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[2014] ZAGPPHC 322
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Kotze v Mpumalanga Department of Education and Others (18453/13) [2014] ZAGPPHC 322; (2014) 35 ILJ 2361 (GNP) (4 June 2014)
IN
THE HIGH COURT OF SOUTH AFRICA
GAUTENG
NORTH PROVINCIAL DIVISION
DATE:
4/6/2014
CASE
NO: 18453/13
In the matter
between:
WILLEM
JOHANNES PAULUS KOTZE
....................................................................
Applicant
and
MPUMALANGA
DEPARTMENT OF EDUCATION
......................................
First
Respondent
GOVERNMENT
EMPLOYEES’ PENSION FUND
....................................
Second
Respondent
MEMBER OF THE
EXECUTIVE COUNCIL
RESPONSIBLE FOR
THE MPUMALANGA
DEPARTMENT OF
EDUCATION IN THE
MPUMALANGA
PROVINCE
...........................................................................
Third
Respondent
HASSIM
AJ
[1]
The applicant seeks a mandatory interdict
(“
the main application
”),
the third respondent, in turn as counter applicant, seeks, a
prohibitory interdict (“
the
counter application
”).
[2]
The applicant applies for an order
compelling its former employer, the member of the exective council in
the Mpumalanga Province
responsible for education (“
the
MEC: Education
”) to:
(a)
complete, finalise and deliver all
documents relating to the termination of his employment;
(b)
pay all amounts due to him in terms of his
contract of employment up until the date of the termination of his
employment, including
outstanding salary and pay
in
lieu
of leave;
(c)]
complete all the requisite documents to
enable him to withdraw the pension benefit payable to him from the
Government Employees’
Pension Fund (“
Fund
”);
(d)
submit the documentation referred to in (c)
above within seven days of this order.
[3]
The third respondent counter applies for an
order, either:
(a)
staying the main application alternatively,
postponing it, pending the finalisation of an action which has been
instituted by it
against the applicant; alternatively
(b)
attaching the applicant’s pension
fund interest and/or other benefits that may be due to him pending
the finalisation of the
aforementioned action.
[4]
The applicant avers that he is owed a
salary and payment
in lieu
of leave (“leave payment”). He states that he has
submitted all the necessary documents to the Human Resources
section
of the Department of Education, in the Mpumalanga province (“
the
Department”)
in order for these
payments to be made to him. It is common cause some money is
due by the third respondent to the applicant.
There is no
compelling reason why these should not be paid to the applicant.
[5]
There one issue which is dispositive of
both the main application and counter application. It is
whether an employer has a
right to preclude the Fund from paying the
benefit (“
the pension benefit
”)
which is due to an employee in terms of the Government Employees’
Pension Law, 1996 (“
GEPL
”).
This question is dependent upon the interpretation given to section
21(3) of the GEPL.
[6]
Section 21(1) of the GEPL prohibits the
assignment or transfer or cession or any other encumbrance of an
employee’s pension
benefit. Section 21(3) does however
provide an exception to this provision. For purposes of this
judgment I need only
consider subsection (1) and subsection
3(c) of section 21 of the GEPL. The latter permits, from the
pension benefit
payable to an employee, the deduction of the amount
of a loss that an employer has suffered due to theft, fraud,
negligence or
any other misconduct on the part of an employee. Then
too, there is a restriction; the deduction may only be made if the
employee
has admitted wrongdoing in writing or this has been proved
in a court of law.
[7]
Subsections 21 (1) and (3)(c) of the GEPL
provide as follows:
“
21
Prohibition on cession and
attachment of benefits
(1)
Subject to section 24A, no benefit
or right in respect of a benefit payable under this Act shall be
capable of being assigned or
transferred or otherwise ceded or of
being pledged or hypothecated or,..be liable to be attached or
subjected to any form of execution
under a judgment or order of a
court of law;
(2)
...
(3)
Notwithstanding the provisions of subsection (1) or of any other law-
(a)
...
(b)
...
(c) the amount of
any loss which has been sustained by the employer through theft,
fraud, negligence or any misconduct on the part
of any member,
pensioner or beneficiary which has been admitted by such member or
pensioner in writing or has been proved in a
court of law;
may be deducted
from the benefit payable to such member, pensioner or beneficiary
under this Law in a lump sum or in such instalments
as the Board [of
Trustees] may determine.”
[8]
A similar provision is found in section
37D(1)(b)(ii) of the Pensions Funds Act, 24 of 1956. It
provides:
“
37D
Fund may make certain deductions from pension benefits
(1)
A registered fund may-
(a)
...
(b)
deduct any amount due by a member to
his employer on the date of his retirement or on which he ceases to
be a member of the fund,
in respect of-
(i)
...
(ii) compensation
(including any legal costs recoverable from the member in a matter
contemplated in subsection (bb)) in respect
of any damage caused to
the employer by reason of any theft, dishonesty, fraud or misconduct
by the member, and in respect of which-
(aa) the member
has in writing admitted liability to the employer; or
(bb) judgment has
been obtained against the member in any court, including a
magistrate’s court,
from
any benefit payable in respect of the member or a beneficiary in
terms of the rules of the fund, and pay such amount to the
employer
concerned
;”
[9]
The applicant was employed in the
Department in the position of deputy dircetor general in the supply
chain manangement section.
