THE SUPREME COURT OF APPEAL OF SOUTH AFRICA
JUDGMENT

Reportable
Case no: 20207/2014
In the matter between:

FINANCIAL SERVICES BOARD
APPELLANT

and

PERCY GEORGE EDWARD BARTHRAM
FIRST RESPONDENT

DISCOVERY LIFE LTD
SECOND RESPONDENT

Neutral citation:
Financial Services Board v Barthram (20207/2014) [2015] ZASCA
96 (1 June 2015)

Bench:
Ponnan, Cachalia and Leach JJA and Dambuza and Gorven AJJA

Heard:

19 May 2015

Delivered:

1 June 2015

Summary:
Financial Services Advisory and Intermediary Services Act 37 of
2002 – debarment in terms of s 14(1) – precludes representative
from rendering financial services on an industry-wide basis.

_____________________________________________________________________

ORDER
______________________________________________________________________

On appeal from: Gauteng Division of the High Court, Pretoria (Makgoba J, sitting as
court of first instance):
In the result:
(1)
The appeal by the Financial Services Board is upheld and the order of the court
below is set aside and replaced with the following:
„The interim order issued against the second respondent, the Financial Services Board,
on 18 September 2012 is set aside and the application against it is dismissed.‟
(2)
The appeal by Mr PGE Barthram is upheld with costs, such costs to be paid by
Discovery Life Ltd and the order of the court below dismissing his application against
Discovery Life Ltd is set aside and replaced with the following:
„(a)
The decision taken by the first respondent, Discovery Life Ltd, to debar the
applicant, Mr PGE Barthram, purportedly in terms of section 14(1) of the Financial
Advisory and Intermediary Services Act 37 of 2002, is set aside.
(b)
The first respondent is ordered to pay the costs of the application, such costs to
include those occasioned by the urgent application of 18 September 2012.‟

______________________________________________________________________

JUDGMENT
______________________________________________________________________

Ponnan JA (Cachalia and Leach JJA and Dambuza and Gorven AJJA . . . ):

[1] On 15 September 2009 Mr Percy Barthram and Discovery Life Limited
(Discovery), an authorised Financial Services Provider (FSP) as defined in the Financial
Services Advisory and Intermediary Services Act 37 of 2002 (FAIS),1 concluded a
written „contract of employment‟,  in terms of which the former was appointed: „a full-
time employee to market and sell the products and policies and to provide Financial
services in relation to the Products and Policies to existing and prospective clients of
Discovery.‟
In terms of clause 6 of the agreement, the applicant warranted that „[he]
was aware of the Applicable Legislation having relevance in [his] capacity as a
representative as defined in FAIS‟.2 Clause 7 of the agreement provided:
„7.1
It is a mandatory requirement that the Consultant complete the NQF60 credits level or
RFP2 examination as indicated in the fit and proper requirements as per the FAIS Act on
signature of this Agreement or during 2006.
7.2
The Consultant shall further ensure that they do all things necessary to achieve and
maintain the above qualifications and fit and proper requirements imposed by law or regulation
or as such other qualifications and requirements as required by Discovery, and any changes
thereto from time to time.
7.3
The Consultant acknowledges that Discovery shall be entitled to terminate the
Consultant‟s employment, if the Consultant fails to meet, achieve and maintain the qualifications
and requirements as set out in 7.1 and 7.2 above.

1 In terms of s 1 of FAIS a financial service provider means „any person, other than a representative, 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‟.
2 In terms of s 1 of FAIS a representative means any „person . . . who renders a financial service to a
client for or on behalf of a FSP in terms of conditions of employment or any other mandate, but excludes
a person rendering clerical, technical, administrative, legal, accounting or other service in a subsidiary or
subordinate capacity . . .‟.

