REPUBLIC OF SOUTH AFRICA
IN THE HIGH COURT OF SOUTH AFRICA
FREE STATE DIVISION, BLOEMFONTEIN
In the matter between:
MUNICIPAL WORKERS' RETIREMENT FUND
and
MAFUBE LOCAL MUNICIPALITY
MUNICIPAL MANAGER,
MAFUBE LOCAL MUNICIPALITY
CHIEF FINANCIAL OFFICER,
MAFUBE LOCAL MUNICIPALITY
EXECUTIVE MAYOR,
MAFUBE LOCAL MUNICIPALITY
THOMAS LINDELO MKAZA
1 The 'Municipality '. Reportable
Case no.: 1653/2024
Applicant
First Respondent1
Second Respondent2
Third Respondent
Fourth Respondent
Fifth Respondent
2 The second to fourth respondents will also be referred to as the 'Municipal Officers'. The fifth respondent
will also be referred to as 'Mr. Mkaza' or the 'Administrator'.
Coram:
Heard: Opperman J
25 July 2024 2
Delivered: 17 January 2025. This judgment was handed down in court and
electronically by circulation to the parties' legal representatives via email and release to
SAFLI I on 17 January 2025. The date and time of hand-down is deemed to be 15h00 on
17 January 2025
Summary: Whether the applicant is entitled to payment of retirement fund
contributions in terms of section 13A of the Pension Funds Act 24 of 1956 from the first
respondent -whether the second to fifth respondents are personally liable for the first
respondent's arrear contributions and interest in terms of ss 13A(8) and 13A(9) of the
Pension Funds Act 24 of 1956
ORDER
1. The first respondent , Mothusi Lepheana (second respondent), Dimakatso
Tryphona Tau (third respondent) , Tlhoare Motsoeneng (fourth respondent) , and Thomas
Mkaza (fifth respondent) are ordered jointly and severally to:
1.1 Make payment to the applicant in the amount of R14 723 639.52;
1.2 make payment to the applicant of interest on the amount of R14 723 639.52
from 1 February 2024 to date of payment at the rate(s) which have been prescribed in
terms of section 13A(7) of the Pension Funds Act 24 of 1956; and
1.3 pay costs of this application on attorney-client scale, including the costs of
two counsel.
2. The Registrar of this court shall forward a copy of this judgment to the Director of
Public Prosecutions : Free State, Bloemfonte in forthwith. The Director of Public
Prosecutions: Free State, Bloemfontein shall report to the court within 60 days of the date
of this order on the progress of the investigation in writing.
Opperman J
Background JUDGMENT 3
[1] The atmosphere of this case is captured in a judgment handed down on 5
September 20243 in this division. It is one in a series of cases4 that pertains to the
Municipality's ongoing non-payment of contributions and noncompliance with court orders
obtained by the Municipal Workers' Retirement Fund (Fund) dating back to 2011.
'[15] Pertinent to this matter is that it always appears common cause that the money 'arrear
pension' is deducted by the Municipality. The disappearance of the money of the employees of
the Municipality and members of the Fund remains questionable. The Municipality would rather
challenge each and every application brought to assist the pension fund members rather than pay
its employees ' money to the Fund. There is a mysterious delay rather than a solution to an ongoing
undisputed problem, namely the non-payment of the arrear pension monies of the Fund's
members to the Fund by the Municipality '5 (Emphasis added.)
[2] It was stated in Mafube Local Municipality v Municipal Workers' Retirement Fund
and Others, 6 after a comprehensive discussion of the disputes, that:
'[45] History has taught that the Municipality tramples on the rights of contributors 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 ' (Emphasis added)
3 Municipal Workers Retirement Fund v Mafube Local Municipality and 3 Others (2218/2024) [2024]
ZAFSHC 272 (5 September 2024) (First Ramdeyal-judgment).
4 Founding affidavit (FA) paras 63-65, Mafube Local Municipality v South African Municipal Workers' Union
National Provident Fund (4836/2016) [2017] ZAFSHC 244 (6 April 2017); Municipality Workers Retirement
Fund v Mafube Local Municipality (2672/2021) [2021] ZAFSHC 342 (9 September 2021 ); Mafube Local
Municipality v Municipal Workers Retirement Fund (2672/2021) [2021] ZAFSHC 311 (3 December 2021 );
Mafube Local Municipality v Municipal Workers' Retirement Fund and Others (2672/2021) (2023) ZAFSHC
136 (2 May 2023) (Cronje-judgment); Municipal Worker.; Retirement Fund v Mafube Local Municipality and
3 Others (2218/2024) [2024) ZAFSHC 272 (5 September 2024) (First Ramdeyal-judgment ); and Mkaza v
Municipal Workers' Retirement Fund and Others (2218/2024) [2024] ZAFSHC 296 (26 September 2024)
(Second Ramdeyal-judgment ).
5 First Ramdeyal-judgment.
6 Cronje-judgment.
4
[3] The applicant motions for an order that the first to fifth respondents are jointly and
severally to make payment of its obligation in terms of the Pension Funds Act 24 of 1956
(PFA).7 It is the Fund's case that the total amount due is R14 723 639.52 (R10 210 053.38
+ R4 513 586.14). The amount includes interest in terms of the rate prescribed in
s 13A(7).
[4] The quantum is not in dispute. The period on which the claim is based is May 2021
to January 2024. The debt comprises the first respondent's arrear monthly retirement
contributions due to the Fund in respect of its employees-members in terms of s 13A(1)
of the PFA read with the rules of the Fund.8 The PFA obliges the Fund to ensure that
contributions are timeously paid.
[5] It is common cause that the monies were deducted from the employees-members.
The Municipality has not opposed the claim. The second to fifth respondents were in office
when the claim was instituted. The claim was instituted on 25 March 2024.
[6] Personal liability of the second to fifth respondents is challenged. The one issue
that hovers strongly is the liability of different individuals that occupied the same office
often over different periods. Some officers served in an acting capacity. The other is the
issue of provincial intervention and the effect thereof. Some findings on the accountability
of the second to fifth respondents were already made in Mafube Local Municipality v
Municipal Workers' Retirement Fund and Others, 9 Municipal Workers Retirement Fund v
Mafube Local Municipality and 3 Others10 and Mkaza v Municipal Workers' Retirement
Fund and Others.11 I will deal with the defences raised to interrogate the correctness and
applicability of the said judgments on the facts of this case. Counsel for the parties to the
7 Reference to a section will be to a section in the PFA unless otherwise indicated. I will also depict the
relevant sections hereunder more comprehensively.
8 The Municipal Workers Retirement Fund Consolidated Rules (July 2019) are at 'MWRF 1' and 'MWRF 2'
at p 30-53 of the court bundle indexed on 17 July 2024. Also, FA paras 18-27 at p 12-15.
9 Cronje-judgment.
1° First Ramdeyal-judgment.
11 Second Ramdeyal-judgment.
5
litigation here did not have the opportunity to argue on the judgments and will it only be
fair to revisit the issues based on their arguments.
[7] The Municipality has become a faceless and untouchable perpetrator of the PFA
to the detriment of the constitutional rights of the affected employees-members. It is
common cause, and as will be shown later, that the Municipality has evaded accountabil ity
for many years and illegitimately so. The individuals comprising the governing body and
that were regularly in control of the financial affairs, 12 have not been held legally liable
and answerable to the neglect of their duties to pay the statutory imposed monthly
retirement contributions to the Fund.
