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[2016] ZASCA 139
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Municipal Employees Pension Fund v Natal Joint Municipal Pension Fund (Superannuation) and Others (562/2015) [2016] ZASCA 139; [2016] 4 All SA 761 (SCA) (29 September 2016)
THE
SUPREME COURT OF APPEAL OF SOUTH AFRICA
JUDGMENT
Reportable
Case
no: 562/2015
In
the matter between:
MUNICIPAL
EMPLOYEES PENSION FUND
APPELLANT
and
THE
NATAL JOINT MUNICIPAL PENSION
FIRST RESPONDENT
FUND
(SUPERANNUATION
)
THE
NATAL JOINT MUNICIPAL FUND
SECOND
RESPONDENT
(RETIREMENT)
THE
KWAZULU-NATAL JOINT MUNICIPAL
THIRD RESPONDENT
PROVIDENT
FUND
Neutral
Citation:
Municipal
Employees Pension Fund v The Natal Joint Municipal Pension Fund
(562/2015)
[2016] ZASCA 139
(29 September 2016)
Coram:
Maya
DP, Theron, Wallis and Zondi JJA and Schoeman AJA
Heard:
22
August 2016
Delivered:
29
September 2016
Summary
:
Pension
funds – local authorities in KwaZulu-Natal obliged to associate
as employer with one or more of the respondents –
not entitled
to associate with appellant fund to the exclusion of the respondents
– local authority employees obliged to
be members of one of the
respondents.
ORDER
On
appeal from:
KwaZulu-Natal
Division of the High Court, Pietermaritzburg (Kruger J sitting as
court of first instance):
1 Save to the
limited extent indicated in paragraph 2 below, the appeal is
dismissed with costs including the costs of two
counsel.
2
The order of the court a quo is amended to read:
‘
1
The Municipal Employees Pension Fund be and is hereby directed to
forthwith make payment to the Imbabazane Municipality
of all amounts
received by it as pension contributions in respect of the individuals
identified in the list annexed to its founding
affidavit in the
application under Case No. 3360/2012 and marked ‘A3’.
2(i) Local
Authorities located within the province of KwaZulu-Natal are, in
terms of the Local Government Superannuation Ordinance
24 of 1973,
the Natal Joint Municipal Pension Fund (Retirement) Ordinance 27 of
1974, the KwaZulu-Natal Joint Municipal Provident
Fund Act 4 of 1995,
and the regulations promulgated in terms of such legislation, obliged
to associate as employer with each of
the Natal Joint Municipal
Pension Fund (Superannuation), the Natal Joint Municipal Pension Fund
(Retirement) and the KwaZulu-Natal
Joint Municipal Provident Fund.
(ii) In terms
of the legislation mentioned in para (i) above and the regulations
promulgated thereunder, local authorities
located within the province
of KwaZulu-Natal may only associate with any other fund, in addition
to their association with the
Natal Joint Municipal Pension Fund
(Superannuation), the Natal Joint Municipal Pension Fund
(Retirement), and the KwaZulu-Natal
Joint Municipal Provident Fund or
the KwaZulu-Natal Municipal Pension Fund.
(iii)
The Municipal Employees Pension Fund is interdicted and restrained
from representing to any local authority located
within the province
of KwaZulu-Natal that it is a pension fund with which such local
authority may be associated in the stead of
the Applicants in terms
of the legislation mentioned in para (i) above and the regulations
promulgated thereunder.
3 The Municipal
Employees Pension Fund is to pay the applicants’ costs, such
costs are to include:
(i) All costs
reserved at previous hearings and appearances in both the Uniform
rule 30 application and this application,
and
(iii) The costs
consequent upon the employment of two counsel.’
JUDGMENT
Theron
JA (Maya DP, Wallis and Zondi JJA and Schoeman AJA concurring):
Introduction
[1]
The parties in this matter are three municipal pension funds and a
provident fund established by provincial legislation for
the purpose
of providing pension and related benefits to employees (and their
dependants) of local authorities. The rules of these
funds enable
employees of a local authority to become members thereof. The
provision of benefits is derived from contributions
paid to the funds
by participating municipalities (qua employers) on behalf of their
employees and from contributions paid by such
employees themselves.
Benefits are paid out to the members who retire, or otherwise become
entitled to a benefit, or their dependants.
