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[2017] ZAWCHC 150
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Ntsibantu v South African Board for Sheriff (1552/2017) [2017] ZAWCHC 150 (18 December 2017)
Republic
of South Africa
IN THE HIGH COURT OF SOUTH AFRICA
[WESTERN
CAPE DIVISION, CAPE TOWN]
Case
No: 1552/2017
In
the matter between:
NCEDILE
NELSON NTSIBANTU, THE
SHERIFF
Applicant
and
THE
SOUTH AFRICAN BOARD FOR
SHERIFFS
Respondent
JUDGMENT DELIVERED: 18 DECEMBER
2017
LE
GRANGE, J
:
Introduction:
[1]
In this matter the Applicant, in terms of the provisions of the
Promotion of Administrative Justice Act, 3 of 2000 (
“
PAJA”),
seeks the review and setting aside of a decision taken by the
Respondent (
“
the
Board”),
refusing to issue a fidelity fund certificate to him for the calendar
year of 2017, as required by s 30(1)(a) of
the Sheriffs Act 90 of
1986 (
“
the
Act”). The
Applicant also seeks that the
pendente
lite
order granted by Binns-Ward, J on 13 January 2017 be confirmed.
[2] Mr. Van der Linde, SC appeared
for the Applicant and Mr. I Jamie, SC assisted by Ms. V Barthus
appeared for the Board.
Background:
[3]
The salient facts underpinning the Application in summary are the
following: Since the start of 2013, the Applicant had been
the duly
appointed sheriff for the area Cape Town West which covers the High
Court and certain magisterial courts jurisdictions.
The Applicant
held a similar position of sheriff previously in Elliotdale, Eastern
Cape during the period of December 2002 to November
2012.
[4]
The current application was preceded by two other applications. The
first was launched in November 2016 by the Board primarily
to compel
the Applicant to disclose all of his bank statements since he took up
office as a sheriff. According to the Board, the
first application
was precipitated by complaints by a number of attorneys, including
preliminary findings by the Board, of questionable
transactions made
by the Applicant in respect of his trust account. This matter became
settled between the parties after the Applicant
agreed to cooperate
with the Board to address some of the serious shortcomings in his
accounting systems.
[5]
The second application was instituted by the Applicant as a result of
the Board
’
s
decision on 8
December 2016, refusing to issue the Applicant a fidelity fund
certificate for the calendar year of 2017. In that
matter, the
applicant sought urgent interim relief against the Board pending the
current review application. Binns-Ward, J granted
certain interim
relief which
inter
alia
included the Board being directed to issue the Applicant a fidelity
fund certificate pending the finalization of the current review
proceedings. In that judgment, Binns-Ward, J at paragraph [20] also
made certain remarks regarding the requirements of 23(1)(b)
of the
Act. According to our Learned Brother
’
s
remarks,
23(1)(b)
does not require a sheriff to produce an unqualified auditors
report. It
merely requires him to submit his records to audit. The
subsequent furnishing of an auditors
report
in
terms
of
s
23(2)
serves
as
confirmation
that the
obligation in terms of s 23(1)(b) had been complied with. Any
deficiencies identified in the audit report may, no doubt,
lead to
disciplinary action being taken against the sheriff, but that is a
separate matter from compliance with s 23(1)(b).
’
The
Board
’
s
decision:
[6]
The Board in its written notice in terms of s 23(3) and s 33(1)(i) of
the Act to the Applicant on 8 December 2016, acknowledged
receipt of
the Applicant
’
s
audit
report
dated 21 August
2016 as compiled by C2M Chartered Accountants Inc. (
“
C2M”).
The Board further stated that it found gross irregularities in the
Applicant’s bookkeeping and accounting records.
The Board also
highlighted C2M
’
s
qualified report,
in particular his non-compliance with s 23 of the Act. The following
qualifications were recorded by the C2M:
(1)
The
inability to establish whether there was sufficient funds to cover
trust balances on 31 August 2015 and 26 February 2016;
(2)
The
failure to keep proper accounting records in terms of section
23(1)(a) of the Act;
(3)
The
failure to comply with section 22 and specifically, section 22(2) of
the Act.
