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[2012] ZASCA 13
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Natal Joint Municipal Pension Fund v Endumeni Municipality (920/2010) [2012] ZASCA 13; [2012] 2 All SA 262 (SCA); 2012 (4) SA 593 (SCA) (16 March 2012)
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1
REPORTABLE
THE
SUPREME COURT OF APPEAL OF SOUTH AFRICA
JUDGMENT
Case
no: 920/2010
In
the matter between:
NATAL
JOINT MUNICIPAL PENSION FUND
…........................
Appellant
and
ENDUMENI
MUNICIPALITY
…..................................................
Respondent
Neutral
citation:
Natal Joint Municipal Pension Fund v Endumeni
Municipality
(920/2010)
[
2012] ZASCA 13
(15 March 2012)
Coram:
FARLAM, VAN HEERDEN, CACHALIA, LEACH and WALLIS JJA
.
Heard
:
23 February, 2012
Delivered
:
16 March 2012
Summary:
Pension Fund for municipal employees – payment of adjusted
contribution by municipality – whether such contribution
recoverable in terms of the proviso to regulation 1(xxi)(h) of the
regulations governing the fund – proper approach to
interpretation
of documents – whether the proviso was valid in
terms of
s 12(1)
of the
Pension Funds Act 24 of 1956
–
whether the requirements for invoking the proviso were satisfied.
ORDER
On
appeal from:
KwaZulu-Natal High Court, Pietermaritzburg (Swain J
sitting as court of first instance):
The
appeal succeeds with costs, such costs to include those consequent
upon the employment of two counsel.
The
order of the trial court is set aside and replaced by the following
order:
‘
Judgment
is granted in favour of the plaintiff and against the defendant for:
Payment
of the sum of R2 573 740;
Interest
on the said sum of R2 573 740 at a rate of 15.5% per annum from 15
October 2007 to the date of payment;
Costs
of suit, such costs to include those consequent upon the employment
of two counsel.’
JUDGMENT
WALLIS
JA (FARLAM, VAN HEERDEN, CACHALIA and LEACH JJA concurring)
[1]
Two pension funds, the Superannuation Fund and the Retirement Fund,
1
and one provident fund, the Provident Fund,
2
established by legislation for employees of local authorities in
KwaZulu-Natal, are managed in terms of a single set of regulations.
They are referred to collectively as the Natal Joint Municipal
Pension Fund (the Fund), the appellant in this appeal. In addition
to
the regulations for the management and administration of the three
funds, each separate fund has its own set of governing regulations
dealing with the operation of that fund and in particular the
contributions payable to that fund by members and employers and the
benefits due to members of that fund. All three funds are registered
as pension funds in terms of the Pension Funds Act 24 of 1956
(the
Act). The Endumeni Municipality (Endumeni), the respondent, is a
participant in the Fund and its employees are entitled to
select
which of the three funds they will join. The dispute between Endumeni
and the Fund concerns an attempt by the latter to
recover an adjusted
contribution imposed on Endumeni under the regulations governing the
Superannuation Fund. The attempt failed
before Swain J and the
present appeal is with his leave. The dispute arises in the following
circumstances.
[2]
In real life it is impossible for a person who is only 43 years old
to have 45 years of service with their employer. However,
in the
arcane calculations that actuaries are required to undertake in
relation to pension funds, that is not only possible but
entirely
legitimate. By changing his membership from the Superannuation Fund
to the Provident Fund; reducing his pensionable emoluments
to R5 000
per month whilst a member of the latter and then rejoining the
Superannuation Fund and, with immediate effect, increasing
his
pensionable emoluments to R34 000 per month, Mr Bart Maltman, a
senior employee with Endumeni, was able to secure that
he was
credited in the Superannuation Fund with 45 years service, although
he was only 43 years old. A year later he resigned his
employment and
received a lump sum withdrawal benefit of some R2.7 million. To some
degree his resignation was stage-managed in
order to enable him to
claim this benefit because he resigned on the basis of advice he
received from within the municipality and
was immediately re-employed
on a contract basis in his former position. However all concerned
accept that his conduct was legitimate
and that he was entitled to
the benefit he received.
[3]
The amount of Mr Maltman’s withdrawal benefit was determined by
two factors: the years of service attributed to him and
his final
average pensionable emoluments in the twelve months prior to his
resignation. The withdrawal benefit was accordingly
calculated on the
basis of some 46 years service and average pensionable emoluments of
around R34 000 per month. Whilst this
is accepted as legitimate
and proper it gave rise to a problem for the Fund. That problem arose
because it had not received the
benefit of contributions by Mr
Maltman and Endumeni for 46 years and the contributions made during
his membership of the Provident
Fund had been reduced to well below
his actual earnings. As the premise underlying the operation of a
defined benefit pension fund,
such as the Superannuation Fund, is
that the contributions of the member and the member’s employer,
plus the investment earnings
of the fund, should be sufficient to
provide the agreed benefits, the result in the case of Mr Maltman was
that the lump sum withdrawal
benefit paid to him was underfunded.
Absent the Fund’s ability to rely on the provision in the
regulations that is the subject
of the present litigation, there were
only two ways in which this problem could be addressed. Either the
shortfall had to be recovered
from a surplus in the Superannuation
Fund,
3
or it had to be recovered by way of a surcharge on all the
municipalities that participate in the Fund. In either event other
members or other employers would shoulder the cost of providing Mr
Maltman with this benefit.
[4]
This problem was not confined to Mr Maltman but arose in relation to
a number of municipal employees who took advantage of the
same or
similar manoeuvres to secure enhanced benefits from the
Superannuation Fund or the Retirement Fund. However Mr Maltman’s
was the most extreme case. On the advice of Mr Els, who has acted for
many years as the actuary appointed by the committee of management
of
the Fund (the committee) and the valuator in terms of s 9A of
the Act for the three funds, the committee sought to claim
an
adjusted contribution from Endumeni under the proviso to the
definition of ‘pensionable emoluments’ in regulation
1(xxi)(h) of the regulations governing the operations of the
Superannuation Fund. This proviso had been inserted
4
in the regulations with effect from 1 July 2004.
[5]
Endumeni resisted the claim on three broad grounds. First it said
that the amendment to the regulations inserting the proviso
was not
registered in terms of s 12(4) of the Act until 17 February
2009, by which stage pleadings had closed and
litis contestatio
had been reached. It contended that until that stage the proviso
was invalid by virtue of the provisions of s 12(1) of the Act
and the Fund therefore had no cause of action: and that, whatever the
consequence of the subsequent registration after
litis
contestatio
, it could not operate retrospectively to validate the
existing defective cause of action. Second it contended that the
regulation,
properly interpreted, did not permit the Fund to make the
claim that it did for an adjusted contribution. Third, even if it
did,
it said that the necessary formalities for the exercise of that
power were not satisfied. In order to address these arguments it
is
necessary to have regard to the regulations governing the
Superannuation Fund.
The
regulations
[6]
Whilst the regulation on which the Fund relies in advancing its claim
takes the form of a proviso and it is convenient to use
that term to
describe it, in truth it is not a proviso properly so-called. A
proviso would serve to qualify and limit the scope
of the definition
to which it was appended,
5
but this is an independent provision dealing with the power of the
committee of the Superannuation Fund to direct a local authority
to
pay an adjusted contribution. It reads as follows:
‘…
provided
further that
should at any time the pensionable emoluments of a member including a
section 57 contract employee, increase in excess of that
assumed by
the actuary from time to time for valuation purposes in terms of
Regulation 13, then the committee, on the advice of
the actuary, may
direct that the local authority employing such member pay an adjusted
contribution in terms of Regulation 21 to
the Fund.’
