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[2016] ZASCA 92
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National Tertiary Retirement Fund v Mokadi and Another (419/2015) [2016] ZASCA 92 (1 June 2016)
THE
SUPREME COURT OF APPEAL OF SOUTH AFRICA
JUDGMENT
Reportable
Case
No: 419/2015
In
the matter between:
NATIONAL
TERTIARY RETIREMENT
FUND
APPELLANT
and
A
T
MOKADI
FIRST RESPONDENT
LUKHAIMAINE
M A N.O.
SECOND RESPONDENT
Neutral
citation:
National
Tertiary Retirement Fund v Mokadi
(419/2015)
[2016] ZASCA 92
(1 June 2016)
Coram:
Ponnan,
Theron, Petse and Zondi JJA and Kathree-Setiloane AJA
Heard:
9
May 2016
Delivered:
1
June 2016
Summary:
Pension Funds Act
24 of 1956
–
s 30N
– discretion conferred on Pension
Funds Adjudicator to determine whether interest shall accrue where
determination consists
of an obligation to pay money, and the rate at
which, and date from which it accrues.
ORDER
On
appeal from
Gauteng
Local Division of the High Court, Johannesburg
(Bashall AJ sitting as
court of first instance):
The appeal is
dismissed.
JUDGMENT
Kathree-Setiloane
AJA (Ponnan, Theron, Petse and Zondi JJA concurring):
[1]
The first respondent, Professor A T Mokadi (Mokadi) was the Rector
and Vice-Chancellor of the Vaal University of Technology
(the
University) until his employment was terminated on 11 July 2006.
During his employment with the University, Mokadi was a member
of the
appellant, the National Tertiary Retirement Fund (the Fund), which is
registered in terms of s 4 of the Pension Funds
Act 24 of 1956
(the PFA). After consideration of the report of a commission of
enquiry appointed to investigate certain allegations
levelled against
Mokadi, the University charged him with misconduct. A disciplinary
tribunal found him guilty of numerous counts
of misconduct including
fraud, corruption, theft, abuse of power and abuse of the
University’s funds. Pursuant thereto he
was dismissed by the
University. Subsequent to his dismissal, Mokadi referred an unfair
dismissal dispute to the Commission for
Conciliation Mediation and
Arbitration, but did not proceed with it. There were seven high court
applications as between the University
and Mokadi immediately before
and after his dismissal. Except for a number of cost orders which
were granted in favour of the University,
these applications are not
directly relevant to the issues in this appeal.
[2]
Subsequent to dismissing Mokadi, the University instituted criminal
charges of fraud and corruption against him. Having done
so, it
requested the Fund to withhold his pension benefit pending
finalisation of the criminal case. Almost a year later on 5 August
2007, the University instituted a civil action against Mokadi for
damages, in the amount of R6 073 215.01, arising from his alleged
fraudulent actions during his tenure as the Rector. When Mokadi was
acquitted of thecriminal charges in February 2009, the University
instructed the Fund to withhold Mokadi’s pension benefit
pending finalisation of the civil action against him.
[3]
Pursuant to this instruction, the Board of Trustees of the Fund (the
Board) resolved to withhold Mokadi’s pension benefit
in terms
of s 37D(1)
(b)
[1]
of the PFA, pending the finalisation of the civil action against him.
Aggrieved by the withholding of his benefit, Mokadi
lodged a
complaint (the complaint) on 3 January 2010, against the Fund with
the second respondent, the Deputy Pension Funds Adjudicator
(the
Adjudicator),
[2]
appointed in
terms of s 30C(1)
(b)
of
the PFA.
[4]
On 2 March 2010 the Adjudicator, in writing, requested the Fund to
respond to the complaint by 1 April 2010 and, in particular,
to
provide her with Mokadi’s benefit statement, his contribution
history and his benefit breakdown. The Fund did not provide
the
Adjudicator with the requested information. However, on 19 April
2010, it filed a response to the complaint. In the response,
the Fund
alleged that Mokadi’s complaint was time-barred in terms of
s 30I of the PFA as it related to a benefit which
he should have
received in June 2006 when his employment at the University was
terminated.
[3]
The Fund
contended that Mokadi ought to have utilised his remedies under the
PFA within three years from the date when he became
aware of the
Fund’s decision to withhold his benefit, which was soon after
his dismissal or, at the latest, on 22 August
2008 when he demanded
payment of his pension benefit from the Fund through his attorneys.