[7]
In the letter, the Board further recorded its grave concern regarding
the manner that the Applicant was using his business bank
account to
receive trust monies and that his business bank records were in fact
deemed as his trust account records. The Board
furthermore alerted
the Applicant that certain investment vehicles were linked to the
business account, which were in fact also
trust monies and that a
real danger existed that the funds in question could become part of
his personal assets in the event of
insolvency or upon death. The
Applicant was further called upon to submit all his records,
including his business records and business
special bank investments,
for the period of 1 March 2015 to 28 February 2016 to his auditors in
order for them to conduct a proper
audit and submit the report to the
Board within 30 days.
[8]
In that letter, the Applicant was informed of his non-compliance with
s 23(1)(b) of the Act and until such time in failing to
comply with
the said section, he is disqualified from being issued a fidelity
fund certificate for the period of 2017 in terms
of s 33(1)(i).
[9]
The Applicant, pursuant to this letter, then employed HDP auditors to
address the concerns raised by the Board. This culminated
in a
further report dated 26 December 2016, which was forwarded to the
Board.
[10] In the HDP report the following
findings were made:
(a)
The
trust bank account went into overdraft on three occasions but
appeared to be an issue of timing as on each occasion a large
deposit
was made the following day which cleared the overdraft. These
payments were made in respect of remittance advices where
there had
been a one day delay in the deposits recorded by the bank.
(b)
Trust
monies were deposited directly into the business account by the Road
Accident Fund who had been asked to update its system
in order to pay
monies into trust. The matter had been resolved.
(c)
Most
of the offending transactions occurred in years prior to that under
review and as such the Applicant was seen to have addressed
same.
(d)
The
Applicant has taken steps to resolve all the difficulties with his
accounting set up and is now using an electronic accounting
package
designed for sheriffs.
[11] HDP auditors in conclusion made
the following remarks:
“
In
conclusion, we
believe that there have been contraventions of section
22 and 23(1)(a)
of the Sheriff
’
s
Act
and
thus
issuing
a
qualified
report.
However,
we
also
are
of
the
opinion
that
the
contraventions
were
largely
as
a
result
of
ignorance
rather
than
mal-intent.
The
accounting
system
employed
by the
sheriff
’
s
office
is
of
an
adequate
standard
and
as
mentioned
previously
will
be
updated
to
include
additional
reports
that
would
assist
with
the
audit.
All
the
accounting
has
been
captured
and
given
a
reasonable
time
we
believe
that
the
trust
account can be
reconciled accurately.
”
[12]
Notwithstanding the report by HDP, the Board refused to issue the
Applicant a fidelity fund certificate.
[13] It is common cause that the
Applicant has been charged by the Board with improper conduct and
received a charge sheet on 22
March 2017. This process is still
pending and had not been finalized, for a variety of reasons.
The
Review
:
[14]
In terms of s 30(1)(a) of the Sheriffs Act, 90 of 1986 (
“
the
Act”)
a
sheriff
shall
not
perform
any
functions
assigned
to
him
unless he or she
is the holder of a fidelity fund certificate. In terms of s 32(2) of
the Act, a fidelity fund certificate is only
valid until 31 December
of the year in respect of which it has been issued.
[15]
The Applicant in its founding affidavit cited various sections
namely, 6(2)(a)(iii), (b), (c), (d) (e)(v), (e)(vi), (f) and
(h) of
PAJA which he claims justify a review and setting aside the decision
taken by the Board. The argument initially advanced
by Mr. Van der
Linde appeared to be that it was an unfair and or unlawful
administrative action taken by the Board to have refused
the
Applicant a fidelity fund certificate without granting him an
opportunity to defend himself against the various charges. It
was
also argued that the Board had other mechanisms which they could have
used against the Applicant such as disciplinary proceedings.
