THE SUPREME COURT OF APPEAL
REPUBLIC OF SOUTH AFRICA

JUDGMENT

REPORTABLE
CASE NO 677/05
In the matter between

REGISTRAR OF PENSION FUNDS

First Appellant
NATIONAL UNION OF METAL WORKERS OF SA

Second Appellant
and
BRIAN ANGUS NO

First Respondent
CA BOYES

Second Respondent
S VORSTER NO

Third Respondent
P WITTSTOCK NO

Fourth Respondent
O GOLDSTUCK NO

Fifth Respondent
H FISCHER NO

Sixth Respondent
L MATTEUCCI NO

Seventh Respondent
DCG MURRAY NO

Eighth Respondent
DA CARSON NO

Ninth Respondent
E VORSTER NO

Tenth Respondent
_____________________________________________________________________

CORAM:
HOWIE P, BRAND, HEHER, PONNAN JJA et MUSI AJA
_____________________________________________________________________

Date Heard:
27 February 2007
Delivered:
30 March 2007
Summary:
Pension Funds Act applies to neither a fund established by an
industrial council agreement nor to one established separately
from, but pursuant to, such an agreement.

Neutral citation:  This judgment may be referred to as Registrar of Pension
Funds v Brian Angus NO [2007] SCA 48 (RSA)
_____________________________________________________________________
HOWIE P

HOWIE P
[1] I have had the advantage of reading the judgment of my Colleague
Heher. What follows is stated with respect to his reasons and conclusion.
In my view the appeal should fail.
[2] The exemption in s 2(1) of the Pension Funds Act (PFA) (in its
original wording) pertained to a fund established ‘in terms of’ an
agreement gazetted under s 48 of the Industrial Reconciliation Act 36 of
1937 (the 1937 Act). It is accepted that publication under the similar s 48
of the Industrial Conciliation (later, Labour Relations) Act 28 of 1956
(the 1956 LRA) sufficed to also bring the exemption into play. Indeed, it
is the latter statute which together with s2(1) of the PFA forms the focus
of the present case.
[3] The appeal, as I see it, turns on the interpretation of ‘in terms of’.
The expression constitutes, in effect, a linking preposition. It can have the
narrow meaning of ‘by’, in the sense that the fund owes its existence to
the agreement, or the wide meaning of ‘pursuant to’ or ‘in accordance
with’. The Afrikaans equivalent used in the original version of s 2(1) was
‘ooreenkomstig’. Currently it is ‘ingevolge’. That there is a great degree
of synonymity in these various expressions (and other common
alternatives), depending on context, appears from the judgments in the

Oosthuizen and Slims cases.1 The narrow meaning conveys an immediate
or direct link between the published agreement and the fund. The wide
meaning conveys a looser or indirect connection.
[4] Much of the argument for the appellant, based on the narrow
meaning, centred on various differences that would exist between a fund
created by the agreement itself and one created as were the funds in this
matter. The thrust of the argument was that a fund established in the
manner of the EIPF and the MIPF required, for example, the oversight
and investigation provisions contained in the PFA. By contrast, a fund
established by the agreement itself was such that it would not fit within
the framework of the PFA whether appropriately or at all.
[5] The effect of the counter argument for the respondents was that
whatever the mode of establishment, it could not detract from the fact that
in either instance the fund would be one set up by a particular industry to
serve and be amenable to the requirements and circumstances of that
industry. Accordingly ‘in terms of’ bore, according to the facts, either the
wide meaning of ‘pursuant to’ or ‘in accordance with’, or the narrow
meaning of ‘by’.
[6] Section 23 of the constitution now confers the right of trade unions
and employers’ organisations to engage in collective bargaining. The
agreements involved in this case were the product of precisely that

1 Oosthuizen v Standard Credit Corporation Ltd 1993 (3) SA 891 (A) at 900J-901B and 909J-910I, and
Slims (Pty) Ltd v Morris NO  1988 (1) SA 715 (A) at 733B-G and 744G-H

process albeit decades before the constitutional era. I shall revert to the
matter of collective bargaining when discussing the question of legislative
purpose and context. First there is the matter of legislative language.
[7] For an agreement to have been published under s 48 it had to have
been an agreement referred to in s 24(1) and, in the present context, an
agreement concerning the subject matter in paragraph (r) of that
subsection. If s 24(1)(r) referred exclusively to an agreement establishing
a fund the conclusion would have been unavoidable that the fund in such
instance would have been one established by the published agreement.
However, s24(1)(r) refers to an agreement which ‘may include provisions
as to ... the establishment of ... funds’ (my emphasis). The wording is
wide enough to cover not only an agreement establishing a fund but also
an agreement in which provision for or reference to establishment is
made.
[8] Then, it is significant to note that s 24(1)(r) ends with the words
‘or towards similar funds established by or in terms of the constitution of the council’.
Those words were not in s 24(1)(r) of the 1937 Act. They serve clearly to
convey that establishment ‘by’ is different from establishment ‘in terms
of’. The same prepositions also appear in s 24(3) of the 1956 LRA in the
phrase ‘the agreement or constitution by or in terms of which such fund
has been established’. Section 24(3) specifically concerns a fund referred
to in s 24(1)(r) and it, too, had no counterpart in the 1937 Act.

