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[2015] ZAWCHC 42
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Smith v Minister of Education and Others (9748/2014) [2015] ZAWCHC 42 (22 April 2015)
REPUBLIC OF SOUTH
AFRICA
IN THE HIGH COURT OF
SOUTH AFRICA
(WESTERN CAPE HIGH
COURT, CAPE TOWN)
Case no: 9748/2014
DATE: 22 APRIL 2015
WILLIE GERALD
SMITH
.....................................................................................................
Applicant
V
MINISTER OF
EDUCATION
....................................................................................
First
Respondent
WESTERN CAPE EDUCATION
DEPARTMENT
..............................................
Second
Respondent
MINISTER OF
FINANCE
.........................................................................................
Third
Respondent
THE NATIONAL
TREASURY
................................................................................
Fourth
Respondent
DEPARTMENT: PUBLIC SERVICE AND
ADMINISTRATION
(DPSA)
......................................................................................
Fifth
Respondent
DEPARTMENT: GOVERNMENT PENSIONS
ADMINISTRATION AGENCY
(GPAA)
...................................................................
Sixth
Respondent
GOVERNMENT EMPLOYEES PENSION FUND
(GEPF)
..............................
Seventh
Respondent
Court: Judge J I Cloete
Heard: 26 February 2015
Delivered: 22 April 2015
JUDGMENT
CLOETE J:
Introduction
[1] The applicant, a retired school
inspector, seeks orders declaring that with effect from the date of
his retirement in 1996 he
became entitled to payment by the State of
a two-thirds contribution (subsidy) towards his monthly medical aid
premiums, and that
he is thus entitled to payment of arrears which
have accrued as a result of the State’s refusal to pay.
[2] Although various disputes are
contained in the papers, the parties agreed that the only issue which
requires determination is
which clause of the applicable staff code
governs the applicant in light of s 16(6) of the Public Service Act
103 of 1994 (‘PSA’).
The parties also agreed that in the
event of the applicant succeeding, his claim for payment of arrear
subsidies would be limited
to those accruing since 3 June 2011, and
that it is the third, fourth and sixth respondents which shall be
liable to effect such
payment.
Common cause facts
[3] The applicant was employed by the
Department of Education, as a teacher and later as a school
inspector, for just over 27 years.
On 29 February 1996 at the age of
50 years he opted for early retirement in terms of s 16(6) of the
PSA.
[4] In its letter to the applicant of
24 January 1996 the second respondent confirmed that approval had
been granted for the applicant’s
early retirement in terms of s
16(6)(a) of the PSA ‘met volle voordele met ingang van 1 Maart
1996’.
[5] Immediately prior to his retirement
the applicant’s benefits included a two-thirds subsidy towards
his monthly medical
aid premiums, limited to 100% of the prescribed
maximum rand amount (‘the two-thirds subsidy’).
[6] The applicant continued to receive
payment of the two-thirds subsidy from the State for seven years
until 14 April 2003 (this
is no longer disputed) when his medical aid
scheme, Pro Sano, wrote to him advising that:
6.1 the third respondent’s
department had decided that the applicant’s two-thirds subsidy
would change to a one-third
subsidy; and
6.2 this would apply with retrospective
effect from 1 April 2002, and the applicant was thus required to
repay the difference of
R6 591.
[7] With effect from 1 April 2002 the
applicant has only received a one-third subsidy limited to 50% of the
prescribed maximum rand
amount (‘the one-third subsidy’).
Applicable legislative and
subsidiary provisions
[8] It is common cause that the
applicant took early retirement in terms of s 16(6)(a) of the PSA.
Although not yet promulgated
at the date of the applicant’s
retirement, the parties agreed, for purposes of determining this
matter, that regard must
also be had to the Public Service
regulations issued in terms of s 41 of the PSA (by GN 20117 of 1 July
1999, replaced by GN 21951
of 5 January 2001), and more particularly,
para G.1 in Part VII, which stipulates that State employees such as
the applicant ‘shall
retire at the age and in the circumstances
specified in s 16’ of the PSA.