7.[4]
Discovery conducts business in the financial services sector in which the qualities of
honesty and integrity are integral to the reputation of Discovery and to this contract of
employment. Accordingly, the Consultant undertakes to act with honesty and integrity. The
Consultant undertakes to refrain from conducting themselves, either during working hours or
outside working hours, in a manner which compromises the trust relationship between the
parties or causes harm to Discovery or its reputation.
7.[5]
The Consultant undertakes to conduct their personal financial affairs in a responsible
way.‟

[2] On 31 May 2012 Mr Barthram purported to terminate his employment with
Discovery on 24 hours‟ notice and he commenced employment a day later with Old
Mutual Life Insurance Limited. Thereafter, on 1 June 2012, certain employees of the
forensic department of Discovery called on Mr Barthram‟s office and demanded the
return of all client files. In his absence, his wife, Natalie, handed over those files. On 12
June 2012 the Barthrams met with Messrs Mark Bamford and Warren Allan,
respectively, a forensic investigator and compliance officer in Discovery‟s employ. At
approximately 5 pm that evening, Mr Allan telephonically informed Mr Barthram that Ms
Surina Meintjes, Discovery‟s Chief Compliance Officer, had taken the decision to notify
the Financial Services Board (FSB) or more accurately the Registrar of Financial
Services Providers (the Registrar),3 that the applicant „did not comply with the
requirements of the FAIS for continued appointment as a representative of [Discovery].‟

[3] On 13 June 2012, Discovery withdrew Mr Barthram‟s authority to act on its behalf
and removed his name from its register.4  In its notice to the FSB, Discovery marked
with an „X‟ the block labelled „honesty and integrity‟ as the reason for the withdrawal of
his authority to act. On receipt of the notice from Discovery, Mr Barthram was listed on

3 In terms of s 2(1) the executive officer referred to in s 1 of the Financial Services Board Act 97 of 1990 is
the registrar of financial services providers and has the powers and duties provided for by or under FAIS.
4 In terms of s 13(3) an authorised FSP must maintain a register of representatives, and key individuals of
such representatives, which must be regularly updated and be available to the Registrar for reference or
inspection purposes.

the FSB‟s website as a debarred representative. The reason given was that he „does
not comply with personal character qualities of honesty and integrity‟.

[4] After failing in his quest to have his debarment lifted, Mr Barthram launched an
urgent application in the North Gauteng High Court, Pretoria. Although both Discovery
and the FSB were cited as respondents, only the former opposed the application. On 18
September 2012, Hiemstra AJ issued the following interim order by agreement between
Mr Barthram and FSB:
„1.
THAT the Second Respondent [FSB] be and is hereby [ordered] to reinstate the
Applicant as a representative of an authorized financial service provider with immediate effect,
should such an application be received;

2.
THAT the FSB is to immediately enter the name of the Applicant in the register referred
to in Section 13(3) of the Financial Advisory and Intermediary Services Act 37 of 2002
(hereinafter “the Act”);
3.
THAT the FSB is to remove any mention of the debarment of the Applicant by notice in
the Government Gazette or by means of any other appropriate public media in which it is
presently published, including its website;
4.
THAT the relief as set out in paragraphs 2 to 4 above, shall act as interim orders
pending the finalization of review proceedings, reviewing, setting aside and/or varying the
decisions and/or rulings of the Respondents [Discovery and the FSB] to bar the Applicant and to
publish such debarment, to be instituted within 30 days of the hearing of this application;
5.
THAT costs shall be costs in the review.‟

[5] On 16 October 2012, Mr Barthram launched the review application envisaged in
paragraph 4 of the interim order. He sought an order in the following terms:
„1.
Reviewing and setting aside the decision/s purportedly taken by the First Respondent
[Discovery], alternatively the Second Respondent [FSB], alternatively both the First and Second
Respondents on the 13th of June 2012, alternatively in the period from 13 June 2012 to 20
August 2012, to debar the Applicant, purportedly in terms of section 14(1) of the Financial
Advisory and Intermediary Services Act 37 of 2002 (hereinafter “the Act”);
2.
Reviewing and setting aside the decision of the Second Respondent to update the
register of debarred persons to include the name of the Applicant on 13 June 2012, alternatively
in the period from 13 June 2012 to 20 August 2012;

3.
Exempting the Applicant in terms of section 7(2)(c) of the Promotion of Administrative
Justice Act No 3 of 2000 (hereinafter “PAJA”) from the obligation to exhaust any internal
remedies that may be provided for in the Act in respect of the first decision or any decisions
thereafter taken by the Respondents, insofar as it may be necessary;
4.
Extending the period of 180 days referred to in section 7(1) of PAJA in terms of section
9(1)(b) of PAJA insofar as it may be necessary;
5.
Directing the First Respondent and any other parties opposing the matter jointly and
severally to pay the costs of the application on the scale as between attorney and client;
6.
Granting further and/or alternative relief to the Applicant.‟

