ABSA Bank Limited v South African Commercial Catering and Allied Workers Union National Provident Fund (under curatorship)

During 2000–2001 the South African Commercial Catering and Allied Workers Union National Provident Fund concluded 15 written rental agreements for office equipment. The agreements were negotiated and signed only by the Fund’s principal officer, Mr Mosiuoa. Sasfin Bank Ltd and Sunlyn Investments (Pty) Ltd financed the transactions and later ceded their rights to ABSA Bank Limited. The Fund defaulted on rental payments and was placed under curatorship in 2003. ABSA sued the Fund for arrears. The Fund raised a special defence that the contracts were invalid because they were not authorised and signed in accordance with Rule 4.13 of the Fund’s registered rules, which required authorisation at a duly constituted trustees’ meeting and signature by the chairperson and two trustees. It was common cause that the rules had been seen by Sasfin and Sunlyn and that Rule 4.13 had not been complied with.

The appeal was dismissed with costs, including the costs of two counsel. The High Court’s order declaring the contracts not binding on the Fund was upheld.

The case affirms the strict application of pension fund rules as a fund’s constitution and underscores that compliance with prescribed formalities for executing contracts is mandatory. It reinforces the doctrine of ultra vires in the context of pension funds and clarifies that third parties contracting with funds bear the risk of non-compliance with registered rules, even where the principal officer appears to act with authority.