REPORTABLE

THE SUPREME COURT OF APPEAL OF SOUTH AFRICA
JUDGMENT

Case no: 920/2010

In the matter between:

NATAL JOINT MUNICIPAL PENSION FUND
Appellant

and

ENDUMENI MUNICIPALITY

Respondent

Neutral citation: Natal Joint Municipal Pension Fund v Endumeni
Municipality (920/2010) [2012] ZASCA 13 (15 March
2012)
Coram:
FARLAM, VAN HEERDEN, CACHALIA, LEACH and
WALLIS JJA.

Heard:
23 February, 2012
Delivered: 16 March 2012

Summary: Pension Fund for municipal employees – payment of adjusted
contribution by municipality – whether such contribution recoverable in
terms of the proviso to regulation 1(xxi)(h) of the regulations governing
the fund – proper approach to interpretation of documents – whether the
proviso was valid in terms of s 12(1) of the Pension Funds Act 24 of 1956
– whether the requirements for invoking the proviso were satisfied.

ORDER

On appeal from: KwaZulu-Natal High Court, Pietermaritzburg (Swain J
sitting as court of first instance):
The appeal succeeds with costs, such costs to include those
consequent upon the employment of two counsel.
The order of the trial court is set aside and replaced by the
following order:
„Judgment is granted in favour of the plaintiff and against the defendant
for:
Payment of the sum of R2 573 740;
Interest on the said sum of R2 573 740 at a rate of 15.5% per
annum from 15 October 2007 to the date of payment;
Costs of suit, such costs to include those consequent upon the
employment of two counsel.‟

JUDGMENT

WALLIS
JA
(FARLAM,
VAN
HEERDEN,
CACHALIA
and
LEACH JJA concurring)

[1] Two pension funds, the Superannuation Fund and the Retirement
Fund,1 and one provident fund, the Provident Fund,2 established by
legislation for employees of local authorities in KwaZulu-Natal, are
managed in terms of a single set of regulations. They are referred to
collectively as the Natal Joint Municipal Pension Fund (the Fund), the
appellant in this appeal. In addition to the regulations for the management
and administration of the three funds, each separate fund has its own set
of governing regulations dealing with the operation of that fund and in
particular the contributions payable to that fund by members and
employers and the benefits due to members of that fund. All three funds
are registered as pension funds in terms of the Pension Funds Act 24 of
1956 (the Act). The Endumeni Municipality (Endumeni), the respondent,
is a participant in the Fund and its employees are entitled to select which
of the three funds they will join. The dispute between Endumeni and the
Fund concerns an attempt by the latter to recover an adjusted contribution
imposed
on
Endumeni
under
the
regulations
governing
the
Superannuation Fund. The attempt failed before Swain J and the present

1 The Superannuation Fund operates in terms of the Local Government Superannuation Ordinance 24
of 1973 and the Retirement Fund operates in terms of the Natal Joint Municipal Pension Fund
(Retirement) Ordinance 27 of 1974.
2 The Provident Fund operates in terms of the KwaZulu-Natal Joint Municipal Provident Fund Act 4 of
1995.

appeal is with his leave. The dispute arises in the following
circumstances.

[2] In real life it is impossible for a person who is only 43 years old to
have 45 years of service with their employer. However, in the arcane
calculations that actuaries are required to undertake in relation to pension
funds, that is not only possible but entirely legitimate. By changing his
membership from the Superannuation Fund to the Provident Fund;
reducing his pensionable emoluments to R5 000 per month whilst a
member of the latter and then rejoining the Superannuation Fund and,
with immediate effect, increasing his pensionable emoluments to R34 000
per month, Mr Bart Maltman, a senior employee with Endumeni, was
able to secure that he was credited in the Superannuation Fund with 45
years service, although he was only 43 years old. A year later he resigned
his employment and received a lump sum withdrawal benefit of some
R2.7 million. To some degree his resignation was stage-managed in order
to enable him to claim this benefit because he resigned on the basis of
advice he received from within the municipality and was immediately re-
employed on a contract basis in his former position. However all
concerned accept that his conduct was legitimate and that he was entitled
to the benefit he received.

[3] The amount of Mr Maltman‟s withdrawal benefit was determined
by two factors: the years of service attributed to him and his final average
pensionable emoluments in the twelve months prior to his resignation.
The withdrawal benefit was accordingly calculated on the basis of some
46 years service and average pensionable emoluments of around R34 000
per month. Whilst this is accepted as legitimate and proper it gave rise to
a problem for the Fund. That problem arose because it had not received

the benefit of contributions by Mr Maltman and Endumeni for 46 years
and the contributions made during his membership of the Provident Fund
had been reduced to well below his actual earnings. As the premise
underlying the operation of a defined benefit pension fund, such as the
Superannuation Fund, is that the contributions of the member and the
member‟s employer, plus the investment earnings of the fund, should be
sufficient to provide the agreed benefits, the result in the case of Mr
Maltman was that the lump sum withdrawal benefit paid to him was
underfunded. Absent the Fund‟s ability to rely on the provision in the
regulations that is the subject of the present litigation, there were only
two ways in which this problem could be addressed. Either the shortfall
had to be recovered from a surplus in the Superannuation Fund,3 or it had
to be recovered by way of a surcharge on all the municipalities that
participate in the Fund. In either event other members or other employers
would shoulder the cost of providing Mr Maltman with this benefit.

[4] This problem was not confined to Mr Maltman but arose in
relation to a number of municipal employees who took advantage of the
same or similar manoeuvres to secure enhanced benefits from the
Superannuation Fund or the Retirement Fund. However Mr Maltman‟s
was the most extreme case. On the advice of Mr Els, who has acted for
many years as the actuary appointed by the committee of management of
the Fund (the committee) and the valuator in terms of s 9A of the Act for
the three funds, the committee sought to claim an adjusted contribution
from Endumeni under the proviso to the definition of „pensionable
emoluments‟ in regulation 1(xxi)(h) of the regulations governing the

3  This was in fact what occurred with the obvious consequence that this portion of the surplus was not
available to fund other obligations of the Superannuation Fund or to increase benefits.

operations of the Superannuation Fund. This proviso had been inserted4
in the regulations with effect from 1 July 2004.

[5] Endumeni resisted the claim on three broad grounds. First it said
that the amendment to the regulations inserting the proviso was not
registered in terms of s 12(4) of the Act until 17 February 2009, by which
stage pleadings had closed and litis contestatio had been reached. It
contended that until that stage the proviso was invalid by virtue of the
provisions of s 12(1) of the Act and the Fund therefore had no cause of
action: and that, whatever the consequence of the subsequent registration
after litis contestatio, it could not operate retrospectively to validate the
existing defective cause of action. Second it contended that the
regulation, properly interpreted, did not permit the Fund to make the
claim that it did for an adjusted contribution. Third, even if it did, it said
that the necessary formalities for the exercise of that power were not
satisfied. In order to address these arguments it is necessary to have
regard to the regulations governing the Superannuation Fund.

