Risk-only life policies with a beneficiary clause

Risk-only life policies with a beneficiary clause, the proceeds thereof do not form part of the deceased’s estate, neither the joint estate even if the deceased was married in community of property.

Upon death, the question of which property formed part of the deceased’s estate during his life time is inevitable, so does the question of which property formed part of the joint estate where the deceased was married in community?

In the matter between Naidoo v Discovery Life Limited & Others (202/2017) ZASCA 88

(31 May 2018), the main issue was whether the proceeds of risk-only policy containing a beneficiary clause, formed part of the joint estate?  And if so, whether the nomination of beneficiaries by the deceased without the consent of the surviving spouse amounted to an alienation of property which is prohibited in terms of section 15 (2) (c) Matrimonial Property Act 88 of 1984 (hereinafter “the Act”)?

It was common cause that the appellant, Ms. Vavanthi Naidoo and the late Merglen Naidoo were married in community of property in 1996. It was also common cause that in 2002, the deceased took out life assurance policy with Discovery Life Limited in terms of which the deceased was the principal life insured and owner thereof.

On the inception of the policy, the deceased nominated the appellant as the beneficiary of the proceeds in terms of the policy. However in 2011, the deceased decided to remove the appellant as a beneficiary, without her knowledge. He substituted her by nominating his parents and siblings as the new beneficiaries. A year later—that was 2012, he passed way.

Pursuant to his death, Discovery Life Limited fulfilled its obligation in terms of the policy by making payment of the proceeds due to the new beneficiaries. It was only then that the appellant learned that the deceased had removed her as a beneficiary.

The appellant formed the view that the proceeds of the policy belonged to the join estate, since she was married to the deceased in community of property. This prompted her to institute legal proceedings in the Gauteng Local Division of the High Court, Johannesburg, seeking an order inter alia to the effect that the proceeds of the policy formed part of the joint estate and that Discovery Life Limited pay such proceed to the joint estate.

In light of the relief claimed against Discovery Life Limited, the new beneficiaries were joined by Discovery as the co-respondents in the matter. It appears that Discovery Health Limited was intending to proceed with a claim for unjustified enrichment against the co-respondents, in the event that the relief against it were to succeed.

The High Court considered the substance of risk-only life policy, with a beneficiary clause and determined that this type of policy constitutes a stipulation alteri contract (a contract for the benefit of a third party).  As such the court held that the proceeds of the policy did not form part of the deceased’s estate, neither the joint estate. The Court held further that the substitution of beneficiaries by the deceased without the written consent of the Appellant did not constitute an alienation in terms of the Act.

The ruling of the High Court was subject to an appeal at the Supreme Court of Appeal (hereinafter “the SCA”).  The SCA confirmed the High Court ruling. It found that the policy holder (“the deceased”) contracted with the insurer to the effect that an offer will be made by the assurer to a third party with the intention that on acceptance of that offer by the beneficiary, a contract will be established between the beneficiary and the insurer.

The SCA also found the following: the proceeds of the policy were payable to the beneficiary upon death of the principal life insured, proceeds were immediately made available to the beneficiaries without the beneficiaries having to wait for the deceased’s estate to wound up, the proceeds did not form part of the deceased’s estate for the purposes of calculating the executor’s remuneration, the policy had no surrender value and the proceeds could have never been paid to the policy holder during his life time.

The SCA, same as the High court, ultimately ruled that the proceeds of the policy did not form part of the deceased’s estate neither the joint estate. Having determined that the policy did not form part of the deceased’s estate neither the joint estate, the SCA held that the nomination of new beneficiaries without the consent of the appellant did not amount to an alienation and as such section 15(2) (c) of the Act was not applicable.

Perhaps an interesting issue which both the SCA and the High court were not call upon to decide is whether the payment of premiums without a spousal consent would have amounted to an alienation in terms of section 15(2) (c) of the Act? In light of the fact that the deceased and the appellant were married in community of property and as such the money utilized to pay for the premiums was part of the joint estate.

By
Jeffrey Maluleke
jeffrey@dyason.co.za

Learn while refueling during your lunch hour!

On the menu

Material Transfer Agreements

Presented by Dr Marietjie Botes

  • On 20 July 2018 SA’s first official MTA was published in Government Gazette no.41781
  • Biological materials previous used exclusively for research purposes – now seen as having direct commercial value
  • MTA’s evolved into hybrid form, including complexities of IP licence agreements

Concern that public funds used to support research institutions are used to indirectly support private biotech companies

 

Book your LAW4LUNCH session now via e-mail and for further info at marietjie@dyason.co.za

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Muslim women in polygamous Muslim marriages’ right to their deceased husband’s estate – with reference to the constitutional judgement of Moosa no and others v minister of justice and correctional services and others (cc)

Losing a spouse is hard enough, having to find out that you are not recognised as a “surviving spouse” in terms of the South African law and cannot inherit from your late husband adds to the grieve and despair.  For Muslim women in South Africa this was their reality for far too long, until the Western Cape High Court, and ultimately the Constitutional Court, changed this injustice.

