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[2015] ZASCA 203
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Registrar of Pension Funds v Howie NO and Others (222/2015) [2015] ZASCA 203; [2016] 1 All SA 694 (SCA) (2 December 2015)
THE
SUPREME COURT OF APPEAL OF SOUTH AFRICA
JUDGMENT
Reportable
Case no: 222/2015
In the matter
between:
REGISTRAR
OF PENSION FUNDS
Appellant
and
C T
HOWIE NO
First Respondent
D L
BROOKING NO
Second Respondent
G O
MADLANGA NO
Third Respondent
ROY ALAN
HUNTER
Fourth Respondent
TELLUMAT
PENSION FUND
Fifth Respondent
Neutral
citation:
Registrar of Pension
Funds v Financial Services Appeal Board
(222/2015)
[2015] ZASCA 203
(2 December 2015)
Coram:
MPATI P, LEACH, WALLIS and MATHOPO JJA and
BAARTMAN AJA
Heard
:
24 November 2015
Delivered
:
2 December 2015
Summary:
Locus standi –
Board
of Appeal established by section 26A of the Financial Services Board
Act 97 of 1990 overturning decision by the Registrar
of Pension Funds
–– Registrar does not have
locus
standi
to review the decision of the
Appeal Board.
ORDER
On
appeal from:
Gauteng Division, Pretoria
(Mavundla J, sitting as court of first instance):
The
appeal is dismissed.
JUDGMENT
Wallis
JA (Mpati P, Leach and Mathopo JJA and Baartman AJA concurring)
[1]
This appeal is joined
with that in
Tellumat
,
[1]
judgment in which is to be handed down simultaneously with this
judgment. The two appeals arise out of the same decision
by the
Board of Appeal (the Appeal Board) established in terms of s 26A
of the Financial Services Board Act (the FSB Act).
[2]
The Appeal Board overturned a decision made under s 14 of the
Pension Fund Act (the Act)
[3]
by the appellant, the Registrar of Pension Funds (the Registrar), to
permit a transfer of business by the Tellumat Pension Fund
(the
Fund). Both the Registrar and Tellumat (Pty) Ltd (Tellumat), the
employer in relation to the Fund, challenged the decision
of the
Appeal Board by way of review in the high court. Those challenges
were dismissed by the high court but it gave leave in
both cases to
appeal to this court.
[2]
Ordinarily it would not be necessary to
write separate judgments in these two cases as they raise the same
issues on the merits
of the review. But there is a separate issue,
arising in this case and not common to
Tellumat
,
that necessitates a separate judgment. The issue is whether the
Registrar has the necessary
locus standi
to challenge on review a decision of the Appeal Board with which the
Registrar does not agree. That issue warrants a separate judgment,
which will be confined to that question alone. As regards the basis
for and merits of the review they are dealt with in the judgment
in
Tellumat.
[3]
This court raised the question of the
Registrar’s
locus standi
prior
to the appeal and we have received full argument from counsel on the
point. Before considering that argument it is helpful
to set
out the statutory background against which the question must be
decided.
[4]
The Registrar’s functions are set out
in the Act. The function with which we are concerned is that of
approving amalgamations
of pension funds and the transfer of any
business from a pension fund to any other person in terms of s 14
of the Act. In
this case the Registrar approved a transfer of part of
the business of the Fund. The transfer involved the cession to
pensioners
of annuities taken out at their election with an insurer
in order to provide them with the benefits that they would otherwise
have
had to look to the Fund to provide. The mechanism by which this
was done is described in the
Tellumat
judgment.
[5]
If anyone is aggrieved by any decision by
the Registrar, including any decision pursuant to s 14 of the
Act, they are entitled
to lodge an appeal against that decision with
the Appeal Board in terms of s 26(1) of the FSB Act. The
composition of the
Appeal Board is set out in s 26A of the FSB
Act. It must be chaired by a retired judge or an advocate or attorney
with a minimum
of ten years experience. Its proceedings must be heard
in public (s 26B(9)) and parties are entitled to representation by a
legal
representative (s 26B(8)). An appeal is decided on the
written evidence, factual information and documentation submitted to
the Registrar before the decision that is the subject of the appeal
was taken (s 26B(10)).
