THE SUPREME COURT OF APPEAL
OF SOUTH AFRICA

REPORTABLE
Case number :   391/2001

In the matter between :

CEDRIC MEYER

APPELLANT

and

ISCOR PENSION FUND

RESPONDENT

CORAM :

HARMS, CAMERON, NAVSA, BRAND  JJA and
JONES AJA

HEARD :

7 NOVEMBER 2001

DELIVERED :

28 NOVEMBER 2002

Chapter V A of Pension Fund Act 24 of 1956 - complaint to Adjudicator -
amendment to Pension Fund Rules - conferring additional benefits on
existing members - whether unfair discrimination against former
members - legitimate expectation of substantive results as opposed to
fair procedure - whether enforceable.

JUDGMENT

BRAND JA/

BRAND JA :
[1] This appeal arises from a successful application to set aside a
determination by the Adjudicator appointed under s 30C of the Pension
Fund Act 24 of 1956 (‘the Act’).  The underlying dispute to the appeal
has already wound its costly way through four tribunals over a period of
nearly a decade.  The respondent (‘the Fund’) is a Pension Fund
registered under the provisions of the Act.  It is a company fund in the
sense that all its members are employed by companies in the Iscor
group, consisting of a large (former parastatal) company, Iscor Limited,
its subsidiaries and affiliates (‘Iscor’).  The appellant (‘Meyer’) was
employed by Iscor for over 33 years until he took early retirement at the
end of July 1993.  He did so because he was informed that he was about
to be retrenched.  Throughout his employment with Iscor, Meyer was a
member of the Fund.  Upon retirement his pension benefits were
calculated in accordance with the then applicable rules of the Fund.
More particularly, rule 6.2 was applied.  This rule provided that if a
member took retirement before reaching the normal retirement age of 63,
‘the pension that is payable on such retirement shall be … reduced by 0,4% in
respect of each month by which his retirement precedes his normal retirement age

[of 63]’.  Since Meyer was only 51 when he took retirement, his pension
benefits were substantially reduced by the application of rule 6.2.
[2] On 20 September 1993, less than two months after Meyer’s
retirement, the trustees of the Fund resolved to amend rule 6.2.  The
amendment was expressly formulated as a temporary measure and was
clearly calculated to advance the personnel reduction programme
embarked upon by Iscor at the time, by encouraging employees of Iscor
(and members of the Fund) who have reached the age of 50 to take
early retirement.  To this end the amended rule 6.2 stipulated that the
pension of employees who (a) attained the age of 50 prior to 31
December 1993 and (b) elected between 1 October and 31 December
1993 (c) to retire during the first quarter of 1994, would not be subject to
the 0,4% per month reduction.  The amended rule also provided that in
calculating the pensionable service of these qualifying members would
be extended by one month for each year of actual service.
[3] Calculated on the basis of rule 6.2 in its original form, Meyer’s
pension benefits amounted to a lump sum award of R152 019,61 and a
monthly pension of R1 669,94.  By contrast, if Meyer had been allowed
to take earlier retirement under the amended rule 6.2, he would have

received a lump sum payment of R342 612,90 and a monthly pension of
R3 939,11.  Quite understandably Meyer felt aggrieved by his exclusion
from the enhanced benefits of the amended rule 6.2.
[4] He first sought relief against his erstwhile employer, Iscor, in the
Industrial Court, pursuant to s 46(9) of the Industrial Relations Act 28 of
1956.  The Industrial Court held in his favour, finding, in essence, that
the amendment discriminated against him;  that Iscor was partly
responsible for the amendment; and that it could therefore be held
answerable to Meyer for the loss that he suffered because of the
discrimination.  In determining the amount of Meyer’s resulting loss, the
Industrial Court relied on an actuarial calculation of the difference
between the pension benefits Meyer actually received and those that he
would have received under the amended rule 6.2.  Based on these
calculations the Court gave judgment for Meyer against Iscor in the sum
of R450 000.  On appeal by Iscor to the Labour Appeal Court the
Industrial Court’s judgment was, however, set aside, substantially on the
basis that the Fund was an entity separate from Iscor and that Iscor
could not be held responsible for a loss occasioned by an amendment to
its rules by this separate entity.  The judgment of the Labour Appeal

Court has subsequently been reported sub nom Yskor v Meyer [1995] 7
BLLR 28 (LAC).
[5] Meyer thereupon redirected his pursuit for compensation.  This
time, he availed himself of the statutory complaints procedure created by
Chapter V A (ss 30A-30X) of the Act by lodging a complaint against the
Fund in terms of s 30A.  On a basis to which I shall presently return, the
Adjudicator determined the dispute between the parties in favour of
Meyer.  He thereupon made an order which inter alia provided that:

