Pretorius and Another v Transport Pension Fund and Others

• Jurisdiction: South Africa

Pretorius and Another v Transport Pension Fund and Others
2019 (2) SA 37 (CC)

2019 (2) SA p37

Citation	2019 (2) SA 37 (CC)
Case No	CCT 95/17; [2018] ZACC 10
Court	Constitutional Court
Judge	Zondo DCJ, Cameron J, Froneman J, Jafta J, Kathree-Setiloane AJ, Kollapen AJ, Madlanga J, Mhlantla J, Theron J and Zondi AJ
Heard	April 25, 2018
Judgment	April 25, 2018
Counsel	W Trengove SC (with J Bleazard and L Zikalala) for the applicants.; M Chaskalson SC (with A Cockrell SC and N Luthuli) for the first and second respondents.; CDA Loxton SC (with MA Chohan SC) for the third respondent.

Flynote : Sleutelwoorde

Constitutional law — The state — Unlawful state action — Breach of promise — State unlawfully and unconscionably reneging on promise — Court recognising C claim based on unlawful state action distinct from claim to administrative justice.

Constitutional law — Human rights — Right to fair labour practices — May be directly relied on — Constitution, s 23(1).

State — Promise by — Enforcement — Exception to claim against state based on D breach of contract — State unconscionably breaching promise to grant annual pension increase to employees of state organ — Exception to pleaded contract dismissed.

Headnote : Kopnota

In 1989 the general manager of the state transport enterprise (South African E Transport Services — SATS) promised employees that their pension benefits would remain the same when a new commercial entity (Transnet Ltd, the third respondent) took over. The promise was repeated by the boards of the SATS pension funds, the then transport minister, and in a SATS brochure distributed to employees.

When the promise was broken a decade later, the applicants, both members of F the successor funds (the first and second respondents), instituted a class action against them. In their claim the applicants challenged the failure to keep the promise on three grounds: (i) breach of contract; (ii) unlawful state action; and (iii) unfair labour practice under s 23(1) of the Constitution. For (ii) the applicants relied on a legal principle — allegedly recognised by the Constitutional Court in the KZN decision [*] — that a promise by the state G to pay is enforceable if it would be legally and constitutionally unconscionable for the state to renege on it.

The respondents filed three exceptions to this claim, all of which were upheld by the High Court. They were that the contractual claim was vague and embarrassing; that the state-action claim should have been challenged H under the Promotion of Administrative Justice Act 3 of 2000 (PAJA); and that the unfair labour practice claim failed to aver the existence of a labour relationship between the applicants and the respondents. When leave to appeal to the Supreme Court of Appeal was refused, the applicants made the present application for leave to appeal to the Constitutional Court. The applicants argued that the High Court's upholding of the exceptions deprived them of the opportunity to pursue two constitutional causes of I action.

2019 (2) SA p38

Held A

Leave to appeal would be granted. The upholding of the exceptions was final and dispositive of important legal issues, and it was in the interests of the parties and the country that they be finally determined (see [14]).

Breach of contract claim:

The pleaded contract — 'an offer to contract duly made by and on behalf of SATS' B 'tacitly accepted . . . by the remaining employees and pensioners of SATS [and] the [old pension funds] without demur' — was elegantly and clearly set out, rather than vague. There was nothing vague and embarrassing that prevented the respondents from knowing the case they had to meet, and the appeal against the High Court's upholding of the exception against the contractual claim would therefore succeed. (See [18] – [19], [23].)

Unlawful C state action claim:

The making of the promise and its implementation for more than a decade created a legitimate expectation that it would be kept (see [28]). The principle established in KZN was not, as found by the High Court, based on a breach of the right to just administrative action, but on far more fundamental misconduct by the state. That conduct was unconscionable in that D it failed to meet the constitutional standards of reliance, accountability and rationality. This conclusion was further buttressed by the constitutional right to social security; the reasonable pension-benefit expectations of pensioners; comparative law; and the doctrine of legitimate expectation. The unlawful state action claim so arising was independent of a claim to administrative justice under PAJA (see [30]). Since the KZN decision was E authority for the proposition that a non-PAJA claim could lie, even though the state conduct complained of might also amount to administrative action under PAJA, the High Court's upholding of the exception could not stand (see [36] – [45]).

Unfair labour practice claim:

The High Court's view that an employer/employee relationship had to be pleaded F was unnecessarily restrictive: jurisprudence under the Labour Relations Act 66 of 1995 (the LRA) recognised that unfair labour practices could extend beyond the termination of employment (see [47]). Contemporary labour trends and the fact that the LRA protected only those in formal employment were also compelling reasons for not restricting the protection of s 23(1) only to those who had formal contracts of employment (see [48]). Nor did the G principle of subsidiarity prevent direct reliance on s 23(1): the section did not require Parliament to act, and the LRA did not regulate the entire field of unfair labour practices (see [49] – [50]). There was more than enough legal uncertainty on the issue to send the unfair labour practice claim to trial (see [53]). Therefore the appeal against the High Court's upholding of the exception to the unfair labour practice claim would also succeed (see [55]).

