A financial services provider debarred an employee and representative (who had taken up other employment whilst still employed and lied about it) without giving the representative notice and a fair hearing in terms of the Promotion of Administration Justice Act (PAJA) before doing so. The representative sued for damages for lost income based on this failure of justice.
The claim for damages in Odinfin (Pty) Ltd v Reynecke was based on delict and the question was whether there was wrongful conduct by the provider giving rise to a pure economic loss recoverable as damages.
The act of debarring someone in terms of the FAIS Act is administrative action for the purposes of PAJA. The courts have held that the question whether the failure of administrative justice under PAJA gives rise to a damages claim is an exacting exercise where a number of important factors come into play. PAJA itself does not suggest that there is a delictual remedy for non-compliance with its provisions. There may be cases where unjust administrative action will lead to a damages claim.
The courts will seldom find that a statute gives a delictual remedy for mere negligence in complying with it.
In the present situation the employer was found to have had no option but to debar the representative once it found him lacking in honesty and integrity. There is no difficulty in imposing delictual liability where the decision-maker acts dishonestly or corruptly but the courts will seldom find that a statute gives a delictual remedy for mere negligence in complying with it. In the present case, the representative relied on strict liability. But it is in the public interest that a financial services provider acts against a representative who is found not to possess honesty and integrity.
The court said that a ‘country which allows rogue persons to act as representatives would be poorer for it’. As there was no evidence of bad faith on the part of the employer, the actions were not wrongful and the claim for damages was dismissed.