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2023
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[2023] ZAFSHC 136
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Mafube Local Municipality v Municipal Workers' Retirement Fund and Others (2672/2021) [2023] ZAFSHC 136 (2 May 2023)
IN
THE HIGH COURT OF SOUTH AFRICA
FREE
STATE DIVISION, BLOEMFONTEIN
Case
no
:
2672/2021
Reportable:
YES/NO
Of
Interest to other Judges: YES/NO
Circulate
to Magistrates: YES/NO
In
the matter between:
MAFUBE
LOCAL MUNICIPALITY
Applicant
and
MUNICIPAL
WORKERS’ RETIREMENT FUND
First
Respondent
FIRST
NATIONAL BANK LIMITED
Second
Respondent
STANDARD
BANK OF SOUTH AFRICA
Third
Respondent
ABSA
BANK
Fourth
Respondent
THE
SHERIFF: HEILBRON
Fifth
Respondent
CORAM:
CRONJÉ,
AJ
HEARD
ON:
20 APRIL 2023
JUDGMENT
BY:
CRONJÉ, AJ
DELIVERED
ON:
2 MAY 2023
This
judgment was handed down electronically by circulation to the
parties’ representatives by email, and release to SAFLII.
The
date and time for hand-down is deemed to be 10h30 on 2 May 2023.
I
INTRODUCTION:
[1]
The Municipal Workers’ Retirement Fund (“the Fund”)
obtained judgment in 2021 against the
Mafube Local Municipality (“the
Municipality”) for payment of
R37 795 476.32
. Writs
of attachment and execution for this amount was issued against the
bank accounts that the Municipality holds at the Second
to Fourth
Respondents.
[2]
The Municipality brings an urgent application requesting that the
Respondents be called upon to show why,
pending the filing of an
application in terms of Section 153 of the Municipal Finance
Management Act (the “MFMA”)
[1]
,
the execution of the warrants should not be stayed and uplifted. This
includes funds in its so-called primary and secondary accounts.
It
intends to file the application in terms of Section 153 of the MFMA
within ninety (90) days of this order.
[3]
The Fund attached the funds in the FNB account on 2 March 2023 and
this allegedly came to the Municipal Manager’s
attention on 7
March 2023. On 9 March 2023, the Fund issued writs against the bank
accounts held at Absa Bank and Standard Bank.
[4]
The Municipality does not state what the balances in those accounts
are. On 9 March 2023, the Municipality’s
attorneys sent a
letter to the Fund requesting the immediate upliftment of the
attachment over the FNB account as it is the secondary
account into
which earmarked grants and its equitable share from the national and
provincial spheres of government are paid.
[2]
A careful reading of the letter isolates the FNB account from the two
other banks’ accounts. It is stated that the
majority
,
thus not all the grants are subject to conditions and cannot be
attached.
[3]
[5]
In support for an argument that the application should be treated
with urgency, Mr Louw, for the Municipality,
referred me to
The
MEC: Northern Cape Provincial Government: Department of Cooperative
Governance and Traditional Affairs and Another v The Renosterberg
Local Municipality and Another
[4]
(“Renosterberg”). In that matter
the
MEC opined that Eskom lacked
bona
fides
and was dealing with the municipality’s banking account as if
it was its own account resulting in massive disruption in the
financial administration of the municipality. The MEC sought that the
municipality declare a formal intergovernmental dispute with
Eskom
and convene a meeting as envisaged in the
Intergovernmental
Relations Framework Act
[5]
(IGRFA)
to deal with the dispute relating to the payment of the judgment
debt. T
here
was an apprehension of further attachment and removal of
all
deposits
made into the banking account. The Mafube Municipality is mum on the
amounts available in the accounts and whether the attachments
will
remove
all
amounts as in Renosterberg
supra
.
[6]
In
Renosterberg
,
however, the Court differentiated between the municipality’s
own revenue and that which are
earmarked
for other infrastructural projects and
for
payment of salaries and related service delivery initiatives in
future.
[6]
Mafube Municipality’s
affidavit is mum on exactly how much is needed for specific
expenditure or what exactly is earmarked.
