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[2016] ZAGPPHC 550
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Lion of Africa Life Assurance Company Ltd v South African Social Security Agency and Another (97973/2015) [2016] ZAGPPHC 550 (15 March 2016)
IN
THE HIGH COURT OF SOUTH AFRICA
(GAUTENG
DIVISION, PRETORIA)
Case
No: 97973/2015
DATE:
15 MARCH 2016
In
the matter between:
LION
OF AFRICA LIFE ASSURANCE COMPANY
LTD
..................................................
Applicant
And
SOUTH
AFRICAN SOCIAL SECURITY
AGENCY
................................................
First
Respondent
MINISTER
OF SOCIAL
DEVELOPMENT
.........................................................
Second
Respondent
REASONS
D
S FOURIE, J:
[1]
On 17 December 2015 I granted an interim
order in the urgent court against the first respondent, a copy of
which is attached hereto
as annexure “X”. A written
request for reasons by the respondents was sent to the Registrar of
this court on 18 December
2015 and later also to my secretary, but
these requests only came to my notice after my return to office at
the beginning of the
new term on 25 January 2016. I have now been
able to attend to this matter and these are my reasons for the order
granted.
BACKGROUND
[2]
The applicant is registered to conduct
long term insurance business in terms of the
Long Term Insurance Act,
1998
and is also licensed as a financial services provider in terms
of the provisions of the
Financial Advisory and Intermediary Services
Act No 37 of 2002
. The first respondent is the South African Social
Security Agency, a juristic person established under the South
African Social
Security Agency Act No 9 of 2004. It is, in terms of
section 2(1)
of the
Social Assistance Act, No 13 of 2004
responsible
for the administration of social assistance in terms of Chapter 3 of
this Act.
[3]
It is common cause that the applicant
underwrites funeral insurance policies administered by Emerald Life
CC. This includes approximately
20 000 policies which form the
subject-matter of the application. It is also not in dispute that in
practice, and in terms of the
Social Assistance Act and
the
Regulations promulgated in terms thereof, social grants are paid to
beneficiaries on a monthly basis within the Republic of
South Africa
by paymasters, who are contracted by the first respondent in order to
assist it in fulfilling its statutory obligations
in terms of the
Act.
[4]
Acting in terms of
section 32
of the
Social Assistance Act, the
second respondent has made regulations in
respect of deductions from social grants as provided for in
section
20(4).
Regulation 26A
allows for deductions to be made from social
grants in certain circumstances. It provides as follows:
"(1)
The Agency [the first respondent] may allow deductions for funeral
insurance or scheme to be made directly from a social
grant where the
beneficiary of the social grant requests such deduction in writing
from the Agency.
(2)
Subject to the provisions of
sub-regulation (1), the Agency may only allow deductions to be made
directly from
a
social
grant where the insurance company requiring such deduction or to whom
the money resulting from the deduction is paid, is
a financial
services provider as defined in section 1 of the Financial Advisory
and Intermediary Services Act, 2002 (Act No. 37
of 2002) and
authorised to act as a financial services provider in terms of
section 7 of that Act.
(3)
Notwithstanding the provisions of
sub-regulation (1), the Agency may only authorise one deduction for a
funeral insurance or for
a funeral scheme not exceeding 10% of the
value of the beneficiary’s social grant. ”
[5]
It is also common cause that the
applicant has since, during or about August 2015, requested the first
respondent in terms of Regulation
26A to allow deductions from social
grants to which its policyholders are entitled and that the first
respondent has allowed such
deductions in all instances where the
requirements of Regulation 26A have been met. It is also alleged in
the founding affidavit
that the applicant had concluded approximately
47 000 policies with beneficiaries of children’s grants
together with an application
form containing the request in writing
by the beneficiary as required by Regulation 26A(1). According to an
e-mail from the paymaster
to the applicant, the submission date for
the January 2016 deduction cycle was 18 December 2015.
[6]
On 4 December 2015 the applicant
received a letter from the first respondent indicating that, “in
order to ensure that protection
against the rights of the children is
adhered to, the Agency has placed a moratorium on the new funeral
policy deductions from
children's grants with effect from 1 January
2016” It also indicated that existing funeral policy deductions
against children's
grants will continue until a further determination
has been made. It is not in dispute that when the application was
launched (on
8 December 2015), the applicant had already concluded 14
639 new funeral insurance policies, with beneficiaries of children’s
grants being approximately 75% of all written policies, and that the
applicant was about to submit the written requests for deductions
of
premiums on or before 18 December 2015.
