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IN THE HIGH COURT OF SOUTH AFRICA
(WESTERN CAPE DIVISION, CAPE TOWN)

CASE NO.: 1633 /2023
In the matter between:

ENGINEERING INDUSTRIES PENSION FUND First Applicant

METAL INDUSTRIES PROVIDENT FUND Second Applicant

And

INSTALLAIR (PTY) LTD (IN LIQUIDATION) First Respondent
PAOLO RINALDA ORSO Second Respondent
SANDRA MARTHA ORSO Third Respondent
__

JUDGMENT
__
PARKER, AJ:

Introduction

‘Pension money forms the cornerstone of most people’s retirement
security. When a person retires from active employment, he or she still

wants to maintain more or less the same standard of living that existed
during his or her working life ’1.

[1] The recent two -pot system introduced in South Africa has highlighted the
dilemma employees find themselves in. A few years ago the issue of pension
benefits were highlighted thus :

‘The non -payment of retirement fund contributions is an ongoing
problem faced by thousands of retirement fund members ’.2

[2] In more recent news it has been reported that about 7 770 employers have
defaulted on paying their pension fund con tributions as of December 2023. It was
said this failure had a negative impact on the implementation of the two -pot
retirement system which came into effect on 1 September 2024 .3

[3] I heard this opposed application on 17 October 2024 pertaining to outstanding
pension and provident fund contribution s for the period of May 2020 to July 2020.
Applicant was seeking p ayment in the amount of R93 715.53 which is calculated
based on contribution schedules duly received but for which payment remains
outstanding for the period January 2020 to April 2020. On the date of the hearing
there was no appearance by the Respondents an d at the conclusion of the hearing I
requested Applicant to file a further note on argument, which was received on the 25
October 2024.

The Applicants

[4] The A pplicants (at times I will refer to them as the “Fund or “Funds” ) both of
whom are pension funds registered in terms of section 4 of the Pension Funds Act,
24 of 1956 (“the PFA”) , rely o n the provisions of s13A(1), s13A(7), s13A (8), s13A (9)

1 Manamela “Deductions from Pension Benefits for Purposes of Section 37D of the Pension Funds
Act 24 of 1956: Employers Forced to Tow the Line” 2007 (19) SA Merc LJ 189 – 204 at 198.
2 Cameron “Troubled Firms must still Contribute to Pension Funds” (14 April 2013) P ersonal Finance
available at http://www.iol.co.za/business/personal -finance (accessed 15 October 2013)
3 Abongwe Kobokana “Over 7 700 employers default on pension contributions: Godongwana” ( 11
December 2024) SABC News available at https://www.sabcnews.com /sabcnews/over -7-700-
employers -default -on-pension -contributions -godongwana/
of the PFA read with Regulation 33 (promulgated in terms of the P FA but now
repealed) .

[5] Section 13A(1) of the PFA places an obligation on the employer of any
member (or members) of a fund to pay the member’s contribution deducted from the
member’s remuneration and any contribution for which the employer is liable in
terms of the Rules to the fund ‘in full’ . This subsection reads as follows:

‘13A Payment of contribution s and certain benefits to pension funds

(1) Notwithstanding any provision in the rules of a registration 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 f und, is to be deducted
from the member’s remuneration; and

(b) any contribution for which the employer is liable in terms of those r ules.’

[6] Any contributio n to a fund in terms of the rules, must be paid to the fund not
later than seven days after the end of the month for which the contribution is
payable.4

[7] Section 31A (7) requires that ‘interest at a rate as prescribed shall be payable
from the first day following the expiration of the [seven day] period in respect of
which such amounts were payable on ’ and not paid.5

4 Section 13 A(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 memb er 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 94 of 1990), not later than seven days after the end of the month
for which such a contribution is payable .’ [own emphasis]
5 Section 13A (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);
(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

[8] The Fund /s are statutorily obliged to collect the contributions and distribute
the benefit payable to its members as provided for in s 7D(1) (d), s13 and s13A of the
PFA.6 The binding nature of the applicants’ rule s is statutorily confirmed in s13 of the
PFA.7

[9] The Financial Services General Laws Amendment Act 22 of 2008 amended
the PFA by deleting ss(1) from s37 of the PFA and thereby decriminalized an
employer’s non -payment of employees’ contribution to the pension fund as required
by s13A of the PFA. There were thus, no clear and direct enforcement mechanisms
which could induce employers to make payments of contributions as required by
s13A of the PFA.8

[10] If the applicants do not receive contributions from the employers as required
by the rules of the Funds and s13A of the PFA, the employees will not receive their
benefits when they either retire or are retrenched by the employer. In this case the
First Respondent was wound up. Aside from members being prejudiced , there are
also prejudice to other mem bers of the Funds.

