IN THE HIGH COURT OF SOUTH AFRICA
WESTERN CAPE DIVISION, CAPE TOWN
Case number: 14578/2023
In the matter between:
JURIE WYNAND VAN DYK t/a VAN DYKS
PROPERTY BROKERS
Plaintiff
and
M3T DEVELOPMENTS (PTY) LTD Defendant
Coram: Acting Justice P Farlam
Heard: 23 August 2024
Delivered electronically: 23 August 2024
JUDGMENT
FARLAM AJ:
Introduction
[1] The issue to be determined in this matter is whether the plaintiff, Mr Jurie van
Dyk, who trades as Van Dyks Property Brokers ( Van Dyk ), acted as a “financial
services provider”, as contemplated in the Financial Advisory and Intermediary
Services Act, 37 of 2002 (the FAIS Act), in his dealings with the defendant.
[2] In terms of section 7(1) (a) of the FAIS Act, a person “may not act or offer to
act as a … financial services provider, unless such person has been issued with a
licence under section 8”. The particulars of claim do not contain an averment that
Van Dyk is an authorised financial services provider ( FSP) and one can infer from
the absence of an a mendment that he was not so authorised . If Van Dyk was acting
as an FSP when providing the services for which he has sought remuneration from
the defendant , his actions would accordingly have been unlawful and , so the
defendant alleges, would mean that the contract(s) under which he performed were
void. In the defendant’s view, the question is therefore potentially determinative of
the claim.
[3] The issue has arisen pursuant to an exception by the defendant. The
principles relevant to exceptions do not ne ed to be restated in this judgment , as they
are well-established. It suffices to record that the contention that Van Dyk acted as
an FSP when dealing with the defendants must be construed against the backdrop
of the particulars of claim read holistically, 1 and in a benevolent manner. 2 No facts
extraneous to the pleadings may be considered. 3 Insofar as there is room for doubt
as to the relevant factual matrix, th at uncertainty should inure to the benefit of the
plaintiff.
[4] The defendant’s notice of exception states that the defend ant excepts to the
particulars of claim on the ground “that it does not disclose a cause of action,
alternatively, that it is vague and embarrassing” . T he vague and embarrassing
component is however irregular, as well as itself confusing.
4.1. In terms of the proviso to rule 23(1), a vague and embarrassing
exception must be preceded by a notice, filed within 10 days of receipt of the
pleading, giving the opposing party an opportunity to remove the cause of
complaint. There is no indication that such a noti ce was delivered in this case.
The defendant’s notice of exception was moreover served about three -and-a-
1 Nel and Others NNO v McArthur 2003 (4) SA 142 (T) at 149F.
2 An excipient must persuade the court that upon every interpretation which the pleading in question,
as well as any document upon which it is based, can reasonably b ear, the pleading is excipiable: see
e.g., First National Bank of Southern Africa Ltd v Perry NO 2001 (3) SA 960 (SCA) at 965C -D (para
[6]); Lewis v Oneanate (Pty) Ltd and Another 1992 (4) SA 811 (A) at 817F; Theunissen v Transvaalse
Lewendehawe Koöp Bpk 1988 (2) SA 493 (A) at 500D; South African National Parks v Ras 2002 (2)
SA 537 (C) at 542B-E.
3 Barnard v Barnard 2000 (3) SA 741 (C) at para [10]; Lockhat & Other v Minister of the Interior 1960
(3) SA 765 (D) at 777C-B.
half months after the issuing of the summons and thus well outside the time
allowed for a vague and embarrassing notice.
4.2. The contention that the particulars of claim are vague and
embarrassing is in any event barely motivated and without substance . There
is nothing in the particulars of claim which suggests that the plaintiff was an
authorised FSP; and there is therefore not hing impermissibly vague about the
particulars in that respect. The particulars are framed on the basis that Van
Dyk did not need to be authorised under the FAIS Act. If that is wrong, then
his claim lacks an averment necessary to sustain the action and wo uld
accordingly fall to be set aside pursuant to the defendant’s “no cause of
action” exception.