It rather relies on an
umbrella protection.
[7]
Mr Van der Berg SC, for the Fund, distinguished
Renosterberg
from the case before me. He submits that the Fund claims a statutory
and not an ordinary debt, the MEC in Renosterberg did not
seek an
impermissible condonation of ongoing non-compliance with the Pension
Funds Act
[7]
(PFA) or the MFMA.
IGRFA
differs from the PFA and MFMA legislation, and the resultant relief
differed.
[8]
I understood Mr Van den Berg to state that this Court does not, in
the absence of facts underpinning the application
of Rule 45A of the
Uniform Rules of Court, have a general equitable discretion to stay
execution. He relies on
Firm
Mortgage Solutions (Pty) Ltd and Another v ABSA Bank Ltd and
Another
[8]
where it was held that where the
causa
for
the execution is a judgment and the judgment is placed in dispute,
and an application for rescission has been brought,
grounds may exist
for the exercise of a favourable discretion by a court.
[9]
Binns-Ward J, in
Stoffberg
N.O and Another v Capital Harvest (Pty) Ltd
[9]
was
of
the view that the principles in
Firm
Mortgage Solutions
have to be seen within a factual context and a
stay
of execution is not to be had on flimsy grounds, merely to
accommodate an alternative payment plan that the judgment debtor
might be able to offer. The court held that the remedy is not just
for the asking.
II
IN LIMINE – NON JOINDER
[10]
The Fund asserts that the individual contributors to the Fund were
not joined. Mr Van der Berg referred to
City
of Johannesburg and Others v South African Local Authorities Pension
Fund and Others
[10]
in support of his submission that the affected contributors have a
legal interest in the non-payment of the deductions. Mr Louw,
for the
municipality, argues that the Fund represents the contributors and
joinder is not necessary.
[11]
I am of the view that the matter before me is distinguishable from
City of Johannesburg
and that non-joiner will not affect their
legal rights adversely. The Court held:
“
[8]
Uncertainty as to the effect of the order also arises from the
general nature of the order itself. Although the content of the
order
is rather verbose and wordy,
it
declares in essence that the employers’ decision to withdraw
from SALA is set aside as ‘unlawful and invalid’
and ‘of
no force and effect’. But its impact on the rights and
obligations of SALA, the employers, the employee-members
and
eJoburg, inter se is left obscure
.
…
But
what about the employees? Are they also liable to pay their arrear
contributions despite the fact that they have in the meantime
paid
their contributions to eJoburg? And what is the position of eJoburg?
Is it bound to repay any of the contributions received
from the
employers and/or the employee-members?
These obscurities, incidentally, underscores the caveat expressed
in Oudekraal Estates (Pty) Ltd v City of Cape Town &
others
2004
(6) SA 222
(SCA)
para 45, that
it
is generally inappropriate for a court to make declarations in a
vacuum
.
But
more pertinent for present purposes is the prospect that the order
could potentially have an even more prejudicial effect on
the rights
and interests of the terminating members than a first glance would
seem to indicate
.
[9]
…
A test often employed to determine whether a particular
interest of a third party is the one or the other, is to examine
whether
a situation could arise in which, because the third party had
not been joined, any order the court might make would not be res
judicata against that party, entitling him or her to approach
the court again concerning the same subject matter and possibly
obtain an order irreconcilable with the order made in the first place
( … ).
[12]
In the matter before me the contributors’ rights are
established. They are only financially affected as payment
is not
made. They are not necessary parties and their prejudice will be
exacerbated by postponing the matter for joinder.
III
THE PARTIES
[13]
The Fund is a registered retirement fund in terms of Section 4 of the
PFA. Its object is to provide retirement and ancillary
benefits for
members and their dependents and/or beneficiaries. Sections 7C and 7D
of the PFA obliges it to take all reasonable
steps to ensure that
contributions are timeously paid. Non-payment of contributions is a
statutory offence that can attract criminal
penalties of up to R10
million and/or ten (10) years’ imprisonment.
[11]
[14]
Contributions shall be deducted from salaries or wages within seven
days of the end of each month and paid to the Fund.