[9] S 16(6) of the PSA provides that:
‘ (6) (a) An executive authority
may, at the request of an employee, allow him or her to retire from
the public service before
reaching the age of 60 years,
notwithstanding the absence of any reason for dismissal in terms of
section 17 (2), if sufficient
reason exists for the retirement.
(b) If an employee is allowed to so
retire, he or she shall, notwithstanding anything to the contrary
contained in subsection (4),
be deemed to have retired in terms of
that subsection, and he or she shall be entitled to such pension as
he or she would have
been entitled to if he or she had retired from
the public service in terms of that subsection.’
[10] S 16(4) in turn provides that:
‘An officer, other than a member
of the services or an educator or a member of the State Security
Agency who has reached the
age of 60 years may, subject in every case
to the approval of the relevant executive authority, be retired from
the public service.’
[11] The relevant provisions of the
applicable staff code (issued in terms of s 42 of the PSA) are
contained in Part III of Chapter
D.IX thereof which bears the heading
‘Medical Assistance to Officers and Employees at Retirement or
Termination of Service’.
The purpose is described in clause 1
as follows:
‘1. PURPOSE
To establish a basis according to which
medical assistance can be rendered to officers or employees who
retire with pension or whose
services are terminated.’
[12] Clause 5 thereof provides that:
‘5. PROVISION
The extent to which assistance is
rendered is set out in [sic] the basis below and will be calculated
only once in accordance with
the position which applies or had been
applied in respect of an officer or employee at termination of
service.’
[13] Clause 6.1 stipulates that:
‘6.1 The following persons, or
their surviving spouses, qualify for assistance in accordance with
the basis as set out further
on:
(a) …
(b) Officers or employees who are 60
years or older –
(i) .…
(ii) …. who, at own request,
retire with the approval of the employer (but not as a result of
misconduct or incapacity),
or as a result of a right to early
retirement; or
(iii) …
(c) ….’
[14] Clause 6.1.1(c)(i) provides that
such officers or employees who retire after 1 December 1993 and who,
at the time of their
retirement are members of a medical aid scheme
with at least 15 years’ service, are entitled to a two-thirds
subsidy (referred
to as 4/6 of membership fees) limited to 100% of
the prescribed maximum rand amount.
[15] Clause 6.2 of Part III provides as
follows:
‘6.2 The following persons, or
their surviving spouses, qualify for assistance in accordance with
the basis as set out further
below:
(a) Officers or employees who have not
yet reached the age of 60 years at retirement/termination of service
–
(i) ….
(ii) who, at own request, retire with
the approval of the employer (but not as a result of misconduct or
incapacity), or according
to a right to early retirement; or
(iii) ….’
[16] Clause 6.2.1(c)(ii) stipulates
that such officers or employees who retire after 1 December 1993 and
who, at the time of their
retirement are members of a medical aid
scheme, are between the ages of 50 and 55 years, and who have at
least 15 years’
service, are entitled to a one-third subsidy
(referred to as 2/6 of membership fees) limited to 50% of the
prescribed maximum rand
amount.
The applicant’s case
[17] It is the applicant’s case
that when at the age of 50 years he took early retirement with full
benefits in terms of s
16(6) of the PSA, those benefits included
payment of the two-thirds subsidy of his medical aid premiums because
he was deemed to
have retired as if he had reached the age of 60
years.
[18] The applicant argues that because
he was allowed to retire in terms of s 16(6)(a) of the PSA, the
provisions of s 16(6)(b),
which deem him to have retired in terms of
s 16(4), as read with s 16(4) which specifically refers to categories
of employees who
have attained the age of 60 years, mean that he must
be afforded the medical aid benefits prescribed in clause 6.1.1(c) of
the
staff code, which apply to employees who take voluntary early
retirement when they are 60 years or older after having completed
at
least 15 years’ service. He is thus entitled to a two-thirds
subsidy instead of a one-third subsidy as prescribed in clause
6.2.1(c)(ii).
