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[2019] ZAGPPHC 83
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Smith v Financial Services Board and Another (9046/2018) [2019] ZAGPPHC 83 (20 March 2019)
IN
THE HIGH COURT OF SOUTH AFRICA
(GAUTENG DIVISION, PRETORIA)
(1)
NOT
REPORTABLE
(2)
NOT
OF INTEREST TO OTHER JUDGES
(3)
NOT
REVISED
Case No. 9046/2018
20/3/2019
In
the matter between:
MARIE
SMITH
APPLICANT
And
THE
FINANCIAL SERVICES BOARD
FIRST RESPONDENT
BEST
ADVICE FINANCIAL SERVICES (PTY) LTD
SECOND RESPONDENT
JUDGMENT
MILLAR.AJ
1.
This
application was brought initially by way of urgency. The first part,
part A was for inter alia a
rule nisi
and was heard on 20 February 2018.
The order sought on that occasion was granted. The application now
comes before me for the hearing
of part B. When the matter was
called, counsel for the applicant informed me that matters relating
to part A had been resolved
and furthermore that in regard to part B,
the applicant would only be seeking an order in terms of prayers 1
and 4. The effect
of this is that no relief would be sought against
the first respondent.
2.
Counsel
for the first respondent confirmed that the applicant would seek no
relief against his client and that each party would
bare its own
costs.
3.
The
relief sought against the second respondent is:
"1. The
decision taken by the 2
nd
Respondent, Best Advice
Financial Services (Pty) Ltd, to debar the Applicant in terms of
Section 14(1)
of the
Financial Advisory and Intermediary Services Act
37 of 2002
, is reviewed and set aside;"
And
"4.
The 2
nd
Respondent pay the costs of this Application"
4.
The
facts in this application are largely common cause and uncontentious.
The applicant has worked in the financial services sector
since 1990
and began working for the second respondent as an agent from 2004 and
earned commission. The second respondent conducts
its business in
Mbombela in the Mpumalanga Province. The applicant although living in
Bloemfontein in the Free State Province from
2012 would travel to
White River in that province to service clients there as and when
necessary.
5.
The
present dispute has its origin in a meeting that the applicant was
invited to at the offices of the second respondent on 14
December
2017. The subject line of the email dated 13 December 2017 which
called for the meeting stated that the applicant “was
to make
herself available for an appointment at the offices of BAFS in terms
of
Sections 6
and
14
of FAIS
[1]
”
and the purpose of the meeting was to "discuss the circumstances
surrounding the current professional liability insurance
claim as
well as to investigate the complaints received from Mrs. V Leach
[2]
6.
The
applicant attended the meeting. The meeting was recorded and the
transcript forms part of the record. The meeting was attended
by the
applicant and Leon Ferreira and Jacobus (Kobus) Janse van Rensburg.
Mr. Gerhardus Pieter's attended vis skype and was not
physically
present.
7.
It
is not disputed that the applicant was never informed that the
meeting was intended to be a formal proceeding, the outcome of
which
would be debarment in terms of
section 14(1)
of FAIS.
8.
The
applicable wording of
section 14(1)
at the time that the hearing was
held read as follows:
"14.
Debarment of Representatives:
(1)
An
authorised financial services provider must ensure that any
representative of the provider who no longer complies with the
requirements
referred to in
section 13(2)(a)
, or has contravened or
failed to comply with any provision of this Act in a material manner,
is prohibited by such provider from
rendering any new financial
service by withdrawing any authority to act on behalf of the
provider, and that the representative’s
name, and the names of
the key individuals of the representative , are removed from the
register referred to in
section 13(3):
Provided that any such
provider must immediately take steps to ensure that the debarment
does not prejudice the interest of clients
of the representative, and
that any concluded business of the representative is properly
concluded."
9.
The
section in turn refers to the requirements set out in
section
13(2)(a).
This section in turn refers in
section 13(2)(a)(i)
to the
requirements set out in
section 6(2)
for a representative to be
regarded as "fit and proper." The section reads-
"6(2) Fit and
proper requirements may include, but are not limited to, appropriate
standards relating to-
(a)
Personal character qualities of
honesty and integrity;
(b)
Competence, including-
(i)
Experience;
(ii)
Qualifications; and
(iii)
Knowledge tested through
examinations determined by the registrar;
(c)
operational ability;
(d)
financial soundness; and
(e)
continuous professional
development.
10.
