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[2012] ZAECPEHC 57
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Fritz v Fundsatwork Umbrella Pension Fund and Others (2323/2011) [2012] ZAECPEHC 57; 2013 (4) SA 492 (ECP) (28 August 2012)
IN THE HIGH COURT OF
SOUTH AFRICA
(EASTERN CAPE, PORT
ELIZABETH)
CASE NO: 2323/2011
Date
Heard: 21 June 2012
Date
Delivered:28 August 2012
REPORTABLE
In the matter between:
BELINDA FRITZ
...................................................................................................
Applicant
and
FUNDSATWORK UMBRELLA
PENSION FUND
...................................
First
Respondent
MOMENTUM GROUP LIMITED
.........................................................
Second
Respondent
RITA BERNADETTE FRITZ
...................................................................
Third
Respondent
RITA BERNADETTE FRITZ
N.O.
(o.b.o. the minor
child B M F)
............................................................
Fourth
Respondent
______________________________________________________________________
JUDGMENT
______________________________________________________________________
GOOSEN, J:
The applicant was
married in community of property to the late Stephen Fritz (“the
deceased”). Two children were born
of the marriage. On 17
October 1992 the marriage relationship between the applicant and the
deceased was dissolved by order of
this court. In terms of the
decree of divorce custody of the minor children born of the marriage
was awarded to the applicant
and the deceased was ordered to pay
maintenance for the two children as well as the reasonable medical,
dental and pharmaceutical
expenses incurred in respect of the minor
children. A division of the joint estate was ordered.
At the time of the
decree of divorce no order was made in respect of the applicant’s
interest in any pension interest which
had then or was to accrue to
the deceased.
The deceased
subsequently married the third respondent and a child, the fourth
respondent was born of the marriage. The deceased
died on 10 July
2009.
The applicant now seeks
a declaratory order that she is entitled to one half share of the
pension interest or benefit of the deceased
as at the date of the
granting of the decree of divorce, together with interest thereon
from the date of divorce to the date
of payment of such portion of
the pension interest.
The first respondent is
cited as being the pension fund which is alleged to hold the
deceased’s pension interest and the
second respondent is cited
as the administrator of said fund.
The first and second
respondents opposed the granting of the relief sought by the
applicant upon the basis,
inter alia
, that at the time of the
granting of the decree of divorce the deceased was not a member of
the first respondent pension fund
the deceased having become a
member of the fund only after the divorce order. Although a pension
interest was transferred to
the first respondent when the deceased
became a member of the fund it is not known what the status was of
any pension interest
held by the deceased as at the time of the
decree of divorce. The respondents also opposed the order sought on
the basis that
the divorce does not comply with the provisions of
the Divorce Act insofar as the respondents are concerned and is
accordingly
not enforceable against them.
The allegation that the
deceased was not a member of the first respondent at the time of the
divorce order is not disputed by
the applicant. Indeed, as is
apparent from the heads of argument filed on behalf of the
applicant, the applicant has “abandoned”
the relief it
sought against the first and second respondents although the
applicant persists in seeking the declaratory relief
set out in the
notice of motion. Notwithstanding the “abandonment” the
first and second respondents appeared at the
hearing by reason of
the fact that the applicant had, in “abandoning” against
the respondents made no tender as to
their costs. The third and
fourth respondents abide the decision of the court.
The applicant’s
application is founded upon the allegation that the deceased was, at
the time of the divorce, a member of
the first respondent pension
fund and had accrued a pension interest in said fund. This
allegation, it is now accepted, is incorrect.
The applicant however
persists in its motion for declaratory relief upon the basis that
when the deceased became a member of
the first respondent a pension
interest which had been accrued in a prior fund was transferred to
the first respondent. Accordingly,
it is suggested, there is
evidence to suggest that the deceased had been a member of a fund as
at the date of the decree of divorce.
On the basis that said pension
interest then formed part of the joint estate established by the
community of property regime
that applied to the applicant and
deceased’s marriage, the order of division of the estate
entitles the applicant to one
half share of the pension interest as
at that date.
It is necessary briefly
to set out the circumstances giving rise to this application.
1
As indicated the
deceased passed away on 9 July 2009. He was, at the time of his
death, a member of the first respondent pension
fund. Pursuant to
the rules of said fund a death benefit payable by the first and
second respondents became payable to the deceased’s
dependant
beneficiaries. On 18 March 2010 the applicant was informed that the
second respondent had resolved to pay out the deceased’s
death
benefit to his dependants and beneficiaries in the amount of 87% to
the third respondent and 13% to the fourth respondent.
On 23 March 2010 the
applicant obtained an interim interdict prohibiting the proposed
payment pending the institution of an application
for declaratory
relief. A final order was granted in May 2010 requiring the
institution of the application within 30 days of
the granting of the
order. This was not done. Instead the applicant apparently gave
consideration to the referral of a dispute
to the Pension Funds
Adjudicator.
On 4 August 2010 the
applicant’s attorneys addressed a letter to the respondents’
attorneys regarding the matter.