The
Fund’s case is that when, on 1 July 2005, Mr Maltman rejoined
the Superannuation Fund and adjusted his pensionable emoluments
from
R5 000 per month to R34 000 per month there was an increase
in his pensionable emoluments in excess of that assumed
by the
actuary in making his most recent valuation of the Superannuation
Fund and that this increase warranted the committee directing
Endumeni to pay an adjusted contribution.
[7]
The provisions of the regulations dealing with contributions are
central to the issues in the case. They are to be found in
regulations 19 and 22 in respect of members and regulation 21 in
respect of local authorities. Under regulation 19(1), members
must
contribute to the Superannuation Fund an amount equal to 9¼
per cent of their pensionable emoluments. This is deducted
either
monthly or at shorter intervals, no doubt depending on whether they
are weekly paid or monthly paid staff. In addition,
under regulation
19(2), a person who becomes a member of the Superannuation Fund after
the introduction of the regulations
6
may elect to make an additional contribution in respect of prior
service with a local authority. Under regulation 22(2) a member
placed on leave without pay may, with the permission of the committee
of the Superannuation Fund, continue to make contributions
to it on
the basis of their full pensionable emoluments. It is apparent that
save in these two exceptional cases the members’
monthly
contributions are relatively stable.
[8]
The contributions to be made by local authorities in terms of
regulation 21 are as follows:
‘
A
local authority shall pay to the Fund within seven days after the
expiration of the period in respect of which the contribution
is
being paid:-
the
contributions and interest paid by the members in the preceding
calendar month;
an
amount equal to the following proportion of the contributions paid
in terms of regulation (19)(1) by the members in its service
: ...
From
1 July 1992 1.946;
an
amount equal to the proportion in paragraph (b) of the contributions
and interest paid in terms of regulations 19(2) and 22
by the
members in its service;
such
surcharge on its contributions in terms of paragraphs (b) and (c) as
may be agreed to by the local authorities in general
committee on
the advice of the actuary in order to provide the whole or part of
bonus additions made in terms of Regulation 37;
provided
that
if the member is paying by instalments,
the local authority may make a lump sum payment to the fund in lieu
of its instalments and
interest.’
These
contributions will necessarily be less consistent from month to month
than those of individual members. There are a number
of variables
that create that situation. They are affected by changes in the
make-up of the workforce. This flows from staff leaving
the employ of
the local authority by virtue of death, retirement, resignation or
dismissal and by recruitment of new staff. They
are affected by
members switching their membership between the three funds
(Superannuation, Retirement or Provident) or adjusting
the level of
their pensionable contributions. If members make contributions under
either regulation 19(2) or regulation 22(2)
the local authority
is compelled to make matching contributions or, if those payments are
being made in instalments, it may elect
to add a lump sum to its
monthly contribution rather than to match the member’s
instalments. All of these factors (and perhaps
others I have not
mentioned), together with any surcharge payable from time to time,
7
will influence the amount that each local authority pays to the
Superannuation Fund each month by way of a contribution. Taking
all
relevant factors into account, the local authority must calculate an
amount each month that represents its contributions to
the
Superannuation Fund. No doubt similar exercises are done in relation
to the other two funds but that is immaterial for present
purposes.
Whilst the variances may not be great from month to month
8
the fact is that, unlike employee members, the local authority’s
contributions are not constant but variable.
[9]
The primary question for determination in this appeal is what is
meant by the proviso. However, before reaching that question
it is
necessary to determine whether the contention that there was no valid
claim at the time of
litis contestatio
is correct, because if
it is the question of construction does not arise. I turn to that
initial question.
Was
the proviso in force?
[10]
In terms of s 4(1) of the Local Government Superannuation Ordinance
24 of 1973 the MEC for Local Government is entitled to
make
regulations governing the operation of the Superannuation Fund. Those
regulations may include regulations governing the contributions
to be
made by members to the Superannuation Fund (s 4(1)(d)) and may
provide for any matter that the MEC regards as necessary
or expedient
for the purposes of that fund (s 4(1)(o)). In terms of s 4(2):
‘
Any
regulations made by the [MEC] in terms of any of the provisions of
subsection (1) may be made with effect from any date whether
prior or
subsequent to the date of promulgation thereof.’
[11]
On 29 July 2004 the MEC promulgated various amendments and additions
to the regulations governing the Superannuation Fund including
the
insertion of the proviso. The notice provides that the effective date
for the proviso to come into force is was July 2004.
Thereafter the
Superannuation Fund operated in terms of the amendments and additions
promulgated by the MEC. Indeed the calculation
of Mr Maltman’s
withdrawal benefit took place partly in terms of one of the other
amendments introduced by the MEC.
[12]
The Fund contends that this is sufficient to render the amendments,
and in particular the insertion of the proviso, operative
from 1 July
2004, and hence operative at the time of Mr Maltman’s transfer
to the Superannuation Fund and his subsequent
withdrawal from that
fund. Endumeni disputes this. It does so on the basis that the
Superannuation Fund is registered in terms
of the Act and as such is
subject to its provisions. It relies on
s 12(1)(b)
of the
Pension Funds Act, which
provides that no alteration, rescission or
addition to the rules of a registered fund shall be valid ‘unless
it has been
approved by the Registrar and registered’ and
contends that, until the Registrar approved the amendments embodying
the proviso,
it was not a valid provision in the rules of the
Superannuation Fund and could not be invoked to direct Endumeni to
pay an adjusted
contribution. The invalidity existed from the time
action was commenced until after the close of pleadings (
litis
contestatio
) and could not be cured by the subsequent
registration of the amendment. It was accepted that if the point was
upheld there was
a possibility of the Fund instituting a fresh action
but Endumeni adopted the stance that it would cross that bridge when
it came
to it.
[13]
In the pleadings the only issue was the wording of the proviso at the
relevant time. At the pre-trial conference Endumeni sought
and
obtained an admission that ‘through the period from 1 July 2004
until 1 November 2008’ it read as set out above.
Accordingly
the parties proceeded to trial on the footing that the proviso was in
force throughout the relevant period. On the
first day of the trial
the parties agreed a list of issues and included this one without any
amendment to the pleadings. In so
doing they expanded the issues in
dispute to go beyond those existing at the close of pleadings. It is
permissible for parties
to do this in an informal way, as a host of
cases demonstrates, but its implications do not appear to have been
considered in the
present case.
[14]
The origin of the concept of
litis contestatio
is the
formulary procedure of the Roman law in which the litigants appeared
before the praetor, who formulated the issues that the
judge had to
decide. Once the issues had been formulated the stage of
litis
contestatio
was reached.
9
In
Government of the Republic of South Africa v Ngubane
10
Holmes JA said:
‘
In
modern practice
litis
contestatio
is
taken as being synonymous with close of pleadings, when the issue is
crystallised and joined … And in modern terminology,
the
effect of
litis
contestatio
is
to “freeze the plaintiff's rights as at that moment”.’