[2]
This appeal concerns a ‘turf war’ between the funds over
the right of the appellant, the Municipal Employees Pension
Fund, to
admit, as participating employers, to the exclusion of the three
KwaZulu-Natal based funds, local authorities within the
province of
KwaZulu-Natal and to provide retirement benefits to municipal
employees within KwaZulu-Natal. The appellant is a pension
fund
established under an ordinance enacted by the legislature of the
former Transvaal Province. The first respondent, the Natal
Joint
Municipal Pension Fund (Superannuation), the second respondent, the
Natal Joint Municipal Pension Fund (Retirement) and the
third
respondent, the KwaZulu-Natal Joint Municipal Provident Fund, (the
respondent funds), were all established by provincial
legislation and
operate exclusively within that province. The court a quo (Kruger J)
found that the provincial legislation relating
to the respondent
funds, as well as the regulations promulgated thereunder, oblige
local authorities within the province to be
associated only with the
respondent funds. It is against this judgment that the appellant
appeals, with the leave of the court
a quo.
Background
[3]
This application arose from proceedings instituted by the appellant
against the Imbabazane Local Municipality (the Municipality),
and 25
of its employees, in April 2012. The Municipality is located at
Estcourt, KwaZulu-Natal, and has from its inception been
a local
authority associated with the respondents. In the early part of 2011
the appellant held a presentation at the Municipality
at which it
represented to the latter’s employees that it was a fund
entitled to solicit members from local authorities within
KwaZulu-Natal and a fund with which the Municipality could be
associated. Following on the presentation, 25 employees became
members
of the appellant.
[1]
[4]
During November 2011 the Municipality formed the view that its
employees were not entitled to be associated with the appellant
and
in writing advised the appellant that the 25 employees’
membership was ‘terminated’. The Municipality suspended
payment of contributions due to the appellant in respect of the 25
employees. The appellant thereafter instituted an application
in which it sought, inter alia, an order compelling the Municipality
to make payment to it of the pension fund contributions of
the 25
employees. The Municipality did not oppose the application and on 4
June 2012, the KwaZulu-Natal Division of the High Court
granted an
order in favour of the appellant (‘the first order’),
declaring that the suspension of payment by the Municipality
of
pension fund contributions was unlawful, and directing the
Municipality to reinstate payment. In August 2012 the respondents
launched an application against the appellant in which they sought to
rescind the first order on the basis that it was erroneously
granted
and to obtain an interdict restraining the latter from conducting
pension fund business within KwaZulu-Natal. The first
order was
rescinded by consent on 19 February 2013. The remaining relief was
granted by Kruger J and that gives rise to this appeal.
Historical
background of the respondent funds
[5]
It is accepted that the history of legislation may serve as an aid to
the interpretation of a legislative provision and shed
‘valuable
light’ on its current meaning.
[2]
Prior to 1939 local authorities in the then province of Natal wishing
to provide pension benefits to employees had to do so by
creating
superannuation funds for their own staff. This posed difficulties for
smaller municipalities, because they had few employees
and the number
of members and the level of contributions affect the viability of a
pension fund. In 1939, by way of the Local Government
Superannuation
Ordinance 12 of 1939 (the 1939 Ordinance) the Natal Joint Municipal
Pension Fund (the NJMPF) was created to address
this problem.
The purpose of the 1939 Ordinance was to ‘empower local
authorities to make provision as to retiring
pensions or other
financial benefits payable to persons employed by local authorities’.
In terms of s 3(1) the NJMPF
would come into existence once two
or more local authorities having at least thirty eligible employees
adopted the 1939 Ordinance.
The only eligible employees were persons
of ‘European descent’.
[3]
All local authorities, irrespective of whether or not they had
existing superannuation funds, could adopt the ordinance and become
associated with the NJMPF.
[4]
If
they had an existing fund then the investments and other moneys of
such fund would be transferred to the NJMPF.
[5]
Larger local authorities, having at least sixty employees and with
existing superannuation funds, could also adopt the 1939 Ordinance
without becoming associated with the NJMPF. In that event the
provisions of the 1939 Ordinance would govern the operation of such
funds, but the funds would not form part of the NJMPF. Of particular
relevance for present purposes were the provisions that obliged
employees to be members of the fund with which their local authority
employer was associated, that is, either the NJMPF or the
local
authority’s own superannuation fund.
[6]
[6] The Local
Government Superannuation Ordinance 25 of 1966 (the 1966 ordinance)
was promulgated to consolidate and amend the law
relating to the
NJMPF and to make provision for the pension rights of an employee
transferring from one local authority to another.
