Case  CCT 228/23
[2025] ZACC 17

Hearing Date: 12 November 2024

Judgement Date: 08 August 2025

Post Judgment Media Summary  

The following explanatory note is provided to assist the media in reporting this case and is not binding on the Constitutional Court or any member of the Court.

On 8 August 2025 at 10h00 the Constitutional Court handed down a unanimous judgment authored by Justice Theron in an application for leave to appeal the judgment and orders of the Supreme Court of Appeal, concerning the interpretation of section 37C of the Pension Funds Act 24 of 1956 (the Act), and the equitable allocation and distribution of death benefits held within a pension fund.

The applicant is Ms Tshifhiwa Shembry Mutsila. Ms Mutsila’s husband passed away in a workplace accident on 15 December 2012. By virtue of the deceased’s employment, he was a member of the Municipal Gratuity Fund. The applicant submitted a claim to the Fund, for the death benefit available to the deceased’s dependants, on behalf of herself and her five children. Ms Dipuo Masete also submitted a claim to the Fund on the basis that she and her children were dependants of the deceased.

The Fund recognised both the applicant and Ms Masete and their respective children as dependants of the deceased and resolved to distribute the death benefit to Ms Masete and her two children, and the applicant and her five children.

The applicant lodged a complaint with the Pension Funds Adjudicator. The basis for the complaint was that Ms Masete was neither married to the deceased nor factually dependent on him, and that Ms Masete’s children were not dependent on the deceased. The Fund requested that the matter be held in abeyance, pending the outcome of court proceedings between Ms Masete and Mr Malema Joseph Mphafudi, pertaining to the custody of Ms Masete’s children. The Adjudicator continued with her determination without the Fund’s response to the complaint. The Adjudicator found that the Fund had not conducted a proper investigation as required by section 37C of the Act to identify the beneficiaries of the deceased and set aside its decision regarding the allocation of the death benefit.

The Fund launched an application in the High Court, seeking a declaratory order that it had conducted a proper investigation to determine the deceased beneficiaries, and seeking to have the determination made by the Adjudicator set aside. The High Court found that the Fund had failed to conduct a diligent investigation and dismissed the Fund’s application. The Fund’s subsequent appeal to the Full Court was dismissed on similar bases.

The Fund appealed the Full Court’s decision to the Supreme Court of Appeal. The Supreme Court of Appeal set aside the Adjudicator’s decision and, in effect, upheld the decision taken by the Fund. It held that both the High Court and the Full Court failed to recognise the essential issue in this case, namely, whether Ms Masete and her two children were factually dependent on the deceased. The Supreme Court of Appeal reasoned that this factual dependency was never challenged. It upheld the appeal and reinstated the decision of the Fund.

In a unanimous judgment penned by Theron J (Madlanga ADCJ, Kollapen J, Majiedt J, Mathopo J, Mhlantla J, Rogers J, Seegobin AJ, and Tolmay AJ concurring) the Court found that the matter engaged its general jurisdiction as it raised arguable points of law of general public importance that ought to be determined by the Court. The Court held that any judgment handed down by it will impact other funds and beneficiaries, and the industry at large. The Court found that the matter involved legislation that has a social security purpose affecting a large section of the population, many of whom are vulnerable and dependent on support from pension fund members. The Court found that it was in the interests of justice that leave to appeal should be granted.

The Court dealt with the question whether the Fund properly exercised its discretion. The Court found that the Fund enjoys a wide discretion under section 37C in the allocation and distribution of a death benefit. Only if the exercise of discretion was unreasonable or improper may the decision be reviewed. Section 37C(1)(a) compels the fund to distribute the benefit to a dependant or to multiple dependants “as may be deemed equitable by the fund”.

The Court found that a proper investigation to determine dependency in relation to Ms Masete and her children was not carried out by the Fund. In these circumstances, it was clear that the Fund failed to establish the extent of the factual dependency of Ms Masete and her children. The extent of factual dependency is crucial when a fund makes an equitable allocation and distribution. The inadequate investigation regarding the extent of the factual dependency of Ms Masete and her children tainted the allocation and distribution decision. The Court found that the Fund failed to properly exercise its discretion in this matter.

This Court also considered whether the Supreme Court of Appeal was correct in its determination that the only dispute that the High Court was required to determine was whether the Adjudicator had complied with the audi alteram partem principle; or whether the issues before the High Court included whether the Fund had conducted a proper investigation as required by section 37C before making its distribution decision. The Court found that the language of section 30P suggests that, depending on the nature of the case, a court may deal with the merits, but that it is not obliged to do so, so that it may additionally consider review attacks upon the decision.

In this case, the Fund’s main contention was that the adjudication process was fatally flawed because the Adjudicator “failed to comply with the audi alteram partem rule as she did not grant the Applicant a further opportunity to submit a response”. The Court found that the Adjudicator was required to apply the principles of procedural fairness, natural justice and equity. The Court found that the Adjudicator made negative findings regarding the Fund’s investigation in circumstances where it had not afforded the Fund an opportunity to substantively respond to the complaint, nor was it afforded an opportunity to place any evidence before the Adjudicator about its investigation. The Court agreed with the Supreme Court of Appeal that the Adjudicator’s decision had to be set aside.

However, the Court further found that the finding of the Supreme Court of Appeal that the factual dependency of Ms Masete and her children was never challenged was a serious misdirection by the Supreme Court of Appeal, entitling the Court to interfere with the order the Supreme Court of Appeal made. The Court found that the Supreme Court of Appeal was wrong in concluding that the only dispute the High Court was required to determine was whether the Adjudicator had complied with the audi alteram partem principle.

The Court then considered at which stage a pension fund must make a determination as to who is a dependant for the purpose of distributing a death benefit. Previously, in Fundsatwork Umbrella Pension Fund v Guarnieri and Others [2019] ZASCA 78; 2019 (5) SA 68 (SCA) (Guarnieri), the Supreme Court of Appeal confirmed that a fund must assess dependency at the date of its distribution decision.

The Court held that a textual reading of section 37C suggested that the determination of dependency is made at the time of death of the member, while giving a fund a 12-month period to conduct a proper investigation. This interpretation also accords with the social security purpose of section 37C. The Court also held that because the date of death is to be used to determine dependency, this did not mean that changed circumstances cannot be taken into account when the equitable allocation is made. The Court held that, to the extent that Guarnieri held that factual dependency is determined based on the objective facts existing on the date of the distribution decision and not the facts that prevailed on the date of the member’s death, it erred.

The Court further found that there is no legal basis for the proposition in Guarnieri that a person must still be a “beneficiary” at the time distribution is made. Once an individual is identified as a dependant, whether legal or factual, that status as a dependant does not change. If, at the distribution stage, there are changed circumstances that alter the needs of the dependant, the fund may have regard to these circumstances when determining an equitable distribution.

With regard to the appropriate remedy, the Court, held that it was not appropriately positioned, without a proper case being made, to place itself in the shoes of the Fund and make a fresh determination. The Court held that it was necessary to remit the matter to the Fund and directed that the Fund conduct its investigation afresh, considering all relevant facts, and identify dependants and determine an equitable allocation. Dependency, as at the date of the member’s death is decisive and the Fund must consider the relevant facts at the time of Mr Mutsila’s death to determine his dependants. The Court further directed that the Fund should conclude its investigation within three months from the date of the judgment.

The Court upheld the appeal against the order of the Supreme Court of Appeal. In respect of costs, the Court held that the ultimate finding that the Fund failed to conduct a proper investigation, justified an award of costs in favour of the applicant.

The Full judgment  here