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[2016] ZALMPPHC 2
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B.S.M (nee M) v N.A.M (HCA18/2015) [2016] ZALMPPHC 2 (17 June 2016)
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Certain
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REPUBLIC
OF SOUTH AFRICA
IN
THE HIGH COURT OF SOUTH AFRICA
(LIMPOPO
DIVISION, POLOKWANE)
CASE
NO: HCA18/2015
In
the matter between:
B.
S. M. (nee M.)
APPELLANT
and
N.
A. M.
RESPONDENT
JUDGMENT
MAKGOBA
JP
[1]
This is an appeal against the judgment and order of the
Regional Court, Sekhukhune regarding the division of the joint estate
in
a divorce action. The order granted by the Regional Magistrate in
the Court a quo amounts to what is colloquially termed “a
blanket division”. The appellant is dissatisfied with the said
order as it stands and contends that the Court a quo should
have gone
a step further and specifically ordered that the division of the
joint estate shall include the parties’ respective
pension
interests held in their respective pension funds.
[2]
A further basis or ground of appeal raised by the appellant is that
the omission by the Court a quo to make an order specifically
in
relation to the parties respective pension interests amounts to an
order of forfeiture by the parties in relation to each other’s
pension interest.
Factual
Matrix
[3]
The respondent instituted divorce proceedings against the appellant
in the Regional Court for the Regional Division of Limpopo
sitting in
Sekhukhune. He prayed for a decree of divorce, division of the joint
estate and ancillary relief. The respondent did
not in his
particulars of claim plead for payment to him of the appellant’s
pension benefit. Equally, the appellant counter
claimed for a decree
of divorce, division of the joint estate and ancillary, relief. She
also did not plead and pray for payment
to herself of the
respondent’s pension benefit in her particulars of
counter-claim.
[4]
At the time of the divorce the appellant was employed at Great North
Transport since 2007 and was a contributor to a pension
fund thereat.
The details of the pension fund are not disclosed. The respondent was
employed by the SAPS and was therefore a contributor
to the
Government Employees Pension Fund.
[5]
The matter proceeded to trial and at the commencement of the trial
the parties’ respective legal representatives informed
the
court from the bar that the only issues to be decided by the court
were plaintiff’s pension benefit and maintenance of
the minor
child.
The
matter proceeded to evidence and judgment was delivered without any
application for amendment of the pleadings having been applied
for or
made by the parties regarding the issue of the pension interest. In
the result the court gave a judgment in the very terms
prayed for by
the parties in their respective prayers regarding the division of the
joint estate.
[6]
The Court a quo in coming to its decision not to award pension
interest to the appellant or respondent expressed itself as follows:
“
In
this matter the parties are both members of pension funds.
The
pension funds were however not disclosed to the Court. Neither of the
parties claimed any portion of pension interest held by
them in their
pleadings. It is the defendant when she gave
viva voce
evidence
that she asked the Court to order that 50% of the plaintiff’s
pension interest be entertained.”
The
Issues
[7]
The legal issues to be decided in this appeal are the following:
7.1.
Whether a pension interest of a party automatically or by operation
of law forms part of the joint estate of the
parties.
7.2.
Whether it is necessary that a claim in regard to such pension
interest be specifically pleaded in the divorce
papers.
7.3.
Whether an omission by a Court in divorce proceedings to award a
non-members spouse 50% (or any portion) of his/her
member spouse’s
pension interest amount to an order of forfeiture by the non-member
spouse of his/her member spouse’s
pension interest.
7.4.
Whether the omission by the Court in divorce proceedings and in its
judgment to order an endorsement or assignment
of any part of the
pension interest to a non-member spouse in terms of
section 7(8)(a)
of the
Divorce Act 70 of 1979
deprives the non-member spouse of
his/her share of the pension interest.
7.5.
What remedy, if any, is available to a non-member spouse to enforce
his/her rights in regard to the pension interest
in the absence of a
declaration or assignment by the divorce Court in terms of
Section
7(8)(a)
of the
Divorce Act 70 of 1979
.
The
Law
[8]
Section 7(7)(a)
of the
Divorce Act 70 of 1979
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”
Section
7(8)(a)
of the
Divorce Act 70 of 1979
, reads as follows:
“
(8)
Notwithstanding the provision of any other law or of the
rules
of any pension fund-
(a)
The Court granting a decree of divorce in respect
of any 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)
…………………………………………………
.”.
[9]
From the reading of the aforementioned legislative provisions it is
clear that
Section 7
of the
Divorce Act opens
a window for parties
engaged in divorce proceedings to have access to the pension interest
of either of them for purposes of achieving
an equitable distribution
of their assets.
