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SAFLII Note: Certain personal/private details of parties or witnesses have been redacted from this document in compliance with the law and SAFLII Policy

THE FINANCIAL SERVICES TRIBUNAL

Case No.:PFA8/2023

 

In the matter between:

 

JENNIFER NOTOANE                                            Applicant

and

 

MOMENTUM RETIREMENT ANNUITY FUND       First Respondent

 

PENSION FUNDS ADJUDICATOR                        Second Respondent

 

MA LUKHAIMANE                                                  Third Respondent

 

TD MURIGWATHOHO                                             Fourth Respondent

 

TD MURIGWATHOHO obo GM[....]

& MMG MURIGWATHOHO                                     Fifth Respondent

 

 

Tribunal Panel: Adv Gift Mashaba SC (Chairperson); Ms. KE Moloto-Stofile; Adv Elias Phiyega

 

Applicant: Prof. Sizwe Snail ka Mtuze

 

First Respondent: L Selemane

 

Second to Fifth Respondent: No appearance

 

Hearing date: 24 August 2023

Date of Order: 04 October 2023

 

Summary:        Application for reconsideration in terms of Section 230 of the Financial Sector Regulation Act 9 of 2017 ('the FSR Act') against a determination of the Pension Fund Adjudicator to dismiss complaint made under Pension Fund Act.

 

 

DECISION

 

 

A.          INTRODUCTION

 

1             Jeniffer Notoane ("the Applicant") brought by this application under Section 230 of the Financial Sector Regulation Act 9 of 2017 ('the FSR Act') for reconsideration and setting aside of a determination of the Pension Fund Adjudicator ("Second Respondent") and MA Lukhaimane N.O. ("Third Respondent"). Section 230 of the FSR Act affords a person aggrieved by a decision of the Pension Fund Adjudicator to apply to the Tribunal for a reconsideration of that decision.

 

2             Unless indicated otherwise hereinafter, reference to the Second Respondents should be read to include MA Lukhaimane, as at all relevant times she was acting in her capacity as the Pension Fund Adjudicator, appointed in terms of Section 30C of the Pension Funds Act 24 of 1956 ("The Pension Fund Act").

 

3             In the determination the Second Respondent had dismissed a complaint filed by the Applicant against a decision of the Momentum (First Respondent") allocating her (1%) of death benefits payable from the estate of the late E Notoane ("the Deceased")[1]. At the time of her death the deceased was a member of the First Respondent and her pension fund death benefits were to be paid in terms of Section 30C of the Pension Fund Act.

 

4             The Pension Fund Trustees made the following allocation.

 

TD Murigwathoho	spouse	67%	R264 847
JM Notoane	major daughter	1%	R3 953
MMG Murlgwathoho	major daughter	5%	R19 765
G[....] M[....]	minor son	7%	R27 671
A[....] M[....]	grandchild	20%	R79 059 will

 

5             The Applicants was aggrieved by the allocation of 1% of death benefits which said was unfair, unjust and inequitable share, and contends that she should be allocated 25% of the benefit.

 

B.          BACKGROUND

 

81.  Application For Reconsideration

 

6             Previously the Applicant referred challenged a decision of the First Respondent to allocate 0% (Zero Percent) of her late mother's death benefit, to the Second Respondent was on 25 September 2020. The Applicant alleged this time that the allocation was unfair and irrational and should be reconsidered and set aside. The allocation made by the Fund was:

 

TD Murigwathoho	spouse	100%	R264 847
JM Notoane	major daughter	0%	R3 953
MMG Murigwathoho	major daughter	0%	R19 765
G[....] M[....]	minor son	0%	R27 671
A[....] M[.....]	grandchild	0%	R79 059 will

 

7             On 19 February 2021 the Second Respondent, ("at the time Ms Thulare") adjudicated the matter and made a determination setting aside the decision of the Board of Trustees board and remitted it to the First Respondent to reconsider and make a proper allocation of the death benefit to the deceased's beneficiaries. In addition the Second Respondent in clause 6.1.3 she ordered the first respondent to provide the complainant and all interested parties with reasons for its decision within two weeks of re-exercising its discretion in terms of section 37C of the Act.[2]

 

8             Consequently, the First Respondent (Fund) amended its previous decision and adjusted the allocation to Applicant from 0% to 1%. Applicant was still dissatisfied with the new allocation. On the 24 May 2021 she lodged a second complaint with the Second Respondent. The Second Respondent ("at this time Ms Lukhaimane") made a determination on 15 December 2022 dismissing the Applicant's complaint. However she did so without any reference to the determination of her predecessor, Ms Thulare.

