Ovation Preservation Pension Fund and Others v Executive Officer of the Financial Services Board

The Executive Officer of the Financial Services Board applied for, and obtained, an order placing Ovation Global Investment Services (Pty) Ltd and Ovation Global Investment Nominees (Pty) Ltd under curatorship in terms of s 5 of the Financial Institutions (Protection of Funds) Act 28 of 2001. The Ovation entities acted as a Linked Investment Services Provider and nominee company holding and administering investors’ funds, including substantial investments by the appellant pension and provident funds. Following financial instability linked to mismanagement and curatorship of associated asset managers (Common Cents and Fidentia), liquidity and governance problems arose. The appellants did not challenge the curatorship itself but objected to specific terms of the order which restricted disinvestment and payment of benefits, and allowed curatorship costs to be recovered from investors’ trust assets.

The appeal was dismissed with costs, including the costs of two counsel.

The case confirms the breadth of a court’s discretion under s 5 of the Financial Institutions (Protection of Funds) Act when appointing a curator. It establishes that investor trust assets may, where necessary, be used to defray curatorship costs and that courts may impose temporary restrictions on disinvestment and benefit payments to safeguard financial institutions and investors during curatorship.