Mutsila v Municipal Gratuity Fund and Others [2025] ZACC 17
The applicant (SM) and the deceased, (EM) were in a civil marriage at the time of EM’s death. EM was a member of the first respondent (the fund). SM and EM had five children and SM submitted a claim on behalf of the five children and herself to the fund for EM’s death benefits. D also submitted a claim to the fund on behalf of herself and two children which she alleges were her children with the deceased. She alleged that she was in a customary marriage with the deceased and that the deceased was responsible for the maintenance of the two children.
The fund recognized both SM and D as well as their children as dependants of the deceased, as defined in the definition of “dependant” in section 1 of the Pension Funds Act, 24 of 1956 (the Act), and allocated 52.5% of the death benefit to D and her two children. The remaining 47.5% was allocated to SM and her children.
A private investigator hired by SM discovered that D was in a customary marriage with M, who was the biological father of D’s children.
Litigation history (paragraphs 9 to 20 of judgment)
SM lodged a complaint with the Pension Funds Adjudicator (PFA) under section 30A of the Act. She stated that D was not married to EM, that neither D nor her children were factually dependent on EM and that EM did not father D’s children.
The PFA ruled against the fund. The fund then approached the Gauteng High Court (Pretoria) with an application under section 30P of the Act, and joined SM in the proceedings. The High Court ruled against the fund after which the fund appealed to the Full Court with leave from the Supreme Court of Appeal (SCA). The Full Court dismissed the fund’s appeal with a punitive cost order. The Fund was granted special leave to appeal to the SCA. The SCA set aside the PFA’s decision and, in effect, upheld the decision taken by the fund. The SCA held that both the High Court and the Full Court failed to recognize the essential issue, i.e., whether D and her children were factually dependent on EM.
Proceedings in Constitutional Court – (paragraphs 21 to 23 of judgment)
The court (Theron J (with Madlanga ADCJ, Kollapen J, Majiedt J, Mathopo J, Mhlantla J, Rogers J, Seegobin AJ and Tolmay AJ concurring)) granted leave to appeal to SM after finding that, as SM argued, the proper interpretation of section 37C of the Act raises constitutional questions and that a definitive interpretation by the courts has not been given yet.
The court held that the following questions are pertinent to the case:
1) Whether the Fund properly exercised its discretion in this matter;
2) At what date should a pension fund make a determination as to who is a dependant for the purpose of distributing a death benefit – see paragraph 83 of judgment; and
3) Whether the person concerned must be a dependant at the time when the distribution is made.
The issues reflected at (2) and (3) above were contained in post-hearing directions issued by the Constitutional Court. The parties were requested to address these questions.
The court found in paragraphs 57 to 61 that a proper investigation was not carried out by the fund to determine the dependency of D and her children.
At what date should a pension fund make a determination as to who is a dependant for the purpose of distributing a death benefit? –
The position before this judgement was regulated by the decision of the Supreme Court of Appeal in Guarnieri v Fundsatwork Umbrella Pension Fund [2018] ZAGPPHC 579 where it was confirmed that a fund must assess dependency at the date of its distribution decision. See paragraphs 89 and 100 of judgment.
The court now ruled that the date of death of a member is relevant to determine who relied on the member for financial support while the member was still alive. The objective facts relevant to determine the factual dependency must therefore have existed at the time of the member’s death. See paragraphs 90, 101,103 as well as 114 of judgment.
Whether the person concerned must be a dependant at the time when the distribution is made – see paragraphs 104 to 111 of judgment.
The position before this judgement was also regulated by the decision of the Supreme Court of Appeal in Guarnieri v Fundsatwork Umbrella Pension Fund where it was confirmed that the person concerned must still be a beneficiary at the time when the distribution is made. See paragraph 104 of judgment.
The court now ruled that there is no basis to conclude that someone must be a “beneficiary” at the time the distribution is made. Whether someone is a legal dependant is a matter of status which does not change over time. Factual dependency, however, is determined at the time of the member’s death according to the Act. See paragraph 111 of judgement.
The court ruled that the matter must be remitted to the fund to make a fresh determination, within three months from the date of this judgment, of dependency and also determine an equitable allocation and distribution of the deceased’s death benefits as at date of his death.
The court’s ultimate finding was that the fund failed to conduct a proper investigation. The first respondent was ordered to pay the SM’s costs, including the costs of two counsel, where so employed in the High Court, the Full Court, the Supreme Court of Appeal and in the Constitutional Court.
Members are urged to ensure that they conduct proper investigations before they make a determination of dependants.