‘(a)
The decision of the [Fund] not to grant enhanced early retirement
benefits to [Meyer] similar to those granted to other former members of
[the Fund], in terms of the amendment to rule 6.2 on 20 September
1993, is declared to be unfair discrimination and thus maladministration
of the fund by the fund as contemplated in paragraph (b) of the
definition of a complaint in section 1 of the Pension Funds Act of 1956.
(b)
The [Fund] is ordered to remove the effects of such discrimination by
placing [Meyer] in the position in which he would have been had he not
been the victim of the discrimination.’
The rest of the order was aimed at facilitating an agreement between the
parties on the amount of Meyer’s compensation and, failing such
agreement, at providing a mechanism for the determination of this
amount by the Adjudicator.  However, instead of implementing the latter
part of the order, the Fund brought an application in the Transvaal

Provincial Division in terms of s 30P of the Act for the setting aside of
paras (a) and (b) of the order.  The Court a quo granted the application
and set the Adjudicator’s order aside, but afforded Meyer leave to appeal
to this Court.
THE STATUTORY SETTING
[6] The Adjudicator’s powers to interfere with the Fund’s management
of its own affairs as well as the jurisdiction of the High Court to confirm
the Adjudicator’s determination or to set it aside are governed by the
provisions of Chapter V A of the Act.  This Chapter was introduced by
the Pension Fund Amendment Act 22 of 1996.  Although the latter Act
only came into operation on 19 April 1996, that is, as far as this matter is
concerned, long after the event, Chapter V A was expressly given
retrospective effect by s 30H.
[7] At the risk of stating the obvious, it must be borne in mind that,
since the office of the Adjudicator is a creature of statute, the Adjudicator
has no inherent jurisdiction.  His powers and functions are confined to
those conferred upon him by the provisions of Chapter V A.   For present
purposes, he is enjoined by these provisions  to determine ‘complaints’
as defined in s 1 of the Act.  The relevant part of the definition reads:

‘”complaint” means a complaint of a complainant [which includes a member or
former member of a fund] to the administration of a fund, the investment of its
funds or the interpretation and application of its rules, and alleging -
(a)
that a decision of the fund … purportedly taken in terms of the rules [of
the fund] was in excess of the powers of that fund … or an improper
exercise of its powers;
(b)
that the complainant has sustained or may sustain prejudice in
consequence of the maladministration of the fund …, whether by act or
omission; …’
[8] The High Court’s jurisdiction to entertain an appeal against a
determination by the Adjudicator is governed by the provisions of s 30P.
The relevant part of this section provides:

‘Access to court - (1)  Any party who feels aggrieved by a determination of
the Adjudicator may … apply to the division of the [High] Court which has
jurisdiction, for relief,  …
(2)
The division of the [High] Court contemplated in subsection (1) shall
have the power to consider the merits of the complaint in question, to take
evidence and to make any order it deems fit.’
As was explained by Trollip J in Tikly & Others v Johannes NO and
Others 1963 (2) SA 588 (T) 590F-591A, an appeal usually falls into one
of the following three categories:

‘(i)
an appeal in the wide sense, that is, a complete re-hearing of, and fresh
determination on the merits of the matter with or without additional
evidence or information …;
(ii)
an appeal in the ordinary strict sense, that is, a re-hearing on the merits
but limited to the evidence or information on which the decision under
appeal was given, and in which the only determination is whether that

decision was right or wrong …;
(iii)
a review, that is, a limited re-hearing with or without additional evidence
or information to determine, not whether the decision under appeal was
correct or not, but whether the arbiters had exercised their powers and
discretion honestly and properly …’

From the wording of s 30P(2) it is clear that the appeal to the High Court
contemplated is an appeal in the wide sense.  The High Court is
therefore not limited to a decision whether the Adjudicator’s
determination was right or wrong.  Neither is it confined to the evidence
or the grounds upon which the Adjudicator’s determination was based.
The Court can consider the matter afresh and make any order it deems
fit.  At the same time, however, the High Court’s jurisdiction is limited by
s 30P(2) to a consideration of ‘the merits of the complaint in question’.  The
dispute submitted to the High Court for adjudication must therefore still
be a ‘complaint’ as defined.  Moreover, it must be substantially the same
‘complaint’ as the one determined by the Adjudicator.  Since it is an
appeal, it follows that where, for example, a dispute of fact on the papers

