THE SUPREME COURT OF APPEAL OF SOUTH AFRICA
JUDGMENT

REPORTABLE
Case No 1079/2013

In the matter between:

ELIZABETH COETZEE

APPELLANT

and

FINANCIAL PLANNING INSTITUTE OF
SOUTH AFRICA (ASSOCIATION INCORPORATED
UNDER SECTION 21)

FIRST RESPONDENT

R KING

SECOND RESPONDENT

E VENTER

THIRD RESPONDENT

J LOURENS

FOURTH RESPONDENT

J MAREE

FIFTH RESPONDENT

M LOUW

SIXTH RESPONDENT

Neutral citation:
Coetzee v Financial Planning Institute of SA (1079/13) [2014]
ZASCA  205 (28 November 2014).
Coram:

Navsa ADP, Leach, Saldulker, Swain JJA et Mocumie AJA
Heard:

12 November 2014
Delivered:

28 November 2014
Summary:  Disciplinary hearing – charge not requiring same degree of
formality as criminal trial – particularity of factual information underlying
allegations required – test whether information sufficient to enable accused to
know what case to meet – appellant adequately informed of particulars of
charge – appeal dismissed.

___________________________________________________________________

ORDER
___________________________________________________________________

On appeal from:    The Western Cape High Court, Cape Town (Louw and Cloete JJ,
sitting as court of first instance):

The appeal is dismissed with costs.
___________________________________________________________________
JUDGMENT
___________________________________________________________________

Swain JA (Navsa ADP, Leach, Saldulker JJA et Mocumie AJA concurring):

[1] This appeal has its origin in disciplinary proceedings instituted by the first
respondent, the Financial Planning Institute of Southern Africa (FPI), against one of
its members, the appellant, Ms Elizabeth Coetzee, as long ago as 19 June 2007.

[2] Those proceedings culminated in a finding that Ms Coetzee had contravened
certain sections of the code of conduct of FPI with the result that her membership of
FPI was suspended for ten years. She was also sentenced to a fine of R10 000.

[3] Aggrieved at the outcome, Ms Coetzee appealed to the appeal tribunal of FPI,
which set aside the findings of the disciplinary committee but substituted those
findings with a finding that she was guilty on two of the charges advanced against
her. The sanction imposed was varied to the suspension of her membership in FPI
for a period of two years. The second to sixth respondents were the members of the
appeal tribunal.

[4] Ms Coetzee‟s dissatisfaction with the appeal tribunal‟s finding resulted in the
institution of review proceedings before the Western Cape High Court. In this
application she sought an order reviewing and setting aside the findings of the
appeal tribunal and its substitution with an order that she was not guilty on these
charges. The High Court (Louw and Cloete JJ) dismissed the application with costs.

[5] Ms Coetzee then sought and was granted leave to appeal to this court on the
ground that one of the charges which formed the basis for her conviction before the
appeal tribunal, had not been drafted with sufficient particularity. As a consequence
she alleged that in the absence of a properly formulated charge she had not had a
proper hearing, neither before the disciplinary committee nor the appeal tribunal. An
order is sought in the present appeal setting aside the decision of the court a quo
and substituting the order of the appeal tribunal with an order that she is not guilty on
all of the charges. As will become apparent, the validity of the second charge is
inextricably linked to the validity of the charge which is challenged on appeal.

[6] The issues before this court are: whether the charge on which the appellant
was found guilty was properly put to her and whether she was afforded the
opportunity to defend herself on that charge.

[7] Before examining the charges advanced against Ms Coetzee, it is necessary
to examine the historical background to the disciplinary proceedings to place them in
context.

[8] The complainant in the disciplinary proceedings, Ms Wagener, is an elderly
widow who at the time of the institution of proceedings was 77 years of age. It is
clear from the record of the disciplinary proceedings that she has no business
acumen or experience and spent her life as a wife and mother to her children. She
left financial matters in the hands of her late husband who passed away in 2002. He
had, by all accounts, successfully managed the investments of the Wagener Family
Trust (the Trust) in the form of a share portfolio. Mr Sparg, a chartered accountant,
who gave evidence before the disciplinary committee described the portfolio as
consisting of „blue chip‟ shares. They had been held by the trust for a long time,
made up a diversified share portfolio, and were all producing tax favourable
dividends that comfortably funded the beneficiaries‟ monthly requirements.
According to Mr Sparg the structure of the investments in these shares was ideal
from a tax point of view and as a long term investment. This evidence was not
challenged by Ms Coetzee.

