Mafube Local Municipality v Sala Pension Fund and Others (37457/2020) [2023] ZAGPJHC 1509 (27 June 2023)

begin wrapper begin container begin header begin slogan-floater end slogan-floater - About SAFLII About SAFLII - Databases Databases - Search Search - Terms of Use Terms of Use - RSS Feeds RSS Feeds end header begin main begin center # South Africa: South Gauteng High Court, Johannesburg South Africa: South Gauteng High Court, Johannesburg You are here: SAFLII >> Databases >> South Africa: South Gauteng High Court, Johannesburg >> 2023 >> [2023] ZAGPJHC 1509 | Noteup | LawCite sino index ## Mafube Local Municipality v Sala Pension Fund and Others (37457/2020) [2023] ZAGPJHC 1509 (27 June 2023) Mafube Local Municipality v Sala Pension Fund and Others (37457/2020) [2023] ZAGPJHC 1509 (27 June 2023) Download original files PDF format RTF format make_database: source=/home/saflii//raw/ZAGPJHC/Data/2023_1509.html sino date 27 June 2023 REPUBLIC OF SOUTH AFRICA IN THE HIGH COURT OF SOUTH AFRICA GAUTENG DIVISION, JOHANNESBURG CASE NUMBER: 37457/2020 1. REPORTABLE:  NO 2. OF INTEREST TO OTHER JUDGES:  NO 3. REVISED:  NO Judge Dippenaar In the matter between: MAFUBE LOCAL MUNICIPALITY                                      APPLICANT and SALA PENSION FUND                                                      FIRST RESPONDENT ABSA BANK                                                                      SECOND RESPONDENT FIRST NATIONAL BANK                                                  THIRD RESPONDENT STANDARD BANK OF SOUTH AFRICA                          FOURTH RESPONDENT THE SHERIFF HEILBRON                                               FIFTH RESPONDENT JUDGMENT Delivered: This judgment was handed down electronically by circulation to the parties’ legal representatives by e-mail. The date and time for hand-down is deemed to be 10h00 on the 27th of June 2023. DIPPENAAR J : [1] The applicant is the Mafube Local Municipality, a Category B Municipality in the Fezile Dabi District of the Free State Provence (“the Municipality”). It is the local government for the towns of Frankfort, Cornelia, Tweeling, Villiers, Ntswanatsatsi, Namahadi, Mafahlaneng and Qalabotjha. [2] It is presently under administration in terms of compulsory intervention by the Provincial Government in the affairs of the Municipality under the provisions of s 139(5) of the Constitution [1] . Such notice was published in the Government Gazette [2] on 9 September 2022. Mr TL Mkaza was appointed as Lead Provincial Exco Representative for the Municipality (“the administrator”) from 1 June 2022 to 31 May 2024. The municipal manager, Mr Lepheana is the deponent to the founding affidavit. Mr Mkaza provided a confirmatory affidavit attached to the founding papers. [3] The first respondent, the South African Local Authorities Pension Fund (“SALA”) is a creditor of the Municipality. It is common cause that the Pension Fund Adjudicator made a determination on 4 August 2020 pertaining to a complaint laid by SALA during August 2019. The basis of SALA’s complaint was that the Municipality had on numerous occasions, in contravention of s 13A of the Pension Fund Act [3] (“the PFA”) by failing to pay contributions to SALA on behalf of its employees despite deducting such contributions from the employees. Pursuant to the determination, SALA calculated the amounts owing to it by the Municipality to be an amount of R98 631 638.58. [4] The genesis of the application lies in a writ of attachment authorised by the Registrar of this court pursuant to the determination by the Pension Fund Adjudicator, which resulted in an attachment of funds standing to the credit of the Municipality in banking accounts held at the second respondent. The notice of attachment under r 45(12)(a) here in issue was issued on 7 February 2023 under s 30O of the PFA. SALA had previously issued a writ of execution under s 30O(2) of the PFA on 29 July 2022 on which it executed on 30 August 2022. That writ is not relevant to the present application. [5] The second to fourth respondents are financial institutions at which the applicant holds banking accounts. The fifth respondent is the Sheriff for the district of Heilbron (“the sheriff”). Only SALA participated in the application. The remaining respondents did not. [6] The applicant seeks confirmation of a rule nisi granted in the urgent court on 14 March 2023. An order was granted that, pending the finalisation of part B of the application: (i) the attachment made by SALA in respect of funds held in the Municipality’s bank accounts with the respondent banks be immediately uplifted; (ii)  the respondent banks were authorised to immediately release the Municipality’s funds from the attachment made by SALA in pursuance of the warrant of execution under case number 2672/21; (iii) the sheriff was authorised to immediately issue a notice of upliftment of the attachment and (iv) SALA was prohibited from levying execution and attaching funds standing to the credit of any of the applicant’s banking accounts in order to give effect to the writ of execution under case number 37457/2020. The orders would operate as interim interdicts with immediate effect. Costs were reserved. [7] In Part B, the Municipality seeks the rescission and setting aside of the warrant of execution issued by the registrar of this court under case number 37457/2020 and the setting aside of