[5]
It also, in the response, sought to justify its decision to withhold
Mokadi’s pension benefit at the University’s
request, on
the basis of the various cost orders obtained by the University
against Mokadi which were outstanding, as well as the
pending civil
action against him. The Fund averred that pursuant to the various
cost orders which the University had obtained against
Mokadi, it had
already paid the University an amount of R431 043.55 from Mokadi’s
pension benefit, and that the remaining
amount held by the Fund was
R1 305 477.10. The Fund furthermore alleged that having regard to the
history of the matter and that
the University had done everything it
could to expedite the proceedings (as obtaining a trial date was
beyond its control), it
was of the view that it acted within the
scope of s 37D of the PFA by withholding payment of Mokadi’s
pension benefit
until the civil action had been properly ventilated
and considered by a court. Finally, as to the status of the pending
civil action,
the Fund asserted that it was being defended by
Mokadi; that the pleadings had closed; and that the matter was set
down for
hearing on 2 June 2010. The Fund sought justification for
withholding the pension benefit in the decision of
Highveld
Steel & Vanadium Corporation Ltd v Oosthuizen
[4]
where this court held that the object of s 37D(1)
(b)
of the PFA is to protect the employer’s right to pursue the
recovery of money misappropriated by its employees.
[6]
A month after filing its response to the complaint, the University’s
attorneys advised the Fund, in a letter dated 21
May 2010, that
another bill of costs, in one of the applications between it and
Mokadi, had been taxed in the University’s
favour in the amount
of R303 803.49. The University furthermore confirmed that Mokadi’s
pension benefit remained subject
to retention as resolved by the
Board, pending the taxation of a further bill of costs in respect of
amongst others, the pending
civil action. Presumably, Mokadi was
advised of this decision because, on 7 June 2010, he wrote to both
the Adjudicator and the
Fund under separate cover, expressing his
dissatisfaction with the decision of the Fund to deduct moneys from
his pension benefit,
without informing him of the deductions. On 10
June 2010, the Fund responded stating that it did not deem it
necessary to deal
with the allegations in Mokadi’s letter and
baldy denied them. These letters were followed by a letter dated 30
June 2010
to the Fund from the National Education Health and Allied
Workers’ Union, a trade union, noting its disappointment with
the
Fund for allowing the deduction of moneys from Mokadi’s
pension benefit to settle legal costs owing to it by him. It also
demanded that Mokadi’s pension benefit be paid out to him
within ten days from the date of the letter.
[7]
There was no further written communication between Mokadi and the
Fund until 11 April 2012, when Mokadi wrote to the Fund stating
‘[a]fter much prevarication the University has eventually, by
resolution of its Council, directed that my pension benefit
be
released forthwith, without any conditions . . .’. To
this, he attached a letter from the University’s
office of the
Vice-Chancellor at the time, Professor Moutlana, but no resolution
from the Council of the University (the Council).
The Fund
consequently sent a letter to the University on 12 April 2012,
requesting a copy of the Council’s resolution referred
to in
Mokadi’s letter of 11 April 2012. The Fund did not receive a
response from the University.
[8]
Mokadi then wrote to the Adjudicator on 10 July 2012 recording that:
‘
There
is no pending civil case against me by my previous employer, Vaal
University of Technology. The first time such an attempt
was made was
in December 2006. I responded by informing the University that I am
instituting a counterclaim which was more than
their claim against
me. That was the last time I heard about this matter. In all
subsequent communications with me, the University
has neither pursued
nor persisted in this fictitious civil suit.’
Pursuant
to this letter, the Adjudicator wrote to the Fund, on the same day,
pointing out that according to a further submission
from Mokadi,
there appeared to be no pending legal proceedings against him, and
hence the withholding of his pension benefit was
unlawful. The
Adjudicator then sought clarification from the Fund as to whether
there were any pending legal proceedings against
Mokadi. On 11 July
2012 the Fund again requested an update from the University on the
pending legal proceedings against Mokadi.
[9]
On 13 July 2012, the University informed the Fund that:
‘
[W]e
wish to point out that our Bill of Costs in the matter of The Vaal
University of Technology v Mr A T Mokadi and Another (North
Gauteng
High Court, Pretoria under case number 5877/2006) was taxed and
allowed in favour of the [University] in an amount of R303 803.49
. . . as long ago as 6 May 2010.
