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[2016] ZAFSHC 132
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M v M and Another (230/2016) [2016] ZAFSHC 132 (4 August 2016)
SAFLII
Note:
Certain
personal/private details of parties or witnesses have been
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SAFLII
Policy
IN
THE HIGH COURT OF SOUTH AFRICA,
FREE
STATE DIVISION, BLOEMFONTEIN
Case
number: 230/2016
In
the matter between:
G
G
M
.........................................................................................................................................
Applicant
and
T
A
M
.................................................................................................................................
1st
Respondent
STANLIB
WEALTH MANAGEMENT
LTD
..............................................................
2nd
Respondent
HEARD
ON: 26 MAY 2016
JUDGMENT
BY: MOKGOBO, AJ
DELIVERED
ON: 4 AUGUST 2016
Introduction
[
1]
This is an application for an order set out in the notice of motion.
For ease of reference, the specific terms of the relief
sought are
reiterated hereunder:
1.1
That applicant is entitled to payment of 50% of 1
st
respondent’s
investment under investment number LA......., held or administered by
the 2
nd
respondent, as soon as the investment falls due to
the 1
st
respondent or his estate pursuant to his passing.
1.2
The 2
nd
respondent is directed to note the order in paragraph 1 above against
their records and immediately effect the required payment
directly to
the applicant when the aforementioned investment falls due.
1.3
Until the 1
st
respondent’s interest falls due and payment to the applicant is
made in accordance with paragraphs 1 and 2 above, the applicant
is
entitled to 50% of all pay-outs, proceeds, interest, pension,
drawdowns and/or payments of whatsoever nature made to the 1
st
respondent, or designated nominee, out of or as a consequence of the
aforementioned investment.
1.4
The 1
st
and 2
nd
respondents are directed to take such administrative steps as may be
required to give effect to the order in paragraph 3 above.
1.5
In the alternative to prayers 1-4
above:
Judgement
is granted in favour of the applicant against the 1
st
respondent for payment of the amount of R1 070 021, 28,
together with interest at 9% per annum,
a
tempora mora
, to date of payment in
full.
[2]
Applicant is Gaongalelwe Masiba, an adult female employed at the
Department of Social Development and 1
st
respondent is Thabo Abel Masiba, a major male person. The 2
nd
respondent is Stanlib Wealth Management Limited, a company registered
in terms of the Laws and Statutes of the Republic of South
Africa,
conducting business as a fund and asset manager
[3]
Before dealing with the factual matrix of this matter, it is prudent
at this juncture to mention that 2
nd
respondent pointed out raised that applicant had cited the
incorrect entity namely, Stanlib Limited instead of Stanlib Wealth
Management Limited. Although Stanlib Limited and Stanlib Wealth
Management Limited are entities that form part of the Stanlib Group
of Companies they are separate and distinct entities. The investment
with the investment number LA……. which is the
subject
matter of this application was made with and administered by Stanlib
Wealth Management Limited and not Stanlib Limited.
However, by
consent between the parties, Stanlib Wealth Management Limited was
substituted for Stanlib Limited.
Facts
[3]
Applicant and 1
st
respondent were married to each other in
community of property in 1982. In 2013, applicant instituted divorce
proceedings against
1
st
respondent and that culminated in
a deed of settlement agreement reached between the parties. In April
2015 the marriage between
the parties was dissolved by Daffue J. The
settlement agreement was made an order of the court. The relevant
parts of the settlement
agreement, encapsulated in the divorce order
are set out in paragraphs 4 and 5. The agreed terms thereof are the
following:
Paragraph
4
In
terms of Sect 7 of the Divorce Act, an amount of equivalent to 50% of
the Plaintiff’s pension interest in the pension fund
known as
GOVERNMENT EMPLOYEES PENSION FUND and whereas the Plaintiff’s
membership number is 9........., shall be paid over
to the Defendant
as on the date
of
the final divorce order.
Paragraph
5
5.1
The Defendant undertakes to pay 50% of his investment with Stanlib,
with investment number LA........., with current value of
R
2 140 042. 55 within 30 days of the final divorce order
being granted to Plaintiff.
5.2
The Defendant further undertakes to pay the Plaintiff the amount of
R250 000. 00 within 30 days of the final divorce order
being
granted.
