Application by an ex-wife to claim a pension benefit from her ex-husband’s pension fund

In the case of C.N.N V N.N (2021-11607) [2023] ZAGPJHC 208 the Johannesburg High Court refused to vary a divorce order to allow her to claim a pension benefit from her ex’s pension fund.   

The ex-wife filed an application to claim a portion of her ex-husband's pension benefit from his pension fund after their divorce. However, the Johannesburg High Court refused to vary the divorce order to allow her to do so. The respondent had resigned from his employment and exited his pension fund before the divorce was finalized, leaving him with no pension interest at the time of the divorce. The applicant was not aware of this and only approached the fund after the divorce to claim her share of the pension benefit, which had already accrued to the respondent. She brought an application to vary the divorce order to direct the fund to pay her a portion of the respondent's accrued pension benefit. 

The Court held that the applicant was relying on a section of the Divorce Act to claim a pension benefit that had already accrued to the respondent through resignation, rather than a pension interest that should have accrued to the respondent due to the divorce. The Court also noted a gap in the law that does not adequately allow non-member spouses to claim portions of pension benefits when the member spouse exits the fund before the divorce. The application was dismissed as the Court was bound by the existing law, and the Court suggested that the applicant should have challenged the current legal position. 

The existing law allows member spouses to deliberately prejudice their non-member spouses' claims by resigning from their employment after being served with a divorce summons.

The divorce process in South Africa

 

The divorce process in South Africa can be a complex and lengthy legal procedure. However, with the right guidance and expertise, it can be a much less daunting process and relatively simple. It's important to note that the process may vary depending on individual circumstances and consulting with a divorce attorney is recommended for guidance and assistance.

Here is a general overview of the divorce process in South Africa and the main considerations to consider before proceeding with this journey:

·         Jurisdiction: To file for divorce in South Africa, at least one of the parties must be a resident of South Africa or have lived in South Africa for at least one year before filing for divorce. 

·         Grounds for divorce: In South Africa, the only ground for divorce is the irretrievable breakdown of the marriage, which is a ‘no fault’ system of divorce. This means that a divorce will be granted if one of the parties believes that there are no reasonable prospects of restoring the marriage. A marriage can be dissolved even if one of the parties does not wish to get divorced. 

·         Summons: A divorce action is instituted by the issuing of a summons in either the Regional Court of the Magistrates’ Court having jurisdiction in your area, or in the High Court. The summons must be served personally on the defendant by the sheriff of the court. The summons specifies the number of days in which the defendant has to file a notice of intention to defend (i.e., contest the divorce), which is 10 days when the parties live within the jurisdiction of the court or 20 days if they live in different provinces. If the defendant does not answer by way of a notice of defence within the allotted time, the plaintiff may approach the court to grant an order of divorce on an unopposed basis. In such a case, only the plaintiff appears in court and the divorce is granted on the Plaintiff’s prayers in their summons. We always try and assist the parties to first try and settle the issues between themselves, if possible, so that the signed settlement agreement can be attached to the summons, making the divorce process much quicker, simpler, and more cost-effective. If an agreement is signed before the service of the summons, the Defendant can choose when and how they would like to be served per sheriff, making it a far less public process. 

·         Parental responsibilities and rights regarding minor children: When minor children are involved (below the age of 18), one must consider the guardianship, care, contact and maintenance of the minor child/children as well as with which parent the children will primarily reside. This will include a parenting plan or settlement agreement outlining the rights and responsibilities of each parent, as well as the amount of maintenance to be paid. The parenting plan or settlement agreement must be endorsed by the Office of the Family Advocate prior to the divorce being heard in court. The court will not conclude a divorce without this endorsement. If the parents cannot agree on the abovementioned parental responsibilities and rights, then the family advocate will conduct an investigation as to what exactly is in the best interests of the minor child/children and the judge or magistrate will hear arguments from each party in this regard and make a final decision.

 ·         Spousal maintenance: if one spouse has primarily maintained the lifestyle of the other throughout the marriage, there may be a claim for rehabilitative or lifelong spousal maintenance. Rehabilitative spousal maintenance is a monthly amount for a fixed period of time, or a once-off lump sum, which is aimed at helping the other spouse get back on their feet following the divorce. Lifelong spousal maintenance is the payment of maintenance to the former spouse until death or remarriage. This applies in circumstances where that spouse is incapable of supporting themselves. 

·         Matrimonial property system: the division of assets and allocation of liabilities will be based on the matrimonial property system under which you are married, in other words, was an ANC signed and if so, was it with or without accrual? Without a signed settlement agreement, the court will order division as per the system under which you are married and it is then up to the parties as to how that division will be effected, failing which, a receiver and liquidator must be appointed to attend to the division of the joint estate or a referee to calculate the accrual in the marriage and payment thereof.  

·         Mediation: Parties are required to first attempt to mediate their disputes before a court will grant a final decree of divorce. This can be done through a trained mediator who will help the parties come to an agreement on issues such as custody, visitation, and division of assets. Mediation however is not always necessary as often we, as the appointed attorneys, can assist with helping the parties reach an agreement between themselves. 

