Mhlontlo v Government Employees Pension Fund (2398/20) [2021] ZAECPEHC 46 (19 August 2021)

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[2021] ZAECPEHC 46
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Mhlontlo v Government Employees Pension Fund (2398/20) [2021] ZAECPEHC 46 (19 August 2021)

IN
THE HIGH COURT OF SOUTH AFRICA
EASTERN
CAPE LOCAL DIVISION, PORT ELIZABETH
NOT
REPORTABLE
CASE
NO.: 2398/20
In
the matter between:
SANDILE
WASHINGHTON MHLONTLO
PLAINTIFF
and
THE
GOVERNMENT EMPLOYEES PENSION FUND
DEFENDANT
JUDGMENT
GOVINDJEE
AJ
Background
[1]
The applicant is a retired educator formerly employed by the
Department of Education, Eastern
Cape Province (‘the Department’).
He commenced employment on 18 January 1972, retiring 37 years later,
on 28 February 2009.
[2]
The applicant’s tenure of employment comprised three separate but
continuous service periods.
The first was with the former Ciskei
Department of Education. The second was with the erstwhile Transkei
Department of Education,
and the final period with the Department. As
a result, the applicant contributed to three different pension funds
at different stages
of his career, namely the Ciskei Government
Pension Fund, the Transkei Government Pension Fund and the Government
Employees Pension
Fund (‘the Fund’).
[3]
Upon retirement, the applicant was credited by the respondent only in
respect of pensionable
service during his third period of employment,
between 1 September 1996 and 28 February 2009. No recognition was
received, in terms
of pension benefits, in respect of the preceding
24-year period. The applicant made various unsuccessful attempts,
contacting both
the Department of Basic Education in Pretoria and the
Department, and searching the latter’s archives, to ascertain what
had transpired
with his pension funds. Documentary proof of pension
contributions for the years 1984-1986 was obtained. The applicant
also obtained
an order obliging the Department to furnish copies of
various pension-related documents in terms of the provisions of the
Promotion of Access to Information Act, 2000
, during 2016.
Eventually, documentation was forthcoming, and forwarded to the
respondent on 19 June 2018, without any meaningful
response.
[4]
The main reason for this is that the Z 102 form completed by the
Department indicates only
the last-mentioned contribution period. As
the applicant’s employment records are held by the employer, the
respondent steadfastly
awaits a corrected or amended Z 102 form from
the Department in order to effect further payments, and refuses to
become involved
in engaging with the Department or in the calculation
of the correct benefits payable. It also claims that the application
should
fail because of the non-joinder of the Department.
Relief
sought and issues to be decided
[5]
The applicant seeks, in essence, the following relief:
a.
An order directing that the respondent’s administrative action in
failing to properly and effectively calculate
and pay the applicant’s
pension benefits, be judicially reviewed and set aside,
alternatively, declared unlawful.
b.
An order directing the respondent take such administrative steps as
may be necessary to procure the proper and
comprehensive calculation
and payment of the applicant’s pension benefits in terms of the
Government Employees Pension Law, 1996
(‘the GEPL’).
[6]
The issues raised by the parties are the following:
a.
Is there merit to the respondent’s non-joinder argument?
b.
Is the respondent entitled to rely solely on the form Z 102,
submitted by the applicant’s employer, for
its calculations of the
applicant’s pension benefits?
c.
Should the application for the judicial review of the respondent’s
decisions be granted?
d.
Should the respondent be ordered to rectify the administrative error
by recalculating the applicant’s
pension benefits to include his
tenure of service with the Ciskei and Transkei Education Departments?
e.
Should the respondent be ordered to take such administrative steps as
may be necessary to procure
the proper and comprehensive calculation
and payment of the applicant’s pension benefits in terms of the
Government Employees Pension
Law, 1996? Alternatively, is the
respondent entitled to await the employer’s submission of an
amended withdrawal from fund application
form in order to process
calculations for any outstanding period.
The
legal framework
[7]
The Fund is a juristic person, managed by a Board of Trustees, and
the successor in name to
the fund established by section 3 of the
Government Service Pension Act, 1973.
[1]
The object of the Fund is to provide pensions and certain other
related benefits as determined in the GEPL to members and pensioners
and their beneficiaries.
[2]
[8]
Various ‘previous funds’, including the Transkeian Government
Service Pension Fund
[3]
and the
Ciskeian Civil Servants Pension Fund,
[4]
were discontinued in terms of the GEPL.
