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[2009] ZAGPPHC 193
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Pension Fund of the Democratic Nursing Organisation of South Africa v Botha (A441/07) [2009] ZAGPPHC 193 (27 May 2009)
NOT
REPORTABLE
IN
THE HIGH COURT OF SOUTH AFRICA
(NORTH
GAUTENG DIVISION)
APPEAL
CASE NO.: A441/07
DATE:
27/05/2009
In
the matter between:
THE
PENSION FUND OF THE DEMOCRATIC
NURSING
ORGANISATION OF SOUTH
AFRICA
..........................................
Appellant
and
CATHELINE
WILHELMINA
BOTHA
................................................................
Respondent
CORAM
LEDWABA J AND EBERSOHN AJ
DATE
HEARD 7 MAY 2009
DATE
JUDGMENT HANDED DOWN: 26 MAY 2009
JUDGMENT
EBERSOHN
AJ:
[1]
The appellant is a pension fund.
[2]
The respondent was a member of the appellant but on the 31st March
2002 terminated her membership of the appellant and in the
result
became entitled to certain resignation and/or termination funds.
[3]
The termination benefit, as alleged by the appellant, amounted to
only R36 035,82 but instead of this amount the appellant on
9 May
2002 made payment to the respondent in the amount of R76 526,32, i.e.
an overpayment on the appellant’s version in
the amount of R40
490,50. The appellant sued the respondent for the repayment of the
alleged overpayment and the summons was served
on the 12th September
2005.
[4]
The respondent defended the matter and raised a special plea of
prescription. The matter was heard by a magistrate and the magistrate
sustained the special plea after hearing evidence and dismissed the
appellant's claim with costs.
[5]
The appeal to this court then followed.
[6]
The party who raises prescription must allege and prove the date of
the inception of the period of prescription. (Gericke v
Sack
1978 (1)
SA 821
(A)). It is common cause, however, in this matter, that
prescription started to run on the 9th May 2002, it being the date
the
overpayment was made and on that day the overpayment became
due.(S. 12(1) of the Prescription Act, No 68 of 1969 ("the
Act");
Santam Ltd. v Ethwar
[1998] ZASCA 102
;
[1999] 1 All SA 252
(A);
1999 (2) SA
244(SCA))
[7]
As such the debt was claimable immediately by the appellant in legal
proceedings and was one in respect of which the respondent,
as
debtor, was under an obligation to perform immediately. (Benson v
Walters
1984 (1) SA 73
(A) at 82; Uitenhage Municipality v Molloy
[1997] ZASCA 112
;
[1998] 1 All SA 140(A)
;
1998 (2) SA 735
(SCA)).
[8]
A debt, whether ex contractu, ex delicto or otherwise, is not deemed
to be due until the creditor has knowledge of the identity
of the
debtor and of the facts giving rise to such debt, provided that a
creditor who could have acquired the knowledge by exercising
reasonable care is deemed to have such knowledge. (S. 12(3) of the
Act; Nedcor Bank Bpk. v Regering van die Republiek van Suid-Afrika
[2000] ZASCA 154
;
[2001] 1 All SA 107
(A);
2001 (1) SA 987
(SCA); Van Immerzeel &
Pohl v Samancor Ltd.
[2001] 2 All SA 235
(A); 2001(2) SA 90(SCA).
[9]
It is for the party raising prescription to allege and prove the date
on which the creditor acquired knowledge of the debtor's
identity and
the date on which the creditor acquired knowledge of the facts from
which the debt arose. The word "debt"
does not refer to the
cause of action but, more generally, to the claim. The debtor may, in
the alternative, allege and prove the
date on which the creditor
could, with the exercise of reasonable care, have acquired the
relevant knowledge. (Cf Gericke v Sack
supra; Drennan Maud &
Partners v Town Board of the Township of Pennington
[1998] ZASCA 29
;
[1998] 2 All SA
571
(SCA);
1998 (3) SA 200
(SCA).
[10]
The evidence on behalf of the appellant was that it was only
discovered during or about November 2002 that the respondent was
only
entitled to the amount of R36 035,82. According to the evidence led
on behalf of the appellant the payment to the respondent
was
calculated according to a certain formula by a firm called Absa
Consultants and Actuaries ("Absa").
[11]
It is common cause that the appellant did not comply with the
relevant statutes of the appellant, with specific reference to
the
appellant's obligatory yearly audits and internal audits and the
minutes of meetings of the trustees of the appellant. It seems
that
their audits were several years in arrear without it, apparently,
causing the appellant much concern and thus they just blundered
on.
[12]
In terms of clause 13.1 of the appellants statutes the appellant was
obliged to keep the necessary financial records up to
date and
further see to it that complete and correct entries were made in
respect of each contributor to the pension fund.
[13]
Furthermore, in terms of clause 13.3 of appellant's statutes, its
financial year ends on 31 December of each year and the financial
records should be verified by the appellant's auditor within 6 months
thereafter.
