GN v JN

• Jurisdiction: South Africa
• Court: Supreme Court of Appeal
• Judge: Mpati AP, Seriti JA, Petse JA, Swain JA and Makgoka AJA
• Judgment Date: 04 November 2016
• Citation: 2017 (1) SA 342 (SCA)
• Hearing Date: 23 August 2016
• Docket Number: 600/2015 [2016] ZASCA 162
• Counsel: M Haskins SC (with RM Molea) for the appellant.JL Basson for the respondent.

Petse JA (Mpati AP and Swain JA concurring):

[1] The primary issue in this appeal concerns the proper interpretation of ss 7(7) and (8) of the Divorce Act 70 of 1979 (the Act). The subsidiary issue concerns the legal effect of the terms of a clause relating to the division of the joint estate contained in the settlement agreement G concluded by the parties and incorporated in the divorce order granted in the Regional Court for the North West Regional Division, Temba (the trial court), on 25 May 2012. These issues arise against the following backdrop.

H [2] The appellant, Ms GN, and the respondent, Mr JN, were formerly married in community of property. On 25 May 2012 their marriage was dissolved by the trial court at the suit of the appellant. The divorce order granted by the trial court incorporated a provision that 'the deed of the settlement between the parties . . . [annexed thereto] is made an order of the court'. The parties' deed of settlement in turn provided inter alia that I their joint estate would be divided equally between them. The appellant asserted that they incorporated this clause into their settlement agreement because at that stage they could not agree on the method of the division of the joint estate.

[3] On 15 April 2013 the appellant's attorneys wrote a letter to the J respondent inviting him to make proposals in relation to the division of

Petse JA

the joint estate. They indicated that if no proposals were forthcoming, A the appellant would institute legal proceedings in which a determination of that dispute would be sought. In the event, no response was received from the respondent. Consequently, on 26 June 2013 the appellant, as applicant, instituted legal proceedings on notice of motion against the respondent in the Gauteng Division of the High Court, Pretoria, in which, in essence, she sought an order for inter alia the appointment of B a liquidator. She also sought a declarator that she and the respondent were entitled to an amount equal to 50% of each other's pension interest. In addition, she sought an order directing each pension fund to make an endorsement in its records that a portion of the pension interest of the member spouse, as at the date of divorce, shall be payable to the non-member spouse when the pension benefits accrued. C

[4] While the respondent did not oppose the appointment of the liquidator, he, however, resisted the remainder of the relief sought. In his answering affidavit the respondent said, inter alia, the following: D

'I deny that either my or the applicant's pension interest form part of the assets to be divided between the parties. Our respective pension interests did not form part of the applicant's claim when she instituted divorce proceedings, it did not form part of the settlement agreement, and no order was granted in terms of which it was deemed to be part of the assets in the joint estate in accordance with section 7(7) and 7(8) of E the Divorce Act 70 of 1979.

. . .

These policies include my retirement annuity fund, which also falls within the definition of pension interest and is similarly excluded from the joint estate, because of the fact that our respective pension F interests did not form part of the applicant's claim when she instituted divorce proceedings, it did not form part of the settlement agreement, and no order was granted in terms of which it was deemed to be part of the assets in the joint estate in accordance with section 7(7) and 7(8) of the Divorce Act 70 of 1979.'

[5] Thus, the respondent's answer to the appellant's claim was, in G substance, threefold. First, he asserted that the appellant had unequivocally renounced her claim in relation to the pension interest in her prayers in the divorce action. Second, that the pension interest nowhere featured in their settlement agreement. Third, that the divorce court which granted the decree of divorce had not made an order deeming the H pension interest as part of the joint estate, as contemplated in ss 7(7)(a) and (8) of the Act. However, it was not contested that the joint estate had still not been divided between them.

[6] The application came before Kgomo J who, after considering the I provisions of the Act and reviewing certain judgments dealing with the interpretation of ss 7(7)(a) and (8) of the Act, dismissed it with costs. The dismissal of the application in relation to the appointment of a liquidator appears to have occurred per incuriam as the court a quo had itself noted that that aspect was uncontentious. In essence, the court a quo approached the matter on the following basis: J

Petse JA

•

A It first asked itself two questions, namely: (i) whether it could grant an order declaring the parties' respective pension interests to be part of the joint estate long after the dissolution of the marriage when no such order was made by the court granting the decree of divorce; and (ii) whether it was open to it to vary the divorce order by supplementing the blanket order relating to the division of the joint estate by B inclusion of the parties' respective pension interests.

•

After reviewing several cases [1] of various divisions of the High Court, it held that the Act contemplates that any order in terms of ss 7(7)(a) and (8) can be granted only by the court granting the decree of divorce. Thus, ss 7(7)(a) and (8) do not avail a party who seeks to C invoke them after the dissolution of the marriage.

•

It concluded that absent a court order by the divorce court declaring the pension interest of the member spouse as part of the joint estate, such pension interest did not form part of the joint estate.

•

That, in any event, the parties' settlement agreement in the divorce D court was silent in relation to their respective pension interests.

[7] Aggrieved by the dismissal of her application, the appellant now appeals to this court with the leave of the court a quo.

[8] Section 7(7) and (8) in their material parts read:

E '(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 F reduced by any amount of his pension 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 contemplated in subsection (1), was accounted in favour of another party.

(c) . . .

G (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 —

(i)

any part of the pension interest of that member which, by virtue of subsection (7), is due or assigned to the other party H 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)

the registrar of the court in question forthwith notify the fund concerned that an endorsement be made in the records of that fund that that part of the pension interest concerned is so I payable to that other party and that the administrator of the

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pension fund furnish proof of such endorsement to the A registrar, in writing, within one month of receipt of such notification;

(b)

. . . .'

[9] The concept of 'pension interest', which is central to ss 7(7) and (8), is, in turn, defined in s 1(1) of the Act as follows: B

''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; C

(b)

. . . .'

[10] As to the nature of the pension interest, this court in Old Mutual Life Assurance Co (SA) Ltd and Another v Swemmer 2004 (5) SA 373 (SCA) said the following (para 18):

'(A)s indicated above, s 7(7)(a) of the Divorce Act "deems" a member D spouse's "pension interest" to be an asset in his or her estate for purposes of the determination of the patrimonial benefits to which the parties to a divorce action may be entitled. Pension interest is narrowly defined and simply establishes a method of ascertaining the value of the interest of the member of the pension or retirement annuity fund concerned as accumulated up to the date of the divorce. E In the words of the South African Law Commission:

A pension interest is not a real asset that is open to division. It is the value that, on the date of divorce, is placed on the interest that a party to those proceedings has in the pension benefits that will accrue to him or her as a member of a F pension fund or retirement annuity fund at a certain future date or event in accordance with the rules of the particular fund. The value of the interest is calculated according to a fixed formula and the amount determined in this manner is deemed to be an asset of the party concerned. What we are dealing with here is a notional asset that is added to all the G other assets of the party concerned in order to determine the extent of the other party's claim to a part of the first-mentioned party's assets.' [Footnotes omitted.]

[11] As indicated, the real issue on appeal is therefore whether a non-member spouse in a marriage in community of property is entitled H to the pension interest of a member spouse in circumstances where the court granting the decree of divorce did not make an order declaring such pension interest to be part of the joint estate. As to a pension...