To
this end we confirm that the determination by the Taxing Master has
the effect of a civil Judgment against [Mokadi] and in favour
of the
[University].
With
further reference to your submission to the Pension Funds
Adjudicator, dated 14 April 2010, we wish to point out that the
abovementioned amount may be deducted from [Mokadi’s]
pension benefits in terms of section 37D of the [PFA], as was
done in
two other matters where the [University] obtained similar costs
orders against [Mokadi].
[Mokadi’s]
allegation that there is currently no civil action pending between
him and the [University] is therefore unfounded
and deprived of
truth. The matter discussed above will only be finalized once the
amount of the taxed Bill of Costs is paid.
It
is indeed so that the [Council] resolved not to pursue the action for
damages against [Mokadi] and the matter discussed above
therefore
remains the only outstanding issue.
.
. .
Turning
to the last issue, we wish to record the following:
1.
A Special [Council] Meeting was convened and held on 5 August 2010 .
. . on the
issue of withholding [Mokadi's] pension benefits.
2.
During the meeting the full [Council]
inter alia
resolved that
[Mokadi’s] pension benefits be withheld further.
3.
To this end, we have to advise that the above resolution may only be
overturned
by a resolution of the full [Council].
.
. .’
Dissatisfied
with the University’s response, the Fund advised it in writing,
on 17 July 2012, that in view of the University’s
decision not
to pursue the action for damages against Mokadi, it could no longer
withhold his benefit. On 18 July 2012, the Fund
received a further
letter from the University confirming that it had decided not to
pursue the claim for damages against Mokadi,
although a judgment for
costs still remained unsatisfied. Following receipt of this letter,
the Fund’s legal advisors advised
both the University and the
Fund, on 20 July 2012, that it could no longer withhold Mokadi’s
pension benefit and that it
had instructed its administrator to
calculate the benefit payable to Mokadi, and essentially, to effect
payment thereafter. In
addition, the Fund stated that the ‘matter
has been resolved and no determination is required’. By 7
September 2012,
when the Fund had still not paid Mokadi his pension
benefit, the Adjudicator enquired by email when payment could
be expected.
Curiously, on the same day, the Fund responded by
requesting the Adjudicator to confirm that the complaint had been
resolved and
that it would not be proceeded with. The Fund, moreover,
somewhat contradictorily advised her that until it received her
determination,
it was unable to proceed with the payment.
[10]
On 10 September 2012, the Adjudicator advised the Fund that she would
issue her determination as requested, and did so on 19
September
2012. She found that the complaint had not prescribed because, as
indicated in the letter of 20 July 2012, the University
had decided
not to pursue the civil claim for damages against Mokadi, but rather
to pay Mokadi his pension benefit. On the
question of whether
the Fund was justified in withholding the benefit pending the
finalisation of the damages action, the Adjudicator
made the
following ruling:
‘
The
purpose of section 37D(1)
(b)
of the [PFA] is to protect an employer’s right to recover
losses caused by the misconduct of an employee and is a legitimate
objective of protecting [an] employer’s rights to recover debts
due (see
Dakin
v Southern Sun Retirement Fund
[1999] 9 BPLR 22 PFA). While this objective is not an absolute right
of the employer, what is implicit is that the employer may
request a
fund to withhold benefits pending the determination of proceedings
against the member.
The
submissions indicate that although the [University] instituted civil
proceedings against [Mokadi] for damages, it subsequently
resolved
not to pursue the matter. Thus there is no pending civil claim
against [Mokadi] and [he] did not sign any written acknowledgment
of
liability for the alleged misconduct. It follows that there is no
reason for the Fund to withhold payment of [Mokadi’s]
benefit.’
The
Adjudicator accordingly made the following order:
‘
6.1.1
The [Fund] is ordered to compute [Mokadi’s] withdrawal benefit
in terms of its rules together with interest
at the rate of 15.5%
from 2 June 2010, within one week of the date of this determination;
6.1.2
the [Fund] is further ordered to pay [Mokadi] his withdrawal benefit,
less any deductions permissible in
terms of the [PFA], within seven
days of completing its computation as stated above.’
[11]
On 28 September 2012 the Fund advised Mokadi that the payment process
was underway and, on 1 October 2012, the pension benefit
(excluding
interest) was finally released into Mokadi’s bank account. On
15 November 2012, the Fund sent Mokadi a statement
of the computation
of his benefit. According to the Fund, although the statement
shows a payment of R597 739.51 in respect
of ‘late payment
interest’, this amount did not represent ‘interest’
accrued, but rather ‘fund return’.