The reply suggested that the matter
had bee referred to the Pension Funds Adjudicator, although it
appears that this was not
so. A reading of the papers suggests that
the parties each believed that the other had or would refer the
matter.
In May 2011 the
applicant’s attorneys again made enquiries from the
respondents’ attorneys. The applicant was then
informed that
since no application had been made it was intended to make payment
of the balance of the death benefit to the beneficiaries.
An
undertaking was sought not to do so and when that was not given the
applicant launched a second application to interdict the
payment of
the benefits held by the respondents. An order was granted on 24
June 2011 and made final on 26 July 2011. This application
was
launched on 3 August 2011, pursuant to the latter order.
Although nothing turns
on the fact that the matter was not referred to the Pension Funds
Adjudicator the fact that it was not
gave rise to a delay in the
resolution of the dispute. In consequence the first interdict lapsed
and, it appears, the second
respondent effected payment of the
largest portion of the deceased’s death benefit to the third
respondent. It was not
suggested that this was in any way improperly
done. The effect of course is that the respondents’ only hold
a small portion
of the death benefit, namely a sum of approximately
R130 000.00 which represents the 13% due to the fourth
respondent.
Following argument of
the matter I raised with counsel the question whether the deceased
estate, as represented by the executor,
ought not to have been
joined in the application by reason of the executor’s clear
interest in the relief sought. Counsel
undertook to consider that
matter and, if so advised, to submit further written submissions
regarding this aspect. I was however
subsequently informed that both
parties did not consider that it was necessary to deal with the
aspect and accordingly no additional
submissions were presented. I
shall revert to this aspect briefly below.
As indicated, no order
was made pursuant to section 7(8) of the Divorce Act at the time of
granting the decree of divorce. In
now seeking the declaratory
relief the applicant relies upon section 7(7) of the Divorce Act
which provides that:
In the determination of
the patrimonial benefits to which the parties to any divorce action
may be entitled, the pension interest
of a party shall, subject to
paragraphs (b) and (c), be deemed to be part of his assets.
The amount so deemed to
be part of a party’s assets, shall be reduced by an amount of
his pension interest which, by virtue
of paragraph (a), in a
previous divorce –
Was paid over or awarded to another party; or
For the purposes of an agreement contemplated in
subsection (1), was accounted in favour of another party.
Paragraph (a) shall not apply to a divorce action in
respect of a marriage out of community of property entered into on
or after
1 November 1984 in terms of an antenuptial contract by
which community of property, community of profit and loss and the
accrual
system are excluded.
In
Sempapalele v
Sempapalele
2001(2) SA 313 (O) Musi J, after undertaking an
analysis of the import of section 7 of the Divorce Act, held (at 312
E –
H) that:
…
(A)
spouse seeking a share in the pension interest of the other spouse
must apply for and obtain an appropriate Court order during
the
divorce proceedings. This much is clear from the provisions of
ss(7)(a) which states:
‘
In
the determination of the patrimonial benefits to which the parties to
any divorce action may be entitled…’
The phrase ‘any
divorce action’ must mean any pending divorce action. This
conclusion is supported by the other provisions
of the section in
terms of which the various orders provided for must be applied for
and all granted by the Court hearing the divorce
case. (Compare
ss(2), (3), (4), (5), (6), (8)(a) and (9).)
To revert to the facts of
the instant case, the applicant failed (for whatever reason) to
obtain at the hearing of the divorce matter
a Court order awarding
her a share in the respondent’s pension interest in terms of s
7 of the Divorce Act. She cannot now
get such an order.
Musi J went on to find
that the applicant’s claim failed on another ground, namely
that she had failed to prove her claim,
including its quantum, on a
balance of probabilities.
In
Maharaj v Maharaj
and Others
2002 (2) SA 648
(D&CLD), Magid J expressed
disagreement with the finding in
Sempapalele
that a spouse
could not, after the finalisation of the divorce action, obtain an
order in terms of section 7(7) of the Divorce
Act. Magid J agreed
with the finding made in respect of the facts of the case,
suggesting that this was indeed the true
ratio
in
Sempapalele
, but went on to state (at 650J – 651A)
that:
“
..if
the learned Judge intended to hold that, if there is no reference to
a spouse’s pension benefit or interest in a divorce
order, the
other party to a marriage in community of property is forever
precluded from claiming to be entitled, as his or her
share of the
joint estate, to a half-share thereof, I am, with respect, unable to
agree with that view.”
The learned Judge found
that the section was inserted into the Act in order to rectify what
may have been regarded as an injustice
to a spouse who did not have
the pension interest and noted that subsection(7) deems the pension
interest to be part of the patrimonial
benefits and in so doing
applied to a marriage in community of property.
On this basis the
learned Judge found (at 651E) that:
In my judgment,
therefore, when the joint estate of spouses married in community of
property is to be divided it is proper to take
into account, as an
asset in the joint estate, the value of a pension interest held by
one of them as at the date of the divorce.
