Eugene Prinsloo v Donovan Theodore Majiedt N.O and Another (257/2024) [2025] ZASCA 74 (30 May 2025)

THE
SUPREME COURT OF APPEAL OF SOUTH AFRICA

JUDGMENT

 Reportable

Case
no: 257/2024

In
the matter between:

EUGENE
PRINSLOO                                                                                      
APPELLANT

and

DONOVAN
THEODORE MAJIEDT N O                                           
FIRST RESPONDENT

REINETTE
STEYNBURG N O                                                     

SECOND RESPONDENT

Neutral
citation:   Eugene Prinsloo v Donovan Theodore
Majiedt N O and Another (257/2024) [2025] ZASCA 74 (30 May 2025)

Coram:      
MATOJANE, WEINER and KOEN JJA and HENNEY and MODIBA AJJA

Heard:       
15 May 2025

Delivered:  
30 May 2025

Summary: 
Practice – non-joinder – Long-term
Insurance Act 52 of 1998 (the Act) – whether
the benefits of a long-term life insurance policy (the policy)
received by surviving spouse as nominated beneficiary of
policy
holder protected in terms of s 63 of the Act on sequestration of
their former joint estate – that issue separated for
determination in action by trustees of former joint estate against
son of deceased policy holder
and surviving spouse, to whom such
benefits were channelled – whether surviving spouse a necessary
party who should have
been joined.

ORDER

On
appeal from: Free State Division of the High Court (Van Zyl J,
sitting as a court of first instance):

1       
The appeal is upheld;

2       
The order of the high court dated 29 September 2022 is set aside and
substituted with
the following order:

‘(a)    
The action is adjourned sine die;

(b)    
The defendant is directed to launch proceedings for the joinder of
Mrs Nelly Arlene Prinsloo, as a party
to the action, within 30 days
of the date of this order, unless she, before the expiry of that
period, by written notice filed
with the Registrar of this court, has
waived the right to be joined and has undertaken to abide by the
decision of this court;

(c)     
The parties are directed to pay their own costs’; 

3       
The action is remitted to the high court;

4       
The parties are directed to pay their own costs of the appeal.

JUDGMENT

Koen
JA (Matojane and Weiner JJA and Henney and Modiba AJJA concurring):

Introduction

[1]          
The issue which the parties seek to have
determined in this appeal is whether the benefits of a long-term life
insurance policy
(the policy) on the life of the late Louis Hendrik
Prinsloo (the deceased), received by his surviving spouse, Mrs Nelly
Arlene
Prinsloo (Mrs Prinsloo) to whom he was married in community of
property as the beneficiary nominated by him, are, following the

sequestration of their former joint estate, protected in terms of s
63 of the Long-term Insurance Act 52 of 1998 (the Act). All

references to sections hereafter are to sections of the Act unless
stated otherwise.  

[2]          
The issue was, by agreement, separated for determination in the
action instituted in the Free State Division of
the High Court (the high court). The action was brought by the
respondents, Donovan Theodore Majiedt and Reinette
Steynburg, in their capacity as provisional trustees of the insolvent
joint estate
(the trustees) as plaintiffs. It was brought against the
appellant, Mr Eugene Prinsloo (Mr Prinsloo), as defendant. He is the
son
of the deceased and Mrs Prinsloo. The issue was formulated as
follows:

‘The
issue to be determined is whether the benefit received by [Mrs
Prinsloo] is protected or not in terms of the provisions of Section

63 of the [Act].’

[3]          
On
29 September 2022, the high court granted an order that the benefit
was not protected. It reasoned that s 63 did not find application
to
the facts.[1] The appeal is
against the whole of the order with the leave of the high court.

[4]          
During the course of preparing for the appeal, the question
arose whether Mrs Prinsloo should have been joined as a party to the

litigation. The parties were accordingly advised
to be ready at the hearing of the appeal to advance submissions as to
whether Mrs Prinsloo should
have been cited as a party to the
proceedings before the high court and the appeal before this Court.
Both parties filed supplementary
heads of argument dealing with this
question.

[5]          
Whether Mrs Prinsloo should have been
joined must be considered: in the light of the common cause facts and
background against which
the issue separated was required to be
decided; the applicable legal framework; and the contentions of the
parties. This judgment
proceeds on that basis.

