Staff Reporter
The Free State High Court has shot down a desperate attempt by a local municipality to stop the attachment of its bank account to recover a staggering R26 million owed to an employee retirement scheme.
Kopanong Local Municipality – which administers the towns of Edenburg, Bethulie, Jagersfontein, Reddersburg, Springfontein and Trompsburg – has been failing to remit staff contributions to the Municipal Workers Retirement Fund, resulting in marathon legal battles over the massive arrears dating back to 2016.
In the latest court episode, the municipality lodged an application seeking an interdict to set aside two orders to attach its bank account.
The Municipal Workers Retirement Fund, the Sheriff of the High Court for Trompsburg/Smithfield and First National Bank were cited as the first, second and third respondents.
First, in June 2016, the fund obtained a court order against the municipality for payment of the amount of R1 208 996.61 in respect of arrear pension contributions.
During November 2019, the fund obtained another order for payment of further arrear contributions against the municipality for the amount of R1 996 716.01.
The municipality also had to pay interest on these two amounts, as well as costs.
In October 2017, the fund obtained another order against the municipality for payment of the amount of R6 505 277.04 plus interest and costs.
The municipality did not honour that order, forcing the fund to issue a writ of execution that saw the council’s movables being attached.
A day before the sale in execution, the municipality brought an application for the setting aside of the writ and certain other relief.
The municipality was successful in the application.
That application was however dismissed on appeal to the full bench during September 2019.
The municipality was ordered to pay the costs of the application and the costs of the appeal.
In June 2020, the court made another order against the municipality in favour of the fund for non-payment of contributions amounting to R19 908 149.91, plus interest and costs.
A warrant of execution was granted and the sheriff attached the movable goods in terms of this writ during July 2020.
At the time of that attachment, the municipality had already fallen in arrears, resulting in yet another application having to be issued.
In November 2020, the court made another order against the municipality in favour of the fund for non-payment of contributions totalling R4 288 938.30, plus interest and costs.
Pursuant to this order a warrant of execution was issued which was served on the municipality during April 2021, resulting in Kopanong’s bank account being attached.
This then compelled the municipality to approach the court to see to the release of the bank account.
Kopanong claimed it was not in a position to clear the arrears in one single payment as per the court orders due to “financial challenges which have negatively impacted on its financial sustainability and delivery of basic services”.
The municipality, which has a monthly salary bill amounting to about R10.5 million and operational costs in the vicinity of R7 million among other expenses, argued it did not receive sufficient income from its own revenue streams to see to its obligations.
It told court that it had no large businesses or industries and therefore relied largely on household consumers to finance its operations.
The municipality further stated that as a result of the COVID-19 pandemic, it had suffered an estimated 40 percent decline in collected revenue since the initial lockdown period.
However, in a ruling handed down recently, Judge FF Hefer dismissed Kopanong’s latest application, meaning the attachment of the municipality’s bank account would proceed in order to offset the R26 million due to the pension scheme.
The judge lambasted the municipality for continuously defaulting on remitting staff pension contributions and failing to honour payment arrangements with the third parties.
Hefer said the municipality had not done anything significant since 2016 to ensure the payments were made on time.
“It is the municipality’s case that an injustice will be done or that there is an apprehension of injustice should the relief sought not be granted,” the judge said.
“On the facts before me, however, there is nothing to show that since the two orders (were) granted, the first being the order during June 2016 and the next during June 2020 . . . as well as an order in 2021, the municipality has taken any steps as provided for in the legislation.
“The municipality has been in almost continuous breach of paying monthly contributions to the fund . . .
“At various times during the past six years the courts have been making orders which have simply not been complied with.
“The municipality is in continuous breach of its statutory duty.
“As pointed out by the (Municipal Workers Retirement Fund), the failure to make (the) contributions on behalf of its members causes severe prejudice to the fund and its members . . .
“Up to date, the municipality has failed to show that it had even attempted to deal with the considerable amounts due to the fund in budgetary context or to obtain additional funds.”
The municipality’s application was dismissed with costs.