is approached in accordance with the guidelines formulated by Corbett
JA in Plascon Evans Paints Ltd v Van Riebeeck Paints (Pty) Ltd 1984 (3)
SA 623 (A) 634E-635D, the complainant should be regarded as the
‘applicant’ throughout, despite the fact that it is the other side who is
formally the applicant to set the Adjudicator’s determination aside.  In
case of a ‘genuine dispute of fact’ on the papers as contemplated in
Plascon Evans, the matter must therefore, in essence, be decided on the
version presented by the other side unless that version can, in the words
of Corbett JA, be described as ‘so far-fetched and clearly untenable that the
court is justified in rejecting [it] merely on the papers’.
THE ADJUDICATOR’S DETERMINATION
[9] What runs through the Adjudicator’s reasons for his determination
like a golden thread, is his finding that, since the pension benefits
received by Meyer were substantially less than those afforded to other
members of the Fund who retired under the amended rule, he was

unfairly discriminated against.  This unfair discrimination, the Adjudicator
found, amounted to ‘maladministration’ of the Fund as contemplated in
para (b) of the definition of a ‘complaint’. A proper evaluation of the
Adjudicator’s reasons for his finding that Meyer was unfairly
discriminated against calls for a somewhat more detailed exposition of
the background facts.  During about 1983 Iscor started an extensive
rationalisation programme which resulted in its workforce being reduced
from 58 000 to about 38 000 over the next ten years.  As part of this
greater rationalisation scheme Iscor decided, in April 1993, to embark on
a new round of retrenchments which was to commence on 1 May 1993
and, it was envisaged, to terminate at the end of December that year.  By
agreement with the trade unions concerned, the 1993 rationalisation
programme started with a voluntary phase and then became a
compulsory one.  During the voluntary phase employees were invited to
accept ‘rationalisation’ or ‘termination’ packages.  Then followed the

compulsory phase during which retrenchment notices were served on
those employees who were regarded as supernumerary.  An employee
who received such notice and who was over the age of 50 years was
again afforded an option.  This time his choice was between taking early
retirement or being retrenched.
[10] From the minutes of the meetings between Iscor and the trade
unions it appears that at an early stage during the negotiations between
them there was some concern on the part of the unions that employees
who volunteered to accept termination packages during the initial phases
of the programme would be prejudiced if, through later negotiations,
there was an improvement in these packages.  Iscor responded to these
concerns by giving an express undertaking that any improvement of
rationalisation or retrenchment benefits negotiated with the unions at a
later stage would be implemented retrospectively and would therefore
apply to everyone whose employment was terminated during the course

of the 1993 rationalisation programme.  This promise by Iscor was
repeated, not only at its subsequent meetings with the unions, but also in
circulars distributed to its employees.
[11] During the first half of 1993 Meyer occupied a senior position in the
electrical section of Iscor’s drawing office at Pretoria.  He opted not to
accept early retirement during the voluntary phase.  During the
compulsory phase, however, he and six of his erstwhile colleagues were
informed that since their office was being closed down, they had become
supernumerary and their retrenchment inevitable.  Even though Meyer
was disappointed by the imminent termination of his employment,
staying was not an option.  He therefore took early retirement on 31 July
1993, being the date upon which he would in any event have been
retrenched.   As appears from what I have said before, Meyer’s pension
benefits were then calculated on the basis of rule 6.2 as it stood on the
date of his retirement, that is prior to its amendment on 20 September

1993.
[12] Probably as a result of the reduction formula of rule 6.2 in its
unamended form, Iscor’s employees clearly did not find early retirement
an attractive option.  Between 1 January 1993 and 30 September 1993
only 839 members of the Fund took early retirement.  They were in the
same position as Meyer in that their pension benefits were calculated on
the basis of the unamended rule 6.2.  Early in 1993 the trustees of the
Fund informed Iscor that the Fund enjoyed a considerable surplus.  At
the beginning of September 1993 Iscor suggested to the trustees that
this surplus might be utilised to promote the rationalisation scheme in
progress by creating a window of opportunity during which employees
who were prepared to take early retirement would receive additional
pension benefits.  The suggestion met with the approval of the trustees
with the result that the amendment to rule 6.2 was effected.  The
amendment plainly achieved its goal in that  2 843 Iscor employees were

persuaded to take early retirement during the first quarter of 1994.  Since
the amendment was aimed at this group they obviously received the
benefits for which it provided.
[13] For reasons that are less obvious the benefits of the rule were also
afforded to 173 Iscor employees who retired during the last quarter of
1993, despite the fact that the terms of the amended rule expressly
limited its range of application to those who retired during the first quarter
of 1994.  It appears that the trustees of the Fund simply acted beyond
the scope of their powers by extending the ambit of the amended rule to
this group.  Included in the latter group were three of Meyer’s erstwhile
colleagues who were employed in the mechanical section of the Pretoria
drawing office.  Like Meyer they were also notified during the compulsory
phase of the 1993 rationalisation programme that they were about to be
retrenched and like Meyer they also applied to take early retirement.
However, because they were required to wind down their section of the