The question under examination in the above matter was whether the Judgment handed down by the Western Cape High Court on 14 September 2017 by Le Grange J. concerning the validity of section 2C(1) of the Wills Act 7 of 1953 was correct.  This section regulates who will benefit if a descendant of the testator repudiates any benefits.  This section provided that such benefits vest in the “surviving spouse” of the testator.

The Western Cape High Court declared Section 2C(1) of the Act inconsistent with the Constitution in terms of Section 172 (1)(a) , and invalid to the extent that it does not recognise a “surviving spouse” in terms of Sharia’ah (Islam) law and therefore does not include multiple female spouses who were married to the deceased testator under polygamous Muslim marriages.

Briefly the facts in the Moosa matter:

Osman Harneker (the deceased) married Ms Amina Harneker (first wife) and later Ms Farieda Harneker under the tenets of Islamic law.  They had 9 children in total.  While Mr Harneker was still alive he purchased a home, but the deed of transfer only reflected Mr Harneker and Amina Herneker as owners, as they were “legally married”.  Mr Harneker then passed away and his will referred the benefit to both wives and his children.  All the children renounced the benefits due to them under the will.  Dr Fareed Moosa (the Applicant) was subsequently appointed as executor of the estate, and as executor he suggested that the children’s shares be distributed equally between first and second wife.  When Dr Moosa sought to register the half portion of the house to Mrs Amina Harneker and Farieda Harneker the Registrar of Deeds approved registration for the first wife, but not the second wife on the basis of the term “surviving spouse” in terms of Section 2C(1) of the Act, as it only covered spouses recognised formally under South African Law.

Dr Moosa  launched the application in the Western Cape High Court for a finding that Section 2C(1) of the Act is inconsistent with the Constitution and it violated the second wife’s rights to equality and dignity.

 

The finding of the High Court

The High Court indicated that Section 2C(1) was founded in the years before our Constitution was born.  It referred only to common law monogamous union, and created no room for interpretation otherwise.  It was later extended to recognise spouses married under customary marriages in terms of Customary African Law.  These marriages were all recognised by our Law and thus all the surviving Spouses could benefit in terms of Section 2C(1).

Section 2C(1) thus made a clear differentiation between spouses in a common law monogamous union and those married under Islam Law, who are not recognised as spouses.  Since only spouses in terms of the common law monogamous unions are recognised in terms of Section 2C(1), it was blatantly clear that the Section discriminated against women in polygamous Muslim marriages.

It was further clear that since our law recognises Customary marriages in terms of Customary African Law the section further discriminated against spouses married under the Customary African Law and those married under Muslim Law, as the latter was not recognised as a spouse for purposes of Section 2C(1).

The Court rightly found that the differentiations, as discussed above, “bears no rational connection to a legitimate governmental purpose and therefore constitutes unfair discrimination in breach of section 9(3) of the Constitution”.

The Court further concluded that Section 2C(1) differentiated between the rights of the first wife and that of the Second wife, since the first wife was recognised as a “surviving spouse” by virtue of her civil union with the deceased, but excluded the second wife since their union was based in Islamic law.  The Court found that this constitutes discrimination against the second wife on the basis of her culture and religion.  There exists no logical, legitimate reason for the discrimination and it was thus found that it was in breach of the spirit and purpose of our Constitution.

 

 

 

The Constitutional Judgment

The Constitutional Court upheld the findings of the Western Cape High Court.  It was confirmed that the Section, as it then stood, infringed on the second’s wife’s right to equality and dignity and that the wording of the Section must indeed be amended.  Ultimately the following was included in Section 2C(1) in order to align the Section with the Constitution:

“…For the purposes of this sub-section, a ‘surviving spouse’ includes every husband and wife of a monogamous and polygamous Muslim marriage solemnised under the religion of Islam.”

It is lastly, important to note that the Constitutional Court declared the invalidity to operate retrospectively with effect from 27 April 1994, but added an important proviso.  The order specifically reads:

“The declaration of invalidity operates retrospectively with effect from 27 April 1994 except that it does not invalidate any transfer of ownership that was finalised prior to the date of this order of any property pursuant to the application of section 2C(1) of the Wills Act 7 of 1953 unless it is established that, when the transfer was effected, the transferee was on notice that the property in question was subject to a legal challenge on the grounds upon which the applicant brought the present application”

By
Marguerite Kirchner

LANDLORDS, TENANTS AND THE DREADFUL EVICTION PROCEDURES

Have you, as a Landlord, ever been the victim of a tenant refusing to vacate your premises at the end of a lease agreement or at the date of termination thereof as a result of the default of a tenant?

