About SAFLII
Databases
Search
Terms of Use
RSS Feeds
South Africa: Constitutional Court
SAFLII
>>
Databases
>>
South Africa: Constitutional Court
>>
2017
>>
[2017] ZACC 43
|

|

Municipal Employees Pension Fund v Natal Joint Municipal Pension Fund (Superannuation) and Others (CCT260/16) [2017] ZACC 43; 2018 (2) BCLR 157 (CC); (2018) 39 ILJ 311 (CC) (1 December 2017)

Links to summary

Heads of arguments

CONSTITUTIONAL COURT OF
SOUTH AFRICA
Case CCT 260/16
In the matter between:
MUNICIPAL EMPLOYEES PENSION
FUND
Applicant
and
NATAL JOINT MUNICIPAL PENSION FUND
(SUPERANNUATION)
First Respondent
NATAL JOINT MUNICIPAL PENSION FUND
(RETIREMENT)
Second Respondent
KWAZULU-NATAL JOINT MUNICIPAL
PROVIDENT
FUND
Third Respondent
Neutral citation:
Municipal Employees Pension Fund v Natal Joint Municipal
Pension Fund (Superannuation)
and Others
[2017] ZACC 43
Coram:
Mogoeng CJ, Nkabinde
ADCJ, Cameron J, Froneman J, Jafta J, Khampepe
J, Madlanga J, Mhlantla J, Mojapelo AJ, Pretorius AJ and Zondo J.
Judgments:
Mhlantla J (majority): [1] to [48]
Jafta J (dissenting): [49] to [93]
Madlanga J (concurring): [94] to [96]
Heard on:
25 May 2017
Decided on:
1 December 2017
Summary:
pension funds — right to association — constitutional
challenge to validity of regulations creating pension funds —

municipalities’ rights and authority in relation to local
government matters
ORDER
On appeal from the
Supreme Court of Appeal (hearing an appeal from the High Court of
South Africa, KwaZulu-Natal Local Division,
Pietermaritzburg).
The following order is made:
1.
Condonation is granted.
2.
The application for leave to appeal is dismissed with costs.
JUDGMENT
MHLANTLA J
(Mogoeng CJ, Nkabinde ADCJ, Cameron J, Froneman J, Khampepe J,
Madlanga J and Pretorius AJ concurring):
Introduction
[1]
This matter involves a dispute
between competing pension and provident funds.  It is an
application for leave to appeal against
an order of the Supreme Court
of Appeal.
[1]
The Supreme Court of Appeal held that municipalities in KwaZulu-Natal
(KZN) may associate with any fund provided this was
in addition to an
association with the KwaZulu-Natal Pension Funds established in terms
of the KwaZulu-Natal Joint Municipal Provident
Fund Act (Fund
legislation).
[2]
The applicant is the Municipal
Employees Pension Fund (applicant).  It is a pension fund
established by section 79
quat
of the Local Government Ordinance,
[2]
(1939 Ordinance).  It is registered as a pension fund in terms
of section 4 of the Pension Funds Act.
[3]
As the applicant’s name suggests, its members are local
government employees.
[3]
The first, second and third respondents are
funds established by provincial legislation, namely, the
Local
Government Superannuation Ordinance 24 of 1973 (1973 Ordinance)
and
the
Natal Joint Municipal Pension Fund (Retirement) Ordinance
27 of 1974
(1974 Ordinance), as well as the
KwaZulu-Natal Joint Municipal Provident Fund Act (Provident Fund
Act)
.
[4]
The first and second respondents are defined
benefit funds.
[5]
The third respondent is
a defined contribution fund.
[6]
These funds are collectively referred to as the “KZN Funds”.
History of legislation
[4]
At the outset, it is necessary to conduct a brief overview of
the history to the legislation and regulations promulgated
thereunder.
The applicant was established for the provision of
pension rights for the employees of local authorities and their
dependants.
The 1939 Ordinance obliged employees to be members
of the fund chosen by their employer (the local authorities
concerned).
The Local Government Superannuation Ordinance
(1966 Ordinance)
[7]
repealed the 1939 Ordinance and made it compulsory for all local
authorities to associate with the first respondent.
The Durban
and Pietermaritzburg local authorities were excluded and had their
own funds.  The Natal Joint Municipal Pension
Fund Ordinance 6
of 1967 (1967 Ordinance)
[8]
made association compulsory for all local authorities in respect of
black employees.
[5]
The 1973 Ordinance repealed the 1966 Ordinance and the name of
the fund was changed to the Natal Joint Municipal Pension Fund
(Superannuation).
It excluded Durban and Pietermaritzburg from
its application and authorised the Administrator to make
regulations.  It contained
no express provision for compulsory
membership or association with the KZN Funds.
[6]
The 1974 Ordinance repealed the Natal Joint Municipal Pension
Fund (Non-White) Ordinance (1967 Ordinance).  It contained
provisions
identical to the 1973 Ordinance.  It also did not
make it compulsory for the Durban or Pietermaritzburg local
authorities
to associate with the KZN Funds or place an obligation on
employees to become members of these funds.
[7]
The 1973 and 1974 Ordinances as well as the Provident Fund Act
each empower the Member of the Executive Council responsible for
Local Government, KZN (MEC) to make regulations in respect of the
respondents.  The MEC duly promulgated the regulations in

question.  All of these regulations made express provision for
compulsory association with and membership of the KZN Funds.

Against this backdrop, the local authorities in KZN associated with
the four funds and their employees became members.
Factual
background
[8]
In 2011, the applicant embarked on a recruitment drive in
KZN.  It conducted a presentation at the Imbabazane Local
Municipality
in Estcourt.  This Municipality has since its
inception been a local authority associated with the KZN Funds and
its employees
are members of one of the KZN Funds.  Pursuant to
the presentation, 25 employees of the Municipality became members of
the
applicant.
[9]
As a result, the Municipality and its employees made pension
contributions to the applicant.
[9]
In November 2011, the Municipality formed the view that its
employees were not entitled to be associated with the applicant on
the
grounds that the Fund legislation prohibited its employees from
becoming members of any other fund save the three KZN Funds.

The Municipality took steps to regularise the matter and advised the
applicant that the membership of the 25 employees had been

terminated.  It thus suspended the payment of pension fund
contributions in respect of the affected employees.
Litigation
history
High Court
[10]
The applicant disagreed with the stance adopted by the
Municipality.  As a result, it launched an application in the
High Court
of South Africa, KwaZulu-Natal Local Division,
Pietermaritzburg (High Court).  It sought an order compelling
the Municipality
to make payment to it of the pension contributions
of the 25 employees.  The High Court granted an order and
declared that
the actions of the Municipality in suspending the
payment of pension fund contributions to the applicant were
unlawful.  The
Municipality was directed to reinstate the
payments to the applicant.
[11]
The respondents, who were not parties to the proceedings
instituted by the applicant, became aware of the High Court order and
the
applicant’s involvement in the KZN local authorities.
They launched an application to rescind the order and to obtain
an
interdict prohibiting the applicant from conducting pension business
in KZN.
[12]
The High Court upheld the interdict application and rescinded
the previous order.  It held that the object of the Fund
legislation
and regulations promulgated thereunder was to establish
funds to provide a pension benefit and lump sum benefits for the
employees
of the local authorities in KZN.  Moreover, the High
Court held that all local authorities in KZN were obliged to
associate
with the respondents only and that the employees of these
local authorities were obliged to become members of the respondents.