It
provides that the pension interest of a party should be deemed to be
an asset in his estate for that purpose. This means that
the interest
is not ordinarily part of the joint estate, but shall be such for
purpose of division upon divorce.
[10]
Section 7(8)
of the
Divorce Act must
be read with
Section 7(7).
Section 7(7)
(a) provides that the contigent pension interest that a
member of a pension fund has in the future benefits from a pension is
to
be classed as an asset in that person’s estate for the
purposes of division of assets on divorce. It follows that if that
person is married in community of property the pension fund interest
is an asset in the joint estate of which that person and the
non-member spouse each has an undivided half share.
[11]
This simply means that
ex lege
the spouses have an undivided
half share in the pension interest of each other.
Accordingly,
that pension interest is part of the bundle of assets to be divided
up between the divorcing spouses. Of course, the
pension interest is
simply a value calculated as at date of divorce. It is that “value”
which falls into the reckoning
of the total value of the basket of
assets along with all the other assets in the joint estate. When the
value of each spouse’s
half share is then known, the assets in
the joint estate are then apportioned.
See
:
Maharaj v Maharaj 2002(2) SA 648 (D) at 651
E,
MS
v. ME Case No 3044 A /2014 South Gauteng High Court (29 October 2014)
per Sutherland J.
[12]
The function of
Section 7(8)(a)
(i) is to enable the Court to give
effect to a division of the joint estate by ordering a pension fund
to recognise that division
and pay or appropriate a portion for the
non-member spouse. This is an extraordinary power given to a Court to
make an order binding
a person who is not a party to the proceedings,
that is, the pension fund.
The
provisions of this subsection mean that if the spouses are married in
community of property that share of the non-member in
the member’s
pension interest alluded to in
Section 7(7)
, as being the part of the
pension interest due to the another party may be subject to an order
against the pension fund (See:
Old Mutual Life
Assurance Co (SA) Ltd & Another v. Swemmer
2004 (5) SA 373
(SCA)
at [17-[20] and [22].)
[13]
It is clear from the wording of
Section 7(8)
(a) that the Court has a
discretion in considering an order in terms of subsection 8(a)(i).
Obviously such discretion must be exercised
judiciously, taking into
consideration relevant factors. In the present case the learned
Regional Court Magistrate in the Court
a
quo
did not grant the order in terms of
Section 7(8)(a)(i)
of the
Divorce Act. He
had the discretion to do
so, and therefore his failure to grant such order cannot be faulted
in the circumstances of this case.
[14]
In the matter of
Eskom Pension and Provident Fund v. Krȕgel
and Another 2012(6) SA 143 (SCA)
the Supreme Court of Appeal
held:
“
A pension fund’s right to
make deductions from a pension benefit is highly circumscribed and
may be exercised only as expressly
provided by
s37D
and s
37A
of the
PFA [Pension Funds Act 24 of 1956]. Relevant for present purposes is
s37D which, in s(1)(d)(ii) allows a fund to “deduct
from a
member’s benefit or minimum individual reserve, as the case may
be… any amount assigned from such benefit or
individual
reserve to a non-member spouse, in terms of a degree granted under
section 7(8)(a)
of the
Divorce Act, 1979
.”…The first
respondent’s entitlement, form the provisions of
s7
(7) and s
7
(8) of the
Divorce Act, which
deal with the pension benefits of a
divorcing member of a pension fund.”
[15]
In my view the Supreme Court of Appeal dicta above, read with the
relevant statutory provisions, constitutes a finding (or
at the very
least a very strong intimation) that although a pension interest of a
member spouse is deemed to form part of the assets
that constitute
the patrimonial benefits of the marriage, a non-member spouse becomes
entitled to a percentage of the pension interest
only when it is
assigned to him or her in terms of
Section 7(8)(a)
of the
Divorce
Act.
[16
]
To sum up my view, where the parties are married in community of
property, if a non-member spouse institutes a claim for pension
benefits in terms of
Section 7(7)
of the
Divorce Act in
divorce
proceedings against the member spouse for 50% of his/he pension
interest and in the absence of a forfeiture order, such
an order will
be granted by the Court granting the decree of divorce in terms of
Section 7(8)(a)(i)
of the
Divorce Act. Absent
this order the
non-member spouse will not be able to enforce a claim for such
pension interest against the pension fund concerned.
[17]
It is appropriate in this case to look into and deal with some case
law relating to the claim for pension interest/benefits
in divorce
proceedings.
