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REPUBLIC OF SOUTH AFRICA
IN THE HIGH COURT OF SOUTH AFRICA
LIMPOPO DIVISION , POLOKWANE
REPORT ABLE: YES/NO
OF INTEREST TO THE JUDGES: YES/NO
REVISED.
2026/03/03 DATE ......................... SIGNATURE..
In the matter between:
GREATER LETABA MUNCIPALITY
and
NATIONAL FUND FOR MUNCIPAL WORKERS
EMMANUEL SELLO SHAI
JUDGMENT
CASE NO: CL 12/2025
Applicant
First Respondent
Second Respondent
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BURNETT, AJ
Introduction
[1 ] T he applicant launched an application for leave to appeal against the judgment (and
subsequent reasons therefore) that was handed down on 31 December 2025.
Superior Courts Act
[2] Section 17 (1) of the Superior Courts Act 10 of 2013 states that: -
"(1) Leave to appeal may only be given where the judge or judges concerned are
of the opinion that:
(a) (i) the appeal would have a reasonable prospect of success.
(ii) there are some other compelling reasons why the appeal should be
heard, including conflicting judgments on the matter under
consideration.
(b) the decision sought to appeal does not fall within the ambit of section
16 (2) (a).
(c) where the decision sought to be appealed does not dispose of all the
issues in the case, the appeal would lead to a just and prompt
resolution of the real issues between the parties."
Reasons for the dismissal.
[3] T he applicant sought an order in terms of Section 37D (1) (b) of the Pensions Fund
Act 24 of 1956. The application before the court was not an anti-dissipation
application in terms of the common law.
[4] Section 37D (1) (b) of the Pension Funds Act 24 of 1956, which reads as follows: -
'~ registered fund may deduct any amount due by a member to the member's
employer on the date of retirement, the date on which the member ceases to be a
member of the fund or the date on which the member's employment with a
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participating employer in a retirement fund is terminated in accordance with the
Income Tax Act and the Tax Administration Act, 2011 (Act No. 28 of 2011 ), in
respect of compensation, including any legal costs recoverable from the member in
a matter contemplated in subparagraph (ii), in respect of any damage caused to the
employer by reason of any theft, dishonesty, fraud or misconduct by the
member, and in respect of which-
(i) the member has in writing admitted liability to the employer; or
(ii) judgment has been obtained against the member in any court, including a
magistrate's court, and includes a compensation order granted in terms of section
300 of the Criminal Procedure Act, 1977 (Act No. 51 of 1977).
from any benefit payable in respect of the member or a beneficiary in terms of the
rules of the fund and pay that amount to the employer concerned."
[5] From a plain reading of the above section, the legislature intended to provide the
registered pension fund concerned with a discretion to deduct certain monies
from a member's pension fund, subject to the following:-
[5.1] T he employee committed theft, dishonesty, fraud or misconduct against the
employer.
[5.2] T he theft, dishonesty, fraud or misconduct by the employee caused damage
to the employer.
[5.3] And also if, the employee admitted liability to the employer; .2r judgement
has been obtained in a court of law for the damages.
[5.4] The deduction must be made in accordance with the Rules of the Fund.
[6] T he purpose of Section 37D (1) (b) is to protect the employer's right to pursue the
recovery of money against an employee, however only in specific instances of theft,
dishonesty, fraud or misconduct. Theft, fraud, dishonesty and misconduct create the
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primary boundaries of this section. If the employee is accused of any act other than
one of those four acts, the employer cannot invoke Section 37D (1) (b).