There
is no problem with this formulation when parties abide by their
pleadings and conduct the trial accordingly. Frequently, however,
they do not do so because other issues arise that they wish to
canvass and either formally, by way of an amendment to the pleadings,
or informally, as in the present case, the scope of the litigation is
altered. Here the defendant sought to add new issues specifically
relating to the validity of the amendment that introduced the
proviso. Up until then the parties were at one that the proviso was
in force and available to be relied on by the Fund, subject to the
issues around its interpretation. If the plaintiff’s rights
were frozen at the close of pleadings the basis would have been that
the proviso was in force. It would make a mockery of the principles
of
litis contestatio
to permit Endumeni to depart from its
previous stance by challenging the validity of the proviso, but to
bind the Fund to a factual
situation at the close of pleadings that
had altered by the time that Endumeni sought to challenge the
validity of the proviso.
[15]
The answer is that when pleadings are re-opened by amendment or the
issues between the parties altered informally, the initial
situation
of
litis contestatio
falls away and is only restored once the
issues have once more been defined in the pleadings or in some other
less formal manner.
That is consistent with the circumstances in
which the notion of
litis contestatio
was conceived. In Roman
law, once this stage of proceedings was reached, a new obligation
came into existence between the parties,
to abide the result of the
adjudication of their case. Melius de Villiers
11
explains the situation as follows:
‘
Through
litiscontestation an action acquired somewhat of the nature of a
contract; a relation was created resembling an agreement
between the
parties to submit their differences to judicial investigation …'
When
the parties decide to add to or alter the issues they are submitting
to adjudication, then the ‘agreement’ in regard
to those
issues is altered and the consequences of their prior arrangement are
altered accordingly. Accordingly, when in this case
they chose to
reformulate the issues at the commencement of the trial, a fresh
situation of
litis contestatio
arose and the rights of the
Fund as plaintiff were fixed afresh on the basis of the facts
prevailing at that stage. Those facts
were that the amendment
embodying the proviso had been registered at least a year earlier
with retrospective effect to 1 July
2004, which was prior to all
relevant events in this case. Had this been appreciated when the list
of issues was prepared the point
would not have been taken. It was
rightly not suggested that any initial defect in the Fund’s
reliance on the proviso would
not be remedied by registration of the
amendment prior to
litis contestatio.
[16]
That conclusion renders it unnecessary to consider an argument
advanced on behalf of the Fund that s 12(1) of the Act
does not
apply to it because its rules have their origin in regulations made
by the MEC in terms of the governing provincial legislation.
The
contention has potentially far-reaching implications for the
regulation of a number of pension funds in South Africa and it
would
be undesirable to consider it without the input as
amicus curiae
of the Registrar of Pension Funds. Although the possibility of a
challenge to the retrospectivity of the amendment was raised in
Endumeni’s heads of argument, and it was suggested that the
decision in
Shell and BP Petroleum Refineries (Pty) Ltd v Murphy
NO
12
was incorrect, this was not pursued in argument. It is accordingly
unnecessary to go into these questions beyond saying that they
might
require a challenge to the constitutionality of s 12(4) of the
Act. I can instead pass to the question of interpretation
of the
proviso.
The
proper approach to interpretation
[17]
The trial judge said that the general rule is that the words used in
a statute are to be given their ordinary grammatical meaning
unless
they lead to absurdity. He referred to authorities that stress the
importance of context in the process of interpretation
and concluded
that:
‘
A
court must interpret the words in issue according to their ordinary
meaning in the context of the Regulations as a whole, as well
as
background material, which reveals the purpose of the Regulation, in
order to arrive at the true intention of the draftsman
of the Rules.’
Whilst
this summary of the approach to interpretation was buttressed by
reference to authority it suffers from an internal tension
because it
does not indicate what is meant by the ‘ordinary meaning’
of words, whether or not influenced by context,
or why, once
ascertained, this would coincide with the ‘true’
intention of the draftsman. There were similar difficulties
in the
heads of argument on behalf of Endumeni. In one paragraph they urged
us, on the basis of the evidence of the actuary who
advised the Fund
to adopt the approach, that the proviso was not intended to cater for
‘a Maltman type of event’ and
in another cited
authorities for the rule that the ‘ordinary grammatical meaning
of the words used must be adhered to’
and can only be departed
from if that leads to an absurd result. In view of this it is
necessary to say something about the current
state of our law in
regard to the interpretation of statutes and statutory instruments
and documents generally.
[18]
Over the last century there have been significant developments in the
law relating to the interpretation of documents, both
in this country
and in others that follow similar rules to our own.
13
It is unnecessary to add unduly to the burden of annotations by
trawling through the case law on the construction of documents
in
order to trace those developments. The relevant authorities are
collected and summarised in
Bastian Financial Services (Pty) Ltd v
General Hendrik Schoeman Primary School.
14
The present state of the law can be expressed as follows.
Interpretation is the process of attributing meaning to the words
used
in a document, be it legislation, some other statutory
instrument, or contract, having regard to the context provided by
reading
the particular provision or provisions in the light of the
document as a whole and the circumstances attendant upon its coming
into existence. Whatever the nature of the document, consideration
must be given to the language used in the light of the ordinary
rules
of grammar and syntax; the context in which the provision appears;
the apparent purpose to which it is directed and the material
known
to those responsible for its production. Where more than one meaning
is possible each possibility must be weighed in the
light of all
these factors.
15
The process is objective not subjective. A sensible meaning is to be
preferred to one that leads to insensible or unbusinesslike
results
or undermines the apparent purpose of the document. Judges must be
alert to, and guard against, the temptation to substitute
what they
regard as reasonable, sensible or businesslike for the words actually
used. To do so in regard to a statute or statutory
instrument is to
cross the divide between interpretation and legislation. In a
contractual context it is to make a contract for
the parties other
than the one they in fact made. The ‘inevitable point of
departure is the language of the provision itself’,
16
read in context and having regard to the purpose of the provision and
the background to the preparation and production of the document.
[19]
All this is consistent with the ‘emerging trend in statutory
construction’.
17
It clearly adopts as the proper approach to the interpretation of
documents the second of the two possible approaches mentioned
by
Schreiner JA in
Jaga v Dönges NO and another
,
18
namely that from the outset one considers the context and the
language together, with neither predominating over the other. This
is
the approach that courts in South Africa should now follow, without
the need to cite authorities from an earlier era that are
not
necessarily consistent and frequently reflect an approach to
interpretation that is no longer appropriate. The path that Schreiner
JA pointed to is now received wisdom elsewhere. Thus Sir Anthony
Mason CJ said:
‘
Problems
of legal interpretation are not solved satisfactorily by ritual
incantations which emphasise the clarity of meaning which
words have
when viewed in isolation, divorced from their context. The modern
approach to interpretation insists that context be
considered in the
first instance, especially in the case of general words, and not
merely at some later stage when ambiguity might
be thought to
arise.’
19
More
recently Lord Clarke SCJ said ‘the exercise of
construction is essentially one unitary exercise’
.
20
[20]
Unlike the trial judge I have deliberately avoided using the
conventional description of this process as one of ascertaining
the
intention of the legislature or the draftsman,
21
nor would I use its counterpart in a contractual setting, ‘the
intention of the contracting parties’, because these
expressions are misnomers, insofar as they convey or are understood
to convey that interpretation involves an enquiry into the
mind of
the legislature or the contracting parties.