[6]
The powers of the Appeal Board are set out
in s 26B(15) of the Act. These read as follows:
‘
The
appeal board may—
(
a
)
confirm, set aside or vary the decision under appeal, and order that
any such decision
of the appeal board be given effect to; or
(
b
)
remit the matter for reconsideration by the decision-maker concerned
in accordance with
such directions, if any, as the appeal board may
determine.’
The
appeal is accordingly of the second type referred to in
Tikly
.
[4]
The Appeal Board decides whether the Registrar’s decision was
right or wrong. Its decision either affirms or replaces that
of the
Registrar.
[7] If
the Appeal Board did not exist the only way to challenge a decision
by the Registrar would be by way of judicial review.
In such a review
the Registrar would be cited and would be able to enter the lists to
defend the challenged decision.
[5]
Where the Appeal Board endorses the decision by the Registrar and an
aggrieved party wishes to challenge it, they may do so by
way of
judicial review in terms of PAJA
[6]
for the reasons explained in
Tellumat
.
In such a case, as the decision under challenge is effectively that
of the Registrar, endorsed by the Appeal Board, both the Registrar
and the Appeal Board are cited as parties to the review and it is
customary for the Registrar to appear and defend the decision.
[7]
That is not a problem. Where the decision by a functionary or body is
challenged by judicial review, and that functionary or body
is cited
in the review proceedings, it is clearly open to them to participate
in the review and defend the challenged decision.
There are many
cases that illustrate this principle.
[8]
But the present case is
different. Here the Registrar is adopting an adversarial position
towards the Appeal Board. The dispute
is not between the Registrar
and an outside party aggrieved by the decisions. It is an internal
quarrel between the Registrar and
the Appeal Board over the
correctness of the Registrar’s decision. It is immaterial to
this review whether other interested
parties also wish to challenge
the decision of the Board. The Registrar is challenging it in her own
right.
[8]
In the submissions on her behalf it was contended that in an appeal
the Registrar is a party to the proceedings and as such enjoys
the
same right as any other party to challenge the outcome by way of
judicial review. The issue dealt with in this judgment is
whether
that proposition is correct.
[9]
The point made in the previous paragraph,
that the Registrar’s challenge is independent of the attitude
of other interested
parties, is indicative of the problem that lies
in accepting that the Registrar has l
locus
standi
to challenge the decision of the
Appeal Board on appeal from one of her decisions. The problem does
not arise in this case because
Tellumat brought review proceedings in
its own right. But, had it not done so, the position would have been
that all the parties
concerned in practical terms with the Appeal
Board’s decision would have accepted it, but it would be
susceptible to being
overturned at the instance of the Registrar.
That would be a most unusual situation. There are any number of
reasons why parties
will be prepared to accept the decision of the
Board of Appeal after it is made. Indeed they might have had an
agreement prior
to the appeal hearing that they would do so. Why
should their acceptance be subject to the Registrar wishing to
establish that
the original decision was correct and that the Appeal
Board has erred?
[10]
It was submitted that the Registrar was a
party to the proceedings before the Board of Appeal, using ‘party’
in its
litigious sense of one of the adversaries in a dispute. Our
attention was drawn in this regard to the provisions of s 26B(12)
of the FSB Act. Under s 26B(11) the Appeal Board is confined to
the material that was before the Registrar in considering
the appeal.
