The Financial Services Tribunal (FST) did not adhere to the Financial Sector Regulation Act (FSRA) and its own rules when it summarily dismissed a reconsideration application by a self-declared “whistleblower”, the High Court in Pretoria has found.
Judge Cassim Sardiwalla also found that the Prudential Authority (PA) failed to comply with the Protected Disclosures Act (PDA) because it did not advise the applicant of the appropriate forum to resolve his complaint against Investec Bank Limited.
The FST and the PA were the first and second respondents, respectively, in the application brought by Ahjeeth Jaihai.
The Tribunal did not oppose Jaihai’s application, but the PA did. Judge Sardiwalla said he did not understand why the PA opposed the application, given that the FST had elected to abide by the court’s ruling.
Background to the litigation
Jaihai worked for Investec Bank from 2005 to 2014, when he resigned. Three years later, he referred grievances pertaining to what he viewed as the unfair, undignified, and discriminatory way he was treated during his period of employment to two sub-committees of Investec’s board, the High Court’s judgment said.
After mediation failed to resolve the dispute, Jaihai made a protected disclosure in terms of section 8(1)(c) of the PDA to the PA in December 2019.
The PDA provides a framework to protect employees who raise concerns about unlawful or corrupt conduct by their employers or fellow employees from dismissal, penalisation, or other sanctions by their employers.
There were numerous exchanges of correspondence between Jaihai and the PA from February 2020 until March 2021, when the PA dismissed the matter.
According to the judgment, the PA informed Jaihai it had assessed all the allegations raised in the disclosure documentation that fell within the PA’s ambit of responsibilities as the prudential supervisor. The Authority said it had not identified any matters of concern or any reason to believe that Investec Bank contravened or transgressed the provisions of the Banks Act and the Regulations.
“Accordingly, the PA could not be of any further assistance to you, and from the PA’s perspective, the matter is regarded as finalised.”
Jaihai asked the PA for a statement of reasons and material facts. The PA refused his request, citing the preservation of secrecy clause in section 33 of the South African Reserve Bank Act.
In May 2021, Jaihai lodged an application with the FST for reconsideration of the PA’s decision.
The Tribunal handed down its decision in July 2021.
“The application for reconsideration is summarily dismissed under section 234(4) of the FSR Act 9 of 2017 because the applicant has no interest in the outcome of the decision or lack of decision. He is in the position of an informer and is not a person aggrieved. Apart for this, the application is otherwise also vexatious and scurrilous,” wrote Judge Louis Harms, the deputy chairperson of the FST.
Jaihai asked the High Court to review and set aside the Tribunal’s decision and for an order declaring the decision unconstitutional, unlawful, and invalid.
The applicant’s submissions
Jaihai’s submissions in support of his application included the following:
- The FST made a decision without affording him an opportunity to address the Tribunal. This infringed on his right to a hearing and to have his dispute resolved by a competent authority.
- The PA intended to oppose the application and bring a counter-application. Therefore, the FST’s conduct in ignoring the contentions of both parties led to the Tribunal making a decision unilaterally and denying him the opportunity to respond to the PA’s averments.
- The FST’s conduct was a breach of his right to access to the courts as guaranteed by the Constitution.
- Section 224 of the FSRA requires the chairperson of the Tribunal to constitute a panel for reconsideration applications. This was not done, and the decision was made by the deputy chairperson alone. Further, there was no indication from the ruling that other members of a panel were involved in making the decision.
- Sections 227 and 229 of the FSRA require the PA to furnish the Tribunal with a “properly collated, indexed, and paginated bundle of the relevant underlying documents on which the decision was based, together with further reasons, where necessary”.
- The bundle submitted by the PA to the FST did not constitute all the underlying documents, and therefore the FST could not have properly engaged or considered the reconsideration application.
- Rules 9 and 13 of the FST’s Rules state that an application for reconsideration must contain a statement of reasons. The PA did not furnish the Tribunal with a statement of reasons, and the FST did not direct the PA to provide a statement of reasons or failed to issue directions in terms of section 232 of the FSRA.