 

9             On 16 February 2023 the Applicant brought an Application to the Tribunal for Reconsideration of the determination of the Second Respondent dated 15 December 2022, together with an Application for Condonation of the late filing of the application. On 02 March 2023 the First Respondent filed its submission opposing the Application for Reconsideration, without opposing the application for condonation. [3]

 

B.2 Amplified/ Augmented Application For Reconsideration

 

10         On 15 March 2023 Applicant filed another application this time seeking leave to serve and file Amplified/ Augmented Request for Reconsideration, in the light of new evidence the Second Respondent included in her determination and Record filed on 6 March 2023.

 

11         Part of the Applicant's objection to the admission of this new evidence was that the Fourth Respondent made untested accusations of criminality and made disparaging allegations against to her, in his evidence. [4] The allegations made by the Fourth Respondent had been accepted as they are, without giving Applicant an opportunity to challenge it. Applicant contends that the conduct of Second Respondent in this case constitutes a breached her constitutional right to a fair hearing and breached the audio alteram partem rule. She challenged the validity of the determination of the 15 December 2022 on the following procedural grounds:

 

11.1        that the Second Respondent committed a gross irregularity in that, she based her determination on a submission by TD Murigwathoho on behalf of G[....] M[....] and MMG Murigwathoho which had not been served upon the Applicant and her legal representative; and

 

11.2        that the Third Respondent did not consider whether the First Respondent had fully complied with the determination of the previous Adjudicator MP Thulare and contends that the allocation of 1% ("one") percent is an insult to the decision of the previous Adjudicator.

 

C.          RESPONDENT'S CASE

 

12         In its Opposing Affidavit the First Respondent objected to the Application seeking leave to serve and file Amplified/ Augmented Request for Reconsideration. It stated that the Applicant was making an attempt to raised completely new facts which were not brought to the attention of the First Respondent or raised in the application to the Second Respondent.

 

13         First Respondent referred to Rule 67 of the Financial Services Tribunal Rules regulating the hearing of applications for reconsideration, which states that the argument is limited to the grounds upon which the application for reconsideration is based.

 

14         The First Respondent contends that:

 

14.1        the Third Respondent correctly found that it had no reason to interfere with the First Respondent's allocation of the death benefit, as the First Respondent discharged its duties as prescribed in the Act; and

 

14.2        The Applicant is accordingly not entitled to the relief sought and the application must therefore be dismissed. The First Respondent requests that the application be dismissed.

 

15         In her address to the Tribunal Ms Selemane, on behalf of the First Respondent, stated was not aware of the contents of the submission made by the Fourth Respondent on behalf of the Fifth Respondents. After taking instruction Ms Selemane withdrew the First Respondents opposition to granting of leave to the Applicant to file Amplified/ Augmented Request for Reconsideration and stated that the other new issues raised by the Fifth Respondents' submission were irrelevant to the proceedings and should be ignored.

 

16         On the merits of the case Ms Selemane argued that:

 

16.1        The Complainant's factual dependency was limited to the education costs that the Deceased was paying for. However, her level of dependency must be weighed against that of the other dependants. In Minnaar v Central Retirement Annuity Fund and Another [2015] 2 BPLR 236 (PFA) it was found that it is necessary for the Board to carefully assess the financial position, degree of dependency and the future prospects of all relevant dependants (see Brummelkamp v Babcock Africa (1997) Pension Fund and Another [2001] 4 BPLR 1811 (PFA)).

 

16.2        Therefore, the future earning capacity of each dependant must be considered, especially for those dependants who have a low or no future earning potential, as they would have been dependent on the Deceased for a longer period than a dependant who has better prospects of employment.

 

16.3        The Board of the First Respondent is vested with discretionary powers to decide on an equitable distribution of the death benefit. It is only when these powers are exercised unreasonably and improperly or where it has unduly fettered its discretion, that the decision may be reviewed and set aside.

