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[2010] ZASCA 95
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Oshry NO and Another v Feldman (401/09) [2010] ZASCA 95; 2010 (6) SA 19 (SCA) ; [2011] 1 All SA 124 (SCA) (19 August 2010)
THE
SUPREME COURT OF APPEAL OF SOUTH AFRICA
JUDGMENT
Case No 401/09
In the matter between:
STANLEY OSHRY N O
First Appellant
BEVERLEY JUNE OSHRY N O Second
Appellant
and
MARJORIE PEARL FELDMAN Respondent
Neutral citation:
Oshry v
Feldman
(401/09)
[2010] ZASCA 95
(19 August
2010)
Coram:
Navsa, Mhlantla,
Bosielo JJA and Saldulker AJA
Heard:
7 May 2010
Delivered:
19 August 2010
Summary:
Claim by surviving
spouse in terms of the Maintenance of Surviving Spouses Act 27 of
1990. Primary obligation of support rests on
a spouse, and if
deceased, on the estate of the latter - provided that the
jurisdictional requirements are met. Lump sum award
competent in
terms of the Act.
___________________________________________________________________
ORDER
___________________________________________________________________
On appeal from
: KwaZulu-Natal
High Court (Durban) (Van Zyl J sitting as court of first instance)
The following order is made:
1. The appeal is upheld to the limited extent reflected
in the substituted order set out hereafter.
2. The order of the court below is set aside and
substituted as follows:
‘
1 Defendants, in their capacities as executors in
the estate of the late Lionel Maurice Feldman, who died on 3 May 2005
(“the
estate”) are hereby;
(a) authorised and directed to:
recognise Plaintiff’s claim against the estate in
terms of section 2(1), read with section 3 of the Maintenance of
Surviving
Spouses Act 27 of 1990 for payment of her reasonable
maintenance needs;
(ii) pay to her a lump sum equal to the net value
of the estate after payment of the claims of other creditors,
funeral expenses,
administration costs and executors’ fees.
(b) directed to pay the plaintiff :
(i) the sum of R50 000-00;
(ii) interest thereon at the rate of 15.5% per
annum with effect from 6 July 2006 to date of payment,
both dates inclusive.
(iii) directed to pay plaintiff’s costs of
suit such costs to include the qualifying fees of the actuary Mr I G
Hunter and
Dr L M Kernhoff.’
3. The cross-appeal is upheld to the extent reflected in
the substituted order set out above.
4. In respect of the appeal the first and second
appellants are directed jointly and severally to pay the respondent’s
costs
of appeal
de bonis propriis
on an attorney and client scale, including the costs of two counsel.
5.
In respect
of the cross-appeal the respondents therein are ordered jointly and
severally to pay the cross-appellant’s costs
de
bonis propriis
, on an attorney and client
scale, including the costs of two counsel.
___________________________________________________________________
JUDGMENT
___________________________________________________________________
NAVSA JA and SALDULKER AJA (MHLANTLA and BOSIELO JJA
concurring)
[1] This case demonstrates just how costly litigation
can be, particularly if a common sense approach is abandoned and
where the
issues are not clearly defined at the outset. We have
before us an appeal by the two executors of a deceased’s estate
against
a judgment of the Durban High Court (Van Zyl J),
1
in terms of which they were ordered to ‘recognise’ a
widow’s claim for maintenance in terms of the Maintenance
of
Surviving Spouses Act 27 of 1990 (the Act) and to pay to her
maintenance in the sum of R9628.63 per month with effect from 6
October 2006, until her death or remarriage, or until otherwise
varied, suspended or discharged according to law. The executors
were
also ordered to pay the widow an amount of R50 000, which she alleged
had been a donation by the deceased to her during his
lifetime, which
had not been paid prior to his death. The executors were ordered to
pay her costs.
[2] Careful scrutiny of the notice of appeal and the
heads of argument initially filed by the appellants reveals that the
primary
basis of the appeal was that since the widow had been
maintained by her two sons from a prior marriage, from the time of
the death
of her husband, and were likely to continue to do so, she
had not established a need for maintenance. The appellants also
contended
that the evidence established that the donation claimed by
the widow had been paid to her by her husband during his lifetime.
The
widow is the respondent. There is also a cross-appeal by her. She
is aggrieved that the high court had held that maintenance in
a lump
sum was not competent in terms of the Act. She had initially claimed
maintenance in a lump sum of R695 804.00. The respondent
is aggrieved
that the high court had rejected an application by her to amend her
particulars of claim to increase her quantum.
She sought an order
that the increased lump sum be paid to her from 9 January 2006 (the
date on which the respondent noted her
claim) rather than from 6
October 2006 (the date of delivery of the appellants’ plea),
which was the date from which the
high court ordered that maintenance
be paid. Furthermore, she sought to have the costs order of the high
court substituted with
an order that the executors be ordered to pay
her costs of trial on an attorney and client scale and that they be
ordered to pay
the costs of appeal on an attorney and client scale
de
bonis propriis
. The appeal and cross-appeal
are before us with the leave of the court below.
[3] The background facts were neatly set out by the
trial court. In our description of the history of the matter, leading
up to
the litigation in the high court, we have borrowed
substantially from the exposition by Van Zyl J.
[4] On 27 January 1987, Ms Marjorie Pearl Klaff, the
respondent, and Mr Lionel Maurice Feldman, in the autumn of their
lives, married
each other at Durban. She was 60 years old and he was
70. The marriage was out of community of property. They each had two
children
from a previous marriage. Their marriage lasted 18 years,
until the death of Mr Feldman, who died testate on 3 May 2005. We
shall
for convenience refer to Mr Feldman as the deceased.
[5] The marriage of the respondent and the deceased was
the second for each of them. The respondent had two adult sons from
her
first marriage, both of whom live permanently in the United
States of America. The deceased had a son who settled in Australia
and a daughter, Beverley (the second appellant). Beverley and her
husband, Stanley Oshry (the first appellant), are the executors
of
the deceased’s estate.
