The issue which the parties sought to have determined were whether the benefits of a life insurance policy received by the surviving community-of-property spouse as beneficiary were protected under section 63 of the Long-term Insurance Act, 1998 (LTIA). The provisional trustees of the insolvent joint estate alleged that the transaction, by which the benefits were immediately given to the spouse’s son, was impeachable under the Insolvency Act of 1936, or the common law, or as part of a repayable loan, or on the basis of enrichment. The claim was referred back to the high court because the trustees had failed to join the surviving spouse in the proceedings despite the spouse having a material direct or substantial interest in the matter.

The policy was taken out on 30 August 2013. The deceased died on 14 February 2018. On 11 April 2018 the life insurer paid the death benefit of R10 million to the surviving spouse. On the same day she transferred the full sum to a bank account of a CC of which her son was the sole member. Her son then caused the CC to transfer two amounts of R5 million each to his personal account on 11 April 2018 and 12 April 2018. On 10 September 2020 the joint estate of the deceased was placed under provisional sequestration. When sued, the son relied on section 63(1)(b) of the LTIA. Section 63(1)(b) protects such benefits devolving on a spouse, child or step-child, or parent where the policy has been in force for at least three years.  The protected period is five years unless it can be shown that the policy in question was taken out with the intention to defraud creditors.

The trustees’ argument that the spouse did not have an interest in the matter because she had divested herself completely of the proceeds did not prevail. This overlooked that, if the son’s contentions did not find favour, he would not become owner of the proceeds, and the spouse would have a direct interest. Secondly, the spouse was the person required to prove that the protection afforded to her under section 63 applied. The question whether the spouse was entitled to divest herself of the proceeds was the very issue to be decided. The spouse might wish to pursue a claim in respect of the policy proceeds in future.

The matter was referred back to the high court for joinder of the spouse and adjudication of the factual issues, depending on the defences she may raise.

Years later the matter has not gone beyond stage one, which shows the importance of joining all parties with a material interest in any proceedings when they are instituted.

[Eugene Prinsloo v Donovan Theodore Majiedt NO and Another 2025] ZASCA 74 (30 May 2025)]