The High Court also rejected a freedom of association argument on the
basis that the applicant had no legal standing to raise that
issue
and that only the employees of the local authorities enjoyed that
right.  The Court directed the applicant to repay
the amounts
received by it as pension fund contributions for the 25 employees.
Supreme Court of Appeal
[13]
Aggrieved by the decision, the applicant appealed to the
Supreme Court of Appeal.  It argued that there was nothing in
law
that justified the conclusion that local authorities within KZN
were bound to be associated with the respondents only or that
prevented
the applicant from doing business with local authorities in
KZN.  The applicant further argued that the legislation and
regulations
do not have the limiting effect advanced by the
respondents.  It also raised a constitutional argument that the
MEC is not
empowered to make regulations that prohibit local
authorities from associating with the pension fund of their choice
and that when
the MEC promulgated the regulations the MEC acted
beyond his or her powers, that is, that the regulations were
ultra
vires
.
[14]
The Supreme Court of Appeal held that the local authorities
located within the KZN province were, in terms of the relevant
legislation,
obliged to associate as employers with the KZN Funds.
However, it departed from the conclusion of the High Court to the
extent
that it noted that there is nothing in the Fund Legislation
and regulations that prohibited a local authority in KZN from
associating
with a pension fund in addition to that local authority’s
association with the respondents.  As a result, the Supreme

Court of Appeal dismissed the appeal subject to the additional order
that a KZN local authority may associate with other funds
if it
already associates with one of the respondents.
[15]
The applicant now seeks leave to appeal against this order.
In this
Court
Applicant’s
submissions
[16]
The applicant submits that leave to appeal should be granted
on the basis that the application implicates constitutional issues.

According to the applicant, the regulations are unconstitutional
because they exceed the MEC’s authority in relation to local

government.  It further contends that this case affects not only
the parties but all other pension funds that wish to operate
in the
KZN Municipalities and their employees.  Furthermore, the
obligation that municipal employees should participate in
specified
pension and retirement funds amounts to an infringement of the right
of freedom of association in section 18 of the Constitution.
[10]
Therefore, the applicant contends that the application raises
arguable points of law of general public importance.
[17]
Regarding the merits, the applicant submits that the 1973 and
1974 Ordinances and the Provident Fund Act that established the KZN

Funds do not prevent it or other pension funds from operating in KZN
and that the regulations do not compel all municipal employees
in KZN
to belong to one of the respondents.  In this regard, the
persons who became employees of KZN municipalities after
1 February
1996 could have conditions of service that require or permit them to
become members of other pension funds.  The
applicant contended
that this interpretation of the regulations gives the best effect to
the spirit, purport and objects
[11]
of the employees’ right to freedom of association.
[18]
The applicant further submits that an interpretation of the
regulations which precludes all municipalities from having conditions

of employment for their employees which compel or allow them to
belong to a pension fund other than the KZN Funds would undermine
the
rights and authority of municipalities in relation to local
government matters conferred by the Constitution.  This would

exceed the authority of the KZN Province in relation to local
government matters.  Furthermore, an interpretation that compels

all municipal employees in KZN to belong to one of the respondents
would make the regulations
ultra vires
the two KZN Ordinances
and the Provident Fund Act under which they were created.
[19]
The applicant raises an alternative argument in the event that
its argument on interpretation is not upheld.  It submits that

the relevant provisions of the Fund legislation became inconsistent
with the Constitution upon its commencement on 4 February
1997
and therefore the Fund legislation is liable to be declared
unconstitutional and invalid in terms of section 172(1)(a) of
the
Constitution.  As no constitutional attack had been launched in
the High Court, the applicant requests that the appeal
be upheld for
a limited purpose of allowing the constitutional challenges to be
properly ventilated and determined by the High
Court.
Respondents’ submissions
[20]
The respondents support the interpretation of the relevant
legislation adopted by the Supreme Court of Appeal.  Regarding
the
alternative argument, the respondents submit that it is not in
the interests of justice to hear the matter as the applicant has
not
complied with the rules relating to the raising of constitutional
issues as the latter were never raised in the High Court.
The
respondents contend that the applicant is precluded from doing so for
the first time in this Court.
Issues
[21]
This matter raises the following issues:
(a)
Should condonation be granted?
(b)
If so, should leave to appeal be granted?
(c)
What is the proper interpretation of the relevant regulations?
(d)
Are the regulations
ultra vires
and is this question properly
before this Court?
(e)
If the interpretative argument is dismissed, what is the appropriate
remedy?
Should this Court uphold the appeal for a limited
purpose of allowing the constitutional challenges to be properly
ventilated and
determined by the High Court?
Condonation
[22]
The application for leave to appeal was filed in this Court on
24 October 2016 and is two days late.  The delay was caused by

the counsel who had previously handled the matter being unavailable
due to an engagement in a long trial.  The respondent
abides the
decision of this Court.  The degree of the delay is minimal and
the explanation is adequate.  Furthermore,
the respondents will
not suffer any prejudice.  In the result, condonation should be
granted.
Leave to
appeal
[23]
In this Court, jurisdiction is determined in terms of section
167(3)(b) of the Constitution.  In terms of this provision, this

Court may hear a constitutional matter or any matter that raises an
arguable point of law of general public importance that ought
to be
decided by the Court.
[24]
In
Paulsen
, this Court held that the inquiry into an
arguable point of law was a bifurcated inquiry.
[12]
First, the issue must be one of law as opposed to one of fact.
Second, the matter must be arguable in that there must
be some degree
of merit or plausibility.
[13]
The Court also considered the meaning of “a matter of general
public importance” in terms of the Constitution.
Relying
on authority from Kenyan and English courts it held that a matter of
general public importance would be a matter that went
beyond the
litigation interests of the parties and bears upon the public
interest.
[14]
The Court said that the matter must pertain to an issue that could
arise again in other cases and where its determination would
affect a
large class of persons.
[15]
[25]
In this regard, the applicant has raised the constitutional
issues of the right to freedom of association and of separation of
powers.
However, even in the case that a matter does raise a
constitutional issue or a matter of general public importance, it
must also
be in the interests of justice for the Court to grant leave
to appeal.
[16]
[26]
This Court has also considered and provided guidelines for
determining what the “interests of justice” test
requires.
In the determination of whether it is in the
“interests of justice” for the Court to grant leave to
appeal, the following
factors are taken into account: whether there
are reasonable prospects of success that this Court will reverse or
materially alter
the decision appealed;
[17]
and whether the matter concerns an issue of importance on which a
decision of this Court is desirable,
[18]
in light of both the importance of the issue and its importance to
the public.
[19]
[27]
Therefore, in order to determine whether leave to appeal
should be granted in this matter, it is necessary to consider its
merits
in order to establish whether there are reasonable prospects
of success.
Proper
interpretation of the regulations
[28]
The first issue to be determined is the proper interpretation
of the regulations.  The applicable principles to statutory
interpretation
were enunciated in
Endumeni
,
[20]
as follows:
“
Interpretation
is the process of attributing meaning to the words used in a
document, be it legislation, some other statutory instrument,
or
contract, having regard to the context provided by reading the
particular provision or provisions in the light of the document
as a
whole and the circumstances attendant upon its coming into
existence.  Whatever the nature of the document, consideration

must be given to the language used in the light of the ordinary rules
of grammar and syntax; the context in which the provision
appears;
the apparent purpose to which it is directed and the material known
to those responsible for its production.  Where
more than one
meaning is possible each possibility must be weighed in the light of
all these factors.
The
process is objective not subjective.  A sensible meaning is to
be preferred to one that leads to insensible or unbusinesslike

results or undermines the apparent purpose of the document.
Judges must be alert to, and guard against, the temptation to