[6] Once again only Discovery opposed the application. In its answering affidavit, Ms
Meintjes on behalf of Discovery stated:
„21.10 The Applicant has failed to draw the vital distinction between what is contained in
sections 14 and 14A of the FAIS Act. Section 14 of the Act, although styled “Debarment of
Representatives” effectively allows for the removal by a financial services provider (such as the
First Respondent) of a representative (such as the Applicant) from the statutorily required
register. The effect thereof is that the representative can no longer represent that particular
financial services provider in the rendering of any financial services.
21.11 Conversely, section 14A of the FAIS Act deals with the debarment by the Registrar of “a
person” rather than a representative. A section 14A debarment precludes a representative from
rendering any financial services on behalf of any services provider for a specified period. In
effect, the debarment by the Registrar of a person in terms of section 14A of the FAIS Act
precludes such person from rendering financial services on behalf of any services provider
whereas a debarment in terms of section 14(1) of the FAIS Act precludes the debarred
representative only from representing the particular services provider who effects the
debarment.
21.12 In the result, the effect of the removal of the Applicant from the First Respondent‟s
register (the debarment in terms of section 14(1) of the FAIS Act) did not and will not preclude
the Applicant from rendering financial services on behalf of his new employer, Old Mutual. That
prohibition could only arise from a debarment by the Registrar as contemplated in section 14A
of the FAIS Act read together with section 9(2) thereof – the withdrawal of the Applicant‟s
licence to act as a financial services provider/insurance intermediary at all.
. . .

28.5
The First Respondent, as a registered financial services provider with many thousands
of clients, has a responsibility placed upon it by the provisions of the FAIS Act to ensure that
only fit and proper persons act as its representatives or intermediaries. Once facts had become
available to me which confirmed that the Applicant was not so fit and proper, I was compelled to
act in terms of section 14(1) of the FAIS Act.
. . .
31.4
I reiterate that, as clearly contemplated by section 14(1) of the FAIS Act, the function of
the First Respondent was no more than to convey to the Second Respondent its election to
have the Applicant removed from the First Respondent‟s Register given that, in the First
Respondent‟s view (as determined by me), the Applicant was no longer a fit and proper person
to represent the First Respondent in the provision of financial advice to the public. The steps to
be taken by the Second Respondent following thereon have nothing to do with the First
Respondent.‟

[7] The review came before Makgoba J who, on 19 November 2013, concluded that:
(a) Mr Barthram had „not made out a case for the relief that he seeks against
[Discovery]‟ and accordingly dismissed his application as against it with costs including
the costs occasioned by the urgent application; and (b) as the FSB did not oppose the
application, the „interim relief obtained against [it] on 18 September 2012 is confirmed
and made a final order of this Court.‟

[8] The learned judge reasoned:
„12.
A vital distinction should be drawn between what is contained in section 14 and 14A of
the FAIS Act. Section 14 of the Act allows for the removal by a financial services provider of a
representative from the statutory required register. The effect thereof is that the representative
can no longer represent that particular financial services provider in the rendering of any
financial services. In addition, the consequence of such debarment is the removal of the
representative from the financial services providers section 13 register of representatives.
13.
In the context of this case the effect of a debarment in terms of section 14(1) of the Act
was that the applicant was thereby precluded from rendering any new financial service on
behalf of the First Respondent. This preclusion was achieved by removing the Applicant‟s
authority to represent the First Respondent and by removing the Applicant‟s name from the First