[7] Counsel for the Applicant argued that Section 37D (1) (b) implied that the withdrawal
of pension interest by an employee could be withheld from him/her pending the
determination of liability for theft, fraud, dishonesty or misconduct in accordance with
the Supreme Court of Appeal held in Highveld Steel & Vanadium Corporation Ltd
v Oosthuizen.1
[8] The Highveld judgment found that it was implied from the wording of section 37D (1)
(b) that whilst a registered pension fund may deduct certain monies from an
employee's pension fund, it may also withhold payment of the pension interest under
the same circumstances and pending a final outcome of the dispute. The Supreme
Court of Appeal articulated the rationale for this as follows:-
"[17] However, a practical problem threatens the efficacy of the remedy afforded by
the section. In many case employers only suspect dishonesty on the date of
termination of an employee's service and fund membership with the consequence
that pension benefits are paid before the suspected dishonesty can be properly
investigated. Furthermore, it must be accepted as a matter of logic that it is only in a
few cases that an employer will have obtained a judgment against its employee by
the time the latter's employment is terminated because of the lengthy delays in
finalizing cases in the justice system. The result, therefore, is that an employer will
find it difficult to enforce an award made in its favour by the time judgment is
obtained against him.
[18] These practicalities lead me to disagree with the submissions for the
respondent, inter alia, that the tense used by the legislature ins 37D(b)(iiJ(aa) and
(bb), in the words 'has in writing admitted liability' and Judgment has been
obtained' reflects an intention that either proof of liability must be available on
obtained' reflects an intention that either proof of liability must be available on
termination of the employment contract. I similarly have a difficulty with the
contention that the words 'as soon as possible' in rule 7.3 require payment of the
pension benefits to be effected immediately upon termination of an employee's
service.
(4) SA (1 ) (SCA) para 16.
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[19] Such an interpretation would render the protection afforded to the employer
bys 370( 1 )(b) meaningless, a result which plainly cannot have been intended by the
legislature. It seems to me that to give effect to the manifest purpose of the section,
its wording must be interpreted purposively to include the power to withhold payment
of a member's pension benefits pending the determination or acknowledgement of
such member's liability. The Funds therefore had the discretion to withhold
payment of the respondent's pension benefit in the circumstances.
[20] Considering the potential prejudice to an employee who may urgently need to
access his pension benefits and who is in due course found innocent, it is
necessary that pension funds exercise their discretion with care and in the
process balance the competing interests with due regard to the strength of the
employer's claim. They may also impose conditions on employees to do justice to
the case."
[9] One must however have careful regard to the wording of Section 370 (1) (b) and the
Highveld Steel case. The discretion to deduct from or withhold pension benefits,
rests with the registered fund and not the court. However, in instances where the
registered fund exercised their discretion incorrectly, the decision is reviewable by a
High Court.
[1 O] The registered pension fund exercised its discretion when it rejected the Applicant's
request to withhold payment of Second Respondent's pension funds benefit to him.
To the extent that the Applicant believes that the registered pension fund exercised
its discretion incorrectly, it ought to have launched a judicial review application.
[11] The Applicant did not launch a judicial review application, instead it asked the court
to exercise a discretion in terms of Section 370 (1) (b) of the Pension Funds Act 24
of 1956 and interdict the pay-out of the Second Respondent's pension fund to him.
This court does not have such a discretion in terms of Section 370 (1) (b).
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Arguments at leave to appeal
[11] The applicant argued that this court erred in that the court made two incorrect factual
findings, namely: -
[11.1] "Following receipt of the Notice to Attend a Disciplinary Hearing, the
Second Respondent, at the age of 63 (sixty-three) years old, resigned
from the Applicant's employ and applied to the First Respondent to
release his pension fund to him."
[11.2] "On 1 O December 2025 the First Respondent dismissed the request to
withhold the pension fund payment."
[12] The Applicant argued that the court incorrectly found that t he Second Respondent
resigned following receipt of the Notice to Attend a Disciplinary Hearing, and that he
in fact resigned during the preliminary stages of the disciplinary process long after
he received the notice. The Applicant attempted to argue that the word ''following"
means "upon", when in fact it means "after or as a result of'. 2 There is no substance
in this argument, and it make no difference to the legal position. The argument
presented by the Applicant in this regard is frivolous.
