THE SUPREME COURT OF APPEAL
OF SOUTH AFRICA

Case number :   198/2002

REPORTABLE

In the matter between :

PEPCOR RETIREMENT FUND

FIRST APPELLANT
PEPKOR LIMITED

SECOND APPELLANT

and

THE FINANCIAL SERVICES BOARD
FIRST RESPONDENT
THE REGISTRAR OF PENSION FUNDS            SECOND RESPONDENT

CORAM :

VIVIER ADP; MARAIS, NAVSA , CLOETE  and
LEWIS JJA

HEARD :

9 MAY 2003

DELIVERED :

30 MAY 2003

Summary:    Locus standi of a functionary, empowered by legislation to make a
decision in the public interest, to have that decision reviewed in a court of
law and set aside; whether of a material mistake of fact should be a
ground of review of such a decision.
__________________________________________________________

JUDGMENT

CLOETE JA/

CLOETE JA:
INTRODUCTION
[1] This appeal concerns primarily the locus standi of a functionary,
empowered by legislation to make a decision in the public interest, to
have that decision reviewed in a court of law and set aside; and the
question whether a material mistake of fact should be a ground of review
of such a decision.
FACTS
[2] At issue are certificates granted by the second respondent, the
Registrar of Pension Funds (‘the Registrar’), issued in terms of s 14(1) of
the Pension Funds Act 24 of 1956 (‘the Act’) in respect of the first
appellant, the Pepkor Pension Fund (‘the Fund’); and also the transfer of
R9 223 118 (‘the R9,2m’) made from the Fund to Pepkor Limited, the
second appellant, which was not authorised in terms of that section.
Commendably the complex chain of events was comprehensively and
compendiously analysed by the court below (Rogers AJ) in a judgment
which has been reported sub nom Financial Services Board and Another
v De Wet NO and Others 2002 (3) SA 525 (C). Neither side challenged
this analysis and accordingly the following relatively brief summary will
suffice for the purposes of this appeal.
[3] The Fund was a defined benefit fund registered in 1973 for the
purpose of providing retirement and ancilliary benefits to eligible

employees in what was to become the Pepkor Group. At all times
material to this matter that Group consisted of the holding company,
Pepkor Limited and three other operating companies: Ackermans, Pep
Stores and Shoprite. The fund is in liquidation; the liquidator, the first
defendant in the court below, did not oppose the action and was not
represented in the appeal. The second appellant was the controlling
employer (‘beherende werkgewer’) for the purposes of administration of
the Fund.
[4] During the mid 1990’s the Fund was ‘unbundled’ – initially into
three ‘daughter’ funds, the Shoprite Pension Fund (the second
defendant), the Ackermans Pension Fund (the third defendant) and the
Pep Stores Pension Fund (the fourth defendant), which were also
defined benefit funds; and ultimately, also into four defined contribution
pension funds, the Shoprite Checkers Retirement Fund (the fifth
defendant), the Ackermans Retirement Fund (the sixth defendant), the
Pepkor Retirement Fund (the seventh defendant and the first appellant)
and the Pep Retirement Fund (the eighth defendant). The Fund
continued to exist. The ‘unbundling’ was effected by a series of
applications for transfers of business in terms of s 14(1) of the Act, all of
which, bar one, were approved by the Registrar. The exception was the
amount of R9,2m which was paid to the first appellant.
[5] Before the approvals were furnished the Registrar was at his

request furnished with information by one Meyer who was the actuary to
the Fund (or, to use the terminology in the Act, its ‘valuator’). The
information related to the funding level of the fund. The funding level is
the ratio of the actuarial value of assets to the actuarial value of liabilities.
Meyer said that the funding level of the Fund before and after the
transfers from the Fund to the ‘daughter’ funds was 137% ‘met uitsluiting
van spesiale reserwes’ in the former case and excluding certain ‘spesiale
surplusse  soos deur die makelaar versoek’ in the latter. It is common
cause that in fact the funding level of the Fund before the transfers was
151% and thereafter, 606%. The Court a quo criticised Meyer’s method
of calculating the funding levels, which essentially involved the
unwarranted exclusion of amounts in the Fund, as ‘arbitrary and
indefensible’ (para [244]).
[6] No attempt was made on appeal to justify Meyer’s calculations.
The applications for the transfers were approved in ignorance of Meyer’s
misstatements and the transferring members transferred from the Fund
to the ‘daughter’ funds without knowledge of the substantial surplus
which stood to the credit of the Fund. In contrast to the funding level of
the Fund after the transfers which, as I have said, was 606%, the funding
levels of the three daughter funds, the second to fourth defendants, was
respectively 123%,  121% and 116%. The ‘unbundling’ left the Fund with
a very large surplus (which by now must be over R100m), no active

members and only fourteen pensioners.
[7] The trustees of the Fund in the fullness of time applied to the
Registrar for the liquidation of the Fund, and this was approved. The
trustees thereafter submitted a draft amendment to the rules of the Fund
which would permit the payment of the surplus to the second appellant. It
was consideration of this draft amendment which led the chief actuary of
the Financial Services Board (‘FSB’) to discover the initial misstatements
by Meyer and the unauthorised transfer of the R9,2m to the first
appellant.
[8] The FSB, a statutory body established by the Financial Services
Board Act 97 of 1990, as the first plaintiff and the Registrar, as the
second plaintiff, brought the proceedings in the court below, the purpose
of which was to review and set aside the approvals and the transfers
made pursuant thereto, and to direct the first appellant to repay the
R9,2m together with interest to the liquidator of the Fund. Rogers AJ
granted that relief but suspended the declarations of invalidity for a
period of six months, with the proviso that any party to the action might,
on notice to the other parties, apply on good cause shown for the period
of suspension to be lifted, reduced or extended. The appellants appeal to
this court with the leave of the court below.
[9] In this court, as in the court below, the appellants challenged the
locus standi of the FSB and the Registrar to bring the proceedings. It

would be convenient to deal with these questions first, after quoting the
provisions of s 14(1) of the Act as it read at the relevant time:

‘14(1) No transaction involving the amalgamation of any business carried on
by a registered fund with any business carried on by any other person (irrespective of
whether that other person is or is not a registered fund), or the transfer of any
business from a registered fund to any other person, or the transfer of any business
from any other person to a registered fund shall be of any force or effect unless -
(a)
the scheme for the proposed transaction, including a copy of every
actuarial or other statement taken into account for the purposes of the
scheme, has been submitted to the Registrar;
(b)
the Registrar has been furnished with such additional particulars or
such a special report by a valuator, as he may deem necessary for the
purposes of this subsection;
(c)
the Registrar is satisfied that the scheme referred to in para (a) is
reasonable and equitable and accords full recognition -
(i)
to the rights and reasonable benefit expectations of the persons
concerned in terms of the rules of a fund concerned; and
(ii)
to any additional benefits the payment of which has become
established practice,
and that the proposed transactions would not render any fund which is
a party thereto and which will continue to exist if the proposed
transaction is completed, unable to meet the requirements of this Act or
to remain in a sound financial condition or, in the case of a fund which
is not in a sound financial condition, to attain such a condition within a
period of time deemed by the Registrar to be satisfactory;

(d)
the Registrar has been furnished with such evidence as he may require
that the provisions of the said scheme and the provisions, insofar as
they are applicable, of the rules of every registered fund which is a
party to the transaction, have been carried out or that adequate
arrangements have been made to carry out such provisions at such
times as may be required by the said scheme;
(e)
the Registrar has forwarded a certificate to the principal officer of every
such fund to the effect that all the requirements of this subsection have
been satisfied.'
LOCUS STANDI OF THE REGISTRAR
[10] This court has already held that if an administrative act has been
performed irregularly – be it as a result of an administrative error, fraud
or other circumstance – then, depending upon the legislation involved
and the nature and functions of the public body, it may not only be
entitled but also bound to raise the matter in a court of law, if prejudiced:
Transair (Pty) Ltd v National Transport Commission and Another 1977
(3) SA 784 (A) at 792H-793G.
[11] The Act was passed, as appears from the preamble thereto, to
provide inter alia for the regulation of pension funds. It is the Registrar
who performs this function. As the learned judge in the court below
pointed out (paras [169] to [175]) virtually every section of the Act
contains some or other provision reflecting the Registrar’s supervision
over the affairs of pension funds. It is not necessary to repeat the

analysis.
[12] It was submitted on behalf of the appellants that, in
contradistinction to certain other sections of the Act, s 14(1) does not
specifically give the Registrar the right to apply to court to have a
certificate wrongly granted by him, set aside; and that the Registrar
accordingly does not have that power. It was further submitted that the
appeal procedure for which provision is made in s 26(2) of the Financial
Services Board Act, points to the same conclusion.
[13] The arguments are without merit. Section 14 deals with an
important aspect of the regulation of pension fund organisations. It
governs the amalgamation of any business carried on by a registered
fund with any business carried on by any other person; and the transfer
of any business from a registered fund to any person, or from any person
to a registered fund. The section provides that no such amalgamation or
transfer ‘shall be of any force or effect’ unless the prescribed
requirements are met. Subsection (2) correspondingly provides inter alia
that the relevant assets of the bodies amalgamated or the relevant
assets of the body transferring its assets shall vest in the body to which
they are transferred, ‘whenever a scheme for any transaction referred to
in subsection (1) has come into force in accordance with provisions of
this section’. One of these requirements is that the Registrar must be
satisfied both generally that the scheme for the proposed transaction is

reasonable and equitable, and also in regard to the other matters
specified in subsection (1)(c). It is unthinkable that if the Registrar were
to realise ex post facto that there had not been compliance with the
section, he could not apply to court to have it set aside. Compare in this
regard what was said by this court in Rajah and Rajah Ltd v Ventersdorp
Municipality 1961 (4) SA 402 (A) at 407E:
‘Mr. de Villiers for the Council submitted that in the exercise of its statutory functions
it has an administrative interest, on behalf of the public, in certificates for local
trading. I agree:  that is what gives it a locus, unlike a purely judicial tribunal.’
It would indeed be the Registrar’s duty to make such an application, if
prejudiced.
[14] It was submitted on behalf of the appellants that the Registrar was
not prejudiced and that it should be left to those prejudicially affected by
his decisions to take them on review. That submission is equally without
merit. The general public interest requires that pension funds be
operated fairly, properly and successfully and that the pension fund
industry be regulated to achieve these objects. That is the whole purpose
which underlies the Act. Of course only a particular fund and the
members of that fund may be directly affected by a particular decision of
the Registrar under s 14(1)(c). But that does not derogate from the fact
that the function which the Registrar performs, is performed in the public
interest generally. In addition, the interests of the very persons affected