4.3. It was submitted by the defendant, with particular reference to a clause
in the written agreement between the parties (referred to in more detail
below), that it was incumbent on the plaintiff to plead that the FAIS Act did not
apply. I do not agree that the plaintiff was required to plead a negative, and to
assert that one or more statutes were not applicable, let alone plead that a
requirement in the FAI S Act (which was not referred to in the clause in
question)4 was not triggered. It was for the defendant to raise such a point,
should it be so advised, as indeed it did. Insofar as this contention
underpinned the defendant’s vague and embarrassing exception, it was thus
misconceived.
[5] In the circumstances, I shall focu s merely on t he defendant’s no cause of
action exception, and give no further consideration to the vague and embarrassing
ground.
4 As is also mentioned later in this judgment, the clause relied upon by the defendant in this regard –
clause 1.4 of the brokerage agreement – stated that: “The Broker shall upon request by the
Companies ( Funders), be required to adhere to any additional requirements imposed upon the
companies by the financial services industry or legislation including but not limited to the Financial
Intelligence Centre Act and the National Credit Act.”
The plaintiff’s pleaded case
[6] The plaintiff , who has described himself as “ a firm carrying on business as
property brokers”, has relied in his particulars of claim on two agreements stated to
have been concluded with the defendant.
[7] The first is a verbal agreement defined as “the collaboration agreement”,
which he alleges was concluded during or about May 2019, and which is said to
contain the following terms:
7.1. the plaintiff was obliged to assist the defendant in securing financing for
the defendant’s various property development projects by referring and
introducing the defendant to potential financiers;
7.2. the plaintiff would receive a commission for its assistance in obtaining
financing for the defendant by referring and introducing potential financiers to
it; and
7.3. the plaintiff’s commission would be calculated at 4% (plus VAT) of the
amount of financing obtained by the defendant, unless otherwise agre ed upon
in writing by both parties.
[8] The second contract is a written agreement defined as “the brokerage
agreement”, which is alleged to have been concluded on or around 9 February 2021,
and is alleged to have been intended to accomplish at least two things:
8.1. confirm the plaintiff’s responsibilities in terms of the collaboration
agreement, specifically in relation to the Môreson Development and Fynbos
Development projects; and
8.2. revise the terms of the collaboration agreement concerning the
commission payable to the plaintiff for the Môreson Development and Fynbos
Development projects.
[9] The material terms of the brokerage agreement, which is annexed to the
particulars of claim, are averred in the particulars of claim to be:
9.1. that the plaintiff may refer prospective financiers to the defendant from
time to time on a non-exclusive basis;
9.2. that the plaintiff shall refer the name and contact details of prospective
financiers to the defendant for the consideration of the granting of a loan;
9.3. that the defendant must pay the plaintiff a brokerage fee in the amount
of R1 million in the event that the defendant obtains funding in the amount of
R30 million for its Môreson Development project, and R2 million in the event
that the defendant obtains funding in the amount of R52 million for its Fynbos
Development project;
9.4. that the fees payable to the plaintiff in respect of the projects shall be
reduced pro rata should the funding obtained for the projects be less than the
amounts stipulated above; and
9.5. that the plaintiff’s fees are payable upon presentation of the plaintiff’ s
invoice or on the date that the defendant receives funding from its chosen
financier, whichever occurs last.
[10] Although not mentioned in the body of the particulars of claim, it is apparent
from the brokerage agreement appended thereto that Van Dyk , who is defined
therein as “Broker”:
10.1. shall, upon request by the financiers, be required to adhere to any
additional requirements imposed upon the funders by the financial services
industry or legislation , including but not limited to the Financial In telligence
Centre Act (FICA) and the National Credit Act;
10.2. has no power to act as, and is not, an agent of the parties and, in
particular, but without limitation, may not incur any liability on behalf of, make
any contract binding on, give or make or purport to give or make any warranty
or representation on behalf of the funders or in any other way act for the
funders; and
10.3. shall have no authority to approve a facility on behalf of the funders, or
represent that any funder is likely to approve a loan.
[11] According to the plaintiff, he complied with his obligations under the
collaboration agreement and the brokerage agreement by referring the name and
contact details of Credit Smith Capital Partners (Pty) Ltd ( Credit Smith ) and an
investment analyst of Credit Smith, Chris Davis, to the defendant.