any attachments made pursuant thereto. That application still needs to be determined. [8] SALA delivered its answering affidavit to Part A on the day of the hearing in the urgent court. No replying affidavit was delivered by the Municipality. [9] The relief sought by the Municipality is based on two distinct grounds, although the parties largely conflated them in argument. The first is that the writ of execution issued by the registrar of this court amounts to an illegality because the registrar exceeded his or her powers when doing so. The applicant’s case is that the registrar was not entitled to issue the writ because ss 30M and 30O of the Pension Funds Act [4] determines that a writ can only be issued by a Registrar having jurisdiction over the debtor. It is argued that it is the Free State High Court which has jurisdiction and its registrar would have the power to issue the writ (“the writ issue”). That argument also underpins the relief sought in Part B that the warrant of execution be set aside together with any attachment in terms thereof. [10] The second ground is wider and is based on the compulsory intervention in the Municipality’s affairs in terms of ss 139(4) and 139(5) of the Constitution [5] , which flows from orders granted by Van Rhyn AJ in the Free State High Court under case number 1969/2021 on 22 April 2022 (“the Van Rhyn judgment”). It is contended that the Municipality is still in financial crisis and in persistent material breach of its obligations to meet its financial commitments and to provide basic services to the community it serves as set out in the Van Rhyn judgment and that the financial recovery plan has not yet been implemented (“the intervention and financial recovery plan issue”). [11] Mr Mkaza, the administrator who manages this process confirms “ that it will still take some time before the recovery plan is implemented” . It is contended that the purpose of the intervention will be defeated if individual creditors are permitted to levy execution against the Municipality’s assets, which is similar to undue preference of creditors in a liquidation situation in an ordinary commercial regime. [12] Reference is made to s 153 of the Municipal Finance Management Act [6] (“the MFMA”) which provides for a municipality to approach a high court for a stay of all legal proceedings, including execution for a period not exceeding 90 days at a time. It is averred that: “ this is however a cumbersome process and cannot be done on an urgent basis” . Mr Mkaza, confirms that he intends to bring an application in terms of s 153, but that this “ could take a month or two”. These averments underpin the contention that the Municipality has no alternative but to seek interim relief staying the execution process pending the filing of such application. The Municipality’s case is that relief is sought to prevent an injustice. [13] It is broadly contended that if the Municipality is not granted relief, it would defeat the entire purpose of the orders granted by Van Rhyn AJ and the intervention in terms of s 139(5) of the Constitution. It is contended that granting the relief sought would allow the intervention to take its course with the implementation of a recovery plan and that the balance of convenience favours the granting of relief as it would not affect SALA’s claim, whose interests could never outweigh the community’s interests. [14] SALA opposes the application on various grounds. By and large the factual averments pertaining to the Municipality’s precarious financial position and the impact on the communities it services are not disputed. SALA’s opposition focusses on the application constituting an abuse of process. [15] SALA’s case is that the Municipality has not come to court with clean hands and has distorted or failed to disclose various material facts in its founding papers, such as compliance with the order granted by Van Rhyn AJ, its failure to inform the court of the steps taken to comply with the Pension Fund Adjudicator’s determination and why it has not to date compiled a recovery plan. It is contended that the Municipality’s version is untruthful, an attempt to mislead the court and that the application constitutes an abuse of process, given that the relief sought in Part B has no prospects of success. It argues that the Municipality has been guilty of recalcitrant and illegal conduct. [16] SALA also criticises the Municipality for failing to exercise its alternative constitutional and statutory remedies, including under s 154 of the PFA and the relevant provisions of the MFMA. It is further argued that the Municipality has failed to meet any of the requirements for the relief sought. SALA contends that it is not in the interests of justice to allow a stay of execution and that there is no bar to it levying execution. [17] Prior to dealing with the issues it is necessary to deal with an ancillary issue. Both parties delivered heads of argument and obtained leave at the hearing to deliver supplementary heads of argument. The parties did so shortly after the hearing. [18] After judgment was reserved and on 30 May 2023, SALA addressed a letter to the parties and the court enclosing a judgment granted by Cronje AJ on 2 May 2023 under case number 2672/2021 in the Free State Division Bloemfontein in Mafube Local Municipality v Municipal Workers’ Retirement Fund (“MWRF”) . The Municipality