CONSTITUTIONAL COURT OF SOUTH AFRICA
Case CCT 142/22
In the matter between:
PANDELANI MIDAS MUDAU Applicant
and
MUNICIPAL EMPLOYEES’ PENSION FUND First Respondent
AKANI RETIREMENT FUND ADMINISTRATORS
(PTY) LIMITED Second Respondent
VHEMBE DISTRICT MUNICIPALITY Third Respondent
and
INSTITUTE FOR RETIREMENT FUNDS AFRICA NPC Amicus Curiae
Neutral citation: Mudau v Municipal Employees’ Pension Fund and Others [2023]
ZACC 26
Coram: Maya DCJ, Kollapen J, Madlanga J, Majiedt J, Makgoka AJ,
Mathopo J, Potterill AJ, Rogers J and Theron J
Judgments: Kollapen J (unanimous)
Heard on: 7 March 2023
Decided on: 2 August 2023
Summary: Pension Funds Act 24 of 1956 — section 12 — amendment of
rules — pension fund may not apply retrospective rule amendment
prior to registration by the Registrar of Pension Funds
ORDER
On appeal from the Supreme Court of Appeal (hearing an appeal from the Full Court of
the High Court of South Africa, Gauteng Division, Pretoria):
1. Leave to appeal is granted.
2. The appeal is upheld.
3. The order of the Supreme Court of Appeal is set aside and replaced with
the following order:
“(a) The appeal is dismissed with costs , including the costs of two
counsel.
(b) The second respondent is ordered to pay the applicant the sum of
R1 493 875.77 (being the balance between R2 140 313.19 and
R646 437.42), together with interest at the prescribed legal rate
calculated from 16 October 2013 until the date of payment , less
any deductions that are permissible in terms of the Pension Fund s
Act 24 of 1956.”
4. The first and second respondents are to pay the costs of the applicant in
this Court, including the costs of two counsel.
KOLLAPEN J
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JUDGMENT
KOLLAPEN J (Maya DCJ, Madlanga J, Majiedt J, M akgoka AJ, Mathopo J,
Potterill AJ, Rogers J and Theron J concurring)
Introduction
[1] This matter traverses the nature of the relationship between a pension fund and
its members and the manner in which benefits arising out of the fund are quantified and
paid in terms of the Pension Funds Act 1 (Act). More crisply, two issues arise which
may require determination. First, whether a pension fund may process a member’s
claim for a withdrawal benefit in terms of a rule amendment that has yet to be registered
by the Registrar of Pension Funds (Registrar). Second, whether a rule amendment may
retrospectively or retroactively impact accrued or vested pension fund benefits.2
[2] We live in an increasingly uncertain world, but the human condition yearns for
certainty in the hope that it will ameliorate our fears and insecurities and enable us to
enter the future with less trepidation and a greater sense of confidence. In an unequal
society such as ours, even that limited level of security is beyond the reach of many as
they simply battle against all odds to eke out a living, let alone plan and contemplate
the future.
[3] For others, however, the ability to plan for their future, including their financial
well-being, is within their means and a pension is one of the more effective vehicles for
future financial planning. A pension is a crucial instrument through which individuals
plan and anticipate a period in which they will no longer be working to generate income.
Pensions also contribute towards fulfilling the right to social security as they are a
1 24 of 1956.
2 See [73] below for a discussion on retroactivity and retrospectivity.
KOLLAPEN J
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means by which individuals can secure financial stability through monetary
contributions.3 South Africa has a bout 5 000 registered retirement funds, with
approximately 17 702 000 total members and aggregate total assets of R4.34 billion.4
Pension funds are important not only for individuals wishing to make decisions
regarding their work and retirement but for the economy as a whole.
[4] Pensions provide an opportunity for individuals to live fully and meaningfully
upon retirement. This is especially important in the context of South Africa’s racially
divided past, its developing economy, and the broad reliance on government social
assistance.
Factual background
[5] The dispute in this matter arises from a withdrawal benefit claim from the
Municipal Employees’ Pension Fund (Fund) – a pension fund registered in terms of
section 4 of the Act, made by the applicant, Mr Pandelani Midas Mudau (Mr Mudau).
Mr Mudau was employed by the third respondent, Vhembe District Municipality, from
3 May 2003 until his resignation on 31 May 2013. He was a member of the Fund
throughout his employment and, upon his resignation, became entitled to withdrawal
benefits in terms of the Fund’s Rules (Rules). The Fund was established in 1970. Its
purpose is to manage financial contributions and maximise the return on investment of
its members, who are largely previously disadvantaged employees of local government
authorities. The second respondent, Akani Retirement Fund Administrators
(Pty) Limited (Akani), is the administrator of the Fund. I shall refer to the Fund and
Akani collectively as “the respondents”.
[6] Prior to 2013, rule 37 of the Rules stated that a member’s withdrawal benefit
would be three times a member’s contribution with interest (old rule). Howeve r, in
January 2013, the Fund received an actuarial valuation report which warned that it was
3 Mhlontlo v Government Employees’ Pension Fund [2021] ZAECPEHC 46 at para 12.
4 Financial Services Conduct Authority Financial Services Conduct Authority Annual Report (2021-2022) (2022)
at 65-6.
KOLLAPEN J
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at risk of failing to meet its future liabilities due to, amongst other things, the calculation
of its withdrawal benefits . This placed its viability in jeopardy. Consequently, on
21 June 2013, a decision was made by the Fund’s board to amend rule 37 of the R ules
in order to provide that a member’s withdrawal benefit would be one and a half times a
member’s contributions with interest (unregistered amended rule). The unregistered
amended rule further provided that the amendment would have retrospective effect from
1 April 2013. On 22 July 2013, the Fund made an application to the Registrar to
register the unregistered amended rule.
[7] On 16 October 2013, Mr Mudau, who had resigned with effect from
31 May 2013, was paid a withdrawal benefit of R646 437.42 in terms of the
unregistered amended rule , which , at that stage, was pending registration by
the Registrar. Mr Mudau alleged that he was entitled to receive a withdrawal benefit of
R2 140 313.19 in terms of the old rule and referred a complaint to this effect to the
Pension Funds Adjudicator (Adjudicator) on 2 December 2013. He sought a ruling that
he was entitled to be paid the balance of R1 493 875.77.
[8] On 1 April 2014, the Registrar registered the amended rule.
Litigation history
Pension Funds Adjudicator
[9] The complaint was referred to the Adjudicator in terms of section 30A of
the Act.5 In a determination issued on 7 July 2014, the Adjudicator found in favour of
5 Section 30A of the Act, dealing with submission and consideration of complaints, provides the following:
“(1) Notwithstanding the rules of any fund, a complainant may lodge a written complaint
with a fund for consideration by the board of the fund.
(2) A complaint so lodged shall be properly considered and replied to in wri ting by the
fund or the employer who participates in a fund within 30 days after the receipt thereof.
