This blog was co-authored by Michelle David, Director and Nomonde Sithole, Candidate Attorney

It is important for a decision-maker to hear submissions from all interested parties.  Failure to do so can result in a decision being irregular on the basis that the decision-making process was defective.  This principle came to the fore in the Financial Services Tribunal hearing in Michael Lefa Selebalo & 1 Other v Afrox Provident Fund & 3 Others, an application for reconsideration in terms of section 230(1) of the Financial Sector Regulation Act, 2017 (FSRA).

Mr Selebalo passed away and a death benefit became payable due to his membership of the Afrox Provident Fund.  He had nominated his partner, Ms Lipali, as a beneficiary of the death benefit.  There were allegations that Mr Selebalo had wanted to remove her as a beneficiary before his death, and that he had a child.  The board of the Fund ultimately identified his siblings as beneficiaries and allocated the death benefits to them. In arriving at this decision, the board accepted that Mr Selebalo had intended to remove Ms Lipali as a nominated beneficiary before he passed away.  The allegation that he had a child was never substantiated.

Aggrieved by the decision, Ms Lipali lodged a complaint with the Pension Funds Adjudicator (PFA).  The PFA found that because there were no dependants identified, the benefit had to be allocated to the nominated beneficiary, Ms Lipali.  The decision was based on section 37C(1)(b) of the Pension Funds Act, 1956 which provides that where a fund cannot trace a dependent of a member within 12 months of their death, the benefit will be payable to a nominee who is not a dependant of the member.

Mr Selebalo’s siblings were not parties to the proceedings before the PFA, despite having been identified as beneficiaries by the board, that is, interested parties.  Consequently, the siblings brought an application to the Financial Services Tribunal for reconsideration of the PFA decision.

The Tribunal found that the PFA made a determination without giving the applicants, who had a vested interest in the matter, an opportunity to make representations.  They were denied the right to be heard prior to a decision being made that would affect them.  To this end, the decision reached by the PFA was procedurally flawed.   The correctness of the decision of the PFA and whether it had the authority to overturn the decision of the board of the Fund in circumstances where there is no indication that, in reaching its decision, the board had taken into account factors which were irrelevant, improper or irrational, could not be considered due to the procedural defect. The correctness can only be determined once all interested parties have made representations before the PFA.  Accordingly, the Tribunal set aside the decision of the PFA and remitted the matter to the PFA for re-consideration.