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2024
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[2024] ZAMPMBHC 52
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South African Retirement Annuity Fund v Pension Funds Adjudicator and Another (4544 / 2023) [2024] ZAMPMBHC 52 (7 August 2024)
THE
HIGH COURT OF SOUTH AFRICA
MPUMALANGA
DIVISION, MBOMBELA MAIN SEAT
CASE
NO: 4544 / 2023
(1)
REPORTABLE: NO
(2)
OF INTEREST TO OTHER JUDGES: NO
(3)
REVISED.
DATE:
07 August
2024
SIGNATURE
In the matter between:
SOUTH
AFRICAN RETIREMENT
APPLICANT
ANNUITY
FUND
And
PENSION
FUNDS ADJUDICATOR
FIRST RESPONDENT
SOPHIA
EM VILJOEN
SECOND RESPONDENT
JUDGMENT
RATSHIBVUMO J:
Delivered:
This judgment was handed down
electronically by circulation to the parties' representatives by
email. The date and time for hand-down
is deemed to be 08H00 on 07
August 2024.
[1]
Introduction
It is common cause that
one of the purposes of the Pension Fund Act no. 24 of 1956 (the Act),
was to protect the dependants of a
pension fund member (the member)
in that any benefit payable by the pension fund (the Fund), upon the
death of the member, shall
be paid directly to the dependant(s) of
the member. To that extent, section 37C of the Act provides,
“
(1)
Notwithstanding anything to the contrary contained in any law or in
the rules of a registered fund,
any
benefit
(other than a benefit payable as a pension to the spouse or child of
the member in terms of the rules of a registered fund, which
must be
dealt with in terms of such rules)
payable
by such a fund upon the death of a member, shall,
subject to a pledge in accordance with
section
19
(5)(b)(i)
and subject to the provisions of
sections
37A
(3)
and
37D
,
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.
[1]
(b)
…
(c)
If
the fund does not become aware of or cannot trace any dependant of
the member within twelve months of the death of the member
and
if the member has not designated a nominee or if the member has
designated a nominee to receive a portion of the benefit in
writing
to the fund,
the
benefit
or the remaining portion of the benefit after payment to the
designated nominee,
shall
be paid into the estate of the member or, if no inventory in respect
of the member has been received by the Master
of the Supreme Court in terms of
section
9
of
the Administration of Estates Act, 1965 (Act No. 66 of 1965),
into
the Guardian’s Fund or unclaimed benefit fund.
”
[My emphasis].
[2]
The dispute however centred around the
interpretation of the passage above on when does the twelve months
start to run. Does it
start when the member dies or it starts when
the fund is made aware of the member’s death? The
interpretation becomes relevant
when the Fund becomes aware of the
member’s death, more than twelve months later, as it happened
in casu
.
The South African Retirement Annuity Fund (the Applicant), took a
view that as it became aware of the death after the twelve months
had
lapsed, there was no obligation on it to trace the member’s
dependants and to pay the death benefit due to them. It took
the
decision to pay the death benefit into the deceased member’s
estate.
[3]
Aggrieved by this decision, the Second
Respondent, who was the deceased member’s dependant and spouse,
complained to the office
of the Pension Fund Adjudicator, the First
Respondent. In interpreting the statutory provision above, the First
Respondent decided
that the duty on the Applicant to trace the
dependants starts the moment the Fund is made aware of the deceased
member’s
death, and that it does not start from the actual date
of death. On 23 June 2023, she proceeded to hand down the order in
the following
terms:
3.1
The decision by the Fund to pay the death
benefit into the deceased’s estate, is hereby set aside.
3.2
The Fund is directed to immediately
commence with investigations in terms of section 37C of the Act,
determine the deceased’s
beneficiaries and their benefit
entitlement within six weeks of this determination;
3.3
The Fund is ordered to notify the
beneficiaries of its decision in terms of the allocation of the death
benefit in paragraph [3.2]
above, within one week of completion
thereof; and
3.4
The Fund is ordered to pay the death
benefit to the deceased’s beneficiaries as identified in
paragraph [3.2] by no later
than 31 August 2023.
