THE SUPREME COURT OF APPEAL OF SOUTH AFRICA
JUDGMENT

Case no. 1134/2020
Reportable

In the matter between:

POST OFFICE RETIREMENT FUND

Appellant

and

SOUTH AFRICAN POST OFFICE SOC LTD

First Respondent

MINISTER OF COMMUNICATIONS AND
DIGITAL TECHNOLOGIES

Second Respondent

SOUTH AFRICAN POSTAL WORKERS UNION

Third Respondent

COMMUNICATION WORKERS UNION

Fourth Respondent

DEMOCRATIC POSTAL AND
COMMUNICATIONS UNION

Fifth Respondent

Neutral citation:
Post Office Retirement Fund v South African Post Office SOC Ltd
and Others (Case no. 1134/2020) [2021] ZASCA 186 (30 December 2021)

Coram:
Petse AP, Makgoka and Plasket JJA and Molefe and Unterhalter AJJA

Heard:
11 November 2021

Delivered:
This judgment was handed down electronically by circulation to the
parties’ representative via email, publication on the Supreme Court of Appeal website
and release to SAFLII. The date and time of hand-down is deemed to be 10:00 am on
30 December 2021.

Summary:
Posts and Telecommunications-Related Matters Act 44 of 1958 – rules
of Post Office Retirement Fund (the Fund) – rule 3 requires the South African Post
Office (SAPO) to pay to the Fund pension contributions, including employees’
contributions, on a monthly basis – SAPO stopped paying contributions – rule 3 places
an obligation on SAPO to pay contributions – the obligation to pay has not been

extinguished or deferred by intervening impossibility of performance – the obligation
to pay may not be avoided by SAPO deciding not to pay the Fund, but to pay other
creditors instead.

ORDER

On appeal from: Gauteng Division of the High Court, Pretoria (Kubushi J sitting as
court of first instance):
The appeal is upheld with costs, including the costs of two counsel.
The order of the court below is set aside and replaced with the following order:
‘1
It is declared that the South African Post Office:
1.1
is obliged and required, in terms of rule 3 of the Post Office Retirement
Fund’s rules, to pay contributions, as defined therein, to the Post Office
Retirement Fund on a monthly basis, in arrear, by not later than the first
working day of each month; and
1.2
is in breach of this obligation in that it has not made the required payments
since May 2020.
It is declared that the South African Post Office’s obligations in terms of rule 3
of the rules have not been extinguished or deferred by intervening impossibility
of performance.
The South African Post Office is directed to pay the costs of the Post Office
Retirement Fund, including the costs of two counsel.’

JUDGMENT

Plasket JA (Petse AP, Makgoka JA and Molefe and Unterhalter AJJA concurring)

[1] The South African Post Office SOC Ltd (SAPO) – the first respondent in this
appeal – is an organ of state that has provided postal services to the South African

public for many years. Its juristic form has varied over the years1 but it now takes the
form of a state-owned company, its continued existence in this form having been
provided for by s 3 of the South African Post Office SOC Ltd Act 22 of 2011 (the SAPO
Act). In terms of s 3(3), the ‘powers and duties of the State as a member and
shareholder of the Post Office must be exercised and performed’ by the Minister of
Communications and Digital Technologies, the second respondent in this appeal.

[2] Section 4(1) of the SAPO Act spells out SAPO’s duties. It provides:
‘Subject to the Postal Services Act and the licence issued to the Post Office in terms of the
said Act, the Post Office must take reasonable measures, within its available resources, to
achieve the progressive realisation of the following duties:

(a)
Ensure the universal and affordable provision of postal services;
(b)
ensure the provision of a wide range of affordable postal services in the interest
of the economic growth and development of the Republic;

(c)
be innovative in the provision of postal services;
(d)
develop postal services that are responsive to the needs of users and
consumers;
(e)
ensure the achievement of universal access to postal services by providing an
acceptable level of effective, reliable and regular postal services to all areas,
including rural areas and small towns where post offices are not sustainable;
(f)
ensure greater equity in respect of the distribution of services, particularly within
the areas of the historically disadvantaged communities, including rural areas;
(g)
ensure that the needs of disabled persons are taken into account in the
provision of postal services;
(h)
ensure the development of human resources and capacity-building within the
postal industry, especially amongst historically disadvantaged groups;

(i)
act in the best interest of postal users and other clients;
(j)
maintain an effective and efficient system of collecting, sorting and delivering
mail nationwide in a manner responsive to the needs of all categories of mail
users;
(k)
actively provide and develop a citizens' post office that contributes to
community and rural development and education, thereby serving as an
interface between government and the community; and

1 Lawrence Baxter Administrative Law (1984) at 115; E Van Eeden ‘Postal Services’ LAWSA (3 ed) Vol
33 para 72.

(l)
ensure compliance with international commitments relevant to the postal
industry.’

[3] In terms of s 5, SAPO may, without derogating from its powers in terms of the
Companies Act 71 of 2008 and subject to the Public Finance Management Act 1 of
1999, engage in a wide range of activities, such as purchasing immovable property,2
erecting buildings, installations and plants,3 acquiring and holding movable property4
and letting its services or otherwise making them available.5 One such service is the
paying of social grants. It is paid to do so by the South African Social Security Agency
(SASSA) and acts as its agent in so doing.

[4] The Post Office Retirement Fund (the Fund) – the appellant in this matter – was
established, along with the Telecommunications Pension Fund, by s 9 of the Posts
and Telecommunications-Related Matters Act 44 of 1958 (formerly known as the Post
Office Act). Section 10 makes provision for rules, which it calls statutes, for both funds.
Section 10(1) states that the control and management of these funds, the conditions
for admission to them and termination of membership, the amount and nature of
contributions and other payments to them by members and employers, the benefits
due to members and beneficiaries and the manner in which they may be amended are
governed by the statutes of each fund. Section 10(4) states that the statutes of the
funds ‘shall be binding on each fund as well as the postal employer and the
telecommunications employer, as the case may be, and on the members and
beneficiaries of each fund’.

[5] By notice of motion dated 31 July 2020, the Fund applied on an urgent basis to
the Gauteng Division of the High Court, Pretoria for the following substantive relief:
‘2.
That the South African Post Office SOC Ltd (“SAPO”) be declared to be in breach of
Rule 3.3 of the South African Post Office Retirement Fund Rules (the “Rules”).
3.
That SAPO be directed to remit to the Fund, within five (5) days of this order, all
outstanding arrear contributions (i.e. employer and employee contributions) in respect of the
periods May 2020 and June 2020, inclusive of interest at 9.75% per annum.

2 Section 5(a).
3 Section 5(b).
4 Section 5(d).
5 Section 5(e).

4.
That going forward, SAPO be directed to continue to timeously pay contributions to the
Fund as they fall due, in accordance with the Rules.’
None of the respondents other than SAPO took part in the proceedings in the high
court or on appeal. The application was dismissed with costs by Kubushi J. She
subsequently granted the Fund leave to appeal to this court.

[6] The material facts upon which the Fund’s case is founded are not complicated
and are largely common cause. Rule 3.3 of the rules of the Post Office Retirement
Fund (the rules) provides that contributions paid by SAPO, which include members’
contributions, are payable to the Fund monthly. SAPO failed to pay any contributions
to the Fund for the months of May and June 2020.

[7] SAPO raised three defences. The first was that the Fund’s rules did not oblige
it to pay contributions to the Fund. The second was that, if it was obliged by the rules
to pay contributions, it had a power to decide not to pay the Fund in the prioritization
of payments to creditors. The third was that its parlous financial state rendered it
impossible to pay the Fund with the effect that its obligation was either extinguished
or deferred.

The facts
[8] The contributions paid by SAPO to the Fund prior to May 2020 comprised of
members’ contributions of 7.5 percent of each employee’s pensionable monthly salary,
employer contributions of 13.55 percent of each employee’s pensionable monthly
salary and an additional voluntary contribution. It is not in dispute that SAPO did not
pay these contributions to the Fund at the end of May and June 2020. It ought to have
paid a total contribution of R40 million in respect of each month. It would appear that
SAPO has not paid any further contributions to the Fund since.

