Monama and Others v Sefalana Empoyee Benefit Organization and Another (317/2000) [2002] ZANWHC 17 (23 May 2002)

CA NO.317/2000

IN THE HIGH COURT OF SOUTH AFRICA

(BOPHUTHATSWANA PROVINCIAL DIVISION)

IN THE MATTER BETWEEN:

ABSOLOM PETER MONAMA & 33 OTHERS: APPLICANTS

AND

SEFALANA EMPLOYEE BENEFITS

ORGANISATION: 1ST

RESPONDENT

NBC EMPLOYEE BENEFIT (PTY) LTD : 2ND

RESPONDENT

FOR THE APPLICANTS:

MR KEKANA

FOR THE RESPONDENT: MS HARDY

REASONS TO BE HANDED DOWN: 23 MAY 2002

REASONS

FOR JUDGMENT

NKABINDE J:

Introduction:

[1] The applicants (thirty four in number) sought an order against the first and second respondents for the release of the contributions which each one of them made to the Sefalana Provident Fund in terms of the Bophuthatswana National Provident Fund Act 19 of 1979 (“the Act”), and costs. The first respondent is Sefalana Employee Benefit Organization (SEBO), a statutory body establish in terms of the Sefalana Employee Benefit Organization Act 37 of 1989. The second respondent is NBC Employee Benefit (Pty) Ltd, a company duly incorporated in terms of the law. It was common cause that the second respondent was, at all material times thereto, an administrator of the Sefalana Provident Fund. The second respondent opposed the application. Argument was addressed to the court and after hearing submissions by counsel I dismissed the application with costs and reserved reasons. The reasons now follow. The facts

[1] The applicants (thirty four in number) sought an order against the first and second respondents for the release of the contributions which each one of them made to the Sefalana Provident Fund in terms of the Bophuthatswana National Provident Fund Act 19 of 1979 (“the Act”), and costs. The first respondent is Sefalana Employee Benefit Organization (SEBO), a statutory body establish in terms of the Sefalana Employee Benefit Organization Act 37 of 1989. The second respondent is NBC Employee Benefit (Pty) Ltd, a company duly incorporated in terms of the law. It was common cause that the second respondent was, at all material times thereto, an administrator of the Sefalana Provident Fund. The second respondent opposed the application. Argument was addressed to the court and after hearing submissions by counsel I dismissed the application with costs and reserved reasons. The reasons now follow.

The facts

[2] The applicants were employees of the OK Bazaar. They were members and contributors to the Sefalana Provident Fund which is regulated by the Act. They applied, in their individual capacities, for the withdrawal of their benefits in cash from the Sefalana Provident Fund because they were also members and contributors to another pension fund scheme by the name of SACCAWU National Provident Fund (“SACCAWU Fund”). The applicants stated that before joining the SACCAWU Fund they were approached by one Mrs Olifant from OK Bazaars during 1994. She gave them forms to complete. One of the options reflected in the form related to the withdrawal of their benefits from SEBO. The applicants, on the advice by Mrs Olifant to the effect that they could not contribute to two provident funds at the same time, completed the forms with a view to withdraw their benefits from the Sefalana Provident Fund. The applicants’ case was that, having opted for option C as shown in the option forms below, they were entitled to the cash withdrawal of their benefits and that if the court found that they were not so entitled, then the second respondent should be estoppel from relying on the provisions of the Act. [3] The second respondent did not deny that the applicants were not entitled to contribute to two separate provident funds at the same time but contended, correctly in my view, that upon a

proper construction of section 54 (1) of the Act read with s. 13 of the Bophuthatswana National Provident Fund Amendment Act 26 of 1995 (“the Amendment Act”) the applicants were prohibited from applying for the withdrawal of their benefits in cash since they did not contribute to the alternative relevant fund established by their employer. The issues [4] The issues related- (1) the interpretation of the provisions of s. 54(1) of the Act as amended by s.13 of the amendment Act; and (2) whether the second respondent should, on the facts, be estopped from relying on the aforesaid statutory provisions. The option form [5] As I have indicated above the applicants relied, inter alia, on option C of the option form which read as follows: “OPTION FORM FOR MEMBERS OF THE