substitute what they regard as reasonable, sensible or businesslike
for the words actually used.  To do so in regard to a
statute or
statutory instrument is to cross the divide between interpretation
and legislation.  In a contractual context it
is to make a
contract for the parties other than the one they in fact made.
The ‘inevitable point of departure is the
language of the
provision itself’, read in context and having regard to the
purpose of the provision and the background to
the preparation and
production of the document.”
[21]
[29]
In
Cool Ideas
,
[22]
this Court laid down the following principles for statutory
interpretation:
“
A fundamental tenet of
statutory interpretation is that the words in a statute must be given
their ordinary grammatical meaning,
unless to do so would result in
an absurdity.  There are three important interrelated riders to
this general principle, namely:
(a)
that statutory provisions should always be interpreted purposively;
(b)
the relevant statutory provision must be properly contextualised; and
(c)
all statutes must be construed consistently with the Constitution,
that is, where
reasonably possible, legislative provisions ought to
be interpreted to preserve their constitutional validity.  This
proviso
to the general principle is closely related to the purposive
approach referred to in (a).”
[23]
[30]
It is imperative to consider the legislative history and
purpose of the enactment of the ordinances and the Provident Fund Act
because
they are necessary tools in the interpretation of relevant
provisions and the context of the legislative scheme.
[24]
The KZN Funds were established for the provision of lump sum benefits
for the employees of local authorities.  This
was to ensure that
municipal employees have a pension arrangement designed for them and
which has a viable scheme.  The viability
of the KZN Funds is
secured by the sufficiency in numbers.
[31]
The object of the establishment of the KZN Funds is set out in
section 2 of both the Natal Ordinances and Provident Fund Act.

This section established each of the respondents for the purpose of
providing pension rights and lump sum benefits for the employees
of
local authorities and their dependants.  The legislation
provided a broad framework for the purpose.  That objective
was
achieved by creating a regulatory framework that obliged all KZN
local authorities to associate with, and become members of,
these KZN
Funds.  As a result, there are now four funds available to
employees of local authorities in KZN that make necessary
provision
for the manner in which these employees would become members of one
or more of them.
[32]
The regulations were promulgated under the 1973 and 1974
Ordinances as well as the Provident Fund Act.  Section 4 of the
1973
Ordinance provides:
“
Power
of Administrator to make regulations.
(1)
The Administrator may make regulations—
(a)
providing that the Joint Fund shall be a continuation of any existing
fund;
(b)
providing for the sources of the Joint Fund;
(c)
determining which employees of local authorities shall be eligible
for membership
of the Joint Fund;
(d)
determining the contributions of members to the Joint Fund;
(e)
providing for the management and control of the Joint Fund including
the establishment
or dis-establishment of any committee,
sub-committee or any other body which the Administrator deems
advisable for that purpose;
(f)
defining the powers and duties of any committee or other body
referred to in paragraph
(e) including the powers of such committee
or other body to make rules and to exercise discretionary powers and
powers of delegation;
(g)
in regard to the investment of the funds of the Joint Fund;
(h)
in regard to any actuarial valuation of the Joint Fund;
(i)
providing for the auditing of the Joint Fund;
(j)
in regard to the payment of any benefit, annuity, gratuity, or other
amount
from the Joint Fund;
(k)
relating to the circumstances in which the interest earned by the
Joint Fund shall
be guaranteed or supplemented;
(l)
in regard to the pension rights of any employee transferred from or
seconded
by one local authority to another;
(m)
in regard to the interchange of employees between local authorities;
(n)
in regard to the local authorities of Durban and Pietermaritzburg
becoming subject
to this Ordinance; and
(o)
providing for all matters which he considers necessary or expedient
for the purposes
of the Joint Fund, the generality of this power not
being limited by any of the provisions contained in the aforegoing
paragraphs.”
[33]
The power given to the MEC under section 4 is indeed very
wide.  It includes the power to make regulations providing for
matters
considered necessary or expedient for purposes of the fund.
That power is not limited to items listed in section 4.

Section 4(c) permits the MEC to make regulations determining which
employees of local authorities shall be eligible for membership
of
the fund.  The regulations are related to the fund’s
purpose or that of the empowering legislation.
[34]
The relevant provisions and regulations promulgated under the
Ordinances and the Provident Fund Act are identical in substance.

Therefore, for the sake of convenience, they will be referred to as
one.  This then brings me to the question of the proper

interpretation of these regulations.
Specific
provisions of the regulations
Regulation 4
[35]
This regulation deals with the compulsory association with and
membership in the four KZN Funds.  It obliges all local
authorities
to be associated with the Provident Fund within six
months from the date of becoming a municipal council.
Regulation 16(4)
[36]
The central issue in this case is the proper interpretation of
regulation 16(4), which deals with persons employed on or after 1

February 1996.  Regulation 16(4) of the Superannuation Fund and
regulation 14(3) of the Retirement Fund provide:
“
A person who becomes an
employee on or after the date of commencement shall
,
subject to his conditions of service,
elect,
in writing, to become a member of either
—
(a)
the Fund;
(b)
the Superannuation Fund; and
(c)
the KZN Municipal Pension Fund if the employee is employed by a Local
Authority associated
with such Fund in terms of its regulations.”
[37]
The applicant appears to accept that persons who were employed
by the KZN municipalities before 1 February 1996 are obliged to
become
members of the KZN Funds.  However, it contends that the
position is different in the case of persons who were employed on
or
after 1 February 1996.  In this regard, the applicant submits
that those employees may have conditions of service that
permit them
to become members of pension funds other than KZN Funds.  Simply
put, an employee has an option to choose any
other pension fund.
The applicant submits that its interpretation is reasonable and
should be preferred to that of the Supreme
Court of Appeal.
[38]
This argument is misconceived.  In order to reach the
interpretation contended for by the applicant one would have to
strain
the language.  It has to be borne in mind that a
purposive approach to the interpretation of the regulation has to be
adopted.
I agree with the reasoning of the Supreme Court
of Appeal that the inclusion of the phrase “subject to his
conditions
of service” does not allow an interpretation that
does not require compulsory membership and association.  The
phrase
relates to the election referred to in section 16(4).
This phrase cannot mean that the employees’ contract of
employment
can provide for an employee not to become a member of one
of the KZN Funds.  The election is made subject to the
employee’s
conditions of service to cater for a situation where
the local authority is not associated with all four of the KZN Funds
or wishes
to restrict the employee’s choice to only one or two
of the KZN Funds.  Furthermore, the election entails a decision

of which fund to join.
[39]
The phrase does not entail that the employee, as a term of
employment, will not become a member of one of the KZN Funds.
It
is intended to cater for those categories of employees employed in
terms of specific conditions and in respect of whom the regulations

contain special conditions which permit them to be employees without
becoming a member of one of the KZN Funds.  For example,

contract workers may, in terms of regulation 76,
[25]
elect not to become a member of any KZN Fund.  Similarly,
persons employed in terms of section 57 of the Local Government:

Municipal Systems Act
[26]
have special conditions in their contracts of employment.
[27]
[40]
This reasoning is fortified by the regulations.  Firstly,
regulation 16(8) provides that a member may not withdraw his or her

membership while he or she remains in the service of a local
authority associated with the Fund.  Secondly, regulation 16(A)

relates to the termination and transfer of membership.  It
provides that a member may elect to terminate his or her membership

of the Fund and to become a member of one of the three KZN Funds.
In other words, an employee is only allowed to transfer
from one KZN
Fund to another whilst in the employ of a KZN local municipality.
Thirdly, regulation 3(1)(b), which states
that all employees of local
authorities who do not elect, in terms of regulation 12, to become
members of the other three KZN Funds
shall become members of the
Provident Fund from the date the local authority became associated
with the Provident Fund.  This
is a default position as
regulation 3(1)(b) clearly states that if an employee is not a member
of one of the other three Funds,
then the scheme provides for
compulsory membership of the Provident Fund.  Viewed
cumulatively, it is clear that the purpose
of the regulations is to
ensure compulsory membership.
[41]
It is therefore clear that the interpretation accords with the
purpose of establishing the funds, the regulations and the empowering

legislation.  The intention of the legislation was to compel all
employees to join one of the KZN Funds and retain membership
until he
or she is no longer employed by a local authority in KwaZulu-Natal.
This was done to ensure the viability of the
KZN Funds to secure
pension benefits for local authorities and their employees.  The
regulations were promulgated to achieve
this purpose and are a
practical mechanism to ensure that the purpose and objectives of the
legislation are realised.  In
the result, the applicant’s
argument on the interpretation of the regulations fails.
Section 18
of the Constitution: freedom of association argument
[42]
The applicant, in its written submission, argued that the
interpretation ascribed by the High Court and the Supreme Court of
Appeal
to the 1973 and 1974 Ordinances, the Provident Fund Act and
the regulations promulgated under these Ordinances and the
KwaZulu-Natal Joint Municipal Provident Fund
Act
[28]
amounts to an infringement of the right of association of employees
who would desire to be part of pension funds such as the applicant.