office which took longer than the winding down of Meyer’s electrical
section, they only left Iscor during October 1993 as opposed to Meyer
who left  at the end of July 1993.  The fact that they were still employed
by Iscor during October 1993 while Meyer was not, was therefore purely
fortuitous.
[14] What seems to have grieved Meyer the most was the favourable
treatment afforded by the Fund to the employees of one of Iscor’s
subsidiaries, referred to in the papers as ‘Usko’.  It appears that the Usko
employees formerly belonged to their own separate pension fund which
was taken over by the Fund during January 1993 at a cost of over R40
million.  In the result, Meyer stated, these new members made no
contribution to the surplus in the Fund.  In fact, their membership caused
the surplus to be reduced.  Despite all this, Meyer complained, some of
these Usko members received the increased benefits of the amended
rule whereas he, who contributed to the surplus in the Fund for more

than thirty years, was excluded from them.
[15] The Adjudicator’s conclusion that Meyer was the victim of unfair
discrimination by the Fund was based on a comparison of his position
with that of other former members in three different categories.  First, the
group of 173, including Meyer’s three erstwhile colleagues, who left Iscor
prior to the end of 1993;  secondly, the members of the Usko Pension
Fund and lastly, the approximately 2 800 employees who retired from
Iscor’s  service during the first quarter of 1994.
[16] With regard to the group of 173 it appears that the Adjudicator had
failed to appreciate the significance of the consideration that this group
did in fact not qualify for the benefits of the amended rule.  Insofar as the
Fund conferred benefits upon them for which they did not qualify, the
Fund acted in breach of its own rules. This probably amounted to
‘maladministration’ of the Fund as contemplated by the definition of a
‘complaint’ in para (b) of s 1 of the Act.  However, Meyer’s case is not

that he suffered any loss as a result of payments to this group.  His
allegations therefore fall short of the second requirement of para (b),
namely that the complainant must have ‘sustained prejudice in consequence
of such maladministration’.  Furthermore, what Meyer’s objection amounted
to is that, although he did not qualify for the benefits of the amended rule,
he should still have received these benefits because they were afforded
to others who equally did not qualify.  Unlike the Adjudicator, I find this
argument untenable.  In terms of s 13 of the Act ‘the rules of a registered
fund shall be binding on the fund and the members … thereof, and on any person
who claims under the rules …’.  Consequently, Meyer could not claim
benefits for which he admittedly did not qualify in terms of the amended
rule 6.2.  Moreover, because the trustees were also bound to apply the
amended rule 6.2 in accordance with its terms,  they acted ultra vires
their powers when they bestowed the benefits of the amended rule on
the group of 173.  The fact that the Fund had acted in breach of its rule in

respect of some of its members does not mean that it can be compelled
to do so again.
[17] Insofar as the Adjudicator’s finding of discrimination against Meyer
is based on the benefits received by the members of the Usko Pension
Fund, the answer is in my view simple.  Whether or not the Usko
employees should have been allowed as members of the Fund with or
without making an additional contribution is not an issue in this case.
After they became members, they were entitled to all the benefits
provided for by the Fund’s rules, including those conferred by the
amended rule 6.2.  As far as payment of the increased benefits to this
group is concerned, Meyer’s objection is not that he was prejudiced by
such payment.  His objection is that he was discriminated against
because he did not receive the same payment.  However, the
preferential treatment received by these members resulted from the fact
that, in terms of the amended rule, they qualified for its benefits whereas

Meyer did not.  Since the trustees of the Fund were bound to apply the
amended rule strictly in accordance with its terms, differentiation which
resulted from the application of the rule cannot be described as unfair
discrimination.
[18] This leaves only the group of some 2 800 employees who retired
during the first quarter of 1994.  Inasmuch as the Adjudicator’s finding of
discrimination is based on the fact  that this group was preferred by the
Fund through the application of the amended rule, the answer, again,
seems to be that the Fund had no choice.  These employees qualified for
the benefits provided for by the amendment whereas Meyer did not.
Consequently, the Fund was neither entitled nor obliged to offer Meyer
the same benefits.  In short, to the extent that the Adjudicator’s finding of
discrimination against Meyer is founded on the application of the
amended rule, it cannot be justified.
MEYER’S ARGUMENT IN THIS COURT

[19] In this Court Meyer’s objection based on discrimination took a
somewhat different course.  In essence the focus of his objection shifted
from the way in which the amended rule was applied to the way in which
the amended rule was formulated.   More specifically, Meyer’s contention
in this Court was that the amendment to rule 6.2 should have been
formulated so as to include him and other former employees in his
position.  In its failure to adopt a rule broad enough to cover these former
employees, Meyer argued, the Fund committed a breach of its duty
towards them (a) by discriminating against them unfairly and (b) by
frustrating their legitimate expectations that were engendered by Iscor’s
promises to the effect that improved retrenchment benefits would be
implemented with retrospective effect.
[20] In developing these arguments Meyer conceded that the trustees
of the Fund enjoyed a wide discretion in matters of rule amendment
which entitled them to decide whether an amendment should be made

and to determine its content.  In view of the provisions of rule 12.8 of the
Fund’s rules this concession was rightly made.  Rule 12.8 states:
‘The Board of Trustees may, with the consent of Iscor Ltd, amend these rules
at any time provided that such amendments are not inconsistent with the
provisions of the Income Tax Act and the [Pension Fund] Act and are
approved by the Registrar and the Commissioner for Inland Revenue.’

