Natal Joint Municipal Pension Fund v Endumeni Municipality (6010/2008) [2010] ZAKZPHC 63 (23 September 2010)

IN THE KWAZULU-NATAL HIGH COURT, PIETERMARITZBURG

REPUBLIC OF SOUTH

AFRICA

CASE NO. 6010/2008

In the matter between:

NATAL JOINT MUNICIPAL PENSION FUND …...............PLAINTIFF

and

ENDUMENI MUNICIPALITY …...........................................RESPONDENT

JUDGMENT Delivered on 23 September 2010

SWAIN J

[1] At the heart of the present dispute lie competing interpretations of the provisions of the second proviso to a definition of the term “pensionable emoluments”, contained in the Regulations governing the plaintiff, which is a body administering three different pension funds, which provide pension benefits for municipal employees in KwaZulu-Natal.

[2] The funds administered by the plaintiff are the Natal Joint Municipal Provident Fund, the Natal Joint Municipal Retirement Fund and the Natal Joint Municipal Superannuation Fund.

[3] The defendant is a municipality and by virtue of its employment of municipal employees, is a participating employer in the Superannuation Fund, as well as the Provident Fund.

[4] The claim advanced by the plaintiff is for payment of the sum of R2,573,740.00, together with interest, by the defendant and is based upon the second proviso to the definition of “pensionable emoluments” contained in Regulation 1 (xxi) (h) which reads as follows:

“(h) any other allowance not herein specified: ……..provided further that should at any time the pensionable emoluments of a member including a section 57 contract employee, increase in excess of that assumed by the actuary from time to time for valuation purposes in terms of Regulation 13, then the committee on the advice of the actuary, may direct that the local authority employing such member pay an adjusted contribution in terms of Regulation 21 to the Fund”.

[5] In order to understand the competing interpretations placed upon this provision by the parties, it is necessary to briefly set out the factual background from which the present claim arises, and which are common cause.

[5.1] Mr. Els gave evidence that he had acted as actuary for the plaintiff and advised the Fund on all factors affecting the stability of the Fund, in order to ensure that there were sufficient funds to cover its liabilities.

[5.2] In order to carry out this function the Fund was valued on an annual basis, as well as a tri-annual basis, the latter valuation being a requirement of the Pension Funds Act No. 24 of 1956 (the Act). The annual valuation, carried out in terms of Regulation 13, has as one of its objectives, the determination of whether there is a deficit in the Fund. In terms of Regulation 13 (3) municipalities are obliged to “make good the deficit”. A way in which such a deficit may be rectified is by way of a surcharge imposed upon all participating municipalities.

[5.3] A source of income for the Fund is by way of contributions by members, as well as contributions by local authorities who employ such members, as provided for in Regulations 19, 20 and 21. In terms of Regulation 19 (1) a member is obliged to contribute to the Fund an amount of nine and a quarter per cent of his “pensionable emolument”. Regulation 20 (1) provides for the manner in which such contribution is to be paid to the Fund and specifies that it is to be paid as a first charge upon the salary or wages, payable to the member. It is to be deducted monthly, or at shorter intervals, by the local authority concerned and paid to the Fund.

[5.4] Regulation 21 provides for the contributions to be made by the local authority and specifies that it shall pay to the Fund within seven days after the expiration of the period, in respect of which the contribution is being paid, the contributions and interest paid by the members, in the preceding calendar month. In addition, the local authority is obliged to pay an amount equal to a specified proportion of the contributions paid by members in its service, as provided for in Regulation 19 (1).

[5.5] Simply put, within seven days of the end of the month, the local authority is obliged to pay to the Fund the contribution payable by members employed by it, as well as the contribution it is obliged to pay in respect of such members.

[5.6] An exception to the manner in which the local authority is obliged to make payment of its contribution to the Fund, is found in the proviso to Regulation 21 (1) which states:

“Provided that if the member is paying by instalments, the local authority may make a lump sum payment to the Fund in lieu of its instalments and interest”.

[5.7] If the assumptions made by the actuary in carrying out the valuation referred to above, in respect of salary increases are exceeded, then additional income has to be obtained by the Fund, to provide for such excess. This is because the liabilities of the Fund increase with an increase in salaries.