The respondents’ case
[19] The respondents submit that the
only relevance of the deeming provision contained in s 16(6)(b) is
that an employee who retires
in terms thereof is entitled to greater
pension benefits and no other greater benefits.
[20] It is argued that this
interpretation is underscored by the fact that no reference is made
to any benefits other than pension
benefits in s 16(6)(b). If it had
been the intention of the legislature to make s 16(6)(b) applicable
to all benefits, then it
would not have been necessary to include the
words ‘and he or she shall be entitled to such pension as he or
she would have
been entitled’ if the employee concerned had
retired in terms of s 16(4).
[21] The respondents submit that Part
III of the staff code provides for two separate categories of
employees who retire with pension,
namely: (a) those who are 60 years
or older, in clause 6.1; and (b) those who are below the age of 60
years, in clause 6.2. They
contend that because the deeming provision
in s 16(6)(b) applies only to pension benefits, the applicant must
fall under clause
6.2 because he was in fact below the age of 60
years when he took early retirement. He is thus only entitled to a
one-third subsidy.
[22] Allied to these are submissions
that the word “pension” on its plain meaning cannot be
regarded as including medical
aid benefits; and that Part III of the
staff code itself speaks of medical assistance to those employees who
retire “with
pension”, and must thus contemplate medical
aid benefits over and above any pension entitlement.
Discussion
[23] In Poswa v MEC for Economic
Affairs, Environment and Tourism, Eastern Cape
2001 (3) SA 582
(SCA)
the Supreme Court of Appeal held at paras [10] – [11] as
follows:
[10] The literal meaning of an Act (in
the sense of strict literalism) is not always the true one, but
escaping its operation is
usually not easy, most often impossible,
for:
“The cardinal rule of
construction of a statute is to endeavour to arrive at the intention
of the lawgiver from the language
employed in the enactment. . . . in
construing a provision of an Act of Parliament the plain meaning of
its language must be adopted
unless it leads to some absurdity,
inconsistency, hardship or anomaly which from a consideration of the
enactment as a whole a
court of law is satisfied the Legislature
could not have intended.”
(Per Stratford JA in Bhyat v
Commissioner for Immigration
1932 AD 125
at 129). (Emphasis
supplied.)
[11] The effect of this formulation is
that the court does not impose its notion of what is absurd on the
legislature’s judgment
as to what is fitting, but uses
absurdity as a means of divining what the legislature could not have
intended and therefore did
not intend, thus arriving at what it did
actually intend.’
[24] In Natal Joint Municipal Pension
Fund v Endumeni Municipality
2012 (4) SA 593
(SCA) at para [18] it
was held that:
‘The present state of the law can
be expressed 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.’
[25] The first enquiry is thus to
consider the plain meaning of s 16(6) as read with s 16(4). S
16(6)(a) does not present any difficulty.
The employee must make a
request to the executive authority for permission to retire before
reaching the age of 60 years. The executive
authority must consider
if sufficient reason exists for such retirement. If it is satisfied
that this is the case it may (not must)
allow the employee to retire.
[26] S 16(6)(b) in turn provides that
if the executive authority allows the employee to retire in
accordance with s 16(6)(a) then
such employee is deemed to have
retired in terms of s 16(4). The latter subsection, on its plain
wording, only pertains to employees
who have already reached the age
of 60 years.
[27] The only real interpretative
difficulty presented by s 16(6)(b) is the insertion after the deeming
provision of the words ‘and
he or she shall be entitled to such
pension’ as if the employee concerned had attained the age of
60 years.
[28] As to the context in which s
16(6)(b) appears in the PSA, s 16(6)(a) provides a mechanism for an
employee to take early retirement
if the executive authority: (a) is
satisfied that sufficient reason exists; and (b) thereafter exercises
its discretion in favour
of the employee and allows him or her to
take early retirement. This clearly implies that the employee
concerned will be treated,
upon early retirement, as a retired
employee, and not one who has resigned or has been dismissed with the
attendant possible loss
of benefits.