[9] Ms Wagener testified that after the death of her husband she was approached
by the mother of Ms Coetzee, a Ms Swanepoel, who told her she was not to worry as
they would look after her. She had known Ms Swanepoel for fifteen years and said
the latter had given her late husband good advice. At the time of her husband‟s
death the family trust had been administered by PSG, but Ms Swanepoel advised
her to replace PSG with Sanlam for whom she was an agent, which Ms Wagener
did.

[10] A representative of Sanlam then advised her to sell a portion of the
Richemont shares held by the trust and replace them with Anglo American shares,
which she did. As a result the income of the trust almost doubled, and she left the
administration of the trust to Ms Coetzee. Ms Coetzee then advised her that Liberty
had approached her to join them. According to Ms Wagener, Ms Coetzee then said
that she wanted to sell R30 million worth of the shares and reinvest the money in low
risk investments such as property linked investments. This was because the share
market was going to correct sharply downwards in the future.

[11] The version of Ms Coetzee, however, was that she had established from
representatives of Old Mutual that although the market would still grow, they
expected that at some stage there would be a correction. Ms Wagener was worried
by this information which caused her to have sleepless nights. Ms Coetzee then
advised Ms Wagener to use R25 million of the profit made by the trust to diversify
the investment of the trust either with Stanlib or Bastion. Ms Wagener then chose to
invest an amount of R30 million in the Stanlib Managed Flexible Fund and the
Stanlib Multi Management High Equity Fund. According to Ms Coetzee, Ms Wagener
told her that she was no longer worried about the trust losing money. Ms Coetzee
admitted that she received a commission of R900 000 for investing the trust‟s funds
in the Stanlib policies and that her continuing commission on the investment
increased to 0,5 per cent per annum. Previously it had been 0,15 per cent per
annum, when the portfolio was transferred to Sanlam. Simply put, the volatility of the
equity market was a risk she sought to avoid and it was in this regard she sought Ms
Coetzee‟s advice.

[12] Problems, however, arose when, according to Ms Wagener there was no drop
in the share market and her auditors advised her that only R12 million had been
reinvested in low risk investments. The rest of the money was in investments which
did not have a lower risk profile than the shares originally held by the trust. A
complaint was then laid with FPI by Ms Wagener in an affidavit, in which she alleged
that Ms Coetzee had advised her to invest in less risky assets, specifically property
investments, but had then indirectly reinvested the majority of these funds in the
share market.

[13] Ms Wagener‟s complaint was dealt with in terms of clause 4.7 of the
disciplinary regulations of FPI which provide that in the event of a complaint being
laid against a member, the chief executive officer „shall cause to communicate the
essence of the complaint or charge to the member involved and request him to
respond thereto within 21 days . . . „. Should a disciplinary hearing follow the
regulations make no provision for the presentation of a formal charge to the member
involved. The regulations simply provide that the duly appointed disciplinary tribunal
„shall determine the procedure to be followed‟. It is, however, obliged to hear the
evidence against the accused member first and thereafter the evidence for the
accused member. The tribunal is also obliged to allow cross-examination and re-
examination of witnesses.

[14] As a result the FPI, in compliance with clause 4.7 of the regulations,
addressed a letter dated 4 July 2006 to Ms Coetzee advising her of the formal
complaint and stating:
„The complaint deals in detail with the advice given to Ms Wagener regarding the
reinvestment of the gains from the increase in the Sanlam Private Investment share portfolio
into less risky assets, specifically property investments. These funds allegedly [was] not
invested in a property investment by you, but reinvested in the Johannesburg Stock
Exchange.‟

[15] By letter dated 9 January 2007, FPI formally advised Ms Coetzee that she
would have to appear before a disciplinary hearing. She was also informed of the
relevant principles in the code of conduct of FPI, which it was alleged she had

contravened. A number of charges were advanced against her but for present
purposes the relevant charges are as follows:

„Kindly take notice that, in terms of the Articles of Association of the Financial Planning
Institute of Southern Africa (“FPI”) read with the Regulations, Code of Conduct and GAPP1
thereof, the disciplinary committee of the FPI hereby accuse you of contravening the Code of
Conduct and/or GAPP in that you committed one and/or some and/or all of the following:
1.
Principle 201 of the Code of Conduct: That you neglected to exercise reasonable and
prudent professional judgement in providing financial services and at all times act in the
interest of the client, and in particular with Me Margaret Wagener and/or the Wagener Family
Trust (“the Complainants”), by

. . .