RELIEF SOUGHT AND
THE RESPONDENTS OPPOSITION THERETO
[7]
The relief sought was in the form of a
final interdict, alternatively and pending the finalisation of an
application to review and
set aside the moratorium referred to above,
that the first respondent be ordered to suspend the operation of the
moratorium and
to allow the requests by the applicant for the
necessary deductions. The application was opposed by the first and
second respondents
on the basis that it is not urgent and also
because the applicant has not made out a case for interim
interdictory relief. A point
in limine was also raised to the effect
that there was a material non-joinder.
I
shall deal with each issue in turn.
URGENCY
[8]
It is not in dispute that notice of the
moratorium was only given on 4 December 2015 to take effect on 1
January 2016. The application
was issued on 8 December 2015 and came
before me on 17 December 2015. Taking also into account that the
submission date for the
January 2016 deduction cycle was the next
day, i.e. 18 December 2015,1 had no doubt that the application was
indeed urgent.
NON-JOINDER
[9]
It was contended that the applicant’s
failure to also join the first respondent’s paymaster should
render the application
fatally defective, as it also has a
constitutional duty, as an organ of state, for the implementation of
a workable payment system
in a manner that gives effect to the right
of access to social security. Notwithstanding the status and
obligations of the paymaster,
I do not agree with the submission that
it was necessary to join the paymaster. It is common cause that the
paymasters are contracted
by the first respondent in order to assist
it in fulfilling its statutory obligations, it has also been
explained by the respondents
in their answering affidavit (par 26)
that officials of the first respondent instructed the paymasters not
to effect Regulation
26A deductions against children’s grants
from January 2016 onwards. Furthermore, according to the respondents
these paymasters
are acting on behalf of the first respondent, on its
instruction and as its agent. It would therefore appear that these
paymasters
do not have a direct and substantial interest, in their
own right, in these proceedings. Furthermore, it is the first
respondent
who took the decision to implement the moratorium and not
the paymaster. Finally, the order was granted against the first
respondent
only.
INTERIM
INTERDICT
[10]
An interim interdict was granted pending
the finalisation of an application to review and set aside the
moratorium contained in
the first respondent’s letter dated 2
December 2015. It is trite that the requirements which an applicant
for such relief
has to satisfy are a prima facie right; a well-
grounded apprehension of irreparable harm if the interim relief is
not granted
and the ultimate relief is eventually granted; a balance
of convenience in favour of the granting of the interim relief; and
the
absence of any other satisfactory remedy
[11]
As far as the requirement of a prima
facie right is concerned/the applicant was relying on an unreported
judgment of Du Plessis
J in this Division, case number 36212/2011,
Channel Life Limited v Minister of Social Development South African
Social Security
Agency, a copy of which is attached to the founding
affidavit. In that judgment Du Plessis J came to the conclusion (p 6
of the
judgment) that “once the requirements of Regulation
26A(1), (2) and (3) have been met, the Agency is obliged to allow
deductions
as provided for (in) Regulation 26A”. The learned
Judge then also granted a declaratory order to this effect.
[12]
In the application before me the
respondents have taken the view that children’s grants cannot
be utilised for funeral cover,
but only for basic needs. To do so,
the argument goes, would deprive children of their constitutional
right of access to social
security. It was further contended that to
grant an order under these circumstances would
u
not
be constitutionally appropriate” and the application should
therefore be refused. Although there may be merit in some
of these
contentions, I was (and still am) of the view that it would be
inappropriate for me to decide a constitutional issue in
the urgent
court (where it is not unusual for a judge, sitting in the urgent
court in this division, to be faced with 20 to 30
urgent applications
per week, many of which are opposed) when it is not necessary to do
so. I don’t say it can never happen.
There may be cases where
it is necessary to decide a constitutional issue in the urgent court.
In the application before me, I
had to consider whether or not to
grant interim relief, pending the finalisation of a review
application, almost immediately after
hearing argument. I took into
account that the parties will have the opportunity, during the main
proceedings, to argue these and
perhaps also other constitutional
issues and to have their rights and obligations then decided finally.
