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[2013] ZAECPEHC 37
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Pienaar v Registrar of Financial Services and Another (629/2013) [2013] ZAECPEHC 37 (16 July 2013)
IN
THE HIGH COURT OF SOUTH AFRICA
EASTERN
CAPE DIVISION – PORT ELIZABETH
CASE NO: 629/2013
REPORTABLE
Heard:
27 June 2013
Delivered:
16 July 2013
In
the matter between:
FRANCOIS
GIDEON PIENAAR
........................................................................
APPLICANT
and
THE
REGISTRAR OF FINANCIAL SERVICES
................................
FIRST
RESPONDENT
NATIONWIDE
FUNERAL SERVICES CC
(Registration
Number 2000/015435/23)
(In
Liquidation)
............................................................................
SECOND
RESPONDENT
______________________________________________________________________
JUDGMENT
______________________________________________________________________
MAGEZA
AJ
The
statutory provisions and Registrar’s directives
to
financial service providers.
[1]
Section 14(1) of the
Financial Advisory and Intermediary Services
Act No. 37 of 2002
(FAIS Act) makes provision for the debarment
of financial services representatives and requires that an authorized
financial services
provider must ensure that any representative who
no longer complies with the ‘fit and proper’ requirements
referred
to in section 13(2) (
a
) read with section 8(1), or
has contravened or failed to comply with any provision of this Act in
a material manner, is prohibited
by such provider by the withdrawal
of any authority to act on behalf of the provider, and that the
representative’s name
is removed from its register referred to
in section 13(3).
[2]
Section 14(2) enjoins: “For the purposes of the imposition of
any prohibition contemplated in subsection (1), the authorized
financial services provider must have regard to –
(a)
information regarding the conduct of the representative as
provided by the registrar
…; and
(b)
any contravention of, or failure to comply with, any relevant
provision of this Act by the representative.”
Section
14(3) provides that an authorized financial services provider must
within
a
period of fifteen days after the removal of the name of a
representative from the
register
as contemplated in subsection 14(1), inform the registrar in writing
thereof and
provide
the registrar with the reasons for the debarment
in such format
as the registrar
may
require
. The registrar may then make known any such debarment
and
the reasons
therefor
by notice in the Gazette or by means of any other appropriate public
media.
[3] The Registrar of
Financial Services Providers has, in terms of the amended
section 13(3)(a) of the
FAIS Act, made available by way of a circular to all financial
services providers, a
‘request for debarment’ form, in a prescribed format in
which a
provider must notify the
Registrar of the removal of the debarred representative’s name
from the register and the
reasons for the debarment. This form is titled:
“
Form and manner of
notification to registrar of financial services providers regarding
debarment of representatives under the section
14 of the financial
advisory and intermediary services Act, 2002”
and provides:
“
Instructions on completing the
prescribed form -
Providers must ensure that the
prescribed form is completed in full and that subsequent alterations
are initialed.
Full reasons for the debarment
must be provided and the information and documentary evidence in
support of the reasons must be
attached
.” (my underlining)
Appearing at the bottom
of the body of the form itself, is the further directive that a
requester must:
“
7. Attach all relevant
documentation including, but not limited to-
(i)
evidence and information supporting the reasons for debarment;
(ii) a copy of the service contract or
mandate between
FSP and debarred representative;
(iii)
transcript of disciplinary hearing; and
(iv) forensic/investigation report (if
any).”
These
are the first respondent’s own directives which it requires of
financial services
providers
to follow and comply with in requesting a debarment.
[4]
This Court is called upon to decide whether (a) second respondent,
represented by one Mari van Rooyen, had lawful reason to
request and
secure a debarment of the appellant without complying with the above
statutory provisions and directives and; (b) whether
the first
respondent acted lawfully in effecting the debarment.
The
application is directed at the review and setting aside of the
decision of the second respondent, effected by the first respondent
at the request of second respondent. The applicant is of the view
that there has been a lamentable failure by both respondents
to
comply with the law and directives provided and set out in the above
paragraphs. The relief he seeks is the following:
“
1.
That the Second Respondent’s debarment of the Applicant on 17
October
2012, in terms of
Section 14
of the
Financial Advisory and Intermediary
Services Act, 37 of 2002
is declared
to be a nullity.
2.
Alternatively
that the said debarment be set aside.
