THE SUPREME COURT OF APPEAL
OF SOUTH AFRICA

Reportable
Case no:
570/04

In the matter between:

SOUTH AFRICAN BROADCASTING

Appellant
CORPORATION

and

FRED PETER COOP & OTHERS

Respondent

_____________________________________________________

Coram:
Navsa, Mthiyane, Brand, Van Heerden JJA et Cachalia AJA
_____________________________________________________

Date of hearing: 15 & 16 November 2005
Date of delivery: 30 November 2005

Summary:
Retiree status of former SABC employees in relation to medical scheme
and concessionary television licences ─ medical scheme subsidy and concessionary
television licences unilaterally withdrawn by the SABC ─ SABC relying on absence of
authority in respect of the grant of retiree status ─ former employees relying on
ostensible authority ─ requirements met.

_____________________________________________________
JUDGMENT
_____________________________________________________

NAVSA JA:

[1] This is an appeal by the South African Broadcasting
Corporation (the SABC), the national public broadcaster which
broadcasts television and radio programmes in terms of the
provisions of the Broadcasting Act 4 of 1999 (the Act), against a
judgment of Blieden J in the Johannesburg High Court, leave to
appeal having been granted by him. The court below ordered the
SABC to reinstate and continue to pay a 60% subsidy of the
monthly medical scheme contributions of the 93 respondents
(hereafter referred to as the plaintiffs), who were formerly
employed by it, and to reimburse and pay such amounts as were
due subsequent to its unilateral withdrawal of the subsidy in 2001.
He also ordered the SABC to reinstate concessionary television
licences to such plaintiffs as had received them prior to their being
unilaterally withdrawn in 1999. The court below took a dim view of
the SABC’s conduct in withdrawing the subsidies and the
concessionary licences and of the manner in which the SABC’s
case was conducted and consequently ordered it to pay costs on
an attorney-client scale. It is against these orders that the present
appeal is directed.

[2] The proceedings in the court below commenced by way of
an application which was later referred to oral evidence. The trial
lasted eight weeks. The plaintiffs called 24 witnesses and the
SABC four. The record of proceedings in the court below
comprises 51 volumes extending to 5088 pages. The purpose of
the trial was to determine whether the SABC’s unilateral
withdrawal of the subsidy and the concessionary licences was
lawful.

[3] The main issue in this appeal is as follows: whether the
plaintiffs did indeed depart from the SABC as retirees. This
requires an enquiry into the related question of whether the basis
on which they departed was authorised by the SABC. In light of a
concession made on behalf of the SABC, to which I will refer in
due course (see para 81 below), it is not necessary to address a
question entertained and answered in the court below; namely,
whether the subsidy and the concessionary licences are, in so far
as retirees are concerned, conditions of service or gratuities that
may unilaterally be withdrawn by the SABC.

[4] In order to understand the present dispute and to address
these questions, it is necessary to set out the background in some

detail, starting with the manner in which the SABC is structured in
terms of the Act.

[5] The SABC operates subject to overall control by a board that
consists of twelve non-executive members, plus the Group Chief
Executive Officer, the Chief Operations Officer and the Chief
Financial Officer or their equivalents, who are the executive
members of the Board.1 The affairs of the corporation are
administered by an executive committee (Exco) consisting of the
three executive members of the Board and no more than eleven
other persons. Exco is accountable to the Board and must perform
such functions as may be determined by the Board.2 The SABC
may engage such officers and employees as is necessary for the
attainment of its objects and determines their duties, remuneration
and their other conditions of service. It is empowered to establish
or support associations or institutions for the promotion of the
interests of its officers and employees and their dependants. It
may establish or support aid funds for the rendering of assistance
to its officers and employees or their dependants. It also has the

1 Section 12 of the Act.
2 Section 14.

power to provide pecuniary benefits for such persons upon
retirement or termination of service under other circumstances.3

[6] The differences between the relevant provisions of the Act
and the provisions of the Broadcasting Act 73 of 1976 under which
the SABC previously operated are for present purposes irrelevant.

[7] With effect from 1 January 1993 the SABC pension fund
amended its rules to provide that an employee who was over the
age of 45 and who resigned, was retrenched, or was dismissed
(save for fraud or dishonesty) was entitled to withdraw the full
actuarial value of his or her pension (hereafter referred to as the
full pension value).4 Prior to this such person was entitled to
receive only his or her own contributions plus interest.

[8] Another regime applied to retirees. The rules dealing with
persons who qualified for retirement remained the same, namely,
that upon retirement an employee would receive a monthly
pension5 and was entitled to apply to the trustees to be paid a
maximum of one-third of the actuarial value of his or her pension.
Unlike the category of persons referred to in the preceding
paragraph, the pension fund rules did not permit retirees to

3 Section 26.
4 Rule 6.4(1)(iv) of the SABC pension fund rules.
5 Rule 6.1 of the SABC pension fund rules.

withdraw their full pension values. The rules of the SABC medical
scheme, on the other hand, entitled retirees to remain on the
scheme as continuation members.6 Persons who resigned, were
retrenched or were dismissed were, however, not so entitled in
terms of the rules.

[9] From 1 April 1990 the SABC paid a subsidy of 60% of the
medical scheme contributions of all employees and retirees.7 In
addition, employees and retirees also received a concessionary
television licence upon request. The benefit of such a licence was
that a holder paid an annual rate substantially lower than that paid
by the general public.