(3) If the complainant is not satisfied with the reply contemplated in subsection (2), or if
the fund or the employer who participates in a fund fails to reply within 30 days after
the receipt of the complaint the complainant may lodge the complaint with
the Adjudicator.
(4) Subject to section 30I, the Adjudicator may on good cause shown by any affected party
KOLLAPEN J
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Mr Mudau, holding that the unregistered amended rule could not be applied until it had
been approved and registered by the Registrar. This was in line with a previous
determination of a separate complaint brought before the Adjudicator by another
member of the Fund as a result of the application of the unregistered amended rule to
the calculation of benefits. 6 Additionally, the Adjudicator held that the retrospective
amendment could not be applied to benefits that had already accrued b efore it was
approved by the Registrar. The A djudicator concluded that the old rule appl ied to
Mr Mudau’s withdrawal benefit. The Fund was ordered to pay Mr Mudau the balance
to which he was entitled under the old rule, together with interest.
High Court
[10] Dissatisfied with the Adjudicator’s findings, the respondents brought an
application in terms of section 30P of the Act7 to review and set aside the Adjudicator’s
determination. The application for review was advanced on the grounds that:
(a) the Adjudicator lacked jurisdiction to determine that the effective date of the
unregistered amended rule was inapplicable, and her decision was thus invalid and
(b) the Adjudicator’s decision was based on m aterial errors of fact and law. The
High Court dismissed the application with costs , finding that there was no basis upon
which the determination of the Adjudicator could be reviewed or set aside.
(a) extend a period specified in subsection (2) or (3) before or after expiry of that
period; or
(b) condone noncompliance with any time limit specified in subsection (2) or
(3).”
6 Raboshakga v Municipal Employees’ Pension Fund PFA/GP/00004216/2013.
7 Section 30P of the Act, dealing with access to court, provides the following:
“(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 High 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 High Court contemplated in subsection (1) may consider the merits
of the compla int made to the Adjudicator under section 30A(3) and on which
the Adjudicator’s determination was based, and may make any order it deems fit.
(3) Subsection (2) shall not affect the court's power to decide that sufficient evidence has
been adduced on which a decision can be arrived at, and to order that no further
evidence shall be adduced.”
KOLLAPEN J
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Full Court
[11] The respondents appealed to the Full Court with the leave of the High Court.
They did so on the basis that the High Court had erred in finding that, amongst other
things, the effective date of the rule amendment was the date of approval and
registration by the Registrar (1 April 2014) rather than the effective date (1 April 2013)
specified in the amended rule adopted by the Fund and registered by the Registrar.
[12] The Full Court, by a majority , found that the Adjudicator was not obliged to
apply the unregistered amended rule which had not been approved and registered by
the Registrar when Mr Mudau resigned and was paid his resignation benefit. It further
found that the amendment could not be approved retrospectively vis-à-vis Mr Mudau,
as he was no longer a member of the Fund when the Fund resolved to amend the rule
and at the time the am ended rule was registered . The minority found for the Fund on
the basis that the Adjudicator had essentially found that the Fund could not pass a
retrospective rule amendment , and that this was ultra vires the powers of
the Adjudicator. The minority also held that the Adjudicator could not invalidate the
rule amendment that had been approved by the Registrar until it was reviewed and set
aside. The appeal was dismissed with costs.
Supreme Court of Appeal
[13] The Supreme Court of Appeal granted the respondents leave to appeal the
Full Court’s judgment and order. Their argument in the main was that the Adjudicator
had erred in finding that the unregistered amended rule could not , despite its
express retroactivity, apply to withdrawal benefits which a ccrued before it was
registered.
[14] The Supreme Court of Appeal found that the Act, read together with the Rules,
authorised the Fund to amend its Rules and to determine the effective date of application
of the amended rule. It said that the clear and unambiguous language contained in the
amended rule meant that, once registered, the amended rule could apply retroactively
KOLLAPEN J
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to all withdrawal benefits which had accrued to the Fund’s members as of 1 April 2013,
the date stipulated in the amended rule approved by the Registrar. Accordingly, the
appeal was upheld with costs.
Before this Court
[15] Aggrieved by the decision, Mr Mudau approached this Court seeking
condonation for his late filing of this application and for leave to appeal the whole
judgment and order of the Supreme Court of Appeal . The Institute for Retirement
Funds Africa NPC (IRFA), a non -profit company which represents and promotes the
interests of the retirement industry in South Africa, was admitted as amicus curiae and
granted leave to make written and oral submissions. I set out below cumulatively, under
appropriate headings, the submissions made by the parties in their respective
submissions to this Court’s directions8 as well as further written submissions9 and oral
submissions presented at the hearing of the matter on 7 March 2023.
Applicant’s submissions
Jurisdiction and leave to appeal
[16] Mr Mudau submits that the application engages this Court’s constitutional
jurisdiction as it relates to the proper interpretation of a statute giv ing content to a
constitutional right , namely the right s to equality, property and social security
guaranteed by the Constitution. He submits that his rights have been limited as follows:
8 On 17 October 2022, the Chief Justice directed the parties to file written submissions addressing the following
issues:
(a) Whether the order of the Supreme Court of Appeal in the present case deviates from its previous
findings in Mostert N.O. v Old Mutual Life Assurance Co (SA) Ltd [2001] ZASCA 104; [2001]
4; All SA 250 (A) and National Tertiary Retirement Fund v Registrar of Pension Funds [2009]
ZASCA 41; 2009 (5) SA 366 (SCA); [2009] 3 All SA 254 (SCA).
(b) Whether, absent a challenge to review the Registrar’s decision to register the rule amendment,
the courts are bound to apply the rule amendment retroactively.
(c) Whether the rule amendment applies to legal proceedin gs instituted before registration of the
amendment and, if so, whether this particular issue raises an arguable point of law of general
public importance in terms of section 167(3)(b) of the Constitution.
9 On 5 January 2023, the Chief Justice directed the parties to file written argument, including on the merits of the
appeal. On 3 March 2023, the amicus curiae filed written submissions , as directed by the Chief Justice.
On 6 March 2023, the respondents filed written submissions in respect of the amicus curiae written submissions.
KOLLAPEN J
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(a) His right to equality and to be treated the same as other members of
pension funds, who are paid their benefits in terms of the registered rules,
has been limited through the application of the unregistered amended rule
to the computation of his benefits.
(b) His right to social security has been limited as his pension benefits , a
vehicle for social security benefits, have been affected.
(c) His right to property has been limited as he has been arbitrarily deprived
of his property – his accrued pension benefit.
[17] In addition, Mr Mudau submits that this Court’s general jurisdiction is engaged,
as the following questions raise arguable points of law of general public importance
which ought to be considered by this Court:
(a) whether rule amendments can bind or be applied to former members who
have exited the pension fund and whose benefits have been calculated and
paid before the amendment is registered;
(b) whether a pension fund can anticipate the registration of a rule
amendment by the Registrar and apply the rule before it has been
registered and thus subjugate the statutory regime; and
(c) whether an amendment which purports to be retrospective ought to affect
pending proceedings before the Adjudicator.