The regulations
[6] Whilst the regulation on which the Fund relies in advancing its
claim takes the form of a proviso and it is convenient to use that term to
describe it, in truth it is not a proviso properly so-called. A proviso would
serve to qualify and limit the scope of the definition to which it was
appended,5 but this is an independent provision dealing with the power of

4 By way of an amendment promulgated by the MEC responsible for local government and housing in
Provincial Notice 863 of 2004 in terms of the powers conferred under s 4(1) of the Local Government
Superannuation Ordinance 24 of 1973 (KwaZulu-Natal).
5 Mphosi v Central Board for Co-operative Insurance Limited 1974 (4) SA 633 (A) at 645C-F.

the committee of the Superannuation Fund to direct a local authority to
pay an adjusted contribution. It reads as follows:
„… provided further that should at any time the pensionable emoluments of a
member including a section 57 contract employee, increase in excess of that assumed
by the actuary from time to time for valuation purposes in terms of Regulation 13,
then the committee, on the advice of the actuary, may direct that the local authority
employing such member pay an adjusted contribution in terms of Regulation 21 to the
Fund.‟
The Fund‟s case is that when, on 1 July 2005, Mr Maltman rejoined the
Superannuation Fund and adjusted his pensionable emoluments from
R5 000 per month to R34 000 per month there was an increase in his
pensionable emoluments in excess of that assumed by the actuary in
making his most recent valuation of the Superannuation Fund and that
this increase warranted the committee directing Endumeni to pay an
adjusted contribution.

[7] The provisions of the regulations dealing with contributions are
central to the issues in the case. They are to be found in regulations 19
and 22 in respect of members and regulation 21 in respect of local
authorities. Under regulation 19(1), members must contribute to the
Superannuation Fund an amount equal to 9¼ per cent of their pensionable
emoluments. This is deducted either monthly or at shorter intervals, no
doubt depending on whether they are weekly paid or monthly paid staff.
In addition, under regulation 19(2), a person who becomes a member of
the Superannuation Fund after the introduction of the regulations6 may
elect to make an additional contribution in respect of prior service with a
local authority. Under regulation 22(2) a member placed on leave without
pay may, with the permission of the committee of the Superannuation
Fund, continue to make contributions to it on the basis of their full

6 The regulations first came into operation on 24 May 1974.

pensionable emoluments. It is apparent that save in these two exceptional
cases the members‟ monthly contributions are relatively stable.

[8] The contributions to be made by local authorities in terms of
regulation 21 are as follows:
„A local authority shall pay to the Fund within seven days after the expiration of the
period in respect of which the contribution is being paid:-
(a)
the contributions and interest paid by the members in the preceding calendar
month;
(b)
an amount equal to the following proportion of the contributions paid in terms
of regulation (19)(1) by the members in its service : ...

From 1 July 1992

1.946;
(c)
an amount equal to the proportion in paragraph (b) of the contributions and
interest paid in terms of regulations 19(2) and 22 by the members in its service;
(d)
such surcharge on its contributions in terms of paragraphs (b) and (c) as may
be agreed to by the local authorities in general committee on the advice of the actuary
in order to provide the whole or part of bonus additions made in terms of
Regulation 37;
provided that if the member is paying by instalments, the local authority may make a
lump sum payment to the fund in lieu of its instalments and interest.‟
These contributions will necessarily be less consistent from month to
month than those of individual members. There are a number of variables
that create that situation. They are affected by changes in the make-up of
the workforce. This flows from staff leaving the employ of the local
authority by virtue of death, retirement, resignation or dismissal and by
recruitment of new staff. They are affected by members switching their
membership between the three funds (Superannuation, Retirement or
Provident) or adjusting the level of their pensionable contributions. If
members make contributions under either regulation 19(2) or

regulation 22(2) the local authority is compelled to make matching
contributions or, if those payments are being made in instalments, it may
elect to add a lump sum to its monthly contribution rather than to match
the member‟s instalments. All of these factors (and perhaps others I have
not mentioned), together with any surcharge payable from time to time,7
will influence the amount that each local authority pays to the
Superannuation Fund each month by way of a contribution. Taking all
relevant factors into account, the local authority must calculate an amount
each month that represents its contributions to the Superannuation Fund.
No doubt similar exercises are done in relation to the other two funds but
that is immaterial for present purposes. Whilst the variances may not be
great from month to month8 the fact is that, unlike employee members,
the local authority‟s contributions are not constant but variable.

[9] The primary question for determination in this appeal is what is
meant by the proviso. However, before reaching that question it is
necessary to determine whether the contention that there was no valid
claim at the time of litis contestatio is correct, because if it is the question
of construction does not arise. I turn to that initial question.

Was the proviso in force?
[10] In terms of s 4(1) of the Local Government Superannuation
Ordinance 24 of 1973 the MEC for Local Government is entitled to make
regulations governing the operation of the Superannuation Fund. Those
regulations may include regulations governing the contributions to be
made by members to the Superannuation Fund (s 4(1)(d)) and may

7 Compare paras 30 and 31 below.
8 From documents in the record it can be seen that Endumeni‟s contributions in May, June, July and
August 2005 were R230 426, R229 527, R237 507 and R247 750 respectively. There were also varying
„reconciliation‟ payments made in each of these months. For May, June and July 2006 the equivalent
figures were R231 351, R231 079 and R256 967.

provide for any matter that the MEC regards as necessary or expedient for
the purposes of that fund (s 4(1)(o)). In terms of s 4(2):
‘Any regulations made by the [MEC] 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.‟

[11] On 29 July 2004 the MEC promulgated various amendments and
additions to the regulations governing the Superannuation Fund including
the insertion of the proviso. The notice provides that the effective date for
the proviso to come into force was July 2004. Thereafter the
Superannuation Fund operated in terms of the amendments and additions
promulgated by the MEC. Indeed the calculation of Mr Maltman‟s
withdrawal benefit took place partly in terms of one of the other
amendments introduced by the MEC.

[12] The Fund contends that this is sufficient to render the amendments,
and in particular the insertion of the proviso, operative from 1 July 2004,
and hence operative at the time of Mr Maltman‟s transfer to the
Superannuation Fund and his subsequent withdrawal from that fund.
Endumeni disputes this. It does so on the basis that the Superannuation
Fund is registered in terms of the Act and as such is subject to its
provisions. It relies on s 12(1)(b) of the Pension Funds Act, which
provides that no alteration, rescission or addition to the rules of a
registered fund shall be valid „unless it has been approved by the
Registrar and registered‟ and contends that, until the Registrar approved
the amendments embodying the proviso, it was not a valid provision in
the rules of the Superannuation Fund and could not be invoked to direct
Endumeni to pay an adjusted contribution. The invalidity existed from the
time action was commenced until after the close of pleadings (litis

contestatio) and could not be cured by the subsequent registration of the
amendment. It was accepted that if the point was upheld there was a
possibility of the Fund instituting a fresh action but Endumeni adopted
the stance that it would cross that bridge when it came to it.

[13] In the pleadings the only issue was the wording of the proviso at
the relevant time. At the pre-trial conference Endumeni sought and
obtained an admission that „through the period from 1 July 2004 until 1
November 2008‟ it read as set out above. Accordingly the parties
proceeded to trial on the footing that the proviso was in force throughout
the relevant period. On the first day of the trial the parties agreed a list of
issues and included this one without any amendment to the pleadings. In
so doing they expanded the issues in dispute to go beyond those existing
at the close of pleadings. It is permissible for parties to do this in an
informal way, as a host of cases demonstrates, but its implications do not
appear to have been considered in the present case.