He had been employed in the
government service since 7 January 1976.
[10]
During 2011 the third respondent instituted
disciplinary proceedings against the applicant. On 21 June 2011
the applicant
and the third respondent agreed to refer the dispute to
the General Public Service Coordinating Bargaining Council. The
applicant
was charged with misconduct on various grounds. In
broad terms the charges all related to financial misconduct.
Some
of the allegations against the applicant were:
(a)
He had issued a guarantee and/or indemnity
to a service provider, without the requisite authority to do so.
(b)
He had appointed a service provider without
complying with Supply Chain Management processes and other related
processes.
(c)
Because of a representation/representations
made by him the Department paid an amount of R10 000 per month
for 5 years to
a service provider.
(d)
He entered into an oral agreement with a
service provider for a transactional value of R40 000, per month for
a period of 5 years
without being authorised to do so and contrary to
Supply Chain Management processes.
(e)
He committed the Department to an amount of
R212 797.46 when the obligation to pay was that of another government
department.
[11]
The applicant pleaded not guilty to all the
charges. He opted not to lead evidence in his defence. He
was found guilty
on all of the charges. On 20 November 2011 the
enquiry resumed to determine the imposition of a sanction. The
applicant
elected not lead evidence in mitigation thereof. In
the course of the hearing the applicant tendered his resignation
which
the Department refused to accept. On 21 November 2011 the
sanction of dismissal was imposed.
[12]
On 25 August 2012, the applicant launched
review proceedings in the labour court challenging his dismissal.
The application
is opposed by the third respondent and has not been
finalised.
[13]
On or about 20 March 2013, the third
respondent instituted an action in this court under case no.
17290/2013 for the recovery of
an amount of R 4 691
219.63. This amount is alleged to constitute the loss which was
suffered as a result
of the applicant’s financial misconduct.
The particulars of claim are regretably not a model of clarity.
The
applicant raised an exception to the particulars of the third
respondent’s claim on the basis that the particulars of the
claim failed to disclose a cause of action
alternatively
that they are vague and embarrasing.
I heard the exception a few days before this application. My
decision on the exception
is in a separate judgment.
[14]
What is however clear from the particulars
of the claim is that the third respondent is seeking compensation for
the alleged loss
that the applicant’s financial misconduct
caused to the Department.
[15]
Mr Shakoane who appears for the third
respondent, in opposing the main application and in support of the
counter application, argues
that if the third respondent were to
succeed in its action, it is probable that the applicant will not be
able to satisfy the judgment.
I tend to agree; on the
applicant’s own version he has no assets and is not earning an
income. The fact that he had
to sell his assets in order to
live because the pension benefit has not been paid to him, is highly
unfortunate. I have sympathy
for his plight. It is
however not beyond the realm of probability that by the time the
action is finalised a large portion,
if not all, of the pension
benefit would have been depleted. I hasten to add that I am not
suggesting that the applicant
will do so with the intent to render
any judgment meaningless. The only hope for the recovery of any
loss suffered by the
Department lies in the pension benefit due to
the applicant. I accept that this is harsh for the applicant.
The allegations
against the applicant are suggestive of
underhandedness. The State has an obligation to root out the
underhandedness that
is plaguing our country. The State owes a
duty to its citizens to ensure that the public purse is for the
benefit of all
and not a select few. To achieve this it must
recover whatever money is due to it. The
Public Finance
Management Act No. 1 of 1999
is unforgiving in this regard.
[16]
Mr Snyman who appears for the applicant
argued that the applicant is entitled to payment of the benefit due
to him from the GEPF.
As I understand Mr Snyman’s
argument it is that the third respondent cannot find comfort in the
exception in
section 21
(3) to the general prohibition on the
attachment of the pension benefit and deductions therefrom. Any
benefit which falls
outside the ambit of
section 21(3)(c)
of the
GEPL, he argues, is secure from any type of attachment or deduction.
He sought to persuade me that the third respondent
cannot call
section 21(3)(c)
in aid. He quite correctly pointed out that
there is no written admission of wrongdoing. But this in itself
is not
enough to protect the benefit. The next question is
whether a court of law has made a decision on compensation, if any
due
to the employer. Mr Snyman argues that there is no such
finding.
[17]
Mr Shakoane conceded that there is no
written admission of wrongdoing. He submits that this does not
affect the third respondent’s
position, because in terms of
section 88A of the Labour Relations Act, 1996 (“
LRA
”)
read together with section 43 thereof the arbitrator’s
dismissal award is equivalent to a court order. I am
not
persuaded that the words that in section 43 that the arbitration
award “may be enforced as if it were an order of the
Labour
Court” assists the third respondent in answering the question
which arises in this case. In any event section
43(3) of the
LRA has to be satisfied before an arbitrator’s award can assume
the status of a court order. There is
no such allegation.