BOPHUTHATSWANA NATIONAL PROVIDENT FUND (SEBO) I (SURNAME

FULL NAMES

[2] The applicants were employees of the OK Bazaar. They were members and contributors to the Sefalana Provident Fund which is regulated by the Act. They applied, in their individual capacities, for the withdrawal of their benefits in cash from the Sefalana Provident Fund because they were also members and contributors to another pension fund scheme by the name of SACCAWU National Provident Fund (“SACCAWU Fund”). The applicants stated that before joining the SACCAWU Fund they were approached by one Mrs Olifant from OK Bazaars during 1994. She gave them forms to complete. One of the options reflected in the form related to the withdrawal of their benefits from SEBO. The applicants, on the advice by Mrs Olifant to the effect that they could not contribute to two provident funds at the same time, completed the forms with a view to withdraw their benefits from the Sefalana Provident Fund. The applicants’ case was that, having opted for option C as shown in the option forms below, they were entitled to the cash withdrawal of their benefits and that if the court found that they were not so entitled, then the second respondent should be estoppel from relying on the provisions of the Act.

[3] The second respondent did not deny that the applicants were not entitled to contribute to two separate provident funds at the same time but contended, correctly in my view, that upon a proper construction of section 54 (1) of the Act read with s. 13 of the Bophuthatswana National Provident Fund Amendment Act 26 of 1995 (“the Amendment Act”) the applicants were prohibited from applying for the withdrawal of their benefits in cash since they did not contribute to the alternative relevant fund established by their employer.

The issues

[4] The issues related-

(1) the interpretation of the provisions of s. 54(1) of the Act as amended by s.13 of the amendment Act; and

(2) whether the second respondent should, on the facts, be estopped from relying on the aforesaid statutory provisions.

The option form

[5] As I have indicated above the applicants relied, inter alia, on option C of the option form which read as follows:

“OPTION FORM FOR MEMBERS OF THE

BOPHUTHATSWANA NATIONAL PROVIDENT FUND (SEBO)

I (SURNAME

FULL NAMES

I wish to elect one of the following options relating to my monies in the Bophuthatswana Provident Fund (SEBO) (Please tick the applicable shaded block) A

To transfer all monies due to me to the Provident Fund as indicated on the reverse side of this option form

B

To transfer 50% of monies due to me to the Provident Fund as indicated on the reverse side of this option form and withdraw the remainder in cash.

C

To withdraw all monies due to me from the Bophuthatswana Provident Fund (SEBO)

D

To allow all my monies to remain in the Bophuthatswana Provident Fund (SEBO) Signed”. I must mention that no information relating to the reverse side of the option form was placed before this Court. The relevant statutory provisions [6] Section 54 (1) of the Act, as amended by section 13 of the Amendment Act read as follows:

I wish to elect one of the following options relating to my monies in the Bophuthatswana Provident Fund (SEBO)

(Please tick the applicable shaded block)

Signed”.

I must mention that no information relating to the reverse side of the option form was placed before this Court.

The relevant statutory provisions

[6] Section 54 (1) of the Act, as amended by section 13 of the Amendment Act read as follows:

“ 54. Method of payment of benefit. -(1) The Minister may, by notice in the Gazette, make regulation prescribing the extent to which and the conditions under which-

(a) a Member of the Fund may, on satisfying a condition for benefit under the Act, other than for emigration, exercise an irrevocable option to convert some or all of such benefit into an immediate or deferred annuity; (b) a registered employer may purchase an immediate or deferred annuity in respect of an employee, or former employee. (c) A Member, or his employer jointly with the Member, who is a contributor to an alternative retirement fund established by the employer, may apply for the withdrawal of that Member’s specified benefit in cash or transfer of that Member’s specified benefit to such alternative retirement fund.”. (My underlining for emphasis) Submissions by counsel [7] The question remained whether the applicants were entitled, under s. 54 (1)(c) above to apply for the withdrawal of their benefits in cash. Mr Kekana, on behalf of the applicants, vigorously contended that the applicants contributed to an alternative retirement fund, namely, SACCAWU Provident Fund. As to whether this fund was established by an employer as required in terms of the Act Mr Kekana submitted, albeit based on mere conjecture, that the SACCAWU Provident Fund was established by the OK Bazaars. Ms Hardy, on behalf of the respondents, submitted that the alternative retirement fund referred to by the applicants was a Union fund and not established by the employer, OK Bazaars. She submitted further that such a Union Fund is strictly not bound by the parameters of the Act. Interpretation

“ 54. Method of payment of benefit. -(1) The Minister may, by notice in the Gazette, make regulation prescribing the extent to which and the conditions under which-

(a) a Member of the Fund may, on satisfying a condition for benefit under the Act, other than for emigration, exercise an irrevocable option to convert some or all of such benefit into an immediate or deferred annuity;

(b) a registered employer may purchase an immediate or deferred annuity in respect of an employee, or former employee.