Respondent‟s register. However, the Applicant was still at liberty to render financial services
with other financial services providers, as he continued doing with Old Mutual.
14.
Conversely section 14A of the FAIS Act deals with the debarment by the Registrar of a
person. A section 14A debarment precludes a representative from rendering any financial
services on behalf of any services provider for a specified period. In effect, the debarment by
the Registrar of a person in terms of section 14A of the FAIS Act precludes such person from
rendering financial services on behalf of any services provider whereas a debarment in terms of
section 14(1) of the FAIS Act precludes the debarred representative only from representing the
particular provider who effects the debarment.
15.
The Applicant prays for the Court to review and set aside the decisions of the
Respondents to debar the Applicant and to publish such fact, in terms of PAJA and the common
law. The Applicant contends that the First Respondent could not purport to debar the Applicant
in terms of section 14 of the Act, as the Applicant was no longer in its employ when the First
Respondent purported to debar the Applicant and therefore did not have the authority to act in
terms of section 14 of the Act.
The Applicant further contends that even if the Court finds that the Respondents acted within
their authority and correctly in terms of section 14(1) of the Act, their actions are to be reviewed
and set aside on the basis that various of the other requirements of PAJA and common law are
not satisfied especially reasonableness  and procedural fairness.
16.
As pointed out earlier in this judgment, I do not deem it necessary to address the
Applicant‟s abovementioned contentions or arguments. This is so in the light of the legal and/or
factual points raised by the First Respondent with which I agree.
. . .
20.
It is common cause that the Applicant is currently still in the employ of Old Mutual and
not the First Respondent. In the result the effect of the removal of the Applicant from the First
Respondent‟s register (that is the debarment in terms of section 14(1) of the FAIS Act) did not
and will not preclude the Applicant from rendering financial services on behalf of his new
employ, Old Mutual.‟

[9] It was only after the matter had been finally determined against it by the High
Court that the FSB chose to enter the fray. It sought and obtained condonation as also
leave from Makgoba J to appeal to this court. The learned judge further granted leave to
Mr Barthram to appeal against the dismissal of his review application against Discovery.

In the result, before this court the FSB has come to be cited as the first appellant and Mr
Barthram as the second. Discovery, who was cited as the respondent, takes no part in
the appeal.

[10] Not having participated in the proceedings before the High Court, the FSB now
seeks the leave of this court to adduce further evidence on appeal. On the narrow issue
that we are called upon to decide, as the intention of the legislature is proclaimed in
clear terms either expressly or by necessary implication, in my view, it is not necessary
to rule on the application. I thus turn to a consideration of the relevant legislative
provisions without recourse to the evidence sought to be adduced by the FSB.

[11] The FSB contends that the High Court erred in its finding that the effect of a
debarment of Mr Barthram by Discovery was that he was only precluded from rendering
financial services to the public on behalf of the latter. Upon a proper construction of the
provisions of ss 13 and 14 of FAIS, so the contention proceeds, the High Court should
have concluded that the effect of his debarment by Discovery was to preclude him from
rendering financial services to the public on behalf of any FSP. According to the FSB,
the interpretation by the High Court of s 14(1) has significant industry-wide
consequences inasmuch as the judgment appealed against has already formed the
basis of representatives who have been debarred in terms of s 14(1), justifying their
continued employment by a different provider notwithstanding that disbarment.

[12] In terms of s 7 of FAIS „a person may not act or offer to act as a [FSP] unless
such person has been issued with a licence under s 8, which authorises the rendering
of those services.‟ Section 8(1) provides that an application for an authorisation must
satisfy the Registrar that „the applicant complies with the fit and proper requirements
determined for financial services providers . . . in respect of (a) personal character
qualities of honesty and integrity; (b) competence; (bA) operational ability; and
(c) financial soundness‟. In terms of s 16A(2)(a) „fit and proper requirements‟ may
include, but are not limited to, appropriate standards relating to „personal character
qualities of honesty and integrity‟. Where an application is granted, the Registrar may:

impose such conditions and restrictions on the exercise of the authority granted by the
licence (subsec (4)(a)); and issue a licence authorising such applicant to act as a FSP
(subsec 5(a)(i)). Section 8A imposes an obligation on a FSP and representatives of
such FSP to continue to comply with the fit and proper requirements.