[18] Mr Mudau submits that it is in the interests of justice to grant leave to appeal as
the matter has important consequences for the broader public. This is illustrated, he
submits, by the extensive commentary that the Supreme Court of Appeal’s judgment
has attracted, and that the interpretation of the Act was held in Mongwaketse10 to have
the potential of affecting all members of pension funds.11
10 Municipal Employees’ Pension Fund v Mongwaketse [2022] ZACC 9; 2022 (6) SA 1 (CC); 2022 (11) BCLR
1404 (CC).
11 Id at para 29.
KOLLAPEN J
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Condonation
[19] Mr Mudau has asked that this Court condone the six-day delay in applying for
leave to appeal. He explains that he was made aware of the Supreme Court of Appeal’s
judgment on 11 April 2022, but could not fund an application before this Court. His
attorneys then sought counsel willing to provide services on a pro bono (without charge)
basis. On 30 April 2022, counsel agreed to assist pro bono and was b riefed on
3 May 2022, but could only attend to the application for leave to appeal after
6 May 2022, due to his attendance in a High Court trial. Mr Mudau submits that it
would be in the interests of justice to condone the delay as, for a large number of other
pension fund members, the consequences of the Supreme Court of Appeal judgment
will be prejudicial and far-reaching.
Merits
The application of an unregistered rule
[20] Mr Mudau’s case is that his right to a withdrawal benefit in terms of the R ules
accrued to him on the date of his resignation (31 May 2013) and his benefit should have
been calculated and paid in terms of the Rules that applied on 31 May 2013. He argues
that the Fund was not empowered by the Act or the R ules to apply the unregistered
amended rule to him and in doing so the Fund had acted ultra vires the Rules and in
breach of sections 12(4), 13 and 37A of the Act.12
[21] Mr Mudau also submits that the application of an unregistered amended rule to
his withdrawal benefits was in conflict wi th how section 12(4) of the Act was
interpreted in Mostert.13 In this regard, Mr Mudau submits that the Supreme Court of
Appeal’s judgment in the present case deviated from the principle in Mostert that,
although amended rules may have retrospective effect after registration, it is not
12 The relevant parts of these sections of the Act are quoted at [53] to [55] below.
13 Mostert N.O. v Old Mutual Life Assurance Co (SA) Ltd [2001] ZASCA 104; 2001 (4) SA 159 (SCA); [2001] 4
All SA 250 (A).
KOLLAPEN J
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permissible to give such rules binding effect before registration. 14 Mr Mudau argues
that the unregistered amended rule was applied in October 2013 in terms of the
“anticipation” practice which was frowned upon by the Supreme Court of Appeal in
Mostert for subjugating the statutory regime.15
[22] In further support of this argument , he argues that section 13 of the Act
prescribes that “the registered rules of pension funds are binding on the fund and the
members”. Therefore, he submits that t he Fund cannot apply an unregistered rule in
conflict with section 13 of the Act, as it did in his case.
[23] Similarly, Mr Mudau submits that the application of an unregistered rule to his
withdrawal benefits was in breach of section 37A, which does not permit the reduction
of benefits of former members based on an amendment that is yet to be registered.
Mr Mudau accepts that the Supreme Court of Appeal correctly relied on NTRF16 for the
proposition that a pension fund may adopt a rule reducing a member’s pension benefits,
provided that it is done in accordance with the fund rules and the applicable statutory
regime. Mr Mudau, however, submits that NTRF is not authority f or the propositions
that:
(a) approval of an amendment can be anticipated;
(b) a pension fund can, while anticipating a rule amendment, act contrary to
the provisions of section 37A of the Act;
(c) an amendment can be applied before it is registered;
(d) an amendment can reduce accrued benefits; and
(e) once registered, an amendment can apply to former members or be
applied to reduce accrued benefits of former members who have already
left and have already been paid.
14 Id at para 60.
15 In Mostert, the fund argued that there was a practice in the Registrar’s office which allowed rule changes to
take effect before registration. See Mostert above n 13 at paras 67 and 69.
16 National Tertiary Retirement Fund v Registrar of Pension Funds [2009] ZASCA 41; 2009 (5) SA 366 (SCA).
KOLLAPEN J
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Retrospective application of a rule to accrued benefits
[24] Mr Mudau concedes that a pension fund may amend its rules and that the
amendment can have retrospective effect on a date prior to the date on which the
amendment is registered. He argues, however, that a retrospective rule amendment
cannot reduce or take away benefits that have already accrued. He, further, argues that
it cannot reduce a benefit that has already been paid or that should already have been
calculated and paid in terms of t he pre-amendment rule. While there is a rebuttable
presumption against retrospectivity, Mr Mudau submits that the presumption was not
rebutted by the unregistered amended rule , as it did not state what its effect would be
on transactions completed and matters which are the subject of pending litigation. Thus,
he concludes that, even if the rule amendment had retrospective effect, it could not apply
to the benefits that had accrued to him on 31 May 2013 nor was it binding on
the Adjudicator in December 2013 when the Adjudicator became seized of Mr Mudau’s
complaint.
Section 12(1)(a) of the Act – a creditor of the Fund
[25] Mr Mudau argues that, on 31 May 2013, he ceased to be a member of the Fund
and became a creditor instead. This is because the term “creditor” can only refer to a
former member (or his beneficiaries), as its plain meaning is a person to whom money
is owed. Further, he says that this is supported by rule 24(7) of the Rules which states
that “a member who leaves service of a lo cal authority shall, subject to the provisions
of [rule] 39(1), cease to be a member”. On that basis, he invokes s ection 12(1)(a) of
the Act and argues that a rule amendment is invalid if it purports to affect any right of
a creditor of the Fund, other than a member.
Review of the Registrar’s decision
[26] Mr Mudau says that he could not be expected to review the Registrar’s decision
to register the rule as there was no decision by the Registrar to review at the time his
KOLLAPEN J
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complaint was lodged. In addition, his case was never based on any deficiency in the
rule but on its application to him while it remained unregistered.
Whether the unregistered amended rule applies to legal proceedings
instituted before registration of the amendment
[27] Mr Mudau submits that the registration of the amendment with retrospective
effect should not affect a complaint that was already before the Adjudicator in
December 2013. This is because, in the absence of contrary intention, the amended rule
cannot be treated as affecting completed transactions and matters which are the subject
of pending litigation.
Costs
[28] Mr Mudau submits that the Supreme Court of Appeal’s costs order, requiring
him to pay the Fund’s costs in the High Court, Supreme Court of Appeal as well as
before the Adjudicator, is flawed. He argues that this cost s order is inappropriate,
extraordinary and unprecedented as the Adjudicator does not ordinarily grant costs
orders against laypeople and that he should not be burdened with an adverse costs order
for unsuccessfully defending his constitutional rights.
