Government Employees Pension Fund and Another v Buitendag and Others

• Jurisdiction: South Africa
• Judge: Harms JA, Zulman JA, Conradie JA, Cloete JA and Ponnan JA
• Judgment Date: 27 September 2006
• Citation: 2007 (4) SA 2 (SCA)
• Docket Number: 550/05
• Hearing Date: 07 September 2006
• Counsel: S J du Plessis SC for the first appellant. J H Dreyer SC and J L Basson for the second appellant. J Vorster for the respondents.
• Court: Supreme Court of Appeal

Cloete JA: D

[1] The bone of contention in this matter is a gratuity of R232 323,96, which became payable as a result of the death of Mrs Marie-Louise Oosthuizen (the deceased). The natural adult children of the deceased E by her first marriage (the children) were the applicants in the Court a quo and are the respondents on appeal. The Government Employees Pension Fund (the fund), the body established by s 2 of the Government Employees Pension Fund Law, 1996 [1] (the Law), was the first respondent in the Court a quo and is the first appellant on appeal. The Provincial F Government of Gauteng (the provincial government) was the second respondent in the Court a quo and is the second appellant on appeal. The third respondent in the Court a quo was the deceased's husband, Mr N Oosthuizen (the husband). The fourth respondent in the Court a quo was Mr C M Oosthuizen, the husband's son by a previous marriage, and therefore the deceased's stepson (the stepson), who was born on G 17 January 1980.

[2] The deceased was employed by the provincial government and was a member of the fund. When she died, the gratuity became payable. [2] On 20 April 2000 the board [3] of the fund, acting on information supplied by the provincial government, awarded the gratuity to the husband, or to H the husband and the stepson in equal shares (it is not clear what the position was). When it made the award, the fund was unaware of the existence of the children. The children brought motion proceedings in which they claimed an order reviewing and setting aside the decision of

Cloete JA

the board; and, in the alternative, damages from the provincial government equal to one-quarter or one-fifth of the gratuity on the basis that the provincial government A had negligently failed to inform the fund of their existence.

[3] Despite the relief being couched in the alternative, the Court a quo (R Claassen J) granted relief against both the fund and the provincial government. B The award was set aside with the following directions to the fund:

'2.2.1

[The children] are to be considered as dependants of the deceased.

2.2.2

The relationship between the deceased and the [stepson] regarding her duty to maintain the [stepson] is to be investigated; and thereafter C

2.2.3

[The fund] is to exercise its discretion as to how the gratuity should be allocated.'

The order then went on:

'3.

Any amount payable to [the children] in terms of [the fund's decision] under para 2 above shall be paid by [the provincial government] to the [children]. D

4.

[The provincial government] is to pay the costs of this application.'

The fund and the provincial government were both granted leave to appeal to this Court by the Court a quo.

[4] Before dealing with the contentions of the fund and the provincial E government on appeal (the children delivered heads of argument but did not appear for financial reasons), it is necessary to analyse the relevant provisions of the Law and the rules (which comprise Schedule 1 to the Law). The short title of the Law states its purpose as follows:

'To make provision for the payment of pensions and certain other benefits F to persons in the employment of the Government, certain bodies and institutions, and to the dependants or nominees of such persons; to repeal certain laws, and to provide for matters incidental thereto.'

Section 3 of the Law reads:

'The object of the fund shall be to provide the pensions and certain other G related benefits as determined in this Law to members and pensioners and their beneficiaries.'

The problem is that neither the Law nor the rules explicitly provide for the payment of a gratuity to the dependants of a deceased member. [4] Section 22 of the Law provides:

'(1) If a gratuity is payable on the death of any member to the dependants H of such a member or to his or her estate, that member may, on the prescribed form and subject to the prescribed conditions, notify the board of his or her wish that the said gratuity be paid on his or her death to the beneficiaries mentioned in that form and be divided among such beneficiaries in the proportion mentioned in that form.

(2) Notwithstanding anything to the contrary in any law contained, the I board may on the death of a member who so notified the board pay at its discretion the gratuity concerned in accordance with the member's wish.'