It made association
with the NJMPF compulsory for all local authorities, save those of
Durban and Pietermaritzburg and, by making
membership compulsory for
all qualifying employees, ensured that all local authority employees
in the province of Natal, outside
Durban and Pietermaritzburg, were
obliged to be members of the NJMPF. The relevant provisions of this
ordinance were ss 3
and 4. Section 3 of the 1966 Ordinance
established
‘
the
Natal Joint Municipal Pension Fund with which every existing or
future local authority
shall
be associated and which
shall
be deemed to be a continuation of the fund as it existed under the
provisions of the Local Government Superannuation Ordinance
12 of
1939.’
[7]
(Emphasis
added.)
The
1966 Ordinance retained almost exclusive application to white
employees but allowed certain black people to be regarded as
employees and become members of the NJMPF’.
[8]
The principle of compulsory association, which was new, and
compulsory membership, which was a continuation of the existing
situation,
was reinforced by s 4 which provided for ‘obligatory
association with and membership of the fund’ and read:
‘
Every
existing local authority not associated with the fund
shall
become associated with the fund from the date of promulgation of this
Ordinance and every future local authority
shall
become
associated with the fund on the date upon which it comes into being,
and every employee of such local authority who is eligible
to become
a member of the fund
shall
become a member.’
[9]
(Emphasis added.)
[7]
The Natal Joint Municipal Pension Fund (Non-White) Ordinance 6 of
1967 (the 1967 Ordinance) was enacted to empower local authorities
to
make provision for pension and other benefits of black employees.
[10]
In terms of this ordinance, an employee was defined as any person,
other than a white person, in the service of a local authority.
[11]
The ordinance made association compulsory because s 3 provided that:
‘
[e]very
existing local authority shall become associated with [the Natal
Joint Municipal Pension Fund (Non-White)] within twelve
months of the
date of promulgation of this Ordinance and every future local
authority shall become associated with the fund within
six months of
the date from which it comes into being’
.
[8]
Section 13 of the Ordinance regulated membership of the fund and
provided that: (1) employees who were under the age of 55 years
as at
the date of adoption would be obliged to become members of the fund;
(2) A person who became an employee on or after the
date of adoption
would become a member of the fund and (3) a member could not withdraw
from membership while in the service of
a local authority.
[9]
The Local Government Superannuation Ordinance 24 of 1973 (the 1973
Ordinance), repealed the 1966 Ordinance. The purpose of this
ordinance was to ‘consolidate and amend the law relating to the
Natal Joint Municipal Pension Fund. The first respondent
was
established in term of s 2 of the Ordinance and s 4(1)
(a)
empowered
the Administrator to make regulations providing that the fund would
be a continuation of an existing fund. Such regulations
were made
with the result that the first appellant is a continuation of the
NJMPF. In 1978 by an amendment to the 1973 Ordinance
the name of the
first appellant was changed to Natal Joint Municipal Pension Fund
(Superannuation). In terms of s 3 of the 1973
Ordinance, it would not
apply the local authorities of Durban and Pietermaritzburg, unless
they made application in the prescribed
manner to become associated
with it. It empowered the Administrator to make regulations for,
inter alia, determining which employees
of local authorities should
be eligible to join the fund. The regulations obliged all local
authorities, with the exception of
Pietermaritzburg and Durban, to
associate with the first appellant and obliged all eligible employees
of associated local authorities
to be members of the first appellant.
[10]
The Local Government Superannuation Ordinance 27 of 1974 (the 1974
Ordinance) repealed the 1967 Ordinance. Its provisions mirrored
those
of the 1973 Ordinance and in 1978, by way of an amendment to the 1974
Ordinance, the name of the fund was changed to Natal
Joint Municipal
Pension Fund (Retirement), which is the second appellant. As with the
first appellant the regulations obliged all
local authorities, with
the exception of Pietermaritzburg and Durban, to associate with the
first appellant and obliged all eligible
employees of associated
local authorities to be members of the first appellant.
[11]
To sum up, the first respondent had existed since 1939 and the second
appellant came into existence in 1967. At all times,
either under the
applicable ordinances or the regulations made in terms of those
ordinances, it was obligatory for every local
authority in what was
then the province of Natal, with the exception of Durban and
Pietermaritzburg, to associate with the two
funds. It was also
obligatory for every employee of those local authorities to be
members of one of those funds. The two ordinances
remain in force and
govern the two funds, save that references in them to ‘the
Administrator’ are now to be read as
referring to the Member of
the Executive Council (MEC) for Local Government and Housing.