- The Tribunal’s finding that the applicant had “no interest in the outcome of the decision of lack of decision” and was in “the position of an informer” and not a “person aggrieved” was a material misrepresentation because Jaihai acted as both an informer and an aggrieved person.
- The PDA obliged the PA to make Jaihai aware of the next steps he must take if the PA was not equipped to deal with the matter. Section 8(2) states that if a body to which a protected disclosure is made believes that the protected disclosure is best dealt with by another body, then the former must assist the employee or worker to ensure that the protected disclosure is properly made and dealt with.
- The finding that the “application is otherwise also vexatious and scurrilous” did not provide clarity on why the application was vexatious and scurrilous.
The PA’s opposing submissions
The PA’s submissions in opposing the application included the following:
- Jaihai was mistaken in regarding an employment-related dispute as constituting a contravention of the financial sector laws that fell within the Authority’s ambit.
- Section 232 of the FSRA indicates how proceedings of the Tribunal must be conducted, and any attempt by the High Court to usurp the FST’s discretionary powers would be a violation of this provision.
- The High Court cannot impart jurisdiction on an administrator when the legislature has not done so. The FSRA circumscribes the FST’s jurisdiction, and the Tribunal can only reconsider decisions as defined in section 218 of the Act. The PA did not take any decision in terms of a financial sector law, and so the FST did not have the jurisdiction to reconsider the PA’s decision.
The PA should have assisted the applicant
Judge Sardiwalla said it was clear from section 8 of the PDA that it was the legislature’s intention that the PA assisted an employee where another body is the appropriate body to deal with a matter and to ensure that the employee can comply with that section.
There was a statutory duty on the PA to have advised Jaihai of the appropriate forum to resolve his complaint, even if the PA believed it was a labour dispute.
The PA refused to provide reasons for its decision to dismiss the matter. Although the court appreciated that some of the information may be covered by the secrecy clause in the South African Reserve Bank Act, this did not absolve the PA of its statutory duty in terms of section 8 of the PDA, Judge Sardiwalla said.
“The second respondent has offered no explanation to this court for its failure to comply with this section. Had the respondent done this, it would not have necessitated the present application or even the reconsideration application to the first respondent,” the judge said.
No panel and no reasons
Section 224(4)(b) of the FSRA required the Tribunal constitute a panel to adjudicate a reconsideration application. But it was clear, based on the Tribunal’s ruling and the evidence on record, that this was not done, Judge Sardiwalla said.
He said sections 228 and 229 of the FSRA required both the Tribunal and the PA to inform Jaihai of his right to request reasons for their decisions and to provide those reasons. But this was not the case.
The Tribunal is entitled to determine its own procedures. However, in a fact-finding investigation, Judge Sardiwalla said it is “prudent” for the FST to inform and interact with a person whose rights may be adversely affected by the decision. The Tribunal did not at any stage of its investigation engage with Jaihai, which went “against the principles of natural justice and fair procedure”.
He said that in the absence of reasons from the PA, the Tribunal did not have the necessary information, which, in terms of the FST’s Rules, it was required to have for a reconsideration application. The Tribunal could not have properly applied its mind to the matter.
Judge Sardiwalla said the PA’s contention that the court could not, in terms of section 232 of the FSRA, attempt to usurp the discretionary powers of the Tribunal was “misguided”. Section 8(2) of the Promotion of Administrative Justice Act powered the court to make an order directing the parties “to do justice” between them.
The court’s order
The High Court set aside the Tribunal’s decision and remitted the reconsideration application to the FST for reconsideration.
In reconsidering Jaihai’s application, the FST was ordered to issue directions on:
- the filing of a statement of reasons, further reasons, and a properly collated, indexed, and paginated bundle of relevant underlying documents by the PA; and
- the filing of amended and/or augmented grounds by the applicant.
The Tribunal and the PA were ordered, joint and severally, to pay the costs of the application.