[5]
Any person who immediately before a date determined in terms of
section 14(1)
(a)
in
respect of a previous fund, was a member of that fund, became a
member of the Fund with effect from that date.
[6]
All assets, including any right to claim any amount, and all
liabilities, including any obligation to pay any pension, related
benefit
or any other amount in terms of any law, of a previous fund
passed to and vested in the Fund from a determined date.
[7]
[9]
It is clear that the GEPL aims to protect the rights of members of
previous funds.
[8]
It is within
the duty and power of the Board to make rules on a range of matters,
including ‘any matter required or permitted to
be prescribed under
this Law and, generally, for the better achievement of the objects
and purposes of this Law.’
[9]
[10]
Schedule 1 to the GEPL contains the Rules of the Government Employees
Pension Fund, as amended (the Rules).
The Rules confirm that the
Board, in the exercise of its powers and duties, is entitled to
prescribe in which way claims must be
lodged against and handled by
the Fund
[10]
and in general
take any steps necessary or perform any actions which are
advantageous for the achievement of the Fund’s objectives.
[11]
The Board is also able to develop policies concerning the payment of
benefits in exceptional or extenuating circumstances.
[12]
[11]
The Board is entitled to require satisfactory proof of the right of
any member, pensioner or his or her beneficiaries
to any benefit and
the Fund is not obliged to pay benefits to a member, pensioner or
their beneficiaries until such proof has been
submitted to the
Board.
[13]
The Rules provide
as follows in respect of ‘communication’:
[14]
‘
For purposes of
communication in regard to membership of the Fund, payment of member
and employer contributions to the Fund, payment
of other monies owing
by members and the employer to the Fund, and related matters, the
Fund shall communicate with the departments,
administrations,
institutions and bodies where members are or were in service:
Provided that where any such matter or any other matter
cannot be
effectively dealt with by means of such communications the Fund shall
communicate with the Minister: Provided further that
a member or
pensioner shall have the right to communicate direct with the Fund in
regard to any matter which affects him or her personally…’
(sic)
Analysis
[12]
Everyone has the constitutional right to have access to social
security, as well as the right to just administrative
action.
[15]
A provision of the Bill of Rights binds a natural or a juristic
person if, and to the extent that, it is applicable, taking into
account the nature of the right and the nature of any duty imposed by
the right.
[16]
[13]
Unfortunately, it appears as if many retired government employees
battle, for one reason or another, to access
the benefits to which
they are entitled following many years of service and
contribution.
[17]
It goes
without saying that pension funds should only be paid upon receipt of
adequate proof of the amount due. On this occasion,
the buck is being
passed between the Department and the respondent in respect of the
verification process required before the correct
amount may be paid
to the applicant.
[14]
A similar turn of events is apparent in
Hangana
v The Government Employees Pension Fund
,
although that judgment was focused on the issue of costs.
[18]
The respondent in that matter raised identical defences, namely that
the department ought to have been joined as a party to the
proceedings,
that the respondent had paid out the pension benefit as
advised by the Department in the completed Z 102 form, and that any
further
amendments to the payment system of the respondent could only
be affected via an amended Z 102 form.
[19]
After a synopsis of the facts, Revelas J held as follows:
‘
12.
It is convenient to deal with the question of misjoinder first. The
Department had no interest in the outcome of the matter even
though
the Department supplied the incorrect information to the respondents
upon which the respondent acted to the applicant’s
detriment. The
respondent nonetheless had an obligation, once the error came to its
attention, to act. Instead, there was inaction.
13.
The applicant’s request for information was not met with
co-operation but inertia until the present application was brought.
Joining the Department would have changed nothing.
14.
Clearly the respondent had a constitutional duty to see that the
applicant was paid out the correct pension amounts. She was entitled
thereto. The applicant correctly makes the point that she was
entitled to relief in terms of the
Promotion of Administrative
Justice Act, 3 of 2000
, as well as declaratory relief in terms of the
Constitution. The respondent in this case failed to act in accordance
with its statutory
and constitutional obligations and chose to shift
the blame onto the Department. Once the respondent realized that
there was an error
in its calculation of the pension payment, it
should have taken steps to rectify it, and not wait for the applicant
to take it up
with the department or until it was brought to court
before finally acting.’
Non-joinder
[15]
The test for a plea of non-joinder or misjoinder is whether or not a
party has a ‘direct and substantial
interest’ in the subject
matter of the action, that is, a legal interest in the subject matter
of the litigation which may be affected
prejudicially by the judgment
of the court.
