The Johannesburg High Court has set aside a R98-million warrant of execution against the troubled Mafube Local Municipality in Free State.
The case stemmed from pension fund contributions that were deducted from employees’ salaries but not paid to the South African Local Authorities Pension Fund (SALPF).
The municipality defaulted on these payments over time, forcing the pension fund to approach the Pension Funds Adjudicator, who ruled in August 2020 that the municipality had contravened Section 13A of the Pension Funds Act.
The municipality was then ordered to pay R98-million.
In February 2023, the Sheriff of Heilbron acted on the writ and attached the municipality’s bank accounts held with Absa, First National Bank and Standard Bank. But the municipality challenged this writ on the basis of jurisdiction and won the case.
“The applicant referred to section 30M of the Pension Funds Act, in terms of which the adjudicator is entitled to refer his findings together with the reasons to the clerk or the registrar of the court which has jurisdiction over the matter.
“In this instance, the registrar of this court does not have jurisdiction as the applicant is a resident within the area of jurisdiction of the Free State High Court, and not within the jurisdiction of the Gauteng High Court. To this end, counsel argued, the warrant of the execution issued at this court should be set aside and be declared pro non scripto,” reads the judgment.
As the municipality is located in the Free State, Judge Mokate Victor Noko agreed that this placed the matter outside the Gauteng court’s jurisdiction.
However, the court criticised the handling of the matter. The municipality’s legal team filed their heads of argument late, claiming recent changes in attorneys and confusion over the hearing date. Noko found these explanations lacking and described the municipality’s conduct as an unreasonable delay.
Although the warrant has now been invalidated, the underlying debt remains. Noko said the municipality had the option to challenge the adjudicator’s determination through proper legal channels, but failed to do so.
“In the premises, the ineluctable conclusion is that the registrar has no jurisdiction and therefore the warrant issued is susceptible being set aside,” said Noko.
In March, Parliament’s select committee on cooperative governance and public administration expressed shock after discovering that the municipality owes the SALPF and Municipal Workers Retirement Fund (MWRF) about R200-million.
The community expressed concern that this would “deny municipal workers their retirement benefits on their retirement and render them unable to access the government’s two-pot retirement scheme”.
The committee said this is unacceptable and called on the municipality to address it as a matter of urgency.
In January, the Bloemfontein High Court ordered the municipality, four municipal officers, and the administrator appointed to clear up its finances to pay more than R14-million, plus interest, to the MWRF.