During the hearing, counsel for the applicant submitted that the
applicant sought the protection of the employees’ right
of
association and not the Pension Fund’s right of association as
was the case in
Oostelike.
[29]
[43]
This argument has no merit.  This is because the
employees and trade unions referred to by the applicant are not
parties to
the application and the applicant failed to demonstrate
its legal standing on behalf of the employees, or why the employees
needed
it to bring this challenge on their behalf.  The
applicant has also not provided any details on the nature and extent
of the
alleged infringement of this right.  Further, the Supreme
Court of Appeal’s interpretation of the legislation and the

regulations as well as its amendment to the order of the High Court
to the effect that employees may join other funds in addition
to the
KZN Funds is valid and retains the employees’ freedom to
associate.
Supreme
Court of Appeal
order
[44]
The Supreme Court of Appeal amended the order of the High
Court in paragraph 2(ii) to read:
“
[L]ocal authorities
located within the province of KwaZulu Natal may only associate
with any other fund, in addition to their
association with the Natal
Joint Municipal Pension Fund (Superannuation), the Natal Joint
Municipal Pension Fund (Retirement),
and the KwaZulu-Natal Joint
Municipal Provident Fund or the KwaZulu-Natal Municipal Pension
Fund.”
The applicant submits that the Supreme
Court of Appeal was wrong to reformulate the order.  There is
nothing wrong with this
order, as there is nothing that precludes
additional association with Funds as long as the obligatory
association with the KZN
Funds is met.  All that this order
means is that the employers and employees are at liberty to associate
with the applicant
and other funds in addition to their primary
association with the KZN Funds.
Conclusion
[45]
In the result, the interpretation advanced by the applicant is
not plausible and is rejected.  The applicant submits that the

legislation is unconstitutional.  However, no proper challenge
has been brought.  The applicant has urged us to uphold
the
appeal on the basis of the underlying constitutional attack for a
limited purpose of allowing it to raise a proper constitutional

challenge in the High Court.
[46]
The applicant in effect is seeking an indulgence from the
Court.  The circumstances of this case do not warrant that.

If the applicant feels strongly about the constitutional issues in
question, it must institute a substantive application in the
High
Court and cite all the interested parties and allow them to respond
to the issues raised.  The constitutional challenge
will then be
fully ventilated and determined by the High Court.
Therefore, we cannot assist the applicant and uphold
the appeal as
sought.  It is therefore not in the interests of justice to
grant leave to appeal.
[47]
I have read the judgment of my brother Jafta J, in which he
concludes that the regulations were
ultra vires
and that the
issue was pertinently raised in the Supreme Court of Appeal.
For the reasons set out in my judgment and on my
approach, the
ultra
vires
issue does not arise.
[48]
In the result, the following order is made:
1.
Condonation is granted.
2.
The application for leave to appeal is dismissed with costs.
JAFTA J (Mojapelo AJ and Zondo J
concurring):
Introduction
[49]
I have had the benefit of reading
the judgment prepared by my colleague Mhlantla J (first
judgment).  While I agree that
the relevant regulations may not
be interpreted as permitting employees of municipalities in KZN a
choice between joining the KZN
Funds and any other fund like the
applicant, I do not support the order contained in the first judgment
to the extent that the
application for leave to appeal ought to be
dismissed.
[50]
One of the grounds on which the
judgment of the Supreme Court of Appeal is challenged is that the
regulations on which that Court
relied were
ultra
vires
the empowering legislation.
In upholding the High Court conclusion, the Supreme Court of Appeal
held that the relevant regulations
compelled all municipalities in
KZN, except Durban and Pietermaritzburg, to associate with the KZN
Funds and that their employees
too were obliged to join one of these
funds.  One of the questions that arises for determination is
whether the regulations
in question are
ultra
vires
the empowering legislation.
[51]
The first judgment does not decide this question on the ground
that it does not arise on the approach followed in that
judgment.
[30]
I do not agree.  The first judgment dismisses the application to
appeal with costs without determining one of the issues
raised
pertinently by the applicant.  In its application in this Court
the applicant asserted that if the impugned regulations
are assigned
the meaning preferred in the first judgment, they are
ultra vires
the empowering legislation and inconsistent with the legality
principle.
[52]
Elaborating on the issue of legality the applicant contended
in the written submissions:
“As explained earlier, none of Ordinance 24 of 1973, Ordinance
27 of 1974 and Act 4 of 1995 expressly provides
that all
employees of all municipalities in KZN must join one of the KZN Funds
or expressly authorises the making of regulations
to that effect.
Accordingly the only source of such power for the regulator could be
the ‘catch all’ power to
make regulations ‘
providing
for all matters which [the regulator] considers necessary or
expedient for the purposes of the [relevant respondent fund]
.’
For the reasons given earlier, however, this power, however, does not
extend to a purpose not sanctioned by the original
legislation, i.e.
compulsory membership of one of the KZN Funds.  Making
membership of one of the KZN Funds compulsory would
be
ultra vires
those laws and, hence, in conflict with the constitutional principle
of legality.”
[53]
The respondents countered this argument by submitting that
section 4(1)(o) of the Ordinance confers a wide power on the MEC
which
includes the power to make the impugned regulations.
Therefore, the issue was squarely raised and addressed by parties on

both sides.
[54]
But, this issue was not only raised here.  It was first
raised in the High Court and later in the Supreme Court of Appeal.