Respondents’ submissions
Jurisdiction and leave to appeal
[29] The respondents argue that the application should be dismissed as it does not
raise any constitutional issues or an arguable point of law of general public importance.
[30] On constitutional jurisdiction, the respondent s submit that the mere
interpretation and application of the Act does not trigger this Court’s jurisdiction ,
especially given Mr Mudau’s failure to challenge the constitutionality of any provisions
of the Act which allow for retroactive amendments. Further, the respondents argue that
Mr Mudau has impermissibly raised the argument that his constitutional rights have
KOLLAPEN J
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been breached for the first time in this Court and at the highest level of abstraction .
They deny that his constitutional rights were violated.
[31] On general jurisdiction, the respondents submit that this matter raises no point
of law as it relates to factual disputes and the application of the settled principle that
pension funds are allowed to amend their rules with retroactive effect, even if it unsettles
accrued benefits. In any event , the respondents submit that it is not arguable , as,
amongst others, it has already been pronounced upon by this Court and lower courts ,
and there is nothing new in the argument raised by Mr Mudau.
[32] They argue further that it would not be in the interests of justice to grant leave to
appeal as there are no reasonable prospects that this Court will reverse the
Supreme Court of Appeal’s order.
Merits
The application of an unregistered rule
[33] The thrust of the respondents’ submissions on the merits is that the Act, properly
interpreted, permits a pension fund to amend its rules, including retrospectively so as to
affect vested or accrued rights.
[34] In relation to section 12(4) and Mostert, the respondents submit that Mostert is
distinguishable from the present case, because it did not deal with a change to members’
benefits, the effect of a retroactive rule amendment or an express decision by
the Registrar to register the rule amendment with retrospective effect. Instead, Mostert
confirms the proposition , in line with section 12(1)(b), that a rule amendment is not
valid and effective unless it is registered. Here, the amended rule was registered and
was thus effective. In addition, Mostert is distinguishable, so they argue, because it
concerned:
(a) a privately administered pension fund subject to strict regulatory controls;
KOLLAPEN J
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(b) whether and how a pension fund could change its legal status from an
underwritten fund to one that was privately administered;
(c) a “practice” in the Registrar’s office; and
(d) the effective date of revised rules, being the date of registration.
[35] The respondents do not challenge Mr Mudau’s interpretation of section 13 of
the Act, as they submit that on either party’s version, Mr Mudau is bound by the Rules –
either as a member (which is defined in section 1 of the Act as including a former
member) or as a person who claims under the Rules. This is because the effect of
section 13 of the Act is that the amended rule is binding on the Fund, its members and
any person who claims under the rule.
[36] The respondents submit that the specific purpose of section 37A of the Act is to
prevent benefits from being reduced by factors external to a fund’s rules. However, it
does not prohibit a pension fund from reducing benefits, as was confirmed in NTRF,17
upon which the Supreme Court of Appeal in this matter correctly relied.
Retrospective application of a rule to accrued benefits
[37] The respondents say that the Supreme Court of Appeal interpreted section 12
consistently with the rules of interpretation. They argue that section 12 implicitly
authorises the Fund to adopt retroactive amendments and that our courts, they say, have
interpreted section 12 to permit retroactive rule amendments . Further, they argue that
that the Supreme Court of Appeal held in Progress Office Machines,18 that it is
permissible for a retroactive provision to have the effect of “unvesting” rights .
Moreover, the respondents submit that the presumption against retr ospectivity cannot
apply here, as the terms of the amended rule clearly and expressly provided that it was
retroactive in nature.
17 NTRF above n 16.
18 Progress Office Machines CC v South African Revenue Services [2007] ZASCA 118; 2008 (2) SA 13 (SCA);
[2007] 4 All SA 1358 (SCA).
KOLLAPEN J
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Section 12(1)(a) of the Act – a creditor of the Fund
[38] The respondents submit that the amended rule applies to Mr Mudau as he is a
member of the Fund and he cannot rely on section 12(1)(a) of the Act to claim that he
is a mere creditor. The respondents argue that the purpose and object of section 12(1)(a)
are to make clear that a rule amendment can affect a member or shareholder’s right
(even if that person is also a creditor) , but cannot affect a third -party creditor’s rights.
They submit that this section does not apply to former members like Mr Mudau but
those “other than” a member.
Review of the Registrar’s decision
[39] The respondents submit that , absent a review of the amended rule , it is binding
and applies with effect from 1 April 2013 and must be so applied.
Whether the unregistered amended rule applies to legal proceedings
instituted before registration of the amendment
[40] The respondents accept that the general presumption against retrospectivity
applies unless the contrary intention is expressed . They say that the Fund and
the Registrar’s express intention of the amended rule’s effective date rebuts this
presumption. Accordingly, the presumption does not apply in this matter. They further
submit that the non-application of the amended rule cannot be based on the institution
of legal proceedings , as the amended rule must be applied uniformly and not simply
because Mr Mudau lodged his complaint prior to registration of the amended rule.
According to the respondents, such an interpretation would render the purpose of the
amended rule’s effective date nugatory.
[41] The respondents submit that, in any event, a complaint in terms of the Act is not
a legal proceeding in the ordinary sense, as section 30P permits a fresh determination
of the merits of a complaint. As the High Court considers the compl aint de novo
(afresh), it must apply the rules that are applicable at the time it is seized of the matter,
KOLLAPEN J
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in this case, being the Rules as retrospectively amended and not as they applied when
the complaint was lodged.
Costs
[42] The respondents submit that the Supreme Court of Appeal’s costs order must be
read as granting costs of the appeal and costs in respect of the High Court as these are
ordinary litigation costs. They accept that they are not entitled to costs in respect of the
proceedings before the Adjudicator and abandon that part of the award made in their
favour by the Supreme Court of Appeal.
IRFA’s submissions
[43] The IRFA explains that backdated rule amendments have , for at least two
decades, been a common industry practice . The IRFA submits that there is no way of
determining the exact date when the Registrar will approve or register a rule
amendment. Accordingly, pension funds are unable to make the appropriate provision
to meet the new liability resulting from an amended rule. As a result, a predetermined
backdated date for the operation of the amended rule affords funds the ability to prepare
for the financial impact of a rule amendment.
[44] However, the IRFA’s central submission is that backdated rule amendments have
been understood by the indus try as not affecting vested rights, specifically accrued
benefits which result from an exit event such as retirement, resignation, dismissal, death
or disability. The IRFA submits that there are no pension law authorities that support
retroactive rule ame ndments. Conversely, it submits, a number of determinations by
the Adjudicator have confirmed that rule amendments may be retrospective but may not
interfere with vested r ights.19 Accordingly, it argues that the judgment of the
Supreme Court of Appeal in this matter fundamentally changed the established legal
and industry position in respect of backdated rule amendments.
19 See Greenwood v Old Mutual Staff Retirement Fund [2000] 9 BPLR 978 (PFA); Greenwood v Old Mutual Staff
Retirement Fund (2) [2000] 11 BPLR 1229 (PFA) ; Nortje v Joint Municipal Pension Fund [2007] 3 BPLR 352
(PFA) at para 35; Schenk v Tibbett & Britten SA Pension Fund [2009] 3 BPLR 334 (PFA).