1.2
Failing to execute the mandate of the Complainants properly, diligently

and professionally; and/or

. . .
4.
Principle 304 of the Code of Conduct: That you failed to charge remuneration that is
fair and equitable for the Complainants and yourself, and without derogating there from, that
you charged R1,035,000 plus Value Added Tax as initial financial advisor commission in
circumstances where such amount is excessive, not fair nor equitable.‟

[16] This letter clearly served the purpose of advising Ms Coetzee of the charges
formulated against her, based as they were upon the complaint made by Ms
Wagener, the essence of which was contained in the earlier letter from FPI.

[17] In order to determine whether Ms Coetzee was properly informed of the case
she was called upon to meet, as set out in paragraph 1.2 of the formal charges, the
allegations made must not be considered in isolation, but in the context of the initial
letter which set out the essence of the formal complaint.2 It would be artificial not to
do so, because the enquiry is whether Ms Coetzee had adequate knowledge of the
facts forming the basis for the charge to enable her to answer that charge. There is
authority for the proposition that a charge sheet in a disciplinary enquiry does not
have to be framed with the same particularity, or with all the formalities of a charge in

1 Generally Accepted Planning Practice.
2 De Villiers v Administrator OFS 1954 (3) SA 395 (O) at 408H.

a criminal trial.3 However, the better view is that although the same degree of
formality is not required, the same degree of particularity of the factual information
underlying the allegations made, is required to enable the accused to know what
case he or she has to meet. This is particularly so where the disciplinary body has
the power (as in the present case) to make findings with far-reaching
consequences.4

[18] The factual information conveyed to Ms Coetzee on a reading of the letter of
complaint dated 4 July 2006, together with the charges advanced against her in
paragraph 1 and 1.2 of the letter dated 9 January 2007, was as follows:
(a)
Ms Wagener was the complainant.
(b)
The complaint concerned advice Ms Coetzee had given to Ms Wagener
regarding the reinvestment of the gains from the increase in the Sanlam Private
Investment Share portfolio.
(c)
The advice had been to reinvest these funds into less risky assets, specifically
property investments.
(d)
In providing this advice Ms Coetzee failed to exercise reasonable and prudent
professional judgment and act in the interests of Ms Wagener.
(e)
Ms Coetzee failed to execute the mandate of Ms Wagener to invest these
funds into less risky assets, specifically property investments, properly, diligently and
professionally because they were reinvested in the Johannesburg Stock Exchange.

[19] It is quite clear that the first charge comprises two components; the
correctness of the advice given by Ms Coetzee to Ms Wagener to reinvest the profits
made, and the failure to carry out the mandate given to her by Ms Wagener. The
second charge dealing with the remuneration received by Ms Coetzee is inextricably
linked to the first charge. In short, it was alleged that an excessive amount was
charged by Ms Coetzee for bad advice and for acting contrary to the mandate.

3 Chislett v Natal Tattersalls & others 1967 (3) SA 419 (D) at 426G.
4 Van Wyk v Director of Education & another 1974 (1) SA 396 (N) at 400H; Van Rooyen v Dutch
Reformed Church, Utrecht 1915 NPD 323 at 331. Section 84 of the Criminal Procedure Act 51 of
1977 provides inter alia, that a charge sheet must include such particulars „as may be reasonably
sufficient to inform the accused of the nature of the charge‟, R v Moyage & others 1958 (3) SA 400 (A)
at 413C-D. The wording of s 35(3)(a) of the Constitution of the Republic of South Africa 1996 that
„every accused person has a right to a fair trial, which includes the right to be informed of the charge
with sufficient detail to answer it‟ embodies this principle.