The benefits that
contributories to the Fund enjoy include normal retirement, voluntary
early retirement, ill-heath early retirement,
late retirement, death
in service, total and permanent disability, as well as a withdrawal
benefit.
[15]
Section 13A of the PFA provides that every person in accordance with
whose directions or instructions the governing body
or structure of
the employer act, or who controls or who is regularly involved in the
management of the employer’s overall
financial affairs, shall
be personally liable for compliance with this section and for the
payment of any contributions. This person
is the Municipal Manager as
accounting officer who is,
inter
alia
,
responsible to exercise his functions, fiduciary responsibilities and
powers assigned to him with
fidelity,
honesty,
integrity.
[12]
[16]
The Municipal Manager is,
inter alia
,
prohibited from
incurring
unauthorised expenditure. The MFMA defines this as any expenditure
incurred
by a municipality otherwise than in accordance with section 15 or
11(3), and includes expenditure of money appropriated for a specific
purpose, otherwise than for that specific purpose, and spending
of
an
allocation
referred
to
in
paragraph
(b),
(c)
or
(d)
of
the
definition
of
“allocation” otherwise than
in accordance with any conditions of the allocation.
[17]
The MFMA defines “allocation” as
inter
alia
a municipality’s share of the local government’s
equitable share referred to in section 214(1)(a) of the Constitution
of the Republic of South Africa
[13]
;
an allocation in terms of section 214(1)(c) of the Constitution;
an allocation in terms of a provincial budget;
or any other
allocation by an organ of state, otherwise than in compliance with a
commercial or other business transaction.
[18]
The Municipality may thus not use the monies for unauthorised
purposes. I cannot find any provision that protects it
against
attachment. The statutory matrix, the responsibilities of the
Municipal Manager and the Municipality’s indebtedness
to the
Fund is not in dispute.
IV
THE HISTORY OF LITIGATION BETWEEN MAFUBE AND THE FUND
[19]
To appreciate the continued defiance of the Municipality towards
complying with its statutory obligations towards the
pensioners,
their dependents and beneficiaries, extracts from a few litigious
skirmishes between the Fund and the Municipality
are necessary.
[20]
During 2011, the Fund launched an application against the
Municipality as it failed to comply with the statutory obligation
of
making payment of the pension deductions. Judgement was granted in
2015. The Municipality eventually, after many years’
delay,
made partial payment.
[21]
In October 2016, the Municipality brought an application to interdict
the Fund from executing the unpaid portion of a
2015 judgment
debt.
[14]
It sought the
Court’s intervention to impose a structural interdict and a
payment plan in respect of the 2015 judgment debt.
It was the Fund’s
case that a proposed payment plan would breach the Municipality’s
legal obligations as it sought
sanction for its unlawful activities
in failing to make payment. Motimele, AJ dismissed that application
on 6 April 2017. The Municipality
was ordered to pay the cost of two
counsel on attorney and client scale.
[22]
The Court,
inter alia,
found that the seriousness of the
Municipality’s default was compounded by the importance of the
State honouring its debts
and Court orders, the extraordinary
statutory nature of pension contributions and the Municipality’s
history of non-payment.
Relevant to this application before me is the
following remark by Motimele, AJ, already in 2017:
“
[21]
Finally section 152 and 153 of the Municipal Management Act
[MFMA}
permits
a municipality to apply for a temporary stay of the legal proceeding
for a period not exceeding 90 days.
The
applicant has not sought to exhaust this remedy
.
”
[my emphasis]
[23]
On 29 July 2019, the Fund issued another application against the
Municipality seeking judgment for
R25
411 872.20
and an order against Absa Bank to disclose to what account the
Municipality transferred
R39 939 000.00
.
Absa confirmed that it was transferred on 8 July 2019 into an FNB
account.
[15]
The transfer took
place surreptitiously whilst litigation was pending between the
Municipality and the Fund.