[18]
In the earlier decision of the Free State High Court in
Sempapalele
v. Sempapalele and Another 2001(2) SA 306 (O)
it was held as
follows:
The
law prior to the introduction of
Section 7
of the
Divorce Act 70 of
1979
had stated that the pension interest was not part of an asset of
the spouse who was a member of a pension fund and hence could not
be
part of the joint estate of the member and his/her spouse.
Section 7
did not abolish the existing law but provided a mechanism for parties
engaged in divorce proceedings to have access to the pension
interest
of either of them for the purpose of achieving an equitable
distribution of their assets. The section provided that the
pension
interest of a party would be deemed to be an asset in his/her estate.
This meant that the interest was not ordinarily part
of the joint
estate but would be such for the purpose of division upon divorce.
Further, that a spouse seeking a share in the pension
interest of the
other spouse had, in terms of Section7 (7)(a), to apply for and
obtain an appropriate Court order during the divorce
proceedings. In
the present case the applicant had failed to obtain a Court order
awarding her a share in the first respondent’s
pension interest
in terms of section 7 of the Act at the hearing of the divorce
matter. She could not now get such an order.
[19]
The principle laid down in
Sempapalele
was followed in the
judgment of another Court of the same division in case number
3981/2010 delivered on 25 April 2013 and reported
as
ML v. JL SAFL
11[2013] ZAFHC 55.
Both
judgments are judgments of single judges of the Free State Division.
[20]
The above judgments were not followed, and in fact overruled in a
judgment of two judges ( Jordaan J and Reinders AJ) of the
same
division in
Motsetse v Motsetse
[2015] 2 ALL SA 495
(FB)
delivered on 12 March 2015. At page 499 in paragraph 18 it was held:
“
[18]
In paragraph 57 of that judgment it appears that the Court concurs
with the findings in the
Sempapalele
judgment.
In particular, the Court found that a pension interest does not
automatically fall within the ambit of a customary division
of the
joint estate and it can only be part of a division if a specific
order is made by a Court in that regard. The Court found
that it has
to be pertinently pleaded and claimed. I am unfortunately not able to
agree.”
[21]
The Court in
Motsetse
referred, with approval, to the decision of the Kwazulu –Natal
division in
Maharaj v. Maharaj and Others
2002(2) SA 648 (D)
and to the decision of the
Eastern Cape Provincial Division in
Fritz v.
Fundsatwork Umbrella Pension Fund and Others 2013(4) SA 492 (ECP)
and came to the following conclusion/ decision:
“
[21]
The result of the aforementioned is that, when parties by deed of
settlement agree to a blanket division of a joint estate or when
an
order of Court orders division of a joint estate, the pension
interest of such parties who have such interest automatically
fall to
be divided as part of the joint estate. Such an agreement or order
defines the rights of the parties in regard to the proprietary
rights
in and to the joint estate….
Thereafter,
if the parties cannot agree as to giving effect to such orders
defining their rights, the Court can be approached to
grant orders
either appointing liquidators or deciding the issue as to the actual
division of the estate …. Those latter
types of orders do not
have to be issued at the time of granting the decree of divorce. The
orders that a Court is authorised (and
not obliged) to make in
subsection 7(8) of the
Divorce Act are
orders that are aimed to give
effect to the defined rights of the parties.”
[22]
In essence the judgment in
Motsetse
is to the effect that
where a settlement agreement provides for a blanket division of a
joint estate or a Court order orders a
blanket division of a joint
estate (as in the present case before me), all pension funds to
which any of the spouses belong and
had an interest in at the date of
divorce are involved, in the sense that all such pension interests
are deemed to be part of the
estate. If after the dissolution of the
marriage, the parties dispute the division, a court can be approached
to either deal with
the matter itself or appoint a liquidator.
Furthermore,
it is not necessary that the issue of pension interest be
specifically applied for or pleaded in the divorce proceedings.
[23]
In the matter of
Kotze v. Kotze and Another
[2013] JOL 30037
(WCC)
the Full Court of the
Western Cape Division held that:
Where
parties who were married to each other in community of property in
subsequent divorce proceedings do not deal with a pension
or
provident fund interest which either or both of them may have had in
separate pension or provident fund either by a way of
settlement
agreement or by an order of forfeiture, each of them nonetheless
remain entitled to a share in the pension or provident
fund to which
the other spouse belonged and such share is to be determined as at
the date of divorce by virtue of the provisions
of
Section 7(7)(a)
of
the
Divorce Act 70 of 1979
.