KOLLAPEN J
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[45] Further, the IRFA submit s that the Supreme Court of Appeal’s judgment has
material consequences for the entire retirement fund industry , which range from
requiring funds to note this new position and to review and clarify their own backdated
rule amendments, to threatening the stability of some funds (specifically where
backdated amendments would result in increased member benefits). The latter, it says,
could result in former members demanding higher benefit pay -outs on the strength of
the Supreme Court of Appeal’s judgment.
Analysis
Condonation
[46] Mr Mudau has made out a proper case for condonation. The application is
unopposed. The six-day delay is not excessive and no prejudice arises . Further,
Mr Mudau’s reasonable prospects of success support the granting of condonation .
Condonation is granted.
Jurisdiction and leave to appeal
[47] The matter engages this Court’s constitutional juri sdiction on two primary
grounds. First, the power of the Adjudicator constitutes the exercise of public power
which is a matter that engages the jurisdiction of this Court.20 Second, the dispute turns
on the Supreme Court of Appeal’s in terpretative approach to the Act, in particular,
whether the Act permits the application of an unregistered rule and the retroactive effect
of the rule. I do not agree with the respondents that Mr Mudau is required to challenge
the constitutionality of the Act in order to engage this Court’s constitutional
jurisdiction. The interpretation of the Act in this matter is a constitutional issue as the
determination of the pension withdrawal benefit affects Mr Mudau’s section 27 right to
20 Steenkamp N.O. v Provincial Tender Board of the Eastern Cape [2006] ZACC 16; 2007 (3) SA 121 (CC); 2007
(3) BCLR 300 (CC).
KOLLAPEN J
19
social security. This right is impacted by the interpretation of the Act, thus bringing the
matter within this Court’s jurisdiction.21
[48] It would be in the interests of justice to grant leave to appeal where pension fund
members and the industry as a whole will benefit from a determinative finding with
regard to both the effect of unregistered rule amendments and, if necessary, the
permissible scope and extent of the retrospectiv ity of pension fund rules. Further, this
matter enjoys good prospects of success and therefore leave to appeal should be granted.
The role of pension funds
[49] Membership to a pension fund is the favoured vehicle by which individuals give
effect to their need to provide for a pension at some point in the future. Pension funds
can take on different iterations, such as a defined contribution fund, where contributions
are defined but benefits payable are not predetermined, or a defined benefit fund, where
benefits payable are predetermined and a deficit or surplus may arise .22 The Fund in
the present case was a hybrid one, comprising a defined benefit component and a
defined contribution component. The applicant’s membership was governed by the
defined benefit component. Pension funds, like the Fund in this matter, will offer a
variety of ben efits to its members including retirement benefits, withdrawal benefits,
death benefits and disability benefits.
[50] A pension fund manages both the interests of the individual member and the
collective interests of all its members. The sustainability of a fund is critical to its ability
to provide the benefits that its members have signed on for and a careful balancing of
these interest s is required if a fund is to chart a clear and coherent path into the
uncertainty of the future . The balancing of these interests is recognised by the Act.
Section 7C(2)(a) to (d) requires that when pursuing its objects , a board shall take all
21 National Education Health and Allied Workers Union v University of Cape Town [2002] ZACC 27; 2003 (3)
SA 1 (CC); 2003 (2) BCLR 154 at para 15.
22 Tek Corporation Provident Fund v Lorentz [1999] ZASCA 54; 1999 (4) SA 884 (SCA) ; [2000] 3 BPLR 227
(SCA) at para 5 (Tek Corporation).
KOLLAPEN J
20
reasonable steps to ensure that the interests of members in terms of the rules of the fund
and the provisions of this Act are protected at all times, act with due care, diligence and
good faith, avoid conflicts of interest and act with impartiality in respect of all members
and beneficiaries. In Meyer,23 the Supreme Court of Appeal described the relationship
between the board of trustees and members of the fund as follows:
“The general proposition that the trustees of the fund are under a fiduciary duty to act
in the best interest of the members appears to be supported by authority (see, for
example, Tek Corporation Provident Fund. . . ) I accept that the trustees ’ fiduciary
duty towards its members includes a duty of impartiality, that is an obligation not to
discriminate between members unfairly. It seems to me to be inherent in the proper
exercise of any discretion that it should be done with impartiality.”24
[51] The relationship, therefore, extends beyond the parameters of contract law and
involves other areas of the law, described by Paul Farlam, who states that—
“[p]ension law essentially involves a combination of contract law, the law relating to
fiduciaries (such as trustees and liquidators), administrative law and what, for want of
a more elegant phrase, might be called statutory law.”25
[52] Hunter et al point out that pension fund rules could be better understood as a type
of delegated domestic legislation as the Act gives binding force to the rules and makes
them subject to the Registrar’s oversight.26
Amendment of pension fund rules
[53] Section 12 of the Act, which deals with the amendment of the pension fund rules
states, in relevant parts:
23 Meyer v Iscor Pension Fund [2002] ZASCA 148 (SCA); 2003 (2) SA 715 (SCA); [2003] 5 BLLR 439 (SCA).
24 Id at para 22.
25 Paul Farlam “ Registrar’s Discretion in terms of Administrative Law including Redoing of Decision”
(Pension Lawyers Association, 2018 ) at 1 available a t http://www.pensionlawyers.co.za/wp-
content/uploads/2018/10/05-Adv.-Paul-Farlam-Paper.pdf.
26 Hunter et al Commentary on the Pension Funds Act , 1956 A Commentary on the Act, regulations, selected
notices, directives and circulars (Hunter Employee Benefits Law, Johannesburg 2010) at 231.
KOLLAPEN J
21
“(1) A registered fund may, in the manner directed by its rules, alter or rescind any
rule or make any additional rule, but no such alteration, rescission or addition
shall be valid—
(a) if it purports to affect any right of a creditor of the fund, other than as
a member or shareholder thereof; or
(b) unless it has been approved by the registrar and registered as provided
in subsection (4).
(2) Within 60 days from the date of the passing of a resolution adopting the
alteration or rescission of any rule or for the adoption of any additional rule, a
copy of such resolution shall be transmitted by the principal officer to the
registrar, together with the particulars prescribed.
. . .
(4) If the registrar finds that any such alteration, rescission or addition is not
inconsistent with this Act, and is satisfied that it is financially sound, he shall
register the alteration, rescission or addition and return a copy of the resolution
to the principal officer with the date of registration endorsed thereon, and such
alteration, rescission or addition, as the case may be, shall take effect as from
the date determined by the fund concerned or, if no date has been so
determined, as from the said date of registration.”
[54] Section 13, which deals with the binding force of pension fund rules, states:
“Subject to the provisions of this Act, the rules of a registered fund shall be binding on
the fund and the members, shareholders and officers thereof, and on a ny person who
claims under the rules or whose claim is derived from a person so claiming.”