(c) A Member, or his employer jointly with the Member, who is a contributor to an alternative retirement fund established by the employer, may apply for the withdrawal of that Member’s specified benefit in cash or transfer of that Member’s specified benefit to such alternative retirement fund.”. (My underlining for emphasis)

Submissions by counsel

[7] The question remained whether the applicants were entitled, under s. 54 (1)(c) above to apply for the withdrawal of their benefits in cash. Mr Kekana, on behalf of the applicants, vigorously contended that the applicants contributed to an alternative retirement fund, namely, SACCAWU Provident Fund. As to whether this fund was established by an employer as required in terms of the Act Mr Kekana submitted, albeit based on mere conjecture, that the SACCAWU Provident Fund was established by the OK Bazaars. Ms Hardy, on behalf of the respondents, submitted that the alternative retirement fund referred to by the applicants was a Union fund and not established by the employer, OK Bazaars. She submitted further that such a Union Fund is strictly not bound by the parameters of the Act.

Interpretation

[8] It was important to closely look at the wording of the provisions in s.54 (1) above to ascertain what the legislature had in mind when enacting such provisions. It seemed to me, upon the reading of the wording of the Act as amended that the legislature’s intention was to ensure that benefits which accrued to the employees would be available to them when they reached a pensionable or old age (see for example s. 77 (1) of the Act). There are however certain circumstances, in terms of the Act as amended, under which benefits may be withdrawn. These circumstances are prescribed in terms of- (a) section 55 of the Act, when a Member qualifies by age; (b) section 56 of the Act, when a Member dies; (c) section 57 of the Act, when a member is disabled; (d) section 58 of the Act, when a member emigrates or is about to emigrate or has already emigrated and has no intention of returning; (e) section 58 A of the Act, as amended, when a member is unemployed; and (f) section 54 (1)(c) of the Act as amended, when a member is a contributor to an alternative retirement fund establish by the employer. (this is a section of the Act which was mainly a subject matter of this application).

[8] It was important to closely look at the wording of the provisions in s.54 (1) above to ascertain what the legislature had in mind when enacting such provisions. It seemed to me, upon the reading of the wording of the Act as amended that the legislature’s intention was to ensure that benefits which accrued to the employees would be available to them when they reached a pensionable or old age (see for example s. 77 (1) of the Act). There are however certain circumstances, in terms of the Act as amended, under which benefits may be withdrawn. These circumstances are prescribed in terms of-

(a) section 55 of the Act, when a Member qualifies by age;

(b) section 56 of the Act, when a Member dies;

(c) section 57 of the Act, when a member is disabled;

(d) section 58 of the Act, when a member emigrates or is about to emigrate or has already emigrated and has no intention of returning;

(e) section 58 A of the Act, as amended, when a member is unemployed; and

(f) section 54 (1)(c) of the Act as amended, when a member is a contributor to an alternative retirement fund establish by the employer. (this is a section of the Act which was mainly a subject matter of this application).

[9] It became clear to me, upon a purely linguistic treatment of the provisions in question and when adopting a construction which was more consonant with and was better calculated to give effect to the said legislative intention, that the applicants were not as yet entitled to the cash payouts of their benefits from the Fund as they failed to satisfy the prescribed statutory requirements, in particular, that the alleged alternative retirement fund was established by the employer, OK Bazaars. I must say that the submissions on behalf of the applicants in that regard were based purely on speculation and not facts. It followed therefore that the applicants did not qualify, not only under the provisions of s. 54 (1)(c) but also under the provisions of ss. 55,56,57,58 and 58A of the Act as amended. Estoppel [10] I now turn to the issue of estoppel. The applicants, as I have already indicated, raised the principle of estoppel, to the effect that the respondents represented by their conduct to the applicants that they could withdraw their benefit in cash. Mr Kekana submitted that Mrs Olifant, who gave them the option form referred to above, was an employee of OK Bazaars and had a connection with the respondents. Ms Hardy correctly submitted that the completion of the option form, per se, did not and could not have entitled the applicants to qualify under s. 54 (1)(c) even on a best case scenario. She further submitted that the respondents were in any event not bound by the impression created by Mrs Olifant who was not an agent of the respondent and that even assuming that she was an agent of the fund, that which she did was outside the law.