[5.8] The reference in the contested Regulation to a so-called “Section 57 contract employee” is a reference to a specific category of municipal employee, who is entitled in terms of his contract of employment to vary the amount of his “pensionable emolument”.

[5.9] One J. B. Maltman was an employee of the defendant and joined the Superannuation Fund on 01 February 1990, at which stage his pensionable salary was R2,809.00 per month. By 01 July 1997 his pensionable salary had increased to R7,926.42 per month when he transferred to the Provident Fund. He then concluded a new contract of employment with the defendant, in terms of which he was entitled to determine what his pensionable salary would be. As at 01 July 2005 his employment package was structured by him, such that his pensionable salary was R5,000.00 per month. On 01 July 2005 he transferred to the Superannuation Fund and by virtue of his pensionable salary and in terms of the Rules of the Fund, he was credited with pensionable service in the Superannuation Fund of forty five years and eleven days, although he was forty three years old at the time. On the same day he re-structured his employment package, so that his pensionable emoluments were R34,000.00 per month. On 30 June 2006 he withdraw from membership of the Fund. By mutual agreement between Maltman and the defendant, his employment agreement was terminated on 30 June 2006 to allow him to claim the benefits on his resignation. A new employment contract was then concluded immediately and took up where the previous contract had ended.

[5.10] It is common cause that the conduct of Maltman at all times legitimately fell within the Rules of the Fund. In essence, Maltman was able to arrange his affairs within the provisions of the Rules of the Fund, to substantially increase the pay-out due to him when he withdrew from membership of the Fund. Simply put, he achieved this by reducing his pensionable emoluments whilst a member of the Superannuation Fund, to provide for a much greater credit for pensionable service in the Provident Fund. By thereafter increasing his pensionable emolument, when taken together with his pensionable service in the Provident Fund, the result was a greater pay-out.

[6] The plaintiff contends that it is entitled to payment of the amount claimed on the following grounds:

[6.1] The pensionable emoluments of Maltman had increased in July by five hundred and eighty percent from R5,000.00 to R34,000.00.

[6.2] This increase was in excess of what Mr. Els, as actuary and valuator had assumed such an increase would be, in his actuarial valuation for purposes of Regulation 13.

[6.3] Such excess resulted in an increased liability of the Fund to Maltman.

[6.4] The Committee of Management of the Fund, acting on the advice of Mr. Els, directed the defendant to pay this amount to the plaintiff.

[6.5] The plaintiff contends that this amount qualified as an “adjusted contribution” within the meaning of that phrase, as contained in the second proviso to Regulation 1 (xxi) (h).

[7] The defences of the defendant to this claim, which found expression in an agreed list of issues to be determined by me, are as follows:

7.1 Was the process in terms of the last proviso to Regulation 1 (xxi) (h) followed, including whether Mr. Els or his firm was an “actuary”?

7.2 Did the fact that the member, Mr. Maltman, cease to be a member of the Superannuation Fund on 30 June 2006, preclude the plaintiff from thereafter relying on the proviso to claim a contribution?

Did the plaintiff validly direct the payment of the entire amount necessary to remedy the effect of the “excessive” salary to be paid in one lump sum or was a claim for monthly contributions only, permitted?

Are the regulations, including the 2004 amendment to include the last proviso, valid since they have not been approved by the Registrar of Pension Funds?

Inasmuch as the proviso makes reference to a payment of an adjusted contribution ”in terms of Regulation 21”, and Regulation 21 does not specifically make reference to an adjusted contribution, is an adjusted contribution claimable at all under the proviso?”

[8] It is agreed between the parties that if I accept the plaintiff’s interpretation of the Regulation in question and decide the above issues in the plaintiff’s favour, then the actuary’s calculations are correct and the amount to which the plaintiff is entitled is the amount claimed.

[9] It is apparent to me that the issues defined in paragraphs 7.2, 7.3 and 7.5 above, go to the heart of the matter and require for their resolution a determination of the competing interpretations, placed upon Regulation 1 (xxi) (h) by the parties.