[10] The series of events that culminated in the present dispute
started in July 1993 with Mr J P Ludick (Ludick), one of the
plaintiffs, who was due to retire on 1 November 1993, his 60th

6 Rule 6.2.2.1 provides:
‘A member shall … retain his membership of the Scheme in the event of his retiring from the
service of his employer or whose service is terminated by his employer on account of age, ill-
health or other disability; provided that such a member had been, at the date of retirement or
termination of his employment a member of the Scheme for a period of not less than 5
years…’
7 The SABC’s present medical scheme was constituted on 1 July 1972. It appears that, from
that time until 1974, the SABC paid a 50% subsidy for both employees and pensioners
(retirees). In 1974 the Board decided that, with effect from 1 January 1975, a 100%
contribution would be paid in respect of pensioners who received a pension of less than R50-
00 per month, other pensioners to receive a 75% contribution. This was followed by a
decision in 1977 to the effect that, from 1 September, the SABC would pay a 100%
contribution for all pensioners. In 1979 the contribution paid in respect of employees was
increased to 62.5%. It is not clear when the contribution paid in respect of employees was
subsequently reduced to 60%, but this appears to have taken place sometime before 1 April
1990, when the decision to reduce the contribution in respect of ‘new’ pensioners from 100%
to 60% took effect.

birthday being 19 October 1993.8 At that stage he had been
employed by the SABC for a period of 34 years and was the
regional head of the then Northern Transvaal broadcast division of
the SABC. Although a senior manager, he was not a member of
Exco.

[11]  As stated above, the amendment to the pension fund rules
enabling retrenchees, persons who had been dismissed and those
who had resigned to withdraw their full pension values took effect
on 1 January 1993. On 3 August 1993 Ludick entered into
discussions with the SABC’s Group Head of Human Resources
(HR), Mr Dan Esterhuyse (Esterhuyse). In a telefacsimile (fax) sent
to Esterhuyse on the same day, Ludick, referring to the
discussions, requested particulars of the ‘usual pension benefits’
due to him on retirement, as well as of ‘die enkelbedrag wat geld
op 30 September 1993 soos deur u verduidelik’. He also requested
the latest copy of the pension fund rules.

[12] On 4 August 1993 Mr Cor Nauta (Nauta), the pension fund
advisor in Esterhuyse’s office, responded in writing, supplying

8 In terms of the personnel regulations, members of top and senior management retire at the
age of 60 and other employees at the age of 63, although the latter may retire at any time
between the ages of 60 and 63 provided they give prior written notification. Employees who
have more than ten years of pensionable service may, with prior permission from the SABC,
retire at any time after reaching the age of 50. According to the pension fund rules ‘normal
retirement date’ means ‘the first day of the month next following the attainment of the Normal
Retirement Age’.

details of Ludick’s monthly pension entitlement with maximum
permissible commutation (one-third) and informed Ludick that the
actuary had been requested to calculate the full value of his
pension (it is common cause that this was in excess of R1 million).
Nauta also recorded that the latest pension fund rules had been
despatched to Ludick.

[13] On the same day Ludick sent a fax to Esterhuyse, pointing
out that he considered many parts of the pension fund rules to be
vague and asking, inter alia, to be referred to the specific clause in
the pension fund rules requiring him to resign in order to withdraw
his full pension value.  In addition Ludick asked for confirmation
that he would be permitted to continue his membership of the
SABC’s medical and group life assurance schemes after the
termination of his services. Ludick testified that Esterhuyse had
informed him that his resignation was ‘a technical mechanism’
required in order to withdraw his full pension value, but that he
would still be regarded by the SABC as a retiree and thus would
remain entitled to post-retirement benefits, including subsidised
membership of the SABC medical scheme.

[14] On 27 August 1993 Ludick wrote to the then Group Chief
Executive of the SABC, Mr W J J Harmse (Harmse), stating that

the new pension fund rules provided the option of withdrawing his
full
pension
value,
but
that,
according
to
Esterhuyse’s
interpretation of the rules, he had to resign in order to do so. He
stated that, if this interpretation was correct, he would terminate his
services with the SABC on 30 September 1993 and transfer his
pension monies to another fund of his choice. Ludick informed
Harmse that, according to Esterhuyse, if he departed from the
SABC in this manner, he could probably (‘waarskynlik’) retain his
membership of the medical and group life assurance schemes and
requested Harmse to confirm that he would indeed be able to
remain a member of the two schemes. He requested Harmse to
regard this letter as ‘my bedanking as lid van die SAUK
pensioenfonds’, effective from 1 October 1993.

[15] Harmse acknowledged receipt of the letter, confirming
acceptance of Ludick’s resignation. He stated (unconditionally) that
Ludick would retain his membership of the medical scheme ‘as
pensioenarislid’ and that he had the choice of continuing as a
member of the group life assurance scheme.

[16] It would seem that Nauta arranged all the formalities for
Ludick’s departure from the SABC on this basis, facilitating the
transfer of his full pension value to another fund. Nauta also

confirmed (in writing) Ludick’s continued membership of both the
medical scheme (with his contribution to the premium being only
40% of the total) and of the group life assurance scheme. Upon his
departure from the SABC Ludick received a gratuity of R2 500-00,
usually afforded only to retirees.

[17] Ludick was the first person to depart from the SABC on the
basis described above. It is clear that his dealings were principally
with Esterhuyse and Harmse. The former died in an aeroplane
accident in October 1993.

[18] Subsequent to Ludick’s departure, in the period from January
to November 1994, a number of managers employed by the SABC
terminated their services on the same basis as he had done. They
all used the mechanism of resigning in order to withdraw their full
pension values and, in their correspondence with their immediate
seniors, senior management and the pension fund advisor’s office,
stated their intention to retire. Like Ludick, they continued to
receive a concessionary television licence, were permitted to
continue their membership of the medical scheme and received
the 60% subsidy in respect thereof from the SABC until the
withdrawal of the subsidy and concessionary licences in 1999 and
2001, respectively.

[19] The same mechanism was during that period utilised by
some managers and employees of Sentech Limited (Sentech), a
public company the shares of which are wholly owned by the
Government. Initially Sentech was contained within the SABC
corporate structure as its signal distribution division. In 1992,
assuming its own corporate identity as described above, it
nevertheless continued in a symbiotic relationship with the SABC,
rendering technical services. In that year a number of SABC
employees transferred to this new corporate entity, but retained
their employment and related benefits. It is common cause that, by
and large, Sentech’s terms of employment were the same as those
of the SABC and that their employees and retirees were
accommodated within the SABC pension fund and medical
scheme.