[9] It became clear to me, upon a purely linguistic treatment of the provisions in question and when adopting a construction which was more consonant with and was better calculated to give effect to the said legislative intention, that the applicants were not as yet entitled to the cash payouts of their benefits from the Fund as they failed to satisfy the prescribed statutory requirements, in particular, that the alleged alternative retirement fund was established by the employer, OK Bazaars. I must say that the submissions on behalf of the applicants in that regard were based purely on speculation and not facts. It followed therefore that the applicants did not qualify, not only under the provisions of s. 54 (1)(c) but also under the provisions of ss. 55,56,57,58 and 58A of the Act as amended.

Estoppel

[10] I now turn to the issue of estoppel. The applicants, as I have already indicated, raised the principle of estoppel, to the effect that the respondents represented by their conduct to the applicants that they could withdraw their benefit in cash. Mr Kekana submitted that Mrs Olifant, who gave them the option form referred to above, was an employee of OK Bazaars and had a connection with the respondents. Ms Hardy correctly submitted that the completion of the option form, per se, did not and could not have entitled the applicants to qualify under s. 54 (1)(c) even on a best case scenario. She further submitted that the respondents were in any event not bound by the impression created by Mrs Olifant who was not an agent of the respondent and that even assuming that she was an agent of the fund, that which she did was outside the law.

[11] The applicants were in effect acquiring rights under s. 54(1)(c) on the basis of estoppel. One of the requirements of the principle of estoppel is that the impression must be created by conduct of a party sought to be estopped. (See Road Accident Fund v Mothupi 2000 (4) SA 38 (SCA) at 53F. In the instant case, the representation was made by Mrs Olifant who did not have the necessary authority to make any such representation and was not even an employee or official of the respondents. The submissions by Mr Kekana to the effect that she had a connection with the respondents had no basis at all. If the applicants’ reliance on estoppel was upheld it would have meant that this Court bound the respondents to an act which was clearly ultra vires. The Court would by so doing, in effect, have accorded legal validity to an ultra vires act, which was legally untenable. (See Strydom v Die Land en Landboubank van SA 1972 (1) SA 801(A) at 815G-816B; Khani v Premier, Vrystaat, en andere 1999 (2) SA 863 (O) at 869B). The reliance on estoppel could, therefore, also not succeed. In the result the application was dismissed with costs. B.E. NKABINDE

JUDGE OF THE HIGH COURT ATTORNEYS FOR THE APPLICANTS : RICHIE THAGA &

PARTNERS

ATTORNEYS FOR THE RESPONDENTS : ANDRE MULLIGAN

[11] The applicants were in effect acquiring rights under s. 54(1)(c) on the basis of estoppel. One of the requirements of the principle of estoppel is that the impression must be created by conduct of a party sought to be estopped. (See Road Accident Fund v Mothupi 2000 (4) SA 38 (SCA) at 53F. In the instant case, the representation was made by Mrs Olifant who did not have the necessary authority to make any such representation and was not even an employee or official of the respondents. The submissions by Mr Kekana to the effect that she had a connection with the respondents had no basis at all. If the applicants’ reliance on estoppel was upheld it would have meant that this Court bound the respondents to an act which was clearly ultra vires. The Court would by so doing, in effect, have accorded legal validity to an ultra vires act, which was legally untenable. (See Strydom v Die Land en Landboubank van SA 1972 (1) SA 801(A) at 815G-816B; Khani v Premier, Vrystaat, en andere 1999 (2) SA 863 (O) at 869B). The reliance on estoppel could, therefore, also not succeed.

In the result the application was dismissed with costs.

B.E. NKABINDE

JUDGE OF THE HIGH COURT

ATTORNEYS FOR THE APPLICANTS : RICHIE THAGA &

PARTNERS

ATTORNEYS FOR THE RESPONDENTS : ANDRE MULLIGAN