A retirement fund seeking to pursue a warrant of execution based on a determination by the Pension Funds Adjudicator must ensure it approaches the court with geographical jurisdiction over the matter.
This point was underscored by the High Court in Johannesburg when it set aside a warrant of execution that the South African Local Authorities Pension Fund attempted to enforce against Mafube Local Municipality in the Free State.
Mafube municipality was responsible for deducting pension fund contributions from its employees’ salaries and transferring these amounts to the SALA Pension Fund. But the municipality failed to forward these contributions over an extended period. This led the pension fund to refer the matter to the Pension Funds Adjudicator in August 2020.
The Adjudicator determined that the municipality had contravened section 13A of the Pension Funds Act (PFA), which mandates timely payment of retirement contributions, and ordered the municipality to pay R98 million in outstanding contributions.
Under section 30O(1) of the PFA, the Adjudicator’s determination has the same legal status as a civil judgment. The determination was subsequently made an order of the High Court in Johannesburg.
Following the court order, the SALA Pension Fund sought to enforce payment of the R98m. In February 2023, the Registrar of the Gauteng High Court issued a warrant of execution based on the adjudicator’s determination. The warrant authorised the Sheriff for the District of Heilbron (in the Free State) to attach the municipality’s bank accounts held with Absa, First National Bank, and Standard Bank.
The attachment involved freezing these bank accounts to secure the funds needed to satisfy the R98m debt. This legal mechanism allowed the retirement fund to prevent the municipality from accessing or dissipating the money in those accounts, ensuring it could be used to pay the outstanding contributions.
Mafube Local Municipality launched a two-part application to challenge the attachment. Part A was for an interim order to stay the warrant of execution pending the adjudication of Part B, which was to set aside of the warrant. The relief sought in Part A was granted in May 2023. The court heard Part B of the application in April this year.
Mafube municipality argued that the Gauteng High Court lacked jurisdiction to issue the warrant.
It relied on section 30M of the PFA, which stipulates that the Adjudicator’s determination should be referred to the clerk or registrar of the court with jurisdiction over the matter. Mafube contended that jurisdiction lies with the Free State High Court because the municipality is based in the Free State and the cause of action arose in the Free State, because the deductions and non-payments occurred within that province.
The SALA Pension Fund argued that section 30O(1) of the PFA allowed it to seek enforcement through the Gauteng High Court because the determination was made an order of that court.
The fund contended that Mafube’s application to set aside the warrant was misguided because it was framed as a rescission application. Rescission, under Rule 42(1)(a) of the Uniform Rules of Court or common law, applies to judgments or court orders, not to warrants of execution. The fund argued that the municipality failed to meet the requirements for rescission, such as demonstrating an error in the judgment or good cause for rescission.
The fund further argued that section 30M of the PFA allows the Adjudicator to decide which court has jurisdiction to enforce the determination. It asserted that the Adjudicator’s choice of the Gauteng High Court remained extant unless set aside by judicial review in terms of section 30P of the Act. By failing to pursue a review, the municipality was engaging in “self-help”, which is prohibited by the courts.
In response, Mafube argued that section 30O of the PFA does not explicitly address jurisdiction. It contended that the phrase “any court of law” should be interpreted to mean the court with jurisdiction over the matter based on its geographical nexus to the cause of action or the defendant’s residence.
Key phrase in section 30M
In his judgment, Judge Mokate Noko said section 30M(1) of the PFA is very specific that the determination should be referred to the clerk or registrar of the court that has jurisdiction over the lawsuit. The relevant portion of the section is “any court of law had the matter in question been heard by such court”. This should be interpreted to mean the court that would have been seized with the matter if it had not been referred to the Adjudicator.
Judge Noko said it is trite that a court has jurisdiction over a defendant who ordinarily resides or carries on business within its area of jurisdiction or if the cause of action arose within its area of jurisdiction. In this case, the cause of action arose in the Free State and the applicant carries its business in the said province. Therefore, the court with jurisdiction is the Free State High Court and not the Gauteng Division.
He set aside the warrant of execution issued by the registrar of Gauteng High Court.
