Second Respondents acted dishonestly and were a party to a fraud
being
perpetrated on the DTI, as Ripple Effect did not legitimately
have an entitlement to the DTI grant.
5.17 Both the
First and Second Respondent, by their conduct as described above,
contravened
rule 2.1.3 and/or rule 2.1.4, and/or rule 2.1.5 and/or
rule 2.1.20 and/or rule 2.1.21 of the old disciplinary rules.
6.
The Second Charge
6.1
[As per para. 4.1.], and/or;
6.2
[As per para. 4.2], and/or;
6.3
[As per para. 4.3], and/or;
6.4
[As per para. 4.4], and/or;
6.5
[As per para. 4.5].
7.
Facts giving rise to the Second Charge
7.1
Ripple Effect trades as a guest house in Plettenberg Bay.
7.2
Tucker is a director of Ripple Effect.
7.3
Loubser du Plessis Incorporated (“LDP”), provided tax and
auditing services to Ripple Effect.
7.4
Ripple Effect applied for a grant from the DTI based on its 2006
audited
annual financial statements, in the amount of R469 000
(four hundred and sixty nine thousand rand).
7.5
In order to qualify to obtain the DTI grant, Ripple Effect was
required
to have a turnover of at least R503 000 (five hundred
and three thousand rand) for a 12 month period. LDP were advised that
in order to qualify to obtain the DTI grant for a 14 month period,
Ripple Effect was required to have a turnover of approximately
R590 000 (five hundred and ninety thousand rand).
7.6
At the time of preparing the annual financial statements of Ripple
Effect
for the 14 month period ended 30 April 2006 the cash book of
Ripple Effect reflected that its turnover for the period March 2005
to 30 April 2006 was R42 892 (forty two thousand eight hundred
and ninety two rand).
7.7
Mr Garth Muller (“Muller”), who was at all material times
an employee of LDP, compiled the draft annual financial statements
for Ripple Effect for the 14 months ended 30 April 2006.
7.8
The Second Respondent instructed Muller to amend the draft annual
financial
statements by:
7.8.1 firstly
including an adjusting journal entry which debited Tucker’s
loan account
in the amount of R85 000 (eighty five thousand
rand) and credited turnover in the amount of R85 000 (eighty
five thousand
rand); and
7.8.2 secondly
including an adjusting journal entry which debited director’s
emoluments
and credited Tucker’s loan account in the amount of
R70 000 (seventy thousand rand).
7.9
The adjustments made as described above in paragraph 7.8.1, resulted
in
the turnover of Ripple Effect for the 14 months ended 30 April
2006 increasing from R507 892 (five hundred and seven thousand
eight hundred and ninety two rand) to R592 892 (five hundred and
ninety two thousand eight hundred and ninety two rand).
Accordingly, Ripple Effect’s annual financial statements were
materially misleading insofar as it did not reflect the actual
turnover that was generated by the company for the period in
question.
7.10 The
adjustment made in paragraph 7.8.2 was required in order to
demonstrate that
Ripple Effect had met the staffing requirements
imposed by the DTI in order to obtain the grant.
7.11
Fictitious income in the amount of R85 000 (eighty five thousand
rand) was added
to the original turnover figure in order to increase
Ripple Effect’s turnover to over R590 000 (five hundred
and ninety
thousand rand) whilst a fictitious expense of R70 000
(seventy thousand rand) was reflected in order for Ripple Effect to
qualify for the DTI grant for the 14 month period ended 30 April
2006.
7.12 The
Second Respondent instructed Muller not to perform any audit
procedures on the
additional income of R85 000 (eighty five
thousand rand) and on the director’s fees of R70 000
(seventy thousand
rand) and was therefore fully aware of the
fictitious income and expense.
7.13 The
increase in turnover resulted in Ripple Effect being required to
register as
a VAT vendor in terms of the VAT Act. The First
Respondent advised Tucker pertaining to the registration of Ripple
Effect
for VAT as a result of the increased turnover.
7.14 The First
Respondent was therefore aware, alternatively should have reasonably
been
aware of the further fictitious additional income of R85 000
(eighty five thousand rand) and expense of R70 000 (seventy
thousand rand) and the fraud that was being perpetrated relative to
the DTI grant in this regard as the First Respondent was involved
in
and/or provided advice to Ripple Effect relative to it registering as
a VAT vendor.
7.15 The
Second Respondent as the audit partner responsible for the audit of
Ripple Effect
was at all material times aware of, alternatively
should have reasonably been aware of, the fictitious income added to
the turnover
amount of R503 000 (five hundred and three thousand
rand).
7.16 The First
and Second Respondents acted dishonestly and was a party to a fraud
being
perpetrated on the DTI, as Ripple Effect did not legitimately
have an entitlement to the DTI grant as it did not meet the
requirements
set by the DTI.
7.17
Both the First and Second Respondent, by their conduct as described
above, contravened
rule 2.1.3 and/or rule 2.1.4, and/or rule 2.1.5
and/or rule 2.1.20 and/or rule 2.1.21 of the old disciplinary rules.
[63]
It
is evident that paragraphs 4 and 6 of the charge sheet merely
recited, without any elaboration, the respective categories of
misconduct under paragraph 2 of the Old Disciplinary Rules with which
the practitioners were being charged. This may be illustrated
by comparing the wording of paragraphs 4.1 and 6.1 of the charge
sheet with that of subrule 2.1.3 of the Old Disciplinary Rules
therein referred to. Subrule 2.1.3 provided: ‘…
any practitioner shall be guilty of improper conduct if he/she
–commits any offence involving dishonesty, and in particular
(but without prejudice to the generality of the foregoing) theft,
fraud, forgery or uttering a forged document, perjury, bribery or
corruption’. Those paragraphs described ‘the
nature’ of the charges within the meaning of s 49(3) of
the Act and subrule 4.10.1 of the New Disciplinary Rules.
The
content of paragraphs 5 and 7, respectively, of the charge sheet was
plainly intended to provide particularity to the baldly
stated
charges recorded in paragraphs 4 and 6.
Paragraphs
5 and 7 would therefore appear to have been intended to provide ‘the
details’ of the charges as required
by s 49(3) and ‘
the
relevant facts upon which the charge(s) are based with sufficient
particularity as to allow the [practitioners] to plead’
within
the meaning of subrule 4.10.2 of the New Disciplinary Rules
.
[64]
The
statement in Baxter, op cit supra
[35]
at p. 546, echoed in Hoexter’s work,
[36]
that ‘at common law the subject of
disciplinary proceedings is entitled to have the charge clearly
formulated with sufficient
particularity in such a manner as will
leave him/her under no misapprehension as to the specific act or
conduct to be investigated’
was endorsed by the Supreme Court
of Appeal in
Roux v Health Professions
Council of SA
[2012] 1 All SA 49
(SCA),
at para. 26, where Mhlantla JA held that it was in accordance
with ‘fundamental principles of administrative
law’ that
‘decisions “affecting individuals” should be based
on substantiated information and that the
person at the receiving end
of disciplinary action should be clearly apprised of the nature of
the charges he or she has to face
to enable a proper defence to be
mounted’. Similarly, in
Coetzee
v Financial Planning Institute of South Africa (Association
Incorporated Under Section 21) and Others
2015 (3) SA 28
(SCA) (in which, in the context of private law
disciplinary proceedings, the issue on review was also whether the
charge had been
put with sufficient particularity), Swain JA
held that ‘although the same degree of formality is not
required [in a
charge sheet in a disciplinary enquiry as in a charge
in a criminal trial], the same degree of particularity of the factual
information
underlying the allegations made, is required to enable
the accused to know what case he or she has to meet. This is
particularly
so where the disciplinary body has the power (as in the
present case) to make findings with far-reaching consequences’.
[37]
Section 49(3)(a) of the Act and subrules 4.10.1
and 4.10.2 of the New Disciplinary Rules are plainly intended to
confirm the incidence
of this rule of natural justice.
[65]
In
Coetzee
,
the preferring of the charges had, like in the current matter, been
preceded by a process in which the accused financial practitioner
had
been informed by letter of the nature of complaint against her and
requested to furnish a response.
[38]
Having regard to the import of the initial advice given to the
practitioner concerning the complaint, the court held, when
considering the adequacy of the particularity conveyed in the
subsequently preferred charges, that ‘[i]n order to determine
whether Ms Coetzee was properly informed of the case she was called
upon to meet, as set out in paragraph 1.2 of the formal charges,
the
allegations made must not be considered in isolation, but in the
context of the initial letter which set out the essence of
the formal
complaint. It would be artificial not to do so, because the
enquiry is whether Ms Coetzee had adequate knowledge
of the facts
forming the basis for the charge to enable her to answer that
charge’.
[66]
In
Coetzee
’s
case the appeal court also thought it relevant, in assessing the
prejudice that the practitioner in that case alleged that
she had
suffered as a result of a lack of particularity in the charge sheet,
that she had been legally represented, and that had
she been
uncertain about the case she had to meet her legal representative
could have sought clarificatory particularity, notwithstanding
the
absence of any formal provision for such a step in the pertinent
rules.
[67]
In the Board’s answering affidavit,
its Director: Legal averred that ‘the relevant parts’ of
the charge sheet
were sub-paragraphs 7.13, 7.14 and 7.16.