This
argument on behalf of the Applicant was seemingly premised on the
proposition that s 23(1)(b)
merely
requires him to submit his accounting books and records for auditing.
It was further contended that the subsequent furnishing
of an
auditor
’
s
report
by the Applicant
in terms of s 23(2) only serves as confirmation that the obligation
in terms of s 23(1)(b) had been complied with
as the said section
does not require a Sheriff to produce an unqualified auditor
’
s
report.
Moreover, if any
deficiencies were to be identified in the auditor
’
s
report,
such
deficiencies
can
lead to
disciplinary action being taken against a Sheriff, however, this does
not mean that s 23(1)(b) has not been complied with.
Support for the
proposition was found in the remarks made by Binns-Ward J, in para
[20] of his judgment.
[16]
Adv van der Linde also seemed to suggest that his argument was
fortified by the various other options that were open to the
Board
when dealing with a member whose accounts are not in order. The
options alluded to were inter alia; - (s24) to approach a
superior
court for an order prohibiting the Sheriff from dealing with a said
account and where the court may appoint a
curator
bonis
to control and administer that account on behalf of the Sheriff; -
(s34) which provides for the cancellation of a fidelity fund
certificate but only after 14 days’
notice
in
writing
to
the
Sheriff
and;
a
third
option,
- (s 45) the
bringing of a charge of improper conduct followed by an enquiry with
stipulated procedural safeguards (ss 46 and 47).
In this regard, the
s 49(c) provision was pointed out which has the effect that one of
the actions which can be taken against a
Sheriff is cancelling the
fidelity fund certificate of the sheriff. A further option suggested
it was in the power of the Minister
to suspend a Sheriff from office
although in terms of s 51 this can only be done where the Sheriff has
been charged with improper
conduct.
[17]
The main thrust of Mr. Jamie’s argument
was
that s23(1)(b) cannot be given a literal interpretation but must be
considered within the broader context of the Act and in
conjunction
with the provisions of ss 22, 23 and 33 of the Act. It was further
contended that s 23(1)(b) cannot be fulfilled unless
23(1)(a) has
been complied with. To this end, it was argued that s 23 properly
construed, means the Act obliges Sheriffs to open
and keep separate
trust accounts and or other interest-bearing accounts as mentioned in
s 22(1) or subsection (2), and a failure
to do so and have those
separate records audited as required by 23(1)(b), precludes the Board
legally in terms of s 33(1)(i) from
issuing a fidelity fund
certificate.
[18]
Mr. Jamie also contended that the Applicant
’
s
understanding
is that the Act
merely requires the furnishing of an audit report and that
“
any
audit report must be accepted” for purpose of s 23(1)(b) is
misguided, as such an interpretation will nullify the real
purpose of
the provisions which is to ensure accountability, transparency and
the effectiveness of the auditing process.
[19]
Reliance
was
also placed on
the
matter
of
Board of
Sheriffs v Koen
(2002) Western Cape High Court, for the proposition that where a
Sheriff, as in the present instance failed to comply with the
statutory requirements to renew his fidelity fund certificate, the
Board is legally prohibited from issuing such certificate and
in the
absence of a formal application to the Board to exercise their
discretion in terms of s 33(2), the Board may not
mero
muto
issue such a certificate.
[20]
In
Koen
,
the Sheriff failed to submit audits; had filed an incomplete
application for a fidelity fund certificate; had failed to comply
with ss 23(1)(b) and s30(1)(b), and had not paid the prescribed levy
to the Board. Koen was notified by the Board about the shortcomings
and was informed that without a certificate he could not carry out
the functions of a Sheriff. The Board
’
s
decision
not to issue a
certificate was taken on review. When the matter came before court,
it was postponed by agreement on the basis that
the Board would
consider the application for the certificate at its meeting and that
same would be attended by Koen and his counsel.
Leave was granted
that should he be unsuccessful in obtaining the certificate, he could
approach the court on the same papers.
