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THE FINANCIAL SERVICES TRIBUNAL

 

CASE NO.: PFA30/2023

 

In the mater between:

 

JG AFRIKA (PTY) LTD STAFF

PENSION FUND (12/8/4157)                         APPLICANT

 

and

 

LIBERTY CORPORATE                                FIRST RESPONDENT

 

THE PENSION FUNDS ADJUDICATOR       SECOND RESPONDENT

 

Re: Application for reconsideration of decision of PFA rejecting a complaint because it did not fall within the PFA’s jurisdiction.

 

 

DECISION

 

 

1             The applicant, JG Afrika (Pty) Ltd Staff Pension Fund (hereinatier “the Fund”), applies under the signature of one Mr PA Olivier (who calls himself the “Applicant” but later identifies the applicant to be the Fund of which he is the chairman) for the reconsideration in terms of sec 230(1)(a) of the Financial Sector Regulation Act 9 of 2017 of a decision of the Pension Funds Adjudicator made under sec 30M of the Pension Funds Act 24 of 1956.

 

2             The first respondent is Liberty Corporate, a division of Liberty Group Ltd. It provided in terms of an agreement administrative functions for the Fund.

 

3             The second respondent is the Pension Funds Adjudicator.

 

4             The parties waived their rights to a formal hearing and agreed that the mater may be decided on the papers as filed.

 

5             Mr Olivier is also the chairman of JG Afrika (Pty) Ltd, the Employer member of the Fund. He filed a complaint with the PFA on 17 October 2022 in the name of the Employer (not the Fund) against Liberty. That was the complaint that was dismissed by the PFA.

 

6             The Employer and the Fund are different legal persona, one registered under the Companies Act and the other under the Pension Funds Act. The one is not the alter ego of the other. One may not blithely ignore the difference.

 

7             Since the Employer had no legal interest in the relief sought in the complaint, the complaint could have been dismissed by the PFA on that ground.

 

8             Because the Fund was not a party to the complaint, the dismissal of the complaint did not elevate the Fund to a person aggrieved as required by sec 230(1)(a) and the Fund has no legal standing to pursue the reconsideration application.

 

9             Despite this, I shall consider the correctness of the PFA’s dismissal of the complaint on the ground that the PFA does not have jurisdiction to consider the alleged “complaint” or to grant the relief sought in the complaint.

 

10         The complaint was formulated in the following terms:

 

The complaint relates to inordinate delays experienced as a result of the tardy and unprofessional manner in which [Libert] have dealt with the administration of the Fund, and with particular regards to their submission and extraneous handling of:

 

1. The statutory actuarial valuation as at 1 July 2018; and

 

2. Section 18 Scheme Arrangement.

 

. . .

 

The delays in finalisation of the abovementioned maters had resultant financial consequences, led to heightened frustrations by all members and parties involved and delayed the approval of three section 14 transfer cases for nearly two years.

 

11         The background is this: Liberty had been appointed to administer and manage the retirement funds of the Fund. Disputes arose that were setled in January 2019, but this did not prevent the complainant to hark back to those complaints.

 

12         In any event

 

On 29 November 2019, JGA [defined as the Employer] formally communicates[1] their intention to terminate [Liberty’s] administration agreement (90-day termination notice, effectively ending on 1 March 2020). Concurrently, management of JGA [the Employer] communicates to [Liberty] that the Board of Trustees had taken the decision to move into an Umbrella Fund arrangement with Allan Gray and to de-register the two standalone funds. This involves transferring all active members by way of section 14 transfer, outsourcing all pensioners within the DB section to a reputable insurer (Sanlam) in anticipation of an ultimate section 14 transfer out of the fund, and to transfer any unclaimed benefits into [Liberty’s] Unclaimed Benefits Fund.

 

The complaint proceeded to state that Liberty had 180 days from date of first submission of the section 14 transfer, being 13 October 2020, to finalise the process, that is, by 12 April 2021. The section 14 for Pensioners, DC Members and DB Members ought reasonably to have been completed and finalised had Liberty

 

a)       made all submissions relating to the statutory valuation timeously, and

b)      made all submissions for the subsequent section 18 Scheme Arrangement timeously and in the prescribed manner and format,

c)       acted with urgency, due care, diligence and skill in the execution of their mandate in a fashion that could reasonably have been expected of them by any Client, and

d)      responded timeously to all FSCA queries.