[10] A cornerstone of the argument advanced by Mr. Kemp S C, who together with Mr. Gani appeared for the plaintiff, was that in interpreting the Regulation it was permissible to have regard to the “mischief” that it sought to ameliorate and the remedy provided to achieve that objective. In order to ascertain the “mischief” that the Regulation was aimed at, it was possible to have regard to background material, to illustrate why the second proviso to the Regulation was introduced

Minister of Health v New Clicks S A (Pty) Ltd. & others

2006 (2) SA 311 (CC) at paras 200 and 201

[11] It is trite that the general rule is that the words of a statute must be given their ordinary grammatical meaning, unless to do so “would lead to absurdity so glaring it could never have been contemplated by the Legislature, or where it would lead to a result contrary to the intention of the Legislature, as shown by the context or by such other considerations as the Court is justified in taking into account”

Summit Industrial Corporation v Jade Transporter

1987 (2) SA 583 (A) at 596 G

quoting

Venter v R 1907 TS 910 at 915

[12] It was pointed out by Corbett J A in Summit Industrial Corporation at 596 J – 597 B that it was dangerous to speculate on the intention of the Legislature and a court should be cautious about departing from the literal meaning of the words of a statute. It should only do so where the contrary legislative intent is clear and indubitable. It was not the function of the Court to supplement a statutory provision in order to provide for a casus omissus.

[13] Of significance in this regard is the following dictum of Schreiner J A in

Jaga v Dönges & another, Bhana v Dönges N.O. & another

1950 (4) SA 653 (A) at 662 G – 663 A

“Certainly no less important than the oft repeated statement that the words and expressions used in a statute must be interpreted according to their ordinary meaning is the statement that they must be interpreted in the light of their context. But it may be useful to stress two points in relation to the application of this principle. The first is that ‘the context’, as here used, is not limited to the language of the rest of the statute regarded as throwing light of a dictionary kind on the part to be interpreted. Often of more importance is the matter of the statute, its apparent scope and purpose and, within limits, its background. The second point is that the approach to the work of interpreting may be along either of two lines. Either one may split the inquiry into two parts and concentrate, in the first instance, on finding out whether the language to be interpreted has or appears to have one clear ordinary meaning, confining a consideration of the context only to cases where the language appears to admit of more than one meaning; or one may from the beginning consider the context and the language to be interpreted together”.

As to the application of these principles Rabie C J had the following to say in

University of Cape Town v Cape Bar Council

1986 (4) SA 903 (A) at 914 D

“I am of the opinion that the words of Section 3 (2) of the Act, clear and unambiguous as they may appear to be on the face thereof, should be read in the light of the subject-matter with which they are concerned, and that it is only when that is done that one can arrive at the true intention of the Legislature.

[14] It seems clear in the light of the facts set out above, which are common cause, that the purpose in enacting the second proviso to Regulation 1 (xxi) (h), was to enable the Fund to recover “an adjusted contribution” from a local authority, when the pensionable emolument of a member, employed by that local authority, has increased in excess of that assumed by the actuary for valuation purposes. In other words, the proviso was intended to cater for excessive salary increases paid to its employees, by a particular local authority.

[15] A court must interpret the words in issue according to their ordinary meaning in the context of the Regulations as a whole, as well as background material, which reveals the purpose of the Regulation, in order to arrive at the true intention of the draftsman of the Rules.

[16] The meaning of “an adjusted contribution” must be examined in the context of Regulation 21, to which express reference is made in the second proviso to the Regulation in question. Regulation 21 is headed “Contributions by a local authority” and provides that: “A local authority shall pay to the Fund, within seven days after the expiration of the period in respect of which the contribution is being paid:

the contributions and interest paid by the members in the preceding calendar month

an amount equal to the following proportion of the contributions paid in terms of Regulation 19 (1) by the members in its service:…….”.

[17] Regulation 20 which is headed

“How contributions by members are to be paid”

provides for the deduction of such contributions by members, from salary or wages payable to such members, “monthly or at shorter intervals by the local authority concerned and paid to the Fund”.