[12]
The KwaZulu-Natal Joint Municipal Provident Fund Act 4 of 1995 (the
Provident Fund Act) established the
KwaZulu-Natal
Joint Municipal Provident Fund, the purpose of which was to provide
lump sum benefits for the employees, and their
dependants, of a local
authority.
[12]
The Provident Fund Act did not contain a definition of
‘employee’ and by this stage the distasteful racial
categorisation
applicable to members of the other two funds had been
abolished. As a result there were now three funds available to
employees
of local authorities in KwaZulu-Natal and it was necessary
to make provision for the manner in which employees of local
authorities
would become members of one or other of them.
Basis
of the parties’ case
[13]
The respondents assert that, apart from Durban and Pietermaritzburg,
local authorities within KwaZulu-Natal are obliged to
be associated
only with the respondent funds and that all employees of local
authorities within KwaZulu-Natal are obliged, under
the governing
enactments establishing these funds, to become members of one of the
respondent funds. They also contend that the
appellant, being a fund
established under provincial legislation of the former Transvaal
Province, has no entitlement to solicit
membership within
KwaZulu-Natal. This argument found favour in the court a quo and was
the basis upon which the respondents were
successful in that court.
[14]
The appellant, on the other hand, contends that there is nothing in
the governing enactments to justify a finding that local
authorities
within KwaZulu-Natal are bound only to participate in the respondent
funds or that prevents the appellant from doing
business with local
authorities in KwaZulu-Natal. It argued that the governing enactments
do not have the limiting effect contended
for by the respondents and
do not empower the Regulator to make regulations restricting the
extent to which a local authority is
entitled to participate in a
fund of its choice. To the extent that the Regulator, in exercising
this power, created a restriction
on the extent to which local
authorities are entitled to participate in other funds, the Regulator
acted
ultra
vires
his powers.
Interpreting
the Legislation
[15]
The starting point in this appeal is an analysis of the enactments
that gave life to each of the respondents. When interpreting
a
statute consideration must be given to the language of the provision
itself read in the context in which it appears and having
regard to
the purpose of the provision and the background and circumstances
surrounding its enactment.
[13]
[16]
The three enactments establishing the respondent funds are for
present purposes sufficiently similar in their terms to be discussed
collectively. As already mentioned, each of the respondents was
established for the purpose of providing pension and related benefits
for the employees of local authorities and their dependants. The rule
making power that the MEC enjoys is wide and there is no
attack on
the regulations on the footing that they were not within the powers
of the MEC.
[17]
The regulations of the respondent funds are substantially identical
and require that those of only one fund, namely the Superannuation
Fund, be considered in detail. An ‘employee’ is defined
as, inter alia, a person who is in the service of a local authority
in a full time capacity and a ‘municipal council’
includes a municipality or municipal entity.
[14]
A ‘member’ is defined as a person not being a local
authority who is a contributor to the fund.
[18]
The regulations relevant to this matter are set out hereinafter.
Clause 4 is headed ‘Obligatory association with the
fund’
and provides that every municipal council,
‘
shall
be associated with the fund from the date of establishment and every
future municipal council
shall
be associated with the fund within six months from the date of
becoming a municipal council’.
[19] Clause 5(1)
deals with the preparation, adoption and approval of a scheme and
reads, in relevant part:
‘
Each
local authority not associated with the Fund at the date of
commencement shall prepare a scheme which shall provide –
(a)
the date from which its association with the Fund is to commence:
Provided that such
date shall not be later than the dates
contemplated in regulation 4.
(b)
that subject to the provisions of Regulation 16 (3) all employees
shall become members
of the Fund as from the date of association’.
[20]
Clause 16, in relevant part, reads:
‘
(1)
. . . a member of the Fund immediately prior to the date of
commencement shall continue to be a member.
