Smith v Smith

• Jurisdiction: South Africa
• Judge: Luthuli AJ
• Judgment Date: 12 December 2008
• Citation: 2008 JDR 1540 (D)
• Docket Number: 5587/08
• Court: Durban and Coast Local Division

Luthuli AJ:

The Background Facts

[1] This application for a declaration of rights arises out of the death of Walter Percival Smith (the deceased) who died on 25 February 2007. At the time of his death, the deceased was a pilot employed by the South African Airways and as such he was a member of the Transnet Retirement Fund, established in terms of section 14A of the Transnet Pension Fund Act 62 of 1990. The Transnet Retirement Fund (the Fund) is the second respondent in this matter.

[2] Prior to his death, the deceased and the applicant had been involved in an intimate relationship. The exact nature of the relationship is in dispute.

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The deceased had nominated the first respondent (his son) as nominee for the purposes of payment of death benefits according to the rules of the Fund.

[3] In terms of the rules of the Fund, upon the death of a member, a lump sum (calculated in accordance with the provisions of the said rules) would become payable to the "dependants" and/or "nominees" of such deceased member. As to who qualified as a "dependant" and as to what portion of such lump sum each dependant or nominee would obtain, were matters left to the discretion of the Fund.

[4] The Fund determined that the applicant was the deceased's "dependant" and awarded her a portion of the lump sum. The first respondent was also awarded a portion of the lump sum. The amount awarded to the applicant was considerably in excess to that awarded to the first respondent. The first respondent was dissatisfied with these awards, contending that the applicant did not qualify as a dependant alternatively if she did, she ought not to have been awarded the amount she was.

[5] The first respondent accordingly sought to institute arbitration proceedings in terms of rule 15 of the Fund's rules by making a demand for arbitration. The third respondent was appointed as the arbitrator. Although initially the applicant was prepared to co-operate and participate in such proceedings, a problem developed with regard to the arbitrator's terms of reference. It was the applicant's contention that inasmuch as the decisions of the Fund as to whether the applicant was a dependant and what amount she

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should receive amounted to the exercise of a discretion, the matter should be treated by the arbitrator as if it were a review of the Fund's decision, rather than simply substituting his own decision for that of the Fund's trustees.

[6] The applicant's concerns in this regard were conveyed to the first respondent's attorneys by means of a letter dated 1 April 2008. No agreement could be reached by the parties in regard to the matters raised in the said letter and the applicant instituted the present proceedings. The second respondent has consented to the jurisdiction of this court.

The Relief Sought by the Applicant

[7] In essence, the relief sought by the applicant is as follows :

7.1 In the first instance the applicant seeks a declarator that the disputes which have arisen in this matter regarding the applicant's entitlement to receive an award from the Fund and the quantum itself, are not types of disputes contemplated in rule 15 of the rules of the Fund, which must be determined by arbitration.

7.2 Alternatively, the applicant seeks a declarator that she is not bound by an award which the arbitrator may make.

7.3 Further alternatively, the court is asked to declare that the powers of the arbitrator in regard to the aforesaid disputes are those which a court hearing a review proceedings would have.

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Opposition to the Application

[8] The application is opposed by the first respondent. The Fund's attitude is to abide the decision of the court. However, the Fund delivered an affidavit setting out its concerns. The Fund's contention is that the disputes in this matter should be determined in a forum where the decision is binding on all three parties.

The First Respondent's Contentions regarding the Relief sought by the Applicant.

[9] The first respondent's contentions are :

9.1 The applicant is not entitled to the declaratory relief which she seeks. She must make an election whether or not to participate in the arbitration proceedings and she is not entitled to an opinion from the court as to whether she should do so or not.

9.2 As to whether or not any arbitration award would be binding on the applicant, she had, by lodging a claim for and accepting benefits, "acquiesced" to be bound by the Fund's rules.

9.3 In any event, whether the applicant was bound by the arbitration award is irrelevant. The arbitration in essence, is one between the first respondent and the Fund. If the arbitrator should set aside the award

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made to the applicant, then the recovery of the same is a matter between the Fund and the applicant and is no of concern to the first respondent.

9.4 As to whether the arbitrator's powers should be that of a court hearing a review or simply to substitute his own decision for that the Fund, this was a matter for the arbitrator himself to determine. If he errs, then after the arbitration award is made the applicant may apply to review the arbitrator's decision in terms of section 33 of the Arbitration Act 42 of 1965.

Is the Applicant entitled to the Declaratory orders which she seeks?

[10] Section 19(1)(a)(iii) of the Supreme Court Act 59 of 1959 gives the High Court the power to grant declaratory orders. That subsection provides that a court has the power :

"In its discretion, and in the instance of any interested person, to enquire into and determine any existing, future or contingent right or obligation...