[11] Following legislative intervention in 2014 with the Financial Services Laws
General Amendment Act No. 45 of 2013 (“the FSLGA”) , the provisions of the
FSLGA, with effect from 28 February 2014, inter alia :

11.1 Amended s379 of the PFA by re -introducing criminal sanctions which
will be imposed on all those who fail to comply with certain provisions
of the PFA including s13A of the PFA.10

(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 bene fit, or right to any benefit, not transferred by the first find to the other fund
before the expiration of the period prescribed therefor by subsection (5).”
6 Joint Municipal Pension Fund v Ehlanzeni District Municipality 2018 (6) SA 197 (GP) at 210 C -D
7 supra at 213 A -D
8 Motseotsile Clement Marumoagae – Section 13A of the PFA: Employer’s Failure to Pay Employee’s
Contribution to the Employee’s Pension Fund, Speculum Juris Volume 29, Par t 1, 2015
9 By section 49(b)
10 37 penalties
(1) Any person who -
a. Contravenes or fail to comply with section 4, 10, 13A, 13B or 31
b. …., or
c. ….,

11.2 Introduced as ss(8) & (9) to s13A11, to enable t he fund to identify and
hold certain persons who are in control of or regularly involved in the
management of the employer’s overall financial affairs, accountable
and personally liable for an y non-compliance with s13A and for the
non-payment (or short payme nt) of pension fund contribution s.12

[12] The First and Second Respondents do not dispute that the employer (i.e the
First Respondent) was a participating member of the Applicants.

[13] With regard to the personal liability provisions s 13A(8) & (9) of the PFA read
as follows:

‘For the purposes of this section, the following persons shall be
personally liable for compliance with this section and for the payment
of any contribution referred to in subsection (1) ;

(a) If an employer is a company, every dire ctor 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
Corporation Act, 1984 (Act 69 of 1984), every member who controls or is
regularly in the manag ement of the close corporation’s overall financial
affairs; and

(c)...

(9)(a) 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).


Is guilty of an offence and liable on conviction to a fine not exceeding R10 million or to imprisonment
for a period not exceeding 10 years, or to both such fine and such imprisonment. ’
11 By section 17 of the FSLGA
12 R176, annexure “OG 7” – Financial Service Board: Circular PF No. 110
(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 c orporation), 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). ’(on emphasis )

[14] This application is about the personal liability provisi ons of s 13A(8) & (9) of
the PFA.

Second and Third Respondents

[15] Before I elaborate on the Second and Third Respondents , I must record that
the First Respondent (“the employer”) was at the time of the application , under
liquidation and as such , no order was sought against First Respondent13. The
Second and Third Respondent s who are the directors of First Respondent, says that
the employees ‘were paid a sum which reflected their net salaries less their fund
contributions. This way the employer's income was [allegedly] distributed such that
all employees would receive a salary ’. The employees thus received their net
salaries [presumably reduced] and their contributions towards their p ension and
provident were deducted from their salaries. But on the Second Respondent's
version , the deducted pension and provident portions were utilised to subsidise
employee salaries. On this version the fund deductions were clearly deducted from
the sal aries and not paid over to the Applicants. Put differently the employee
members did not receive any pension and provident fund benefits despite receiving a
net salary which excludes their pension and provident fund contributions. The
Second Respondent calls this an adjustment of payment of employee compensation
which the Applicants do not accept ; nor do they agree as the actual deductions were
not made from the employees' salaries. The Second Respondent has demonstrably
failed to substantiate this allegation with relevant and objective evidence.

[16] Second, they contend that the personal liability provisions of section 13A(8) of
the PFA do not apply to the Third Respondent, although listed as a director, as she

13 This is in accordance with the moratorium on legal proceedings in terms of s133 of the Companies
Act
was not involved in the affair s of the employer and an order should not be granted
against her.

[17] Third, in instances where the employer and the directors are unable to comply
with their statutory obligations due to reasons beyond their control and have not
been either reckless or negligent in their actions, the applicability of the personal
liability provisions of section 13(8) of the PFA is dependent on two considerations,
namely:

17.1 The circumstances which lead to the breach of the statutory provisions
by the employer and its individual directors;

17.2 The extent to which the directors were resp onsible for those
circumstances.

Evaluation

[18] The Second Respondent cannot unilaterally decide not to submit contribution
schedules. This runs contrary to the purpose, spirit and import of the PFA and, to
allow this type of conduct would undermine the provisions of the PFA.

