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THE FINANCIAL SERVICES TRIBUNAL

 

Case No: PFA67/2022

 

 

In the matter between:

 

CYNTHIA SIBONGILE NDUBANA                             Applicant

 

and

 

CORPORA TE SELECTION UMBRELLA

RETIREMENT FUND                                                    First Respondent

 

and

 

NO 2: PARTICIPATING EMPLOYERS SILULUMANZI (RF) (PTY) LTD

 

THE PENSION FUNDS ADJUDICATOR                      Second Respondent

 

 

Tribunal: Adv W Ndinisa (Chair), Adv SM Maritz, and Adv M E Phiyega

 

For Applicant: Adv I Arzamastsev, instructed by Baartman & Du Plessis Attorneys

 

For First Respondent: Mr Ndaba (Trustee member

 

Date of hearing: 25 May 2023

 

Date of decision: 30 June 2023

 

 

Summary: Section 37C of the Pension Funds Act 24 of 1956 - distribution of death benefits - section 1 of the Pension Funds Act - definition of Dependant - Large discretion of board of trustees in determining proportion of death benefit

 

 

DECISION

 

 

Introduction

 

 

1.      The Applicant applies for reconsideration of a determination by the Pension Funds Adjudicator ("the Adjudicator") dated 28 September 2022.

 

The Adjudicator is cited as the Second Respondent.

 

2.      This is an application brought in terms of section 230 of the Financial Sector Regulation Act 9 of 2017 ("the FSR Act").

 

3.      The Applicant is aggrieved by the determination of the Adjudicator when the latter dismissed her complaint against the decision of the Corporate Selection Umbrella Retirement Fund, the First Respondent, in this matter. The First Respondent is referred to herein as the Fund.

 

4.      This matter concerns equitable distribution of death benefit to dependants of the deceased, Mr PM Ndubana ("the Deceased"), in terms of section 37C of the Pension Funds Act 24 of 1956 ("the Pension Fund Act").

 

5.              The Applicant initially challenged the allocation of 20% and 5% death benefits to OM Nkosi ("Ms Nkosi") and GN Ndubana respectively. However, during the hearing of the matter, the legal representative of the Applicant stated that the Applicant is no longer challenging the 5% allocation of death benefit to GN Ndubana.

 

Grounds of reconsideration

 

6.      The Applicant advanced several points for reconsideration in this application. In essence, the Applicant states that: (i) the Adjudicator based her determination on affidavits from Ms Nkosi, Mr Joel Ndubana, the uncle and cousin of the Deceased for proof of a forged relationship between the Deceased and Ms Nkosi to claim on the death benefit; (ii) she pleaded with the Adjudicator not to consider any submission obtained during 2019 as a proof of dependency; and (iii) averred that there are contradictions between the information submitted by Ms Nkosi regarding the dates of reconciliation with the Deceased.

 

7.      It is noted that the Applicant provided a historical account and raised issues regarding the conduct of Ms Nkosi in respect of latter's relationship with the Deceased. In brief, the Applicant disputes the relationship between Ms Nkosi and the Deceased.

 

Background

 

8.      When the Deceased passed away on 7 January 2020, a death benefit in the amount of R1 615 019.94 became available for distribution to his beneficiaries.

 

9.      The Fund issued a preliminary resolution regarding the allocation of death benefit and in that resolution the following distribution is stated:

 

10.  The Applicant was aggrieved by the allocations of 20% and 5% to Ms Nkosi and GN Ndubana respectively. Ms Nkosi is referred herein as the first customary wife and Mr GN Ndubana is referred herein as the father of the Deceased. Based on these grievances the Applicant approached the offices of the Adjudicator for relief. The Applicant disputed the dependencies of Ms Nkosi and Mr GN Ndubana on the Deceased.

 

11.  The determination of the Adjudicator assessed the submissions from the Applicant and the Fund. According to the Adjudicator, the Fund conducted an investigation in accordance with the provisions of section 37C of the Pension Funds Act to identify the beneficiaries.

 

12.  Further, the Adjudicator assessed the reply of the Applicant to the responses of the Fund. The hallmark of the Applicant's response to the submissions of the Fund and the claim of Ms Nkosi was, amongst other things, that Ms Nkosi's claim in respect of the death benefit was fraudulent. The Applicant sought the Adjudicator to investigate the matter.