[20] It is common cause that there was only one occasion when Ms Coetzee sold
shares held by the trust and reinvested them. It must have been quite clear to Ms
Coetzee that what was in issue was the reinvestment of these funds, in the sum of
R30 million in the Stanlib Managed Flexible Fund and the Stanlib Multi Management
High Equity Fund on 23 August 2005.

[21] In my view the particulars of the facts forming the basis for the charge
contained in paragraph 1.2 of „the charge sheet‟ were sufficient to enable Ms
Coetzee to know what case she had to meet. If Ms Coetzee was uncertain of the
nature of the charge advanced against her, her legal representative, Mr Nieuwoudt,
would have been entitled to ask for particulars to the charge to clarify the position.
The fact that the disciplinary regulations of FPI do not make provision for a request
for particulars to a charge, because no provision is even made for a formal charge to
be framed, would not in itself justify a refusal to furnish particulars to the charge.5 On
the contrary, the record shows that Mr Nieuwoudt at the commencement of the
disciplinary proceedings stated the following:

„Ek weet nie of u werklikwaar wil vereis dat die klagstaat gelees moet word nie. As dit die
procedure is dan moet dit gebeur, maar ek kan u verseker ons het die klagstaat gelees en
my kliënt is gereed om onskuldig te pleit op al die klagtes soos dit gestel is. As die procedure
egter vereis dat dit gelees moet word, dan sal ons daarna luister.‟

In essence he confirmed his client understood the case she had to meet.

[22] I am fortified in my view that Ms Coetzee was fully aware of the nature of the
charge advanced against her in paragraph 1.2 of the charge sheet and was not
prejudiced in the preparation of her answer to this charge, by a reference to the
record of proceedings of the disciplinary hearing. Mr Nieuwoudt, before cross-
examining Mr Sparg, requested confirmation that the charges dealt solely with the
transaction of 23 August 2005. This was confirmed by the evidence leader.

[23] In addition, Mr Nieuwoudt put to Ms Wagener that she told Ms Coetzee that
she was worried that all of her money was in the stock market and that if the stock

5 Mhlambi v Matjhabeng Municipality & another 2003 (5) SA 89 (O) para 12.

market fell she would lose money. He also put to her that she sought specific advice
from Ms Coetzee, the object of which was to protect herself if the market fell. In other
words, Ms Coetzee‟s legal representative knew that what was in issue was the
nature of the advice given to Ms Wagener, the reason why the advice was given and
the object the advice sought to achieve.

[24] Mr Sparg gave evidence in the  respects set out above, and added that in
August 2005 he would not have advised the sale of the existing  blue-chip shares as
they would have been able to weather a drop in the market and their sale caused
substantial tax complications for the trust and its beneficiaries. He added that even if
the shares were to be sold, the reinvestment of the proceeds in the Stanlib funds
was poor advice as, first, it exposed the trust to substantial capital gain tax and
liability for commission and, second, approximately half the proceeds would thereby
be reinvested in the equity market and to that extent the desired end of lessening the
trust‟s exposure to the vagaries of the stock-market would not be avoided.  At the
end of his evidence Mr Nieuwoudt asked for an adjournment to consult an expert in
relation to what Mr Sparg had testified, on the ground that this expert evidence lay at
the centre of a number of the charges. At no stage thereafter did Mr Nieuwoudt
suggest either that he and his client had been taken by surprise by this evidence or
that the charges did not encompass these issues.

[25] When cross-examining Ms Wagener, Mr Nieuwoudt referred her to her
affidavit where she complained that she was advised by Ms Coetzee to reinvest the
gains in less risky assets, specifically property investments, but had reinvested the
majority of the funds indirectly in the Johannesburg Stock Exchange. It is clear that
he knew precisely what the gravamen of the complaint was.

[26] Mr Nieuwoudt, when leading the evidence of Ms Coetzee, put it to her that
she had heard the view expressed in the evidence that the financial advice she had
given was very poor, she had had a long time to think about it and she was asked to
express her views on the advice she had given. She replied that it was very good
advice and that diversification of the funds as invested was a good option. Again it is
clear that she understood the nature of the charge against her.

