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[2010] ZAGPPHC 122
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Dynamic Wealth Management (Pty) Ltd and Another v Registrar of Financial Services Providers (53187/10) [2010] ZAGPPHC 122 (27 September 2010)
Not Reportable
IN THE NORTH GAUTENG
HIGH COURT,
PRETORIA (REPUBLIC
OF SOUTH AFRICA)
CASE
NUMBER:53187/10
DATE:
27/09/2010
In the matter
between:
DYNAMIC WEALTH
MANAGEMENT (PTY) LTD
DYNAMIC WEALTH
STOCKBROKERS (PTY) LTD
................................
The
Applicants
and
THE REGISTRAR OF
FINANCIAL SERVICES
PROVIDERS
...................................................................................................
Respondent
JUDGMENT
Ismail AJ:
[1] The
applicants sought an order that:
(1) The
application be heard as an urgent application in terms of Rule 6 (12)
and that the necessary condonation be granted to
the applicants in
respect of non-compliance with the prescribed forms, time limits and
service;
(2) That the
Respondent be interdicted from implementing, giving effect to or
further publishing its decision to withdraw the financial
services
provider licences/authorisation (FS559 and FSP7652) of the First and
Second Applicants pending the outcome of an application
to be
launched by the Applicants in terms of section 26 (3) of the
Financial Services Act, 97 of 1990, within 15 (fifteen) days;
(3) That the
respondent be ordered to immediately issue a media statement
reflecting the contents of this order;
(4) That the
respondent be ordered to pay the costs of this application.
Background
[2] The
respondent commenced investigation into the affairs of the Applicants
during April 2009. The nature of the investigation
embraced a number
of interrogations and inspections at the Applicants offices.
[3] The
investigation resulted in a draft report in July 2009 which the
Applicants were invited to comment upon.The Applicants did
so by the
17 August 2009.
[4] The
respondent's final inspection report was concluded and signed on the
15 September 2009.
[5] On the 16
October 2009 the respondent launched an urgent application to place
the business of the applicants under curatorship.
The curatorship
application was argued in this division of the High Court on the
18.19 and 22 February 2010. Judgment in the application
was reserved
and was handed down on the 21 September 2010 shortly after the
parties argued this application.
[6] Pursuant to
the hearing of the urgent application referred to above the
respondents notified the applicants of its intention
to withdraw the
authorisation of the second applicant, [see JS2]
[7] The
applicants^ attorney respondent to the letter of the respondent,
dated 26 October 2009, by two letters dated 6 and 11
November 2009
[8] On the 16
April 2010 the Applicants received notification from the Respondent
of the possible withdrawal of the licence /
authorisation of the
Applicants. The Respondent afforded the Applicants an opportunity to
respond to this notification by the 17
May 2010.
[9] The
Applicants responded to the notice of the Respondent on the 17 May
2010. [see JS12]
[10] On the 8 June
2010 the respondent wrote to the applicants attorneys acknowledging
receipt of their letter dated 17 May 2010
and in turn undertook to
reverrtto the applicants attorneys.
[11] Between 24 June
2010 and 15 July 2010 correspondence was exchanged between the
respondent and the applicants attorneys.
[12] On the 15
September 2010 the applicants received notification of the
respondent's decision to withdraw the licence/authorisations
of the
applicants. This letter consists of 22 folios and can be found at
pages 27- 49 and again at pages 284-305 of the papers.
[13] On the 16
September 2010 the applicants filed a notice of appeal in terms of
section 26 of the Finanacial Services Board Act.97
of 1990 (FSB Act),
read with section 39 of the Financial Advisory and Intermediary
Services Act, No 37 of 2002 (The FAIS Act)
[14] In terms of
section 26(3) of the FSB Act, the lodging of an appeal against the
withdrawal of authorisation does not suspend
the withdrawal pending
the outcome of the appeal, unless the Chairperson or Deputy
Chairperson of the Appeal Board, on application
by an affected party
directs otherwise.