Considering that the PFA and the 1956 LRA were passed in the same
year and must have been drafted at much the same time as each other, one
must conclude that the legislature, in using ‘established in terms of’ in s
2(1) of the PFA, was conscious of its use of ‘by or in terms of’ in the
1956 LRA and deliberately used the expression of wider import in the
PFA.
[9] It may therefore not be altogether surprising that when the EIMF
applied in 1964 for registration under the PFA (because, so it said, it had
up to then understood that it was excluded from the PFA’s provisions by
the  exemption in s 2(1)) its letter of application stated:
‘We also enclose two copies of the Industrial Agreement in pursuance of which the
Fund was established.’
[10] Coming now to the EIPF agreement and its content, it was entered
into by the parties to the council of the particular industries concerned.
The declared purpose of the agreement was ‘in accordance with the
provisions of the [1956 LRA] to provide for the payment of contributions
to a Fund to be established and known as “the Metal Industries Group
Life and Provident Fund”. (This was the EIPF’s original name.) It was
therefore an industrial council agreement aimed at the eventual creation
of an industry pension fund.
[11] The agreement stated in clause 4 who would be members of the
fund on its establishment, and clause 5 required contributions to be paid

by employers to the council, which would then pay the accumulated
contributions to the fund when established. Clause 6 required that the
fund be administered by a board of management in accordance with rules
and a constitution and that the rules be consistent with the agreement and
the 1956 LRA. In addition a copy of the rules and amendments were to be
lodged with the Secretary for Labour (the then title of the administrative
head of the Department of Labour).
[12] It seems to me that all these provisions were, to quote s 24(1)(r) of
the 1956 LRA, provisions ‘as to the establishment’ of the EIPF.
[13] It is not clear by virtue of what further decisions of the council or
by what procedures the constitution and rules of the EIPF were drafted.
Nor does one know precisely how the representatives of the parties to the
fund came to assemble together when the resolution to adopt the
constitution and rules was taken. Accepting fully that it was such
adoption that established the fund, the question remains whether
establishment was ‘in terms of’ the agreement.
[14] Despite the absence of fuller information it seems sufficiently clear
that the hand of the council lay heavy on everything that was done from
and including the conclusion of the agreement until the fund was
established and operating. The parties to the fund and the parties to the
board of management were the same as the parties to the council. It is
also more than likely that the constitution and rules were procured and

drawn by or at the instance of the council. The establishment of the fund
was therefore squarely in accordance with the council’s stated purpose
that the fund for which contributions would be collected would ‘be
established’.
[15] All that is reinforced by the content of the constitution and rules.
The first name of the fund accorded with the name stated in the
agreement. As required by the agreement, a board of management was set
up to manage the fund in accordance with the rules. Membership
eligibility under the constitution was basically in accordance with what
the agreement laid down. Contribution collection was to be effected as
required by the agreement and, indeed, the rules’ provisions for collection
not only echoed very closely the provisions of the agreement on the same
topic but referred specifically to the agreement. As regards amendments,
the constitution provided that amendments to it and the rules would be
notified to, inter alia, the Secretary for Labour, again following a
provision of the agreement. Finally, winding up was to be by unanimous
decision of the organisations constituting the parties to the council, who
were, as I have said, also the parties to the fund and board of
management.
[16] Counsel for the appellant sought to meet the impact of all these
features by stressing that in clause 5(4) of the agreement it was envisaged
that the fund might not be established after all and that in that event

contributions collected in the interim would be refunded. I do not think
that the subclause detracts from the weight of the features to which I have
referred. Seeing that the fund’s establishment was at the time of the
agreement only a contemplated future event it was no more than an
obvious and sensible precaution to provide for refunds in the event of
non-establishment.
[17] Next, appellant’s counsel pointed to the winding up provision in
the constitution of the fund which laid down that distribution would occur
in accordance with the rules unless inconsistent with the PFA. I do not
think that this reference to the PFA supports the argument that a fund’s
establishment other than ‘by’ an agreement appropriately qualifies the
fund to receive the benefit of the provisions of the PFA. It may do so but
that is not the point. The PFA ‘formula’ is simply an equitable example to
follow. If anything, the reference to the PFA serves to show that the
parties to the agreement intended the fund to be under the industrial
council umbrella and recognised that the PFA would not apply as a matter
of lawful course.
[18] The essence of the appellant’s argument was, as I have indicated,
that a fund established in the manner of the EIMF and the MIPF is open
to a number of material advantages which a fund established ‘by’ a s
24(1)(r) agreement cannot secure. I accept that that is so. I am not
persuaded, however, that the availability of those advantages serves to

compel the conclusion that ‘in terms of’ in s 2(1) of the PFA must mean
‘by’ in so far as the funds in question are concerned. The availability of
those advantages is simply the reason why an industrial council will
probably, most times, prefer establishment in the way the funds in issue
were established. But it does not warrant the conclusion that
establishment in the present case was establishment other than ‘in terms
of’ the published agreement.
[19] Turning to the matter of legislative purpose and context there is,
first, the consideration that these funds were the product of collective
bargaining every bit as much as a fund established ‘by’ a published
agreement. On the face of it the legislature would have had good reason,
therefore, to intend that whichever mode of establishment was resorted to
the fund concerned would remain an industry fund and be exempt from
the provisions of the PFA.
[19] As to the legislative purpose in enacting the PFA, counsel for the
appellant endeavoured, unsuccessfully, to find relevant parliamentary
material bearing on the subject.  All that the Annual Survey of South
African Law, 1956 tells one (at 398) is that parliamentary investigation
had revealed the existence of a multiplicity of private pension funds
nationwide whose combined assetholding was very extensive indeed. The
Act was therefore passed in order to provide for the registration and
regulation of such funds. Section 2(1) appears, however, to have been

intended to let industrial council funds go their own way. There is no
ground for concluding that, seen against that background, the legislature
would have thought that industrial councils could not cope adequately
with the needs of funds established and operating in the way of the EIMF.
[20] Agreements published under s 48 of the 1956 LRA constitute
subordinate domestic industrial legislation2. It would have been illogical
and frankly remarkable had the legislature intended that an industrial
council fund, having been brought into being in that legislative
environment, were to be hived off and, for the rest of its existence, to be
governed by entirely different legislation. And, what is more, without any
express legislative provision effecting the severance, and pointing the
new direction, such as was passed in 1998.
[21] Furthermore, the body of industrial agreements emanating from a
particular council is designed to establish a coherent system of labour
relations within the industry concerned.3 It would not make for such intra-
industry coherence, or consistency, were the contention for the appellant
to prevail.
[22] Overarching all the points already discussed is this consideration.
The enactment in issue has been on the statute book for over 50 years but