[6] At the time of their marriage, the deceased had
retired from his previous business activities and was living in a
flat in Hyde
Park, Berea, Durban. The respondent was employed as an
estate agent, an occupation in which she continued until her
retirement
at the age of 75. A hallmark of her life is that she
always asserted her independence.
[7] Shortly before her marriage to the deceased, the
respondent had sold her town house, intending at the time, that the
deceased
would also sell the flat that he occupied at Hyde Park and
that they would then as a couple jointly purchase a residential
property,
where they would live after their marriage. The deceased
declined to do so. In the result they lived in his Hyde Park flat for
the duration of their marriage.
[8] With the proceeds of the sale of her town house the
respondent purchased a flat in Rucon Glen which she then let. Later,
on
the advice of her son, Anthony Klaff, she sold the flat. Anthony
acted as her financial advisor. After she stopped working she
transferred the proceeds of the sale to him for investment on her
behalf in America. During the second half of 2004 the respondent
repatriated what remained of her funds in America. The investment
unfortunately was not insulated from the economic downturn in
America. Using what remained of her moneys, supplemented by her sons,
she purchased a residential unit at Eden Crescent, a retirement
village, which she then let.
[9] The reason for purchasing the unit at Eden Crescent
was that the deceased had informed her that in the event of his death
the
Hyde Park flat would devolve upon his children. The deceased had
told her that upon his death she would become her sons’
responsibility. She was concerned about what would become of her. Her
insecurity led to her purchasing the unit.
[10] According to the respondent’s unchallenged
evidence she shared expenses with the deceased from the outset and
they used
her motor vehicle for transport. Before their financial
situation deteriorated, they travelled overseas, entertained
frequently
and appear to have had a fairly happy marriage. After she
stopped working the respondent relied mainly on the deceased for her
support.
[11] The financial position of the couple gradually
deteriorated after the respondent had stopped working. The deceased
told the
respondent that his financial position was precarious and he
asked her to turn to her sons for assistance and to seek the
repatriation
of her funds. This request was made before the
acquisition of the unit at Eden Crescent.
[12] The deceased envisaged that the respondent’s
sons should start contributing to her maintenance. He also appears to
have
held the view that, upon his death, the respondent’s sons
should take over the responsibility of maintaining her. The
respondent’s
sons have indeed been dutiful. They made financial
contributions to their mother during her marriage. After the
deceased’s
death they continued making contributions to her. In
the eighteen months preceding the trial, the respondent’s sons
had provided
her, on average, with an amount of R18 468 per month.
[13] Sadly, the deceased, when he executed his will on
21 November 2002, made wholly inadequate provision for the
respondent. He
bequeathed the sum of R150 000 to her and
recorded his ‘desire’ that she be allowed to remain in
the Hyde Park
flat until her death or remarriage, or until his
children decided to sell it. The Hyde Park flat had in fact been
bequeathed to
his children in terms of his first wife’s will,
so did not form part of the deceased’s estate. The balance of
his estate
was left to his children.
[14] After the deceased’s death, antagonism
quickly developed. The respondent voiced her concern about her future
security
and according to her, Stanley Oshry, the first appellant,
told her that she could, if all else failed, move to Beth Shalom, a
retirement
home, which, although it had residents who paid their own
way, also provided for indigent aged, funded by a Jewish welfare
organisation.
[15] The respondent remained in the Hyde Park flat for
a short period, whilst she made arrangements to move. During March
2006
she moved to Eden Crescent.
[16] Anxious about her situation, the respondent,
shortly after the deceased’s death, gave early indications that
she would
be claiming maintenance from the estate. This, in turn,
caused resentment on the part of the deceased’s family who
considered
that not enough respect was shown for the traditional
Jewish period of mourning. After some correspondence between the
parties
the respondent resorted to an action in the Durban High Court
for maintenance and for payment of the amount of R50 000.
[17] The appellants contended that after the death of
the deceased, the obligation to maintain the respondent fell to her
sons,
who had been her main source of financial support after the
death of the deceased. As stated earlier they contended that the
respondent
had not shown a need for maintenance and that the estate
was thus excused from maintaining her.
[18] We consider it convenient first to address the
appellant’s R 50 000 claim against the estate and the
conclusion of the
court below that it was payable. During his
lifetime the deceased had held a share in Taxi Liquor CC. After his
share in the close
corporation was sold for R50 000, the deceased
undertook in writing on 7 April 1992 to invest that amount in a
Liberty Life policy
for the benefit of the respondent, payable to her
upon his death. The respondent asserted that she had accepted the
donation. She
testified that the deceased had not discharged that
obligation during his lifetime. It was contended on her behalf that
the deceased’s
estate was consequently liable to her in that
amount.
[19] It was the appellants’ case that a single
premium policy of R 50 000 issued by Liberty Life in 1993, of which
the respondent
was the owner, was the policy that the deceased had
intended to purchase from Liberty Life. It was submitted that he had
thereby
discharged his obligation in terms of the written
undertaking. The record reveals that the appellants’ case in
this regard
was based on speculation with no evidence adduced in
support thereof. It is clear from the first appellant’s
evidence that
he entertained a mere suspicion that the deceased had
made good the donation but had no substantiating proof.
[20] The respondent, on the other hand, testified
convincingly in regard to the policy referred to in the preceding
paragraph.
She testified that she had purchased it with her own funds
whilst still in employment and that the deceased had played no part
in its acquisition. The appellants, having pleaded that the debt had
been discharged failed to discharge the burden of proof resting
on
them.
2
It follows that
the
conclusion of the court below in
this regard is unassailable.
[21] We turn to deal with the remaining issues in the
appeal and cross-appeal. The primary question for consideration is
whether
the deceased’s estate in the circumstances set out
above owed a duty of support to the respondent. Put differently, the
question
is whether she established a claim for maintenance in terms
of the Act.
