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[2010] ZAWCHC 10
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Kagan v Kagan and Others (6887/09) [2010] ZAWCHC 10 (8 February 2010)
IN
THE HIGH COURT OF SOUTH AFRICA (WESTERN CAPE HIGH COURT, CAPE TOWN)
Case
No. 6887/09
In
the matter between:
HELMAN
KAGAN
Applicant
and
RUTH
KAGAN
First
Respondent
LIBERTYLIFE
GROUP LIMITED
Second Respondent
METROPOLITAN
LIFE LIMITED
Third Respondent
MOMENTUM
GROUP LIMITED
Fourth Respondent
JUDGMENT
DELIVERED ON 8 FEBRUARY 2010
BINNS-WARD
J:
[1]
The applicant claimed various heads of relief in the notice of
motion. It is unnecessary to describe them because at the hearing
the applicant's counsel advised that the only relief actually sought
was an order directing that the Liberty Life endowment policy,
which
was ceded by him to the first respondent on 29 September 1975, 'be
released from its cession to First Respondent and that
it revert to
Applicant'.
[2]
The background to the application is as follows. The applicant and
the first respondent were formerly man and wife. Their marriage
was
dissolved in terms of an order granted by this court on 25 June
1975. In terms of that order the consent paper executed by
the
parties on 28 April 1975 was made an order of court. As correctly
identified by Mr
Weinkove
SC,
for the applicant, the relief sought in the current application
turns on the proper construction of clause 6 of the consent
paper,
read in context.
[3]
The consent paper provided that the applicant had to pay maintenance
to the first respondent until the first occurring of her
death or
re-marriage; and also maintenance in respect of the three minor
children of the marriage, of whom the first respondent
was granted
custody, until they attained the age of 18 or earlier became
self-supporting. This maintenance obligation was initially
fixed by
the consent paper in the amount of R30 per month for the first
respondent and R90 per month in respect of each of the
children. The
consent paper provided that the maintenance payable was to escalate
annually on the anniversary of the divorce order
by five percent.
[4]
Clause 6 of the consent paper reads as follows:
'
CESSION
OF INSURANCE POLICIES:
In
order to ensure the continued maintenance payments after his death,
Defendant
[i.e.
the applicant]
undertakes
that against the obtaining of the Final Order of Divorce he will
cede to the Plaintiff
[i.e.
the first respondent]
Insurance
Policies to the value of R66.000-00 and shall bear liability for the
costs of such cession.'
[5]
Clause 15 of the consent paper recorded an undertaking by the
applicant to pay the premiums on the policies ceded by him in
terms
of clause 6 and afforded the first respondent the right to claim
reimbursement thereof from him should she be obliged to
pay the
premiums herself in the event of the applicant's default. Clause 14
of the consent paper provided that save as set out
therein neither
party would have any further claims of whatsoever nature against the
other.
[6]
In discharge of his obligation in terms of clause 6, the applicant
ceded three long-term insurance policies to the first respondent,
having between them a total death value of R66500. The cessions were
effected in terms of three deeds of cession, each of which
was
executed by the applicant on 29 September 1975.
[7]
The deed of cession in respect of the policy currently in issue
provided insofar as relevant that the applicant thereby transferred,
assigned and set over to the first respondent
'all
right, title and interest in
[the
insurance policy]
and
all benefits and advantages to be derived therefrom'.
The
applicant further stated in the deed of cession that
'this
Cession is I. T.
O.
order
of Court of 25/6/75'.
[8]
The policy in question had been taken out by the applicant in July
1970 with life cover in the sum of R12000. The applicant
had however
taken out supplementary life cover under the policy in the sum of
R45000 in April 1975, and it seems likely in the
context of the
facts that this was done with the provisions of clause 6 of the
consent paper, which was signed shortly afterwards,
in mind. The
policy therefore made up R57000 of the R66500 death cover provided
by the three policies ceded by the applicant to
the first respondent
in September 1975.
[9]
By reason of the terms of the policy, which included an investment
component, its death and surrender values as at 18 February
2009
stood at R241 111.16.
[10]
The contention of the applicant is that clause 6 of the consent
paper properly construed means that the value of insurance
cover
that he is required to provide thereunder was to be at all times
limited to R66000; and that accordingly, if the value of
any of the
policies ceded by him to the first respondent should have increased
so as to at any time, in combination, afford death
cover in an
amount exceeding R66000, he would be entitled to an adjustment. Of
course the only manner in which this could be achieved
would be the
recession by the first respondent of one or more of the policies, or
of part of the death cover beneficiary's rights
under the policies.
When the applicant asks in this application for a 'cancellation of
the cession', he in truth seeks an order
directing the first
respondent to recede it to him. He does so because he says that
after a recession of the policy the first respondent
will still be
left with policies with a death cover value well in excess of the
R66000 referred to in clause 6.
