Impact Financial Consultants CC and Another v Bam NO and Others (856/2019) [2021] ZASCA 54; [2021] 3 All SA 83 (SCA) (30 April 2021)

Impact Financial Consultants CC and Another v Bam NO and Others (856/2019) [2021] ZASCA 54; [2021] 3 All SA 83 (SCA) (30 April 2021)

The Supreme Court of Appeal held that the Ombud for Financial Services committed a reviewable error by failing to ascertain the true nature of the financial product before determining liability and compensation. The Ombud proceeded on the assumption that the investment was a hedge fund regulated by the FAIS Act, without establishing whether the product fell within the statutory definition. This foundational error undermined the jurisdiction of the Ombud and the validity of the determinations. The Court found that liability under the FAIS Act requires both proof of negligent breach and a causal link to the loss suffered, and that the Ombud's approach of imposing liability solely on breach...

Citation
[2021] ZASCA 54
Parties
Applicant: Impact Financial Consultants CC; Applicant: Michal Johannes Calitz; Respondent: Noluntu Nellisa Bam N O; Respondent: Yvonne Mokgoro N O; Respondent: Lorendana Hansen; Respondent: Natalina Natali; Respondent: Hendrik Frederick du Plessis; Respondent: Erna Elizabeth du Plessis; Respondent: Johannes Jacobus Matthys Coetzee; Respondent: Jeanrich Hein Ehlers; Respondent: Robert William Whitfield Jones; Respondent: Carolina Johanna Olivier; Respondent: Erika Elise Kruger; Respondent: Martha Hendrina Carstens; Respondent: Hendrik Johannes Cartens; Respondent: Ettienne du Preez van der Merwe N.O.; Respondent: Craig Stewart Inch; Respondent: Hendrina Amedje Rautenbach; Respondent: Garvitte Herman Lombard; Respondent: Martha Catharina Jooste; Respondent: Johannes Enoch Hartshorne; Respondent: Fiona Avery King
Court
Supreme Court of Appeal
Jurisdiction
South Africa
Judgment Date
30 April 2021
Case Number
856/2019
Procedural Posture
Civil Appeal / Appeal From Gauteng Division of the High Court, Pretoria; Review Application Dismissed; Appeal Heard and Judgment Delivered
Outcome
Appeal upheld; high court order set aside; complaints referred back to the Ombud for proper determination; costs awarded against the first respondent.
Judges
Navsa, Makgoka, Dlodlo, Goosen, Unterhalter
Legal Topics
Financial Advisory and Intermediary Services Act, Ombud Jurisdiction, Negligence, Causation, Reviewable Error
Banking and Finance Administrative Law Financial Advisory and Intermediary Services Act Ombud Jurisdiction Negligence Causation Reviewable Error

Case Brief

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Parties

Impact Financial Consultants CC

Applicant

Michal Johannes Calitz

Applicant

Noluntu Nellisa Bam N O

Respondent

Yvonne Mokgoro N O

Respondent

Lorendana Hansen

Respondent

Natalina Natali

Respondent

Hendrik Frederick du Plessis

Respondent

Erna Elizabeth du Plessis

Respondent

Johannes Jacobus Matthys Coetzee

Respondent

Jeanrich Hein Ehlers

Respondent

Robert William Whitfield Jones

Respondent

Carolina Johanna Olivier

Respondent

Erika Elise Kruger

Respondent

Martha Hendrina Carstens

Respondent

Hendrik Johannes Cartens

Respondent

Ettienne du Preez van der Merwe N.O.

Respondent

Craig Stewart Inch

Respondent

Hendrina Amedje Rautenbach

Respondent

Garvitte Herman Lombard

Respondent

Martha Catharina Jooste

Respondent

Johannes Enoch Hartshorne

Respondent

Fiona Avery King

Respondent

Procedural Posture

Civil Appeal / Appeal From Gauteng Division of the High Court, Pretoria; Review Application Dismissed; Appeal Heard and Judgment Delivered

Legal Issues

  1. 1 Whether the Ombud for Financial Services had jurisdiction to determine complaints regarding advice on investments in the RVAF Trust.
  2. 2 Whether the Ombud committed a reviewable error by failing to ascertain the nature of the financial product before determining liability and compensation.
  3. 3 Whether liability for negligent breach of statutory duties under the FAIS Act arises strictly upon breach or requires a causal link between conduct and loss.

Ratio Decidendi

The Supreme Court of Appeal held that the Ombud for Financial Services committed a reviewable error by failing to ascertain the true nature of the financial product before determining liability and compensation. The Ombud proceeded on the assumption that the investment was a hedge fund regulated by the FAIS Act, without establishing whether the product fell within the statutory definition. This foundational error undermined the jurisdiction of the Ombud and the validity of the determinations. The Court found that liability under the FAIS Act requires both proof of negligent breach and a causal link to the loss suffered, and that the Ombud's approach of imposing liability solely on breach...

Court Disposition

Appeal upheld; high court order set aside; complaints referred back to the Ombud for proper determination; costs awarded against the first respondent.

Orders

  • Leave to appeal is granted with costs.
  • The appeal is upheld to the extent set out in the substituted order.