The effect of this
passage is that an order may be sought in terms of subsection (7)
even if a divorce order has already been
granted. There is however a
very important qualification, as is apparent from the quoted passage
itself. In the
Maharaj
matter the evidence indicated that
although there had been an order of divorce, division of the joint
estate had, as a matter
of fact, not yet occurred. In other words,
the determination of what constituted the joint estate and its
proper division between
the parties, as required by the decree of
divorce, still had to be undertaken, whether by agreement between
the parties or by
way of the appointment of a liquidator. In these
circumstances it is not surprising that the court in
Maharaj
came to the conclusion that a party may, in respect of an estate yet
to be divided, seek to give effect to subsection(7) even
after a
decree of divorce has been granted.
In the event that a
court orders division of a joint estate and the parties are not,
after such order is made, able to reach agreement
regarding the
division of the estate, the dispute may be resolved by the court
itself or by the appointment of a receiver or
liquidator who gives
effect to the division of the estate on behalf of the court (see
Gillingham v Gillingham
1904 TS 609
at 613;
Revill v
Revill
1969 (1) SA 325
(C)). In giving effect to the division of
the joint estate the court will, generally, apply the rules and
principles applied
to the dissolution of commercial partnerships
(see
Ex parte De Wet N.O.
1952 (4) SA 122
(O);
Van Onselen
NO v Kgengwenyane
1997(2) SA 423 (B) at 428). Whether the
division is effected by the court itself or by way of the
appointment of a receiver ort
liquidator, the court is exercising
its jurisdiction to determine the patrimonial benefits to which
parties are entitled upon
the dissolution of a marriage.
This, is my view brings
the process of giving effect to an order of division of the joint
estate by way of a subsequent appointment
of a receiver or by way of
the resolution of a dispute in relation to the division by the
court, squarely within the ambit of
section 7(7) of the Divorce Act
which speaks of determining the patrimonial benefits in a divorce
action. The definition of “divorce
action” which refers
to an action by which a decree of divorce
or other relief in
connection therewith
is applied for, is broad enough to cover
proceedings whereby the court exercises its supervisory jurisdiction
in relation the
division of a joint estate in the absence of
agreement between the parties.
It follows therefore
that I am in agreement with the view expressed by Magid J, namely
that until the joint estate is in fact
divided, whether by agreement
or otherwise, it is open to a court to make an order as envisaged by
section 7(7).
In this matter of course
different considerations apply. Here the evidence establishes that
the applicant and the deceased entered
into an agreement, apparently
to give effect to the order of division of the joint estate.
According to uncontested allegations
put up by the respondents a
written settlement agreement pertaining to the joint estate was
concluded between applicant and the
deceased in 1995. The agreement
is silent as to the pension interest but records agreement in
respect of the division of certain
movable and immovable assets held
in the joint estate.
The applicant does not
contest the allegation that the joint estate has in fact already
been divided pursuant to the order made
at the time that the decree
of divorce was granted. It must therefore be accepted that the
applicant and the deceased reached
agreement as to the manner in
which to divide their joint estate and divided it in accordance with
such agreement.
Leaving aside for the
moment the content of such an agreement and any disputes that may
arise in relation thereto, it seems to
me that when once a joint
estate has, a matter of fact been divided (whether by agreement or
otherwise), a court cannot then
grant an order in terms of section
7(7) of the Divorce Act. Where there is no longer a joint estate to
be divided an order the
effect of which is to “deem” a
pension interest to be part of the joint estate is not competent.
I need not consider what
the effect would be of a challenge to the terms of an agreement
regarding the manner of division of a
joint estate on the basis of
an alleged fraud or some other cognisable legal basis for avoiding
such agreement, since that is
not at issue in this matter. Nor need
I consider whether a division of a joint estate may be revisited on
the basis of the failure
(for whatever reason) to include certain
assets in the division which ought to have been included. In any
action or application
brought on such basis the erstwhile spouse and
party to the division of the estate would of necessity need to be
joined as a
necessary party. Where that party is deceased the
executor of the deceased estate would undoubtedly be a necessary
party. In
the circumstances of this matter the failure to join the
executor would be an insuperable obstacle to the grant of the relief
sought. I need, however, not take this aspect any further.
It follows from what I
have found above that the applicant’s application for
declaratory relief cannot succeed. In regard
to the question of
costs I did not understand counsel to argue that the costs should
not follow the result. The application was
founded upon a
misapprehension as to the facts regarding the deceased’s
membership of the first respondent. The delays
in the prosecution of
the application, although explained, had the effect that the largest
portion of the deceased’s death
benefit had already been paid
out by the time the application was made. The correspondence
addressed to the applicant’s
attorneys indicated that the
applicant’s claim was one to be pursued against the deceased
estate. These are all factors
which indicate that there is no reason
to exercise my discretion in favour of the applicant and not order
her to pay the costs
of the application.
I therefore make the
following order:
The application is
dismissed with costs.
G
GOOSEN
JUDGE OF THE HIGH
COURT
APPEARANCES
:
For applicant: Adv B.
Dyke instructed by
Howard Collen Attorneys
For 1
st
&
2
nd
respondents: Adv J Nepgen instructed by
Pagdens Attorneys
1
The
full circumstances appear from a reading of both the applicant’s
and respondents’ papers together with relevant
correspondence
annexed to the papers.