[11]
On the authority of
Hughes
N.O. v The Master and Another
1960
(4) SA 936
(C) it is apparent that the parties probably accepted
that a consequence of the agreement by the applicant to maintain the
first
respondent until her death or remarriage would be that in the
event of his death occurring during the currency of the undertaken
maintenance obligations the first respondent would enjoy a claim for
the residual performance of the obligation of personal maintenance
for herself against his estate. The dependant children would in any
event enjoy such a claim. In the context just sketched the
evident
intention in clause 6 was to afford some guarantee or assurance to
the first respondent that in the event of the stipulated
contingency
arising the performance of the deceased's maintenance obligations
would not be dependant, or at least not entirely
dependant, on what
might prove at such time to be the inadequate value of the
applicant's deceased estate.
[12]
There was some debate in the heads of argument as to whether the
cession contemplated by clause 6 was of an out an out nature
or
in
securitatem debiti.
At
the hearing counsel were, however, in agreement, rightly so in my
view, that nothing really turned on that. If the cessions were
out
and out there would be no basis in law for the applicant to assert
any right in the policies. If they were
in
securitatem debiti,
the
applicant's only interest in the policies would be of a reversionary
nature and they would automatically revest in his deceased
estate
against the discharge by it of any outstanding maintenance
obligations under the consent paper. That the parties intended
a
cession
in
securitatem debiti
is,
however, most improbable because the intention was that the proceeds
of the policies, at least to the value of R66000 on the
applicant's
version, would enure to the first respondent upon the insured event.
Accordingly, there would in reality be nothing
by way of extant
insurance policies to revert to the applicant's deceased estate once
the insurers had paid out the proceeds of
the policies, as they
would be obliged to do on his death. It is for these reasons that
the alleged proper meaning of clause 6,
and not the character of the
cession to be effected thereunder, was eventually recognised as the
only basis on which the applicant's
claim could be arguably
sustainable.
[13]
In my judgment the meaning contended for by the applicant is
inconsistent with the language of the provision and also bears
with
it such impractical connotations as to make it unlikely to have been
what the parties intended. On the plain language of the
provision it
imposed a once off act of obligation on the applicant. He was
obliged after the final order of divorce to cede insurance
policies
to the value of R66000 to the first respondent. The nature of the
insurance policies to be ceded was not specified, but
counsel were
agreed, correctly, that it is clear from the context that the 'value
of R66000' denoted the value of the death cover
benefit to be
provided thereby and it is equally clear that the applicant's life
would have to be the life insured in terms of
the policies. The
language of the contract suggests that once he had ceded insurance
policies of the nature just described, the
applicant's only
continuing obligation would be to pay the premiums. It would follow
that any risks or benefits attaching to the
policies after their
cession in terms of clause 6 would attach to or vest in the first
respondent exclusively. That this was the
intention is indeed
confirmed in the wording of the deed of cession executed by the
applicant, and quoted earlier.
[14]
There is nothing in clause 6, or any other provision of the consent
paper, to indicate that a periodic audit of the value of
the ceded
policies was intended with a concomitant obligation on the applicant
to cede further policies if the exigencies of fate
had for one or
other reason reduced the death cover originally provided to below
R66000, or one on the respondent to cede back
rights in the policies
if the death cover provided thereby rose to exceed R66000. Any such
intention would have resulted in a cumbersome
ongoing process,
which, if it had been desired, one would have expected the parties
to expressly describe and define. There would
moreover have been no
business sense, if an ongoing process of reconciliation and
accounting were to have been imported into clause
6, to maintain the
insured value at R66000 in nominal terms on an ongoing basis. As the
years went by the required cover would
be expected to diminish as
the children became self-sufficient and the first respondent's own
expectation of longevity reduced
with the passing of the years.
[15]
If it could be said that there is an element of ambiguity in clause
6 (and I do not consider that there is), it would be appropriate
in
the circumstances to examine how the parties had conducted
themselves in relation to it. Nothing in the conduct of the parties
in the intervening 34 years before the institution of this
applications suggests that either of them understood the contract in
the manner now contended by the applicant. Instead, as I have
pointed out the terms of the deed of cession executed by the
applicant
point the other way.
[16]
In my judgment the applicant has failed to show any basis in law for
his claim. The only beneficial effect that the applicant
enjoys in
the policies is that any claim that may possibly subsequently arise
by the first respondent for maintenance against his
deceased estate
will be reduced by the proceeds received by her from the policies
that he ceded to her.
[17]
I have refrained from setting out in this judgment the personal
circumstances of the applicant that gave rise to this application.
It was not necessary to do so because, without derogation from their
emotional significance, they are legally quite irrelevant.
I
nevertheless express the hope from a purely humane perspective that
the result of this application will not deter the parties
from
seeking to achieve a settlement of the underlying issue if the first
respondent's circumstances in any way allow it.
J
[18]
The application is dismissed with costs.
A.G.
BINNS-WARD
Judge
of the High Court