[13] In terms of s 13(1)(a), a person may not carry on business by rendering financial
services to clients for or on behalf of any person who is not authorised as a financial
services provider (or exempted from the application of the Act). And in terms of s
13(1)(b),  no person may act as a representative of an authorised FSP, unless such
person:
„(i)   prior to rendering a financial service, provides confirmation, certified by the provider, to
clients-
(aa)   that a service contract or other mandate, to represent the provider, exists; and (bb)   that
the provider accepts responsibility for those activities of the representative performed within the
scope of, or in the course of implementing, any such contract or mandate; and
(iA)   meets the fit and proper requirements . . .‟
An authorised FSP must in terms of s 13(2),5 at all times be satisfied that its
representatives are, when rendering a financial service on its behalf, competent to act
and comply with the fit and proper requirement. To that end, s 13(3) requires an
authorised FSP to maintain „a register of representatives, and key individuals of such
representatives, which must be regularly updated and be available to the Registrar for
reference or inspection purposes.‟ Such register must, according to s 13(4): „(a) contain
every representative‟s or key individual‟s name and business address, and state
whether the representative acts for the provider as employee or as mandatory; and (b)
specify the categories in which such representatives are competent to render financial

5 Section 13(2)  provides:
„An authorised financial services provider must-
(a)   at all times be satisfied that the provider's representatives, and the key individuals of such
representatives, are, when rendering a financial service on behalf of the provider, competent to act, and
comply with-
(i)   the fit and proper requirements; and
(ii)   any other requirements contemplated in subsection (1)(b)(ii);
(b)   take such steps as may be reasonable in the circumstances to ensure that representatives comply
with any applicable code of conduct as well as with other applicable laws on conduct of business.‟

services.‟ The Registrar relies, inter alia, on the register contemplated in subsection (4)
to maintain and continuously update a central register of all representatives and key
individuals (subsec 5).

[14] Section 14, which lies at the heart of the appeal and is headed „debarment of
representatives‟, reads:
„(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 unconcluded business of the representative is properly concluded.
(2)
For the purposes of the imposition of a prohibition contemplated in subsection
(1), the authorised financial services provider must have regard to information regarding
the conduct of the representative as provided by the registrar, the Ombud or any other
interested person.
(3)(a) The authorised financial services provider must within a period of 15 days after the
removal of the names of a representative and key individuals from the register as
contemplated in subsection (1), inform the registrar in writing thereof and provide the
registrar with the reasons for the debarment in such format as the registrar may require.
(b)
The registrar may make known any such debarment and the reasons therefor by
notice on the official web site or by means of any other appropriate public media.‟

[15] Sections 13(2)(a) and (b), as also s 14(1) and (2), are couched in peremptory
terms. Failing compliance with those provisions the FSP itself is liable to sanction.6 FAIS
requires an authorised FSP not just to be authorised and licenced as such by the
Registrar, but also to exercise oversight in respect of the initial and continuing fitness of

6 In terms of s 36, any person who inter alia contravenes ss 7(1) or (3), 13(1) or (2) and 14(1), is guilty of
an offence and liable on conviction to a fine not exceeding R10 million or to imprisonment for a period not
exceeding 10 years or to both such fine and imprisonment.

its chosen representatives. The FSP having itself gone through a vetting process at the
hands of the Registrar is eminently suited to subject its representatives to a similar initial
vetting and thereafter to exercise oversight in respect of them. The Registrar would only
get to learn of a representative‟s employment or appointment by an FSP in
consequence of the updating of the FSB‟s central register by such FSP pursuant to s
13(5). A debarment of a representative in terms of s 14(1) is complete when the FSP
has withdrawn the representative‟s authority to act on its behalf and has removed such
person‟s name from its own register in terms of s 13(3). Moreover, the Registrar only
gets to learn of a representative‟s debarment, after the event, on being informed of such
by the FSP in terms of s 14(3).  Upon removal of the representative‟s name from the
FSP‟s register, the FSB‟s central register is correspondingly updated.

[16] The court below appears to have misinterpreted the legal effect of a debarment
in terms of s 14(1) in holding that it precludes the representative from acting as such
only in respect of the debarring FSP. The absurdity of such an approach is patent. The
debarment of the representative by a FSP is evidence that it no longer regards the
representative as having either the fitness and propriety or competency requirements. A
representative who does not meet those requirements lacks the character qualities of
honesty and integrity or lacks competence and thereby poses a risk to the investing
public generally. Such a person ought not to be unleashed on an unsuspecting public
and it must therefore follow that any representative debarred in terms of s 14(1), must
perforce be debarred on an industry-wide basis from rendering financial services to the
investing public.