[9] When SAPO had not paid the May 2020 contribution by the due date of the first
working day of June 2020, Mr Michael Faasen, the Fund’s principal officer, wrote to
Mr Ivumile Nongogo, SAPO’s acting group chief executive officer. He pointed out that
the payment of contributions is a statutory obligation and that a failure on the part of
SAPO to pay placed the Fund in a difficult position. He understood that SAPO’s cash

flow would improve within a few days and said that ‘it will be much appreciated if this
payment will receive your favourable consideration’.

[10] Nongogo responded two days later. He said:
‘Indeed SAPO’s financial situation is dire and each month we are having to make a call on
payments. Last month we paid the pension fund but did not pay Medipos, this month we will
commence payments with Medipos and then the fund. We are cognizant that both parties
have statutory requirements in this regard but we are trying not to be unfair to any one party.’
(Medipos is SAPO’s in-house medical aid scheme.)

[11] Faasen wrote back to Nongogo to ask for clarity. He wanted to know whether
his understanding was correct that SAPO would pay contributions a month after the
due date for payment, with the effect that ‘SAPO’s arrears will grow exponentially until
the financial position of SAPO normalises’. In his response, Nongogo said:
‘Ideally this should not be the case, we are hopeful that as we open for business and start to
receive normal revenues we can cover all statutory payments and not create a backlog,
otherwise as you point out we will have an exponential growth in that backlog that will become
unmanageable. We are prioritizing these payments and as the cash comes in we will attempt
to bring any arrears to zero.’

[12] The Fund’s board of trustees decided that a formal letter, copied to the Minister,
should be sent to SAPO to spell out the Fund’s position. Prior to that letter being sent,
however, Faasen wrote to Nongogo to inform him of the board’s decision. He also
raised a further concern – that SAPO had also not paid premiums in respect of a
temporary disability policy for employees and that death and permanent disability
benefits of SAPO employees were at risk as well. Nongogo replied to say that he
appreciated the ‘serious impact that is [being] caused by SAPO’s non-payment’. He
assured Faasen that ‘everything is being done to resolve the financial issues’ but he
was unable to indicate when a solution to the problem would be found.

[13] The board’s formal letter followed. It is dated 11 June 2020 and was written by
Mr Ashwin Trikamjee, the chairperson of the Fund’s board. After stating that one of
the board’s responsibilities was to ensure that both employer and employee

contributions were paid timeously to the Fund and that SAPO’s contributions for May
2020 had not been paid, he said:
‘We are therefore concerned that members will suffer prejudice due to the non-payment and/or
delay by the Company in paying the required contributions. This specifically relates to death
and disability benefits not being funded as well as exit benefits being underfunded. Of special
concern is the deduction of member contributions from salaries but not being paid to the Fund,
which could have further legal implications for the Company.’

[14] Trikamjee requested that SAPO investigate the failure to pay the Fund and
furnish the board with ‘detailed feedback’. He demanded an undertaking from SAPO
that the outstanding contributions, plus interest, would be paid within 21 days of the
date of his letter. He asked for an ‘unequivocal commitment’ from SAPO that, in future,
contributions would be paid in accordance with the rules. He expressed the board’s
willingness to discuss ‘any challenges that the Company might be experiencing during
these times of upheaval caused by the Covid-19 outbreak that might negatively impact
the Company’s legal obligations towards the Fund as well as possible relief measures
within the ambit of the law’.

[15] Nongogo replied about two weeks later. He apologized for SAPO having been
‘unable to remit the pension contributions as required on a monthly basis’. He said that
SAPO’s financial position had deteriorated dramatically and that this had accelerated
as a result of ‘the Covid-19 induced lockdowns’, with a negative impact for all of its
creditors including the Fund.

[16] Nongogo informed the board that SAPO had approached the Department of
Communications and Digital Technologies for financial assistance but the earliest any
assistance could be expected was October 2020. In the meantime, he said, ‘the
situation remains extremely dire’. He expressed his appreciation that the board was
willing to discuss temporary relief measures. He identified two possible options for
discussion. They were a ‘contributions holiday’ of six months, and a ‘once-off capped
withdrawal by pension fund members who are still employees to cushion them from
decisions that SAPO will need to make that may impact on their earnings’. Finally, he
said that SAPO was ‘fully cognizant of the legal implications that arise from non-
remittance and the financial consequences that will impact on employees’, but it

looked forward to ‘an engagement with the Fund as to ways that could be pursued to
mitigate the situation’.

[17] Trikamjee responded on 6 July 2020, by which time SAPO’s June 2020
payment to the Fund was overdue. He informed Nongogo that the Fund’s board had
discussed the two proposals that he had made. Both were impractical for various
reasons and could not be pursued without a change to the rules, in the case of the first
proposal, and the amendment of an Act, in the case of the second. He said that the
board had resolved to request SAPO ‘to pay the contributions in respect of risk benefits
and fund expenses for May and June 2020 as a matter of extreme urgency to ensure
that members of the Fund are covered in respect of death and disability benefits’ and
that ‘Additional Voluntary Contributions which have already been deducted from
employees’ salaries at the end of May 2020 and June 2020 also need to be paid over
to the Fund’. The board, he said, would appreciate the opportunity to meet Nongogo
and his senior staff in order to discuss payment of the outstanding contributions after
the board had ‘considered all the legal options available to them to accommodate
SAPO in its present dire financial position’.

[18] On 21 July 2020, however, Faasen sent an email to Nongogo in which he
informed him that when the board had sought legal advice, it had been told that the
type of engagements it had thus far had with SAPO fell short of compliance with its
fiduciary duties to the Fund and its members. He informed Nongogo that the Fund
would shortly be launching an urgent application against SAPO ‘with a view to
receiving payment of outstanding contributions and ensuring that the Post Office pays
such future contributions as may arise’. He then said that the Fund would ‘at the same
time, consider a Rule Amendment in order to provide possible relief for all the parties,
and this would likely require further engagements with the employer’.

[19] On the following day, Nongogo replied as follows:
‘This is well noted and the stance is well understood. We remain cognizant of the outstanding
contributions to the fund and we are doing all things necessary to bring SAPO to a position
where it can honour these payments. In the meantime your consideration of possible actions
to offer relief [is] greatly appreciated.’

[20] The Fund’s attorneys then drafted the founding papers in the urgent application.
The notice of motion was dated 31 July 2020, as payment of the July contributions
was about to fall due. The papers were issued on the same day.

[21] In SAPO’s answering affidavit, deposed to by Ms Nondumiso Ngonyama, a
non-executive member of its board, the application was categorized as not being ‘a
simple claim by a creditor against a debtor’, but rather a matter that raises ‘a multitude
of contractual, statutory, constitutional and public policy issues’. She stated that it was
unclear what the Fund was trying to achieve:
‘It seeks payment of over R80 million and an order that SAPO must continue timeously to pay
R40 million a month. However, it does so while readily conceding that SAPO’s financial
position is dire and that each month SAPO has to prioritise its most critical financial obligations.
In fact, the Fund purports to found its claim for urgent payment on the basis that SAPO cannot
pay the amount in question. This is a non-sequitur.

[22] She explained that as a result of the ‘current economic environment and the
impact of COVID-19’, SAPO chose to pay medical aid contributions rather than
pension fund contributions. It had reasoned that it was ‘more important to pay its
employees’ salaries (rather than any fringe benefits) so that those employees may
continue to provide for themselves and their families whilst the COVID-19 pandemic
ravages South Africa’s health and wealth’.

[23] Ngonyama made the claim that the Fund had not made out a case as to why it
required payment of R40 million a month, as its operational expenses were only R1.4
million and it had reserves that would enable it to operate for four or five months
without SAPO’s contributions. She described the Fund’s insistence on being paid what
was owed to it as bewildering. Nonetheless, she claimed that SAPO was trying ‘to
make as many payments as it can, in order to ensure the fulfilment of its various duties
under section 4 of the South African Post Office SOC Act, 2011’. It would, she
undertook, pay the Fund as soon as it was able to, but said that it was not possible to
predict with certainty when that would be. At the time of deposing to her affidavit,
however, ‘paying R40 million a month to the Fund is not only financially impossible
and fiscally irresponsible, but payment of any material amount to the Fund would likely
cause SAPO’s demise’.