3.
That the First Respondent be directed to amend his central
representative
register
to reflect the decision of this Honourable Court in terms of 1,
alternatively 2 above;
4.
That the First Respondent be directed to pay the costs of this
application.
5…”
[5]
First respondent is defined as a person contemplated in section 2 of
the Financial Advisory and Intermediary Services Act, 37
of 2002
(FAIS Act) charged with the duty to enforce compliance by registered
financial services providers and exercises public
power and function
as contemplated in the definition of “administrative action”
in section1 of the Promotion of Administrative
Justice Act 3 of 2000
(PAJA). The second respondent in turn, prior to its liquidation,
conducted business as an administrator of
group funeral insurance
policy schemes and sold funeral insurance policies. Second respondent
does not oppose the relief sought
and it has thus been left to the
first respondent to resist the relief sought by applicant on the
grounds set out hereunder.
[6]
Applicant details in his papers that he is the founder of the second
respondent and commenced the business in 1994 ‘literally
from
nothing’. According to him, at the time of its liquidation in
2012, the business yielded a turnover of some seven million
rands in
revenue. Ms Mari van Rooyen, his daughter, joined him in the business
at a time when she was still a student and had,
over a period of
time, admittedly made a substantial contribution in the development
thereof. Motivated by her contribution, he
decided to relinquish some
of his member’s interest in the close corporation in her favour
with a view to increasing her
personal holding gradually over time,
in anticipation of his own retirement from the business.
[7]
These laudable intentions however did not come to pass as the
relationship between father and daughter took a nasty turn, leading
in the end to a complete breakdown in their relationship and
eliminating, as he puts it, ‘the possibility of any future
co-operation between us.’ He says, in an effort to hound him
out of the enterprise and to assume his participation and member’s
interest therein, his daughter launched an urgent application for
Interdictory relief against him on 15 October 2012 before the
Western
Cape High Court under case number 1976/2012. He says:
‘
The
relief van Rooyen sought in the Cape Town application was couched
in the form of a temporary interdict
pending the conclusion of a substantive
application she intended launching in
terms of
Section 36
of the
Close
Corporations Act, 69 of 1984
whereby
she would seek the approval of the court
for my removal as a member of the
Second Respondent and the acquisition by
the Second Respondent of my membership
interest.’
[8]
He goes on to say that:
‘
Contemporaneously
with the launching of the Cape Town application van
Rooyen, unilaterally, formally
notified the First Respondent that I had been
debarred from acting as a
representative of the Second Respondent, as
contemplated in section 14 of the
Act.’
and
that,
‘
On 5 November 2012 the First
Respondent wrote to Ms van Rooyen, confirming
that he had recorded my purported
debarment in its central representative
register.’
[9]
Applicant also makes reference to a prescribed form circulated by
first respondent to all financial services providers, the
completion
of which form is mandatory for purposes of lodging debarment requests
with first respondent. This form was completed
and submitted by Ms
van Rooyen on 17 October 2012. The form bears the following
inscription at the top thereof,
‘
DEBARMENT IN
TERMS OF SECTION 14 OF THE FAIS.’
He
points out that contrary to what is anticipated in the first
respondent’s own prescribed forms, no reasons for the request
to debar him are evident and no relevant document was attached
thereto. The debarment was also neither authorized by the second
respondent, as no resolution to this effect had been taken by the
members, nor was he informed or afforded an opportunity to answer
any
“charges” of wrongdoing against him. According to him he
had in fact committed no wrong, save that her daughter’s
only
interest was his removal from the business by any means necessary.
Applicant also relies on a further ground. He alludes to
a meeting
held in Cape Town on 22 October 2012 during which it was agreed that
van Rooyen would immediately attend to uplifting
the debarment in
order for the first respondent to amend its records accordingly. This
meeting held to attempt to settle the dispute
before the Western Cape
High Court was attended by their respective legal representatives. In
light of the view I take of the matter
on the main ground advanced by
applicant, I do not propose to canvas the detail relating to this
alleged agreement.
[10]
First respondent in its answer deals with how debarments are
initiated and undertaken by a financial services provider as well
as,
what it views as, its role in such proceedings as follows:
“
7.1 Its [first respondents]
primary function is to oversee the activities of financial
institutions (other than banks) and exercises
supervision over
compliance with the laws regulating financial institutions.