[12] The plaintiff has further alleged that:
12.1. on or about 8 November 2021, Mr Davis sent a final term sheet to the
plaintiff and the defendant, confirming that the defendant had obtained
funding for its Fynbos Development project in the amount of R30 million;
12.2. the defendant received R14 million in funding from its se lected
financier for the Fynbos Development project between 8 November 2021 and
10 May 2022, and a further R16 million in funding from the same financier
after 10 May 2022;
12.3. as a result, the defendant is liable to the plaintiff for the brokerage fee
in relation to the Fynbos Development project.
[13] It is evident from the final term sheet and covering email annexed to the
particulars of claim that the R30 million funding for the Fynbos Development was
provided to the defendant by a company called Sa licure 2 (Pty) Ltd (Salicure) (as
lender), and that th e term sheet was sent to the defendant for signature by Chris
Davis (copying in Van Dyk).
[14] The plaintiff alleges finally that, in terms of clause 2.1 of the brokerage
agreement, the brokerage fee i s R1,153,846.16, and that he has demanded that fee
from the defendant which has refused to pay it.
Relevant provisions of the FAIS Act
[15] As mentioned, the defendant has contended in its exception that Van Dyk has
performed the services of a “financial services provider”, without being authorised to
act as such, and that Van Dyk has thus contravened section 7(1)(a) of the FAIS Act.5
[16] The term “financial services provider” is defined in section 1 of the FAIS Act
as meaning:
‘any person, other than a representa tive, who as a regular feature of the
business of such person –
(a) furnishes advice; or
(b) furnishes advice and renders any intermediary service; or
(c) renders an intermediary service.’
[17] To fall foul of the section 7(1) prohibition against acting as an FSP without
authorisation, Van Dyk would therefore have had to furnish advice and/or render an
intermediary service to the defendant.
5 As mentioned at the outset, section 7(1)( a) of the FAIS Act precludes a person from acting, or
offering to act, as a financial services provider unless that person has been issued with a licence
under section 8.
Section 8, headed “Application for authorisation” , regulates applications for, and the granting of,
authorisations of FSPs or a representative of an FSP. It is inter alia stipulated in subsection 8(1) that
an application for authorisation must be accompanied by information to satisfy the Financial Sector
Conduct Authority (FSCA) that the applicant complies with the fit and proper requirements.
(The defendant also appears to rely on an alleged contravention of section 13 of the FAIS Act, but
that provision is not applicable to Van Dyk, as it deals with per sons who carry on business on behalf
of others or act as a representative of an authorised financial services provider.)
[18] The word “advice” is defined in section 1 of the FAIS Act as meaning:
‘subject to subsection (3) (a), 6 any recommendation, guidance or proposal of
a financial nature furnished, by any means or medium, to any client or group
of clients-
(a) in respect of the purchase of any financial product; or
(b) in respect of the investment in any financial product; or
(c) on the conclusion of any other transaction, including a loan or cession,
aimed at the incurring of any liability or the acquisition of any right or benefit in
respect of any financial product; or
(d) on the variation of any term or condition applying to a financial product,
on the replacement of any such product, or on the termination of any
purchase of or investment in any such product,
and irrespective of whether or not such advice-
6 Subsection 1(3)(a) states that:
“For purposes of this Act -
(a)advice does not include-
(i)factual advice given merely-
(aa)on the procedure for entering into a transaction in respect of any financial product;
(bb)in relation to the description of a financial product;
(cc)in answer to routine administrative queries;
(dd)in the form of objective information about a particular financial product; or
(ee)by the display or distribution of promotional material;
(ii)an analysis or report on a financial product without any express or implied recommendation,
guidance or proposal that any particular transaction in respect of the produ ct is appropriate to the
particular investment objectives, financial situation or particular needs of a client;
(iii)advice given by-
(aa)the board of management, or any board member, of any pension fund organisation or friendly
society referred to in para graph (d) of the definition of 'financial product' in subsection (1) to the
members of the organisation or society on benefits enjoyed or to be enjoyed by such members; or
(bb)the board of trustees of any medical scheme referred to in paragraph (g) of the said definition of
'financial product', or any board member, to the members of the medical scheme, on health care
benefits enjoyed or to be enjoyed by such members; or
(iv)any other advisory activity exempted from the provisions of this Act by the registra r by notice in the
Gazette”.
