How much should the Estate Get?

 

Harold Tan examines the decision of the Federal Court on Section 58(1) of the Employees Provident Fund Act

 

 

In Lembaga Kumpulan Wang Simpanan Pekerja v Ong Lian Chee (unreported), the Federal Court was called upon to answer the following question of law:

 

“Whether the correct interpretation of sections 54(1)(a) and 58(1) of the Employees Provident Fund Act 1991 (“Act”) and the Fifth Schedule of the Act, all of which as amended by Act A1080/2000 and which came into force on 1 July 2000, is that the additional amount as set out in the Fifth Schedule that is payable is the amount stipulated therein as at the date of granting of authority for withdrawal under section 54(1)(a) rather than the date of death of the deceased member”.

 

 

FACTS

Goh Tin Poh (“the deceased”) was a member of the Employees Provident Fund ("EPF"). He died on 12 October 1998. Letters of Administration to the estate of the deceased were granted to his wife, Ong Lian Chee, the Respondent.

 

In August 2001, the Respondent had applied for the withdrawal of all sums of money standing to the credit of the deceased with the EPF pursuant to section 54(1)(a) of the Act. The relevant portion of the section in force at the material time reads:

 

“54(1) The Board may authorise the withdrawal of all sums of money standing to the credit of a member of the Fund upon any terms and conditions as may be prescribed by the Board if the Board is satisfied that ... (a) the member of the Fund has died;”

 

The Respondent’s application under section 54(1)(a) was approved by the EPF Board (“Board”) on 27 September 2001 and 9 July 2002 for the sums of RM29,999.00 and RM135,208.00 respectively. The said sums were paid to the Respondent on 2 October 2001 and 15 July 2002 respectively.

 

Subsequent to the withdrawal, the EPF paid to the Respondent an additional amount of RM2,000.00 pursuant to section 58(1) of the Act which provides as follows:

 

“58(1) Where authority for withdrawal under section 54(1)(a) has been granted, an additional amount as set out in the Fifth Schedule shall be payable:

 

Provided that where the Board is satisfied that a member of the Fund has died, and no authority for withdrawal under section 54(1)(a) has been granted, the Board may as it deems fit, pay the additional amount to such person as the Board may approve.”

 

It was not in dispute in the case that prior to an amendment made to the Fifth Schedule to the Act which came into force on 1 July 2000, the additional amount payable to the Respondent would have been RM30,000.00. However, following the amendment, the additional amount payable stipulated in the Fifth Schedule was reduced to RM2,000.00.

 

Aggrieved by the decision of the EPF to pay her RM2,000.00, the Respondent initiated a suit to challenge the validity of the EPF’s decision.

 

 

THE RESPONDENT’S CONTENTION

The Respondent contended that her right to the additional amount under section 58(1) of the Act accrued upon the death of the deceased, namely on 12 October 1998, and that therefore, she ought to have received RM30,000.00 instead of only RM2,000.00 from the EPF as provided for in the Fifth Schedule prior to the amendment.

 

EPF’S CONTENTION

The EPF on the other hand submitted that the event which entitled the Respondent to payment of the additional amount under section 58(1) of the Act was not the death of the deceased member per se, but the approval or exercise of the discretion by the EPF Board to grant the authority for withdrawal under section 54(1)(a).

 

DECISIONS OF THE HIGH COURT AND THE COURT OF APPEAL

The Respondent’s arguments were accepted by both the High Court and Court of Appeal which both held that the event which gave rise to the withdrawal of a deceased member's money pursuant to sections 54(1)(a) read together with section 58(1) and the Fifth Schedule is the death of the member. Accordingly both Courts held that the additional amount payable under section 58(1) of the Act should be based on the date of the member's death and not the subsequent approval by the EPF.

 

DECISION OF THE FEDERAL COURT

Leave to appeal was granted by the Federal Court on the question of law set out at the beginning of this article.

 

The Federal Court unanimously allowed the appeal and found that both the High Court and Court of Appeal had erred in law in their decisions.

 

The Federal Court held that the statutory provisions of section 54(1)(a) and 58(1) of the Act were plain and unambiguous, and ought to be given their ordinary meaning.

 

The apex court agreed with the contention by counsel for the EPF and held that section 58(1) of the Act clearly provided that the event which entitles the respondent to payment of the additional amount under that section is not the date of the death of the deceased per se, but the approval or exercise of discretion by the EPF to grant the authority for withdrawal under section 54(1)(a).

 

The Court also noted that there is no mention in section 58(1) that the additional amount is payable upon the death of a member.

 

On the facts of the case under appeal, the Federal Court found that since the authority for withdrawal was granted by the EPF Board to the Respondent on 27 September 2001 and 9 July 2002, after the amendment to the Fifth Schedule had come into force on 1 July 2000, the additional amount payable was RM2,000.00 and not RM30,000.00.

 

The Federal Court explained that the additional amount payable under section 58(1) of the Act did not constitute the deceased member’s contribution to the EPF but is a subsidy which object and purpose is to alleviate the hardship faced by the deceased’s dependants that ensued after his demise. Consequently, the decision as regards the quantum of the additional amount to be paid out was a matter of policy consideration for the legislature to determine.

 

 

CONCLUSION

The decision of the Federal Court is significant as it establishes that the right to receive the additional payment under section 58(1) read together with the Fifth Schedule to the Act only accrues to the estate of a deceased member upon the grant of withdrawal under section 54(1) by the EPF Board and not as at the date of death of a member.

 

 

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