7.2 In terms of section 13(2) of the
FAIS Act it is the responsibility of an authorized financial services
provider (in this instance
second respondent) to ensure and to be
satisfied that its representatives at all times comply with the fit
and proper requirements
prescribed by section 8(1) of the FAIS Act.
7.3 Section 14(1) of FAIS Act requires
the financial services providers to debar representatives who,
inter
alia
, do not comply with the fit and proper requirements. The
responsibility in terms of the FAIS Act to ensure that
representatives
comply with the Act rests on the financial services
providers themselves. The Registrar plays no role in the debarment
and any
aggrieved person must address such grievance with the
financial services provider directly.
7.4 The Registrar is not required to
evaluate or adjudicate on the reasonableness, validity or otherwise
of the reasons for the
debarment.
First respondent does nevertheless
point out in a letter dated 9 November 2012 to applicant’s
attorneys that,
‘…
the Registrar must
ensure that a financial services provider acts in accordance with the
provisions of the Act. As such, the Registrar
may engage a financial
services provider to determine whether a debarment was effected in
accordance with the requirements of section
14(1) of the FAIS Act.’
[11]
In a further affidavit filed [by agreement] by first respondent,
paragraph 6 thereof sets out the following detail explaining
the
manner in which it had proceeded in effecting the debarment:
“
6.1 Finally, I need to deal
with the investigations by the Registrar’s office
into the matters alluded to in
paragraph 6.8 of the answering affidavit.
6.2 Firstly the reasons for the
debarment provided by Ms Van Rooyen on
behalf of Second Respondent in terms
of section 14(3).
6.3 These reasons are
not
perused for the purposes of intervention into the
fsp’s (financial services
provider) decision to debar a representative. That
decision is the fsp’s
prerogative and duty as is abundantly clear from section
14(1) read with section 13.
6.4 The Registrar looks at the reasons
to see that they relate to the
representative’s (in this case
the Applicant’s) fitness and propriety as
understood by the FAIS Act; and that
the debarment has not been
effected for another reason. The
reasons provided normally also serve to
guide the Registrar in his decision
whether the debarment and reasons
therefor should be published in the
Gazzette as contemplated by section
14(3)(b).
6.5 In this particular instance the
Applicant queried the motives for his
disbarment and prevailed upon the
Registrar to investigate the
debarment and to exercise his (the
Registrar’s) power to debar Ms Van
Rooyen in terms of section 14A.
6.6 The reasons for the debarment were
set out in a form used by the
Registrar’s office for this
purpose. The office has also published
guidance notes on section 14
debarments. (The Registrar receives
between 40 and 90 debarment
notifications on a monthly basis). A copy
of the debarment form received in this
instance dated 17 October 2012 is
attached marked GEA 5.
6.7
Attached to the form was a
notice of motion (without any founding
affidavit) in Case No 19761/2012 of
the Western Cape High Court
, in which van
Rooyen figured as applicant and sought
interdictory relief against Applicant (First
Respondent in that matter), not to
interfere in the affairs of the Second
Respondent.
6.8 These documents were scrutinized
not only for reasons furnished by van
Rooyen for the debarment of Applicant,
but also against the background of the
Applicant having insisted that the
Registrar should exercise his powers to debar
van Rooyen in terms of section 14A for
the improper debarment of the Applicant.
6.9 As it were the Registrar’s
office was not satisfied that the information
was sufficient and on 22 January 2013
advised van Rooyen to provide
appropriate evidence that the
debarment complied with the section 14
requirements.“
Conduct
of Ms Van Rooyen
[12]
Ms Van Rooyen does not resist the relief sought and from the
applicant’s papers it does appear that the parties had started
on a sound business footing but had over time gravitated apart with
their relationship ultimately reaching the proverbial dead-end,
disabling them from operating the business with the same goals and
mutual tolerance. The genesis of this is not fully germaine
to the
relief sought but the fights led ultimately to a battle for control
and complete takeover by Ms van Rooyen. The nature of
the relief set
out in the notice of motion filed with the Western Cape High Court
makes this pretty clear and Ms van Rooyen was
proceeding with a view
to assuming all the members’ interest in the second respondent.
I will revert to the detail set out
in this notice of motion.