[8] Recent judgments in this division show that there had been some relentlessly and
ruthlessly questionable conduct to avoid payment to the Fund.13 The Fund has now, out
of dire desperation, joined the second to fifth respondents to account for their actions. The
applicant is the Municipal Worker's Retirement Fund registered in terms of s 4 of the PFA.
[9] The Mafube Local Municipality is a duly constituted municipality in terms of s 214
of the Local Government Municipal Systems Act 32 of 2000. The Municipality is a
12 Chapter 7 of the Constitution of the Republic of South Africa is applicable. The governing body of a
municipality is the municipal council. The responsibilities of the council are among others to make decisions
for the municipality , including adopting policies, developing plans, and approving budgets. They also
implement national and provincial legislation , set service charges, and regulate the provision of municipal
services. The council is led by an elected mayor, who is assisted by an executive committee of councilors.
The mayor and executive oversee the work of the municipal manager and department heads. The Municipal
Council has several duties, including providing democratic and accountable government, using the
municipality's resources in the best interests of the local community, ensuring that municipal services are
provided in a sustainable manner and respecting the rights of citizens and others protected by the Bill of
Rights.
13 The judgments referred to above in fn 4 give a sense of the mischief that prevails.
14 Section 2 of the Loal Government Municipal Systems Act 32 of 2000 provides:
'2. Legal nature. -A municipality-
(a) is an organ of state within the local sphere of government exercising legislative and executive
authority within an area determined in terms of the Local Government: Municipal Demarcation Act,
1998;
(b) consists of-
(i) the political structures and administration of the municipality ; and
(ii) the community of the municipality ;
(c) functions in its area in accordance with the political, statutory and other relationships between its
political structures , political office bearers and administration and its community; and
6
participating employer in the Fund and has employees registered as members. The
Municipality falls, undisputedly so, within the ambit of s 13A(8)(c).15
[1 O] The second to fifth respondents are the Municipal Manager, the Chief Financial
Officer, the Executive Mayor and the Administrator of the Municipality who has been
appointed as the Lead Provincial EXCO Representative of the Municipality . I will refer to
their statutory imposed duties to determine their accountability later. It seems to be
common cause except for the fact that it causes liability in the context of this case.
[11] The Fund did make the prescribed request in terms of s 13A(9)(a) to the
Municipality.16 They were simply ignored, and no response was forthcoming. The situation
persisted during the hearing of the matter in July 2024.
[12] The applicant claims costs against all five respondents jointly and severally on an
attorney and client scale due to the history of transgressions by the Municipality and its
officers on this score.
[13] It is true as will also be shown later that: 'The Municipality would rather challenge
each and every application brought to assist the pension fund members rather than pay
its employees ' money to the Fund.'17 The sloppy litigation by the respondents is
undeniable. On 25 March 2024, notice of motion was issued. The first to fifth respondents
have filed a notice of intention to oppose on 24 April 2024. The respondents were at the
time represented by Peyper Attorneys. On 8 May 2024 the fifth respondent filed another
notice of intention to oppose via the Office of the State Attorney. Mr. Mkaza filed an
answering affidavit on 3 June 2024. The 15-day period within which the respondents had
{d) has a separate legal personality which excludes liability on the part of its community for the actions
of the municipality.'
15 '(c) In respect of any other employer of any legal status or description that has not already been referred
to in paragraphs {a) and (b), every person in accordance with whose directions or instructions the governing
body or structure of the employer acts or who controls or who is regularly involved in the management of
the employer's overall financial affairs.'
16 'MWRF 3' attached to the FA at 54 and FA paras 39-40, p 18-19.
17 First Ramdeyal-judgment para 15.
7
to file their answering affidavits expired on 17 May 2024. On 19 June 2024 the Fund
served the notice of set down on both Peyper Attorneys and the State Attorney, CE
Cawood. The second to fourth respondents only filed their answering affidavits on 16 July
2024; one day before the heads of argument for the applicant was filed and after the
notice of set down dated 19 June 2024. They were fully aware of the date of the hearing
of 25 July 2024. Worse even, the first respondent has, to date, not filed any answering
affidavit and the case against the Municipality and the relief sought stands unopposed.
There, astoundingly so, are not any condonation applications on the non-compliance with
the Uniform Rules of Court. For the sake of finality and completeness the Fund dealt with
all the issues and disputes in their case. The judgment will similarly be comprehensive of
the issues raised.
The Law
In general
[14] The statutory obligation in terms of s 13A(1) enacted to pay pension contributions
is a sui generis constitutional obligation that raises the bar on liability for non-compliance .
The Supreme Court of Appeal18 ruled that:
'[13] The legal principles that apply to pension and provident funds are clear and uncontroversial.
The trustees of a fund are bound to observe and implement the rules of that fund. Their powers
and responsibilities and the rights and obligations of members and participating employers are
governed by the rules, 19 applicable legislation and the common law ... .'20
[15] Fundamental is the fact thats 13A may not be read in isolation. There is a mosaic
of law applicable that specifically regulates the Municipal Officers' and Administrator's
duties and responsibilities and it must be read in conjunction herewith. The subsections
may not be regarded in seclusion. For instance; the argument of counsel for the Municipal
Officers that the words 'is to be deducted ' in subsection 13A(1) from the employees­
members remuneration only creates future liability and not retrospective liability for the
18 Sasol Limited v Chemical Industries National Provident Fund (20612/2014 ) [2015] ZASCA 113 (7
September 2015).
19 'MWRF 1' and 'MWRF 2' at 30-53 of the court bundle.
20 Neither counsel for the applicant nor for the respondents could refer the court to case law that is directly
applicable to the facts of this case. Same could also not be located by the court except for the matters
referred to.
8
current incumbent on existing debt of the pension monies, is narrow and out of context.
It is ascribed a meaning different from the meaning that was intended as it is intrinsically
entwined with the surrounding relevant law. The suggestion by counsel could never have
been the intention of the Lawgiver; it would clash with the miscellany of legislation and
case law. It cannot be that the current employer and its officers are only liable for future
deductions ; such an interpretation will have bizarre consequences .
[16] Section 13A is the point of departure . Inter a/ia, the Constitution of the Republic of
South Africa (Constitution), the Municipal Workers Retirement Fund Consolidated Rules
(July 2019) (Rules), the Local Government: Municipal Finance Management Act 56 of
2003 (MFMA) and the Municipal Systems Act 32 of 2000 (Systems Act) are crucially
relevant to complete the law to be drawn from. The legislation is underscored by the
relevant case law. There is limited case law on the personal liability of current Municipal
Officers and Administrators on the facts of this case. Available case law does, however,
provide precedent on application and interpretation of the legislation .
[17] Section 13A 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
(b) any contribution for which the employer is liable in terms of those rules.
(2) (a) The minimum information to be furnished to the fund by every employer with regard
to payments of contributions made by the employer in terms of subsection (1), shall be as
prescribed.
(b) If that information does not accompany the payment of a contribution , the
information shall be transmitted to the fund concerned not later than 15 days after the end
of the month in respect of which the payment was made.
