The Equality Court in Cape Town has dismissed a complaint brought by a financial services provider whose licence was withdrawn for non-payment of the statutory levy, finding that Covid-19 business licence extensions announced in 2021 did not apply to FSPs.
The complainants, David Jeffrey Lotterie and Lotterie Holdings (Pty) Ltd, approached the Equality Court under the Promotion of Equality and Prevention of Unfair Discrimination Act (PEPUDA). They sought reinstatement of the licence, an apology, and R10 million in damages.
Lotterie Holdings failed to pay an outstanding levy, plus interest by February 2021. The Financial Sector Conduct Authority notified the company of its intention to suspend the licence and afforded it an opportunity to respond. No response was received within the stipulated period. On 12 March 2021, the licence was suspended. The correspondence explained that:
- The suspension could be lifted upon payment of the outstanding levy; and
- The decision could be reconsidered within 30 days of publication.
On 2 September 2021, the FSCA withdrew the licence. The outstanding levy amounted to R6 153.82 at the time.
The President’s July 2021 address
The central plank of the complainants’ case was a public address delivered in July 2021 by President Cyril Ramaphosa during the Covid-19 pandemic.
In that address, the President stated: “All business licenses and permits that expired between March 2020 and June 2021 will remain valid until 31 December 2022. New business licenses or permits that are issued from 1 July will also be valid until 31 December 2022, and no licence fee will be payable.”
The complainants interpreted this statement as a “presidential pardon” that:
- Extended their FSP licence until December 2022; and
- Suspended the obligation to pay licence-related levies.
On 12 July 2021, the first complainant emailed the FSCA referring expressly to the President’s announcement and requested that the suspension of the company’s FSP licence be lifted “as per the guideline”.
The FSCA responded that the President’s address did not apply to FSPs and referred the complainant to the applicable Ministerial Directives.
Further correspondence followed, during which the FSCA explained the limited scope of the relief measures and referred the complainant to the relevant statutory instruments. The complainant, however, maintained that “all businesses” included FSPs.
The legal effect of the relief measures
In a judgment delivered on 16 February, Judge Mas-udah Pangarker held that reliance on the President’s speech was misplaced.
The Court found that the speech itself did not create binding legal rights. Its legal effect was given through Directives issued by the Minister of Small Business Development and published in Government Gazette No. 44853, Notice 615 of 15 July 2021.
Those Directives had to be read together with Schedule 1 of the Businesses Act. The definition of “business” in the Directives referred to businesses required to obtain a licence or permit under that Act and listed in Schedule 1.
Schedule 1 includes businesses such as:
- Those selling or supplying meals or perishable foodstuffs;
- Certain health and entertainment establishments; and
- Hawkers in meals or perishable foodstuffs.
The Court found that FSPs regulated under the FAIS Act do not fall within those categories. There was no reference to FSPs in Schedule 1 of the Businesses Act.
The judge concluded that the Directives applied only to the specified businesses and did not extend to FSP licences. The company therefore remained obliged to comply with its levy obligations under financial sector legislation.
Alleged discrimination under PEPUDA
The complaint was framed as one of unfair discrimination under section 6 of PEPUDA.
The Court referred to the Constitutional Court’s three-stage enquiry in Harksen v Lane NO and Others (1997):
- Does the impugned conduct differentiate between persons or categories of persons, and if so, is there a rational connection to a legitimate governmental purpose?
- If differentiation amounts to discrimination, is it on a prohibited ground?
- If discrimination is established, is it unfair, and if so, can it be justified?
The Court also relied on Nedbank Ltd and Another v Survé and Others (2023), emphasising that bald assertions of discrimination are insufficient; objective facts must support the claim.
Judge Pangarker found:
- The FSCA acted in accordance with its statutory mandate.
- The company failed to pay its levy despite notice and opportunity to remedy.
- Numerous other FSP licences were withdrawn around the same time for similar non-compliance. A published notice of withdrawal listed multiple affected FSPs.
- There was no evidence that the complainants were singled out.
- No prohibited ground of discrimination was established.
Although the first complainant had previously alleged to the Public Protector that he had been marginalised as a “coloured male”, that allegation was not pleaded in the Equality Court complaint.
The Court held that the complainants failed to establish even a prima facie case of discrimination. As such, the burden of proof did not shift to the FSCA.
Economic harm and expansion of the case
The complainants alleged that the withdrawal of the licence caused economic hardship. As a micro-lender, the company could not trade, and service providers allegedly instituted litigation against it. The complainants further alleged reputational harm and defamation.
The Court held there was no evidence that the FSCA’s conduct amounted to discrimination, harassment, hate speech, or defamation within the meaning of PEPUDA.
The judgment also records that the first complainant filed at least three subsequent and irregular documents seeking to introduce about 20 additional orders or forms of relief under PEPUDA, including:
- Legitimate expectation;
- Unlawful administrative action under the Promotion of Administrative Justice Act; and
- Alleged constitutional violations.
The Court dismissed these attempts, ruling the complainants could not expand their original Form 2 complaint without proper procedural steps. The judge observed that these irregular filings resulted in wasted judicial time and unnecessary costs.
Internal remedies and costs
The Court noted that the complainants had been informed that they could seek reconsideration of the withdrawal decision before the Financial Services Tribunal. The Court was inclined to accept the FSCA’s submission that the complainants had not exhausted this internal remedy.
The Court awarded costs against the complainants. It characterised the complaint as frivolous and ill-founded and did not engage a matter of constitutional importance that would justify protection from an adverse costs order.