But s 26B(12) authorises a departure from this principle. It
reads:
(
a
) Despite
the provisions of subsection (11) the chairperson of a panel
designated to hear an appeal may on application
by—
(i)
the appellant concerned, and on good cause shown, allow further oral
and written
evidence or factual information and documentation not
made available to the decision-maker prior to the making of the
decision
against which the appeal is lodged; or
(ii)
the decision-maker concerned, and on good cause shown, allow further
oral and written
evidence or factual information and documentation to
be submitted and introduced into the record on appeal.
(
b
) If
further oral and written evidence or factual information and
documentation is allowed into the record on appeal
under paragraph
(
a
) (i), the matter must revert to the decision-maker
concerned for reconsideration, and the appeal is deferred pending the
final
decision of the decision-maker.
(
c
) If,
after the decision-maker concerned has made a final decision as
contemplated in paragraph (
b
),
the appellant continues with the appeal by giving written notice to
the secretary, the record on appeal must include the further
oral
evidence, properly transcribed, written evidence or factual
information and documentation allowed, and further reasons or
documentation submitted by the decision-maker concerned.’
[11]
I do not think that
this section bears the construction suggested by the Registrar. The
reference to an application is merely a
convenient way of describing
the mechanism whereby the appellant or the Registrar may escape the
constraints of s 26B(11).
It does not necessarily bear any
connotation of a form of legal procedure. It means nothing more than
that the appellant may ask
the Appeal Board for permission to submit
additional material that was not before the Registrar when the
decision was made. If
there is a good reason for permitting it to do
so the Appeal Board may permit it to be admitted, but must then remit
the matter
to the Registrar for a reconsideration of the original
decision. In the same way the Registrar may ask to submit additional
material,
either on the basis that it is necessary to elucidate an
issue that the Appeal Board must consider, or because it is relevant
and
has only recently become available.
[9]
The Board of Appeal has a discretion to permit the introduction of
additional material taking into account its relevance and questions
of prejudice that may be caused by permitting it to be introduced.
[12]
In my view none of that
means that the Registrar becomes a party to the appeal proceedings in
the sense that would permit it now
to adopt an adversarial position
vis-à-vis the Appeal Board. Such a status would be
inconsistent with the role of the Registrar
as an impartial regulator
acting in the interests of the industry generally and, when dealing
with an application such as this,
acting as a neutral decision maker,
bearing in mind the interests of all parties to the fund in question.
That the Registrar is
obliged to adopt an impartial stance when
considering an application under s 14 of the Act goes without
saying. Indeed if
the Registrar did not do so that would be a ground
of review under s 6(2)(
a
)(iii)
of PAJA.
[10]
As that is undoubtedly the case, I find it difficult to see on what
basis the Registrar can become a party to the merits of the
decision
in an adversarial sense when that decision is taken on appeal. The
position is wholly different from that which pertains
in a review,
where the lawfulness of the procedure adopted by the Registrar would
be attacked. Recognising that a decision maker
has
locus
standi
to defend
the lawfulness of their conduct is different from recognising them as
having
locus standi
to defend the
correctness of their decision. But in an appeal to the Board of
Appeal the latter is the issue.
[13
]
There is a further problem that arises if
the Registrar has
locus standi
to challenge the decision of the Appeal Board on review. It is well
illustrated by this case. In the Registrar’s founding
affidavit
she charged the Appeal Board with misdirections of fact and law; of
taking into account irrelevant considerations and
ignoring relevant
considerations; and finally of taking a decision that was so
unreasonable that no reasonable person could have
so exercised their
powers. These allegations were addressed to an Appeal Board chaired
by a former President of this court. While
that does not render the
Appeal Board immune from criticism, if the Registrar is free to
challenge in the courts the decisions
of the Appeal Board established
by Parliament to hear appeals against her decisions, that will serve
to undermine public confidence
in the Appeal Board. After all, if the
Registrar regards the decisions of the Appeal Board as grossly
unreasonable, why should
the public have any faith in them?
[14]
But the Registrar’s
claim lies under PAJA and the question of
locus
standi i
s therefore
to be answered in terms of s 38 of the Constitution.