[19] Given the nature of the relief s ought and the serious prejudicial consequences
of the failure to comply with the provisions of the PFA to the employees and other
members of the Applicants, the Second and T hird Respondents are not entitled to
excuse themselves from these very serious stat utory obligations. Their explanations
are not plausible. Personal liability is statutorily regulated by the PFA and under the
circumstances, as demonstrated above, applies .

[20] The Applicants therefore requires the schedules and returns for the period
May 202 0 – July 2020 to finally do the outstanding calculations. However , the
Employer had generated sales in excess of R 232 000.00 for the period April 2021 –
March 2023, notwithstanding it being in liquidation in May 2022.

The period January 2020 - April 2020

[21] Second Respondent contends that no actual deductions were made from
employees in this period. In terms of s 13A(1) read with ss(3) , it is peremptory to pay
over the contributions deducted from salaries. Section 13(8)(a) imposes personal
liability on those directors of the employer who are regularly involved in the
management of the employer's overall financial affairs. Unilateral conduct is
precluded on a plain interpretation of the PFA. The employer must submit
contribution schedules (and m ake payment accordingly) as it is a statutory obligation
imposed on it by the relevant provisions of the PFA, Regulation 33 to the PFA and
Circular PF No. 110 form: Financial Services Board.

[22] Moreover, the period January 2020 to almost the end of Marc h 2020 was
manifestly prior to the Covid -19 pandemic. The National Lockdown was only
imposed on 26 March 2020. The pandemic and its general effects are not an excuse
for the non -compliance with payment of contributions for January, February and
March 2020, during which time the employer was operational. Fund contribution
exposure for this period (and for which no defence on the merits have been
advanced) amounts to R74 , 046.80 which the directors are liable to pay.

[23] The amount of R 93 715 .53 is calculated on co ntributions already receive d;
therefore , payment is due . The Second R espondent persists and ignores the
statutory obligation (and other obligations in terms of the rules) to pay over the
employer's portion of the contributions to the Funds. Here the answering affidavit
demonstrates a fundamental misconception: it is not a bonus for the employees if the
employer matches their monthly contributions. The employer is statutorily obliged to
pay over contributions for which it is liable. The Secon d Respondent should have
ensured that the employer's portion towards the employees' pension and provident
funds were made. He has not done so, despite on his version having used personal
resources to fund other expenses of the employer.

The period May 202 0 – July 2020

[24] The Applicants require the submission of the contribution schedules for this
period to calculate the pension and provident fund contributions and ancillary
payment s such as interest which is due.

Personal liability

[25] The Secon d Respondent contends that the T hird respondent, although listed
as a director, was not involved in the affairs of the employer and an order should not
be granted against her. This assertion cannot stand. She was a director of First
Respondent and has to acce pt the responsibilities that c ome it, as she is listed as a
director on the Secon d Respondent's own CIPRO search, reflected she had a loan
account with the employer in the amount of R285 , 672.37 as at 21 November 2021,
on the version advanced in the answering affidavit. The Second R espondent further
denies that the directors breached the provisions of the PFA and that they are
personally liable (i.e the personal liability provisions of section 13 (8) of the PFA is
dependent on the circumstances which lead to the breach of the statutory provisions
by the employer and its individual directors and the extent to which the directors
were responsible for those circumstances).This too , cannot stand .

[26] The Second R espondent accepts that the PF A prescribes personal liability . At
common law, the Applicants have no redress against anyone other than the
employer; however, s13A(8)(a) now permits them to hold not only the employer, but
also the employer's dir ectors personally l iable for the employer's debts ‘without the
need to pierce the corporate veil ’. In other words, there is no need to give s
13A(8)(a) an interpretation unsupported by the text to achieve its purpose; the text -
based inter pretation achieves its purpose. T he Second R espondent is confusing his
fiduciary duties as a director of the employer with his statutory duties in terms of the
PFA.

[27] Furthermore, the Second R espondent has not demonstrated as a fact, that for
the periods Januar y 2020 to April 2020 and May 2020 to July 2020, no factual
deductions were made. In any event there remains the issue of the employer's
portion of the contributions which the seco nd respondent has not addressed. The
Second R espondent has similarly not demo nstrated, as a fact, that the employer was
not trading between May 2 020 until its final liquidation.

[28] In all the circumstances it is submitted that the Second and T hird
Respondents have fallen short of advancing a bona fide defence. The purported
defences are far -fetched and untenable and falls to be rejected on the papers. Given
the high interest in withdrawal claims from the two -pot retirement system which has
exposed the failure of employers to pay pension contributions, this is but just another
example of how retirees and those who thought they could readily access their
benefits, suffer .

