A warning to all maintenance court officials

September 1st, 2014

Mthimunye v Minister of Justice and Constitutional Development and Others (GP) (unreported case no 61876/2012, 9-5-2014) (Hiemstra AJ)

By Naleen Jeram

The High Court in Mthimunye v Minister of Justice and Constitutional Development and Others (unreported case no 61876/2012, 9-5-2014) (GP) (Hiemstra AJ) handed down a far-reaching judgment affecting the rights of maintenance creditors. The issue in dispute was the negligent conduct of the maintenance officials at a particular magistrate’s court which resulted in the plaintiff (the mother of the children entitled to the maintenance benefit) not being able to attach a pension benefit paid to the debtor (the father). This note briefly examines the significance of the judgment and its practical consequences.

The plaintiff sued the Minister of Justice and Constitutional Development (first defendant) in his capacity as political head of the Department of Justice, and the National Prosecuting Authority (second defendant) in its capacity as the employer of the various maintenance officers that dealt with the matter (fourth, fifth, sixth, and seventh defendants respectively). The plaintiff’s claim was based on the fact that the maintenance officers, acting in the course and scope of their employment, had negligently and unlawfully failed to take steps in terms of the Maintenance Act 99 of 1998 to attach a pension benefit in order to secure a valid maintenance claim.

In order to understand the impact of the judgment, it is necessary to sketch briefly the facts giving rise to the claim.

The father was employed as a teacher and was required to pay maintenance to the plaintiff in respect of his two minor children. In about 2006, the father resigned from his employment and was entitled to a pension benefit payable by his pension fund. According to the plaintiff, she had on numerous occasions informed the maintenance officers that the father had resigned and was entitled to a benefit payable by the fund.

Thereafter, she approached a senior magistrate at the court to ensure that her claim was prosecuted and that the pension benefit was attached. However, she was erroneously informed by the magistrate that pension benefits were not capable of attachment.

From the judgment, it is not clear why the maintenance inquiry was not finally resolved, but on 6 June 2006 a criminal case was enrolled in respect of the arrear maintenance liability. This matter was postponed on several occasions. The magistrate recorded that the father had failed to pay maintenance as he was awaiting his pension benefit but at that stage arrear amounts had been paid in full. As a result, the matter was withdrawn by the state. It subsequently emerged that this was also incorrect in that the debtor was still R 900 in arrears.

The plaintiff had on several occasions requested the various maintenance officers at the court to attach the pension benefit in order to secure her claim. During the evidence of the maintenance officials, it emerged that they were not fully aware of the remedies available in terms of the legislation with regard to the attachment of pension benefits. Moreover, it appeared as if the maintenance officials were under the impression that the father, on receipt of his pension benefit, would settle the arrear maintenance amounts. The maintenance officials could also not provide an explanation as to why criminal proceedings had been instituted instead of using the extensive civil remedies provided for in legislation.

By March 2007, the father’s bank account was in overdraft. It emerged that he had made 24 withdrawals ranging from R 2 000 to R 8 000 and all of these withdrawals were made at the automatic teller machine at the Carousel Sun Casino. Hereafter, another criminal inquiry was held and on 28 October 2009 he was convicted of the criminal offence for failing to pay maintenance. At that stage, the arrear maintenance amounted to R 24 500. He was sentenced to a fine of R 2 000 or 2 years’ imprisonment. However, the court further ruled that the arrears of R 24 500 were ‘written off’. No reasons were provided as to why these amounts were written off. Thereafter, no steps were taken by the state to appeal the ruling nor was the decision reviewed. As a result, the plaintiff could not recover the arrear maintenance owed.

Hiemstra AJ was not satisfied with the conduct of the various maintenance officials and outlined the various statutory duties placed on them. The court concluded that the maintenance officials had been grossly negligent. As a result, the plaintiff had suffered pure economic loss in the amount of the arrear maintenance due of R 24 500. The court concluded that, as a team of maintenance officers, they had neglected to take steps provided for in legislation and consequently, the employer, and the Minister of Justice were held liable for their unlawful and negligent omissions. The court, in this instance, opted not to make any orders against the maintenance officers in their personal capacities.

This ruling should send a clear message to all maintenance officials to remind them of their important duty to implement and fulfil the maintenance rights of the various maintenance creditors.

Retirement funds: Benefits payable on termination

In the context of retirement funds, benefits payable by employment-based pension or provident funds are normally payable on the termination of the employment contract. In terms of our law, it is well established that a pension benefit may be attached in order to secure a claim for arrear maintenance. Our courts have expanded this right and held that a pension benefit may also be attached to secure a future maintenance claim of the creditor, where there is a reasonable fear that the debtor may default on his or her future payments (see Mngadi v Beacon Sweets and Chocolates Provident Fund and Others [2003] 7 BPLR 4870 (D), Magewu v Zozo and Another [2003] 7 BPLR 4859 (C), Soller v Maintenance Magistrate, Wynberg and Others [2006] 1 BPLR 53 (C), and Burger v Burger and Another [2007] 2 BPLR 50 (D)).

Where orders are to be made against retirement funds, the fund/s must be clearly identified and the amount to be attached must be specified. It must also be noted that the maintenance amount deducted from the pension benefit payable by the fund is subject to tax. More-over, the method of payment (whether payment should be made to the court or some other mode of payment) should be contained in the order. The common practice is for the fund to pay the maintenance ordered as a capitalised lump sum to the court, which in turn, pays the maintenance creditor on a monthly basis.

Maintenance officers or debtors and their representatives, in any maintenance inquiry, can contact retirement funds or their administrators directly to establish membership and current benefit values. It is important to note that a private retirement fund is a separate juristic person and registered as such in terms of s 4 of the Pension Funds Act 24 of 1956 (and State funds are established in terms of various Acts of Parliament). The participating employer in the fund (the employer of the debtor) is a distinct separate entity from the fund and hence any order made against the employer is not binding on the fund.

The practical difficulty facing many maintenance claimants (unlike the plaintiff in this case) is that often they are not aware that the member (maintenance debtor) has left service and is entitled to a benefit payable by the retirement fund. Where a maintenance inquiry is in progress or about to be instituted, and the member has left service, the maintenance creditor may then request the fund to withhold the benefit pending the outcome of the inquiry. Opinion is divided on whether the fund may legally withhold the benefit in these circumstances. On the strength of rulings by the courts in accepting that there can be a claim for future maintenance (including the strong emphasis on courts taking all possible steps to protect the rights of children) and the approach taken by the courts and the Pension Funds Adjudicator on the issue of withholding of benefits to secure the employer’s claims pending civil or criminal proceedings, one can make a compelling argument supporting the withholding of the benefit pending the maintenance inquiry. Thus, maintenance creditors, to secure any future order granted by the court, may request the fund to withhold the benefit.

Maintenance officials and maintenance claimants should familiarise themselves with the legal requirements relating to the attachment of pension benefits. The failure to do so on the part of maintenance officials may result in adverse consequences for the maintenance officials personally and their respective employers.

Naleen Jeram BA LLM (UCT) is a senior legal adviser at a long-term insurer and an Adjunct Professor at the University of Cape Town.

This article was first published in De Rebus in 2014 (Sept) DR 43.