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Not Reportable

IN THE NORTH GAUTENG HIGH COURT,

PRETORIA (REPUBLIC OF SOUTH AFRICA)

CASE NUMBER:53187/10

DATE: 27/09/2010

In the matter between:

DYNAMIC WEALTH MANAGEMENT (PTY) LTD

DYNAMIC WEALTH STOCKBROKERS (PTY) LTD................................The Applicants

and

THE REGISTRAR OF FINANCIAL SERVICES

PROVIDERS...................................................................................................Respondent

JUDGMENT

Ismail AJ:

[1] The applicants sought an order that:

(1) The application be heard as an urgent application in terms of Rule 6 (12) and that the necessary condonation be granted to the applicants in respect of non-compliance with the prescribed forms, time limits and service;

(2) That the Respondent be interdicted from implementing, giving effect to or further publishing its decision to withdraw the financial services provider licences/authorisation (FS559 and FSP7652) of the First and Second Applicants pending the outcome of an application to be launched by the Applicants in terms of section 26 (3) of the Financial Services Act, 97 of 1990, within 15 (fifteen) days;

(3) That the respondent be ordered to immediately issue a media statement reflecting the contents of this order;

(4) That the respondent be ordered to pay the costs of this application.

Background

[2] The respondent commenced investigation into the affairs of the Applicants during April 2009. The nature of the investigation embraced a number of interrogations and inspections at the Applicants offices.

[3] The investigation resulted in a draft report in July 2009 which the Applicants were invited to comment upon.The Applicants did so by the 17 August 2009.

[4] The respondent's final inspection report was concluded and signed on the 15 September 2009.

[5] On the 16 October 2009 the respondent launched an urgent application to place the business of the applicants under curatorship. The curatorship application was argued in this division of the High Court on the 18.19 and 22 February 2010. Judgment in the application was reserved and was handed down on the 21 September 2010 shortly after the parties argued this application.

[6] Pursuant to the hearing of the urgent application referred to above the respondents notified the applicants of its intention to withdraw the authorisation of the second applicant, [see JS2]

[7] The applicants^ attorney respondent to the letter of the respondent, dated 26 October 2009, by two letters dated 6 and 11 November 2009

[8] On the 16 April 2010 the Applicants received notification from the Respondent of the possible withdrawal of the licence / authorisation of the Applicants. The Respondent afforded the Applicants an opportunity to respond to this notification by the 17 May 2010.

[9] The Applicants responded to the notice of the Respondent on the 17 May 2010. [see JS12]

[10] On the 8 June 2010 the respondent wrote to the applicants attorneys acknowledging receipt of their letter dated 17 May 2010 and in turn undertook to reverrtto the applicants attorneys.

[11] Between 24 June 2010 and 15 July 2010 correspondence was exchanged between the respondent and the applicants attorneys.

[12] On the 15 September 2010 the applicants received notification of the respondent's decision to withdraw the licence/authorisations of the applicants. This letter consists of 22 folios and can be found at pages 27- 49 and again at pages 284-305 of the papers.

[13] On the 16 September 2010 the applicants filed a notice of appeal in terms of section 26 of the Finanacial Services Board Act.97 of 1990 (FSB Act), read with section 39 of the Financial Advisory and Intermediary Services Act, No 37 of 2002 (The FAIS Act)

[14] In terms of section 26(3) of the FSB Act, the lodging of an appeal against the withdrawal of authorisation does not suspend the withdrawal pending the outcome of the appeal, unless the Chairperson or Deputy Chairperson of the Appeal Board, on application by an affected party directs otherwise.

[15] The applicants notified the respondent of their intention to apply to the Chairman of the Appeal Board for an order suspending the decision pending the outcome of the appeal in terms of section 26(3) of the FSB Act.

[16] The present application before me is for interim relief pending the application in terms of section 26(3) of FSB Act.

Legal Submissions

[17] Mr Maritz SC acting for the applicants submitted that the Respondent did not comply with the provisions of section 9 (2)(a) (ii) of the FAIS Act and for that reason the power to withdraw the licence was invalid. He referred to the matter of Blou v Lampert & Chipkin NNO& Others 1973(1) SA 1 (AD) at 9 where the court dealt with the principles applicable in deciding whether it was the intention of the legislature that non-compliance should be visited with a nullity.

[18] Section 9(2)(a) (ii) of FAIS stipulates: must inform the licensee of the intention to suspend or withdraw and the grounds therefor and must give the licensee a reasonable opportunity to make a submission in response thereto."

[19] In Ex Parte Mothuloe (Law Society, Transvaal, Intervening) 1996 (4) SA 1131 at 1137-113 Van Dijkhorst J referred to the matter of Maharaj and Others v Rampersad 1996 (4) SA 638 (A) at 646C where Van Winsen AJA. after having concluded that the Legislative provision he was concerned with was peremptory, went on to enquire whether it was fatal that it had not been strictly complied with. The learned judge laid down the following test: "The enquiry, I suggest, is not so much whether there has been "exact" "adequate" or "substantial" compliance with this injunction but rather whether there has been compliance therewith. This enquire postulates an application of the injunction to the facts and a resultant comparison between the position is and what, according to the requirements of the injunction, it ought to be. It is quite conceivable that a Court hold that, even though the position as it is not identical with what it ought to be. the injunction has nevertheless been complied with. In deciding whether there had been compliance with the injunction the object sought to be achieved by the injunction and the question of whether this object has been achieved are of imponance."

