Metal Industries Provident Fund v TK Office Supplies (Pty) Ltd t/a Tirade Props 1140 CC and Another (4624/2020) [2021] ZAFSHC 163 (7 July 2021)

IN THE HIGH COURT OF SOUTH AFRICA,

FREE STATE DIVISION, BLOEMFONTEIN

Reportable: YES/NO

Of Interest to other Judges: YES/NO

Circulate to Magistrates: YES/NO

Case number: 4624/2020

In the matter between:

METAL INDUSTRIES PROVIDENT FUND

Applicant

And

TK OFFICE SUPPLIES (PTY) LTD

1st Respondent

t/a TIRADE PROPS 1140 CC

JAN JOHANNES BLIGNAUT

2nd Respondent

HEARD ON: 25 MARCH 2021

JUDGMENT BY: DANISO, J

DELIVERED ON: This judgment was handed down electronically by circulation to the parties' representatives by email and by release to SAFLII. The date and time for hand-down is deemed to be 15H30 on 07 July 2021

[1] The applicant is a pension fund organization established to administer monthly contributions deducted from members’ salaries together with their employers’ contributions to set up a retirement income for the members as envisaged in section 1 of the Pension Funds Act[1] (“The PFA”).

[2] The applicant alleges that the first respondent is a company and a participating employer in the pension fund. Accordingly, in terms of section 13A (1) and (2) of the PFA read with Regulation 33 of the Pension Fund Regulations the first respondent is obliged to pay the monthly contributions and also submit a record of the contribution schedules to the applicant.

[3] The applicant submits that the first respondent has contravened the provisions of section 13A in that it has failed to pay over the contributions to the applicant and is currently in arrears in the amount of R2 672 509.46. The first respondent has also neglected to submit the contribution schedules for the period November 2009, February 2010, April 2010, October 2010, March 2011, June 2011, February 2013, May 2018, December 2019, February 2020 and August 2020.

[4] The applicant initially sought an order against both the respondents on the following terms: in prayer 1, the respondents to furnish the applicant with the overdue contribution schedules; in prayer 2, to pay the arrear contributions in the sum of R2 672 509.46 together with interest thereon; and in prayer 3, to pay a further amount to be determined once the respondents have submitted the outstanding contribution schedules, prayer 4 is an alternative to prayer 2, the applicant be authorized to approach the court on the same papers, as supplemented to seek payment once the amount due has

been quantified and lastly, the respondents to pay the costs of this application on the scale of attorney and own client.

[5] At the hearing of the matter, the application against the first respondent was postponed by agreement till 24 March 2022 pending the finalization of the business rescue proceedings. The applicant tendered the wasted costs occasioned by

the postponement.

[6] The application against the second respondent is premised on the basis that the second respondent as the director of the first respondent is personally liable for the first respondent’s non-compliance with the requirements of section 13A.

[7] The second respondent opposes the application on points in limine: the non-joinder of the business rescue practitioner (“the BRP”), the mis-joinder of the second respondent and the

illiquidity of the claimed amounts.

[8] The second respondent contends that the first respondent was placed under business rescue on 22 February 2013 consequently Mr Jacobus Kritzinger was appointed as a business rescue practitioner. In terms of section 140 (1) (a) of the Companies Act[2] (“The Act”) the BRP assumes the full management control of the company during the business rescue proceedings relieving the director of his

responsibilities in that regard. Therefore, the BRP has a direct and substantial interest in the matter, he should have been joined as a party to these proceedings. The second respondent should not have been joined as his responsibility to exercise any management control of the company and its financial affairs was transferred to the BRP.

[9] As regards the alleged illiquidity of the claims. The second respondent avers he is not liable to make the payment claimed by the applicant due to the fact that the debt has been compromised as it was allegedly due before the rescue proceedings commenced and it is also based on an amount which is unquantified, there is no evidence as to how the amount and the interest claimed is arrived at.

[10] The provisions of section 13A place the responsibility to pay the contributions and to submit the contribution schedules to the pension fund on the employer. The obligation is also derived from an employment contract between the employer and the employee. Business rescue proceedings have no effect on employment contracts.[3] It can therefore not be said that the BRP has a direct and substantial interest in this matter.

[11] During a company’s business rescue proceedings a director continues to exercise his functions as a director, except that he is subject to the authority of the BRP.[4] Section 13A (8)(a) of the PFA imposes the consequences of non-compliance with section 13A on the director of the company. The second respondent has a direct and substantial interest which may be affected prejudicially by the judgment of this court.[5] There is no merit to these objections, they are accordingly dismissed.

[12] The applicant concedes that the claim in prayer 2 has not been quantified. It is the applicant’s submission that the amount can only be determined upon receipt of the outstanding contribution schedules and it is in that regard that the applicant seeks an order in the alternative that the order for the payment due in this regard be stayed pending the receipt of the contribution schedules. The amount of R2 672 509.46 has been properly quantified based on the contribution schedules submitted by the respondents, Annexure “OG6” as attached on the applicant’s founding affidavit. The compound interest payable on late contribution payments is prescribed by the PFA, section 13A (7).

[13] The applicant’s stance is that except for the unsustainable preliminary objections the second respondent has to proffer a defence to the applicant’s claim. The applicant is accordingly entitled to the relief sought.

[14] I’m in agreement with the applicant’s contentions and it is on that basis that I make the following order;

(1) The application against the first respondent is postponed till 24 March 2022. Applicant to pay the wasted costs occasioned by the postponement.

(2) The second respondent is ordered to furnish the applicant with the outstanding contribution schedules for the period November 2009, February 2010, April 2010 to October 2010, March 2011, June 2011 to February 2013, May 2018 to December 2019 and February 2020 to August 2020.

(3) The applicant is granted leave to approach this court on the same papers, as supplemented for the payment of the arrear contributions pertaining to the outstanding contribution schedules once the amounts have been quantified.

(4) The second respondent to pay the amount of R2 672 509.46 together with the prescribed interest.

(5) The costs in this regard shall be paid by the second respondent.

NS DANISO, J

APPEARANCES:

Counsel on behalf of Applicant: Adv. K. Magan

Instructed by:

Soonder Inc.

C/O EG Cooper Majiedt Inc.

BLOEMFONTEIN

Counsel on behalf of Respondents: Adv. R van der Merwe

Instructed by:

Honey Attorneys

[1] Act No. 24 of 1956.

[2] Act No. 71 of 2008.

[3] Section 136(1) & 144 supra.

[4] Section 137 (2) (a) supra

[5] Bowring NO v Vrededorp Properties CC 2007 (5) SA 391 at paragraph 21.