[21] Meyer’s contention was, however, that this wide discretion afforded
by rule 12.8 was bounded by the rights vested in members, including
their right to be treated with impartiality, as well as by the members’
legitimate expectations engendered during the currency of their
membership.  As to the origin of these duties towards members on the
part of the Fund, Meyer’s proposition was twofold.  First, that these
duties arose from the fiduciary relationship between the members and
the Fund and, secondly, from the fact that the grounds for administrative
review had been impliedly incorporated into the contractual relationship
between the Fund and its members.
[22] The general proposition that the trustees of the Fund are under a

fiduciary duty to act in the best interest of the members, appears to be
supported by authority (see eg Tek Corporation Provident Fund and
Others v Lorentz 1999 (4) SA 884 (SCA) 898H-I).  I accept that the
trustees’ fiduciary duty towards its members includes a duty of
impartiality, that is, an obligation not to discriminate between members
unfairly.  It seems to me to be inherent in the proper exercise of any
discretion, that it should be done with impartiality.  The fact that the
decision under consideration was taken before the introduction of the
new constitutional dispensation is therefore of no consequence. On the
view that I hold on the ultimate validity of Meyer’s contentions in this
regard, I am prepared to assume, without deciding, that as a matter of
principle, a court is entitled to scrutinise the decisions taken by the
trustees in the exercise of their discretion under rule 12.8 on a basis
analogous to the review of administrative decisions, that is, in
accordance with the principles of natural justice (cf Turner v Jockey Club

of South Africa 1974 (3) SA 633 (A) 645H-646B; Lunt v University of
Cape Town and Another 1989 (2) SA 438 (C) and Edge and Others v
Pension Ombudsman and Another 1999 (4) All ER 546 (CA) 567d-569g).
[23] The Fund’s first answer to Meyer’s case based on the manner in
which the amendment to rule 6.2 was formulated, is that this objection
does not constitute a ‘complaint’ as contemplated by the definition of that
term in s 1 of the Act in that, even if the objection were valid, it could not
relate to ‘maladministration of the fund’ in terms of para (b) of the
definition.  Consequently, the objection cannot be entertained under the
provisions of the Act.  In support of this contention the Fund argued that
‘maladministration of the fund’ must be confined to the administration of
the Fund contrary to the provision of its rules and that it does not extend
to the sphere of rule amendments.  Though I am inclined to agree with
the meaning of the term ‘maladministration’ contended for by the Fund, I
find it unnecessary to come to any final conclusion on this issue since

Meyer’s objection falls within the ambit of para (a) of the definition of a
‘complaint’.  Paragraph (a) of the definition contemplates an objection
‘that a decision of the fund … purportedly taken in terms of the rules [of the Fund] …
was an improper exercise of [the Fund’s] powers’.  That would, in my view,
include Meyer’s objection that the way in which rule 6.2 was amended
amounted to an improper exercise of the Fund’s powers under rule 12.8.
[24] I now turn to consider the merits of Meyer’s objection that the
trustees exercised their discretion in formulating the rule unlawfully in
that it resulted in unfair discrimination against him and other former
members of the Fund.  In considering this objection it must be borne in
mind that when the decision to amend rule 6.2 was taken on 20
September 1993 Meyer had already retired and was no longer a member
of the Fund. At the time he no longer had any claim against the
members’ portion of the Fund or an interest in the members’ portion of
the surplus.  An amendment to the rules of a pension fund quite

frequently brings about an improvement in the position of existing
members.  Normally such improvement cannot be regarded as
discrimination against those members who have ceased to be members
prior to the amendment.  The question that therefore arises is why the
amendment to rule 6.2 should be regarded as being different from the
norm.  Meyer’s first answer to this question was that the circumstances
surrounding the amendment to rule 6.2 were peculiar in that retirements
which occurred both prior and subsequent to the amendment were all
part of a single rationalisation scheme.  In determining the validity of this
answer, it must be accepted that the idea to utilise the surplus in the
Fund as an incentive for Iscor’s employees to accept early retirement,
was raised with the trustees of the Fund for the first time at the beginning
of September 1993.  It follows that when the amendment was considered
by the trustees for the first time Meyer had already ceased to be a
member.  In these circumstances I do not believe that the trustees can

