The City of Johannesburg v The South African Local Authorities Pension Fund

The City of Johannesburg and several municipally owned utilities were participating employers in the South African Local Authorities Pension Fund (SALA). In 2004 they gave notice that they would terminate their participation in SALA and, from 1 January 2005, cease employer contributions to SALA and instead contribute to the eJoburg Retirement Fund. Employees effectively became paid-up members of SALA while contributing to eJoburg. SALA, supported by trade unions and some individual members, applied to the High Court to set aside the employers’ decision as unlawful. The employers raised a preliminary objection that the affected employee-members had not been joined to the proceedings. The High Court dismissed the non-joinder objection and set aside the employers’ decision. The employers appealed to the Supreme Court of Appeal.

The appeal was upheld with costs. The High Court’s order was set aside and replaced with an order staying the application for three months to allow joinder of affected members and former members, failing which the application would be dismissed with costs.

The case is an important authority on non-joinder in South African civil procedure, particularly in pension fund disputes. It clarifies that pension fund boards cannot rely on section 7C(2) of the Pension Funds Act to litigate on behalf of members where members’ interests may diverge, and it reinforces the requirement that all parties with a direct and substantial interest must be joined before a court determines the merits.