[11]
Two possible grounds for
locus
standi
arise there.
The first would be that the Registrar is acting in her own
interest.
[12]
In
Giant
Concerts
[13]
the Constitutional Court held that whilst this might not require the
same sufficient, personal and direct interest as the common
law, it
still required that the litigant must show that the contested legal
decision directly affects their rights or interests,
or potential
rights or interests. But the Registrar’s rights and interests,
actual or potential, are not affected by the
Appeal Board’s
decision. She has no interest in the Fund other than as regulator and
this case raises no regulatory concerns.
The parties interested in
the decision are the Fund, the pensioners and Tellumat, as the
employer.
[15]
It was suggested that the Registrar would
be bound by any underlying principle articulated by the Appeal Board
in its decision.
But the principle of
stare
decisis
is not applicable in relation
to the decisions of the Appeal Board.
[16]
The other possibility
recognised in the Constitution is that the Registrar is acting in the
public interest.
[14]
Counsel urged upon us that the Registrar performs important functions
and has an interest, shared by the public, in the correctness
of her
decisions. My difficulty with this is that the existence of the
Appeal Board presupposes that the legislature was of the
view that
some of the decisions by the Registrar might be incorrect, and that
there needed to be a mechanism to challenge and correct
those
decisions. The view of the legislature was that when an appeal
against a decision of the Registrar succeeds, the Registrar
is wrong
and the Appeal Board right, or expressed more charitably, as between
the Appeal Board and the Registrar the Appeal Board’s
decision
is to be taken as correct.
[15]
[17]
Counsel referred us to
a number of cases dealing with
locus
standi
while
accepting that none of them were on all fours with this case. He
cited
McLoughlin
,
[16]
but the question in issue there was whether a statutory council that
had conducted disciplinary proceedings against a medical practitioner
and imposed sanctions, could appeal to the then Appellate Division
against a judgment setting aside its decisions on review. Not
surprisingly the court held that, as a party to the review
proceedings it had a right to do so.
[18]
Of rather more
relevance to the situation in the present case is the earlier
decision in
Minister
of Labour.
[17]
The Industrial Registrar, under the old Industrial Conciliation
Act,
[18]
refused to register certain amendments to a trade union’s
constitution. An appeal to the Minister of Labour was dismissed
and
the union pursued a statutory appeal to the Supreme Court. Under the
terms of the statute the decision of the court was deemed
to be that
of the Minister, and the decision of the Minister was deemed to be
the decision of the Registrar. This court held that
this necessarily
excluded a further appeal by the Minister. The parallel with this
case lies in the fact that under s 26B(15) the
decision of the Appeal
Board either confirms or replaces the decision of the Registrar.
Although there is no equivalent deeming
provision, permitting the
Registrar to challenge that decision in effect means that the
Registrar is challenging her own decision.
[19]
The other case on which
counsel placed considerable reliance was
Brits
Town Council v Pienaar NO.
[19]
He particularly stressed a sentence in the judgment of Roper J,
[20]
where the judge said that a town council, as the body having
jurisdiction over the issue of trading licences, had an interest in
the grant or refusal of a certificate by the Administrator of the
province compelling it to issue such a licence. But the context
was
different and did not involve an appeal against the council’s
refusal of a licence. Three times the council refused an
application
for the issue of a motor garage and general dealer’s licence.
Under the Ordinance the Administrator could issue
a certificate
compelling the council to issue a licence if its grounds for refusal
had been that there were sufficient such licences
in the
municipality. Purporting to act in terms of this provision, but
without asking the council why it had refused the licences,
the
Administrator issued a certificate. The council challenged that
decision as unlawful and beyond the powers of the Administrator.
It
was in that context and in relation to a challenge to the council’s
locus standi
that
Roper J said that it had an interest in the grant or refusal of
a certificate because it was the authority responsible
for licencing
in the town. The case is entirely distinguishable.