[15] The applicants
notified the respondent of their intention to apply to the Chairman
of the Appeal Board for an order suspending
the decision pending the
outcome of the appeal in terms of section 26(3) of the FSB Act.
[16] The present
application before me is for interim relief pending the application
in terms of section 26(3) of FSB Act.
Legal Submissions
[17] Mr Maritz SC
acting for the applicants submitted that the Respondent did not
comply with the provisions of section 9 (2)(a)
(ii) of the FAIS Act
and for that reason the power to withdraw the licence was invalid. He
referred to the matter of Blou v Lampert
& Chipkin NNO&
Others 1973(1) SA 1 (AD) at 9 where the court dealt with the
principles applicable in deciding whether it
was the intention of the
legislature that non-compliance should be visited with a nullity.
[18] Section 9(2)(a)
(ii) of FAIS stipulates: must inform the licensee of the intention to
suspend or withdraw and the grounds therefor
and must give the
licensee a reasonable opportunity to make a submission in response
thereto."
[19] In Ex Parte
Mothuloe (Law Society, Transvaal, Intervening)
1996 (4) SA 1131
at
1137-113 Van Dijkhorst J referred to the matter of Maharaj and Others
v Rampersad
1996 (4) SA 638
(A) at 646C where Van Winsen AJA. after
having concluded that the Legislative provision he was concerned with
was peremptory, went
on to enquire whether it was fatal that it had
not been strictly complied with. The learned judge laid down the
following test:
"The enquiry, I suggest, is not so much whether
there has been "exact" "adequate" or
"substantial"
compliance with this injunction but rather
whether there has been compliance therewith. This enquire postulates
an application
of the injunction to the facts and a resultant
comparison between the position is and what, according to the
requirements of the
injunction, it ought to be. It is quite
conceivable that a Court hold that, even though the position as it is
not identical with
what it ought to be. the injunction has
nevertheless been complied with. In deciding whether there had been
compliance with the
injunction the object sought to be achieved by
the injunction and the question of whether this object has been
achieved are of
imponance."
[20] Mr Maritz
submitted that the registrar imposed terms which the applicants have
to comply with notwithstanding the former having
withdrawn the
licence. Once the licence is withdrawn the applicants cease to be
Financial Service Providers. He rhetorically questioned
where the
registrar got the authority to issue terms when the licence is
withdrawn. He argued that "terms" had no place
where a
licence was withdrawn.
He submitted that
the registrar could only impose terms where the licence was suspended
in terms of section 9 (2)(b) and not where
it was withdrawn. In other
words upon suspension certain conditions could be imposed such as if
X, Y and Z are done or complied
with the suspension would be
uplifted.
[21] He also
submitted that by the respondent's own admission in the opposing
affidavit nothing 'new' arose since the letter it
advanced on the 16
April 2009. He contended that the registrar was permitted in mattters
of urgency to suspend or withdraw a licence
in terms of section 9 (3)
of FAIS, however the licence was not withdrawn in terms of that
section.
Whether this court
has the jurisdiction to hear this application?
[22] On behalf of
the Respondent Mr Lubuschagne SC submitted that the applicants were
in the wrong forum since section 26(3) of
the Financial Services
Board Act [FSB] gave the applicants alternative remedy and therefore
the interdictory relief sought should
fail on this ground alone
[23] He also
contended that in the light of the Oudekraal Estates (Pty) Ltd v City
Council of Cape Town and Others
2004 (6) SA 222
(SCA) the applicants
should have brought a review application against the registrars
decision instead of seeking intermediary relief
as they are presently
seeking. According to him the decision even if it were patently
incorrect still stands, as he it put it "
the decision still
stands and one cannot simply ignore it". He relied upon
paragraph [26] of that decision at pages 241/2
where the court
stated:
" In other
words was the Cape Metropolitan Council entitled to disregard the
Administrator's approval and all its consequences
merely because it
believed that they were invalid provided that its belief was correct?
In our, view it was not Until the Administrators
approval (and thus
also his consequences of the approval) is set aside by the court in
proceedings for judicial review it exist
in fact and it has legal
consequences that simply cannot be overlooked.."
