About SAFLII
Databases
Search
Terms of Use
RSS Feeds
South Africa: Western Cape High Court, Cape Town
SAFLII
>>
Databases
>>
South Africa: Western Cape High Court, Cape Town
>>
2014
>>
[2014] ZAWCHC 30
|
|
Herbst v Sanlam Life Insurance Limited and Others (13776/2012) [2014] ZAWCHC 30 (12 March 2014)
REPUBLIC OF SOUTH
AFRICA
IN THE HIGH COURT
OF SOUTH AFRICA
(WESTERN CAPE
DIVISION, CAPE TOWN)
Case
no: 13776/2012
DATE:
12 MARCH 2014
MARIA SUSANNA
ELIZABETH
HERBST
.....................................................................
APPLICANT
v
SANLAM LIFE
INSURANCE
LIMITED
........................................................
FIRST
RESPONDENT
HANELIE HERBST
(ON BEHALF OF SEAN HERBST)
..........................
SECOND
RESPONDENT
Court: Justice J
Cloete
Heard: 10 March
2014
Delivered: 12
March 2014
JUDGMENT
CLOETE J:
[1] The applicant by
way of amended relief seeks a declaratory order that she is entitled
to 50% of the proceeds of a certain living
annuity which had its
origin in the erstwhile joint estate of herself and the late Willem
Jacobus Herbst (‘the deceased’),
which joint estate was
terminated by divorce on 20 November 1998. Coupled to this relief are
prayers that the first respondent
(and to the extent necessary, the
second respondent) pay to the applicant 50% of the proceeds of such
living annuity. The second
respondent is the guardian of Sean Herbst,
the sole beneficiary of the living annuity and the deceased’s
grandson, who was
nominated as such by the deceased after the divorce
but prior to his death. During the course of argument it emerged that
the amended
Notice of Motion has not been served upon the second
respondent. The applicant thus only persists with the relief sought
against
the first respondent at this stage.
[2] The applicant
and the deceased were married to each other in community of property
on 9 October 1970. During the subsistence
of the marriage the
deceased became a member of the Central Retirement Annuity Fund (‘the
Fund’). In order to entrench
its obligations to the deceased,
the Fund took out Sanlam Policy No. 7462821X5 (‘the retirement
annuity’). The retirement
annuity commenced on 1 August 1983.
[3] The applicant
and the deceased were divorced on 20 November 1998. On the date of
divorce the applicant was the sole beneficiary
nominated to receive
the death benefits under the retirement annuity.
[4] The settlement
agreement incorporated in the order of divorce provides that:
‘Die partye
plaas op rekord dat die Verweerder die eienaar is van ʼn sekere
Sanlam Annuiteit en Uitkeur Polis [sic] waarvan
die Eiseres huidiglik
die begunstigde is. Die partye kom ooreen om elkeen R100.00 (EEN
HONDERD RAND) per maand by te dra as premie
tot gemelde polis en dat
hulle in gelyke dele geregtig sal wees op die opbrengste en voordele
van gemelde polis. Die partye kom
ooreen dat hierdie Skikkingsakte en
Egskeidingsbevel na uitreiking daarvan by Sanlam opgeteken sal word
om die partye se onderskeie
belange in die polis te registreer.’
[5] After the
divorce was granted neither the applicant nor the deceased made any
further contributions to the retirement annuity.
On 1 August 2007 it
matured. The deceased was at that time still alive. On 8 November
2007 the first respondent (‘Sanlam’)
calculated the
amount to which the applicant was entitled as being R71 293.43 and
paid this amount to her on 7 May 2008.
[6] Sanlam also paid
an amount of R218 032.21 to the deceased on 7 May 2008. The balance
remaining in the retirement annuity of
R436 065 (which represented
two-thirds of the total amount thereof) was used by the deceased to
purchase a living annuity under
Glacier Plan No 2385391 (‘the
living annuity’) on 16 May 2008, and he lived off the income
therefrom until his death.
Although a separate legal entity which
should have been joined in these proceedings, Glacier has informed
Sanlam that it does not
require to be joined.
[7] On 7 August 2008
the applicant’s then attorney addressed a letter to Sanlam
disputing that the amount of R71 293.43 received
by her represented
the amount to which she was entitled in terms of the settlement
agreement. It was alleged that the applicant
was entitled to 50% of
the proceeds and benefits of the retirement annuity as set out in the
settlement agreement, which in turn
had been made an order of court.