(i) is furnished in the course of or incidental to financial planning in
connection with the affairs of the client; or
(ii) results in any such purchase, investment, transaction, variation,
replacement or termination, as the case may be, being effected.’
[19] The term “intermediary service” is defined as meaning:
‘subject to subsection (3) (b), 7 any act other than the furnishing of advice,
performed by a person for or on behalf of a client or product supplier-
(a) the result of which is that a client may enter into, offers to enter into or
enters into any transaction in respect of a financial product with a product
supplier; or
(b) with a view to-
(i) buying, selling or otherwise dealing in (whether on a
discretionary or non -discretionary basis), managing, administering,
keeping in safe custody, maintaining or servicing a financial product
purchased by a client from a product supplier or in which the cl ient has
invested;
(ii) collecting or accounting for premiums or other moneys payable
by the client to a product supplier in respect of a financial product; or
7 Subsection 1(3)(b) is clearly not applicable in this case. It provides that:
‘intermediary service does not include-
(i)the rendering by a bank, mutual bank or co -operative bank of a service contemplated in paragraph
(b) (ii) of the definition of 'intermediary service' where the bank, mutual bank or co -operative bank acts
merely as a conduit between a client and another product supplier;
(ii)an intermediary service rendered by a product supplier-
(aa)who is authorised under a particular law to conduct business as a financial institution; and
(bb)where the rendering of such service is regulated by or under such law;
(iii)any other service exempted from the provisions of this Act by the registrar by notice in the
Gazette.’
(iii) receiving, submitting or processing the claims of a client against
a product supplier.’
[20] As is apparent from those definitions, the advice or other services which a
person cannot provide without being an authorised FSP must pertain to a “financial
product”. It is therefore also necessary to refer to the definition of that term in section
1 of the FAIS Act, where it is defined as follows:
‘ “financial product” means, subject to subsection (2)-
(a) securities and instruments, including-
(i) shares in a company other than a 'share block company' as
defined in the Share Blocks Control Act, 1980 (Act 59 of 1980);
(ii) debentures and securitised debt;
(iii) any money-market instrument;
(iv) any warrant, certificate, and other instrument acknowledging,
conferring or creating rights to subscribe to, acquire, dispose of, or
convert securities and instruments referred to in subparagraphs (i), (ii)
and (iii);
(v) any 'securities' as defined in se ction 1 of the Financial Markets
Act, 2012 (Act 19 of 2012);
(b) a participatory interest in one or more collective investment schemes;
(c) a long-term or a short -term insurance contract or policy, referred to in
the Long -term Insurance Act, 1998 (Act 52 of 1998), and the Short -term
Insurance Act, 1998 (Act 53 of 1998), respectively;
(d) a benefit provided by-
(i) a pension fund organisation as defined in section 1 (1) of the
Pension Funds Act, 1956 (Act 24 of 1956), to the members of the
organisation by virtue of membership; or
(ii) a friendly society referred to in the Friendly Societies Act, 1956
(Act 25 of 1956), to the members of the society by virtue of
membership;
(e) a foreign currency denominated investment instrument, including a
foreign currency deposit;
(f) a deposit as defined in section 1 (1) of the Banks Act, 1990 (Act 94 of
1990);
(g) a health service benefit provided by a medical scheme as defined in
section 1 (1) of the Medical Schemes Act, 1998 (Act 131 of 1998);
(h) any other product similar in nature to any financial product referred to
in paragraphs (a) to (g), inclusive, declare d by the registrar by notice in the
Gazette to be a financial product for the purposes of this Act;
(i) any combined product containing one or more of the financial products
referred to in paragraphs (a) to (h), inclusive;
(j) any financial product issued by any foreign product supplier and which
in nature and character is essentially similar or corresponding to a financial
product referred to in paragraph (a) to (i), inclusive.’
[21] Section 36 of the FAIS Act states that any person who fails to comply with
inter alia section 7(1) of the FAIS Act is guilty of an offence.
