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Supreme Court of Appeal of South Africa
MEDIA SUMMARY– JUDGMENT DELIVERED IN SUPREME COURT OF APPEAL
From: The Registrar, Supreme Court of Appeal
Date: Thursday 29 September 2005
Status: Immediate
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
A B Nichol & The Sage Schachat Pension Fund v The Registrar of Pension Funds & 6 Others
The Supreme Court of Appeal today dismissed an appeal against an order made by the Pretoria High Court refusing to exempt Mr Archibald Barry Nichol, a pensioner of a pension fund in the Sage Group of companies, from the obligation to exhaust his appeal to the Board of Appeal (established under the Financial Services Board Act 97 of 1990) against a decision of the Registrar of Pension Funds, before seeking to have the Registrar’s decision reviewed by the High Court.
In August 1998, the management of the Sage Group of companies decided to amalgamate three pension funds in the Group by transferring the businesses of two of the funds to the third, in accordance with section 14 of the Pension Funds Act of 24 of 1956. The proposed amalgamation was approved by the boards of trustees of the three funds in December 1998. Although the merger took practical effect from 1 December 1998, it was only in October 1999 that the three funds applied to the Registrar for retrospective approval of the merger. In the meantime, in April 1999, Mr Nichol had lodged a complaint regarding the merger with the Pension Funds Adjudicator. The basis of his complaint was that he and the other members and pensioners of the Sage Schachat Pension Fund had not been consulted on the proposed merger. The Sage Schachat Fund was smaller and in a much better surplus position than the other two funds and the effect of the merger would be to dilute the Sage Schachat Fund surplus by the cross-subsidisation of the other two funds.
The Adjudicator made his determination on 13 November 2001, holding that, since the Registrar had not yet approved the merger by issuing the necessary certificates in terms of section 14 of the Pension Funds Act, an indispensable requirement for the validity of the merger had not been met. He thus held that the three funds still existed as three separate legal entities, no matter what might be occurring in practice.
On 18 December 2001 the Registrar approved the merger and issued the necessary certificates with retrospective effect to 1 December 1998. An application to the Cape High Court, launched on 27 December 2001 by the merged fund (the Sage Group Pension Fund) and Sage Life Limited (the employer of persons employed in the Sage Group) to set aside the Adjudicator’s determination, was dismissed on 17 October 2003.
After becoming aware of the Registrar’s retrospective approval of the merger, Mr Nichol applied to the Pretoria High Court in February 2002, asking the court to review this decision of the Registrar and set aside the retrospective approval of the merger. He did this without having first appealed against the Registrar’s decision to the Board of Appeal established in terms of section 26 of the Financial Services Board Act. The respondents later argued that section 7(2) of the Promotion of Administrative Justice Act 3 of 2000 (PAJA) obliged Mr Nichol to exhaust this internal remedy before bringing review proceedings. In response, Mr Nichol asked the Pretoria High Court to exempt him from this obligation, in terms of section 7(2)(c) of PAJA, on the grounds that ‘exceptional circumstances’ existed and that the exemption was ‘in the interest of justice’ as required by section 7(2)(c).
The Pretoria High Court dismissed Mr Nichol’s exemption application on 29 April 2004 and directed him to exhaust his internal remedy of appeal to the Board of Appeal.
On appeal by Mr Nichol, the Supreme Court of Appeal agreed with the Pretoria High Court that there were no exceptional circumstances in terms of section 7(2)(c) of PAJA for exempting Mr Nichol from his obligation to exhaust his internal remedy prior to launching review proceedings. The SCA pointed out that the powers of the Board of Appeal, a specialist tribunal with a wide range of expertise available to it, are extensive enough to give Mr Nichol the same relief (if justified) as that claimed by him in the review application. Mr Nichol had failed to demonstrate why the Board of Appeal would not be able effectively to consider and remedy each of his complaints. The issues raised by Mr Nichol in his review application, including the relationship between the Adjudicator and the Registrar, and the status of the Adjudicator’s determination in the light of the subsequent retrospective approval of the merger by the Registrar, were the sort of issues that could – and should – be addressed by the Board of Appeal.
Mr Nichol’s appeal was therefore dismissed by the SCA.