[24]
On 11 June 2021, the Fund brought an application for the unpaid
contributions for the period between July 2015 to April
2021. On 9
September 2021, Molitsoane J, in
Municipality
Workers Retirement Fund v Mafube Local Municipality
[16]
ordered
the Municipality to pay
R37
795 476.32
representing the capital amount until April 2021 with interest, and
costs on attorney and client scale based on the Municipality’s
own contribution schedules.
[25]
Molitsoane J found that: “
T
he
answering affidavit of the Municipality does not raise any defence.
It is replete with allegations of its own internal maladministration
and mismanagement which have nothing to do with the Fund
”.
[17]
The Court concluded:
“
[10]
The assertion by the Municipality of the alleged irregular promotions
in its ranks does little to assist it in this case. …
The
Municipality did not even pay the benefits of those employees it does
not ‘suspect’ of being irregularly promoted.
Common sense
dictates that there exists the likelihood that a number of
employees still occupy the same positions they occupied
six years ago
which begs the question why their contributions were not paid to the
Fund. It is not in dispute that the Municipality
made no payment
whatsoever for the last six years.
The
prejudice to the employees, the former employees and their families
is too ghastly to contemplate
.
No explanation is forthcoming as to why this is so. Even if I could
find that there were people irregularly appointed to certain
positions and enjoyed benefits they did not deserve,
that
can hardly excuse the Municipality as a participating employer in
terms of the PFA to perform its statutory obligations of
paying its
contributions and those of its employees to the Fund
.
”
[my emphasis]
[26]
Nothing has since changed. The Municipality did not pay, nor did it
bring an application in terms of section 153 of the
MFMA. On 1
October 2021, after the Fund gave instructions to the Sheriff to
execute the judgment debt, the Municipality filed a
notice for leave
to appeal. That application was dismissed by Molitsoane J
[18]
on 3 December 2021, again with costs. He remarked:
“
[10]
The assertion that this court failed to appreciate the applicant’s
responsibility as a public entity to ensure that it
does not make
payments that are irregular by asking time to debate the amounts owed
is misconceived.
Over
a period of six years were the amounts outstanding
.
The applicant does not dispute its indebtedness to the respondent.
The indebtedness of the applicant is calculated from the schedules
it
furnishes to the respondent.
The
applicant does not seem to appreciate the obligations of the
respondent towards its members. It is not only about the applicant.
This ground of appeal has no merit
.
[my
emphasis]
[27]
The Municipality now repeats its delaying tactics as it did before
2017 and since 2021. The Municipal Manager now states
that Provincial
Government intervention came about as a result of a judgment by Van
Rhyn, AJ (as she then was) in
Mafube
Business Forum and Another v Mafube Local Municipality and
Others
[19]
.
[28]
He states that part of the orders granted by Van Rhyn AJ, was that
the Provincial Government is to implement a recovery
plan to enable
the Municipality to meet its obligations. He then states that the
judgment makes mention of the various factors
contributing to the
Municipality’s financial crisis, that the same factors still
exist, and that “
the financial recovery plan has not yet
been
implemented
”. The present application is
issued close to 5 years after Motimele, AJ’s judgment wherein
reference was made to section
153, close to two years after
Molitsoane’s judgment, and nearly a year after Van Rhyn AJ’s
judgment.
[29]
Van Rhyn AJ’s judgment notes that t
he
Standing Committee on Public Accounts (“SCOPA”) summoned
the Municipality and its Administrator at the time, to a
meeting
on
17
September 2019 regarding the dire situation at the Municipality. The
issues raised during the meeting were,
inter
alia,
the
Auditor General’s repeated adverse findings regarding the
Municipality’s financial situation since 2014. The then
Municipal Manager and the Administrator failed to attend several
meetings of SCOPA.
[20]
[30]
It was noted that the Municipality made payments to the then
Administrator notwithstanding that no services were rendered
and also
transferred an amount of “R40 million” (the
R39 939 000.00
)
from an ABSA bank account to FNB without providing reasonable
explanation for the transfer.
[21]
The Court noted that a decision by the Provincial Executive for a
mandatory intervention in terms of Section 139(4) and (5) of
the
Constitution is indicated.