However, in light of the conclusion I arrive at, it is not necessary
for me to consider whether Mr Shakoane
is correct.
[18]
In
Highveld
Steel and Vanadium Corporation Ltd v Oosthuizen
[1]
the Supreme Court of Appeal has decided the question which I have to
decide. It had to consider whether section 37D (1)(b)
of the
Pension Funds Act, 24 of 1956 stood in the way of an employer
preserving a benefit payable to an employee by a pension fund
in
order to satisfy any future compensation award. In a unanimous
decision the court found that the wording of the relevant
section had
to be interpreted purposively so as to include the withholding of the
payment of pension benefits from an employee
pending the
determination, or acknowledgement, of the employee’s
liability. The court found that an interpretation
that the
acknowledgement of wrongdoing or a judgment of a court must be
available on the termination of the employment contract
is far too
restrictive. Such an interpretation the court held, does not
reflect the intention of the legislature which is
to protect the
employer’s right to recover money for wrongdoing of the nature
contemplated in the section.
[19]
The appeal was by an employer who had been
refused leave by the court
a quo
to
intervene in proceedings before it. The main application before
the court
a quo
had followed from a pension fund’s decision not to pay the
pension benefit due to the employee pending an action (to be
instituted) for the recovery of losses suffered by the employer as a
result of the employee’s misconduct. The employee challenged
the decision, which was made by the pension fund at the employer’s
request, and applied for an order compelling the pension
fund to pay
the pension benefit due to him.
[20]
The pension fund decided not to defend its
decision and abided the court’s decision. In the
circumstances it comes as
no surprise that the employer wanted to
intervene in the employee’s application and prayed for an
interdict restraining the
employee from withdrawing the pension
benefit.
[21]
The Supreme Court of Appeal found that the
employer was not seeking a deduction from the pension benefit due to
the employee, nor
a reduction thereof. It found that the only
thing that the employer was asking for was that the fund should
withhold the
payment of the benefit pending the determination of its
claim against the employee. The court upheld the appeal against
the
refusal of the application for intervention and postponed the
employee’s application pending the final determination of an
action to be instituted by the employer.
[22]
In deciding as I do, I am mindful that the
appeal was against the refusal of an application for leave to
intervene. I am also
mindful that the appeal concerned the
provisions of section 37D(1)(b) of the Pension Fund Act 24 of 1956.
I am of the view
that, save for the differences identified,
that the case is
in pari materia
with this application and counter application and is otherwise not
distinguishable. In my opinion, the principles established
are
relevant to the main application and counter application; and are
binding on me.
[23]
Mr Snyman drew my attention to the fact
that the applicant was not applying for the GEPF to pay the pension
benefit to him and that
the order prayed for was confined to
compelling the third respondent to complete documents and give them
to the second respondent.
Mr Snyman is correct in this regard.
However the effect of such an order would be that the GEPF will have
to pay the benefit
within 60 days of the benefit becoming payable.
The order will defeat the object which the counter application seeks
to achieve.
[24]
I am disposed to postponing the main
application pending a final decision on the action.
[25]
I have not left out of consideration the
potential prejudice that the applicant may suffer from my order. In
an effort to
ameliorate the prejudice to the applicant I intend
making an order which will entitle him to apply for any relief deemed
appropriate,
on these papers supplemented if necessary, in the case
where the value of the pension benefit due to the applicant is in
excess
of the third respondent’s claim inclusive of a
reasonable estimate for both interest and costs. Of course the
second
and third respondents must be duly notified and they will be
entitled to oppose such application.
[26]
I also intend ordering the second
respondent to within a period of not more than 60 days assess the
value of the applicant’s
pension benefit.
[27]
I urge the parties to fully cooperate with
each other in giving effect to my order.
[28]
I make the following order:
(a)
All amounts due to the applicant as at the
date of the termination of his employment which arise from his
contract of employment
or which are due to him in law, including if
any, outstanding salary and payment
in
lieu
of leave, together with interest
on such amounts calculated at 15.5% p.a from the day of the
termination of the employment to date
of payment must be paid to the
applicant within 30 days of this order;
(b)
subject to paragraph (a), the main
application is postponed
sine die
and the costs thereof are to be in the cause;
(c)
the second respondent may not pay the
pension benefit due to the applicant until the final determination of
the action instituted
by the third respondent in this court under
case no. 17290/2013;
(d)
the second respondent must within 60 days
of this order assess the value of the applicant’s pension
benefit and notify the
parties in writing thereof;
(e)
leave is granted to the applicant to apply
on the present papers, duly supplemented, for any relief it considers
appropriate, if
the pension benefit due to the applicant (as assessed
by the second respondent) is in excess of third respondent's claim,
including
an estimated amount for costs and interest.
(f)
the costs of the counter application are
costs in the action under case no. 17290/2013;
(g)
the parties must bring this order to the
attention of the second respondent forthwith.
__________________________________
S K HASSIM
Acting Judge:
Gauteng North High Court
4 June 2014
[1]
[2009]
1 All SA 225
(SCA)