[20] In the court below Sentech was the second defendant.
Sentech did not oppose the relief sought and adopted the same
attitude in respect of this appeal. The third defendant, the SABC
medical scheme which is a body corporate registered and
functioning as such in terms of the Medical Schemes Act 131 of
1998, took the same stance.

[21] Not only did the plaintiffs who fell in the category presently
under discussion openly state their intention to retire but, more
importantly, top management and their immediate seniors
considered them to be retirees. Ludick, for example, interacted
with Esterhuyse and with Harmse and it is clear from the relevant
correspondence that Ludick was regarded by them as a retiree.

[22] Fred Coop (Coop), who is the first plaintiff and an important
character in the present dispute, succeeded Esterhuyse (albeit in
an acting capacity) as the SABC’s Group Head of HR after the
latter’s unfortunate death. At the time that Ludick was preparing for
his departure from the SABC and whilst Esterhuyse was still alive,
Coop was the second most senior person in the HR department.
His first appearance in written correspondence in the present saga
was on 10 September 1993 when he wrote to the Group Head of
Financial Services at the SABC, seeking payment of the gratuity of
R2 500-00 due to Ludick upon his retirement.

[23] Scrutiny of written correspondence involving persons who
left the SABC and Sentech on the same basis as Ludick reveals
that, in doing so, they interacted with a range of senior and top
managers and that they were located in different divisions and
geographical areas. Some of them dealt with the HR managers in

the geographical regions in which they were employed. Some
communicated directly with the CEO of the SABC, with Coop, or
with Sentech’s CEO or HR manager.

[24] In December 1994 a process was started which culminated
in the involvement of another distinct group of plaintiffs in the
present litigation. During that month, a management report in
which Coop played a major part was presented by the SABC’s HR
department for approval by Exco. The report proposed a staff
reduction exercise, with employees being invited to apply for
voluntary retrenchment. The apparent motivation was cost
effectiveness, but an underlying concomitant reason was a major
transformation exercise to enable formerly disadvantaged South
Africans to take up leadership positions within the SABC and to
provide an incentive for the departure of those of the ‘old order’
who wished to leave or who were unacceptable as part of the new
face of the SABC.

[25] The report proposed offering those who applied for voluntary
retrenchment the SABC’s standard severance package (with a
slight modification with which we need not be concerned). It is of
some importance that the report, in dealing with a timetable for
action to achieve what is set out in the preceding paragraph and in

relation to proposed acts by management, used the phrase
‘retirement/voluntary retrenchment’ three times as shown here.

[26] The Board approved the plan on 1 February 1995. The
SABC produced a special edition of its internal publication,
Intekom (No 24), dated 3 February 1995, to publicise the
retrenchment exercise. It spelt out the details of the retrenchment
package on offer, stating that it was primarily directed at ‘staff in
management and non-programme related disciplines’, but that all
employees could apply. Approval of packages would be subject to
management discretion. The offer was open for acceptance until
31 March 1995. Applications had to be submitted to the relevant
line managers who had to consult with the appropriate divisional
head before final decisions were made. Employees were warned
not to approach the pensions office before their applications were
approved.

[27] This retrenchment process should be viewed in the context
of significant changes that were taking place at the SABC. A new
Board had been appointed in June 1993, primarily to ensure that
the SABC’s media coverage leading up to and including South
Africa’s first democratic elections in 1994 would be fair. In line with
the transformation process, Mr Zwelakhe Sisulu (Sisulu) had

joined the SABC on 1 February 1994 as special assistant to
Harmse. It was accepted by all that he was being groomed to
succeed Harmse, which he did at the end of 1994. Sisulu had
been charged to lead the transformation process and was assisted
in this by Professor Govan Reddy, who had been appointed head
of SABC radio in January 1994.

[28] As part of a communication drive in relation to the
retrenchment programme mentioned in Intekom No 24, Sisulu
addressed SABC staffers countrywide by way of an internal live
television broadcast to all SABC centres. He was joined in this
transmission by Dr Matsepe-Casaburri, the new chairperson of the
SABC Board. The retrenchment exercise as described in Intekom
No 24 was thus communicated to all SABC staff.

[29] It is common cause that, shortly after the transmission,
Sisulu and Coop (in his role as head of the HR department)
addressed SABC staff in a hall at SABC headquarters in Auckland
Park. Coop testified that in his presentation, in Sisulu’s presence,
he described not only the details concerning the retrenchment
package but also the benefits that were available to those
employees who were accepted for voluntary retrenchment and
who also qualified for early retirement. These benefits were the

same as those received by Ludick. Sisulu could not recall the
details of what was discussed but was unwilling to state positively
that Coop had not done this.  I will return to this and other aspects
of Coop’s testimony when I deal with the criticisms levelled against
Coop by the SABC.

[30]    Because Sentech employed mostly technically skilled staff
whose services were sorely required, the invitation to apply for
voluntary retrenchment was not extended to its employees.

[31] Hundreds of SABC employees responded. Divisional heads
were approached for approval. Coop and Nauta featured
prominently in the interaction with divisional heads and employees.
Coop testified that he and senior managers within the HR
department and those located elsewhere in the SABC acted on the
basis of the precedent that had been set by Ludick (and those who
followed him) and permitted those who now applied for voluntary
retrenchment and who qualified for early retirement to withdraw
their full pension values and take the retrenchment package and
retain their subsidised membership of the medical scheme and if
they so wished, continue to participate in the group life assurance
scheme. Most of the plaintiffs fall into this category.

[32] Although Sentech personnel were not entitled to apply for the
1995 retrenchment package, a few plaintiffs who were Sentech
employees and who qualified for early retirement utilised the
‘Ludick resignation/early retirement option’ in 1995 and obtained all
the benefits which Ludick had received on his departure from the
SABC. None received retrenchment packages. Prior to their
departure they directed their queries to the HR manager at
Sentech, Mr Hendrik Calitz (Calitz), and/or the managing director,
Mr Niel Smuts. Calitz interacted with Coop and Nauta concerning
some of these applications for early retirement. Nauta regularly
gave advice to Sentech and SABC employees on how their ‘early
retirement/resignation’ letters should be worded.