[12]
The Fund appealed the decision of the Adjudicator to the Gauteng
Local Division, Johannesburg (the court a quo), in terms of
s 30P
[5]
of the PFA. In addition to opposing the appeal, Mokadi lodged a
counter-application in which he requested the court a quo to make
an
order allowing interest on the pension benefit to be calculated from
27 November 2006 (the date on which a tax directive was
issued in
respect of the pension benefit) as opposed to 2 June 2010, as
determined by the Adjudicator. Both the Fund’s application
and
Mokadi’s counter application were dismissed by Bashall AJ, who
reasoned:
‘
The
[PFA], in terms, does provide that where there is a determination
consisting of an obligation to pay an amount of money, then
there is
a statutory obligation that, that debt will bear interest. The
interest will be as determined by the Adjudicator as to
the rate and
as to the commencement date.
.
. .
I
have already found that the [Fund] exercised a proper discretion in
withholding the benefit pending determination of the civil
action by
the University. Neither acted unreasonably having regard to the
factual background.
Once
the University had determined not to proceed further, then the [Fund]
became obliged to pay the benefit.
The
[Adjudicator], on learning of the decision not to proceed further
then issued the Determination and Orders including the order
as to
interest which was ancillary to the order to pay the benefit.
The
[Adjudicator] was statutorily empowered to determine the date of
payment of the interest as also the rate. She did so. She did
not act
improperly or unreasonably in doing so. There is, in my view, no
merit in the counter-application.’
Bashall
AJ made no order as to costs. The present appeal is with leave of
this court.There is no cross-appeal against the court
a quo’s
dismissal of Mokadi’s counter-application.
[13]
The primary issue for determination in this appeal is whether the
Adjudicator was empowered under the PFA to order interest
against the
Fund. The Fund’s contentions are two-fold: First, that it
was not in mora and therefore not liable to pay
the interest which
the Adjudicator awarded to Mokadi as it had, in terms of s 37D
of the PFA, lawfully withheld Mokadi’s
benefit pending the
finalisation of the civil action instituted by the University.
Second, that because it had paid Mokadi his
benefit together with the
fund return on his benefit to the date of payment, the payment of
interest will result in Mokadi receiving
a double benefit.
As
to the Fund’s first contention:
[14]
Section 30N of the PFA regulates the payment of interest. It
provides:
‘
Where
a determination consists of an obligation to pay an amount of money,
the debt shall bear interest as from the date and at
the rate
determined by the Adjudicator.’
Section
30N confers a discretion on the Adjudicator to order the payment of
interest, where his or her determination consists of
an obligation to
pay money, and to determine the rate of interest that shall accrue,
and the date from which it will run. It goes
without saying that the
discretion must be exercised in a manner that is fair and
appropriate.
[15]
The central purpose of the regulatory framework for occupational
pension funds, is to protect the pension benefit of members
since the
payment of contributions to their retirement often extend across
their lifetimes.
[6]
These
contributions are, to my mind, perhaps the most significant source of
saving for most individuals in formal employment. The
object of s 30N
is thus to recompense a member for the late payment by the Fund of a
benefit, so as to place the member in
the same ─ or
substantially similar ─ position that he or she would have been
in, had the benefit been paid timeously.
[16]
Thus, whether interest shall accrue at all and the rate at which it
accrues and date from which it runs, are matters that have
been left
by the legislature to the discretion of the Adjudicator.
Principally for this reason, the PFA does not make
the
Prescribed Rate of Interest Act 55 of 1975 (the
Prescribed Rate of
Interest Act) applicable
to the rate of interest payable under
s 30N
of the PFA. Notably,
s 1
of the
Prescribed Rate of Interest Act
governs
interest payable on all debts, but only to the extent that
the interest payable ‘is not governed by any other law or by an
agreement or a trade custom or in any other manner’. Since the
interest payable on amounts awarded by the Adjudicator is
governed by
s 30N
of the PFA, such a debt is not in law subject to the
Prescribed Rate of Interest Act. The
Adjudicator is, therefore, not
obliged to use the prescribed rate as determined in that Act when
making a determination as contemplated
in s 30N of the PFA.