[18] It is quite clear that the contributions payable by members and a local authority, are to be made periodically at defined monthly intervals (or at shorter intervals) in the future. The only exception to this defined mode of payment of contributions, is contained in the proviso to Regulation 21 (1) (d), which allows the local authority, where the member is paying by instalments “to make a lump sum payment to the Fund in lieu of its instalments and interest”. What is clearly envisaged is a lump sum payment by the local authority, in advance of its obligation to pay contributions to the Fund, by way of monthly instalments. The payment is to be made “in lieu” of its instalments and interest and consequently it is a lump sum payment “instead” of such instalments.

[19] The discretion whether to make a “lump sum payment”, resides exclusively with the local authority and may not be demanded by the Fund. In addition, it is clear that what are referred to as “contributions” in the Regulations, are described as “instalments” in this context, as contrasted with the “payment” of such “lump sum”.

[20] An “adjusted contribution” in the context of Regulation 21, can consequently only mean a periodical payment, which is “arranged” in order to “harmonize” the shortfall in the assets of the Fund, caused by the event contemplated by the Regulation in question.

See definition of “adjust” – Shorter Oxford English Dictionary

[21] The argument that the term “an adjusted contribution” means a lump sum payment, which may be demanded by the Fund, ignores the clear wording of Regulation 21, as well as the express proviso to Regulation 21 (1) (d), which accords to the local authority the sole discretion to make payment by way of a “lump sum”, in lieu of instalments.

[22] In addition, it must be borne in mind that the proviso in question, appears simply as part of the definition in the Regulations of “pensionable emoluments”, whereas Regulation 21 provides for the substantive obligation of local authorities to make payment of contributions. The definition of “pensionable emoluments” in Regulation 1 (xxi) is as follows:

“means, subject to the provisions of these Regulations, the emoluments on which contributions shall be paid….”

What then follows is a list of what are included as “pensionable emoluments”. Because what is contained in the definition as “emoluments on which contributions shall be paid” is subject to the provisions of the Regulations, what is contained therein is “dependent upon a certain correcting or modifying condition” which are the conditions contained in Regulation 21, concerning the payment of contributions by a local authority.

See definition of “subject to” – The Shorter Oxford English Dictionary

[23] No provision is made in Regulation 21 for an “adjusted contribution” and consequently any variation in the contributions to be paid by a local authority, must be in accordance with the process envisaged by Regulation 21, i.e. periodical instalments in the future. In addition, once it is accepted that what is meant by “an adjusted contribution” is an increased monthly contribution and not the payment of a lump sum, then it is clear that the phrase “employing such member” requires that the individual concerned, must remain an employee of the local authority. This is so because the liability of the local authority to pay such “an adjusted contribution”, is dependent upon the individual concerned being a member “in its service” in terms of Regulation 21 (1) (b). This interpretation is supported by the definition of “member” in the Act which provides, in part, as follows:

“…but does not include any such member or former member or person who has received all the benefits which may be due to him from the Fund and whose membership has thereafter been terminated in accordance with the Rules of the Fund”

[24] Consequently, in my view, the ordinary meaning of the words in the second proviso to Regulation 1 (xxi) (h), in the context of the Regulations as a whole, by specific reference to Regulation 21, leads to the conclusion that it was not the intention of the draftsman of the Regulations, to enable the Fund to recover the entire amount necessary to remedy the effect of the “excessive” salary, by payment of one lump sum and only a claim for monthly contributions by the local authority was permitted. In addition, the fact that Mr. Maltman ceased to be a member of the Superannuation Fund on 30 June 2006, precluded the plaintiff from thereafter relying on the proviso, to claim a contribution. Consequently, in accordance with the first approach postulated in Dönges N.O. it becomes unnecessary to consider the background to the passing of the proviso, as well as its purpose. However, in the light of the second approach postulated in Dönges N.O., as well as the approach in University of Cape Town,

although the provisions are in my view clear and unambiguous, they should nevertheless be read in the context of the subject matter they are concerned with, as well as the surrounding circumstances existing when the proviso was passed, and more specifically the mischief they were aimed at remedying.