[33] It should be noted that after the amendment of the pension
fund rules an amendment to revenue legislation was contemplated
in terms of which monies withdrawn from pension funds would be
subjected to a substantially increased tax rate.9 This generated
public interest and discussion and served as an additional
motivation for those who approached the SABC and Sentech to
retire in terms of the Ludick option and later in terms of the 1995
retrenchment option.

9 The increased tax rate apparently came into effect during August/September 1995.

[34] In 1997 a second SABC retrenchment exercise was put into
operation. It followed on a report by consultants employed by the
SABC.  The details of this exercise are sketchy but, since it did not
impact on the plaintiffs, it need detain us no further.

[35] I turn to deal with some individuals who fall outside the
categories already dealt with.

[36] Mr Gert Claassen (Claassen) is the only plaintiff who had
less than 10 years service with the SABC. Many of the plaintiffs
have service records spanning two or three decades. Claassen,
however, had only been employed by the SABC for approximately
six years and was 56 years old when he left the SABC in 1997. At
that time he was second-in-command of the operational arm of the
SABC. He was employed on a fixed-term contract and was not a
member of the SABC pension fund or of its provident fund. It is
common cause that he qualified for early retirement in terms of the
then applicable personnel regulations and, in December 1996, he
wrote to Sisulu (then the CEO) requesting early retirement and
continued membership of the medical scheme. Ms Langa-Royds,
who had succeeded Coop as Group HR head, confirmed in writing
that his contract would terminate on 31 May 1997 and that he
would retain his membership of the medical scheme ‘against the

current rate of contribution and subject to future adjustments’. He,
like the other plaintiffs, received the 60% medical scheme subsidy
and the concessionary television licence until they were unilaterally
withdrawn. By contrast with the other plaintiffs discussed so far, in
a subsequent letter from Mr Anton Heunis (then Group Manager of
HR) confirming Claassen’s continued membership of the medical
scheme, it was specifically recorded that ‘the subsidy rate was
subject to revision’. This reservation on exit from the SABC was
recorded in respect of only one other plaintiff, Mr Jan Hendrik Otto.

[37] Harmse’s rise in the SABC was meteoric. Starting with the
SABC as an administrative assistant in 1963, he became the CEO
in 1988. He was appointed by the Board and his terms of
appointment were determined after negotiations with the then
chairperson of the board. He was appointed on a five-year contract
but, at the end of 1993, his contract was extended for one year
after an accord had been reached with Dr Matsepe-Casaburri.

[38] Harmse verbally negotiated the terms of his departure with
Mr Hickling, the deputy-chairperson of the Board at that time. On
his departure he did not receive a package but was permitted to
withdraw his full pension value and continue his membership of the

medical scheme. He too received the 60% contribution until it was
withdrawn.

[39] Mr Willie Lindstrom (Lindstrom) was employed by the SABC
from 1967 until 2000 when he terminated his services. At that
stage he was five years from his normal retirement date. He had
undergone a number of joint replacements and required extensive
surgical and medical attention. Continued membership of the
subsidised medical scheme was therefore particularly important to
him. In October 1999, he wrote to Mr Snuki Zikalala, the executive
editor of the news division, who was part of the new face of the
SABC, requesting a retrenchment package and continued
membership of the medical scheme. Correspondence ensued with
a number of the SABC’s new regime officers.  The matter was
taken up with Reverend Mbatha, who succeeded Sisulu. Lindstrom
arranged a meeting with Ms Cecilia Khuzwayo (Khuzwayo), who
had succeeded Ms Langa-Royds as Group HR Head. This
meeting was also attended by Mr Delarey Nell, another plaintiff. In
discussions with Khuzwayo, it became clear that the SABC was
not prepared to offer them any kind of retrenchment package and
that they could choose either redeployment or early retirement with
continued membership of the medical scheme. They chose the

latter and this was recorded in writing by the SABC. After
discussions with Mr Jaco van Staden who was ‘standing in’ for Ms
Lynne Gildenhuys (Nauta’s successor as pension fund advisor),
they were both permitted to withdraw their full pension values and
to remain members of the medical scheme as retirees.

[40] Coop departed from the SABC on 30 August 1995 after he
had negotiated the terms of his departure directly with Sisulu. He
was entitled to early retirement as he had been in the service of
the SABC for almost 30 years. It is true that, in the
correspondence between himself and Sisulu, no mention was
made of early retirement or of continued membership of the
medical scheme. However, his evidence that he intended to leave
the SABC as a retiree and that he made this clear to Sisulu was
not seriously challenged. As far as he was concerned he received
what he had requested, namely, his full pension value, continued
subsidised membership of the medical scheme, the retirement
gratuity of R2 500-00 and all the other benefits usually afforded to
retirees.

[41] This discussion of individual cases is meant to be illustrative
and not exhaustive.

[42] I record that the SABC made provision for the 60% subsidy
in its annual budgets presented to the board and, in doing so, drew
no distinction between retirees and employees. Since at least 1994
its audited financial statements, as approved by the Board and
signed by the respective CEO’s, reflected the payment of a post-
retirement subsidy as a long term liability calculated as a projection
in respect of both present and past employees. Thus, for example,
in accounts for the year ending 30 September 1996, the SABC
made provision in an amount of R189.4 million for the ‘present
value, as actuarially valued…of post-retirement contributions
payable by the Corporation to the Medical Aid Scheme in respect
of current and past employees’. It is clear from the evidence that
this included provision for direct-paying members of the medical
scheme. Direct paying members were retirees who did not receive
a monthly pension from the SABC (this included retirees who had
subscribed to a provident fund or who had made their own private
pension fund arrangements). Direct payment was necessary
because, for this category of persons, deductions could not be
effected from a monthly pension paid by the SABC. The provision
made thus included the projected subsidy for the plaintiffs. For the
financial years ending 31 March 1998 (covering a period of 18
months), 31 March 1999, 31 March 2000 and 31 March 2001, such

provision was made in amounts of R217 million, R210 million,
R238.4 million and R238.9 million, respectively. It is important to
note that, apart from external audit, the SABC was subject to
stringent internal audit as well.