22
The reason is that the enquiry is restricted to ascertaining the
meaning of the language of the provision itself. Despite their
use by
generations of lawyers to describe the task of interpretation it is
doubtful whether they are helpful. Many judges and academics
have
pointed out
23
that there is no basis upon which to discern the meaning that the
members of Parliament or other legislative body attributed to
a
particular legislative provision in a situation or context of which
they may only dimly, if at all, have been aware. Taking Parliament
by
way of example, legislation is drafted by legal advisers in a
ministry, redrafted by the parliamentary draftsmen, subjected
to
public debate in committee, where it may be revised and amended, and
then passed by a legislative body, many of whose members
have little
close acquaintance with its terms and are motivated only by their or
their party’s stance on the broad principles
in the
legislation. In those circumstances to speak of an intention of
parliament is entirely artificial.
24
The most that can be said is that in a broad sense legislation in a
democracy is taken to be a reflection of the views of the electorate
expressed through their representatives, although the fact that
democratically elected legislatures sometimes pass legislation
that
is not supported by or unpopular with the majority of the electorate
tends to diminish the force of this point. The same difficulty
attends upon the search for the intention of contracting parties,
whose contractual purposes have been filtered through the language
hammered out in negotiations between legal advisers, in the light of
instructions from clients as to their aims and financial advice
from
accountants or tax advisers, or are embodied in standard form
agreements and imposed as the terms on which the more powerful
contracting party will conclude an agreement.
25
[21]
Alive to these difficulties there have been attempts to justify the
use of the expression ‘the intention of the legislature’
on broader grounds relating to the manner in which legislation is
drafted and passed and the relationship between the legislature
as
lawgiver and the judiciary as the interpreter of laws. Francis
Bennion, an eminent parliamentary draftsman and the author of
a
standard work on statutory interpretation,
26
says that ‘Legislative intention is not a myth or fiction, but
a reality founded on the very nature of legislation’.
He bases
this on the undoubtedly correct proposition that legislation is the
product of the intentional volition of all participants
in the
legislative process so that:
‘…
Acts
are produced down to the last word and comma, by people. The law
maker may be difficult to identify. It is absurd to say that
the law
maker does not exist, has no true intention or is a fiction.’
However,
that criticism misses the point. Critics of the expression ‘the
intention of the legislature’ are not saying
that the law-maker
does not exist or that those responsible for making a particular law
do not have a broad purpose that is encapsulated
in the language of
the law. The stress placed in modern statutory construction on the
purpose of the statute and identifying the
mischief at which it is
aimed should dispel such a notion. The criticism is that there is no
such thing as the intention of the
legislature in relation to the
meaning of specific provisions in a statute, particularly as they may
fall to be interpreted in
circumstances that were not present to the
minds of those involved in their preparation. Accordingly to
characterise the task of
interpretation as a search for such an
ephemeral and possibly chimerical meaning is unrealistic and
misleading.
[22]
The other objection raised by Bennion,
27
that the idea that there is no true intention behind an Act of
Parliament is undemocratic, suggests that the debate is being
conducted
at cross-purposes. In a constitutional democracy such as
South Africa, or the United Kingdom, which is Bennion’s
terrain,
no-one denies that statutes and statutory instruments
emanating from Parliament and other legislative bodies are the
product of
the democratic process. Interpretation always follows upon
the democratic process leading to legislation and is, in that sense,
a secondary and subordinate process. The interpreter does not write
upon a blank page, but construes the words written by others.
Nor is
it denied that the broad purpose of the relevant legislative body (or
legislator in the case of regulations or rules made
by a functionary)
is highly relevant to the process of interpretation, as is the
mischief at which the legislation is aimed. Courts
have repeatedly
affirmed their importance and thereby respect the legislature’s
role in a democracy. Courts do not set out
to undermine legislative
purpose but to give it effect within the constraints imposed by the
language adopted by the legislature.
If ‘the intention of the
legislature’ was merely an expression used to encompass these
matters as a form of convenient
shorthand perhaps the matter would
not have provoked so much comment. But the problem lies in it being
said that the primary or
‘golden’ rule of statutory
interpretation is to ascertain the intention of the legislature. At
one extreme, as has
been the case historically, it leads to a studied
literalism and denies resort to matters beyond the ‘ordinary
grammatical
meaning’ of the words. At the other judges use it
to justify first seeking to divine the ‘intention’ of the
legislature
and then adapting the language of the provision to
justify that conclusion.
28
It has been correctly said that:
‘
It
is all too easy for the identification of purpose to be driven by
what the judge regards as the desirable result in a specific
case.’
29
When
that occurs it involves a disregard for the proper limits of the
judicial role.
[23]
Three Australian judges have sought to explain the use of the
expression on other grounds. Gleeson CJ in
Singh v The
Commonwealth
,
30
said:
‘…
references
to intention must not divert attention from the text, for it is
through the meaning of the text, understood in the light
of
background, purpose and object, and surrounding circumstances, that
the legislature expresses its intention, and it is from
the text,
read in that light, that intention is inferred. The words
“intention”, “contemplation”, “purpose”
and “design” are used routinely by courts in relation to
the meaning of legislation. They are orthodox and legitimate
terms of
legal analysis, provided their objectivity is not overlooked.’
French
J
31
described the intention of the legislature as ‘an attributed
intention based on inferences drawn from the statute itself’
and added that it is ‘a legitimising and normative term’
that ‘directs courts to objective criteria of construction
which are recognised as legitimate’.
32
In a broad ranging discussion of the concept, Spigelman CJ concludes
that it is acceptable because the interpreter is concerned
to
ascertain the ‘objective’ will of the legislature or the
contracting parties.
33
However, in each instance the expression is being used either as a
shorthand reference to something else or to convey a restricted
and
unrealistic meaning. If interpretation is, as all agree it is, an
exercise in ascertaining the meaning of the words used in
the statute
and is objective in form, it is unrelated to whatever intention those
responsible for the words may have had at the
time they selected
them. Their purpose is something different from their intention, as
is their contemplation of the problem to
which the words were
addressed.
[24]
The sole benefit of expressions such as ‘the intention of the
legislature’ or ‘the intention of the parties’
is
to serve as a warning to courts that the task they are engaged upon
is discerning the meaning of words used by others, not one
of
imposing their own views of what it would have been sensible for
those others to say. Their disadvantages, which far outweigh
that
benefit, lie at opposite ends of the interpretative spectrum. At the
one end they may lead to a fragmentation of the process
of
interpretation by conveying that it must commence with an initial
search for the ‘ordinary grammatical meaning’
or ‘natural
meaning’ of the words used seen in isolation, to be followed in
some instances only by resort to the context.
At the other it
beguiles judges into seeking out intention free from the constraints
of the language in question and then imposing
that intention on the
language used. Both of these are contrary to the proper approach,
which is from the outset to read the words
used in the context of the
document as a whole and in the light of all relevant circumstances.
34
That is how people use and understand language and it is sensible,
more transparent and conduces to greater clarity about the task
of
interpretation for courts to do the same.
[25]
Which of the interpretational factors I have mentioned will
predominate in any given situation varies. Sometimes the language
of
the provision, when read in its particular context, seems clear and
admits of little if any ambiguity. Courts say in such cases
that they
adhere to the ordinary grammatical meaning of the words used. However
that too is a misnomer. It is a product of a time
when language was
viewed differently and regarded as likely to have a fixed and
definite meaning, a view that the experience of
lawyers down the
years, as well as the study of linguistics, has shown to be mistaken.
Most words can bear several different meanings
or shades of meaning
and to try to ascertain their meaning in the abstract, divorced from
the broad context of their use, is an
unhelpful exercise. The
expression can mean no more than that, when the provision is read in
context, that is the appropriate meaning
to give to the language
used. At the other extreme, where the context makes it plain that
adhering to the meaning suggested by
apparently plain language would
lead to glaring absurdity, the court will ascribe a meaning to the
language that avoids the absurdity.
