Metro Group Retirement Fund and Another v Murphy NO and Another (8278/2001) [2002] ZAWCHC 39 (23 July 2002)

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[2002] ZAWCHC 39
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Metro Group Retirement Fund and Another v Murphy NO and Another (8278/2001) [2002] ZAWCHC 39 (23 July 2002)

20
REPORTABLE
IN
THE HIGH COURT OF SOUTH AFRICA
(CAPE
OF GOOD HOPE PROVINCIAL DIVISION)
CASE NO: 8278/2001
In
the matter between:
METRO GROUP
RETIREMENT FUND First Applicant
METCASH
TRADING LIMITED
Second Applicant
and
JOHN
MURPHY NO
First Respondent
BUTANA
EDWARD MANZINI
Second Respondent
JUDGMENT
DELIVERED ON 23 JULY 2002
HJ ERASMUS,
J
Introduction
On 27 September 2001 the first applicant, the
Metro Group Retirement Fund (“the Fund”), and the second
applicant, Metcash Trading
Limited (“Metcash”), sought by way of
urgent application to interdict and restrain the first respondent,
the Pension Funds Adjudicator
(“the adjudicator”), from making
any further determination in relation to a complaint by the second
respondent, Mr Butana Edward
Manzini (“Manzini”), and for an
order calling upon the adjudicator and Manzini to show cause, on a
date to be determined, why
an order should not issue:
Reviewing, correcting and/or setting aside the determinations
by the first respondent dated 23 July and 24 August 2001 relating to
the complaint by the second respondent against the applicants;
Replacing the said determinations with an award dismissing
the claim by the second respondent;
(c) Directing such of the respondents as may oppose the
application, to pay the costs thereof and in the case of the first
respondent,
on the scale as between attorney and client.
Background
Manzini
was employed by Metcash on 20 June 1977. On 13 January 1994 he was,
following upon a disciplinary enquiry, dismissed for misconduct.
At
the time he was an assistant branch manager within a division of
Metcash. Upon the termination of his employment, he ceased to
be a
member of the Fund and was paid the amount due to him in terms of the
rules of the Fund. The effect of rule 12.2 of the rules
of the Fund
is that an employee is deprived of the employer’s contribution to
his retirement benefit where the termination of his
employment is due
to dismissal for misconduct. Manzini did not at the time challenge
the fairness of his dismissal or the pension
benefits paid to him
pursuant to his dismissal.
On
30 November 1999 Manzini addressed a letter of complaint to Messrs
Alexander Forbes who administer the funds of the Fund on its
behalf.
On 14 February 2000 Manzini lodged a complaint with the adjudicator
in terms of section 30A of the Pension Funds Act 24 of
1956 (“the
Act”). The crux of his complaint was that he considered himself
entitled to his employer’s contribution to his retirement
benefit.
The
Fund and Metcash raised the following contentions is respect of
Manzini's complaint:
the
claim had prescribed in terms of the provisions of the
Prescription
Act 68 of 1969
;
the
claim was lodged late in terms of the provisions of section 30I of
the Act without any good cause having been shown by the complainant;
and
the
claim was ill-founded in view of the provisions of rule 12.2 of the
rules of the Fund.
The
first preliminary determination: 23 July 2001
On
23 July 2001 the adjudicator handed down what he termed a
"Preliminary Determination in terms of
section 30J
of the
Pension Funds Act&quot
;.
Section
30J(1) of the Act provides as follows:
“
(1) The Adjudicator may follow any procedure which he
or she considers appropriate in conducting an investigation,
including procedures
in an inquisitorial manner.”
In
a letter dated 20 September 2001 addressed to the applicants’
attorneys, the adjudicator deals at some length with the procedures
he follows in conducting investigations. He points out that section
30D of the Act requires the adjudicator to dispose of complaints
“in
a procedurally fair, economical and expeditious manner”. He says
that the limited resources available to his office compel
him “to
seek creative alternative methods for resolving complaints”. He
acknowledges that despite having the advantage of speed,
informality,
and hopefully better access to impecunious members, “our unorthodox
procedure admittedly raises questions of legitimacy
and
constitutionality”. The adjudicator proceeds as follows in
paragraph 8 of his letter:
“
Nevertheless, in order
to meet our mandate in the context of our limited resources we are
compelled to experiment with different methodologies
in search of the
most efficient alternative. Hence, we routinely dispense with oral
hearings and limit our investigations to written
submissions,
documentary evidence and telephonic interactions. We have discovered
that such an approach, while effective in many
cases, does not always
succeed in furnishing us with what we need to resolve the dispute.