2  S v Prefabricated Housing Corporation (Pty) Ltd.1974 (1) SA 535 (A) at 540A-B
3  Photocircuit SA (Pty) Ltd v National Industrial Council for the Iron, Steel and Metallurgic Industry
[1996] 17 ILJ 479(A)

the court is, of course, enjoined by s 39(2) of the Constitution4 now to
interpret the legislation in a way that promotes the spirit, purport and
objects of the Bill of Rights. In my view it gives due expression to the
industrial council parties’ freedom to bargain collectively to resolve
matters of mutual concern to adopt that interpretation of s 2(1) of the PFA
according to which the exempted funds are not only those established by
a gazetted agreement but also those established pursuant to or in
accordance with such an agreement.  In that way both kinds of fund are
administered implemented and, if needs wound up according to the terms
and provisions collectively bargained for.
[23] I conclude, therefore, that the EIPF (then differently named) was
established pursuant to and thus ‘in terms’ of the agreement published on
19 July 1957.
[24] The MIPF was not in all ways comparable with the EIPF but it was
nevertheless sufficiently similar in material respects that the parties to the
appeal approached the matter on the basis that what counted for the one
counted also for the other.
[25] It follows that the two funds in issue are exempt from the
provisions of the PFA and that the learned Judge in the court a quo was
right.

4 See 39(2) says that when interpreting any legislation, and when developing the common law or
customary law, every court, tribunal or forum must promote the spirit, purport and objects of the Bill of
Rights.

[26] The appeal is accordingly dismissed. First appellant is to pay the
costs including the costs of two counsel.

_________________________
CT HOWIE
PRESIDENT
SUPREME COURT OF APPEAL

CONCUR:
BRAND JA
PONNAN JA
MUSI AJA

HEHER JA:
[27] The primary question in this appeal is whether the ENGINEERING
INDUSTRIES PENSION FUND (the EIPF) and the METAL
INDUSTRIES PROVIDENT FUND (the MIPF) were:-
‘established in terms of an agreement published or deemed to have been published
under section 48 of the Industrial Conciliation Act, 28 of 1956 . . .’5
[28] The answer to that question determines whether the EIPF and the
MIPF are subject to the provisions of the Pension Funds Act 24 of 1956
(the PFA) and properly registered thereunder or whether in terms of
section 2(1) of the PFA the provisions of that Act are not applicable to
them and accordingly their existing registrations are void and of no effect.
[29] The respondents in the appeal the employer trustees of the two
funds, and the Steel and Engineering Industries Federation of South
Africa. They applied to the Pretoria High Court for an order:
‘1. Declaring that:
1.1
The provisions of the Pension Funds Act, No. 24 of 1956, as amended
(“the PFA”) do not apply in relation to the Second and Third
Respondents.

5 Section 2(1) of the Pension Funds Act 24 of 1956.
As originally enacted the section read: “The provisions of this Act shall not apply in relation to any
pension fund which has been established in terms of an agreement published or deemed to have been
published under section 48 of the Industrial Conciliation Act, 1937 (Act No. 36 of 1937) except that
such fund shall from time to time furnish the Registrar with such statistical information as may be
prescribed by the Minister.” This was the relevant provision in 1958 in regard to the EIPF and in 1991
in regard to the MIPF, save that the reference to section 48 of the Industrial Conciliation Act 1937 was
to be read as referring to section 48 of the Industrial Conciliation Act 28 of 1956. The remaining
legislative changes do not affect matters.

1.2
The purported registration by the First Respondent of the Second and
Third Respondents as pension fund organizations in terms of Section 4
of the PFA, is of no force and effect.
1.3
The Second and Third Respondents are not obliged to comply with any
provision of the PFA, including the obligation imposed by Section 15B
thereof upon the board of a fund to submit to the First Respondent a
scheme for the proposed apportionment of any actuarial surplus in the
Fund, save for the requirement in Section 2(1) thereof that “a pension
fund shall from time to time furnish the Registrar with such statistical
information as may be requested by the Minister.”
2.
Ordering the First Respondent to cancel the certificates of registration issued
to the Second and Third Respondents respectively, purportedly in terms of Section
4(4) of the PFA.’
The appellants opposed the relief claimed. Hartzenberg J granted the
order as prayed but granted leave to appeal to this Court. The second
appellant, the National Union of Metal Workers of South Africa, did not
pursue the appeal and was not represented before us.
[30] The first appellant contends that:-
(a)
the exemption applies only where the fund was created and came
into existence as a result of the promulgation of an industrial
council agreement under section 48 of the Industrial Conciliation
Act 28 of 1956 (hereinafter referred to as ‘the Act’);

(b)
the EIPF and MIPF were created and came into existence because a
constitution and rules for each fund was adopted in 1957 and 1991
respectively and not in terms of any industrial council agreement;
(c)
the industrial council agreements relied on by the Respondents
expressly state that the EIPF and MIPF are established other than
in terms of those agreements and they should be taken at their face
value;
(d)
the fact that industrial council agreements were published in order
to facilitate the collection of contributions to the funds does not
mean that the funds were established in terms of those agreements.
[31] Subject only to the submission which is dealt with in paragraphs 12
and 41 et seq below, the respondents stand or fall by the submission that
the phrase ‘in terms of’ in s 2(1) is to be given a wide meaning: any fund
established in pursuance of a published agreement is excluded. The EIPF
and the MIPF, are they contend, funds so established.
The establishment of the EIPF
[32] On the 28th August 1957 at a meeting of duly authorized
representatives of prospective parties to a Metal Industries Group Life
and Provident Fund (as the EIPF was originally known) it was resolved to
adopt a constitution and rules.
[33] The constitution establishes the EIPF as a fund all the assets of
which vest in its Board of Management and capable of suing and being