Order: H

Leave to appeal would be granted and the appeal upheld with costs (see [58]).

Cases cited

Baliso v FirstRand Bank Ltd t/a Wesbank 2017 (1) SA 292 (CC) (2016 (10) BCLR 1253; [2016] ZACC 23): referred to

Barclays National Bank Ltd v Thompson I 1989 (1) SA 547 (A): dictum at 553F – I applied

Blaauwbosch Diamonds Ltd v Union Government (Minister of Finance) 1915 AD 599: dictum at 601 applied

Carmichele v Minister of Safety and Security and Another (Centre for Applied Legal Studies Intervening) 2001 (4) SA 938 (CC) (2002 (1) SACR 79; J 2001 (10) BCLR 995; [2001] ZACC 22): referred to

2019 (2) SA p39

Fredericks and Others v MEC for Education and Training, Eastern Cape, and Others A 2002 (2) SA 693 (CC) ((2002) 23 ILJ 81; 2002 (2) BCLR 113; [2001] ZACC 6): applied

H v Fetal Assessment Centre 2015 (2) SA 193 (CC) (2015 (2) BCLR 127; [2014] ZACC 34): applied

Itzikowitz v Absa Bank Ltd 2016 (4) SA 432 (SCA) ([2016] ZASCA 43): referred to B

Joseph and Others v City of Johannesburg and Others 2010 (4) SA 55 (CC) (2010 (3) BCLR 212; [2009] ZACC 30): referred to

Kahn v Stuart and Others 1942 CPD 386: dictum at 391 applied

KwaZulu-Natal Joint Liaison Committee v MEC for Education, KwaZulu-Natal and Others 2013 (4) SA 262 (CC) (2013 (6) BCLR 615; [2013] ZACC 10): discussed and applied C

Maize Board v Tiger Oats Ltd and Others 2002 (5) SA 365 (SCA) ([2002] 3 All SA 593; [2002] ZASCA 74): dicta in paras [12] – [14] applied

Masetlha v President of the Republic of South Africa and Another 2008 (1) SA 566 (CC) (2008 (1) BCLR 1; [2007] ZACC 20): referred to

MEC for Health and Social Development, Gauteng v DZ obo WZ 2018 (1) SA 335 (CC) (2017 (12) BCLR 1528; [2017] ZACC 37): dictum in para [29] applied D

MEC for Health, Eastern Cape and Another v Kirland Investments (Pty) Ltd t/a Eye & Lazer Institute 2014 (3) SA 481 (CC) (2014 (5) BCLR 547; [2014] ZACC 6): compared

My Vote Counts NPC v Speaker of the National Assembly and Others 2016 (1) SA 132 (CC) (2015 (12) BCLR 1407; [2015] ZACC 31): applied E

Premier, Mpumalanga, and Another v Executive Committee, Association of State-Aided Schools, Eastern Transvaal 1999 (2) SA 91 (CC) (1999 (2) BCLR 151; [1998] ZACC 20): applied

Pretorius v Transport Pension Fund [2016] ZAGPPHC 352: reversed on appeal

Serobe v Koppies Bantu Community School Board 1958 (2) SA 265 (O): F dictum at 271 – 272 applied

Telematrix (Pty) Ltd t/a Matrix Vehicle Tracking v Advertising Standards Authority 2006 (1) SA 461 (SCA) ([2006] 1 All SA 6; [2005] ZASCA 73): dictum in para [3] applied

Wellington Court Shareblock v Johannesburg City Council; Agar Properties (Pty) Ltd v Johannesburg City Council 1995 (3) SA 827 (A) ([1995] ZASCA 74): G applied.

Legislation cited

The Constitution, 1996, s 23(1): see Juta's Statutes of South Africa 2017/18 vol 5 at 1-22.

Case Information

W Trengove SC (with J Bleazard and L Zikalala) for the applicants. H

M Chaskalson SC (with A Cockrell SC and N Luthuli) for the first and second respondents.

CDA Loxton SC (with MA Chohan SC) for the third respondent.

An application for leave to appeal to the Constitutional Court against a I decision of the Pretoria High Court after the Supreme Court of Appeal refused leave to appeal to it.

Order

1.

The applicants are granted leave to appeal.

2.

The appeal is upheld with costs, including the costs of two counsel. J

2019 (2) SA p40

3.

A The High Court's main orders in [54.1] are replaced with the following:

'The defendants' exceptions are dismissed with costs, including the costs of two counsel.'

4.

The High Court's order for costs in the applicants' application for B leave to appeal to the Supreme Court of Appeal is replaced with an order that the costs of the application, including the costs of two counsel, be costs in the appeal to this court.

5.

The applications for leave to...