(3)
(4)
(5)
(6) 9
(a) Any contribution to a fund in terms of its rules, whether it be a contribution
contemplated in subsection (1), a contribution for the payment of which a member of the
fund is responsible personally, or a contribution to be paid on a member's behalf-
(i) shall be transmitted directly into the fund's account with a bank finally registered
as such under the Banks Act, 1990 (Act No. 94 of 1990), not later than seven days
after the end of the month for which such a contribution is payable; or
(ii) shall be forwarded directly to the fund in such a manner as to have the fund receive
the contribution not later than seven days after the end of that month; or
(iii) in the case of a fund contemplated in section 15(4) that has been exempted from
the provisions of sections 5(2) and 9 because, in operating as a fund, its assets
consist exclusively of one or more policies of insurance with an insurer carrying on
long-term insurance business as contemplated in the Insurance Act, 1943, shall be
forwarded to the insurer concerned in such manner as to have the insurer receive
the contribution not later than seven days after the end of that month.
(b) Any contribution forwarded to and received by a fund in the circumstances
contemplated in paragraph (a) (ii), shall be deposited in the fund's bank account on the
first business day following the day of receipt.
(a) For the purpose of monitoring and ensuring compliance with this section, the
principal officer of the fund or any authorized person shall, at the times and in the manner
and format prescribed , submit reports to the categories of persons, to be specified in that
notice, who have an interest in ~uch compliance.
(b) In applying paragraph (a), "authorized person" means any person who has been
authorized by the relevant board to perform the function contemplated in that paragraph
and of whom the registrar has been advised in writing.
(7) Interest at a rate as prescribed shall be payable from the first day following the expiration
of the period in respect of which such amounts were payable on-
(a) the amount of any contribution not transmitted into a fund's bank account before
the expiration of the period prescribed therefor by subsection (3)(a)(i);
10
(b) the amount of any contribution not received-
(i) by a fund before the expiration of the period prescribed therefor by
subsection (3)(a)(ii); or
(ii) in the circumstances contemplated in subsection (3)(a)(iii), by the insurer
concerned before the expiration of the period prescribed therefor by that
subsection;
(c) the value of any benefit, or right to any benefit, not transferred by the first fund to
the other fund before the expiration of the period prescribed therefor by subsection
(5).
(8) For the purposes of this section, the following persons shall be personally liable for
compliance with this section and for the payment of any contributions referred to in subsection
(1):
(9) (a) If an employer is a company, every director who is regularly involved in the
management of the company's overall financial affairs;
(b) if an employer is a close corporation registered under the Close Corporations Act,
1984 (Act No. 69 of 1984), every member who controls or is regularly involved in
the management of the close corporation's overall financial affairs; and
(c) In respect of any other employer of any legal status or description that has not
already been referred to in paragraphs (a) and (b), every person in accordance
with whose directions or instructions the governing body or structure of the
employer acts or who controls or who is regularly involved in the management of
the employer's overall financial affairs.
(a) [Sub-s. (8) added by s. 17 of Act No. 45 of 2013.]
A fund to which the provisions of subsection (8) apply, must request the employer
in writing to notify it of the identity of any such person so personally liable in terms
of subsection (8).
(b) In the event that an employer fails to comply with the requirements of this provision,
all the directors (in respect of a company), all the members regularly involved in
the management of the closed corporation (in respect of a closed corporation) , or
all the persons comprising the governing body of the employer. as the case may
!2st, shall be personally liable in terms of subsection (8).
[Sub-s. (9) added by s. 17 of Act No. 45 of 2013.]
11
(10) A board of a fund must report any non-compliance with the provisions of this section, in
accordance with such conditions and in the format as may be prescribed .
[S. 13A inserted by s. 15 of Act No. 86 of 1984, amended by s. 6 of Act No. 22 of 1996 and
substituted bys. 1 of Act No. 94 of 1997. Sub-s. (10) added bys. 17 of Act No. 45 of 2013.]'
(Emphasis added)
[18] There is not any other process ·to be followed outside s 13A(9)(a). The only
preliminary process prescribed to claim against the liable entities in terms of the PFA on
the scenario in this case is that notice must be given in terms of s 13A(9). The Fund did
make the prescribed request in terms of s 13A(9)(a) to the Municipality on 24 October
2019. However, they were simply ignored, and no response was forthcoming. This is the
only required procedure that had to be complied with before the claim was instituted. The
claim was filed on 25 March 2024 and notwithstanding a reference to the request in terms
of s 13A(9)(a) and the attachment thereof to the founding affidavit, the current incumbents
remained silent.
[19] The argument of defective joinder and citation of the respondents by counsel for
the Municipal Officers falls by the wayside due to their own neglect and contempt of the
provisions of the PFA. The onus is on the employer as represented by the governing body
that it is constituted of, in the least, the Municipal Officers and the Administrator, to indicate
the identity of the persons to be held accountable . This silence speaks volumes.
[20] There is not any requirement that the Fund must embark on an inquiry into the
persons in power from May 2021 to January 2024. The onus is on the employer to supply
the information. In addition; the current entity in power has the authority to erase the
arrears and meet the claim by paying. In fact, it is a legislative duty to honour outstanding
debt and specifically pension-related fees.
[21] The principles decreed ins 13A(9)(b) now, undisputedly so, take effect. It decrees
that in the event that an employer fails to comply with the requirements of this provision,
all the directors (in respect of a company) , all the members regularly involved in the
12
management of the closed corporation (in respect of a closed corporation), or all the
persons comprising the governing body of the employer, as the case may be, shall be
personally liable in terms of subsection (8). The legislation is mandatory .
[22] Section 13A(9)(b) must be read with s 13A(8)(c) which gives a definitive definition
of the entities that are to be held liable in this case:
'In respect of any other employer of any legal status or description that has not already been
referred to in paragraphs (a) and (b), every person in accordance with whose directions or
instructions the governing body or structure of the employer acts or who controls or who is
regularly involved in the management of the employer's overall financial affairs.'
It is any employer of any legal status; this includes the Administrator .
[23] Engineering Industries Pension Fund and Another v Pioneer Mechanical CC and
Another21 (Engineering Industries/Pioneer) provides some valuable precedent and the
standard to be applied on the personal liability provisions of the PFA:
a. Sections 13A(8) and 13A(9) must be interpreted strictly and to the word. The
personal liability claim is not accessory but primary:
'[6] Notwithstanding the above, the second respondent makes significant admissions which,
in my view, underscores the rationale for the implementation and application of section 13A(8),
and thereby weakens his argument that this section only imposes accessory, not primary,
obligations upon him to comply therewith. In my view, the raison d'etre of this section is to ensure
that, in circumstances where a failure to comply with section 13A(1) occurs, someone must and
should, via compulsion, be responsible to 'step into the shoes' of the employer, in this case of the
first respondent. If this were not the intention of the Legislature, it would call into question why this
section was enacted and is interpreted strictly. In Fundstrust (Pty) Ltd (In Liquidation) v Van
Deventerthe Court held:
"The Legislature has not unambiguously expressed its intention and here it becomes of prime
importance to have regard to the context, and thus including the often more important matter of
the statute it's apparent scope and purpose and within limits, its background."
