The Supreme Court of Appeal (SCA) has provided its reasons for dismissing an appeal by Akani Retirement Fund Administrators (Pty) Ltd and the Chemical Industries National Provident Fund (CINPF). The dismissal of the appeal means a ruling by the Full Bench of the High Court that invalidated the fund’s decision to terminate NBC Fund Administration Services (Pty) Ltd stands.
Akani and CINPF have been engaged in a dispute with NBC since CINPF’s decision to end its 30-year relationship with NBC and appoint Akani. The dispute has led to multiple court cases, culminating in an appeal to the SCA.
In September last year, the SCA dismissed, with costs, the appeal by Akani, CINPF, and various CINPF trustees.
However, the SCA dismissed the appeal without addressing the substantive issues that lie at the heart of the dispute. Instead, the SCA found that the appeal was moot because Akani had itself been replaced as CINPF’s administrator.
Last week, the SCA provided its reasons for reaching this conclusion.
High Court’s judgment
The conflict began in November 2019 when CINPF, a R6-billion retirement fund for 21 600 blue-collar workers in industries such as chemical and paper, terminated its long-standing administrator, NBC Holdings, citing poor performance and high fees.
CINPF then appointed Akani, along with Novare Actuaries and Consultants (as its investment consultants) and Moruba Consultants and Actuaries. NBC challenged this decision, leading to a case heard by the High Court in Johannesburg.
Akani claimed the decision by CINPF’s board had been tainted by fraud. It alleged the board’s chairperson, Reginald Sema (now deceased), vice-chairperson Ayanda Sithole, and principal officer Bonginhlanhla Dangazele (also now deceased) received money from the Neighbour Funeral Scheme (NFS) – which shared directors and premises with Akani – as a reward for ensuring that Akani was hired.
Akani did not dispute that these payments. However, it said the payments were made because the three office-bearers had bought funeral policies from NFS in August 2019, and each was due money because a person whose life was insured had died. Akani said the fact that this money was paid to all three people on the same day, one day after CINPF decided to terminate NBC, was “coincidental”.
In July 2020, Judge Bashier Vally dismissed NBC’s application to retain control. He ruled that NBC did not have any legal standing to challenge CINPF’s decision, because it had no right to remain appointed to provide services to the fund.
Regarding the corruption allegations, Judge Vally said there was not enough evidence to find that there was a corrupt relationship between NFS and the three CINPF office-bearers.
NBC appealed to the Full Bench of the High Court.
Decision by the Full Court
By the time the Full Court heard the appeal in February 2022, Akani had terminated its mandate with CINPF – in August 2021 – and had appointed Momentum Retirement Administrators in its place (on 1 November 2021). CINPF submitted that this rendered the appeal moot.
The Full Court handed down its ruling in June 2022. It dismissed the mootness point on two grounds:
- The point was not properly before it because it was only raised in CINPF’s heads of argument and not in an affidavit.
- It was in the interests of justice to determine the appeal because the outcome could affect future business relations between the parties.
Significantly, the Full Court reversed almost all of Judge Vally’s findings. It found that the payments made to the three officials did amount to “bribes”.
Judge Leicester Adams said the three CINPF office-bearers had not properly explained the nature of their relationships to the people whose deaths had allegedly triggered these payments.
The court set aside CINPF’s decision to fire NBC and hire Akani, Novare, and Moruba, removed Sema and Sithole from office, and awarded costs against the fund.
Akani and CINPF both appealed this decision.
Appeal to the SCA
Before the SCA, CINPF and Akani argued that the Full Court’s order should be set aside, reinstating the High Court’s ruling, and that the appeal remained relevant despite Akani’s removal as CINPF’s administrator, Momentum’s appointment, and the deaths of two trustees.
Akani also submitted that the Full Court’s adverse findings against it contained factual and legal errors and set a bad precedent regarding how such factual disputes should be resolved in motion proceedings. Akani submitted that the officers against whom the adverse findings had been made needed to clear their names.
NBC submitted that the appeal was neither moot before the Full Court nor the SCA, and the outcome of the SCA’s order would have a practical effect. It further submitted that if the SCA found that the appeal was moot, the appeal should nevertheless be determined in the interests of justice.
Reasons for the decision
In its judgment setting out its reasons for dismissing the appeal, the SCA said Akani’s replacement by Momentum and the removal or death of the impugned trustees meant the appeal’s outcome would have no practical effect. The historical dispute between Akani and NBC has been overtaken by these events.
“The legal dispute has essentially always been between Akani and NBC, i.e. the removal of the latter as CINPF’s administrator and its replacement with the former. Both have been removed, and that relationship, to the extent it concerns CINPF, has come to an end. Neither Akani nor NBC seeks to challenge Momentum’s appointment. Nor for that matter was Momentum sought to be joined as a party to the proceedings after its appointment in Akani’s stead. Thus, whatever may be said about the merits of the dispute between Akani and NBC, Momentum’s position as the new service provider to CINPF would remain unaffected and unaltered. The historical dispute between Akani and NBC has simply been overtaken by Momentum’s appointment, and consequently the appeal has become moot,” wrote Judge Tati Makgoka.
The SCA then considered whether, despite its mootness, the court should exercise its discretion and hear the appeal. It decided against doing so because there was no discrete legal issue of public importance. The Full Court’s fraud and bribery findings were fact-specific, not binding in future trials, and its ruling on administrative action under the Promotion of Administrative Justice Act was case-specific, not broadly significant.
The SCA also corrected a conclusion in the Full Court’s judgment that the question of mootness should always be raised formally in an affidavit. The court pointed out that there can be no absolute procedural bar to mootness being raised for the first time in the heads of argument filed on appeal.