sued in its own name. Provision is made for the fund to be wound up in
terms of its rules subject to those not being inconsistent with the PFA.
The rules of the EIPF provide in conventional form for the fund to
operate a defined benefit pension scheme. They deal with membership of
the fund, the payment of contributions, the benefits due to members and
the financial administration of the fund.
[34] Although the constitution and rules were published in the
Government Gazette on the 8th November 1957, that did not take place in
terms of section 48 of the Act, which had commenced on the 1st January
1957, or its predecessor. The publication does not state why or by whom
they were being published but correspondence produced to us suggests
that they were published for purposes of ‘information’.
[35] Clause 2(b) of the rules provides that contributions to the fund:-
‘. . . shall be made in accordance with the provisions of the Agreement in terms of the
Industrial Conciliation Act currently providing for contributions to this, the Metal
Industries Group Life and Provident Fund.’
That is a reference to an agreement that was published in terms of
sections 48(1)(a) and (b) of the Act on 19 July 1957, which provided for
the payment of contributions to a fund ‘to be established’ and known as
the Metal Industries Group Life and Provident Fund. It is this agreement
upon which the respondents relied in both courts as the agreement in

terms of which the EIPF was established for the purposes of s 2(1) of the
PFA.
[36] All of these events occurred before the PFA came into force on the
1st January 1958 although that must have been anticipated as the Act had
been passed the previous year and, as I shall show, there are clear
indications in the constitution and rules that the compilers were careful to
follow the requirements of the PFA. Initially the EIPF did not register in
terms of the PFA but did so in January 1964.
[37] Since 1958 the EIPF has continued to operate in terms of its
constitution and rules and these have been altered from time to time in
terms of the provisions governing such amendments. At all times there
has also been in operation an agreement duly promulgated initially and
subsequently continued from time to time under the Act and afterwards
under the Labour Relations Act, 66 of 1995 providing for contributions to
be made to the EIPF and the collection of such contributions.
[38] It is not suggested by any party that these changes over the years
have affected the ‘establishment’ of the EIPF. However, in the event of
their primary argument failing the respondents advance a secondary
argument that the EIPF became exempt by virtue of the provisions of
clause 3A of the 1991 agreement dealing with contributions.6

6 The clause states that the EIPF ‘is hereby continued’. Reliance is placed for this argument on the
current wording of section 2(1) of the PFA which refers to a pension fund ‘which has been established
or continued in terms of a collective agreement’.

The establishment of the MIPF:
[39] On the 22nd March 1991 at a meeting of duly authorised
representatives of prospective parties of the MIPF it was resolved to
adopt a constitution and rules. The constitution establishes the MIPF as a
fund all the assets of which vest in its Board of Management and capable
of suing and being sued in its own name. Clause 11(b) provides that any
addition or alteration to the constitution and the rules shall be submitted
to the Registrar of Pension Funds for approval in accordance with the
PFA.
[40] The rules of the MIPF are to similar effect as those of the EIPF.
Neither the constitution nor the rules of the MIPF was published in the
Government Gazette.
[41] Clause 2(1) of the rules of the MIPF provides that contributions
shall be made in accordance with the provisions of the Industrial
Agreement ‘relating to the fund’ as published in terms of the relevant
sections of the Labour Relations Act, 1956. That initially referred to an
agreement published in terms of section 48(1)(a) and (b) of the Labour
Relations Act, 28 of 1956 on 19 April 1991 which provided for the
payment of contributions to inter alia the MIPF which is defined in the
agreement as ‘the Metal Industries Provident Fund, to be established’. It
is this agreement upon which the respondents relied in both Courts as the

agreement in terms of which the MIPF was established for the purposes
of s 2(1) of the PFA.
[42] As with the EIPF the published agreement has altered over the
years and the Respondents also advance their secondary argument in
relation to that agreement by virtue of the provisions of clause 4 of the
1998 version of the agreement dealing with contributions.7
[43] The reasons for the exception in relation to pension funds
established under industrial council agreements.
17.1 The PFA was the first statutory regulation of private pension funds
in South Africa. It created the office of the Registrar of Pension Funds
and conferred the powers that enabled the Registrar to regulate pension
funds. Those required in the first instance that all pension fund
organisations should register in terms of the PFA and that their
constitutions and rules and any amendments thereof should be subject to
approval by the Registrar.
17.2 Since at least 1937 and the enactment of the Industrial Conciliation
Act in that year, industrial councils established and operating in terms of
that Act had possessed the power to establish pension funds in terms of
industrial council agreements and those agreements could be made
binding on the entire industry by way of promulgation by the Minister of
Labour in terms of section 48 of that Act. Accordingly when the PFA was

7 ‘(1)
The Metal Industries’ Provident Fund . . . established in terms of Government Notice No R
624 of 19 April 1991, is hereby continued.’

being enacted consideration had to be given to the relationship between
pension funds established in terms of the 1937 Act (which was
simultaneously being replaced by the 1956 Act) and the regulatory
regime being established generally in respect of pension funds.
17.3 The scheme of regulation contemplated by the PFA was in material
respects inconsistent with the operation of a pension fund in terms of an
industrial council agreement. Primarily those practical problems flowed
from the fact that the industrial council pension fund was the product of
collective bargaining in the council with oversight by the Minister of
Labour in deciding whether a particular agreement should be rendered
binding under section 48.8 This made it fundamentally different from the
conventional private sector pension fund put in place by an employer for
the benefit of its employees.9
17.4 For a fund to be registered under the PFA its constitution and rules
had to be approved by the Registrar. The PFA contained no mechanism
for dealing with a situation where the Registrar did not approve of a
provision in the constitution and rules which had been agreed upon by
parties to the industrial council. If it was agreed in the annual round of
collective bargaining in the council that contribution rates be increased or
benefits improved or the pension fund be varied in some other respect,

8 The process was one of enacting subordinate delegated legislation. S v Prefabricated Housing
Corporation (Pty) Ltd and another 1974 (1) SA 535 (A) at 539F-540B.
9 Those funds appear to have been established as trusts which was in accordance with the practice in
England. See Ex parte Trans-African Staff Pension Fund 1959 (2) SA 23 (W) at 27G-H.