[22] It is trite that one of the invariable consequences
of marriage is a reciprocal duty of support between spouses. That is
a
primary duty owed by one spouse to another. Of course, where the
party seeking support is indigent and his or her spouse is unable
through lack of means to meet that obligation such spouse may look to
a child with means for support. In
Oosthuizen
v Stanley
3
the following was stated:
‘
The liability of children to support their
parents, if these are indigent (
inopes
),
is beyond question; See Voet 26.3.8 . . . .
Whether a parent is in such a state of comparative
indigency or destitution that a court of law can compel a child to
supplement
the parent’s income is a question of fact depending
on the circumstances of each case.’
[23] In
Manuel v African
Guarantee and Indemnity Co Ltd & another
4
it was said that where a husband has the means to support his wife,
the wife cannot compel a child of the parties to support her
unless
she satisfies the court that she has taken all reasonable steps to
enforce her rights against her husband.
[24] At common law a surviving spouse had no claim for
maintenance against the estate of his or her deceased spouse. In
Glazer v Glazer NO
5
the applicant instituted an action for maintenance against the
respondent, the executor in the estate of her late husband. The
claim
was made on the grounds that she was indigent. The respondent
excepted to the declaration on the ground that it was bad in
law, for
failure to disclose a cause of action. The exception was upheld. The
applicant applied for condonation for the late noting
of an appeal
against that decision. In refusing condonation, Steyn CJ, after
discussing the common law position in some detail,
held that her
prospects of success on the merits, if there was any at all, was so
slender that condonation would not be justified.
[25] In
Hodges v Coubrough NO
,
6
Didcott J stated as follows:
‘
The duty of support which each spouse owed to the
other, and consequently the liability for maintenance that depended
on and gave
effect to the duty, were incidents of their matrimonial
relationship. The termination of the relationship by either death or
divorce
left the duty with no remaining basis and brought it in turn
to an end.’
[26] The Maintenance of Surviving Spouses Act 27 of
1990 altered the common law. The preamble sets out the purpose of the
Act thus:
‘
To provide the surviving spouse
in
certain circumstances
with a claim for
maintenance against the estate of the deceased spouse; and to provide
for incidental matters.’ (Our emphasis.)
Section 2(1) of the Act provides:
‘
2 Claim for maintenance against estate of
deceased spouse
(1) If a marriage is dissolved by death after the
commencement of this Act the survivor shall have a claim against the
estate of
the deceased spouse for the provision of his reasonable
maintenance needs until his death or remarriage in so far as he is
not
able to provide therefor from his
own
means and earnings
. (Our emphasis.)
(2) . . .
(3) (a) . . .
(b) The claim for maintenance of the
survivor shall have the same order of preference in respect of other
claims against the estate
of the deceased spouse as a claim for
maintenance of a dependent child of the deceased spouse has or would
have against the estate
if there were such a claim, and, if the claim
of the survivor and that of a dependent child compete with each
other, those claims
shall, if necessary, be reduced proportionately.
(c) . . .
(d) The executor of the estate of a
deceased spouse shall have the power to enter into an agreement with
the survivor and the heirs
and legatees having an interest in the
agreement, including the creation of a trust, and in terms of the
agreement to transfer
assets of the deceased estate, or a right in
the assets, to the survivor or the trust, or to impose an obligation
on an heir or
legatee, in settlement of the claim of the survivor or
part thereof.’
[27] As can be seen, in the event of a marriage being
‘dissolved by death’ the primary obligation by a spouse
has now
been transferred to his deceased estate, in the event that it
has the means to meet that obligation and provided that the surviving
spouse is unable to have her maintenance needs met from ‘own
means and earnings’.
7
Section 2(3)(b) deals with the order of preference of a maintenance
claim in relation to other claims.
8
This is an aspect to which we shall revert later in this judgment.
Section 2(3)(d) provides for rapprochement between the survivor
of a
deceased estate and the heirs and legatees of that estate. That
subsection enables an executor to enter into an agreement
with these
interested parties. An executor, in doing so, will of course have
regard to the rights and interest of all these parties.
In terms of
this subsection the executor has fairly extensive powers, albeit that
in executing those powers consensus has to be
achieved.
[28] Section 3 of the Act sets out factors that a court
should take into account in determining a surviving spouse’s
reasonable
maintenance needs. It reads as follows:
'3. Determination of reasonable maintenance needs
In the determination of the reasonable maintenance needs
of the survivor, the following factors shall be taken into account in
addition
to any other factor which should be taken into account:
(a) The amount in the estate of the deceased spouse
available for distribution to heirs and legatees;
(b) the existing and expected means, earning capacity,
financial needs and obligations of the survivor and subsistence of
the marriage;
and
(c) the standard of living of the survivor during the
subsistence of the marriage and his age at the death of the deceased
spouse.’
[29] Having regard to these and
any
other factor
a court
then arrives at a decision concerning the surviving spouse’s
reasonable maintenance needs. It has always been accepted
that in
determining an award of maintenance a court always considers the
needs of the claimant and the means of the party bearing
the
maintenance obligation.
[30] Section 3(a) requires a court, in determining the
reasonable maintenance needs of a surviving spouse, to have regard,
right
at the outset, to the amount in the estate available for
distribution to heirs and legatees. This provision in the main
relates
to the estate’s ability to meet a maintenance claim.
The factors set out in section 3(b) and (c) relate to the surviving
spouse’s needs and ability to maintain herself.
[31] The asserted total value of the estate as per the
inventory dated 6 June 2005 is R1 313 367. However, of that amount,
R819
471 is the value of insurance policies the beneficiaries of
which are the deceased’s son and daughter. If the latter amount
is deducted then the estate is left with the residual amount of R493
896. We were subsequently provided by the appellants with
a schedule,
dated 8 June 2010, showing the value of the insurance policies at
that date in an amount of R847 355.95. The value
of the assets in the
estate is reflected as being R528 057.19. Of course, the R150 000
bequest to the respondent, referred to earlier,
was paid to her and
falls to be deducted from the asset value. If the schedule recently
provided is taken at face value, a further
amount of R43 028.77 has
been expended in respect of funeral costs, ‘creditors and
winding up the estate but excluding executors’
fees’.