[4]
The Applicant took a dim view of this
interpretation as in its view, it goes against the literal
interpretation of the statutory
provision. It is on that basis that
it brought this application in terms of section 30P of the Act to
have the decision of the
First Respondent set aside. The application
is opposed by the Second Respondent.
[5]
Condonation.
Section 30P of the Act
provides,
“
30P
Access to Court
1.
Any party who feels aggrieved by a
determination of the Adjudicator may, within six weeks after the date
of the determination, apply
to the division of the High Court which
has jurisdiction, for relief, and shall at the same time give written
notice of his or
her intention so to apply to the other parties to
the complaint.
2.
The division of the High Court contemplated
in subsection (1) may consider the merits of the complaint made to
the Adjudicator under
section 30A(3) and on which the Adjudicator’s
determination was based, and may make any order it deems fit.
3.
Subsection (2) shall not affect the court’s
power to decide that sufficient evidence has been adduced on which a
decision
can be arrived at, and to order that no further evidence
shall be adduced.”
[6]
The application was issued on 29 September
2023, almost three months after the ruling by the First Respondent.
The application was
clearly out of time given the provisions above to
the effect that any application should be brought within six weeks
from the date
of the ruling sought to be reviewed, was made. It is
for this reason that the Applicant seeks an order condoning its
non-compliance
with the legislative provision. The duration by which
the issuing of the application was delayed does not appear to be
magnitude,
or there is no such submission made before the court. It
also does not appear like any party suffered substantial prejudice,
other
than the fact that any delay is generally prejudicial to the
prospective dependants, and in this case, the Second Respondent. The
condonation is not opposed by the Second Respondent. For these
reasons, condonation should be allowed.
[7]
Background
The Applicant is a
retirement annuity fund that was started in 1961.It is underwritten
and administered by Old Mutual Life Assurance
Company (South Africa)
Limited. It is also registered with the Financial Sector Conduct
Authority. It operates as a legal entity
in its own right and is
administered by a board of trustees.
[8]
Mr. M Viljoen (the deceased member) became
a member of the Applicant in 2006. He died on 26 December 2019
leaving a death benefit
of R52 120.53 (before tax), held by the
Applicant. At the time of his death, the deceased had not nominated a
beneficiary
to receive the death benefit and he left no will. At the
time the Applicant was informed of his death, no executor has been
appointed
to his estate, which is estimated to be below R250 000.00
in value. The Applicant learned about the death of the deceased
member for the first time on 28 March 2022, when the Second
Respondent submitted a claim to it.
[9]
The Second Respondent, Ms. SEM Viljoen, was
a spouse to the deceased member. She resides within the area of this
court’s jurisdiction.
She was a housewife throughout her life
who depended wholly on the deceased member. Her only source of income
is the social relief
grant she receives from the South African Social
Security Agency – SASSA, owing to her old age. This information
was advanced
by the Second Respondent to the Applicant in an attempt
to demonstrate that she was a dependant of the deceased. She did not
immediately
bring it to the attention of the Applicant that the
deceased had died because she was not aware that he was its member.
Her claim
was only submitted on her behalf by the brokers whom she
approached after she was referred to them.
[10]
Whereas the Applicant acknowledges that
section 37C(1)(a) of the Act mandates it to investigate and trace all
the deceased member’s
dependants and to pay them the death
benefit due to them; in this instance, it did not attempt to trace
them. The reason for not
doing so is that in its understanding of the
relevant statutory provision, that duty only arises if it (the
Applicant) learns of
the death within twelve months of the death of a
member. Since in this case it only learned of the death after the
twelve months
had lapsed, it decided not to investigate, but to
rather pay the death benefit into his estate.
[11]
The Pension Fund Adjudicator’s
ruling.