It was alleged that Sanlam was bound by the relevant provisions of
the settlement agreement, although
it had not been joined as a party
to the divorce proceedings, nor had it been furnished with any prior
notice of the terms of the
settlement agreement. Demand was made for
payment of the balance “due” to the applicant at that
stage. It is common
cause that Sanlam failed to comply with the
demand contained in the aforementioned letter. The applicant admits
that the aforementioned
letter was sent to Sanlam and that no further
steps were taken by her against Sanlam thereafter until some 3 ½
years later
on 17 May 2012.
[8] The deceased
passed away on 6 May 2012, with the consequence that the living
annuity devolved upon his appointed beneficiary
(Sean Herbst).
[9] On 17 May 2012
the applicant, through her current attorney of record, made demand
upon Sanlam to cease any further payments
from the living annuity
until finalisation of these proceedings. When Sanlam failed to
comply, the applicant launched urgent proceedings
in this court and
obtained an interdict preventing payment (to which Sanlam ultimately
consented without admission of liability)
pending the outcome of this
application. Sanlam opposes the relief sought and at this stage it is
unclear whether the second respondent
will do so, although the
indications are that she will.
[10] In essence, the
applicant’s case is that Sanlam was bound to give effect to the
terms of the agreement reached between
herself and the deceased as
contained in their settlement agreement. On the other hand, it is
Sanlam’s case that it was only
obliged to endorse the
retirement annuity in accordance with the relevant statutory
provisions relating to a spouse’s interest
in a pension fund
for purposes of the Divorce Act, 70 of 1979 (‘the
Divorce Act&rsquo
;)
as read with the Pension Funds Act, 24 of 1956 (‘the
Pension
Funds Act&rsquo
;). It is also Sanlam’s case that, whilst the
applicant may have a claim against the deceased’s estate or the
second
respondent, she has no claim against Sanlam.
[11]
S 37A(1)
of the
Pension Funds Act provides
as follows:
37A. Pension
benefits not reducible, transferable or executable.—(1) Save to
the extent permitted by this Act, the Income
Tax Act, 1962 (Act No.
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 a determination of a judgment debtor’s
financial position in terms of section 65 of the Magistrates’
Courts Act, 1944 (Act No. 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 any such benefit or any benefit in pursuance of such
contributions, or part thereof, to any one or more of
the dependents
of the member or beneficiary or to a guardian or trustee for the
benefit of such dependent or dependents during
such period as it may
determine.’
[12]
S 7(7)(a)
of
the
Divorce Act stipulates
that the ‘pension interest’ of
a party to a divorce action shall be deemed to be part of his or her
assets, subject
to certain exceptions which are not relevant here.
S
7(8)(a)
stipulates that, notwithstanding the provisions of any other
law or the rules of any pension fund, a court granting a decree of
divorce in respect of a member of such fund may make an order that
any part of the pension interest of that member which by virtue
of
s7(7)
is due or assigned to the other party to the divorce action
concerned, shall be paid by the fund to that other party when any
pension
benefits accrue in respect of that member.
[13] When the
applicant and the deceased divorced in 1998,
s 7(8)(ii)
of the
Divorce Act stipulated
that the obligation on a pension fund was to:
‘[Make] an
endorsement… in the records of that fund that that part of the
pension interest concerned is so payable
to that other party.’
[14] ‘[P]ension
fund’ and ‘pension interest’ are in turn defined in
s 1(1)
of the
Divorce Act as
follows:
“pension fund”
means a pension fund as defined in section 1 (1) of the Pension Funds
Act, 1956 (Act No. 24 of 1956),
irrespective of whether the
provisions of that Act apply to the pension fund or not;
[Definition of
“pension fund” added by s. 1 of Act No. 7 of 1989.]
“pension
interest”, in relation to a party to a divorce action who—
(a) is a member of a
pension fund (excluding a retirement annuity fund), means the
benefits to which 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) is a member of a
retirement annuity fund which was bona fide established for the
purpose of providing life annuities for the
members of the fund, and
which is a pension fund, means the total amount of that party’s
contributions to the fund up to
the date of the divorce, together
with the total amount of annual simple interest on those
contributions up to that date, calculated
at the same rate as the
rate prescribed as at that date by the Minister of Justice in terms
of section 1 (2) of the Prescribed
Rate of Interest Act, 1975 (Act
No. 55 of 1975), for the purposes of that Act’.
[15] Accordingly a
‘pension interest’ has a specific meaning for purposes of
divorce proceedings, and there is a statutory
method of calculating
the value of the ‘pension interest’ of a member of a
retirement annuity, namely the total amount
of the contributions to
the fund up to the date of divorce plus annual simple interest
thereon. It is not in dispute that this
was how Sanlam calculated the
amount due to the applicant of R71 293.47, being 50% of the value of
the deceased’s pension
interest at date of divorce. Any amount
not yet accrued to the deceased as at date of divorce did not
constitute a patrimonial
benefit to which the applicant might have
been entitled upon divorce: see Old Mutual Life Assurance Co (SA) Ltd
and Another v Swemmer
2004 (5) SA 373
(SCA) at para [19]; Eskom
Pension and Provident Fund v Krugel and Another
2012 (6) SA 143
(SCA)
at para [11].