I therefore disagree with the second respondent's rationale and practical application of subsection
(8).' (Emphasis added)
21 Engineering Industries Pension Fund and Another v Pioneer Mechanical CC and Another (13568/2020)
[2022) ZAWCHC 215 (3 June 2022). •
13
b. There is not any constraint on the applicant to first seek payment from the
employer ; in this case, the Municipality. The applicant can go directly to the officers that
are accountable. The Municipal Officers and Administrator shall not hide behind the
'corporate veil'. In Engineering Industries/Pioneer, it was held that:
'[8] Inasmuch as these submissions might have sought to convince me to apply same to this
matter, they did not. In Fundstrust the appellate division states that the regime of the corporate
veil 'remained firmly intact ... except for rare and exceptional cases of ''piercing" by the
Legislature or the Courts.' I agree with this approach and am of the view that this matter is
precisely such an instance as the Legislature foresaw in enacting the provisions of section 13A(8),
and this court should apply its discretion in invoking its powers to prevent the second respondent
from hiding behind the corporate veil and escaping liability, discarding any onus which rests upon
him, leaving unsuspecting and disadvantaged employees rudderless and up the creek without a
paddle. The three amendments of subsections (B}i (9) and (10):
" ... aim to pierce the corporate veil and mandates employers to identify a person who can be held
personally liable for non-payment of contributions to the fund."' (Emphasis added)
[24] The second to fifth respondents have a heightened obligation to comply with the
rule of law and specifically the Constitution. They may not choose when and how to
implement the legislation that decrees their conduct. Some of the defences that are raised
in this case have been disposed of and ruled on by the judgments that went before this
case. The Municipality was unsuccessful , but they persisted .22 The Constitutional Court
condemned the conduct of some Municipal Officers in no uncertain terms in Municipal
Manager O.R. Tambo District Municipality and Another v Ndabem 23 (Ndabem):
'[38] Although the Municipal Parties escape being held in contempt, their dilatoriness , inertia
and unaccountability must be viewed through the lens of the Municipality's heightened duty to
comply with court orders. Organs of state, of which the Municipality is one, are expressly enjoined
to "assist and protect the courts to ensure the independence, impartiality, dignity, accessibility and
effectiveness of the courts". They have obligations under the Constitution to respect the rule of
law and the courts as guardians of the Constitution .' (Emphasis added)
22 See footnote 4.
23 Municipal Manager O.R. Tambo District Municipality and Another v Ndabeni (CCT 45/21) [2022] ZACC 3
(14 February 2022); [2022] 5 BLLR 393 (CC); (2022) 43 ILJ 1019 (CC); 2022 (10) BCLR 1254 (CC); 2023
(4) SA421 (CC).
14
[25] The legislation was clearly conceived to curtail the conduct of perpetual
perpetrators. It will therefore not exclude any current officeholder from liability. It is
irrelevant that some of the Municipal Officers were in acting appointments and are not
formal fixed term-or permanent appointments . The scope to evade liability will be too
wide and entities such as the Municipality may very well, on a permanent basis, employ
acting office holders; the result will be enduring impunity.24 The fact that an employer is
under administration in terms of the Constitution does not pose a defence for the current
incumbent .
[26] In the First Ramdeyal -judgment it came to light that the Municipality receives
revenue from the central government annually (its equitable share). This was R128 million
in 2023/24 and R138 million in 2024/25. Despite this revenue, the contributions have not
been paid. The Fund contended that the Municipality has moved the money from one
bank account to another to prevent it from being attached. The Fund sought an order to
furnish a full accounting of every withdrawal , payment, or transfer from the Municipality's
ASSA and First National Bank (FNB) accounts from 10 October 2023. It also sought an
order to obtain copies of the bank statements of the relevant accounts and copies of bank
statements for the accounts where the equitable shares are held, as well as the dates on
which the Municipality expects to receive this revenue. The application was granted
against all the respondents. It included the Municipal Manager, Chief Financial Officer,
Executive Mayor, and the fifth respondent in casu, Mr. Thomas Lindelo Mkaza.
[27] The above establishes the liability of the current incumbent in whatever capacity,
whether it be permanent or not, stretches over periods retrospectively , presently and most
possibly into the future. In the scenario of the claim in this ca~e; it goes to the claim and
the debt due; the whole and total claim and debt.
[28] The essential context wherein adjudication must be conducted is the constitutional
gravity of the case. The basic rights to social security of the members of the Fund in terms
24 Answering Affidavit (AA) paras 11-16.
15
of s 27(1 )(c)25 of the Constitution of the Republic of South Africa. 1996 is the foundation .
It is trite in the instance that the contributions have been deducted from hard-earned
income; most probably from breadline-salaries , by the Municipality.26 It must now be paid
over to the Fund.
[29] The PFA protects a member's pension from being attached or being the subiect of
execution.27 It may not be misappropriated and used for any other purpose that what it
was deducted for. Contributions in terms of s 13A(1) are akin to a payment made into a
trust account of attorneys.
[30] In Post Office Retirement Fund v South African Post Office SOC Ltd and Others 28
(SAPO), the purpose of legislation such as the PFA was, inter alia, emphasised. The
monies must simply be transferred to the Fund, because the monies have been deducted .
It may not be utilized for any other purpose; it, in the least, constitutes unfair labour if not
paid over to the Fund. The employer and the responsible officers may not appropriate the
monies to pay other debt or salaries. The 'founding constitutional value of the rule of law'
may not be ignored by the Municipal Official or the Administrator, as was held by the
Supreme Court of Appeal in SAPO:
'By misappropriating a portion of its employees ', salaries required to be paid on their behalf to the
Fund, and using that money for other unauthorized purposes , SAPO perpetrated an obvious unfair
labour, in contravention of s 23(1) of the Constitution, and did so on a grand and persistent scale.
And the endorsement of an arbitrary, open-ended and undefined power in the hands of SAPO to
prefer its creditors of choice over other creditors undermines thf! rule of law enshrined as a
25 Section 27(1 )(c): '(1) Everyone has the right to have access to-
(c) social security, including, if they are unable to support themselves and their dependents , appropriate
social assistance .
(2) The state must take reasonable legislative and other measures , within its available resources , to
achieve the progressive realization of each of these rights.'
26 Paragraph 60 of the FA.
27 Sentinel Retirement Fund and Another v Masoanganye (1003/2017) [2018] ZASCA 126 (27 September
2018) paras [8]-[18].
28 Post Office Retirement Fund v South African Post Office SOC Ltd and Others (1134/2020) [2021] ZASCA
186; [2022) 2 All SA 71 (SCA) (30 December 2021) (SAPO). Also see Mudau v Municipal ~mp/oyees
Pension Fund and Others (CCT 142/22) [2023] ZACC 26; 2023 (10) BCLR 1165 (CC); [2023] 11 BLLR 1109
(CC); (2023) 44 ILJ 2641 (CC) (2 August 2023) para [47].