[43] It is clear from documentary evidence that, when the Board
made the decision to withdraw the subsidy, it did so under the
impression that the reservation set out in the letters presented to
Claassen and Otto had been included in letters to all the persons
in the plaintiffs’ position upon their departure from the SABC. It is
also abundantly clear from the documentary motivation presented
to the Board on which it based its decision to withdraw the subsidy
that the primary consideration was financial savings. So much so
that it was contemplated that the savings that might be effected by
the withdrawal of the medical scheme subsidy for persons in the
position of the plaintiffs could turn the SABC from a loss-making
position into a profitable organisation.

[44] Coop and other top and senior managers amongst the
plaintiffs, who testified, stated that they had assumed that authority
for the Ludick precedent derived from an Exco decision. It appears
to be accepted by all that there was in fact no Board decision
permitting persons to leave on that basis. Despite both parties’

efforts, minutes for the period in which such a decision might have
been taken by Exco could not be traced.

[45] It is clear that the pension fund did not suffer any financial
prejudice, and the indications are that the pension fund reserves
might in fact have benefited from the withdrawal by the plaintiffs of
their full pension values. According to the testimony of Mr Anton
Els, the pension fund actuary, the Ludick option contravened a
directive of the South African Revenue Service and could have
threatened the fund’s tax status. The pension fund did not,
however, seek to recover any of the monies it paid to the plaintiffs
and is not a party to the present litigation.

[46] Not only did the medical scheme not oppose the relief sought
by the plaintiffs, but neither it, nor the SABC is against retaining
them as continuation members. The only issue in this regard is
whether the SABC should continue to pay the subsidy.

[47] In his evidence, Coop stated, at one stage, that he had in
fact been told by Esterhuyse, who was a member of Exco at the
time, that there had been a decision concerning Ludick. At another
stage he testified that he had made the assumption that there had
been such a decision. Some of the plaintiffs knew Esterhuyse and

testified that he had been a meticulous man who acted according
to prevailing rules and that he would not have acted without an
official decision. That then was the basis of the assumption. Coop
and others accepted too, that the decision would not have been
one peculiar to Ludick, but that it had been decided that persons in
his position would be entitled to depart on those terms.

[48] Sisulu and Reddy who in some instances, at least on the
face of the documents produced at the trial, were party to the
decisions which led to several of the plaintiffs receiving the
benefits in question, testified that they had not in fact considered
whether the rules entitled these plaintiffs to what they had
received. Both testified that they signed what their subordinates
had prepared and put before them in this regard. Sisulu in
particular appreciated the fact that some of the people earmarked
by the 1995 retrenchment process had dedicated their entire
working lives to the SABC and that it was important that such
people be treated sensitively and with the utmost fairness. He
testified that Harmse, Claassen and Coop had, in his experience,
always acted with great integrity, that he had the fullest confidence
in them and a relationship of mutual respect with them.

[49] The SABC’s case concerning the events described above,
as best as can be discerned, vacillated between two positions.
First, more or less accusing Coop and Harmse and other top
executives of having ‘conspired’ and acted fraudulently in favour of
a select group of white managers in order to obtain the benefits in
question when they must have known that they were not entitled to
them. Second, stating before us that their case was that Coop and
others had acted ‘opportunistically’ on the basis of the Ludick
precedent in order to obtain the benefits for a select few white
managers when they knew or ought to have known that they were
not entitled to them.

[50] The SABC contended that Coop, Harmse and others
deliberately withheld from the Board the details of the manner in
which the plaintiffs departed from the SABC. According to the
SABC, those who had either ‘conspired’ or acted opportunistically
could not keep matters within the circle of the favoured few and, as
word got around, they were thus compelled to extend the benefits
to persons whom they had not initially contemplated.

[51] In essence, the SABC submitted that neither the Board, nor
Exco, had authorised persons such as Coop and Harmse to grant

the plaintiffs the benefits which they had received and that
consequently the SABC ought not to be held liable.

[52] The SABC further contended that, since the plaintiffs had
held out to the pension fund and to the SABC that they had
resigned, they ought to be held to their word. They should thus be
regarded as having severed all links with the SABC and
consequently be held to have no right to the subsidy, the
concessionary television licence or any other benefit as might
accrue to an actual retiree.

[53] Too much time and energy was spent by counsel for the
SABC in the court below cross-examining plaintiffs about the
meaning of the pension fund and medical scheme rules. Too little
time was spent analysing the proper ambit of the dispute or
whether there were adequate grounds for a proper defence. Much
of the SABC’s case was based on conjecture and it is thus not
surprising that it is difficult to glean its true nature.

[54] One fundamental weakness of the SABC’s case is that there
were no attempts at secrecy by those labelled ‘conspirators’ or
‘opportunists’. Ludick was unchallenged when he stated that, after
he had come to the arrangement described above, he announced

its details to all who enquired about his departure. Almost every
plaintiff who testified stated that the Ludick case or what it
represented was common knowledge in the corridors of the
SABC’s headquarters. Furthermore, there are no discernable
patterns of association or a conspiratorial modus operandi in
respect of all of those who approved and received the benefits in
question. When the plaintiffs were cross-examined, the precise
manner of their alleged conspiracy or opportunism in collaboration
with others was not put to them.

[55] The voluminous correspondence makes it clear that the
‘mechanism’ employed in the Ludick case was just that ─ a
mechanism. It was disclosed as such to the plaintiffs’ immediate
superiors, to the pension funds advisor, to other top managers and
even in some instances to Sisulu and/or Reddy. In two instances,
as discussed above, the benefits in question were negotiated with
Khuzwayo, independently of any decision made by senior or top
white managers. In most instances the plaintiffs’ immediate
supervisors and/or senior management suggested the mechanism
in question. It should also be borne in mind that the relevant
events occurred at a time when the SABC was under intense
public scrutiny.