[20]
There is a brief
statement in
Rajah &
Rajah
,
[21]
that indicates that a local authority with a licencing function may
have
locus standi
to
review and set aside the grant of a licence on the basis that it is
in the public interest for it to oversee the issue of such
licences.
But the context is again different and the case was decided on the
basis that the council had suffered no prejudice as
a result of the
issue of the licence. As it was not prejudiced, and on the face of it
could not be prejudiced, by the issue of
the licence it is not clear
why its licencing function should have given it
locus
standi
to bring
review proceedings.
[21]
Lastly, it is necessary
to have regard to the decision in this court in
Pepcor
.
[22]
The case also arose from an application to the Registrar under s 14
of the Act. Some years after the Registrar issued a certificate
under
that section it appeared that the certificate had been issued on the
basis of information that was inaccurate and misleading.
The
Registrar accordingly applied to set the certificate aside. His
locus
standi
to do so was
challenged. The court held that he had
locus
standi
on the basis
that he had committed an irregular act in issuing the approval in the
first instance and therefore had
locus
standi
in the
public interest to remedy the situation by seeking to set the
approval aside by way of review proceedings. This constitutes
an
exception to the principle that once a public body or functionary has
exercised their powers they are
functus
officio
and their
decision may only be set aside by a court at the instance of a third
party having a legal interest in that decision.
[23]
[22]
Once again that case is distinguishable
from this situation. The Registrar was seeking to set aside his own
decision that had been
made irregularly. Here the Registrar seeks to
set aside a decision of the Appeal Board in order to vindicate a
decision that the
Appeal Board decided was incorrect. Counsel argued
that because there was
locus standi
in the former situation and also when the Appeal Board was taken on
review after upholding the Registrar’s decision, it necessarily
followed that the Registrar had
locus
standi
in this case. I do not agree.
The answer to the question whether a party has
locus
standi
will vary depending on the
nature of the interest that the party seeks to vindicate.
[23]
In order to determine
the nature of that interest one must go back to the purpose behind
the establishment of the Appeal Board and
its powers under s 26B(15)
of the FSB Act. The purpose is clear. It is to enable persons
affected by decisions of the Registrar
[24]
to challenge those decisions before a specially constituted body. The
Appeal Board is to decide, on the information before the
Registrar,
what decision the Registrar should have made. And, once the Appeal
Board has spoken, either the Registrar’s decision
stands,
because it has been confirmed, or it is substituted by the Appeal
Board’s decision. In the latter event the Appeal
Board’s
decision stands in the place of the decision of the Registrar. In
effect it becomes the Registrar’s decision.
That much is clear
from the fact that it does not direct the Registrar to act
differently, but directs that its own order be given
effect.
[25]
[24]
Recognising that the Registrar has
locus
standi
to challenge the decision by the
Appeal Board would upset the statutory relationship between the two
as set out in the FSB Act.
It would be inconsistent with the purpose
of creating the Appeal Board and has the potential to undermine it in
performing its
function. If one of the parties affected by it is
unhappy with a decision by the Appeal Board they are free to review
it. Recognising
an independent right in the Registrar would permit of
challenges to a decision accepted by the parties affected thereby.
The Registrar
does not point to any aspect of her regulatory
functions that would be detrimentally affected if she cannot
challenge decisions
by the Appeal Board. Whilst the absence of
authority to support the Registrar’s position is not of itself
fatal it provides
a further pointer to the conclusion that the
Registrar does not have
locus standi
in
this situation.
[25]
This conclusion should not be a hindrance
to the performance by the Registrar of her functions. It relates only
to a narrow area
where the Registrar disagrees with a decision of the
Appeal Board overturning one of her decisions. It will not affect the
Registrar’s
ability when she and the Appeal Board see eye to
eye to defend that position in review proceedings. Nor will it
prevent the Registrar
from bringing proceedings in other instances
relating to her performance of her statutory functions.