by the decision require the Registrar to perform his functions properly
and to seek judicial review of his own decisions should he not have done
so. The prejudice to the Registrar in allowing a certificate improperly
given in terms of s 14(1)(e), and transfers pursuant thereto, to stand,
consists in his not having had an opportunity to evaluate the true facts in
arriving at decisions which he is required to make in the protection of the
public interest generally, and the particular interests of those directly
affected.   His function is compromised.
[15] I therefore conclude that the Registrar had locus standi to bring
review proceedings to have the validity of the certificates granted under s
14(1) and the subsequent transfers made pursuant thereto, set aside.
[16] The Registrar’s claim for repayment of the R9,2m was brought by
way of an amendment granted subsequent to the insertion of s 6A into
the Financial Institutions (Investment of Funds) Act 39 of 1984 by s 3 of
Act 22 of 1997. The relevant part of s 6A reads:
‘(1)
Despite anything to the contrary contained in any other law, but subject to the
Constitution of the Republic of South Africa, 1996 (Act 108 of 1996), and any
provision in such other law relating to jurisdiction, procedure and evidence, the
registrar has locus standi in judicio to institute and conduct proceedings in the High
Court having jurisdiction (after this referred to as the court) in an instance where no
other statutory provision makes such provision, if he or she has reasonable cause to
believe that it is necessary or desirable for him or her to do so in order  -
(a)
…

(b)
to compel any person to comply with any law or to cease contravening
a law;
(c)
…
(d)
…
subject to any additional procedural requirements which the court may impose in any
particular instance to ensure fair and equitable legal proceedings.’
[17] Counsel for the appellants accepted that the Registrar was entitled
to rely on s 6A because that section was introduced before the claim for
repayment of the R9,2m was incorporated into the particulars of claim.
The submission was that reliance on the section was misplaced because
the transfer had already taken place.
[18] The R9,2m was paid by the Fund to the first appellant without the
procedure prescribed by s 14(1) having been followed and therefore not
only in contravention of that section, but also in contravention of s 5(2) of
the Act which requires inter alia that ‘all monies … belonging to a
pension fund shall be kept by that fund’. In terms of s 14(2), it is only
when ‘a scheme for any transaction referred to in subsection (1) has
come into force in accordance with the provisions of this section’ that ‘the
relevant assets … of the body transferring its assets … or any portion
thereof shall … vest in … the body to which they are to be transferred’.
The Fund is not intent on reclaiming the R9,2m and the first appellant is
intent on retaining it. The contravention by the Fund of s 5(2) of the Act
and the contravention by the first appellant of s 14(2) of the Act are

continuing and the Registrar accordingly has locus standi in terms of s 6
A(1)(b) to compel the Fund and the first appellant to cease the
contraventions.
LOCUS STANDI OF THE FSB
[19] The functions of the FSB are set out in s 3 of the Financial
Services Board Act, which, before its amendment on 12 May 2000 by s 2
of Act 12 of 20001, read as follows:
‘The functions of the board are –
(a)
to supervise the exercise of control, in terms of any law, over the activities of
financial institutions and over financial services; and
(b)
to advise the Minister on matters concerning financial institutions and financial
services, either of its own accord or at the request of the Minister.’
The term ‘financial institution’ is defined in s 1 of the FSB Act to include
‘any pension fund organisation registered in terms of the Act’ and the
‘daughter’ funds, the second to eighth defendants, were and are
registered as pension funds in terms of the Act. It follows that the FSB is
empowered by s 3(a) of the Financial Services Board Act, read with the
definition of the term ‘financial institution’ in s 1 thereof, to supervise the
exercise of control, in terms of  any  law, over  the  activities of the Fund

1 In its amended form, s 3 of the Financial Services Board Act reads:
‘Functions of the board.  The functions of the board are    (a)  to supervise the compliance with laws
regulating financial institutions and the provision of financial services; (b) to advise the Minister on matters
concerning financial institutions and financial services, either of its own accord or at the request of the Minister;
and (c) to promote programmes and initiatives by financial institutions and bodies representing the financial
services industry to inform and educate users and potential users of financial products and services.’

and the ‘daughter’ funds.
[20] In terms of ss 3 and 14 of the Act, the Registrar, who holds that
office because he is ‘the executive officer’ of the FSB, must exercise
such control on behalf of the FSB by inter alia considering and
determining proposed transfers of business such as those in issue in the
present matter. Similarly, s 13(3) of the Financial Services Board Act
provides that the Registrar ‘shall, subject to supervision by the board [the
FSB], perform the functions entrusted to him by or in terms of this or any
other Act’.
[21] The question which arises is whether the FSB’s power, conferred
by s 3(a) of the Financial Services Board Act to supervise the exercise of
such control, includes the power to seek judicial review of the Registrar’s
decisions on transfers of business when the FSB considers such
decisions to be invalid. In Financial Services Board and Another v
Pepkor Pension Fund and Another 1999 (1) SA 167 (C) at 172G
Conradie J held that:
‘Had it been the Legislature's intention that the Board's supervision should include a
power to direct or to override, one would have expected the express conferment of
such a power on the Board, a power, that is, to set aside a decision of the Registrar
or to direct him how to decide. The wording of the Board Act suggests no such
power.’
The learned Judge also said (at 173C-D):
‘[T]he expression “supervision of control over” in fact conveys well the general