[25] The argument of Mr. Kemp S C in this regard was that the conclusion I have arrived at separates the mischief and the remedy, where this was not intended. In other words, the mischief which is an imbalance between salary benefits and contributions paid, is to be remedied by increased future contributions, and not by a payment to a present liability, the benefit of which has been secured by the member. He submits that it is closing the proverbial door after the horse has bolted and not a proper or effective remedy to combat the mischief of the Fund going into the red. In addition, it does not combat the mischief of an unequal distribution of the burden to correct it, because if the individual is no longer a member of the Fund, the deficit will possibly have to be made up by way of a surcharge on all local authorities, and not just an adjusted contribution by the local authority responsible. He submits that this could never have been intended. The mischief in Maltman’s case had been done when he resigned, because the past contributions of the defendant were inadequate to cover that “mischief”. The proviso seeks to provide a remedy for such a situation and to interpret the proviso in the manner I have done, would defeat the objective contained in the proviso.

[26] The warning of Corbett J A in Summit Industrial Corporation, that it is not the function of the Court to supplement a statutory provision in order to provide for a casus omissus is, in my view, of particular relevance on the facts of this case.

As stated by du Plessis, writing in

The Law of South Africa, Vol 25 Part 1 para 346 (b)

“Where there is a casus omissus in the formulated text and that it, given its purpose and scope does not cater for a situation or an eventuality it can be expected to provide for, the courts have consistently refused to fill the gap”.

[27] It is clear that the purpose and scope of the proviso in question, and the mischief it was intended to remedy, was the recovery by plaintiff of any shortfall caused by a local authority, by way of excessive salary increases granted to its employees. The casus omissus however was that it failed to provide for the situation where the individual concerned ceased to be a member of the Fund, after receiving his benefits. By providing for the recovery of such a shortfall from the “the local authority employing such members” by way of “an adjusted contribution in terms of Regulation 21”, any such recovery was predicated upon the individual concerned continuing to be a member of the Fund, and continuing to be employed by the local authority in accordance with the employment contract, which gave rise to an increase in the pensionable emoluments “in excess of that assumed by the actuary”.

[28] If Maltman had continued to be a member of the Fund, in the employment of the defendant, in terms of the contract of employment which gave rise to the increase in excess of the assumptions of the actuary, the plaintiff would have been entitled to recover the excess by way of adjusted contributions, payable by the defendant, in an amount and for a time, specified by the committee acting on the advice of the actuary.

[29] I therefore disagree that a consideration of the mischief that the proviso was sought to remedy, requires that a different meaning be ascribed to it, other than that which I have placed upon it. To ascribe the meaning to it contended for by Mr. Kemp S C would, in my view, constitute an attempt to cater for a situation or eventuality, which it could have been expected to cater for, but did not.

[30] Simply put, the so-called “mischief rule” which is nothing more, nor less, than an aid to interpreting a statute, cannot be used as a means to cater for a situation or eventuality that the legislation was intended to provide for, when it is clear on the wording of the statute that it does not do so, and the failure so to provide, is simply a casus omissus, on the part of the legislature.

[31] Mr. Kemp S C also called in aid of his interpretation of the proviso in question, the presumption of statutory interpretation that statute law is presumed not to be unjust, inequitable or unreasonable. Because the purpose behind the proviso was to ensure that the local authorities who were not responsible for excessive salary increases, were not obliged to foot the bill for those local authorities who were, a contrary interpretation, so the argument went, would have as its consequence, an unjust, inequitable or unreasonable result. The answer of Mr. Pillemer S C who, together with Mr. Blomkamp, appeared for the defendant, was that the plaintiff was responsible for drafting the Rules and it ill-behoved the plaintiff to seek refuge in such a presumption, to justify its failure to clearly provide for the present factual situation. He also argued that this was not a case where the defendant had increased Maltman’s salary, but one where Maltman was entitled in terms of his contract of employment, to vary his pensionable emolument. Be that as it may, on the present facts an application of the presumption would only be justified where more than one interpretation of the proviso was possible. In such a case, the most just and equitable interpretation is to be preferred.

Law of South Africa Vol 25 Part 1 para 322

For the reasons set out above, in my view, an interpretation of the proviso in the manner contended for by the plaintiff, is not possible. Consequently, the presumption is not applicable in the present case.

[32] This conclusion renders it strictly unnecessary for me to consider the remaining issues, but I will do so for the sake of completeness.