16
founding value of the Constitution in s 1 {c). It is far from clear to me how this promotes
constitutional values. At best, if it does, it does so while simultaneously undermining other
fundamental rights and constitutional values. This interpretation of the rule turns a blind eye to
SAPO routinely giving undue preferences to some creditors at the expense of others. '29
The Court continued:
'SAPO. being a public body, may only do what it is empowered by law to do. It is not free to do
what it pleases. No provision is made in the rules for an exemption from the obligation to pay
contributions on a monthly basis and SAPO is not authorized , in its discretion , to decide to
withhold payment. . . . The purpose of the Fund would be undermined if SAPO was free to
contribute if it wanted to, and to withhold contributions at will.'30 (Emphasis added)
[31] The words of the legislation may not be ignored, distorted or manipulated by a
court or the respondents . The doctrine of impossibility does not come into play and an
inability by the Municipal Officers to pay on account of financial constraints of the
Municipality is not a defence. There is a difference between interpretation and divination.
SAPO made it clear that:
'[58] Secondly, the high court confused the interpretation of rule 3.3 with the separate doctrine
of impossibility of performance when it held that the rule should not be interpreted to include an
obligation on the part of SAPO to pay contributions when this was impossible . In order to make
such a finding as to the meaning of the rule, the high court had to ignore the words of the rule, its
context and purpose, and read other, unspecified , words into it. A dictum of Kentridge AJ on
constitutional interpretation, in S v Zuma and Another, is apposite:
"We must heed Lord Wilberforce 's reminder that even a constitution is a legal instrument , the
language of which must be respected . If the language used by the lawgiver is ignored in favour of
a general resort to "values" the result is not interpretation but divination. '" (Emphasis added)
[32] The monies claimed in this case, for instance, were deducted and earmarked to
be paid over to the Fund and there may not and cannot be any financial constraint . If the
person(s) liable proposes financial constraint or impossibility. the monies were
illegitimately appropriated , and it simply culminates into confession to a criminal offence
29 SAPO para 59.
30 Ibid para 56.
17
and of civil liability. There is not any onus on the Fund, or the court for that matter, to
inquire into the state of the finances of the employer before liability can be established .
[33] The dictum in Engineering Industries/Pioneer slots in with the above in that:
'[11] Based on my understanding of section 13A(8) there are two remaining aspects I wish to
deal with:
11.1 Firstly, there is no mention by any stretch of the imagination , nor is it suggested in the
interpretation thereof, that some form of 'other process', for instance an enquiry, must first be
undertaken under section 13A(1) before the provisions of section 13A(8) may be invoked. This
simply does not exist.
11.2 Secondly, section 13A(8)(b) states: ' ... the following persons shall be personally liable for
compliance with this section and for the payment of any contributions referred to in subsection
(1)'. (My emphasis .) This is self-explanatory and, in my view, any interpretation to the contrary
can only be considered as being otherwise hopeful and therefore wrong. This is well summarized
as follows:
"Section 13A(8) of the of the Act imposes personal liability on certain parties within the employer's
organization . These persons will be held personally responsible for ensuring that contributions
are deducted and paid to the fund within the prescribed period. This section allows for determining
the person who will be held personally liable for the corporation's failure to make contributions. In
the event that an employer fails to comply with the requirements of this provision, all the directors
(in respect of a company) , all the members regularly involved in the management of the closed
corporation (in respect of a closed corporation), or all the persons comprising the governing body
of the employer, as the case may be, shall be personally liable in terms of subsection (8)'"
[34] Non-payment of contributions is an ongoing, single and continuous act and
offence. The Municipal Officers and Administrator do not dispute the fact that the
contributions with the interest stipulated are due. They simply allege that they made some
efforts to conclude an arrangement with the Fund. The financial constraints of the
Municipality, according to the Municipal Officers, cause an inability to pay. The Municipal
Officers suggest that because the Municipality is (allegedly) unable to pay contributions,
18
and because they (allegedly) 'did what they could' they cannot be held personally liable.
This defence clearly has no merit because of the following: 31
a. Fault is not a requirement for the imposition of personal liability in terms of s
13A(8)(c). As per Engineering Industries/Pioneer and Natal Joint Municipal Pension Fund
v Endumeni Municipality, 32 all that is required is the strict application of the plain language
of subsecs (8) and (9).
b. Marumoagae33 writes, with reference to case law, that:
'It is not clear from these amendments, if after such a person has been identified and the company
experiences financial difficulties which lead to the identified person to fail to make contributions to
the fund, whether such identified person would still be held liable for the non-payment. This
subsection appears to be placing a heavy burden on the identified person more particularly if the
non-payment is due to circumstances beyond his or her control, for instance, financial difficulties
experienced by the corporation . However. as far as employers who continue to deduct
contributions from their employees ' salaries and fail to pay them over to the intended pension
funds, this subsection appears to be what is needed to address this issue. Section 9(10) of the
PFA mandates the board of trustees to report any noncompliance with section 13A in accordance
with such conditions as may be prescribed. This entails that there is a duty on the board of trustees
to ensure that employers who fail to comply with the requirements of section 13A of the PFA are
adequately dealt with by among others reporting them to the National Prosecuting Authority to
face heavy criminal sanctions imposed by the recent amendments to the PFA. These
amendments are welcomed and are a step in the right direction and would go a long way in
ensuring that contributions made by members of pension funds reach the funds to which they are
contributing.' (Emphasis added)
c. The second to fourth respondents relied on some offers of settlement. In argument
in reply during the hearing of the matter it was pointed out that due to the sui generis
nature of pension contributions the offers could not be accepted. The offers were simply
31 AA paras 18-24.
32 Natal Joint Municipal Pension Fund v Endumeni Municipality (920/2010) [2012) ZASCA 13; [2012) 2 All
SA262 (SCA); 2012 (4) SA 593 (SCA) (16 March 2012).
33 Motseotsile Marumoagae , 'SECTION 13A OF THE PFA: EMPLOYER 'S FAILURE TO PAY EMPLOYEE'S
CONTRIBUTION TO THE EMPLOYEE 'S PENSION FUND', Speculum Juris, Volume 29 Part 1, 68-85,
2015 at 78-79.
19
not sufficient to service the pension claims. It would have been reckless and illegal for the
Fund to accept the compromise . It is trite law that the Fund's rules bind the employer and
the members . It provides the law of the payments . The rules relevant here provide
payment of contributions by the 7th day of the month following the month in respect of
which contributions are due.34 The payments to the Fund were not paid for the period May
2021 to January 2024. It is a fact undisputed by all the respondents . The non-negotiable
mandatory prescriptions of the PF A were transgressed and negated. Section 13A dictates,
to reiterate, that
'(3) (a) Any contribution to a fund in terms of its rules, whether it be a contribution
contemplated in subsection (1 ), a contribution for the payment of which a member of the
fund is responsible personally , or a contribution to be paid on a member's behalf-
(i) shall be transmitted directly into the fund's account with a bank finally registered as
such under the Banks Act, 1990 (Act No. 94 of 1990), not later than seven days after
the end of the month for which such a contribution is payable; or
(ii) shall be forwarded directly to the fund in such a manner as to have the fund receive
the contribution not later than seven days after the end of that month; or ...
(b) Any contribution forwarded to and received by a fund in the circumstances
contemplated in paragraph (a) (ii), shall be deposited in the fund's bank account on the first
business day following the day of receipt.'