·         The final decree of divorce: Once all issues have been resolved, the court will issue a final decree of divorce, officially ending the marriage. Once the order is granted, the parties then need to register the divorce at Home Affairs in order to change their marital status. Our firm can also assist with this process to avoid standing in line at Home Affairs!

 

 

Warning to a parent that refuses to pay maintenance.

By Sasha Kadish.

In a recent case, a divorcing couple who were married in community of property signed a settlement agreement. The divorce was granted in 2014, and the agreement was made a court order. The couple had three minor children, and the father, who was an accountant, businessman and sole director of an accounting firm, was ordered to pay maintenance for their upkeep.

However, the father failed to comply with the court order and did not pay maintenance for the minor children. In 2018, a new court order was obtained, ordering the accounting firm owned by the father to pay 75% of the outstanding maintenance. Despite this, the father still did not comply with the court order, forcing the mother to sell immovable property to support the children, and the bank sought foreclosure on a second property.

The mother then brought a contempt of court application against the father. The court found that the father intentionally and willfully disobeyed the orders, severely undermining the best interests of the minor children. As a result, the court sentenced him to three months imprisonment for the crime of contempt of court.

This case serves as a warning to parents who refuse to pay maintenance for their children. The court will not hesitate to imprison a parent who can afford to pay but refuses to do so. Therefore, if you are an aggrieved parent suffering because of a non-paying parent, it is important to pursue all avenues in court to bring the non-paying parent to justice. Remember, the welfare of your children should always be your top priority.

Can the trustees of a pension fund ignore the wishes of a member as recorded in the member’s nomination form?

The court dealt with this question in Ndwandwe v Trustees of Transnet Retirement Fund and Others [2023] ZAKZDHC 8 (22 February 2023) of Transnet Retirement Fund and Others [2023] ZAKZDHC 8 (22 February 2023).

The conclusion was that the trustees of a fund may apportion death benefits to the member’s nominees as well as identified dependents and beneficiaries who are not included in the nomination form, subject to the wording of its rules.

Ndwandwe (the deceased) worked for Transnet. When he died, he was survived by two wives and 10 children.

Years before his death the deceased completed a beneficiary nomination form, nominating certain family members. Retirement funds rules are the main source of the rights and obligations that regulate the relationship between the fund on one hand, and its members and the employer, on the other. The board of trustees of a fund are therefore guided by the rules of that fund.

Notwithstanding the nominees and percentages stipulated by the deceased in the nomination form, the trustees deviated from the nominations. Mrs Ndwandwe was unhappy with the change and approached the court, seeking to set aside the revised apportionment by the trustees of the fund. She contended that the trustees committed a reviewable irregularity by ignoring the contents and stipulations in the deceased’s nomination form.

The trustees of the fund argued that it was not bound by the nomination form and was entitled to make an independent apportionment of the deceased’s death benefit to his qualifying dependents as defined in terms of the fund’s rules.

The court found that the trustees acted reasonably and rationally in arriving at the decision to vary the proportions of the death benefits amongst the deceased’s dependants, contrary to the express wishes of the deceased, stipulated in his nomination form.

It found that the trustees of the fund had a large discretion to determine, in the light of its assessment of their respective needs, in what proportions the death benefit of the deceased would be distributed among his dependants.

This judgment accords with the prevailing law set out in section 37C of the Pension Funds Act 24 of 1956 (PFA). The PFA empowers a board of trustees to take all reasonable steps to identify and locate all potential dependents and beneficiaries of the deceased member’s death benefits and to distribute the benefits in a rational and equitable manner. The board of trustees is therefore not bound to rely solely on the information that is brought to its attention through a member’s nomination form.

What is the effect of a restraint of trade clause when a business is sold?

A client asked if she is bound by the restraint of trade undertaking contained in her employment contract when her employer sold the business as a going concern. She is now working for the new buyer on the same terms as her old contract.

Section 197 of the Labour Relations Act, 1995 (“LRA”) protects employment where a business transfer occurs. In terms of section 197 and section 197B(1)(b), a “transfer” means the transfer of a business by one employer (the old employer) to another employer (the new employer) as a going concern.

In the case of Slo-Jo Innovation (Pty) Ltd v Beedle and another [2023] (LC), the court had to decide if Beedle was in breach of a restraint of trade clause. Slo-Jo Trading employed her as a sales representative in 2007. Her employment contract contained a restraint of trade clause. In 2018, she was transferred to Slo-Jo Innovation. She was employed on the same terms and conditions she had with Slo-Jo Trading.

Beedle subsequently resigned from the Applicant and took up employment with a direct competitor of Slo-Jo Trading and Slo-Jo Innovation.

The Labour Court found that Beedle's contract of employment had transferred from Slo-Jo Trading to Slo-Jo Innovation in terms of section 197 of the LRA and that she was thus bound by the restraint of trade. It agreed that if the 'new employer' has a proprietary interest worthy of protection it may seek to enforce the provisions of such a restraint.

The Court held that a "contract of employment is transferable under the provisions of section 197 of the LRA, including all the terms agreed to between the parties, not only those that are more favourable than the provisions of the BCEA". Furthermore, the effect of section 197(2)(b) of the LRA is that "if the obligation was in existence at the time of the transfer, it continued in force beyond the transfer".