[55] Section 37A provides that pension benefits are not reducible, transferable or
executable and states in relevant parts:
“(1) Save to the extent permitted by this Act, the Income Tax Act, 1962 (Act 58 of
1962), and the Maintenance Act, 1998, no benefit provided for in the rules of
a registered fund (including an annuity purchased or to be purchased by the
said fund from an insurer for a member), or right to such benefit, or right in
respect of contributions made by or on behalf of a member, shall,
KOLLAPEN J
22
notwithstanding anything to the contrary contained in the rules of such a fund,
be capable of being reduced.”
[56] Pension funds enjoy a wide remit to alter or rescind or make any additional rules
in terms of section 12(1) of the Act. However, such rule amendments are required to
be made within the prescripts directed by the Act. As explained by Hunter et al, pension
funds’ power to amend rules is not unfettered and a rule amendment:27
(a) must be made in compliance with the trustees’ objectives and fiduciary
duties;28
(b) must be in the manner directed by the fund’s rules;29
(c) may not purport to affect any right of a creditor of the fund;30
(d) may not be inconsistent with the Act or its regulations;31
(e) must be financially sound;32
(f) must be approved and registered by the Registrar;33 and
(g) will take effect from the date determined by the fund concerned or, if no
date has been determined, as from the date of registration thereof.34
The application of an unregistered rule
[57] At the heart of the appeal, is whether a fund may apply a rule amendment that is
not yet registered in anticipation of its future registration and determine the payment of
benefits due on that basis. It may not do so.
27 Id at 243-53.
28 Sections 7C and 7D of the Act. Section 7C(1) sets the tone for section 7C(1)(e) to (g) which took effect from
28 February 2014 with the adoption of section 9 of the Financial Services Laws General Amendment Act 45 of
2013. Section 7D(1)(c) and (g) and (2)(a) to (b) took effect on 28 February 2014.
29 Section 12(1) of the Act.
30 Id. See National Tertiary Retirement Fund v Sithole N.O. [2008] ZAGPHC 62; [2008] 3 BPLR 203 (T).
31 Section 12(1)(b) and (4) of the Act.
32 Id.
33 Id, section 12(4).
34 Id.
KOLLAPEN J
23
[58] While the registration of the amended rule in this matter was to take effect from
1 April 2013, retrospectivity is a different matter from the determination of the rule that
was in existence at the time that Mr Mudau had his withdrawal benefits determined and
paid. Section 13 of the Act prescribes that “the rules of a registered pension fund shall
be binding on the fund and the members”. Section 1 of the Act provides that the
expression “rules” means “the rules of a fund registered in terms of this Act ”.
Therefore, it is the registered rules that are binding on the pension fund. Simply on this
basis, it is clear that during the relevant period when the withdrawal benefit accrued and
was paid, between May 2013 and October 2013, only the old rule was in existence , as
the registration of the amended rule had not yet been effected by the Registrar. That is
the rule that the Fund had to apply at that time – there was no other registered rule in
place, even though the registration of a rule amendment was anticipated by the Fund.
[59] This issue was dealt with decisively and unambiguously in Mostert. There, the
Supreme Court of Appeal held that, although amende d rules may have retrospective
effect after registration, they do not have binding effect before registration. The
conclusion that arises from Mostert is that a pension fund may not apply a rule without
it first being registered by the Registrar. Mostert holds:
“Registration was an essential prerequisite for any change in the status of the fund.
Old Mutual’s reliance upon a so-called practice in the Registrar’s office which allowed
rule changes to take effect before registration is misplaced. More will be said about
this later. Apart from the fact that the evidence relating to this practice is far from
convincing, there is simply no basis in law for subjugating the provisions of the Act
and regulations to such practice. It is one thing to giv e amended rules retrospective
effect after registration; it is something entirely different to seek to give them binding
effect before registration.” 35 (Emphasis added.)
[60] The respondents’ attempt to distinguish Mostert and confine its holding to rules
that affect a fund’s change in status , is unsustainable. A proper reading of Mostert
35 Mostert above n 13 at para 60.
KOLLAPEN J
24
provides no support for the narrow construction t hat the respondents seek to attach to
it. If the respondents were correct in their stance on this aspect , it would have the
consequence that an unregistered rule amendment would be capable of being applied
and its later registration would retrospectively validate the unlawful application of the
unregistered amendment.
[61] This startling proposition is generally offensive to the rule of law and the trite ,
but powerful , observation that the rule of law requires all power to be exercised in
accordance with the law. 36 I am satisfied that Mostert articulates a proposition of
general application that a n unregistered rule amendment can not have a binding effect
on a fund and its members. This proposition is also aligned with the fiduciary duties
that a fund owes its members, foremost of these duties being to manage and administer
the fund in accordance with the rules of the fund, legislation and the common law and
to act in the best interests of its members.37
[62] The respondents claim that they had paid Mr Mudau in terms of the amended
rule. If this was the case , as it must have been , such a decision was fatally flawed as
there was no amended rule in October 2013 and accordingly no legal basis by which
the Fund could deal with the withdrawal benefit other than in terms of the old rule that
was in place at the time . There can be no amend ment to a rule until it has been
registered.38 Purporting to rely on a rule still to be registered was simply not open to
the Fund. On this basis alone, the respondents acted outside the provisions of the Act,
specifically, sections 12 and 13 , as well as in breach of the fiduciary duty they owed
Mr Mudau.
[63] The Supreme Court of Appeal reasoned that the Fund was entitled to amend its
rules and that the amended rule , when it was registered on 1 April 2014, applied
36 Fedsure Life Assurance Ltd v Greater Johannesburg Transitional Metropolitan Council [1998] ZACC 17; 1999
(1) SA 374; 1998 (12) BCLR 1458 at para 56.
37 Tek Corporation above n 22 at para 15; Meyer above n 23 at para 22.
38 Mostert above n 13 at para 60.
KOLLAPEN J
25
retroactively to all benefits from 1 April 2013, even those benefits that had accrued by
then.39 In doing so, it accepted that when Mr Mudau’s withdrawal benefits were paid
to him, they were paid in accordance with the amended rule. 40 It was also common
cause that the amended rule was registered on 1 April 2014.41 It follows that, on what
was before the Supreme Court of Appeal, it was indisputable that the Fund had applied
a rule that was not registered in quantifying the benefits that were payable to Mr Mudau
in October 2013. This was also the primary ground on which the Supreme Court of
Appeal found that the Adjudicator had reached her conclusion.42 This was also in part
the basis on which the Full Court dismissed th e appeal against the finding of
the Adjudicator.