[26]
In the result I hold that the Registrar
lacked
locus standi
to
institute the review proceedings in this case. The appeal is
dismissed.
M
J D WALLIS
JUDGE
OF APPEAL
Appearances
For
appellant:
F C SNYCKERS SC (with him S KHUMALO
Instructed
by:
Rooth
& Wessels Attorneys, Pretoria;
McIntyre
& Van der Post, Bloemfontein
For
respondents: No
appearance.
[1]
Tellumat (Pty) Ltd v Appeal Board of the
Financial Services Board and Others
[2015]
ZASCA 202.
[2]
Financial Services Board Act
97 of 1990.
[3]
Pension Funds Act 24 of 1956
.
[4]
Tikly and Others v Johannes NO and Others
1963 (2) SA 588
(T) at 590F-H.
[5]
S A Medical & Dental Council v McLoughlin
1948 (2) SA 355
(A) (
McLoughlin
)
at 370-1.
[6]
The
Promotion of Administrative Justice Act 3 of 2000
.
[7]
Edcon Pension Fund v
Financial Services Board of Appeal and Another
[2008]
ZASCA 65
;
2008 (5) SA 511
(SCA);
National
Tertiary Retirement Fund v Registrar of Pension Funds
[2009]
ZASCA 41
;
2009 (5) SA 366
(SCA);
Registrar
of Pension Funds v ICS Pension Fund
[2010]
ZASCA 63
;
2010 (4) SA 488
(SCA) are all cases of this type,
[8]
The decision in question was
taken by the previous registrar, Mr Jurgen Boyd, but the current
registrar, Ms Rosemary Hunter, is
pursuing the review.
[9]
This is not intended to be an exhaustive statement of the
circumstances in which additional material may be introduced.
[10]
The
Promotion of Administrative Justice Act 3 of 2000
.
[11]
See
Giant Concerts CC v Rinaldo Investments
(Pty) Ltd
[2012] ZACC 28
;
2013 (3) BCLR 251
(CC) paras 41 and 43;
Tulip Diamonds FZE v
Minister of Justice and Constitutional Development and Others
[2013]
ZACC 19
;
2013 (10) BCLR 1180
(CC) para 31.
[12]
Section 38(
a
) of the
Constitution.
[13]
Para 41.
[14]
Section 38(
d
) of the
Constitution.
[15]
This is reminiscent of
Justice
Jackson’s aphorism about the United States Supreme Court that
‘We are not final because we are infallible,
but we are
infallible only because we are final’.
Brown
v Allen
344
US 443
at 540.
[16]
At 370-1. See also
Maske
v The Aberdeen Licencing Court
1930
AD 30.
[17]
The
Minister
of Labour v Building Workers’ Industrial Union
1939
AD 328.
[18]
Industrial Conciliation Act 36 of 1937.
[19]
Brits Town Council v Pienaar NO and Another
1949 (1) SA 1004
(T).
[20]
At 1024-5.
[21]
Rajah & Rajah (Pty) Ltd v Ventersdorp
Municipality and Others
1961 (4) SA 402
(A)
at 407E.
[22]
Pepcor Retirement Fund and Another v
Financial Services Board and Another
[2002]
ZASCA 198
;
2003 (6) SA 38
(SCA)
[2003] 3 All SA 21
(SCA) at para 13.
[23]
See also
Transair
(Pty) Ltd v National Transport Commission and
another
1977 (3) SA 784
(A)
at 792H–793G;
Municipal
Manager: Qaukeni Local Municipality v F V Guard Trading CC
[2009]
ZASCA 66
;
2010 (1) SA 356
(SCA);
[2010] 4 All SA 213
(SCA) at paras
23-24.
[24]
The definition of ‘decision maker’ in section 1 means
that the right of appeal in s 26 is far wider than a right
of
appeal against decisions of the Registrar and extends to the
registrars of other financial institutions.
[25]
Section 26B(15)(
a
) of
the FSB Act.