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[2016] ZAGPPHC 441
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RFS Administrators (Pty) Ltd and Another v NFMW And Others (19948/16) [2016] ZAGPPHC 441 (30 May 2016)
REPUBLIC
OF SOUTH AFRICA
IN THE
HIGH COURT OF SOUTH AFRICA
GAUTENG
LOCAL
DIVISION,
JOHANNESBURG
DATE:
30/5/16
CASE
NO: 19948/16
(1)
REPORTABLE: YES
(2) OF
INTEREST TO OTHER JUDGES: NO
In the matter between:
RFS
ADMINISTRATORS (PTY)
LTD
1
st
Applicant
RFS
HOMELOANS
(PTY)
LTD
2
nd
Applicant
and
NATIONAL
FUND
FOR
MUNICIPAL
WORKERS
('NFMW')
1
st
Respondent
NATIONAL
PENSION FUND FOR MUNICIPAL WORKERS
('NPFMW')
2
nd
Respondent
RONALD
JOHN
FIELD
3
rd
Respondent
CHAIRPERSON
OF NFMW AND NPFMW NO
S
SAMON
4
th
Respondent
PRINCIPAL
OFFICER OF THE NFMW and NPFMW NO
THE
REGISTRAR OF PENSION
FUNDS
5
th
Respondent
THE
FINANCIAL SERVICES
BOARD
6
th
Respondent
INDEPENDENT
MUNICIPAL ALLIED TRADE UNION
('IMATU')
7
th
Respondent
THE
SOUTH AFRICAN MUNICIPAL WORKERS UNION
('SAMWU')
8
th
Respondent
THE
SOUTH
AFRICAN LOCAL
GOVERNMENT
ASSOCIATION ('SALGA')
9
th
Respondent
SANLAM
LIMITED
10
th
Respondent
JUDGEMENT
MBONGWE,
AJ:
INTRODUCTION
[1]
The applicants, RFS Administrators (Pty) Ltd and RFS Homeloans (Pty)
Ltd launched this semi urgent application in terms of Rule
6(12)
seeking interim restraining orders against the first to the fourth
respondents from unlawfully terminating the administration
agreements
with the first and second respondents pending the outcome of the main
proceedings already instituted by the applicants
wherein the
applicants seek orders setting aside the decisions of the board of
trustees of the first and second respondents to
terminate the
agreements. The said decisions were taken on the 19 and 23 February
2016.
THE
PARTIES
[2]
The first applicant performs administrative work for the first and
second respondents since 1997 and 1999, respectively.
[3]
The second applicant concluded a surety agreement with the first
respondent in terms of which home loans are granted to members
of
both the first and second respondents.
[4]
The first and second respondents are pension funds established in
terms of the provisions of the Pension Funds Act ("the
PFA").
The provisions of sections 7A, 7C and 7D of the PFA constitute the
framework within which these funds function. Paragraph
3.2(d) of the
Board Notice No 24 of 2002 sets out the powers of the parties to
terminate the agreements.
[5]
Ronald John Field, the third respondent, is the chairperson of the
board of trustees of both the first and second respondents.
[6]
S Samons, the 4
th
respondent, is the disputed employee of
the RFS Administrators who was deputed be the Principal Officer of
both the first and second
respondents.
[7]
The Registrar of the Pension Funds and the Financial Services Board,
the 5th and sixth respondents, are the custodians of the
members'
pension funds in term of the provisions of the PFA.
[8]
IMATU and SAMWU, the 7
th
and respondents, are members of
the first and second respondents. The latter has filed an affidavit
in support of the granting
of this application.
[9]
SALGA, the 9
th
respondent is an association representing
members of the first and second respondents.
[10]
Sanlam Limited, the 10
th
respondent is an insurance
company registered in terms of the company laws of the Republic of
South Africa. Sanlam has accepted
an instruction from the first and
second respondents to administer them should self- administration by
these entities not be feasible.
