Platinum Asset Management (Pty) Ltd v Financial Services Board and Others; Anglo Rand Capital House (Pty) Ltd and Others v Financial Services Board and Others

• Jurisdiction: South Africa

Platinum Asset Management (Pty) Ltd v Financial Services Board and Others;
Anglo Rand Capital House (Pty) Ltd and Others v Financial Services Board and Others
2006 (4) SA 73 (W)

2006 (4) SA p73

Citation	2006 (4) SA 73 (W)
Case No	2004/3081
Court	Witwatersrand Local Division
Judge	Jajbhay J
Heard	November 14, 2005; November 15, 2005; November 16, 2005
Judgment	December 5, 2005
Counsel	N B Tuchten SC (with D Vetten) for the applicants.; O Rogers SC (with A M Breitenbach) for the first and third to eighth respondents.; P M Mtshaulana SC (with K Pillay) for the second respondent.; I A M Semenya SC for the first Amicus (the registrar of Medical Schemes).; S van Nieuwenhuizen SC (with E L Theron) for the second Amicus (registrar of Banks).

Flynote : Sleutelwoorde E

Financial institution — Inspection of — Constitutionality of — Search of premises F and seizure of documents during course of inspection of affairs of financial institution as intended in ss 3 and 4(1)(b) — (f) of Inspection of Financial Services Control Act 80 of 1998 — Search and seizure by definition G limiting right to privacy guaranteed by s 14 of Constitution — Limitation of right to privacy inherent in inspection of financial institution in terms of ss 3 and 4(1)(b) — (f) of new Inspection Act justifiable under s 36(1) of Constitution — Nor do such inspections violate right to freedom of trade, occupation or profession, or right to just administrative action guaranteed, respectively, by ss 22 and 33 of Constitution — Sections 3 and H 4(1)(b) — (f) of Inspection Act not unconstitutional.

Financial institution — Inspection of — Legality of — Decision of registrar to order inspection of financial institution in terms of s 3 of Inspection of Financial Services Control Act 80 of 1998, read with I s 45 of Stock Exchanges Control Act 1 of 1985 and s 26 of Financial Markets Control Act 55 of 1989 — Instructions to inspectors failing to set clear parameters for inspection — Whether rule-of-law principle enshrined in s 1(c) of Constitution violated — Registrar having developed guidelines for exercise of powers and duties of inspectors — Furthermore, instruction complying with provisions of s 3(1) of new Inspection Act — Registrar's decision not liable to be set aside J

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Financial institution — Inspection of — Legality of — Decision of registrar to A order inspection of financial institution in terms of s 3 of Inspection of Financial Services Control Act 80 of 1998 read with s 45 of Stock Exchanges Control Act 1 of 1985 and s 26 of Financial Markets Control Act 55 of 1989 — Grounds of — In appointing inspection, registrar acting ultra vires powers B of Financial Services Board in terms of new Inspection Act and Financial Services Board Act 97 of 1990 — Neither Act applicable — Accordingly, registrar's decision not liable to be reviewed and set aside — Applications dismissed.

Financial institution — Inspection of — Legality of — Decision of registrar to order inspection of financial institution in terms of s 3 of Inspection of Financial Services Control Act 80 of 1998, read with C s 45 of Stock Exchanges Control Act 1 of 1985 and s 26 of Financial Markets Control Act 55 of 1989 — Institution inspected must be 'financial institution' as defined in Inspection Act — Inspection ordered in terms of s 45 of SECA and s 26 of FMCA, and not in terms of Inspection Act — Applicant not required to be 'financial D institution' as defined in Inspection Act — Applicant having been approved for purposes of inspection in terms of s 45 of SECA and s 26 of FMCA — Registrar's decision not liable to be set aside.

Financial institution — Inspection of — Legality of — Decision of registrar to order inspection of financial institution in terms of s 3 of Inspection of Financial Services Control Act 80 of 1998, read with E s 45 of Stock Exchanges Control Act 1 of 1985 and s 26 of Financial Markets Control Act 55 of 1989 — Section 3(4) requiring registrar to take reasonable steps to ensure that inspectors able to report objectively and impartially on affairs of institution — Inspection guidelines also including objectivity and impartiality in profile of inspector — Where no objective evidence brought to impugn F objectivity or impartiality of inspectors, registrar's decision to appoint inspectors not liable to be set aside on that ground.