The ongoing failure by parties to furnish
us with sufficient evidence
and argument is a recurring inconvenience. One way of solving the
problem is to issue preliminary determinations
giving our
prima
facie
view of the merits on the limited evidence and arguments
available and to invite the parties to show cause why the proposed
order
should not be made final. As you know, this is the method we
have applied in the complaint concerning your client.”
In
his first preliminary determination, the adjudicator rejected the
first two contentions raised by the Fund and Metcash. In doing
so he
failed to distinguish between time-barring under section 30I of the
Act, in relation to which he has a power of condonation,
and
prescription under the
Prescription Act 68 of 1969
, in relation to
which he has no such power.
In
paragraph 14 of the first preliminary determination, the adjudicator
formulates his understanding of the four alternative grounds
of
Manzini's complaint. In regard to the fourth ground, he says the
following:
"Finally, contained in his reply of 15 August 2000
is the allegation that there is some unfairness in the fact that the
rule
under consideration was never drawn to his attention in the
context of the benefits promised in the guide book. Implicit in his
reply
is the suggestion that there might be some substantial
unfairness or unreasonableness about the rule itself."
The
adjudicator proceeded to evaluate the fairness of
rule 12.2
and found
the rule to advance an illegitimate purpose (namely as a punitive
measure in the employment relationship). He accordingly
expressed the
view in the first preliminary determination that the rule is
ultra
vires
the powers of the trustees of the Fund
and unconstitutional.
The
adjudicator postponed the matter to 30 September 2001 “at which
time this tribunal shall fashion an appropriate remedy”. In
accordance with the procedure set out in his letter of 20 September
2001, the adjudicator gave the parties until 15 September 2001
to
place additional evidence and written submissions before the tribunal
“for consideration in determining a final remedy”.
The
second preliminary determination: 24 August 2001
The
attorneys of the Fund and Metcash raised a number of objections to
the first preliminary determination. The adjudicator conceded
that
there was merit in “at least some” of these objections and
considered it appropriate to make “a further interim ruling”
that
took account of these objections. This further interim ruling is
again headed “Preliminary Determination in terms of
section 30J
of
the Pension Funds Act”. In paragraph 6.1 of this second preliminary
determination it is stated:
“
The ruling issued by
this tribunal on 23 July 2001 is superseded by the present one.”
In the second preliminary
determination, the adjudicator conceded the error of his finding that
rule 12.2
of the rules of the Fund was unconstitutional. He replaced
it with a finding that the rule is unreasonable and therefore
ultra
vires
the powers of the trustees of the Fund. The adjudicator
further purported to issue a rule
nisi
calling upon interested
parties to show cause before 30 September 2001 why a final order
should not be made in terms of which (i)
rule 12.2
is declared to be
ultra vires
and invalid, (ii) the board of management of the
fund is directed to file an appropriate amendment of the rule, and
(iii) the board
of management of the Fund is directed to pay the
complainant benefits accruing to him under the amended rule.
In his second preliminary
determination, the adjudicator makes it clear that he does not intend
canvassing all the objections that
the applicants raised to the first
preliminary determination, “since it would be more appropriate to
deal with them after the parties
have been given the opportunity of
making full submissions”.
The nature of the first and second determination
The adjudicator termed his decisions of
23 July and 24 August "preliminary determinations". In his
letter of 30 September
2001 the refers to them as "preliminary
rulings", and he characterizes his second preliminary
determination as “an interim
ruling”. Within the context of the
Act, it is indeed more accurate to describe those decisions as
"rulings"; they are
not "determinations" as
envisaged by the Act for the following reasons:
both in
respect of the first and the second "determination" or
ruling, the parties were afforded the opportunity to make
further
submissions before a final determination was to be made;
neither ruling was a final decision on the specific complaint
lodged by Manzini in terms of section 30A(3) of the Act;
the adjudicator lodged neither ruling with the Registrar of
this Court -- section 30M of the Act requires the adjudicator to
lodge
his determinations with the clerk or Registrar of the Court
which would have had jurisdiction had the matter been heard by a
court.
The reason for the requirement is that section 30O of the Act
deems a determination by the adjudicator to be a civil judgment of
any court of law "had the matter in question been heard by such
court".
Proceedings under section 30P of the
Act
The applicants and the adjudicator
treated the current application as a proceeding under the provisions
of section 30P of the Act.