This is said to involve a
departure from the plain meaning of the words used. More accurately
it is either a restriction
35
or extension
36
of the language used by the adoption of a narrow or broad meaning of
the words, the selection of a less immediately apparent meaning
37
or sometimes the correction of an apparent error in the language in
order to avoid the identified absurdity.
38
[26]
In between these two extremes, in most cases the court is faced with
two or more possible meanings that are to a greater or
lesser degree
available on the language used.
39
Here it is usually said that the language is ambiguous although the
only ambiguity lies in selecting the proper meaning (on which
views
may legitimately differ). In resolving the problem the apparent
purpose of the provision and the context in which it occurs
will be
important guides to the correct interpretation An interpretation will
not be given that leads to impractical, unbusinesslike
or oppressive
consequences or that will stultify the broader operation of the
legislation or contract under consideration.
Construction
of the proviso
[27]
As already mentioned the proviso is not strictly a proviso. In
addition it has been inserted at an inappropriate point in the
regulations. It has nothing to do with the pensionable emoluments of
members. As it deals with the adjustment of an employer’s
contributions it would have been more appropriate for it to have been
inserted in regulation 21, perhaps as an additional sub-clause
in
that regulation. Be that as it may, the fact that it has been located
elsewhere does not affect its construction.
[28]
Starting with the language of the proviso it empowers the committee
of the Superannuation Fund to direct a local authority
to pay an
adjusted contribution in terms of regulation 21. The circumstance in
which it may do so is that the pensionable emoluments
of a member
have at any time increased by an amount in excess of the increase
assumed by the fund’s valuator in the triennial
valuation
required by regulation 13 and under the Act. Before directing a local
authority to pay such an adjusted contribution
the committee must
obtain the advice of the actuary and may only proceed if the actuary
so advises it.
[29]
The context within which to consider the proviso is provided by the
fact that the Superannuation Fund was a defined benefit
fund and that
at the time of introduction of the proviso in 2004 it had been in
deficit for several years. As a result employers
were paying a
surcharge on their contributions. The circumstances in which this
arose require an understanding of the funding of
a defined benefit
pension fund.
[30]
In the regular valuations, both triennial and interim, of a defined
benefit fund such as the Superannuation Fund, the actuary
assesses
its financial soundness by making use of conventional actuarial
methods.
40
The fund is financially sound if the assets match the liabilities.
The latter only accrue and become payable over a lengthy future
period and fluctuate with membership of the fund and the levels of
remuneration of the members. To place a value on these requires
the
actuary to make an assessment of a number of different factors. Among
them are the likely number of members; their years of
service; the
number who will die, retire or resign in the years ahead; the salary
and pension levels payable to them and the likely
salary and pension
increases they will receive. In undertaking this exercise the actuary
will be aware that people may transfer
between funds under the
general aegis of the Fund, although the Superannuation Fund had been
closed to new employees, so that there
would be no new members other
than by way of transfer from other funds. The actuary makes a number
of ‘best estimates’
or ‘reasonable long-term
assumptions’
41
of the relevant variables in order to compute its liabilities in the
future and then discounts the liabilities so determined to
arrive at
their present value. A similar exercise needs to be done on the
assets of the fund in the light of current contribution
rates. At the
end of this the actuary can assess the financial soundness of the
fund and make recommendations to the committee
as to future
contribution rates, the need to raise a surcharge and related issues.
If the fund is in deficit a surcharge will need
to be imposed in
order to ensure its financial soundness.
[31]
It will be apparent from this that the actuary does not make
calculations in respect of each and every member of the fund,
but
makes an assessment across the whole body of members using
appropriate statistical techniques. When the proviso referred to
the
increase in pensionable emoluments assumed by the actuary, it was
therefore not concerned with the increase afforded to any
single
member. Instead it was concerned with the broad level of increases
across the entire body of members at the average rate
determined by
the actuary. This was clearly set out in each of the valuations in
the record. In the relevant valuation as at 31 March
2005 the
rate of salary increases allowed for was 6.5 percent per annum plus a
small allowance for merit increases. From July 2003
employers had
been paying a surcharge of 3 percent of pensionable emoluments and in
the 2005 report the actuary recommended that
the surcharge increase
to 6 percent. The Superannuation Fund was in deficit, as it had been
for some years. The actuary attributed
this to the fact that salary
increases had been substantially in excess of the rate of inflation.
The actuary warned that ‘future
excessive salary increases will
result in further deficits’ and that this would result in the
surcharge having to increase
in the future. It is clear from this
report and from the evidence of the actuary, Mr Els, that this had
been a persistent problem
for several years.
[32]
Against that background it is plain that the proviso was addressed to
the problem of local authorities giving staff increases
that were
excessive in the light of the assumptions in regard to salary
increases made by the actuary. When this occurred the contributions
to the fund would not suffice to meet the obligations being incurred
under the regulations and the existing deficit in the fund
would
increase. This would then have to be funded in some way. Originally
the only way in which this could be done would be by
surcharging all
the employers in the Superannuation Fund. The proviso created a
further way of addressing this problem. It was
focussed on instances
where the underfunding could be attributed to excessive increases in
pensionable emoluments in a particular
local authority.
[33]
Mr Els testified that the Superannuation Fund experienced
difficulties when previously disadvantaged members of the fund
received
salary increases considerably in excess of those for which
allowance had been made in determining the contributions that needed
to be made to that fund. This is what led to the introduction of the
proviso. As the manoeuvres undertaken by Mr Maltman still
lay in the
future they were not present to the minds of the actuary and the
committee when they sought to have the proviso introduced.
Counsel
therefore argued that the proviso should not be interpreted to cover
Mr Maltman’s situation, as it was not contemplated
by the
draftsman of the proviso. But this is precisely the error of
construction that flows from saying that the process is one
of
seeking the intention of the legislature and then relying on the
subjective contemplation of those responsible for the legislation.
If
correct it would have the consequence that, once it was demonstrated
that a situation was unforeseen at the time the legislation
was
introduced, that situation could not be brought within the
legislation save by amendment, which as a matter of construction
would be unnecessary. The fact that something was not contemplated
may occasionally be a factor that may affect ascertaining the
meaning
of the words used. It cannot, however, operate as a bar to the
application of a statutory provision to new or altered circumstances.
[34]
The primary argument advanced before us was that Mr Maltman’s
pensionable emoluments had been R5 000 per month when
he was a
member of the Provident Fund, but that from the time he rejoined the
Superannuation Fund they had been R34 000 per
month. Accordingly
it could not be said that his pensionable emoluments as a member of
the latter fund had increased, much less
increased in excess of the
assumptions in regard to salary increases made by the actuary at a
time when Mr Maltman had not been
a member of the Superannuation
Fund. It followed that his conduct did not fall within the terms of
the proviso.
[35]
This is a possible construction of the proviso based on a narrow
conception of what constitutes an increase in pensionable
emoluments,
namely a change in such emoluments whilst the person is a member of
the fund. Whilst that will be the normal case it
is not the only one.
When a person transfers their membership from the Provident Fund to
the Superannuation Fund and transfers
an accumulated fund from the
one to the other, the Superannuation Fund must, in terms of
regulation 16(10)(a), calculate their
period of service on the
basis not only of the amount transferred but also on the basis of an
imputed level of pensionable emoluments.