[24]
The Gauteng Division held in
Chiloane v. Chiloane (27836/06)
[2007] ZAGPHC 183(7 September 2007)
that “a spouse seeking
a share in the pension interest of the other spouse who had not in
terms of
Section 7(8)(a)
applied for and obtained a Court order
during the divorce proceedings, may do so by way of motion
proceedings after the divorce
decree is granted.”
Likewise
in
M v. M 2012 ZAKZDHC 17
it was held that the fact that no order is made in terms of
Section
7(8)(a)
of the
Divorce Act at
the time of the divorce, does not
preclude the non-member spouse from later making a claim against the
other former spouse for
a portion of the pension proceeds.
[25]
It appears clearly from the decisions referred to above that the law
as set out earlier in the
Sempapalele
is no longer good law.
In
Maharaj v. Maharaj 2002(2) SA 648 (D)
Magid J rejected the decision in
Sempapalele
that, unless a pension interest is dealt with expressly at the time
of the divorce, the pension interest can never be shared between
the
spouses. Magid J pointed out that
Section 7(7)(a)
of the
Divorce Act
states
quite unequivocally that a pension interest is deemed to be
part of the assets of a party in the determination of the patrimonial
benefits to which the parties to a divorce action may be entitled. At
650J-651A of the judgment the Court found that a spouse is
not
precluded from claiming a share of the other spouse’s pension
interest simply because the divorce order does not expressly
refer to
such pension interest.
Conclusion
[26]
Having considered and dealt with the legislative provisions as well
as case law relating to the pension interest in divorce
proceedings,
I now come to the conclusion hereunder in order to answer the
questions or issues raised in this appeal.
[27]
The pension interest of a spouse who is married in community of
property automatically falls into the joint estate upon divorce
and
does not have to be specified applied for or pleaded to be part of
the joint estate –
Section 7(7)
of the
Divorce Act.
[28
]
Section 7(8)(a)(i)
of the
Divorce Act empowers
the Court which grants
a divorce order to make an order that any part of a pension interest
which is due or assigned to the spouse
of the member of a pension
fund must be paid to the non-member spouse by the fund when any
pension benefit accrues to the member.
[29]
An omission by a Court in divorce proceedings to award a non-member’s
spouse 50% (or any portion) of his/her member spouse’s
pension
interest does not amount to an order of forfeiture by non-member
spouse of his/her member spouse’s pension interest.
[30]
In terms of
Section 37D
(1)(d)(i) of the
Pension Funds Act 24 of
1956
, a pension fund may only deduct the non-member’s share of
the member’s pension interest from the member’s pension
benefit if the amount has been assigned from such benefit or
individual reserve to a non-member spouse in terms of a decree
granted
under
section 7(8)(a)
of the
Divorce Act.
Thus
,
even though the pension interest of a spouse who is married in
community of property automatically falls into the joint estate
upon
divorce and does not have to be specified to be part of the joint
estate, an order in terms of
section 7(8)(a)
is required in order to
enable the non-member to compel the pension fund to pay his or her
portion of the member’s pension
interest to him or her. In the
absence of an order in terms of
section 7(8)(a)
, the pension fund
would refuse to pay any portion to the non-member.
In
such event, the non-member spouse would have to claim his or her
portion of the pension interest from the member personally.
[31]
The appellant in this appeal finds herself in a position where the
Court a quo did not make an order in terms of
Section 7(8)(a)
of the
Divorce Act. This
does not mean that she has lost her right to claim
her share of the pension interest against the respondent. She is at
liberty
to do so but she should bear in mind that the respondent has
a right to counter claim for his share in the pension interest of the
appellant.
[32]
In the circumstances the appellant has embarked on a wrong procedure
by taking the decision of the Court a quo on appeal. Such
an appeal
is misdirected and/or ill-advised. On this basis the appeal cannot
succeed and the appellant should be liable for the
costs of this
appeal.
[33]
In the result the appeal is dismissed with costs.
_________________________
E
M MAKGOBA JP
JUDGE
OF THE HIGH COURT OF SOUTH AFRICA, LIMPOPO DIVISION, POLOKWANE
I
agree,
_________________________
M
MADIMA AJ
ACTING
JUDGE OF THE HIGH COURT OF SOUTH AFRICA, LIMPOPO DIVISION, POLOKWANE
APPEARANCES
Heard
on
: 10 June
2016
Judgment
delivered on
:
17 June
2016
For
the Appellant
: J R
Kgarimetsa
J R Kgarimetsa Attorneys
C/o Mohlaba Moshoana Inc.
For
the Respondent
:
M M
Makgaleng
Makgoba Kgomo & Makgaleng Inc.