[20] Mr Maritz submitted that the registrar imposed terms which the applicants have to comply with notwithstanding the former having withdrawn the licence. Once the licence is withdrawn the applicants cease to be Financial Service Providers. He rhetorically questioned where the registrar got the authority to issue terms when the licence is withdrawn. He argued that "terms" had no place where a licence was withdrawn.

He submitted that the registrar could only impose terms where the licence was suspended in terms of section 9 (2)(b) and not where it was withdrawn. In other words upon suspension certain conditions could be imposed such as if X, Y and Z are done or complied with the suspension would be uplifted.

[21] He also submitted that by the respondent's own admission in the opposing affidavit nothing 'new' arose since the letter it advanced on the 16 April 2009. He contended that the registrar was permitted in mattters of urgency to suspend or withdraw a licence in terms of section 9 (3) of FAIS, however the licence was not withdrawn in terms of that section.

Whether this court has the jurisdiction to hear this application?

[22] On behalf of the Respondent Mr Lubuschagne SC submitted that the applicants were in the wrong forum since section 26(3) of the Financial Services Board Act [FSB] gave the applicants alternative remedy and therefore the interdictory relief sought should fail on this ground alone

[23] He also contended that in the light of the Oudekraal Estates (Pty) Ltd v City Council of Cape Town and Others 2004 (6) SA 222 (SCA) the applicants should have brought a review application against the registrars decision instead of seeking intermediary relief as they are presently seeking. According to him the decision even if it were patently incorrect still stands, as he it put it " the decision still stands and one cannot simply ignore it". He relied upon paragraph [26] of that decision at pages 241/2 where the court stated:

" In other words was the Cape Metropolitan Council entitled to disregard the Administrator's approval and all its consequences merely because it believed that they were invalid provided that its belief was correct? In our, view it was not Until the Administrators approval (and thus also his consequences of the approval) is set aside by the court in proceedings for judicial review it exist in fact and it has legal consequences that simply cannot be overlooked.."

[24] Mr Maritz in opposition to this view relied upon two decisions where the courts considered applications for intermediary relief however, the courts did not grant the orders because the require­ments for such relief were not met. He relied upon the decisions of Soundprop 1239 CC t/a 777 Casino v Minister of Safety and Security and Others 1996 (4) SA 1086 and Lady Chin Investments v South African National Roads Agency Ltd and Others 2001 (3) SA 354 (N). In the latter decision Nicholson J at 356 referred to a quote from De Villiers J from Moll v Civil Commissioner of Paarl and Another (1897) 14 SC 463 AT 467-8 where the following was stated: "The wide power possesed by the Court .of interdicting illegal acts., also implies the power of correcting any illegality commited by (a) public officer, so long as it is capable of correction, if the rights of an individual are infringed by such illegality."

[25] Mr Maritz submitted that the High Court had inherent jurisdiction to hear this matter. Section 26(3) of the FSB Act stipulates:

" (3) An appeal lodged in terms of this section does not suspend any decision of a decision-maker pending the outcome of an appeal unless the Chairperson or deputy chairperson of the appeal board, on application by a party, directs otherwise."

He submitted that section 26(3) does not say that this court has no jurisdiction to hear matters of this nature. The statute does not say that no other court or forum may hear matters relevant to it.

[26] He submitted that the registrar attached terms to the withdrawal which were coersive and even to the extent of threat of prosecution. These terms are to be found at page 540 of the indexed pages. I do not propose to burden the judgment by repeating them herein. He contended that terms which were attached to the withdrawal could not be done in terms of section 9(2)(a). The respondent conceeded that it was an error of law and that the registrar could only impose terms by virtue of section 9(2) (d). Mr Maritz in developing this argument submitted that the registrars action to attach terms in terns of provisions of section 9 (2) (a) was an error in law. According to him once a licence is withdrawn by virtue of section 7 a service provider ceases to act as such. Once again he asked a rhetorical question namely where does the registrar get the authority to issue terms when a licence is withdrawn'

[27] It was argued by Mr Lubuschagne SC on behalf of the respondent that the application should be dismissed on the ground that an interdict should not be granted because the applicants have an alternative remedy in terms of s 26 (3) of the FSB Act, which they followed and lodged an appeal to the Chairperson of the Appeal Board. He suggested that the 14 day period which the applicants submitted it would take, was merely a guideline and that the applicants were entitled to approach the chairperson of the Appeal Board on an urgent basis. The time periods for the hearing will depend upon the circumstances of the case and it could be heard earlier then suggested. He submitted that for this reason olone the interim interdict should not be granted. The applicants he contended had an alternative remedy and that this court should not have been burdened with this application.