The section provides as follows:
"(1) Any party who
feels aggrieved by a determination of the adjudicator may, within six
weeks after the date of the determination,
apply to the Division of
the Supreme Court which has jurisdiction, for relief, and shall at
the same time give written notice of
his or her intention so to apply
to the other parties to the complaint.
(2) The Division of the
Supreme Court contemplated in ss (1) shall have the power to consider
the merits of the complaint in question,
to take evidence and to make
any order it deems fit."
The applicants rely on subsection (2)
of the section in that they seek an order dismissing the second
respondent's claim. In their
heads of argument, counsel for the
applicants refer to
Iscor Pension Fund v Murphy NO and Another
2002 (2) SA 742
(T) at 749A as authority for the proposition that the
Court is competent to grant that relief. In the passage concerned (at
748H
-- 749D) the Court deals with the "proper approach to be
adopted" by the Court in considering an application in terms of
section 30P of the Act.
The adjudicator, in turn, relies on the
time-barring provision contained in subsection (1) of the section. He
also consents to an
order being made under subsection (2) for the
dismissal of Manzini's complaint.
An
application under section 30P of the Act is
sui generis;
it is
not an appeal or review. The Court's jurisdiction is analogous to
original jurisdiction (
Resa Pension Fund v Pension Fund
Adjudicator and Others
2000 (3) SA 313
(C) at 318G). In
Southern
Staff Pension Fund v Murphy NO and Another,
(unreported, case no
14179/99, Witwatersrand Local Division) cited with approval in
Iscor
Pension Fund v Murphy NO and Another, supra,
at 749C--D) it is
said that the section does not --
"exclude or limit
this Court's inherent review jurisdiction. In my view it is the
intention of this section to give the Court
powers in addition to its
inherent powers of review."
In other words, the High Court --
"does not merely
exercise powers of review over their performance by the adjudicator
of his functions, but is required itself
to assess the merits of the
complaint, and decide whether the adjudicator's determination was
correct in law. If not, this Court
will substitute its own decision."
(
South African Eagle Pension Fund v
Murphy NO
(unreported, case no 30587/99, Witwatersrand Local
Division) cited with approval in
Iscor Pension Fund v Murphy NO
and Another, supra,
at 749B).
The Court's jurisdiction to deal with a
matter under section 30P of the Act derives from the determination
made by the adjudicator.
The Court is empowered "to consider the
merits of the complaint in question". This means the complaint
that was put before
the adjudicator under section 30A(3) of the Act
which, in turn, means a complaint as defined in the Act (see
Shell
an BP South African Petroleum Refineries (Pty) Ltd v Murphy NO and
Others
2001 (3) SA 683
(D) at 693E--F).
In this matter, the adjudicator has not
made a determination of Manzini's complaint. He has done no more than
to make interim rulings
which may, or may not, affect the nature of
his determination of that complaint. The applicants are, accordingly,
not entitled at
this stage to invoke the Court's jurisdiction under
section 30P of the Act.
Review of the preliminary rulings
Section 30P does not exclude or limit
the Court's inherent review jurisdiction. The applicants seek to have
the "first determination"
reviewed on the following
grounds:
The legitimacy and constitutionality of rule 12.2 was not the
dispute referred in terms of section 30A(3) of the Act by Manzini.
The adjudicator is not competent to consider the
reasonableness of pension fund rules registered in terms of the Act.
The adjudicator does not have the powers to consider a
complaint tantamount to a “debt” within the meaning thereof as
contained
in
section 10
of the
Prescription Act 68 of 1969
.
The determination evidenced a material error of law in that
the adjudicator found the rules of the Fund to be unconstitutional
when
the application of those rules to Manzini antedates the
operation of the Interim Constitution of 1993.
The adjudicator committed a gross irregularity in not
presenting the Fund and Metcash with an opportunity to be heard in
the respect
of the issue pertaining to the legitimacy and
reasonableness of rule 12.2.
The applicants seek to have the "second
determination" reviewed on the ground that it was
ultra vires
the powers of the adjudicator:
The adjudicator is not competent to vary his own findings in
respect of which he is
functus officio
.
The adjudicator is not competent to consider the
reasonableness of pension fund rules registered in terms of the Act.
The adjudicator committed a gross irregularity by not giving
the parties an opportunity to be heard before making his second
determination.
The applicants further contend that the
adjudicator’s determinations fall to be reviewed and set aside by
reason of the fact that
his conduct, objectively considered, created
a reasonable apprehension of bias.