These, and in particular, sub-paragraph 7.16, made it clear, it was
argued, that
it was being alleged that the applicant had been party
to a fraud on the DTI arising out of the representation of
‘fictitious
additional income of R85 000 and expense of
R70 000’ for the purposes of meeting the requirements set
by the DTI
for the incentive grant that Ripple Effect had applied
for.
[68]
In their heads of argument before the
disciplinary committee, a copy of which was attached to the
applicant’s replying affidavit,
the applicant’s counsel
in relevant part (i.e. with footnoted cross-reference to parts of
para. 7 of the charge sheet) summarised
the import of ‘the
Ripple Effect charges’ as ‘relat[ing] primarily to –
‘the alleged creation and
insertion of adjusting journal
entries in the 2006 Ripple Effect financial statements in respect of
turnover, the loan account
of its sole director and director’s
emoluments (“
the adjusting journal
entries
”; an adjustment of the
2006 Ripple Effect financial statements in December 2006, to reflect
turnover in an amount of R592 892,00
(“
the
second revenue adjustment
”);
[and] the events that occurred in 2006 relating to Ripple Effect’s
registration as a VAT vendor’. The
subparagraphs of
paragraph 7 of the charge sheet to which reference was made in these
respects were subparagraphs 8, 9, 13 and
14. Oddly,
notwithstanding the express reference to ‘fraud’ in
relation to the charge brought under paragraph
2.1.3 of the Old
Disciplinary Rules (referred to in paras. 4.1 and 6.1) and in
subparagraph 16 of para. 7 of the charge sheet,
counsel omitted any
mention thereof in their description of the ‘primary’
import of the charges. Nor did they
make any connection in
their introductory summary of the Ripple Effect-related charges
between the first and second revenue adjustments
and the DTI grant
application. I say ‘oddly’ because it seems to me
conspicuous on an overall reading of those
charges that fraud was the
most serious allegation advanced against the practitioners in the
charge sheet, and that it plainly
related to the alleged
misrepresentation of the company’s financial position in
respect of the year in question for the purposes
of claiming an
entitlement to a DTI grant. It was for that reason that I asked
the applicant’s counsel on more than
one occasion during
argument what the applicant could have thought she was being charged
with.
[69]
Later passages in the applicant’s
counsel’s heads of argument before the disciplinary committee
did, however, identify
that the charges against the practitioners
contained allegations of fraud and dishonesty, and that the fraud was
one on the DTI.
Thus, at para. 115.2 of the heads of
argument, counsel acknowledged that the ‘facts alleged by the
Board
relative to the second charge, are that - … [s]he
allegedly acted dishonestly and was party to a fraud perpetrated on
the
DTI in circumstances where Ripple Effect did not legitimately
have an entitlement to receive the DTI grant’.
[70]
The committee articulated its appreciation
of the ‘essence of the second charge’ and the evidence
concerning it in paras.
265 and 266 of its decision as follows:
265 The
essence of the second charge against Du Plessis is that –
265.1
she was aware or should reasonably have been aware of further
fictitious additional
income of R85 000 and expense of R70 000
and the fraud that was being perpetrated relative to the DTI grant in
this regard;
265.2
she was or ought to have been aware of this because of her role in
advising
Tucker in relation to Ripple Effect’s registration as
a VAT vendor;
265.3 Du
Plessis acted dishonestly and was party to a fraud being perpetrated
on
the DTI, as Ripple Effect did not legitimately have an entitlement
to the DTI grant as it did not meet the requirements set by the
DTI.
266
At the heart of the second charge lies an exchange of email
correspondence that
took place between 1 and 4 December
2006.
The disciplinary committee’s findings
[71]
The disciplinary committee found the
applicant guilty on the second charge on the basis of the factual
findings described below.
It proceeded on the assumption in her
favour that no communications ‘extraneous to the exchange of
email correspondence’
had taken place between her and Muller,
notwithstanding what it regarded as ‘the inherent improbability
of her assertion
in [that] regard’.
[72]
The committee considered that the exchange
of email correspondence, in December 2006, had to be read in the
context of Ms Du
Plessis’ signature for LDP of the
company’s financials, in September 2006, ‘which already
accounted in the turnover
figure for substantial personal use of the
guest house by Tucker for himself, his family and friends’.
The implication
was that when the applicant signed the financials in
September she would have done so knowing that the financial year
involved
covered a period of 14 months and being satisfied, having
regard to the duties on auditors in terms of s 44 of the Act,
that
their content was supportable, at least on the basis of the
firm’s working papers.
[73]
The committee held that it was evident from
the content of Ms Geyser’s email of 1 December 2006,
quoted in paragraph
[39]
above, that she
was seeking an amendment of the reported turnover of Ripple Effect in
its signed financial statements, as well as
‘further amendments
to introduce human resources expenses … in order to meet a
requirement that such expenses be 30%
of total operating costs’.
It held that the applicant would have appreciated that these were the
requirements that
had to be met in order for the company to qualify
for the DTI grant. It considered that Muller’s email to
Ms Du Plessis
of 4 December 2006, quoted in paragraph [41]
above, clearly conveyed Muller’s
understanding of the email from Ms Geyser as a request to amend
the previously signed
financials so as to increase the company’s
reported turnover against a further debit of Tucker’s loan
account and to
introduce a previously unreported expense in respect
of human resources. It regarded it as ‘important’
in its
assessment of the applicant’s conduct that Muller’s
email was ‘clearly framed as a request to [the applicant]
for
authorisation of his proposed amendments’.
[74]
The committee held (at para. 277 of its
decision) that ‘[a]n honest and rational response by Du Plessis
to the emails from
Geyser and Muller would have been one of
considerable concern. Changes were being requested to financial
statements on which
she had already signed off and which already
incorporated a significant amount of turnover based on personal use.
The changes
were manifestly aimed at meeting targets set for
qualification for a grant from the DTI’. The committee
considered
that it was clear in the circumstances that a ‘risk
of fraud had entered into the picture’ and that the applicant
ought
‘at the very least to have told Muller that under no
circumstances would she permit him to make any such adjustments
unless
it could be shown that they were the result of turnover truly
earned and that there was a good reason for its not already been
included in the financial statements when she signed them’.
[75]
The committee contrasted what it considered
should have been the applicant’s reaction to the emails from Ms
Geyser and Mr
Muller with her actual conduct in writing the email
quoted in paragraph [42]
above. It
considered that the content of that email demonstrated that the
applicant had not been ‘simply acting as a
go-between, as she
contended’. Having analysed the content of the email, the
committee concluded that it showed ‘a
willingness to
accommodate Formentco’s requirements for meeting the
requirements of the grant’ irrespective of the
factual
position. It rejected the applicant’s explanation of the
email as having been intended merely to convey her
understanding that
the financials could be amended without difficulty because she
understood (wrongly) that they had not yet been
published to third
parties.
[39]
It found the explanation was not consistent with the manner in which
the email had been worded and that in any event the
circumstances
were such that there was such an evident risk of fraud that, had she
been acting with professional propriety, Ms
Du Plessis would have
been ‘most hesitant’ about any adjustments to the
financials to meet the requirements stated
by Formentco.
[76]
The committee then referred to the email
from Ms Geyser quoted in paragraph [43]
above
and observed that that had made it abundantly apparent that the
source of the information for the requested adjustments to
Ripple
Effect’s financials had been Formentco, not Tucker or Ripple
Effect, and that the amendments were ‘DTI claim-target-driven’
and represented very close to a 14/12ths arithmetical adjustment to
the R503 000 figure for a 12-month period indicated in
the
September 2006 email correspondence quoted in paragraphs [35]
and[36]
above. The
committee found that all the indications pointed to the amendments to
the financial statements having been ‘driven
by DTI targets and
not by the true operations and cash flows of the guest house’.
[77]
Ms Du Plessis’ endeavour to
explain her conduct on the basis that she had understood that two
months’ actual turnover
had not been accounted for in the
financials she had signed in September 2006 was rejected by the
committee. It gave three
reasons for doing so. Firstly,
it pointed out that the financial statements signed by the applicants
had indicated on each
of the first four pages that they were ‘for
the 14 months ended 30 April 2006’. One of those pages
had been the
one incorporating the audit opinion that the applicant
had signed on 12 September 2006. The committee considered
that
Ms Du Plessis ‘would therefore have known that it was
purely a misunderstanding on the part of Formentco and no-one else’.
Secondly, the amendments effected were in line with the information
provided by Formentco, which was concerned only with meeting
the
DTI’s requirements and was not ‘a logical source of
information about additional actual income from operations’.
Thirdly, it considered that the wording of the emails from Ms Geyser
did not correlate with Ms Du Plessis’ ‘purported
[?professed] understanding of them’.
[78]
The committee rejected the applicant’s
claim to have been reliant on the information provided by Muller.
It considered
it to be clear that the source of the information was
Formentco, and held that it was evident from the email correspondence
that
Muller ‘was the one asking her for authorisation’.
It held that ‘[s]he was called upon to take responsibility’.
In the context of the December 2006 exchange of emails, the committee
concluded that the forwarding by the applicant of Ms Geyser’s
second email
[40]
could ‘only be interpreted as authorisation [by the applicant
to Muller] to proceed with the amendment of the financial statements
on the basis set out in Geyser’s second email’.
