Ndaba v Ndaba – reconciling the irreconcilable

June 1st, 2017
x
Bookmark

Ndaba v Ndaba [2017] 1 All SA 33 (SCA)

By Makhado R Ramabulana

In the recent decision of Ndaba v Ndaba [2017] 1 All SA 33 (SCA) the Supreme Court of Appeal (SCA) had the opportunity to resolve an issue regarding the limits of the deeming provision contained in s 7(7)(a) of the Divorce Act 70 of 1979 (the Act) in marriages in community of property. The issue has been niggling in that, except for contradictory findings in the lower courts, the SCA itself had prior to the Ndaba matter decided on the issue twice, namely, in Old Mutual Life Assurance Co (SA) Ltd and Another v Swemmer 2004 (5) SA 373 (SCA) and Eskom Pension and Provident Fund v Krugel and Another 2012 (6) SA 143 (SCA), and yet the issue remained clouded. When the Ndaba matter was decided, the expectation was that clarity would be achieved and the issue raised in the earlier cases would be put to rest.

The Ndaba matter concerned the distribution of pension interest, which was not expressly included in the settlement agreement when the divorce was granted. The appellant approached the court and sought to appoint a liquidator to divide the estate and to issue a declarator to declare the parties pension interests part of the estate, even though the pension interest did not appear in the settlement agreement.

The deeming provision in s 7(7) of the Act

At the heart of the debate is the sharing of a divorcing couple’s (who are married in community of property) pension benefits during the divorce proceedings. The Act defines such pension benefit to be shared as ‘pension interest’. The basic rule regarding the payment of unaccrued pension benefits, is that, it does not form part of the member’s estate. The legislature sought to include these benefits into the members’ estates in terms of s 7(7)(a) of the Act which reads:

‘In the determination of the patrimonial benefits to which the parties to any divorce action may be entitled, the pension interest of a party shall, subject to paragraphs (b) and (c), be deemed to be part of his assets.’

The issue at the center of the debate in the Ndaba matter and the previous similar cases was: What is the effect of the deeming provision in s 7(7)(a)? That is, do parties to a divorce still need to expressly include pension interest in their settlement agreement when they divide the matrimonial estate or is the pension interest automatically included without the parties expressly mentioning it?

The previous cases, in particular Sempapalele v Sempapalele and Another 2001 (2) SA 306 (O); YG v Executor, Estate Late CGM 2013 (4) SA 387 (WCC); Maharaj v Maharaj and Others 2002 (2) SA 648 (D) and the SCA’s Swemmer and Krugel matters had been split regarding whether the deeming provision required pension interest to be expressly included in the settlement agreement to be divided.

In the Ndaba matter, both the majority judgment per Petse JA (with Mpati AP and Swain JA concurring) and the minority judgment per Makgoka AJA (with Seriti JA concurring) agree that no declaration is necessary for the pension interest to form part of the estate, as the Act deems it. However, the two sides differ in whether this automatic inclusion remains even after a settlement agreement is entered into. The majority, in their ratio decidendi, are of the view that the deeming provision keeps the window open until the estate is divided (and in an obiter dictum, that this window stays open until a claim is made). Whereas, the minority are of the view that if the parties decide to reduce their terms to writing in a settlement agreement, as was the case in the Ndaba matter, then the deeming window closes and the pension interest will be excluded if it is not an item in the list of the divided property in the agreement. The debate goes to the essence of what a settlement agreement is. Thus, does a deeming provision in the Act overrule the parties rights to agree on the division of their assets, in that pension interest can always be added at a later stage.

The legal basis of the findings

The majority appears to disagree with the minority’s reasoning, where the latter reason that the classification of assets as immovables and movables as listed in the (disputed) settlement agreement, implied that pension interest, which according to the latter is neither, was excluded in terms of the maxim expressio unius est exclusio alterius. The majority are of the view that, pension interest, having been correctly classified in the Swemmer matter as a notional asset, is an incorporeal asset and, therefore, a movable asset. They conclude that, regardless of the fact that there is no contradiction between the headings and the contents of the assets in the settlement agreement and despite the fact that pension interest is not among the items listed under the movables, it remains an asset if not expressly excluded. Petse JA concludes that ‘[s]een in this light, the maxim expressio unius est exclusio alterius is therefore unavailing’.  In as much as the SCA had to tailor-make its coat according to its cloth, it is admitted that perhaps the facts in the Ndaba matter were restrictive as compared to previous cases, in that, the settlement agreement itself was being disputed by the applicant. The peculiar circumstances raises an issue of whether the majority would still have arrived at the same conclusion if the facts had been slightly different, as in the Swemmer and Krugel matters, where the estates had already been divided. Petse JA at para 31 leaves no doubt how those matters should have been decided, when he stated: ‘In the result those decisions which held that, if there is no reference in the divorce order of parties married in community of property to a member spouse’s pension interest, the non-member spouse is precluded in perpetuity from benefiting from such pension interest as part of his or her share of the joint estate, were wrongly decided.’

Opinion

The finding of the majority is not as flawless as it could have been. Even if the majority disagreed with the minority on the incorrect classification of pension interest as neither an immovable or a movable asset, there was nothing preventing the parties from including the third heading of incorporeals under which pension interest could be counted. Thus, the reasoning of the majority in this aspect contradicts the maxim expressio unius est exclusio alterius and confirms the suggestion by the minority that the majority may have adopted a sympathy approach, which under the circumstances was woefully inappropriate as the judgment on this issue was still unenforceable against the fund.

Conclusion

If the majority in the Ndaba matter had intended its decision to be the final word on the matter, the well-reasoned minority judgment is the fly in the ointment and it does not appear that the SCA has succeeded in permanently putting this issue to bed.

  • See also p 28 and 34.

Makhado R Ramabulana BA Law LLB (University of Venda) is an advocate and consultant at Mutodandimo Enterprise (Pty) Ltd in Johannesburg.

This article was first published in De Rebus in 2017 (June) DR 51.