[24] Ngonyama claimed that the Covid-19 pandemic and the lockdowns put in place
to control it had a severe, adverse effect on SAPO’s business. Without any historical
context and without any detail, she stated that, as at 31 July 2020, only 55 of SAPO’s
1 416 post offices were operating profitably. In July 2020, SAPO incurred a net loss of
R97 million. This was nearly triple the net loss of R 34 million at the corresponding
time in 2019. It year to date loss at 31 July 2020 was R1.066 billion.

[25] As a result of SAPO’s dismal financial performance, it was only able to pay
some of its creditors but not others. It therefore decided to prioritise which would be
paid and which not. So, for instance, it prioritised the payment of transport costs,
national linehaul expenses, property costs including rental expenses, information
technology expenses and the cost of security. It chose to prioritise these expenses,
Ngonyama said, ‘in order to continue to meet its primary statutory duties’.

[26] Ngonyama stated that as a result of SAPO’s failure to pay creditors, critical
services, including the payment of social grants, had been interrupted and continued
‘negatively to impact on SAPO’s ability to recover lost revenue and to move to financial
sustainability’. She continued to say:
‘As a result of the economic downturn and constraints on its business, SAPO’s YTD loss as
at 31 July 2020, was R1.066 billion. YTD (as at 31 July 2020) staff costs are R1.2 billion . . .
Staff costs constitute 61% of total expenses . . . Despite the risks in not paying trade creditors,
SAPO has done everything it can to continue to pay employees’ basic salaries, even if it cannot
afford to cover all fringe benefits, especially medium to long term ones such as pension fund
contributions. Not all creditors are being paid, and once critical payments have been made,
SAPO has no cash left. For instance, once the August 2020 salaries have been paid, SAPO
will need to accumulate cash during the course of September to pay the September salaries.
The COVID-19 pandemic has had a fundamental impact on SAPO’s business.’
From this, it was clear that ‘at this stage SAPO does not have the R 40 million per
month, or any other amount, to pay the Fund’.

[27] Paying the Fund was described by Ngonyama as not being ‘one of SAPO’s
primary statutory duties’. She said that the Fund was ‘in no worse a position than any
of SAPO’s other statutory creditors’. As at 31 July 2020, SAPO owed its ‘statutory

creditors’ R 454 million. This included R 162 million to the medical aid scheme, R 125
million to the South African Revenue Service and R 18 million to the Unemployment
Insurance Fund.

[28] SAPO claimed that it was simply not possible for it to pay ‘tens of millions of
Rand to the Fund on a monthly basis simply because the Fund has brought this
application’. It averred that it would be ‘contrary to public policy and the Constitution,
and a forced breach of the Board’s fiduciary duties for the Court to compel SAPO to
make payment to the Fund to the detriment of the public and in unlawful preference
vis-a-vis all the other creditors of SAPO’.

[29] Finally, Ngonyama dealt with the fact that employees’ contributions, along with
employer’s contributions and voluntary contributions were not being paid. She said
that the Fund was confused when it alleged that SAPO was deducting employees’
contributions from their salaries and then failing to pay those amounts to the Fund.
Her explanation was this:
‘SAPO is intended to pay both the member and employer contributions, out of its own funds.
The member does not actually place SAPO in funds to pay any of the contributions. The
member portion of pension fund contributions would show up as a notional “deduction”, simply
as a matter of payroll accounting or book entry, on the employees’ payslips. No funds are
being diverted from the employees, because no such funds exist.’

[30] In the Fund’s replying affidavit, Faasen made the points that SAPO did not deny
its indebtedness to the Fund or that it failed to pay contributions to the Fund. Instead,
he said, it had redirected contributions meant for the Fund ‘to its operational
expenditure for an indeterminate period of time’. He accused the SAPO board of acting
with impunity, resorting to self-help and attempting to avoid judicial scrutiny.

[31] Faasen also made the point that SAPO’s financial difficulties pre-dated the
Covid-19 pandemic and that its governance failures were not temporary in nature.
SAPO’s version amounted to it simply being unable to pay its debts as they fell due
which, Faasen said, ‘begs the question whether SAPO’s Board is not continuing to
trade the company under reckless circumstances, bordering on delinquency’. Its
explanation for not paying what it owed, when all was said and done, was that it was

insolvent. He described SAPO’s utilization of employees’ pensions and risk cover for
the payment of operational expenses as being fiscally and morally irresponsible. What
is more, SAPO’s continued trading under these circumstances constituted, in Faasen’s
view, a potentially serious dereliction of duty in terms of the Companies Act 71 of 2008.

[32] In respect of the deduction of employees’ contributions that were not paid to the
Fund, Faasen categorised SAPO’s explanation, quoted above, as troubling
particularly because the recording of deductions of pensionable emoluments on
employee payslips was, on SAPO’s version, fraudulent. Furthermore, once the
deductions were made from employees’ gross salaries, the obligation to pay them to
the Fund was triggered.

The high court’s judgment
[33] The high court found that as a result of the lockdown induced by the Covid-19
pandemic, SAPO shut down completely and that the pandemic had a profound impact
on its business. The first statement of fact is nowhere to be found in the papers, and
the second, as I will show, is only partially correct. It then recorded information
concerning SAPO’s financial difficulties, some of which has been mentioned above,
and stated that it was against this background that the Fund had brought its
application.

[34] The approach of the high court to the issues that arise for decision were
encapsulated thus in the judgment:6
‘For the reasons that follow hereunder, I have to agree with SAPO that this application cannot
just be categorized as a simple monetary claim of a creditor against a debtor. It is a
constitutional matter which implicates constitutional and statutory duties of organs of state and
indeed the protection of fundamental rights. The claim takes place against the background
sketched in the opening passages of this judgment. Ordinarily, SAPO would be expected to
comply with the provisions of Rule 3.3 without much ado. These, however, are not ordinary
times. The imperatives of the time require a fresh look at the provisions and requirements of
the Rule.’

6 Para 40.

[35] This was so for two primary reasons. First, in terms of s 4 of the SAPO Act,
SAPO was placed under an obligation to provide services such a ensuring a universal
and affordable postal service. Secondly, SAPO is the agent that pays social grants on
behalf of SASSA. These functions, according to SAPO, were critical in fulfilling socio-
economic rights like the rights to social security and children’s rights, and also in
supporting and strengthening ‘almost every other right in the Bill of Rights’. The high
court found that to jeopardise SAPO’s ability to fulfil these functions would endanger
‘key constitutional rights and values’.7

[36] The high court accepted that SAPO had not paid its contributions to the Fund
and that it was unlikely to be able to do so in the immediate future. The crux of the
matter, it held, was whether SAPO should be ordered to pay the contributions that it
accepted were owing.8 It then turned to rule 3.3 of the rules. While disavowing the
need to interpret rule 3.3, as the parties had done, it accepted that the rule required
SAPO to make monthly payments to the Fund. It held, however, that ‘the Rules cannot
be read and/or interpreted to require payment where this is impossible, which is the
case here’.9

[37] An interpretation of rule 3.3 that meant that SAPO would be ordered to pay
what it owed would ‘fundamentally jeopardise the ability of SAPO to fulfil its core
functions and imperil key constitutional rights, if not the total collapse of SAPO’.10 Its
limited resources had to be applied ‘to achieving a government developmental
mandate and to maintain the infrastructure for the payment of social grants’. Reliance
was placed on the Constitutional Court judgment of Soobramoney v Minister of Health,
KwaZulu-Natal11 in support of the proposition that ‘there is a hierarchy of rights –
favouring the good of the many above the good of the few’; and that this ‘principle’
applied to the instant case in which the ‘rights of the many should trump the few’.12

7 Para 47.
8 Para 49.
9 Para 52.
10 Para 54.
11 Soobramoney v Minister of Health, KwaZulu-Natal [1997] ZACC 17; 1998 (1) SA 765 (CC); 1997 (12)
BCLR 1696 (CC).
12 Para 56.

