Brief Summary

Administration of Estates — Life insurance proceeds — Proceeds of life policy not forming part of joint estate — Applicants, children of the deceased, sought to review the Master's decision that life policy proceeds should be included in the joint estate of the deceased and his wife — Court held that proceeds of life policies do not fall into the joint estate and are part of the deceased's separate estate — Condonation for late application granted; third respondent's applications for postponement and striking out dismissed; Master's decision set aside and proceeds to be distributed per Intestate Succession Act.

Comprehensive Summary

Summary of Judgment

1. Introduction

The proceedings took the form of a review application brought in terms of section 35(10) of the Administration of Estates Act 66 of 1965, directed at setting aside a decision of the Master of the High Court (Gauteng Local Division, Johannesburg). The applicants also sought declaratory relief concerning the proper treatment of life policy proceeds in the administration of a deceased estate, and additionally sought an order declaring the deceased’s surviving spouse unworthy to inherit.

The applicants were Duma Maqubela and Patiwe Singaphi, children of the late Patrick Ntobeko Maqubela (the deceased). The first respondent was the Master of the Gauteng Local Division, Johannesburg. The second respondent was Barend van Heerden N.O., cited in his capacity as executor of the deceased estate. The third respondent was Sheryl Thandi Maqubela, the deceased’s widow. The fourth and fifth respondents were Athenkosi Maqubela and Ncane Skhethucwaka Maqubela, daughters born of the marriage between the deceased and the third respondent. Only the third respondent opposed the substantive relief.

The procedural history included (i) the executor’s initial formulation of the liquidation and distribution account on the basis that the relevant policy proceeds fell into the deceased’s estate, (ii) an objection by the third respondent that resulted in the Master directing that the policy be reflected as an asset such that the third respondent would receive half by virtue of the marriage in community of property, (iii) the applicants’ later objection in terms of the Administration of Estates Act which the Master refused to sustain, and (iv) the present review application brought out of time with an accompanying condonation request. The third respondent also launched an interlocutory postponement application and an application to strike out portions of the affidavits as scandalous and vexatious.

The dispute’s general subject matter concerned the administration of an intestate estate where the deceased had been married in community of property, and where a central question arose as to whether the proceeds of a life policy payable upon death formed part of the joint estate (thereby entitling the surviving spouse to half as a matrimonial proprietary consequence), or whether those proceeds fell into the deceased’s separate estate for distribution under intestate succession. A further issue was whether the surviving spouse ought to be declared unworthy to inherit, in light of allegations (and a common-cause conviction) relating to fraud and forgery concerning a purported will.

2. Material Facts

It was common cause that, at the time of his death, the deceased and the third respondent were married in community of property. It was also accepted that the deceased died intestate, and that a life policy on the deceased’s life (a Liberty Life policy identified in the order) paid out death benefits after his death.

The executor originally prepared a liquidation and distribution account treating the policy proceeds as falling into the deceased estate rather than the joint estate. The executor recorded that the policy had no surrender value at the time of death and that the death benefit became payable only after death, and relied on case law for the conclusion that such proceeds do not form part of the joint estate.

The Master, however, upheld an objection (raised by the third respondent) and directed the executor to reflect the policy as an estate asset in a manner that treated the third respondent as entitled to one-half of the proceeds by virtue of the marriage in community of property. The executor then produced an amended account consistent with that direction. The applicants later lodged an objection under the Administration of Estates Act to the Master’s approach; the Master refused to sustain the objection, stating in substance that the surviving spouse was not automatically excluded from receiving her half share unless there was a declaratory order to that effect.

As to the unworthiness relief, it was common cause that the third respondent had been convicted of forgery and fraud arising from the falsification of a purported will and misrepresentations to the Master that it was the deceased’s will, and that she had served a term of imprisonment. It was also recorded that a murder conviction had been overturned on appeal by the Supreme Court of Appeal. The third respondent did not appeal the forgery and fraud conviction, stating that this was a tactical decision taken on legal advice.