Both Courts considered and rejected the point.  In paragraph 14
of its judgment, the Supreme Court of Appeal stated:
“
[The
appellant] argued that the governing enactments do not have the
limiting effect contended for by the [KZN Funds] and do not
empower
the Regulator to make regulations restricting the extent to which a
local authority is entitled to participate in a fund
of its choice.
To the extent that the Regulator, in exercising this power, created a
restriction on the extent to which local
authorities are not entitled
to participate in other funds, the Regulator acted ultra vires his
powers.”
[55]
The Supreme Court of Appeal rejected
this argument in one sentence.  It declared:
“
The
rule making power that the MEC enjoys is wide and there is no attack
on the regulations on the footing that they were not within
the
powers of the MEC.”
[31]
[56]
The Supreme Court of Appeal reached
the conclusion that the MEC enjoys a wide power without any analysis
of the empowering legislation.
Therefore its conclusion to the
effect that the MEC acted within the powers conferred by the
regulation is not well-founded.
More importantly the opinion
that the regulations were not attacked “on the footing that
they were not within the powers
of the MEC” was incorrect:
merely two paragraphs earlier in the judgment, the Supreme Court of
Appeal had explicitly recorded
that challenge.
[57]
Once it is accepted, as it should,
that one of the grounds upon which the applicant challenges the
judgment of the Supreme Court
of Appeal is that the relevant
regulations were
ultra vires
,
justice and fairness demand that the application cannot be dismissed
without deciding this ground.  Like any other litigant,
the
applicant is entitled to fair hearing rights guaranteed by section 34
of the Constitution.
[32]
That section guarantees everyone the right to have a dispute that can
be resolved by the application of law decided by a
court in a fair
hearing.
[58]
In
De
Beer N.O.
this right was defined by
Yacoob J in these terms:
“
This
section 34 fair hearing right affirms the rule of law which is a
founding value of our Constitution.  The right to a fair
hearing
before a court lies at the heart of the rule of law.  A fair
hearing before a court as a prerequisite to an order
being made
against anyone is fundamental to a just and credible legal order.
Courts in our country are obliged to ensure
that the proceedings
before them are always fair.  Since procedures that would render
the hearing unfair are inconsistent
with the Constitution courts must
interpret legislation and rules of court, where it is reasonably
possible to do so, in a way
that would render the proceedings fair.
It is a crucial aspect of the rule of law that court orders should
not be made without
affording the other side a reasonable opportunity
to state their case.  That reasonable opportunity can usually
only be given
by ensuring that reasonable steps are taken to bring
the hearing to the attention of the person affected.  Rules of
courts
make provision for this.  They are not, however, an
exclusive standard of reasonableness.  There is no reason why
legislation
should not provide for other reasonable ways of giving
notice to an affected party.  If it does, it meets the notice
requirements
of section 34.”
[33]
[59]
The applicant was entitled to have a
fair hearing before every court before which its dispute was placed
for adjudication, including
this Court.  That right incorporated
consideration of all legal points it raised.  This is specially
so here where the
decision went against it.  It would have been
different if the decision favoured the applicant.  In those
circumstances,
the failure to decide the point would not have had any
bearing on the outcome.  Consequently, there would not have been
unfairness
visited upon the applicant and it would have had no cause
for complaining.
[60]
A court cannot choose to ignore
properly raised legal points, if that would prejudice one of the
litigants.  Disposing of this
matter without deciding the
ultra
vires
point would prejudice the
applicant.  Therefore, I conclude that in the present
circumstances we are duty bound to confront
and decide this point.
In doing so, it is convenient to begin the analysis with a
consideration of the relevant regulations
before examining the
empowering provisions.
[61]
Since the regulations of the KZN
Funds are identical, an examination of the regulations of one fund
will suffice.  I choose
to consider the regulations of the
Natal Joint Municipal Pension Fund (Retirement) (Retirement
Fund).
Regulation 2
[62]
This regulation establishes the Retirement Fund and determines
the scope of three chapters of the regulations.  It provides:
“
2.
There
is hereby established a pension fund to be known as the Natal Joint
Municipal Pension Fund (Retirement).
2A
Application of the Provisions of Chapters II, III and IV
The
provisions of these Regulations shall not apply to that portion of
the Durban Metropolitan Municipality formerly constituted
as the
North Central and South Central Local Councils in terms of the Local
Government Transition Act, 1993 (Act No. 209 of
1993) whose
employees were members of the Durban Pension Fund unless it makes
application to that end in terms of Regulation 38.”
Regulation 3
[63]
Regulation 3 is framed in mandatory terms and requires every
municipal council in KZN to associate with the Retirement Fund, from

the date of this Fund’s establishment.  This applied to
municipalities that were in existence on that date.  A
municipal
council formed after that date is obliged to be associated with the
Fund within six months from the date on which the
council is
established.  But this obligatory association with the Fund does
not cover a part of the Municipality of Durban
whose employees are
members of the Durban Pension Fund.
[64]
Regulation 3 reads as follows:
“
Every
municipal council, with the exception of that portion of the Durban
Metropolitan Municipality formerly constituted as the
North and South
Central councils in terms of the
Local Government Transition Act,
1993
whose employees are members of the Durban Pension Fund, shall be
associated with the Fund from the date of establishment and every

future municipal council shall be associated with the Fund within six
months from date of becoming a municipal council.”
Regulation
14
[65]
This regulation is located in chapter three of the regulations
whereas
regulations 2
and
3
are in chapter two.  It regulates
membership to the Retirement Fund and three other related funds,
namely, the Superannuation
Fund, the Provident Fund and the KZN
Municipal Pension Fund.  It affords employees of a municipality
associated with the Retirement
Fund the choice of joining either this
fund or any of the other three funds.  An employee must exercise
this choice in writing.
The regulation also permits employees
to change funds.  But this must be done within “six months
of the date of becoming
an employee”.
[66]
Regulation 14
provides:
“
(1)
Subject to the provisions of these Regulations, a member of the fund
immediately prior to the date
of commencement shall continue to be a
member.
(2)
An employee of a local authority which becomes
associated with the fund on or after the date of commencement shall
elect, in writing,
to become a member with effect from the date of
association of either—
(a)
the Fund;
(b)
the Superannuation Fund;
(c)
the Provident Fund; or
(d)
the KZN Municipal Pension Fund:
Provided
that he may elect, in writing, within a period of six months of the
date of association, to amend such original election
retrospectively
to the date of association, but provided, further, that such right of
election shall not apply to an employee electing
to become a member
of the KZN Municipal Pension Fund.
(3)
A person who becomes an employee on or
after the date of commencement shall, subject to his conditions of
service, elect, in writing,
to become a member of either—
(a)
the Fund;
(b)
the Superannuation Fund,
(c)
the Provident Fund; or
(d)
the KZN Municipal Pension Fund if the employee is
employed by a local authority associated with such Fund in terms of
its regulations:
Provided
that he may elect, in writing, within a period of six months of the
date of becoming an employee, to amend such original
election
retrospectively to the date of becoming an employee, but provided,
further, that such right of election shall not apply
to an employee
electing to become a member of the KZN Municipal Pension Fund.
(4)
A person who is a member of the Superannuation
Fund or the Provident Fund may elect, in writing, to become a member
of the fund
in terms of the Regulations of the said Funds.”
[67]
Therefore specific regulations are foundational to the claim
made by the KZN Funds against the applicant.  It will be
recalled that in the High Court the KZN Funds sought declaratory
and interdictory relief.  They asked for an order declaring
that
the applicant was not entitled to be associated with any local
authority in KZN and to receive payment of pension contributions.

In addition they asked the Court to order the applicant to repay
pension fund contributions it had received in respect of 25 employees

of one municipality in KZN.  They also sought an interdict
restraining the applicant from doing business with any municipality

in their province as well as recruiting municipal employees to join
the applicant.
[68]
One of the defences advanced by the applicant against the KZN
Funds claim was that the regulations on which reliance was placed for