[79]
It was noted in the committee’s
decision that Ms Du Plessis was aware that the financials had in
fact subsequently been
amended consistently with the DTI grant
application requirements conveyed by Formentco. This much was
implicit in the applicant’s
concession under cross-examination
that she had considered the amended financials before signing off on
the DTI grant application
documentation, which had used the values
reflected in the amended financials.
[80]
The committee also regarded it as
significant that the applicant had signed annexure B to the DTI grant
application, entitled ‘Report
of the Independent Auditors to
the Board for Manufacturing Development in terms of the Small/Medium
Enterprise Development Programme’,
as auditor. It quoted
the following parts of the report signed by Ms Du Plessis:
Findings
Our findings are reported below:
We found that:
1.
The financial statements have been prepared in accordance
with South
African Statements of Generally Accepted Accounting Practice.
2.
The accounting policies have been applied consistently.
3.
The amounts per the claim form agree to the financial
statements
and/or accounting records of Ripple Effect 3 (Pty) Ltd.
4.
The financial statements are for the same period as that
of the
claim.
5.
The casts/cross casts and extensions are correct.
6.
The approved tourism activity of Ripple Effect 3 (Pty)
Ltd are (sic)
as set out in the contract …
7.
Ripple Effect 3 (Pty) Ltd has complied with the terms
and conditions
including any special condition as set out in the contract …
8.
…
11.
Turnover. No discrepancies were found.
Because our procedures were limited to those agreed with
the Board, our report is limited to the above findings and we do not
express
any assurance on the attached claims. Furthermore, had we
performed additional procedures, other matters might have come to our
attention that would have been reported.
…
Preparation of Financial Statements
On the basis of information provided by the entity’s
management, we have prepared the financial statements for the entity
for the year ended 30 April 2006.
Audit of Financial Statements
We have audited the financial statements of Ripple
Effect 3 (Pty) Ltd for the year ended April 2006 in accordance with
the statements
[?requirements]
of the South African Auditing
Standards
[81]
Consideration was given by the committee to
the defence advanced by both practitioners that the absence of the
audit file containing
the working papers meant that there was no
evidence to support a finding of fraud apart from the oral evidence
of Muller, which
had been discredited in certain respects. The
committee recorded the practitioners’ position in this regard
that the
working papers would have contained the information
necessary to show the reasonableness of the amounts reflected in the
financial
statements.
[82]
In rejecting this defence the committee
pointed to the unlikely combination of coincidences between the
reported figures stated
in the company’s financials during the
relevant periods and the DTI application requirements. So, in
2005, when a minimum
of turnover of R150 000 had been required,
the reported turnover was R150 703. And for the 2006
financial year,
when a minimum turnover of R503 000 was
required, the reported turnover in the financials signed by Ms Du
Plessis was R508 000.
And that was subsequently amended to
R592 000 for the same period after Formentco belatedly became
astute to the fact
that the financial year in question had spread out
over 14 rather than 12 months, and indicated that the financials
would have
to reflect turnover in that amount for the 14-month
period. The committee held that ‘[s]uch a sequence of
coincidences
is highly improbable’ and concluded that once that
was taken into account it was apparent, at least on a balance of
probabilities,
that the figures in the company’s 2006 financial
statements had been dishonestly manipulated. It held that the
exchange
of emails in December 2006 indicated that the applicant was
aware of and complicit in the manipulations.
[83]
The committee concluded its findings in
respect of the second charge by setting out the elements of the
offence of fraud and proceeding
to find that, by allowing the amended
financial statements incorporating the misstated turnover and
directors’ emoluments
to be attached to and submitted with the
DTI grant application, the applicant misrepresented in the
documentation forming part
of the claim information that the amended
financial statements were ‘true and fair’, that the
financial statements
were final and correct and that no discrepancies
had been found in turnover. The committee held that the
prejudice to the
DTI was patent and therefore found that fraud and
dishonesty by the applicant had been established. The committee
found that
the applicant was guilty for purposes of the second charge
of improper conduct within the meaning of subrules 2.1.3
[41]
and 2.1.4
[42]
of the Old Disciplinary Rules.
[84]
The applicant was fined R100 000 in
respect of her conviction on the second charge and R50 000 on
the fifth charge.
It was directed that her name, the charges
against her, a summary of the material facts, the findings in respect
of the charges
and the sanction be published in the IRBA News.
She was also ordered to pay a contribution of R320 000 towards
the costs
of the investigation committee and the disciplinary
committee in connection with the investigation and hearing. The
sanction
was suspended pending the final determination of judicial
review proceedings to be instituted by the applicant.
The applicant’s case on review
[85]
The applicant’s case is founded
principally on her allegation that the committee’s verdict was
premised on findings
of fact in respect of matters that had not been
adumbrated in the factual allegations made in the charge sheet in
support of the
charge brought against her and in the face of findings
that some of the alleged facts that were material to the charges had
been
found by the committee not to have been proved. The
conviction had therefore been brought in on a charge that had been
formulated
in a manner materially non-compliant with the requirements
of s 49(3)(a) of the Act and subrules 4.10.1 and 4.10.2 of the
New Disciplinary Rules. The applicant averred that the schedule
of charges had been ‘important’ to her ‘as
it
reflected the factual allegations made against [her] in respect of
the individual charges … on which [her] legal representatives
and [she] prepared for the hearing; and to which [she] responded in
[her] evidence during the course of the hearing’.
[86]
The applicant contended that it was evident
that the allegations in the charge sheet concerning the adjustments
to Ripple Effects
financials in December 2006 (what Ms Du
Plessis terms ‘the second revenue adjustment’) were
levied ‘in the
first instance’ against Mr Bestbier,
and not herself. She averred that it appeared from the charge
sheet that
the ‘sole basis’ upon which the Board had
sought to implicate her in the second charge was in respect of her
dealings
with regard to the VAT registration issue, which had
occurred in September 2006. The applicant submitted that as
there had
been no evidence connecting her dealings in respect of the
VAT registration issue with the second revenue adjustment, which she
said ‘form[ed] the basis of the second charge, the ‘factual
basis for the allegations against [her] had not been proved,
and
accordingly, the second charge was not proved either’. Insofar
as the Board relied on the provisions of paragraph 7.16
of the charge
sheet, she contended that it was lacking in any ‘primary
facts’,
[43]
maintaining that the primary facts upon which the allegations therein
appeared to her to have been premised were those stated in
paragraphs
7.13 and 7.14. The applicant argued that paragraph 7.16 could
not implicate her ‘in any conduct beyond that
which is alleged
in the charge sheet’.
[87]
The applicant alleged that the committee’s
reliance on the emails exchanged during December 2006 was
impermissible because
they comprised factual matter the relevance of
which had not been adumbrated in the content of the charge sheet.
She contended
that the correspondence relied upon by the disciplinary
committee for its finding had been ‘extraneous to the set of
alleged
facts relied upon by the Board in the Schedule of Charges’.
Ms Du Plessis acknowledged that she had dealt with the emails
in her
evidence, saying, however, that this had been to explain her view at
the time that it was possible to change financial statements
that had
not yet been released and to explain her understanding at the time
that the change in the reported turnover resulted from
the fact that
14 months, as opposed to 12 months, were to be accounted for. (The
applicant did not make it clear how that
could have been considered
by her to have been relevant to any advice that she had given in
September in respect of the company’s
registration for VAT.)
[88]
The
applicant emphasised that the disciplinary committee had placed
significant reliance on her signature of the DTI grant application
in
January 2007 in convicting her on the second charge. She
pointed out that her conduct in that respect had not been referred
to
at all in the charge sheet and was therefore ‘not part of the
set of facts which [she] was required to deal with, either
in [her]
preparation for the hearing, or at the hearing itself’.
Ms Du Plessis annexed a copy of the transcript of
her evidence in
chief before the committee and highlighted that she had not dealt in
it with her signature of the DTI application
claim form. She
pointed out that it was only during her cross-examination that the
issue was raised with her, when, she said,
she had dealt with the
pro-forma complainant’s questions as best she could at the time
considering that she had not prepared
on that aspect of the facts.
She also alleged that there had been nothing in Muller’s
affidavit to the Board that had
required her to deal with her
signature of the claim form. In reply, the applicant emphasised
that the signed DTI application
form had been added to the bundle
only six days before the commencement of the hearing.
[44]
She argued that it fell to be inferred in the circumstances
that the signed document could not have been in the possession
of the
pro-forma complainant when the charges were framed, and thus could
not have been something upon which he had intended to
rely when he
formulated the charges.
[89]
Ms
Du Plessis contended that she had not been in a position to deal at
the hearing with her signature of the DTI claim as she would
have
done had she been given advance notification that it would be relied
on to substantiate the charge against her. In para.
57 of her
founding affidavit she set out five subparagraphs, in which she
sought to ‘explain how [she] would have addressed
the issue had
she received such notification’.
[90]
The applicant said that she would have
signed the claim documentation in the knowledge that LDP’s
auditing division would
have complied with the agreed upon procedures
and that the working papers (which were in any event not available,
having been destroyed)
would have been there to confirm that.
[45]
She pointed out that the audit had been ‘under the control and
supervision’ of Muller.