The
section provides a list of no less than 5 different categories of
criteria to be considered and specifically provides that the
list is
not a closed one.
11.
Section
14
has however since, and with effect from 1 April 2018 been amended
to provide specifically for hearings, the outcome of which debarment
is a possibility. The procedure followed in the present matter does
not comply with the section as it is now.
12.
In
considering a matter in respect of which a debarment was challenged,
under the section applicable at the time, it was held by
the Supreme
Court of Appeal in Financial Services Board v Barthram and Another
[3]
"even in our
pre-constitutional era, our courts generally accepted that certain
principles of procedural fairness would find
application in an
instance such as this
[4]
."
13.
The
Court quoted with approval the dictum of Colman J in Heatherdale
Farms (Pty) Ltd and Others v Deputy Minister of Agriculture
and
Another
[5]
:
"It is clear on the
authorities that
a
person who is
entitled to the benefit of the audi alterem partem rule need not be
afforded all the facilities which are allowed
to
a
litigant in
a
judicial trial.
He need not be given an oral hearing or allowed representation by an
attorney or counsel; he need not be given an
opportunity to cross
examine; and he is not entitled to discovery of documents. But on the
other hand (and for this no authority
is needed)
a
mere pretence of
giving the person concerned
a
hearing would
clearly not be in compliance with the Rule. For in my view it will
suffice if he is given such
a
right to make
representations
as
in the
circumstances does not constitute
a
fair and adequate
opportunity of meeting the case against him. What would follow from
the last-mentioned proposition is, firstly,
that the person concerned
must be given
a
reasonable time
in which to assemble the relevant information and to prepare and to
put forward his representations; secondly he
must be put in
possession of such information as will render his right to make
representations
a
real and not an
illusory one"
14.
The
applicant was not afforded a sufficient time to prepare and not
notified of the possibility of an outcome that would result
in a
debarment. A consideration of the record as a whole also does not
give any indication that this was drawn to her attention
or for that
matter ever appreciated by her.
15.
The
second respondent argued that the applicant being an experienced and
qualified representative in the financial services sector
knew or
ought to have known what the provisions of section 6 and 14 of the
FAIS Act were, and been sufficiently alerted to the
true purpose of
the meeting by the reference to those sections in the subject line of
the email of 13 December 2018.
16.
Even
if this were to be accepted, the notice period of one day, given that
the applicant had to travel from Bloemfontein to Mbombela
taken
together with the explanation in the email of the purpose of the
meeting could not be said to have given her sufficient notice
of the
case she was expected to answer and the sanction which the second
respondent would seek to impose. This is apparent from
the record.
17.
The
applicant having been given inadequate notice and insufficient
particularity to prepare for the meeting, it follows that the
decision taken pursuant thereto cannot stand.
18.
the
circumstances I make the following order:
18.1
The
decision taken by the second Respondent to debar the Applicant in
terms of
Section 14(1)
of the
Financial Advisory and Intermediary
Services Act 37 of 2002
, is reviewed and set aside;
18.2
The
second Respondent pay the costs of the Application.
A
MILLAR
ACTING
JUDGE OF THE HIGH COURT
GAUTENG
DIVISION, PRETORIA
HEARD
ON:
18 MARCH 2019
JUDGMENT
DELIVERED ON:
20 MARCH 2019
COUNSEL
FOR THE APPLICANT:
ADV. COLLIS
INSTRUCTED
BY:
PEYPER AUSTIN INC.
REFERENCE:
MSC DE BEER
COUNSEL
FOR THE FIRST RESPONDENT:
MR L GROOME
INSTRUCTED
BY:
RW ATTORNEYS
REFERENCE:
MR L GROOME
COUNSEL
FOR THE SECOND RESPONDENT: ADV M BESTER
INSTRUCTED
BY:
CAZ DRY ATTORNEYS INC
REFERENCE:
MR B DRY
[1]
"om jouself beskikbaar to stel vir 'n afspraak by die kantore
van BAFS i.t.v Artikels 6 en 14 van FIAS"
[2]
The email calling for the meeting was written in Afrikaans and
stated the purpose of the meeting to be:"om omstandighede
aangaande die huidige eis teen ons
profesioneleaanspreeklikheids-versekering sowel as die klagte
ontvang van Mev V. Leach te
ondersoek
[3]
2018 (1) SA 139 (SCA)
[4]
Supra at 151D-E
[5]
1980 (3) SA 476
(T) at 486E-G