[14] The origin of the concept of litis contestatio is the formulary
procedure of the Roman law in which the litigants appeared before the
praetor, who formulated the issues that the judge had to decide. Once the
issues had been formulated the stage of litis contestatio was reached.9 In
Government of the Republic of South Africa v Ngubane10 Holmes JA said:
„In modern practice litis contestatio is taken as being synonymous with close of
pleadings, when the issue is crystallised and joined … And in modern terminology,
the effect of litis contestatio is to “freeze the plaintiff's rights as at that moment”.‟
There is no problem with this formulation when parties abide by their
pleadings and conduct the trial accordingly. Frequently, however, they do

9 JAC Thomas Textbook on the Roman Law, Chapter VII on the formulary process. P van Warmelo An
Introduction to the Principles of Roman Civil Law at 278, para 733.
10 Government of the Republic of South Africa v Ngubane 1972 (2) SA 601 (A) at 608D-E.

not do so because other issues arise that they wish to canvass and either
formally, by way of an amendment to the pleadings, or informally, as in
the present case, the scope of the litigation is altered. Here the defendant
sought to add new issues specifically relating to the validity of the
amendment that introduced the proviso. Up until then the parties were at
one that the proviso was in force and available to be relied on by the
Fund, subject to the issues around its interpretation. If the plaintiff‟s
rights were frozen at the close of pleadings the basis would have been
that the proviso was in force. It would make a mockery of the principles
of litis contestatio to permit Endumeni to depart from its previous stance
by challenging the validity of the proviso, but to bind the Fund to a
factual situation at the close of pleadings that had altered by the time that
Endumeni sought to challenge the validity of the proviso.

[15] The answer is that when pleadings are re-opened by amendment or
the issues between the parties altered informally, the initial situation of
litis contestatio falls away and is only restored once the issues have once
more been defined in the pleadings or in some other less formal manner.
That is consistent with the circumstances in which the notion of litis
contestatio was conceived. In Roman law, once this stage of proceedings
was reached, a new obligation came into existence between the parties, to
abide the result of the adjudication of their case. Melius de Villiers11
explains the situation as follows:
„Through litiscontestation an action acquired somewhat of the nature of a contract; a
relation was created resembling an agreement between the parties to submit their
differences to judicial investigation …'
When the parties decide to add to or alter the issues they are submitting to
adjudication, then the „agreement‟ in regard to those issues is altered and

11 Melius de Villiers The Roman and Roman Dutch Law of Injuries 236.

the consequences of their prior arrangement are altered accordingly.
Accordingly, when in this case they chose to reformulate the issues at the
commencement of the trial, a fresh situation of litis contestatio arose and
the rights of the Fund as plaintiff were fixed afresh on the basis of the
facts prevailing at that stage. Those facts were that the amendment
embodying the proviso had been registered at least a year earlier with
retrospective effect to 1 July 2004, which was prior to all relevant events
in this case. Had this been appreciated when the list of issues was
prepared the point would not have been taken. It was rightly not
suggested that any initial defect in the Fund‟s reliance on the proviso
would not be remedied by registration of the amendment prior to litis
contestatio.

[16] That conclusion renders it unnecessary to consider an argument
advanced on behalf of the Fund that s 12(1) of the Act does not apply to it
because its rules have their origin in regulations made by the MEC in
terms of the governing provincial legislation. The contention has
potentially far-reaching implications for the regulation of a number of
pension funds in South Africa and it would be undesirable to consider it
without the input as amicus curiae of the Registrar of Pension Funds.
Although the possibility of a challenge to the retrospectivity of the
amendment was raised in Endumeni‟s heads of argument, and it was
suggested that the decision in Shell and BP Petroleum Refineries (Pty)
Ltd v Murphy NO12 was incorrect, this was not pursued in argument. It is
accordingly unnecessary to go into these questions beyond saying that
they might require a challenge to the constitutionality of s 12(4) of the
Act. I can instead pass to the question of interpretation of the proviso.

12 Shell and BP Petroleum Refineries (Pty) Ltd v Murphy NO  2001 (3) SA 683 (D).

The proper approach to interpretation
[17] The trial judge said that the general rule is that the words used in a
statute are to be given their ordinary grammatical meaning unless they
lead to absurdity. He referred to authorities that stress the importance of
context in the process of interpretation and concluded that:
„A court must interpret the words in issue according to their ordinary meaning in the
context of the Regulations as a whole, as well as background material, which reveals
the purpose of the Regulation, in order to arrive at the true intention of the draftsman
of the Rules.‟
Whilst this summary of the approach to interpretation was buttressed by
reference to authority it suffers from an internal tension because it does
not indicate what is meant by the „ordinary meaning‟ of words, whether
or not influenced by context, or why, once ascertained, this would
coincide with the „true‟ intention of the draftsman. There were similar
difficulties in the heads of argument on behalf of Endumeni. In one
paragraph they urged us, on the basis of the evidence of the actuary who
advised the Fund to adopt the approach, that the proviso was not intended
to cater for „a Maltman type of event‟ and in another cited authorities for
the rule that the „ordinary grammatical meaning of the words used must
be adhered to‟ and can only be departed from if that leads to an absurd
result. In view of this it is necessary to say something about the current
state of our law in regard to the interpretation of statutes and statutory
instruments and documents generally.

[18] Over the last century there have been significant developments in
the law relating to the interpretation of documents, both in this country
and in others that follow similar rules to our own.13 It is unnecessary to

13 Spigelman CJ describes this as a shift from text to context. See „From Text to Context:
Contemporary Contractual Interpretation‟, an address to the Risky Business Conference in Sydney, 21
March 2007 published in J J Spigelman Speeches of a Chief Justice 1998 – 2008 239 at 240. The shift
is apparent from a comparison between the first edition of Lewison The Interpretation of Contracts and

add unduly to the burden of annotations by trawling through the case law
on the construction of documents in order to trace those developments.
The relevant authorities are collected and summarised in Bastian
Financial Services (Pty) Ltd v General Hendrik Schoeman Primary
School.14 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.15 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

the current fifth edition. So much has changed that the author, now a judge in the Court of Appeal in
England, has introduced a new opening chapter summarising the background to and a summary of the
modern approach to interpretation that has to a great extent been driven by Lord Hoffmann.
14 Bastian Financial Services (Pty) Ltd v General Hendrik Schoeman Primary School 2008 (5) SA 1
(SCA) paras 16 - 19. That there is little or no difference between contracts, statutes and other
documents emerges from KPMG Chartered Accountants (SA) v Securefin Ltd & another 2009 (4) SA
399 (SCA) para 39.
15 Described by Lord Neuberger MR in Re Sigma Finance Corp [2008] EWCA Civ 1303 (CA) para 98
as an iterative process. The expression has been approved by Lord Mance SCJ in the appeal Re Sigma
Finance Corp (in administrative receivership) Re the Insolvency Act 1986 [2010] 1 All ER 571 (SC)
para 12 and by Lord Clarke SCJ in Rainy Sky SA and others v Kookmin Bank [2011] UKSC 50; [2012]
Lloyds Rep 34 (SC) para 28. See the article by Lord Grabiner QC „The Iterative Process of Contractual
Interpretation‟ (2012) 128 LQR 41.

