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Legal Insights: How de Graaf NO v C Defines Ex-Spouse Pension Rights

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Legal Insights: How de Graaf NO v C Defines Ex-Spouse Pension Rights

Legal Insights: How de Graaf NO v C Defines Ex-Spouse Pension Rights

The case of de Graaf NO v C centers on the interpretation and enforceability of clauses within a consent paper signed during divorce proceedings, ultimately determining the entitlements of the ex-spouse regarding pension benefits and retirement annuities.

Deciphering Divorce Agreements: A Deep Dive into the de Graaf NO v C Case 

Case name: de Graaf NO v C

Citation: [2023] ZASCA 117

Court: Supreme Court of Appeal 

Date Of Judgment: 12 May 2023 

Overview of the Matter at Hand 

This case is an appeal against the judgment of the High Court which had awarded an ex-wife 50% of her deceased ex-husband’s pension interests. 

Legal Issues Raised in the Case 

The legal issue in this case concerns the interpretation and enforceability of certain clauses of a consent paper concluded between ex-spouses.

In divorce matters, a consent paper is a signed document that sets out the agreements that the parties have reached. It is normally made a court order.

Relevance to Divorce and Family Law 

This case sets out valuable guidance in the interpretation of agreements between parties to divorce proceedings. 

Description of the Facts Leading up to the Case

Ms C and the late Mr C were married out of community of property without accrual.

When the couple divorced, they signed a consent paper, which was made an order of court.

In terms of the consent paper, they agreed that Ms C would be entitled to 50% of Mr C’s pension fund at the date of divorce and 50% of his retirement annuity at the date of divorce.

Mr C also agreed to pay an additional amount to Ms C at the time of his withdrawal from the pension fund and the retirement annuity to ensure that she receives one-half of the net entitlement to him at the date of his withdrawal from both funds.

At the time of their divorce, the law did not allow a party to obtain his/her entitlement to a pension interest at the date of the divorce. A former spouse could only obtain the benefit when the member spouse exited the fund.

This law was eventually changed. This means that a non-member spouse does not have to wait until the member spouse exits the fund to claim their entitlement upon divorce.

Ms C accordingly later claimed her entitlements as of the date of divorce. The issue in this case concerns Ms C’s claim to the additional payments as agreed to in the consent paper.

Chronological Order of Events 

1983 – The couple married out of community of property without accrual.

1999 – The couple divorced and signed the consent paper. At the date of divorce, Ms C’s 50% entitlements were R52 648.73 in the pension fund and R10 619.42 in the retirement annuity.

2011 – Ms C claimed and was paid her 50% portions of Mr C’s pension fund and retirement annuity as at the date of divorce.

2015 – Mr C retired. His pension fund gave him the option to take up to one third of his pension benefit in cash. He was obliged to purchase an annuity with the balance. He opted to cash out less than one third.

2018 – Mr C passed away.

Relationship Between the Parties Involved 

Mr de Graaf is the executor of the estate of the late Mr C. Ms C is the ex-wife of the late Mr C.

Issues to be Determined. 

There were two issues to be determined by the court:

1.     What is the correct interpretation of the relevant clauses in the consent paper?

2.     What amount, if any, is Ms C entitled to?

Summary of the Arguments Made by Both Parties

Ms C argued that she is entitled to 50% of the deceased’s entire pension and retirement annuity benefits accumulated during the marriage as well as after the divorce up to the deceased’s exit from the funds at retirement. 

Mr de Graaf made the following alternative arguments:

  1. Ms C is not entitled to any of the deceased’s pension interests because the relevant clauses of the consent paper are vague, unenforceable and void. 
  1. Ms C is only entitled to 50% of the pension interest growth as at the date of divorce. He argued that the amount of R52 642.73 increased to R212 802.57 according to the fund’s actuarial calculations.
  1. At best, Ms C is entitled to 50% of Mr C’s cash pay-out, minus the R52 648.73 she was already paid.

Discussion of Legal Principles 

The court emphasised that when it comes to interpretation, context is everything.

The court said that to give context to the consent paper, it is important to take into account the circumstances surrounding the terms of the consent paper.

Court’s Decision and Order 

The court ordered Mr de Graaf to pay Ms C an amount of R805 125.00 in respect of the pension fund.

This amount constitutes one third of the deceased’s pension fund after tax deductions, and after deduction of the R52 648.73 she already received in 2011. (The reason the court awarded her 50% of one third instead of 50% of the full amount, is because according to the fund rules the deceased was entitled to a third of his pension in cash upon retirement.)

The court also ordered Mr de Graaf to pay Ms C an amount of R22 320.94 in respect of the retirement annuity.

This amount constitutes half of the annuity after deduction of the amount she already received in 2011.

Reasoning Behind the Court’s Decision 

The court examined the circumstances surrounding the terms of the consent paper.

The court considered the fact that the parties divided all the assets they acquired during the marriage on a fifty-fifty basis.

The parties considered the terms of the consent paper very seriously, they were both represented by experienced divorce lawyers and had no doubt about its enforceability and implementation.

The court said:

.. there can therefore be little doubt that the parties intended that Ms C would be entitled to an additional amount over and above what is provided for in the Divorce Act.

..that an examination of the consent paper reveals that the words “in addition” are used in the relevant clauses.

..this means that the deceased agreed and undertook to pay an additional amount to Ms C at the time of his withdrawal from the funds.

The court emphasised that the parties agreed to this to ensure that Ms C receives one-half of the net entitlement to the deceased as of the date of withdrawal, as stated in the consent paper.

Finally, the court concluded that considering the language, context and purpose of the consent paper, the contractual intention of the parties is expressed clearly.

Implications for Divorce and Family Law

The outcome of this case illustrates that a court will give effect to what parties to divorce proceedings contractually agree to, especially where the language, context and purpose of the agreement are clear.

Lessons To Be Learned from The Case for Potential Clients

Potential clients should be advised of the weight that the law attaches to their agreements before entering into such agreements.

Recommendations For Individuals Facing Similar Situations

Individuals facing similar situations are advised to speak to divorce and family law specialists for advice on their specific matters.

Judges and Legal Teams 

Judges: Saldulker, Mocumie and Meyer JJA; and Nhlangulela and Daffue AJJA

For the Appellant: BDJ Gassner SC

Instructed by De Klerk & Van Gend Inc, Cape Town and Louis Block Attorneys, Bloemfontein

For the Respondent: JA van der Merwe SC

Instructed by Ashersons Attorneys, Cape Town and Webbers Attorneys, Bloemfontein

Read the full Judgement 

Read More:

Navigating Divorce and Pension Funds in South Africa

Mashola v Mashola: Pension Forfeiture Order

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