[21]
At the meeting Koen asked the Board to exercise its discretion in
terms of 33(2) of the Act. The Board voted and a decision
was taken
to issue the certificate on condition that Koen submit audited
financial statements every 6 months. Koen thereafter approached
the
court and supplemented his papers with the transcript from the
meeting with the Board. He sought a costs order on the basis
that he
had obtained substantial success. The court
a
quo
held that it was satisfied that even without getting into the merits
of the application, the failure by the Board to comply with
the rules
of natural justice in removing Koen from the post of Sheriff and
declining to issue a certificate was fatally defective
and could have
decided the whole issue. The court a quo expressed the view that Koen
would have been successful and the Board was
ordered to pay costs.
[22]
On appeal Griesel J, writing for the Full Court, came to a different
conclusion and held at para [48] that the Board
’
s
decision
not
to
renew
Koen’s
fidelity fund
certificate was in fact in all the circumstances procedurally fair
and that he would not have been successful in obtaining
any of the
relief sought in the court
a
quo
.
It was further decided at para [49]-[52] that where a Sheriff fails
to comply with the statutory requirements for an application
to renew
his or her fidelity fund certificate, the Board is precluded by the
peremptory provisions as contemplated in s 33(1) to
issue a fidelity
fund certificate, and in the absence of a formal application by a
Sheriff, the Board is not compelled to
mero
muto
in terms of s 33(2) to issue such a certificate.
[23] The importance of s 33(2) is
that the Board has a discretion to issue a fidelity fund certificate
to a Sheriff who is subject
to a disability but only when he or she
applies therefor.
Discussion:
[24]
In
casu
,
The Board
’
s
decision
that
s
33(1)
prohibits
it
from
issuing
a
fidelity
fund
certificate
to
the
Applicant
as
he
failed to comply
with s 23(1)(b), brings into sharp focus the meaning and purpose of s
23(1)(b) within the context of the Act as
a whole and the underlying
legal duty on Sheriffs to account for trust monies. The relevant
provisions of Chapter III, namely ss
22-23 provides as follows:
22 Accounts
for trust moneys
(1) Every sheriff shall open
and keep a separate trust account, which shall contain a reference to
this subsection, with a
banking institution or building society, and
shall forthwith deposit therein the moneys held or received by him on
account of any
person.
(2) (a) A sheriff may invest in a
separate savings or other interest-bearing account opened by him with
a banking institution or
building society any money deposited in his
trust account and not immediately required for any particular
purpose.
(b) A savings or other
interest-bearing account referred to in paragraph (a) shall contain a
reference to this subsection.
(3) The amount standing to the credit
of an account opened by a sheriff in terms of subsection (1) or (2),
shall not form part of
the assets of that sheriff or, if he dies or
becomes insolvent, of his deceased or insolvent estate.
(4) Interest on money in an account
mentioned in subsection (1) or (2) shall, unless the person on whose
behalf the sheriff is holding
or has received those moneys, in
writing indicates otherwise, be paid in the prescribed manner to the
Fund by the sheriff concerned:
Provided that, before a sheriff pays
the interest to the Fund, he or she may deduct his or her expenses
incurred in respect of
his or her trust account, from the interest
accrued on the trust account in accordance with a tariff and
procedure prescribed by
the Board.
[Subsection (4) substituted by
section 7 of Act No. 74 of 1998]
23
Book-keeping and auditing of accounts
(1) A sheriff shall, subject to
the provisions of subsection (4)—
(a) keep separate record of moneys
deposited or invested by him in, and payments made by him out of, an
account mentioned in section
22(1) or (2) ;
(b) cause the records referred
to in paragraph (a) to be audited by an auditor at least once
annually.
[Subsection (1) substituted by
section 2(a) of Act No. 3 of 1991]
(2) An auditor who has
performed an audit in terms of subsection (1) (b) shall as soon as
may be practicable after completion
of the audit furnish the Board
with a report on his findings on the prescribed form.