[17] It follows that the FSB‟s appeal must succeed. As to costs: It is so that in
approaching this court the FSB is acting in its regulatory capacity in the public interest.
Moreover, it has succeeded in overturning the decision of the court a quo. In those
circumstances it ought, ordinarily at any rate to have been entitled to its costs on
appeal. As against that, it ill-advisedly chose not to participate in the proceedings before
the High Court. That court was thus denied the benefit that such participation would
have brought. Had it participated, it could possibly have influenced the outcome of those

proceedings. In that event an appeal may not have been necessary. In those
circumstances Counsel for the FSB was constrained to accept that in the event of its
appeal succeeding there should be no order as to costs.

[18] Turning to Mr Barthram‟s appeal: Although the court a quo dismissed his
application to review Discovery‟s decision to debar him, it arrived at that conclusion
without entering into the merits of the matter. There was a dispute on the papers as to
whether Mr Barthram was still in the employ of Discovery when the decision was taken
to debar him. From the Bar in this court, however, his counsel accepted that we should
approach this aspect of the matter on the factual footing that he was still in Discovery‟s
employ at the relevant time.

[19] In support of the review application, Mr Barthram stated:
„I agree that the First Respondent [Discovery] has a responsibility to ensure that only fit and
proper persons act as its representatives or intermediaries. I deny that I was not a fit and proper
person and specifically deny that the First Respondent was entitled to act in terms of Section
14(1) of the FAIS Act as alleged or at all. The decision taken by the First Respondent was
unwarranted and this would have been clear had the First Respondent afforded me an
opportunity to represent myself and to present my case.‟
He accordingly complained that:
„there was not a proper disciplinary hearing and furthermore whether the First Respondent had
used the correct process, both in terms of the FAIS Act, common law, PAJA and the rules of
natural justice when it took the decision to debar me. It will be argued on my behalf at the
hearing of this matter that there is nothing before this Honourable Court to prove that I am not a
fit and proper person to act as a legal representative.‟
In opposing the application Ms Meintjies stated:
„23.1
My decision, as the First Respondent‟s Chief Compliance Officer, to invoke the
provisions of Section 14(1) of the FAIS Act and to report to the Registrar the First Respondent‟s
election to debar the Applicant as one of its authorised representatives followed on
consultations that I held with Messrs Mark Bamford (a forensic investigator in the First
Respondent‟s employ).
23.2
I was furnished by Messrs Bamford, Allan and Hudson with certain reports which formed
part of my report to the Second Respondent. Those reports form part of annexure “PB14” to the

Applicant‟s founding affidavit. It was on the strength of the facts contained in the annexed
reports and what was conveyed to me by Messrs Allan and Bamford of their meeting with the
Applicant (referred to below) that I made my decision.
. . .
23.4
The contents of the aforesaid reports warranted the conclusion that the Applicant was
not a fit and proper person to function as a representative of the First Respondent in the
provision of financial advice to members of the public as defined in the FAIS Act. It was that fact
which was reported by me to the Registrar on 13 June 2012.‟

[20] The meeting between the Barthrams and Messrs Bamford and Allan was thus an
important feature of Ms Meintjies‟ decision. A transcript thereof served before the High
Court. To the extent relevant for present purposes, it reads:
„Mr Bamford: We are recording the interview for record keeping purposes and obviously it is
just so that we can reflect back on our notes, what we have said what was discussed. You are
more than welcome to speak in Afrikaans. I am going to speak in English, if you are comfortable
with that, and Warren will address you in whatever language he is comfortable in. And then we
have just got a few concerns that we are going to present to you and try and get your input on
what our concerns are if that is okay. Do you object to having the meeting recorded?
. . .
Mr Barthram: I actually resigned the Thursday . . .
. . .
Mr Bamford: Okay. So obviously we are in this, when that type of thing happens, we then just
go and do an audit just to make sure that everything that you have left behind for us to deal
with, is in order and that is obviously where Warren come in and where I come in.
Mr Barthram: Yes, I understand.
Mr Bamford: You understand that? Okay. So during that process there were certain things that
I have picked up in the file which I do not believe are correct, but perhaps you can just shed
some light on the concerns that I have and I think we should just jump straight in.
Mr Barthram: Sure.
Mr Bamford: Warren, is there anything else that you want to . . .?
Mr Allan:
No, I (inaudible) under that, I will just ask one or two questions regarding some
replacements.
Mr Bamford: Okay, that is good.