[24] Mr Maritz in
opposition to this view relied upon two decisions where the courts
considered applications for intermediary relief
however, the courts
did not grant the orders because the requirements for such
relief were not met. He relied upon the decisions
of Soundprop 1239
CC t/a 777 Casino v Minister of Safety and Security and Others
1996
(4) SA 1086
and Lady Chin Investments v South African National Roads
Agency Ltd and Others 2001 (3) SA 354 (N). In the latter decision
Nicholson
J at 356 referred to a quote from De Villiers J from Moll v
Civil Commissioner of Paarl and Another
(1897) 14 SC 463
AT 467-8
where the following was stated: "The wide power possesed by the
Court .of interdicting illegal acts., also implies
the power of
correcting any illegality commited by (a) public officer, so long as
it is capable of correction, if the rights of
an individual are
infringed by such illegality."
[25] Mr Maritz
submitted that the High Court had inherent jurisdiction to hear this
matter. Section 26(3) of the FSB Act stipulates:
" (3) An appeal
lodged in terms of this section does not suspend any decision of a
decision-maker pending the outcome of an
appeal unless the
Chairperson or deputy chairperson of the appeal board, on application
by a party, directs otherwise."
He submitted that
section 26(3) does not say that this court has no jurisdiction to
hear matters of this nature. The statute does
not say that no other
court or forum may hear matters relevant to it.
[26] He submitted
that the registrar attached terms to the withdrawal which were
coersive and even to the extent of threat of prosecution.
These terms
are to be found at page 540 of the indexed pages. I do not propose to
burden the judgment by repeating them herein.
He contended that terms
which were attached to the withdrawal could not be done in terms of
section 9(2)(a). The respondent conceeded
that it was an error of law
and that the registrar could only impose terms by virtue of section
9(2) (d). Mr Maritz in developing
this argument submitted that the
registrars action to attach terms in terns of provisions of section 9
(2) (a) was an error in
law. According to him once a licence is
withdrawn by virtue of section 7 a service provider ceases to act as
such. Once again he
asked a rhetorical question namely where does the
registrar get the authority to issue terms when a licence is
withdrawn'
[27] It was argued
by Mr Lubuschagne SC on behalf of the respondent that the application
should be dismissed on the ground that
an interdict should not be
granted because the applicants have an alternative remedy in terms of
s 26 (3) of the FSB Act, which
they followed and lodged an appeal to
the Chairperson of the Appeal Board. He suggested that the 14 day
period which the applicants
submitted it would take, was merely a
guideline and that the applicants were entitled to approach the
chairperson of the Appeal
Board on an urgent basis. The time periods
for the hearing will depend upon the circumstances of the case and it
could be heard
earlier then suggested. He submitted that for this
reason olone the interim interdict should not be granted. The
applicants he
contended had an alternative remedy and that this court
should not have been burdened with this application.
[28] He submitted
that the power to suspend the withdrawal of the applicants license
vested by statute in the Chairman of the Appeal
Board.
[29] Mr Maritz
raised the issue that the respondent did not comply with the
statutory compliance of the audi alterem partem rule
by allowing the
applicants the right to comply with section 9 (2) (a)(ii) of the FAIS
Act, which was a condition precedent to the
withdrawal of the
licence.
He posed the
question what changed since April 2009 when the registrar wrote to
the applicants intimating his decision to suspend
/ withdraw the
licence. There was an investigation relating to 70 files and that the
" formation of SIL and its continued
management had absorbed and
is still absorbing investors funds.." The applicants were not
given a reasonable opportunity to
make submissions.
Mr Lubuschagne on
the other hand submitted that the issue of the 70 files and loss of
monies were not new matters which called for
the applicants being
given an opportunity to respond thereto. He submitted that they were
ongoing problems and that the applicants
failed to co-operate with
the Registrar and they failed to provide an affidavit as requested
without consulting with their attorneys.
[30] He submitted
on behalf of the respondent that the aplicants did not introduce a
'new fundamental ground' calling for the courts
intervention.