According to this schedule the costs of the high court trial, which
it will be recalled the estate is liable for,
amount to R 121 906.82.
We will return to the value of the policies and deal with the
question whether they should be included
in the estate for
distribution, later in this judgment.
[32] In answering the primary question whether the
respondent established an entitlement to maintenance in terms of the
provisions
of the Act, it is necessary to return to a consideration
of s 2(1), which makes a claim by a survivor subject to her not being
able to provide for her own reasonable maintenance needs from her
‘own means and earnings’. We take into account that
a
court, in determining the survivor’s reasonable maintenance
needs, is required, in terms of s 3(b) of the Act, to consider
the
survivor’s existing and expected means, earning capacity,
financial needs and obligations and the subsistence of the
marriage.
Furthermore, in terms of s 3(c) the respondent’s standard of
living during the subsistence of the marriage and
her age at the time
of the death of the deceased are to be considered.
[33] It is necessary to deal with the expression ‘own
means’. It is defined as follows in s 1 of the Act:
‘
includes any money or property or other
financial benefit accruing to the survivor in terms of the
matrimonial property or the law
of succession or otherwise
at the death of the deceased spouse.’ (Our emphasis.)
[34] The respondent has a relatively modest income,
derived from a monthly return on investments. First, she receives an
amount
of approximately R1 200 from a Liberty Life annuity. Second,
she invested what remained of a R150 000 bequest in terms of the
deceased’s
will, namely, R100 000, in a money market account
with a market related interest rate. It is clear from the first
actuarial report,
dated 6 December 2005, that a discount rate of
6.5 per cent per annum was ‘obtained with reference to the
expected return
of [the respondent’s] current assets, net of
fees and charges’. The return on these investments would
undoubtedly be
part of her ‘own means’ as defined in the
Act. It is quite clear that these two sources of income per month on
their
own are wholly inadequate to meet the respondent’s
maintenance needs.
[35] The argument advanced on behalf of the executors
that the words ‘existing and expected means’, employed in
s 3(b),
extends the meaning to include acts of generosity such as
that shown by the respondent’s sons, is entirely without
substance.
It was submitted that in this subsection the omission of
the word ‘own’ meant that contributions from other
sources
ought to be taken into account. In our view, this is a
fallacious argument. Contextually, ‘the existing and expected
means’
must be those of the surviving spouse. The legislature
did not intend to draw a distinction between ‘existing and
expected
means’ and ‘own means’. During his
lifetime the deceased could not, if he had the means to support the
respondent,
have insisted that she look to her children or any other
source for maintenance. Furthermore, the relevant provisions of the
Act
should be construed in accordance with constitutional norms and
values. The dignity, particularly of the vulnerable, is a prized
asset. The Act was intended to ensure, in the event that the
stipulated jurisdictional requirements were met, that the primary
obligation of a spouse who owed a duty of support continued after the
death of that spouse. In effect, the executors of the deceased’s
estate step into his shoes. To construe these provisions so as to
make surviving spouses dependent on the largesse of others, including
their children, defeats the purpose of the Act.
[
36]
Before us, apart from the contention that her sons’ acts of
financial generosity fell within the ambit of ‘expected
means’
as contemplated in s 3(b) of the Act, it could not be disputed that
the respondent was in need of maintenance. There
was some dispute
about whether the court below had considered the respondent’s
income from her investments and whether her
maintenance needs as
asserted were reasonable.
[37] The appellants contended that
the court below did not have regard to the respondent’s monthly
income of approximately
R1 200 from her Liberty Life annuity nor of a
return on an amount of R100 000 she had invested in the money market
account. It
is clear from what is set out above that Van Zyl J in the
court below took into account the first actuarial report dated 6
December
2005 and the revised actuarial report compiled later that
month. The Liberty Life income is reflected in the first report. The
respondent testified that the R100 000, which constituted the
remainder of the bequest had been invested in a money market account.
As stated above the actuary in the first report set out the net
return on all the respondent’s investments, which the court
below considered in determining the award of maintenance.
[38] The respondent had sought a lump
sum payment, which the court below, with reference to the decision of
this court in
Zwiegelaar v Zwiegelaar
2001 (1) SA 1208
(SCA), had held was not competent. Van Zyl J stated
that even if he was wrong in that conclusion policy considerations
militated
against the grant of a lump sum payment. He considered that
a single lump sum payment would expose the estate to risk. The
learned
judge was of the view that the accuracy of the assumptions
made in calculating a lump sum could not be assured. The claimant for
maintenance, he reasoned, could die earlier than expected or
predicted by life expectancy tables. The respondent could, even at
her advanced age remarry and the estate would thereby be prejudiced
by the prior grant of maintenance in a lump sum. Conversely,
the
court below stated, a surviving spouse might outlive her life
expectancy, leaving a claimant who accepted a lump sum award
destitute. Van Zyl J rightly stated that an order for the periodical
payment of maintenance over a long or indefinite period would
cause
difficulties in the administration and finalisation of a deceased
estate. This would cause delay and uncertainty concerning
how much of
the assets of the estate had to be retained to discharge future
maintenance obligations. The court below reasoned that
it was for
this reason that the legislature enacted s 2(3)(d) of the Act which
provided for a negotiated settlement. The court
below remained
unpersuaded that a lump sump award was called for. At para 29 of the
judgement of the court below the following
is stated:
‘
The total value of
the estate as per the inventory is R 1 313 367-00. Prima facie the
estate has sufficient assets to meet the plaintiff’s claims.
Certainly defendants did not raise inability to pay as a defence or
factor in the determination of the estate’s liability
to
plaintiff’.’
[
39] In
deciding the periodical amount to be awarded to the respondent Van
Zyl J considered that towards the end of their marriage
the deceased
and the respondent’s financial position had deteriorated. In
coming to a conclusion on an appropriate award
the learned judge
stated the following at para 47:
‘
There is also the fact that
the more lavish the inroads made
upon the limited assets of the estate of the deceased, the less
likely it is that its capital will endure for the remainder of
the
life of the plaintiff, particularly if she were to outlive the life
expectancy table for her category.’