[46]
[91]
The
applicant averred that she would have made reference to an email from
Mr Gerrit Potgieter of Formentco to Muller, dated
3 April 2008
(which was in the bundle of documents put in before the committee in
terms of rule 6.2 of the New Disciplinary Rules
[47]
)
to indicate ‘that it was Muller’s duty to examine the DTI
claim documentation and to ensure that the documentation
was compiled
in accordance with the financial statements for the particular
year’.
[48]
The applicant averred in this respect that ‘The reference in
the email to “in the usual manner” refers
to Muller’s
usual responsibility of ensuring that the agreed upon procedures for
the Ripple Effect audit engagement were
met’.
[92]
In subparagraph 57.4 of her affidavit, the
applicant pointed out that she would also have relied on the
correspondence between Potgieter
and Muller, at pp. 293-296 of
the bundle of documents, to bear out that ‘Muller had
communicated with Potgieter regarding
certain proposed amendments [to
the DTI claim documentation], in accordance with his managing role in
that regard’.
[93]
The correspondence consisted of a chain of
emails.
[94]
The first was an email from Potgieter of
Formentco to the applicant, dated 11 January 2007 (09:38), in which
Potgieter requested
the applicant (whom he addressed as ‘Mr du
Plessis’) to check and sign the enclosed DTI application.
The full
text of the email, which was copied to Muller, and attached
to Muller’s affidavit to the Board, has been quoted in
para. [47]
above.
[95]
The next email in the chain was one from
Muller to Potgieter, dated 16 January 2007 (10:03AM), which was
copied to the applicant.
Muller addressed Potgieter concerning
three ‘proposed amendments’ to the DTI claim form ‘as
discussed this morning’.
The three amendments concerned
(i) the particulars of Ripple Effects shareholders, on page 1 of
the form, (ii) LDP’s
contact details, on page 2 of the
form, and (iii) s.v. ‘TOURISM’, particulars of the
company’s revenue (R592 892.00),
on page 8 of the form.
Muller concluded the email to Potgieter inviting the latter to
‘[p]lease contact [him] with
any further enquiries in this
regard’.
[96]
Potgieter
responded to Muller 33 minutes later (10:36) stating:
Hi Garth
Herewith the amended pages to the claim.
The turnover for 14 months is R592 892, however we need
to adjust this to 12 months (592 892 x 12/14 = R508 193).
We
adjust the turnover to indicate the turnover is more than the min
requirement of R502 058.
Please advise if there is (sic) any further amendments.
Kind regards
Gerrit
[97]
Muller responded shortly thereafter (at
10:46AM) advising that he would ‘amend and send it though’.
He enquired
whether the documents should be couriered and requested
confirmation of the destination address. Potgieter confirmed
that
the documents should be couriered and furnished a street address
in Pretoria. At 11:01AM, Muller sent an email to the applicant,
as follows:
Hi Fran
Ek sal hierdie dokumente gereed kry maar wag eers vir ’n
faks vanaf Jacqui voordat ek die goodies deur stuur.
Groete
Garth
[49]
[98]
Referring
to the aforementioned matters, Ms Du Plessis averred in subparagraph
57.5 of her founding affidavit:
Had
the DTI claim documentation, and the fact that I had signed the 2006
DTI claim documentation on behalf of LDP, formed part of
the facts
relevant to the charges against me, I would have addressed these
aspects more fully at the hearing. Moreover, I
would have been
at pains to indicate to the Disciplinary Committee that I would not
have signed the claim documentation unless
Muller had shown me the
signed working papers in the audit file and confirmed that he had
ensured that all auditing aspects were
in order, with no matters
outstanding.
The
Board’s answer
[99]
The
first respondent’s answering affidavit was largely
argumentative in content, not surprisingly having regard to the
nature
of the case. I have already outlined in broad strokes,
in paragraph [4]
above, the essence of the
Board’s grounds for opposing the application in respect of the
second charge. The deponent
to the Board’s answering
affidavit responded as follows to the points advanced in para. 57
of the founding affidavit:
1.
The evidence that the applicant said she
would have adduced about checking the working papers before signing
the independent auditor’s
declaration in Ripple Effect’s
DTI grant application form was in point of fact adduced at the
hearing. A number of
passages in the transcript of the
applicant’s evidence before the committee were cited in support
of this observation.
2.
The email of 3 April 2008, at p. 297 of the
bundle,
[50]
did not relate to the charge, which pertained to the 2006 financials,
dated 12 September 2006, that were submitted to the DTI via
Formentco
and certified by the applicant on 7 February 2007.
3.
The Board also contended that the
correspondence at pp. 293-296 of the bundle was irrelevant,
because it had been only the
applicant, not Muller, who had made the
false representation to the DTI that company’s 2006 financials
were true and correct.
[100]
As
to the point described in subparagraph 1 of the preceding paragraph,
it does indeed appear from the passages in the transcript
cited by
the Board that the applicant did not profess any actual recollection
of signing the application form. Her evidence
was rather to the
effect of what she must have done, or would have done in the
circumstances. In answer to a question from
a member of the
committee, however, the applicant had replied that she was
‘absolutely convinced’ that there had been
an audit file
in place and that all the work had been completed and signed off.
The applicant has not indicated, and it is
difficult to conceive, how
she could have improved on the evidence that she did give had she
been expressly forewarned in the charge
sheet that the pro-forma
complainant would rely on her signature of the auditor’s
declaration in the grant application form
in support of the second
charge.
It was common ground that the
audit file had been destroyed, and would therefore in any event have
not been available.
[101]
As to the point made by the Board as
described in subparagraph 2 of paragraph [99]
above,
it also bears mention that it is apparent from the copy of the email
at p. 297 of the bundle that Muller does not appear
to have
responded to it. The document at p. 297 suggests that
Muller immediately forwarded the email from Potgieter
to Hendrik Du
Plessis (without comment). The evidence before the committee
established that Hendrik Du Plessis was a qualified
chartered
accountant in the employ of LDP, who acted as Muller’s
superior. The applicant’s assertion that reference
to the
email would have confirmed that Muller ‘usually’ did the
necessary checking would have fallen to be assessed
by the committee
in the context of Ms Du Plessis’s evidence that one Betsie
Botha, not Muller, had been in charge when the
previous DTI grant
application supported by the company’s financial statement for
the 2005 year had been submitted, and that
it was with Ms Botha that
she had interacted when she signed those financials, because Mr
Bestbier had, yet again, not been available.
[102]
As
to the Board’s third point mentioned in paragraph [99]
above, I am not persuaded that the committee would
have disallowed evidence concerning the correspondence as
irrelevant. I
fail to see, however, and the applicant has not
explained, how the reference to the correspondence could have
influenced the committee’s
findings on the effect of the
December 2006 emails which, as discussed, were the primary basis for
the committee’s decision
to convict her on the second charge.
The correspondence at pp. 293-296 may well have served to
confirm Muller’s
complicity in the fraud, but that was not the
issue. I therefore agree with the Board that there is nothing
in the correspondence
that is relevant to the committee’s
findings, or that would have affected its decision.
Discussion
[103]
The issue of whether the conviction was
misaligned with the charge requires a determination in the first
place of what it was that
the applicant was accused of in terms of
the second charge.
[104]
A useful point of departure when
considering the charge put to the applicant is to look at the
objective requirements for its formulation
in compliance with s 49(3)
of the Act and subrule 4.10 of the New Disciplinary Rules.
The Board’s counsel
drew an analogy with the requirements for
drawing a pleading in a civil case. Mr
Marcus
referred in this respect to rule 18(4) of the Uniform Rules,
which in relevant part reads ‘Every pleading shall contain
a
clear and concise statement of the material facts upon which the
pleader relies for his claim … with sufficient particularity
to enable the opposite party to reply thereto’. In that
connection, counsel cited the judgment in
Nel
and Others NNO v McArthur and Others
2003 (4) SA 142
(T), at 146, in which Basson J emphasised the
phrase ‘
with sufficient
particularity to enable the opposite party to reply thereto
’
as the determining criterion for compliance.
[105]
In my judgment the analogy was well-drawn
for the purpose of explaining the object of the pertinent requirement
of the Act and the
related procedural disciplinary rule. The
object is that the practitioner who is the subject of the
disciplinary proceedings
should know what he or she is alleged to
have done by way of the alleged misconduct with sufficient
particularity to know the case
he or she is called upon to answer.
That much is borne out in the wording of subrule 4.10.2 of the New
Disciplinary Rules
in particular. As remarked earlier, the
requirement does no more than to articulate the rule of natural
justice that is in
any event applicable, which is founded squarely on
simple fairness. The object of the provisions is not to
introduce an undue
degree of nicety or technicality in the
formulation of charges.
[106]
Consideration of the alleged incongruence
between the charge and the basis for the conviction must also take
place cognisant that
the basis of the attack on the disciplinary
committee’s findings is also founded on an application of the
principle of fairness.
Any question falling to be determined by
reference to what would be fair in the circumstances has to be
approached with appropriate
flexibility, astute to the peculiar
circumstances of the given case; cf. e.g
Joseph
and Others v City of Johannesburg and Others
2010 (4) SA 55
(CC), at para. 56. The approach of the appeal
court in
Coetzee
,
discussed earlier,
[51]
exemplified this in a closely comparable context; cf. also the
remarks of Harms DP in
National
Director of Public Prosecutions v King
2010 (7) BCLR 656
(SCA), at para. 5, in respect of the fair trial
rights enshrined in s 35 of the Constitution.