be criticised for taking the view that, like most other rule amendments
bestowing benefits on members, the amendment under consideration
need not be retrospective in its effect.  The fact that in this case the
former members ceased to be members as a result of the same
rationalisation scheme does not, in my view, detract from the validity of
the consideration that there are distinct differences between members
and former members and that differentiation between these two groups
does not in itself amount to unfair discrimination.
[25] The second reason advanced by Meyer for his contention that the
amendment to rule 6.2 should, unlike other rule amendments with
prospective effect, be regarded as discriminating against former
members, rested on the promise made by Iscor during the early stages
of
the
1993
retrenchment
programme,
namely
that
improved
retrenchment benefits would be implemented with retrospective effect.
As appears from what I have said earlier, Meyer’s contention in this

regard was not that the Fund was contractually bound to fulfil Iscor’s
promise, but that he was entitled to rely on the doctrine of legitimate
expectation recognised in administrative law.  At the end of his argument
in this Court, Meyer relied on the doctrine of legitimate expectation not
only to reinforce his objection based on unfair discrimination, but as the
mainstay of his whole case.   He was, however, immediately confronted
with the fundamental difficulty that, in administrative law, the doctrine of
legitimate expectation has traditionally been utilised as a vehicle to
introduce the requirements of procedural fairness and not as a basis to
compel a substantive result.  According to the traditional approach, it
matters not whether the expectation of a procedural benefit is induced by
a promise of the procedural benefit itself or by a promise that some
substantive benefit will be acquired or retained.  The expectation remains
a procedural one.  This appears clearly from the following statements by
Hoexter JA in Administrator, Transvaal, and Others v Zenzile and Others

1991 (1) SA 21 (A) 39E-I:
‘The nature, scope and limits of the doctrine of legitimate expectation are
explored in the judgment of this Court in Administrator, Transvaal, and Others
v Traub and Others [1989 (4) SA 731 (A)].   In Traub’s case this Court
accepted that, in certain circumstances, the dictates of fairness require that a
public body or a public official should afford a person a hearing before taking a
decision concerning him although the decision has no effect on such person’s
existing rights.
…
In regard to the doctrine of legitimate expectation Goldstone J in Mokoena’s
case [ie Mokoena and Others v Administrator, Transvaal 1988 (4) SA 912 (W)]
stated (at 918D) that, on his understanding of the position,
“ … the legitimate expectation refers to the rights sought to be taken away and
not the right to a hearing”.
(Emphasis supplied.)  In Traub’s case, however, in delivering the unanimous
judgment of the Court, Corbett CJ expressed (at 758F) the opposite view.
This Court [therefore affirmed] that the doctrine of legitimate expectation
relates to the right to a hearing rather than to the rights sought to be taken
away …’

[26] As appears from the aforegoing, Meyer does not claim any
procedural benefit.  On the basis of a legitimate expectation of a
substantive benefit, he claims that the promise that gave rise to the
substantive benefit should be fulfilled.  In answer to the difficulty raised
by the traditional limits of the legitimate expectation doctrine, as
formulated by this Court in Traub and Zenzile, Meyer sought support for

his claim based on the fulfilment of a substantive legitimate expectation
in the judgment of the Constitutional Court in Premier, Mpumalanga, and
Another v Executive Committee, Association of State-Aided Schools,
Eastern Transvaal 1999 (2) SA 91 (CC).  However, in my view the
judgment of O’Regan J in the Mpumalanga case decided no more than
that the attempt by the Provincial Government to terminate the payment
of bursaries, contrary to its earlier undertaking and without affording the
respondent’s members an opportunity to be heard, was in breach of their
right to procedural fairness under s 24(b) of the 1993 Constitution.  In
fact, O’Regan J makes it clear (in para 38 of her judgment at 108F-G)
that the
‘legitimate expectation that bursaries would continue to be paid subject to
reasonable notice meant that if the second applicant wished to terminate the
bursaries he could not do so unless he gave reasonable notice prior to
termination.  Once, however, he had given reasonable notice there would
have been no obligation to consult with the governing bodies or the schools
concerned.’