Mr Barthram: Do you have some paper and pen for me as well so that I can also just make
some . . .
Mr Bamford: Like I said, the files that I have got here, is just a sample of what we found and I
believe if you can explain what has happened here, then it will pretty much apply to what has
happened in the other cases.
. . .
Mr Barthram: . . . If you want to nail me, you can.
Mr Bamford: No, the idea is not to nail you, Percy, the idea is to ask you questions.
Ms Barthram: I get the feeling it is.
Mr Bamford: No sir, the idea is to ask you questions. We have picked up some irregularities,
we need to ask you questions.
. . .
Mr Bamford: Okay, that is what we have to do. It is a question and answer session, that is all.
We had some concerns just around the documentation that was just incomplete, been signed,
and I just want to just show you, just as an example. Okay, so just, we got this incomplete
information here, all right, incomplete information. The (inaudible) is not completed.
. . .
Mr Bamford: Percy, we, I just want to come back to you. This is, we are asking questions, that
is all. I had a job to do, you understood that, you acknowledged that I had a job to do, to go
through your files. I found irregularities on the files and I am just asking you for information on
these files.
. . .
Mr Bathram: Ja, I understood.
Mr Barthram: . . . So what is going to happen now?
Mr Allan:
Well, what will happen is, Mark will draft his findings or whatever and then it will
go through to compliance, Sorina there, the head of compliance and that, and they will just
either make notes. From a risk point of view for Discovery, we may have to report certain things
to the FSB, just to say we have reported this, the advisors are no longer in our employ, but we
are just notifying them that these are the files and we will correct the error or whatever the case
may be. That they will have to take up.
Ms Barthram: Okay, what we are looking here . . . (intervenes)
Mr Bamford: Need to be remindful, that is not our decision whether to debar or not to debar,
that is the FSB‟s . . . (intervenes)
. . .

Mr Barthram: So the next call I will get is from the FSB?
Mr Bamford: Not necessarily, no. That is the really negative side, a way of looking at it, but
Percy, thank you very much for coming through. I am going to switch the recording off now . . .
(intervenes)
Mr Barthram: Ja.
Mr Bamford: So anything you say after this is off the record.
Mr Barthram: Okay.‟

[21] There was some debate on the papers as to whether the power that Discovery
exercised when debarring Mr Barthram was reviewable under PAJA. It seems to me that
it is unnecessary to enter into that debate for the purposes of this case because 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. In Heatherdale
Farms (Pty) Ltd v Deputy Minister of Agriculture 1980 (3) SA 476 (T) at 486E-G, Colman
J put it thus:
„It is clear on the authorities that a person who is entitled to the benefit of the audi alteram
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 a compliance with the Rule. For in
my view will it 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 lastmentioned proposition is, firstly, that the person concerned must be
given a reasonable time in which to assemble the relevant information and to prepare and 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.‟

[22] Here none of the principles alluded to by Colman J were observed by Discovery
in their dealing with Mr Barthram. If anything, it appears that he was positively misled as
to the true nature and purpose of his meeting with Messrs Bamford and Allan. It must
follow that his review application as against Discovery ought to have succeeded before
the court a quo. Insofar as the costs are concerned: In dismissing Mr Barthram‟s

application, the High Court ordered him to pay Discovery‟s costs, including the costs of
the urgent application launched by him on 18 September 2012. That order obviously
cannot stand. It was necessary for Mr Barthram to approach this court to vindicate his
rights. Discovery‟s conduct prompted the litigation and it has now been found to have
acted unlawfully. Notwithstanding the fact that Discovery elected not to participate in the
appeal, it should be held liable for Mr Barthram‟s costs both in this court and the one
below.