[27] The appeal tribunal found that Ms Coetzee had received an instruction from
Ms Wagener to protect the share portfolio against a drop in the share market. It
concluded that the advice given by Ms Coetzee to invest in the Stanlib funds was not
„reasonable and professional‟ judgment because it did not achieve the mandated
objective. It is clear that the grounds for Ms Coetzee‟s conviction are clearly
comprehended by the factual information conveyed to her as set out above as part of
the charge. There is accordingly no basis for the ground of appeal.

[28] During argument before us counsel for Ms Coetzee sought to expand his
argument beyond the issue upon which leave to appeal was granted by the court a
quo. He submitted that the common intention of Ms Coetzee and Ms Wagener was
to protect the investment of the trust against a fall in the share market, but it had
never been proved that the Stanlib investments had not achieved this. Ms Coetzee
accordingly had not been given the opportunity to deal with this aspect.

[29] As pointed out by the court a quo, the appeal tribunal, which in terms of the
disciplinary regulations of FPI consisted of five members, all of whom were Certified
Financial Planner Licensees, relying upon its own expertise and having examined
the Stanlib policies, correctly concluded that they did not achieve the desired
objective to protect the trust against a drop in the share market. In this regard
counsel for Ms Coetzee stressed that the appeal tribunal correctly found that Ms
Coetzee had never been confronted with this issue. That view is, however, not
correct. Ms Coetzee for the reasons set out above was well aware that the gravamen
of the complaint against her was whether the Stanlib policies achieved the desired
objective.

[30] It was common cause that a substantial portion of the reinvestment of the
funds via the Stanlib policies was in the share market. It is of significance that in the
information furnished by Stanlib concerning the Multi Management High Equity Fund
under the heading „Investment Strategy‟ the following appears; „focus of the portfolio
is on capital appreciation rather than capital preservation and this is achieved
through high exposure equities‟. In the application for review FPI in its answering
affidavit referred to this passage and pointed out that in the summary which Ms
Coetzee furnished to Ms Wagener, setting out the details of the Stanlib policies,

translated into Afrikaans, the whole of the section under „Investment Strategy‟ was
set out, but this sentence was pertinently omitted. In her replying affidavit Ms
Coetzee did not respond to this allegation. The inference is irresistible that this
information was expressly omitted so as not to alert Ms Wagener to the fact that a
substantial portion of the investment was being invested in high exposure equities.
The only reason to conceal this information was because Ms Coetzee knew that the
policy in question did not fulfil the terms of the mandate.

[31] The details of the Stanlib policies were placed before the appeal tribunal by
Ms Coetzee. Knowing that the object was to protect the trust against a drop in the
share market, and that the complaint was that the Stanlib policies did not achieve
this objective, it must have been self-evident to Ms Coetzee in presenting details of
the Stanlib policies to the appeal tribunal that she should attempt to show how they
achieved this objective, particularly where there was a substantial investment in high
exposure equities.

[32] As pointed out by the appeal tribunal it would be clear to anybody who knew
anything about investments, confronted with a mandate to protect a portfolio against
a fall in the market, that it was impossible to fulfil that mandate by investing in the
Multi Management High Equity Fund with its emphasis on high exposure equities. It
added that it could be argued that the mandate could be achieved by the Managed
Flexible Fund. As correctly conceded by counsel for FPI there would have been no
complaint against Ms Coetzee if the funds had only been invested in this policy.
There is accordingly no basis for this argument. It is also self-evident that the amount
of R900 000 received by Ms Coetzee was excessive and not fair or equitable,
because her advice did not reduce the risk of a loss by the Trust in its investments,
in the event of a sharp drop in the share market. Moreover it burdened the trust with
substantial capital gains tax and commission.

[33] Although two counsel were employed by FPI in this appeal the issues
requiring determination were not sufficiently complex to justify their employment.

[34] I grant the following order:

The appeal is dismissed with costs.

_______________________
K G B SWAIN
JUDGE OF APPEAL

APPEARANCES:

For the Appellant:

W G Burger SC
Instructed by:
Muller and Juby Attorneys, Somerset West
c/o McIntyre & Van der Post, Bloemfontein

For the Respondent:

M Helberg SC, J E Ferreira
Instructed by:
Lombard Muller and Vennote Inc, Pretoria
c/o Christo Dippenaar Prokureurs, Bloemfontein