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[2021] ZAGPJHC 444
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M v SALA Pension Fund (2021/5781) [2021] ZAGPJHC 444 (31 August 2021)
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IN THE HIGH COURT OF
SOUTH AFRICA
GAUTENG LOCAL
DIVISION, JOHANNESBURG
CASE NUMBER:
2021/5781
REPORTABLE: NO
OF INTEREST TO OTHER
JUDGES: NO
REVISED: YES
31 AUGUST 2021
In the matter between:
M[....]1
M[....]2 E[....] M[....]3
Applicant
(Identity
Number: [....])
and
SALA
PENSION
FUND
Respondent
JUDGMENT
DE WET AJ:
1.
This is an application in terms whereof the
applicant, the former spouse of Mr H[....] Z[....] T[....] (“the
deceased”),
seeks an order against the respondent, the South
African Local Authorities Pension Fund, a pension fund organisation
registered
in terms of
section 4
of the
Pension Funds Act, 27 of
1956
:
1.1
Declaring that she is entitled to 50% of
the deceased’s pension interest which accrued to him at the
date of divorce between
the applicant and the deceased, in terms of a
decree of divorce dated 2 March 2000, which incorporated the terms of
a settlement
agreement entered into between them (“the court
order”);
1.2
declaring that the court order dated 2
March 2000 is binding on the respondent;
1.3
directing the respondent to pay 50% of the
deceased’s pension interest accrued at the date of divorce to
the applicant;
1.4
directing the respondent to disclose the
names of the beneficiaries to whom the respondent had paid the
pension fund interest consequent
upon the deceased’s death;
1.5
costs of the application in the event that
the application is opposed.
2.
The applicant did not in her heads of
argument or in argument persist with her claim that the respondent
disclose the names of the
beneficiaries to whom the respondent had
paid the pension fund benefit consequent upon the deceased’s
death. It appeared
however, during the respondent’s argument,
that she is aware of who the beneficiaries are. Accordingly, it is
not necessary
to decide this issue.
3.
The applicant and the deceased were
formerly married to one another in community of property, which
marriage was dissolved by decree
of divorce issued by the Central
Divorce Court, held at Vereeniging, on 2 March 2000 under case number
7351/99 (hereinafter referred
to as “the court order”).
The deceased, during his life, was a member of the South African
Police Force and as a result
he was a member of the South African
Local Authorities Pension Fund.
4.
The relevant portion of the settlement
agreement, which settlement agreement was in manuscript, was
incorporated in the court order,
reads as follows:
“
2.
50% (half)
the pension fund
of the Defendant
accruing
from the date of divorce to the date of payment
is awarded to the Plaintiff – the endorsement should
be entered on the pension records to that effect.
”
(own emphasis)
5.
The issues herein are to be determined
against the following statutory context.
5.1
The Divorce Act, 70 of 1979 (the
“
Divorce Act&rdquo
;)
5.1.1
In terms of
section 1
of the
Divorce Act:
5.1.1.1
’
pension
fund’ means a
pension fund as defined in
section 1(1)
of the
Pension Funds Act, 24
of 1956
5.1.1.2
’
pension interest’, in
relation to a party to a divorce action who-
(a)is a member of a
pension fund (excluding a retirement annuity fund), means the
benefits to which that party as such a member
would have been
entitled in terms of the rules of that fund if his membership of the
fund would have been terminated on the date
of the divorce on account
of his resignation from his office:”
5.1.2
Section 7(7)(a)
reads as follows:
“
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
.
”
5.1.3
Section(7)(8) reads as follows:
“
(8)
Notwithstanding the provisions of any other law or of the rules of
any pension fund-
(a)
the court granting a decree of
divorce in respect of a member of such a fund, may make an order
that-
(i)
any part of the
pension
interest
of that member which,
by virtue of subsection (7), is due or assigned to the other party to
the divorce action concerned, shall
be paid by that fund to that
other party when any pension benefits accrue in respect of that
member;
(ii)
the registrar of the court in
question forthwith notify the fund concerned that an endorsement be
made in the records of that fund
that that part of the pension
interest concerned is so payable to that other party and that the
administrator of the pension fund
furnish proof of such endorsement
to the registrar, in writing, within one month of the receipt of such
notification;”
5.2
The Pension Funds Act, 24 of 1956 (the
“
Pension Funds Act”
>)
5.2.1
A
dependant
of a member of a pension fund is defined in
section 1
of the
Pension
Funds Act as
, in relation to a member, a person in respect of whom
the member is legally liable for maintenance, or in respect of whom
the member
is not legally liable for maintenance, if such person was,
in the opinion of the board, upon the death of the member in fact
dependent
on the member for maintenance, is the spouse of the
member;
or is a child of the member.
