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[2013] ZASCA 190
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Jakins v Baxter and Another (178/13) [2013] ZASCA 190 (29 November 2013)
THE
SUPREME COURT OF APPEAL OF SOUTH AFRICA
JUDGMENT
Case
No: 178/13
NOT
REPORTABLE
In the matter between:
JOAN SHANNON JAKINS (nee
DELL
)
)……………………………..
APPELLLANT
and
MICHELLE
BAXTER
…………………………………………
FIRST
RESPONDENT
SANDRA-LEE
HENSBURG
………………………
..……
SECOND
RESPONDENT
Neutral citation:
Jakins v
Baxter
(178/13)
[2013]
ZASCA 190
(29 November 2013)
Coram
:
Lewis,
Cachalia, Leach, Wallis JJA and Meyer AJA
Heard
: 19 November 2013
Delivered
: 29 November 2013
Summary
:
Disputed clause in
an antenuptial contract - proper interpretation.
ORDER
On appeal from
:
Full
Court of the Eastern Cape, Grahamstown (Van Zyl, Nhlangulela JJ and
Bacela AJ concurring sitting as court of appeal):
1 The appeal is upheld with costs,
such costs to be paid out of the estate of the late Norman Emslie
Jakins. The order of the court
below is set aside and substituted
with the following order:
‘
1.1 The appeal is dismissed
with costs, such costs to be paid out of the estate of the late
Norman Emslie Jakins.
1.2
The order of the high court
is confirmed but amended as follows:
1.2.1
The
decision of the Master of the High Court, Grahamstown, not to uphold
the objection of the applicant lodged against the First
and Final
Liquidation and Distribution Account in the estate of the late Norman
Emslie Jakins, in relation to the proceeds of the
Old Mutual
Flexi-life Policy in the name of the erstwhile Norman Emslie Jakins
(Policy Number 12383353), is set aside.
1.2.2
It
is declared that the applicant is entitled to payment of the proceeds
of the life policy referred to in para 1 above.
1.2.3
The
first and second respondents, as executors in the estate of the late
Norman Emslie Jakins, are directed to pay to the applicant
the sum of
R783 306.15, together with interest thereon at the legal rate,
calculated from the date of the submission of the applicant’s
claim to the executors of the estate, to date of payment.
1.2.4
The
first and second respondents, as executors in the estate of the late
Norman Emslie Jakins, are directed to pay the costs of
the
application.’
JUDGMENT
CACHALIA JA (LEWIS, LEACH,
WALLIS JJA AND MEYER AJA CONCURRING):
[1]
This appeal concerns a
disputed benefit of an Old Mutual life policy. The proceeds of the
policy, amounting to R799 967.21, became
payable upon the death of Mr
Norman Emslie Jakins. Old Mutual paid the amount to his estate. His
widow, Joan Shannon Jakins (nee
Dell), the appellant in this appeal,
then sought declaratory relief to the effect that she, and not the
estate, was entitled to
receive this benefit. She also asked for
other consequential relief. The executors of the deceased’s
estate, who are the
respondents in this appeal, opposed the relief
claimed on the ground that the benefit fell into the estate. The
court of first
instance found in her favour, but a full court of the
Eastern Cape reversed the high court’s order. The appellant now
comes
on further appeal with leave of this court.
[2]
The
appellant’s claimed entitlement to the relief is founded upon a
clause in an antenuptial contract (ANC) concluded before
her marriage
to Mr Jakins in October 1995. The clause was contained in an
undertaking to make over, cede, transfer, and assign
in favour of the
appellant:
‘
All benefits which will
accrue as at the date of his death arising from his membership of his
Tongaat-Hulett Pension Fund.’
[3]
The
appellant contends that the meaning and effect of the clause is that
the benefit from the life policy accrued to her because
its source
was the proceeds of his pension fund, albeit that this occurred after
his retirement when he was no longer a member
of the fund. The
respondents dispute her interpretation of the clause. In their view
the clause allowed her to claim the proceeds
of the pension fund,
which would have accrued upon the deceased’s death, only if he
was a member of the fund at the time.
So, they contend, because he
had retired and was no longer a member of the fund when he died, the
benefit did not accrue to her.
[4]
To
better understand the dispute it is helpful to set out the context in
which the ANC was concluded. The deceased was, at the time,
an
employee of Tongaat-Hulett and a member of its pension fund. The
division in which he was employed was taken over by the Bokomo/Sasco
Group. The Bokomo/Sasco Group and its pension fund were in turn taken
over by Pioneer Foods. The respondents accept that notwithstanding
the changes in the identity of the pension fund, it remained the same
fund for the purposes of the clause.
[5]
The appellant and the
deceased were middle-aged when they concluded the ANC in anticipation
of their marriage in 1995. She was 50
years of age and he 56. He was
nearing retirement. The pension fund to which he belonged was
governed by the Pension Funds Act
24 of 1956 (the Act). The rules of
the fund allowed him to withdraw a third of his retirement benefits
as a cash sum upon retirement
and to buy a pension with the balance.