[64] That issue, however, does not feature in the reasoning and the conclusion of the
Supreme Court of Appeal. It was a n issue that, on the timeline of the facts before it ,
arose in the period of May to October 2013, long before the rule amendment had been
registered in April 2014. On the respondents’ version, it applied an amended rule in
finalising the withdrawal benefits of Mr Mudau. The case for Mr Mudau was that his
claim had to be dealt with in terms of the rule in existence when his employment
terminated on 31 May 2013. This assertion is not a controversial one, as it accords with
both the Act and the holding in Mostert. His claim was not dealt with in accordance
with the applicable rule at the time in question. Accordingly, t he findings of
the Adjudicator and the Full Court majority are unassailable. Had the Supreme Court
of Appeal embarked on a similar enquiry, it is difficult to see how it could have arrived
at any other conclusion. That in itself would have been dispositive of the appeal.
39 Municipal Employees’ Pension Fund v Mudau [2022] ZASCA 46; 2022 (6) SA 343 (SCA) at paras 21-2.
40 Id at para 6.
41 Id.
42 Id at para 15.
KOLLAPEN J
26
Whether the unregistered amended rule applies to legal proceedings instituted
before registration of the amendment
[65] An additional reason why the appeal must succeed is that the retrospective rule
amendment which came into effect on 1 April 2014 would not have had the effect of
interfering with the state of the law as it was when the applicant’s claim was lodged
with the Adjudicator on 2 December 2013. The principle that legal proceedings should
be determined in accordance with the law applicable at the time of the institution of
proceedings unless a contrary intention is indicated, applies here.43 It is a presumption
that applies even though in all other respects the law is found to have been amended
retroactively, that is, in respect of matters which have not yet become the su bject of
legal proceedings. It is significant that , as at 2 December 2013 , the rule amendment
had not been registered and there was only one rule before the Adjudicator. When I
have regard to the provisions of Chapter VA of the Act that relate to the consideration
and adjudication of complaints before the Adjudicator, it is clear that the date of the
lodgement of the claim with the Adjudicator on 2 December 2013 would have
constituted the commencement of legal proceedings.44 That date would then have fixed
the date of the law applicable to the determination of the dispute.
[66] The respondents say that complaint proceedings before the Adjudicator are not
legal proceedings and the principle expressed above is therefore not applicable .45
I disagree. The Act provides that:
(a) the lodging of a complaint with the Adjudicator interrupts prescription;46
43 Robertson v City of Cape Town; Truman-Baker v City of Cape Town 2004 (5) SA 412 (C); 2004 (9) BCLR 950
(C) at para 124; Woerman and Schutte N .N.O. v Masondo 2002 (1) SA 811 (SCA); [2002] 2 All SA 53 (A) at
para 18 ( Woerman and Schutte N.N.O. ); Naude v Heat lie; Naude v Worcester -Oos Hoofbesproeiingsraad en
Andere 2001 (2) SA 815 (SCA) ; Corium (Pty) Ltd v Myburgh Park Langebaan (Pty) Ltd 1995 (3) SA 51 (C) at
64A-C; Bellairs v Hodnett 1978 (1) SA 1109 (A) at 1148F-G; Bell v Voorsitter van die Rasklassifikasieraad 1968
(2) SA 678 (A) ; [1968] 3 All SA 1 (A) at 684E-F. See also the Australian position as discussed recently in
Stephens v The Queen [2022] HCA 31.
44 See Chapter VA of the Act and, in particular, sections 30A-Q.
45 See [65] and n 43 above.
46 Section 30(H)(3) of the Act.
KOLLAPEN J
27
(b) the Adjudicator must keep a record of the proceedings;47
(c) the Adjudicator must follow a fair procedure by affording an implicated
party an opportunity to comment on the complaint;48
(d) a determination by the Adjudicator is deemed to be a civil judgment of a
court;49 and
(e) in any subsequent proceedings in the High Court, the High Court may
determine the merits of the complaint made to the Adjudicator, but it may
not determine something which did not form the subject of the complaint
to the Adjudicator.50
[67] These provisions , cumulatively, are sufficient to characterise the proceedings
before the Adjudicator as legal proceedings , and the lodgement of a complaint as the
date of the commencement of such proceedings , for purposes of the presumption . For
the reasons expressed above, the old rule was the only relevant rule to consider for
purposes of the complaint proceedings before the Adjudicator. Accordingly,
the Adjudicator was required to apply the old rule in place in December 2013 and not
the unregistered amended rule which was only registered in April 2014. It is also for
this reason that the appeal must succeed.
[68] The respondents argue, relying on section 30P of the Act, that as the High Court
is entitled to consider the merits of the complaint de novo, it had to apply the amended
rule, being the rule in force by the time of the High Court proceedings. I disagree.
While section 30P entitles the High Court to consider the merits of the complaint afresh,
it is nevertheless the complaint made to the adjudicato r that the High Court must
consider. This, in itself, confines the High Court to deal with the complaint made to the
Adjudicator. The identification of the complaint and the law applicable to it are
47 Id, section 30L.
48 Id, section 30F.
49 Id, section 30O.
50 Id, section 30P.
KOLLAPEN J
28
determined with reference to the proceedings before the Adjudicator, even though in
section 30P proceedings additional evidence may be placed before the High Court on
the merits of that complaint . To hold otherwise would mean that the Adjudicator, the
High Court and any subsequent court might have to apply different rules that would
have been in existence from time to time to deal with the same complaint. The language
of section 30P is clear : in fixing the power of the High Court, it does so in relation to
the complaint made to the Adjudicator. It is the merits of that complaint and the law in
place then that the High Court must consider.
[69] The presumption against retrospectivity may be rebutted where its retrospective
operation is expressly or by necessary implication provided for. The presumption
would only be rebutted if an indication can be found in the relevant provision or the
legislation as a whole that the amendment with retrospective effect was to apply to
pending actions. 51 In addition, it may be rebutted where the statute deals with past
matters and events; confirms existing law; clarifies and settles any doubt that it is to
operate retrospectively; the retrospectivity would benefit a subject (such as penalties
and sentencing in criminal matters); or where the statute deals with procedural matters.52
[70] The amended rule 37, which deals with resignation discharge or leaving of
service in circumstances not provided for elsewhere, states the following:
“(1) If a member resigns from the service of a local authority . . . and—
. . .
(b) he became a member of the Fund a fter 30 June 1998, he shall be
entitled to—
(i) the amount of his contributions;
plus
(ii) interest in respect of his pensionable service,
51 Woerman and Schutte N.N.O. above n 43.
52 Du Plessis “Interpretation of Statutes and the Constitution” in Bill of Rights Compendium Service 36 (2002) at
2C-96 to 2C-97.
KOLLAPEN J
29
multiplied by 1 ,5 (one comma five) subject to member minimum
benefits.”
[71] When regard is had to the text of the amended rule, there is nothing in the
language of the rule that in any manner can sustain the conclusion that the rule
amendment was intended t o apply to pending actions . Rule 37 is silent on the impact
of its retrospective effect on pending legal proceedings. It must follow that in the
absence of the presumption being rebutted, it would have application in the proceedings
before the arbitrator and those thereafter.