[22]
[31]
The MEC for Finance for the Free State was responsible for approving
the financial recovery plan, but despite requests
the Municipal
Financial Recovery Service (MFRS) did not receive progress reports
from the Municipality, its Administrator(s) or
the Provincial
Executive on the implementation of the recovery plan.
[23]
[32]
In December 2020, the Free State Government resolved to terminate the
Section 139(1)(b) intervention with effect from
30 March 2021 but
continued post-intervention support. The Minister of Finance conceded
that the Municipality and the Administrators
failed to implement the
financial recovery plan.
[33]
Before Van Rhyn AJ, it was argued that it would be unconstitutional
to make an order against the newly elected municipal
council, which
was elected by the electorate in November 2021. It was argued that
the new municipal council must be given an opportunity
to deal with
the problems which they inherited.
[24]
This is approximately 18 months before issuing of this application
before me.
[34]
Van Rhyn, AJ made the following declarator:
“
1.5
The
jurisdictional facts for mandatory National intervention in the
affairs of Mafube Local Municipality in terms of s 139(7) of
the
Constitution, as read with s139, s140 and s150 of the LGMFMA
[MFMA]
are now
present and have consistently been present in the past
as a result of the failure of the First to Fifth and Sixteenth
Respondents, as well as the Sixth to Tenth Respondents, to ensure
that the First Respondent
[the
Municipality]
meets
its constitutional obligations.”
[my
emphasis]
[35]
She made the following orders:
“
2.
In terms of the provisions of s139(4) and (5) of the
Constitution, read with the aforementioned provisions of the
LGMFMA,
Sixth to Tenth Respondents (“the Provincial Respondents”)
are directed forthwith to undertake a mandatory provincial
intervention into the affairs of the First Respondent by exercising
the powers conferred by section 139(4) and (5) of the Constitution,
as read with sections 139, 140 and 146 to 149 of the LGMFMA. The
Sixth to Tenth Respondents are specifically directed:
2.1
to approve a temporary budget or revenue-raising measures or
any other measures intended to give effect to the Financial
Recovery
Plan detailed in paragraph 2.2 below, to provide for the continued
functionality of the Municipality.
2.2
to implement a recovery plan aimed at securing the
Municipality’s ability to meet its obligations to provide basic
services and to meet its financial commitments, having due regard to
the existence and the terms of the Financial Recovery Plan
already
developed for Mafube Municipality (the plan is attached to the
Founding Affidavit as Annexure “JJS26”).
2.3
….”
[25]
V
PROVINCIAL GOVERNMENT INTERVENTION
[36]
The Municipality states it is presently under administration in terms
of compulsory intervention by the Provincial Government.
A Notice to
this effect was published in the Government Gazette on 9 September
2022
[26]
. Under the caretaker
provisions, Mr Mkaza was appointed as the Lead Provincial Exco
representative from
1
June 2022
to
31
May 2024
.
[37]
A copy of the publication was attached to the founding affidavit.
[27]
In terms of the Notice, Mr Mkaza has to exercise and perform
inter
alia
the following powers and functions: he and the Intervention Support
Team will have unrestricted access to the municipal manager
and all
the senior managers reporting to him; he must exercise oversight over
the implementation of Municipal Finance Systems,
Policies and
Procedures; he must ensure and report on the implementation of the
Financial Recovery Plan (FRP) targets, including:
submitting a
revised financial recovery plan to the municipal council for inputs
and consideration and to the MEC for finance for
approval; ensuring
the adoption and implementation of the funding plan supporting the
unfunded budget of 2022/2023; ensuring that
funded budgets are
prepared for the 2023/2024 financial year; ensuring that conditional
grants are ring-fenced and are used for
the intended purpose;
ensuring management of creditors including prioritization of payments
for critical services, assessment of
contractual obligations of the
Municipality, negotiations for contractual payments and scope with
service providers; implementing
prevention and reduction of
unauthorized, irregular, fruitless and wasteful expenditure; and the
intervention support team must
manage the intervention on behalf of
the Province/Cabinet, and ensure that the specified executive
obligations which the Municipality
is failing to fulfil are fulfilled
and must ensure that the financial recovery plan is implemented.