[22] The FAIS Act does not regulate the consequences of a contract providing for
the provision of financial services by someone who is not an authorised FSP. In
accordance with the general rule espoused in a long line of authorities it can
however be regarded as implied in this instance that, because it would be an offence
to require a person to act as an FSP without authorisation , an agreement which is
premised on performance of that kind should be regarded as prohibited and
therefore void.8
Analysis
[23] Although the exception is not a model of clarity, it appear s that the defendant
contends in general terms that the plaintiff has furnished advice to the defendant,
alternatively rendered an intermediary service, pursuant to the brokerage agreement,
read with the collaboration agreement. The defendant further alleges that, as a
consequence, the “brokerage agreement is void ab initio as Plaintiff could not render
any financial services to Defendant without a valid licence as require d in terms of
section 8 of the [FAIS] Act”, and “[a]ccordingly the Plaintiff’s Particulars of Claim do
not establish a basis in law for the claim due to the non -compliance with the [FAIS]
Act”.
[24] In both its exception and its heads of argument, the defendant has focused on
clause (c) of the definition of “advice”, and consequently sought to contend that Van
Dyk has furnished to the defendant a “recommendation, guidance or proposal of a
financial na ture … on the conclusion of any other transaction, including a loan or
cession, aimed at the incurring of any liability or the acquisition of any right or benefit
in respect of any financial product”. That argument is however unsustainable for at
least a couple of reasons.
8 For example, Standard Bank v Estate van Rhyn 1925 AD 266 at 274 -275; Schierhout v Minister of
Justice 1926 AD 99 at 109; Schutz and De Jager v Edelstein 1942 CPD 126 at 131 -132; Pottie v
Kotze 1954 (3) SA 719 (A) at 726-727; De Faria v Sheriff, High Court, Witbank 2005 (3) SA 372 (T) at
397; and, see more generally, Bradfield Christie’s Law of Contract in South Africa 8ed pp 414-419.
[25] In the first instance , it was not sufficient for Van Dyk to have made a
recommendation or proposal to the defendant in connection with the conclusion of a
loan agreement. What also had to be shown was that the loan was connected wit h
the incurring of liability or the acquisition of a right or benefit “ in respect of any
financial product” [emphasis added].
[26] The defendant’s counsel submitted that, on a proper interpretation, clause (c)
of the definition did not require this, as t hat clause should be considered to deal with
two separate events: (i) the conclusion of any other transaction, including a loan or
cession, aimed at the incurring of any liability; or (ii) the acquisition of any right or
benefit in respect of any financial product. As will be apparent from the previous
paragraph, I disagree. Neither the context nor the language is, in my view, consistent
with such an interpretation . Clauses (a), (b) and (d) of the definition are concerned
merely with advice relating to a fi nancial product, and it is highly improbable that
clause (c) was intended to be different – all the more so, as an “intermediary service”
must also, in terms of its definition , relate to a financial product. It would moreover
not be justified on the wording of clause (c) to read it as covering two entirely
different scenarios: had that been the legislature’s intention, there would have been
two different clauses. On the plain wording of clause (c), it covered advice on the
conclusion of a transaction – whether aimed at incurring a liability, or acquiring a
right or benefit – in respect of any financial product. 9 This could possibly have been
made clearer by inserting commas in the clause after “liability” and “benefit”, though I
do not think that was necessary as the clause is not ambiguous in its current form.
[27] The term sheet concluded between Salicure and the defendant to regulate the
furnishing of funds by Salicure to the defendant would not be a “financial product” as
contemplated in the definition of that term in section 1 of the FAIS Act (quoted in
paragraph [20] above), and the defendant understandably did not seek to contend
otherwise. Nor is a secured loan, as entered into between Salicure and the
defendant, a “product”, whether financial or otherwise. It would instead be a credit
9 Resulting in clause (c) reading as follows: “on the conclusion of any other transaction, including a
loan or cession , aimed at the incurring of any liability, or the acquisition of any right or benefit, in
respect of any financial product”.
agreement (albeit one which would not in this instance be covered by the National
Credit Act, 34 of 2005 (NCA) as a result of the defendant being a juristic person and
also presumably having a turnover exceeding the threshold in the NCA).
[28] The requirements of clause (c) of the definition of “advice” are therefore not
met in the present matter.
[29] Secondly, in order for Van Dyk to have furnished “advice” as defined, he
would have had to have given a “recommendation, guidance or proposal of a
financial nature” in relation to the financial product. Even if one were to assume for
the sake of argument that a loan agreement could be a financial product for
purposes of the FAIS Act (which, as indicated, I do not believe to be the case), that
requirement is not satisfied either.