[52]
It is appropriate to have regard to the rights and interests of both
sides and also, if applicable, to the objects of the
statutory
provisions in the context of which the proceedings are being
conducted or have taken place. This principle would
also bear
on the assessment of the materiality of any non-compliance with
s 49(3) and/or subrule 4.10, should there be a finding
that the
provisions had not been complied with.
[107]
I should say at once that I think it is
beyond debate that the second charge was somewhat ineptly drafted.
Notwithstanding
Muller’s unimpressive attempts during his oral
evidence to tailor his evidence to it, it was obvious, for example,
that nothing
in Muller’s affidavit, which everyone concerned
appreciated was the source of the complaint, supported the allegation
in
para. 7.8 of the charge sheet that Mr Bestbier had instructed
Muller to effect the second set of adjustments to Ripple Effect’s
financials in December 2006. Muller’s affidavit had
attributed that instruction to Ms Du Plessis; and some of
the
emails attached to the affidavit were obviously provided in
elaboration of the allegation. The affidavit and emails were
thereafter also included in the bundle provided in terms of rule 6.2
of the New Disciplinary Rules.
[53]
In my view, the evident blemishes in the formulation of the charge
sheet, regrettable as they were, did not, however, obscure
the
substance of the charge that the practitioners were called upon to
meet.
[108]
On
a purposive reading of paragraphs 6 and 7 it is obvious that the
nature of the charge being preferred against both practitioners
was
one of fraud. So, for example, despite the rehearsal,
ipsisimmis verbis
,
in the charge sheet of clause 2.1.3 of the Old Disciplinary Rules,
which itemises a variety of offences including theft, fraud,
forgery
or uttering a forged document, perjury, bribery or corruption, it is
nonetheless clear on a contextual reading of the charge,
in
particular subparagraph 7.16, that it was only about fraud; it did
not concern any of the other itemised offences. The
fact that
the other offences were quite superfluously listed in the charge
sheet did not detract from its much narrower actual
import.
[109]
What then did the alleged fraud entail?
A charge of fraud should state the
facta
probanda
. The
facta
probanda
are the facts stated in broad
terms which the prosecution will seek to establish in order to prove
the essential elements of the
offence. They give a broad
outline of what the case is about; hence the analogy mentioned
earlier that the Board’s
counsel drew with Uniform Rule 18(4).
If the
facta probanda
are apparent on the face of the charge sheet, the accused has enough
information to plead to the charge. He or she does not
need to
be in possession of the particulars of all the evidence (the
facta
probantia
) that the prosecutor will
lead to prove the commission of the alleged offence. In the
commentary on s 84 of the Criminal
Procedure Act (‘Essentials
of charge’) in
Hiemstra’s
Criminal Procedure
[54]
it is appositely remarked that ‘The touchstone is and remains
the question whether the accused got a fair chance by being
informed
about what called for a response’. As it was, in the
current matter, the applicant was placed in possession,
before the
hearing, of all of the documentary evidence on which the pro-forma
complainant intended to rely and of the witness statement,
on oath,
of its only witness in respect of the alleged conduct of the
practitioners.
[110]
The applicant graduated from Stellenbosch
University with a Bachelor of Laws degree, and before she decided to
make a career move
into accountancy she had worked for a while as a
public prosecutor, attaining the position of senior public prosecutor
at Stellenbosch.
[55]
I have little doubt therefore that she was aware of the essential
elements of the offence of fraud; (a) unlawfully, (b)
with
the intention to defraud; (c) making a misrepresentation
(d) causing prejudice. She was legally represented.
Certainly, her legal representatives, who included senior counsel and
an experienced junior, would have been alive to the essentials
of the
offence. The questions they put to the applicant during her
evidence confirmed that.
[111]
Appreciating that the preferred charge was
one of fraud – whether as perpetrator,
particeps
or
socius
does not matter - an informed reader of the charge sheet would read
it asking themselves the questions ‘what was the
misrepresentation
that the practitioners allegedly made and who was
prejudiced thereby and how?’, and looking to find the answers
in the document.
They would be looking for the
facta
probanda
. That is what I meant
earlier
[56]
when I referred to ‘a purposive reading’.
[112]
If the charge of fraud on the second count
was to make any sense at all, it had to be read to be related to the
alleged misrepresentation
of the company’s turnover by means of
‘the second revenue adjustment’ in the company’s
financial statements;
that is by inflating the represented turnover
by R85 000 to an amount of R592 892 and by representing an
incurred expense
of R75 000 merely for the purpose, by such
devices, of qualifying the company for a DTI grant in the amount of
R469 000
for which it would otherwise not have qualified.
On such a reading, the nature of the misrepresentation is clear, as
is the
nature of the prejudice and identity of the party prejudiced.
The December emails and the signature of the auditor’s
declaration on the DTI grant application form were
facta
probantia
, not
facta
probanda
.
[113]
The content of the alleged
misrepresentation is conveyed in para. 7.11 of the charge
sheet. The nature of the prejudicial
conduct alleged and the
identity of the victim of it are evident from the content of paras.
7.10 to 7.16 of the charge sheet.
Any lack of clarity that
might be ascribable to the somewhat garbled recitation of facts set
out in paragraph 7 of the charge sheet
if read in isolation is
resolved when the document is read in the context of the other
information that had been provided to the
applicant, namely Muller’s
affidavit and the bundle of documents in terms of rule 6.2.
Frankly, if the document were
not read in that context, it would be
impossible to make out what the detail of the charge of fraud in
terms of subrule 2.3.1 against
the applicant was. In which case
it might have been expected of the applicant, or certainly her legal
representatives, to
have objected to the charge as not disclosing an
offence within the meaning of the subrule and not complying with
subrule 4.10
of the New Disciplinary Rules. I am not surprised,
however, that they did not.
[114]
For these reasons I am disposed to uphold
the argument of the Board’s counsel that the charge was pleaded
with sufficient
particularity. That determination necessarily
disposes of the applicant’s review challenge based on an
alleged non-compliance
with s 49(3) of the Act and subrule 4.10
of the New Disciplinary Rules.
[115]
Ms Du Plessis has claimed, however, that
she was misled by the charge sheet into understanding that the charge
she had to meet on
the second count was premised on her advice to
Tucker concerning the obligation on Ripple Effect to register as a
vendor in terms
of the VAT Act. There is indeed a basis for
that contention in para. 7.13 of the charge sheet. The
difficulty is, however,
that if the charge sheet were read in that
way that it would not afford a comprehensible basis for the charge of
fraud that the
Board was clearly preferring. How could the
advice concerning registration for VAT, which the applicant knew, and
the charge
sheet (in para. 5) confirmed, had occurred in September
2006 bear on a misrepresentation to the DTI in respect of the second
adjustment,
which it was common ground happened in December 2006 or
January 2007, to which Ms Du Plessis was alleged to have been party?
The construction that the applicant would have the court accept that
she had given to the charge requires paragraphs 6 and 7 of
the charge
sheet to be read in isolation from the other information with which
she had been provided. Read in that manner
the charge would
have been incomprehensible. It requires reference to be had to
the broader context described above to be
read sensibly.
[116]
I
agree, for the reasons set out elsewhere in this judgment, with the
submission by the Board’s counsel that the manner in
which the
applicant’s case was conducted before the disciplinary
committee does not bear out her allegations in the current
application as to how she had understood the second charge. On
the contrary, I consider that it would have been clear to
Ms Du
Plessis on a contextual reading of the document that the relevance of
her advice on the VAT issue was that that allegedly
served to confirm
her knowledge that the company’s
audited
turnover had been in the order of only R507 000, which would go
to showing that she must have appreciated, when that amount
was
increased to R592 000 in the second adjustment, that the
increased amount was contrived solely for the purpose of representing
to the DTI that Ripple Effect had achieved the qualifying criteria
for the grant.
[117]
The applicant’s evidence in chief
before the committee on the second charge was adduced by her counsel
on the basis of a systematic
reference sub-paragraph by sub-paragraph
to the content of paragraph 7 of the charge sheet. There was
little reference in
her evidence in chief to the evidence that had
been adduced in Board’s case, most especially to that of
Muller. Her
counsel did, however, also take her to various
passages in Muller’s affidavit even though they had not been
replicated in
any of the sub-paragraphs of paragraph 7.
So, for example, counsel pointed to the contradiction between
paragraph 7.8
of the charge sheet, in which it was alleged that
Bestbier
had instructed Muller to make the set of adjustments, and the content
of para. 109 of Muller’s affidavit, in which Muller
had
averred that
the applicant
had given the instruction. Counsel asked her whether she had
given such an instruction, which she vehemently denied.
Indeed,
counsel observed, while leading the applicant, that one had to bear
in mind ‘that we are dealing with somewhat different
versions,
depending on whether you are looking at the affidavit or looking at
the charge sheet’.
[118]
Leaving aside the (already determined)
question whether express reference to them in the charge sheet had
been necessary, any suggestion
that the applicant had not been
alerted that the December emails were material to the allegation that
she had been aware that the
second adjustment to the company’s
income provided fictitious additional income in the sum of R85 000
does not withstand
scrutiny. That she and her legal
representatives were astute to their evidential materiality was
conveyed clearly in the
following question put to her by her counsel
during her evidence in chief: ‘We have seen the exchange of
emails. The
suggestion appears to be that you knew that the
figure of R85 000 in respect of additional income, that there
was such a figure
and that it was fictitious’.
