Nichol and Another v Registrar of Pension Funds and Others

• Jurisdiction: South Africa
• Judge: Mpati DP, Navsa JA, Van Heerden JA, Maya AJA and Cachalia AJA
• Judgment Date: 29 September 2005
• Citation: 2008 (1) SA 383 (SCA)
• Docket Number: 467/04
• Hearing Date: 13 September 2005
• Counsel: D Neser SC (with J du Plessis) for the appellants MJD Wallis SC (with N Fourie) for the respondents
• Court: Supreme Court of Appeal

Van Heerden JA:

Introduction G

[1] The main issues in this appeal are the interpretation and application of the provisions of s 7(2) of the Promotion of Administrative Justice Act 3 of 2000 (PAJA). Both the first and the second appellants appeal against an order made by the Pretoria High Court (per Legodi AJ) dismissing an application, brought by H the former in terms of s 7(2)(c) of PAJA, to exempt him from the obligation [1] to exhaust an internal remedy available to him before pursuing review proceedings which he had previously instituted in the same High Court. The first, second, fourth and fifth respondents cross-appeal against the order of the Pretoria High Court postponing the review application sine I die, the costs of such application to be reserved. Both the appeal and the cross-appeal are with the leave of this court.

Van Heerden JA

Parties

[2] The first appellant, Mr Archibald Barry Nichol (Nichol), is a A pensioner who until his retirement in 1994 was an active, contributing member of the second appellant, the Sage Schachat Pension Fund (the Sage Schachat Fund), a pension fund registered in accordance with the Pension Funds Act 24 of 1956 (the PF Act). The first respondent B is the Registrar of Pension Funds (the registrar), appointed in terms of the PF Act and vested with extensive powers and functions in terms thereof. The second respondent is the Financial Services Board (the FSB), a statutory body established in terms of the Financial Services Board Act 97 of 1990 (the FSB Act) with the primary function of supervising the compliance with laws regulating financial institutions C and the provision of financial services. [2] This supervisory function includes compliance with the PF Act by pension fund organisations registered in terms of such Act. [3] Section 3 of the PF Act provides that the executive officer of the FSB and his or her deputy shall, respectively, also be the Registrar and Deputy-Registrar of Pension Funds. The fourth D respondent is the Sage Life Ltd Staff Pension and Life Assurance Scheme, now known as the Sage Group Pension Fund (the Sage Group Fund), also a pension fund registered in accordance with the PF Act. The fifth respondent is Sage Life Ltd (Sage), a public company which, for present purposes, may be described as the employer of persons employed within the Sage Group of companies. E

Factual background

[3] The present dispute between the parties has a long and convoluted history, most of which is dealt with in considerable detail in the Cape F High Court judgment in Sage Schachat Pension Fund and Others v Pension Funds Adjudicator and Others. [4] It began in 1997 with a regrouping of operational activities within the Sage Group of companies. This resulted in a decision taken in August 1998 by the management of the Sage Group to amalgamate the Sage Schachat Fund, the Sage Group Ltd Staff Pension Fund (the third G respondent) and the Sage Group Fund by transferring the businesses (members, pensioners, assets and liabilities) of the first two pension funds to the third in accordance with the provisions of s 14 of the PF Act. On 9 and 10 December 1998 the boards of trustees of all three pension funds adopted resolutions approving the proposed amalgamation. H

[4] The three funds were merged with effect from 1 December 1998, from which date the merged fund has been operating under the name of the Sage Group Fund. It was however only in October 1999 that the I

Van Heerden JA

three funds applied to the registrar in terms of s 14 of the PF Act A for retrospective approval of the transfers. [5] In the meantime, on 2 April 1999, Nichol, acting in terms of s 30A(3) of the PF Act, had lodged a complaint regarding the transfer of the Sage Schachat Fund with the sixth respondent, the Pension Funds Adjudicator appointed in terms of ch VA of that Act (the adjudicator). [6] The basis of Nichol's complaint B was that he (and others in the same position) had not been consulted on the proposed merger of the Sage Schachat Fund with the other two funds. The Sage Schachat Fund was smaller and in a much more favourable surplus position than either of the other funds. Nichol thus opposed the merger on the ground that, should it take place, the Sage Schachat Fund surplus would 'effectively be diluted by the cross-subsidisation C of the other funds' as a result of 'the pooling of resources'.