Perhaps it would have been
different if the applicant had insisted
(which it did not) on the granting of final relief only. I have
therefore decided not to
make any finding in this regard and to leave
the constitutional issue for consideration in due course and after
proper notice has
been given in terms of the rules. This will also
have the benefit to allow other interested parties, as envisaged by
rule 16A,
to put forward their submissions.
[13]
Having regard to the judgment of Du
Plessis J and the fact that a system allowing for funeral policy
deductions against children’s
grants was already in place, I
concluded that a prima facie right had been demonstrated.
I
also took into account that, since the relief is only temporary and
not decisive of either party's rights, the applicant need
only have
to demonstrate a prima facie right, even if open to some doubt.
Furthermore, the relief sought (and the relief granted)
was not
unconditional. The order was granted subject to fulfilment of the
requirements set out in Regulation 26A and would lapse
if the
applicant failed to launch the review application by 1 February 2016.
[14]
As far as the second requirement of
irreparable harm is concerned, it has been explained in the founding
affidavit that if the moratorium
were to take its effect,
approximately 20 000 policies with total monthly premiums of
approximately R1.7 million will be affected.
It has also been pointed
out that the applicant and the policyholders entered into the
relevant policy agreements on the assumption
that the premiums would
be deducted from the children’s grants. According to the
applicant the beneficiaries also accepted
that they would have cover
for accidental death and that the relevant premiums will for that
purpose also be deducted. If these
premiums are not paid and the
“default” is not remedied, the policyholders will lose
their cover which will be devastating
to such policyholders in the
event of accidental death. Furthermore, according to the applicant it
would be obliged, if the moratorium
were to be enforced, to also make
contact with the relevant policyholders and convince them to agree to
change their chosen method
of payment. This exercise will be
expensive, time-consuming and may even result in some of the
policyholders not being notified
in time about this change. Although
these allegations have been denied by the respondents, 1 had no
reason not to accept them for
purposes of the interim relief claimed.
I was therefore satisfied that this requirement had also been
complied with.
[15]
I also considered the requirements of a
balance of convenience and the absence of any other satisfactory
remedy carefully. I took
into account that, when the application was
heard, a system was already in place in terms whereof the first
respondent has allowed
funeral policy deductions from children’s
grants in all instances where the requirements of Regulation 26A have
been met.
Furthermore, in terms of the first respondent’s
notification, this system will be allowed to continue as far as
existing
(as opposed to new) funeral policy deductions are concerned.
Put differently, if an interim order were to be granted it would only
preserve the status quo as it was before the moratorium had been
introduced. On the other hand, if the
relief
were to be refused it would probably have all the negative
consequences referred to above.
[16]
It was contended by the respondents that
if the interdict were to be granted the order will effectively
“scupper the process
being put in place by the respondents to
protect the constitutional rights of children to access social
grantsI appreciate the
respondents’ concern with regard to the
rights of children. These rights are important However, I have
already indicated
above that this is not an issue to be finally dealt
with in the urgent court when it is not necessary. The relief sought
in the
alternative (and granted) is only of a temporary nature. The
allegation with regard to the respondents’ duty to protect the
constitutional rights of children and the relevancy thereof with
regard to Regulation 26A has not been ignored, but will ultimately
be
dealt with and decided, if necessary, in the main proceedings. On the
other hand, if interim relief were to be refused, the
policyholders
stand to lose their cover which may have serious consequences in the
event of accidental death. Furthermore, the
applicant has pointed out
that if the moratorium were to be enforced, it would not only have
expensive and time-consuming consequences
for the applicant, but will
in all probability also have the effect that the applicant will not
be able to contact the majority
of policyholders in time to put
alternative arrangements in place. Having regard to all these
considerations, I was satisfied that
the balance of convenience was
in favour of the granting of interim relief.
[17]
The fourth requisite for the granting of
an interim interdict is the absence of another adequate ordinary
remedy. This requisite
is closely linked with that of Irreparable
harm”. No doubt, having taken into account all the facts and
circumstances referred
to above, more particularly those with regard
to the requirement of Irreparable harm” and the fact that this
application
was urgent, I was unable to conclude that another
adequate remedy was under these circumstances available to the
applicant. For
all these reasons I have exercised my discretion in
favour of the applicant when the order, annexure “X”
hereto, was
granted.
O
S FOURIE
JUDGE
OF THE HIGH COURT, PRETORIA.