that could ordinarily be implemented relatively easily by way of an
amendment to the industrial council agreement that was promulgated by
the Minister. If the amendment required also to be approved by the
Registrar of Pension Funds under section 12 of the PFA this would create
a substantial risk of delay and even the possibility that the Registrar might
not approve on actuarial grounds. In that event the result would be that a
collectively bargained wage agreement might not be put into operation
and this could give rise to the possibility of industrial unrest.
17.6 There were significant differences between a pension fund
operating under the PFA and a pension fund operating under an industrial
council agreement. Under the PFA the fund was constituted as a separate
legal entity and its funds were owned by it and no-one else whatever the
origin of the fund might have been.10 Where the fund was created and
operated in terms of an industrial council agreement it did not become a
separate entity even though separate bank accounts and records might be
maintained. Accordingly the funds remained the property of the industrial
council as the mere fact of their being paid into a separate account did not
have the effect of conferring title on a fund that had no separate
existence.11 This rendered them vulnerable to any financial difficulties
besetting the industrial council. In addition the restrictions applicable to

10 Tek Corporation Provident Fund and others v Lorentz 1999 (4) SA 884 (SCA) at 894B-C.
11 Vereins-und Westbank AG v Veren Investments and others 2002 (4) SA 421 (SCA) para 14, p 430C-
E.

investments by an industrial council12 applied to them and on liquidation
any surplus accrued to the industrial council. Furthermore if the industrial
council ceased to exist the pension fund would suffer the same fate.
17.7 In addition the degree of regulation and oversight exercised by the
Registrar of Pension Funds over pension funds in his or her jurisdiction
was far more extensive than that of the Minister of Labour or the
industrial registrar over the operations of a pension fund conducted in
terms of an industrial council agreement. No doubt this explains the more
stringent requirements in regard to the range of investments that such a
fund could make.
17.8 Having regard to these not insignificant differences, I think counsel
for the first appellant was justified in submitting that the regulatory
regime contained in the PFA would have been difficult to apply to
pension funds created and operating in terms of industrial council
agreements. That difficulty would not arise if the industrial council
decided that a pension fund should be established on conventional lines as
a separate legal entity deriving its existence and powers from its own
constitution and rules. In that event there was no reason for it not to be
under the regulatory supervision of the Registrar of Pension Funds.
Indeed as such a fund would be subject to very little oversight by the

12 Section 21(3) restricted the permissible investments of funds established under industrial council
agreements. Only the industrial registrar could permit them to invest in assets other than those
specified. Whilst pension funds were subject to some investment restrictions they were not as
extensive.

Minister of Labour, because only its agreement in respect of the
collection of contributions would be subject to his or her jurisdiction
under section 48 of the Industrial Conciliation Act, it was highly desirable
that it be subject to the same regulatory regime as other similarly
constituted pension funds.
17.9 This examination of the underlying reasons for the exception
supports the first appellant’s construction of section 2(1) of the PFA.
17.10 By contrast, the respondents’ counsel were unable to suggest any
good reason why pension fund organisations established as were the
MIPF and the EIPF would find any problem at all in accommodating the
yoke of the PFA. The constitution and rules of both funds reflect no
characteristics in conflict with the PFA. Indeed both have recognised and
observed the regime established under that legislation through much the
greater part of their existence.
The interpretation of s 2(1) of the PFA
[44] The answering affidavit makes it clear that the Registrar of Pension
Funds has interpreted and applied s 2(1) in a particular sense since the
PFA came into operation. In addition, the Deputy Registrar of Pension
Funds deposed in the present proceedings that
’21.
According to the records under my control there are only 5 pension funds that
are established in terms of industrial agreements. These funds have no separate
constitutions and the basis upon which they operate appears from the published

industrial agreements. (These agreements are now collective agreements under the
present LRA.)
22.
These funds are relatively small having a total membership in 2003 of
approximately 114 000 and they have correspondingly small funds under
administration, with only R1,388 billion in total assets.
23.
By contrast there are many funds that have been established on a basis similar
to that of the Second and Third Respondents. In the time available to prepare this
affidavit I have not been able to obtain membership figures for these funds or figures
relating to the total assets they have under administration. However I can say with
confidence that they will have more than a million members and pensioners and the
funds they administer run into several hundred billion Rand.
24.
The importance of these funds cannot be overstated. They represent a
significant proportion of the funds under the jurisdiction of the First Respondent and a
significant proportion of the total number of pension fund members and pensioners
and the total amount under administration in pension funds in South Africa.
25.
According to the First Respondent at the 31st March 2004 had 30 227 members
and 42 777 pensioners and administered funds totalling some R 23 billion.
26.
According to those records the Third Respondent on the same date had 202
661 members and administered funds totalling some R 11 billion.
27.
If the Applicants are correct all of these funds will cease to be subject to any
regulation whether by the First Respondent or anyone else. That would not only be an
extraordinary situation, when it has always been accepted that they are subject to
regulation under the PFA, but potentially harmful to the interests of the members and
pensioners. I say this not specifically in relation to the Second and Third Respondents

but as a general reflection of the risks involved in having such a significant portion of
the pension funds industry not subject to any regulatory oversight.
28.
Amongst the regulatory provisions that are important in this regard are those
dealing with the apportionment of actuarial surplus contained in Chapter IV of the
PFA.
29.
It is apparent that the impetus for this application is an attempt to avoid the
statutory provisions relating to the apportionment of actuarial surplus and the payment
of minimum benefits to pensioners and former employees in the relevant industry as
provided for in those provisions.’
The EIPF has recognised the authority of the PFA and the Registrar for
forty years and the MIPF for at least ten. Rights have been acquired and
exercised and obligations fulfilled in accordance with that interpretation
without apparent dissent by interested parties.
[45] In R v Lloyd 1920 AD 474 at 477 Juta JA said
‘This it appears has been the view taken for thirty years, since the passing of the Act,
by those responsible for its administration, by the trade itself and by the Natal Court,
which however has never pronounced on it. This of course would not justify the
placing of a construction on the section which the language would not allow; and if
that language were clear such a view, though established for thirty years and upon
which vested rights of various kinds must necessarily have become based, could not
influence the construction; but where the language is anything but clear and is capable
of various constructions leading to most curious anomalies as appears from the
judgments themselves of the magistrate and of the court below, and is capable of the