29.1. Van Dyk’s mandate was, according to the particulars of claim, to refer
and introduce the defendant to potential financiers so that it could obtain
funds for its projects. Pursuant thereto, what Van Dyk did, according to the
particulars, was to refer the defendant to, and provide it with the contact
details of, Credit Smith, and m ore particularly one of its investment analysts,
Chris Davis, who then secured a funder. There is no suggestion in the
particulars of claim that Van Dyk made any recommendation or proposal to
the defendant about any kind of financing, or offered any opinio n about how
the defendant should raise money for its projects. Nor was that his
responsibility; his role was as an intermediary or facilitator, connecting parties
who might benefit from working together .10 Insofar as the defendant was
furnished with advice about a loan or other form of financing , this would, on
the plaintiff’s case, have been done by Davis or the financiers.
10 While Van Dyk was, according to the particulars, “obliged to assist the defendant in securing
financing for the defendant’s various property development projects”, this was merely “by referring
and introducing the defendant to financial financiers”, not in making any representations about what
finance might be provided.
29.2. Although the phrase “of a financial nature” is a wide and open -ended
one, I do not think that, read in context, the words “a recommendation,
guidance or proposal of a financial nature” were intended to encompass a
situation in which a person recommended an investmen t analyst to engage
with a client about potential financing and financiers. This is borne out by the
exclusion in subsection 1(3)( a), which provides that “advice” for the purposes
of the FAIS Act does not include, among other things, “factual advice given
merely … (aa) on the procedure for entering into a transaction in respect of
any financial product; (bb) in relation to the description of a financial product;
(cc) in answer to routine administrative queries; (dd) in the form of objective
information abou t a particular financial product; or (ee) by the display or
distribution of promotional material”. If that kind of factual advice is excluded
from the definition of “advice” in the FAIS Act , it cannot reasonably be
contended that advice for which an author isation is needed under the Act
would include a n introduction to, or referral of, an investment analyst who
could then, in turn, discuss financing with the client. 11
[30] The defendant’ s vague and unparticularised alternative allegation that Van
Dyk rendered an intermediary service must be rejected as well ; and was
understandably not pursued by defendant’s counsel in argument . As noted in
paragraph [20] above, with reference to the definition quoted in paragraph [19], an
“intermediary service” pertains to a financial product ; and as has already been
discussed, the term sheet which was concluded between the defendant and
11 I might add that, even if one were to assume for the sake of argument that the loan agreement with
Salicure constituted a financial product (which I do not consider to be the case) and that Van Dyk
would have made statements about the loan agreement (which would also be wrong, as that would
constitute impermissible speculation at the exception stage), one could still not conclude that any
statements that Van Dyk may have made in respect of the loan agreement, or the conclusion thereof,
constituted “advice”, as they could have fallen within the ambit of “factual advice” covered by
subsection 1(3)(a) of the FAIS Act, and thus have fallen outside of the definition of “advice”, pursuant
to the qualification in the opening line of that definition.
(As evident from the definition of “advice” as quoted in paragraph [18], what follows in the definition is
“subject to subsection (3) (a)”. While the expression “subject to” has no fixed meaning, it is often used
to establish what is dominant and what is subservient, alternatively to mean “except as curtailed by”,
which is what it was seemingly intended to convey in this instance. See e.g., Premier, Eastern Cape
and Another v Sekeleni 2003 (4) SA 369 (SCA) para [14] (and the cases cited there) and Steve
Tshwete Local Municipality v Fedbond Participation Mortgage Bond Managers (Pty) Ltd and Another
2013 (3) SA 611 (SCA) para [19].)
Salicure, to record the loan agreement between those parties, does not qualify as
such.
[31] The case of Atwealth,12 on which the defendant relie d in its heads of
argument, does not warrant a contrary conclusion. It is clearly distinguishable on the
facts, and so was correctly not pressed in argument.