[33] Turning to the issue set out in para 7.1 supra. This requires a consideration of the following issues:

[33.1] Whether Mr. Els was an “actuary” within the meaning of the definition contained in the Regulations of the plaintiff, for the period 2005 to 2007 for the purposes of the proviso and Regulation 13.

[33.2] Whether the change in Maltman’s pensionable emoluments from when he was a member of the Provident Fund, to when he was a member of the Superannuation Fund, qualified as an “increase in excess of that assumed by the actuary” for the purposes of the proviso.

[33.3] Whether the plaintiff, in seeking to recover the amount in question from the defendant, followed the process required of it in terms of the proviso.

[34] As regards the issue of whether Mr. Els was an “actuary” within the definition contained in the Regulations. The definition provides as follows:

“actuary means a Fellow of an institute, faculty, society or chapter approved by the Minister and appointed by the committee”.

“Minister” is defined in the regulations as “the Member of the Executive Council for the Province of KwaZulu-Natal responsible for local government and housing”.

[35] It is common cause that Mr. Els has never been formally approved as an actuary by the M E C concerned. The issue is whether this is necessary. In my view it is not, for the reason that the approval required relates to the body to which the actuary belongs, and not to the individual. The nature of the approval required, also determines the identity of the Minister, who is required to give such approval, whether the Minister of Finance in terms of the Act, or the M E C in terms of the Regulations. The necessary approval of the Minister was contained in the definition of actuary in the Act, before it was amended by Act No. 22 of 2008. The provisions of the Act are applicable to the plaintiff, by virtue of the provisions of Section 2 (1) of the Act.

[36] In any event, I agree with the submission of Mr. Kemp S C, that what is being challenged by the defendant is the validity of the directive by the plaintiff to pay in terms of the proviso, on the basis that the M E C has failed to perform an administrative act, being the approval of Mr. Els, as an actuary for the purposes of the Regulations. I have a discretion which is the “indispensable moderating tool” in administrative law “for avoiding or minimising injustice when legality and certainty collide”.

Oudekraal Estates (Pty) Ltd. v City of Cape Town & others

2004 (6) SA 222 (SCA) at para 36

[37] When regard is had to the results of finding that the actuary, in the form of Mr. Els, was not validly appointed, the consequences for the plaintiff in regard to the pension funds it administers for the benefit of many individuals, would be immense. The need for certainty and the consequences for the public at large, leave me in no doubt that I should not exercise my discretion in favour of the defendant in this regard.

Oudekraal para 46

[38] Turning to the issue of whether the change in Maltman’s pensionable emoluments from R5,000.00 per month, when he was a member of the Provident Fund, to R34,000.00 per month when he was a member of the Superannuation Fund, qualified as an “increase in excess of that assumed by the actuary” for the purposes of the proviso.

[39] The argument of Mr. Pillemer S C was that the actuary had found that Maltman’s salary had increased by five hundred and twenty eight per cent by comparing his salary of R5,000.00, as at 01 April 2005 with his salary of R34,000.00, as at 31 March 2006. However, so the argument went, Maltman was not a member of the Superannuation Fund on 01 April 2005, as he only joined this Fund on 01 July 2005. When Maltman joined the Superannuation Fund on 01 July 2005 his salary was recorded as R34,000.00 in the records of the Fund. Consequently, if the actuary, notionally, upon Maltman joining the Superannuation Fund on 01 July 2005, were to make an assumption as to any future increases in his salary, this would have to have as its starting point his salary of R34,000.00. Because his salary remained at R34,000.00 until he left the Superannuation Fund, any assumption made by the actuary could not be exceeded.

[40] Although at first glance, such an argument may appear attractive, it ignores the reality of the situation and the provisions of Regulation 16, which deals with the admission of members to the Superannuation Fund and contributions to such Fund. Regulations 16 (10) (b) and (c) provides as follows:

“(10) If a person becomes a member on transfer from the Retirement Fund or the Provident Fund, in terms of subregulation (5), the following conditions shall apply:

(a) ………

His contributions to the Retirement Fund or the Provident Fund, as the case may be, shall be included in his contributions to the Fund.