(3) If in the opinion of the Board
sound reasons exist for doing so, it may by way of a notice in
writing request any sheriff to
submit to the Board within the period
specified in the notice, which period shall not be less than 30 days
after the date of the
notice, such auditor's report, statement or
other document relating to an account mentioned in section 22(1) or
(2) as the Board
may require.
(4) The Board may, on such
conditions as it may determine, exempt a sheriff from the provisions
of subsection (1)(b) of this
section.
[Subsection (4)
added by section 2(b) of Act No. 3 of 1991]
[25]
In respect of the issuing, disqualification and cancellation of
fidelity fund certificates ss 32 to 34 provides as follows:
32 Issue of
fidelity fund certificates
(1) If the Board is satisfied,
after consideration of an application referred to in section 31, that
the sheriff is, having
regard to the provisions of section 33, a
suitable person to hold a fidelity fund certificate, the Board shall
issue to him a fidelity
fund certificate on the prescribed form.
(2) A fidelity fund certificate
shall be valid until 31 December of the year in respect of which it
has been issued.
(3) Notwithstanding the provisions of
subsection (2), the Board may at any time issue to an acting sheriff
a fidelity fund certificate
having a period of validity of not less
than one month and not more than one year.
[Subsection (3) substituted by
section 10 of Act No. 74 of 1998]
33
Disqualifications relating to fidelity fund certificates
(1) Subject to the provisions of
subsection (2), the Board shall not issue a fidelity fund certificate
to a sheriff if he—
(a) is not a South African citizen
permanently resident in the Republic;
(b) is not of or over the age of 21
years;
(c) is an unrehabilitated insolvent;
(d) is of unsound mind;
(e) does not comply with the
prescribed standard of training;
(f) does not have the prescribed
practical experience;
(g) has at any time been dismissed
from a position of trust by reason of improper conduct involving a
breach of such trust;
(h) has at any time been convicted of
any offence involving dishonesty or of any other offence for which he
has been sentenced to
imprisonment without the option of a fine;
(i) has failed to comply with a
provision of section 23(1)(b) during a period of one year immediately
prior to the date on which
he applies for a fidelity fund
certificate;
(j) has at any time been
prohibited under section 24(1) from dealing with an account mentioned
in section 22(1) or (2) in
any manner;
(k) was previously the holder of a
fidelity fund certificate which has been cancelled under section
34(1) or 49;
(l) has at any time incurred
liability towards the Board by virtue of the provisions of section
39, unless he has repaid the relevant
amount in full to the Board or
has made in the opinion of the Board satisfactory arrangements for
the repayment of any such amount;
(m) has not obtained
professional indemnity insurance to the satisfaction of the Board to
cover any liability which he or
she may incur in the course of the
performance of his or her functions in terms of this Act.
[Paragraph (m) inserted by section 11
of Act No. 74 of 1998]
(2) If in respect of any sheriff who
is subject to any disability mentioned in subsection (1), the Board
is satisfied that, having
regard to the relevant considerations, the
issue of a fidelity fund certificate to him is justified in the
interest of fairness
towards him, the Board may, on such conditions
as the Board may with the concurrence of the Minister determine,
issue a fidelity
fund certificate to him when he applies therefor.
34
Cancellation of fidelity fund certificates
(1)
Notwithstanding the provisions of Chapter IV, the Board may cancel a
fidelity fund certificate issued to a sheriff after at
least 14 days'
notice in writing to the sheriff—
(a) if the sheriff becomes subject to
a disability mentioned in section 33(1)(a) , (c) , (d) , (g) , (h) ,
(j) or (l);
(b) if the sheriff contravenes or
fails to comply with a condition imposed under section 33(2); or
(c) if that fidelity fund certificate
was issued on information subsequently proved to be false.
(2) The Board shall cancel the
fidelity fund certificate of a sheriff if it is requested by the
sheriff to do so or if the sheriff
ceases to hold office.
(3) Any
person who has in his possession or under his control any fidelity
fund certificate cancelled under this section,
shall return that
certificate to the Board within 30 days after he became aware of the
cancellation.