[38] Having dealt thus with the meaning and effect of rule 3.3, the high court turned
to the second leg of SAPO’s defence, namely that of supervening impossibility of
performance. It observed that ‘any unqualified obligation to pay this court may make,
is at present not capable of being fulfilled’; that a court ‘cannot make an order the
implementation of which would not come to fruition’; and that SAPO had made it clear
that ‘even if it can be compelled to pay the amounts claimed by the Fund by a court
order, it will be impossible for it to pay’.13 Having concluded that it was impossible for
SAPO to pay what it owed to the Fund, the high court held that SAPO was ‘excused
from paying over its employees’ retirement contributions, at least for the duration of
the impossibility’.14 On this basis, the Fund’s application was dismissed.

[39] Finally, the high court ordered the Fund to pay SAPO’s costs on an attorney
and client scale. Its reasoning appears to have been that both parties had asked for a
punitive costs order against the other and that, as SAPO was the successful party,
these spoils too went in its favour.

The interpretation of rule 3.3
[40] The high court made a number of far-reaching findings as to the meaning of
rule 3.3 without attempting even the most perfunctory engagement with its terms or
the most basic of interpretive exercises. It is by now well-known that the interpretation
of written documents, including legislative instruments, involves a consideration of the
language used, the context in which it is used and the purpose of the document that
is the subject of interpretation. This was explained by Wallis JA in Natal Joint Municipal
Pension Fund v Endumeni Municipality15 as follows:
‘Interpretation is the process of attributing meaning to the words used in a document, be it
legislation, some other statutory instrument, or contract, having regard to the context provided
by reading the particular provision or provisions in the light of the document as a whole and
the circumstances attendant upon its coming into existence. Whatever the nature of the
document, consideration must be given to the language used in the light of the ordinary rules
of grammar and syntax; the context in which the provision appears; the apparent purpose to

13 Para 58.
14 Para 61.
15 Natal Joint Municipal Pension Fund v Endumeni Municipality [2012] ZASCA 13; 2012 (4) SA 593
(SCA) para 18. See too Bothma-Batho Transport (Edms) Bpk v S Bothma & Seun (Edms) Bpk [2013]
ZASCA 176; 2014 (2) SA 494 (SCA) paras 10-12; Capitec Bank Holdings Limited and Another v Coral
Lagoon Investments 194 (Pty) Ltd and Others [2021] ZASCA 99; [2021] 3 All SA 647 (SCA) para 25.

which it is directed and the material known to those responsible for its production. Where more
than one meaning is possible each possibility must be weighed in the light of all these factors.
The process is objective, not subjective. A sensible meaning is to be preferred to one that
leads to insensible or unbusinesslike results or undermines the apparent purpose of the
document. Judges must be alert to, and guard against, the temptation to substitute what they
regard as reasonable, sensible or businesslike for the words actually used. To do so in regard
to a statute or statutory instrument is to cross the divide between interpretation and legislation;
in a contractual context it is to make a contract for the parties other than the one they in fact
made. The “inevitable point of departure is the language of the provision itself”, read in context
and having regard to the purpose of the provision and the background to the preparation and
production of the document.’

[41] Section 9 of the Post and Telecommunication-Related Matters Act established
the Fund. Its principal purpose was to provide pensions for employees of SAPO in
order to ensure their security and dignified living in their latter, post-retirement lives.
Section 10(1) provided that the Fund’s control and management, the conditions for
admission to membership and the termination thereof, and the amount and nature of
contributions by members and the contributions by SAPO are governed by the Fund’s
rules. In terms of s 10(2), those rules, in common with subordinate legislation
generally, were required to be published in the Government Gazette. In terms of s
10(4), the rules ‘shall be binding on’ the Fund, SAPO and members and beneficiaries
of the Fund. Section 10 thus sets out the purpose of the rules and their context as the
mechanism for running and funding a vehicle for the eventual payment of benefits to
employees of SAPO who retire or leave its employ, and to the beneficiaries of those
who died while in SAPO’s service.

[42] In order to interpret rule 3.3, it is necessary to consider it in its broader context.
I shall first detail some of the more important provisions of the rules in order to sketch
that context and the purpose of the rules. I will then turn to rule 3.

[43] Rule 1.4 states that the object of the Fund is ‘to provide retirement and ancillary
benefits for the BENEFICIARIES as described in the RULES’. A beneficiary is rather
unhelpfully defined in rule 1.1 as ‘any person who is entitled to benefits in terms of

these RULES’. It becomes evident from the rules, however, that the beneficiaries of
the Fund are SAPO employees, both pre- and post-retirement, and their dependents.

[44] Rule 2 concerns the financial structure of the Fund. Rule 2.1 provides that the
Fund’s assets are to be held in three separate accounts. They are the share account,
the pensions account and the reserve account. For present purposes, the share
account is the most important of the three accounts. In terms of rule 2.1(1), it is
comprised of ‘all the MEMBERS’SHARES plus the additional voluntary contribution
account’. In respect of each member, it is made up of a member’s opening balance;
each member’s subsequent monthly contributions in terms of rule 3.1; SAPO’s
monthly contribution on behalf of each member in terms of rule 3.2(1)(a); transfers of
a member’s pension value from another Fund in terms of rule 9.8(1); investment
earnings; surplus bonuses; special transfers from the stabilization reserve in terms of
rule 3.2(4); and transfers from the data reserve. Additional contributions made by a
member in terms of rule 3.1(3) are also reflected in the share account, but separately
in an additional voluntary contribution account.

[45] Rule 4 defines who is eligible for membership of the Fund. Rule 4.1 provides
that ‘eligible employees’ shall become members of the Fund. An eligible employee is
defined in rule 1.1 as a permanent employee of SAPO, including a permanent part-
time employee, who has not attained the age of 65 years. Rule 4.1(5) stipulates that
membership of the Fund is a condition of service of every eligible employee.

[46] Rule 5 is headed ‘RETIREMENT’. It provides for the payment of pensions to
SAPO employees in the event of ‘normal retirement’, in rule 5.1, and ‘early retirement’,
in rule 5.2. It also makes provision, in rule 5.3, for lump sum benefits to be paid. To
illustrate the working of this rule, rule 5.1(1) provides that on retirement, a member
‘shall receive a PENSION vesting on the following day secured by the balance of the
MEMBER’S SHARE at that date after the amount of any lump sum benefit paid in
terms of RULE 5.3 has been deducted’. Rule 5.3(1) provides that a member, on
retirement, may choose to be paid a lump sum, but it may not be more than a third of
that member’s share.

[47] Rule 6 deals with the payment of benefits to the spouse of an employee who
has died while in the service of SAPO or after retirement. Rule 7 concerns itself with
benefits for employees who are disabled by accidents, diseases or illness to the extent
that they are no longer able to work.

[48] Rule 10 deals with the management of the Fund. In terms of rule 10.2(1), the
‘management, control and administration’ of the Fund is vested in the board. Rule 10.5
provides for the appointment of a principal officer and rule 10.6 requires the board to
appoint an auditor. Rule 10.8 requires the board to appoint an actuary for the Fund.

[49] From the above truncated and incomplete precis of the rules, it is apparent that
they create a sophisticated vehicle to provide for the social security of SAPO
employees when they retire, of dependents of SAPO employees who die either while
in service or after retirement and of SAPO employees who, prior to retirement, are
disabled. The funding model for this social security model is employee and employer
contributions, plus the fruits of the investment of these contributions. As SAPO
employs a large number of people, the Fund, of necessity, manages large sums of
money.

[50] With this context in mind, as well as the purpose of the rules to provide social
security for SAPO employees and their dependents, I now turn to rule 3. This rule is
headed ‘CONTRIBUTIONS’. It consists of three inter-locking parts.

[51] Rule 3.1 concerns itself with members’ contributions to the Fund. Rules 3.1(1),
3.1(2) and 3.1(3) provide:
‘(1)
Each MEMBER other than a DEFINED BENEFIT MEMBER shall contribute monthly
an amount equal to 7,5% of one-twelfth of his PENSIONABLE EMOLUMENTS to the FUND.
(2)
Contributions are deducted monthly by the EMPLOYER from the MEMBER’S
remuneration.
(3)
A MEMBER may make additional contributions to the FUND in order to secure greater
benefits or in respect of a period of past service. The conditions relating to the additional
contributions and the benefits payable shall be as provided for in RULES 5.4, 6.3 and 7.3(4).’