[56] It is no answer to say that Sisulu, Reddy and others of the
new order were unaware of the true import of what was being done
in the SABC’s name, or that they were yet to come to terms with
the personnel regulations and the rules that governed the pension
fund and medical aid scheme, or that they unwittingly signed
letters put before them.

[57] Even if one were to accept in the SABC’s favour (in the
absence of an evidentiary basis for so doing), that a few top
managers were involved in a conspiracy that later got out of hand,
the problem remains that one is unable to identify which of the
remaining plaintiffs were co-conspirators who were unable
reasonably to rely on advice from top management including, in
some instances, the CEO and the Group Head of HR.

[58] The probabilities in this regard are against the SABC, in that
it is unlikely that persons who were approaching their retirement
would jeopardise their entitlement to subsidised membership of the
medical scheme by doing something they must have known was
tainted with dishonesty and might attract serious and irrevocable
consequences. At that stage of their lives, medical scheme
membership was clearly increasingly important, not just in respect

of the amount of the SABC’s contribution, but in respect of readily
obtaining membership and similar benefits elsewhere.10

[59] Furthermore, not all the plaintiffs constituted ‘top’ or ‘senior’
management. Some were at best junior middle managers and at
least one was a secretary.  How they became part of the
opportunism or conspiracy was neither explained nor explored. In
real life it is probable that such persons who might justifiably be
described as the rank and file would rely on guidance from top
management.

[60] Whilst I agree with counsel for the SABC that the court below
erred in basing its decision to reinstate the subsidy on ratification,
as this had neither been pleaded, nor pointedly explored during the
trial, I do not agree that on the totality of the evidence it follows that
the plaintiffs should not have been afforded the relief they sought
in the court below.

[61] In considering whether the plaintiffs proved that there was
actual authority for the decisions on which the plaintiffs’ claims are
based the following must be taken into account. Coop testified

10 Cf. Section 29(1)(u) read with s 29(1)(s) of the Medical Schemes Act 131 of 1998 which
compels medical schemes to admit without a waiting period or the imposition of new
restrictions based on health persons (and their dependants) who retired from the service of an
employer or whose employment was terminated on account of age, ill-health or other
disability. No such provision exists in respect of persons who voluntarily resign.

about Exco authorisation for the Ludick matter on a hearsay-basis
─ that he had been told by Esterhuyse that Exco had made such a
decision. This should be compared with his testimony at another
stage, that he had simply made an assumption, like others, that
there must have been such authorisation because he knew that
Esterhuyse always acted according to prevailing rules. He was
reminded under cross-examination, that in an affidavit in the
application proceedings he had stated that a Board decision had
provided authority for the Ludick option. A number of plaintiffs who
served on Exco could not recall such a decision which, since it
might impact on them, one would have expected them to
remember. Exco minutes for the relevant period could not be
traced.

[62] In these circumstances it follows that the plaintiffs failed to
prove that there was actual authority by Exco, either express or
implied. In this regard the discussion in paras [65]-[75] hereafter
has relevance.

[63] The plaintiffs in a replication relied on estoppel, otherwise
described as ostensible authority. A person who has not
authorised another to conclude a juristic act on his or her behalf
may in appropriate circumstances be estopped from denying that

he or she had authorised the other so to act. The effect of a
successful reliance on estoppel is that the person who has been
estopped is liable as though he or she had authorised the other to
act.11

[64] The essentials of estoppel can briefly be stated as follows:
The person relying on estoppel will have to show that he or she
was misled by the person whom it is sought to hold liable as
principal to believe that the person who acted on the latter’s behalf
had authority to conclude the act, that the belief was reasonable
and that the representee acted on that belief to his or her
prejudice.12

[65] The distinction between actual and ostensible authority was
explained by Denning MR in Hely-Hutchinson v Brayhead Ltd., and
Another [1968] 1 QB 549 (CA) at 583A-G ([1967] 3 All ER 98 at
102A-E):
‘[A]ctual authority may be express or implied. It is express when it is given by
express words, such as when a board of directors pass a resolution which
authorises two of their number to sign cheques. It is implied when it is inferred
from the conduct of the parties and the circumstances of the case, such as
when the board of directors appoint one of their number to be managing

11 1 Lawsa (reissue) para 210.
12 1 Lawsa (reissue) para 211 and NBS Bank Ltd v Cape Produce Co (Pty) Ltd and Others
2002 (1) SA 396 (SCA) para 26.

director. They thereby impliedly authorise him to do all such things as fall
within the usual scope of that office. Actual authority, express or implied, is
binding as between the company and the agent, and also as between the
company and others, whether they are within the company or outside it.
Ostensible or apparent authority is the authority of an agent as it appears to
others. It often coincides with actual authority. Thus, when the board appoint
one of their number to be managing director, they invest him not only with
implied authority, but also with ostensible authority to do all such things as fall
within the scope of that office. Other people who see him acting as managing
director are entitled to assume that he has the usual authority of a managing
director. But sometimes ostensible authority exceeds actual authority. For
instance, when the board appoint the managing director, they may expressly
limit his authority by saying he is not to order goods worth more than £500
without the sanction of the board. In that case his actual authority is subject to
the £500 limitation, but his ostensible authority includes all the usual authority
of a managing director. The company is bound by his ostensible authority in
his dealings with those who do not know of the limitation. He may himself do
the “holding-out”. Thus, if he orders goods worth £1 000 and signs himself
“Managing Director for and on behalf of the company”, the company is bound
to the other party who does not know of the £500 limitation...’