[38]
Mr Mkaza had to issue directives and instructions to the Municipal
Manager and relevant staff
to implement the financial recovery
plan
,
submit
monthly progress reports
to the MEC
for Finance/Provincial Exco/Municipal Council and the Minister for
Finance,
prepare quarterly financial recovery plan reports
on
impact achieved against said indicators,
maintain a record of
decisions of financial recovery plan implementation
, and
assist
in the preparation and implementation of the financial recovery plan
.
Not a single document that even purports to be a directive,
instruction, plan, report or decision was appended to the papers
before me.
[39]
The Municipal Manager states that Mr Mkaza “
manages the
process, and he has confirmed that it will still take some time
before the Recovery Plan is implemented
”. [my emphasis]
[40]
The Municipal Manger continues to state that “
Mr
Mkaza confirms that he intends to bring an application for relief in
terms of section 153 of the MFMA, but this will take a month
or two”.
This section provides that a
municipality may apply to the High Court for an order to stay, for a
period not exceeding 90 days at
a time, all legal proceedings,
including the execution of legal process, by persons claiming money
from the municipality and the
Court may make an order in terms of
subsection (1) only if the
provincial
executive
has
intervened
in
terms
of
section
139
and
a
financial
recovery
plan
to
restore the municipality to financial health
has
been approved
for the municipality.
On the papers before me, and which is confirmed by the Municipal
Manger and Mr Mkaza, neither the Municipality,
Mr Mkaza or the
Provincial Government executed their obligations and they can
therefore not utilize section 153 as there is no
plan. If there was
any plan available, they could have brought the section 153
application.
[41]
On 19 April 2023, the Municipality’s attorneys filed a
Supplementary Affidavit. The Municipal Manager states that:
“
Since
I deposed to the founding affidavit
[
10 March 2023
]
the
Municipal Financial Recovery Service has
started
a process to
prepare
a Financial Recovery Plain
as contemplated in section 141(2)
”.
[42]
The Municipal Manager, rather audaciously, states that the
Municipality seeks to address “
a wrong committed
,
… namely a writ of execution for attachment of movable assets
and subsequent attachment”
by Fund. There is nothing in the
papers of any wrong committed by the Fund. The only wrong,
objectively established and perpetuated
since 2015, is the
Municipality’s failure to comply with legislation and to pay.
[43]
He likens the attachment of the bank accounts
to undue preference
of creditors in liquidation proceedings
. This analogy is
misplaced.
[44]
Van Rhyn, AJ, in April 2022, made an order for implementation of a
plan. Complaining now of a cumbersome process that
cannot be
implemented on an urgent basis, flies in the face of the long period
that has expired from the date of that judgment
to the date on which
this application was launched.
[45]
History has taught that the Municipality tramples on the rights of
contributories to the Fund and who will rely on their
pension’s
growth when they retire or may have to rely on earlier. The words of
Molitsoane J, that what the Municipality is
doing is too ghastly to
contemplate, remain shuddering
VI
THE PENSIONERS’ PREJUDICE
[46]
The Fund cannot invest what is owed and cannot improve the benefits
to match the devaluation of money over time.
[47]
This was considered in
Municipal
Workers Retirement Fund v South African Local Government Bargaining
Council and Others and Other Related Matters
[28]
:
“
S
12(3) of the PFA provides that in considering whether any proposed
amendment ‘may affect the financial condition’
of a fund,
it is necessary to submit a certificate or statement of ‘financial
soundness’ to the Registrar. In issuing
such a certificate or
making such a statement, the valuator – usually an actuary, or
the fund must consider several factors.
These include:
“
The
value of accrued benefits, particularly in retirement funds and life
insurance instruments, is determined with reference to
actuarial
liabilities. In calculating these liabilities, the actuary is guided
by several assumptions. These relate to
economic
assumptions
,
which refer to the
investment
income likely to be earned
,
future
rates of inflation or salary growth
,
future
tax rates and changes in the regulatory environment
.
Demographic assumptions also have to be made, factoring in elements
such as rates of mortality,
disability
and
emigration
from the scheme
.