[35] As indicated above; admission of non-payment is confession to criminal and civil
liability. The mere nonpayment of the deducted contributions by the employer as
represented by the Municipal Officers and Administrator , is certainly within the realm of
criminal. Non-comp liance must be reported to the South African Police Service by the
Fund. The Municipal Officers and Administrator , personally liable to pay the claim, must
also be prosecuted ; there is no getting away from liability. Apart from the common law
offences that might be applicable, s 37(1 )(a) read with s 37(1 )(c) of the PFA decrees that:
'37. Penalties. -(1) Any person who-
(a) contravenes or fails to comply with section 4, 10, 13A, 138 or 31;
(b)
(c)
34 Fund Rule 4.4. FA para 26, p 15.
20
is guilty of an offence and liable on conviction to a fine not exceeding R1 O million or to
imprisonment for a period not exceeding 10 years, or to both such fine and such imprisonment.'
[36] To sum up; the purpose of s 13A(8) is to ensure that the persons comprising the
governing body of the employer shall via compulsion be responsible for the payment of
the contributions to the Fund. If the arguments of the second to fifth respondents are
presumed to be the situation in law in that they are not liable on the defences raised; then
there will be not anyone accountable, and the whole pension system in South Africa will
collapse.
[37] The second to fifth respondents step into the shoes of the employer. New
appointees shall be liable for the total arrears, an officer shall not escape liability by
resigning and multiple officers in the governing body shall be liable. Current incumbents
are liable for the whole amount in arrears and amount due as at the time of the institution
of the claim. They are authorised and must erase the whole claim during their tenure.
Counsel for the Fund explained the law fittingly and is correct:
'35 The Municipal Officers do not seem to deny that a municipal manager, a CFO and a mayor
do fall within the ambit of section 13A(8)(c) but suggest that because they did not hold the
positions at the time ( or for the whole period) when the arrear contributions became payable,
they cannot be held personally liable. This contention is wrong in law.
36 The current municipal manager, chief financial officer and mayor are personally liable in
terms of section 13A(8) if regard is had to the following principles of interpretation set out in
Endumeni :35
"The inevitable point of departure is the language of the provision itself, read in context and
having regard to the purpose of the provision and the background to the preparation and
production of the document." (Own emphasis)
37 The language of section 13A(8) shows that the current incumbent of the positions listed in
the sub-section are personally liable.
35 Natal Joint Municipal Pension Fund v Endumeni Municipality (920/201 0) [2012] ZASCA 13; [2012] 2 All
SA 262 (SCA); 2012 (4) SA 593 (SCA) (16 March 2012).
21
38 Firstly, section 13A(8) is worded in the present tense in imposing personal liability and does
not distinguish between current and former incumbents of the relevant positions:
38.1 sub-para (a): "a director who is regularly involved",
38.2 sub-para (b): "controls or who is regularly involved",
38.3 sub-para (c): "every person in accordance with whose directions or instructions the
governing body or structure of the employer acts or who controls or who is regularly
involved."'
The respondents
(38] The Municipality does not deny liability. The second, third, fourth and fifth
respondents are individuals comprising the governing body of the Municipality and are
regularly involved in the management of the employer's overall financial affairs. This
follows from their statutory and common law obligations and powers.
(39] The Municipal Manager is tasked with overseeing the implementat ion of court
orders against the Municipality. In the matter of Meadow Glen Home Owners Association
and others v Tshwane Municipality and Anothei36 the Supreme Court of Appeal was clear
on the legislatively pronounced duties of the Municipal Manager and it ties in with personal
liability in terms of s 13A(8)(c):
'[23] There are numerous legislative provisions regarding the person or persons responsib le
for the administration of local authorities. Section 82 of the Local Government: Municipal
Structures Act 117 of 1998 determines that the municipality must appoint a municipal manager as
the person responsible for the administration of the municipality and such person will also be the
accounting officer of the municipality. In terms of s 56(3) of the same Act, the executive mayor, in
performing his duties must monitor the management of the municipality 's administration in
accordance with the direction of the municipal council (s 56(3)(d)) and oversee the provision of
services to communities in the municipality in a sustainable manner (s 56(3)(e)). Section 54A of
the Local Government: Municipal Systems Act 32 of 2000 also provides that the municipal council
must appoint a municipal manager as the head of administration of the municipal council.
36 Meadow Glen Home Owners Association and others v Tshwane Municipality and Another (767/2013)
(2014] ZASCA 209; (2015] 1 All SA 299 (SCA); 2015 (2) SA 413 (SCA) (1 December 2014).
22
Furthermore, s 55 sets out the responsibilities of the municipal manager as head of the
administration , subject to the policy directions of the municipal council. Section 55(1)(b)
determines that the municipal manager is responsible and accountable for the management of
the municipality 's administration. Section 60 of the Local Government: Municipal Finance Act 56
of 2003 provides that the municipal manager is the accounting officer of the municipality.
[24] From the abovementioned provisions it is clear that the municipal manager is, as far as
the officials of a municipality are concerned , the responsible person tasked with overseeing the
implementation of court orders against the municipality. The municipal manager would know, as
the accounting officer, what is feasible and what is not. The municipal manager cannot pass
responsibility for these administrative duties to a manager or director who is not directly
accountable in terms of their duties .. .'
[40] In Pheko and Others v Ekurhuleni Metropolitan Municipality 37 the ruling was clear
on the liability of the Mayor and the Municipal Manager:
'[59] The Mayor and the Municipal Manager are tasked with the oversight and management ,
respectively , of the provision of services by municipalities to the local community in a sustainable
and, in the case of the Municipal Manager, equitable manner. In addition to these responsibilities ,
the Municipal Manager is also tasked with the implementation of national and provincial legislation
applicable to the municipality , like the Housing Act. Thus, despite Mr Chainee's efforts to
exonerate the Mayor and the Municipal Manager, they nonetheless have Constitutional and
statutory obligations in relation to the supervisory orders of Pheko I.'
[41] The Municipal Manager is the accounting officer and in terms of s 60 of the MFMA.
Section 65(2)(f) of the MFMA decrees that the accounting officer of a Municipality is
responsible for ensuring that the Municipality complies with its statutory commitments.
This includes taxes, levies, duties, pensions, medical aid, and audit fees. The accounting
officer is also responsible for taking all reasonable steps to ensure that the municipality
makes adequate provision to repay all creditors.
37 Pheko and Others v Ekurhuleni Metropolitan Municipality (No 2) (CCT19/11) [2015] ZACC 10; 2015 (5)
SA 600 (CC); 2015 (6) BCLR 711 (CC) (7 May 2015).
23
[42] Creditors must be remunerated in accordance with the law and the Municipal
Officers, and the Administrator does not have any discretion on this score. The Fund is a
legislatively proclaimed creditor. Section 61 of the MFMA imposes fiduciary duties on the
accounting officer towards the Municipality and inter alia provides that the accounting
officer must seek to 'prevent prejudice' to the financial interests of the Municipality.
Section 55(1) of the Systems Act provides that the Municipal Manager is responsible and
accountable for the management of the Municipality's administration in accordance with
this Act and other legislation applicable to the Municipality. Section 55(2) of the Systems
Act imposes further relevant responsibilities on the Municipal Manager as accounting
officer. Clearly, the personal liability of the Municipal Manager is undeniable.
[43] The third respondent as Chief Financial Officer also falls within the provisions of
s 13A(8)(c) of the PFA in accordance with 'regularly involved in the management of (the
Municipality's) overall financial affairs' and is also one of the 'persons comprising the
governing authority' because of the provisions of s 81 of the MFMA.