[66] In NBS Bank Ltd v Cape Produce Co (Pty) Ltd and Others
2002 (1) SA 396 (SCA) this Court, in applying that dictum, stated

(para 25):
‘As Denning MR points out, ostensible authority flows from the appearances
of authority created by the principal. Actual authority may be important, as it is
in this case, in sketching the framework of the image presented, but the
overall impression received by the viewer from the principal may be much
more detailed. Our law has borrowed an expression, estoppel, to describe a
situation where a representor may be held accountable when he has created
an impression in another’s mind, even though he may not have intended to do
so and even though the impression is in fact wrong... But the law stresses that
the appearance, the representation, must have been created by the principal
himself. The fact that another holds himself out as his agent cannot, of itself,
impose liability on him. Thus, to take this case, the fact that Assante13 held
himself out as authorised to act as he did is by the way. What Cape Produce
must establish is that the NBS created the impression that he was entitled to
do so on its behalf. This was much stressed in argument, and rightly so. And it
is not enough that an impression was in fact created as a result of the
representation. It is also necessary that the representee should have acted
reasonably in forming that impression: Connock’s (SA) Motor Co Ltd v
Sentraal Westelike Ko-operatiewe Maatskappy Bpk 1964 (2) SA 47 (T) at
50A-D. Although an intention to mislead is not a requirement of estoppel,
where such an intention is lacking and a course of conduct is relied on as
constituting the representation, the conduct must be of such a kind as could
reasonably have been expected by the person responsible for it, to mislead.

13 The manager of the NBS Bank Ltd.

Regard is had to the position in which he is placed and the knowledge he
possesses…’

[67] Esterhuyse was the Group Head of HR and a member of
Exco until his death in 1993.  Harmse was the CEO and a member
of both the Board and of Exco. For those in subordinate positions
at the SABC they would be the two persons, par excellence, to
whom they could look for guidance and authority on matters
affecting personnel.

[68] I agree with counsel for the SABC that Coop’s evidence in
regard to the question of how he established the authority for the
Ludick precedent was unsatisfactory. This could perhaps be
attributed to the fact that he felt pressurised by having advised
many of the plaintiffs on an assumption he was later unable to
substantiate. It does not necessarily make him a liar in respect of
the assumption he made, nor does it follow that he acted
unreasonably in making such an assumption. He was supported in
this by a number of plaintiffs who readily assumed that Esterhuyse,
because of his meticulousness, must have obtained at least Exco’s
approval. Furthermore, according to Coop, Esterhuyse told him
that he (Esterhuyse) would inform the Regional HR managers of
‘the resignation/early retirement option’ so that they could apply it

to other employees of the SABC. An overview of the evidence
indicates that, in time, this information was indeed passed on to
the Regional HR managers. In their testimony both Harmse and
Claassen maintained that, they too had assumed that there had
been such a decision.

[69] Ludick, as the correspondence shows, in the first instance
looked to the Group Head of the HR department and asked him
pointed questions. He questioned his interpretation of the pension
fund rules but was reassured that the resignation mechanism was
a legitimate way of withdrawing his full pension value. There was
no reason to doubt that Esterhuyse was speaking for the SABC
when he confirmed that Ludick’s ‘resignation’ from the pension
fund would not affect his retiree status and that he would be
permitted to continue his membership of the medical scheme.

[70] Still not satisfied, Ludick approached Harmse asking for
confirmation. The letter he received from Harmse, the relevant
particulars of which are set out in para [15] above, understandably
reassured him. The SABC could hardly be heard to say that its
CEO, in addressing a senior manager’s personnel concerns on
official stationary and acting in conjunction with the Group HR
Head, was not speaking on behalf of the SABC. Coop, Harmse

and Claassen all testified that, as far as they were concerned, the
resignation option was merely a mechanism to enable an
employee who qualified for early retirement to withdraw his/her full
pension value. They all regarded those employees who took early
retirement, but utilised the resignation option so as to withdraw
their full pension values, as retirees. Because there was no
financial implication for either the SABC or the pension fund, they
did not consider it necessary that Board approval be obtained for
permitting the resignation option.

[71] But it goes further. Nauta, the pension fund advisor,
facilitated the withdrawal of Ludick’s full pension benefit and
confirmed in writing that he was entitled to remain a subsidised
member of the medical scheme. Furthermore, upon departure
Ludick received a gratuity paid only to retirees.

[72] It does not behove the SABC to adopt the position that, if
Ludick and the other plaintiffs had properly considered the rules of
the pension fund and the medical scheme, they could not
reasonably have relied on what was told to them by management
or that they could not reasonably have believed that they were
entitled to depart the SABC on the bases in question. This
presupposes that each plaintiff considered the rules in detail and

that they would not have been reassured by top management that
the use of the mechanism was legitimate, particularly when the
pension fund and the medical scheme appeared to approve. We
know now that the pension fund did not suffer financial loss of any
kind. When one considers those who followed on Ludick’s
precedent, one is compelled to the conclusion that they were
doubly reassured.

[73] The following factors should be considered in tandem with
what is set out in the preceding paragraphs.  In the ensuing years
not only did the number of persons in the different categories of
plaintiffs grow substantially, but the SABC budgeted for and in fact
paid the subsidy for them. It was common knowledge that the
SABC was subject to stringent internal and external audits.
Successive CEO’s and Group HR Heads had continued to permit
people to depart in the Ludick manner.  The financial statements in
which there was exponential annual growth in the provision made
for the SABC’s long-term commitment to post-retirement medical
scheme contributions for current and past employees, including
the plaintiffs, contributed to the impression that the Ludick method
of departure was approved at the highest level. Each successive
plaintiff could rely on what had passed between the SABC and

others before him or her. Indeed, Anton Heunis, who was the
SABC’s principal witness and is its present Senior General
Manager, Audience Service Division, conceded as much under
cross-examination.

[74] As in the NBS Bank case, supra, the plaintiffs’ case was not
limited to the appointment of the various relevant officers who
acted on the SABC’s behalf.14 It included their senior status, the
trappings of their appointment, the manner in which they went
about their dealings with the plaintiffs, the use of official documents
and processes, the apparent approval of subordinate and related
organisations, such as the pension fund and medical scheme, the
length of time during which the Ludick option was applied, the
Board’s own financial accounts and the conduct of CEO’s who
were Board members.