[40] It is clear from the judgment of the court below
that it considered the proceeds of the insurance policies referred to
above
to form part of the assets of the deceased’s estate. Even
though there had been an exchange of correspondence between the
parties on the issue before the trial, it is equally clear from the
record, the judgment of the court below, the notice of appeal
and the
initial heads of argument on behalf of the appellant that the
question whether the policies were rightly included in the
inventory
was not an issue during the trial or initially during the appeal
process. It was raised for the first time during argument
before us
by counsel on behalf of the appellants. However, after submissions on
behalf of the respondent and on the assumption
that the respondent’s
maintenance claim rendered the deceased’s estate insolvent, he
appeared to accept that the proceeds
of the policies were payable
into the deceased’s estate.
[41] Subsequent to the hearing of the appeal we
requested the parties to submit further written argument on the
question whether
the insurance policies rightly constituted part of
the total assets of the deceased’s estate. The request was
complied with.
We proceed to deal first with that question, the
answer to which is critical to a proper determination of the matter.
[42] In
Pieterse v Shrosbree NO &
others
2005 (1) SA 309
(SCA) this court
considered whether the trustee of an insolvent estate was entitled,
in preference to nominated beneficiaries,
to the proceeds of certain
insurance policies, for distribution to creditors. It had been
submitted that
s 63
of the
Long Term Insurance Act 52 of 1998
entitled the trustee to the proceeds. Ponnan JA dealt in some detail
with the nature and effect of insurance policies which were
payable
upon the death of an insured. At para 8 the following appears:
‘
A proposer may effect the insurance either in
his/her own favour or in favour of someone else. If the proposer
effects the insurance
in favour of someone else, the contract of
insurance is a contract for the benefit of a third party and may be
accepted by such
third party who thereupon becomes the owner.
Policies commonly entitle the owner to nominate a beneficiary on
condition that the
nomination will confer no rights on the nominated
beneficiary during the owner’s lifetime. The legal nature of
such a nomination
is a
stipulatio alteri
(a
contract for the benefit of a third person).'
[43] At para 9 of
Shrosbree,
this court stated that what is required is an intention, that upon
acceptance of that offer by the beneficiary, a contract will
be
established between the beneficiary and the insurer. Upon acceptance
the beneficiary would obtain rights enforceable against
the insurer.
At para 10 the following appears:
‘
On the death of the insured, provided that the
nomination has not been revoked during the insured’s lifetime,
any claim to
the policy proceeds by the beneficiary against the
insurance company would be based on the contract of insurance between
the deceased
and the insurance company. It is to the insurance
company and no one else that the beneficiary would have to look for
payment.
Section 63
does not regulate the payment of the proceeds of
the policy, because the beneficiary appointment, until revoked, has
the effect
that payment of the proceeds will be made to the
beneficiary and not the estate of the deceased.’
[44] In para 12 Ponnan JA stated the following:
‘
In the ordinary course, the proceeds of an
insurance policy will go directly to a nominated beneficiary. Absent
s 63
, on the death of the policy holder, the trustee of such person’s
insolvent estate would not have any claim to those policy
proceeds.
Nothing to the contrary is provided in
s 63.
Section 63
does not
purport to divert the proceeds of an insurance policy from a
nominated beneficiary to the insolvent estate of a deceased
policy
holder. Nor, for that matter does such a trustee, by virtue of
s 63
,
become a creditor of the nominated beneficiary.’
[45] The provisions of the Act examined above make it
clear that the means of the estate to provide maintenance is a
primary consideration.
Counsel for the respondent now rightly concede
that in determining the respondent’s maintenance claim the
amount available
for distribution, from which the proceeds of the
policies fall to be excluded, is the upper limit that can be
recognised in her
favour and that the insolvency of the deceased’s
estate does not arise. As is clear from what is set out above, the
extent
of the means of the deceased’s estate has to be decided
without reference to the proceeds of the insurance policies in
respect
of which there are nominated beneficiaries. See also in this
regard what is stated by Meyerowitz
op cit
para15.35:
‘
Although the nomination of a beneficiary under a
policy may be revocable by the deceased, if it has not been revoked,
the proceeds
are payable directly to the beneficiary and do not form
part of the estate to be administered by the executor (other than
having
to be taken into account for estate duty purposes).’
[46] Constrained to accept the conclusion set out at the
end of the preceding paragraph counsel on behalf of the respondent
submitted
that the beneficiaries must accept the benefit of a policy
in order to acquire the right to payment and that in the present case
there is no evidence that the beneficiaries accepted the benefit. It
was submitted that the indications are that the deceased’s
children did not accept the benefit, especially if regard be had to
the inventory. It was submitted that unless the beneficiaries
accepted the benefits the proceeds of the policies remain an asset in
the estate and consequently were available for distribution
to
creditors, including the respondent.
[47] These submissions on behalf of the respondent are
without substance. The benefit was not revoked during the deceased’s
lifetime. An executor is obliged to deal with an estate according to
legal prescripts. A liquidation and distribution account has,
in any
event, not been finalised. The beneficiaries of the policies have to
be afforded the opportunity of accepting the benefits
intended for
them. Given that they are the children of the deceased who have
opposed the respondent’s claim for maintenance
in any amount at
all the probabilities are overwhelming that now, being aware of the
correct legal position, they will undoubtedly
accept the benefits to
which they are entitled. The correspondence between the parties
preceding the trial makes this clear. Certainly,
as accepted on
behalf of the respondent, at least, in respect of two Liberty Life
insurance policies, the deceased’s two
children sought payment
of the proceeds. Thus they were intent on accepting the benefits due
to them.