construction contended for, then the fact that it has been so construed by everyone
concerned for thirty years since it came into operation is an element to be considered.’
And Mason AJA (at 486):
‘Custom, though said to be the best interpreter, does not dictate absolutely the
construction of statutes; but, where a statute may fairly be interpreted in either of two
ways, custom may well be invoked to tip the balance.’
See also R v Detody 1926 AD 198 at 202-3 and Ellert v Commissioner for
Inland Revenue 1957 (1) SA 483 (A) at 490G-H. That the expression ‘in
terms of’ is inexact and tends to invite different emphases in a statutory
context is obvious from the reported cases. It appears to me that its use in
s 2(1) provides a clear example of a statutory provision which may fairly
be interpreted in either of two ways, one narrow, the other broad. It is, to
say the least, anomalous that the Registrar (and the members of the funds)
should now be told that every amendment approved at the instance of the
EIPF board by the Registrar since 1964 was ultra vires. Given the long
and uncontested construction placed on it by the Registrar and interested
parties and the matters of great public consequence to which the Registrar
has deposed, I am satisfied that this Court would be unwise to depart
from that construction merely to serve the expedient interests of the

present trustees of the two funds.13 On this basis alone the appeal should
be upheld.
[46] I am, however, of the view that a narrower interpretation better fits
the exclusionary purpose of s 2(1) as discussed above and the intention of
the legislature in so far as that can be determined from its chosen
language.
[47] The connecting phrase ‘in terms of’ has a wide range of possible
nuances depending on the context in which it is placed. However, to
describe something as ‘established in terms of’ considerably limits its
range, suggesting as it does a connection between a creative act and the
origin of the power to perform such an act. That the establishment is to be
‘in terms of an agreement published or deemed to have been published
under section 48 of the Industrial Conciliation Act, 1937’ narrows the
field of operation still further. An agreement which has been so published
has a binding effect on the parties to the agreement and their members (if
published under s 48(1)(a)) and upon all employers and employees in the
particular industry to which the agreement relates (if published under s
48(1)(b)). It appears, therefore, that the legislature intended to exclude
from the operation of s 2(1) those funds to which the parties and others in
the industry were legally committed by the publication, bearing in mind

13 It is common cause that the sudden interest of the funds in removing themselves from the ambit of
the PFA was occasioned by the availability of large surpluses and a desire to dispose of them in a
manner which conflicted with regulatory mechanisms of the PFA.

that a published agreement has statutory force and breaches of its terms
constitute criminal offences (s 53(1) of the Act read with s 82(1)(b)).
[48] It is hardly conceivable that the legislature could in the
circumstances have intended to extend the exclusion in s 2(1) of the PFA
to a fund established in consequence of (or in pursuance of) an agreement
in which the principle of its establishment was agreed but most of the
detail was left over for later determination by the parties or the council
without the need for further publication under s 48 of either the fact of its
establishment or the substance of the constitution and rules of the fund.
The publications which did take place under s 48 did not oblige the
parties to establish the funds. In relation to neither of the two funds in
question was there a later publication under s 48. The particulars of the
contemplated funds as one may derive then from the agreements fall far
short of the substance eventually emerging, presumably as a result of
private agreement between the representatives of employers and
employees outside of the bargaining council. I conclude, therefore that
neither fund was one established in terms of a binding agreement within
the scope of the exclusion.
[49] If I am wrong in so interpreting s 2(1) narrowly and ‘in terms of’
properly deserves a more lenient slant, my conclusion would be the same.
Even on the most generous interpretation of the connecting phrase neither
fund was established in terms of the agreement which preceded its

creation. My reasons for reaching this conclusion are set out in the
succeeding paragraphs.
[50] Both agreements were reached in the statutorily-created bargaining
council for the particular industry. Each was duly published by the
Minister at the request of the council as the agreement of the parties to the
council. When the legislature refers in s 2(1) of the PFA to such
agreements it necessarily means only those agreements the content of
which is a statutorily-authorised subject of approval by a council and
which falls within the powers conferred on it.
[51] When, therefore, a pension fund is established (directly or
indirectly) in terms of an agreement, the fund must be one which the
council is empowered to create and not one which may be created at the
will of the parties to the council without recourse to its powers. That it is
intended to serve the industry and does so cannot of itself be the
determining factor.
[52] It is accordingly necessary to examine the scope of the powers
conferred on a council in relation to the creation of funds. Once the limits
are determined there will, I suggest, be no difficulty in deciding whether
the MIPF and the EIPF qualify as funds established in terms of the
published agreements which are relied upon by the respondents as
removing them from the ambit of the PFA.

[53] The statutory competence of parties to a council to enter into
agreements which may be declared binding under s 48 derives from ss 23
and 24 of the Act. The relevant provisions are
‘23.
(1)
An industrial council shall, within the undertaking, industry, trade or
occupation, and in the area, in respect of which it has been registered, endeavour by
the negotiation of agreements or otherwise to prevent disputes from arising and to
settle disputes that have arisen or may arise between employers or employers’
organizations and employees or trade unions and take such steps as it may think
expedient to bring about the regulation or settlement of matters of mutual interest to
employers or employers’ organizations and employees or trade unions.
(2)
The parties to an industrial council registered in respect of any activity carried
on by a local authority shall have the power to enter into an agreement such as is
referred to in sub-section (1) notwithstanding anything to the contrary contained in
any law regulating the affairs of the local authority concerned.
24.
(1)
An agreement which may be declared binding under section forty-eight
may include provisions as to all or some or any of the following matters-
. . . (r) the establishment of pension, sick, medical, unemployment, holiday, provident
and other insurance funds, and the levying upon employers and employees of
contributions towards such funds or towards similar funds established by or in terms
of the constitution of the council;
and, generally, as to any matter affecting or connected with the remuneration or other
terms or conditions of employment of all employees or of the members of any class or
classes of employees whether remunerated according to time worked or work
performed or on any other basis, or as to any matter whatsoever of mutual interest to