The proviso is capable of
being construed as including both an increase in pensionable
emoluments during the course of membership
and an increase from the
imputed level of pensionable emoluments on joining the fund to a
higher level. In either case, where the
level of increase is in
excess of the actuarial assessment of the level of increases on which
the fund is operating at the time,
it results in a funding deficit.
[36]
Viewed from a purely linguistic standpoint the construction advanced
by Endumeni may arguably be the more apparent. However
it disregards
the context in its entirety. It ignores the purpose of the proviso,
which was to address the problem of excessive
increases in
pensionable emoluments leading to a funding deficit; it creates a
distinction that is extremely artificial and it
leads to results that
are impractical. The Superannuation Fund has no control over the
remuneration policies of local authorities.
When changes are made to
members’ pensionable emoluments the fund is required to afford
them the benefits defined in the
regulations that govern its
operations. The steps taken by Mr Maltman to obtain the benefit he
has had from the fund required in
large measure the co-operation of
Endumeni. But for Mr Maltman’s ability, as agreed between him
and Endumeni, to adjust his
pensionable emoluments with effect
precisely from the date when he rejoined the Superannuation Fund the
problem could not have
arisen.
42
That oddity of timing should not prevent the proviso from achieving
in this instance its clear purpose. The interpretation that
treats
both actual and imputed values of pensionable emoluments as forming a
basis for the increases referred to in the proviso
does not suffer
from these problems and is more faithful to the purpose of the
proviso. For those reasons I think the expression
‘should …
the pensionable emoluments of a member … increase’
should be construed as encompassing both
actual increases and
increases from the imputed level of pensionable emoluments at the
time a member transfers into the Superannuation
Fund. Endumeni’s
main argument is accordingly rejected.
[37]
The increase from R5 000 per month to R34 000 per month was
an increase of over 500 per cent. In a letter to the
director of the
Fund on 24 January 2007 Mr Els undertook a calculation to
determine how many members of the Superannuation
and Retirement Funds
had received excessive increases falling within the proviso. It is
unnecessary to set out details of his calculations.
It suffices to
say that they erred on the side of generosity in favour of members
and local authorities and recommended that action
under the proviso
should only be taken in cases where the increase in pensionable
emoluments exceeded 42 per cent. It was submitted
that he undertook
the incorrect calculation, but I fail to see how a generous approach
that favoured the members and local authorities
can be condemned on
that ground. This is particularly so in view of the fact that the
proviso does not require any calculation
to be done. He was also
criticised on the basis that when he made the recommendation he had
in mind the wording of the proviso
not in the form that it is before
us but in a further amended form. Assuming that is so the committee
took his advice and pursued
the present litigation on the proviso in
its original form, with Mr Els’ support as its principal
witness. The contention
that the jurisdictional pre-requisites for
directing Endumeni to pay an adjusted contribution were not present
is unsound as the
trial judge correctly held.
[38]
Accepting that Mr Els had advised the Fund to direct Endumeni to pay
an adjusted contribution, there was a further string to
Endumeni’s
bow. It drew attention to the definition of ‘actuary’ in
the regulations as meaning:
‘
a
Fellow of an institute, faculty, society or chapter of actuaries
approved by the Minister and appointed by the committee’;
and
the definition of ‘Minister’ as referring to the MEC for
local government and housing. Mr Els was unable to point
to any
approval of either the Actuarial Society of South Africa or him
personally by the MEC. On that basis it was argued –
acknowledging that it was an extremely technical point – that
Mr Els was not qualified to be the actuary of the Superannuation
Fund
in terms of its regulations and accordingly was not a person who
could give the advice to the committee that was a pre-requisite
to
its directing Endumeni to pay an adjusted contribution.
[39]
This was a further fresh point raised when the issues were
reformulated at trial. Prior to that it had been admitted that Mr
Els
was the actuary duly appointed as such. It is accepted that he is the
duly appointed valuator of the Superannuation Fund in
terms of s 9A
of the Act and, for that purpose, is approved by the Minister of
Finance. Mr Kemp SC sought to overcome the
problem by submitting that
the definition in the regulations is taken directly from the
definition of ‘actuary’ in
the Act prior to its amendment
by Act 104 of 1993. Accordingly, and based on the principle that a
definition is always subject
to a contrary indication in the
context,
43
he submitted that this must be read as a reference to the Minister of
Finance. However, whilst initially plausible, the contention
does not
stand up to scrutiny in the light of the history of the definition of
’actuary’ in the regulations. The history
shows that the
definition in the regulations originally referred to the
‘Administrator’ and not the ‘Minister’
and
was amended to its present form when the definition of ‘Minister’
was introduced after the new provincial governmental
structures came
into effect with the transition to democracy. The reference to
‘Administrator’ cannot possibly have
been taken to refer
to the Minister of Finance and equally the amendment can only refer
to the MEC.
[40]
It was argued in the alternative that there must have been at least a
tacit approval by the MEC of the Actuarial Society of
South Africa
and of Mr Els acting as the actuary for the Superannuation Fund.
However the evidence in that regard is extremely
vague and it raises
difficult questions about the exercise of public powers that it is
unnecessary to deal with in the light of
the conclusion to which I
have come on a different approach. If one assumes that the MEC did
not approve the Actuarial Society
of South Africa or Mr Els as an
actuary then it follows that he was not qualified to be appointed to
that position by the committee.
However, one cannot disregard the
fact that he was so appointed and has discharged the functions of
actuary to the Superannuation
Fund (and the other funds) for a number
of years. Nor can one disregard the fact that he is qualified to be
the actuary for the
fund in terms of the Act and has likewise
discharged that function for a number of years. The issue then is
whether, accepting
the deficiency in his appointment, that
invalidates his actions as actuary and in particular the advice he
gave to the Fund in
terms of the proviso. In my view it does not. It
is important to focus on the nature of the alleged defect. It is not
that Mr Els
is not a qualified actuary. It is that the MEC has not
formally approved either of the actuarial societies of which he is a
member
as bodies, the members of which can be appointed as the
actuary of the Superannuation Fund. The defect, if there is one, is
one
of no practical moment. It would be pointless to require an
actuary, belonging to the only recognised society of actuaries in
South
Africa and approved to act as such under the Act, to obtain a
separate authority from a provincial MEC in order to discharge his
or
her functions, when the Minister of Finance, under the legislation
governing pension funds has already approved of persons,
situated as
Mr Els is, being appointed as actuaries of pension funds in South
Africa. The defect is one of form, not one of substance,
and I can
detect nothing in the regulations that suggests that an appointment
lacking the MEC’s approval renders invalid
the actions of the
person so appointed.
44
Therefore, whether or not there is a technical defect in Mr Els’
appointment, his actions in discharging the duties of actuary
to the
Superannuation Fund are not rendered invalid thereby. That disposes
of this objection.
[41]
That brings me to the next argument advanced by Endumeni. It was that
where the proviso refers to ‘an adjusted contribution’
it
must refer to an adjustment of the contribution made by a local
authority in terms of regulation 21. The submission was that
there is
no provision in regulation 21 warranting a lump sum contribution and
that the only adjustment permitted by the proviso
was an adjustment
to the contribution of 1.946 times the contributions payable by
members provided for in regulation 21(1)(b).