[13]
She was also (within the business) its compliance officer appointed
and discharging the duties set out in terms section 17
of the FAIS
Act. As a compliance officer, she was vested with a statutory power
and function to ensure that representatives who
no longer comply with
the ‘fit and proper’ requirements set out in section
13(2)(a) read with section 8(1) are “prohibited”
by her
as compliance officer from rendering any new financial service and
removed from the list of representatives (s13(3)).
[14]
Contemporaneously with launching the Western Cape proceedings on 15
October 2012, she requested the first respondent to debar
the
applicant by letter dated 17 October 2012. The letter was accompanied
by the prescribed form and, first respondent says, attached
to this
form was also the Western Cape High Court notice of motion. First
respondent confirmed the debarment on 5 November 2012
without
requiring any additional information underpinning the debarment. Once
applicant became aware of the aforegoing, extensive
correspondence
was exchanged between applicant (through his legal representatives)
and the first respondent seeking removal of
the debarment. First
respondent adopted the attitude that in its view the second
respondent had complied with the FAIS Act and
that its only role was
to simply effect the debarment.
[15]
Now, what is in my assessment undeniable is that Ms van Rooyen filed
a request for debarment without any reasons being provided
other than
the attached notice of motion. It is clearly evident that there were
many proper courses available to her if she perceived
there was
financial misconduct on the part of applicant. The most immediate
course would have been to source an internal auditor’s
report
detailing misappropriation or wrongdoing. Once available and
presented to applicant for comment, she could if dissatisfied
with
the response, commission an independent financial investigation based
on such a report and if material wrongdoing was confirmed
on the two
reports becoming available, in my view justifiably approach the first
respondent and submit these with a request to
debar. Although a
disciplinary hearing presided over by an independent chairperson is
ideal, a small entity with two partners,
members or co-shareholders
acting also as representatives may well not have the ability to
undertake a lengthy hearing. In such
event it could sufficiently
comply with a credible financial investigation in which a
representative is afforded an opportunity
to gainsay investigative
findings. She neither did this nor did she convene a hearing. The
legislative provisions entrust her with
a crucial responsibility to
serve a public good whose aim is the protection of a vulnerable
public by prohibiting offending representatives
and submitting
requests to debar.
Conduct
of the first respondent?
[16]
First respondent failed to act lawfully by debarring applicant
without determinable reason and exacerbated the situation by
undertaking what I view as an inexplicable excursion to search for
reasons post effecting the debarment. Its own letter dated 5
November
2012 acknowledged the letter requesting the debarment and with an
alarming innocence and lack of consciousness of its
duties, assured
her that it had recorded the debarment of applicant and had entered
this in its central representative register
“as per your
notification in the letter referred to above”. In this Court
first respondent advanced differing alternative
premises in
justifying its conduct. First it denies that it has a role to play in
the process of a debarment by a requester and
states that “any
aggrieved individual must address such grievance with the financial
services provider.” That, “the
Registrar is not required
to evaluate or adjudicate on the reasonableness, validity or
otherwise of the reasons for debarment”
but nonetheless it
acknowledges that it has a duty to ensure the financial service
provider acts within the terms of the FAIS Act
and the law. The first
respondent then makes the startling averment that Ms van Rooyen
furnished it with reasons and, ‘The
reasons for the debarment
were set out in a form used by the Registrar’s office for this
purpose’ and, ‘
Attached to the form was a notice of
motion (without any founding affidavit) in Case No 19761/2012 of the
Western Cape High Court
, in which van Rooyen figured as applicant
and sought interdictory relief against Applicant (First Respondent in
that matter) not
to interfere in the affairs of Second Respondent.’
[17]
I do not agree with this assertion made in first respondent’s
papers. In the first place, the prescribed form referred
to by first
respondent and annexed is no more than a sterile and bland document
requiring only the personal details of the compliance
officer and
representative sought to be debarred. All that Ms van Rooyen had done
in addition was to simply tick the ‘Honesty
and Integrity’
box or column but failed to attach any report of a duly convened
hearing or forensic investigative report
from which the first
respondent could have seen detail resembling reasons. There were
none. The fact such a material assertion,
is made by an officer
charged with the responsibility to independently navigate the
obligations set out in the FAIS Act and enforce
compliance therewith,
is disturbing.