[29] S 16(4) stipulates how the retired
employee shall be treated, i.e. as if he or she has already reached
the age of 60 years.
It is noteworthy that no limitations are placed
on retirement benefits in terms of s 16(4) itself. Accordingly, an
employee retiring
in terms of s 16(4), whether in terms of the
deeming provision in s 16(6)(b) or s 16(4) alone, by necessary
implication becomes
entitled to all of the benefits of a retired
employee of 60 years or older. For purposes of this enquiry therefore
the words inserted
in s 16(6)(b) in relation to pension cannot limit
the ambit of s 16(4).
[30] The next enquiry is to consider
the apparent purpose to which s 16(6)(b) was directed together with
any material known to those
responsible for its production. In the
present matter no such material has been placed before the court.
However what is of valuable
assistance is the respondents’ own
understanding of the purpose of s 16(6)(b) as evidenced by what are
now common cause facts.
[31] Although denied by the respondents
throughout this litigation until it was finally conceded during
argument, the applicant
in fact received a two-thirds subsidy for a
period of seven years after his retirement until April 2003. Pro Sano
issued a medical
aid card to the applicant upon his retirement which
expressly reflects that he would henceforth receive the two-thirds
subsidy.
This the respondents admitted, and did not attempt to
explain any error on Pro Sano’s part.
[32] The letter from Pro Sano of 14
April 2003 informed the applicant that ‘We have been advised by
the Department of Finance
in Pretoria, that your State subsidy has
been changed to 33.3%’ backdated to 1 April 2002. It is fair to
assume that the
information initially supplied to Pro Sano upon the
applicant’s retirement emanated from the same State department.
Certainly,
there is no indication from the respondents to the
contrary. The Pro Sano letter clearly implies that the position which
pertained
for the preceding seven years was now being changed, and
not that there had been an error on the part of the State which it
sought
to rectify. Presumably because of the respondents’
stance right up until the matter was argued, namely that the
applicant
had only ever received a one-third subsidy after his
retirement, no attempt was made by the respondents to explain the
reason for
this “change”.
[33] The respondents however admitted
the contents of a letter addressed to the applicant by the fourth
respondent on 7 May 2003,
almost a month after the Pro Sano letter,
in which he was informed inter alia that:
‘STATE SUBSIDY TO YOU (sic)
MEDICAL AID SCHEME AFTER YOUR RETIREMENT
The Public Service Commission has
recommended that a basis according to which financial assistance can
be rendered to officers and
employees who retired or whose services
are terminated and their surviving spouses, be vested in the Public
Service Staff Code
(now contained in Resolution 3 of 1999). The basis
is applicable with effect from 1 December 1993. This basis is set out
in Chapter
DIX, part III of the Public Service Staff Code and in
accordance with paragraph 3 of the Office of the Public Service
Commissions
(sic) Circular 4 / 10 / 1 / B. Paragraph 5 of the Staff
Code clearly indicates that assistance will be calculated only once
in
accordance with the position which applies or had been applied in
respect of an officer or employee at termination of service.
According to the Public Service Staff
Code pensioner members (50 years but not yet 55 years) that retired
during the period 1 December
1993 and 30 April 1996 can qualify for a
2/6 subsidy if they have at least 15 years of government service on
the last day of service.
The 2/6 subsidy is limited to 50% of the
maximum Rand amount. Currently this is limited to a maximum Rand
amount of R 507.00. As
you retired during this period you can only
qualify for a 2/6 subsidy…’
[34] It is significant that nowhere in
the aforementioned letter is any reference made to the specific
statutory basis upon which
the applicant had been permitted by the
executive authority to retire, namely s 16(6)(a) of the PSA. Two
possibilities arise therefrom,
namely that either the fourth
respondent had not been informed of this by the second respondent, or
the fourth respondent was indeed
aware of the basis upon which the
applicant had retired but chose, for reasons which it has not
disclosed, to ignore this. A third
possibility, namely that the State
did not understand its own statutory obligation, must be rejected for
the reason that it had
adhered to that obligation towards the
applicant without demur for the preceding seven years.