Review — Procedure — Requirement that domestic remedies be exhausted before instituting legal proceedings — Failure to comply with — Exemption from compliance in terms of s 7(2)(c) of Promotion of Administrative Justice Act 3 of G 2000 — Review of registrar's decision to appoint inspectors in terms of s 3 of Inspection of Financial Services Control Act 80 of 1998, read with s 45 of Stock Exchanges Control Act 1 of 1985 and s 26 of Financial Markets Control Act 55 of 1989 — Applicant failing first to exhaust internal remedy, namely appeal to Financial Services Board of Appeal in terms of H s 26(2) of Financial Services Board Act 97 of 1990 — In casu, several 'exceptional circumstances' justifying exemption 'in interest of justice' noted by Court — Court proceeding to consider merits of application for review.

Headnote : Kopnota

The applicants sought the review and setting aside, under s 1(c) of the Constitution of the Republic of South Africa, I 1996, of the decision of the seventh respondent, in his capacity as registrar under the Inspection of Financial Institutions Act 80 of 1998 (the new Inspection Act), to appoint an inspection into the affairs of the applicants in terms of s 3 of the new Inspection Act, read with s 45 of the Stock Exchanges Control Act 1 of 1985 (SECA) and s 26 of the Financial Markets Control Act 55 of 1989 (FMCA). They did so on the grounds that: (i) the inspection was ultra vires J

2006 (4) SA p75

the provisions of s 3 of the new Inspection Act since the applicant was not a 'financial institution' as defined, nor was the appointment A of the inspectors authorised by the provisions of s 45 of SECA or s 26 of the FMCA; (ii) the authorisation was overbroad, undefined and unspecified, and accordingly inconsistent with the rule-of-law principle enshrined in s 1(c) of the Constitution, in that it failed to provide clear parameters for the inspection; (iii) ulterior purpose, in that the investigation was initiated by a foreign B regulator and the dominant purpose of the investigation was to monitor compliance with UK law; (iv) the lack of independence of the inspectors; and (v) the inspection was ultra vires the functions and powers of the Financial Services Board (FSB), in that it was acting under the new Inspection Act and the FSB Act and was thus empowered only to conduct inspections pertaining to contraventions of C the laws supervised by the FSB, namely the laws regulating financial institutions. The applicants also sought an order declaring the provisions of ss 3 and 4(1)(b) - (f) of the new Inspection Act to be unconstitutional on the ground that the impugned provisions violated the applicants' fundamental rights to privacy, freedom of trade, occupation and profession and just administrative action. The respondents contended in limine that the D application for review was barred by the provisions of s 7(2) of PAJA, in that the applicants had failed first to exhaust the internal remedies, namely, an appeal to the Financial Services Board of Appeal in terms of s 26(2) of the Financial Services Board Act 97 of 1990 (FSB Act), before launching the present proceedings. In response, the applicants sought exemption, in terms of s 7(2)(c) of PAJA, from the requirement first to exhaust its internal remedies before E instituting review proceedings.

Held, as to the point in limine, that the following circumstances cumulatively constituted 'exceptional circumstances' that 'in the interest of justice' justified the exemption of the applicants from the requirement that they should first exhaust their internal remedies before launching an application for review: (a) when the search and seizure complained of was F conducted, the time period within which the applicants were entitled to note an appeal had expired; (b) the applicants became aware of their right to note an appeal only when the point was raised by the respondents, by which time the right to appeal had lapsed; (c) the application would entail a consideration of the powers of inspectors appointed under the new Inspection Act, which were powers utilised, inter alia, by the amici; G (d) it would be unsatisfactory to dispose of a matter of such magnitude and importance on a technical preliminary point, only to be resumed later on the merits; and (e) the Court had to strike a proper balance in exercising its discretion. (Paragraph [59] at 94B - E.)

Held, further, as to (i), that the argument had to be rejected because it had not been a prerequisite for the ordering of the H inspection that the applicant had to be a 'financial institution' as defined in the FSB and new Inspection Acts. Even if the applicant was not a 'financial institution', the inspection had been validly ordered under s 45 of SECA and s 26 of the FMCA (both of which were subsequently repealed) because those Acts permitted appointment, in terms of s 3 of the new Inspection Act, of an inspection into the affairs of any institution approved under s 4(1) I of SECA or s 5(1) of the FMCA, irrespective of whether the institution were a 'financial institution', and it was common cause that the applicant was an institution so approved. (Paragraphs [68] and [71] at 96I - 97A and 98H - I.)

Held, further, as to (ii), that on the evidence the registrar had developed guidelines for the exercise by inspectors of their powers and duties. The guidelines distinguished between routine and special inspections, and the J

2006 (4) SA p76

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