[18]
The notice of motion first respondent refers to is a document used in
application proceedings and sets out little else but
the relief
claimed. Such a notice does not set out the facts upon which an
applicant relies and the notice must refer to and be
accompanied by
at least one affidavit in which the facts constitute the evidence in
support of the relief claimed. –
Rule 6(1) of the Uniform
Rules of Court; Wingaardt v Grobler
2010 (6) SA 148
(ECG)
No
such affidavit was availed first respondent as at 5 November 2012
when the debarment was effected. A perusal of this notice of
motion
is also damning in that it clearly spells out that the applicant
therein acted in her personal capacity and cited the applicant
herein
as first defendant and second respondent herein as second respondent.
From this it is immediately decipherable that she
was pursuing a pure
personal interest against the present applicant. The relief therein
was totally unrelated to the applicants
conduct for purposes of the
FAIS Act. She was not acting
qua
compliance officer as the
relief sought was directed only at interdicting the applicant from
participating in the day to day conduct
of the business; implementing
a so-called “Risk Management Plan”; entering the business
premises; using its facilities;
using motor vehicles and log books
and conducting any financial transactions pending his leaving the
business. First respondent
could not have misconceived the relief
sought and it eludes me as to how he could continue in his papers to
make this assertion.
[19]
Whilst I do not deem it necessary to burden this judgment with
irrelevant matter, it is necessary to refer to the paragraphs
(in the
notice) which specify Ms van Rooyen’s true intentions.
Paragraph 4 states:
“
4. DAT die bevele uiteengesit
in 2.1, 2.2 en 3 hiervan sal dien as ‘n tussentydse interdik
met onmiddelike werking, hangende
die beregting van ‘n aansoek
…
4.1 Dat die Eerste Respondent op hou
om lid van die tweede Respondent tewees, en verder bevele dien
aangaande wat insluit:
4.1.1 die verkryging van die Eerste
Respondent se ledebelang deur die Tweede Respondent;
4.1.2 die bedrae (as daar is) wat
betaal moet word opsigte van die betrokke ledebelang of die eise teen
die tweede respondent van
Eerste Respondent;
4.1.3 die bedraaie (as daar is) wat
betaal moet deur die Eerste Respondent aan die Tweede Respondent van
Eerste Respondent;
4.1.4 die wyse en tye van sodanige
betalings; en
4.2 enige ander angellentheid
betreffende die beeindiging van lidmaatskap wat die Hof mag goeddunk;
4.3 Koste
4.4 “
In
my view, this lends credence to the applicant’s averment that
the request to debar was sought not for the purposes set
out in the
FAIS Act but for her own self-serving ends.
[20]
There is the further unsupported proposition by first respondent that
it was within its powers to enter the name of applicant
in its list
of debarred financial services advisory practitioners without
considering reasons for the request. In making this groundless
averment, first respondent relies for justification on the mistaken
view that it plays no role in the debarment procedures available
to
financial services providers other than to enter the name of a
non-compliant representative at the request of a compliance officer
representing an authorized financial services provider. Having set
this view out in the letter dated 9 November 2012 to applicant’s
attorneys, first respondent hastens to cover its rearguard by
adopting the posture that
,
‘…
the Registrar must
ensure that a financial services provider acts in accordance with the
provisions of the Act. As such, the Registrar
may engage a financial
services provider to determine whether a debarment was effected in
accordance with the requirements of section
14(1) of the FAIS Act.’
PAJA
[21]
It is common cause that first respondent exercises public power and
function as contemplated in the definition of “administrative
action” in section1 of the Promotion of Administrative Justice
Act 3 of 2000 (PAJA). Section 3(1) of PAJA provides that:
“
Administrative action which
materially and adversely affects the rights or legitimate
expectations of any person must be procedurally
fair.”
Section 3(2)(b) provides
that an administrator must give an affected
person
“
(i) adequate notice of the
nature and purpose of the proposed administrative action;
(ii) a reasonable opportunity to make
representations;
(iii) a clear statement of the
administrative action;
(iv) adequate notice of any right of
review or internal appeal, where applicable;
and
(v) …”
Section
6(1) of PAJA provides that any person may institute proceedings in a
court for judicial review of an administrative action
where such an
act was in terms of section 6(2)(c) procedurally unfair; or the
action was taken in bad faith or arbitrarily or capriciously
(section
6(2)(e)(v) and (vi)).
