The Municipal Workers Retirement Fund (previously known as the South African Municipal Workers Union Provident Fund v Ndlambe Local Municipality

• Jurisdiction: South Africa
• Court: Eastern Cape Division
• Judge: Roberson J
• Judgment Date: 22 November 2018
• Citation: 2019 JDR 0133 (ECG)
• Hearing Date: 07 November 2018
• Docket Number: 4884/2017

Roberson J:

[1]

The plaintiff in this action (the Fund) is a pension fund registered in terms of the Pension Funds Act 24 of 1956 (the PFA). The defendant (the Municipality) is an employer of persons who are members of the Fund. Section 13A (1) of the PFA provides:

"13A Payment of contributions and certain benefits to pension funds

(1)

Notwithstanding any provision in the rules of a registered fund to the contrary, the employer of any member of such a fund shall pay the following to the fund in full, namely-

(a)

any contribution which, in terms of the rules of the fund, is to be deducted from the member's remuneration; and

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(b)

any contribution for which the employer is liable in terms of those rules."

[2]

The rules of the Fund provide that a member and an employer shall contribute to the Fund at the rate specified in a schedule to the rules.

[3]

It is common cause that during the period July 2007 to February 2013 the Municipality did not pay to the Fund the full amount it was obliged to pay in terms of the applicable schedule to the rules of the Fund, both in respect of the members' contributions and the Municipality's contribution. The total shortfall for the members' contribution was R1 159 843.71 and the total shortfall for the Municipality's contribution was R2 783 588.27. In terms of s 13A (7) of the PFA, interest at a prescribed rate is payable on a contribution not paid within the prescribed time, which is not later than seven days after the end of the month for which a contribution is payable. The prescribed rate of interest, as published, for the amounts concerned in this matter, is the repo rate plus one third thereof plus 8 percentage points with a finance charge rate cap of 20% per annum. Regulation 33 (7) of the PFA provides that this is compound interest and that the interest constitutes investment income for a fund. As at 28 September 2018, the total amount claimed to be owed to the Fund by the Municipality, including interest of R9 705 754.23, was R13 649 186.21. The Fund claims this amount together with further interest thereon at the same rate from 28 September 2018, and costs.

[4]

The Municipality raised two special pleas: prescription and non-compliance with s 3 of the Institution of Legal Proceedings against Certain Organs of State Act 40 of 2002. This latter plea was correctly not pursued, the Fund's claim not being

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one for damages. In its plea over the Municipality pleaded that it had paid to the Fund the amounts which it had deducted from the members' remuneration and that these deductions were in accordance with the schedule to the rules, of which the Municipality had been notified by the Fund at the relevant time. Therefore, so it was pleaded, it could not be held liable for amounts which had not been deducted from the members' remuneration. Similarly, the Municipality pleaded that it had paid its own contribution in accordance with the schedule. In the alternative it was pleaded that in the event that the Municipality was found to be liable for the shortfall, it should not be liable for interest because it was not aware that it was payable at the relevant time. Further in the alternative it was pleaded that payment should exclude contributions on behalf of employees who are no longer in the employment of the Municipality. Lastly it was pleaded that in terms of regulation 33 of the PFA the Fund bore the responsibility to notify the Municipality and its employees of any short payment and because it did not do so the Municipality believed that its contributions were correct.

Prescription

[5]

A number of grounds of resistance to the defence of prescription were raised but I shall deal with only one, which in my view is dispositive of this defence. Counsel for the Fund referred me to the judgment in Roestorf and Another v Johannesburg Municipal Pension Fund and Others 2012 (6) SA 184 (SCA). In this matter the two appellants, who were members of the first respondent, had been medically boarded in 1995. Their pensions were paid to them monthly but years later they challenged the calculation of their retirement benefits and in 2006 filed a

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complaint with the Pension Funds Adjudicator, who upheld their complaint that their retirement benefits had been incorrectly calculated. The first respondent was ordered to pay the revised...