THE SUPREME COURT OF APPEAL OF SOUTH AFRICA
JUDGMENT

Reportable

Case no: 1001/19

In the matter between:

MALCOLM WENTZEL
APPELLANT

and

DISCOVERY LIFE LIMITED
FIRST RESPONDENT
JOACHIM HENDRIK BOTHA NO
SECOND RESPONDENT
REINETTE STEYNBURG NO
THIRD RESPONDENT
ZOLILE ABEL DLAMINI NO
FOURTH RESPONDENT
THE MASTER OF THE HIGH COURT, PRETORIA
FIFTH RESPONDENT

In re:

Cross appeal

JOACHIM HENDRIK BOTHA NO
FIRST CROSS-APPELLANT
REINETTE STEYNBURG NO
SECOND CROSS-APPELLANT
ZOLILE ABEL DLAMINI NO
THIRD CROSS-APPELLANT

and

MALCOLM WENTZEL
RESPONDENT

Neutral Citation:
Malcolm Wentzel v Discovery Life Limited and Others: In
Re Botha and Others NNO v Wentzel (Case no 1001/19) [2020] ZASCA 121
(2 October 2020)
Coram:
NAVSA, MBHA and MOLEMELA JJA and EKSTEEN and
UNTERHALTER AJJA
Heard:
26 August 2020

Delivered:  This judgment was handed down electronically by circulation to
the parties’ legal representatives via email, publication on the Supreme Court
of Appeal website and release to SAFLII. The date and time for hand-down is
deemed to be 09h45 on 2 October 2020.
Summary:
Insolvency Act 24 of 1936 – unrehabilitated insolvent –
nominated beneficiary in life insurance policy – save for narrowly defined
exceptions, unrehabilitated insolvent not permitted to receive property that
vests in him personally and keep it out of the reach of the trustees of the
insolvent estate, even after liquidation and distribution account filed and
approved – proceeds of life insurance policy vests in the trustees.
______________________________________________________________

ORDER
______________________________________________________________

On appeal from: The Gauteng Division of the High Court, Pretoria (Tlhapi J,
sitting as court of first instance): judgment reported sub nom Wentzel v
Discovery Life Limited and Others [2019] ZAGPPHC 164; 2019 (6) SA 472
(GP).
The appellant's appeal is dismissed.
The first to third cross-appellants' appeal is upheld.
The order of the Court a quo is set aside and replaced with the following
order:
‘(a)
It is declared that the second, third and fourth respondents, in their
respective capacities as the trustees of the insolvent estate of Malcolm
Wentzel and Lizane Wentzel, Master’s reference number T1179/12, are
entitled to the proceeds of the Discovery Life Policy number 5130640002
payable by the first respondent, Discovery Life Limited, pursuant to the
provisions of such life insurance policy.
(b)
The first respondent is ordered to pay the proceeds of the policy referred
to in (a) to the second, third and fourth respondents in their official
capacity as trustees.
(c)
The applicant, Malcolm Wentzel, is ordered to pay the costs of the
application.’
The appellant is ordered to pay the costs of the appeal and the cross-
appeal, such costs to include the costs occasioned by the employment of two
counsel, where so employed.

______________________________________________________________
JUDGMENT
______________________________________________________________

Mbha JA (Navsa and Molemela JJA and Eksteen and Unterhalter AJJA
concurring):

[1] What this court has to decide is whether an unrehabilitated insolvent,
who is the nominated beneficiary in terms of a life insurance policy, is personally
entitled (that is, to the exclusion of the trustees of the insolvent estate) to the
proceeds of that life insurance policy if, on the date when such proceeds
become payable, the insolvent has not yet been rehabilitated by an order of
court, but the first and final liquidation and distribution account in respect of the
insolvent estate has already been filed and accepted by the Master. If not, the
question is whether the proceeds of the life insurance policy are an asset that
vest in the trustees of the insolvent estate and are thus to be utilised by them
for purposes of realisation and distribution. An application and a counter
application for declarators in respect of these issues failed in the Gauteng
Division of the High Court, Pretoria (Tlhapi J). The appeal and the counter
appeal are brought with the leave of the court below. The factual matrix within
which the issues arose is fairly straightforward and is set out in the paragraphs
that follow.