This is a situation wherein no Landlord wants to be in since it will result in a lot of headaches and unnecessary legal costs in an attempt to have the unlawful occupant of the premises correctly evicted according to the Provisions of the Prevention of Illegal Eviction from and Unlawful Occupation of Land Act 19 of 1998.

The Pie Act, as it is commonly known, can be a very tricky and daunting act if it is not properly complied with during the eviction proceedings. Although you do not want to incur any further costs pertaining to the dispute, it is of the outmost importance that you ensure that the correct proceedings are followed in order to avoid further complications.

Lease Agreement

In order to avoid unnecessary complications during the litigation process regarding the validity of your Lease Agreement, it is important to consult your attorney prior to entering a Lease Agreement with a prospective tenant in order to ensure that the Lease Agreement contain the necessary provisions to protect all parties involved and also stipulate the relevant procedures in the event of the non-compliance of the Lease Agreement.

Notice to Evict

Should a situation arise where a tenant defaults in terms of his/her obligations as set out in the Lease Agreement, one would need to carefully consider the provisions of the default clauses in the Lease Agreement in order to ensure that the correct procedures are followed before terminating the agreement. The aforementioned would also apply where a Landlord gives notice to a tenant of his/her intention not to renew the Lease Agreement upon the lapse thereof.

For example, let’s assume that there is a proper default in terms of the Lease Agreement or the period of the Lease Agreement has lapsed and you now request your tenant to vacate the premises in order for a new tenant to occupy same but they then refuse to comply with your request, then, in terms of the Act, a Notice to Evict should be delivered to the tenant at its domicile address as set out in the Lease Agreement.

Said notice must include the confirmation of termination of the lease agreement as well as information regarding the reason for the termination, also stating that the tenant is now unlawfully occupying the premises as a result of the termination of the agreement for whatsoever applicable reason. The notice will then also grant the occupier a reasonable period, normally 30 calendar days, to vacate the premises, failing which further legal proceedings will be instituted against him/her.

Should the tenant fail to vacate the premises on the stipulated date, the application for the eviction of the unlawful occupiers will now need to be brought against them in terms of Section 4(1) of the Act, to be heard and decided in the applicable Court.

Application for Eviction

Your attorney will now proceed to draft the necessary Application for Eviction as well as a affidavit for the owner of the Leased Premises to sign in the presence of a Commissioner of Oaths stating that he/she is the registered owner of the property and also provide the proof of ownership thereof. You will also need to state how the relationship with the tenant arose, in this circumstance as a result of a Lease Agreement and also clearly indicate what the reason for the termination of the Lease Agreement is and why the tenant has failed to vacate the premises despite demand to do so.

The Notice to Evict which was delivered to the tenant will also be attached to the affidavit as confirmation of the cancellation of the Lease Agreement.

Once the application and the affidavit in support thereof is finalised, same will be issued at Court and served by the Sheriff on the tenant. The Notice of the application will also include a date on which the tenants should appear before the relevant court in order to defend or consent to their eviction of the premises. The tenants will also have the opportunity to consult an attorney who will assist them with the furtherance of the matter.

According to the Act, a further notice, referred to as the Section 4(2) Notice and Order to Evict, which should be signed by a Magistrate or Judge, must be served by Sheriff on the Tenants at least 14 days before the hearing of the Eviction proceedings. The Section 4(2) proceedings is referred to as the ex parte proceedings and your attorney will need to approach the Court in the interim but before the 14 days period to obtain said Ex Parte order from a Magistrate or Judge, depending on in which Court the application will be heard.

Upon hearing of the eviction proceedings, whether opposed or unopposed, the relevant Magistrate or Judge will peruse the merits of the case and then make an order for the eviction of the tenants, should he/she be of the opinion that it is in the interests of justice to do so. It is important to note that an order to evict will not be granted if the tenants have no alternative accommodation. In this event, the local Municipality will be afforded the opportunity to provide the tenants with the necessary accommodation.

Once the tenants have been evicted from the premises you can then also proceed to institute the necessary legal proceedings to recover any outstanding rent and/or damages you have incurred as a result of the tenant’s unlawful occupation of your property. these proceedings may be brought at any time, before, during or after the eviction proceedings.