[32] The differences between Atwealth and the present case are readily apparent
from the opening paragraphs of the Supreme Court of Appeal’s judgment, where
Davis AJA noted the following:
‘[2] … During the period 2009 – 2010 second appellant, Ms Moolman,
rendered financial advice to [the Kernicks] in the course and scope of her
employment with first appellant (Atwealth) and thereafter in 2011 with third
appellant (Vaidro). The Kernicks contended that the advice given by Ms
Moolman was to invest their funds in certain investment products offered by
the Relative Value Arbitrage Fund (RVAF) and associated products, and MAT
Abante UK Relative Value Arbitrage Fund and MAT Worldwide Ltd (the
investment companies), of which MAT Securities (Pty) Ltd was the fund
manager. This range of potential investments was said to fall under an entity
referred to as Abante Capital.
[3] The Kernicks further contended that they were assured by Ms Moolman
that these inve stment companies generated higher returns through legitimate
investment vehicles than was the case with alternative financial products. It
was common cause that this did not prove to be the case. Mr and Mrs
Kernick made the following investments:
Date of investment Amount Investment company
20/01/2010 £100 000 MAT Worldwide
01/08/2010 £70 000 MAT Worldwide
12 Atwealth (Pty) Ltd and Others v Kernick and Others 2019 (4) SA 420 (SCA).
01/07/2011 £45 000 MAT Worldwide
28/10/2011 R700 000 RVAF
01/03/2012 £150 000 MAT Worldwide
Kernick Consulting made the following investments:
Date of investment Amount Investment company
01/09/2009 £50 000 MAT Worldwide
01/10/2010 £100 000 MAT Worldwide
01/02/2012 £50 000 MAT Worldwide’
[33] As is further apparent from the judgment , Ms Moolman’s job description , in
contrast to that of Van Dyk, was that of financial adviser . More particularly, she had,
on 23 March 2009, entered into a memorandum of agreement with Atwealth, in
terms of which she “was appointed as a financial advisor by Atwealth 'in the area of
Financial Planning and Selling of approved financial products from the
commencement date'.”13
[34] The extent of the financial advice that Ms Moolman gave the Kernicks is also
noteworthy. According to the Supreme Court of Appeal judgment:
‘[13] Ms Moolman made a presentation to the Kernicks, including a
description of Abante Capital (Pty) Ltd as 'a South African hedge fund
management company: Abante's funds each focus on the core strategy of
quantitative arbitrage'. From the documents whic h she claimed to employ
during her presentation, it appears that she introduced them to two specific
products, namely RVAF and a product described as Bridgefin.
[14] According to Mr Kernick, Ms Moolman spoke of RVAF as a —
“product that was invested in the top twenty shares, sorry forty shares in
either the UK or South Africa, depending which fund you were in. Sorry, there
was the RVA and the MAT Worldwide. And then the top forty shares were
13 Atwealth para [11].
traded electronically, which appealed to us, and they were based on sectors
so there was a technical sector or a financial sector. And based on
fluctuations within a sector which share would be traded, either bought or
sold. So they didn't look at it as a day -to-day what shares are doing well, they
looked at it by sector.”
[15] Mr Kernick emphasised that it was important to both him and his wife that
the RAV fund 'was invested in the top equities in the country or the top
shares, so we felt that was more to our liking'. He said of the products which
Ms Moolman introduced:
“(I)t was in equities, and a known asset effectively, not in properties or
something. It was known in the top 40 companies on the stock market. The
second thing we enjoyed about it was that the trading was very much
computerised or we were led to believe computerised and which took the
human emotion out of it. We wanted something that would trade, you know,
based on fact not on hearsay. And then the third th ing was the returns
indicated to us, was why we invested [in] it.”
[35] The advice which was considered in the Atwealth matter thus unquestionably
involved a recommendation, guidance or proposal of a financial nature in respect of
a financial product. In stark contrast, the introduction and referral by Van Dyk in the
present case did not.
Conclusion and order
[36] The exception is consequently without merit and must be dismissed. Both
parties were agreed that costs of counsel should be on scale A.
[37] I accordingly make the following order:
The exception is dismissed with costs, including the costs of counsel, which are
granted on scale A.
_________________________
ACTING JUDGE P FARLAM
For plaintiff: Adv A Oosthuizen
Instructed by: Roux Van Dyk Attorneys, E Van Dyk, M Matthee,
For defendant: Adv A Titus
Instructed by: Abrahams Kiewitz Inc., K Kiewitz