THE
FACTS
[11]
The first and second respondents have been under the administration
of the first applicant for approximately 20 years. The
relationship
between the applicants and the 1st to 4th respondents soured from
about November 2015, thus putting in jeopardy the
application of the
provisions of the administration agreement which require that the
parties work in close association with each
other at all times. The
first four respondents were the first to report the first applicant's
failures to fulfil its administration
obligations to Registrar. That
the strain in the relationship between the parties was deepening is
apparent from the fact that
the applicants in turn laid complaints
with the Registrar and the FSB against the Principal Officer of the
first and second respondents
as well as laying criminal charges with
the SAPS against him.
TERMINATION
OF ADMINISTRATION
AGREEMENTS
[12]
The boards of both the first and second respondents resolved on the
19 and 23 February 2016 to terminate the administration
agreements
these entities have with the first applicant, respectively. Written
notices were sent to the applicants and ostensibly
received around
the 29 February 2016. In terms of these notices the administration
agreements will terminate on the 31 May 2016.
APPLICANTS'
CHALLENGE
[13]
In response to the notices, the applicants launched proceedings in
April 2016 challenging the lawfulness and validities of
the first and
second respondents' decisions to terminate the agreements. In
particular, the applicants seek to challenge the reasons
for the
termination of the agreements and further speculate that the
decisions were influenced by the applicants' reporting to
Registrar
and the FSB as well as the SAPS of irregularities in the affairs of
the first and second respondents perpetrated by their
respective
boards under the influence of Samons. The applicants argue that they
are merely being victimised for whistle blowing
and seek protection
in terms
section 9
of the
Protected Disclosures Act 26 of 2000
.
[14]
The applicants have also launched the instant proceedings to
interdict and prevent the first to the 4th respondents from acting
in
pursuance of the termination notices and further seek an order
directing that the status quo remains in force pending the outcome
of
main proceedings instituted in April 2016.
GIST
OF THE APPLICANTS' CHALLENGES
[15]
The gist of the applicants' challenges of the first to fourth
respondents' decisions to terminate the administration appears
to be
two- fold, albeit inter-twined; that the decisions were not taken
unfairly and are, therefore unlawful in that they were
precipitated
by the fact that the applicants have reported irregularities
obtaining in the first and second respondents and such
irregularities
are still being investigated by the Registrar and the FSB.
1
st
TO 4
th
RESPONDENTS' POINTS IN LIMINE
[16]
The first four respondents have raised a few points in limine in
seeking the dismissal of the applicants' application. The
first point
is that the decisions to terminate the two agreements were properly
taken and that the terminations are, therefore,
lawful and valid .
These respondents also aver that their reasons for terminating the
agreements are irrelevant as the funds have
unqualified rights to do
so. They further contend that the protective provisions of the
Protected Disclosure Act do not find application
in the circumstances
of this case. Further points in limine such as the alleged
mis-joinders of the second applicant as well as
the fifth to tenth
respondents in these proceedings have also been raised. These are, in
my view, not the determinant tenets of
this case and, due to the
urgency of this case, this judgement will seek to traverse the two
issues raised by the applicants
THE
RIGHT TO TERMINATE AND THE VALIDITY OF THE TERMINATION:
[17]
In traversing these aspects I deem it necessary refer to the
administration agreement which, on these aspects, has by law to
comply with the provisions of Paragraph 3.2(d) of Board Notice no 24
of 2002. Clause 13 of the agreement reads thus:
"CANCELLATION
AND TERMINATION
13.1
Either party to this Agreement may cancel this agreement in the event
of any one of the PARTIES being in breach of their obligations
in
terms of this agreement, and remain in breach for seven (7) days
after having been requested by the other party to rectify the
said
breach;
13.2
Notwithstanding anything contained to the contrary in this agreement,
this Agreement may be terminated by a party thereto by
giving the
other party at least three (3) months written notice of his intention
to do so."
17.1
It is apparent from these provisions that the first to fourth
respondents have opted to terminate the administration agreements
following the provisions of clause 13.2. The wording in these
provisions unambiguously makes the giving of the 90 days' notice
an
imperative. The first and second respondents have appropriately
complied with this substantive requirement. Thus the notice
to
terminate is impeachable.