 

13.  The Adjudicator considered the submissions of the Fund in respect of the allegations of fraud regarding the claims of Ms Nkosi and Mr GN Ndubana. The Fund reported that its forensic department investigated the fraud allegations and concluded that no fraud was committed.

 

14.  Further, the Adjudicator considered what the investigation of the Fund yielded. The Fund submitted that in reaching its preliminary decision, it considered a number of factors such as: (i) the ages of the potential beneficiaries; (ii) their relationship with the Deceased; (iii) the nature and the extent of dependency of each dependant on the Deceased; (iv) the amount available for distribution; and (v) the financial status of each dependant.

 

15.  The issue before the Adjudicator was to determine whether the Fund allocated the death benefit equitably and in term of section 37C of the Pension Funds Act. It is further apposite to note in passing that one of the issues which are in contention is the issue whether or not there was fraud committed by Ms Nkosi in order for her to benefit from the Deceased's pension undeservedly.

 

16.  On careful consideration of the Adjudicator's determination, the Adjudicator highlighted the duties that trustees of the fund have flowing from the provisions of section 37C of the Pension Funds Act. She stated that the board of trustees must: (i) identify and trace all beneficiaries; (ii) investigate the circumstances of the beneficiaries to decide an equitable distribution; and (iii) determine an appropriate mode of payment to each of the beneficiaries who are identified to receive a share of the death benefit.

 

17.  Further, the Adjudicator noted that section 37C of the Pension Funds Act entrusts the board of trustees with discretionary powers that must be exercised fairly and reasonably in the distribution of the death benefits.

 

18.  In respect of who qualifies as a beneficiary, the Adjudicator considered the definition of "Dependant" as stated in section 1 of the Pension Funds Act. After having considered same, she stated that the Pension Funds Act recognises three categories of dependants; namely: (i) legal dependants; (ii) factual dependants; and (iii) future dependants.

 

19.  Further, the determination considered the definition of "spouse" as provided in section 1 of the Pension Funds Act. According to the provisions of section 1, a spouse is:

 

"a person who is the permanent life partner or spouse or civil union partner of a member in accordance with the Marriage Act, 1961 (Act No. 68 of 1961), the Recognition of Customary Marriages Act, 1998 (Act No. 68 of 1997), the Civil Union Act, 2006 (Act No. 17 of 2006), or the tenets of a religion;"

 

20. 

Paae 16

The Fund, as noted by the Adjudicator, identified Ms Nkosi as the first customary wife of the Deceased. The Applicant is considered a second wife. Consequently, the Fund regarded Ms Nkosi and the Applicant as the legal dependants of the Deceased by virtue of their status as spouses of the Deceased. Although the Applicant forcefully questioned the truthfulness of the affidavits the Fund relied on, the Adjudicator stated that the Applicant failed to provide prima facie evidence in rebuttal of Ms Nkosi's claims to the effect that she is a dependant of the deceased. It is noted that Ms Nkosi submitted an affidavit in which she indicated that during 2018 and 2019 when the Deceased was critically ill, she was responsible for managing the financial affairs of the Deceased. This consisted of making monthly withdrawals and payment of all necessary bills including maintenance of the two minor children of the Applicant.

 

21.  After having considered the submissions of the parties, the Adjudicator arrived at the following view:

 

"On the balance of probabilities, this confirms Ms OM Nkosi statement that she was still in a relationship with the deceased and managing his financial affairs in 2019. It should be noted that the a/location of a death benefit does not depend on the existence or registration or a marriage.

 

Dependency is a critical factor. The complainant should note that affidavits are statements made under oath. Therefore, the Adjudicator finds that Ms OM Nkosi was a dependant and therefore the board did not err in considering her as such." (Own emphasis)

 

22.  It is on the aforementioned basis that the Adjudicator concluded that Ms Nkosi qualifies as a dependant.

 

Legal framework and Analysis

 

23.  Section 37C of the Pensioned Fund Act provides a legal framework for the regulation of payment of a death benefit.

 

24. 

