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1999
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[1999] ZASCA 27
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Kaplan and Katz NNO and Another v Proffesional and Executive Retirement Fund and Another (292/97) [1999] ZASCA 27; [1999] 3 All SA 1 (A); 1999 (3) SA 798 (SCA) (14 May 1999)
IN THE SUPREME COURT OF APPEAL
OF SOUTH AFRICA
In the matter of:
MARK OLIVER KAPLAN
MERLE SANDRA KATZ NNO
in their capacity as trustees of the
Daniel Kaplan Trust
First Appellant
MARK OLIVER KAPLAN
MERLE SANDRA KATZ NNO
in their capacity as trustees of the
Ilan Jonathan Kaplan
Trust
Second Appellant
and
THE PROFESSIONAL AND EXECUTIVE RETIREMENT FUND
(WLD case 96/16523)
THE VIP RETIREMENT ANNUITY FUND
First Respondent
(WLD case 96/16524)
LIBERTY LIFE ASSOCIATION OF AFRICA LTD
Second Respondent
CORAM
:
HEFER, GROSSKOPF, HOWIE, PLEWMAN and STREICHER
JJA
DATE OF HEARING
:
3 May 1999
DATE OF DELIVERY
: 14 May 1999
J U D G M E N T
HOWIE JA
:
The late Arthur Ralph Kaplan was a member of two pension funds managed by
Liberty Life Association of Africa Ltd ("Liberty Life").
In terms of the rules
of the funds he nominated his children (two minor sons) as the beneficiaries in
respect of each fund in the
event of his death.
He also created a trust for the benefit of each son. On his death in July
1990 he was survived by three dependants - the two boys
and his widow. (She is
not their mother.) Liberty Life, instead of acting in terms of the nominations,
allocated the benefits payable
by the funds to all three dependants.
As a result, the joint trustees of each trust (to whom, it was common cause,
the boys’ benefits must be paid) sought an order
in the High Court at
Johannesburg,
inter alia
, declaring that the benefits fell to be paid to
them to the exclusion of the widow. The principal respondents cited were the
funds
and Liberty Life. The deceased’s widow was also cited but she did
not oppose and has taken no part in the litigation. The matter
was heard by
Goldstein J who held that Liberty Life, in apportioning the benefits as they
did, acted in accordance with the law and
the trustees were therefore refused
relief. With the leave of the Court below they appeal.
The judgment of the Court
a quo
is reported as
Kaplan and Another
NNO v Professional and Executive Retirement Fund and Others
1998 (4) SA 1234
(W).
The funds in question are registered pension fund organisations in terms of
the
Pension Funds Act 24 of 1956
("the
Act"). The
Act does
not deal with the
manner of appointment of a fund manager nor does it indicate who is eligible to
be appointed. In various sections
reference is made to "the person managing the
business of the fund" but "person" is merely defined as "(including) any
committee
appointed to manage the affairs of a fund". In the Interpretation Act
33 of 1957, however, "person" is defined as including any registered
company.
Liberty Life, a registered insurance company, was therefore eligible to be
appointed and was, as indicated earlier, in fact
appointed as manager of the
business of the funds concerned.
The Act provides for a fund to have rules and the rules regulate, amongst
other matters, the conditions under which a member or other
person may become
entitled to a benefit (s 11(d)). The rules of both funds enable a member to
nominate beneficiaries to receive the
due benefits in the event of the
member’s death. In the absence of a nomination the rules require that a
deceased member’s
benefits be paid to dependants. Both the Act and the
rules define the word "dependant" but it suffices to say for present purposes
that the deceased’s sons and his widow - his dependants at common law -
are also dependants in terms of those definitions.
It was common cause
throughout that the deceased’s nominations were validly made and that they
were accepted by the funds as
made in accordance with the rules. It was also
undisputed that, but for the Act, the nominations would have entitled the sons
to
all the benefits and the trustees to the relief claimed.
The crucial question, therefore, is whether the Act overrides the
nominations.
The main argument for the trustees is that the Act does not. It is said that
the nominations must prevail because the Act does not
cover the present
situation.