[28] He submitted that the power to suspend the withdrawal of the applicants license vested by statute in the Chairman of the Appeal Board.

[29] Mr Maritz raised the issue that the respondent did not comply with the statutory compliance of the audi alterem partem rule by allowing the applicants the right to comply with section 9 (2) (a)(ii) of the FAIS Act, which was a condition precedent to the withdrawal of the licence.

He posed the question what changed since April 2009 when the registrar wrote to the applicants intimating his decision to suspend / withdraw the licence. There was an investigation relating to 70 files and that the " formation of SIL and its continued management had absorbed and is still absorbing investors funds.." The applicants were not given a reasonable opportunity to make submissions.

Mr Lubuschagne on the other hand submitted that the issue of the 70 files and loss of monies were not new matters which called for the applicants being given an opportunity to respond thereto. He submitted that they were ongoing problems and that the applicants failed to co-operate with the Registrar and they failed to provide an affidavit as requested without consulting with their attorneys.

[30] He submitted on behalf of the respondent that the aplicants did not introduce a 'new fundamental ground' calling for the courts intervention.

[31] Mr Maritz in his heads qouted paragraphs [32]-[37] of the Oudekraal matter, supra. He argued that where a subject is sought to be coerced by a public authority to comply with an unlawful administrative act- the subject may raise a 'defence' or a collateral challenge to the validity of the administrative act.

In paragraph [29] of the decision, mention is made to two types of acts namely those that are void and those that are voidable. Christopher Forsyth analysed the problem and drew a distinction between what exists in law and what exists in fact- see page 243A- F

[32] The requirements for an interim interdict have been set out in

the matter of Setlogelo v Setlogelo 1914 AD 221. They are:-

(a) a prima facie right;

(b) a well- grounded apprehension of irreparable harm if the interim relief is not granted and the ultimate relief is eventually granted;

( c) that the balance of convenience favours the granting of an interim interdict: and

(d) that the applicant has no other satisfactory remedy.

See: Harms, Civil Procedure in the Supreme Court, Lexis nexis A39-A46

[33] Mr Lubuschagne as previously stated argued that the applicants had an alternative remedy by approaching the chairman of the Appeal board. That may be so, however, the Registrar in my view acted irregularly by imposing conditions when he withdrew the licence. This was clearly an error of the law and this permits me in the exercise of my discretion to intervene in terms of De Villiers J's judgment in the Moll matter, referred to in para [24] supra.

[34] Mr Maritz alluded to two types of Administrative Acts, namely those which were void and those which were voidable. He submitted that the the Registrar did not give the applicants an opportunity to respond to what the JSE stated, and this was anathema to the provisions of s 9(2)(a)(ii).

[35] He submitted that the applicants have established that they have a prima facie right and he relied upon the decisions of Gauteng Gambling Board v Silverstars 2005 (4) 67 (SCA|); Airoadexpress v Chairman Local Road Transportation Board. Durban and Others 1986 ( 2) SA 663 and Winkelbauer and Winkelbauer t/a Eric's Pizzeria and Another v Minister of Economic affairs and Technology and Others 1995 (2) SA 570 (T) at 573

[36] The applicants in my view establised that they have a prima facie right in this matter. Such a right can be prima facie established even if it is open to some doubt- Webster v Mitchell 1948 (1) SA 1186 at 1189. Having heard the arguments for and those against the granting of the order I am of the view that the applicants established that they have a prima facie right in this matter.

[37] The remedy which the court grants is merely pendente lite in nature and the final determination of the withdrawal of the license would still vests with the Chairman or the Deputy Chairman of the Appeal Board, because an interim interdict is an interlocutory. The question of prima facie right can be re-argued on the return date -see Airoadexpress matter supra. The court must weigh the prejudice which the applicants would suffer if an interdict is not granted as opposed to the prejudice the respondent would suffer should the interdict be granted. The situation has hardly changed since April 2009 and I am of the view that the prejudice to the respondent would be minimal if any at all. Whereas the harm to the applicants would be irreparable.

[38] In the circumstances I make an order in the following terms: (1) That the Respondent be interdicted from implementing, giving effect to or further publishing its decision to withdraw the financial services provider licences/authorisation (FS559 an FSP7652) of the First and Second Applicants pending the outcome of an application to be launched by the Applicants in terms of section 26 (3) of the Financial

Services Act. 97 of 1990, within 15 (fifteen) days;

(2) That the respondents be ordered to immediately issue a media statement reflecting the contents of this order;

(3) That the respondent be ordered to pay the costs of this application, such costs to include the costs of two counsel .

Ismail AJ

Appearances :

For the Applicant: Adv N Maritz asssisted

by Adv A P J Els

Instructed by van der Merwe , Pretoria

For the Respondent: Adv E C Lubuschagne SC instructed by

Instructed by Rooth and Wessels Attorneys, Pretoria.

Date of Hearing : 21 September 2010.

Date of Judgment: 27 September 2010

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