[119]
It was in fact the applicant herself who
spontaneously first made reference to the December emails in her
evidence in chief.
She did that when asked by her counsel to
respond to the content of para. 7.10 of the charge sheet.
[57]
[120]
In written argument submitted at the
conclusion of the hearing on the charges, the applicant’s
counsel engaged in an analysis
of the emails exchanged in December
2006, and submitted that they showed that the second revenue
adjustment came about as a result
of Muller’s suggestions and
the direct instructions of Ms Du Triou. As indicated earlier,
the disciplinary committee
took a different view and held that the
emails demonstrated that Muller had sought authorisation from the
applicant and that she
had authorised him to adjust the financials to
comply with the requirements conveyed by Formentco, not information
given by Ms
Du Triou. I cannot find that the inferences drawn
by the committee from the content of the emails were of a nature that
no
disciplinary tribunal, acting reasonably, could have drawn on the
evidence. As also indicated earlier, the committee dealt
in
addition with the applicant’s argument that, in the absence of
the audit working papers, the adjusted figures had not
been shown to
have been fictitious.
[121]
The heads of argument demonstrate that the
applicant’s legal representatives regarded the email
correspondence exchanged in
December 2006, and thus its effect, to be
relevant to the second charge. It is difficult to find any
connection between the
import of the correspondence and the advice
concerning registration for VAT given by the applicant in September
2006, other than
that identified by me in paragraph [116]
above. By contrast, the relevance of the
correspondence as arguably implicating the applicant as party to a
fraudulent misrepresentation
of Ripple Effect’s turnover for
the purposes of supporting its application for a DTI grant (the
matter alleged in terms of
para. 7.16 of the charge sheet) was
obvious.
[122]
It is evident from the questioning of the
applicant by her counsel during her evidence in chief that she was
informed by the charge
sheet that she was party to a fraud on DTI
arising from the second adjustment to the company’s
financials. Counsel,
referring to the charge sheet, put it to
the applicant ‘The suggestion is that you were either aware or
should have been
aware of the fraud being perpetrated on the DTI.
What is your response?’ In context, it was clear that the
alleged
fraud in issue was understood by the applicant and her legal
representatives to have entailed the misrepresentation of the
company’s
income by way of the second adjustment. The
questioning of the applicant also demonstrated that they appreciated
the evidential
significance of the December emails in the
determination of the issue.
[123]
It was also put to the applicant by her
counsel ‘It [is] said that you acted dishonestly and were party
to a fraud on the
DTI as Ripple Effect did not have an entitlement to
the DTI grant. Your response to that?’ Ms Du Plessis’
response
was ‘I do not know whether they were entitled to the
DTI grant. I was not party to the application or to meeting the
requirements or knowing what the requirements were. They had a
professional firm Formentco that was advising them in that
regard.’
[124]
In my view, the questions and answers
indicated quite clearly that the applicant was well aware that the
second charge concerned
her alleged complicity in the
misrepresentation to the DTI that the company’s income for the
2006 financial year was correctly
reflected as per the financials as
amended in terms of the second adjustment. Despite the
applicant’s assertions
to the contrary, Muller’s
affidavit to the Board did allege quite clearly her complicity in
misrepresenting Ripple Effect’s
turnover for the purpose of
meeting the requirements of the company’s DTI grant
application. The point was illustrated
with reference to the
attached graphs showing how the turnover was adjusted irrespective of
underlying reality and copies of the
December emails. The
finally adjusted turnover figures and employment remuneration, which
were in accordance with the implementation
of Ms Geyser’s
requests in the December email correspondence, were reflected in the
unsigned copy of the claim application
form attached as annexure N5
to Muller’s affidavit. The adjustment s.v. ‘Tourism’
on that page indicates
that the date of provenance of the unsigned
claim form attached to the affidavit postdated Mr Potgieter’s
email of 16 January
2007, quoted in paragraph [96]
above. The applicant clearly had regard to
the claim form in preparing her response to Muller’s
affidavit. Why
else, and for what purpose, would she have
sought to obtain a copy of the signed copy from Formentco?
[125]
The focus placed by the applicant on the
role of her signature of the claim form (which was not a fact alleged
in charge sheet)
in her conviction on the second charge is in any
event misplaced in my view. The conviction was in point of fact
founded
originally in the committee’s finding that she had
authorised the second adjustment to be effected knowing the reported
turnover
to have been based only on the requirements to meet the DTI
claim, and intending that the unsubstantiated information would be
used for the purpose of representing to the DTI that the minimum
required turnover had been achieved by the company. In the
context of the committee’s findings on the December emails, it
would not have mattered if someone else – Mr Bestbier
or
any other director of LDP, for example – had signed the
application form containing the ‘second adjustments’,
the
falsehood would have been represented at her instance;
qui
facit per alium facit per se
.
[126]
The applicant stated in her evidence in
chief that she was not aware of any changes to the financial
statements after 12 September
2006, when she had signed them.
That was plainly untrue. And it is most unlikely, even in the
context of the omission
of any express reference in the charge sheet
to her certification of the amended financials, that she would not
have been reminded
thereof by the exchange of December emails of
which she had plainly been cognisant in her preparation for the
hearing. As
mentioned, her attorneys had attempted to obtain a
copy of the signed DTI grant application form from Formentco for the
purpose
of preparing the response by the applicant and Mr Bestbier to
Mr Muller’s affidavit sent to them under cover of the
Board’s letter of 28 May 2013. An unsigned copy of the
form had been attached to Muller’s affidavit, and a signed
copy
had been furnished by the Board to her legal representatives on
14 April 2015, six days before the commencement of the
hearing
before the disciplinary committee and more than six months before she
testified at the hearing. What relevance could
that document
have had other than to the second charge? (It bears mention
that Mr Muller, who was the only witness called
by the Board to give
direct evidence in support of the events giving rise to the second
charge, was recalled at the instance of
the applicant’s legal
representatives for further cross-examination when the hearing
resumed after a more than six-month
interval in November 2015.)
[127]
The applicant attacked what she contended
was an implied finding by the disciplinary committee, in para. 296 of
its decision, that
she had signed the auditor’s certificate in
the DTI grant application aware that the figures reflected in the
company’s
amended financials were incorrect. She asserted
that such finding was wrong and unsupported by the evidence.
The applicant
appears in this regard to have considered that the only
evidence that had been relevant in this connection had been her
replies
to questions under cross-examination in which she had
admitted that she must have checked the content of the application
before
signing the certificate. The committee’s finding
was in fact that the applicant had authorised Muller to effect the
second adjustments to the company’s financials solely to meet
the requirements conveyed in Ms Geyser’s email of 4 December
2006, quoted in paragraph [43]
above.
Its reasons for so finding have already been described. The
signed application form reflected those adjustments.
[128]
I am unable to find that the committee
could not reasonably have made these findings. The company’s
accounts had already
been audited in September 2006. The
financials had been signed off by the director of the company and LDP
(represented by
the applicant) at that time, presumably on the basis
of fieldwork and working papers that substantiated the results
reflected in
the statements. There was no suggestion in any of
the available source material that two months’ turnover had
been
omitted and that remuneration paid or determined in favour of Mr
Tucker had been overlooked. Even if there had been such
shortcomings in the financials signed off by LDP and the company’s
director in September, it would indeed have been a most
unlikely
coincidence that the extent of the turnover that had been overlooked
should match virtually exactly what was required
to be made up for
the company to qualify for DTI grant. The chance that
director’s remuneration had been overlooked,
also in an amount
that closely matched the belatedly stated requirements for the
company’s DTI grant application conveyed
by Ms Geyser merely
underscored the basis for the committee’s findings in this
respect.
[129]
The contextual effect is that the
applicant’s admission that she had been aware of the adjusted
figures submitted in support
of the grant application necessarily
affirmed her awareness at the time that manipulated results were
being used in support of
the application. This attack on the
committee’s findings on the grounds that they were not
supported by the evidence
comes close to one of the sort that might
be advanced in an appeal. I assume, however, that it was
advanced on the basis
of an allegation of the sort of gross
irregularity that would be comprehended by sub-secs 6(2)(e)(iii)
and 6(2)(f)(ii)(cc)
of PAJA. On that assumption, the attack is
groundless because it is clear that the implication that the
applicant signed
the auditor’s certificate knowing that the
results therein reflected were not correct was founded on her own
admissions and
the inferential findings that the committee had made
as to her state of mind arising from its analysis of the December
email correspondence.
As this is not an appeal, it is not for
this court to consider whether those findings were correct. It
suffices to point
out that there was evidence to support the finding
and that, in the face of the committee’s reasoned analysis of
the December
email correspondence, there is no basis to hold that the
findings were not rationally connected to the information before it.