[2] The appellant, Malcolm Wentzel, was married in community of property
to Lizane Wentzel on 25 August 2007. On 1 January 2012, a contract of
insurance was concluded with the first respondent, Discovery Life Limited
(Discovery), in terms of which the life of Mrs Wentzel was insured. Mr Wentzel
was appointed beneficiary of the proceeds payable upon her death. In terms of
the same policy Mr Wentzel’s life was also insured, though, in the event of his
death, it was his wife who was appointed as the beneficiary. Approximately five
and a half years later, on 16 April 2017, Mr Wentzel’s wife passed away (the
deceased).

[3] Prior to his wife’s death, their joint estate was provisionally sequestrated
by an order of court. The provisional order was confirmed on 3 April 2012. On
20 September 2012 the second, third and fourth respondents were appointed
as trustees of the sequestrated joint estate (the trustees). The first and final
liquidation and distribution account duly filed by the trustees was accepted by
the fifth respondent, the Master of the High Court, Pretoria (the Master), on 11
July 2014.

[4] On 9 May 2017, shortly after his wife’s passing, Mr Wentzel claimed
payment of the proceeds of the insurance policy. Discovery informed him that
these proceeds, amounting to R5 240 345.56 (the proceeds), would be paid
over to the trustees of the insolvent joint estate. Mr Wentzel objected and, on 5
September 2017, claimed the proceeds in a letter of demand addressed to
Discovery. On 8 December 2017 the trustees registered their objection to Mr
Wentzel’s claim, insisting that the proceeds be paid to them because neither
Mr Wentzel nor the deceased had been rehabilitated by an order of court at the
time when the proceeds became payable. As the appellant was still an
unrehabilitated insolvent, the trustees insisted that payment could only be made
to the insolvent estate. It is these mutually exclusive claims that gave rise to the
application and counter application in the court a quo and the relief presently
sought by the parties in this court. I pause to record that Discovery chose to
abide the decision of the court and took no part in the proceedings in the court
below and before us.

[5] The appellant contended, as he did in the court below, that as the
nominated beneficiary in terms of the insurance policy, the proceeds were due
and payable to him, exclusively, when he accepted the benefits under the policy
on 9 May 2017. On the other hand, the trustees contended that the proceeds
must be paid to them, in their capacity as trustees of the insolvent joint estate,
as a result of the appellant’s status as an unrehabilitated insolvent at the time
when the proceeds became payable.

[6] The high court found that the proceeds, though payable to the appellant
in terms of the policy, nevertheless represented an asset that had not been

exempted or excluded from the reach of the creditors of the insolvent joint
estate by the laws of insolvency. Thlapi J thus held that the appellant was
obliged to pay over the proceeds to the trustees for realisation and, ultimately,
distribution to the creditors of the insolvent joint estate. However, she held
further that the trustees were ‘to notify the Master that a situation [had] arisen
whereby a second liquidation and distribution account might be lodged’ after
they had engaged with the creditors on the proceeds that had since become
available. She stated the following:
‘Both the main and the counter-applications have to be dismissed to allow the trustees
to engage such process because the applicant as an insolvent has not been
rehabilitated and the trustees have not been discharged’.
The court a quo dismissed both the application and the counter application for
appropriate declaratory relief.

[7] The basis on which Mr Wentzel claimed the proceeds may be
summarised as follows:
7.1
On 3 April 2012, the joint estate between the appellant and the deceased
(which came about as a consequence of their marriage in community of
property on 25 August 2007) was sequestrated. The respondents' first
and final liquidation and distribution account was confirmed on 11 July
2014, with the effect that the administration of the sequestrated joint
estate was, for all intents and purposes, completed and finalised on that
date.
7.2
The death of the appellant's wife on 16 April 2017 had the effect of finally
dissolving the sequestrated joint estate ex lege.
7.3
Because of the ex lege dissolution of his marriage, the appellant was no
longer disqualified from receiving and holding property in his own name,
particularly the proceeds of the contract of insurance. Moreover, he
accepted the benefits payable to him in his capacity as the nominated
beneficiary of the proceeds in the event of the deceased’s death. This
acceptance, on 9 May 2017, happened after the administration of the
sequestrated joint estate was finalised upon confirmation of the first and
final liquidation and distribution account by the fifth respondent on 11
July 2014.