[5] On 13 November 2001 the adjudicator made his determination, holding that, since the registrar had not yet approved the merger of the funds by issuing the requisite certificates in terms of s 14(1)(e) of the Act, an 'indispensable requirement for the legal validity of the new scheme' had not been D met. Thus, according to the adjudicator, 'the legal position is that the funds are still three separate legal entities, no matter what may be occurring in practice'. The adjudicator accordingly declared that the Sage Schachat Fund 'still exists as an independent pension fund organisation as defined in the Act'. [7] E

[6] On 18 December 2001 the registrar approved the amendments to the rules of the Sage Group Fund and also issued certificates under s 14(1)(e) of the PF Act approving the transfer of the businesses of the Sage Schachat Fund and the Sage Group Ltd Staff Pension Fund to the Sage Group Fund. The effect of these decisions was made retrospective to 1 December 1998, from which F date the de facto merger had been in operation.

[7] An application to the Cape High Court, launched on 27 December 2001 by the Sage Schachat Fund, the Sage Group Ltd Staff Pension Fund, the Sage Group Fund and Sage to set aside the adjudicator's determination, was ultimately dismissed with costs by G Van Zyl J on 17 October 2003. [8]

Van Heerden JA

[8] On 7 January 2002 Nichol became aware of the fact that the registrar had issued the s 14(1)(e) certificates giving A retrospective approval to the transfers of business, as set out above. A month later, on 8 February 2002, Nichol launched review proceedings in the Pretoria High Court, seeking the following relief:

1.

To review and set aside the decision or decisions referred to in the letter of Jeremy Andrew (chief actuary) addressed to B Mr John Murphy, Pension Funds Adjudicator, dated 29 November 2001. . . .

2.

To review and set aside the certification in terms of section 14(1)(e) of the Pension Funds Act 24 of 1956, that the requirements referred to in paragraph (a) to (d) of the above section with regard to the transfer of C business with effect from 1 December 1998 of 17 Members and 52 Pensioners from the Sage Schachat Pension to the Sage Group Pension Fund have been satisfied.

The review application (the main application) was brought in terms of Uniform Rule 53, but it is now common cause that, notwithstanding D the fact that no mention is made anywhere in the papers filed in the main application of PAJA or any of its provisions, the review would fall to be decided in terms of PAJA. [9]

[9] According to Nichol, at the time when the review application E was lodged, his attorney of record advised him that 'all forms of internal appeal against administrative acts must be exhausted before a court may be approached to review an administrative act'. It was explained to him, however, that 'in the event of the administration acting in bad faith, the court may be approached directly'. As Nichol 'firmly believed that the registrar and the FSB acted in bad faith', he apparently instructed his attorney to lodge the review application F with the High Court.

[10] In the answering affidavit filed in April 2002 on behalf of the registrar and the FSB, it was specifically pointed out that the relief sought by Nichol was inappropriate in that any person aggrieved by a decision of the registrar had a right of appeal against such G decision to the Board of Appeal constituted under s 26(1) of the FSB Act (the FSB Appeal Board) and that 'the nature and intricacies of this matter more appropriately fell to be dealt with by [this] expert tribunal'. Nichol's response to this, in his replying affidavit filed during March 2003, was simply to state that he 'honestly believed' that the High Court was 'the right tribunal to address [his] H grievances'.

[11] In the respondents' heads of argument filed in the court below in late March and early April 2004 it was pointed out that, as Nichol had an internal remedy provided for in another law (ie an appeal to the FSB Appeal Board), s 7(2)(a) of PAJA rendered it impermissible for a court to review the decision of the I registrar before such internal remedy had been exhausted. It was also pointed out that Nichol had not made any

Van Heerden JA

application in terms of s 7(2)(c) of PAJA for exemption from the obligation to A exhaust his...