THE SUPREME COURT OF APPEAL
OF SOUTH AFRICA
Reportable
Case no: 32/05
In the matter between:
GOVERNMENT EMPLOYEES PENSION FUND Appellant
and
JANE NAIDOO 1
ST Respondent
SIVANAUNDAN NAIDOO 2 ND Respondent
_______________________________________________________
Coram : SCOTT, NAVSA, MTHIYANE, LEWIS JJA
et MAYA AJA
Date of Hearing : 17 November 2005
Date of delivery : 28 November 2005
Summary: Interpretation of s 21(1 ) of Government Employees Pension
Law 1996 – wife marr ied in community of propert y in circumstances of the
case entitled on divorce to recover from the pension fund her share of
husband’s pension benefit
_______________________________________________________
JUDGMENT
_______________________________________________________
SCOTT JA/…
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SCOTT JA:
[1] The respondents in this appeal were formerly married. Their
marriage, which was in community of property, was dissolved in the
Durban High Court on 7 May 2004. The first respondent (Mrs Naidoo)
was the plaintiff in the divorce proceedings. The second respondent
(Mr Naidoo) did not oppose them. The order granted in Mrs Naidoo’s
favour included the following:
‘(d) That the Plaintiff is entitled in term s of Sections 7(7)(a) and 7(8)(a)(i) of the
Divorce Act No 70 of 1979 (hereinafter referred to as the said Act) to a one
half share of the Defendant’s interest in and to the Defendant’s Pension
Fund by virtue of his employment with the KwaZulu-Natal Provincial
Administration (hereinafter referred to as the said Fund) calculated at the
date of divorce between the parties but payable when the benefits of the
said Fund accrue to the Defendant.
(e) That the Manager of the said fund is directed to endor se its records in
terms of Section 7(8)(a)(ii) of the said Act to reflect the Plaintiff’s right
as aforesaid in and to the Defendant’s interest in the said Fund;
(f) That in terms of Section 7(8)(a)(i) of the said Act the said Fund and/or
the Defendant shall pay to the Plaintiff one half of the value of the
Defendant’s interest in and to the said Fund calc ulated at the date of
divorce but payable w hen the benefits ther eof accrue to the
Defendant.’
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The orders in terms of th ese paragraphs were granted per incuriam.
Subsections 7(7) and 7(8) of th e Divorce Act 70 of 1979 are
concerned with pension benefits wh ich have not yet accrued to the
member spouse. In so far as is relevant the subsections read:
‘(7)(a) 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.
(b) The amount so deemed to be part of a party’s assets, shall be reduced
by any amount of his pen sion interest which, by virtue of paragraph (a), in a
previous divorce –
(i) was paid over or awarded to another party; or
(ii) for the purposes of an agreement contempl ated in subsection (1), was
accounted in favour of another party.
(c) . . . .’
‘7(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 –
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(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) an endorsement be m ade in the reco rds of that f und that that
part of the pension interest concerned is so payable to that other
party;
(b) . . . .’
‘Pension interest’, in turn, is defined in s 1(1) of the Divorce Act as
follows:
‘"Pension interest", in relation to a party to a divorce action who –
(a) is a member of a pension fund (exc luding a retirement annuity fund),
means the benefits to wh ich 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;
(b) . . . . '
What these provisions envisage is an award to the non-member
spouse of any part of the member s pouse’s ‘interest’ calculated as at
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the date of the divorce but with effect from some time in the future
when the pension benefit accrues to the member spouse. (Cf Old
Mutual Life Assurance Co (SA) Ltd v Swemmer 2004 (5) SA 373
(SCA) para 18.) Once the pension be nefit has accrued the provisions
of ss 7(7) and 7(8) are no longer applicable. See De Kock v Jacobson
1999 (4) SA 346 (W) at 349F-G. In the present case, Mr Naidoo
resigned from his post at the Clairwood Hospital in February 2004. By
reason of his resignation he ceas ed to be a member of the appellant
(‘the fund’). See rule 5.2.2 of the Funds Rules contained in the First
Schedule to the Government Empl oyers Pension Law, 1996. His
pension benefit thereupon accrued to t he joint estate of himself and
his wife. An order in terms of ss 7(7) and 7(8) of the Divorce Act was
accordingly no longer competent.
[2] There was some dispute as to the circumstances in which the
terms of the order relating to Mr Naidoo’s pension interest came to be
granted. It is unnecessary to resolve it. What is common cause is that
in a letter dated 6 May 2004 (the day before the di vorce) addressed
by the fund to Mrs Naidoo’s att orneys, the latter were informed that
the fund had no objection to an ord er being made in terms of s 7(8)
provided Mr Naidoo was still a contributing member of the fund at the
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date of divorce. The significance of the proviso appears, however, not
to have been appreciated and the order was granted.