Cloete JA

A Neither this section, nor any other section of the Law, explicitly confers any rights on dependants. Rule 14.5.2 provides that '(i)f a member with at least ten years' pensionable service dies, a gratuity shall be paid . . .', and then the basis of the calculation of the gratuity is set out. The identity of the recipient is not.

B [5] A 'dependant' is defined in s 1 of the Law as follows:

'(D)ependant, in relation to a member or a pensioner, means

(a)

any person in respect of whom the member or pensioner is legally liable for maintenance;

(b)

any person in respect of whom the member or pensioner is not legally liable for maintenance, if such a person -

(i)

C was, in the opinion of the board at the time moment [5] of the death of the member or pensioner in fact dependent upon such member or pensioner for maintenance;

(ii)

is the spouse of the member or pensioner, including a party to a customary union

according to indigenous law and custom, or to a union recognised as a marriage D under the tenets of any religion; or

(c)

a posthumous child of the member or pensioner; and

(d)

a person in respect of whom the member or pensioner would have been legally liable for maintenance had that person been a minor.'

There is, however, no order of precedence among the dependants in the definition E section or in any other section, nor is any general discretion explicitly conferred on the board by any provision of the Law or rules as to the award of a gratuity where there is more than one dependant. By way of contrast, where there is more than one spouse, rule 18.4 provides in regard to a spouse's pension:

'If a deceased member or pensioner leaves behind more than one spouse, the board F decides to which of them and, if to more than one, in which ratio the spouse's pension shall be paid: Provided that such ratio shall not be changed thereafter.'

[6] It was nevertheless common cause between the children and the fund that the board has a discretion to choose which dependants will receive a gratuity G and in what proportions. It seems to me that, by necessary implication, this must be so. I say this for the following reasons. If a gratuity cannot be paid to a dependant, it will have to fall into the deceased member's estate. But the stated purpose of the Law is to benefit, inter alia, dependants of a member - not his or her estate. In addition, in terms of s 28, [6] a gratuity payable to a dependant is deemed H not to be property in the estate of the member and is accordingly protected from estate duty. Furthermore, s 22.1 presupposes that a gratuity may be payable to dependants of a member; and if the board has a discretion to override the express wishes of a member contained in a nomination, as it does in terms of that section, it would be logical for it. I

Cloete JA

to have a discretion to determine which dependants shall benefit where A no nomination has been made. And then, finally, the legislation which preceded the Law conferred, and the Pension Funds Act [7] confers, a wide discretion of the nature sought to be implied. The legislation which preceded the Law comprises the Government Service Pension Act [8] and the regulations made thereunder. [9] Section 1 of that Act defined who a B 'dependant' was in relation to any member or any person entitled to an annuity or benefits. [10] Regulation 14(2) provided:

'If a member who has completed at least ten years' pensionable service dies, there shall be paid to the dependants of the member designated by the Director-General or, if no dependants are so designated, to his estate, a gratuity. . . .' C

Section 37C(1) of the Pension Funds Act [11] provides:

'(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 upon the death of a member, shall, subject to a pledge in accordance with s 19(5)(b)(i) and subject to the provisions of s 37A(3) and 37D, not form part of the assets D in the estate of such a member, but shall be dealt with in the following manner:

(a)

If the fund within 12 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 board, to one of such dependants or in proportions to some of or all such dependants.' E

[7] The provincial government contended that the children are not 'dependants' as defined in the Law. Ms Regina Kgasi, the deponent to the affidavits delivered on behalf of the provincial government, said in reply to Ms Scheepers, who deposed to the affidavits delivered on behalf of the fund, that: F

'Ms Scheepers argues in this paragraph that the applicants are major children of the deceased and that they are therefore ''dependants'' of the deceased. I dispute the legal correctness of this argument in view of the evidence that none of the applicants were financially dependent on the deceased at the time of her death.'

Counsel representing the provincial government put forward submissions G in support of this contention in the heads of argument. The submissions are untenable. They amount to this: that in the case of children, para (a) of the definition must be confined to minors, and para (d) must be interpreted as relating to major children who are not self-supporting. In that way, the written submission proceeded, the H common-law requirement that...