As has been pointed out above, the
adjudicator has not, as yet, made any determination of Manzini's
complaint. He has done no more
than to make interim rulings which
may, or may not, affect the nature of his determination of that
complaint. In respect of both
rulings, the parties were afforded the
opportunity to make further submissions before a determination was to
be made. The applicants
availed themselves of the opportunity to
raise objections to the "first preliminary determination"
and succeeded in convincing
the adjudicator of the error of his ways.
They did not avail themselves of the opportunity, afforded by the
adjudicator's rule
nisi
, to make submissions in regard to the
"second preliminary determination". Had they done so, they
might once more have succeeded
in convincing the adjudicator that he
was mistaken. In any event, he immediately conceded that he was wrong
when the papers in these
proceedings were served upon him.
The allegations that the adjudicator's
conduct, objectively considered, created a reasonable apprehension of
bias are largely built
upon the contents of a conversation between Ms
MacKenzie, an investigator in the adjudicator's office, and the
applicants' attorney.
There are factual disputes around this
conversation which cannot, and need not, be resolved on the papers.
On the assumption that
the conversation was ill-advised, it is not
necessarily indicative of bias on the part of the adjudicator.
The applicants urged this Court to
interfere on the basis of the principles enunciated in
Wahlhaus v
Additional Magistrate, Johannesburg
1959 (3) SA 113
(A) at
119F--120D. In terms of those principles, a Court has the power to
interfere with the unterminated course of proceedings in
a court
below in rare cases where grave injustice might otherwise result or
where justice might not otherwise be obtained. In general,
a Court
would hesitate to intervene, especially having regard to the effect
of such a procedure upon the continuity of proceedings
in the court
below and to the fact that redress by means of review or appeal would
ordinarily be available (see also
Ismail and Others v Additional
Magistrate, Wynberg
1963 (1) SA 1
(A) at 5H--6A;
Van Wyk v
Midrand Town Council and Others
1991 (4) SA 185
(W) at 188D).
In my view, this is not a case in which
those principles find application. This is not a matter in which
"grave injustice"
might result or where "justice might
not otherwise be obtained" if the Court declines to interfere in
the unterminated
proceedings before the adjudicator. Once the
adjudicator has made a determination of a complaint, expeditious and
effective redress
is available under the special procedure in terms
of section 30P of the Act.
The attitude of the adjudicator
In his letter of 20 September 2001
addressed to the applicants' attorneys, the adjudicator indicated his
willingness to suspend handing
down a determination pending the
outcome of review proceedings. The applicants say that it was only
after the application had been
prepared, and counsel engaged, that
the adjudicator consented to the interim order. The ensuing
proceedings escalated into a fully-fledged
opposed matter and
answering and replying affidavits were in due course filed.
The adjudicator adopted a strangely ambivalent attitude. In
paragraph 3 of his answering affidavit, he says that he wishes to
make
it clear that he "does not oppose the application and the
relief sought on the merits" and that he accordingly will not
deal with the merits of the application.
He does, however, proceed to oppose the
application on the ground that the deponent to the founding papers,
Mr DO Pretorius, legal
director of Metcash, had no authority to bring
the application and he makes the submission that, should the
applicants fail to establish
such proper authority, the application
should fail with costs. I shall deal more fully with this issue
below.
In paragraph 9 of his supplementary
answering affidavit, the adjudicator says that on the issue of the
ratification by the applicants
of Pretorius' authority, "[l]egal
argument will be addressed to this Honourable Court in due course".
A few days before
the hearing, the adjudicator filed written
submissions in the form of a letter in which he (i) advises the Court
that there will
be no appearance on his behalf, and (ii) urges the
Court to find that the deponent to the founding papers had no
authority to bring
the application, and contends that in any event he
be awarded the costs of opposing the matter until 15 January 2002,
alternatively
that no order be made as to costs. This conduct on the
part of an official in the position of the adjudicator is to be
deprecated.
The rules of Court make provision, in application
proceedings, for evidence to be presented by way of affidavit and for
oral argument.
The rules do not provide for argument by way of
correspondence.
The adjudicator also deals with further
matters in his affidavits, namely, allegations which he says reflect
deleteriously on the
manner in which he and his office carried out
their functions, and the question of costs.
Authority to bring the
application
Both the Fund and Metcash on 22
November 2001 passed resolutions ratifying the decision to launch the
application and the authority
of Mr DO Pretorius to bring the
application on their behalf. The adjudicator raises two issues:
Whether the applicants had the necessary authority in respect
of the period 20 September 2001 to 22 November 2001.