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‟,16 read in context and having regard to the purpose
of the provision and the background to the preparation and production of
the document.

[19] All this is consistent with the „emerging trend in statutory
construction‟.17 It clearly adopts as the proper approach to the
interpretation of documents the second of the two possible approaches
mentioned by Schreiner JA in Jaga v Dönges NO and another,18 namely
that from the outset one considers the context and the language together,
with neither predominating over the other. This is the approach that
courts in South Africa should now follow, without the need to cite
authorities from an earlier era that are not necessarily consistent and
frequently reflect an approach to interpretation that is no longer
appropriate. The path that Schreiner JA pointed to is now received
wisdom elsewhere. Thus Sir Anthony Mason CJ said:
„Problems of legal interpretation are not solved satisfactorily by ritual incantations
which emphasise the clarity of meaning which words have when viewed in isolation,
divorced from their context. The modern approach to interpretation insists that context
be considered in the first instance, especially in the case of general words, and not
merely at some later stage when ambiguity might be thought to arise.‟19
More recently Lord Clarke SCJ said „the exercise of construction is
essentially one unitary exercise‟.20

16 Per Lord Neuberger MR in Re Sigma Finance Corp [2008] EWCA Civ 1303 (CA) para 98. The
importance of the words used was stressed by this court in South African Airways (Pty) Ltd  v Aviation
Union of South Africa & others 2011 (3) SA 148 (SCA) paras 25 to 30.
17 Bato Star Fishing (Pty) Ltd v Minister of Environmental Affairs & others 2004 (4) SA 490 (CC)
para 90.
18 Jaga v Dönges NO & another, Bhana v Dönges NO & another  1950 (4) SA 653 (A) at 662G-663A.
19 K & S Lake City Freighters Pty Ltd v Gordon & Gotch Ltd (1985) 157 CLR 309 at 315.
20 Rainy Sky SA and others v Kookmin Bank supra para 21.

[20] Unlike the trial judge I have deliberately avoided using the
conventional description of this process as one of ascertaining the
intention of the legislature or the draftsman,21 nor would I use its
counterpart in a contractual setting, „the intention of the contracting
parties‟, because these expressions are misnomers, insofar as they convey
or are understood to convey that interpretation involves an enquiry into
the mind of the legislature or the contracting parties.22 The reason is that
the enquiry is restricted to ascertaining the meaning of the language of the
provision itself. Despite their use by generations of lawyers to describe
the task of interpretation it is doubtful whether they are helpful. Many
judges and academics have pointed out23 that there is no basis upon which
to discern the meaning that the members of Parliament or other legislative
body attributed to a particular legislative provision in a situation or
context of which they may only dimly, if at all, have been aware. Taking
Parliament by way of example, legislation is drafted by legal advisers in a
ministry, redrafted by the parliamentary draftsmen, subjected to public
debate in committee, where it may be revised and amended, and then
passed by a legislative body, many of whose members have little close
acquaintance with its terms and are motivated only by their or their
party‟s stance on the broad principles in the legislation. In those

21 „A slippery phrase‟ according to Lord Watson in Salomon v A Salomon & Co Ltd (1897) AC 22 at
38. For its use see Ebrahim v Minister of the Interior 1977 (1) SA 665 (A) at 677-8 and the authorities
there cited; Protective Mining & Industrial Equipment Systems (Pty) Ltd  (formerly Hampo Systems
(Pty) Ltd) v Audiolens (Cape) (Pty) Ltd 1987 (2) SA 961 (A) at 991F-H; Summit Industrial
Corporation v Claimants against the Fund Comprising the Proceeds of the Sale of the MV Jade
Transporter 1987 (2) SA 583 (A) at 596G-597B and Manyasha v Minister of Law and Order 1999 (2)
SA 179 (SCA) at 185B-C.
22 In Lewison The Interpretation of Contracts (5 ed 2011) para 2.05 the heading reads: „For the purpose
of the interpretation of contracts, the intention of the parties is the meaning of the contract. There is no
intention independent of that meaning.‟ The whole discussion in this paragraph makes it clear that the
international trend in countries with which we share some common heritage is to treat the „intention of
the parties‟ as a myth or abstraction remote from the reality of interpretation and unnecessary.
23 The earliest that I have found is Jerome Frank Law and the Modern Mind 29 (6 ed 1960) originally
published in 1930. He points out that statutes directed at horse-drawn vehicles before the advent of
motor cars were applied to the latter. For a South African instance see S v Sweers 1963 (4) SA 163 (E).

circumstances to speak of an intention of parliament is entirely artificial.24
The most that can be said is that in a broad sense legislation in a
democracy is taken to be a reflection of the views of the electorate
expressed through their representatives, although the fact that
democratically elected legislatures sometimes pass legislation that is not
supported by or unpopular with the majority of the electorate tends to
diminish the force of this point. The same difficulty attends upon the
search for the intention of contracting parties, whose contractual purposes
have been filtered through the language hammered out in negotiations
between legal advisers, in the light of instructions from clients as to their
aims and financial advice from accountants or tax advisers, or are
embodied in standard form agreements and imposed as the terms on
which the more powerful contracting party will conclude an agreement.25

[21] Alive to these difficulties there have been attempts to justify the
use of the expression „the intention of the legislature‟ on broader grounds
relating to the manner in which legislation is drafted and passed and the
relationship between the legislature as lawgiver and the judiciary as the
interpreter of laws. Francis Bennion, an eminent parliamentary draftsman
and the author of a standard work on statutory interpretation,26 says that
„Legislative intention is not a myth or fiction, but a reality founded on the
very nature of legislation‟. He bases this on the undoubtedly correct
proposition that legislation is the product of the intentional volition of all
participants in the legislative process so that:

24 See Lord Nicholls of Birkenhead in „My Kingdom for a Horse: the Meaning of Words‟ (2005) 121
LQR 577 at 589-590. In his judicial capacity he said in R v Secretary of State for the Environment,
Transport and the Regions and another, Ex parte Spath Holme Ltd [2001] 2 AC 349 at 395 that the
intention of the legislature is „a shorthand reference to the intention which the court reasonably imputes
to Parliament in respect of the language used‟.
25 See the discussion of contracts of adhesion by Sachs J in Barkhuizen v Napier 2007 (5) SA 323 (CC)
paras 135 - 139. As to the process of preparing contracts see Lord Neuberger MR in Re Sigma Finance
Corp, supra, para 100 and Lord Collins in the appeal at para 35.
26 F A R Bennion Bennion on Statutory Interpretation (5 ed 2008) section 164, pp 472-474.