[48] Critically, the deceased’s children contended
that they are entitled to all the assets of the estate (after claims
by
other creditors) including the policy proceeds, to the
respondent’s exclusion. It is that contention that the
executors seek
to enforce. The submissions on behalf of the
respondent, understandably, are a desperate attempt to avoid the
consequences that
follow on the exclusion of the policies from the
deceased’s estate. Respondent’s legal representatives
ought to have
appreciated at an earlier stage the full implications
of the inevitable failure on this issue.
[49] If it had been specifically brought to the
attention of the court below, or if it had
mero
motu
appreciated what is set out in the
preceding paragraphs, it would necessarily have come to the
conclusion that the amount available
for an award of maintenance to
the respondent was limited. Assuming it to be competent, a lump sum
award, might in the circumstances
be the most appropriate. The court
below held that such an award was not competent.
[50] In our view, for the reasons set out above and
those that follow, it is necessary to consider the issue raised by
the respondent
in her cross-appeal, namely, whether a lump sum
payment is competent and secondly whether it is appropriate in the
present circumstances.
[51] We turn to deal with the first question. On behalf
of the executors it was conceded for the first time in argument
before
us that a lump sum maintenance payment is competent in terms
of the Act. Earlier cases, seemingly to the contrary, were decided
either when the definition of maintenance in the Maintenance Act 26
of 1963 (the 1963 Act) prevailed, before that Act was repealed,
or
they failed to take into account that the definition was no longer in
operation.
9
The court below relied on those cases when it held that a lump sum
award was not competent.
10
[52] The Maintenance Act 23 of 1963 (the 1963 Act) was
repealed and replaced with the Maintenance Act 99 of 1998 (the 1998
Act).
Under the 1963 Act the prevailing view was that a lump sum
could not constitute a maintenance payment, because that Act defined
a maintenance order as ‘any order for the periodical payment of
sums of money towards the maintenance of any person made
by any
court’.
[53] The 1998 Act came into operation in November 1999
and defines a maintenance order as ‘any order for the payment,
including
the periodical payment, of sums of money towards the
maintenance of any person issued by any court in the Republic. . . .’
[54] Although there is no particular reference to lump
sum payments in the definition of a ‘maintenance order’
in the
1998 Act, its other provisions do not expressly exclude the
payment of maintenance by way of a lump sum.
[55] The court below noted ‘policy considerations’
militating against a conclusion that maintenance in a lump sum could
be awarded in terms of the Act. The concerns expressed by the court
below are set out in para 38 above. The difficulties with estimating
an appropriate lump sum award by reference to certain assumptions
that might later prove to be unfounded do not present insurmountable
difficulties. In delictual claims, for example, damages in relation
to loss of support are estimated with regard to the life expectancy
of a claimant and on the basis of other assumptions. There too, total
accuracy can never be assured. Courts do the best they can.
This does
not mean that a court assessing a claim for maintenance should not
take these factors into account in the totality of
the presented
circumstances in deciding an appropriate award.
[56] In claims under the Act the rights of beneficiaries
and legatees are implicated. Section 3(a) of the Act obliges a court
to
take into account the amount in the estate available to heirs and
legatees. This, of course, has to be balanced against the factors
that bear upon the claimant for maintenance as set out in s 3(b) and
s 3(c) of the Act, referred to in para 28 above. These include
the
claimant’s needs and financial means and obligations, the
subsistence of the marriage and the couple’s standard
of living
during the marriage. Importantly, section 3 states that these factors
must be considered together with
any other
factor
that should be taken into account. A
court is thus obliged to consider the totality of the circumstances
of a case to arrive at
a just result.
[57] Additional extended administration burdens,
including costs attendant upon the grant of a periodical payment that
might also
prove to be longer than initially envisaged is another
issue for consideration.
11
In our view, for the reasons set out above the concession that a lump
sum was competent under the Act was rightly made on behalf
of the
appellants. Accordingly, the court below erred in holding to the
contrary.
[58] The legislature in its wisdom introduced a
provision in the Act for a negotiated settlement between affected
parties. If common
sense was to prevail such settlements would be the
order of the day. Human experience has proved that when disputes
arise and often
in litigation, common sense, ironically, is a rare
commodity. This is an aspect, in relation to this case, about which
more will
be said later.
[59
] Having
correctly made the concession that a lump sum maintenance award was
competent, counsel on behalf of the appellants, nonetheless,
contended that it was undesirable in the present circumstances,
because of the advanced age of the respondent and because of the
relatively modest estate. In the further written submissions it was
contended that in the event that the policy proceeds were excluded
and if the costs of litigation and the executors’ fees were
taken into account no amount at all should have been awarded.
We
disagree and in the paragraphs that follow we deal with this question
and whether a lump sum payment was appropriate in the
circumstances.
[60
] By
the time the judgment of the court below was delivered the respondent
had not received a cent in maintenance for approximately
four years.
More than a year has passed since then. The respondent had been
married to the deceased for close to two decades. She
is now an
octogenarian. During the subsistence of the marriage the respondent
had made significant contributions to the common
household and had
not been extravagant in her maintenance claims. The deceased’s
children, by virtue of the policy proceeds,
will be better off in
respect of financial benefits flowing from the deceased’s
death. They also appear to be persons of
means. Without the generous
support of her sons the respondent will be in dire straits. The award
of costs in her favour in the
court below, against the executors in
their official capacities, meant the net value of the estate was
further diminished. This
did not trouble the court below because of
the view it took of the value of the estate.
[61] According to the appellants’ recently
provided schedule the residual value of the estate - after deducting
the respondent’s
costs of trial, the administration costs and
funeral expenses, other creditors’ claims as well as deducting
the bequest to
the respondent and her portion of the shared assets is
R204 827.60. Executors’ fees to be determined by the Master
have not
been deducted from that amount.
[62
] The
court below rightly held that the respondent was in need of
maintenance. Given the passage of time during which she was not
in
receipt of any maintenance and considering the limited value of the
estate and the respondent’s advanced age no useful
purpose
would be served by ordering periodical maintenance payments. Simple
arithmetic dictates that if the arrears of the periodical
amount
ordered were brought up to date it would wipe out the entire asset
value of the estate, were the policy benefits to be excluded.
