Edition: July / September 2016
CLASS ACTIONS 2
Multi-billion rand action under way.
Can a favourable outcome for pensioners derail Transnet?
So you thought that the class action launched by two pensioners – against the Transport Pension
Fund, Transnet Second Defined Benefit Fund
and Transnet itself – was a noise to grow faint in the
mists of time? Wrong! Although it’s taken ages to
get out of the ground (TT Sept-Nov ’14), out of the
ground it is now in an action that involves way over
In the Gauteng division of the High Court, Justice
Legodi has found partially for the plaintiffs and
partially for the defendants on matters of “exception”.
This is a legal objection to an opponent’s pleadings,
described as a useful mechanism for weeding out cases
without legal merit. If it does not have the effect of
disposing of a case in whole or in part, and avoiding
unnecessary evidence being led at the trial, the judge
said that the exception should not be entertained.
The plaintiffs, Johan Pretorius and Montana
Kwapa, are together suing both in their personal
capacities and in the interests of the funds’ members.
They have three claims.
First is that, from 1989 to 2002, a promise was
made and implemented by authorised persons that
pensions would annually increase by at least 70%
of the inflation rate. Relief sought is that Transnet’s
failure to keep this promise be declared unlawful
and that the funds be ordered to keep this promise,
including payment of arrear increases, with effect from
The court dismissed the defendants’ exception
to this claim. However, it upheld them on the
plaintiffs’ “failure to identify the terms of the
promise” and their allegations of “unlawful
state conduct”. Also upheld was the defendants’ exception to the plaintiffs’ claim of “unlawful
Second concerns the “legacy debt” by which the old
SA Railways & Harbours and SA Transport Services
had to pay into the funds sufficient amounts to keep
them in a sound financial condition. Transnet had
inherited these obligations. The amount payable to
the funds had to be determined by the state actuary
in consultation with an actuary appointed by the
Minister of Public Enterprises. They duly determined
the legacy debt, payable to the funds, at R171,8bn.
The plaintiffs want an order that declares Transnet
indebted to the funds for payment of R171,8bn plus
interest from 1 April 1990 at a rate of not less than
12% a year determined by the state actuary; that
Transnet pays the legacy debt to the funds, and that
the funds and Transnet jointly and severally pay the
Transnet’s exception to this claim was
The third claim relates to an “unlawful donation”.
The plaintiffs contend that, in November 2000,
trustees of the Transport Fund and Transnet
agreed that the fund would donate 40% of its
members’ surplus to Transnet and that trustees of
the fund will thereafter implement the donation
by paying R309,1m to Transnet. The donation, say
the plaintiffs, was unlawful and invalid because
the trustees did not have the power to make the
donation. Further, the trustees made the donation
in breach of their fiduciary duty to act in the best
interests of the fund and its members.
Accordingly, the plaintiffs want the donation
declared unlawful and invalid. They also want
Transnet ordered to pay the fund R309,1m plus
interest, as well as costs of the action.
The exception by all of the defendants to this
claim was dismissed.
The funds had objected to the first and third
claims on the basis that the particulars of them
were “vague and embarrassing”, and that they do
not sustain a cause of action. For its part, Transnet
had objected to all three claims as being “vague and
embarrassing” and disclosing no cause of action.
Because both plaintiffs and defendants had
partially succeeded, the judge ruled that the
respective parties pay their own costs.