5.2.2
The relevant sections of the
Pension Funds
Act read
as follows:
“
37C
Disposition of pension benefits upon death of member
(1)
Notwithstanding anything to the
contrary contained in any law
or
in the rules of a registered fund,
any
benefit
...
payable
by such a fund upon the death of a member, shall,
...
not form part of the assets
in the estate of such a member, but shall be dealt with in the
following manner
:
(a)
If the fund within twelve months of
the death of the member becomes aware of or traces a
dependant
or dependants of the member, the benefit shall be paid to such
dependant or, as may be deemed equitable by the fund, to
one of such
dependants or in proportions to some of or all such dependants.
”
(own
emphasis)
5.2.3
Section 37D
makes provision for certain
deductions from pension benefits. The relevant portions read:
“
37D
Fund may make certain deductions from pension benefits
(1)
A registered fund may-
(a)
…
(b)
…
(c)
…
(d)
deduct from a member’s or
deferred pensioner’s benefit, member’s interest or
minimum individual reserve, or the
capital value of a pensioner’s
pension after retirement, as the case may be-
(i)
any amount assigned
from such benefit or individual reserve to a
non-member’s spouse
in
terms of a decree granted under section 7(8)(a) of the Divorce Act,
1979 (Act No. 70 of 1979)
or in
terms of any order made by a court in respect of the division of
assets of a marriage under Islamic law pursuant to its dissolution;
…
(4)
(a) For purposes of section 7(8)(a) of
the Divorce Act, 1979 (Act No. 70 of 1979), the portion of
the
pension interest assigned to the non-member spouse in terms of a
decree of divorce or decree for the dissolution of a customary
marriage is deemed to accrue to the member on the date on which the
decree of divorce or decree for the dissolution of a customary
marriage is granted, and, on the written submission of the court
order by the non-member spouse-
(i)
must be deducted by
-
(aa)
the pension fund
or pension funds named in or unidentifiable from the decree
;
(bb) the pension funds or
pension funds to which the pension fund referred to in item (aa)
transferred the pension interest referred
to in the decree;
(ii)
must be deducted on the date on which an
election is made or, if no election is made within the period
referred to in paragraph
(b)(ii), the date on which that period
expires; and
(iii)
must reduce the member’s accrued
benefits or minimum individual reserve at the date of the decree.
(b)
(i) The pension fund
must, within
45 days of the submission of the court order by the
non-member spouse, request the non-member spouse to elect if the
amount to
be deducted must be paid directly to him or her, or if it
must be transferred to a pension fund on his or her behalf.
(ii)
The non-member spouse must within 120 days of being requested to make
an election-
(aa)
inform the pension fund of how the amount referred to in subparagraph
(i) must be dealt with; and
(bb)
if he or she elects that the amount must be paid to him or her
directly, provide the pension fund with the details of how that
payment must be effected; or
(cc)
if he or she elects that the amount must be transferred to a pension
fund on his or her behalf, provide the pension fund with
the details
of that pension fund.
(iii)
The pension fund must pay or transfer the amount within 60 days of
being informed
of how the amount must be dealt with in accordance
with the non-member spouse's election.
(iv)
In the event that the non-member spouse
fails to make an election or identify the pension fund to which the
amount should be transferred
within the period referred to in
subparagraph (ii), the pension fund must pay the amount directly to
the non-member spouse within
30 days of the expiry of that period.
(v)
Despite subparagraph (iv), in the event
that the pension fund cannot reasonably ascertain how the payment to
the non-member spouse
must be effected, the pension fund must retain
the amount and any fund return referred to in paragraph (c) (ii) in
the pension
fund until such time as details of how that payment must
be effected is made available to the pension fund by the member, the
non-member
spouse or any other person.
(c)
A non-member spouse-
(i)
is not a member or beneficiary in relation to the pension fund; and
(ii)
is entitled to the accrual of fund return from the date of the
deduction contemplated
in paragraph (a) (ii) until payment or
transfer thereof, but not to any other interest or growth."
(own emphasis)
6.
