COMMUNICATION & ALLIED INDUSTRIES PENSIONERS' ASSOCIATION v COMMUNICATION & ALLIED INDUSTRIES PENSION FUND 2008 (2) ZLR 288 (S)

Flynote

Arbitration — arbitration clause — clause in rules of pension fund — construction of clause — clause providing that dispute under rules may be referred to arbitration — proper construction of rules showing that dispute was not about matter arising out of rules — matter not a dispute falling within terms of arbitration clause

Headnote

The respondent was a self-administered fund governed by a set of rules. The affairs of the fund were administered and controlled by nine trustees. The object of the fund was to provide benefits for officers and employees and former officers and employees of the PTC and its successor companies on their retirement through age, ill-health or other reasons specified under the rules.

One of the categories of beneficiaries under the fund was that of employees who were discharged owing to the abolition of office or to any retrenchment. They were entitled to benefits calculated in accordance with a formula which took into account the accumulated contributions made by the member every year from the fifth year of service, together with an additional benefit equal to a prescribed percentage of his accumulated contributions, excluding any voluntary contributions paid. The rules gave the trustees the discretionary power to make additions to the benefits payable to the member as they saw fit. The additions referred to could be made to a benefit payable to a member of any category of pensioners. Where the benefit was to be paid to a pensioner who received an additional pension from another source, the exercise of the power must take into account amounts of increases made to those pensions.

The appellant, as an association of pensioners, claimed on behalf of retrenched pensioners that such pensioners were entitled to additions to benefits calculated in accordance with a formula which took into account the amounts of increases made to salaries of employees in the services of the successor companies. The trustees denied that the rules imposed any obligation on them to do this. The appellant asked that the matter be referred to arbitration in terms of r 7 of the rules, which allowed a dispute about a claim from a member about any matter under the rules to be referred to arbitration. In the High Court, the judge held that the claim did not arise from the rules but rather sought an amendment of the rules.

The appellants were demanding, as a matter of law, that the trustees had to act in the manner suggested, whilst the trustees argued that the decision as to what factors were to be taken into account in calculating additions to benefits payable to pensioners or beneficiaries was a matter of discretion. The appellant conceded that the rules did not impose an obligation on the trustees but argued that the court could nonetheless proceed on the basis that the trustees were under the obligation.

Held, that the matter about which the dispute which the parties must refer to arbitration, should the other party in the dispute be dissatisfied with the decision of trustees, should not be a matter outside the rules; it must be a matter for which provision is made under the rules. The first thing to be ascertained was the precise nature of the dispute which had arisen. The dispute in this case was about the existence, or otherwise, as a matter of law under the rules, of an obligation on the trustees to take into account amounts of increases made to salaries of serving employees by the successor companies when calculating additions to benefits payable to retrenched pensioners.

Held, further, that the next question was whether the dispute was one which fell within the terms of the arbitration clause, that is, whether the matter about which the dispute arose was a matter under the rules. To hold the court should proceed on the basis that the trustees were under the obligation referred to would impose on the trustees a burden they did not undertake under the rules. The principle of impartiality, which the trustees had to observe in dealing with beneficiaries under the rules, required that the court should intervene in matters of administration of the fund for purposes of enforcing the rules. The matter sought to be imposed on the trustees was one outside the rules. Accordingly, the dispute did not fall within the terms of the arbitration clause.