Maynard v Carrick Wealth (Pty) Limited (Leave to Appeal) (21243/23) [2024] ZAWCHC 441 (20 December 2024)

begin wrapper begin container begin header begin slogan-floater end slogan-floater - About SAFLII About SAFLII - Databases Databases - Search Search - Terms of Use Terms of Use - RSS Feeds RSS Feeds end header begin main begin center # South Africa: Western Cape High Court, Cape Town South Africa: Western Cape High Court, Cape Town You are here: SAFLII >> Databases >> South Africa: Western Cape High Court, Cape Town >> 2024 >> [2024] ZAWCHC 441 | Noteup | LawCite sino index ## Maynard v Carrick Wealth (Pty) Limited (Leave to Appeal) (21243/23) [2024] ZAWCHC 441 (20 December 2024) Maynard v Carrick Wealth (Pty) Limited (Leave to Appeal) (21243/23) [2024] ZAWCHC 441 (20 December 2024) Download original files PDF format RTF format make_database: source=/home/saflii//raw/ZAWCHC/Data/2024_441.html sino date 20 December 2024 IN THE HIGH COURT OF SOUTH AFRICA WESTERN CAPE DIVISION, CAPE TOWN Case Number: 21243/23 In the matter between: GILES ALEXANDER POWER MAYNARD        Applicant and CARRICK WEALTH (PTY) LIMITED                 Respondent JUDGMENT - APPLICATION FOR LEAVE TO APPEAL JANISCH AJ: 1.         The Applicant applies for leave to appeal against the whole of the judgment and order handed down by me in the above matter on 15 November 2024. 2.         I have had the benefit of written submission on leave to appeal furnished by counsel for both parties, as well as oral argument at a virtual hearing on 19 December 2024. 3.         The application was brought pursuant to the provisions of both section 17(1)(a)(i) and section 17(1)(a)(ii) of the Superior Courts Act 10 of 2013 . These provide that leave to appeal may only be granted where I am of the opinion either that (i) the appeal would have a reasonable prospect of success, or (ii) there is some other compelling reason why the appeal should be heard. The section 17(1)(a)(i) test 4.         Despite the fact that it has been in force for more than a decade, there remains a degree of uncertainty as to whether, and if so to what extent, the test in section 17(1)(a)(i) differs from the long-established test for leave appeal under the prior statute (the Supreme Court Act 59 of 1959). That was to the effect that leave should be granted where there is a reasonable prospect of success on appeal ( Zweni v Minister of Law and Order 1993 (1) SA 523 (A) at 531C). 5.         An argument which is often advanced by parties successful in a lower court is that the Superior Courts Act raises the bar for granting leave to appeal through its use of the word " only " and the requirement that another court " would' (rather than could) find differently from the lower court. 6.         It may seem extraordinary that, so many years since the introduction of the new Act, a question so fundamental to High Court practice remains formally unresolved. However, what this suggests is that, in practice, there is no real controversy about the circumstances in which leave to appeal may be granted. 7.         The Applicant relied upon the following dictum in Ramakatsa v African National Congress [2021] ZASCA 31 in paragraph [10] (endorsed by a Full Bench of this court in Adomisi v Minister for Transport & Public Works, Western Cape [20212] ZAWCHC 73 in paras [15] and [16]): "If a reasonable prospect of success is established, leave to appeal should be granted. Similarly, if there are some other compelling reasons why the appeal should be heard, leave to appeal should be granted. The test of reasonable prospects of success postulates a dispassionate decision based on the facts and the law that a court of appeal could reasonably arrive at a conclusion different to that of the trial court. In other words, the appellants in this matter need to convince this Court on proper grounds that they have prospects of success on appeal. Those prospects of success must not be remote, but there must exist a reasonable chance of succeeding. A sound rational basis for the conclusion that there are prospects of success must be shown to exist." 8.         The Respondent, while contending that the test of leave to appeal is higher than beforehand, and that the applicant should demonstrate " a measure of certainty that another court will differ " from the judgment of the present court, relied on the judgment of the SCA in Smith v S 2012 (1) SACR 567 (SCA) n para [7], where the following was stated: "What the test of reasonable prospects of success postulates is a dispassionate decision, based on the facts and the law, that a court of appeal could reasonably arrive at a conclusion different to that of the trial court. In order to succeed, therefore, the appellant must convince this court on proper grounds that he has prospects of success on appeal and that those prospects are not remote but have a realistic chance of succeeding. More is required to be established than that there is a mere possibility of success, that the case is arguable on appeal or that the case cannot be categorised as hopeless. There must, in other words, be a sound, rational basis for the conclusion that there are prospects of success on appeal." 9.         In my view, these are simply different ways of saying the same thing. There will only be reasonable prospects of success before another court if one can realistically imagine, on rational grounds, that other court adopting a different approach to the relevant law or the facts. It cannot be the case that leave will only be granted if the lower court is convinced or certain that it got it wrong. Justice requires that a losing party who has a rational basis to contend that a higher forum might reasonably see things differently should be entitled to appeal. As much as one may wish to reformulate the test, it seems to me that these are all merely ways of asking the long-standing question: whether there is a reasonable prospect of success of appeal. I do not think that the inclusion of the words " only " and " would' in section 17(1)(a)(i) signal a departure from that standard. The section 17(1)(a)(ii) test 10.       