[17]
This does not, however, preclude the Adjudicator from applying the
prescribed rate of interest, if he or she considers it to
be
appropriate in the circumstances of a particular case. The
Adjudicator is also free to use a different interest rate such as,
for instance, the average rate of inflation
[7]
or the rate of fund return,
[8]
where these would be more appropriate. It follows that on this
score the Fund’s contention to the contrary is untenable.
[18]
In determining the date from which interest shall run, the
Adjudicator may again choose from a range of options which in his
or
her view is fair and appropriate. For instance, the Adjudicator may
choose to order interest to run from the date of the determination
to
the date of payment of the debt, or that it be calculated from the
date that the benefit awarded should originally have been
paid to the
complainant, ie the date from when the fund was in default or
mora.
[9]
Under the common law,
where payment of a debt is overdue, and no interest has been agreed
upon between the parties, mora interest
may be charged.
[10]
What
this means, in the context of a determination under s 30P of the PFA,
is that even where the rules of a pension fund do not
provide for
interest to be paid, for example, on the late payment of a
pension benefit or there is no contractual arrangement
to that
effect, then the Adjudicator may in the proper exercise of her
discretion, order the fund to pay interest on the benefit
from the
date that the benefit was originally due to the member, or any other
date which she deems just and appropriate in the
circumstances.
[11]
Accordingly, there is no merit in the contention that the Adjudicator
was not permitted to order the payment of interest, because
there was
no agreement between the parties to do so or the Fund’s rules
did not provide for such payment.
[19]
In
Meyer
v Iscor Pension Fund
,
[12]
this court considered the nature of an application in terms of s 30P
of the PFA and described it as follows:
‘
From
the wording of section 30P(2) it is clear that the appeal to the
High Court contemplated is an appeal in the wide sense.
The High
Court is therefore not limited to a decision whether the
Adjudicator’s determination was right or wrong. Neither
is it
confined to the evidence or the grounds upon which the Adjudicator’s
determination was based. The Court can consider
the matter afresh and
make any order it deems fit. At the same time, however, the High
Court’s jurisdiction is limited by
section 30P(2) to a
consideration of “the merits of the complaint in question”.
The dispute submitted to the High
Court for adjudication must
therefore still be a “complaint” as defined. Moreover, it
must be substantially the same
“complaint” as the one
determined by the Adjudicator. Since it is an appeal, it follows that
where, for example, a
dispute of fact on the papers is approached in
accordance with the guidelines formulated by Corbett JA in
Plascon-Evans
Paints Ltd v Van Riebeeck Paints (Pty) Ltd
[1984] ZASCA 51
;
1984 (3) SA 623
(A) [at] 634E-635D, the complainant should be
regarded as the “applicant” throughout, despite the fact
that it is the
other side who is formally the applicant to set the
Adjudicator’s determination aside. In case of a “genuine
dispute
of fact” on the papers as contemplated in
Plascon-Evans
,
the matter must therefore, in essence, be decided on the version
presented by the other side unless that version can, in the words
of
Corbett JA, be described as “so far-fetched and unclearly
untenable that the court is justified in rejecting [it] merely
on the
papers”.’
[13]
[20]
In line with these principles, Mokadi had to establish the date
whence the Fund became liable to pay him his benefit. Any factual
disputes on the papers had to be decided in accordance with
Plascon-Evans
.
[14]
[21]
In
Highveld
Steel
[15]
this court considered the question of the interpretation of
s 37D(1)
(b)
(ii)
of the PFA and held that the board of a pension fund has the power to
withhold payment of a pension benefit due to a member
(or ex-member)
pending the outcome of a damages action to be instituted by the
employer against the member. In view of this finding,
both the
Adjudicator and the court a quo found, correctly in my view, that the
Fund had no obligation to pay Mokadi his benefit
pending finalisation
of the civil action which the University had instituted against him.
In reliance upon this finding, the Fund
contended that it was not in
default when it withheld Mokadi’s benefit pending finalisation
of the civil action, because
it did so lawfully. It accordingly
submitted that it is not liable to pay interest on Mokadi’s
pension benefit from 2 June
2010. As I understand the contention, it
is that although the Adjudicator ordered payment of interest from 2
June 2010, that date
had no apparent significance because even though
the civil action between the University and Mokadi was set down for
that date,
he had failed to adduce any evidence to establish that as
the date when the civil claim fell away.