The Pension Fund
Adjudicator was cited in this application as the First Respondent.
She elected not to oppose or take part in the
proceedings. Her ruling
was attached to the founding affidavit. In the ruling, it appears
plainly clear that before penning down
her decision, the First
Respondent afforded the Applicant and the Second Respondent
opportunities to present their submissions.
At the end, the decision
boiled down to the proper interpretation of section 37C(1)(c) of the
Act.
[12]
The question before the First Respondent
was, when does the twelve months, within which the Fund is required
to finalise the tracing
and investigation of the deceased member’s
dependants, start counting? Is it from the date of death of the
deceased member,
or the date the Fund becomes aware of his/her death.
The Applicant was adamant that the literal interpretation of the
statutory
provision was the proper approach. It submitted that
section 37C(1)(a) & (c) of the statute obliges it to pay the
death benefit
to the estate if no dependant of the deceased member is
traced within twelve months from the date of his death. This remains
its
contention in this application.
[13]
The
First Respondent was alive to the contentious statutory provision
which was fully quoted in her ruling. She went on to express
the
following,
[2]
“
The
general rule expressed in section 37C(1) of the Act that the death
benefit does not form part of the estate is subject to three
exceptions. The Fund can pay a death benefit into the deceased’s
estate only under the following circumstances:
·
It has not identified any dependant and
there is no nominated beneficiary, but the estate’s liabilities
exceed its assets;
or
·
The deceased has no dependants and did not
designate a nominee in writing; or
·
The deceased has designated a nominee only
to receive a portion of the death benefit, and the remaining balance
must be paid to
the estate (see
Jacobs
NO v Central Retirement Annuity Fund and Another
(2001) 1 BPLR 1488 (PFA)).”
[14]
The
First Respondent further reasoned that section 37C of the Act
required the Fund to be proactive in locating the member’s
dependants and investigate the extent of their dependency. In
reaching this conclusion, she relied on an earlier decision of
Itumeleng
v SALA Pension Fund
.
[3]
In her analysis, it came out clear that the Fund would not know if
there are dependants without conducting an investigation. She
concluded as a result, that the twelve-months period starts running
from the time the Fund learns about the death of a member.
In
reaching this conclusion, the First Respondent relied on a decision
by the High Court in
Masindi
v Chemical Industries National Provident Fund
[4]
where
the court held,
“
Whilst
section 37C(1) does not expressly state that the 12 month’
investigation period to trace the dependants of a deceased
only
commences once the Fund has obtained knowledge of the death of the
deceased, the only logical interpretation of this section
is that a
Fund cannot comply with its obligation if the legislative requirement
for its imposition, namely the death of a member,
is not made known
to the Fund. In
Government
Employees Pension Fund Provincial Government of Gauteng v Buitendag &
Others
[5]
it was held that the employer in that matter had the obligation
to provide the Fund with information pertaining to the dependents
of
the deceased. By implication, the employer had to inform the Fund of
the death of the deceased as well. The 12 month’
period could
only have commenced to run from the time that the respondents became
aware that the deceased had died.”
[15]
Discussion.
I find the interpretation
in
Masindi
to be logical and in line with the purport of the
Legislature when it enacted section 37C of the Act. Any other
interpretation
would be absurd and defeating the purpose and the
spirit of the Act, which is to protect the member’s dependants
and give
them access to the benefits, without having to compete with
other creditors who lay their claims against the estate. I also hold
a view that if the Applicant’s interpretation was to prevail,
the Fund would end up with far shorter than the envisaged twelve
months to trace and investigate the dependants, upon death of a
member as practically, it is near impossible for a Fund to know
of
the death on the day a member dies. One would expect that after the
burial and mourning period, the Fund would be notified of
the death,
through the member’s employer. In those instances, that could
be a month or maybe two after the death, meaning
the Fund would be
left with ten or eleven months to trace and investigate the
dependants.