[26] It is now well accepted in our
law that when a court is seized, as in this instance, with
interpreting a statute, a sensible
meaning is to be preferred over
one that may undermine the purpose of the statute. In this regard,
see
Natal Joint Municipal Pension Fund v Endumeni Municipality
2012 (4) SA 593
(SCA) at paragraph [18] and
Novartis SA v Maphil
Trading
2016 (1) SA 518
at paragraphs [24]-[29]. In
Endumeni
supra
at paragraph [18], the following was held:
“…
The
present
state
of
the
law
can
be
expressed
as
follows:
Interpretation
is
the
process
of
attributing
meaning
to
the
words
used
in
a
document,
be
it
legislation,
some other statutory instrument, or contract, having regard to the
context provided by reading the particular provision
or provisions in
the light of the document as a whole and the circumstances attendant
upon its coming into existence. Whatever
the nature of the document,
consideration must be given to the language used in the light of the
ordinary rules of grammar and
syntax; the context in which the
provision appears; the apparent purpose to which it is directed and
the material known to those
responsible for its production. Where
more than one meaning is possible each possibility must be weighed in
the light of all these
factors. The process is objective, not
subjective. A sensible meaning is to be preferred to one that leads
to insensible or unbusinesslike
results or undermines the apparent
purpose of the document. Judges must be alert to, and guard against,
the temptation to substitute
what they regard as reasonable, sensible
or businesslike for the words actually used. To do so in regard to a
statute or statutory
instrument is to cross the divide between
interpretation and legislation; in a contractual context it is to
make a contract for
the parties other than the one they in fact made.
The 'inevitable point of departure is the language of the provision
itself',
read in context and having regard to the purpose of the
provision and the background to the preparation and production of the
document.
”
[27]
In the present instance, Chapter III of the Act deals with the
‘
Position
of Trust of Sheriffs
’
.
On an objective and purposive reading of the provisions of the Act, s
22 clearly creates an obligation on a Sheriff to account
for trust
monies. This requires him (or her) to keep ‘
a
separate trust account’
and to ‘
forthwith
deposit therein the monies held or received by him on account of any
person’
.
The further provisions permit a Sheriff to deposit trust monies into
a separate savings or other interest–bearing account.
The
underlying purpose of this section is clear and that is, trust monies
must be kept separate from amongst others, the Sheriff’s
own
monies and that of his business.
[28] Similarly, s23 deals with
bookkeeping and auditing of accounts. Section 23 (1)(a) and (b)
compels a Sheriff to ‘
keep separate record of monies
deposited or invested by him in..’
and payments made by him
out of the abovementioned trust account and to submit these records
to be audited annually. On a purposive
reading of these two
sub-clauses it is evident that the records that need to be audited
annually must be that of the
separate
records a Sheriff is
compelled to keep
(my underlining)
. The sub-clauses can
therefore not be interpreted disjunctively but conjunctively in order
to give it a sensible and businesslike
meaning. I am therefore
inclined to agree with the argument advanced by Adv. Jamie that s
23(1)(b) properly interpreted requires
a Sheriff to cause his or her
separate
records to be audited and if those
separate
records are insufficient then a Sheriff has failed to comply with the
basic requirements as contemplated in s 23(1)(a) which means
that,
s
23(1)(b) has not and cannot be complied with.
[29]
In advancing this argument further, it was contended that both audit
reports, the one commissioned by the Board and the other
by the
Applicant, recorded that there was no proper or full separation of
trust and business monies. Accordingly, it was contended
that s
23(1)(a) read with s 22 was not adhered to and by definition s
23(1)(b) could therefore not be complied with, whether such
an audit
was qualified or not.
[30]
The argument advanced on behalf of the Board, is indeed convincing.
If the statutory requirements of s 23(1)(a) read with s
22 are not
adhered to, it follows by reading the subsections conjunctively that
by definition s 23(1)(b) cannot be complied with
even if those
inadequate records achieved a qualified or unqualified audit report.