The court distinguished between the existence of a criminal conviction (which was common cause) and the evidential use that could be made of that conviction in the present civil proceedings. The court also treated as material that, in the unworthiness portion, the founding affidavit was advanced in part on the basis of the first applicant having observed the criminal trial, but without clearly distinguishing what was within personal knowledge and what depended on the evidence given by others in that criminal trial.

In relation to the interlocutory matters, the postponement application was based on the filing of a signed version of a document that was already present in unsigned form in the papers; the court treated that “new” document as not truly new and found no resulting prejudice. The strike-out application targeted allegations central to the applicants’ case (including allegations linked to the will forgery, post-death conduct, and denial of paternity), and the court treated the relevance and prejudice enquiry as decisive.

3. Legal Issues

The principal legal question was whether the proceeds of the life policy payable upon the deceased’s death formed part of the joint estate arising from the marriage in community of property, or whether they fell into the deceased’s estate for distribution in accordance with the Intestate Succession Act. This was primarily a question of law (the legal characterisation of death benefits in the context of community of property), applied to largely common-cause facts (the existence of the marriage in community of property, the policy’s nature as a death benefit policy, and the timing of the accrual of the right to payment).

A subsidiary legal issue was whether the third respondent’s opposition could be sustained on the basis of insurable interest, namely whether her marriage to the deceased created an insurable interest entitling her to the policy proceeds regardless of whether they formed part of the joint estate. This required a legal assessment of the scope and relevance of insurable interest principles to a life policy taken out by the deceased on his own life, and the basis upon which entitlement to policy proceeds arises.

A further central issue concerned whether the third respondent should be declared unworthy to inherit under the law applicable to intestate succession, given allegations of forging and presenting a will. This engaged a value judgment informed by public policy, but the determinative difficulty identified by the court was evidential: whether the court could treat the third respondent’s criminal conviction for forgery and fraud as admissible proof in the civil proceedings, given the continued application in South African evidence law of the rule in Hollington v F Hewthorn & Company Ltd as entrenched through section 42 of the Civil Proceedings Evidence Act 25 of 1965.

Additional procedural issues included whether condonation should be granted for the late launching of the review, whether a postponement should be allowed, and whether allegations in affidavits should be struck out as scandalous or vexatious. These were matters of judicial discretion guided by established principles (interests of justice for condonation; prejudice and relevance for striking out; adequacy of grounds and prejudice for postponement).

4. Court’s Reasoning

On condonation, the court applied the statutory framework permitting an extension beyond the 30-day period for a section 35(10) review. The court evaluated the explanation for the delay and the broader interests of justice factors, including the extent of the delay (approximately five weeks), the reasons advanced (including seeking reasons from the Master and obtaining documents), the absence of demonstrated prejudice, the importance of the issues, and the merits. The court accepted that the applicants had actively pursued the matter and were not dilatory, and found the third respondent’s allegation of prejudice to be bald and unsupported.

On postponement, the court assessed whether there was a legitimate basis for a postponement given that the document relied upon (a signed version of an already-filed annexure) was not materially new, did not alter the issues, and did not prejudice the third respondent’s preparation. The court treated the postponement application as lacking merit and dismissed it.

On striking out, the court treated the remedy as discretionary, with prejudice and relevance being central. The court reasoned that the impugned allegations were not gratuitous but went to the core disputes, including the unworthiness relief and issues surrounding the deceased estate administration. It concluded that the allegations were neither scandalous nor vexatious in context and that the third respondent had not demonstrated prejudice warranting striking out.

On the merits of the review, the court framed the “crisp question” as whether the proceeds of the life policy formed part of the joint estate. The court applied the principle that community of property terminates upon death, and that a joint estate ceases to exist once the marriage ends by death. Relying particularly on Danielz NO v De Wet 2009 (6) SA 42 (C), the court reasoned that, prior to death, the proceeds of a life policy payable on death do not yet exist as an enforceable death benefit and are not assets in the joint estate; only upon death do rights in respect of death benefits arise, and by that time the joint estate has terminated ex lege. The court treated this as dispositive: the policy proceeds never formed part of the joint estate, and therefore the third respondent could not become entitled to half by virtue of community of property.