[8] On the other hand, the respondents submitted that the appellant was, at
all relevant times, and in particular when the proceeds of the life insurance
policy were accepted and became payable, an unrehabilitated insolvent. As
such, all property acquired by him during his sequestration belongs to the
estate, and the estate remains vested in the trustees until it re-vests in the
appellant upon his rehabilitation.

[9] It is common cause that the appellant is an unrehabilitated insolvent. It
bears mentioning that the appellant has in fact brought an application for his
rehabilitation in the court a quo under a separate case number. The trustees
have applied to intervene in this application in order to oppose the same. This
application is still pending.

[10] The question which this court must determine can be formulated thus:
can an unrehabilitated insolvent receive property that is to vest in him
personally, and that is beyond the reach of his trustees, by virtue of the ex lege
dissolution of his marriage in community of property, and therefore the
dissolution of the joint estate? Put differently, can the death of Mr Wentzel's
wife alter the ordinary consequences of insolvency and result in a modified
application of the Insolvency Act 24 of 1936 (the Insolvency Act), to allow for
an insolvent to receive and own property that is beyond the reach of the trustees
of his insolvent estate?

[11] Section 20(1)(a) of the Insolvency Act  provides expressly that the effect
of the sequestration of the estate of an insolvent shall be 'to divest the insolvent
of his estate and to vest it in the Master until a trustee has been appointed, and,
upon the appointment of a trustee, to vest the estate in him…’. Section 20(2),
in turn, provides that for the purposes of subsection (1) the estate of an
insolvent shall include:
‘(a)
all property of the insolvent at the date of the sequestration, including
property or the proceeds thereof which are in the hands of a sheriff or a
messenger under writ of attachment;

(b)
all property which the insolvent may acquire or which may accrue to him
during the sequestration, except as otherwise provided in section
twenty-three.'
In addition, parties married in community of property both become insolvent
debtors when their joint estate is sequestrated.1

[12] It is necessary to consider the definitions section of the Insolvency Act.
The phrase 'insolvent estate' is there defined as 'an estate under sequestration'.
The word 'insolvent', when used as a noun, is defined as ‘a debtor whose estate
is under sequestration and includes such a debtor before the sequestration of
his estate, according to the context’.

[13] In Du Plessis v Pienaar NO and Others,2 the appellant sought an order
declaring that certain property, that was owned separately by her - received as
an inheritance from her father with the stipulation that it not form part of the joint
estate of the appellant and her husband - was excluded from the joint estate,
did not form part of the insolvent estate and that the trustees were accordingly
prohibited from selling such property for the benefit of creditors. The appellant
sought to escape liability by contending that the debts that had given rise to the
claims against the insolvent estate were debts that were incurred by the joint
estate; and that they were on this basis only recoverable from the property of
the joint estate – not from the property that was separately owned and thus fell
outside the joint estate. Nugent JA rightly rejected this argument, holding that:
’… Debts are not incurred by a person's estate – the estate is merely the source from
which the debt is recovered. The debt is incurred, however, by the person who is the
debtor. Accordingly, the “joint estate” did not incur the debts that are now sought to be
recovered and it is not the insolvent debtor. The insolvent debtors are both the
appellant and her husband, for when spouses are married in community of property
debts incurred by one spouse generally accrue to them both.'3

1 Section 21(1) of the Act provides that the effect of sequestration of the separate estate of one
of two spouses who are not living apart shall be to vest in the Master, until a trustee has been
appointed, all the property of the spouse whose estate has not been sequestrated.
2 Du Plessis v Pienaar NO and Others 2003 (1) SA 671 (SCA).
3 Ibid para 4.

[14] Thus, the appellant's argument that, because the death of his wife on 16
April 2017 had the effect of finally dissolving, ex lege, the sequestrated joint
estate, he was no longer disqualified from receiving and holding property in his
own name, in particular the proceeds of the policy, fails at the first hurdle. The
debts he incurred personally, which led to the sequestration order on 3 April
2012, remain extant. Sight must also not be lost of the fact that in terms of the
first and final liquidation account that was confirmed by the Master on 11 July
2014, there was (and still is) a deficit in the insolvent joint estate of R3 480 986
due to the creditors. In fact, this uncontroverted position of the insolvent joint
estate unequivocally puts paid to the appellant's assertion that the Master's
confirmation of the aforesaid liquidation and distribution account finalised the
administration of the insolvent joint estate, with the effect that there were no
longer any debts still payable to the creditors.