The common cause facts

[6]          
The deceased and Mrs Prinsloo were married to each
other in community of property. On or about 27 September 2011, the
deceased concluded
the policy with Old Mutual. The deceased, as the
life insured, was registered as the initial beneficiary. On 30 August
2013, he
appointed Mrs Prinsloo as beneficiary of the death benefits
provided in terms of the policy.

[7]          
The deceased passed away on 14 February 2018. On
11 April 2018, Old Mutual paid the death benefit amounting to R10
million to Mrs
Prinsloo. On the same day she transferred the full sum
to the bank account of Iceburg Trading 713 CC (Iceburg). Mr Prinsloo
is
the sole member of Iceburg. Mr Prinsloo then caused Iceburg to
transfer two tranches of R5 million from Iceburg to his personal
ABSA
bank account on 11 April 2018 and 12 April 2018 respectively.

[8]          
On 17 April 2018, the Master appointed an executor
to the joint estate that previously subsisted between the deceased
and Mrs Prinsloo.
On 10 September 2020, the joint estate of the
deceased and Mrs Prinsloo was placed under provisional sequestration
in the hands
of the Master. A final order of sequestration was
granted on 22 October 2020. On 24 November 2020, the Master appointed
the trustees
as provisional trustees of the insolvent joint estate.

[9]          
The
trustees subsequently issued summons against Mr Prinsloo for payment
of the sum of R10 million, claiming it: as a disposition
by Mrs
Prinsloo, alternatively the joint estate, to Mr Prinsloo, to be set
aside as impeachable pursuant to various provisions
of the Insolvency
Act 24 of 1936[2] (the
Insolvency Act), or in terms of the common law;[3]
or as part of a larger loan of R40 million; or, on the basis of
enrichment. Mr Prinsloo pleaded, amongst other defences, that the

benefits of the policy received are protected in terms of s 63(1)(b)
of
the Act and are therefore not available for the purpose of payment of
the debts of the deceased and/or the insolvent joint estate,
being
the purpose for which the trustees seek to recover the R10 million
from him. In terms of the parties’ agreement relating
to the
separated issue, if the court found in favour of Mr Prinsloo on the
application of s 63, then the trustees’ action
should be
dismissed with costs.   

Statutory framework

[10]      
Part VII of the Act is headed ‘Business
practice, policies and policyholder protection’. Sections 62 to
65 follow under
the heading ‘Policyholder protection’.
The following provisions of the Act are material. The term
‘policyholder’
is defined in s 1 to mean, in respect of a
registered insurer, ‘the person entitled to be provided with
the policy benefits
under a long-term policy’. The term ‘life
insured’ is defined to mean ‘the person or unborn to
whose life,
or to the functional ability or health of whose mind or
body, a long-term policy relates’. Section 63 of the Act
provides
as follows:

‘Protection
of policy benefits under certain long-term policies

(1)           
Subject to subsections (2), (3) and (4),
the policy benefits provided or to be provided to a person under one
or more-

(a)            
in respect of a registered insurer,
assistance, life, disability or health policies; or

(b)            
in the case of a licensed insurer,
policies written under the risk, fund risk, credit life, funeral,
life annuities, individual
investment or income drawdown class of
life insurance business as set out in Table 1 of Schedule 2 of the
Insurance Act, in which
that person or the spouse of that person is
the life insured and which has or have been in force for at least
three years (or the
assets acquired exclusively with those policy
benefits) shall, other than for a debt secured by the policy –

(i)    
during his or her lifetime, not be liable
to be attached or subjected to execution under a judgement of a court
or form part of
his or her insolvent estate; or

(ii)  
upon his or her death, if he or she is
survived by a spouse, child, stepchild or parent, not be available
for the purpose of the
payment of his or her debts.

(2)           
The protection contemplated in subsection
(1) shall apply to policy benefits and assets acquired solely with
the policy benefits,
for a period of five years from the date on
which the policy benefits were provided.

(3)           
Policy benefits are only protected as
provided in-

(a)          
subsection
(1)(b),[4] if they devolve upon
the spouse, child, stepchild or parent of the person referred to in
subsection (1) in the event of that person’s
death; and

(b)          
subsection (1)(a) and (b), if the
person claiming such protection is able to prove on a balance of
probabilities that the protection
afforded to him or her under this
section.

