Municipal Employees Pension Fund and Another v Mongwaketse

Ms Mongwaketse was employed by Ngaka Modiri Molema District Municipality as chief audit executive on a fixed-term contract of 5 years from February 2012. She and the Municipality signed an application for her membership of the Municipal Employees Pension Fund (MEPF). Her remuneration package was inclusive of all benefits, and all contributions (7.5% employee and 22% employer portions totalling 29.5%) were deducted from her salary. In November 2014, she received a benefit statement suggesting she would only receive the 7.5% contributions on withdrawal, at which point she learned that the MEPF's rules excluded fixed-term employees from membership. The Municipality requested refund of all contributions in September 2015, stating her membership was an error. The MEPF refused, maintaining she had become a member. After her employment ended in January 2017, she lodged a complaint with the Pension Fund Adjudicator in March 2017. In June 2017, the MEPF paid her R237,422.67 (net of tax) as a withdrawal benefit calculated only on the 7.5% contributions.

• Whether the respondent was a 'complainant' as defined in section 1 of the Pension Funds Act 24 of 1956
• Whether the respondent's grievance was a 'complaint' as defined in the Act
• Whether the Pension Fund Adjudicator had jurisdiction to entertain the complaint
• Whether the respondent became a member of the MEPF despite being a fixed-term employee
• Whether the MEPF's rules precluded fixed-term employees from membership
• Whether the Adjudicator had jurisdiction to grant relief based on unjustified enrichment
• Whether the requirements for the condictio indebiti were satisfied
• Whether the claim had prescribed

Leave to appeal was granted. The appeal was dismissed. The Adjudicator's determination ordering the MEPF to repay all contributions to Ms Mongwaketse (less amounts already paid) was upheld. No order as to costs was made as Ms Mongwaketse abided the Court's decision.

The binding legal principles established are: (1) A person employed "for a limited period" as defined in pension fund rules is employed for a fixed term, and a renewal clause in the employment contract does not alter this characterization at the time of purported admission to membership. (2) Where pension fund rules exclude a category of persons from membership, the admission of such a person is ultra vires and void, regardless of the fund's subjective belief about eligibility. (3) Estoppel and waiver cannot be invoked to validate conduct by a pension fund that is ultra vires its rules, as this would create an unlawful situation. (4) For purposes of section 1 of the Pension Funds Act, paragraph (d) of the definition of "complainant" ("any person who has an interest in a complaint") should be interpreted broadly to include any person with an interest in a grievance meeting the substantive requirements of the "complaint" definition, not only persons with an interest in an existing complaint lodged by someone else. (5) The admission of persons to membership and receipt of contributions constitute "administration" of a pension fund for purposes of the "complaint" definition, even when done unlawfully or ultra vires. (6) The Pension Fund Adjudicator has jurisdiction under section 30E(1)(a) of the Act to grant any relief that a court of law could grant, including relief based on unjustified enrichment. (7) Where contributions are paid to a pension fund in respect of a person who never legally became a member, the elements of the condictio indebiti are prima facie satisfied: the person making/authorizing the payments is impoverished, the fund is enriched by receiving money without legal cause, and the onus shifts to the fund to prove it was not enriched or only partially enriched.

The Court made several non-binding observations: (1) It was unnecessary to decide precisely where the line should be drawn regarding what constitutes "administration" of a fund, but the expression would be capable of limitation to exclude ordinary contractual and delictual disputes with third-party service providers or members of the public. (2) Paragraphs (a)-(c) of the "complainant" definition may be tautologous given the wide meaning of paragraph (d), but they serve the useful purpose of identifying obvious classes of persons with an interest, making a separate inquiry unnecessary in those cases. Tautology in legislation is not unknown and the presumption against superfluity should not create artificial distinctions. (3) The words "of a complainant" in the "complaint" definition simply acknowledge that only a defined complainant may lodge a complaint, rather than imposing a substantive limitation. (4) Section 30G's provisions for joining additional parties with an interest tells against a narrow interpretation of paragraph (d) of the "complainant" definition. (5) Although not determinative, CALS correctly argued that interpretation should be undertaken with regard to constitutional rights under sections 27(1)(c) (social security) and 34 (access to courts). Denying the Adjudicator jurisdiction would force vulnerable persons to the High Court which they might not afford. (6) The Court noted it would not have had jurisdiction to determine the section 30P appeal on the merits, as this involved reassessment of factual findings rather than constitutional or legal principles of general public importance. (7) Had it been necessary to decide, the Court indicated the MEPF's allegations were likely insufficient to discharge the burden of proving non-enrichment.

This judgment is significant for clarifying the scope of the Pension Fund Adjudicator's jurisdiction under the Pension Funds Act. It establishes that: (1) The definition of "complainant" in paragraph (d) - "any person who has an interest in a complaint" - should be given a wide interpretation and is not limited to persons having an interest in an existing complaint by someone else. (2) Persons wrongly admitted to pension fund membership despite being ineligible under the fund's rules can lodge complaints with the Adjudicator. (3) The Adjudicator has jurisdiction to grant relief based on unjustified enrichment in appropriate cases. (4) The admission of members and receipt of contributions constitutes "administration" of a fund for purposes of the "complaint" definition, even when done ultra vires. (5) Pension funds cannot rely on estoppel or waiver to validate admissions to membership that are ultra vires the fund's rules. The judgment ensures access to a cost-effective dispute resolution mechanism for vulnerable persons who might not afford High Court litigation, thus promoting the constitutional rights to social security (section 27) and access to courts (section 34). It prevents pension funds from retaining contributions unlawfully received from persons who were never entitled to membership.