This
would be so even if the bequest to the respondent was brought back
into account.
[63] There is no reason why the court below could not
have ordered maintenance in a lump sum, which would result after the
deduction
of all the items listed in para 61 above and executors’
fees, after the bequest to the respondent was brought back into
account.
Such an award was clearly viable. Whilst the accuracy of the
figures supplied by the appellants, in the recently provided
schedule,
might well be contested, it is clear that on their own
version an order in the terms referred to earlier in this paragraph
was
viable at the conclusion of the trial in the court below.
[64] To sum up: The respondent established a right to
maintenance in the court below, albeit not in the amount claimed or
awarded.
The court below erred in concluding that a lump sum award
was not competent and ought to have granted a lump sum in the terms
spelt
out above. Given the limited funds available and the order
envisaged no purpose will be served by making a further order in
respect
of interest on that sum.
COSTS
Mr I G Hunter, the actuary
[65] In the light of its conclusions that a lump sum
payment was not competent, the court below disallowed the qualifying
fees of
the respondent’s expert, the actuary Mr I G Hunter.
Given the contrary conclusion reached on appeal that order obviously
cannot stand.
Dr L M Kernhoff
[66] The respondent also sought the qualifying fees in
respect of the medical doctor, Dr Kernhoff, who was due to testify in
relation
to her life expectancy. In her heads of argument, the
respondent contended that the evidence of Dr Kernhoff became
unnecessary
only by reason of an agreement reached at the doors of
the court on the first day of the trial, as appears from the opening
address
recording the mutual agreement, a copy of which was attached
to her heads of argument. In our view, the qualifying fees of Dr
Kernhoff
should have been allowed as part of the costs order in
favour of the respondent.
Costs of suit, of appeal and cross-appeal
[67] The respondent sought an order in terms of which
the order of costs in her favour in the court below on the ordinary
scale
be set aside and substituted with a costs order on the attorney
and client scale. It was never advanced on her behalf that the costs
order in the court below ought to have been paid by the appellants in
their personal capacities. It is the scale of costs that
is
contested. The respondent also sought an order that the appellants,
in their personal capacities, should pay the costs of the
appeal and
of the cross-appeal on
an
attorney and client scale.
[68] The appellants adopted an intractable and
obstructive attitude from inception of the respondent’s claim
for maintenance.
The second appellant is a beneficiary in the estate
and she and her husband should have been alert not to be motivated by
selfish
personal interest but to act in the interests of the estate.
12
The antagonism between the parties has led to protracted litigation
that could have been avoided had common sense prevailed. The
executors could have attempted to reach an accord with the
respondent, which would have avoided a waste of money and the
depletion
of the estate’s not very substantial assets. They
were unwilling to do so. As stated above the respondent proved an
entitlement
to maintenance in terms of the Act. It was submitted in
the court below that she was entitled to a punitive costs order. Van
Zyl
J, having regard to the respondent’s claim for a lump sum
payment and the dearth of authority in relation to such a claim
under
the Act, and after describing the ‘circumstances and outcome’
of the case as unusual, considered that the appellants
rightly
sought to have the court’s guidance on the issue. The learned
judge consequently declined to order costs on a punitive
scale.
Whilst it is true that the appellants were being obstructive, that
hardly justifies our interfering with the costs order
in the court
below. In any event, an increased costs order, for which the estate
would be liable, would have the effect of further
reducing the value
of the respondent’s maintenance entitlement. We are thus
disinclined to interfere with the costs order
in the court below.
[69] We turn to deal with the costs of the appeal and
cross-appeal. The appellants’ persistent obstructive attitude,
beyond
the decision of the court below, is a matter of grave concern.
The appeal did not succeed on any of the bases set out in their
notice of appeal. They conceded very late in the day that a lump sum
payment was competent. The submission on their behalf, that
in the
circumstances of the present case a lump sum award was undesirable,
has also been rejected. Furthermore the appeal in respect
of the R50
000 claim was entirely without merit. The appellants were ultimately
successful on a point that was raised and seemingly
abandoned during
oral argument, and which, in the practical result, bore no real
benefit for the estate. Therefore, ultimately
the estate would not by
virtue of the inclusion of the proceeds of the policy benefits be
worse off. The estate’s indebtedness
for maintenance at the
time of the decision of the court below extended beyond its full true
asset value. Loss would have been
endured by the beneficiaries of the
policies, the deceased’s children and not by the deceased’s
estate. When the court
below granted leave to appeal it presented an
ideal opportunity for a negotiated settlement. If the net asset value
of the estate
was the real dispute between the parties then a careful
consideration of the law would have presented clear authority that
the
policy proceeds fell to be excluded.
[70] No doubt, from their perspective, the appellants
bore no risk as they were litigating at the expense of the deceased’s
estate. The personal antagonisms that the record reflects that had
arisen between the appellants and the respondent, stultified
mature
reflection and judgment. It is regrettable that the executors adopted
the attitude referred to above. It is equally regrettable
that the
respondent who is aged and vulnerable was put through protracted
litigation because the issues were not properly defined
at the
outset. The parties are the poorer for it, materially as well as in
human currency.
[71] The appeal is successful to the limited extent that
the proceeds of the policy, which fall outside of the estate, is to
be
excluded when the respondent’s maintenance entitlement is
calculated. The cross-appeal succeeds on the principal point. In
the
totality of circumstances, a costs order against the appellants in
their personal capacities, on an attorney and client scale,
both in
respect of the appeal and cross-appeal is wholly justified.
[72] Finally, it is necessary to record that our
colleague Van Heerden JA, who with us heard the appeal, has by reason
of subsequent
indisposition, become incapable of being a party to the
final decision. In terms of s 12(3) of the Supreme Court Act 59 of
1959
the judgment of the remaining members of the court consequently
becomes the judgment of the court.
[73] The following order is made:
1. The appeal is upheld to the limited extent reflected
in the substituted order set out hereafter.