stewardship of the Board over the (independently exercised) control functions of the
Registrar.’
He concluded (at 173D) that
‘the Board determines broad policy and may lay down guidelines, but that it is not
empowered to participate in or interfere with decisions of the Registrar under the
Pension Funds Act.’
[22] It was perhaps in response to this decision that s 1 of Act 12 of
2000 elaborated on s 13 of the Financial Services Board Act by inserting
a definition of ‘supervision’,2 in relation to the supervision by the FSB
over the performance of functions by the Registrar in terms of any law.
[23] Neither the basis of Conradie J’s judgment nor the amendment to
the Act denies the FSB locus standi to institute proceedings for judicial
review of decisions of the Registrar under the Act. The FSB is merely
precluded from itself reviewing and setting aside such decisions by the
Registrar, and from directing him how to decide matters which is his
function to decide.
[24] The nature of the functions conferred on the FSB by s 3(a) of the
Financial Services Board Act, both in its original form and in its amended
form, entitle and oblige the FSB to seek the review by the High Court of

2 “Supervision”, in relation to supervision by the board overt the performance of functions by the executive
officer in terms of any law, means  (a)  the determination by the board that a particular function or category of
functions   (i)  may not be performed by the executive officer without the prior approval of the board; (ii) may
be performed by the executive officer in accordance with guidelines issued by the board; or (iii) may be
performed by the executive officer in his or her discretion; and  (b) the periodical reporting to the board by the
executive officer on the performance of his or her functions at such a time and in such a manner as may be
determined by the board.’

decisions of the Registrar under the Act which it considers to be invalid
and which, if not reversed, would prejudice the public interest. The FSB
has an administrative interest, on behalf of the public, in the proper
exercise of the control vested in the Registrar and in this context, the
quotation from Rajah, in para [13] above, is again apposite. The same
prejudice which the Registrar has in respect of decisions incorrectly
taken by him discussed in para [14] above, attaches to the FSB.
[25] The FSB does not, however, have the right in terms of the
Financial Services Board Act, in its original or amended form, itself to
institute proceedings for the recovery of the R9,2m. That is the function
of the Registrar. If the Registrar were to decide not to perform this
function, or simply failed to do so, the FSB could no doubt in the exercise
of its supervisory function bring proceedings for the review of his
decision, or a mandamus compelling him to do so. But the FSB cannot
ignore the Registrar’s decision or inaction and itself perform the function
entrusted to him. Its function is to supervise, not to act in the stead of the
Registrar.
[26] I therefore conclude that the FSB had the necessary locus standi to
approach the court to review the decisions by the Registrar to grant the s
14(1)(e) certificates and to set those certificates and the transfers
consequent upon them, aside; but that the FSB had no locus standi itself
to seek an order that the R9,2m be repaid.

CLAIM FOR REPAYMENT OF THE R9.2M
[27] The arguments raised on behalf of the appellants and which were
dismissed by the court below, were repeated on appeal. I am unable to
accept them. The only submission made on behalf of the appellants with
which it is necessary to deal is that the Registrar did not have locus
standi to bring the condictio necessary for the R9,2m to be repaid by the
first appellant to the Fund. It was found by the court below (para [290])
that the Registrar’s claim would be a type of condictio. This finding was
not correct. A condictio would indeed be the remedy were the Fund itself
to seek repayment. But the Registrar has the powers to which I have
referred in para [13] above and it is those powers conferred on him ex
lege which entitle and indeed oblige him to approach the High Court to
order the money to be repaid. He cannot be remediless and obliged to
tolerate a continuing statutorily prohibited retention of money which has
been retained unlawfully from a pension fund’s coffers when he is the
very person whose consent to the removal was necessary to render it
lawful.
THE S 14(1) TRANSFERS
[28] Had fraud been proved, that would have sufficed for the relief
sought by the respondents because the certificates would have been
void:  cf Principal Immigration Officer v Bhula 1931 AD 323 at 330. But
fraud was not alleged and the review could only have succeeded on

some other ground. The appellants’ counsel made a particular
submission on the facts, and another on the law.
[29] On the facts, it was submitted on behalf of the appellants that even
had the correct information about the funding levels before and after the
transfer been furnished to the Registrar, the Registrar’s decision would
have been no different. The learned judge in the court below, after a
careful and detailed survey of the evidence, concluded (para [255]) that
‘[I]f the misrepresentations had not been made the initial transfers would
not as a fact have been approved as they were’. I have carefully
considered the detailed argument to the contrary submitted on behalf of
the appellants but I am unable to fault the learned trial judge’s
conclusion. It appears to me to have been entirely justified.
[30] On the law, it was submitted on behalf of the appellants that the
size of the surplus remaining in a defined benefit fund such as the Fund
is legally irrelevant to the exercise by the Registrar of his powers under s
14(1). The submission was that because the Fund and the ‘daughter’
funds are defined benefit funds and not defined contribution funds,3
transferring members can have an interest only in the security of the
benefits to which they will become entitled; and once they are
adequately  secured,  as  they  were  in  the  present  case,  any  surplus

3 As to the distinction, see Tek Corporation Provident Fund and Others v Lorentz 1999 (4) SA 884 (SCA) at
890F and 891B-C.

