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[2009] ZAGPPHC 19
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Kruger v Sanlam Lewensversekering Beperk (8154/09) [2009] ZAGPPHC 19 (3 April 2009)
IN THE HIGH
COURT OF SOUTH AFRICA
(NORTH
GAUTENG HIGH COURT, PRETORIA)
DATE:
3/4/2009
NOT
REPORTABLE CASE NO: 8154/09
In the matter
between
STEPHANUS
JOHANNES KRUGER APPLICANT
And
SANLAM
LEWENSVERSEKERING BEPERK RESPONDENT
JUDGMENT
MSIMEKI, J
INTRODUCTION
[1]
The
Applicant brought this application on urgency seeking an order:
“
2. That a
rule nisi do issue, returnable on 31 March 2009, calling upon the
Respondent to provide reasons on the return date why
the following
order should not be made final:-
That the
Respondent be ordered to, within 5 days of the granting of this
order:-
Uplift
the debarment of the Applicant in terms of section 14 of the
Financial Advisory and Intermediary Services Act, No.
37 of 2002
(as amended) (“the Act”) to deliver any new financial
services;
Restore the
Applicant’s name on the register of representatives, kept in
terms of the provisions of section 13 (3) of
the Act;
Inform the
Financial Services Board (“FSB”) accordingly;
That
the Applicant be granted leave to file his application for review
and setting aside of the Respondent’s decision to
remove his
name from the register of representatives and/or of the process
before as well as the recommendation of the Tokiso
Legal Consultant,
within 15 days of this order;
That the
Respondent be ordered to pay costs of the application;
3. That
the order in paragraph 2
supra
will serve as temporary interdict with immediate effect pending the
finalization of the Applicant’s application to FSB for
a
licence to work as authorized supplier of financial services and/or
the Applicant’s application for review mentioned
supra,
whichever
is concluded successfully first.
4. Further and/or
alternative relief.”
[2] The
Respondent did not file its Notice of intention to oppose the
application but filed an Answering Affidavit on 25 February
2009.
This was followed by the affidavit of the Registrar of Financial
Services Providers (“the Registrar”) which was
submitted
on 02 March 2009. Mr H. B. Smalberger SC (“Mr Smalberger”)
on behalf of the Respondent, had no difficulty
if the Registrar’s
affidavit was admitted. It was accordingly admitted. Mr Venter, on
behalf of the Applicant, also was not
worried by the fact that no
Notice of Intention to Oppose the application had not been filed. So
the matter accordingly proceeded.
BACKGROUND
FACTS
[3] The
Applicant worked for 27 years since 1981 in the Insurance Industry
attached to Sanlam (“the Respondent”), an
authorised
financial services provider and according to the contract between
them earned a commission only as an independent contractor.
His case
is that, he
,
for the past 5 years, was one of the elite group consisting of the
best 15 representatives who generated the most business for
the
Respondent. He, in 2002 when Sanlam trust received a contract to
manage the rehabilitation trust formed by mining companies
in terms
of the mining legislation, received a contract to do the investments
on behalf of the trustees. With the support of his
branch manager and
armed with his prior knowledge from the mining industry, he developed
an insurance product which enabled the
mines to provide security that
required less capital in the form of re-assurance. He managed this
lucrative and complex business
alone for the first 3 years. Jacko
Moll and Johan Kruger, also representatives from the same branch,
joined him in 2006 and did
the mining rehabilitation business. They,
however, encountered problems in September 2008 when a decision was
taken which meant
that 15% of their commission on mine rehabilitation
business be given to one Mr Dries Bekker (“Bekker”). The
three
were against the decision which was not implemented. Bekker
then launched a forensic investigation against the Applicant who was
notified thereof in October 2008. Bekker, on 5 November 2008,
informed the Applicant that he had been suspended pending the
finalisation
of the forensic investigation. The Applicant, on 11
November 2008, was advised that the Respondent would be submitting
the forensic
reports to a legal consultant from Tokiso for
recommendations and that it was contemplating terminating his
contract as financial
advisor (which at the time the Applicant was)
and debarring him. The legal consultant only found the Applicant
guilty on all the
charges after hearing oral evidence. The matter was
heard on 23 January 2009 while the Applicant was notified about the
verdict
on 2 February 2009. The Applicant’s contract was
terminated on 4 February 2009. The Applicant, in terms of Section 14
of
Financial Advisory and Intermediary Services Act, No. 37 of 2002
(“the Act”) was, accordingly debarred.