To conclude, it is thus evident, whilst taking the above into account, that it is very important for you as a Landlord to ensure that your Lease Agreement is in order and that your attorney provide you with the necessary assistance in the event that you are caught up in a situation where you have a tenant who refuses to vacate your rental property.

Defamation vs Freedom of Expression – Where do we draw the line?

With regard to Antony Louis Mostert & three others v Simon John Nash & seven others

Introduction:

In today’s society there is a plethora of ways that people can make their voices heard, be it through media, social media, blogs, articles or the good old grapevine. But have you ever stopped and wondered how free freedom of expression really is? It’s perhaps a thought that should have crossed the mind of the First Respondent in this matter.

Dispute:

The dispute herein relates to very unsavory remarks about the First Applicant which were made by the First Respondent.

An application was brought by the First Applicant, Antony Louis Mostert, in his personal capacity and in his capacity as curator and liquidator of the Third and Fourth Applicants respectfully, both being pension funds. Such application was brought to seek an order to prohibit the Respondents from disseminating, directly or indirectly false and defamatory allegations about the First Applicant and certain other relief. The Application was brought on the basis of urgency, as publication of further defamatory allegations were anticipated.

The First Respondent alleges that the abovementioned order would severely violate his Constitutional right to freedom of expression on two grounds, firstly that it would limit his right to impart information and ideas unjustifiably and, secondly, it unjustifiably limits the public’s right to receive such information.

The defamatory allegations made by the First Respondent were made on more than one occasion and continued on the website www.pensionscam.co.za. Such allegations were made after the First Applicant’s appointment as curator and consisted of accusations of fraud, corruption and further went on to attack the character of the First Applicant. It must be noted that the aforesaid allegations were not supported by any facts.

Right to dignity and freedom of expression:

The court had to take into account the following factors in determining the dispute:

  1. Has the First Respondent undermined the right of the First Applicant to the safeguard of his dignity and reputation or fama which personality right is protected by the law of defamation;
  2. Does freedom of expression exonerate the First Respondent from all liability for his untruthful statements about the First Applicant; and
  3. Is the order sought justified?

Human dignity and freedom of expression are rights afforded to South Africans and are protected by the Constitution. The right to human dignity is protected by Section 10 of the Constitution and includes inherent dignity and the right to have their dignity respected and protected. On the other hand, the right to freedom of expression is protected by Section 16 of the Constitution and any limitations are subject to the requirements of Section 36.

The Court stated that freedom of expression does not trump the right to dignity and further referred to what was stated by the Constitutional Court in S v Mamabolo with regard to the relationship between the rights to dignity and freedom of expression, namely:

“With us, the right to freedom of expression cannot be said automatically to trump the right to human dignity. The right to dignity is at least as worthy of protection as the right to freedom of expression. How these two rights are to be balanced, in principle and in any particular set of circumstances, is not a question that can or should be addressed here. What is clear though and must be stated, is that freedom of expression does not enjoy superior status in our law. ”

Defamation Requirements:

The elements of defamation consist of:

  1. The wrongful; and
  2. Intentional;
  3. Publication of;
  4. A defamatory statement.

The Court stated that “the law of defamation is designed to protect the reputation of people, in doing so, it limits the right to freedom of expression. Such limitation can be consistent with the Constitution only if it can be said that ‘an appropriate balance is struck between the protection of freedom of expression on the one hand, and the value of human dignity on the other‘.”

The court further went on to state:

“It follows in my view, that in defamation cases the truth of what is said and the public interest are relevant factors. Also relevant are the context in which the statements were made, their reasonableness, the tone used, the identity of the person who made the statements and the identity of the victim. These criteria are useful, in my view, when determining whether freedom of expression justifies the violations of a person’s right to dignity.”

Order:

The Court disregarded the First Respondent’s defence that such statements were fair comment and in the public interest and came to the conclusion that the defamatory statements were not supported by any evidence and were “outrageously defamatory”.

The Court made the following order:

  1. The First to Third Respondents are interdicted from disseminating, directly or indirectly, false and defamatory allegations pertaining to the First and Second Applicants as well as their associates;
  2. The Respondents are directed to cause the website http://pensionscam.co.za or any other website established by them which refer to the First Applicant or his associates to be closed down within 24 hours, failing which the Sheriff shall be authorised to do so;
  3. The First and Fourth Respondents are ordered to obtain leave of the Court prior to instituting further proceedings against the Applicants;
  4. The costs of this application shall be borne by the First to Third Respondents jointly and severally.

Conclusion:

Simply put, defamation is not something to be taken lightly. Our Constitution affords South Africans an array of Rights that should not, and will not, be used to defend wrongful behavior.

By
Lauren Padayachee
lauren@dyason.co.za