…
(3) An
employee of a local authority which becomes associated with the Fund
on or after the date of commencement shall elect,
in writing, to
become a member with effect from the date of association of either –
(
a
) the Fund;
(
b
) the
Retirement Fund;
(
c
) the
Provident Fund; or
(
d
) the KZN
Municipal Pension Fund:
Provided
that he may elect, in writing, within a period of six months of the
date of becoming an employee, to amend such original
election
retrospectively to the date of becoming an employee, but provided,
further, that such right of election shall not apply
to an employee
electing to become a member of the KZN Municipal Pension Fund;
(4) A person
who becomes an employee on or after the date of commencement shall,
subject to his conditions of service, elect,
in writing, to become a
member of either –
(
a
) the Fund;
(
b
) the
Retirement Fund;
(
c
) the
Provident Fund; or
(
d
) the KZN
Municipal Pension Fund if the employee is employed by a local
authority associated with such Fund in terms of its regulations:
…
(8) Subject to the
provisions of Regulation 16A(1), a member may not withdraw from
membership while he remains in the service of
a local authority which
is associated with the Fund.
(9)
When a member ceases to be in the employ of a local authority which
is associated with the Fund he shall, subject to the provisions
of
these Regulations, forthwith cease to be a member’
.
[21]
Clause 16A(1) governs transfer of membership and provides:
‘
A
member may elect to terminate his membership of the Fund [ie the
Superannuation Fund] and to become a member of either the Retirement
Fund or the Provident Fund, or the KZN Municipal Pension Fund if the
local authority employing such member is associated with that
Fund.’
[22] Clause 76 deals
with special conditions applicable to contract employees:
‘
In
an event that, a contract employee who was compelled to become a
member of the Fund in accordance with Regulation 16(4) elects,
after
the commencement of this Chapter, not to remain a member of the Fund,
the benefits payable to such members shall be in accordance
with
Regulation 71.’
[15]
[23]
Certain additional provisions in the regulations of the third
respondent are particularly material to this matter. Clause 12(5)
prohibits a member from withdrawing from membership whilst the member
remains in the service of a local authority that is associated
with
the Provident Fund. The exception is where members terminate their
membership to become a member of one of the other respondent
funds.
The only cessation of membership permitted under these regulations is
a transfer between funds.
[24]
The Ordinances and the Provident Fund Act expressly provide that the
Legislature’s objective in establishing the respondents
was to
provide benefits for the employees of local authorities and their
dependants. These could only be local authorities located
within the
Province of KwaZulu-Natal. It was to give effect to this objective
that the regulations promulgated under these enactments
obliged all
local authorities within KwaZulu-Natal to be associated with the
respondent funds. It must follow (save for the exceptions
in the
regulations, which do not apply to the present matter) that local
authorities must be associated with the respondent funds
for the
purpose of providing pension benefits to their employees. Were local
authorities entitled to be associated with a fund
other than the
respondents, in order to provide pension benefits to their employees,
the purpose of the Ordinances and the Provident
Fund Act would be
subverted. The effect of the regulations is that local authorities
are legally obliged to ensure that their employees
join one of the
respondent funds. Individual employees may not continue their
employment without holding membership with one of
the respondent
funds. The employees obviously have the right to hold membership in
any other fund as well, but that is an entirely
different matter of
the individual making additional provision for their own retirement.
[25]
Clause 3 of the Provident Fund regulations relates to local
authorities that are not associated with the third respondent at
the
date of commencement of the regulations. It obliges each such local
authority to prepare a scheme that makes provision for
two matters.
The first is ‘the date from which the association with the fund
is to commence.’ The scheme must accordingly
provide for the
local authority concerned to become associated with the Provident
Fund from a particular date provided for in the
scheme.
[26]
The second aspect that the scheme must provide for (pursuant to
Clause 3(1)(b)) is that all employees of local authorities,
who do
not elect in terms of regulation 12 to become members of the first
respondent, the second respondent or the KZN Municipal
Pension Fund,
shall
become members of the Provident Fund as from the date on which the
local authority becomes associated with the Provident Fund.
The
scheme must accordingly provide for compulsory membership of the
Provident Fund as the default position, if the employee concerned
elects not to become a member of the first or second respondents.
[27]
Clause 16(4) of the Superannuation Fund’s regulations provides
that every person who becomes an employee of a KwaZulu-Natal
municipality on or after the date of commencement of the regulations,
shall, subject to his conditions of service, elect, in writing,
to
become a member of one of the respondent funds or the KZN Municipal
Pension Fund. The meaning of this, according to the appellant,
is
that persons who become employees of KwaZulu-Natal municipalities on
or after 1 February 1996, may have conditions of service
which
require or permit them to become members of other pension funds. The
appellant interprets ‘subject to his conditions
of service’
in the Regulations to introduce a potential choice between the
respondent funds or any other pension fund, including
the appellant.