[20]
The mere
fact that a party may have an interest in the outcome of the
litigation does not warrant a non-joinder plea.
[21]
The rule is that any person is a necessary party and should be joined
if such person has a direct and substantial interest in any
order the
court might make, or if such an order cannot be sustained or carried
into effect without prejudicing that party.
[22]
[16]
In this instance the test for non-joinder has not been passed.
[23]
Given the nature of the relief sought in the notice of motion, it
cannot be said that the Department holds a
direct
and substantial
interest in any order that this court might make. Similarly, it is
not the case that such an order would not be sustained or carried
into effect without prejudicing the Department. There is also little
explanation on the papers as to what steps the respondent took
to
secure the Department’s co-operation, to enable it to fulfil its
own constitutional obligations.
[24]
To the extent that the respondent relies on misjoinder on the basis
that it ought
not
to have been cited as respondent, this plea must be rejected on a
similar basis.
The
Z 102 form
[17]
There is no legal basis pleaded to suggest that a benefit payment and
/ or a withdrawal from the Fund may only
be processed at the instance
of an employer and upon receipt of documents from that employer.
[25]
There is no provision in the GEPL which states, as a requirement for
the payment of a pension benefit, that the employer is obliged
to
submit the appropriate claim form. Nor is there any provision in the
Rules which contains such obligation.
[26]
[18]
Instead of expecting the applicant to deal exclusively with the
Department, the respondent ought to have meaningfully
engaged in the
type of communication with the applicant envisaged by the second
proviso in Rule 22: ‘…Provided further that a
member of pensioner
shall have the right to communicate direct with the Fund in regard to
any matter which affects him or her personally…’
[19]
There is also no apparent reason why the Board cannot refine its
rules to address such occurrences, and to
develop rules of engagement
with employers to the benefit of people in the position of the
applicant. This would be advantageous
for the achievement of the
Fund’s objectives.
[27]
At
the very least, one would have expected the development of a policy
to deal with exceptional instances where the Z 102 form failed
to
match the reality of the contributions made during the course of
employment, or where it was clear that incomplete records were
available.
[28]
The papers
filed in this matter suggest that this has not yet occurred.
[20]
As Goosen J noted in
Mpofu
,
the effect of section 26(1) of the GEPL is that a benefit becomes due
and payable on the last day of service and imposes an obligation
upon
the respondent to effect payment within 60 days of that day:
[29]
‘
The
respondent is generally obliged to conduct itself in a manner that is
consistent with the provisions of the Constitution. It must
promote
the spirit, purport and objects of the Constitution. As a pension
fund, established by government to administer the funds
of state
employees who are its members, it is obliged to act with fidelity and
the utmost good faith in the interests of its members.
It cannot
adopt an obstructive and obfuscating approach to the processing of
claims made by or on behalf of members of the Fund.
Nor can it choose
to ignore communications from a member who seeks to protect his or
her interests. The respondent’s conduct in
this matter amounts to
precisely this.’
[21]
These sentiments may be echoed in this case and the respondent’s
conduct in the matter deprecated. The applicant
has succeeded in
establishing that the respondent has failed to act in accordance with
its constitutional and statutory obligations.
The order issued is
directed to compel the respondent to do so.
Order
[22]
I make the following order:
(1)   The
respondent is ordered forthwith to take all steps necessary to
procure the proper and comprehensive calculation
of the applicant’s
pension benefits in terms of the Government Employees Pension Law,
1996, and to thereafter process the applicant’s
claim for further
payment of pension benefits.
(2)
The respondent is ordered to pay the costs of the
application.
A
GOVINDJEE
ACTING
JUDGE OF THE HIGH COURT
APPEARANCES:
For
the Applicant   :
Adv I Bands
Instructed
by
:
Nolands
Law Attorneys, Port Elizabeth
For
the Respondent:         Adv
NO Nhantsi
Instructed
by
:
Rwexwana Attorneys, Port Elizabeth
Heard
on      :
29 July 2021
Delivered
on:
19 August 2021
[1]
Act 57 of 1973. Sections 2 and 6 of the GEPL.
[2]
Section 3 of the GEPL.
[3]
Referred to in section 2 of the Transkeian Government Service
Pension Fund Act, 1970 (Act 4 of 1970).
[4]
Referred to in the Government Service Pensions Act, 1989 (Act 4 of
1989).
[5]
Section 14(1) read with section 14(5) of the GEPL.