An
administrative act?
[22]
First respondent is admittedly a public body established by statute
to protect the public from wrongful conduct of finance
service
representatives resulting in financial losses or prejudice. It owes
its powers and duties to an act of parliament, serves
a public
functionand performs an administrative act. Second respondent is an
authorized financial services provider defined in
terms of section 1
of the FAIS Act as “a person who has been granted authorization
as a financial services provider by the
issue to that person a
licence under section 8.”
[23]
Ms Van Rooyen was a key individual appointed compliance officer in
terms of section 17 charged with the responsibility to monitor
compliance with the Act. One of these responsibilities contained in
section 14 was to ‘prohibit’ a non-compliant
representative
from rendering such a service and ensuring
adebarmentby first respondent in order to protect the public.
Section1
of the PAJA defines administrative action as:
“
any
decision taken, or any failure to take a decision, by –
…
A natural or juristic person, other
than an organ of state, when exercising a public power or performing
a public function in
terms of an empowering provision which
adversely affects the rights of any person and which has a direct or
external legal effect
…”
In
our law a legal entity “does not have to be part of government
itself to be bound by the Constitution” – see
AAA
Investments (Pty) Ltd v Micro Finance Regulatory Council
2006 11 BCLR
1255
(CC). Section 239 of the Constitution defines an organ of state
to include “any other functionary or institution …
exercising a public power or function.”
It
is instructive to note that the FAIS Act provides for debarment at
the request of an authorized financial services provider (section
14)
or (
mero motu
) by the Registrar or Deputy-Registrar of the
Financial Services Board (section 14A, inserted by Parliament in
2008). Whether the
debarment is requested in terms of section 14 or
14A an administrative function is performed and the provisions of
PAJA find application.
In President Republic of South Africa and
Others v South African Rugby Football Union and Others
2000 (1) SA 1
CC
at paras 140-141 it is emphasized that in determining whether
an act is of an administrative nature the emphasis is on the function
rather than on the functionary. What is important is the nature of
the power that is being exercised. Whilst section 1 of PAJA
defines
administrative action in terms of ‘a decision taken’, the
kind of action that will constitute a ‘decision’
is a
matter of construction in the context of each case – see
Bhugwan v JSE Ltd 2010(3) SA 335 (GSJ) and Mobile Telephone
Networks
(Pty) Ltd 2013(1) All SA 60 (SCA).
[24]
The steps taken by first respondents’ officials in receiving,
considering and implementing a debarment must be lawful.
In this
sense, it is imperative that the reasons for the requested debarment
must be evident in the documentation provided by the
requester and
attached to the form provided by the Financial Services Board. It is
evident from the first respondent’s own
prescribed debarment
forms that financial services providers are required to submit
supporting documentation which include, but
not limited to, a
transcript of a disciplinary hearing pursuant to which a debarment is
sought. It is not for the Board to insulate
itself from the
obligation to act lawfully by denying that it owes a representative
sought to be debarred from considering whether
there were such valid
reasons or not. Its consequence is that members of the public may be
informed of such a debarment by a notice
in the Government Gazzette
and by way of an entry of the name of such a representative in first
respondent’s central representative
register. In all such
cases, the individual is entitled to just and reasonable procedure.
Section 14(1) does not authorize unlawful
acts either in respect of
the conduct of the financial services provider or the first
respondent.
[25]
Section 3(1)
of the
Promotion of Administrative Justice Act (the
Act)
requires administrative action which materially adversely affects the
rights or legitimate expectations of any person to be
procedurally
fair. A compliance officer in the position of second respondent must
provide any such person in terms of section 3(2)(b)
of the Act
adequate notice of the nature and purpose of the administrative
action; reasonable opportunity to make representations;
notice of any
right of review and right to request reasons for the administrative
action. In terms of section 6 of the Act a court
may review action
taken by an administrator who was biased and/or where such action was
procedurally unfair. In receiving the information
and carrying out
the public function of recording the details of the debarment and
publishing a notice in the Government Gazzette
for public information
the first respondent concurrently carries out a public function and
must act consonant with procedural fairness.
Must
the non-compliance be visited with nullity?
[26]
All administrative acts not authorized by law are invalid. This is
expressed in the maxim
quid fit contra legem est ipso jure nullum.