The court found that, in refusing to sustain the applicants’ objection, the Master had failed to distinguish between a surviving spouse’s entitlement to one-half of the joint estate (as a matrimonial proprietary consequence) and a right to inherit, and further had assumed the policy proceeds formed part of the joint estate. The court concluded that the Master’s decision involved a material error of law and was irrational on the applicable legal principles, warranting review and setting aside.

As to the third respondent’s reliance on insurable interest, the court analysed the authorities cited and drew a distinction between insurable interest in indemnity/property insurance and the present case involving a life policy taken out by the deceased on his own life. The court held that it was incorrect to contend that absent an insurable interest no beneficiary can claim policy proceeds, and stated that entitlement to policy proceeds arises from nomination as beneficiary or from the law of succession, not from an asserted insurable interest of the surviving spouse. On the facts and the nature of the policy arrangement described, the court concluded there was no insurable-interest basis that could justify upholding the Master’s decision.

On unworthiness to inherit, the court accepted the public policy proposition that a person who seeks to defraud by forging a will should be regarded as unworthy to succeed. However, the court treated as determinative the evidential rule that a prior criminal conviction is not admissible in later civil proceedings as proof that the accused committed the offence. The court traced this to section 42 of the Civil Proceedings Evidence Act 25 of 1965, which preserved the English law of evidence as at 30 May 1961 in matters not otherwise provided for, including the rule in Hollington v F Hewthorn & Company Ltd [1943] KB 587 (CA) ([1943] 2 All ER 35). The court noted the criticism of the rule and recorded that it has been abolished in England, but held itself bound to apply it as part of South African law.

Applying Hollington, the court concluded it could take no cognisance of the third respondent’s conviction as evidence that she committed fraud and forgery, notwithstanding that the conviction was common cause. The court further held that the evidence presented in the review papers (including the first applicant’s account based on observing the criminal trial) did not prove the offences for purposes of the civil unworthiness enquiry. As a result, the application to declare the third respondent unworthy to inherit could not succeed.

On costs, the court drew a distinction between the unworthiness claim (which failed due to the evidentiary obstacle posed by Hollington) and the remaining relief (where the third respondent’s opposition, postponement application, and strike-out application were characterised as lacking merit). The court considered a punitive costs order justified in relation to the broader application, but made no costs order in respect of the unworthiness claim.

5. Outcome and Relief

The court granted condonation for the late institution of the review application. The third respondent’s applications for postponement and to strike out portions of the affidavits were dismissed, with the strike-out dismissal carrying a costs order.

On the review, the court reviewed and set aside the Master’s decision dated 23 August 2018 refusing to sustain the applicants’ objection. The court declared that the proceeds of the specified Liberty Life policy were excluded from and did not form part of the assets of the joint estate between the deceased and the third respondent, and directed that those proceeds be distributed in terms of the Intestate Succession Act.

The court dismissed the application to have the third respondent declared unworthy to inherit, and made no order as to costs in respect of that unworthiness application.

The court ordered that the remaining costs (including costs relating to condonation, postponement, and strike out) be paid by the third respondent on the attorney-and-client scale.

Cases Cited

Danielz NO v De Wet 2009 (6) SA 42 (C); Grimbeek v The Master 1926 CPD 183; Joseph v Joseph 1951 (3) SA 776 (N); Hay v Hay 1910 NPD 90; Lubbe v O’Dwyer 1942 WLD 137; Hees NO v Southern Life Association Ltd 2000 (1) SA 943 (W); Naidoo v Discovery Life Limited [2018] ZASCA 88; Refrigerated Trucking (Pty) Ltd v Zive NO (Aegis Insurance Co Ltd, Third Party) 1996 (2) SA 361 (T); Hollington v F Hewthorn & Company Ltd [1943] KB 587 (CA) ([1943] 2 All ER 35); Institute for Accountability in Southern Africa v Public Protector 2020 (5) SA 179 (GP); Groenewald NO and Another v Swanepoel 2002 (6) SA 724 (E); Prophet v National Director of Public Prosecutions 2007 (6) SA 169 (CC); Nel v Law Society, Cape of Good Hope 2010 (6) SA 263 (ECG); Lagoon Beach Hotel (Pty) Ltd v Lehane NO and Others 2016 (3) SA 143 (SCA); Taylor v Pim 1903 NLR 484; Yassen v Yassen 1965 (1) SA 438 (N); Casey NO v The Master 1992 (4) SA 505 (N); Pillay v Nagan 2001 (1) SA 410 (D); Stephens v De Wet 1920 AD 279; Reed v Master of the High Court of South Africa [2005] 2 All SA 429 (E); Grootboom v National Prosecuting Authority 2014 (2) SA 68 (CC).