The applicant did not attempt to enforce
her rights in terms of the court order until the passing of the
deceased, almost twenty
years after the date of divorce. The
applicant was not a dependant of the deceased at the time of the
deceased’s passing.
7.
After the passing of the deceased the
applicant approached the respondent and demanded her portion of the
deceased’s pension.
The applicant explains in an
affidavit, which is dated 3 September 2020 and which was prepared in
support of a claim submitted
by her former attorneys of record, Frans
Mashele Incorporated, to the respondent, that at the time of her
divorce and signing of
the settlement agreement she had not been
informed by her attorney that the full pension fund details had to be
incorporated into
the Settlement Agreement in order for her to have a
claim against the pension fund. She further explained that she
delayed
in claiming her entitlement as she and the deceased had
agreed that she would produce the settlement agreement to the fund
administrators
upon him going on pension. This did not realize
as he passed whilst still in service.
8.
The applicant testified that she submitted
her claim to the respondent, that correspondence was exchanged
between her and the administrators
of the respondent, subsequent to
which her claim was rejected on the grounds more fully set out
hereunder. The applicant
took various steps and approached
inter alia
the administrators of the respondent as well as the Family Court,
Johannesburg for assistance.
9.
The applicant approached Mr Richard
Maluleke, the assistant registrar of the Family Court of
Johannesburg, on 5 August 2020 for
assistance after she had been
informed by the respondent that she had to amend the court order to
include the name of the respondent.
Mr Maluleke in a letter addressed
to the respondent, recorded that the deceased had passed away and
that it would be difficult
for the applicant to amend the court
order. He suggested that the respondent consider “other option
to avoid burrying (
sic)
her
under huge legal costs”.
10.
On 22 December 2020, the applicant’s
present attorneys of record, Mohanoe Incorporated Attorneys,
addressed a letter of demand
to the respondent recording certain
historic events that included payment having been made to
beneficiaries and requesting a copy
of the rules of the respondent.
11.
On 19 January 2021 the respondent, in its
response to the letter of demand dated 22 December 2020,
inter
alia
provided the applicant a detailed
explanation of the grounds upon which it relied in rejecting the
applicant’s claim. It referred
the applicant to the provisions
of
sections 1
,
7
(7) and (7)(8) of the
Divorce Act as
well as
section
37D
of the
Pension Funds Act. It
informed the applicant that in order
to be binding on the respondent the court order had to comply with
the foresaid sections.
The respondent advised that whilst the
applicant and the deceased had concluded a settlement agreement which
was made an order
of court, it was not binding on the respondent and
that she should submit a claim against his estate. The respondent
further referred
the applicant to
section 37C
of the
Pension Funds
Act and
advised her that upon the deceased’s death the death
benefit becomes payable to the dependants. As she was neither a
dependant
nor a nominee of the deceased pension she was not entitled
to receive any benefits and neither was she entitled to the
information
sought in her letter of demand dated 22 December 2020.
12.
The court order upon which the applicant
relies does not confirm the applicant’s entitlement in terms of
section 7(7)
of the
Divorce Act. The
settlement agreement records
that the applicant is entitled to half of the deceased’s
pension fund accruing from the date
of divorce to the date of
payment, being an entitlement other than that which
ex
lege
exists as a consequence of the
marriage in community of property.
13.
Ms Makhoebe
inter
alia
submitted that the applicant is
entitled to the relief sought against the respondent as:
13.1
The applicant and the deceased were married
to one another in community of property as a consequence whereof, at
date of divorce
the deceased’s pension interest was an asset in
the joint estate. This is common cause;
13.2
In respect of marriages in community of
property, the absence of an order in terms of
section 7(7)
does not
of itself deprive the non-member spouse of its entitlement to the
pension interest as it was an asset in the joint estate.
This too, is
common cause;
13.3
Consequently, the applicant is entitled to
50% of the deceased’s pension interest as at date of divorce
irrespective of whether
the divorce order specifically directed so in
terms of
section 7(7)(a)
of the
Divorce Act. The
applicant relied in
argument on the dicta in Kotze
v Kotze
2013
JOL 30037
(WCC) and particularly GN v JN
2017 (1) SA 342
(SCA) at
paragraph 25. This is not in dispute;
13.4
The applicant further submitted that, on a
proper reading of section (7)(8) of the
Divorce Act, the
provisions
of that section:
13.4.1
did not oblige the court granting the
decree of divorce to assign a portion of the pension interest of the
member spouse to the
non-member spouse or make a declaration in that
regard;
13.4.2
does not require that the pension fund need
be identified to oblige it, and herein the respondent, to pay the
non-member spouse
their assigned portion of the member’s
pension interest. She submitted that the court order was
sufficient to enable
her to enforce her claim against the respondent;
13.4.3
Consequently, she concluded, that the
applicant is entitled to enforce her rights in the court order
against the respondent.