[14]
A Mr. Mavuso, an employee of Absa, testified on behalf of the
appellant. His evidence shed some light on the badly managed
financial affairs of the appellant. It was admitted that Absa were
specialists in this field.
[15]
The appellant's trustees entrusted the administration of the
appellant's funds and payouts to Absa as of September 2000.
[16]
The auditor’s firm Gebodo was appointed to conduct the annual
financial audit of the appellant as of the year ending
31 December
2003. The audited financial statements were, however, late and/or not
provided in accordance with the set time periods
and there was a
delay in the forwarding of the “contribution schedules”
by the appellant to its agent, Absa. As at
15 March 2003, as can be
gleaned from the minutes of the appellant’s meeting of
trustees, the audited financial statements
for the years ending 2001
and 2002 were still outstanding.
[17]
On the appellant’s own version it was admitted that Absa were
specialists in the administration, calculation and management
of
employee benefits, pension funds, provident funds, and other
associated benefits, and further in providing services such as
the
administration of funds, consulting and advisory services, actuarial
services, investment consulting and legal services.
[18]
Mr Mavuso testified that the first of the erroneous payments were
made during 1 September to 31 December 2000, but were only
discovered
during November 2002. These payments were made erroneously as a
result of a system error since the “system”
calculated
the benefits to be paid out by taking the value of the employee’s
own contribution and adding to it another value,
which was the part
paid by the employer. All claims were calculated incorrectly since
the information utilised in the system was
incorrect.
[19]
The appellant and Absa were only alerted to the problem in November
2002 after an employee who was a member of the appellant
requested
information with regard to the computation of a withdrawal benefit.
[20]
It only transpired after the appellant received the aforesaid enquiry
that all payments that were made to beneficiaries during
the
preceding years were incorrectly calculated in the same fashion.
[21]
With regard to the delay in the finalisation of the appellant’s
audit procedure and compliance with statutory requirements
the
following evidence was placed before the court a quo:
a)
The financial statements compiled on behalf of the appellant were not
timeously submitted and an accumulated penalty was imposed
by the
Financial Services Board amounting to R15,200.00
b)
If the financial statements and audit procedure were completed and
submitted timeously the error in the calculation of the payouts
would
have been picked up earlier most likely in 2000 already.
c)
Although the appellant appointed its own auditors the said auditors
failed and/or omitted to perform their duties timeously and/or
in
accordance with the stipulated time periods.
[22]
Mr Mavuso, testifying on behalf of the appellant, stated the
following
and
I quote from the record:
“
MR
DANIELS: Let us call it for the year 2000, just to keep it simple. If
that audit report had been at hand, presumably this mistake
would
have been noticed before. — Correct.
And
by the same token, if in May 2002 the audit report for 2001 had come
to hand, the same applies - Correct.
COURT: And
then we can assume that the situation would
have
been rectified and that the payment would not have been made in this
instance, specifically to Ms Botha. - Correct your worship.”
[23]
The vast fine imposed on the appellant by the authorities as a result
of the late submission of the audited statements, was
apparently
merely paid by the appellant without the appellant's Board taking any
recourse against either Absa and/or the appellant's
auditors.
[24]
The erroneous payments could have been prevented and corrected at an
earlier stage if the audit procedure was timeously adhered
to. What
makes matters worse is that the Board of Trustees of the appellant
knew that there was noncompliance, alternatively, a
delay in
compliance with the prescribed audit procedure, yet the appellant
failed to take any steps to rectify it. The Board of
Trustees of the
appellant and the appellant's servants did not exercise the necessary
skill and diligence as can be expected and
required of a specialised
pension fund in accordance with its fiduciary duty.
[25]
It is thus clear that the appellant did not exercise reasonable care
regarding the payments and the overpayments and the appellant
is thus
deemed to have had knowledge of the overpayment to the respondent on
the date it was made namely the 9th May 2002 and the
appellant's
claim against the respondent has become prescribed.
[26]
The Court noted that according to the testimony before the Court
a
quo Absa repaid the amount overpaid to the appellant. The “loss”
was therefore made good and neither the appellant
nor its members
suffered any loss. That in itself did not absolve the appellant which
is a Government body from the necessary criticism
from this Court.
[27]
I accordingly make the following order:
"The
appeal is dismissed with costs"
P.Z.
EBERSOHN
ACTING
JUDGE OF THE HIGH COURT
I
agree
A.P.
LEDWABA
JUDGE
OF THE HIGH COURT
Appellant's
counsel : Adv. J. Daniels
Appellant's
attorneys: Routledge Modise
Ref.
Mr. Jonathan Levy/K794
Tel.
012 320 2202
Respondent's
counsel: Adv. J.P. van den Berg
Respondent's
attorneys: Van Heerden Incorporated
Ref.
F.J. Groenewald /FB0024
Tel.
012x430 6600