This phrase is the appellant’s escape hatch from the general
import of the Regulations. The proposition is
that a local
authority’s conditions of service for its employees may include
a condition that they elect to become a member
of one of the
respondents
or
some
other fund.
[16]
[28]
The obligation to ‘
elect
’
relates to the employee electing to become a member of one of the
respondent funds and not an entitlement to elect to become
a member
of some other fund. The word ‘subject to his conditions of
service’ which govern and relate to that election
cannot
logically convey that the employee’s contract of employment can
provide for the employee not to become a member of
one of the
respondent funds.
The
election is made subject to the employee’s conditions of
service in order to cater for a situation where the local authority
is not associated with all of the four funds referred to in the
regulation or wishes to restrict incoming employees’ choice
to
only one or two of the respondent funds.
[29]
In this context, ‘subject to’ clearly means save as
otherwise qualified. This is the obvious and sensible construction
of
clause 16(4) and the appellant’s suggestion that the regulation
must be interpreted to afford a municipal employee the
entitlement to
choose to become a member of
any
fund without holding membership in one of the respondent funds, is
contrary to the wording of the regulations and the objective
of the
Natal Ordinances and the Provident Fund Act. Clause 16(9), for
example, expressly provides that when an employee’s
employment
with a local authority ceases, the employee’s membership of the
fund ceases.
[30] The purpose of
the compulsory membership provisions of the KwaZulu-Natal legislation
serves to enhance pension benefits and
secure the viability of the
respondent by ensuring that they have significant numbers of members.
There is nothing to indicate
that the legislation does not serve its
purpose. The evidence of the respondents supports the view that funds
must have the necessary
critical mass to make them viable. The
Principal Officer of the respondent funds has said:
‘
It
is also extremely expensive to administer and manage a fund. As
explained above the [respondent funds] are collectively
self-administered
on a costs-recovery basis and matters such as
administration are not outsourced to third parties. On account of the
costs of administering
a fund the number of members which a fund has
directly affects the viability of the fund and hence the benefits
which members will
receive. A large pool of members result in
economies of scale and this reduces the overall costs. In the case of
local authorities
they have perpetual existence and the consequence
is that they will continue to employ people. In this context
economies of scale
and the number of members are crucial
considerations. Related to this fact is the fact that permitting
employees to join multiple
funds generates additional administrative
obligations since the employer is required to produce and maintain
records of the rules
and requirements of several funds and deal with
each administratively. This would result in additional costs having
to be incurred
and additional functions being performed by municipal
staff, which reduces productivity.’
[31]
In its affidavits, the appellant raised constitutional points
premised on the rights to freedom of association, freedom of
trade,
occupation and profession and fair labour practices. On appeal, it
invoked only the right to freedom of association. It
in fact advanced
no constitutional challenge. The issue on appeal was the proper
interpretation to be placed on the legislation
establishing the
respondent funds and the regulations promulgated thereunder. The
appellant’s reliance on the Constitution
was restricted to
interpreting the legislation and regulations consistently therewith.
[32]
The contention that the constitutional issues raised favour the
MEPF’s interpretation, is based on the assumption that
such
interpretation better accords with a local authority’s freedom
of association. It would appear from the papers that
the decision to
impose a restricted choice of pension funds on municipal employees in
KwaZulu-Natal, enhances the pension benefits
of such employees and is
to the advantage of municipalities in respect of cost effectiveness.
When interpreting a statute and more
than one meaning is possible, a
sensible meaning is to be preferred to one that leads to insensible
or unbusinesslike results or
undermines the apparent purpose of the
legislation.
[17]
On the
established principles of interpretation, the Ordinances, the
Provident Fund Act and the regulations of each of the respondents
oblige all local authorities within KwaZulu-Natal to be associated
with the respondents and also oblige the employees of such local
authorities to elect to become a member of one of the respondents. In
my view, the court a quo correctly interpreted these instruments.
[33]
In support of its argument that the area of jurisdiction of the
appellant is not restricted to the area of the former Transvaal,
the
appellant relied on the repeal of s 79
quat
of
Local Government Ordinance 17 of 1939 (for the province of
Transvaal). This provision was repealed with effect from 19 March
1999 by s 58 of the Rationalisation of Local Government Affairs Act
10 of 1998, Gauteng. Section 79 of the Ordinance regulated
the
general powers of the council.