The second basis (whether there are compelling reasons for an appeal) applies independently of the first basis. In other words, leave can be granted on this basis even where the court is of the view that the appeal would not have a reasonable prospect of success. 11.       It has been held that this criterion will be met where the decision involves an important point of law, or concerns a question of statutory interpretation, or raises an issue of public importance which will have an effect on future matters (se e.g. Caratco (Pty) Limited v Independent Advisory (Pty) Limited 2020 (5) SA 35 (SCA) at 37D). But the mere fact that the appeal turns on an issue of law does not mean that leave must necessarily be granted. The merits of the appeal (including the legal point relied upon) " remain vitally important and will often be decisiv e" ( Minister of Justice v Southern Africa Litigation Centre 2016 (3)SA 317 (SCA) in para [24]). Where it appears that there are no or only very remote prospects of the legal point falling in the applicant's favour, leave would usually not be granted. Discussion 12.       My judgment addressed the applicant's two lines of attack on the respondent's institution of debarment proceedings, each of which was reflected in a declaratory order sought in Part B: first, that this was in breach of, and precluded by, the terms of the settlement agreement entered into between the parties the day before the section 14(3) notice was issued; and second, that it was unlawful because it was taken for an ulterior purpose (i.e. to quell competition rather than to address genuine concerns about the fitness of the applicant to act as a representative.) The contractual argument 13.       In relation to the first line of attack, I concluded that, as a matter of law, an FSP had a statutory duty to initiate debarment proceedings where it became aware of information about a representative which, if verified following the process envisaged in section 14(3)(a) and (b), could warrant a debarment under section 14(1). On that basis, and having regard to the clear public interest purpose which the debarment process serves (which extends beyond the interests of the FSP and representative concerned to the protection of the general public), I concluded that it is not competent in law for an FSP to agree not to commence debarment steps where the duty to do so exists. I dismissed the first line of attack (on the first declarator sought) on that basis, having held that on the facts the threshold for initiating the process had been met. It was not necessary to determine, in the circumstances, whether the settlement agreement actually purported to preclude the respondent from taking such steps. 14.       The applicant argued that leave to appeal should be granted, at least under section 17(1)(a)(ii), because the conclusions on which my judgment was based involved novel questions of law and statutory interpretation, and raised matters of public importance " which will almost certainly have an effect on future matters ". 15.       The applicant's primary contention in this regard is that another court may conclude that there is no duty on an FSP to commence debarment proceedings - so that it could not be concluded that an agreement not to do so is necessarily incompetent. In the alternative, it was argued that another court might take a different view as to the threshold test for when such a duty arises. 16.       It is correct that my judgment seems to have been the first to conclude formally that there is a duty on an FSP to commence debarment proceedings in certain circumstances, and to formulate a test for when that duty arises. However, I do not consider that there is any realistic prospect of another court finding that an FSP, which the applicant accepts has a duty to debar a representative where the objective circumstances for this are present, does not have a corresponding duty to commence those proceedings. Such an outcome would undermine the clear statutory purpose of the debarment mechanism and the protection of the investing public. Moreover, as regards the test for when this duty arises, the applicant was unable to suggest a formulation of that test, different from that which I articulated (which was based on the Constitutional Court's approach in analogous circumstances in Viking Pony ), which another court might adopt. 17.       I therefore do not think that the applicant has established grounds for the granting of leave to appeal in relation to the legal conclusions which I reached regarding the duty on an FSP to commence debarment proceedings. Nor do I consider that there is a realistic prospect of another court finding that it is competent for an FSP to enter into a binding agreement not to commence such proceedings where the statutory duty to do so exists. 18.       The application for leave to appeal in regard to the first line of attack however went further. It was contended that another court could take a different approach towards whether the duty, if one exists in law, was triggered on the present facts. The logical conclusion to this argument is that if there was no statutory duty, there could be no objection to an agreement not to take such steps. 19.       The applicant referred to a number of facts or factors which he contended another court may rely upon to conclude that the threshold for commencing debarment proceedings was not met. These included the isolated nature of the event in question (sharing client information with Ms Lategan, an ex­employee of the respondent), the context of that disclosure in relation to settlement discussions, and the terms of the settlement agreement that was reached which implicitly recognised and acknowledged that the respondent was a fit and proper person to provide financial services. 20.       The respondent argued that none of these factors would properly exonerate it from commencing debarment proceedings given in particular the fact that there was an undisputed breach of the Code of Conduct for representatives, that Ms Lategan was associated with a competitor, and that 80 clients' information was disclosed. 21.       