R5m bill stays after pension fund’s ‘gross negligence’ sinks appeal in SCA

The Municipal Employees Pension Fund (MEPF) lost its bid to overturn a default judgment that ordered it to pay the Ntabankulu Local Municipality approximately R5.1 million. The dispute began in September 2013, when 101 municipal employees transferred their membership from the South African Municipal Workers Union (Samwu) Provident Fund to the MEPF.

Consequently, the municipality redirected pension contributions to the MEPF. The Gauteng High Court found the transfer unlawful, requiring the municipality to repay the employees' outstanding pension contributions to Samwu. The MEPF refunded the municipality for contributions it had already received, but Ntabankulu claimed a further R5.1 million remained outstanding.

Despite receiving the default judgment from the high court, the MEPF waited until July 2023 to request rescission, which was dismissed. The pension fund claimed an internal failure and an employee's workload prevented them from defending the case, while the municipality stated the delay was excessive. The Supreme Court of Appeal dismissed the MEPF's appeal, ruling there was no error in the default judgment as the fund was properly served.

They criticized the MEPF's lack of a strong case for rescission and the unconvincing explanation for the delay in bringing the application.