2. The order of the court below is set aside and
substituted as follows:
‘
1 Defendants, in their capacities as executors in
the estate of the late Lionel Maurice Feldman, who died on 3 May 2005
(“the
estate”), are hereby;
(a) authorised and directed to:
recognise Plaintiff’s claim against the estate in
terms of section 2(1), read with section 3 of the Maintenance of
Surviving
Spouses Act 27 of 1990 for payment of her reasonable
maintenance needs;
(ii) pay her a lump sum equal to the net value of
the estate after payment of the claims of other creditors, funeral
expenses,
administration costs and executors’ fees.
(b) directed to pay the plaintiff :
(i) the sum of R50 000-00;
(ii) interest thereon at the rate of 15.5% per
annum with effect from 6 July 2006 to date of payment, both dates
inclusive.
(iii) directed to pay plaintiff’s costs of
suit such costs to include the qualifying fees of the actuary Mr I G
Hunter and
Dr L M Kernhoff.’
3. The cross-appeal is upheld to the extent reflected in
the substituted order set out above.
4. In respect of the appeal the first and second
appellants are directed jointly and severally to pay the respondent’s
costs
of appeal
de bonis propriis
on an attorney and client scale, including the costs of two counsel.
5.
In respect
of the cross-appeal the respondents therein are ordered jointly and
severally to pay the cross-appellant’s costs
de
bonis propriis
, on an attorney and client
scale, including the costs of two counsel.
M S Navsa
Judge of Appeal
___________________
H Saldulker
Acting Judge of Appeal
APPEARANCES
APPELLANTS: A Stewart SC (with him W Shapiro)
Instructed by Tate, Nolan & Knight Inc,
Durban North
Matsepes
Inc, Bloemfontein
RESPONDENTS: J Julyan SC
Instructed
by J H Nicolson Stiller & Geshen
Durban
Honey Attorneys Inc, Bloemfontein
1
Reported as
Feldman v Oshry
& another NNO
2009 (6)
SA 454
(KZD).
2
In
Pillay
v Krishna & another
1946 AD 946
, it was stated that when a defendant in his plea sets up
a plea of payment of money (as the executors have done in this
case),
the onus is upon him, and if he fails to satisfy the court
that there is a sufficiently strong balance of probabilities in his
favour, judgment must be given for the plaintiff.
3
1938 AD 322
at 327-328.
4
1967 (2) SA 417
(R) at 419H.
5
1963 (4) SA 694
(A).
6
1991 (3) SA 58
(D) at 62J-63A.
7
The Constitutional Court in
Volks
NO v Robinson
[2005] ZACC 2
;
2005 (5)
BCLR 446
(CC) paras 55-56 said that the maintenance benefit in s
2(1) of the Act falls within the scope of the maintenance support
obligation
attached to marriage.
8
Section 2(3)(b) of the Act places a surviving spouse’s claim
on par with a claim by a dependent child. A minor’s
claim for
maintenance cannot compete with the claims of the deceased’s
creditors but it must be satisfied before any payment
of legacies
and inheritances is made. In this regard see D Meyerowitz
The
Law and Practice of Administration of Estates and Estate Duty
(2007)
para
21-24 and
In re Estate
Visser
1948 (3) SA 1129
(C). See also Corbett, Hofmeyr and Kahn
The
Law of Succession in South Africa
2 ed (2001) p 46.
9
In
Zwiegelaar
v Zwiegelaar
2001 (1) SA 1208
(SCA) paras 6-10, the court (Chetty AJA) referred
to the Maintenance Act 23 of 1963 for the definition of a
maintenance order
(which excluded lump sum payments). However, in
1999, a new definition of maintenance order (which did not exclude
lump sum payments)
had come into effect with the
Maintenance Act 99
of 1998
. The court below referred to the old definition and appears
to have been persuaded by the reasoning in
Zwiegelaar
,
see para 32-33 of the judgment;Joubert (ed)
The
Law of South Africa
(reissue) vol 16 para 191; Boberg
Law
of Persons and the Family
2 ed (1999) p 286 fin 34; See also, Schäfer
Family
Law Service
C36;
Bannatyne
v Bannatyne
2003 (2) SA 359
(SCA).
10
The court below held that the maintenance envisaged by the Act ‘like
in the case of divorce under section 7(2) of the Divorce
Act, would
be in the form of periodic payments, as opposed to a lump sum
payment (
Schmidt v Schmidt
1996 (2) SA 211
(W)’.The court reasoned that the respondent
was entitled to periodical payments relative to the actuary’s
initial
computation as at December 2005 but made allowance for the
fact that these figures at the time represented an inflated claim
well exceeding the ’reasonable maintenance needs’ of the
respondent as contemplated in s 2(1) and s 3 of the Act. The
court
below concluded that a periodical payment was justified on the basis
that 'accepting the claim as at December 2005 of R12
838.17 per
month at face value, I consider that 75% thereof, or R9628.63 per
month, would meet the demands of the situation.’
11
In the master’s report to the court below he stated the
following:
‘
6. In
practice for practical reasons and in the interest of every one
having an interest in a deceased estate a once-off payment
in full
and final settlement of the maintenance claim seems to be the way by
which all the claims have been disposed off.
7. There
seems to be no practice or policy suggesting the payment of
instalments in satisfaction of a maintenance claim of a surviving
spouse as this will not bring administration of the estate to
finality thereby prejudicing creditors and the heirs of the estate.
8. I
abide by the decision of the Honorable Court.’
12
In
Estate
Orr v The Master
1938 AD 336
342, the court stated that ‘[t]he proceedings have
not been brought in the interests of the heirs or for the
interpretation
of difficult provisions in the will but merely in the
interest of the executors personally. Having been unsuccessful in
the court
below, there seems to me to be no reason why the executors
should be entitled to bring an appeal at the expense of the estate.’
See also:
Adkins and Hunter v MG Crosbie and FW Crosbie
,
and
MM
Crosbie’s Executors
1916 EDL 357
at 364.