[16]
The
interpretation in
Masindi
also appears to be in line with approved general approach in many
other similar provisions, to the effect that the countdown only
commences when one is made aware of the root cause, as opposed to the
date of the root cause, irrespective of whether one has been
alerted
of that root cause. For example, prescription may not start running
on the date the debt becomes due if the creditor is
not aware of the
facts that give rise to the debt.
[6]
[17]
When counsel for the Applicant was invited
to comment on the practice adopted in respect of the prescription of
a debt, he submitted
that the provision in the Prescription Act
confirms his argument in that the Legislature was conscious of the
possibilities that
the death of a member may not become known to the
Fund early enough, as much as it knew that a creditor may not become
familiar
with the facts that give rise to the debt. The Legislature
however, so it argues, chose not to make a similar provision when it
comes to the Pension Fund Act, as it did in the Prescription Act,
which suggests that this could not have been an error or omission
on
its part.
[18]
In as much as the Supreme Court of Appeal
(the SCA) in
Buitendag
,
held that the employer had the obligation to provide the Fund with
information pertaining to the dependents of the deceased and
to
inform it of the death of the deceased, it appears that the
Legislature may not have envisaged the situation where it could
be
practically possible for the Fund to be unaware of the death of a
contributing member for longer than twelve months. It understandable
for the Legislature not to foresee this in that, practically, the
employer should be amongst the first to realise when a member
ceases
to work and/or contribute to the Fund. This would naturally force it
to investigate the cause thereof and bring it to the
attention of the
Fund. If this does not happen, and the Fund is not informed that a
member has ceased from making regular contributions,
it exposes the
employer or ‘the Fund’s failure in carrying out the
mandatory duties referred to by the SCA in
Buitendag
.
[19]
Both the Applicant and the Second
Respondent expressly made it clear that they do not challenge the
constitutional validity of the
provisions of section 37C(1)(c) of the
Act. They only want the court to confirm the correct interpretation
thereof. There seems
to be consensus that the above statutory
provision is capable of more than one interpretations. The first
interpretation is the
one advanced by the Applicant and the other
one, by the Second Respondent, which is in line with the First
Respondent’s ruling.
I hold a view that the interpretation
advanced by the Applicant lacks logic for going against the purpose
and the spirit of the
Act.
[20]
In
De
Beer N.O. v North-Central Local Council and South-Central Local
Council (Umhlatuzana Civic Association Intervening)
,
[7]
the Constitutional Court held that, where a statutory provision is
capable of more than one reasonable construction, one of which
would
lead to constitutional invalidity and the other not, a court ought to
favour the construction which avoids constitutional
invalidity,
provided such interpretation is not unduly strained.
[21]
The interpretation advanced by the
Applicant would not only defeat the purpose of the Legislature in
enacting section 37C(1) of
the Act; but would also fail in ensuring
that the Fund carries out its mandate to trace the dependants and
investigate their dependency
on the deceased member. The Fund could
simply sit back instead of being proactive, until the twelve months
is over; only for it
to claim that it did not investigate because it
only became aware of the death after twelve months had lapsed. There
are no safeguard
measures through which the Fund can be held
accountable for doing nothing to investigate while years go by
without any further
contribution from a member who, by anyone’s
judgment, it would mean that he has died or ceased to work. The
lacuna in the
Act, real or perceived, cannot be used as a means to
condone the failure by any party to heed the mandate given by the
same statutory
provision. If this is allowed, the statute shall
become self-destructive for failing to police adherence to its
provisions.
[22]
The
Applicant’s interpretation is not consistent with the general
purpose of the Act that mandates the Fund to be proactive
in tracing
and investigating. It is too rigid, and in the process, it forgets
the purpose for the existence of the same statutory
provision it
attempts to interpret. It is for this reason that in
Fundsatwork
Umbrella Pension Fund v Guarnieri and Others
[8]
,
the SCA said, where there is doubt about the identity of the
dependants who are to receive a distribution, or as to the correct
distribution among those dependants, the board is not bound by the
twelve months period, but may delay for a time necessary to
resolve
the issue.