I have considerable reservations as to whether another court would find that the fairly low threshold for commencing debarment proceedings was not met on these facts. However, I am not prepared to go so far as to say that there are no reasonable prospects of such a result, particularly given the possible inferences which may be drawn from the fact, timing and content of the settlement agreement entered into by the parties the day before the debarment commenced. I address this further below. The ulterior motive ground 22.       In relation to the second line of attack, I concluded that an exercise of public power (which includes the commencement of debarment proceedings) may be held to be unlawful if it was taken for an ulterior purpose or motive. I was however not prepared to find, on the papers, that such an ulterior motive or purpose had been established, having regard particularly to the Plascon­Evans test and the respondent's statements on oath that its purpose in initiating the debarment process was to comply with its legal obligations under the FAIS Act and not to quell competition. 23.       At the same time, I made it clear that there were a number of factors which give rise to doubt as to whether the respondent's conduct was primarily motivated by an understanding that it was compelled by law to do so rather than by a desire to remove the applicant from the competitive market. I refer in this regard to paragraphs 140 and 141 of my judgment. 24.       It is true that a court will not lightly reject a respondent's version on the papers in an application for final relief. However, I acknowledge that there are circumstances where a more robust approach towards disputes on motion may be adopted ( cf . Soffiantini v Mould 1956 (4) SA 150 (E) at 154G-H). 25.       What weighs with me primarily in this regard is the fact that one day before the debarment process commenced, the respondent signed an agreement which expressly authorised the applicant to " immediately provide financial services " to 15 clients, and to commence doing so from a later date in relation to 6 other clients. As I said in paragraph 141 of my judgment, this seems on the face of it inconsistent with a view that the applicant's conduct in sharing the client list is such as to disqualify him entirely from acting as a representative. The respondent has also not tendered an explanation for the timing of the commencement of the process. 26.       Although I remain of the view that these factors were not sufficient for me to find on the papers that there was an ulterior motive, I accept that there is a rational basis for an argument to the contrary, and that another court may take such a view having regard to the factors listed in paragraphs 140 and 141. 27.       The consequences for the debarment proceedings, if another court finds that the initiation was the product of an ulterior motive, may be open for debate. One question which would arise is whether the motive by itself justifies the shutting down of the debarment process where objectively, and in the absence of such motive, the threshold to commence such a process was crossed. A court on appeal would have to address that aspect. The possibility that it might find that the ulterior motive is not enough to stop the proceedings, or that despite the unlawfulness of the conduct the applicant had an alternative remedy in the form of going through the debarment process and challenging any adverse outcome through the Tribunal or on review, does not in my view warrant the refusal of leave on the question of whether such a motive was established on the papers. Conclusion 28.       In the circumstances, I am persuaded to grant leave to appeal in relation to the question whether the debarment proceedings should, on these papers, be interdicted owing to the existence of an ulterior motive on the part of the respondent. 29.       It will however be apparent from the discussion above that this question is not entirely independent of the factual enquiry into whether the threshold for commencing a debarment process was reached on the present facts - which is central to the question as to whether the respondent validly agreed not to commence the process. It would therefore seem justified (and practical) also to grant leave in relation to that factual question. If the court on appeal finds that there was no duty to commence such proceedings, it would also then have to decide whether the settlement agreement includes such an undertaking - another factual question. 30.       For the reasons given above, I do not however believe that there are grounds to grant leave in relation to the legal conclusion reached in regard to an FSP's duty to initiate debarment proceedings, and in regard to the finding that an agreement not to comply with that duty is impermissible. 31.       Since the aspects on which I grant leave are primarily factual in nature, consider it appropriate that the appeal should lie to the full court of this Division. ORDER 32.       In the premises, I make the following order: 32.1.      The applicant is granted leave to appeal against the refusal of the first declaratory order under Part B on the basis that, on the facts, the respondent had a duty to initiate debarment proceedings, which duty could not be compromised by agreement; 32.2.      The applicant is granted leave to appeal against the refusal of the second declaratory order under Part B on the basis that the respondent's alleged ulterior motive was not established; 32.3.      To the extent necessary, the applicant is accordingly granted leave to appeal against the dismissal of the interdictory relief flowing from the declaratory orders; 32.4.      The appeal will lie to the full court of the Western Cape High Court; 32.5.      Costs will be costs in the appeal. M W JANISCH Acting Judge of the High Court Western Cape Division APPEARANCES: For the Applicant:                J Muller SC Instructed by:                      Cowan-Harper-Madikizela Attorneys For the Respondent:           G Leslie SC Instructed by:                      M van der Berg Mcaciso Stansfield Inc Date of hearing:                  19 December 2024 Date of judgment:               20 December 2024 (electronically) sino noindex make_database footer start