the exclusive operation in the province were illegal as the person
who made them had exceeded the powers under the enabling
legislation.
If this defence were to be upheld, the claim by
the KZN Funds would fail.  The High Court rejected the defence
and stated:
“
Mr
Cassim SC who, together with Ms Wood, appeared on behalf of the
[Municipal Employees Pension Fund], has however submitted that
the
Ordinances and the Act do not contain provisions which would suggest
that the Regulator is entitled to impose restrictions
on the Local
Authorities compelling them only to belong to one or other of the
funds.  Accordingly, as I understand his submission,
there is no
bar to any Local Authority from being associated with the [Municipal
Employees Pension Fund].  I disagree.
The provisions of
Section 4(1)(o) . . . ,is an all-encompassing one.  It grants
the Minister the power to make regulations
which he considers
‘expedient for the purposes of the Joint Fund’.  One
must therefore look at the regulations
read with the powers of the
Minister in order to ascertain the intention or purpose aimed
at.”
[34]
[69]
It is apparent from this statement that the High Court held
that the power set out in section 4(1)(o) of the Ordinance includes
the power to make regulations that compel municipalities to associate
with the KZN Funds and oblige their employees to join one
of those
funds.  This conclusion was reached after examining various
regulations and the object of the empowering legislation
which was
determined to be the establishment of funds to provide pension
benefits for municipal employees in KZN.
[35]
Having rejected all the defences raised by the applicant the High
Court granted the declaratory and interdictory relief
sought and
directed that the applicant should pay to the fund or Imbabazane
Local Municipality all pension contributions it had
received in
respect of the employees who had joined the applicant.
[70]
On appeal, the Supreme Court of Appeal amended the order of
the High Court to allow municipalities in KZN to associate with
pension
funds of their choice in addition to their association with
the KZN Funds.  This meant that Imbabazane Local Municipality
could associate with the applicant only if that association was
additional to that municipality’s association with one of
the
KZN Funds.  The amended order was silent on whether the 25
employees of Imbabazane Local Municipality could join
the applicant
as it appeared from the record that this municipality had associated
with the KZN Funds as from its inception.
[71]
In their founding affidavit, the KZN Funds had averred that
the municipality had associated with them.  They stated:
“
19.
The
Imbabazane
Municipality has complied with the applicants’ Regulations over
the years and duly made payment of
the
employee and
employer contributions.  Likewise, the applicants have complied
with their obligations and provided the benefits
contemplated in
their respective Regulations.
20.
The 26 employees of the Imbabazane Municipality who feature in the
p
r
esent
dispute apparently completed application forms to join the MEPF
pursuant to a misrepresentation by the MEPF that
it
was a fund with
which the Municipality could be associated and that it is was
entitled
to
solicit membership
from within this Province.  When the Municipality detected the
error during November 2011, the Municipality
took steps to regularise
the matter by terminating the ‘membership’ of the 26 so
as to permit them to join one of the
applicants
.
The
MEPF
did not accept this
and
thereafter instituted the
main application.”
[72]
In the light of this it appears that Imbabazane Local
Municipality was not prohibited to associate with the applicant.
It
is therefore not clear why the applicant was ordered to repay
pension contributions of the 25 employees.
Power to
make regulations
[73]
The source of the MEC’s power to make the relevant
regulations is section 4 of the1974 Ordinance, and the Provident
Act.
These pieces of legislation have identical provisions.
Therefore it is not necessary to examine both of them.
[74]
Section 4 of the Ordinance provides:
“
(1)
The Administrator may make regulations
(a)
providing that the Joint Fund shall be a continuation of any existing
fund;
(b)
providing for the sources of the Joint Fund;
(c)
determining which employees of local authorities shall be eligible
for membership
of the Joint Fund;
(d)
determining the contributions of members to the Joint Fund;
(e)
providing for the management and control of the Joint Fund including
the establishment
or disestablishment of any committee, sub-committee
or any other body which the Administrator deems advisable for that
purpose;
(f)
defining the powers and duties of any committee or other body
referred to in paragraph
(e) including the powers of such committee
or other body to make rules and to exercise discretionary powers and
powers of delegation;
(g)
in regard to the investment of the funds of the Joint Fund;
(h)
in regard to any actuarial valuation of the Joint Fund;
providing
for the auditing of the Joint Fund;
(j)
in regard to the payment of any benefit, annuity, gratuity, or other
amount
from the Joint Fund;
(k)
relating to the circumstances in which the interest earned by the
Joint Fund shall
be guaranteed or supplemented;
(l)
in regard to the pension rights of an employee transferred from or
seconded
by one local authority to another;
(m)
in regard to the interchange of employees between local authorities;
(n)
in regard to the local authorities of Durban and Pietermaritzburg
becoming subject
to this Ordinance; and
(o)
providing for all matters which he considers necessary or expedient
for the purposes
of the Joint Fund, the generality of this power not
being limited by any of the provisions contained in the aforegoing
paragraphs.
(2)
Any regulations made by the Administrator in terms of any of the
provisions of subsection (1)
may be made with effect from any
date whether prior or subsequent to the date of promulgation
thereof.”
[75]
In the context of this section the reference to the
administrator means the MEC.  A close reading of the provision
reveals
that in the main the MEC is empowered to make regulations
that govern the operation of the Retirement Fund.  These include

determining which employees shall be eligible for membership of the
Retirement Fund and the determination of contributions to be
made by
members.  This suggests that municipal employees are not
automatically entitled to join the Retirement Fund purely
by virtue
of being employees.  It is left to the MEC to determine which of
such employees will be eligible.  In other
words the MEC may
determine that all employees will be eligible or only some of them
will qualify.
[76]
The whole provision is dedicated to matters relative to the
Retirement Fund and does not refer to municipalities except in one
respect.
In section 4(1)(n) the Ordinance authorises the MEC to
regulate the application of the Ordinance to local authorities of
Durban and Pietermaritzburg.  The regulations would apply to
these local authorities only if they request that the Ordinance

should be applied to them.  This much is clear from section 3
which stipulates that the Ordinance does not apply “unless
such
local authorities shall make application to that end in the manner
prescribed”.  The regulations made by the MEC
must
prescribe the form in terms of which the two municipalities may ask
that the Ordinance be extended to them.
[77]
Section 4(1)(o) on which the High Court relied in holding that
the MEC had power to compel all municipalities to associate with the

KZN Funds must be interpreted not only in the context of the entire
section but also with reference to other provisions of the
Ordinance
and its purpose.  The Retirement Fund was established to cater
for municipal employees who were not eligible to
join the
Superannuation Fund.  This is apparent from the provisions of
section 2 which provide:
“
There
is hereby established a fund to be known as the Natal Joint Municipal
Pension Fund (Retirement), hereinafter referred to as
the Joint Fund,
for the provision of pension rights for the employees and their
dependants of local authorities, who are not eligible
for membership
of the Joint Fund as contemplated by the Local Government
Superannuation Ordinance, 1973 (Ord. 24 of 1973).”
[78]
Plainly this section debunks the theory embraced by the High
Court and the Supreme Court of Appeal to the effect that the
Ordinance
contemplated a restriction where all municipalities were
obliged to associate with the Retirement Fund and their employees
were
compelled to join it.  First and foremost section 2
demonstrates that the Retirement Fund was established to provide
retirement
benefits for employees to whom the 1974 Ordinance
[36]
did not apply.  Therefore, even where the former Ordinance
applied, it did not extend to the whole workforce.
[79]
It is evident from section 2 that the law-maker did not seek
to make membership of the Retirement Fund compulsory.  The
restriction
contemplates that the employees eligible to join the
Retirement Fund shall be those who do not qualify to be members of
the Superannuation
Fund.  Those who were eligible to join the
Superannuation Fund could join the Retirement Fund only if the
regulations made
in terms of section 4 allowed this.  Section
4(1)(c) empowers the MEC to make regulations “determining which
employees
of local authorities shall be eligible for membership of
the Joint Fund”.  Having created the Retirement Fund, the
legislator
left it to the MEC, formerly administrator, to determine
eligibility to the fund.  This power does not include the
mandate
to compel membership of the Retirement Fund, let alone the
other KZN Funds which are not even mentioned in section 4.
[80]
This is the backdrop against which section 4(1)(o) must be
understood.  The provision was meant to enable the MEC to
regulate
matters that are reasonably necessary or expedient to the
proper operation of the Retirement Fund whose purpose was to provide
pension benefits to employees who could not join the
Superannuation Fund.  But those matters are limited to
issues that
are reasonably incidental to those specified in
paragraphs (a) up to (n) of section 4(1).  In other words
section 4(1)(o)
does not create a category of matters that are
separate from and independent of those listed in the preceding
paragraphs.
[81]
Therefore the phrase “all matters which he considers
necessary or expedient for purposes of the Joint Fund” must be
construed with reference to listed matters and the purpose for
establishing the Retirement Fund.  When read in this way, the