5.3
The Defendant undertakes to pay the above amounts to the Plaintiff
within the specified timeframe as stated above, and further
confirms
that he is indebted to the Plaintiff in the
amount
of at least R1 320 021.28.
[4]
The 1
st
respondent had been in the employment of Telkom and was a member of
the Telkom Retirement Fund. Upon his resignation/retirement
from
Telkom and prior to the dissolution of the marriage, he transferred
his pension proceeds to a linked annuity fund administered
by Stanlib
Wealth Management Limited. He receives a monthly payment of around
R13800.
[5]
Around July 2015, applicant’s attorney approached 2
nd
respondent to give effect to the divorce order. The 2
nd
respondent refused to give effect to the court order and contended
that the invested amount is a benefit which enjoys the protection
afforded by
section 37A
(1) of the
Pensions Fund Act, 24 of 1956
. Mr
Mlungisi Mdwaba, apparently an employee from the Legal Department of
the 2
nd
respondent confirmed the legal status of the benefit, however, he
went further and advised that the viable option under the
circumstances
would be to attach the member’s bank account in
which he receives the monthly payments. (See page 23 of the paginated
papers).
On the strength of that advice, applicant approaches this
court for an order set out in the notice of motion.
[6]
The 1
st
respondent does not oppose the application whereas 2
nd
respondent opposes the application and its opposition is grounded on
the following: by the relief sought, applicant is attempting
to found
a cause of action against the 2
nd
respondent for payment and further applicant is attempting to execute
the terms of the settlement agreement upon 2
nd
respondent. Secondly, the investment in question is a pension benefit
and enjoys the protection provided for in terms of Section
37A (1) of
the Pension Funds Act.
Issues
[
7]
Upon perusal of the papers and submissions during the hearing, the
following issues are to be determined:
-
whether the relief sought in the notice of motion is an attempt by
applicant to enforce the deed of settlement or to found a cause
of
action against the 2
nd
respondent.
-
whether the applicant is entitled to the monthly pay out due to 1
st
respondent and does the protection provided for under
Section 37A
(1)
of the
Pension Funds Act 24 of 1956
apply only to the capital amount
or does it extend to the monthly pay-out received by a member from
the fund.
The
Law and application
[8]
The issues that have to be determined revolve around the deed of
settlement and will be resolved in that context and of course,
the
applicable legislation. The relevant parts of the Deed of Settlements
have been set out above. For convenience, the provisions
of
section
37A
(1) of the
Pension Funds Act, 24 of 1956
, which appears to be the
alpha and omega
of this matter, are set out hereunder:
37
A Pension benefits not reducible, transferable or executable
(1)
Save to the extent permitted by this
Act, the Income Tax Act, 1962 (
Act
58 of 1962
), and the
Maintenance Act, 1998
, no benefit provided for in the rules of a
registered fund (including an annuity purchased or to be purchased by
the said fund
from an insurer for a member), or right to such
benefit, or right in respect of contributions made by or on behalf of
a member,
shall, notwithstanding anything to the contrary contained
in the rules of such a fund, be capable of being reduced, transferred
or otherwise ceded, or of being pledged or hypothecated, or be liable
to be attached or subjected to any form of execution under
a judgment
or order of a court of law, or to the extent of not more than three
thousand rand per annum, be capable of being taken
into account in
determination of a judgment debtor’s financial position in
terms of section 65 of the Magistrates’
Courts Act, 1944 (Act
32 of 1944 ), and in the event of the member or beneficiary concerned
attempting to transfer or otherwise
cede, or to pledge or
hypothecate, such benefit or right, the fund concerned may withhold
or suspend payment thereof: Provided
that the fund may pay such any
benefit or any benefit in pursuance of such contributions, or part
thereof, or any one or more of
the dependants of the member or
beneficiary, or to a guardian or trustee for the benefit of such
dependant or dependants during
such period as it may determine.