„… Acts are produced down to the last word and comma, by people. The law maker
may be difficult to identify. It is absurd to say that the law maker does not exist, has
no true intention or is a fiction.‟
However, that criticism misses the point. Critics of the expression „the
intention of the legislature‟ are not saying that the law-maker does not
exist or that those responsible for making a particular law do not have a
broad purpose that is encapsulated in the language of the law. The stress
placed in modern statutory construction on the purpose of the statute and
identifying the mischief at which it is aimed should dispel such a notion.
The criticism is that there is no such thing as the intention of the
legislature in relation to the meaning of specific provisions in a statute,
particularly as they may fall to be interpreted in circumstances that were
not present to the minds of those involved in their preparation.
Accordingly to characterise the task of interpretation as a search for such
an ephemeral and possibly chimerical meaning is unrealistic and
misleading.

[22] The other objection raised by Bennion,27 that the idea that there is
no true intention behind an Act of Parliament is undemocratic, suggests
that the debate is being conducted at cross-purposes. In a constitutional
democracy such as South Africa, or the United Kingdom, which is
Bennion‟s terrain, no-one denies that statutes and statutory instruments
emanating from Parliament and other legislative bodies are the product of
the democratic process. Interpretation always follows upon the
democratic process leading to legislation and is, in that sense, a secondary
and subordinate process. The interpreter does not write upon a blank
page, but construes the words written by others. Nor is it denied that the
broad purpose of the relevant legislative body (or legislator in the case of

27 At p 474.

regulations or rules made by a functionary) is highly relevant to the
process of interpretation, as is the mischief at which the legislation is
aimed. Courts have repeatedly affirmed their importance and thereby
respect the legislature‟s role in a democracy. Courts do not set out to
undermine legislative purpose but to give it effect within the constraints
imposed by the language adopted by the legislature. If „the intention of
the legislature‟ was merely an expression used to encompass these
matters as a form of convenient shorthand perhaps the matter would not
have provoked so much comment. But the problem lies in it being said
that the primary or „golden‟ rule of statutory interpretation is to ascertain
the intention of the legislature. At one extreme, as has been the case
historically, it leads to a studied literalism and denies resort to matters
beyond the „ordinary grammatical meaning‟ of the words. At the other
judges use it to justify first seeking to divine the „intention‟ of the
legislature and then adapting the language of the provision to justify that
conclusion.28 It has been correctly said that:
„It is all too easy for the identification of purpose to be driven by what the judge
regards as the desirable result in a specific case.‟29
When that occurs it involves a disregard for the proper limits of the
judicial role.

[23] Three Australian judges have sought to explain the use of the
expression
on
other
grounds.
Gleeson
CJ
in
Singh
v
The
Commonwealth,30 said:

28 Wilson CJ identified the illegitimacy of this latter approach in Richardson v Austin (1911) 12 CLR
463 at 470 where he said: „… As to the argument from the assumed intention of the legislature, there is
nothing more dangerous and fallacious in interpreting a statute than first of all to assume that the
legislature had a particular intention, and then, having made up one‟s mind what that intention was, to
conclude that that intention must necessarily be expressed in a statute, and then proceed to find it.‟
29 The Hon J J Spigelman AC „The intolerable wrestle: Developments in statutory interpretation‟
(2010) 84 ALJ 822 at 826. Lewison, supra, para 2.06.
30 Singh v The Commonwealth [2004] HCA 43 para 19. Keith Mason J „Legislators‟ Intent: How judges
discern
it
and
what
do
they
do
when
they
find
it?‟
available
at

„…references to intention must not divert attention from the text, for it is through the
meaning of the text, understood in the light of background, purpose and object, and
surrounding circumstances, that the legislature expresses its intention, and it is from
the text, read in that light, that intention is inferred. The words “intention”,
“contemplation”, “purpose” and “design” are used routinely by courts in relation to
the meaning of legislation. They are orthodox and legitimate terms of legal analysis,
provided their objectivity is not overlooked.‟
French J31 described the intention of the legislature as „an attributed
intention based on inferences drawn from the statute itself‟ and added that
it is „a legitimising and normative term‟ that „directs courts to objective
criteria of construction which are recognised as legitimate‟.32 In a broad
ranging discussion of the concept, Spigelman CJ concludes that it is
acceptable because the interpreter is concerned to ascertain the
„objective‟ will of the legislature or the contracting parties.33 However, in
each instance the expression is being used either as a shorthand reference
to something else or to convey a restricted and unrealistic meaning. If
interpretation is, as all agree it is, an exercise in ascertaining the meaning
of the words used in the statute and is objective in form, it is unrelated to
whatever intention those responsible for the words may have had at the
time they selected them. Their purpose is something different from their
intention, as is their contemplation of the problem to which the words
were addressed.

http://www.lawlink.nsw.gov.au/lawlink/Supreme_Court/ll_sc.nsf/vwPrint1/SCO_mason021106 quotes
Gleeson CJ as saying: „The concept of the intention of Parliament expresses an important constitutional
principle rooted in political reality and judicial prudence‟, but I have been unable to trace the reference.
31 Now Chief Justice of the High Court of Australia.
32 NAAV v Minister for Immigration and Multicultural Affairs [2002] 193 ALR 449 (FCA) paras 430 -
433.
33 „The Principle of Legality and the Clear Statement Principle‟ opening address by the Honourable J J
Spigelman AC, Chief Justice of New South Wales, to the New South Wales Bar Association
Conference
„Working
with
Statutes‟
Sydney,
March
2005
available
at
http://www.lawlink.nsw.gov.au/lawlink/supreme_court/ll_sc.nsf/vwPrint1/SCO_speech_spigelman180
305.

[24] The sole benefit of expressions such as „the intention of the
legislature‟ or „the intention of the parties‟ is to serve as a warning to
courts that the task they are engaged upon is discerning the meaning of
words used by others, not one of imposing their own views of what it
would have been sensible for those others to say. Their disadvantages,
which far outweigh that benefit, lie at opposite ends of the interpretative
spectrum. At the one end they may lead to a fragmentation of the process
of interpretation by conveying that it must commence with an initial
search for the „ordinary grammatical meaning‟ or „natural meaning‟ of
the words used seen in isolation, to be followed in some instances only by
resort to the context. At the other it beguiles judges into seeking out
intention free from the constraints of the language in question and then
imposing that intention on the language used. Both of these are contrary
to the proper approach, which is from the outset to read the words used in
the context of the document as a whole and in the light of all relevant
circumstances.34  That is how people use and understand language and it
is sensible, more transparent and conduces to greater clarity about the
task of interpretation for courts to do the same.