[22]
I disagree. In deposing to his affidavit in the counter-application
Mokadi explains that the civil action had been set down
for 2 June
2010, but ‘this date came and passed’, and the University
did nothing to proceed with the matter, yet the
Fund had neither
released his benefit nor enquired from the University about the
status of the case until two years later. He then
suggests that
‘either the [Fund] knew that the set down of 2 June 2010 had
lapsed’ and was aware that the University
did ‘nothing
further in prosecuting the matter’ or ‘it neglected to
enquire from the [University] what the status
of the civil case was’.
The Fund responds by criticising the allegation as vacuous, since
Mokadi had purportedly failed to
allege that the claim had been
‘withdrawn’.
[23]
However, just a few pages later when Mokadi pertinently enquires ‘so
the question is why was my pension delayed, when
already the [Fund]
was in receipt of [the] final bill of cost of R 303 803.49 by 21
May 2010, and by 3 June 2010 the [Council)
in its sitting had for all
intents and purposes
abandoned
the civil claim
which
had a set down on 2 June 2010, the previous day’,
[16]
the
Fund responds brusquely that: ‘[t]his relates to issues between
the [University] and [Mokadi] and is irrelevant to this
application’.
When Mokadi alleges, repeatedly so, that ‘from 2 June 2010
there was no valid reason for withholding
his benefit’; that
‘beyond 2 June 2012 there was no further cases of litigation
between him and the [University] and
that all matters pertaining to
loss or damages or claims by the [University] were finalized’;
and that ‘after 2 June
2010 there was no further litigation
processes’, the Fund simply fails to respond. Crucially, these
allegations stand unchallenged.
It must thus be accepted as not
being in dispute that the University had abandoned the civil action
against Mokadi on 2 June
2010, and that the Fund was no longer
justified, in terms of s 37D of the PFA, to withhold Mokadi’s
benefit beyond that
date. I turn to consider the contention of the
Fund that the court a quo erred by failing to deal with this very
issue ─
which it viewed as the ‘core’ issue in the
appeal.
[24]
I am not convinced that the judge in the court a quo did not apply
his mind to this issue. That he did so, is made clear from
a reading
of the penultimate paragraph of judgment, where he found that the
Adjudicator ‘was statutorily empowered to determine
the date of
payment of interest as also the rate . . . [s]he did not act
improperly or unreasonably in so doing’. It
is implicit
from this finding, read in the context of the judgment as a whole
that the learned judge in the court below remained
unpersuaded that
the Adjudicator was wrong in ordering interest to run from 2 June
2010. He accordingly found no basis for interfering
with that
conclusion by the Adjudicator.
[25]
In my view, the Fund was not justified in withholding Mokadi’s
benefit once the University decided not to proceed with
the civil
action against Mokadi. Mokadi’s benefit was originally
due to him in July 2006, when his employment with
the University was
terminated. At that stage, the Fund’s justification for
withholding Mokadi’s benefit was that the
University had
charged Mokadi with fraud and corruption. When Mokadi was acquitted
of these charges, the Fund then sought to justify
the withholding of
his benefit on the basis of the pending civil action. The Fund was
aware that the civil action was set down
for hearing on 2 June 2010.
It, nonetheless, adopted a supine attitude and simply made no effort
to enquire from the University
what the status of the civil action
was subsequent to that date, until after it had received the enquiry
from the Adjudicator on
10 July 2012. If, as contended by the
Fund, the Adjudicator was not empowered under s 30N of the PFA
to award interest,
in the terms determined, then one wonders why the
legislature found it necessary to enact s 30N of the PFA at all.
Acceptance
of the submissions advanced on behalf of the Fund would
render this statutory provision nugatory.