[23]
In light of the above, I conclude that the
order made by the First Respondent is consistent with the purpose of
the Act. The interpretation
preferred by the Applicant has a
potential to prejudice the dependants of the deceased member. For
these reasons, the application
to set aside the decision of the First
Respondent has to fail.
[24]
As
for costs, counsel for the Second Respondent referred this court to
the words of the Constitutional Court in
Mudau
v Municipal Employees Pension Fund
[9]
where it said,
“
We
were informed that counsel for Mr Mudau, Mr S Khumalo SC, Mr K
Magan, Ms L Mbatha and Mr B Letuka represented Mr Mudau
pro
bono
.
They did so with aplomb and commendable ability. This act of public
service is recognised and acknowledged as an important contribution
to advancing the objective of access to justice for all. Section
92(1) of the Legal Practice Act
provides
that, even when legal services are rendered for free, when costs
become payable to a litigant, the award of costs that
this court
makes in favour of that litigant is deemed to have been ceded to the
legal practitioner. This provision finds application
in these
proceedings insofar as it relates to the costs of counsel and the
costs award should therefore include these costs, with
the costs of
two counsel being warranted.
”
[25]
The words above were directed to the
services offered by the same counsel who appeared for the Second
Respondent in this case. This
court was also informed that he and the
instructing attorneys offered their services to the Second
Respondent, who is an unemployed
widow,
pro
bono
. I think it is befitting to repeat
every word expressed by the Constitutional Court given the commitment
and hard work they dedicated
to this matter.
The
award of costs that this court makes in favour of that litigant is
deemed to have been ceded to the legal practitioner as provided
in
Section 92(1)
of the
Legal Practice Act, No. 28 of 2014
.
[26]
For the aforesaid reasons, I make the
following order.
[26.1] The Applicant’s
failure to comply with section 30P of the Pension Fund Act is
condoned.
[26.2]
The application is dismissed with costs on party and party scale C.
[26.3] The order of the
First Respondent is confirmed.
[26.4] The Applicant is
ordered to comply with the First Respondent’s order as per
paragraphs 3.1 to 3.4 of this judgment,
within 60 days from the date
of this order.
TV RATSHIBVUMO
JUDGE OF THE HIGH
COURT
FOR
THE APPLICANT:
ADV.
E FAGAN SC
INSTRUCTED
BY:
WALKERS
INC
C/O:
KRUGER
& PARTNERS INC
MBOMBELA
FOR
THE RESPONDENT:
ADV.
S KHUMALO SC
INSTRUCTED
BY:
RW
ATTORNEYS
C/O:
MAKHOBA
ATTORNEYS INC
:
MBOMBELA
DATE
HEARD:
23
JULY 2024
JUDGMENT
DELIVERED:
07
AUGUST 2024
[1]
Para.
(a) was substituted by s. 5 of Act 22/96 and s. 51 of Act 45/2013
w.e.f. 28 February 2014.
[2]
See
paragraph 5.7 of the First Respondent’s ruling.
[3]
[2007]
3 BPLR 311 (PFA).
[4]
[2017]
JDR 0480 (GJ) at paragraph 27.
[5]
[2007]
1 All SA 445
(SCA) at paragraph 20.
[6]
See
section 12(3)
of the
Prescription Act, No. 68 of 1969
which
provides, “
[a]
debt shall not be deemed to be due until the creditor has knowledge
of the identity of the debtor and of the facts from which
the debt
arises
…”
[7]
[2001]
ZACC 9
;
2002 (1) SA 429
(CC);
2001 (11) BCLR 1109
(CC) at paragraph
24.
[8]
2019
(5) SA 68 (SCA).
[9]
2023
(10) BCLR 1165 (CC); [2023] 11 BLLR 1109 (CC); (2023) 44 ILJ 2641
(CC) (2 August 2023)
at paragraph 78.