was the applicant in that application and was represented by the same firm of attorneys as in the present application. That matter was also referred to in the Municipality’s founding affidavit [7] in the context that the Municipality was in the process of making a similar application in the Free State Division. SALA contended that the judgment was crucial to a proper determination of the present application. [19] Despite the MWRF judgment having been delivered [8] well prior to the date on which this application was argued, the judgment was not brought to the attention of either SALA or the court, as it properly should have been. [20] The Municipality, by way of correspondence sought to distinguish MWRF on the facts. In relation to the second ground on which the Municipality’s case is based, the case advanced by the Municipality in MWRF pertaining to its intention to launch proceedings under s 153 is in substantially similar terms to its case in the present application. I have already referred to those broad averments. MWRF is thus not distinguishable or irrelevant as the Municipality contends and will be considered where appropriate. [21] The parties did not seek leave to deliver any supplementary heads of argument on the issue, nor were any delivered. [22] I turn to consider the issues. The relevant principles applicable to a stay of execution are enunciated in Ikamva [9] with reference to the relevant authorities . It is not necessary to repeat all of them, save where relevant in the present factual context. [23] As a starting point, execution must generally speaking be allowed. Courts however enjoy constitutionally supported inherent jurisdiction to control their own processes taking into account the interests of justice, affording a discretion which falls to be exercised judicially in light of the particular facts. [24] A distinction must be drawn between cases where an applicant is asserting a right and cases where it seeks to avert injustice. As held in Gois [10] and reiterated in Ikamva [11] , a court will be guided by considering the factors usually applicable to interim interdicts unless the applicant seeks to avert injustice. In the latter case, courts will generally grant a stay of execution if the applicant demonstrates that substantial justice requires it [12] or where an injustice [13] will result in if execution proceeds [14] . [25] In broad terms, the Municipality contends for a prima facie right to administer its finances in compliance with its statutory duties. In respect of the writ issue, the Municipality contends that it is invalid based on a jurisdiction issue and has approached a court to set it aside. In relation to the intervention and financial recovery plan issue, the Municipality contends that it is averting an injustice. [26] As held in Gois : ” (a) The court will be guided by considering the factors usually applicable to interim interdicts, except where an applicant is not asserting a right, but attempting to avert injustice. (b)The court must be satisfied that: (i) the applicant has a well-grounded apprehension that the execution is taking place at the instance of the respondent; and (ii) irreparable harm will result if the execution is not stayed and the applicant ultimately succeeds in establishing a clear right. (c) Irreparable harm will invariably result if there is a possibility that the underlying causa may ultimately be removed because it is the subject matter of an ongoing dispute between the parties. (d) The court is not concerned with the merits of the underlying dispute- the enquiry is simply whether the causa is in dispute”. [27] An important factor to consider is prejudice. It is well established that courts will generally grant a stay of execution where the underlying causa of a judgment debt is being disputed. [28] It is convenient to first deal with the intervention and financial recovery plan issue. I have already referred to the Municipality’s case on this issue, which is underpinned by the need to obtain interim relief pending proceedings to be instituted in terms of s 153 of the MFMA to avert a substantial injustice. [29] In MWRF , the applicant had on similar grounds brought an urgent application for the release of its funds from attachment and an interim interdict pending the filing of an application under s 153 of the MFMA within 90 days, the stay of the warrants should not be stayed and uplifted. That application was dismissed by Cronje AJ, who expressed severe criticism at the delaying tactics employed by the Municipality before 2017 and since 2021. The application was characterised as a repetition of those delaying tactics. Cronje AJ concluded that the Municipality had failed to meet any of the requirements for either the interim interdictory relief sought and had made out no case for final relief being the release of its funds from attachment. [30] Here, as in MWRF , the Municipality relied on the broad and unsubstantiated allegations referred to earlier in this judgment [15] . It failed to provide any cogent evidence pertaining to the financial recovery plan or any steps that have been taken in relation thereto.  