[52] Rule 3.2 deals with the employer’s contributions and the quantification of those
contributions. Rule 3.2(1) reads as follows:
‘The EMPLOYER shall contribute monthly the following amounts to the FUND:
(a)
9% of one-twelfth of each MEMBER’S PENSIONABLE EMOLUMENTS in respect of
MEMBERS other than DEFINED BENEFIT MEMBERS towards the provision of retirement
benefits only;
(b)
4.75% of one-twelfth of each MEMBER’S PENSIONABLE EMOLUMENTS in respect
of MEMBERS other than DEFINED BENEFIT MEMBERS to procure the death and disability
benefits described in Rules 6.1(1) and 7 and to cover the cost of expenses referred to in Rule
10.14 and rule 10.15; relating to members other than defined benefit members as decided by
the TRUSTEES in consultation with the ACTUARY;
(c)
such amounts as mutually agreed between the EMPLOYER and the TRUSTEES
acting on the advice of the ACTUARY, as may be necessary to eliminate a shortfall in the
Stabilisation Reserve;
(d)
such amounts as determined from time to time by the TRUSTEES after consultation
with the ACTUARY as may be necessary to eliminate any actuarial shortfall in the Pensions
Account or the Defined Benefit Reserve in the Reserve Account . . .
(e)
a percentage of the DEFINED BENEFIT MEMBERS’ PENSIONABLE EMOLUMENTS
as determined from time to time by the TRUSTEES after consultation with the ACTUARY to
fund the benefits of DEFINED BENEFIT MEMBERS in the defined benefit reserve in the
Reserve Account and to fund the cost of expenses referred to in Rules 10.14 and 10.15
relating to DEFINED BENEFIT MEMBERS.’

[53] Rule 3.2(2) allows for the increase or reduction of SAPO’s contributions in
defined circumstances. In terms of rule 3.2(3), SAPO may, in consultation with the
Fund’s actuary, ‘from time to time make additional contributions to the FUND in order
to increase the balance in the Reserve Account’. In terms of rule 3.2(4), the board may
on the request of SAPO , and after consultation with the Fund’s actuary, ‘make special
transfers of all or part of any balance in the stabilization reserve in the Reserve
Account as contemplated in RULE 2.2(3) to the MEMBERS’ SHARES or the defined
benefit reserve in the Reserve Account, pro rata to the contributions due by the
EMPLOYER in terms of [rule 3.2](1)(a) or (e) above, in which case the EMPLOYER’S
contributions will be reduced by the amount of such transfer’.

[54] Rule 3.3 is headed ‘PAYMENT OF CONTRIBUTIONS’. It states:

‘Contributions are payable to the FUND monthly, in arrears, not later than the first working day
after the end of the calendar month to which such contributions relate.’

[55] Rule 3 follows a series of logical steps. The first is that SAPO’s employees
contribute a defined proportion of their salaries to the Fund on a monthly basis. Their
contributions are deducted from their salaries by SAPO and are then paid to the Fund
by SAPO. The second step is that SAPO is required to contribute to the Fund, also on
a monthly basis, in respect of each of its permanent employees. The amounts that
SAPO is required to pay, and their purpose, are set out in rule 3.2(1)(a) to (e). The
third step determines when SAPO is required to pay the contributions contemplated
by rules 3.1 and 3.2. Rule 3.3 requires payment to be made monthly in arrears and
immediately after the end of a month to which they relate.

[56] Understood in this way, within the wider context of the rules as a whole and
their purpose of providing social security to SAPO’s employees, it is clear that SAPO
has no choice: it is placed under an obligation by the rules – a statutory obligation – to
pay the Fund the contributions provided for in rules 3.1 and 3.2 and, in terms of rule
3.3, to do so by ‘not later than the first working day after the end of the calendar month
to which such contributions relate’. SAPO, being a public body, may only do what it is
empowered by law to do. It is not free to do what it pleases.16 No provision is made in
the rules for an exemption from the obligation to pay contributions on a monthly basis
and SAPO is not authorized, in its discretion, to decide to withhold payment. In
unqualified terms, rule 3 requires SAPO to pay contributions to the Fund. It had no
power, in terms of the rules, to decide to withhold payments and to prioritise other
creditors over the Fund. The purpose of the Fund would be undermined if SAPO was
free to contribute if it wanted to, and to withhold contributions at will.

[57] It is necessary now to comment on the approach taken by the high court to the
interpretation of rule 3. First, the high court committed an irregularity by holding that
while ordinarily rule 3.3 imposed an obligation on SAPO to pay contributions monthly
to the Fund, the extraordinary times required a different result. In so doing it took the

16 Compcare Wellness Medical Scheme v Registrar of Medical Schemes and Others [2021] ZASCA 91;
2021 (1) SA 15 (SCA) paras 21-23 and 30-32. See too Cora Hoexter and Glenn Penfold Administrative
Law in South Africa (3 ed) (2021) at 357-358.

view that rule 3.3 could mean one thing on a particular day and another on the
following day – that circumstances dictated its meaning. That is not correct. The
interpretation of a written document is an objective exercise and the starting point is
the words of the document to be interpreted.17 Those words remain constant and
cannot be made to mean different things in order to suit the perceived needs of the
moment. As Lord Aitken said in Liversidge v Anderson,18 the laws ‘speak the same
language in war as in peace’.

[58] Secondly, the high court confused the interpretation of rule 3.3 with the
separate doctrine of impossibility of performance when it held that the rule should not
be interpreted to include an obligation on the part of SAPO to pay contributions when
this was impossible. In order to make such a finding as to the meaning of the rule, the
high court had to ignore the words of the rule, its context and purpose, and read other,
unspecified, words into it. A dictum of Kentridge AJ on constitutional interpretation, in
S v Zuma and Another,19 is apposite:
‘We must heed Lord Wilberforce’s reminder that even a constitution is a legal instrument, the
language of which must be respected. If the language used by the lawgiver is ignored in favour
of a general resort to “values” the result is not interpretation but divination.’

[59] Thirdly, in holding that an interpretation that rule 3.3 required SAPO to pay
contributions would not promote constitutional values, the high court simply ignored
both the plain meaning of the rule and the fundamental rights of SAPO’s employees
to social security and to fair labour practices. It also ignored the founding constitutional
value of the rule of law. The purpose of the obligation was to enable SAPO to fulfil its
employees’ fundamental rights to social security in terms of s 27(1)(c) of the
Constitution. By misappropriating a portion of its employees’ salaries required to be
paid on their behalf to the Fund, and using that money for other unauthorized
purposes, SAPO perpetrated an obvious unfair labour, in contravention of s 23(1) of
the Constitution, and did so on a grand and persistent scale. And the endorsement of
an arbitrary, open-ended and undefined power in the hands of SAPO to prefer its

17 Natal Joint Municipal Pension Fund v Endumeni Municipality (note 15) para 18.
18 Liversidge v Anderson 1942 AC 206 (HL) at 244. See too Esau and Others v Minister of Co-operative
Governance and Traditional Affairs and Others [2021] ZASCA 9; 2021 (3) SA 593 (SCA) para 4.
19 S v Zuma and Another [1995] ZACC 1; 1995 (2) SA 642 (CC); 1995 (6) BCLR 665 (CC) para 18.

creditors of choice over other creditors undermines the rule of law enshrined as a
founding value of the Constitution in s 1(c). It is far from clear to me how this promotes
constitutional values. At best, if it does, it does so while simultaneously undermining
other fundamental rights and constitutional values. This interpretation of the rule turns
a blind eye to SAPO routinely giving undue preferences to some creditors at the
expense of others.20

[60] Perhaps because the high court eschewed the need to interpret rule 3, it is not
at all clear how it arrived at its conclusion that the rule included a power in the hands
of SAPO to choose which of its creditors to pay and which to ignore. The high court’s
most profound misdirection, it seems to me, is its complete lack of any principled basis
for its decision: it has failed to explain how the power it recognized can, as a matter of
interpretation, to be said to be included in rule 3. I find, however, that rule 3’s meaning
is clear: it requires employees and SAPO to pay contributions to the Fund and those
contributions are required to be paid monthly, on the first working day of a month for
the preceding month. The argument that rule 3 does not impose an obligation on
SAPO to pay contributions to the Fund is consequently without merit.