[29] I would be failing in my constitutional duty if an order is not granted to the
vulnerable groups . I reiterate , my attention is drawn to an article in the media and to
the high interest in withdrawal claims from the two -pot retirement system which has
expos ed the failure of employers to pay pension contributions /s to funds who
administer these contributions as envisaged under these unfortunate
circumstances .14

Costs

[29] The Applicants see k a punitive costs order on the scale as between attorney
and own client as it is prejudicial to the Applicants members’ that the costs have to
be borne by the members of the Fund s who have to fight to access benefits and face
unwarranted reduced benefits. The Directors (and the employer) have neglected
their statutory r esponsibilities in terms of the PFA towards their employees which
justifies a punitive costs order.

The Second and Third Respondents withdrawal

[30] Before I conclude I deem it prudent to address the following. On 11th July
2024 the Registrar issued a Notice of Set Down for the opposed hearing of this
application to take place on 17th October 2024. Therein the Second and T hird
Respondent's address was recorded as 0[...] B[...] Drive, Plattekloof Glen, 7460. On
3rd October 2024 the ir attorney wit hdrew as attorney of record. In term s of the
withdrawal notice the Second and T hird respondents ’ last known address is recorded
as 0[...] B[...] Drive, Plattekloof Glen, 7460 (“ 0[...] B[...] Drive” ). The Applicants cited
B[…] Drive under oath in the Founding Affidavit as the Second and T hird
Respondents’ residential address, confirmed i n the Answering Affidavit to by the

14 Two-pot: While claims spike, many employers never paid pensions
https://www.msn.com/en -za/news/other/two -pot-while -claims -spike -many -employers -never -paid-
pensions/ar -AA1vgblb?ocid=BingNewsVerp
Second R espondent on 27th September 2023 wherein he confirmed under oath that
0[...] B[...] Drive is his res idential ad dress. The same applies to the Third R espondent
in respect of he r confirmatory affidavit . On 16th October 2024 the Sheriff provided
returns of non -service of the Notice of Set Down [for 17th October 2024] on the
Second and T hird Respondents at 0[...] B[...] Drive.

[31] On the date of the hearing , 17th October 2024, anticipating new counse l or
appearances in person by the Second and Third R espondent s, who however were
not present at court. Given the nature of the claims and the importance of the matter,
the Respondents names were called out in the passages . I further stood down the
matter till after 10:00am to cater for possible late arrival s whereafter I heard
argument conducted by the Applicants. Despite no appearance by the R espondents,
I nevertheless evaluated t heir version s placed before Court under oath w hich
versions I took cognisance of.

Order

[32] Having heard counsel for the Applicants it is ordered :

a) Directing the Second and Third Respondents to provide the
Applicant with the documents set out below within 30 calendar days
of the date of this Court Order:

(i) Outstanding pension fund contribution schedules, in respect
of pension fund contribution s for it s employees which is
payable to the First Applicant, as contemplated in Regulation
33 of the Pension Funds Act, Act 24 of 1956 for the periods
May 2020 to July 2020.

(ii) Outstanding provident fund contribution schedules, in respect
of provident fund contribut ions for its employees which is
payable to the Second Applicant, as contemplated in
Regulation 33 of the Pension Funds Act, Ac t 24 of 1956 for
the period May 2020 to July 2020.

b) Directing the Second and Third Respondents to pay over the
monies owing to th e Applicants, as determined based on
contribution schedules already submitted by the Respondents but
not paid over, which amount has accrued to R 93 715,53 (Ninety -
Three Thousand, Seven Hundred and Fifteen Rand, Fifty -Three
Cents ).

c) Within one calendar month of the Applicants having determined the
outstanding pension and provident fund contributions, payable by
the Respondents based on the schedules, provided by the
Respondents in terms of par agraph (a) above, directing the Second
and Third Resp ondents to pay:

(i) All outstanding pension fund contributions, together with
prescribed interest thereon, to the First Applicant.

(ii) All outstanding provident fund contributions, together with
prescribed interest thereon, to the Second Applicant.

d) The Applicants are granted leave to approach this Court on the
same papers, as supplemented, to see k relief once the amounts
payable by the Respondents have been quantified based on the
returns, sche dules and forms are provided by the Second and Third
Respondents.

e) The Second and Third Respondents , jointly and severally are to pay
Applicants ’ legal costs in respect of this application on an att orney
and own client scale .


______________________
PARKER AJ
Acting Ju dge of the High Court ,
Western Cape Division


APPEARANCES

For the First & Second Applicant s: Adv Peter Coston
Instructed by: Soonder Inc c/o Vezi & De Beer Inc.
Cape Town

For the First , Second & : Not Represented
Third Respondent s

Date of Hearing: 17 October 2024
Date of Judgment: 16 January 2025

This judgment was handed down electronically by circulation to the parties’
representatives by email.