[35] Furthermore, the letter itself
expressly acknowledges that, in accordance with clause 5 of the staff
code, medical aid benefits
‘will be calculated only once in
accordance with the position which applies or had been applied in
respect of an officer
or employee at termination of service’.
[36] Clauses 6.1(b)(ii) and 6.2(ii) of
the staff code present their own interpretive challenge when read
against s 16(6) of the
PSA. As I have said, s 16(6)(a) caters for
employees who opt for voluntary retirement with the consent of the
executive authority
before reaching the age of 60 years, and are then
deemed in terms of s 16(4) to have retired at 60 years or older. Yet
the aforementioned
clauses of the staff code create something of an
anomaly in that they purport to distinguish between employees of 60
years or older
on the one hand, and those below the age of 60 years
on the other, while at the same time applying equally to employees
who take
voluntary retirement with the consent of their employer. The
staff code is silent on whether a distinction is to be drawn between
early retirement in terms of the deeming provision in s 16(6)(b) or
in terms of s 16(4) itself.
[37] However the clauses of the staff
code must be subordinate to the PSA and to the extent that there is
conflict between the two,
the PSA must prevail. In any event, the
single strongest indicator of how the State itself interpreted its
statutory obligation
towards the applicant lies in its having
determined his entitlement to the two-thirds subsidy upon termination
of his employment
by voluntary early retirement.
[38] Any subordinate provision in the
staff code which may create confusion cannot affect this common cause
fact, given that in
terms of clause 5 of the staff code the
applicant’s medical aid subsidy could be determined only once
upon termination of
service. The respondents are therefore precluded
from seeking to revisit that determination. To the extent that they
seek to limit
the applicant’s entitlement to that of greater
pension benefits only, this must be rejected.
Costs
[39] The applicant cannot fairly be
criticised for initially citing some of the respondents incorrectly
as parties in a bona fide
attempt to negotiate his way through the
labyrinth of responsible state departments. By the same token, the
State cannot be held
responsible for the applicant’s error. In
the circumstances it would be appropriate to make the costs order
which follows.
Conclusion
[40] In the result the following order
is made:
1. It is declared that the applicant
has since his retirement in 1996 been entitled to a two-thirds
contribution to his monthly
medical aid premiums, limited to 100% of
the prescribed maximum rand amount, in accordance with clause
6.1.1(c)(i) of the staff
code annexed to the applicant’s
founding affidavit marked “WS12”.
2. The third, fourth and sixth
respondents shall henceforth ensure that the two-thirds contribution
to the applicant’s medical
aid premiums are paid in accordance
with paragraph 1 above.
3. The third, fourth and sixth
respondents shall retrospectively reimburse the applicant for the
short payment of the contributions
to his medical aid premiums for
the period from 3 June 2011 to the date of this order by:
3.1 Paying the one-third shortfall on
such contributions calculated from 3 June 2011 to the date of this
order to the applicant
personally;
3.2 Paying interest at 15,5% per annum
on the monthly shortfall for the period from 3 June 2011 to 30 April
2014, which interest
is to be calculated on the first day of each
month when the premiums were due to the date of final payment; and
3.3 Paying interest at 9% per annum on
the monthly shortfall for the period from 1 May 2014 to date of this
order, which interest
is to be calculated on the first day of each
month when the premiums were due to the date of final payment.
4. Payment in terms of paragraph 3
above shall be made within 90 calendar days from date of this order.
5. The third, fourth and sixth
respondents shall pay the costs of this application, including any
reserved costs orders, jointly
and severally, the one paying, the
others to be absolved, but excluding the wasted costs incurred by the
incorrect citation of
the remaining respondents as parties, in
respect of which there shall be no order as to costs.
J I CLOETE