Could SAPO decide not to pay the Fund despite the terms of rule 3?
[61] I turn now to two related arguments advanced by SAPO that are said to be
based on the Constitution and its values. They are to the effect that even if rule 3
imposes an obligation on SAPO to pay the Fund, it enjoys an unrestricted power to
decline to pay creditors of its choosing.

[62] As I understand the first of these arguments, it has the following contours:
SAPO’s contractual obligation to pay social grants implicates the fundamental rights
of access to social security, including social assistance21 and, in some cases, the
fundamental right of the paramountcy of a child’s best interests;22 the obligations
imposed on SAPO in terms of s 4 of the SAPO Act also impose constitutional
obligations because, by requiring SAPO to take reasonable measures within its
available resources to progressively realise, for instance, ‘the universal and affordable

20 Insolvency Act 24 of 1936, s 30.
21 Constitution, s 27(1)(c).
22 Constitution, s 28(2).

provision of postal serves’23 or the development of postal services that ‘are responsive
to the needs of users and consumers’,24 SAPO fulfils the fundamental rights of its
customers to dignity, equality and, it claims, virtually every other fundamental right; the
fact that it is fulfilling fundamental rights in this way vests in it a power, derived from
the Constitution or its values, to prioritise the payment of social grants and the
provision of the services it offers at the expense of some of its creditors.

[63] I have my doubts as to the correctness of the assertion that, by fulfilling its
mandate to provide a postal service, SAPO is fulfilling fundamental rights. That
assertion seems to me to be a bridge too far. Section 4 of the SAPO Act does no more
than place on SAPO an obligation to progressively realise, within its available
resources, a number of postal services. I shall, however, despite my doubts, accept
SAPO’s premise to be the case for purposes of the argument advanced by it.

[64] In my view, there is no merit in the argument for the reasons that follow. In
Fedsure Life Assurance Ltd v Greater Johannesburg Transitional Metropolitan
Council25 Chaskalson P, Goldstone J and O’Regan J held that it was ‘central to the
conception of our constitutional order that the Legislature and Executive in every
sphere are constrained by the principle that they may exercise no power and perform
no function beyond that conferred upon them by law’. As a public body, SAPO labours
under the same constraint, imposed by the rule of law and its principle of legality.

[65] We have not been directed to any provision in the Constitution that empowers
SAPO and, presumably every other organ of state, to decide which of its creditors it
wishes to pay, and which not, in order to prioritise its spending. If such an extraordinary
power existed, its effect would be to undermine the rule of law by placing organs of
state above the law in respect of the payment of their contractual and statutory
obligations. This attempt by SAPO to dress its failure to meet its obligations to the
Fund in the finery of the Constitution must therefore fail.

23 Section 4(a).
24 Section 4(d).
25 Fedsure Life Assurance Ltd v Greater Johannesburg Transitional Metropolitan Council [1998] ZACC
17; 1999 (1) SA 374 (CC); 1998 (12) BCLR 1458 (CC) para 58.

[66] The second argument is a variation on the same theme. SAPO places reliance
on Soobramoney v Minister of Health, KwaZulu-Natal26 to justify its failure to pay its
debts. It was argued that Soobramoney recognizes that an organ of state may
prioritise its activities in the context of shortage of resources. It is necessary to consider
Soobramoney in detail in order to determine whether it assists SAPO in this case.

[67] Soobramoney was terminally ill and required kidney dialysis in order to prolong
his life, it being common cause that his illness could not be reversed. He sought kidney
dialysis from a state hospital but was refused treatment. Because of a shortage of
resources, the hospital was not able to provide the treatment to all who required it. It
had developed guidelines to determine who would receive treatment and who would
not. Soobramoney was not eligible for treatment because his renal failure was
irreversible and he was not, for various reasons, eligible for a kidney transplant. He
applied for an order directing the hospital to treat him. His application was dismissed
but he appealed to the Constitutional Court.

[68] Chaskalson P found that the fundamental right in issue in the case was the right
of access to health care in s 27(1)(a) of the Constitution. That right was subject to s
27(2) which provided that the state was required to take ‘reasonable legislative and
other measures, within its available resources, to achieve the progressive realisation’
of this and other socio-economic rights mentioned in s 27(1). Chaskalson P held that
the obligations imposed on the state by s 27 were dependent on the availability of
resources ‘for such purposes’ and that ‘the corresponding rights themselves are
limited by reason of the lack of resources’.27 Because the hospital could not treat
everyone who required treatment, the hospital administration had to develop
guidelines concerning access to dialysis treatment. Those guidelines were reasonable
and had been applied fairly and rationally in relation to Soobramoney.

[69] Soobramoney’s case is not authority for the proposition that an organ of state
may ignore its legal obligations in order to pursue what it considers to be more
important goals. It is, instead, authority for a different proposition, namely that when

26 Note 11.
27 Para 11.

access to a right such as health care is made dependent on the availability of
resources, an organ state may put in place a program in which it prioritises how that
right will be made available, as long as that program is reasonable.28 In this case, by
analogy, that means that when SAPO was faced with its financial crisis, it could and
should have formulated a plan of action to prioritise its s 4 duties, as they are
dependent on the availability of resources. It was not entitled to take the law into its
own hands and simply ignore its statutory obligation to pay contributions to the Fund.
The high court also misinterpreted Soobramoney. It is not authority for the proposition
that there is ‘a hierarchy of rights’ that favours ‘the good of the many over the good of
the few’ and that the ‘rights of the many should trump the few’.29

[70] Much was made in SAPO’s answering affidavit of its obligation to pay social
grants. It sought to create the impression that this was a cost that it bore. That is not
so for two reasons. In the first place, social grants are paid from the budget of SASSA
to SAPO, its agent, which pays beneficiaries. Secondly, SAPO is paid by SASSA for
providing this service. Its obligations in relation to beneficiaries cannot therefore have
a bearing on its failure to pay its contributions to the Fund.

Impossibility of performance
[71] The final defence raised by SAPO is that its obligation to pay the Fund was
extinguished by supervening impossibility of performance. The event that, according
to SAPO, rendered performance impossible was the onset of the Covid-19 pandemic
and its attendant lockdowns. In order to determine whether this defence may avail
SAPO, it is necessary first to consider the facts relevant to this defence and then to
consider the nature of the impossibility relied upon.

[72] In the communications between Faasen and Trikamjee, on the one hand, and
Nongogo, on the other, very little was said by the latter about the Covid-19 pandemic
being the cause of SAPO’s failure to pay contributions to the Fund. And this despite
Trikamjee asking for ‘detailed feedback’ on the causes of that failure. At one stage,

28 See too Government of the Republic of South Africa and Others v Grootboom and Others [2000]
ZACC 19; 2001 (1) SA 46 (CC); 2000 (11) BCLR 1169 (CC).
29 Para 56.

however, Nongogo said that SAPO’s financial position had deteriorated dramatically
and that this trend had accelerated as a result of the lockdown.

[73] The evidence as to the cause of SAPO’s failure to honour its obligations to the
Fund are, at best, ambiguous. For instance, Ngonyama spoke of SAPO’s parlous
financial position being the result of the ‘current economic environment and the impact
of COVID-19’. While she asserted that the Covid-19 pandemic had had a severe
impact on SAPO, she provided little historical evidence as to SAPO’s financial position
prior to the lockdown. Even so, on the limited evidence available, there is merit in the
Fund’s assertion that SAPO’s financial woes pre-dated the Covid-19 pandemic and
were caused by managerial failures.

[74] For instance, SAPO’s net loss in July 2020, a few months after the imposition
of the lockdown and at a time when the worst of it had been ameliorated, was R97
million. In July 2019, however, well before the start of the Covid-19 pandemic, SAPO’s
loss was R34 million. In other words, SAPO was a loss-making enterprise before the
lockdown, even though, as Nongogo said, the lockdown accelerated its decline. The
year-to-date loss, as at 31 July 2020, of R1.066 billion must be seen in that light.
Strangely, for a party seeking to establish a defence to its failure to meet its obligations,
SAPO has not taken the court into its confidence as to how many of the 1 361 loss-
making post offices were profitable before the lockdown started. The statement in the
answering affidavit that only 55 out of 1 416 post offices in the country were profitable
as at 31 July 2020 is a largely meaningless statistic.