There is merit in SALA’s contention that the Municipality failed to deal with all the relevant facts and that a misleading impression was created in the founding papers. [31] It is undisputed that no financial recovery plan has been implemented or approved and the remedy under s 153 of the MFMA is not presently at the Municipality’s disposal. That is expressly stated in the Municipality’s heads of argument. However, the case made out in the Municipality’s founding papers is predicated upon it obtaining interim relief pending an application in terms of s 153. I respectfully agree with the conclusion reached in MWRF that such application would be unsuccessful for failure to meet the jurisdictional requirements [16] . [32] During the hearing, the Municipality tendered that an order be granted directing the Municipality to provide a report regarding the recovery plan. Such last ditch attempt to overcome the deficiencies in its founding papers does not bear scrutiny and I decline to grant such an order. [33] In my view there is merit in SALA’s argument that in this context the application constitutes an abuse. Had the Municipality relied only on this ground for relief, the application would have been dismissed. [34] It is however also necessary to consider the writ issue. The requirements for interim interdictory relief are trite. They are: (i) a prima facie right, although open to some doubt; (ii) an injury actually committed or reasonably apprehended; (iii) a favourable balance of convenience; and (iv) the absence of any other satisfactory remedy available to the applicant. [35] In considering whether the Municipality has established a prima facie right it must demonstrate a prima facie right that is threatened by impending or imminent irreparable harm [17] . The disputes between the parties regarding whether the writ should be set aside are predicated primarily on a proper interpretation of various sections of the PFA, including ss 30M and 30O relating to jurisdiction and ancillary issues, including the non- joinder of the Pension Fund Adjudicator. [36] I am mindful that those issues will finally be determined by the court which hears Part B of the application. It is not appropriate to prejudge those issues in the present proceedings. It must also be taken into consideration that answering and replying affidavits must still be delivered in Part B and the papers are presently incomplete. [37] I intend to adopt the approach of Malan J in Johannesburg Municipal Pension Fund [18] in considering whether the Municipality has illustrated a prima facie right, although open to some doubt. It is only necessary for the Municipality to illustrate a prospect of success to meet that threshold. [38] Considering the facts and the issues raised, I am persuaded that there is a prospect of success and a serious issue to be tried in Part B of the application in relation to the setting aside of the writ of attachment. It cannot be concluded that the Municipality’s claim is frivolous or vexatious. It can also not be concluded that Part B of the application has no prospect of success, as SALA contends. [39] On the issue of irreparable harm, the Municipality’s version is undisputed. Its case is that if relief is not granted, it would not only hamper the Municipality in the execution of its functions, but would have a catastrophic effect on the citizens of the district as the Municipality would come to a standstill, because it would not be in a position to pay service providers rendering health, sewerage and sanitation services. There would be no money to pay staff salaries and the prejudice which would beset the community would be endless as it would be unable to purchase chemicals for water purification to address a serious pollution problem which exists and the community’s health and hygiene would be at risk. The Municipality’s average monthly revenue is some R12 million and its income substantially less. Reference is made to conditional grant funding of R5 million for a project to prevent further pollution of the Vaal River, which forms part of the funds attached by SALA. [40] Considering these undisputed facts, I am persuaded that the Municipality has illustrated an injury actually committed or reasonably apprehended, given SALA’s clear and ongoing expressed intention to levy execution. If it is found in Part B of the application that the registrar had no jurisdiction to issue the writ, irreparable harm and a real and substantial injustice would result if execution had been levied. [41] In considering the balance of convenience, it is necessary to balance the prejudice to SALA and its members against the potential prejudice to the Municipality and the community which it serves. SALA did not dispute the version of the Municipality pertaining to the severe detrimental effect execution would have on service delivery to the communities the Municipality serves were the execution to proceed. [42] It is clear that SALA’s rights as creditor are impugned and it is unable to invest the funds due to it to enhance the benefits of the member employees. However, those selfsame members will be prejudiced if the Municipality does not have sufficient funds to pay salaries to its employees or their current pension fund deductions. Moreover, the determination of the Pension Fund Adjudicator in favour of SALA has not been attacked and whatever the outcome of Part B of the application, the Municipality will still be obliged to pay its debt to SALA. It is undisputed that in terms of the PFA, such determination is afforded the status of a civil judgment. What tips the scales in the Municipality’s