14.
Herein lies the dispute.
15.
The respondent was not a party to the
divorce action and neither is it identified in the court order as the
relevant pension fund.
The settlement agreement that was made an
order of court further records an entitlement other than the
applicant’s entitlement
in terms of
section 7(7)
of the
Divorce
Act. There
is a difference between the applicant’s entitlement
in terms of the court order and her entitlement in terms of
section
7(7)
of the
Divorce Act. There
is further a contradiction in prayer 1
of the applicant’s notice of motion in that the terms of that
prayer and the terms
of the court order, which the applicant seeks to
enforce in prayer 1, are irreconcilable.
16.
Notwithstanding having been advised to do
so, the applicant has not sought to amend the court order in this
application or any other
application, be it to identify the
respondent as required in terms of
section 7(8)
of the
Divorce Act,
or
otherwise.
17.
Mr
Khumalo SC, for the respondent, correctly points out that the court
order does not name or identity the respondent and neither
does it
direct the respondent to make payment of any amount or part of the
deceased’s pension interest to the applicant.
Absent such
identification and direction the respondent is not bound by the court
order. He referred to Nhlapo v Iscor Employees
Provident Fund &
another [2020] 3 BPLR 849 (PFA)
[1]
in
which the pension fund adjudicator, at page 854, paragraph 5.4,
confirmed that in terms of the applicable legislation a pension
fund
can only make a “divorce payment” if the court order is
binding on the fund and to be binding it should meet certain
criteria
which include that the court order must be valid, the member spouse
should be a member of the fund at the date on which
the court order
is granted, it must specify the pension interest assigned to the
non-member spouse, the fund must be identified
by name or at least
should be identifiable for the court order and the fund must be
ordered to pay the non-member spouse.
18.
Mr Khumalo SC further submitted that the
respondent could only make deductions from member’s pension
interest in very limited
circumstances and strictly according to the
enabling provisions of
Pension Funds Act. The
respondent could only,
he submitted, make a deduction from the deceased’s pension
interest for the purposes of
section 7(8)
of the
Divorce Act as
provided in
section 37D(4)(a)
of the
Pension Funds Act. Section
37D(4)(a)(i)(aa) provides that a pension fund that may make a
deduction from a member’s pension interest aforesaid is the
pension fund mentioned in or identifiable from the decree, being the
court order.
19.
Mr Khumalo SC in opposition to the
applicant’s claim also relied on GN v JN
supra
,
particularly paragraph 37 in which the Supreme Court of Appeal held
that:
“
[37]
Section 7(8)
, on the other hand,
creates
a mechanism in terms of which the Pension Fund of the member’s
spouse is statutorily bound
to
effect the payment of the portion of the pension interest (as at the
date of the divorce) directly to the non-member spouse
as provided
for in
s 37D(1)(d)(i)
of the
Pension Funds Act, 24 of 1956
and
s
21(1)
of the Government Pension Law, 1996. This is as far as
s 7(8)
goes and no further.
The
non-member spouse is thereby relieved of the duty to look to the
member spouse for payment of his or her share of the pension
interest
with all its attendant risks
.
The remarks by this court in relation to
s 7(8)(a)
, in Old Mutual
Life Assurance Co (SA) Ltd & Another v Swemmer
2004 (5) SA 373
(SCA) are instructive. It said the following (para 20):
‘
Once
a part of the pension interest of the member spouse becomes “due”
or “is assigned” to the non-member
spouse in the course
of the divorce proceedings,
the
Court may order that such part of the pension interest must be paid
by the pension fund concerned to the non-member spouse
when any pension benefits accrue in respect of ‘the member
spouse’ …
”
.
(Own emphasis).
20.
The respondent submitted that the mechanism
created by
section 7(8)
of the
Divorce Act in
terms whereof the
respondent is bound to make payment, being a court order issued in
terms of
section 7(8)
of the
Divorce Act directing
that an identified
pension fund, the respondent herein, make payment of the specified
portion of the member’s pension interest
assigned to the
non-member spouse, is absent in this matter. Absent the inclusion of
such provision, Mr Khumalo SC submitted, correctly
so, the non-member
spouse, being the applicant, is obliged to seek satisfaction for the
benefit assigned to her in the court order
directly from the member
spouse or his estate.
