THE SUPREME COURT OF APPEAL
OF SOUTH AFRICA

MEDIA SUMMARY – JUDGMENT DELIVERED IN THE
SUPREME COURT OF APPEAL
MEDIA SUMMARY – JUDGMENT DELIVERED IN COURT OF
APPEAL
31 May 2018

STATUS: Immediate

Moor v Tongaat-Hulett Pension Fund (518/17)

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

1.
The Supreme Court of Appeal (the SCA) today dismissed an appeal against
an order of the Kwazulu-Natal Local Division of the High Court, Durban (the high
court), which had held that the apportionment and distribution of actuarial surplus in
the amount of R363.2 million to an employer surplus account in 2012 was lawful.
The second respondent, the Tongaat-Hulett Defined Benefit Pension Fund (the
Fund), made the surplus apportionment in terms of Rule 11.5.4.1 of its Rules. That
Rule formed part of rule amendment no 3 which was approved by the Registrar of
Pension Funds (the Registrar) on 13 December 2012.

2.
The surplus apportionment formed part of a composite conversion and
restructuring exercise (the scheme) by the Fund, approved by the Registrar in terms
of s 14 of the Pension Funds Act (the PFA) on August 2013. In terms of the scheme,
the Fund’s obligations to the appellants (former members of the Fund) and its other
pensioner members were outsourced to Old Mutual with effect from 1 April 2013. As
a result, the appellant’s membership of the Fund was terminated.

3.
Aggrieved by this and other apportionments, the appellants lodged complaints
with the Pension Funds Adjudicator (in terms of s 30A of the PFA. The adjudicator
dismissed the complaints. The appellants appealed against that dismissal to the high
court in terms of s 30 P(1) of the PFA, by way of an application. The high court
dismissed the application, but granted leave to appeal to the SCA.

4.
The crux of the appellants’ challenge was that Rule 11.5.4.1 did not comply
with s 15C(1) of the PFA, since it referred to ‘excess assets’ and not ‘actuarial

surplus’ as s 15C(1) did. They argued that the purported apportionment was
unlawful, since Rule 11.5.4.1 was not a rule as contemplated in s 15C(1). The SCA
identified the key question as being whether the 20% of the excess assets
apportioned to the employer surplus account was an apportionment as contemplated
in s 15C. In finding that the answer to this question is in the affirmative, the SCA
considered two related questions.

5.
First, the SCA held that it was undisputed on the facts that the sum of R363.2
million was in fact actuarial surplus. Secondly, it held that the rule is a rule
contemplated in s 15C(1). In answering that question as a matter of law, it held that
the narrow, technical interpretation advanced by the appellants would undermine the
purpose of the legislation.

6.
A further compelling consideration against the appellants’ contentions was the
fact that the rule amendment and the surplus apportionment were part of a
composite, comprehensive conversion and restructuring exercise. The appellants
could not cherry-pick and challenge a part of the scheme (the 2012 surplus
apportionment), while leaving the rest of the scheme intact.

7.
The SCA dismissed the appellants’ contentions that the board of the 2nd
respondent was conflicted, which gave rise to a reasonable apprehension of bias. It
held that to the extent that all the trustees of a pension fund are invariably also
members of that fund, there is an unavoidable structural conflict inherent in all funds.

8.
An application to lead further evidence on appeal with regard to costs was
dismissed, since the further evidence would not have materially affected the
outcome.

9.
Lastly, the SCA rejected a contention that the principle in Biowatch Trust v
Registrar, Genetic Resources and others 2009 (6) SA 232 (CC) regarding costs
should apply in this case. It held that this is not public interest litigation – it
concerned a dispute between a pension fund and two of its former members. That
emanated from a private relationship governed by a contract (the rules of the
pension fund). The appellants had throughout acted personally and not on behalf of
other pensioners or members. There was no basis for interfering in the high court’s
discretion with regard to costs.

10.
Both the appeal and application to lead further evidence were consequently
dismissed with costs, including the costs of two counsel.

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