[42]
The language of the proviso does not support this contention. In
addition it flows from an assumption that is fallacious. That
assumption is that the contributions of local authorities are stable
periodical payments in the same way as those of members. That
is
incorrect as demonstrated in paragraph 8 of this judgment. Local
authority contributions vary from month to month. There is
no
practical or principial difference between the committee directing
that the contribution for the following month be adjusted
by an
increase in a specific amount and the committee directing that the
contributions for the next twelve months be adjusted by
a specific
monthly uplift of the multiple of 1.946. It would be relatively
simple to calculate the amount of the uplift in order
to realise the
lump sum amount required by the committee to resolve a situation of
underfunding. Yet it was accepted that the latter
form of adjustment
was permissible and contended that the former was not. That is not a
sensible construction of the provision.
[43]
There was one further argument on behalf of Endumeni. It was that
where the proviso refers to ‘the local authority employing
such
member’, that requires the member to be employed by the local
authority when the proviso is invoked. The basis for this
contention
is that the word ‘employing’ is a present participle, but
this ignores the fact that a present participle
may properly be used
in relation to both present and past situations.
45
Here it is plainly used to identify the local authority at the time
of the excessive increase in pensionable emoluments. That is
the
local authority that it is appropriate to fix with liability to pay
an adjusted contribution. It also avoids the situation
that the
entitlement to invoke the proviso is subject to such an uncertain
factor as the continued employment of the employee in
question. The
eccentric results that flow from that construction are illustrated by
the case of a member like Mr Maltman, who resigns,
or dies, or
reaches pensionable age. On their doing so – something of which
the management of the fund will only become aware
after it has
occurred and an entitlement to benefits has arisen – the
entitlement to invoke the proviso would fall away.
However the
enhanced benefits secured by the excessive increase would still have
to be paid and would remain unfunded. That is
not a sensible
construction, whereas the alternative that this relates to the
employer at the time of the increase is perfectly
sensible.
[44]
The committee of the Superannuation Fund was accordingly entitled to
direct Endumeni to pay an adjusted contribution to the
fund arising
out of the increase in Mr Maltman’s pensionable emoluments. The
appeal must therefore succeed. The parties agreed
that in that event
judgment must be entered in favour of the Fund in an amount of
R2 573 740. Any judgment must bear
interest from the date
of
mora
. The direction to pay the adjusted contribution was
given on 28 September 2007 and rejected on 15 October 2007.
The latter
is the appropriate date from which
mora
commenced.
[45]
In the result
it is ordered that:
The
appeal succeeds with costs, such costs to include those consequent
upon the employment of two counsel.
The
order of the trial court is set aside and replaced by the following
order:
‘
Judgment
is granted in favour of the plaintiff and against the defendant for:
Payment
of the sum of R2 573 740;
Interest
on the said sum of R2 573 740 at a rate of 15.5% per annum from 15
October 2007 to the date of payment;
Costs
of suit, such costs to include those consequent upon the employment
of two counsel.’
M
J D WALLIS
JUDGE
OF APPEAL
Appearances
For
appellant: Kemp J Kemp SC (with him H S Gani)
Instructed
by:
J
Leslie Smith & Co, Pietermaritzburg;
Locally
represented by:
Honey
Attorneys Inc, Bloemfontein
For
respondent: M Pillemer SC (with him P Blomkamp)
Instructed
by:
Acutt
& Worthington, Dundee;
Locally
represented by:
Webbers,
Bloemfontein.
1
The
Superannuation Fund operates in terms of the Local Government
Superannuation Ordinance 24 of 1973 and the Retirement Fund
operates
in terms of the Natal Joint Municipal Pension Fund (Retirement)
Ordinance 27 of 1974.
2
The
Provident Fund operates in terms of the KwaZulu-Natal Joint
Municipal Provident Fund Act 4 of 1995.
3
This
was in fact what occurred with the obvious consequence that this
portion of the surplus was not available to fund other obligations
of the Superannuation Fund or to increase benefits.
4
By
way of an amendment promulgated by the MEC responsible for local
government and housing in Provincial Notice 863 of 2004 in
terms of
the powers conferred under s 4(1) of the Local Government
Superannuation Ordinance 24 of 1973 (KwaZulu-Natal).
5
Mphosi
v Central Board for Co-operative Insurance Limited
1974 (4) SA
633
(A) at 645C-F.
6
The
regulations first came into operation on 24 May 1974.
7
Compare
paras 30 and 31 below.
8
From
documents in the record it can be seen that Endumeni’s
contributions in May, June, July and August 2005 were R230 426,
R229 527, R237 507 and R247 750 respectively. There were also
varying ‘reconciliation’ payments made in each of these
months. For May, June and July 2006 the equivalent figures were R231
351, R231 079 and R256 967.
9
JAC
Thomas
Textbook on the Roman Law
, Chapter VII on the
formulary process. P van Warmelo
An Introduction to the
Principles of Roman Civil Law
at 278, para 733.
10
Government
of the Republic of South Africa v Ngubane
1972 (2) SA 601
(A) at
608D-E.
11
Melius
de Villiers
The Roman and Roman Dutch Law of Injuries
236.
12
Shell
and BP Petroleum Refineries (Pty) Ltd v Murphy NO
2001 (3) SA
683
(D).
13
Spigelman
CJ describes this as a shift from text to context. See ‘From
Text to Context: Contemporary Contractual Interpretation’,
an
address to the Risky Business Conference in Sydney, 21 March 2007
published in J J Spigelman
Speeches of a Chief Justice 1998 –
2008
239 at 240. The shift is apparent from a comparison between
the first edition of Lewison
The Interpretation of Contracts
and
the current fifth edition. So much has changed that the author, now
a judge in the Court of Appeal in England, has introduced
a new
opening chapter summarising the background to and a summary of the
modern approach to interpretation that has to a great
extent been
driven by Lord Hoffmann.
14
Bastian
Financial Services (Pty) Ltd v General Hendrik Schoeman Primary
School
2008 (5) SA 1
(SCA) paras 16 - 19. That there is little
or no difference between contracts, statutes and other documents
emerges from
KPMG Chartered Accountants (SA) v Securefin Ltd &
another
2009 (4) SA 399
(SCA) para 39.
15
Described
by Lord Neuberger MR in
Re Sigma Finance Corp
[2008] EWCA Civ
1303
(CA) para 98 as an iterative process. The expression has been
approved by Lord Mance SCJ in the appeal
Re Sigma Finance Corp
(in administrative receivership) Re the Insolvency Act 1986
[2010]
1 All ER 571
(SC) para 12 and by Lord Clarke SCJ in
Rainy Sky SA
and others v Kookmin Bank
[2011] UKSC 50
;
[2012] Lloyds Rep 34
(SC) para 28. See the article by Lord Grabiner QC ‘The
Iterative Process of Contractual Interpretation’ (2012) 128
LQR
41
.
16
Per
Lord Neuberger MR in
Re Sigma Finance Corp
[2008] EWCA Civ
1303
(CA) para 98. The importance of the words used was stressed by
this court in
South African Airways (Pty) Ltd v Aviation Union of
South Africa & others
2011 (3) SA 148
(SCA) paras 25 to 30.
17
Bato
Star Fishing (Pty) Ltd v Minister of Environmental Affairs &
others
[2004] ZACC 15
;
2004 (4) SA 490
(CC) para 90.
18
Jaga
v Dönges NO & another, Bhana v Dönges NO & another
1950 (4) SA 653
(A) at 662G-663A.
19
K
& S Lake City Freighters Pty Ltd v Gordon & Gotch Ltd
[1985] HCA 48
;
(1985) 157 CLR 309
at 315.
