Tristar Investments (Pty) Ltd v The Chemical Industries National Provident Fund

Two representatives purporting to act for the Chemical Industries National Provident Fund concluded an Investment Consultancy Agreement with Tristar Investments (Pty) Ltd. Under the agreement, Tristar undertook to provide a range of investment consulting services, including advising on investment strategy, drafting asset manager mandates, liaising with asset managers, and monitoring their performance. The Fund later contended that it was not bound by the agreement, alleging (i) lack of authority of the signatories, (ii) that the agreement was unlawful because Tristar was not licensed under the Financial Advisory and Intermediary Services Act 37 of 2002 (FAIS Act) to render ‘intermediary services’, and (iii) that the agreement had been cancelled. The High Court separated and decided only the issue of illegality, holding that the agreement was void because Tristar was licensed only to furnish advice and not to render intermediary services. Tristar appealed to the Supreme Court of Appeal.

The appeal was upheld with costs. The orders of the High Court were set aside and substituted with an order declaring that the agreement between the parties was not unlawful, directing the plaintiff to pay the costs associated with the disposed issue, and reserving the remaining costs for determination by the court dealing with the outstanding issues.

The case provides authoritative guidance from the Supreme Court of Appeal on the interpretation of ‘intermediary service’ under the FAIS Act. It clarifies the boundary between advisory services, investment consultancy, and regulated intermediary activities, thereby offering certainty to financial service providers, pension funds, and investment consultants regarding licensing requirements.