employers and employees, the scope of this provision not being limited in any way by
the mention in this sub-section of particular matters.’
(Corresponding provisions were contained in ss 23 and 24(1) of the 1937
Act.)
The statute provides no other basis for establishing a pension fund
whether by, in or in pursuance of an agreement capable of publication
under s 48.
[54] When a fund is established by, in or in pursuance of such an
agreement, the agreement once published is the agreement of the council.
Section 24(3) provides:
‘(3)
Any industrial council may by resolution admit to membership of any fund
such as is referred to in paragraph (r) of sub-section (1) any office-bearer, official or
employee of the council or of any of the trade unions or employers’ organizations
which are parties to the council, in which event such council, union or organization
and any person so admitted shall, for the purposes of the relative provisions of the
agreement or constitution by which or in terms of which such fund has been
established, be deemed to be an employer and employee respectively in the
undertaking, industry, trade or occupation in respect of which the council is
registered.’
[55] The assets in the fund thus established form part of the assets of the
council which, in terms of s 20(1) becomes a body corporate on
registration capable of holding and alienating property. For this reason the
legislature deemed it necessary to distinguish on the dissolution of a

council, whether in consequence of winding up (voluntary or
compulsory) or for the other reasons referred to in s 34(1), between the
disposal of the unexpended general funds of the council (dealt with in s
34(4)) and the assets of the pension fund established by an agreement of
the parties to the council (in s 34(5)) as follows:
‘(5)
The provisions of sub-section (4) shall not apply to any fund established by a
council for a purpose other than that referred to in paragraph (q) of sub-section (1) of
section twenty-four, nor to any such funds as are referred to in paragraph (r) of sub-
section (1) of section twenty-four, which shall be disposed of in accordance with the
provisions of the constitution or agreement under which they were established, or, if
that constitution or agreement does not contain any provisions in regard thereto, then
in accordance with the directions of the registrar.’
[56] In the two cases under consideration each industrial council
certainly contemplated and may, in the broadest sense, be said to have
authorized the establishment of the fund. But the agreement which it
requested the Minister to publish did not purport to establish a fund: in
terms each agreement provides for the levying and collection of
contributions for a fund ‘to be established’. The parties to the application
to court, who might reasonably be expected to have access to the
resolutions of their respective councils did not produce a resolution by
either council to establish a fund. They did not request the Minister to
publish a notice under s 48 in which the establishment of the fund was
confirmed.

[57] The industrial council concerned did not, as such, participate in the
establishment of either fund. The parties to the establishment were its
employer and employee members, but they too did not purport to
represent their councils. Indeed there is nothing in the constitution and
rules of either which involves the councils. Each fund was established
with its own corporate personality and power to hold and alienate assets
in terms of a constitution and rules. Its existence was not coterminous
with or dependent on the continued existence of the council. The fund
rules purported to admit to membership of the funds the office-bearers,
officials and employees referred to in s 24(3) of the Act. But there was no
resolution produced as required by that section (as, of course, there could
not be for funds set up as independent bodies corporate). There was thus
no legal identity between the pension fund which each council was
empowered to establish by s 24(1)(r) (and the establishment of which had
been presaged in the published notices) and the funds which in fact came
into being, albeit that they served the same interests. In the circumstances
neither fund was established in terms of the relevant industrial agreement
in the sense intended by the legislation.
[58] The status of a fund must judged objectively having regard to what
was actually established and not by the intention of a council in
concluding and publishing an agreement no matter how plain that may be.
In the instance of the EIPF its constitution and rules (at its foundation)

were unequivocal in subjecting the fund to the PFA and its regulatory
system.
[59] The objects of the EIPF include
‘3(a)
To establish, organize and provide pension and death benefits for the
employees of employers in the group of industries known as the Iron, Steel,
Engineering and Metallurgical Industries in the Republic of South Africa and such
other industry/industries in the Republic as may from time to time be admitted to
participate in the Fund by the Board of Management in terms of this Constitution, and
benefits for the dependants of such employees for which purpose the Fund may
receive moneys payable by premiums, contributions, donations or otherwise.’
An industrial council possessed no powers under s 24 of the Industrial
Conciliation Act 1937 (or its successor sections) to establish a pension
fund which could provide membership to persons employed outside the
industries for which the council is established as the constitution of the
fund confers on its board.
[60] The constitution of the EIPF then (and now) contains the following
provisions:
‘6(c)
If the principal executive officer is absent from the Republic for more than 30
days or is otherwise unable to perform his duties, the Board of Management shall
appoint another person to act as principal executive officer for the period of his
absence or disability and shall notify the Registrar of Pension Funds of such person’s
name.’

. . .

‘11(b) Notwithstanding anything to the contrary contained in the Constitution or
Rules, any addition or alteration to the Constitution and/or Rules shall be submitted to
the Registrar of Pension Funds for registration in accordance with the Pension Funds
Act, 1956 . . . ’
’12.
The Fund may be wound up at any time subject to the unanimous agreement
of the Steel and Engineering Industries Federation of South Africa and the
Employees’ Organisations in Annexure 1, whereupon the distribution and winding up
provisions set out in the Rules shall apply.’
[61] The rules of the MIPF include the following clauses:
‘2.
INTERPRETATION
(i)

“Act” shall mean the Pension Funds Act, 1956 and the
regulations framed thereunder.