20
Rainy
Sky SA and others v Kookmin Bank
supra para 21.
21
‘
A
slippery phrase’ according to Lord Watson in
Salomon
v A Salomon & Co Ltd
(1897)
AC 22
at 38. For its use see
Ebrahim
v Minister of the Interior
1977
(1) SA 665
(A) at 677-8 and the authorities there cited;
Protective
Mining & Industrial Equipment Systems (Pty) Ltd (formerly Hampo
Systems (Pty) Ltd) v Audiolens (Cape) (Pty) Ltd
1987
(2) SA 961
(A) at 991F-H;
Summit
Industrial Corporation v Claimants against the Fund Comprising the
Proceeds of the Sale of the MV Jade Transporter
1987
(2) SA 583
(A) at 596G-597B and
Manyasha
v Minister of Law and Order
[1998] ZASCA 112
;
1999
(2) SA 179
(SCA) at 185B-C.
22
In
Lewison
The Interpretation of Contracts
(5 ed 2011) para 2.05 the heading
reads: ‘For the purpose of the interpretation of contracts,
the intention of the
parties is the meaning of the contract. There
is no intention independent of that meaning.’ The whole
discussion in this
paragraph makes it clear that the international
trend in countries with which we share some common heritage is to
treat the ‘intention
of the parties’ as a myth or
abstraction remote from the reality of interpretation and
unnecessary.
23
The
earliest that I have found is Jerome Frank
Law and the Modern
Mind
29 (6 ed 1960) originally published in 1930. He points out
that statutes directed at horse-drawn vehicles before the advent of
motor cars were applied to the latter. For a South African instance
see
S v Sweers
1963 (4) SA 163
(E).
24
See
Lord Nicholls of Birkenhead in ‘My Kingdom for a Horse: the
Meaning of Words’
(2005) 121
LQR
577
at 589-590. In his
judicial capacity he said in
R v Secretary of State for the
Environment, Transport and the Regions and another, Ex parte Spath
Holme Ltd
[2000] UKHL 61
;
[2001] 2 AC 349
at 395 that the intention of the
legislature is ‘a shorthand reference to the intention which
the court reasonably imputes
to Parliament in respect of the
language used’.
25
See
the discussion of contracts of adhesion by Sachs J in
Barkhuizen
v Napier
[2007] ZACC 5
;
2007 (5) SA 323
(CC) paras 135 - 139. As to the process
of preparing contracts see Lord Neuberger MR in
Re Sigma Finance
Corp,
supra, para 100 and Lord Collins in the appeal at para 35.
26
F
A R Bennion
Bennion on Statutory Interpretation
(5 ed 2008)
section 164, pp 472-474.
27
At
p 474.
28
Wilson
CJ identified the illegitimacy of this latter approach in
Richardson
v Austin
[1911] HCA 28
;
(1911)
12 CLR 463
at 470 where he said: ‘
…
As
to the argument from the assumed intention of the legislature, there
is nothing more dangerous and fallacious in interpreting
a statute
than first of all to assume that the legislature had a particular
intention, and then, having made up one’s mind
what that
intention was, to conclude that that intention must necessarily be
expressed in a statute, and then proceed to find
it.’
29
The
Hon J J Spigelman AC ‘The intolerable wrestle: Developments in
statutory interpretation’
(2010) 84
ALJ
822
at 826.
Lewison, supra, para 2.06.
30
Singh
v The Commonwealth
[2004]
HCA 43
para 19.
Keith
Mason J ‘Legislators’ Intent: How judges discern it and
what do they do when they find it?’ available
at
http://www.lawlink.nsw.gov.au/lawlink/Supreme_Court/ll_sc.nsf/vwPrint1/SCO_mason021106
quotes
Gleeson CJ as saying: ‘
The
concept of the intention of Parliament expresses an important
constitutional principle rooted in political reality and judicial
prudence’, but I have been unable to trace the reference.
31
Now
Chief Justice of the High Court of Australia.
32
NAAV
v Minister for Immigration and Multicultural Affairs
[2002] FCAFC 228
;
[2002] 193
ALR 449
(FCA) paras 430 - 433.
33
‘
T
he
Principle of Legality and the Clear Statement Principle’
opening address by the Honourable J J Spigelman AC, Chief Justice
of
New South Wales, to the New South Wales Bar Association Conference
‘Working with Statutes’ Sydney, 18 March 2005
available
at
http://www.lawlink.nsw.gov.au/lawlink/supreme_court/ll_sc.nsf/vwPrint1/SCO_speech_spigelman180305
.
34
Spigelman
CJ makes the point vividly in the speech referred to in footnote 29
where he said:
‘
Context
is always important. … [I]n an adaptation of an example
originally propounded by Ludwig Wittgenstein, parents leave
their
young children in the care of a babysitter with an instruction to
teach them a game of cards. The babysitter would not
be acting in
accordance with these instructions if he or she taught the children
to play strip poker. Furthermore, when a nanny
is instructed to
“drop everything and come running” she would know that
it is not intended to apply literally to
the circumstance in which
she was holding a baby over a tub full of water. As Professor Lon L
Fuller said of this example:
“
Surely
we have a right to expect the same modicum of intelligence from the
judiciary.”’(Footnotes omitted.)
35
As
in
Venter v Rex
1907 TS 910
;
R v Detody
1926 AD 198
at
203;
R v Schonken
1929 AD 36
at 42;
Bertie van Zyl (Pty)
Ltd & another v Minister of Safety and Security & others
2010 (2) SA 181
(CC) para 31.
36
Barkett
v SA National Trust & Assurance Co Ltd
1951 (2) SA 353
(AD)
at 363;
Hanekom v Builders Market Klerksdorp (Pty) Ltd &
others
2007 (3) SA 95
(SCA) para 7
37
Melmoth
Town Board v Marius Mostert (Pty) Ltd
[1984] ZASCA 71
;
1984 (3) SA 718
(A) at
728F-H.
38
This
possibility is referred to in English cases such as
Investors
Compensation Scheme Ltd v West Bromwich Building Society
[1998]
1 All ER 98
(HL) at 114-115;
Chartbrook Ltd v Persimmon
Homes Ltd & Others
[2009] UKHL 38
;
[2009] 4 All ER 677
(HL)
paras 14 and 15.
39
That
they must be available on the language used is clear.
S v Zuma
and others
[1995] ZACC 1
;
1995 (2) SA 642
(CC) paras 17 and 18. As Kentridge AJ
pointed out any other approach is divination rather than
interpretation.
40
Tek
Corporation Provident Fund & others v Lorentz
1999 (4) SA
884
(SCA) para 16;
Associated Institutions Pension Fund &
Another v Le Roux & others
2001 (4) SA 262
(SCA) para 16.
41
The
expressions are taken from the statutory valuation of the
Superannuation Fund preceding Mr Maltman rejoining it and then
resigning.
42
The
documents reveal that the Fund was only informed of the adjustment a
few weeks after his transfer to the Superannuation Fund
on the basis
that it would take effect from the date of entry. That illustrates
the impracticality of Endumeni’s contention.
43
The
principle appears from the headnote to
Town Council of Springs v
Moosa and another
1929 AD 401
, which accurately summarises the
legal position as set out at 416-417.
44
Standard
Bank v Estate Van Rhyn
1925 AD 266
at 274;
Swart v Smuts
1971
(1) SA 819
(A) at 829C-830C.
45
A
simple example is ‘the girl is reading/the girl was reading’.