Various factors, such as
the
impact of medical advances and HIV/AIDS
have to be considered. Assumptions as to the rates of accrual, that
is
the
rates at which occupational benefits accrue, must also be made
.
Finally,
surpluses
and shortfalls are also the subjects of assumptions
.(my
emphasis).
”
[additional
emphasis added]
VII
NO CLEAR RIGHT
[48]
The Municipality has for years been aware of mechanisms available to
address its challenges. Mr Mkaza was apparently
appointed to assist
in the exercise of its obligations, to render support services and to
pay creditors.. This application is not
the correct approach. The
jurisdictional requirements for reliance on section 153 have not been
met.
Section 151 of the MFMA provides that nothing limits or
affects the rights of any creditor or other person having a claim
against
a municipality or any person’s access to ordinary legal
process in accordance with the common law and relevant legislation.
The Fund exercises a statutory right to collect contributions and the
Municipality continues to commit an offence. It has no
prima facie
or clear right.
VIII
NO WELL-FOUNDED APPREHENSION OF HARM
[49]
No financial information was placed before me. The Fund avers that
the Municipality’s own records show that it
had a surplus of
R124 million in the 2021/2022 financial year.
[29]
This was not denied in the replying affidavit. The Fund referred to a
public website
[30]
where it is
shown that the Municipality had a surplus of R124 898 000.00 in
the 2021/2022 financial year. The replying affidavit
was a general
repetition of remarks by Van Rhyn AJ as well as a repetition of the
steps in the preparation of the Financial Recovery
Plan, of which
nothing was disclosed. It leaves more questions than provide answers.
I can only conclude that the Municipality
had no pertinent defence to
those allegations in the answering affidavit of the Fund that it
failed to address.
[50]
What is indisputable is that the Municipality is harming its own
employees and continues to do so by unlawful use of
their monies. It
deals with the monies of the employees as if they are its bank. It
has not since 2021, and still does not, make
a cents worth of
payment.
IX
NO BALANCE OF CONVENIENCE
[51]
As it seeks final relief (release of the monies to enable it to spend
it), it cannot rely on a balance of convenience.
Even if it did,
trampling on other’s rights can hardly have been justified as
inconvenient to it.
X
ALTERNATIVE REMEDY
[52]
Its alternative remedy has been available since as early as 1 July
2005 when the MFMA was enacted. It was reminded of
it by Motimele AJ
in 2017, and again in April 2022 by Van Rhyn AJ. The outcome of this
matter does not close its door to exploit
the alternative remedy in
section 153.
[53]
The Municipality failed to show how much exactly is
protected
.
On 8 July 2019, the Municipality, whilst in litigation about monies
due to the Fund, surreptitiously transferred
R39 939 000.00
from its Absa account to an FNB account.
[54]
In my view, the Municipality had many opportunities of substantial
redress since 2005 when it started experiencing challenges.
[55]
Municipal Managers are appointed for their assumed professed
knowledge and expertise and Administrators presumably as
well. Fact
is that neither this Municipal Manager, the previous municipal
managers, Mr Mkaza, or the Provincial Executive have
shown any
urgency or resolve.
[56]
I can place no reliance on any assurances of the Municipal Manger or
Mr Mkaza, who is incidentally the Province’s
agent. They,
together, fulfil the duties of accounting officer and the high
watermark of their activity is this
urgent
application for
which the taxpayers have already paid more than their share.
[57]
In failing to pay, the Municipality, through the Municipal Manger, is
committing a criminal offence and it has to stop.
The Municipal
Manager has to be called to account for the Municipality’s
unlawful conduct.
[58]
Can the word of the Municipality be trusted when it says that all the
monies in the FNB account is protected. Clearly
not. History showed
how it surreptitiously transferred
R39 939 000.00
between accounts.
XI
ALTERNATIVE DISPUTE RESOLUTION
[59]
I could, notwithstanding a comprehensive search, not find any
provision in legislation or elsewhere that limits execution,
whether
in primary or secondary accounts.