Section Z7C(bfK) of the Act entitled him to exclude the benefit from
forming part of the
assets of his estate by designating a beneficiary
- the appellant in this case - to receive the benefit upon his death,
which is
the effect of the disputed clause.
[6]
Before their marriage the appellant had a
usufruct in her favour over an amount of R1 198 312 left to her by
her previously deceased
husband. But the right to the use of this
money would endure only if she remained unmarried. In her founding
papers the appellant
says that she and the Mr Jakins were mindful of
this fact when they concluded the ANC, which conferred the benefit on
her. Put
simply they understood and intended the benefit to
compensate her for her loss of the income from the usufruct in the
event of
his death.
[7]
It is also significant that
upon his retirement, and in line with the regulatory provisions
referred to above, the deceased invested
the sum of R799 967.21 from
his pension fund in a ‘Capital Preservation Option’. Old
Mutual in turn invested the sum
in two annuities which were to
provide the deceased with a monthly income of R7 879.98 and R1
677.29. From the latter amount a
monthly sum of R1276.74 was deducted
to fund the life policy so that the capital amount of R799 967.21 was
preserved. It is this
amount - the exact sum that was transferred
from his pension
fund - that the appellant
claims as a benefit that accrued as at the deceased’s death
arising from his membership of his pension
fund.
[1]
[8]
I now turn to the proper
interpretation of the disputed clause. The respondents submit that
the syntax and grammatical arrangement
of the clause is that
‘benefits’ refers to what is payable from a pension fund;
‘accrue’ to that which
comes into existence upon the
death of Mr Jakins, and ‘arising’ to that coming into
existence as a result of his membership
of the pension fund at the
time of his death. Thus interpreted, they contend, the language does
not permit an interpretation that
extends the meaning to include the
proceeds of a life policy funded out of income received during his
lifetime from the investment
proceeds of his pension.
[9]
Considered
within the context in which the ANC was concluded - and the purpose
of the benefit conferring provision to make financial
provision for
the appellant upon the death of the deceased - the respondents’
interpretation of the clause is not correct.
On their interpretation
the word ‘arising’ is superfluous. Without that word the
clause would read:
‘
All benefits which will
accrue as at the date of his death from his membership of his . . .
Pension Fund.’
[10]
Worded
thus the benefit would have accrued from the deceased’s
membership of the pension fund, which is how the respondents
seek to
interpret the disputed clause. But the inclusion of the word
‘arising’ means that the clause has to be read
to mean
that the benefit originates
[2]
from the pension fund, and does not require the deceased to have been
a member at the time of his death. If the clause is read
in this way,
which accords with the context within which the ANC was concluded,
the life policy clearly originated from the pension
fund because it
was funded from the fund’s proceeds. It follows that the court
of first instance was correct to treat the
life policy as a benefit
that fell within the ambit of the disputed clause, and the full court
incorrect to hold the contrary.
[11]
In the result the appeal
must succeed and the order of the full court must be set aside. The
order of the court of first instance
ought to have been confirmed,
but amended so that it read sequentially and referred to the correct
sum mentioned in fn 1.
[12]
The following order is
made:
1 The appeal is upheld with costs,
such costs to be paid out of the estate of the late Norman Emslie
Jakins. The order of the court
below is set aside and substituted
with the following order:
‘
1.1 The appeal is dismissed
with costs, such costs to be paid out of the estate of the late
Norman Emslie Jakins.
1.2
The order of the high court
is confirmed but amended as follows:
1.2.1
The
decision of the Master of the High Court, Grahamstown, not to uphold
the objection of the applicant lodged against the First
and Final
Liquidation and Distribution Account in the estate of the late Norman
Emslie Jakins, in relation to the proceeds of the
Old Mutual
Flexi-life Policy in the name of the erstwhile Norman Emslie Jakins
(Policy Number 12383353), is set aside.
1.2.2
It
is declared that the applicant is entitled to payment of the proceeds
of the life policy referred to in para 1 above.
1.2.
The
first and second respondents, as executors in the estate of the late
Norman Emslie Jakins, are directed to pay to the applicant
the sum of
R783 306.15, together with interest thereon at the legal rate,
calculated from the date of the submission of the applicant’s
claim to the executors of the estate, to date of payment.
1.2.4
The
first and second respondents, as executors in the estate of the late
Norman Emslie Jakins, are directed to pay the costs of
the
application.’
A CACHALIA
JUDGE OF APPEAL
APPEARANCES:
For
Appellant:A G Dugmore
Instructed
by:
Neville
Borman & Botha, Grahamstown
Rossouws
Attorneys, Bloemfontein
For
Respondents: D H de la Harpe
Instructed
by:
Netteltons
Attorneys, Grahamstown
Honey
& Partners Inc, Bloemfontein
[1]
The
actual amount was R783 306.15, not R799 967.21. This was because Old
Mutual had overpaid an amount of R16 661.06 on the two
annuities.
This was deducted from the capital amount, which is the benefit the
appellant now claims.
[2]
Concise
English Oxford Dictionary 12 ed.