[25] Which of the interpretational factors I have mentioned will
predominate in any given situation varies. Sometimes the language of the
provision, when read in its particular context, seems clear and admits of
little if any ambiguity. Courts say in such cases that they adhere to the
ordinary grammatical meaning of the words used. However that too is a

34 Spigelman CJ makes the point vividly in the speech referred to in footnote 29 where he said:
„Context is always important. … [I]n an adaptation of an example originally propounded by Ludwig
Wittgenstein, parents leave their young children in the care of a babysitter with an instruction to teach
them a game of cards. The babysitter would not be acting in accordance with these instructions if he or
she taught the children to play strip poker. Furthermore, when a nanny is instructed to “drop everything
and come running” she would know that it is not intended to apply literally to the circumstance in
which she was holding a baby over a tub full of water. As Professor Lon L Fuller said of this example:
“Surely we have a right to expect the same modicum of intelligence from the judiciary.”‟(Footnotes
omitted.)

misnomer. It is a product of a time when language was viewed differently
and regarded as likely to have a fixed and definite meaning, a view that
the experience of lawyers down the years, as well as the study of
linguistics, has shown to be mistaken. Most words can bear several
different meanings or shades of meaning and to try to ascertain their
meaning in the abstract, divorced from the broad context of their use, is
an unhelpful exercise. The expression can mean no more than that, when
the provision is read in context, that is the appropriate meaning to give to
the language used. At the other extreme, where the context makes it plain
that adhering to the meaning suggested by apparently plain language
would lead to glaring absurdity, the court will ascribe a meaning to the
language that avoids the absurdity. This is said to involve a departure
from the plain meaning of the words used. More accurately it is either a
restriction35 or extension36 of the language used by the adoption of a
narrow or broad meaning of the words, the selection of a less
immediately apparent meaning37 or sometimes the correction of an
apparent error in the language in order to avoid the identified absurdity.38

[26] In between these two extremes, in most cases the court is faced
with two or more possible meanings that are to a greater or lesser degree
available on the language used.39 Here it is usually said that the language
is ambiguous although the only ambiguity lies in selecting the proper

35 As in Venter v Rex 1907 TS 910; R v Detody 1926 AD 198 at 203; R v Schonken 1929 AD 36 at 42;
Bertie van Zyl (Pty) Ltd & another v Minister of Safety and Security & others 2010 (2) SA 181 (CC)
para 31.
36 Barkett v SA National Trust & Assurance Co Ltd 1951 (2) SA 353 (AD) at 363; Hanekom v Builders
Market Klerksdorp (Pty) Ltd & others 2007 (3) SA 95 (SCA) para 7
37 Melmoth Town Board v Marius Mostert (Pty) Ltd 1984 (3) SA 718 (A) at 728F-H.
38 This possibility is referred to in English cases such as Investors Compensation Scheme Ltd v West
Bromwich Building Society [1998] 1 All ER 98 (HL) at 114-115; Chartbrook Ltd v Persimmon Homes
Ltd & Others [2009] UKHL 38; [2009] 4 All ER 677 (HL) paras 14 and 15.
39 That they must be available on the language used is clear. S v Zuma and others 1995 (2) SA 642
(CC) paras 17 and 18. As Kentridge AJ pointed out any other approach is divination rather than
interpretation.

meaning (on which views may legitimately differ). In resolving the
problem the apparent purpose of the provision and the context in which it
occurs will be important guides to the correct interpretation An
interpretation will not be given that leads to impractical, unbusinesslike
or oppressive consequences or that will stultify the broader operation of
the legislation or contract under consideration.

Construction of the proviso
[27] As already mentioned the proviso is not strictly a proviso. In
addition it has been inserted at an inappropriate point in the regulations. It
has nothing to do with the pensionable emoluments of members. As it
deals with the adjustment of an employer‟s contributions it would have
been more appropriate for it to have been inserted in regulation 21,
perhaps as an additional sub-clause in that regulation. Be that as it may,
the fact that it has been located elsewhere does not affect its construction.

[28] Starting with the language of the proviso it empowers the
committee of the Superannuation Fund to direct a local authority to pay
an adjusted contribution in terms of regulation 21. The circumstance in
which it may do so is that the pensionable emoluments of a member have
at any time increased by an amount in excess of the increase assumed by
the fund‟s valuator in the triennial valuation required by regulation 13
and under the Act. Before directing a local authority to pay such an
adjusted contribution the committee must obtain the advice of the actuary
and may only proceed if the actuary so advises it.

[29] The context within which to consider the proviso is provided by the
fact that the Superannuation Fund was a defined benefit fund and that at
the time of introduction of the proviso in 2004 it had been in deficit for

several years. As a result employers were paying a surcharge on their
contributions. The circumstances in which this arose require an
understanding of the funding of a defined benefit pension fund.

[30] In the regular valuations, both triennial and interim, of a defined
benefit fund such as the Superannuation Fund, the actuary assesses its
financial soundness by making use of conventional actuarial methods.40
The fund is financially sound if the assets match the liabilities. The latter
only accrue and become payable over a lengthy future period and
fluctuate with membership of the fund and the levels of remuneration of
the members. To place a value on these requires the actuary to make an
assessment of a number of different factors. Among them are the likely
number of members; their years of service; the number who will die,
retire or resign in the years ahead; the salary and pension levels payable
to them and the likely salary and pension increases they will receive. In
undertaking this exercise the actuary will be aware that people may
transfer between funds under the general aegis of the Fund, although the
Superannuation Fund had been closed to new employees, so that there
would be no new members other than by way of transfer from other
funds. The actuary makes a number of „best estimates‟ or „reasonable
long-term assumptions‟41 of the relevant variables in order to compute its
liabilities in the future and then discounts the liabilities so determined to
arrive at their present value. A similar exercise needs to be done on the
assets of the fund in the light of current contribution rates. At the end of
this the actuary can assess the financial soundness of the fund and make
recommendations to the committee as to future contribution rates, the

40 Tek Corporation Provident Fund & others v Lorentz 1999 (4) SA 884 (SCA) para 16; Associated
Institutions Pension Fund & Another v Le Roux & others 2001 (4) SA 262 (SCA) para 16.
41 The expressions are taken from the statutory valuation of the Superannuation Fund preceding Mr
Maltman rejoining it and then resigning.

need to raise a surcharge and related issues. If the fund is in deficit a
surcharge will need to be imposed in order to ensure its financial
soundness.

[31] It will be apparent from this that the actuary does not make
calculations in respect of each and every member of the fund, but makes
an assessment across the whole body of members using appropriate
statistical techniques. When the proviso referred to the increase in
pensionable emoluments assumed by the actuary, it was therefore not
concerned with the increase afforded to any single member. Instead it was
concerned with the broad level of increases across the entire body of
members at the average rate determined by the actuary. This was clearly
set out in each of the valuations in the record. In the relevant valuation as
at 31 March 2005 the rate of salary increases allowed for was 6.5 percent
per annum plus a small allowance for merit increases. From July 2003
employers had been paying a surcharge of 3 percent of pensionable
emoluments and in the 2005 report the actuary recommended that the
surcharge increase to 6 percent. The Superannuation Fund was in deficit,
as it had been for some years. The actuary attributed this to the fact that
salary increases had been substantially in excess of the rate of inflation.
The actuary warned that „future excessive salary increases will result in
further deficits‟ and that this would result in the surcharge having to
increase in the future. It is clear from this report and from the evidence of
the actuary, Mr Els, that this had been a persistent problem for several
years.

[32] Against that background it is plain that the proviso was addressed
to the problem of local authorities giving staff increases that were
excessive in the light of the assumptions in regard to salary increases

made by the actuary. When this occurred the contributions to the fund
would not suffice to meet the obligations being incurred under the
regulations and the existing deficit in the fund would increase. This
would then have to be funded in some way. Originally the only way in
which this could be done would be by surcharging all the employers in
the Superannuation Fund. The proviso created a further way of
addressing this problem. It was focussed on instances where the
underfunding could be attributed to excessive increases in pensionable
emoluments in a particular local authority.

