Mark Oliver Kaplan and Merle Sandra Katz NNO v The Professional and Executive Retirement Fund and Others

Arthur Ralph Kaplan was a member of two pension funds managed by Liberty Life Association of Africa Ltd. He nominated his two minor sons as beneficiaries in respect of each fund and created a trust for each son's benefit. When he died in July 1990, he was survived by three dependants: his two sons and his widow (who was not their mother). Instead of paying the benefits according to the nominations, Liberty Life allocated the benefits to all three dependants. The trustees of the trusts created for the sons sought a court order declaring that the benefits should be paid to them (for the sons) to the exclusion of the widow. The High Court at Johannesburg (Goldstein J) dismissed their application, holding that Liberty Life acted in accordance with the law. The trustees appealed to the Supreme Court of Appeal with leave.

• Whether section 37C(1) of the Pension Funds Act 24 of 1956 overrides validly made beneficiary nominations in pension fund rules
• Whether benefits subject to beneficiary nominations fall within the scope of section 37C(1) of the Pension Funds Act
• Whether the allocation of benefits by Liberty Life constituted an unlawful subdelegation in terms of the maxim delegatus delegare non potest
• Whether a fund manager (being a company) can delegate the power to allocate benefits to its employees

The appeal was dismissed with costs. The Court declined to order costs of two counsel for the respondents on appeal, noting that only one counsel represented them in the court below and only one counsel represented the trustees at all stages.

Section 37C(1) of the Pension Funds Act 24 of 1956 applies to all benefits payable in respect of a deceased member of a registered pension fund, whether or not the member has made a valid nomination of beneficiaries in terms of the fund rules. The phrase "notwithstanding anything to the contrary contained in any law or in the rules of a registered fund" makes the statutory scheme mandatory and overrides beneficiary nominations. Where dependants are traced within twelve months of a member's death, section 37C(1)(a) requires that benefits be paid to such dependants in proportions deemed equitable by the fund manager, regardless of any nominations. The section does not limit its application only to benefits that would otherwise have fallen into the deceased member's estate. Where a fund manager is a company, the authority to subdelegate the power to allocate benefits to employees is necessarily implied, as a company can only act through its officers or employees.

The Court assumed, without deciding, that: (1) the maxim delegatus delegare non potest applies in the context of pension fund benefit allocations; (2) Liberty Life was indeed a delegee; and (3) the company's internal authorization constituted the relevant employee a delegee rather than an agent. Even on these assumptions favorable to the appellants, the Court held that subdelegation was permissible. The Court also observed that there is no warrant to confine delegated power to those of senior rank in a large company, particularly where no attack was made on the competence or efficiency of the employee concerned. The Court commented on the appropriateness of costs for two counsel, noting that the nature of the legal question involved in the main issue did not justify such an order in this case.

This case established important principles regarding the operation of section 37C of the Pension Funds Act 24 of 1956. It clarified that the statutory scheme for distribution of death benefits overrides beneficiary nominations made in terms of pension fund rules where dependants exist. The judgment reinforces the protective purpose of section 37C, which ensures that dependants are provided for from pension benefits regardless of the deceased member's nominations. The case is significant in South African pension funds law as it confirms the mandatory and overriding nature of section 37C(1), prioritizing dependants' interests over testamentary freedom in the pension fund context. It also provides guidance on delegation by corporate fund managers.