 

13         The case appears to be that had Liberty acted expeditiously, the members and the Employer, as well as the Fund’s financial adviser (WPS) would not have suffered from intense dissatisfaction, discontent and frustration, and Fund would not have had to pay the agreed Asset Based Management Fee (0.33%) due under the agreement, but a lesser advice fee (0.23%) that would have been charged by Allen Gray. In addition, WPS was unable to earn a fee on the assets “held hostage by the disastrous handling of the section 14 process” and therefore lost income.

 

14         That explains the relief sought:

 

a)       Instructing a reduction of the Asset Based Management Fee (ABAF) charged by Liberty from 0.33% (typical average as this is asset value based) to a flat 0.23% with immediate effect. The revised fixed fee should endure until such time as payment is made by Liberty to Allan Gray.

b)      Instructing a refund to members of the Fund, by Liberty, for the difference between the actual ABAF charged and 0.23%, from 12 April 2021 (180 days following the Section 14 submission on 13 October 2020) to the final date of payment to Allan Gray.

c)       Instructing refund to WPS, by Liberty, for the scheme advice fees lost from 12 April 2021 to an agreed setlement date. The fees which WPS would have earned in the Allan Gray Umbrella Fund arrangement amount to 0.20% (plus VAT) per annum, payable monthly, on the month-end value of assets under administration.

d)      Instructing a formal writen apology, from Liberty, to all members of The Fund relating to the delays and frustrations caused.

 

15         Dealing with the prayers in reverse order, there is no basis on which the PFA can instruct anyone to apologise. Courts may do so in defamation cases but that is about the limit. This kind of relief falls outside the scope of the PFA’s jurisdiction.

 

16         A prayer for an instruction to “refund” WPS lost fees is a legal novelty. WPS is not a complainant and Mr Olivier/the Fund/the Employer cannot claim on its behalf. In any event, there is no legal basis on which WPS could claim anything from Liberty.

 

17         That leaves claims (a) and (b). The claims, as the Fund and/or the Employer elsewhere states, are said to be for damages for breach of contract. But (a) is more: it requires of the PFA to change the terms of a contract. The same applies to (b) but there are additional problems: first, the Employer or the Fund cannot lay complaints or claims on behalf of Fund members and second, the prayer is open-ended.

 

18         The PFA stated explicitly and correctly, and the Fund/Employer did not take issue with this:

 

It is trite law that the Adjudicator does not have jurisdiction to make orders of damages. Although, in respect of maters that fall within its jurisdiction it has the power to make orders which any court of law may make, it does not mean that it is a court of law (see Cohen v The Pension Funds Adjudicator and Others (decided on 25 April 2019)[2] and Joint Municipal Pension Fund and Another v Grobler and Others [2007] 4 All SA 855 (SCA) at para 27) Thus, the Adjudicator has no authority in terms of its enabling legislation to grant damages and cost orders.[3]

 

19         It is necessary to mention the other basis of the PFA’s decision of lack of jurisdiction, namely that the complaint was not covered by the definition of “complaint” in sec 1 because, in performing its contractual obligations to deal with the sec 14 and 18 maters, Liberty was not administering the Fund within the meaning of that term in the Act. Administering a fund in the context of the Act, the PFA held, related to the functions set out in sec 13B, and not to other administrative tasks because of an agency or mandate agreement. This issue was fully debated and decided in Cohen v The Pension Funds Adjudicator and Others – and the PFA was correct.

 

20         The Fund finally submited that if the complaint fell outside of the PFA’s jurisdiction, then it should at least fall within the jurisdiction of the Tribunal. That assumption is incorrect. The Tribunal does not have original jurisdiction. If the decision-maker did not have jurisdiction, the Tribunal does not have. Apart from the fact that this is obvious, it is confirmed by sec 234(1): if the Tribunal would uphold the application for reconsideration, it must remit it to the PFA for reconsideration – and to remit it to a body or functionary without jurisdiction would amount to a brutum fulmen – an empty and ineffective act.

 

21         ORDER: The application for reconsideration is dismissed.

 

 

Signed on behalf of the Tribunal on 30 August 2023

 

LTC HARMS (deputy chair)

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