[33] Mr Els testified that the Superannuation Fund experienced
difficulties when previously disadvantaged members of the fund received
salary increases considerably in excess of those for which allowance had
been made in determining the contributions that needed to be made to that
fund. This is what led to the introduction of the proviso. As the
manoeuvres undertaken by Mr Maltman still lay in the future they were
not present to the minds of the actuary and the committee when they
sought to have the proviso introduced. Counsel therefore argued that the
proviso should not be interpreted to cover Mr Maltman‟s situation, as it
was not contemplated by the draftsman of the proviso. But this is
precisely the error of construction that flows from saying that the process
is one of seeking the intention of the legislature and then relying on the
subjective contemplation of those responsible for the legislation. If
correct it would have the consequence that, once it was demonstrated that
a situation was unforeseen at the time the legislation was introduced, that
situation could not be brought within the legislation save by amendment,
which as a matter of construction would be unnecessary. The fact that
something was not contemplated may occasionally be a factor that may
affect ascertaining the meaning of the words used. It cannot, however,

operate as a bar to the application of a statutory provision to new or
altered circumstances.

[34] The primary argument advanced before us was that Mr Maltman‟s
pensionable emoluments had been R5 000 per month when he was a
member of the Provident Fund, but that from the time he rejoined the
Superannuation Fund they had been R34 000 per month. Accordingly it
could not be said that his pensionable emoluments as a member of the
latter fund had increased, much less increased in excess of the
assumptions in regard to salary increases made by the actuary at a time
when Mr Maltman had not been a member of the Superannuation Fund. It
followed that his conduct did not fall within the terms of the proviso.

[35] This is a possible construction of the proviso based on a narrow
conception of what constitutes an increase in pensionable emoluments,
namely a change in such emoluments whilst the person is a member of
the fund. Whilst that will be the normal case it is not the only one. When
a person transfers their membership from the Provident Fund to the
Superannuation Fund and transfers an accumulated fund from the one to
the
other,
the
Superannuation
Fund
must,
in
terms
of
regulation 16(10)(a), calculate their period of service on the basis not
only of the amount transferred but also on the basis of an imputed level of
pensionable emoluments. The proviso is capable of being construed as
including both an increase in pensionable emoluments during the course
of membership and an increase from the imputed level of pensionable
emoluments on joining the fund to a higher level. In either case, where
the level of increase is in excess of the actuarial assessment of the level of
increases on which the fund is operating at the time, it results in a funding
deficit.

[36] Viewed from a purely linguistic standpoint the construction
advanced by Endumeni may arguably be the more apparent. However it
disregards the context in its entirety. It ignores the purpose of the proviso,
which was to address the problem of excessive increases in pensionable
emoluments leading to a funding deficit; it creates a distinction that is
extremely artificial and it leads to results that are impractical. The
Superannuation Fund has no control over the remuneration policies of
local authorities. When changes are made to members‟ pensionable
emoluments the fund is required to afford them the benefits defined in the
regulations that govern its operations. The steps taken by Mr Maltman to
obtain the benefit he has had from the fund required in large measure the
co-operation of Endumeni. But for Mr Maltman‟s ability, as agreed
between him and Endumeni, to adjust his pensionable emoluments with
effect precisely from the date when he rejoined the Superannuation Fund
the problem could not have arisen.42 That oddity of timing should not
prevent the proviso from achieving in this instance its clear purpose. The
interpretation that treats both actual and imputed values of pensionable
emoluments as forming a basis for the increases referred to in the proviso
does not suffer from these problems and is more faithful to the purpose of
the proviso. For those reasons I think the expression „should … the
pensionable emoluments of a member … increase‟ should be construed as
encompassing both actual increases and increases from the imputed level
of pensionable emoluments at the time a member transfers into the
Superannuation Fund. Endumeni‟s main argument is accordingly
rejected.

42 The documents reveal that the Fund was only informed of the adjustment a few weeks after his
transfer to the Superannuation Fund on the basis that it would take effect from the date of entry. That
illustrates the impracticality of Endumeni‟s contention.

[37] The increase from R5 000 per month to R34 000 per month was an
increase of over 500 per cent. In a letter to the director of the Fund on
24 January 2007 Mr Els undertook a calculation to determine how many
members of the Superannuation and Retirement Funds had received
excessive increases falling within the proviso. It is unnecessary to set out
details of his calculations. It suffices to say that they erred on the side of
generosity in favour of members and local authorities and recommended
that action under the proviso should only be taken in cases where the
increase in pensionable emoluments exceeded 42 per cent. It was
submitted that he undertook the incorrect calculation, but I fail to see how
a generous approach that favoured the members and local authorities can
be condemned on that ground. This is particularly so in view of the fact
that the proviso does not require any calculation to be done. He was also
criticised on the basis that when he made the recommendation he had in
mind the wording of the proviso not in the form that it is before us but in
a further amended form. Assuming that is so the committee took his
advice and pursued the present litigation on the proviso in its original
form, with Mr Els‟ support as its principal witness. The contention that
the jurisdictional pre-requisites for directing Endumeni to pay an adjusted
contribution were not present is unsound as the trial judge correctly held.

[38] Accepting that Mr Els had advised the Fund to direct Endumeni to
pay an adjusted contribution, there was a further string to Endumeni‟s
bow. It drew attention to the definition of „actuary‟ in the regulations as
meaning:
„a Fellow of an institute, faculty, society or chapter of actuaries approved by the
Minister and appointed by the committee‟;
and the definition of „Minister‟ as referring to the MEC for local
government and housing. Mr Els was unable to point to any approval of

either the Actuarial Society of South Africa or him personally by the
MEC. On that basis it was argued – acknowledging that it was an
extremely technical point – that Mr Els was not qualified to be the
actuary of the Superannuation Fund in terms of its regulations and
accordingly was not a person who could give the advice to the committee
that was a pre-requisite to its directing Endumeni to pay an adjusted
contribution.

[39] This was a further fresh point raised when the issues were
reformulated at trial. Prior to that it had been admitted that Mr Els was
the actuary duly appointed as such. It is accepted that he is the duly
appointed valuator of the Superannuation Fund in terms of s 9A of the
Act and, for that purpose, is approved by the Minister of Finance. Mr
Kemp SC sought to overcome the problem by submitting that the
definition in the regulations is taken directly from the definition of
„actuary‟ in the Act prior to its amendment by Act 104 of 1993.
Accordingly, and based on the principle that a definition is always subject
to a contrary indication in the context,43 he submitted that this must be
read as a reference to the Minister of Finance. However, whilst initially
plausible, the contention does not stand up to scrutiny in the light of the
history of the definition of ‟actuary‟ in the regulations. The history shows
that the definition in the regulations originally referred to the
„Administrator‟ and not the „Minister‟ and was amended to its present
form when the definition of „Minister‟ was introduced after the new
provincial governmental structures came into effect with the transition to
democracy. The reference to „Administrator‟ cannot possibly have been

43 The principle appears from the headnote to Town Council of Springs v Moosa and another 1929 AD
401, which accurately summarises the legal position as set out at 416-417.

taken to refer to the Minister of Finance and equally the amendment can
only refer to the MEC.