Legislation Cited

Administration of Estates Act 66 of 1965; Intestate Succession Act 51 of 1987; Intestate Succession Act 81 of 1987; Civil Proceedings Evidence Act 25 of 1965; Law of Evidence Amendment Act 45 of 1988; Superior Courts Act 10 of 2013; Civil Evidence Act of 1968 (United Kingdom).

Rules of Court Cited

Uniform Rules of Court, Rule 6(15); Uniform Rules of Court, Rule 35(12).

Held

The court held that community of property terminates upon death, and that the proceeds of a life policy payable upon death do not exist as an asset in the joint estate during the insured’s lifetime. The court held further that the rights to the death benefits arise only after death, when the joint estate has already terminated, with the consequence that the proceeds fall into the deceased’s estate and are to be distributed under intestate succession rather than being treated as part of the joint estate.

The court held that the Master’s decision refusing to sustain the applicants’ objection proceeded from a misunderstanding of the relevant legal position, including a failure to distinguish between a surviving spouse’s entitlement to a half share of the joint estate and inheritance. The Master’s decision was therefore reviewed and set aside.

The court held that the third respondent’s reliance on insurable interest did not provide a valid basis to claim the policy proceeds in the manner contended for, and that entitlement to policy proceeds arises through nomination or succession rather than an asserted insurable-interest entitlement in this context.

On unworthiness to inherit, the court held that, notwithstanding public policy considerations, it was bound by the Hollington rule (as preserved through section 42 of the Civil Proceedings Evidence Act and South African case law) and therefore could not treat the third respondent’s criminal conviction as admissible evidence proving commission of the relevant offences in these civil proceedings. On the evidence placed before it, the court held that the applicants had not proved the wrongdoing required for an unworthiness order, and this relief was refused.

LEGAL PRINCIPLES

A marriage in community of property gives rise to a joint estate, but the joint estate and the matrimonial proprietary consequences terminate ex lege upon death of a spouse. In that setting, assets or rights that arise only after death are not treated as part of the joint estate for purposes of division between spouses.

In relation to life assurance, death benefits under a life policy do not constitute an existing asset forming part of the joint estate during the insured’s lifetime. The enforceable rights to the death benefit arise only after death, and therefore accrue at a time when the joint estate has already terminated, with the result that such proceeds fall into the deceased’s estate for distribution under succession principles.

Entitlement to life policy proceeds arises by beneficiary nomination or by operation of the law of succession, rather than through a free-standing claim based on an asserted insurable interest by a surviving spouse in circumstances where the policy was taken out by the deceased on the deceased’s own life and the dispute concerns the proprietary consequences of marriage and succession.

Under South African evidence law, as preserved through section 42 of the Civil Proceedings Evidence Act 25 of 1965, the rule in Hollington v F Hewthorn & Company Ltd [1943] KB 587 (CA) ([1943] 2 All ER 35) remains applicable, with the consequence that a criminal conviction is not admissible in later civil proceedings as evidence that the accused committed the offence of which they were convicted. Where that rule applies, a party seeking civil relief premised on the commission of a crime must establish the underlying facts by admissible evidence in the civil proceedings, rather than relying on the conviction itself.

Costs may be awarded on a punitive scale where the court considers the opposition and interlocutory applications to be without merit and the conduct of the litigation to warrant such an order, while a different costs approach may be adopted where a claim fails due to a legal evidentiary obstacle rather than the substantive merits of the position advanced.

Maqubela and Another v Master of the Gauteng Local Division Johannesburg and Others (2018/40955) [2022] ZAGPJHC 346; 2022 (6) SA 408 (GJ) (19 May 2022)