[130]
In the context of the conduct of the
hearing before the disciplinary committee as described above, I
conclude that even were I wrong
in holding that the second charge was
formulated in a manner substantially compliant with s 49(3) and
subrule 4.10, the effect
of the irregularity was not material in
that, for the reasons I have given, it did not result in the
proceedings before the committee
being procedurally unfair. The
deficiencies in the charge sheet did not result in the applicant
being tried or convicted
in respect of a count of misconduct other
than that which it is clear she was aware that she had been called
upon to meet. The
purpose of s 49(3) and subrule 4.10 of
the New Disciplinary Rules was thus not thwarted or subverted in any
material manner.
As to the averments by the applicant in
para. 57 of her founding affidavit,
[58]
it should be apparent from my observations at paragraphs [100]
–
[102]
above that
I consider that the Board has effectively refuted them.
[131]
In the result I have not been persuaded
that there is any merit in the applicant’s challenge on review
of the committee’s
decision to convict her on the second
charge.
The fifth charge
[132]
The review challenge to the findings in
respect of the fifth charge is premised on the contention that it was
legally misdirected
to visit non-compliance with s 45 of the Act
on Ms Du Plessis, as she was not the engagement partner seized
of the audit.
The implication is that the duty in terms of s 45
is specifically imposed only on the engagement partner. As
mentioned
at the outset, the Board does not oppose the relief sought
by the applicant in respect of the fifth charge and neither side
addressed
any argument on the question.
[133]
The point taken by the applicant in this
connection does appear to find support in the wording of s 45(1)(a)
of the Act. The
substantive relief that she seeks in that
regard will therefore be granted. Having not heard any argument
on the point, I
would, however, wish to make it clear that this
judgment should not be regarded as precedential on the reach of the
provision.
Effect of the result of the review application on the ancillary
directives of the disciplinary committee
[134]
In addition to the fines that it imposed on
the applicant in respect of each of the counts of misconduct on which
it convicted her,
the disciplinary committee directed, in terms of
s 51(4) of the Act, that she must pay a contribution of R320 000
towards
the Board’s costs in the hearing and that a summary of
its findings be published in the Board’s periodical
publication,
IRBA News.
[59]
The applicant did not argue, that in the event of the review
application being successful only in respect of the committee’s
decisions on the fifth charge, that these ancillary directions should
be affected. It would obviously be appropriate, however,
that
any publication of the committee’s findings should be
supplemented to record the fact that its decisions in respect
of the
fifth charge were set aside by this court on review in proceedings
that were not opposed by the Board.
Costs
[135]
The applicant’s counsel submitted
that as it had been necessary for the applicant to come to court to
get the decision in
respect of the fifth charge set aside the
applicant should be awarded her costs of suit, even if her
application in respect of
the second charge did not succeed. In
my view such an order would not do justice in the case. There
is no suggestion
that the Board acted mala fide in preferring the
charge, and it was bound by the Act to accept the decision of the
disciplinary
committee, the bona fides of which were also not called
into question. The Board did not oppose the relief sought by
the
applicant in respect of the fifth charge. The opposing and
replying papers were given over entirely to dealing with the case
on
the second charge, as, indeed, were the heads of argument and the
hearing before this court. I consider that that it would
be
fair in the circumstances that there should be no order as to costs
in respect of the application for relief in respect of the
fifth
charge, and that the applicant should be directed to pay the costs of
the first respondent in respect of the opposed application
for the
review and setting aside of the decision on the second charge.
How the division is to be made is a question for determination
by the
taxing master. I am satisfied that the engagement of two
counsel was reasonable.
[136]
An
order is made as follows:
1.
The decisions of the third respondent (the
disciplinary committee) to convict the applicant on the fifth charge
(that is of having
acted in breach of the duty imposed in terms of
s 45
of the
Auditing Profession Act 26 of 2005
) and to impose a
sanction of R50 000 in respect thereof are reviewed and set
aside.
2.
Any publication of the findings of the
committee in terms of s 51(5) of the Act shall, insofar as it
contains any reference
to the committee’s decisions in respect
of the fifth charge, record that they were set aside on review.
3.
There shall be no order as to costs in
respect of the application for the review and setting aside of the
decisions of the third
respondent in respect of the fifth charge.
4.
The application for the review and setting
aside of the decisions of the third respondent in respect of the
second charge is dismissed.
5.
The applicant is ordered to pay the first
respondent’s costs of suit in respect of the application for
the review and setting
aside of the third respondent’s
decisions in respect of the second charge, including the fees of two
counsel where such were
engaged.
A.G. BINNS-WARD
Judge of the High Court
[1]
Act 80 of 1991 was repealed in terms of s 58
of the
Auditing Profession Act 26 of
2005
. The Old Disciplinary Rules remained in force,
notwithstanding the repeal of Act 80 of 1991, by virtue of
s 59(8)(b)
of Act 26 of 2005.
[2]
The Board is a juristic person established in
terms of s 3 of the Act.
[3]
Section 20(2)(f) provides:
The Regulatory Board
must, at least, establish the following permanent committees:
(f)
a disciplinary committee.
Section
24(2) provides:
The
disciplinary committee-
(a)
must be chaired by
a retired judge or senior advocate;
(b)
must consist of a
majority of persons not registered as auditors in
terms of this Act,
but must include registered auditors; and
(c)
may include other suitably qualified persons.
[4]
The Board’s Director: Legal who deposed to
the answering affidavit averred that she did so on behalf of the
first and third
respondents. In context it is clear, I think,
that she did not purport to do so on behalf of the individual
members of
the committee, but on behalf of the committee as an organ
of the Board.
[5]
Footnote 4 in para. 219 of the disciplinary committee’s
decision suggest that the applicant’s counsel had, for what
it
was worth, expressed a different opinion when the matter was argued
before that tribunal. The observation is, however,
inconsistent with the applicant’s counsel’s heads of
argument before the committee and the attribution may therefore
have
been erroneous, and may actually have reflected the position of the
pro-forma complainant. The only relevance of the
point is that
different views on the question were reportedly expressed at any
earlier stage.
[6]
The seven elements identified are ‘
(a)
a decision of an administrative nature; (b) by an organ of state or
a natural or juristic person; (c) exercising a public
power or
performing a public function; (d) in terms of any legislation or an
empowering provision; (e) that adversely affects
rights; (f) that
has a direct, external legal effect; and (g) that does not fall
under any of the listed exclusions
’.
Hoexter commented on the elements in the statutory definition as
follows in ‘“
Administrative
Action” in the Courts
’,
2006
Acta Juridica
303
, at 306: ‘
They are a
curious combination of substantive features — those that
relate clearly to the characteristics of administrative
action —
and procedural ones that relate more obviously to issues such as
standing and ripeness. Trained lawyers find the
definition of
administrative action puzzling, and one can only imagine how bemused
legally untrained administrators must be by
it
’.
[7]
Italicisation supplied for emphasis.
[8]
An incisive discussion about the ‘classificatory
system’ used by the courts under the common law in respect of
various
types of administrative acts is to be found in Baxter,
Administrative Law
(Juta, 1984), at pp.344-353.
[9]
Cora Hoexter,
Administrative
Law in South Africa
, 2 ed. (Juta,
2012), at pp. 203-205.
[10]
Act 66 of 1995.
[11]
Cf.
New Clicks
supra, at para. 97, where
Chaskalson CJ referred with approval to the following statement in a
paper delivered by Professor
Hoexter in March 2005 entitled
‘“
Administrative Action”
in the Courts
’ (later published
in
2006
Acta Juridica
303):
The
principle of legality clearly provides a much-needed safety net when
the PAJA does not apply. However, the Act cannot simply
be
circumvented by resorting directly to the constitutional rights in
s 33. This follows logically from the fact that the
PAJA gives
effect to the constitutional rights. (The PAJA itself can of course
be measured against the constitutional rights,
but that is not the
same thing.) Nor is it possible to sidestep the Act by resorting to
the common law. This, too, is logical,
since statutes inevitably
displace the common law.
The
common law may be used to inform the meaning of the constitutional
rights and of the Act
, but it
cannot be regarded as an alternative to the Act.
(Underlining
supplied for emphasis.)
Cf. also
Grey's Marine
supra, at para. 22.
[12]
Note 11
above.
[13]
Essentially the same view was expressed by
Wallis J in
Sokhela and Others v
MEC for Agriculture and Environmental Affairs (KwaZulu-Natal) and
Other
2010 (5) SA 574
(KZP), at
para. 82.
[14]
Cf.
Minister of Home
Affairs and Others v
Scalabrini
Centre and Others
2013 (6) SA 421
(SCA), at para. 53.
[15]
See
Transnet Ltd v
Goodman Brothers (Pty) Ltd
[2000] ZASCA 151
;
2001 (1) SA
853
(SCA) and
Logbro Properties CC v
Bedderson NO and Others
2003 (2) SA
460
(SCA). (Cancellation of a tender before adjudication,
however, does not constitute ‘administrative action’ as
defined; see
Tshwane City and Others v
Nambiti Technologies (Pty) Ltd
2016
(2) SA 494
(SCA) at paras. 22-24.)
[16]
Note 13
above.
[17]
In this connection, Wallis J observed (at
para. 61)‘…
the
determination of what constitutes administrative action does not
occur by default, on the basis that, if it does not fit some
other
juristic pigeonhole, it is administrative action
’.
[18]
Id. This passage in
Sokhela
was referred to with approval by the Supreme Court of Appeal (per
Nugent JA) in
Scalabrini
supra, at paras. 51-52; see also
Tshwane
City and Others v Nambiti Technologies
supra,
at para. 25, and
University of the
Free State v Afriforum
[2017] ZASCA 32
(28 March 2017), at para. 17.