[40] It was argued in the alternative that there must have been at least a
tacit approval by the MEC of the Actuarial Society of South Africa and of
Mr Els acting as the actuary for the Superannuation Fund. However the
evidence in that regard is extremely vague and it raises difficult questions
about the exercise of public powers that it is unnecessary to deal with in
the light of the conclusion to which I have come on a different approach.
If one assumes that the MEC did not approve the Actuarial Society of
South Africa or Mr Els as an actuary then it follows that he was not
qualified to be appointed to that position by the committee. However, one
cannot disregard the fact that he was so appointed and has discharged the
functions of actuary to the Superannuation Fund (and the other funds) for
a number of years. Nor can one disregard the fact that he is qualified to be
the actuary for the fund in terms of the Act and has likewise discharged
that function for a number of years. The issue then is whether, accepting
the deficiency in his appointment, that invalidates his actions as actuary
and in particular the advice he gave to the Fund in terms of the proviso. In
my view it does not. It is important to focus on the nature of the alleged
defect. It is not that Mr Els is not a qualified actuary. It is that the MEC
has not formally approved either of the actuarial societies of which he is a
member as bodies, the members of which can be appointed as the actuary
of the Superannuation Fund. The defect, if there is one, is one of no
practical moment. It would be pointless to require an actuary, belonging
to the only recognised society of actuaries in South Africa and approved
to act as such under the Act, to obtain a separate authority from a
provincial MEC in order to discharge his or her functions, when the
Minister of Finance, under the legislation governing pension funds has

already approved of persons, situated as Mr Els is, being appointed as
actuaries of pension funds in South Africa. The defect is one of form, not
one of substance, and I can detect nothing in the regulations that suggests
that an appointment lacking the MEC‟s approval renders invalid the
actions of the person so appointed.44 Therefore, whether or not there is a
technical defect in Mr Els‟ appointment, his actions in discharging the
duties of actuary to the Superannuation Fund are not rendered invalid
thereby. That disposes of this objection.

[41] That brings me to the next argument advanced by Endumeni. It
was that where the proviso refers to „an adjusted contribution‟ it must
refer to an adjustment of the contribution made by a local authority in
terms of regulation 21. The submission was that there is no provision in
regulation 21 warranting a lump sum contribution and that the only
adjustment permitted by the proviso was an adjustment to the
contribution of 1.946 times the contributions payable by members
provided for in regulation 21(1)(b).

[42] The language of the proviso does not support this contention. In
addition it flows from an assumption that is fallacious. That assumption is
that the contributions of local authorities are stable periodical payments in
the same way as those of members. That is incorrect as demonstrated in
paragraph 8 of this judgment. Local authority contributions vary from
month to month. There is no practical or principial difference between the
committee directing that the contribution for the following month be
adjusted by an increase in a specific amount and the committee directing
that the contributions for the next twelve months be adjusted by a specific

44 Standard Bank v Estate Van Rhyn 1925 AD 266 at 274; Swart v Smuts 1971 (1) SA 819 (A) at 829C-
830C.

monthly uplift of the multiple of 1.946. It would be relatively simple to
calculate the amount of the uplift in order to realise the lump sum amount
required by the committee to resolve a situation of underfunding. Yet it
was accepted that the latter form of adjustment was permissible and
contended that the former was not. That is not a sensible construction of
the provision.

[43] There was one further argument on behalf of Endumeni. It was that
where the proviso refers to „the local authority employing such member‟,
that requires the member to be employed by the local authority when the
proviso is invoked. The basis for this contention is that the word
„employing‟ is a present participle, but this ignores the fact that a present
participle may properly be used in relation to both present and past
situations.45 Here it is plainly used to identify the local authority at the
time of the excessive increase in pensionable emoluments. That is the
local authority that it is appropriate to fix with liability to pay an adjusted
contribution. It also avoids the situation that the entitlement to invoke the
proviso is subject to such an uncertain factor as the continued
employment of the employee in question. The eccentric results that flow
from that construction are illustrated by the case of a member like Mr
Maltman, who resigns, or dies, or reaches pensionable age. On their
doing so – something of which the management of the fund will only
become aware after it has occurred and an entitlement to benefits has
arisen – the entitlement to invoke the proviso would fall away. However
the enhanced benefits secured by the excessive increase would still have
to be paid and would remain unfunded. That is not a sensible
construction, whereas the alternative that this relates to the employer at
the time of the increase is perfectly sensible.

45 A simple example is „the girl is reading/the girl was reading‟.

[44] The committee of the Superannuation Fund was accordingly
entitled to direct Endumeni to pay an adjusted contribution to the fund
arising out of the increase in Mr Maltman‟s pensionable emoluments. The
appeal must therefore succeed. The parties agreed that in that event
judgment must be entered in favour of the Fund in an amount of
R2 573 740. Any judgment must bear interest from the date of mora. The
direction
to
pay
the
adjusted
contribution
was
given
on
28 September 2007 and rejected on 15 October 2007. The latter is the
appropriate date from which mora commenced.

[45] In the result it is ordered that:
The appeal succeeds with costs, such costs to include those
consequent upon the employment of two counsel.
The order of the trial court is set aside and replaced by the
following order:
„Judgment is granted in favour of the plaintiff and against the defendant
for:
1 Payment of the sum of R2 573 740;
2 Interest on the said sum of R2 573 740 at a rate of 15.5% per
annum from 15 October 2007 to the date of payment;
3 Costs of suit, such costs to include those consequent upon the
employment of two counsel.‟

M J D WALLIS
JUDGE OF APPEAL

Appearances

For appellant:
Kemp J Kemp SC (with him H S Gani)
Instructed by:
J Leslie Smith & Co, Pietermaritzburg;

Locally represented by:

Honey Attorneys Inc, Bloemfontein

For respondent:

M Pillemer SC (with him P Blomkamp)

Instructed by:

Acutt & Worthington, Dundee;

Locally represented by:

Webbers, Bloemfontein.
Supreme Court of Appeal of South Africa

MEDIA SUMMARY– JUDGMENT DELIVERED IN THE SUPREME COURT OF
APPEAL

From:   The Registrar, Supreme Court of Appeal

Date:  16 March 2012

Status:  Immediate

Please note that the media summary is intended for the benefit of the media and does
not form part of the judgment of the Supreme Court of Appeal.

Natal Joint Municipal Pension Fund v Endumeni Municipality

The SCA today upheld a claim by the Natal Joint Municipal Pension
Fund for payment of an adjusted pension contribution by the Endumeni
Municipality. The claim arose in consequence of a municipal employee
exploiting the rules of the Provident and Superannuation Funds
administered by the appellant to secure that he was credited with 46 years
of pensionable service in the Superannuation Fund, although e was only
43 years old and had only worked for the municipality for some 15 years.
He then resigned his employment and was immediately re-employed on a
contract basis in his former position. However, as a result of his
resignation he became entitled to a payment from the fund of some R2.7
million.
The Fund sought an adjusted contribution from the municipality to cover
the shortfall in funding of this withdrawal benefit. The municipality
successfully resisted this claim in the lower court on the grounds that the
claim was impermissible in terms of the applicable rule of the Fund.
However on appeal the claim succeeded. As a result the municipality will
have to pay an additional contribution to the Fund of some R2.4 million
together with interest and costs.