[31]
Having regard to the abovementioned, it follows that in the present
instance, the Applicant fell within the purview of s 33
which is
headed ‘
disqualifications
relating to fidelity fund certificates’
.
The Applicant was indeed someone who under subsection 33(1)(i) had
‘
failed
to comply with a provision of section 23(1)(b) during a period of one
year immediately prior to the date on which he applied
for a fidelity
fund certificate’.
That being the case, the Board was therefore legally compelled to act
in accordance with the provisions of s 33(1) which stipulates
that it
‘
shall
not issue a fidelity fund certificate to a sheriff if he
– (is so disqualified).
[32]
The contention by the Applicant that this Court should follow the
remarks made by our Learned Brother, Binns-Ward J, in para
[20] of
his judgment is, unconvincing. Firstly, the issues for consideration
before our Learned Brother were entirely different
at the time. It
related mainly to the interim relief that was sought at the time.
Secondly, and perhaps more importantly Binns-Ward
J, when he made the
remarks never had the benefit of full argument relating to the issues
in the review application.
[33]
The issue is therefore not whether s 23(1)(b) requires a Sheriff to
produce a qualified or unqualified auditor’s report
but whether
a Sheriff has submitted all his separate accounting records as
required by s 23(1)(a) to audit. If a Sheriff has failed
to keep
separate trust and interest–bearing account records in terms of
s 23(1)(a) then it must follow he or she could not
have caused
separate records to be audited. If that is the case, the underlying
purpose of s 23(1)(b) cannot be complied with and
hence the
peremptory provision of s 33(1)(i) precludes the Board from issuing
such a certificate, as the Sheriff is disqualified
when he applies
therefor.
[34]
Support for this reasoning is also to be found in
Koen
.
Although the facts in
Koen
are different, the Full Court at para [49]-[52] held
that
where a Sheriff fails to comply with the statutory requirements for
an application to renew his or her fidelity fund certificate,
the
Board is precluded by the peremptory provisions as contemplated in s
33(1) to issue a fidelity fund certificate, and in the
absence of a
formal application by a Sheriff, the Board is not compelled to
mero
motu
in
terms of s 33(2) to issue such a certificate. The Applicant
in
casu
,
did not make any formal application to the Board under the provisions
of s 33(2) and therefore the remarks by Binns-Ward J are
of no
assistance to him.
[35]
Turning to some of the specific facts in the present instance. In the
first audit report as complied by C2M in August 2016,
it is evident
that the Applicant failed to keep proper accounting records as
required by s 23(1)(a). The Applicant also failed
to comply with s 22
and specifically 22(2). This section and subsection deal with the
opening and keeping of trust accounts and
the depositing of trust
monies into a trust account and the related trust balances of trust
creditors.
In
sum, C2M auditors were not satisfied that the Applicant complied with
s 23 of the Act.
[36]
With regard to the Board’s own inspection, it was determined
that the Applicant used his business bank account to receive
trust monies. The
Applicant’s business bank records were now also regarded as
trust accounting records. He also failed to
comply with sec 22 which
deals with the keeping of separate trust accounting records.
[37]
The Applicant was called upon by the Board in terms of sec 23(3) to
submit all of his banking records for audit, including
‘business
bank records’ and business bank special investment accounts.
[38]
It was during this stage, on 8 December 2016, the Board said to the
Applicant that ‘
currently
you are not in compliance with 23(1)(b)’
and
will not issue a 2017 fidelity fund certificate ‘
until
such time’
as the Applicant complies with 23(1)(b).
[39]
On a plain reading of the decision taken by the Board, it did not
decide that the Applicant would never get his 2017 fidelity
fund
certificate but that he would have to submit all his records i.e.
including business bank records so that they could do a
proper audit.
[40]
The Applicant attempted to resolve the situation by referring to his
subsequent audit report by HDP dated 26 December 2016,
which contains
a more benevolent interpretation or assessment of the Applicant’s
accounting records.