[4] On
behalf of the Respondent, on the other hand, it was contended by Mr
Smalberger that the Respondent had merely discharged
its duties in
terms of the Act. These are that:
4.1 The Respondent
in terms of section 13 (1)(b)(1)(aa) and (bb) and 13(1)(b)(ii) of the
Act must ensure that:
4.1.1 the
representative (such as the Applicant) is contractually allowed or
entitled to represent the financial services provider
(such as the
Respondent) (the provider)
4.1.2 it accepts
responsibility for the representative’s activities performed
within the scope of, or in the course of implementing
only such
contract or agreement.
4.1.3 if
debarred as envisaged by section 14 of the Act, that he or she
complies with the requirements determined by the Registrar
for the
reappointment of a debarred person as a representative. (Section
13(1)(b)(ii)),
14.1.4 the
representative has personal character qualities of honesty and
integrity (Section 8 (1) (a) of the Act)
4.2 The Respondent
is obliged to maintain an up to date register of its representatives
(Section 13(3) of the Act)
4.3 Section 14 of
the Act which is peremptory requires the Respondent :
4.3.1 to
prohibit a representative who no longer complies with the
requirements referred to in Section 13 (2) (a) of the Act from
rendering any new financial services by withdrawing any authority to
act on its behalf ,
4.3.2 to
remove the name of the representative from the register referred to
in section 13(3),
4.3. 3 to, within
30 days after the removal of the names of the representative from the
register as contemplated in subsection 1,
inform the Registrar in
writing thereof.
[5] The
Respondent, after the disciplinary process described by the Applicant
in the founding affidavit, cancelled its contract
with the Applicant,
removed the names of the Applicant from its register of
representatives, debarred him in terms of section 14
(1) of the Act
and accordingly notified the Registrar in accordance with the
provisions of Section 14 (3) of the Act. This happened
immediately
the Applicant, according to the Respondent, no longer complied with
the requirements referred to in section 13 (2)
(a) of the Act. It is
contended on behalf of the Respondent, that the Applicant, due to the
cancellation of the contract, no longer
can represent the Respondent.
The Applicant acknowledges this in his case stressing that it is also
not his wish to do so. The
order that the Applicant seeks then
becomes an exercise in futility. It will serve no purpose because the
basis for the existence
of his name on the register of the Respondent
is gone. The name, clearly, cannot be restored to the Respondent’s
register.
It will be contrary to the provisions of section
13(1)(b)(i)(aa) and (bb) of the Act. It will also be contrary to the
provisions
of Section 14 (1) of the Act. Mr Smalberger’s
submission, therefore, has merit.
[6] What
is left for the Applicant, it is further contended on behalf of the
Respondent, is for the Applicant to comply with the
requirements
determined by the Registrar. This contention, too, is correct. Unless
the Applicant complies with the provisions of
section 13 (1)(b)(ii),
he cannot, too, act as a representative for another authorised
financial services provider. The Applicant
has, consequently, it is
further contended, on behalf of the Respondent, approached this court
for an order compelling the Respondent
to annul or uplift the
debarment. In deed, this is the relief that the Applicant seeks. The
question that immediately springs to
mind is whether the court can
give such an order. This then takes me to the issues that need to be
decided.
ISSUES TO BE
DECIDED
[7] These are
whether:
7.1 the
Registrar should have been joined as a party,
7.2 the matter is
urgent,
7.3 the
Applicant has made out a case for the relief that he seeks. Put
differently whether the Applicant has satisfied the requirements
for
the relief that he seeks.
COMMON CAUSE
FACTS
[8] These are:
1. The
Applicant was a representative of the Respondent as a financial
services provider for many years,
2. a
forensic investigation was launched against the Applicant and that
that resulted in the Applicant being found guilty and his
contract
with the Respondent cancelled,
3. his
name was removed from the Respondent’s register and he was
debarred,
4. the Applicant
does not intend to again represent the Respondent,
5. following
a disciplinary process the Respondent complied with the provisions of
the Act.
[8] Mr
Smalberger, on behalf of the Respondent, as already shown above,
contended that the Respondent cannot be faulted for complying
with
the requirements of the Act. The contract that had brought the
parties together, according to him, no longer exists. The name
of the
Applicant has validly been removed from the Respondent’s
register and the Applicant has properly been debarred and
such
debarment has duly been communicated to the Registrar. It is Mr
Smalberger’s contention that what was done was properly
done in
accordance with the peremptory provisions of section 14 (1) of the
Act. This debarment of the Applicant, according to him,
stands until
set aside in review proceedings. This contention is also correct. A
debarred representative
must
(my emphasis) comply with the provisions of section 13 (1)(b)(ii) of
the Act if he/she seeks reappointment as a representative
of a
financial services provider. The Registrar determined the
requirements which
shall
(my emphasis) be met before one is reappointed once he/she is
debarred. These are that the Applicant in such a case must prove
that:
1. twelve
(12) months have lapsed since the date of
such debarment,
2. all
unconcluded business of the appellant has been properly concluded,
3. all complaints
or legal proceedings submitted by clients, or other administrative or
legal procedures have been lawfully resolved,
4. all fit and
proper requirements are complied with.