[23] In the result:
(1)
The appeal by the Financial Services Board is upheld and the order of the court
below is set aside and replaced with the following:
„The interim order issued against the second respondent, the Financial Services Board,
on 18 September 2012 is set aside and the application against it is dismissed.‟
(2)
The appeal by Mr PGE Barthram is upheld with costs, such costs to be paid by
Discovery Life Ltd and the order of the court below dismissing his application against
Discovery Life Ltd is set aside and replaced with the following:
„(a)
The decision taken by the first respondent, Discovery Life Ltd, to debar the
applicant, Mr PGE Barthram, purportedly in terms of section 14(1) of the Financial
Advisory and Intermediary Services Act 37 of 2002, is set aside.
(b)
The first respondent is ordered to pay the costs of the application, such costs to
include those occasioned by the urgent application of 18 September 2012.‟

_________________
V M Ponnan
Judge of Appeal

APPEARANCES:

For First Appellant:

E C Labuschagne SC

Instructed by:

Rooth & Wessels Inc., Pretoria

Phatshoane Henney Attorneys, Bloemfontein

For First Respondent:

J R Minnaar

Instructed by:

Peet Delport Attorneys, Pretoria

Honey Attorneys, Bloemfontein

THE SUPREME COURT OF APPEAL OF SOUTH AFRICA

MEDIA SUMMARY OF JUDGMENT DELIVERED IN THE SUPREME COURT OF APPEAL

FROM

The Registrar, Supreme Court of Appeal

DATE

1 June 2015

STATUS

Immediate

Please note that the media summary is for the benefit of the media and does not form part of
the judgment.

Financial Services Board v Barthram (20207/2014) [2015] ZASCA 96 (1 June 2015)

MEDIA STATEMENT

Today the Supreme Court of Appeal (SCA) (i) upheld an appeal by the Financial Services Board
(the FSB) and overturned the decision of the Gauteng Division of the High Court, Pretoria, relating to
the effect of a debarment of a representative of a financial services provider (FSP) in terms of s 14 of
the Financial Services Advisory and Intermediary Services Act 37 of 2002 (FAIS); and (ii) upheld an
appeal by Mr PGE Barthram (Barthram) and accordingly set aside a decision taken by Discovery Life
Ltd (Discovery) to debar Barthram as a representative in terms of that section.

The issues before the SCA were (i) whether a debarment of a representative of an FSP in terms of
s 14 of the FAIS was an industry-wide debarment or operated only in respect of that specific FSP;
and (ii) whether the decision taken by Discovery to debar Barthram in terms of s 14 of the FAIS
should be set aside on the grounds of procedural unfairness.

The facts of the case were as follows. Barthram was employed by Discovery to market and sell
financial products and to provide financial advice. When he later resigned, he returned his various
clients’ files, and during the handover Discovery detected certain irregularities. A meeting was held to
discuss these, and then Discovery took the step of removing Barthram from their register of
representatives and informed the FSB that the reason for this related to his ‘honesty and integrity’.
The FSB then listed Barthram on its website as a debarred representative who did not comply with
the personal character qualities of honesty and integrity. Barthram launched proceedings to (i) have
the debarment uplifted because, he argued, it operated as an industry-wide debarment which
prevented him from being employed by another FSP; and (ii) have Discovery’s decision reviewed and
set aside.

The court a quo held that a debarment in terms of s 14 of the FAIS only related to the specific FSP
that applied for the debarment; that Barthram was accordingly not prevented from being employed by
another FSP as a representative; and therefore the FSB must remove the industry-wide debarment of
Barthram from its website. Flowing from this, the court a quo held that Discovery’s decision to have
him debarred did not have any material prejudicial effect, and so considered it unnecessary to deal
with the application for its review.

On appeal, the SCA held that the court a quo misinterpreted the effect of s 14 of the FAIS. A
debarment in terms of that section indicates that the FSP believes that the representative no longer
meets the fitness and propriety or competency requirements. A representative who does not meet
these requirements lacks the character qualities of honesty and integrity or lacks competence and
thereby poses a risk to the investing public generally. It must therefore follow, the SCA held, that any
representative debarred in terms of s 14(1), is debarred on an industry-wide basis from rendering
financial services to the investing public. Accordingly, the FSB’s appeal relating to the effect of a
debarment in terms of s 14 of the FAIS was upheld.

With respect to the review of Discovery’s decision to debar Barthram, the SCA held that the process
followed by Discovery when making its decision was procedurally unfair and that it should have been
set aside. Accordingly, Barthram’s appeal was also upheld.

-- ends ---