The Payout of a Life Insurance Policy into an Unrehabilitated Insolvent's Estate: Malcolm Wentzel v Discovery Life Limited: In Re Botha v Wentzel (1001/19) [2020] ZASCA 121 (2 October 2020)

Authors

DOI:

https://doi.org/10.17159/1727-3781/2022/v25ia11486

Keywords:

Sequestration , life insurance policy, insolvent, trustee, vesting , protection of policy benefits , stipulatio alteri, insolvent estate , community of property, insurer

Abstract

One of the consequences of sequestration is the vesting of the property of an insolvent person in the trustee of the insolvent estate. However, not all the property of the insolvent person vests in the trustee as there are some exceptions. Under section 63 of the Long-Term Insurance Act 52 of 1998, life insurance policy benefits are excluded from forming part of the insolvent estate and thus do not vest in the trustee and are unavailable for the payments of the debts of the insolvent. The exclusion of these benefits diverts property from the insolvent estate and, consequently, the creditors who could benefit from the property. This note discusses Malcolm Wentzel v Discovery Life Limited: In Re Botha v Wentzel (1001/19) [2020] ZASCA 121 (2 October 2020), and considers whether a beneficiary of a life insurance policy payout is required to hand over such payment to the trustee of his insolvent estate. Further, it highlights the conflicting provisions between insolvency legislation and insurance legislation and examines the effects of section 63 on an insolvent estate where the insolvent was married in community of property.

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Author Biographies

Zingapi Mabe, University of South Africa, Department of Mercantile Law

I am a Senior lecturer of Insolvency Law at the Department of Mercantile Law at Unisa.

Edith Mbiriri, University of South Africa

Edith Mbiriri is a lecturer at the University of South Africa and a co-author of this article.

References

Literature

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Case law

DE v RH 2015 5 SA 83 (CC)

Du Plessis v Pienaar 2003 1 SA 671 (SCA)

Ex parte Mark Schmukler-Tshiko [2012] ZAGPJHC 209 (26 October 2012)

Ex parte Pillay: Mayet v Pillay 1955 2 SA 309 (N)

Ex Parte Potgieter 1967 2 SA 310 (T)

Harksen v Lane 1998 1 SA 300 (CC)

Malcolm Wentzel v Discovery Life Limited: In Re Botha v Wentzel (1001/19) [2020] ZASCA 121 (2 October 2020) DOI: https://doi.org/10.4324/9780429027963-5

Moodley v Milner 1965 1 SA 154 (D)

Naidoo v Discovery Limited (202/2017) [2018] ZASCA 88 (31 May 2018)

Oshry v Feldman 2010 6 SA 19 (SCA)

Pieterse v Shrosbree, Shrosbree Love 2005 1 SA 309 (SCA)

PPS Insurance Co Ltd v Mkhabela 2012 3 SA 292 (SCA)

Shrosbree v Van Rooyen 2004 1 SA 226 (SE)

Walker v Syfret 1911 AD 141

Warricker v Liberty Life Association of Africa Ltd 2004 3 SA 445 (SE)

Wentzel v Discovery Life Limited 2019 6 SA 472 (GP)

Wessels v De Jager 2000 4 SA 924 (SCA)

Legislation

Friendly Societies Act 25 of 1956

Financial Services Laws General Amendment Act 45 of 2013

Insolvency Act 24 of 1936

Insurance Act 18 of 2017

Long Term Insurance Act 52 of 1998

Matrimonial Property Act 88 of 1984

Published

2022-05-31

How to Cite

Mabe, Z., & Mbiriri, E. . (2022). The Payout of a Life Insurance Policy into an Unrehabilitated Insolvent’s Estate: Malcolm Wentzel v Discovery Life Limited: In Re Botha v Wentzel (1001/19) [2020] ZASCA 121 (2 October 2020). Potchefstroom Electronic Law Journal, 25, (Published 31 May 2022) pp 1 – 27. https://doi.org/10.17159/1727-3781/2022/v25ia11486

Issue

Section

Case Notes