P::mp 17

Section 37C(1)(bA) of the Pension Funds Act deals with the status of nomination form completed by a deceased member. The courts have previously stated that the contents of a nomination form are merely a guide to the trustees of the board in the exercise of their discretion[1] The fact that the board did not strictly follow the nomination form is not a ground for review.[2]

 

25.  Mr Arzamastsev, Counsel for the Applicant, submitted that the Deceased recorded his wishes in the written nomination form where the Deceased stated that 60% of death benefit be allocated to his son, Linda Vincent Ndubana, and 40% to Applicant. The legal position, as stated above, is that the provisions of section 37C of the Pension Funds Act take precedence over any nomination.

 

26.  It was argued on behalf of the Applicant that although the Fund and the Adjudicator may have established the fact of Ms Nkosi's legal dependency, this category of dependency is highly questionable. It is our considered view, however, that the fact of the existence of a customary marriage and recognition of Ms Nkosi as the first customary wife of the Deceased qualified Ms Nkosi as a dependant. We therefore agree with the view of the Adjudicator that proof the dependency of Ms Nkosi has been proven.

 

27.  Ms Nkosi stated under oath that during the period of 2018 and 2019 she become responsible for managing the financial affairs of the Deceased by among other things conducting monthly withdrawals and paying all necessary monthly bills including maintenance of the two minor children of the second wife, the Applicant. Further, Ms Nkosi stated under oath that she was financially dependent on the Deceased and that she received R5000.00 from the Deceased on a monthly basis.

 

28.  The Applicant submits that the Deceased had only one household which was running and that none of his bills were paid from late 2018 to 2019 while the Deceased was critically ill.

 

29.  However, the information before us, contained in affidavit which had not been challenged, indicates that prior to 1 November 2028, Ms Nkosi was involved in the affairs of the Deceased when the latter was critically ill. The information is contained in the affidavit of Mr Joel Ndubana, the brother to the Deceased.[3] This is consistent with the affidavit of Ms Nkosi.[4]

 

30.  Therefore, it is our view that the record indicates that Ms Nkosi was involved in the financial affairs of the Deceased and that Ms Nkosi was financially dependent on the Deceased. The recognition of Ms Nkosi as the first customary wife qualified her as a legal dependant and the events that took place during 2018 and 2019 are supported by affidavits on record. It is our considered view that Ms Nkosi was in fact a dependant of the Deceased.

 

31.  It was also conceded on behalf of the Applicant that a customary marriage was in fact entered into between Ms Nkosi and the Deceased and that this relationship was never terminated by divorce. This concession puts it beyond any doubt that as at the date of the death of the Deceased Ms Nkosi was a spouse of the Deceased as envisaged in section 1 of the Pension Funds Act. As a spouse Ms Nkosi falls squarely within the definition of dependent as envisaged in section 37C of the Pension Funds Act. On this basis alone the dependency of Ms Nkosi is established.

 

32.  Applicant further submits, amongst other things, that the Fund and the Adjudicator erred or alternatively failed to exercise their discretion in allocation of the benefits.

 

33.  Fundsatwork Umbrella Pension Fund v Guanieri and Others[5], the Supreme Court of Appeal stated that after having identified the class of dependants, the board of the fund is vested with a large discretion to determine, in light of assessment, of the needs of the beneficiaries and in what proportion the death benefits should be distributed among the class of dependants.[6]

 

34.  It is recognized by the Supreme Court of Appeal that the board of trustees' decision can only be interfered with where it is demonstrated that it had considered irrelevant, improper, or irrational factors, or where its decision can be said to be one that no reasonable board of trustees properly directing themselves could have reached.⁷ Nowhere in submissions on behalf of the Applicant has it shown that decision of the trustees was arrived at on consideration of improper, irrelevant or irrational considerations.

 

Conclusion

 

35.  After having assessed the information before us we have come to the conclusion that there was a valid customary marriage entered into between the Deceased and Ms Nkosi and that as at the death of the Deceased, such customary marriage was still in existence, bringing Ms Nkosi into the purview of a spouse as envisaged in section 1 of the Pension Funds Act.

 

36.  Furthermore, we have not found that the discretion of the board of trustees was vitiated by irrelevant, improper, or irrational factors by either the Adjudicator or the Fund.

 

37.  We thus find no basis in law to interfere with the large discretion of the Fund to determine the apportionment as set out above.

 

ORDER:

 

The application for reconsideration is dismissed. Signed on 30 Jun 2023.

 

With the panel consisting also of:

 

 

Adv SM Maritz and M E Phiyega

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