remaining in the Fund was effectively none of their business:  the
employer could use the surplus for a ‘contribution holiday’ but the
members were not entitled to it. But s 14(1)(c) required at the time the
transfer applications were approved, and still requires, that the Registrar
‘be satisfied’ inter alia that the scheme for the proposed transaction is
‘reasonable and equitable’. In my view, if the Registrar were to conclude,
in the exercise of the wide discretion conferred on him by s 14(1)(c), that
the proposed transaction was neither just nor equitable, because the
funding level of the transferring fund considerably exceeded the funding
level of the transferee funds and there was a substantial surplus which
would remain in the transferring fund, he would be acting fully within his
regulatory powers and a court would not on review be able to interfere
with his decision simply because it did not agree with it. A fortiori would
this be so where, as here, the transferring members were unaware of
the  imbalance. It  is  true  that  they  were  not  legally entitled  to
participate in the surplus, but they had not only the hope that the trustees
might use the surplus to pay increased benefits but also the peace of
mind in knowing that their benefits would be more than adequately
protected. Actuaries are not infallible and no-one could have predicted
the events of September 11 2001 and their worldwide economic
consequences. And, of course, if the Fund should be liquidated (as it has
been) they would have some prospect of sharing in a surplus should one

exist (as it does)   not because they had an existing legal right to do so,
but because some arrangement would have to be made to deal with the
surplus.
[31] I have pointed out that a public functionary may be entitled and
even obliged to seek the review by a court of its own decision; and I have
already held that the Registrar and the FSB are entitled to do so. The
question which now arises is whether this should be permitted because
of a material mistake of fact, even a mistake due to the functionary’s own
negligence (which the appellants submit was present in this case in as
much as, according to the appellants, the Registrar should have realised
that the information provided by Meyer could not have been correct and
should have made further inquiries) and even if the mistake was not
induced by the person who benefited by the decision.
[32] Hitherto, where jurisdiction is not in issue and there is no obvious
transgression of the boundaries within which the functionary has been
empowered to make decisions, our courts have not permitted a review
solely on the basis of a material mistake of fact on the part of the person
who made the decision. Judicial intervention has been limited to cases
where the decision was arrived at arbitrarily, capriciously or mala fide or
as a result of unwarranted adherence to a fixed principle or in order to
further an ulterior or improper purpose; or where the functionary
misconceived the nature of the discretion conferred upon him and took

into account irrelevant considerations or ignored relevant ones; or where
the decision of the functionary was so grossly unreasonable as to
warrant the inference that he had failed to apply his mind to the matter:
Johannesburg Stock Exchange v Witwatersrand Nigel Limited and
Another 1988 (3) SA 132 (A) at 152C-D; Hira and Another v Booysen
and Another 1992 (4) SA 69 (A) at 93B-C. There are decisions in other
jurisdictions, however, which go further.
[33] In England there are two cases which are relevant:  Secretary of
State for Education and Science v Tameside Metropolitan Borough
Council [1977] AC 1014 and Regina v Criminal Injuries Compensation
Board, Ex Parte A [1999] 2 AC 330 (H.L.(E.)).
[34] The facts in the Tameside case were in essence the following. A
local education authority proposed to bring all the schools in their area
under the comprehensive principle. Their scheme was approved by the
Secretary of State for Education and Science in November 1975, and
implementation of the scheme was envisaged by the beginning of the
school year in September 1976. In May 1976 local government elections
were held, and in the authority’s area the survival of the grammar
schools was a strongly fought issue on which the opposition party took a
stand. The opposition party gained control of the authority, and
considered that they had a mandate to reconsider their predecessor’s
education policy, which they did. The Secretary of State, acting under s

68 of the Education Act 1944,4 directed the authority to give effect to the
proposals approved by him in November 1975. Subsequently, the
Secretary of State applied for an order of mandamus ordering the
authority to comply with his direction. The Divisional Court made the
order of mandamus.
[35] The Court of Appeal quashed the order. Scarman LJ, in a judgment
concurring in the result arrived at by the other two members of the court,
summarised part of the argument put forward by Mr Bingham, leading
counsel for the Secretary of State, as follows (at 1030A-B):
‘[W]hile judicial review of the exercise of the [Secretary of State’s] discretion is not
excluded by the section [s 68], the court can declare the Secretary of State’s direction
unlawful only if there be proved to exist one or other of the following situations:  bad
faith on the part of the Secretary of State, misdirection in law, taking account of
irrelevant matters or omitting to consider relevant matters, and finally a situation
where the Secretary of State has taken a view which on the material and the
information available to him no reasonable man could have taken.’
The learned Lord Justice continued (at 1030E-H and 1031D-E):
‘I do not accept that the scope of judicial review is limited quite to the extent
suggested by Mr. Bingham. I would add a further situation to those specified by him:
misunderstanding or ignorance of an established and relevant fact. Let me give two

4 Section 68 provided inter alia : ‘If the Secretary of State is satisfied, either on complaint by any person or
otherwise, that any local education authority or the managers or governors of any county or voluntary school
have acted or are proposing to act unreasonably with respect to the exercise of any power conferred or the
performance of any duty imposed by or under this Act, he may, notwithstanding any enactment rendering the
exercise of the power or the performance of the duty contingent upon the opinion of the authority or of the
managers or governors, give such directions as to the exercise of the power or the performance of the duty as
appear to him to be expedient…’.