scope of section 4(1)(o) is restricted to additional matters that are
reasonably necessary or expedient to achieving the purpose
for which
the Retirement Fund was established.
[37]
That purpose was to afford municipal employees a pension fund they
could join as members.
Ultra vires
regulations
[82]
The subject-matter of regulation 3 is municipal councils.
It purports to oblige them to associate with the Retirement Fund,

except a portion of the Durban Municipality.  Section 4
does not authorise this!  The only power relative to
municipalities
conferred by the section upon the MEC is to prescribe
the manner in which the municipalities of Durban and Pietermaritzburg
may
request that the Ordinance be applied to them.  The
regulation is also inconsistent with the Ordinance under which it was
made.  Instead of prescribing how the application of the
Ordinance can be extended to those two municipalities, it obliges

them to associate with the Retirement Fund and only exempts a portion
of the Durban Municipality.  This portion was exempted
on the
ground that its employees were members of the Durban Pension Fund.
[83]
But the Durban Pension Fund is not part of the KZN Funds which
the High Court and the Supreme Court of Appeal had held
municipal
employees in KZN must join.  What regulation 3 read
with regulation 2A does is to exempt members of the Durban Pension
Fund
from joining the KZN Funds.  This is because in terms of
regulation 2A, the regulations do not apply to employees who are
members of the Durban Pension Fund unless that Fund specifically asks
for their application.  What one sees in regulations
2A and 3 is
an attempt to exercise the power in section 4(1)(n) of the Ordinance
read with section 3.  But instead of exempting
the
municipalities of Durban and Pietermaritzburg and prescribing how
they could ask to be included, the MEC decided to exempt
a portion of
the Durban Municipality only.  As a consequence regulation 3
obliges Pietermaritzburg Municipality and the other
portion of Durban
Municipality to associate with the KZN Funds.  This is in
conflict with sections 3 and 4 of the empowering
legislation.
Consequently, the regulations are
ultra vires
.
[84]
Regulation 14 forces municipal employees in KZN to join one of
the KZN Funds, regardless of whether they belong to some other
pension
fund or not.  Even members of the Durban Pension Fund
would be obliged to join one of the KZN Funds if their employer

requested that the regulations be applied to it in terms of
regulation 38.  This is because the obligation imposed on
employees
by regulation 14 is triggered as soon as a local authority
becomes associated with the Retirement Fund.
[85]
This is at odds with the structure of the Ordinance as set out
in section 2 read with section 4(1)(c).  Central to that scheme

is the element of choice.  What the Ordinance sought to achieve
by establishing the Retirement Fund was to afford employees
who could
not join the Superannuation Fund an option of having a fund they
could join.  The Ordinance did not only establish
the Retirement
Fund but it also authorised the MEC to determine which employees
shall be eligible to join the Fund.  The power
to determine
eligibility makes it plain that not every municipal employee was
expected to join.  This power is not consonant
with the power to
compel all employees to join.
[86]
In addition, section 4 of the Ordinance authorises the MEC to
make regulations pertaining to the Retirement Fund only.  But

regulation 14 binds employees to elect to be members of three other
funds.
[38]
Apart from the fact that the MEC had no power to make regulations for
membership of the other funds, regulation 14 seriously
undermines the
purpose for which the power was conferred.  By allowing that
employees may instead of joining the Retirement
Fund, choose to be
members of the other funds this regulation defeats the very purpose
of establishing the Retirement Fund.
It will be remembered
that this fund was established to cater for municipal employees who
could not join the Superannuation
Fund.  Regulation 14 dispenses
with the disqualification that led to the establishment of the
Retirement Fund.  In making
this regulation also the MEC
exceeded the powers conferred by section 4 of the Ordinance.
[87]
Section 4(1)(n) does not even remotely refer to membership of
the Superannuation Fund, the Provident Fund and the KZN Municipal
Fund.  Yet regulation 14 obliges municipal employees to choose
to join one of them instead of the Joint Fund referred to in
the
section.  The section empowers the MEC to make regulations
providing for all matters necessary or expedient for the purposes
of
the Joint Fund.  Wide as it is, this power does not cover the
other Funds.  Nor does it authorise the MEC to make
regulations
which permit municipal employees to choose the other Funds over the
Joint Fund.  This is a classic example of
a functionary that
exceeded the power conferred on him or her.
[88]
By so doing the MEC breached the principle of legality.
In
Affordable Medicines Trust
,
[39]
Ngcobo J declared that such breach renders regulations invalid:
“
The
exercise of public power must therefore comply with the Constitution,
which is the supreme law, and the doctrine of legality,
which is part
of that law.  The doctrine of legality, which is an incident of
the rule of law, is one of the constitutional
controls through which
the exercise of public power is regulated by the Constitution.
It entails that both the Legislature
and the Executive are
constrained by the principle that they may exercise no power and
perform no function beyond that conferred
upon them by law.  In
this sense the Constitution entrenches the principle of legality and
provides the foundation for the
control of public power.
In exercising
the power to make regulations, the Minister had to comply with the
Constitution, which is the supreme law, and the
empowering provisions
of the Medicines Act.  If, in making regulations, the Minister
exceeds the powers conferred by the empowering
provisions of the
Medicines Act, the Minister acts
ultra
vires
(beyond the powers) and in breach of the doctrine of legality.
The finding that the Minister acted
ultra
vires
is
in effect a finding that the Minister acted in a manner that is
inconsistent with the Constitution and his or her conduct
is
invalid.  What would have been
ultra
vires
under
common law by reason of a functionary exceeding his or her powers is
now invalid under the Constitution as an infringement
of the
principle of legality.”
[89]
As mentioned the impugned regulations are not
ultra vires
only by reason that the MEC exceeded his or her powers but also
because they are inconsistent with the enabling legislation.
[40]
In
Watchenuka
,
[41]
the Supreme Court of Appeal was confronted by the question whether an
enabling provision that was framed in wide terms authorised
the
Minister of Home Affairs to regulate conditions relating to work or
study by asylum seekers.  The empowering provision
mandated the
Minister to make regulations relating to “conditions of sojourn
in the Republic of an asylum seeker, while his
or her application is
under consideration”.  Acting in terms of this provision,
the Minister made regulations which
prohibited asylum seekers from
undertaking employment or studying.  Another provision empowered
a committee to “determine
the conditions relating to study or
work in the Republic under which an asylum seeker permit may be
issued”.
[90]
The issue that arose for determination was whether the
unqualified power of the Minister to determine conditions of sojourn
of asylum
seekers extended to the conditions pertaining to study and
work which fell under the authority of the committee.  In
holding
that the Minister acted in a manner that was at odds with the
statute Nugent JA said:
“
Having
vested the power to determine such conditions in the Standing
Committee the Legislature could not have intended the same
powers to
be exercised by the Minister.  It must necessarily be implied in
s 38(1)
(e)
of the Act that the ‘conditions of sojourn’ that he is
empowered to regulate do not include conditions relating to
work or
study.”
[42]
[91]
Another case that dealt with the issue of regulations that
were inconsistent with a statute is
Singapi
.
[43]
In that case the statute permitted black residents of an area
of a community council to vote and stand for office in the
council.
Regulations made by a
minister restricted the rights to vote
and stand for office to residents with permits and their wives.
In that matter Smalberger
J held:
“
When
subordinate regulations are under consideration, however, it is
necessary to consider them in relation to the empowering provisions

under which they have been made.  No matter how clear and
unequivocal such regulations may purport to be, their interpretation