Now the material terms of the Act are contained in s 37 C (1) as it read in
1990. Omitting irrelevant wording, the subsection then
provided as follows:
"(1) Notwithstanding anything to the contrary contained in any law or in the
rules of a registered fund, any benefit payable by such
a fund in respect of a
deceased member, shall . . . 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, in such proportions as may be deemed equitable by the
person managing the business
of the fund, to such dependants.
(b) 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 the member has
designated in writing to the fund a nominee who is not a dependant of the
member, to receive the benefit or such
portion of the benefit as is specified by
the member in writing to the fund, the benefit or such portion of the benefit
shall be
paid to such nominee: Provided that where the aggregate amount of the
debts in the estate of the member exceeds the aggregate amount
of the assets in
his estate, so much of the benefit as is equal to the difference between such
aggregate amount of debts and such
aggregate amount of assets shall be paid into
the estate and the balance of such benefit or the balance of such portion of the
benefit
as specified by the member in writing to the fund shall be paid to the
nominee.
(bA) . . .
(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
Estates Act, 1965 (Act No. 66 of 1965), into the Guardian’s Fund."
The contention for the trustees put more specifically is this. The subsection
aims to exclude from the member’s estate only
that which would otherwise
have fallen within it. The nominations, it is argued, constituted contracts for
the benefit of third parties
and their legal effect would have been that the
benefits in issue would not have fallen into the deceased’s estate.
Therefore
the benefits were not assets to which the subsection applied.
To my mind this argument cannot succeed. There is nothing to convey the
suggested limitation of the subsection’s ambit to only
such benefits as
would otherwise have been assets in the estate.
The plain meaning of the subsection is this. All benefits payable in respect
of a deceased member, whether subject to a nomination
or not, must be dealt with
in terms of one or other of the quoted subparagraphs. In other words
none
fall into the estate save in the circumstances stated in subparagraphs (b) and
(c). In addition, these nominations having been made
in terms of the rules, and
the rules requiring the benefits to go to the nominated beneficiaries, the
trustees’ case is inextricably
linked to the rules. However, as the phrase
"(n)otwithstanding anything to the contrary . . . contained in the rules" makes
unmistakably
clear, it matters not in the present situation what the rules say
— the benefits must be disposed of according to the subsection’s
statutory scheme.
In this case the benefits had to be disposed of in terms of s 37C (1)(a).
They were.
The only other submission advanced in support of the appeal was that the
division was undertaken and effected in conflict with the
rule
delegatus
delegare non potest
.
It was not open to dispute on the papers that the Liberty Life employee who
performed the allocation was properly authorised by competent
and authorised
superiors within the company. The argument was, however, that Liberty Life was
itself a delegee and, therefore, in
terms of the maxim, incapable in law of
delegating further. Alternatively, so it was submitted, if subdelegation was in
order then
the employee concerned was inappropriately subordinate.
There is no merit in either contention. Assuming in the trustees’
favour, firstly, that the maxim applies at all in the present
context, secondly,
that Liberty Life was indeed a delegee, and, thirdly, that the company’s
internal authorisation constituted
the relevant employee a delegee (as opposed
to an agent), it is plain that once a "person managing the business of a fund"
is a company
- which cannot act other than through duly empowered officers or
employees - then such manager’s authority to delegate is necessarily
implied. Once that is so, there is no warrant, especially in the case of a large
company, to confine the delegated power to those
of senior rank. (No attack was
made in the papers on the competence or efficiency of the employee
concerned.)
It follows that the Court
a quo
was right.
As to costs, the respondents on appeal were represented by two counsel and in
the heads of argument on their behalf the costs occasioned
by such employment
were requested. Significantly, only one counsel represented them in the court
below and only one counsel represented
the trustees at all stages. Considering
the nature of the legal question involved in the main issue on appeal I am not
disposed to
think that this is a case in which an order for the costs of two
counsel is appropriate.
The appeal is dismissed with costs.
_________________
C T HOWIE
HEFER JA,GROSSKOPF JA, PLEWMAN JA, STREICHER JA CONCUR