[15] The effects of s 20(2) of the Insolvency Act are clear. Upon the
sequestration of a debtor’s estate, all property belonging to the insolvent first
vests in the Master and thereafter in the appointed trustee(s). Importantly, all
property that the insolvent acquires, or which may accrue to him, during the
currency of his insolvency also vests in the trustees.

[16] This general position is confirmed by the express wording of s 23(1) of
the Insolvency Act, which provides that ‘[s]ubject to the provisions of this section
and of section twenty-four, all property acquired by an insolvent shall belong to
his estate’. The only exceptions are those cases specifically mentioned in
s 23(7)-(9).4

4 Section 23 provides, in relevant part, that:
(7) The insolvent may for his own benefit recover any pension to which he may be entitled for services by
him.
(8) The insolvent may for his own benefit recover any compensation for any loss or damage which he may
have suffered, whether before or after the sequestration of his estate, by reason or any defamation or
personal injury: Provided that he shall not, without the leave of the court, institute an action against the
trustee of his estate on the ground of malicious prosecution or defamation.
(9) Subject to the provisions of subsection (5) the insolvent may recover for his benefit, the remuneration
or reward for work done or for professional services rendered by or on his behalf after the sequestration
of his estate.’
Subsection (5) entitles the trustee to ‘any moneys received or to be received by the insolvent in the course
of his profession, occupation or other employment which in the opinion of the Master are not or will not be
necessary for the support of the insolvent and those dependent upon him’.

[17] Clearly, s 23 does not contain any provision excluding the proceeds of a
life insurance policy, received by an insolvent, from the reach of trustees. If the
legislature had wanted to exclude such proceeds from the general operation of
the Insolvency Act, it would have clearly provided so. It follows, then, that the
proceeds payable to the appellant in terms of the contract of insurance,
acquired during the appellant's insolvency, must fall into his insolvent estate for
the benefit of the creditors.

[18] In Du Plessis this court observed that one has to accept that debts are
incurred by persons rather than by their estates, and that when a marriage is in
community of property both spouses are generally liable for payment of the
debts that are incurred by one of them and that it follows that a creditor may
look to the estates of both the debtors for the recovery of the debt.5 Nugent JA
went on to state the following:
‘[T]he remedies provided for by the Insolvency Act 24 of 1936 are available against
both spouses for recovery of the debt that is due by both of them’.

[19] From the foregoing it is clear that, pursuant to the sequestration of their
joint estate on 3 April 2012, Mr Wentzel and the deceased both became
‘insolvent debtors’ for purposes of the Insolvency Act. The effect is that all
property acquired by the appellant as ‘the insolvent’ before the sequestration,
as well as property that was acquired or which may have accrued to him during
the sequestration, to wit, the proceeds of the contract of insurance payable to
the appellant after the death of the deceased, vests in the trustees to be used
to meet the claims of creditors.

[20] Mr Wentzel did not cease to be an insolvent. He maintains that status
until his rehabilitation.

[21] The appellant's reliance on the decision in Pieterse v Shrosbee and
Others; Shrosbree NO v Love and Others6 is misplaced. The issue for

5 Para 5.
6 Pieterse v Shrosbee and Others; Shrosbree NO v Love and Others 2005 (1) 309 SCA.

determination by this Court in Pieterse was whether, pursuant to the provisions
of s 63 of the Long Term Insurance Act 52 of 1998, the trustee of an insolvent
deceased’s estate was entitled, in preference to the nominated beneficiaries,
to the proceeds of certain insurance policies for distribution to the deceased’s
creditors.7

[22] This was a consolidated appeal of two cases. The facts in Love are
entirely distinguishable from those in this case. In Pieterse the appellant, an
unrehabilitated insolvent, had been married out of community of property to the
deceased policy holder who had nominated him as beneficiary in a life
insurance policy. When she died her estate was hopelessly insolvent and was
subsequently sequestrated. Pieterse had accepted the benefits under the
policy. However, the trustees in the insolvent estate claimed that they were
entitled to the proceeds of the policy. This Court held that the proceeds accrue
to the trustee of Pieterse's insolvent estate. In doing so it merely gave effect to
s 20(2) and 23 of the Insolvency Act. It is not authority for the argument
advanced on behalf of Mr Wentzel. On the contrary it is against him.

