Jurie Wynand Van Dyk t/a Van Dyks Property Brokers v M3T Developments (Pty) Ltd

The plaintiff, Mr Jurie van Dyk, trading as Van Dyks Property Brokers, concluded two agreements with the defendant, M3T Developments (Pty) Ltd: (1) a verbal 'collaboration agreement' in May 2019, obliging the plaintiff to assist the defendant in securing financing for its property development projects by referring and introducing it to potential financiers in exchange for a commission of 4% plus VAT of the financing obtained; and (2) a written 'brokerage agreement' concluded on or around 9 February 2021, which confirmed the plaintiff's responsibilities under the collaboration agreement in relation to the Môreson Development and Fynbos Development projects and revised the commission payable. The plaintiff alleged that he performed his obligations by referring the defendant to Credit Smith Capital Partners (Pty) Ltd and its investment analyst, Chris Davis. The defendant subsequently obtained R30 million in funding for its Fynbos Development project from Salicure 2 (Pty) Ltd, with a final term sheet sent on 8 November 2021. The defendant received R14 million between November 2021 and May 2022 and a further R16 million thereafter. The plaintiff claimed a brokerage fee of R1,153,846.16 in terms of clause 2.1 of the brokerage agreement, which the defendant refused to pay.

• Whether the plaintiff acted as a 'financial services provider' as contemplated in the Financial Advisory and Intermediary Services Act 37 of 2002 (FAIS Act) by furnishing 'advice' and/or rendering an 'intermediary service' without authorisation.
• Whether a secured loan agreement falls within the definition of 'financial product' under section 1 of the FAIS Act.
• Whether the mere referral and introduction of potential financiers constitutes 'advice' of a financial nature under the FAIS Act.
• Whether a contract performed by an unauthorised financial services provider is void under the FAIS Act.
• Whether the particulars of claim disclosed a cause of action or were vague and embarrassing.

The exception was dismissed with costs, including the costs of counsel, on scale A.

For a person to be acting as a 'financial services provider' under the FAIS Act by furnishing 'advice', the recommendation, guidance or proposal must be made in connection with a 'financial product' as defined in section 1 of the Act. A secured loan agreement does not constitute a 'financial product' for purposes of the FAIS Act. Furthermore, the mere referral and introduction of a client to potential financiers, without making any recommendation, guidance or proposal of a financial nature to the client, does not constitute 'advice' under the FAIS Act. The introduction of an investment analyst to engage with a client about potential financing falls outside the scope of advice requiring authorisation under the Act.

The court observed that, on the plain wording of clause (c) of the definition of 'advice', it covers advice on the conclusion of a transaction — whether aimed at incurring a liability or acquiring a right or benefit — in respect of any financial product, and that the clause could possibly have been made clearer by inserting commas after 'liability' and 'benefit', though it was not necessary. The court also noted that even if one were to assume the loan agreement constituted a financial product and that Van Dyk made statements about it, any such statements could have fallen within the excluded category of 'factual advice' under section 1(3)(a) of the FAIS Act, which excludes advice on procedures for entering transactions, descriptions of financial products, routine administrative queries, objective information about financial products, and display or distribution of promotional material. Additionally, the court commented on the meaning of 'subject to' in the definition of 'advice', suggesting it was intended to convey 'except as curtailed by'.

This case provides important clarity on the scope of the FAIS Act and the definition of 'financial services provider', particularly in the context of property brokers and intermediaries who facilitate introductions between clients and financiers without providing financial advice. It confirms that not all intermediaries in financial transactions fall within the ambit of the FAIS Act, and that the definition of 'financial product' must be narrowly construed. The judgment distinguishes between active financial advisers who recommend specific financial products (as in Atwealth) and passive facilitators who merely make introductions. It also reinforces the procedural requirements for exceptions based on vagueness and embarrassment under rule 23(1).