The administrative agency is not simply free to use its powers as
it pleases … it must exercise them in a manner which advances
the public interest whilst remaining faithful to the purpose of the
enabling legislation. – see Lawrence Baxter,
Administrative
Law
(1984) at p351.
Can
the first respondent reverse the debarment?
[27]
First respondent expressed the view in its papers that, having
effected the debarment, it was not in a position to remove the
same
and that the only route for relief available to applicant was
initiating Court proceedings for a review of the decision to
have him
debarred and to have the Court set aside the debarment. To put it
differently, the debarment of the applicant stands until
set aside in
review proceedings. For once I agree with the first respondent in
this restatement of the law. Although an act may
be unlawful and thus
invalid, our law acknowledges that pending a declaration of
invalidity, the unlawful act carries factual effect
… and it
is necessary to secure a Court order to obtain reparation or prevent
the harm. – Baxter
op cit
at p 360.
[28]
In
Oudekraal Estates (Pty) Ltd v City of Cape Town and Others
2004
(6) SA 222
(SCA)
at para 26, this is put as follows:
“
For those reasons it is clear,
in our view, that the Administrator’s permission was unlawful
and invalid at the outset. Whether
he thereafter also exceeded his
powers in granting extensions for the lodgement of the general plan
thus takes the matter no further.
But the question that arises is
what consequences follow from the conclusion that the Administrator
acted unlawfully. Is the permission
that was granted by the
Administrator simply to be disregarded as if it had never existed? 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 its belief was
correct? In our view it was not. Until the Administrator’s
approval (and thus also the
consequences of its approval) is set
aside by a court in proceedings for judicial review it exists in fact
and it has legal consequences
that cannot simply be overlooked. The
proper functioning of a modern State would be considerably
compromised if all administrative
acts could be given effect to or
ignored depending upon the view the subject takes of the validity of
the act in question. No doubt
it is for this reason that our law has
always recognized that even an unlawful administrative act is capable
of producing legally
valid consequences for so long as the unlawful
act is not set aside.”
[29]
See also the as yet unreported decision of Plasket AJA in
MEC for
Health, Province of Eastern Cape NO and Another v Kirkland
Investments (Pty) Ltd t/a Eye & Laser Institute (473/12)
[2013]
ZASCA 58
(16 May 2013)
at para 21 where the learned Judge expands
as follows:
“
There is no suggestion in the
above passage that the obviousness of the unlawfulness is a factor of
any relevance. Indeed, Hoexter
understands
Oudekraal
to mean – and she is in my view correct – that ‘even
an obvious illegality cannot simply be ignored’. One
can easily
understand why this is so. It would be intolerable and lead to great
uncertainty if an administrator could simply ignore
a decision he or
she had taken because he or she took the subsequent view that the
decision was invalid, whether rightly or wrongly,
whether for noble
or ignoble reasons. The detriment that would be caused to the person
in whose favour the initial decision had
been granted is obvious.”
-
the Court went on to refer toLawrence Baxter
Administrative
Law
(1984)
at p372 where the author states:
‘
Indeed, effective daily
administration is inconceivable without the continuous exercise and
re-exercise of statutory powers and
the reversal of decisions
previously made. On the other hand, where the interests of private
individuals are affected we are entitled
to rely upon decisions of
public authorities and intolerable uncertainty would result if these
could be reversed at any moment.
Thus when an administrative official
has made a decision which bears directly upon an individual’s
interests, It is said
that the decision-maker has discharged his
office or is
functus
officio
.’
[30]
The matter then in my view resolves as follows:
30.1
The application succeeds.
30.2
The second respondent’s debarment of the Applicant on 17
October
2012, in terms of
Section 14
of the
Financial Advisory and
Intermediary
Services Act, 37 of 2002
is declared to be a nullity.
30.3
The first respondent is directed to amend its central
representative
register to remove the debarment of the applicant
Francois
Gideon Pienaar.
30.4
First respondent is ordered to pay the costs of this application.
______________
MAGEZA
AJ
For
Applicant: Mr OH Ronaasen
Instruted
by: Van Zyl’s Incorporated
25 4
th
Avenue
Newton Park
Port Elizabeth
For
First Respondent: Mr Van der Linde
Instructed
by: Strauss Daly Attorneys
57 Pickering Street
Newton Park
Port Elizabeth
21