Accordingly, this judgment of the Constitutional Court went no further

than the judgments of this Court in acknowledging that a legitimate
expectation of fair procedure can be induced by a promise that a
substantive benefit will be acquired or retained.
[27] In an alternative argument, Meyer invited this Court to follow the
example of the recent developments in English law by extending the
doctrine of legitimate expectations so as to substantiate a claim for the
fulfilment of a promise or undertaking.  In this regard he relied, inter alia,
on the judgments of the Court of Appeal in R v North and East Devon
Health Authority, Ex parte Coughlan [2001] QB 213 (CA) and in R (Bibi)
v Newham London Borough Council [2002] 1 WLR 237 (CA).  These
judgments may be understood to constitute authority for the proposition
that in English law the doctrine of legitimate expectations has now
developed into a comprehensive code that embraces a spectrum of
administrative relief ranging from a claim for procedural fairness to a
claim for substantive relief.  (See also, eg, Karen Steyn, Substantive

Legitimate Expectations, [2001] JR 244.)  Despite these decisions, I
believe that we must decline Meyer’s invitation to follow them in this
case.  The question whether we should emulate the developments in
English law by incorporating, what has been described as the doctrine of
substantive legitimate expectation, into our law, is a difficult and complex
one.  Before simply transplanting a legal concept from one system of law
to another it is imperative to first examine the context in which that
concept originated and developed in its system of origin.  In deciding
whether to adopt the doctrine of substantive legitimate expectation as
part of our law, we will have to consider the possibility that the doctrine
was developed as a solution to problems arising from the rule in English
law that, generally speaking, an undertaking without valuable
consideration is not enforceable.  Since our law does not require
valuable consideration for the enforceability of an undertaking (see eg
Conradie v Rossouw 1919 AD 279 at 320, McCullogh v Fernwood

Estate, Ltd 1920 AD 204 at 206 and R H Christie, The Law of Contract,
4th ed at 7-12) the problem does not arise.  In England these
developments were initially accompanied by a fair amount of
controversy.  Not so long ago, it was described by the Court of Appeal
itself in R v Secretary of State for the Home Department, Ex parte
Hargreaves and Others [1997] 1 WLR 906 (CA) 921E as ‘heresy’
(though its status is now closer to doctrine).  However, the Australian
High Court found this extension of the doctrine of legitimate expectation
unacceptable (see eg Cameron Stewart,  Substantive Unfairness: A New
Species of Abuse of Power? (2000) 28 Fed. L. Rev. 617 at 634).  In
Canada the issue of substantive legitimate expectation was raised in the
Supreme Court in Mount Sinai Hospital Center v Quebec (Minister of
Health and Social Services) [2001] 2  S.C.R. 281.  The minority (Binnie J
with McLachlan CJ concurring) decided to follow the Australian and
South African approach (the latter with reference to the Traub case) and

confirmed that in Canada ‘the doctrine of legitimate expectation is limited
to procedural relief’ (see para 35 of the judgment).  The majority decided
the matter on a different basis.  (See also pronouncements to the same
effect by the Supreme Court of Canada in Reference Re Canada
Assistance Plan (BC) [1991] 2 S.C.R. 525 at 528 and 557.)
[28] Why I do not believe that this is the case in which this Court should
finally pronounce on the difficult question whether the English doctrine of
substantive relief should be grafted onto our legal system, is that Meyer
would, even on the acceptance of the doctrine as part of our law, not be
entitled to compel performance of the promise by Iscor that forms the
basis of his claim.  I say this for two reasons.  First, the promise relied
upon by Meyer, namely that improved retrenchment benefits would be
implemented with retrospective effect, was made by Iscor and not by the
Fund.  As to why the Fund would be liable to fulfil a promise made by a
separate entity, Meyer’s contention was that the majority of the trustees

of the Fund were appointed by Iscor;  that the trustees were, in any
event, all employed by Iscor;  that they were aware of Iscor’s undertaking
and that the main purpose of the amendment was to promote Iscor’s
interests.  It is obvious, however, that these factors were not sufficient to
render Iscor an agent of the Fund.  In fact Meyer quite rightly insisted, in
a somewhat different context, that the Fund should act independently
from Iscor.  According to the doctrine of substantive legitimate
expectations, as applied in English law, it appears to be a requirement
that the promise relied upon was made by someone with actual or
ostensible authority to make it on behalf of the authority that is sought to
be held liable (see R v Inland Revenue Commissioner, Ex parte Matrix-
Securities Ltd [1994] 1 WLR 334 (HL) and Cameron Stewart, op cit 626).
In any event, I can see no reason why someone who relies on a
substantive legitimate expectation should be in a stronger position than
one who seeks to enforce a contractual provision in his favour.