[75] A second factual strand concerning impossibility of performance is apparent.
Nongogo, in his exchanges with Faasen, explained that SAPO was paying its creditors
in turns: one month it planned to pay medical aid contributions but not pension fund
contributions, and the following month it planned to do the reverse. This plan does not,
however, appear to have been put into effect.

[76] In the answering affidavit, Ngonyama explained that SAPO had decided to pay
medical aid contributions rather than pension fund contributions. She said that SAPO
was trying to pay as many of its creditors as it could, and she undertook to pay the

Fund as soon as it could. At the time she deposed to her affidavit, it was not possible,
she said, to pay the Fund what was due to it.

[77] Although the legal principles relating to impossibility of performance are most
closely associated with the law of contract,30 they have a wider application and are
based on the notion that the law does not require people to do the impossible – lex
non cogit ad impossibilia.31 These principles also apply in respect of the non-
performance of statutory obligations. For example, in Montsisi v Minister van Polisie,32
a special plea of prescription was dismissed on appeal because it had been impossible
for Montsisi to give the required statutory notice timeously of his intention to institute
proceedings against the Minister for damages arising from an assault on him by
policemen. It had been impossible for him to have complied while he was being
detained without trial, with no access to the outside world, in terms of s 6 of the
Terrorism Act 83 of 1967.

[78] The operation of the principles, in a contractual setting, was explained thus by
Scott JA in MV Snow Crystal:33
‘As a general rule impossibility of performance brought about by vis major or casus fortuitus
will excuse performance of a contract. But it will not always do so. In each case it is necessary
to “look to the nature of the contract, the relation of the parties, the circumstances of the case,
and the nature of the impossibility invoked by the defendant, to see whether the general rule
ought, in the particular circumstances of the case, to be applied”. The rule will not avail a
defendant if the impossibility is self-created; nor will it avail the defendant if the impossibility is
due to his or her fault.’

[79] It is evident from the dictum cited above that it is not every instance of
impossibility that would allow a defendant to escape the consequences of their
bargain. In Peters, Flamman and Co,34 Solomon ACJ held that it was only if ‘a person

30 See for example Peters, Flamman and Co v Kokstad Municipality 1919 AD 427 at 434-435; MacDuff
& Co Ltd (In Liquidation) v Johannesburg Consolidated Investment Co Ltd 1924 AD 573 at 600-601;
MV Snow Crystal: Transnet Ltd t/a National Ports Authority v Owner of MV Snow Crystal [2008] ZASCA
27; 2008 (4) SA 111 (SCA) para 28.
31 R v Hargovan and Another 1948 (1) SA 764 (A) at 769-770; Montsisi v Minister van Polisie 1984 (1)
SA 619 (A) at 634H-636H; Gassner NO v Minister of Law and Order and Others 1995 (1) SA 322 (C)
at 325H-327H.
32 Note 31.
33 Note 30 para 28. See too Bischofberger v Vaneyk 1981 (2) SA 607 (W) at 611B.
34 Note 30 at 435.

is prevented from performing his contract by vis major or casus fortuitus’ that ‘he is
discharged from liability’. These terms, taken together, mean ‘any happening, whether
due to natural causes or human agency, that is unforeseeable with reasonable
foresight and unavoidable with reasonable care’.35

[80] In order to establish impossibility of performance, whether initial or
supervening,36 four requirements must be met by the party relying on this defence.
They have been set out by Bradfield as follows:37
‘First, the impossibility must be absolute as opposed to probable. The mere likelihood that
performance will prove impossible is not sufficient to destroy the contract. Second, the
impossibility must be absolute as opposed to relative. If I promise to do something which, in
general, can be done, but which I cannot do, I am liable on the contract. Third, the impossibility
must not be the fault of either party. A party who has caused the impossibility cannot take
advantage of it and so will be liable on the contract. Fourth, the principle must give way to the
contrary common intention of the parties. This intention may be expressed, as when, for
example, a seller expressly represents or guarantees that the goods sold exist.’

[81]     There are three fundamental problems that arise in relation to SAPO’s
invocation of supervening impossibility of performance. The first is that the evidence,
such as it is, does not establish that the impossibility of performance that is alleged
arose as a result of vis major or casus fortuitus. At best for SAPO, its financial
misfortunes preceded the Covid-19 pandemic and were only made worse by it. In July
2019, for instance, more than six months before the onset of the Covid-19 pandemic,
it incurred a loss of R34 million. To this extent, its financial difficulties were foreseeable
and avoidable, with the fault lying squarely with the management of SAPO. As Meer J
said in Quinella Trading (Pty) Ltd v Minister of Rural Development and Land Reform,38
‘[s]elf-created impossibility does not discharge the obligations’ of a party to a contract.

35 G B Bradfield Christie’s Law of Contract in South Africa (7 ed) (2016) at 549.
36 In Peters, Flamman and Co v Kokstad Municipality (note 30) at 434, Solomon ACJ held that ‘a
contract is void if at the time of its inception its performance is impossible’ and that ‘where a contract
has become impossible of performance after it has been entered into the general rule was that the
position is then the same as if it had been impossible from the beginning’.
37 Bradfield (note 35) at 109-110.
38 Quinella Trading (Pty) Ltd v Minister of Rural Development and Land Reform 2010 (4) SA 308 (LC)
para 28.

[82]     The second problem is that impossibility of performance was not established.
The evidence, boiled down to its basics, establishes that SAPO chose to pay certain
of its creditors and not others because it did not have sufficient funds to pay all of its
debts when they fell due. It decided that it would not pay the Fund. It could have
decided not to pay another creditor and, instead, to pay the Fund. Performance was
thus not objectively impossible.

[83]     The third problem concerns whether the impossibility relied on by SAPO is
absolute or relative. In Unibank Savings and Loans Ltd (formerly Community Bank) v
ABSA Bank Ltd,39 the court held that ‘[i]mpossibility is furthermore not implicit in a
change of financial strength or in commercial circumstances which cause compliance
with the contractual obligations to be difficult, expensive or unaffordable’ because
‘[d]eteriorations of that nature are foreseeable in the business world at the time when
the contract is concluded’. Bradfield says of the requirement of absolute impossibility
that if a person promises to do something which, generally speaking, can be done, but
which the person concerned is unable to do, they are liable on the contract.40 In Scoin
Trading (Pty) Ltd v Bernstein NO41 it was held by this court that the law ‘does not
regard mere personal incapacity to perform as constituting impossibility’.

[84]     The position, when a debtor is unable to pay a debt, was set out by Meyer J in
Unlocked Properties 4 (Pty) Ltd v A Commercial Properties CC.42 He held that when
the impossibility on which a seller relied was ‘peculiar to itself because of its personal
financial situation and incapability of securing payment of the full debt owed to the
bank’, it was not absolute and so the seller’s ‘incapability does not render the contract
void’ on account of impossibility of performance.

39 Unibank Savings and Loans Ltd (formerly Community Bank) v ABSA Bank Ltd 2000 (4) SA 191 (W)
para 9.3.1.
40 Note 35 at 110.
41 Scoin Trading (Pty) Ltd v Bernstein NO [2010] ZASCA 160; 2011 (4) SA 118 (SCA) para 22.
42 Unlocked Properties 4 (Pty) Ltd v A Commercial Properties CC [2016] ZAGPJHC 373 para 13. See
too Matshazi v Mezepoli Melrose Arch (Pty) Ltd and Another; Nyoni v Mezepoli Nicolway (Pty) Ltd and
Another; Moto v Plaka Eastgate Restaurant and Another; Mohsen and Another v Brand Kitchen
Hospitality (Pty) Ltd and Another [2020] ZAGPJHC 136 para 39; Pillay v Personify Investments (Pty)
Ltd and Others; Pillay and Another v Huntrex 302 (Pty) Ltd and Others; Pillay v Misty Blue Investments
(Pty) Ltd and Others; Investec Bank Ltd v Personify Investments (Pty) Ltd; Investec Bank Ltd v Misty
Blue Investments (Pty) Ltd; Investec Bank Ltd v Huntrex 302 (Pty) Ltd; Huntrex 302 (Pty) Ltd and Others
v Investec Bank Ltd  and Others [2021] ZAKZDHC 41 paras 40-43; Nedbank Limited v Groenewald
Familie Trust and Others [2021] ZAFSHC 150 paras 16-17; Mahomed NO v VGZ and Others [2020]
ZAECPEHC 20 paras 28-29.