As
to the Fund’s second contention:
[26]
I turn to the Fund’s second contention that because it had paid
Mokadi his benefit together with ‘fund return’
from date
of his dismissal to date of payment, the Adjudicator was not entitled
to order it to pay interest on the benefit, because
that will result
in Mokadi receiving a double benefit. ‘Fund return’ and
‘interest’ are independent concepts
which serve different
purposes in the scheme of the PFA. This much is clear from the
definition of ‘fund return’ in
s 1 of the PFA which
provides:
‘“
fund
return”
in relation
to —
(
a
)
the
assets of a fund, means any income (received or accrued) and capital
gains and losses (realised or unrealised) earned on the
assets of the
fund, net of expenses and tax charges, associated with the
acquisition, holding or disposal of assets; or
(b)
any portion of the assets of a fund if the assets are separately
identifiable, means
any income (received or accrued) and capital
gains and losses (realised or unrealised) earned on those assets, net
of expenses
and tax charges associated with the acquisition, holding
or disposal of assets; or
(c)
the assets of a fund, to the extent that those assets consist of
long-term policies
which are “fund member policies” as
defined in Part 5 of the Regulations under the Long-term Insurance
Act, 1998 (Act
No. 52 of 1998), means the “growth rate”
(as defined in those Regulations) applicable to those policies, as
determined
in accordance with those Regulations,
which
in any such case may be positive, negative or nil: Provided that the
board may use a reasonable approximation, made in such
manner as may
be prescribed, to allocate a fund return if there are sound
administrative reasons why an exact allocation cannot
be effected.’
[27]
Fund return is fundamental to the rationale of a pension fund. It
accrues
as part of the objective for which moneys are invested in a pension
fund − to yield speculation gains. Interest, as
envisaged in s
30N of the PFA, on the other hand, is clearly distinguishable. Its
purpose may be comparable to
a
tempore mora
interest, which was described by this court in
Scoin
Trading (Pty) Ltd v Bernstein NO
,
[17]
as follows:
‘
If
a debtor’s obligation is to pay a sum of money on a stipulated
date and he is in
mora
in that he failed to perform on or before the time agreed upon, the
damages that flow naturally from such failure will be interest
a
tempore morae
or
mora
interest. The purpose of
mora
interest is to place the creditor in the position he would have been
if the debtor had performed in terms of the undertaking. This
notion
was more fully explained in
Bellairs
v Hodnett
&
another
[1978] (1) SA 1109
(A) at 1145D-G:
“
It
may be accepted that the award of interest to a creditor, where his
debtor is
in
mora
in regard to the payment of a monetary obligation under a contract,
is, in the absence of a contractual obligation to pay interest,
based
upon the principle that the creditor is entitled to be compensated
for the loss or damage that he has suffered as a result
of not
receiving his money on due date. . . . This loss is assessed on the
basis of allowing interest on the capital sum owing
over the period
of
mora
. . . Admittedly, it is pointed out by Steyn,
Mora
Debitoris
[at] 86, that there were differences of opinion among the writers on
Roman-Dutch law on the question as to whether
mora
interest was lucrative, punitive or compensatory; and that, since
interest is payable without the creditor having to prove that
he has
suffered loss and even where the debtor can show that the creditor
would not have used the capital sum owing, this question
has not lost
its significance. Nevertheless, as emphasised by Centlivres, CJ, in
Linton
v Corser
,
1952 (3) SA 685
(AD) at 695, interest is today the “lifeblood
of finance” and under modern conditions a debtor who is tardy
in the
due payment of a monetary obligation will almost invariably
deprive his creditor of the productive use of the money and thereby
cause him loss. It is for this loss that the award of
mora
interest seeks to compensate the creditor.’
More
recently in
Crookes
v Regional Land Claims Commission
[18]
this court made plain that:
‘
.
. . a party who has been deprived of the use of his or her capital
for a period of time has suffered a loss (
Thoroughbred
Breeders’ Association v Price Waterhouse
2001 (4) SA 551
(SCA) ([2001]
4 All SA 161)
para 85). And that, in
the normal course of events, such a party will be compensated for his
loss by an award of mora interest.’
What
is apparent from these authorities is that the concept and purpose of
‘interest’ is distinguishable from ‘fund
return’
as defined in the PFA. There is accordingly no merit in the
contention of the Fund that Mokadi will receive a double
benefit,
should it be required to pay interest on the benefit which the
Adjudicator awarded to him.
[28]
For these reasons, the appeal must fail. As in the court below,
Mokadi was not represented in this court. As he succeeds on
appeal,
the question of costs does not arise.
[29]
It is ordered that:
The
appeal is dismissed.
________________
F
Kathree-Setiloane
Acting
Judge of Appeal
APPEARANCES:
For
Appellant:
P van
der Berg SC
Instructed by:
Bowman Gilfillan, Sandton
McIntyre & Van der
Post, Bloemfontein
For
First Respondent: In Person
[1]
Section 37D
of the PFA provides:
‘
Fund
may make certain deductions from pension benefits ─
(1)
A registered fund may ─
(a)
. . .
