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[2016] ZAGPJHC 297
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GP Msibi Attorneys Incorporated v Rodel Financial Services (Pty) Ltd and Another (39261/2016) [2016] ZAGPJHC 297 (17 November 2016)
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REPUBLIC OF
SOUTH AFRICA
IN THE HIGH COURT OF SOUTH AFRICA
GAUTENG LOCAL
DIVISION, JOHANNESBURG
CASE
NUMBER: 39261/2016
In
the matter between:
GP
MSIBI ATTORNEYS INCORPORATED
Applicant
and
RODEL
FINANCIAL SERVICES (PTY) LTD
First
Respondent
SHERIFF
OF THE DISTRICT OF BRAKPAN
Second Respondent
JUDGEMENT
NGALWANA
AJ
[1]
Armed with a judgment against the applicant and the its sole director
and shareholder for the payment of R734,079,92, the first
respondent
obtained a writ of execution against the applicant and its sole
director and shareholder, Mr Msibi, pursuant to which
certain listed
moveable assets were attached by the second respondent on 12
September 2016.
[2]
The sale in execution of those assets is scheduled for this Friday 18
November 2016. This has prompted the applicant to
approach this
Court for an urgent interdict to stop the sale and for the return of
those assets to the applicant.
[3]
The deponent to the founding affidavit describes himself as a
business rescue practitioner appointed by the applicant on 10
October
2016 in terms of section 129 of the Companies Act, 71 of 2008 (“the
Companies Act&rdquo
;). He says the commencement of those
proceedings was published to every affected person, including the
first respondent,
on 13 October 2016. He says pursuant to
section 132(1)(a)
and (b) read together with
section 133
of the
Companies Act “
all
legal proceedings [against the applicant] may not be proceeded with
without the written permission of the business rescue practitioner
or
by leave of the court”
.
[4]
In resisting the application, the first respondent advances
essentially two defences:
4.1
First, it says the non-joinder of the Law Society is “
fatal”
.
4.2
Second, it says business rescue provisions of the
Companies Act do
not apply respect of an incorporated legal practice.
4.3
Third, it says the matter is in any event not urgent.
[5]
In my view, although the matter may be of interest to the Law Society
and, indeed, interesting to it, it is not one in which
the Law
Society has a direct and substantial interest for purposes of
joinder.
[6]
I also doubt whether business rescue provisions of the
Companies Act
are
confined to certain types of entities and do not extend to
others. There is, in my view, no basis in law for such a
distinction
to be drawn simply by reason of an attorney’s
practice being subject to “
stringent
ethical rules”
and “
fiduciary
duty to clients”
.
There are numerous provisions in the Financial Advisory and
Intermediary Services Act, 37 of 2002 (“
the
FAIS Act”
)
which impose fiduciary duties on financial services providers,
particularly in the manner in which they deal with client monies.
[7]
For example, section 19(3) of the FAIS Act says:
“
(3)
The authorised financial services provider must maintain records in
accordance with subsection (1)(a) in respect
of money and assets held
on behalf of clients, and must, in addition to and simultaneously
with the financial statements referred
to in subsection (2), submit
to the registrar a report, by the auditor who performed the audit,
which confirms, in the form and
manner determined by the registrar by
notice on the official web site for different categories of financial
services providers
-
(a)
the amount of money and financial products at year end held by the
provider on behalf of clients;
(b)
that such money and financial products were throughout the financial
year kept separate from those of
the business of the authorised
financial services provider and, report any instance of
non-compliance identified in the course
of the audit and the extent
thereof; and
(c)
any other information required by the registrar.”
[8]
Section 10 of the General Code of Conduct for Authorised Financial
Services Providers and Representatives (“
the
General Code”
)
is to similar effect. What is more, section 2 of the General
Code imposes a fiduciary duty on financial services providers
“
at
all times [to] render financial services honestly, fairly, with due
skill, care and diligence, and in the interests of clients
and the
integrity of the financial services industry”
.
[9]
Despite all these provisions, which are no different in substance
from the professional strictures to which attorneys practices
are
subject, financial services providers and their firms have been
placed under business rescue without eliciting any demurring
murmurs
from creditors. An example is that of firms and financial
services providers involved in litigation with pensioners
in respect
of complaints to the FAIS Ombud arising from property syndication
schemes involving Sharemax Investments (Pty) Ltd.
[10]
To my mind, the nature of an attorney’s practice does not
exempt that practice from business rescue provisions of the
Companies
Act. The
provision is not reasonably capable of that
construction. The “
fiduciary”
argument advanced by Counsel for the first respondent does not make
it so.
[11]
What remains is urgency. The basis advanced by Counsel for the
applicant is that the sale for execution is scheduled
to take place
tomorrow – Friday 18 November 2016. But the applicant has
known about this eventuality since 12 September
2016 when the assets
were attached by the second respondent. The first sale in
execution was supposed to take place on 14
October 2016. That
it did not go ahead was by no intervention of the applicant. He
says the reason was that the sale
had not been properly advertised.
[12]
A month after the attachment, on 10 October 2016, the applicant
commenced business rescue proceedings. On the papers
these
appear to be nothing more than an attempt at staving off the first
respondent’s rightful redress in law. Bald
assertions of
turning fortunes for the applicant are made without any plausible
substantiation. A basis for urgency, and
delay since 11 October
2016, they are not.
[13]
In the circumstances, the applicant has created its own urgency.
[14]
The application is struck from the roll with costs.
Order
[15]
In the result, the application is struck from the roll with costs.
______________________
V Ngalwana
JUDGE
OF THE HIGH COURT OF SOUTH AFRICA
GAUTENG
LOCAL DIVISION, JOHANNESBURG
Appearances
For
the applicant:
Steyn
Instructed
by:
JH Van Heerden &
Cohen
For
the 1
st
respondent: J Erasmus
Instructed
by:
Norman Berger & Partners
INC
Date
of heads:
15 November 2016
Date
of judgment:
17 November 2016