 

16.4        The Board of the First Respondent considered each factor that needed to be considered and as held in the case of Berge v Alexander Forbes Retirement Fund [2006] ZAJPHC 241 (18 April 2006), 'When a discretion has been exercised reasonably, a court cannot interfere even if it would have exercised its discretion differently'.

 

16.5        In the matterofTO Mashau v Momentum Retirement Annuity Fund PFA/LP/00081235/2021 /MM, the Adjudicator found that the board applied its mind to the matter based on the information in its possession. The Adjudicator also stated as follows at paragraph 5.12 of the determination:

 

"The duty of the Adjudicator is not to decide what is the fairest or most generous distribution, but rather to determine whether the board has acted rationally and arrived at a proper and lawful decision".

 

16.6        She concluded that the Second Respondent was satisfied that the First Respondent acted rationally and arrived at a proper and lawful decision.

 

D.          LEGAL FRAMEWORK AND ANALYSIS

D.1     Procedural Fairness Inquiry

 

17         Section 300 of the Act provides that the main object of the Adjudicator is to dispose of complaints lodged in terms of section 30A(3) of the Act in a procedurally fair, economical, and expeditious manner. Thus, section 300 states the obvious namely, that proceedings must be procedurally fair, which includes the principles of Audi Alteram Partem.

 

18         Section 30F provides that when the Adjudicator intends to investigate a complaint, he or she shall afford the fund or person against whom the allegations contained are made, the opportunity to comment on the allegations.

 

19         Although Section 30J provides that the Adjudicator may follow any procedure which he or she considers appropriate in conducting an investigation, including procedures in an inquisitorial manner. However the court found that this did not empower the Adjudicator to deal with complaints in a procedurally unfair manner.

 

20         Southern Staff Pension Fund v Murphy NO and Another [2009] 9 BPLR 963 (W)). The Court mentioned that failure to observe the requirements of the Audi Alteram Partem Rule was material and sufficient to render the procedure by which a finding was reached as unlawful and in such a case the decision should be set aside.

 

D2. Substantive Law Inquiry

 

21         The Applicant had lodged a complaint against the decision of the First Respondent set out in a letter dated 05 August 2020 regarding allocation of death benefits.

 

22         The payment of a death benefit is regulated in terms of section 37C of the Act, which provides as follows:

 

(1)          Notwithstanding anything to the contrary contained in any law or in the rules of a registered fund, any benefit (other than a benefit payable as a pension to the spouse or child of the member in terms of the rules of a registered fund, 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, as may be deemed equitable by the board, to one of such dependants or in proportions to some of or all such dependants.

(b)          ...

 

23         Section 37C governs the disposition of death benefits. It places a duty on the board to trace and identify the beneficiaries of a deceased member and also vests the board with discretionary powers on the proportions and manner of distributing the proceeds of a death benefit.

 

23.1        As with the exercise of any discretionary power, in effecting an equitable distribution, the board is required to give proper consideration to relevant factors and to exclude irrelevant ones from consideration.

 

23.2        It is the board's responsibility when dealing with the payment of death benefits to conduct a thorough investigation to determine the beneficiaries, to thereafter decide on an equitable distribution and finally to decide on the most appropriate mode of payment of the benefit payable. Their duties in this regard were summarised in Sithole v /CS Provident Fund and Another [2000] 4 BPLR 430 (PFA), at paragraph 24 and 25, as follows:-

 

"When making an "equitable distribution" amongst dependants the board of management has to consider the following factors:

 

the age of the dependants - younger, minor children may need to be allocated larger amounts of the benefit, as they may need a longer period of dependency before they are capable of supporting themselves;

the relationship with the deceased - the board must ensure that it does not fetter its discretion by favouring legal dependants over factual dependants without Justification;

the extent of dependency- the board must consider whether a beneficiary was totally or partially dependent on the deceased. The person's dependency in relation to other beneficiaries should also be compared. Those who were more dependent would probably need greater assistance and therefore a greater benefit;

the wishes of the deceased placed either in the nomination form and/or his last will - this is merely one of the factors to be considered by the board when effecting an equitable distribution and the board must ensure it does not fetter its discretion;

financial affairs of the dependants including their future eaming capacity potential- the board should consider the beneficiaries, this includes income expenses and other assets and liabilities. The board should examine any bequest made to the beneficiaries by the deceased, the standard of living and life insurance proceeds paid to any beneficiary;

future earning capacity- the board must look at the beneficiaries' employment prospects and consider if they are in financial difficulties and whether the financial hardship is of a temporary nature and the prospects of securing gainful employment;

amount available for distribution - benefits available for distributions may not be enough to cover the maintenance needs of all beneficiaries forcing the board to consider other factors when determining an equitable distribution. This may lead to awarding a benefit which is less than maintenance needed of a dependant or a nil benefit in certain circumstances.