. . . .
(xxviii)
“Registrar” shall mean the Registrar of Pension Funds
appointed under the Act.’
‘15.
WINDING UP
(a)
If circumstances arise at any time which, in the opinion of the Board, render
the winding up of the Fund desirable or necessary, the Board shall, with the
unanimous approval of the Steel and Engineering Industries Federation of
South Africa, and the Employees’ Organisations listed in Annexure 1 of the
Constitution, appoint a liquidator approved by the Registrar in terms of
Section 28(2) of the Act. Such liquidator shall be empowered to wind up the
Fund in which event the assets shall be divided among the Members and
beneficiaries on such terms and in such manner as the liquidator, acting on the
advice of the Actuary with the approval of the Steel and Engineering

Industries Federation of South Africa and the Employees’ Organisations listed
in Annexure 1, may determine.’
This was not simply a case of ‘an equitable example to follow’ (to quote
Howie P14). The parties here resorted to the authority of the Registrar and
the statutory liquidator. Both are creatures of the PFA, neither possessing
powers outside those which it confers on them, and then only in relation
to funds which are governed by its provisions.
[62] In certain respects the position of the MIPF is, if possible, clearer
than that of the EIPF. It was established more than thirty years after the
PFA came into operation. Its constitution and rules, on establishment,
expressly recognized the authority of the PFA and the Registrar of
Pension Funds. On 2 April 1991, less than two weeks after the parties
approved its constitution and rules, it applied for registration under s 4 of
the PFA. Even if, in so establishing the fund, they intended to give effect
to the published agreement (and no-one has so deposed) the reality was
otherwise.
[63] We were furnished by counsel for the appellant with copies of a
notice published under s 48(1) of the 1937 Act in which the Cape
Clothing Industry Provident Fund was established by the industrial
council for that industry (published in GG No 242 of 12 March 1954
under GN 493) and which fully bears out the characteristics attaching to a

14 Paragraph 17 of the judgment.

fund established under the powers conferred by s 24(1), as I have
identified them and illustrates the differences between the establishment
of such a fund and one deriving its life from an agreement extraneous to
the council.
[64] We were also provided with a copy of a continuation agreement for
Provident Fund of the Leather Industry published in terms of s 48(1) in
GG No 8135 of 2 April 1982 under GN R640 in which is contained the
full terms of the fund’s constitution and rules. This agreement also is
signed by the representatives of the industrial council. It too on
examination bears the true nature of an agreement which gives effect to s
24(1)(r).
[65] The conclusion is inevitable: what was in fact generated by the
parties was not a fund contemplated by the Industrial Conciliation Act
whatever germ of creation may be discerned in the published agreement
which preceded it.
[66] This judgment was written as a dissent in anticipation of receiving
a majority judgment to the contrary effect. Having now had sight of that
judgment I wish to add only this. The use of the expression ‘as to’ in the
opening sentence of s 24(1) of the Act means no more than ‘in relation
to’. It precedes a long list of matters with which an industrial council may
deal but does not reflect on the scope of those matters. If ‘in terms of’ in s
2(1) possesses a broad meaning then I have no doubt that an agreement

could lawfully provide for the establishment of a fund without actually
establishing it and that such a fund could be established subsequently by
the members of the council acting in that capacity. But before the
exclusionary provisions of s 2(1) can operate
(a)
the establishment of the fund and not merely the intention to
establish it must be the subject of a published agreement;
(b)
the council must be a party to the establishment;
(c)
the substance of the fund (as embodied in its constitution and rules)
must be such as the council itself has the power to establish.
As I have tried to show in this judgment the establishment of the MIPF
and EIPF fails on all these counts.
[67] In its replying affidavit the first respondent stated:
‘The applicants do contend that even if they were not established in terms of
Industrial Council Agreements which were published by the Minister of Labour, they
would nevertheless be exempt from the provisions of the LRA if they were
‘continued’ as contemplated by Section 2(1).’
[68] This is an unsustainable contention. The use of the word
‘continued’ clearly relates to the finite existence of a fund under the
labour legislation. As pointed out above each fund so created endures
only for the life of the council under the aegis of which it operates.
However the practice has always been that such life is continued by the
publication agreement of an extension notice, usually for the same period

as before. In this manner the fund is continued from time to time. The
‘continuation’ for which provision is made has nothing to do with a fund
originally established outside of the labour legislation and subject to the
PFA. It is directed solely at ensuring that funds established under s
24(1)(r) do not lose their exempt status on the expiry of the initial period
for which they were established. The fact of such extensions by
publication under the labour legislation is indicative of an understanding
on the part of those responsible for publication that the funds were
established under the powers of a council but cannot decide the issue of
whether the funds are subject to the PFA or not.
[69] For these reasons I would uphold the appeal with costs including
the costs of two counsel, and set aside paragraphs 1, 2, 3 of the order of
the court a quo replacing it with an order in the following terms:
‘The application is dismissed with costs such costs to include the costs of two
counsel.’

_________________
J A   HEHER

JUDGE OF APPEAL

THE SUPREME COURT OF APPEAL
REPUBLIC OF SOUTH AFRICA

MEDIA SUMMARY – JUDGMENT DELIVERED IN THE SUPREME COURT OF APPEAL

REGISTRAR OF PENSION FUNDS & ANOTHER v BRIAN ANGUS
NO & OTHERS
FROM:

The Registrar, Supreme Court of Appeal
Date:

30 March 2007
Status:

Immediate
With a combined actuarial surplus of about R9 billion for distribution the
trustees of two industrial pension funds applied to the High Court at
Pretoria for an order declaring that the funds were not subject to the
Pension Funds Act.  The Act has detailed provisions governing
apportionment and distribution of such surplus and payment of minimum
benefits.
If the funds were outside the terms of the Act they were not obliged by
their rules to deal with the surplus other than by the trustees observing
their legal duty to act with due care and good faith in the interests of
members. The Registrar of Pensions argued that the Act applied. The
High Court found that the funds were not subject to the Act but, instead,
were governed by their own constitutions and rules.

On appeal to the SCA the High Court’s decision was upheld. The SCA
decided that a provision in the Pension Funds Act which says that it does
not apply to a pension fund established ‘in terms of’ an industrial council
agreement meant not only a fund established in the agreement itself but
also a fund – such as the two in question – established separately but in
accordance with what such an agreement stated.