examples. The fact may be either physical, something which existed or occurred or
did not, or it may be mental, an opinion. Suppose that, contrary to the minister’s
belief, it was the fact that there was in the area of the local education authority
adequate school accommodation for the pupils to be educated, and the minister
acted under the section believing that there was not. If it were plainly established that
the minister was mistaken, I do not think that he could substantiate the lawfulness of
his direction under this section. Now, more closely to the facts of this case, take a
matter of expert professional opinion. Suppose that, contrary to the understanding of
the minister, there does in fact exist a respectable body of professional or expert
opinion to the effect that the selection procedures for school entry proposed are
adequate and acceptable. If that body of opinion be proved to exist, and if that body
of opinion proves to be available both to the local education authority and to the
minister, then again I would have thought it quite impossible for the minister to invoke
his powers under  section 68.
…
I have already put in my own words the situation which I think, in addition to
those more commonly described, enables the court to exercise its power of review. I
would now try to put that situation into a formula; and my formula would be as
follows: that the Secretary of State cannot lawfully be satisfied that the local
education authority is proposing to act unreasonably unless upon the information that
was or ought to have been available to him the local education authority acting
reasonably, could not have acted, or proposed to act, as it in fact did.’ (Emphasis
supplied.)
[36] The Tameside case went on further appeal to the House of Lords.
Five speeches were delivered. Lord Wilberforce said at 1047C-F:

‘The section is framed in a “subjective” form – if the Secretary of State “is
satisfied”. This form of section is quite well known, and at first sight might seem to
exclude judicial review. Sections in this form may, no doubt, exclude judicial review
on what is or has become a matter of pure judgment. But I do not think that they go
further than that. If a judgment requires, before it can be made, the existence of some
facts, then, although the evaluation of those facts is for the Secretary of State alone,
the court must inquire whether those facts exist, and have been taken into account,
whether the judgment has been made upon a proper self-direction as to those facts,
whether the judgment has not been made upon other facts which ought not to have
been taken into account. If these requirements are not met, then the exercise of
judgment, however bona fide it may be, becomes capable of challenge …’.
[37] In Regina v Criminal Injuries Board, Ex. p. A, supra, the facts were
the following (I quote from the headnote):
‘In 1991 two men pretending to be C.I.D. officers entered the applicant’s house,
assaulted her, stole her money and valuables and vandalised the premises before
leaving. The applicant called the police and when an officer arrived told him of the
assault and burglary and showed him the damage. He took her to hospital where, on
examination, she was found to be bruised. Three days later she contacted the police
and alleged that in the course of the burglary she had also been the victim of rape
and buggery. Five days after the burglary the applicant was examined by a police
doctor to whom she gave an account consistent with what she had told the police.
The police doctor reported that her findings were consistent with the allegation of
buggery but neither confirmed nor excluded vaginal intercourse. Subsequently, the
applicant made a claim to the Criminal Injuries Compensation Board. At the hearing
of her claim, the evidence did not include the police doctor’s report and a police

witness said that “the doctor could only see trauma to the back passage   the
applicant had haemorrhoids.”  The board rejected the claim, concluding that the
medical evidence gave no assistance in determining the  applicant’s claims.’
[38] In the House of Lords, Lord Slynn of Hadley said at 344G-345C:
‘Your Lordships have been asked to say that there is jurisdiction to quash the board’s
decision because that decision was reached on a material error of fact. Reference
has been made to Wade & Forsyth, Administrative Law, 7th ed. (1994), pp. 316-318
in which it is said:
“Mere factual mistake has become a ground of judicial review,
described as ‘misunderstanding or ignorance of an established and relevant
fact,’ [Secretary of State for Education and Science v. Tameside Metropolitan
Borough Council [1977] A.C. 1014, 1030], or acting ‘upon an incorrect basis of
fact’ … This ground of review has long been familiar in French law and it has
been adopted by statute in Australia. It is no less needed in this country, since
decisions based upon wrong facts are a cause of injustice which the court
should be able to remedy. If a ‘wrong factual basis’ doctrine should become
established, it would apparently be a new branch of the ultra vires doctrine,
analogous to finding facts based upon no evidence or acting upon a
misapprehension of law.”  [Emphasis supplied in view of the conclusion in para
[47] below.]
de Smith, Woolf and Jowell, Judicial Review of Administrative Action, 5th ed.
(1995), p. 288:
“The taking into account of a mistaken fact can just as easily be absorbed into
a traditional legal ground of review by referring to the taking into account of an
irrelevant consideration, or the failure to provide reasons that are adequate or

intelligible, or the failure to base the decision on any evidence. In this limited
context material error of fact has always been a recognised ground for judicial
intervention.”
For my part, I would accept that there is jurisdiction to quash on that ground in
this case, but I prefer to decide the matter on the alternative basis argued, namely
that what happened in these proceedings was a breach of the rules of natural justice
and constituted unfairness.’
[39] In Halsbury’s Laws of England 4th ed (2001 reissue) vol 1 (1) para
76 p 164 the English law is stated as follows:
‘Errors of fact. In exercising their functions, public bodies evaluate evidence and
reach conclusions of fact. The court will not ordinarily interfere with the evaluation of
evidence or conclusions of fact reached by a public body properly directing itself in
law. The exercise of statutory powers on the basis of a mistaken view of the relevant
facts will, however, be quashed where there was no evidence available to the
decision maker on which, properly directing himself as to the law, he could
reasonably have formed that view. The court may also intervene where a body has
reached a decision which is based on a material misunderstanding or error of fact.’
(Emphasis supplied.)
The learned authors then point out that the courts adopt a different
approach where the existence of a state of affairs is a statutory
precondition to the jurisdiction of a public body. Whether this is still good
law in England may be debatable. After the passage in Wade and
Forsyth Administrative Law 7th ed pp 317-8 quoted by Lord Slynn (see
para [38] above), the learned authors continue:

‘A minister, for example, would have to show not only that he decided reasonably on
the material before him, but that he had the relevant material before him in correct
form. This would tighten still further the court’s control over administrative findings of
fact and would consign much of the old law about jurisdictional fact, etc., to well-
deserved oblivion. It would make judicial review into a comprehensive system, able to
correct serious errors of all kinds.’5
[40] In New Zealand in Daganayasi v Minister of Immigration [1980] 2
NZLR 130 Cooke J (who was the only one of the three learned Judges of
Appeal who incorporated this reasoning) quoted from the judgment of
Scarman LJ in the Tameside case, and continued (at 147 lines 20-25):
‘The speeches of their Lordships appear to show, not indeed unreserved acceptance,
but at least a considerable degree of endorsement of Scarman LJ’s views’
and then, after quoting from or summarising the speeches of the learned
Law Lords, concluded (at page 148 lines 45-50):
‘Taken as a whole the observations of the House of Lords seem to me to provide a
strong foundation for holding at least that the traditional duty to take into account
relevant considerations extends to considerations which should have been within the
knowledge of the Minister. Parliament would be unlikely to confer authority on the
Minister on any other basis.’
[41] In South Africa we have a new constitutional dispensation. The
consequence of this in the context of administrative law has been dealt
with by the Constitutional Court in several decisions, including Fedsure

5 Lord Clyde and Denis Edwards in Judicial Review refer to these passages in Wade and Forsyth and say that ‘a
strong argument is presented for the recognition of broad and simple rules of review whereby erroneous and
decisive facts may enable a decision to be quashed.’

Life Assurance Ltd and Others v Greater Johannesburg Transitional
Metropolitan Council and Others 1999 (1) SA 374 (CC), President of the
Republic of South Africa and Others v South African Rugby Football
Union and Others 2000 (1) SA 1 (CC) and Pharmaceutical
Manufacturers Association of SA and Another :  In Re Ex Parte President
of the Republic of South Africa and Others 2000 (2) SA 674 (CC).
[42] In Fedsure five of the learned justices held at 400F-G (para [59]):
‘There is of course no doubt that the common-law principles of ultra vires remain
under the new constitutional order. However, they are underpinned (and
supplemented where necessary) by a constitutional principle of legality. ‘
[43] In Sarfu the court held at 71A-C (para 148):
‘In the past, under the doctrine of parliamentary supremacy, the major source of
constraint upon the exercise of public power lay in administrative law, which was
developed to embrace the exercise of public power in fields which, strictly speaking,
might not have constituted administration. Now, under our new constitutional order,
the constraints are to be found throughout the Constitution, including the right, and
corresponding obligation, that there be just administrative action.’
[44] In Pharmaceutical Manufacturers the court held at 696E-H
(para[45]):
‘The interim Constitution which came into force in April 1994 was a legal watershed.
It  shifted constitutionalism, and with it all aspects of public law, from the realm of
common law to the prescripts of a written constitution which is the supreme law. That
is not to say that the principles of common law have ceased to be material to the
development of public law. These well-established principles will continue to inform

the content of administrative law and other aspects of public law, and will contribute
to their future development. But there has been a fundamental change. Courts no
longer have to claim space and push boundaries to find means of controlling public
power. That control is vested in them under the Constitution, which defines the role of
the courts, their powers in relation to other arms of government and the constraints
subject to which public power  has to be exercised. Whereas previously constitutional
law formed part of and was developed consistently with the common law, the roles
have been reversed.’
[45] The section which deals with ‘just administrative action’ in the 1996
Constitution is s 33. Subsection 33(1) provides:
‘Everyone has the right to administrative action that is lawful, reasonable and
procedurally fair.’
Administrative action based upon a material mistake of fact resulting in
the type of prejudice considered in para [14] above, cannot be
categorised as complying with that subsection.
[46] The national legislation envisaged in s 33(3) of the Constitution has
now been enacted in the Promotion of Administrative Justice Act, 3 of
2000; but that Act came into operation well after the present proceedings
were instituted. Nevertheless it is relevant to note in passing that s
6(2)(e)(iii) provides that a court has the power to review an administrative
action inter alia if ‘relevant considerations were not considered’. It is
possible for that section to be interpreted as restating the existing

common law;6  it is equally possible for the section to bear the extended
meaning that material mistake of fact renders a decision reviewable.
[47] In my view a material mistake of fact should be a basis upon which
a court can review an administrative decision. If legislation has
empowered a functionary to make a decision, in the public interest, the
decision should be made on the material facts which should have been
available for the decision properly to be made. And if a decision has
been made in ignorance of facts material to the decision and which
therefore should have been before the functionary, the decision should
(subject to what is said in para [10] above) be reviewable at the suit of
inter alios the functionary who made it - even although the  functionary
may have been guilty of negligence and even where a person who is not
guilty of fraudulent conduct has benefited by the decision. The doctrine
of legality which was the basis of the decisions in Fedsure, Sarfu and
Pharmaceutical Manufacturers requires that the power conferred on a
functionary to make decisions in the public interest, should be exercised
properly ie on the basis of the true facts; it should not be confined to
cases where the common law would categorize the decision as ultra
vires.