17.2 The provisions of
clause 13.2 do not require that the party who gives notice of his
intention terminate an administration agreement
gives reasons for his
decision. This legal position has been stated in numerous judgements;
Burochowitz J reiterated this legal
position thus: "It is a well
established principle that where trustees choose to delegate any part
of their functions, they
are at liberty at any time to revoke such
delegation of authority." (see JOHANNESBURG MUNICIPAL PENSION
FUND & ANOTHER
v NBC EMPLOYEE BENEFIT (PTY) LIMITED &
ANOTHER; WLD CASE NO 74/01; judgement dated 11 April 2001. Quoting
Kumleben J in Soofie
v Hajee Shah Goolam Mohamed Trust and Others
1985 (3) SA 322
(N), Burochowitz J continued: " A trustee who
has delegated the exercise of his authority may revoke such authority
at any
time without having to show good cause for doing so."
This exposition of the law makes it clear that a challenge of the
trustees'
decision to terminate, based on the validity or fairness of
the reasons for the decision, is without legal grounding and ought to
be rejected. The confirmatory affidavits of each of the trustees with
regard to the constitution of the board and confirming the
decisions
form part of the annexures to the founding affidavit. For these
reasons I find that the termination of the agreements
is lawful and,
consequently, valid.
CHALLENGE
OF VALIDITY
BASED ON PROTECTED
DISCLOSURE
ACT
[18]
The applicants argued in motivation for the granting of this
application that the termination of the administration agreements
in
this case was precipitated by their reporting, to the Registrar, the
FSB and the police, of irregularities by the first and
second
respondents' Principal Officer and the chairperson of the board of
trustees in the execution of their duties. The applicants
invoke and
seek protection against victimisation (the terminations of the
agreements) by virtue of the provisions of section 9
of the
Protective Disclosure Act in this regard. The argument, in short, is
that a lawful act becomes unlawful where it brings
about an unlawful
consequence.
[19]
Whether the applicants' argument holds depends on the proper
construction of the provisions of section 9 which I quote :
"
9 General protected disclosure
(1)
Any disclosure made in good faith by an employee-
(a)
Who reasonably believes that the information disclosed and any
allegation contained in it, are substantially true; and
(b)
Who does not make the disclosure for purposes of personal gain,
excluding any reward payable in terms of any law;
is
a protected disclosure if -
(i)
One or more of the conditions referred to in subsection (2) apply;
(ii)
In all the circumstances of the case, it is reasonable to make the
disclosure."
[20]
The obvious qualification the applicants should possess in order to
enjoy protection from victimisation in terms of the afore-stated
provisions is that they should be employees of the first and second
respondents. The applicants' argument that they are such employees
by
virtue of them doing work for the first and second respondents is
misplaced as the preamble to the Protective Disclosure Act
defines an
employee thus :
"
(a) any person- excluding an independent contractor, who works for
another person or for the State and who receives, or is
entitled to
receive, any remuneration;
(b)
any other person who in any manner assists in carrying on or
conducting the business of the employer."
[21]
The applicants can clearly not be employees in the circumstances of
this case as alleged and are excluded, firstly, in the
definition of
an employee in that they are for all intents and purposes independent
contractors of the first and second respondents
and, secondly, by the
provisions of section 9(1)(b) - the applicants seek, in these
proceedings, to be retained or reinstatement
as administrators and
thus their effort is for personal gain. I find, therefore, that the
provisions of the Protective Disclosure
Act do not find application
in the relationship between the applicants, on the one side and the
first and second respondents, on
the other. The applicants' plea for
a finding of unlawfulness in the termination of the agreements on the
basis of the termination
being a victimisation ought to be dismissed.
[22]
I consequently make the following order;
1.
This application is dismissed
2.
The applicants are ordered to pay the costs which shall include the
costs consequent upon the employment of two counsel
________________
M MBONGWE, AJ
ACTING JUDGE OF THE
HIGH COURT,
PRETORIA
Date of hearing
:
26 May 2016
Date of judgement
:
30 May 2016
For the
Applicants :
M Brassey SC,
with
him, ESJ Van Graan SC
For the First to
Fourth Respondent :
A Franklin SC
with
him, KS Mclean