[3] The fund failed to comply with paragraphs (d), (e) and (f) of the
divorce order, contending that they were unenforceable. On 8 June
2004 Mrs Naidoo applied ex parte for, and was granted, an order in
the form of a rule nisi which, shortly stated:
(a)(i) directed Mr Naidoo to do all things necessary to comply with the
administrative requirements of the fund to facilitate payment;
(ii) restrained and interdicted him from receiving from the fund
Mrs Naidoo’s ‘interest in the proceeds from the fund’.
(b)(i) interdicted the fund from paying Mrs Naidoo’s interest in the
proceeds from the fund to Mr Naidoo, and
(ii) directed the fund to pay Mrs Naidoo's in terest in the proceeds
to Mrs Naidoo’s attorneys on her behalf.
Mr Naidoo filed no opposing papers and on the extended return day
the court a quo was informed that the dispute between Mr and Mrs
Naidoo had ‘by and large been reso lved’. We were informed by
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counsel for the fund that Mr Naidoo was present in court at the time.
The fund, on the other hand, opposed the order sought against it. In
an answering affidavit it was pointed out that for the reasons already
mentioned the order in terms of s 7(8) of the Divorce Act was granted
in error and was unenfor ceable. It was also cont ended that the fund
was precluded from paying any part of the pension benefit to Mrs
Naidoo by reason of the provisions of s 21(a) of the Government
Employees Pension Law 1996. Th ere was no suggestion that the
benefit was subject to a deduction in terms of s 7(7)(b) of the Divorce
Act or any other permissible claim.
[4] Mrs Naidoo did not dispute that Mr Naidoo had left his
employment before the divorce and that his pension benefit had
accrued to the joint estate. However, she stressed both in her
founding and replying affidavits that the pension benefit was the only
asset in the joint estate which, by reason of the divorce, had to
be divided equally between herself a nd Mr Naidoo. Neither the fund
nor Mr Naidoo contested this allega tion. As far as the need for the
order against the fund was concerned, she said that Mr Naidoo was
not only secretive regarding his pension benefit but had repeatedly
told her that he would make her ‘suffer’.
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[5] The court a quo (Jappie J) found on the facts that were
common cause that on divorce Mrs Naidoo became entitled to half of
the pension benefit and rejected the fund’s contention that it was
precluded by s 21(1) of the Gove rnment Employees Pension Law
from paying her half share to her. The rule nisi in so far as it related to
the fund was accordingly made final. T he appeal is with the leave of
the court a quo.
[6] Mrs Naidoo elected to abide the decision of this court and there
was accordingly no appearance on her behalf. There was also no
appearance on behalf of Mr Na idoo who in pursuance of the
settlement with Mrs Naidoo took no further part in the proceedings.
The issue in this court was ultimately the proper interpretation of s
21(1) of the Government Employees Pension Law. Counsel for the
fund argued that it pre cluded payment to Mrs Naidoo and that the
court a quo had erred in holding the contrary. The section reads:
‘(1) No benefit or right in respect of a benefit payabl e under this Act shall be
capable of being assigned or transferred or otherwise ceded or of being pledged
or hypothecated or, save as is provided in section 26 or 40 of the Maintenance
Act, 1998, and section 7(8) of the Divorce Act, 1979 (Act 70 of 1979), be liable to
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be attached or subjected to any form of execution under a judgment or order of a
court of law.’
[7] It will be observed that the sectio n covers two situations. First, it
prohibits the ‘benefit or right’ from ‘being assigned or transferred or
otherwise ceded or of being pledged or hypothecated’. The object, no
doubt, is to prohibit a member from hi mself dealing with the benefit in
the manner contemplated. (Section 21(2) provides that if he does, the
fund may withhold payment.) But nothing like this arises in the
present case. Secondly, the sectio n seeks to protect the benefit
against the creditors of the member. The benefit may not be ‘attached
or subject to any form of execution under a judgment or order of a
court of law’. It is this second leg of the section that counsel contends
precluded the court a quo from making the order it did. But Mrs
Naidoo is not a creditor seeking to attach, or execute a judgment
against, the benefit as one would an asset in Mr Naidoo’s estate.
Prior to the divorce the benefit ac crued to the joint estate. It is the
only asset in the joint estate. Mrs Naidoo accordingly acquired an
undivided half share in the benefit. On divorce, she became entitled
to her half share. That is what she claims. In my view such a claim is
not precluded by the section. Nor, I should add, could Mr Naidoo
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have cause for complaint if the fund pays Mrs Naidoo her half share.
He was joined as a party and was aware of the relief sought against
the fund, yet he chose to settle th e claim in so far as relief was
claimed against him and ignore the relief claimed against the fund,
notwithstanding his interest in the latter.
[8] The appeal is accordingly dismissed.
________________
D G SCOTT
JUDGE OF APPEAL
CONCUR
NAVSA JA
MTHIYANE JA
LEWIS JA
MAYA AJA
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