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

The Municipal Employees Pension Fund had failed to file a notice of appearance to defend. The Municipal Employees Pension Fund (MEPF) has lost its bid to overturn a default judgment ordering it to pay the Ntabankulu Local Municipality about R5.1 million. The dispute dates back to September 2013, when 101 Ntabankulu municipal employees moved their membership from the South African Municipal Workers Union (Samwu) Provident Fund to the MEPF. Following the move, the municipality redirected the employees’ pension contributions to the MEPF. The arrangement was later challenged by the Samwu Provident Fund in the Gauteng High Court in Johannesburg, which found that the workers’ transfer to the MEPF was unlawful and invalid. As a consequence of that ruling, Ntabankulu was required to repay the affected employees’ outstanding pension contributions to Samwu for the period between September 2013 and June 2020. Ntabankulu Municipality seeks to recover shortfall The municipality paid R45.9 million (R45 968 219.20) to comply with the court order. The MEPF subsequently refunded the municipality R19.9 million (R19 928 666.19) for contributions it had received. However, Ntabankulu claimed that a further R5.1 illion (R5 127 149.63) remained outstanding and turned to the courts to recover the amount. Summons were served on the MEPF in March 2022, but the fund did not enter an appearance to defend the case. That failure resulted in a default judgment being granted in favour of Ntabankulu in September 2022. Despite receiving the judgment the following month, the MEPF waited until July 2023 before seeking to have it rescinded. The high court dismissed the rescission application although it allowed the MEPF to seek leave to appeal in the Supreme Court of Appeal (SCA). MEPF blames employee and investigation process The MEPF told the SCA on 20 May 2026 that the default judgment had been wrongly granted and put forward several possible defences. The fund claimed its failure to defend the municipality’s case was linked to an internal failure involving employee Juan Moodley, who had been instructed by MEPF officials to brief attorneys but failed to do so because of her hectic workload. The appellant also sought to explain why it took months to bring the rescission application. According to the MEPF, newly appointed strategic legal manager Merriam Cheue had to first investigate the matter, familiarise herself with its history and consult other employees before attorneys could be instructed. Cheue also had to reconcile financial information linked to Ntabankulu’s claim. The pension fund further disputed the municipality’s calculation of the amount it was seeking. It argued that the list of employees used in calculating the claim was incorrect and argued only 71 of the 101 workers were still active members of the MEPF. On that basis, the fund argued that it could not be held liable to repay more than the amount it had already returned to the municipality. Ntabankulu rejected the explanation, arguing that the MEPF had failed to provide a reasonable account of why it did not defend the original proceedings. The municipality further contended that the delay in seeking rescission was excessive. SCA rejects MEPF’s explanation SCA Judge Thokozile Mbatha, with two other judges concurring, dismissed the fund’s appeal in a judgment delivered on 28 August 2026. The court found there was no error in the granting of the default judgment because the MEPF had been properly served with the summons. Mbatha pointed out that the MEPF had failed to file a notice of appearance to defend the proceedings in the original dispute involving Samwu. “This absence was not due to any procedural irregularity on the part of Ntabankulu,” the judgment reads. The judge said the fund’s failure stemmed from internal “administrative failures” and “gross negligence”. “The reasons advanced by it for Ms Moodley’s failure to brief attorneys, due to her hectic schedule, do not amount to an election to be absent nor a failure of procedures that precluded it from participating in the proceedings. “Nothing procedurally precluded it from participating, instead, it simply failed to act,” Mbatha said. Court questions unexplained lack of action The SCA was also not persuaded that the MEPF had presented a sufficiently strong case for rescission. The court was equally critical of the fund’s explanation for the delay in bringing its rescission application. “The loss of memory on the part of all its employees and officials is unexplained and unpersuasive. “It is unimaginable that not a single employee or official of the MEPF remembered to enquire about the progress of the matter after receipt of the summons and the default judgment order.” Mbatha concluded that the pension fund could not blame Ntabankulu for its failure to participate in the proceedings. The SCA, therefore, dismissed the appeal and ordered the MEPF to pay the costs.