[6]
Section 4(3) of the GEPL. Section 16 provides further that: ‘In
any case where a person who is a member…of a previous fund…becomes
a member of the Fund in terms of section 4(3)…such person shall
forfeit all rights and privileges in respect of, and shall be
released from all obligations towards the fund in question…’
[7]
Section 14(2) of the GEPL. In terms of section 26, ‘Notwithstanding
anything to the contrary in any law contained, a benefit
payable in
terms of this Law shall be paid to the member, pensioner or
beneficiary entitled to such benefit within a period of
60 days from
the benefit becoming payable to the member, pensioner or
beneficiary, which 60 days shall be calculated from the day
following the date on which the benefit becomes payable: Provided
that a benefit shall become payable to a member, pensioner or
beneficiary on the last day of service at the employer of that
member or pensioner or the death of that pensioner.’
[8]
For
example,
section
30(1) provides that ‘Where a member of a previous fund becomes a
member of the Fund, the member’s benefits in the Fund
on the date
determined in terms of section 14(1) in respect of that previous
fund shall satisfy the condition that the real value
of the accrued
benefits of such member on that date as represented by the Fund’s
actuarial liability towards the member and his
or her beneficiaries,
shall not be less than the real value of the accrued benefits of
such member in that previous fund immediately
before that date, as
represented by the actuarial liability of that previous fund towards
the member and his or her beneficiaries,
in accordance with a
certificate from an actuary appointed by the Board.’
[9]
Section 29(1) of the GEPL.
[10]
Rule 4.2.
[11]
Rule 4.2.9.
[12]
Rule 4.2.11.
[13]
Rule 6.
[14]
Rule 22.
[15]
Sections 27 and 33 of the Constitution of the Republic of South
Africa, 1996 (‘the Constitution’). While there is presently
no
judicial consensus on whether decisions of pension funds, either
generally or in limited circumstances, constitute administrative
action as contemplated in the Promotion of Administrative Justice
Act, 2000 (Act 3 of 2000), the parties did not address this issue
on
the papers or in argument: see
Public
Servants Act of South Africa and Others v Government Employees
Pension Fund and Others
[2020] ZASCA 126
at para 42.
[16]
Section 8(2) of the Constitution. When applying a provision of the
Bill of Rights to a natural or juristic person in terms of

subsection (2), a court – a) in order to give effect to a right in
the Bill, must apply, or if necessary develop, the common law
to the
extent that legislation does not give effect to that right; and b)
may develop rules of the common law to limit the right,
provided
that the limitation is in accordance with section 36(1): section
8(3) of the Constitution.
[17]
See Public Protector ‘Report on a systematic investigation into
the deficiencies with the processing of pension benefits payable
to
former government employees and their dependants’ (Report No. 11
of 2008/09) at para 1.2, as quoted in C Marumoagae ‘The
need to
provide members of retirement funds which are not regulated by the
Pension Funds Act access to a specialized dispute resolution
forum’
De
Jure
(2019) 115-137, at p 124.
[18]
Unreported Eastern Cape Local Division, Port Elizabeth, case no.
2608/2017. Also see
Mpofu
v Government Employees Pension Fund
[2015]
ZAECPEHC 53 and
Mmileng
v Government Employees Pension Fund and Others
[2016] ZAGPPHC 1067.
[19]
Hangana
supra
at
para 9.
[20]
Henri
Viljoen (Pty) Ltd v Awerbuch Bros
1953 (2) SA 151
(O) at 168-170.
[21]
Judicial
Service Commission v Cape Bar Council
2013 (1) SA 170
(SCA) at 176I-177A.
[22]
One
South Africa Movement v President of the RSA
2020
(5) SA 576
(GP) at para 22.
[23]
Also see
Mpofu
supra
at para 22.
[24]
See
Mpofu
supra
at para 22.
[25]
See
Mpofu
supra
at para 10.
[26]
Mpofu
supra
at
para 16.
[27]
See rule 4.2.9.
[28]
In this instance, and by way of example, the respondent relies on
limited correspondence from the then Transkeian Government to
the
Department noting the failure to receive contributions in respect of
the applicant for parts of 1977 and 1978. The correspondence
includes the suggestion that the amount owing was to be calculated,
determined and paid in, as well as a query seeking advise as
to how
the non-contributory period should be treated. There is also
correspondence suggesting that the amount owed would be recovered
over a period not exceeding twenty-four months, suggesting that the
applicant in fact contributed to the erstwhile funds.
[29]
Mpofu
supra
at
paras 18, 21.