(b)
deduct an amount due by a member to his employer
on the date of his retirement or on which he ceases to be a member
of the fund,
in respect of ─
(i)
(
aa
) . . .
(
bb
)
. . .
(ii)
compensation (including any legal costs recoverable from the member
in a matter contemplated in subparagraph (
bb
)) in respect of
any damage caused to the employer by reason of any theft,
dishonesty, fraud or misconduct by the member, and
in respect of
which ─
(
aa
)
the member has in writing admitted liability to the employer; or
(
bb
)
judgment has been obtained against the member in any court,
including a magistrate’s court, from any benefit payable in
respect of the member or a beneficiary in terms of the rules of the
fund, and pay such amount to the employer concerned; . .
.’.
[2]
The Adjudicator did not oppose the proceedings in the court a quo.
Nor does she oppose the appeal in this court.
[3]
Section 30I
of the PFA provides:
‘
(1)
The Adjudicator shall not investigate a complaint if the act or
omission to which it relates occurred more than three years
before
the date on which the complaint is received by him or her inviting.
(2)
The provisions of the Prescription Act, 1969 (Act no. 68 of 1969),
relating to a debt apply in respects of the calculation
of the three
year period referred to in subsection (1).’
[4]
Highveld
Steel & Vanadium Corporation Ltd v Oosthuizen
[2008] ZASCA 164
;
2009 (4) SA 1
(SCA) paras 16-19.
[5]
Section 30P
of the PFA provides:
‘
(1)
Any party who feels aggrieved by a determination of the Adjudicator
may, within six weeks after the date of the determination,
applied
to the division of the High Court which has jurisdiction, for
relief, and shall at the same time give written notice
of his or her
intention so to apply to the other parties to the complaint.
(2)
The division of the High Court contemplated in subsection (1) may
consider the merits of the complaint made to the Adjudicator
under
s 30A(3) and on which the Adjudicator’s determination was
based and, may make any order it deems fit.
[6]
As
reflected in the Explanatory Summary of the Pension Funds Amendment
Bill, 2007, National Treasury Regulations, GN R169,
GG
29632,16 February 2007.
[7]
Nakalebe
v South African Retirement Annuity Fund & another
[2005] 11 BPLR 954 (PFA) paras 19-20.
[8]
Khumalo v Prosure
Retirement Annuity Fund & another
[2006]
3 BPLR 247 (PFA) para 27.
[9]
R Hunter, J Esterhuizen, T Jithoo and S Khumalo
The
Pension Funds Act: A
commentary on the Act, regulations, selected
notices, directives and circulars
(The
law as at November 2009.)
(2010) at 623-624.
[10]
Commissioner
for Inland Revenue v First National Industrial Bank Ltd
[1990]
ZASCA 49
;
1990 (3) SA 641
(A) at 645D and 659A;
Mahambehlala
v Member of the Executive Council for Welfare, Eastern Cape &
another
2002 (1) SA 342
(SE) at 356H-J and
Mbanga
v Member of the Executive Council for Welfare, Eastern Cape &
another
2001
(8) BCLR 821 (SE).
[11]
See
Bogie
(obo Trustees of Chaka’s Rock Pension Fund) v Metropolitan
Life Limited & others
[2009] 3 BPLR 237 (PFA), where the adjudicator found that in order
to put the creditor in the same position as he or she would
have
been if the debt was paid, an interest rate in the amount of 25 per
cent should be imposed given the failure of the employer
to comply
with its duties to pay contributions for a protracted period.
[12]
Meyer v
Iscor Pension Fund
[2002] ZASCA 148
;
[2003] 1 All SA 40
(SCA)
.
[13]
Meyer v
Iscor Pension Fund
para 8.
[14]
Meyer v
Iscor Pension Fund
para 8,
citing
Plascon-Evans
.
[15]
Highveld
Steel
para 16-19.
[16]
Own
emphasis.
[17]
Scoin
Trading (Pty) Ltd v Bernstein NO
[2010]
ZASCA 160
;
2011 (2) SA 118
(SCA) para 14. See also
David
Trust & others v Aegis Insurance Company Ltd & another
[2000] ZASCA 19
;
2000 (3) SA 289
(SCA) para 39.
[18]
Crookes
v Regional Land Claims Commission
[2012] ZASCA 128
;
2013
(2) SA 259
(SCA) para 16.