(b) Whether,
having regard to the fact that the resolutions were passed
retrospectively after expiry of the six week period referred
to in
section 30P of the Act, the decisions could in fact be ratified.
In
Baeck & Co SA (Pty) Ltd v Van Zummeren &
Another
1982 (2) SA 112
(W) it was held (at
118H--119D) that deficiency in authority can be cured by ratification
having retrospective operation, and that
an applicant should be
allowed to establish such ratification in his replying affidavit in
the absence of prejudice to the respondent.
This approach was
subsequently approved and adopted in
Merlin
Gerin (Pty) Ltd v All Current and Drive Centre (Pty) Ltd &
Another
1994 (1) SA 659
(C) at 660I--J;
National Co-op Dairies Ltd v Smith
1996 (2) SA 717
(N) at 719A--C, and
Smith v
Kwanonqubela Town Council
1999 (4) SA 947
(SCA) at 954B--H. The respondents in this matter will not be
prejudiced if the applicants are allowed to raise the issue of
ratification
in reply. This is a matter in which, if I may paraphrase
the words of Conradie J (as he then was) in
Merlin
Gerin (Pty) Ltd v All Current and Drive Centre (Pty) Ltd &
Another, supra,
at 660I, the resolutions of
the boards of the applicants' have "only to be submitted to be
accepted".
The
adjudicator's contention that the ratification is invalid in as much
as it occurred after the expiry of the six week period prescribed
in
section 30P(1) of the Act falls to be rejected on one of two
alternative grounds.
Firstly,
it has been held above that the present application is not one in
which the special jurisdiction of section 30P can be invoked.
In so
far as the Court's inherent powers of review are invoked in this
application, such an application is not subject to any time
limit,
except that the application must be brought within a reasonable time.
It cannot be said that the application in this matter
was not brought
within a reasonable time.
Secondly,
if it is accepted that the provisions of section 30P are applicable
to the present proceedings, the section is not a time-barring
provision which prevents the applicants from retrospectively
ratifying the authority of Pretorius to institute proceedings on
their
behalf. The suggestion that retrospective ratification is
invalid after a statutory prescribed time derives from the general
rule
stated in
Finbro Furnishers (Pty) Ltd v
Peimer
1935 CPD 378
at 380 that ratification
cannot affect vested rights previously acquired by third parties. In
the present matter, the adjudicator
has not acquired any vested right
which may be affected by ratification. Moreover, provisions as to
time must be dealt with in the
light each of its own language, scope
and object and the consequences in relation to justice and
convenience (
Charlestown Town Board v Vilakazi
1951 (3) SA 361
(A) at 370D). Strict enforcement of the time-barring
provision in the subsection may have serious consequences in so far
as it may
render a valid application for relief unenforceable. In
addition, there is no right of appeal against a determination by the
adjudicator,
and the disputes determined by the adjudicator may
affect large numbers of people and may have profound socio-economic
implications.
In
my view it was clearly open to the applicants to ratify the bringing
of these proceedings
ex post facto
and they have duly done so. I am accordingly satisfied that the
proceedings are duly authorised.
Costs
In the normal course, the dismissal of
the application would have brought in its wake an order that the
applicants pay the first respondent's
costs. The second respondent
did not participate in the proceedings and no order of costs needs to
be made either for or against
him.
The bulk of the papers filed by the
adjudicator deals with the issue of the authority of the deponent to
the founding papers to bring
the application. After the ratifying
resolutions were taken, the adjudicator persisted in his attitude
that the deponent to the founding
papers had no authority and that
the purported ratification by the resolutions of 22 November 2001 was
invalid. This was also the
stance that he adopted in his letter
delivered to the Court a few days before the hearing of the matter --
the major part of that
letter is concerned with the issues of
authority and ratification.
The
adjudicator's challenge to the applicants' authority elicited the
ratifying resolutions. Once the applicants had rectified the
position
by way of the resolutions of 22 November 2001, there was no
justification for the adjudicator to persist with the issue.
The
issue was not one that provided any material or substantial advantage
to the adjudicator -- persisting with it merely contributed
to an
escalation of costs (see
National Co-op
Dairies Ltd v Smith
1996 (2) SA 717
(N) at
710E--F;
Smith v Kwanonqubela Town Council
1999 (4) SA 947
(SCA) at 954H).
In
view of the adjudicator's conduct in these proceedings, a fair order
of costs would be to order the parties to bear their own costs.
I would make the following orders:
The application is dismissed.
Each party to pay its own costs.
HJ ERASMUS, J
I agree and it is so ordered.
NEL, J