The Chemical Industries National Provident Fund v Tristar Investments (Pty) Ltd

The appellant, a large pension fund governed by a board of trustees, concluded a three-year fixed-term investment consulting agreement with the respondent, Tristar Investments (Pty) Ltd, effective from 1 January 2008. The agreement was signed on behalf of the Fund by its principal officer and the chairperson of the trustees after a procurement process involving a sub-committee, presentations by bidders, legal vetting, and approval recorded in the trustees’ November 2007 meeting minutes. Tristar performed services for over three months and was paid approximately R2.7 million. In April 2008 the trustees voted to terminate Tristar’s appointment, alleging that the signatories lacked authority and that the agreement was ultra vires the Fund’s rules. The Fund sought a declaration of invalidity and repayment; Tristar denied invalidity, accepted the termination as repudiation, and counterclaimed for accrued income for the unexpired period of the agreement.

The appeal was dismissed with costs, including the costs of two counsel. The High Court’s finding that the agreement was valid and its award to Tristar for accrued income were upheld.

The case clarifies that, in the absence of a prescribed method in a pension fund’s rules, trustee decisions may validly be taken by consensus rather than formal voting. It affirms a purposive, business-like interpretation of pension fund rules when assessing alleged ultra vires conduct. The judgment also reinforces the principle that courts must assess and award damages or accrued contractual claims even where the calculation is inherently speculative, provided credible evidence exists.