[9] Mr
Venter, on behalf of the Applicant, submitted that the Applicant
seeks to set aside the debarment and not reappointment
and that the
two are different. In this event, then, as Mr Smalberger correctly
pointed out, the Applicant’s answer lies
in the review
proceedings. The Registrar, having determined the requirements for
the reappointment of the debarred representative,
becomes a relevant
party in proceedings such as these.
The
relevance, as Mr Smalberger correctly submitted, lies in the fact
that the Registrar of necessity has to be approached for
his
indication, whether or not he is prepared to allow the Applicant to
act as a representative pending his proposed review application.
The
interim remedy, in deed, lies with the Registrar should he be
unwilling to allow the Applicant to act as a representative pending
the finalization of the review application. Clearly the Registrar has
a direct and substantial interest in the relief that the
Applicant
seeks.
[10] Mr
Smalberger is correct in his contention that the relief that the
Applicant seeks is a final interdict couched in a
Rule
nisi
.
(Prayer 2 of the Notice of Motion dated 16 February 2009.) This
relief, in my view, the Applicant is not, as shown above, entitled
to. The Applicant should have approached the Registrar for assistance
and only if such assistance was not forthcoming would the
Applicant
have been justified in approaching the court for an interim relief,
to have the court suspend the operation of the debarment,
pending the
finalisation of the review proceedings. This, the Applicant failed to
do. The decision of the Respondent, in deed,
stands until it is set
aside in review proceedings. The Applicant should have joined the
Registrar as an interested party to these
proceedings. The affidavit
that the Registrar submitted, in my view, is of no assistance to the
Applicant. It will, in my view,
not be prudent to order that the
debarment be uplifted or annulled as there, in deed, will remain
nothing to review, as Mr Smalberger
correctly contended. I need to
point out that the Applicant, in any event, needs no permission from
the court to institute the
review proceedings. This renders prayer 2
(b) unnecessary.
[11] The
above discussion reveals that it is unnecessary to deal with the
other aspects of the case, however, it is important to
mention the
following;
APPLICANT’S
REMEDY
The
Applicant in his founding affidavit does not deal with
whether
or not the Registrar has been approached with a view to establish his
attitude to the Applicant acting as representative
of other
authorised financial services providers now that he has been
debarred. It is also not known how the Registrar would react
in terms
of section 13 (1) (b) (ii) of the Act were he to be approached. In
deed, the Applicant provides no particulars of employment
available
to him as a representative. Even if the matter was urgent the
Applicant has a problem, as he now either wants to be an
authorised
financial services provider himself or to act representing other
authorised financial services providers. this of course
presupposes
that the Registrar becomes an interested party to the proceedings.
Whether the Registrar will allow him to act as a
representative
pending review proceedings is unclear. The Applicant, in the result,
cannot be said to have established the necessary
urgency. That he is
unable to earn income as a representative of an authorised financial
services provider, as it was submitted
on his behalf, cannot be said
to be sufficient to establish urgency. On this ground too, the
application stands to fail.
PRIMA FACIE
RIGHTS
The
Applicant does not
sufficiently
disclose that he, in deed, would succeed in a review application if
he brought one to set aside the decision of the
Respondent to bar
him. The Applicant, in his founding affidavit, fails to refer to or
deal with the relevant sections of PAJA disclosing
the basis from
which one can see that prima facie he, in deed, would succeed in the
review application. He fails to reveal the
relevant evidence which
the legal consultant did not consider before the decision to find him
guilty as shown was arrived at.
[12] The
above clearly demonstrates that the Applicant cannot be said to have
made out a case for the relief that he seeks. The
application,
therefore, should fail.
In the result, I
make the following order.
The application is
dismissed with costs.
M.
W. MSIMEKI
JUDGE OF
THE HIGH COURT
Heard on: 05 March
2009
For the Applicant:
Adv. Venter
Instructed by: S
Roux Inc
For the
Respondent: Adv. H. Smalberger (SC)
Instructed by:
Erasmus Inc.