[60]
In view of the enormous legal cost incurred by the Municipality over
the years on litigation, wherein it had no and still
does not have a
defence, the parties would be well-advised to employ the alternative
dispute resolution mechanisms provided for
in section 151 of the
MFMA, read with Rule 41A of the Uniform Rules of this Court.
XII
REFERRAL TO THE NDPP
[61]
The Municipality fails to pay pension fund deductions of employees to
the Fund as regulated by
section 13A
of the
Pension Funds Act, 24 of
1956
..
[62]
In terms of
section 37
of the
Pension Funds Act this
constitutes a
criminal offence.
[63]
The Registrar is directed to bring this judgement to the attention of
the National Director of Public Prosecutions for
consideration of
instituting criminal proceedings against the Municipality for breach
of the
Pension Funds Act.
XIII
COSTS
[64]
I believe that the time may have arrived that functionaries should be
called upon to show cause why they should not be
ordered to pay costs
de bonis propriis
in litigation over this indisputable claim.
I was not asked to make such an order in this application.
[65]
I believe that a punitive cost order on this occasion would only
cause the inhabitants further hardship. It is with reluctance
that I
order costs on party and party scale.
ORDER:
[66]
The following orders are made.
1.
The Application is dismissed.
2.
The Applicant pays the costs of the application, including the costs
attendant on employment of one Senior Counsel
and one Junior Counsel,
on party and party scale.
3.
The costs include the travelling and accommodation costs of two
counsel and the instructing attorney.
4.
The Registrar is directed to bring this judgement to the attention of
the National Director of Public Prosecutions
for consideration of
instituting criminal proceedings against the Municipality in respect
of its breach of
section 13A
read with
section 37
of the Pension
Funds Act, 24 of 1956.
P
R CRONJÉ, AJ
On
behalf of the Applicants: Adv
M Louw
Instructed
by:
Peyper
Attorneys
BLOEMFONTEIN
On
behalf of the Respondents: Adv.
P Van der Berg SC
Adv.
H Drake
Instructed
by: Shepstone
Wylie Attorneys
McIntyre
Van der Post Attorneys
BLOEMFONTEIN
[1]
56 of 2003 – Also sometimes referred to as the LGMFMA
[2]
Pleadings, p. 78, para 4
[3]
Pleadings, p. 24, para 23
[4]
(803/2021)
[2022] ZANCHC 34
(31 May 2022) paragraphs [11] –
[23]
[5]
13 of 2005
[6]
Renosterberg
supra
,
para [46] – [47]
[7]
34 of 1956
[8]
(11126/2013)
[2013] ZAWCHC 135
;
2014 (1) SA 168
(WCC) (18 July 2013)
[9]
(2130/2021)
[2021] ZAWCHC 37
(2 March 2021)
[10]
(20045/2014)
[2015] ZASCA 4
; (2015) 36 ILJ 1439 (SCA) (9 March 2015)
[11]
Section 37
of the PFA
[12]
Sections 60
and
61
of the MFMA
[13]
108 of 1996
[14]
Reported
in Mafube Local Municipality v South African Municipal Workers'
Union National Provident Fund (4836/2016) [2017] ZAFSHC
244 (6 April
2017)
[15]
Pleadings, p, 233
[16]
2672/2021)
[2021] ZAFSHC 342
(9 September 2021)
[17]
At para [8]
[18]
Mafube
Local Municipality v Municipal Workers Retirement Fund (2672/2021)
[2021] ZAFSHC 311 (3 December 2021)
[19]
(1969/2021)
[2022] ZAFSHC 86
(28 April 2022)
[20]
Mafube Business Forum
supra
,
para
[25]
[21]
Ibid
para [30]
[22]
Ibid
para [31]
[23]
Ibid
para [32]
[24]
Ibid
para [58]
[25]
Ibid
para
[92]
[26]
Provincial Gazette. Provincial Notice 79 of 2022, 9 September 2022,
p. 5
[27]
Pleadings, p. 29
[28]
(2905/2022; 4580/2022; 30396/2022;) [2023] ZAGPPHC 98 (20 February
2023)
[29]
Pleadings, p. 129, para 52.1
[30]
https://municipalities.co.za/financial/1039/mafube-local-municipality