[23] The fact is that upon Mr Wentzel’s acceptance of the benefit, the
proceeds became an asset in his hands as an insolvent debtor. And, as is
demonstrated above, the proceeds cannot belong to a separate estate of the
appellant where such separate estate is not legally recognised.

[24] Shortly before the hearing of this appeal, a new argument, additional and
in the alternative, was raised on behalf of the Mr Wentzel. An attempt was made
to base his exclusive entitlement to the proceeds of the contract of insurance
on the provisions of s 23(8) of the Insolvency Act.

[25] Section 23(8) provides that:
‘(8) The insolvent may for his own benefit recover any compensation for any loss or
damage which he may have suffered, whether before or after the sequestration of his
estate, by reason of any defamation or personal injury: Provided that he shall not,

7 Ibid para 2.

without the leave of the court, institute an action against the trustee of his estate on
the ground of malicious prosecution or defamation.’

[26] The argument, as I understand it, is as follows: The contract of insurance
in issue is a pure risk policy for the provision of an indemnity in the event of a
future risk, to wit, the death of the Mr Wentzel’s wife. The policy in casu became
payable as a result of the death of the Mr Wentzel's wife and provides for
indemnity for her death, inclusive of the loss of consortium suffered by the
appellant. In the circumstances, so it was submitted, the proceeds of the pure
risk insurance policy in casu fall squarely within the ambit of s 23(8) of the
Insolvency Act and are payable to Mr Wentzel.

[27] In my view, considering the fact that reliance on s 23(8) was not even
foreshadowed in the founding affidavit, the appellant is precluded from relying
on the provision at this stage.

[28] In any event, even if the new argument were to be allowed, it is trite that
a claim for the loss of consortium is a claim for damages. In DE v RH,8 the
Constitutional Court was called upon to consider whether in this day and age,
in relation to the traditional field of claims of contumelia associated with loss of
consortium, namely, adultery, liability should attach. It decided that question in
the negative. If one were to assume that a claim for loss of consortium was
notionally viable in other circumstances the obvious problem, before looking to
indemnification, would be to identify a wrongdoer in relation to such a claim.
Therein lies an insurmountable problem for Mr Wentzel.

[29] In the circumstances, the appellant’s reliance on s 23(8) is unfounded.
In the light of all of the foregoing, this appeal must fail. The respondents’ cross-
appeal accordingly stands to succeed.

[30] I make the following order:
The appellant's appeal is dismissed.

8 DE v RH [2015] ZACC 18; 2015 (5) SA 83 (CC).

The first to third cross-appellants' appeal is upheld.
The order of the Court a quo is set aside and replaced with the following
order:
‘(a)
It is declared that the second, third and fourth respondents, in their
respective capacities as the trustees of the insolvent estate of Malcolm
Wentzel and Lizane Wentzel, Master’s reference number T1179/12, are
entitled to the proceeds of the Discovery Life Policy number 5130640002
payable by the first respondent, Discovery Life Limited, pursuant to the
provisions of such life insurance policy.
(b)
The first respondent is ordered to pay the proceeds of the policy referred
to in (a) to the second, third and fourth respondents in their official
capacity as trustees.
(c)
The applicant, Malcolm Wentzel, is ordered to pay the costs of the
application.’
The appellant is ordered to pay the costs of the appeal and the cross-
appeal, such costs to include the costs occasioned by the employment of two
counsel, where so employed.

_________________
B H Mbha
Judge of Appeal

APPEARANCES:

For appellant:
G F Heyns SC

L Badenhorst

Instructed by:

Day Attorneys Inc, Pretoria

Phatshoane Henney Attorneys, Bloemfontein
In re
For cross-appellants:
Tintingers Inc, Pretoria

Honey Attorneys, Bloemfontein

For respondent:
J Vorster

U Lottering
For 1st respondent:
Instructed by:

Keith Sutcliffe & Associates, Randburg
For 2nd, 3rd & 4th respondents: Tintingers Inc, Pretoria

Honey Attorneys, Bloemfontein
For 5th respondent:
Master of the High Court, Pretoria

In re
For respondent:
Day Attorneys Inc, Pretoria

Phatshoane Henney, Bloemfontein
For 1st respondent:
Keith Sutcliffe & Associates, Randburg
For 5th respondent:
Master of the High Court, Pretoria