[18]
In view of my conclusion on the main argument it is unnecessary to
express a definite view on this point. The notion that the repeal
of
the original empowering provision, which is still referred to in the
appellant’s rules, had the effect of enabling it
to operate on
a broader scale than previously is certainly unusual. But the point
requires a more careful consideration of the
statutory provisions
governing pension funds and we have not had the detailed argument on
the point that would permit us to reach
a firm conclusion one way or
the other.
[34]
It must be reiterated that there is nothing in the legislation and
the regulations enacted thereunder that prevents a local
authority
located within KwaZulu-Natal from being associated with a pension
fund other than the respondent funds, provided that
such association
is in addition to its association with the respondent funds. In the
premises, and to the extent that the order
of the court a quo
provides that local authorities located in KwaZulu-Natal may
only
associate with the respondent funds, such order needs to be amended.
[35]
For these reasons, the following order is granted:
1 Save to the
limited extent indicated in paragraph 2 below, the appeal is
dismissed with costs including the costs of two
counsel.
2
The order of the court a quo is amended to read:
‘
1
The Municipal Employees Pension Fund be and is hereby directed to
forthwith make payment to the Imbabazane Municipality
of all amounts
received by it as pension contributions in respect of the individuals
identified in the list annexed to its founding
affidavit in the
application under Case No. 3360/2012 and marked ‘A3’.
2(i) Local
Authorities located within the province of KwaZulu-Natal are, in
terms of the Local Government Superannuation Ordinance
24 of 1973,
the Natal Joint Municipal Pension Fund (Retirement) Ordinance 27 of
1974, the KwaZulu-Natal Joint Municipal Provident
Fund Act 4 of 1995,
and the regulations promulgated in terms of such legislation, obliged
to associate as employer with each of
the Natal Joint Municipal
Pension Fund (Superannuation), the Natal Joint Municipal Pension Fund
(Retirement) and the KwaZulu-Natal
Joint Municipal Provident Fund.
(ii) In terms
of the legislation mentioned in para (i) above and the regulations
promulgated thereunder, local authorities
located within the province
of KwaZulu-Natal may only associate with any other fund, in addition
to their association with the
Natal Joint Municipal Pension Fund
(Superannuation), the Natal Joint Municipal Pension Fund
(Retirement), and the KwaZulu-Natal
Joint Municipal Provident Fund or
the KwaZulu-Natal Municipal Pension Fund.
(iii)
The Municipal Employees Pension Fund is interdicted and restrained
from representing to any local authority located
within the province
of KwaZulu-Natal that it is a pension fund with which such local
authority may be associated in the stead of
the Applicants in terms
of the legislation mentioned in para (i) above and the regulations
promulgated thereunder.
3 The Municipal
Employees Pension Fund is to pay the applicants’ costs, such
costs are to include:
(i) All costs
reserved at previous hearings and appearances in both the Uniform
rule 30 application and this application,
and
(iii)
The costs consequent upon the employment of two counsel.’
____________________
L
V Theron
Judge
of Appeal
APPEARANCES
For
Appellant:
AM Breitenbach SC
Instructed by:
Dockrat Inc,
Johannesburg
Honey Attorneys,
Bloemfontein
For
Respondents:
KJ Kemp SC with HS Gani
Instructed
by:
J
Leslie Smith & Company Inc, Pietermaritzburg
McIntyre
& Van Der Post, Bloemfontein
[1]
The
affidavits filed in this matter refer to 26 members but this appears
to be a typographical error as 25 persons were joined
as respondents
by the appellant
in
the application under Case No. 3360/2012 and the details of these 25
persons are listed in Annexure ‘A3’ to its
founding
affidavit in that application.
[2]
Santam
Insurance Ltd v Taylor
1985 (1) SA 514
(A) at 526I - 527C;
S
v H
1988 (3) SA 545
(A) at 552D-E;
Natal
Joint Municipal Pension Fund v Endumeni Municipality
[
2012]
ZASCA 13
;
2012 (4) SA 593
(SCA) at paras 17-24.
[3]
See the definition of ‘employee’
in s 6 of the Ordinance.
[4]
Section 4 dealt with local
authorities with no fund and s 5 with local authorities with an
existing fund.
[5]
Section 5(2)
(c).
[6]
Sections 9(3) and 10.
[7]
Section 49 of
the Ordinance repealed Ordinance 12 of 1939.
[8]
Section
1(xii)(iv) provided that:
‘…
a local
authority may determine that any person, other than a white person,
… in its service in grade or class specified
by it for the
purpose shall, subject to the same conditions as for a white person,
be an employee’.