For the purpose of calculating his final average emoluments, his pensionable emoluments and continuous service in the Retirement Fund or Provident Fund, as the case may be, shall be included in his pensionable emoluments and continuous service in the Fund”

[41] It is clear therefore that Maltman’s “contributions” to the Provident Fund and “pensionable emoluments” in the Provident Fund formed the basis for the benefits he received when he resigned from the Superannuation Fund. Indeed, his final average emoluments were also based in part upon his contributions to the Provident Fund. In my view, to draw the distinction advocated by Mr. Pillemer S C, would be artificial and contrary to the realities of the situation.

[42] Turning now to the argument that the plaintiff failed to follow the process required of it in terms of the proviso, in seeking to recover from the defendant.

[43] The argument advanced by Mr. Pillemer S C in this regard was as follows:

[43.1] The actuary must have made an assumption at the time of the valuation, as to the future increases in the pensionable emoluments of Maltman, in the Superannuation Fund.

[43.2] The pensionable emoluments of Maltman must have increased in excess of the future rate of growth assumed by the actuary.

[43.3] The actuary must advise the committee of the fact that this has occurred.

[43.4] The committee must consider the advice of the actuary and must have acted upon it, by applying its mind to the matter and deciding whether to direct the employer to pay an adjusted contribution, in respect of that member.

[43.5] If the committee decides to direct that an adjusted contribution be paid, it must request the actuary to determine what the amount of such increased contribution is to be.

[44] The issues set out in paras 43.1 and 43.2 have already been dealt with and determined. As regards the issue set out in para 43.5, this has been resolved to the extent that I have decided that the plaintiff was not entitled to claim an “adjusted contribution”, by way of the payment of a lump sum, by the defendant. I agree that if the plaintiff claims an “adjusted contribution” from a local authority, it would need to request the actuary to determine the amount thereof.

[45] As regards the issues contemplated in paras 43.3 and 43.4, I find it unnecessary to set out and examine the evidence in detail, because I agree with the argument of Mr. Kemp S C, in which he relies upon the following dictum in

Howick District Landowners Association

v

Umngeni Municipality

2007 (1) SA 206 (SCA) at para 15

“The question is what meaning can properly be gleaned from the council’s acts on that day. The landowners’ argument treats the council’s acts as though they constitute a jumble, each bit of which must be separately parsed, even if that leads to incoherence. That cannot be correct. The criterion of intelligibility, which governs all communication, requires that the council’s connected acts be read cohesively, to draw fairly from them the meaning sought to be conveyed”.

[46] I am satisfied when the evidence is considered on this approach, the conduct of Mr. Els and the committee, fulfilled these requirements.

[47] Turning to the final issue, namely whether the Regulations of the plaintiff, including the 2004 amendment, which included the proviso in question are valid, because they have not been approved by the Registrar of Pension Funds.

[48] I agree with the submission of Mr. Kemp S C that the Regulations in question were promulgated in terms of the Local Government Superannuation Ordinance No. 24 of 1973. In terms of the Act, a distinction is drawn between Regulations which are “made and in force under this Act” and “Rules” which means “the Rules of a Fund”. It is only “Rules” which have to be registered by the Registrar in terms of the Act. It appears in any event, that Mr. Els submitted the amendments to the Regulations to the Registrar and the Financial Services Board, and they were approved.

[49] As regards the issue of costs, I was advised by Counsel that the costs should follow the result and include the costs of two Counsel.

The order I make is the following:

Judgment is granted in favour of the defendant.

The plaintiff is ordered to pay the defendant’s costs, such costs to include the costs of two Counsel.

___

Appearances /

Appearances:

For the Plaintiff : Mr. K. J. Kemp S C with

Mr. H. Gani

Instructed by : J Leslie Smith & Company

Pietermaritzburg

For the Defendant : Mr. M. Pillemer S C with

Mr. P. Blomkamp

Instructed by : Acutt & Worthington

C/o Tomlinson Mnguni James

Date of Hearing : 13 September 2010

Date of Filing of Judgment : 23 September 2010

Date of Hearing : 10 May 2010

Date of Filing of Judgment : 20 May 2010