21.
The respondent further submitted that the
court order upon which the applicant relies is fatally defective in
that:
21.1
it incorrectly defines the interest to
which the applicant is entitled as 50% (half) of the
pension
fund
of the deceased
accruing
from the date of divorce to the date of payment
rather than 50% of his pension interest as at date of divorce;
(own emphasis)
21.2
it does not identify the respondent or
direct the respondent to make any payment to the applicant.
22.
The entitlement of the applicant on divorce
was not, as is contained in the order, 50% of the deceased’s
pension fund, but
50% of his pension interest at date of divorce. The
further difficulty with the court order is that it defines the
applicant’s
entitlement as the pension fund that accrues as
from date of divorce until date of payment. These provisions are
contradictory
and further demonstrates the need to have had the court
order amended.
23.
As a consequence of 21.2 above, the
respondent submitted the court order is not binding on the
respondent. The pension funds adjudicator
has consistently held in
various matters that in the absence of compliance with the above, the
decree of divorce or court order
must be amended to satisfy the above
requirements. The applicant was advised to do so but elected not to.
24.
The applicant contended that the respondent
acted improperly when, upon the deceased having passed away, it paid
out the proceeds
of the deceased’s pension to the beneficiaries
thereof, including dependants of the deceased, whilst being aware
that she
had a claim against it.
25.
The respondent is obliged, in terms of
section 37C
of the
Pension Funds Act, upon
the death of the deceased,
to pay the pension benefits to the deceased’s dependants or
nominees. The respondent had no discretion
in the matter. As at date
of the hearing of this application the respondent had already
distributed the benefits to the beneficiaries
and dependants of the
deceased as it was obliged to do. The applicant was neither a
dependant nor a nominee of the deceased and
accordingly she was not
entitled to receive any benefits in terms of
section 37C.
1.
5cm; text-indent: -1.5cm; margin-bottom: 1cm; line-height: 150%">
26.
In light of the above, I am not persuaded
by the submissions made by the applicant that the respondent acted
improperly herein.
27.
On considering the terms of the court
order, the applicable legislation, particularly
section 7(8)
of the
Divorce Act read
with
section 37D(4)
of the
Pension Funds Act, and
the judgement by the Supreme Court of Appeal in
GN
v JN
supra
,
by which this court is bound, this court finds that whilst the
applicant may be entitled to 50% of the deceased’s pension
interest as at date of divorce, the respondent, absent compliance
with
section 7(8)
of the
Divorce Act, is
not bound by the court order
and consequently not obliged to pay to the applicant 50% of the
deceased’s pension interest
as at the date of divorce.
28.
The applicant submitted that this court is
obliged to interpret the applicable legislation as well as to develop
the common law
such as to promote the spirit, purpose and objects of
the Bill of Rights. It could not have been the intention of the
legislature,
the applicant submitted, to punish the legally
unrepresented litigants when it enacted
section 7(8)(a)
of the
Divorce Act.
29.
At
no stage was the applicant
unrepresented. Most importantly, the applicant was represented by an
attorney on 2 March 2000 when the
settlement agreement was concluded
and the court order granted.
30.
The applicant is an unemployed woman of 60
years of age. The respondent does not dispute that the applicant will
suffer hardship
as a consequence of the court order made herein. The
applicant will be obliged to seek redress against the deceased’s
estate.
This may prove difficult as she is impecunious and not able
to pay legal fees.
31.
This court has a discretion when
determining the issue of costs. In determining the respondent’s
claim for costs, the facts
of this matter are taken into account as
well as the applicant’s circumstances.
32.
Consequently, I make the following order:
32.1
The application is dismissed.
A. DE WET
Acting Judge of the
High Court
Gauteng
Local Division, Johannesburg
Heard:
18 August 2021
Judgment:
31 August 2021
Applicant’s
Counsel:
Adv. M G Makhoebe
Instructed
by:
Mohanoe Incorporated Attorneys
Respondent’s
Counsel: Adv. S Khumalo SC
Instructed
by:
ZNS Incorporated Attorneys
[1]
See
Rampa
v Sentinel Mining Industries Retirement Fund [2014] 1 BPLR 106 (PFA)