[13] The Applicant further argued that the First Respondent did not dismiss the
Applicant's request to withhold the pension fund, but rather refrained from making a
decision, and referred the parties to court.
[14] The letter from the registered fund dated 10 December 2025, referring to a letter
dated 1 December 2025 states, inter alia that:-
2 The Oxford Dictionary (2026 ).
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"As conveyed in o ur letter dated 1 December 2025, addressed to the Municipal
Manager of Letaba Local Municipality, the Fund provided the employer w ith an
opportunity to provide it with relevant information, including court documentation by
the end of business on 31 December 2025. The fund will therefore not process the
payment of Mr. Shai's withdrawal benefit until the request to withhold procedure has
been completed in the time frames as communicated previously. With reference to
your statement in paragraph 4.8 of your letter, the Fund will not be opposing the
Local Municipality's court application. As the fund may only act in accordance with
the applicable legislation, any court order not in compliance with the legislation will
be unenforceable against the fund."
[15] The letter dated 10 December wherein it conveyed the above to the Applicant, must
be read with the letter dated 1 December 2025 wherein it stated that: -
"From the information provided by the Municipality it is unclear whether the reason
for the request as well as the legal procedures as prescribed by the Pension Funds
Act are complied with for the NFMW to consider the request to withhold the payment
of the member's benefit. It is also indicated that the reason for the request is due to
the members' dereliction of duty and/or gross negligence, which does not seem to
comply with the requirements, i.e. theft, fraud, dishonesty or dishonest misconduct.
From the NFMW to be in a position to make an informed decision, the NFMW will
provide the Municipality with an opportunity to provide the relevant information
stated above by no later than end of business on 31 December 2025 for our
consideration. If the required information, including court documentation, i.e. an
interdict against the NFMW not to make payment or a court order application against
Mr. Shia that complies with the above legal requirements is not received within the
required period, the NFMW will proceed with the payment process, on the conditions
required period, the NFMW will proceed with the payment process, on the conditions
as prescribed in its rules."
[16] Rightly or wrongly, the registered pension fund exercised its discretion and made a
decision not to withhold the Second Respondent's pension benefits.
[17] A registered pension fund cannot delegate its own duty in terms of legislation to a
court of law, and that decision in itself would be reviewable.
[18] Instead of launching an application for an interdict in terms of Section 37D (1) (b) of
the Pension Funds Act 24 of 1956, the Applicant ought to have launched an
application for a review of the registered pension fund's decision; whatever the
decision was.
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[19] The Applicant argued that the Highveld Steel states that a court may grant an
interdict in terms of Section 37D (1) (b) of the Pension Funds Act 24 of 1956. The
Applicant has misinterpreted the Highveld Steel case. The Highveld Steel case
does not provide authority for the proposition that a court can take the place of the
registered pension fund and assume its discretion. The Highveld Steel case extends
the interpretation of Section 37D (1) ( b) to allow a registered pension fund to
withhold pension benefits pending the determination of an employee's liability for
theft, fraud, dishonesty or misconduct, and not merely deduct funds resulting from
an acknowledgment of liability.
Conclusion
[20] There are no prospects of success on appeal, and neither are there any compelling
reasons to grant leave to appeal.
[21] I according make the following order:-
[21.1] The application for leave to appeal is dismissed.
[21.2] The Applicant is to pay the Second Respondent's taxable party and
party costs on Scale B.
BURNETT , E J
ACTING JUDGE OF THE HIGH COURT ,
POLOKWANE ; LIMPOPO DIVISION
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APPEARANCES
FOR THE APPLICANT: - ADV. QOFA-LEBAKENG
INSTRUCTED BY: - MPHOKE MAGANE ATTORNEYS
FOR THE 1st RESPONDENT: - NO APPEARANCE
FOR THE 2nd RESPONDENT: - ADV. MARX
INSTRUCTED BY: - CHAUKE ATTORNEYS
DATE OF HEARING: - 16 FEBRUARY 2026
DATE OF JUDGMENT: - 3 MARCH 2026