[44] The fourth respondent as Executive Mayor is bound by ss 52 and 56 of the MFMA
that impose duties and responsibilities on the Executive Mayor, which include overseeing
the responsibilities of the Accounting Officer and the Chief Financial Officer assigned to
them in terms of the MFMA.
[45] A prima facie view on the liability of the fifth respondent , Mr. Mkaza, was already
expressed in this division38 in an application for rescission of a court order. The law
dictates that the dictum is correct and applicable to this case:
'[18] The Executive Head of the Free State Province appointed Mr. Mkaza as the Lead
Provincial EXCO representative of the Municipality with effect from 1 June 2022 to 31 May 2024
to exercise and perform the powers and functions as set out in annexure "FA2'' of the court bundle.
Some of the functions include: submitting a revised Financial Recovery Plan to the municipal
council for inputs and consideration and to the MEC for Finance for approval, to ensure that
funded bu~gets are prepared for the 2023/2024 financial year, ensuring daily management of
38 Second Ramdeyal-judgment.
24
cash and bank balances, providing strategic leadership and direction to implement the financial
recovery plan, issuing directives and instructions to the accounting officer and relevant staff to
implement the financial recovery plan, submitting monthly progress reports to the MEC for
Finance/ the Provincial EXCO I the Municipal Council and the Minister of Finance, maintaining a
record of the decisions on Financial Recovery Plan implementation and assisting in the
preparation and implementation of the Financial Recovery Plan.
[19] The above powers and duties conferred on the applicant in itself is indicative of the
applicant's involvement and information of the financial issues of the Municipality , which he does
not deny, and could only obtain same by having access to the bank accounts and relevant bank
statements as sought in the notice of motion for the main application. He is not the accounting
officer as he avers and does not have fiduciary duties, but his duty and power delegated to him
to confer on the accounting officer is much higher. He has to issue directives and instructions to
the accounting officer. He did have the necessary power, duties and obligations in the
management of the Municipality 's finances during his term of appointment and at the time the
notice of motion application was served at his place of employment , and his involvement in same
cannot simply vanish 20 days later when the order against him was granted by a court of law. His
defence of lapsed appointment is not a reasonable explanation. does not hold water for a bona
fide defence and simply appears to be that Mr Mkaza "was playing for time" by using specious
excuses to gain time, hence causing unnecessary delays in the administration of justice. He had
access to the relevant information sought and was in a position to furnish the required
information .' (Emphasis added)
[46] In terms of the Provincial Notice and s 139(5)(c) of the Constitution, the fifth
respondent is a person who falls within the ambit of s 13A(8)(c) of the PFA. The Provincial
Government ordered an intervention into the affairs of the Municipality under the
provisions of s 139(5)(c) of the Constitution and appointed the fifth respondent as the
Lead Provincial EXCO Representative at the Municipality with effect from 1 June 2022 to
31 May 2024 in terms of Provincial Notice 79 of 2022 published in the Provincial Gazette
of 9 September 2022 (the Provincial Notice).39
39 See 'RA1', 'RA2' and 'RA3' at p 105-421 of the court bundle.
25
[47] The Administrator is not expected to have exercised any power that he did not
have as was argued by his counsel in following of the case of the President of the Republic
of South Africa and Others v South African Rugby Football Union and Others.40 There is
not a separation of powers implicated in his duties and obligations. All that is prescribed
is that, as by decree of his functions set out in the Provincial Notice, Mr. Mkaza is on all
fours as Administrator and Lead Provincial EXCO Representative at the Municipality
within the ambit of subsection 13A(8)(c).
[48] The provincial intervention does not suspend the Municipality's obligations to the
Fund. It does not replace or suspend the duties of the second to fourth respondents . The
Municipal Council has not been dissolved. The contract of the Administrator is a
constitutional decree; ss 139(5)(a) and (c) of the Constitution provides:
'(5) If a municipality, as a result of a crisis in its financial affairs, is in serious or persistent
material breach of its obligations to provide basic services or to meet its financial commitments ,
or admits that it is unable to meet its obligations or financial commitments , the relevant provincial
executive must-
(a) impose a recovery plan aimed at securing the municipality's ability to meet its obligations
to provide basic services or its financial commitments, which-(i) is to be prepared in accordance
with national legislation; and (ii) binds the municipality in the exercise of its legislative and
executive authority, but only to the extent necessary to solve the crisis in its financial affairs; and
(b) ... ; or
(c) if the Municipal Council is not dissolved in terms of paragraph (b), assume responsibility
for the implementation of the recovery plan to the extent that the municipality cannot or does not
otherwise implement the recovery plan.'
[49] In the Cronje-judgment, the conduct of Mr. Mkaza as Administrator was depicted
and an attempt to hide behind the corporate veil and s 139-administration 41 in terms of
the Constitution was unsuccessful. The Court held:
40 President of the Republic of South Africa and Others v South African Rugby Football Union and Others
(CCT16/98) [1999] ZACC 11; 2000 (1) SA 1; 1999 (10) BCLR 1059 (10 September 1999) paras 44-58.
41 Paragraphs 13-18 and 36-45.
26
'[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.'
[50) Cronje AJ continued to criticise Mr. Mkaza and statec:1 that:
'[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 reli~nce 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.' (Emphasis added)
[51) The Municipal Officers refer to and complain about schedules which the
Municipality , as a participating employer, has to furnish to the Fund on a monthly basis in
terms of s 13A(2). They are in possession of the schedules and cannot complain that it
has not been attached to the founding affidavit; it is their own evidence, not that of the
Fund, to submit. This has been ruled upon in previous cases in this division and one
wonders why this is still an issue conjured up as a defence.
[52] The Fund is justified in their concern of the damaging snowball-effect the conduct
of the Municipal Officers triggers:42
'8.5 Non-payment reduces the employee-members' capital savings towards retirement. Should
any of the affected employee-members resign or be retrenched, they would have a smaller benefit
payable from the Fund.
8.6 For the same reasons, the employee-members would not receive any potential investment
returns on the outstanding capital amounts because the Fund could not invest the capital
contributions. This further reduces their retirement savings.
42 Heads of argument for the applicant dated 17 July 2024.
27
8.7 It also prevents the Fund from paying the affected employee-members ' risk premiums
which are deducted from contributions received in terms of the Fund rules. If an affected
employee-member becomes sick, disabled or dies in service (all insured risks), there is a risk that
the Fund's insurers would repudiate the claim because of premium non-payment.
8.8 It prejudices the Fund membership as a whole because other Fund members have to
subsidize the portion of the administration costs which would have been paid by the affected
employee-members. '
[53] In Municipal Workers Retirement Fund v Groot Kei Municipality and two others43
(Brody-judgment) the court stated that the Municipal Officers face personal liability and
that it has been confirmed to be the law in the case preceding this case. For their non­
compliance, Brody JA ordered that the first, second and third respondents were in
contempt of court by failing to comply with the court order granted under case number
2377/2022 on 13 September 2022; the second and third respondents were committed to
imprisonment for a period of 30 days, suspended for a period of 30 court days on condition
that the first, second or third respondents, within 30 court days of the granting of the order,
complied with the court order granted under case number 2377/2022 on 13 September
2022; the Sheriff and the South African Police Services were authorised and ordered to
take all necessary steps to commit the second and third respondents to imprisonment in
the event that the condition of suspension was not fulfilled within the period stipulated ;
and the first, second and third respondents were ordered, jointly and severally, to pay the
costs of the application on a scale as between attorney and client, including costs
associated with travelling for applicant's counsel and the attorney of record.