 

24              We have considered the Applicant's affidavit in support of her application to serve and file Amplified/ Augmented Request for Reconsideration, and found that paragraphs 3-14 deal with issues that are not relevant to the First Respondents allocation of pension benefits.[5]

 

25         We concluded that that Ms Selemane, on behalf of the First Respondent was correct that this was not forum to raise and debate the issues raised in the Fifth Respondents submission.

 

26         With regards to the Applicants second ground for reconsideration being that the Third Respondent did not consider whether the First Respondent had fully complied with the determination of the previous Adjudicator MP Thulare, and her contends that the allocation of 1% ("one") percent is an insult to the decision of the previous Adjudicator, and her submission that an allocation of 25% of the benefit would be fair, just and equitable and requests a reconsideration on that basis. We found that:

 

26.1        The Applicant seems to be labouring under a misapprehension that the Board of Trustees of the was bound by rules similar to the laws of intestate succession, to allocate her 25%. In this regard we wish point out that the fact that a person qualifies as a legal or factual dependant does not automatically give them the right to receive a portion of a death benefit (see Varachia v SA Breweries Staff Provident Fund and Another [2015] 2 BPLR 314H-I (PFA)). The deciding factor is financial dependency (see Morgan v SA Druggists Provident Fund and Another (1) [2001] 4 BPLR at 1890G-H (PFA)).

 

26.2        Although in the matter of Kelly & Anita Wilkinson vs Pension Funds Adjudicator & Others (PFA73!2019) (2020) Financial 13 Services Tribunal (10 March 2020), the Financial Services Tribunal found that the non-financially dependent children of a deceased member qualify as dependants and should not be excluded from the death benefit on the basis of their lack of evidence of financial dependency. But dependency is the decisive factor in the allocation of the death benefit. Section 37C of the Act serves a social purpose and intends to protect people who were dependent on the deceased during his lifetime and to ensure that they continue to be provided for (see Matlakane v Royal Parrafin Provident Fund {2003] 6BPLR 4785 (PFA))

.

26.3        We further wish to refer the Applicant to bottom of paragraphs 10 and paragraph 11 of letter from the First respondent of 08 April 2021 in which it states that the fund submitted that the amount available for distribution (R395 294), is insufficient to cater for the needs of the spouse, the two minor children and the major children.[6] Mothibi stated that:

 

"The fact that a person is identified as a dependant does not mean that they are automatically entitled to receive the death benefit. The Trustees are required to balance the factors set out in paragraph 9 above to make an equitable distribution of the death benefit. Having considered factors such as age, the extent of dependency, the amount available for distribution and the financial position of each dependant, the Trustees believe that they made an equitable distribution of the benefit by allocating in the manner set out above."

 

27         The Applicant had further accused the First Respondent of not providing her as the complainant and all interested parties with reasons for its decision within two weeks of exercising its discretion in terms of section 37C of the Act. In this regard we found that:

 

27.1         The First Respondent had furnished reasons for its decision in its undated Resolution and a letter to Applicant dated 05082020 and thereafter letters addressed to the Second Respondent dated 08042021, and 17082022.

 

27.2        In this regard we found that the First Respondent had provided ample evidence that it didn't disregard the Applicant but considered her as a legitimate beneficiary and subjected her to criteria set out in Sithole v /CS Provident Fund referred to in clause 23.2 above

 

E.           CONCLUSION

 

28         In our view, the determination by the Adjudicator cannot be faulted. It would be inappropriate for this Tribunal, under the circumstances of this matter, to interfere with the decision of the Board of Trustees of the Fund.

 

29         In the premise, the applicant's application stands to be dismissed.

 

ORDER

The following order is granted:

 

(a). The applicant's application for reconsideration dismissed.

 

 

Signed on behalf of the Tribunal

 

K.E Moloto Stofile

 

With the Panel consisting also of: Adv. MG Mashaba SC (Chair) and Adv. E Phiyega.

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