and validity are dependent upon the empowering provisions which
authorise them.  One must therefore have regard to the intention

of the Legislature as reflected in the Act, it being the enabling
statute under which the Election Regulations were promulgated,
in
order to ascertain whether the regulations are in conformity, and not
in conflict, with such intention, for to the extent that
they are in
conflict with such intention they are
ultra
vires.
”
[44]
[92]
In
Singapi
, like here, the applicants sought an order
that declared what was done in a manner not in line with the
regulations as invalid.
In opposing the claim, the respondents
asserted that the regulations on which the claim was based were
ultra vires
.  The Court agreed with the respondents
and the application was dismissed.
[93]
Here too the application by the KZN Funds should have failed,
for it was founded on invalid regulations.  For these reasons
I
would grant leave and uphold the appeal with costs.
MADLANGA J:
[94]
I have read the judgments prepared by my colleagues, Mhlantla
J (first judgment) and Jafta J (second judgment).  I support the

order and reasons contained in the first judgment.  I consider
it necessary to touch briefly on an argument that was raised
by the
applicant, which the first judgment does not deal with.
[95]
The argument is that if the regulations are interpreted to
have the effect of making it impossible for municipal employees in
KZN
to have membership of only a
fund or funds outside KZN, the
regulations are
ultra vires
the two KZN Ordinances and the
Provident Fund Act.  The applicant urged us to adopt an
interpretation that
keeps the regulations
intra vires
.
Based on the interpretation of the regulations adopted by the first
judgment, the applicant’s interpretation does
not seem viable;
the regulations do indeed decree the compulsion that the applicant
suggests they don’t.
[96]
However, on a variety of reasons, for some of which I refer to
the second judgment, there does appear to be substance in the
suggestion
by the applicant that the respondents’
interpretation of the regulations may well lead to the regulations
being
ultra vires
.  For the brief reasons that follow, I
need not make a definitive holding on this.  What I want to
emphasise though is
that on a proper reading of the applicant’s
case, in particular the founding affidavit before us, the case is
about the interpretation
of the regulations.  To demonstrate
that this is so, the applicant’s constitutional challenge based
on the
ultra vires
point is raised as an alternative in case
the interpretative argument fails.  Crucially, that alternative
is not asking us
to decide that challenge.  Rather it urges us
to remit the matter to the High Court for the determination of the
challenge.
I see no reason why we must do that.  The
applicant’s fate must be determined on the case that has been
presented thus
far.
For the Applicants:
A M Breitenbach
SC and K D Iles instructed by Dockrat Inc Attorneys
For the Respondents:
K J Kemp SC and H S Gani instructed
by J Leslie Smith & Company
[1]
Municipal Employees Pension Fund v The Natal Joint Pension Fund
[2016] ZASCA 139
;
[2016] 4 All SA 761
(SCA judgment).
[2]
17 of 1939.
[3]
24 of 1956.
[4]
KwaZulu-Natal Joint Municipal Provident Fund Act 4 of 1995.
[5]
In a defined benefit fund, the employer’s contribution is not
earmarked to benefit any specific member but is paid into
the fund
and used to provide benefits in respect of all members of that fund.
[6]
Members in a defined contribution fund are guaranteed payment of a
cash benefit on leaving the fund.
[7]
25 of 1966.
[8]
6 of 1967.
[9]
The Supreme Court of Appeal notes that there is a reference to 26
employees in the affidavits, but this appears to be an error
as only
25 people were joined as respondents by the appellant in the
application.  See SCA judgment above n 1 at fn 1.
[10]
Section 18 of the Constitution provides that “[e]veryone has
the right to freedom of association.”
[11]
See section 39(2) of the Constitution.
[12]
Paulsen v Slip Knot Investments 777 (Pty) Ltd
[2015] ZACC 5;
2015 (3) SA 479 (CC); 2015 (5) BCLR 509 (CC).
[13]
Id at paras 20-1.
[14]
Id at para 25.
[15]
Id at para 26.
[16]
Id at paras 29-30.
[17]
S v Boesak
[2000] ZACC 25
;
2001 (1) BCLR 36
(CC);
2001 (1) SA
921
(C) at para 12.
[18]
De Reuck v Director of Public Prosecutions (Witwatersrand Local
Division)
[2003] ZACC 19
;
2004 (1) SA 406
(CC);
2003 (12) BCLR
1333
(CC) at para 3.
[19]
Glenister v President of the Republic of South Africa
[2011]
ZACC 6
;
2011 (3) SA 347
(CC);
2011 (7) BCLR 651
(CC) at para 53.
[20]
Natal Joint Municipal Pension Fund v Endumeni Municipality
[2012] ZASCA 13
;
[2012] 2 All SA 262
(SCA);
2012 (4) SA 593
(SCA)
(
Endumeni
).
[21]
At para 18.
[22]
Cool Ideas 1186 CC v Hubbard
[2014] ZACC 16
;
2014 (4) SA 474
(CC);
2014 (8) BCLR 869
(CC) (
Cool Ideas
).
[23]
Id at para 28.
[24]
Endumeni
above n 20 at para 18.
[25]
Regulation 76 provides:
“In an event
that, a contract employee who was compelled to become a member of
the Fund in accordance with Regulation 16(4)
elect[s], after the
commencement of the Chapter, not to remain a member of the Fund, the
benefits payable to such members shall
be in accordance with
Regulation 71.”
[26]
32 of 2000.
[27]
Section 57 of the Municipal Systems Act deals with the employment
contracts of municipal managers and managers directly accountable
to
municipal managers.
[28]
4 of 1995.
[29]
Oostelike Gauteng Diensteraad v Transvaal Munisipale
Pensioenfonds
1997 (8) BCLR 1066
(T) (
Oostelike
).
[30]
See [47].
[31]
SCA judgment above n 1 at para 16.
[32]
Section 34 of the Constitution provides:
“Everyone
has the right to have any dispute that can be resolved by the
application of law decided in a fair public hearing
before a court
or, where appropriate, another independent and impartial tribunal or
forum.”
[33]
De Beer N.O. v North-Central Local Council and South-Central
Local Council
(
Umhlatuzana Civic Association Intervening
)
[2001] ZACC 9
;
2002 (1) SA 429
(CC);
2001 (11) BCLR 1109
(CC) at
para 11.
[34]
The Natal Joint Municipal Pension Fund (Superannuation) and
Others v Municipal Employees Pension Fund and Others
, unreported
judgment of the High Court of South Africa, KwaZulu-Natal Local
Division, Pietermaritzburg, Case No 3144/2013 (6
October 2014) at
para 16.
[35]
Id at para 27.
[36]
Which established the Superannuation Fund.
[37]
Compare
Makoka v Germiston City Council
1961 (3) SA 573
(A);
[1961] 3 All SA 495
(A) at 581-2.
[38]
These are the Superannuation Fund, Provident Fund and the KZN
Municipal Pension Fund.
[39]
Affordable Medicines Trust v Minister of Health
[2005] ZACC
3
;
2006 (3) SA 247
(CC);
2005 (6) BCLR 529
(CC) at paras 49-50.
[40]
Sizabonke Civils t/a Pilcon Projects v Zululand District
Municipality
2011 (4) SA 406
(D) at para 28.
[41]
Minister of Home Affairs v Watchenuka
2003 [ZASCA] 142;
2004
(4) SA 326
(SCA) (
Watchenuka
) at paras 17-8.
[42]
Id at para 18.
[43]
Singapi v Maku
1982 (2) SA 515 (SE).
[44]
Id at 517D.  Compare
Belinco (Pty) Ltd v Bellville
Municipality
1970 (4) SA 589
(A) and
Komani N.O. v Bantu
Affairs Administration Board, Peninsula Area
1980 (4) SA 448
(A).