[9]
In terms of s
2 of Ordinance 25 of 1966, the local authorities of Durban and
Pietermaritzburg were excluded from the application
of Chapters II,
III and IV of the Ordinance – unless express provision to the
contrary was made.
[10]
Section 2
provided:
‘
There
is hereby established a pension fund to be known as the Natal Joint
Municipal Pension Fund (Non- White) with which every
existing or
future local authority shall become associated as hereinafter
provided.’
[11]
Section 1(xi)
defined an employee as:
‘
any
person (other than a white person as defined in s 1 of the
Population Registration Act 30 of 1950 who, at the date of
adoption of a scheme by a local authority, is in the service of such
local authority or who subsequently joins the service of
a local
authority and who –
(a)
has attained the age of seventeen years but has not attained the age
of fifty-five years;
(b)
devotes his whole time to the said service;
(c)
has completed twelve months’ continuous service with a local
authority;
(d) is in receipt of a salary or
wage of not less than R400 per annum of has been classified as an
employee in terms of section
4(1)(c) of section 5;
provided that any employee who
is a member of the Natal Joint Municipal Pension Fund shall be
excluded from the provisions of
this Ordinance’.
[12]
The Provident
Fund Act defined a local authority as:
‘
a
city or town council, a town board or a health committee constituted
under the provisions of the Local Authorities Ordinance,1974
(Ordinance No. 25 of 1974), the Development and Services Board in
relation to any development or regulated area within the meaning
of
the Development and Services Board Ordinance, 1941 Ordinance No. 20
of 1941), any body, council, committee or board contemplated
in
paragraphs (
a
),
(
b
),
(
c
),
(
e
)
and (
i
)
of the definition of ‘local government body’ in section
1(1) of the Act, any transitional council or transitional
metropolitan substructure established under the Act, and includes
any other body or institution deemed to be a local authority
by the
Minister for the purposes of this Act, and in relation to an
employee or member means a local authority employing such
employee
or member.’
[13]
Natal
Joint Municipal Pension Fund
v
Endumeni
Municipality
,
supra, paras 17-24;
City
of Tshwane
v
Marius
Blom & GC Germishuizen Inc & another
[2013] ZASCA 88
;
2014 (1) SA 341
(SCA) paras 14-15.
[14]
Clause 1
(xviiAA) of the regulations states that:
‘“
municipal
council” means where appropriate according to the context in
which the expression occurs -
(a)
a municipal council as defined in section 1 of the Municipal
Structures Act;
(b)
a municipality;
(c)
the management body of uMsekeli appointed in terms of section 2(2)
of the uMsekeli Municipal Support Services Ordinance, 1941
(Ordinance No. 20 of 1941), as amended;
(d)
uMsekeli; or
(e)
a municipal entity as defined in section 1 of the Local Government :
Municipal Systems Act, 2000 (Act No. 32 of 2000)
and
any reference in the Regulations to a local authority shall be
deemed to be a reference to the appropriate meaning of “municipal
council”’.
[15]
The
corresponding Provident Fund regulations in relation to those quoted
in the text are regulations 2, 3, 12 and 40.
[16]
It was not
suggested that Imbabazane’s conditions of service, or those of
any other local authority, contained such a provision.
[17]
Natal
Joint Municipal Pension Fund v Endumeni Municipality,
supra, paras
17-24.
[18]
Section
79
quat
came into operation on 1 July 1970 and was inserted by s 4(1) of
Local Government Ordinance 16 of 1972 which read as follows:
‘
(1)
The Administrator may establish a joint municipal pension fund
(hereinafter in this section referred to as a joint fund),
for the
benefit of Non-White employees and retired Non-White employees of
local authorities, of the joint fund, of the joint
medical aid fund
established in terms of s 79
bis
and of any other body established in the interest of local
government and approved by the Administrator and for the dependants
of such employees and retired employees.
(2) The Administrator may, if he
deems it expedient, approve of the dissolution of the joint fund and
may give instructions regarding
the disposal of the assets of such
fund.
(3)
Subject to the provisions of subsection (4), every local authority
shall be associated with the joint fund.
(4) The Administrator may,
subject to such conditions as he may determine, exempt any local
authority from the provisions of subsection
(3).
(5) The provisions of subsection
(4) and of subsection (5) of section 79
ter
of the principal
Ordinance shall apply mutatis mutandis to the joint fund.’