[16] In the Krugel
case at para [8] the court held that: ‘a pension fund’s
right to make deductions from a pension benefit
is highly
circumscribed and may be exercised only as expressly provided by
section 37D and
section 37A
…’ of the
Pension Funds Act.
[17
] The clause in
the settlement agreement relied upon by the applicant is thus in
conflict with the aforementioned provisions. The
provisions in fact
prevent Sanlam from giving effect to the parties’ intention as
expressed therein.
[18] The deceased
was therefore unable, as he purported, to bind Sanlam to transfer his
right to 50% of the future benefits under
the retirement annuity to
the applicant in terms of the settlement agreement, whether or not he
intended in good faith to do so;
and irrespective of whether he
intentionally waived his right to rely on those statutory provisions.
The applicant, who had no
entitlement to the future benefits under
the
Divorce Act, was
similarly unable to do so.
[19] Sanlam was
obliged to act in the manner in which it did. In addition, and as
already mentioned, Sanlam was not a party to the
divorce proceedings
which culminated in the settlement agreement being made an order of
court. That portion of the court order
which fell foul of the
statutory provisions is a nullity insofar as Sanlam is concerned.
Sanlam was thus entitled to disregard
it without having to take steps
to have it set aside: see Swemmer at para [24].
[20] Sanlam also
contends that any claim that the applicant might have against it has
in any event prescribed in terms of
s 11(d)
as read with
s 12(1)
and
(3) of the
Prescription Act 68 of 1969
. It is submitted that more
than three years have elapsed since, on her own version, the
applicant’s erstwhile attorney despatched
the initial letter of
demand to Sanlam on 7 August 2008.
[21] Clearly the
applicant was aware, by that date, both of the identity of the
“debtor” and of the facts from which
the “debt”
arose. This notwithstanding, she failed to take any further steps
against Sanlam until 17 May 2012.
[22] During argument
the applicant’s counsel sought to distinguish between the
earlier claim contained in the letter of 7
August 2008, namely that
based on what the applicant contended was due to her under the
retirement annuity at that stage, and the
applicant’s “new”
claim to 50% of the proceeds of the living annuity which, it was
submitted, only arose on the
date of the deceased’s death,
being 6 May 2012. She sought to draw this distinction after conceding
that, but for the latter
claim, all other claims have by now
prescribed.
[23] This
distinction is artificial. That portion of the retirement annuity
that the deceased transferred to the living annuity
accrued to him on
16 May 2008. This much is clear when regard is had to the fact that,
on the applicant’s own version, the
living annuity commenced on
16 May 2008 and the deceased received the benefit thereof by way of
monthly income from 19 May 2008
until his death.
[24] It accordingly
follows that the applicant’s claim against Sanlam, to the
extent that it might exist, has nonetheless
prescribed.
[25] Given that
Sanlam has been successful in its opposition to the relief sought,
there is no reason why costs should not follow
the result. There are
three costs orders which are standing over for determination. The
first relates to the urgent application
launched by the applicant at
the outset of these proceedings. The applicant’s counsel
submitted that, because Sanlam failed
to furnish the undertaking
demanded, and only consented to the interim relief after the
application was launched, Sanlam should
bear the costs thereof. I
disagree. Sanlam was clearly entitled, not only to oppose the main
relief subsequently sought, but also
to decline to accede to the
applicant’s demand because of the direct and substantial
interest of the second respondent.
[26] Insofar as the
second and third reserved costs orders are concerned, in the first
instance, the applicant’s legal representatives
failed to
follow the provisions of practice note 37(19) to compel the filing of
Sanlam’s answering affidavit. Instead the
applicant, despite
having been informed thereof, insisted on the premature set down of
the matter, causing Sanlam to deliver a
notice in terms of
rule 30
which resulted in the matter being postponed. In the second instance,
the matter was again not properly enrolled through the registrar
and
the court file was also not placed in order by the applicant’s
legal representatives. It is thus appropriate that the
applicant
should be ordered to bear these costs as well.
[27] In the result
the following orders are made:
1. The application
against the first respondent is dismissed with costs, such costs to
include the costs incurred by the first respondent
in respect of the
urgent application launched on 18 July 2012 and the postponements of
the main application on 7 November 2012
and 13 November 2013.
2. The relief sought
against the second respondent is postponed sine die.
J I CLOETE