6 Cf the remarks of Mason J in Minister for Aboriginal Affairs and Another v Peko-Wallsend Ltd and Others [1986-1987] 162
CLR 24 (HC of A) at 39 in regard to s 5(2)(b) of the Administrative Decisions (Judicial Review) Act which provides that an
improper exercise of a power (a ground of review in terms of subsection (1)(e)) shall be construed as a reference to inter alia
‘failing to take a relevant consideration into account in the exercise of a power’. The learned judge held ‘The failure of a
decision maker to take into account a relevant consideration in the making of an administrative decision  is one instance of an
abuse of discretion entitling a party with sufficient standing to seek judicial review of ultra vires administrative action. That
ground now appears in s 5(2)(b) of the A.D. (J.R.) Act which, in this regard, is substantially declaratory of the common law.’

[48] Recognition of material mistake of fact as a potential ground of
review obviously has its dangers. It should not be permitted to be
misused in such a way as to blur, far less eliminate, the fundamental
distinction in our law between two distinct forms of relief: appeal and
review. For example, where both the power to determine what facts are
relevant to the making of a decision, and the power to determine whether
or not they exist, has been entrusted to a particular functionary (be it a
person or a body of persons), it would not be possible to review and set
aside its decision merely because the reviewing court considers that the
functionary was mistaken either in its assessment of what facts were
relevant, or in concluding that the facts exist. If it were, there would be no
point in preserving the time-honoured and socially necessary separate
and distinct forms of relief which the remedies of appeal and review
provide. Of course, these limitations upon a reviewing court’s power do
not extend to what have come to be known as jurisdictional facts and, in
my view, it will continue to be both necessary and desirable to maintain
that particular category of fact. I am therefore, with respect, unable to
share the opinion of Professors Wade and Forsyth (quoted in para [39]
above) that one can safely ‘consign much of the old law about
jurisdictional fact, etc, to well-deserved oblivion’ if by that statement is
meant that the distinction between appeal and review will be eliminated.
In the present appeal none of the considerations to which I have referred

in this paragraph of the judgment arise. The Registrar was entitled to act
on the assumption that the correct facts had been placed before him.
[49] Whether a review should succeed in a matter such as the present
will depend on a consideration of the public interest in having the
decision corrected and other factors, and in particular, the interests of the
person in whose favour a decision has been made. Ultimately, a value
judgment, balancing all the relevant factors, will be required. I turn to
consider the factors relevant in the present case.
[50] The Registrar was misled on a fact material to his decision. I have
already dealt with the public interest, and the interest of those directly
affected, in the proper performance by the Registrar of the functions
entrusted to him by the Act, and s 14(1) in particular.
[51] There is no prejudice to the second appellant, Pepkor Limited,
sufficient to warrant denial of the relief:  the effect of the relief will be
potentially to deny to it a windfall which it could not legitimately have
expected and to which it has never become entitled. Nor can there be
any question of prejudice to the Fund. The appellants’ counsel submitted
that it would be ‘practically unworkable and legally indefensible to undo
the transfers at this late stage’. Paragraphs 3 and 4 of the order of the
court below (at 628F) which suspended the operation of the order and its
consequences, were designed to ameliorate this difficulty; and although
common sense dictates that considerable problems may arise in the

implementation of the order made by the court a quo, there was no
suggestion to any of the witnesses who testified (all of whom were called
on behalf of the plaintiff), much less any evidence from the defendants
(who included the liquidator of the Fund),  that the order would be
impossible to carry out.
[52] I therefore consider that the appeal against the setting aside on
review of the s 14(1)(e) certificates and the resultant transfers of money
from the Fund to the ‘daughter’ funds, and the ‘daughter’ funds to the
defined contribution funds, should be dismissed.
COSTS
[53] I do not consider that the appellants’ limited success in challenging
the locus standi of the FSB to require repayment of the R9,2m is a
reason for depriving the FSB of any part of its costs. It has been
substantially successful on appeal and this finding is of academic interest
only in as much as the money will have to be repaid at the suit of the
Registrar. In addition the point was one of law which did not result in the
record on appeal being more voluminous than it would otherwise have
been and argument on the point was relatively brief.
[54] Although only one counsel appeared on behalf of the respondents
to argue the appeal, the costs of two counsel were otherwise sought.
The heads of argument were prepared by two counsel. The request is
amply justified   indeed, the appellants asked for the costs of three

counsel.
ORDER
1.
The appeal against the order granted at the suit of the Financial
Services Board for repayment of the amount of R9 223 118 paid by
the Pepkor Pension Fund to the first appellant, is upheld.
2.
The appeal is otherwise dismissed.
3.
The appellants are ordered jointly and severally to pay the
respondents’ costs of the appeal, including the costs of two
counsel where two counsel were employed.

………………
T D CLOETE
JUDGE OF APPEAL

Concur:

Vivier ADP
Marais JA
Navsa JA
Lewis JA