[85]     The authorities I have cited apply foursquare to SAPO’s position. It chose not
to pay the Fund when it could have done so; its financial distress pre-dated the Covid-
19 pandemic, was foreseeable and avoidable, and so was not the result of vis major
or casus fortuitus; and the impossibility it relied upon was, in any event, relative as
opposed to absolute. The result is that SAPO’s defence of impossibility of performance
fails, and it is bound to perform its obligations in terms of rule 3 of the Fund’s rules.

Conclusion
[86]     Each of the three defences raised by SAPO lacks merit. Its conduct in this case
is worthy of censure. Instead of facing up to its financial challenges, as it initially did,
and dealing with the Fund openly and honestly, it changed tack and sought to vilify the
Fund for seeking to protect the rights of its members, as its board was duty-bound to
do. Not only was SAPO’s approach to this matter opportunistic, but it was also cynical:
while claiming to be concerned about the fundamental rights of social grant
beneficiaries and its customers, it infringed the rights of its employees and sought,
through transparent legal sophistry, to place itself above the law. An organ of state
ought not to act in this way. SAPO, like any other debtor, cannot choose which debts
to pay. If it is trading in insolvent circumstances, its board’s obligation is to place it in
liquidation, not to pick and choose which of its debts to honour.

[87]     SAPO’s approach was cynical in another respect as well. It attempted to use
the scare tactic of predicting its collapse if the relief sought by the Fund was granted.
And that it did without a tenable legal defence. Its apparent purpose was to divert the
court from applying the law – that when a statutory instrument places an obligation on
a party to pay contributions to another, it must do so. Courts of law exist to determine
disputes through the application of legal principles, not to attempt to find expedient,
non-legal, ad hoc solutions for one of the parties at the expense of the other. If the
consequence of the law taking its course is the demise of SAPO, that is a factor that
cannot influence us when the law is clear: SAPO is under a statutory obligation to pay
its employees’ contributions and its own contributions to the Fund every month, and it
is in breach of that obligation.

[88]     On appeal, the Fund, perhaps influenced by its symbiotic relationship with
SAPO, informed us that it only sought declarators to the effect that SAPO was in
breach of its obligations in terms of rule 3 and that supervening impossibility of
performance has not extinguished or deferred its obligations. While it also sought a
remittal of the matter to the high court, with a view to seeking further remedial relief, I
do not believe that that is appropriate. If, despite the declaratory relief, SAPO
continues to breach its obligations the Fund can in that event take whatever steps it
considers to be appropriate.

[89]     Before making the order, it is necessary to comment on the high court’s costs
order. It decided that costs should follow the result and that the Fund should pay
SAPO’s costs on an attorney and client scale because both parties asked for such a
costs order against the other. In this it misdirected itself. Even if the judgment was
otherwise correct, I can see no possible justifiable basis for an attorney and client costs
order being made against the Fund. As the appeal will succeed and the high court’s
order, including the costs order, will be set aside, the costs of the proceedings in the
high court and on appeal will have to be paid by SAPO. Given my comments on its
conduct in this matter, it can consider itself fortunate that those costs will only be on a
party and party scale.

[90]     I make the following order.
1     The appeal is upheld with costs, including the costs of two counsel.
2     The order of the high court is set aside and replaced with the following order.
‘1
It is declared that the South African Post Office:
1.1 is obliged and required, in terms of rule 3 of the Post Office Retirement Fund’s
rules, to pay contributions, as defined therein, to the Post Office Retirement
Fund on a monthly basis, in arrear, by not later than the first working day of
each month; and
1.2 is in breach of this obligation in that it has not made the required payments
since May 2020.
2 It is declared that the South African Post Office’s obligations in terms of rule 3 of
the rules have not been extinguished or deferred by intervening impossibility of
performance.

3 The South African Post Office is directed to pay the costs of the Post Office
Retirement Fund, including the costs of two counsel.’

____________________
C Plasket

Judge of Appeal

APPEARANCES

For the appellant:

T Motau SC (with him R Tshetlo)
Instructed by:
Norton
Rose
Fulbright
SA
Inc,
Johannesburg

Webbers Attorneys, Bloemfontein

For the first respondent:

J P V McNally SC
Instructed by:

Webber Wentzel, Johannesburg

Symington & De Kok, Bloemfontein

THE SUPREME COURT OF APPEAL OF SOUTH AFRICA

MEDIA SUMMARY OF JUDGMENT DELIVERED IN THE SUPREME COURT OF APPEAL

FROM

The Registrar, Supreme Court of Appeal

DATE

30 December 2021

STATUS

Immediate

Please note that the media summary is for the benefit of the media and does not form part of
the judgment.

Post Office Retirement Fund v South African Post Office SOC Ltd and Others
(1134/2020) [2021] ZASCA 186 (30 December 2021)

MEDIA STATEMENT

The Supreme Court of Appeal (SCA) today upheld the appeal of the Post Office
Retirement Fund (the Fund) against the South African Post Office SOC Ltd (SAPO).

All permanent employees of SAPO are members of the Fund. It administers
contributions paid monthly by SAPO, comprising primarily of an employee contribution
and an employer contribution. The purpose of the Fund is to pay retirement, death and
disability benefits to employees or their dependants. Rule 3 of the Fund’s rules
requires SAPO to deduct a certain percentage of each employee’s salary and to pay
it, together with its own contribution in respect of each employee to the Fund on a
monthly basis. In May 2020, SAPO failed for the first time to pay the contributions to
the Fund. When it failed to do so again at the end of the following month, the Fund
brought an urgent application to compel it to pay the contributions and to continue to
do so. The Fund’s application was dismissed with costs on a punitive scale by the high
court, but leave to appeal to the SCA was granted.

SAPO raised three defences. First, it argued that rule 3 of the Fund’s rules did
not impose an obligation on it to pay the Fund. This argument was found by the SCA
to be without merit.  The language of the rule, interpreted contextually and purposively,
clearly placed an obligation on SAPO to pay the defined contributions on a monthly
basis.

Secondly, SAPO argued that it had the power to choose which of its debts to
pay and which not. As a result of its financial weakness, it was not able to pay all of its
creditors and had decided to prioritise the payment of those that related directly to its
core business of providing a postal service to the public, and the payment of social
grants. It claimed to have derived this power from the Constitution. This argument was

also found to be without merit. SAPO, as an organ of state, could only do what the law
authorised it to do. No provision of the Constitution authorised SAPO to decide which
of its creditors to pay and which not.

Thirdly, SAPO argued that payment of contributions to the Fund had become
impossible as a result of the Covid-19 pandemic, with the result that supervening
impossibility of performance extinguished its obligation to pay contributions to the
Fund. This argument also did not succeed. In the first place, the evidence did not
establish that the impossibility arose as a result of vis major or casus fortuitus, as
required by the law: SAPO’s financial woes preceded the Covid-19 pandemic, and
were only made worse by it. In the second place, the evidence did not establish that it
was impossible to pay the Fund. SAPO could have paid the Fund but chose not to,
and to pay other creditors instead. In the third place, the impossibility of performance
was relative and not absolute, as the law requires. This means that if a person
undertakes to do something which, generally speaking, can be done, but which that
particular person is unable to do, because for instance of a deterioration in their
financial position, they remain liable on their undertaking: impossibility of performance
does not excuse them from liability because the impossibility is relative to them, and
not absolute.

In the result, the SCA upheld the Fund’s appeal and set aside the high court’s
order dismissing the Fund’s application. In its place, the SCA made a declaratory order
to the effect that SAPO was obliged and required in terms of rule 3 of the Fund’s rules
to pay contributions to the Fund on a monthly basis; that it was in breach of this
obligation; and that its obligation in terms of rule 3 had not been extinguished by
supervening impossibility of performance.