[31] Mr Maritz in
his heads qouted paragraphs [32]-[37] of the Oudekraal matter, supra.
He argued that where a subject is sought
to be coerced by a public
authority to comply with an unlawful administrative act- the subject
may raise a 'defence' or a collateral
challenge to the validity of
the administrative act.
In paragraph [29] of
the decision, mention is made to two types of acts namely those that
are void and those that are voidable.
Christopher Forsyth analysed
the problem and drew a distinction between what exists in law and
what exists in fact- see page 243A-
F
[32] The
requirements for an interim interdict have been set out in
the matter of
Setlogelo v Setlogelo
1914 AD 221.
They are:-
(a) a prima facie
right;
(b) a well- grounded
apprehension of irreparable harm if the interim relief is not granted
and the ultimate relief is eventually
granted;
( c) that the
balance of convenience favours the granting of an interim interdict:
and
(d) that the
applicant has no other satisfactory remedy.
See: Harms, Civil
Procedure in the Supreme Court, Lexis nexis A39-A46
[33] Mr Lubuschagne
as previously stated argued that the applicants had an alternative
remedy by approaching the chairman of the
Appeal board. That may be
so, however, the Registrar in my view acted irregularly by imposing
conditions when he withdrew the licence.
This was clearly an error of
the law and this permits me in the exercise of my discretion to
intervene in terms of De Villiers
J's judgment in the Moll matter,
referred to in para [24] supra.
[34] Mr Maritz
alluded to two types of Administrative Acts, namely those which were
void and those which were voidable. He submitted
that the the
Registrar did not give the applicants an opportunity to respond to
what the JSE stated, and this was anathema to the
provisions of s
9(2)(a)(ii).
[35] He submitted
that the applicants have established that they have a prima facie
right and he relied upon the decisions of
Gauteng Gambling Board v
Silverstars 2005 (4) 67 (SCA|); Airoadexpress v Chairman Local Road
Transportation Board. Durban and Others
1986 (
2) SA 663
and
Winkelbauer and Winkelbauer t/a Eric's Pizzeria and Another v
Minister of Economic affairs and Technology and Others
1995 (2) SA
570
(T) at 573
[36] The applicants
in my view establised that they have a prima facie right in this
matter. Such a right can be prima facie established
even if it is
open to some doubt- Webster v Mitchell
1948 (1) SA 1186
at 1189.
Having heard the arguments for and those against the granting of the
order I am of the view that the applicants established
that they have
a prima facie right in this matter.
[37] The remedy
which the court grants is merely pendente lite in nature and the
final determination of the withdrawal of the license
would still
vests with the Chairman or the Deputy Chairman of the Appeal Board,
because an interim interdict is an interlocutory.
The question of
prima facie right can be re-argued on the return date -see
Airoadexpress matter supra. The court must weigh the
prejudice which
the applicants would suffer if an interdict is not granted as opposed
to the prejudice the respondent would suffer
should the interdict be
granted. The situation has hardly changed since April 2009 and I am
of the view that the prejudice to the
respondent would be minimal if
any at all. Whereas the harm to the applicants would be irreparable.
[38] In the
circumstances I make an order in the following terms: (1) That the
Respondent be interdicted from implementing, giving
effect to or
further publishing its decision to withdraw the financial services
provider licences/authorisation (FS559 an FSP7652)
of the First and
Second Applicants pending the outcome of an application to be
launched by the Applicants in terms of section 26
(3) of the
Financial
Services Act. 97 of
1990, within 15 (fifteen) days;
(2) That the
respondents be ordered to immediately issue a media statement
reflecting the contents of this order;
(3) That the
respondent be ordered to pay the costs of this application, such
costs to include the costs of two counsel .
Ismail AJ
Appearances :
For the
Applicant
: Adv N Maritz asssisted
by Adv A P
J Els
Instructed by van
der Merwe , Pretoria
For the
Respondent
: Adv E C Lubuschagne SC instructed by
Instructed by Rooth
and Wessels Attorneys, Pretoria.
Date of Hearing
: 21 September 2010.
Date of Judgment
:
27 September 2010