[29] The second reason why Meyer’s claim for specific performance of
Iscor’s promise cannot succeed is that, in my view, he has failed to
establish the contents of the promise upon which he relies.  It is not
denied by the Fund that Iscor made a promise at an early stage of its
1993 rationalisation programme that improved rationalised benefits
would be implemented retrospectively.  What is, however, denied by the
Fund is that the rationalisation benefits contemplated in the promise
included pension benefits.  Accordingly, the Fund denied that the
promise relied upon by Meyer had anything to do with the improvement
in pension benefits that were brought about by the amendment of rule
6.2.  This denial gave rise to a genuine or bona fide dispute of fact as
contemplated by Corbett JA in Plascon Evans Paints Ltd v Van Riebeeck
Paints (Pty) Ltd (supra) 634E-635C.  As I have already indicated, Meyer
must, for purposes of the Plascon Evans rule, be regarded as the
‘applicant’.  In accordance with the rule, the matter must therefore be

decided on the Fund’s version of the facts unless that version is, in the
words of Corbett JA, ‘so far-fetched or clearly untenable that the Court is justified
in rejecting it merely on the papers’.  Both parties found support for their
respective versions in the contents of various documents annexed to the
affidavits.  I find it unnecessary to repeat these references.  Suffice it to
say that, having regard to all these documents, I do not find the Fund’s
version ‘far-fetched’ or ‘untenable’ at all and that, therefore, the matter
must be decided on the facts presented by the Fund which, as I have
said, excludes the improved pension benefits of the amended rule from
the scope of Iscor’s promise that forms the whole basis of Meyer’s claim.
APPROPRIATE REMEDY
[30] Apart from the aforegoing, there is another overriding consideration
why the Adjudicator’s determination in favour of Meyer could not stand
and why it was rightly set aside by the Court a quo.  It will be
remembered that in terms of the order granted by the Adjudicator (see

para [5] above), the Fund is obliged to place Meyer, by way of
compensation, in the position that he would have been in if he had
qualified for the increased benefits of the amended rule.  We know,
however, that in terms of the amended rule, Meyer did not so qualify and
that the Fund cannot be compelled to do something not allowed by its
rules.  Meyer’s case is, in essence, that the trustees of the Fund should
have considered the terms of the amendment on the basis that he and
some 800 other former members of the Fund are to be included in the
advantaged group.  There is, however, no probability that if the
parameters of the advantaged group were to be determined on that
basis, the benefits conferred upon every individual member of the group
would remain the same.  On the contrary, the inherent probabilities
appear to indicate that if the number of members to be benefited were to
be increased from about 3 000 to about 3 800, the benefits acquired by
each member of the group would be substantially reduced.  In fact, it

appears from the evidence given by one of the Fund’s trustees during
the Labour Court proceedings that the decision on the parameters of the
group that would be entitled to the benefits of the amendment, was not a
straightforward matter.  Different alternatives were considered and each
alternative was submitted to the Fund’s actuary for his view on its impact
on the surplus in the Fund.  An example of an alternative so considered
by the trustees was to set the age of those eligible for the increased
benefits at 52 instead of 50.  If the latter alternative had been adopted,
Meyer would in any event have been excluded from the group.  The
problem is that one simply cannot determine what decision the trustees
of the Fund should have taken if they knew that the amendment should
be retroactive.  This problem goes to the heart of Meyer’s case.  What he
sought, in substance, was for the Fund’s decision regarding the
formulation of the amendment to be reviewed on administrative law
grounds.  If successful, he would have been entitled to an order (a)

setting the Fund’s decision aside and (b) referring the matter back to the
Fund for reconsideration of its decision on a proper basis.  That,
however, was not the order that Meyer wants.  What he wants was an
order (a) reformulating the amendment so as to extend its benefits to
every member, including himself, who retired during 1993 and (b)
compensating him on the basis of the properly amended rule.  The
fundamental difficulty with this request is that neither the Adjudicator nor
the Court was ever placed in a position to determine what the terms of
the amendment should have been if its benefits were to have been made
available to everyone who retired in 1993.  The problem is, of course,
exacerbated by the fact that even when the matter was considered by
the Adjudicator, but even more so now, the train has moved on.  In the
meantime, a substantial part of the surplus in the Fund had been paid
out to some 3 000 former members and nearly ten years had elapsed
during which period the fortunes of the Fund may well have changed

dramatically.  Accordingly - and leaving aside all the other difficulties in
Meyer’s case - neither the Adjudicator nor the Court was ever in the
position to grant Meyer the relief that he essentially sought.
Consequently the appeal cannot succeed and it is therefore not
necessary to consider the other arguments raised by the Fund.
[31] The only remaining issue relates to the costs of this appeal.
Normally these costs would not give rise to any issue since they would
simply follow the event.  However, it was urged upon us on Meyer’s
behalf that, after all the trials and tribulations he had gone through and
the costs that he had already incurred to remove, what he, quite
understandably, thought to be discrimination against him, he should not
be mulcted in further costs.  Although I am not without sympathy for
Meyer, I believe that it would be wrong to deprive the Fund, purely on the
basis of sympathy, of a costs order that it is entitled to.

[32] For these reasons the appeal is dismissed with costs, including the
costs of two counsel.

……………….
F D J BRAND
JUDGE OF APPEAL
Concur:

HARMS JA
CAMERON JA
NAVSA JA
JONES AJA