[54] The High Court in the Brody-judgment condemned the municipality and its officers
for contempt of court, emphasising their repeated disregard for legal obligations under the
PFA. The Municipality 's liability was established under section 13A(1 ), and the personal
liability of the officers concerned was based on ss 13A(8) and 13A(9).
43 Municipal Workers Retirement Fund v Groot Kei Municipality and two others (2377/2022) [2024]
ZAECMKHC 137; [2025) 1 All SA 258 (ECG) (22 August 2024).
28
[55] On 2 November 2023 Reinders J of this division ordered in Municipal Workers
Retirement Fund v Letsemeng Local Municipality and others (Case number 3447/2023 ;
unreported judgment) that the Municipality , the Municipal Manager and the Chief Financial
Officer shall jointly and severally make payment to the applicant of interest prescribed in
terms of s 13A(7) of the PFA. Ex tempore reasons for judgment were apparently handed
down. The circumstances in fact and law in which the order was made are not known.
The fact remains that Municipal Officers were held liable in their personal capacity and
cited by their names.
Conclusion
[56] The law is clear and unambiguous . Section 13A of the PFA might raise some
eyebrows and be described as draconic and unfair, but it emphasises the fact that organs
of state and specifically municipalities and its office bearers must protect the constitutional
ethos and democracy diligently. It is at the core of their designation. Neither the Municipal
Officers nor the Administrator can claim ignorance of the provisions of s 13A and the fact
that they shall be personally liable for not paying the retirement contributions and the
injury it causes. They accepted the responsibility when they took office.
[57] The date of appointment and resignation is irrelevant to the liability. What is
significant is that the respondents were in office at the time the claim was lodged. The
claim that is based in the period May 2021 to January 2024 constitutes one claim and
cannot be segmented into the timeframes wherein Municipal Officers and the
Administrator held office or divided between them. It will cause total anarchy in the
management of municipalities . It is not required that Mr. Mkaza must be the employer,
accounting officer or administrator himself. This was well-justified in the replying affidavit 44
with facts and law stated by the applicant that were well known to Mr. Mkaza. The litigation
was embarked upon on 25 March 2024. The respondents are liable for the debt as a
whole.
44 Para 12 at p 99-102.
29
The History and Costs
[58] In the Cronje-judgment , a stern warning was issued in 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.
[59] The history of the litigation by the Fund with Mafube Local Municipality, and this
case, is a conspicuous and disappointing example of the destruction of the sacrosanct
constitutional ethos of the Republic of South Africa by the very institution and its officers
that must protect it. The conduct of the Municipal ity and the other respondents causes a
malfunction of the rule of law. The consequences for the employees-members , that are
innocent bystanders , are grave.
[60] The tragedy in our legal history is depicted in the founding affidavit and
furthermore, some recent litigation. The outcome of the case to order personal liability of
the Municipal Officers and the Administrator is necessary to even the scales of justice;
there is not any other remedy that will suffice. Their conduct is criminal according to the
PFA. The legal costs that sustained the litigation since 2011 and surely come from the
pockets of the taxpayer, paint a bleak picture. The undisputed history of the litigation was
depicted by counsel for the Fund:
'64. The court cases were:
64.1 2011: Section 13A application for arrear pension contributions.
64.2 July 2015: Successful application in order for arrear pension contributions of more than
R16 million plus interest.
64.3 October 2016: The Municipality brought an application seeking to interdict the Fund from
executing an unpaid portion of a prior judgment debt. The application was dismissed.
64.4 July 2019: The Municipality brings another extremely urgent application against the Fund
on two hours' notice to suspend or set aside a writ in respect of a prior judgment debt. The
application was dismissed.
30
64.5 July 2019: The Fund discovered that in spite of the pending application to stay the writ,
the Municipality had unlawfully transferred about R40 million out of its bank accounts contrary to
ongoing court proceedings and a freezing order. The Fund then brought contempt proceedings
against the Municipality and certain of its officers. This application was eventually settled to enable
the Municipality the opportunity to calculate the amounts due to the Fund for the parties to appoint
representatives to agree in such calculations . The Municipality failed to comply with the order,
resulting in the Fund issuing a writ for the balance.
64.6 June 2021: The Fund instituted an application for unpaid contributions for the period July
2015 to April 2021. The Municipality raised spurious defences, and the application was successful.
An application for leave to appeal was also dismissed .
64.7 March 2023: The Municipality brought an urgent application to stay a writ of execution in
respect of a prior judgment debt. The application was dismissed .
64.8 October 2023: The Municipality brought yet another urgent application to set aside or stay
a writ. This application was dismissed.
65. In other words. the Municipality has been unsuccessful in each and every single case, and
in every case an adverse cost order was made against it, mostly on attorney and client scale.'45
(Emphasis added)
[61] The disdain with which the respondents regard the litigation and courts is
astounding . They could not even maintain some respect for the Uniform Rules of Court in
this case, as was shown above. This case confirms the personal liability of the Municipal
Officers and Mr. Mkaza. All the respondents were aware of their responsib ilities when they
embarked on the litigation.
[62] The order will comply with the notice of motion filed on 25 March 2024 and as was
argued during the hearing. The large amount claimed, the significant implications of the
case to affected employees -members and the rule of law, the extensive attention to the
45 FA p17-22.
31
sources in law that had to be regarded to come to a just and equitable solution as the
case concerns somewhat novel findings to be made in terms of the sui generis principles
decreed in the PFA's personal liability provisions, call for costs of two counsel.
[63] ORDER
In the result, it is ordered that:
1. The first respondent , Mothusi Lepheana (second respondent) , Dimakatso
Tryphona Tau (third respondent) , Tlhoare Motsoeneng (fourth respondent), and Thomas
Mkaza (fifth respondent) are ordered jointly and severally to:
1.1 Make payment to the applicant in the amount of R14 723 639.52;
1.2 make payment to the applicant of interest on the amount of R14 723 639.52 from
1 February 2024 to date of payment at the rate(s) which have been prescribed in terms
of section 13A(7) of the Pension Funds Act 24 of 1956; and
1.3 pay costs of this application on attorney-client scale, including the costs of two
counsel.
2. The Registrar of this court shall forward a copy of this judgment to the Director of
Public Prosecutions : Free State, Bloemfontein forthwith. The Director of Public
Prosecutions : Free State, Bloemfontein shall report to the court within 60 days of the date
of this order on the progress of the investigation in writing.
Appearances
Applicant:
Second to fourth respondents:
Fifth respondent: P VAN DEN BERG SC
H DRAKE
Chambers , Sandton
Shepstone & Wylie Attorneys , Sandton
c/o McIntyre van der Post Attorneys
Bloemfontein
MC LOUW
Chambers , Bloemfontein
Peyper Attorneys
Bloemfontein
L BOMELA
Chambers, Bloemfontein
The Office of the State Attorneys : Free State
Bloemfontein 32