[10]
It is common cause that the deed of settlement was an agreement
entered between applicant and the 1
st
respondent. The 2
nd
respondent was not a party to the agreement. Counsel for applicant
had correctly conceded that the deed of settlement cannot be
enforced
against the 2
nd
respondent. However, he contended that the purpose of the relief
sought in prayers 1, 2, and 4 of the notice of motion is not to
enforce the agreement but merely a declaratory order that the
interest of applicant be noted against their records that applicant
is entitled to 50% of the investment held under investment number LA
4039502 administered by 2
nd
respondent. The relief sought in prayer 3 is also not an attempt to
enforce the deed of settlement but rather an attempt to enforce
the
advice given to the applicant by Mlungisi Mdwaba, apparently an
employee from the legal department of the 2
nd
respondent. Paragraph 5 of applicant’s founding affidavit
should be read in conjunction with her replying affidavit. It was
further his contention that it had always been the intention of the
parties to share in their pensions. He further contended that
the
protection under
section 37A
(1) of the
Pension Funds Act, applies
only to the capital amount and not to a monthly pay-out. It was
further his contention that if the monthly pay-out due to a member
is
exempted from attachment that would imply that pensioners are immune
against debt collection procedures. He could not provide
any
authority to substantiate his latter submission.
[11]
Adv. Cilliers, for the 2
nd
respondent, submitted that the
relief sought is clearly an attempt by applicant to enforce the Deed
of Settlement against the 2
nd
respondent and for his
contention he relied on paragraph 5 of applicant’s founding
affidavit. It was further his contention
that
section 37A
(1)
of the
Pension Funds Act provides
enhanced protection to pension
benefits and applies to both the capital amount and monthly pay-out
under the control of the Fund.
For his submissions, he referred me to
the judgments,
Elesang v PPC Lime Limited and Others
2007 (6) SA 328
(NC) para 40 and
Ehlers v Nedcor Defined
Contribution Provident Fund and
Another
[2002] 3 BPLR 3141 (PFA).
[12]
I now turn to the first issue to be determined namely: whether
applicant is attempting to enforce the Deed of Settlement or
attempting to found a cause of action against the 2
nd
respondent.
[13]
I am in agreement with Counsel for applicant that the Deed of
Settlement cannot be enforced because the 2
nd
respondent was never party to the agreement and further, the amount
held under investment number LA........, administered by 2
nd
respondent is a living annuity protected under
section 37A
(1) of the
Pension Funds Act. However
, his contention is irreconcilable with the
applicant’s founding affidavit. I am saying this on the
following grounds. The
applicant, in her own founding affidavit,
purportedly drafted on the strength of advice given to her by Mr
Mdwaba, it is her own
say so that she seeks to enforce her rights in
terms of the Deed of Settlement. When the 2
nd
respondent raised the issue in its answering affidavit that the Deed
of Settlement cannot be enforced, she replied and stated that
her
intention is not to enforce the Deed of Settlement but merely to
execute her rights to claim half of 1
st
respondent’s monthly pay-out as advised by Mr Mdwaba. The above
averments are clearly contradictory and as the 2
nd
respondent, correctly raised the issue in its answering affidavit,
raise more questions than answers. For instance, if her intention
is
not to enforce the Deed of Settlement but merely to enforce the
advice given to her by Mr Mdwaba, then why such an averment
in
paragraph 5 of her founding affidavit as alluded above? Further, if
the applicant’s intention was merely to claim half
of 1
st
respondent’s monthly pay out in terms of prayers 3 of her
notice of motion, then what is the relevance or purpose of the
relief
sought in prayers 1,2 and 4 in her notice of motion. A closer
scrutiny of Mr Mdwaba’s letter, page 23 of the papers,
poses
some difficulties. For one moment, he expressed the view, that
monthly payments can be attached and in the same vein he goes
further
to say that he is not sure whether, operationally, Stanlib, being the
fund, can adhere to an order instructing the splitting
of monthly
payments. He is further adamant that their business rules would not
allow third party payments. This advice, to say
the least, is
abstruse and misleading. It would, in my view, be reckless if not
dangerous to rely on such advice. In any event
attaching a bank
account of the 1
st
respondent is a matter between the 1
st
respondent and the bank and has absolutely nothing to do with the 2
nd
respondent.
[14]
The relief sought in the notice of motion emanates from the Deed of
Settlement which has been made an order of court. The averments
in
applicant’s founding affidavit, her belated denial in her
replying affidavit and the relief sought in prayers 1,2 and
4, are
mutually destructive averments, raising some serious doubts about
applicant’s bona fides. In view of the above, I
am inclined to
agree with Adv. Cilliers that applicant is indeed attempting to
enforce the Deed of Settlement or attempting to
found a cause of
action against a non-party (the 2
nd
respondent).