favour is the overwhelming public interests of the communities served by the Municipality. [43] I conclude, considering the undisputed facts and applying the relevant principles enunciated in Olympic Passenger Services [19] , that the balance of convenience favours the granting of relief. [44] The argument advanced by SALA that the Municipality has alternative statutory remedies at its disposal, is primarily advanced in opposition to the intervention and financial recovery plan issue. Its argument pertaining to the writ issue was that Part B of the application had no prospect of success and that the entire application was an abuse of process. [45] Considering that Part B of the application remains pending until adjudicated upon, I am persuaded that in the context of the writ issue, the Municipality has no alternative remedy at its disposal. [46] It follows that the Municipality has established the requirements for the interim interdictory relief sought on the writ issue. The question is whether, as SALA contends, the application constitutes an abuse [20] and the court should exercise its discretion against granting relief. [47] SALA argues that the rescission application (Part B) is only brought as a conduit for the present application and serves no legitimate of practical purpose but to halt compliance with the determination of the Pension Funds Adjudicator. It argues that the Municipality’s dereliction in its duties towards SALA and its employees who are members of SALA is grotesque and an attack on a litigant’s rights to enforce determinations of the Pension Fund Adjudicator, justifying the discharge of the rule nisi on this ground alone. [48] I am not persuaded that on the facts, it can be concluded at this stage that the application, including Part B, constitutes an abuse or that it is doomed to failure without resorting to speculation. The Municipality should be afforded the opportunity of fully ventilating Part B of the application in court. It is further possible to join further parties insofar as they have an interest in the proceedings and it cannot at this stage be concluded that the failure to join the provincial government is fatal to the Municipality’s case, as contended by SALA. [49] Importantly, a discharge of the rule nisi would render the relief sought in Part B moot, a factor which strongly militates against exercising the discretion in favour of SALA. In my view no cogent basis has been illustrated to dismiss the application on these grounds, as argued by SALA. [50] I conclude that the Municipality has established its entitlement to confirmation of the rule nisi. [51] I turn to the issue of costs. The Municipality argues that costs should follow the result. SALA argues that as the Municipality is seeking an indulgence it should bear the costs, even if interim relief is granted. [52] In my view there are circumstances which justify a deviation from the normal principle that costs follow the result. It cannot be concluded that SALA’s opposition to the application was unreasonable or in bad faith, given that it is seeking to protects its rights as judgment creditor [21] . [53] Given the particular facts and the supine approach adopted by the Municipality, I am of the view that it would be just to all parties to direct the costs of the application including the reserved costs of 14 March 2023 to be costs in cause in Part B of the application. [54] I grant the following order: [1] The rule nisi in prayer 2.1 of the order granted on 14 March 2023 by Adams J is confirmed; [2] The costs of the application, including the reserved costs of 14 March 2023 are to be costs in the cause in Part B of this application. EF DIPPENAAR JUDGE OF THE HIGH COURT JOHANNESBURG APPEARANCES DATE OF HEARING :                                      10 May 2023 DATE OF JUDGMENT :                                   27 June 2023 APPLICANT’S COUNSEL :                             Adv. LA Roux APPLICANT’S ATTORNEYS :                         Peyper Attorneys FIRST RESPONDENT’S COUNSEL :              Adv. K. Kabinde FIRST RESPONDENT’S ATTORNEYS :          Molatsi Seleke Attorneys [1] 108 of 1996 [2] No 53 [3] 24 of 1956 [4] 24 of 1956 [5] 108 of 1996 [6] 56 of 2003 [7] Deposed to on 10 March 2023 [8] On 20 April 2023 [9] MEC, Department of Public Works v Ikamva Architects 2022 (6) SA 275 (ECB) paras [81]-[90] and the authorities cited therein. [10] Gois t/a Shakespeare Pub v Van Zyl 2011 (1) SA 148 (LC) [11] Par [84] [12] Stoffberg NO and Another v Capital Harvest (Pty) Ltd [2021] ZAWCHC 37 at para [26] [13] Strime v Strime 1983 (4) SA 850 (C) 852A; [14] Para [82] [15] Paras [11]-[12] [16] Para [46] [17] MEC Northern Cape Provincial Governance and Traditional Affairs v The Renosterberg Local Municipality (803/2021) [2022] ZANCHC 34 (31 May 2022) paras [28]-[29] [18] Johannesburg Municipal Pension Fund and Others v City of Johannesburg 2005 (6) SA 273 (W) at 281-282 [19] Olympic Passenger Services v Ramlagan 1957 (2) SA 382 (D). [20] Solomon v Magistrate Pretoria & Another 1950 (3) SA 603 (W) 607F-H; Phillips v Botha [1998] ZASCA 105 ; 1999 (2) SA 555 (SCA) at 56 G-I [21] MEC: Northern Cape Provincial Government: Department of Cooperative Governance and Traditional Affairs and Another v The Renosterberg Local Municipality and Another (803/2021) [2022] ZANCHC 34 (31 May 2022) paras [11]-[23] sino noindex make_database footer start