Retrospectivity
[72] The scope and extent of a retrospective rule amendment was the subject of
considerable debate during argument in this Court and also enjoyed the attention of the
other courts through which the matter traversed.
[73] The concepts of retrospectivity and retroactivity are distinguishable , yet
interrelated. In some instances, retroactivity has been referred to as retrospectivity in
the “strong sense”. 53 Retroactive legislation has been conceptualised as that which
affects or “invalidates” what was previously valid and effectual. 54 A retroactive
amendment reaches into the past and operates as at a time prior to the amendment, such
that events that were pre viously valid become invalidated (or vice versa ).55
Contrastingly, a retrospective amendment is forward looking. It imposes new
consequences for events that have already taken place and changes the law from what
it otherwise would have been in the past.56 What it does not do, however, is to invalidate
that which was previously valid.
53 National Director of Public Prosecutions of South Africa v Carolus [1999] ZASCA 101; 2000 (1) SA 1127
(SCA); [2000] 1 All SA 302 (A) at para 35 (Carolus) at para 35.
54 S v Mhlungu [1995] ZACC 4; 1995 (3) SA 867 (CC); 1995 (7) BCLR 793 (CC) at para 65.
55 Carolus above n 53 at para 34.
56 Id.
KOLLAPEN J
30
[74] The respondents sought to distance themselves from the argument that they had
applied an unregistered rule and instead asserted that the rule amendment that was
unregistered at the time of the finalisation of Mr Mudau’s claim was ultimately
registered and then applied retroactively. I have already demonstrated that this is an
unsustainable proposition both in fact and in law. In this regard, retroactivity does not
arise, as the answer to the first proposition (that a rule amendment cannot be applied
before it is registered ) effectively puts paid to any argument on retro activity. Simply
put, when the rule was amended in April 2014 there was no claim of Mr Mudau then in
existence to which the rule amendment could be retro actively applied. What the Fund
was required to do in October 2013 was to finalise the claim of Mr Mudau on the basis
of the rule in existence then, which would have warranted payment of R2 140 313.19.
Following that, and only upon the rule amendment becoming valid in April 2014, could
the Fund then apply the rule as well as attempt to enforce its retroactive effect.
[75] Whether retroactivity could be used to unsettle vested or accrued benefits is a
matter which may require consideration in the future , but this is not the case for that
determination. In this regard, NTRF is authority for the proposition that the effect of a
rule amendment may be a retrospective reduction of benefits. 57 The case does not ,
however, go as far as providing authority for the proposition that a retrospective rule
amendment may un settle accrued benefits. On the other hand , Carolus may have set
the bar high when it said that there is a presumption against retrospectivity in “the sense
of taking away or impairing a vested right acquired under existing laws” unless clearly
intended otherwise.58 For now, however, no more needs to be said on the issue. The
same applies to the questions of whether the retroactive amendment of a rule may, after
its registration, result in a payment made to a former member in terms of an earlier
version of the rule becoming an “overpayment” and whether a pension fund may in such
circumstances seek to recover the difference from the former member.
57 NTRF above n 16 at paras 23-4.
58 Carolus above n 53 at para 31.
KOLLAPEN J
31
The absence of an application to review the unregistered amended rule
[76] Finally, the respondents argue that Mr Mudau should have sought to review the
amended rule. This argument is misguided as Mr Mudau has never had an issue with
the amended rule or its retrospective effect. Mr Mudau’s argument has consistently
been that the unregistered amended rule could not be applied before it was registered .
It would, therefore, not have been necessary for Mr Mudau to seek to review and set
aside the amended rule as that was not central to the basis on which he sought the relief
that he did from the Adjudicator.59 There is no merit in this contention.
Costs
[77] The costs order of the Supreme Court of Appeal would require Mr Mudau to pay
the respondents’ costs in respect of the proceedings before the Adjudicator. This order
was not warranted in the circumstances. The parties were in agreement that ordinarily
costs orders should not be made in proceedings before the Adjudicator. In terms of
section 30E(1) of the Act, an Adjudicator may make an order that any court of law may
make. While costs have been awarded in some instances,60 Hunter et al explain that, as
a matter of practice , an Adjudicator seldom gran ts costs.61 Such orders will only be
made when the parties’ actions are found to be “frivolous, vexatious or unreasonable”,
as was said in Van Vuuren.62 This is no such case. Subject to that clarification regarding
the costs of the complaint with the adjudicator , there is no reason why the respondent s
should not be ordered to pay the costs in this Court as well as those in the Supreme Court
of Appeal.
[78] We were informed that c ounsel for Mr Mudau, Mr S Khumalo SC,
Mr K Magan, Ms L Mbatha and Mr B Letuka represented Mr Mudau pro bono. They
59 South African Local Authorities Pension Fund v Msunduzi Municipality [2015] ZASCA 172 ; 2016 (4) SA
403 (SCA) at paras 39-40.
60 Costs were ordered in Jones v National Technikon Retirement Fund [2002] 1 BPLR 2960 (PFA) ; Kolb v
University of Natal Retirement Fund (2) [2002] 6 BPLR 2100 (PFA); Nkuna v Corporate Select Retirement Fund
PFA/GA/3093/05/LCM; and Macevele v Metal Electroplanting Provident Fund [2002] 10 BPLR 3938 (PFA).
61 Hunter et al above n 26 at 606.
62 Van Vuuren v Central Retirement Annuity Fund [2000] 6 BPLR 661 (PFA) at para 36.
KOLLAPEN J
32
did so with aplomb and commendable ability. This act of public service is recognised
and acknowledged as an important contribution to advancing the objective of access to
justice for all. Section 92(1) of the Legal Practice Act63 provides that, even when legal
services are rendered for free , when costs become payable to a litigant , the award of
costs that this court makes in favour of that litigant is deemed to have been ceded to the
legal practitioner. This provision finds application in these proceedings insofar as it
relates to the costs of counsel and the costs award should therefore include the se costs,
with the costs of two counsel being warranted.
Order
[79] The following order is made:
1. Leave to appeal is granted.
2. The appeal is upheld.
3. The order of the Supreme Court of Appeal is set aside and replaced with
the following:
“(a) The appeal is dismissed with costs , including the costs of two
counsel.
(b) The second respondent is ordered to pay the applicant the sum of
R1 493 875.77 (being the balance between R2 140 313.19 and
R646 437.42), together with intere st at the prescribed legal rate
calculated from 16 October 2013 until the date of payment, less
any deductions that are permissible in terms of the Pension Fund s
Act 24 of 1956.”
4. The first and second respondents are to pay the costs of the applicant in
this Court, including the costs of two counsel.
63 28 of 2014.
KOLLAPEN J
33
For the Applicant:
For the First and Second Respondents:
For the Amicus Curiae:
S Khumalo SC, K Magan, L Mbatha
and B Letuka instructed by Mafuyeka
and Associates Incorporated
R Bhana SC and I Goodman instructed
by Webber Wentzel
H Drake and L Molete instructed by
Shepstone and Wylie Attorneys