[15]
The second issue that has to be determined is whether applicant is
entitled to half of the monthly pay-outs received by the
1
st
respondent and are those benefits enjoying the protection under
section 37A
(1)of the
Pension Funds Act.
[16
]
To address the above controversy, it is important to have regard to
the Deed of Settlement and the provisions of
section 37A
(1) of the
Pension Funds Act.
[17
]
Upon reading, in particular, paragraph 5.1 of the Deed of Settlement
it was the intention of the applicant and the 1
st
respondent that each should receive half of the current value of the
investment under investment number LA.......... within thirty
(30)
days of the final divorce order being granted. The Deed of Settlement
is silent on any other form of sharing or payment of
the invested
amount other than on the terms set out above.
[18]
In terms of
section 37A
(1) of the
Pensions Fund Act, the
1
st
respondent’s interest in the living annuity administered by
Stanlib Wealth Management Limited is a benefit. In terms of
Section 1
of the
Pensions Fund Act, a
benefit is defined as any amount payable
to a member or beneficiary. The Act does not distinguish between the
capital and monthly
pay-outs or proceeds from the living annuity and
it is therefore my view, that the term or phrase,
any
amount,
is quite extensive to
include both the capital and monthly pay-outs or proceeds. Therefore,
any order directing the 2
nd
respondent as the administrator of the living annuity, to pay half of
the monthly proceeds to applicant would amount to a reduction,
transfer, execution or attachment and contrary to spirit and purpose
of the Act.
[19]
In
Ehlers v Nedcor Defined
Contribution Provident Fund and Another
[2002] 3 BPLR 3141 (PFA), it was held that the monies, once paid into
an account, lose their “pension status” and the
protection afforded by section 37A of the Act and therefore become
capable of attachment because ownership would have passed from
the
Fund to the bank. I am mindful of the fact that the above matter is
judgment of a Pension Adjudicator, however, the above interpretation
is in my view, correct, relevant and has some persuasive force in
determining the issue at hand, with regard to the legal status
of
pension benefits under the control of the Fund and the position after
ownership of the money has passed to the bank.
Conclusion
[20]
In view of the above, I am satisfied that from the Deed of Settlement
there is no objective rationale to support the relief
sought in the
Notice of Motion against the 2
nd
respondent. The applicant
is indeed attempting to found a cause of action against the 2
nd
respondent.
The
protection the capital amount enjoys under
Section 37A
(1) of the
Pension Funds Act, equally
applies to monthly pay-outs or proceeds
due to a member, provided the money is still under the control of the
Fund. Once the money
is paid by the Fund into the account of the
member, ownership will inevitably pass to the bank and the provisions
of
section 37A
(1) of the
Pension Funds Act no longer
apply.
[21]
In view of the above, the contention by Adv. Johnson that applicant
is entitled to half of 1
st
respondent’s monthly pay-out, that protection under
section 37A
(1) does not extend to monthly pay out and the fact that pensioners
are immune to execution steps is, with respect, misplaced.
[22]
With regard to the alternative relief, Adv. Johnson has conceded that
judgment granted against 1
st
respondent is not a satisfactory option since the capital amount is
protected under
section 37A
(1). In view of the fact that the 1
st
respondent has acknowledged his indebtedness to the applicant (see
paragraph 5.3 of the Deed of Settlement above) and he did not
oppose
the application, I am satisfied that judgment granted in favour of
the applicant will do him no harm.
Order
[22] The following
order is made:
(a)
The application against the 2
nd
respondent is dismissed.
(b)
Judgment is granted in favour of the applicant against the 1
st
respondent for payment of the amount of R1 070 021.28, with
interest at 9% per annum, a tempore morae, to date of payment
in
full.
(c)
Both the applicant and the 2
nd
respondent have attained some measure of success in this application,
I order that each party to pay its own costs.
M
C MOKGOBO, AJ
On
behalf of ApplicantAdv. JMC JOHNSON
Instructed
by:
BLAIR
ATTORNEYS
BLOEMFONTEIN
On
behalf of 2
nd
Respondent Adv. H CILLIERS
Instructed
by:
ETTIENNE
DE HEUS ATTORNEYS
C/O
VAN DER MERWE SOROUR
ATTORNEYS
BLOEMFONTEIN