[75] As in the NBS Bank case, the SABC created a façade of
regularity and approval and it is in the totality of the appearances
that the representations relied on are to be found.15

[76] The plaintiffs were adamant that their continued subsidised
membership of the medical scheme was a material consideration

14 Paras 28-32.
15 Para 33.

when they made the decision to terminate their services with the
SABC. As already pointed out, in the twilight of their lives they
would have found it extremely difficult, if not impossible, to obtain
affordable membership of a substitute medical scheme (with or
without a waiting period). For the majority of them, this difficulty
has been compounded by the lapse of a decade since their
departure from the SABC. Having regard to the number of years
spent in the service of the SABC and as members of the medical
scheme they would, no doubt, have contributed to the reserves of
the scheme and be entitled to benefits that flowed from this.

[77] The vast majority of plaintiffs who testified insisted that, had
the representations not been made, they would not, because of the
importance of medical aid in relation to their personal
circumstances, have ‘resigned’ as suggested. They would have
retired in the normal course, thereby retaining membership of the
medical scheme and avoiding the parlous circumstances in which
they now find themselves.

[78] They thus acted to their prejudice in relying on the
representations made. The subsidy and the concessionary
television licences were unilaterally terminated and the plaintiffs

were thus treated differently to other retirees. They were required
to justify their positions and finally resorted to the present litigation.

[79] If, as stated above, we can rightly conclude that the SABC
has failed to establish a conspiracy of any sort or that their
submissions about opportunism are without foundation, then it
must, in my view, follow that the plaintiffs have established the
essentials of estoppel.

[80]  For all the reasons referred to above this conclusion would
apply equally to Coop and Harmse. As rightly conceded by
counsel for the SABC, the facts surrounding Claassen’s departure
from the SABC make his case the strongest of all the plaintiffs.

[81] Before us counsel for the SABC conceded that in the event
of a finding by this Court that the plaintiffs did indeed depart from
the SABC as retirees, it follows that they ought rightly to have been
treated in exactly the same manner as all other retirees.

[82] As demonstrated above, the total provision for post-
retirement medical scheme subsidy funding made by the SABC for
current and past employees was substantial. The dispute
concerning the proper ‘retiree status’ of the plaintiffs provided an
opportunity in 2001 for the unilateral termination (on three months’

notice) of their subsidy with effect from 1 November 2001. In 2002
the SABC Exco, possibly contemplating that prospective
employees would provide the easiest opportunity for costs savings,
decided that all employees appointed after 1 June 2002 would not
qualify for any medical scheme subsidy upon their retirement. This
was then expressly incorporated in new letters of appointment.

[83] It did not stop there. In 2003 the SABC Board set in motion a
process aimed at phasing out the medical scheme subsidy for all
retirees, present and future, over a five-year period at a reduction
rate of 20% per annum. A consultation process was initiated with
continuation members of the medical scheme and all current
employees and their unions ─ the plaintiffs were not involved in
this process. In a letter dated 3 November 2003, Dr Namane
Magau, who succeeded Khuzwayo as Group Head of HR (now
called ‘Director: Human Capital’), informed all continuation
members (other than the plaintiffs) of the SABC’s intention to
follow this course, commencing on 1 April 2004, and invited written
representations concerning the proposed changes. According to
this letter, the subsidy had been made gratuitously and the SABC
could no longer justify the level of expenditure required to maintain
same.

[84] We were informed by counsel that the response by the
general body of continuation members (other than the plaintiffs)
has been a storm of protest and the commencement of legal
proceedings against the SABC in this regard. The particulars of the
challenge and the SABC’s response to it are not before us.

[85] Counsel for both parties accepted that, in the light of the
concession referred to in para [81], in the event of this Court
deciding the main issue in favour of the plaintiffs, they were
entitled to the relief sought in the declaration and mirrored in the
order of the court below.16 It is thus not necessary to decide any of
the other issues raised by counsel, including the plaintiffs’
alternative challenge on the basis of administrative review.

[86] I turn to the question of costs. Blieden J was justifiably
distressed at the attitude adopted by the SABC towards those who
had served it for a substantial part of their working lives. He was
critical of the manner in which counsel for the SABC advanced
their client’s case, as were counsel for the plaintiffs. However,
having regard to the gap in internal documentation and considering
the death or departure of several key actors in the history of the
matter, some leeway ought to have been afforded them in the

16 See para [1] above.

presentation of their client’s case. In my view, Blieden J’s reaction
in the form of the punitive costs order was too severe.

[87] Counsel for the SABC submitted before us that, in the event
of the plaintiffs’ succeeding in the present appeal, they should
nonetheless be mulcted in the costs of the application in the court
below to vary an agreement (restricting the issues) reached by the
parties. They referred in this regard to the many mutations of the
plaintiffs’ case during the course of the proceedings in the court
below.

[88] Whilst it is true that the plaintiffs’ case mutated from time to
time, the same is true of the SABC’s case. In my view, the plaintiffs
are entitled to all the costs properly incurred to enable a proper
ventilation of the dispute. I see no reason to deny them the costs
of the aforesaid application.

[89] It was accepted by counsel that a variation of the punitive
costs order issued by Blieden J should not affect the ordinary order
of costs attendant upon success on appeal.

[90] For all the reasons set out above, the following order is
made:
1.
The appeal is dismissed, save that the order of costs made
in the court below is set aside and substituted as follows:
‘The SABC is ordered to pay the plaintiffs’ costs of suit, including the costs of
two counsel.’
2.
The SABC is ordered to pay the costs of appeal, including
the costs of two counsel.

_________________
M S NAVSA
JUDGE OF APPEAL

CONCUR:

MTHIYANE

JA
BRAND

JA
VAN HEERDEN
JA
CACHALIA

AJA