[41]
There are two difficulties in this regard. The first is the audit
report is still damning of the Applicant’s accounting
records.
In this regard, HDP recorded the following: ‘
[a]n
accounting system was employed and transactions were recorded but
there are weaknesses. We are reasonably sure that the trust
bank
account exceeds trust creditors but there is some uncertainty’
.
Furthermore, in the accompanying letter HDP said ‘
we
were unable to obtain a list of trust creditors that agreed with the
trust current account and trust savings account that had
been
opened’
.
(This was an audit for 2016). Moreover, according to HDP, the
Applicant failed to keep the trust bank account; it went into
overdraft
on three occasions and there were ‘
numerous
instances in which trust monies were deposited directly into the
business bank account’
.
Although it was stated that this matter had apparently been resolved,
by definition the Applicant on his own auditor’s report
was not
keeping trust monies separate. The report then specifically
recorded that the Applicant had contravened s 22 and
23(1)(a) of the
Act.
[42]
The second difficulty with the HDP audit report is that strictly
speaking, it is irrelevant to the administrative law challenge
of the
Board’s decision on 8 December 2016, since the report did not
exist at the time of that decision. But even if it is
taken into
account, the report does not assist the Applicant’s case as his
accounting records still fall foul of the provision
of s 22 and
23(1)(a).
[43]
The Applicant has also contended, that the Board was trying to
circumvent the provisions of the Act by refusing to issue his
certificate rather than instituting and finalising the disciplinary
proceedings against him. More importantly, the Applicant has
averred
that if his fidelity fund certificate was not issued to him, it will
put him out of business. This argument of the Applicant
is in my view
misplaced. There is an important distinction between the charges
which the Applicant may face in the disciplinary
enquiry (which may
require a more thorough investigation) and the Applicant’s
non-compliance in respect of keeping separate
records and accounts.
Whilst both categories may result in the Applicant being disqualified
as a Sheriff, it is the latter where
the Board has no discretion to
issue a certificate. To do so would amount to an illegality unless
the Applicant has brought an
application in terms of s 33(2) for the
Board to consider.
[44]
In the present instance, the Applicant for some unknown reason did
not deem it appropriate to utilise the provisions in terms
of s 33(2)
to obtain an exemption from his disqualification and to carry on his
business.
[45]
This brings me to the question whether the administrative law
challenge was not premature as the Applicant did not exhaust
all his
internal remedies. Although the Applicant has in his founding
affidavit cited various sections of PAJA which he claims
justify a
review, none of it in my view justifies that the decision of the
Board be reviewed and set aside. More importantly, in
terms of s
7(2)(c) of PAJA, the Applicant has failed to set out any exceptional
circumstances why it would have been in the interest
of justice to
exempt him from the obligation to exhaust his internal remedy as
provided for in terms of s 33(2) of the Act. On
the facts of this
case, it is evident that the Applicant is not a new-comer to the
profession as a Sheriff. In fact, he was a Sheriff
for more than 10
years’ in the Eastern Cape before accepting the Sheriff’s
post in Cape Town West. It is therefore
rather disquieting that he
still has these major difficulties in keeping proper and separate
accounting records as required by
the Act.
[46]
For these stated reasons, I am satisfied that the Board’s
interpretation of s 23(1)(b) cannot be faulted and it did not
commit
a reviewable act by refusing to issue the Applicant a fidelity fund
certificate for the year 2017 until he fully complies
with s 23(1)(b)
of the Act.
[47]
It follows that the Application cannot succeed.
[48]
In the result, the following order is made.
The Application is dismissed with
costs.
________________
LE GRANGE, J
I
agree.
________________
BOZALEK, J
Coram
: L J Bozalek J
et
A Le Grange J
Judgment
by
: Le Grange J
For
the Applicant
: Adv H van der Linde
SC
For
the Respondent
: Adv I Jamie SC
Date
of Hearing
: 24 November
2017
Judgment
delivered on
: 18 December
2017