Cora Hoexter
has bemoaned the effects of the judicial enquiries necessitated by
the convoluted and confusing multi-element
definition of
‘administrative action’, and illustrated how the
resultant potential distraction from the substance
of cases brought
on judicial review has on occasion led to regrettable failures of
substantive administrative justice; see Hoexter,
“
Administrative
Action” in the Courts
,
2006
Acta
Juridica
303
, at 309-311. That
the exercise can indeed be a distraction has been borne out by my
own experience in dealing with the
issue in the preparation of this
judgment. It would not have been an issue if the court were
applying the common law, or
able to apply s 33 of the
Constitution directly.
[19]
Graham
at
para. 29 (second bullet point).
[20]
The type of decision under the Attorneys Act to
which Mothle J was referring would in fact be more closely
analogous, in
the context of the Act, to that of the investigating
committee established in terms of s 20(2)(e) to refer a matter
for
hearing before the disciplinary committee (see s 49(1))
than it would be to the impugned decision in the current case.
[21]
See
Hamata and
Another v Chairperson, Peninsula Technikon Internal Disciplinary
Committee, and Others
2002 (5) SA 449
(SCA), at para. 23.
[22]
At pp. 762G-763, with reference, inter alia,
to the discussion in Baxter,
Administrative
Law
(Juta, 1984) at pp. 344-348
and 575-576.
[23]
See e.g.
SA Medical
& Dental Council v McLoughlin
1948 (2) SA 355
(A), in which the available right of review of the
proceedings of a statutory disciplinary body was said to that under
the second
category of review identified by Innes CJ in
Johannesburg
Consolidated Investment Co. v Johannesburg Town Council
1903 TS 111
at 115,
Hira and Another v
Booysen and Another
1992 (4) SA 69
(A)
and
South African Veterinary Council
and Another v Veterinary Defence Association
2003
(4) SA 546
(SCA), at para 34.
[24]
See
President of the
Republic of South Africa and Others v South African Rugby Football
Union and Others
2000 (1) SA 1
(CC),
1999 (10) BCLR 1059
,
at para. 141
.
[25]
Section 2 of the Act provides:
The objects of this Act
are-
(a)
to protect the public in the Republic by regulating audits performed
by registered auditors;
(b)
to provide for the establishment of an Independent Regulatory Board
for Auditors;
(c)
to improve the development and maintenance of internationally
comparable ethical standards and auditing
standards for auditors
that promote investment and as a consequence employment in the
Republic;
(d)
to set out measures to advance the implementation of appropriate
standards of competence and good ethics
in the auditing profession;
and
(e)
to provide for procedures for disciplinary action in respect of
improper conduct.
[26]
A function that entails the implementation of
legislation as distinct from the development of policy in terms of a
statutory power
is ordinarily regarded as ‘administrative
action’ within the meaning of s 33 of the Constitution;
see e.g.
President RSA v South African
Rugby Football Union
supra, at para.
142.
[27]
Section 25(c) of the Act.
[28]
At paras. 122-141.
[29]
Cf.
Sidumo and
Another v Rustenburg Platinum Mines Ltd and Others
2008 (2) SA 24
(CC), at para. 140, where O’Regan J, with
reference (in fn 29) to the observation in Hoexter
Administrative Law in South Africa
(Juta, 2007) at p.53, note 6, ‘
it
is because administrative tribunals dispense with some of the
procedural protections of the ordinary judicial process that
they
are subject to review, or even appeal, by the ordinary courts
’
stated ‘
Our Constitution
recognises the need for the conduct of administrative agencies to be
scrutinised, to ensure that they act lawfully,
reasonably and
procedurally fairly
’.
[30]
See para. 2.2 of the rules.
[31]
Paragraph 2.3 of the ‘New Disciplinary
Rules’, which governed the procedural aspects of disciplinary
proceedings instituted
after 1 January 2011, provides that the
Board may, for the purpose of deciding whether to refer the matter
to the investigating
committee, notify the respondent of the nature
of the complaint and call upon the respondent to furnish a written
explanation
in answer to the complaint within 30 days of the notice.
[32]
See paragraph [24]
above.
[33]
The Code of Conduct cited in the attorneys’ letter was
published in June 2010, and came into effect on 1 January
2011. It was therefore not in force when the 2006 AFS
auditor’s report was signed. It is not necessary for
present purposes to determine whether the applicant’s
interpretation of s 41(8) was well-founded, or whether section
150.5 of the Code (which the Code itself tells us is based on an
adaptation to the equivalent provision in the
Code of Ethics for
Professional Accountants
of the International Ethics Standards
Board of Accountants published by the International Federation of
Accountants in April
2010) is congruent with the statutory
provision.
[34]
Subrules 4.10.1 and 4.10.2 of the New
Disciplinary Rules provide:
4.10
The charge sheet shall:
4.10.1
set out the nature of the charge(s);
4.10.2
set out the relevant facts upon which the charge(s) are based with
sufficient particularity as
to allow the respondent to plead;
4.10.3
…
.
[35]
See note 8
above.
[36]
Hoexter,
Administrative
Law in South Africa
, 2ed at p. 369.
[37]
Coetzee v Financial Planning Institute of
South Africa
supra, at para. 17.
[38]
It is not apparent from the judgment whether a
response was given.
[39]
No consideration was given to the question of
whether in fact Formentco was not itself a ‘third party’
in the relevant
sense.
[40]
The email quoted in paragraph [43]
above.
[41]
The relevant part of rule 2.1.3 has been quoted
in paragraph [63]
above.
[42]
Rule 2.1.4 provided in relevant part that ‘
any
practitioner shall be guilty of improper conduct if he/she –
is dishonest in the performance of any work or duties devolving
upon
him/her in relation to –
2.1.4.1
any work of a type commonly performed by a practitioner; or
2.1.4.2
any office of trust which he/she has undertaken or accepted
’
.
[43]
The term was employed in the sense described in
Die Dros (Pty) Ltd v Telefon Beverages
CC
[2003] 1 All SA 164
(C),
2003 (4)
SA 207
, at para. 28.
[44]
Rule 6.2 of the New Disciplinary Rules provides
for a bundle of the documents intended for use in the hearing to be
put before
the disciplinary committee. The subrule reads as
follows:
6.2
Documents to be adduced in evidence
6.2.1
The Director: Legal or the CEO shall cause bundles of documents to
be adduced in evidence in the hearing under this Rule
and under Rule
7 (if any) to be distributed to such members of the Disciplinary
Committee who indicated that they would attend
the hearing under
this Rule, to the respondent and to the pro forma complainant.
6.2.2
The bundles shall comprise:
6.2.2.1
the notice and charge sheet(s) sent to the respondent under 4.4;
6.2.2.2
any plea(s) and written explanation(s) furnished by the respondent;
6.2.2.3
any documents which the pro forma complainant and the respondent may
agree are admissible in evidence;
6.2.2.4
at the discretion of the pro forma complainant, a certified copy of
the record of the trial and conviction of the respondent
if the
respondent
is
charged with improper conduct which amounts to the offence of which
the respondent was convicted, unless the conviction has
been set
aside by a superior court.
6.2.3
Nothing in 6.2 shall prevent any evidence not included in any bundle
referred to in those sub-rules from being adduced at
the hearing
under this Rule or Rule 7.
[45]
Subpara. 57.1.
[46]
Subpara. 57.2.
[47]
See note 44
above.
[48]
The 3 April 2008 email from Potgieter to Muller
read as follows:
Dear Garth
Please find attached
the reconciliation clam as set out. We request that you
examine the claim in the usual manner to ascertain
that it was
compiled in accordance with the financials and also in terms of the
rules of the scheme.
Should you have any
queries, you are requested to direct them either to myself, Gerri
Potgieter or Anna-Mart Geyser on the number
xxx.
When you have completed
your procedure, please intial each page and sign in full where
applicable, also contact us in order to
collect the claim.
Please note this claim
will expire on 30 April 2008.
Regards
Gerrit Potgieter.
[49]
‘
Hi Fran
I
shall get these documents ready but I am just awaiting a fax from
Jacqui before I send through the goodies.
Regards
Garth
’
(My
translation.)
[50]
See note 48
above.
[51]
At paras. [64] - [66] above.
[52]
Referred to with approval in
Estate Agency Affairs Board v
Auction Alliance and Others
2014 (3) SA 106
(CC), at para. 71,
fn 81 and
Savoi and Others v National Director of Public
Prosecutions and Another
2014 (5) SA 317
(CC), at para. 68.
[53]
See note 44
above.
[54]
A. Kruger,
Hiemstra’s
Criminal Procedure
(LexisNexis)
(looseleaf, last updated May 2016 – SI 9), at 14-9.
[55]
See para. 32 of the Disciplinary Committee’s decision on
sanction.
[56]
At paragraph [108].
[57]
See page 28 above for the wording of para. 7.10.
[58]
See paragraphs [89] – [98] above.
[59]
Notwithstanding rule 8.3 of the New Disciplinary
Rules, the question of publication in fact appears to be one within
the discretion
of the Board, rather than the disciplinary committee;
see s 51(5) of the Act.