(4)           
Policy benefits are protected as provided
for in subsection (1)(a) and (b), unless it can be shown that the
policy in question was
taken out with the intention to defraud
creditors.’

In the high court

[11]      
In finding that the benefits of the policy
received by Mrs Prinsloo did not enjoy protection because s 63 did
not apply, the high
court: interpreted the section and found that the
references to ‘person’ and ‘his/her’ and
‘he/she’
in s 63 were to the policy holder; held that in
circumstances where s 63 is applicable, the policy benefits are, on
the death of
the policyholder, protected only against the debts of
the policy holder; and disagreed with the contention that s 63
applied in
the circumstances of the present matter where the third
party, being the spouse of the policy holder in a marriage in
community
of property, was nominated as beneficiary, accepted the
appointment and received payment of the policy benefits directly and
not
via the estate of the deceased. Regarding costs, the high court
noted that the parties had agreed that should it find in favour
of
the trustees, that the costs should be awarded in their favour. It
however declined to do so as, in its view, its findings did
not fall
within the ambit of the agreement which separated the issue for
determination.

Mr Prinsloo’s
contentions on appeal

[12]      
Mr
Prinsloo does not pursue the contention that s 63 should be
interpreted to apply not only to the policy holder/insured life,
but
also to a beneficiary like Mrs Prinsloo. He has limited his
submissions to the impact which a marriage in community of property

has on the ambit and application of s 63, contending that the policy
proceeds are protected against creditors of the insolvent
joint
estate, that is the debts owed by the deceased and Mrs Prinsloo. The
parties had made submissions on this aspect before the
high court,
but the high court did not pronounce thereon, the learned judge
having concluded that she was not called upon to do
so.[5]

Joinder

[13]      
A person is
required to be joined as a party to proceedings if it is concluded
that her joinder is necessary. The
joinder of a party is necessary if she has a material direct or
substantial interest in the relief claimed,[6]
unless she has waived that right. A direct and substantial interest
is an interest in the right which is the subject matter of
the
litigation, not merely a financial interest, which is an indirect
interest in such litigation.[7]
Where a joint financial or proprietary interest is implicated joinder
should follow.[8] Joinder
is not
dependent on the nature of the subject matter of the suit but on the
manner in which, and the extent to which, the court’s order
may
affect the interests of third parties.[9]
If
it is concluded that a party should be joined, then it is required of
a court to make an order which addresses that conclusion.[10]

[14]      
The
test to be applied is well established. This Court, in Transvaal
Agricultural Union v Minister of Agricultural & Land Affairs,[11]
approved
of the following crisp formulation of the test in Herbstein
& Van Winsen’s The Civil Practice of the Supreme Court of
South Africa:[12]

‘The
first was to consider whether the third party would have locus
standi
to claim relief considering the same subject-matter. The second was
to examine whether a situation could arise in which, because
the
third party had not been joined, any order the Court might make would
not be res
judicata against
him, entitled him to approach the Courts again concerning the same
subject-matter and possibly obtain an order irreconcilable
with the
order made in the first instance.’[13]

Discussion

[15]      
Ultimately, every case must depend on its own
facts.  Mr Prinsloo concedes that Mrs Prinsloo should
have been joined. The trustees deny that Mrs Prinsloo should be
joined. They
contend that she does not have a direct and substantial
interest in the subject matter of the litigation, that is the policy
proceeds,
or the interpretation of s 63. This, they argue, is because
she divested herself completely of the policy proceeds and any
interpretation
she could notionally address on the issue will not and
cannot have the effect that the policy proceeds will vest or revest
in her
post termination of the joint estate. Mr Prinsloo had become
the owner of the proceeds. That is why they were compelled to proceed

against him invoking the impeachment provisions of the Insolvency
Act. Put differently, they argue, if Mr Prinsloo’s
interpretation is correct, Mr Prinsloo keeps the proceeds, they do
not go to Mrs
Prinsloo.  

[16]      
The trustees’ argument does not recognise that if Mr Prinsloo’s
contentions
do not find favour, that Mrs Prinsloo indeed has a direct
and substantial interest and should have been joined to the
proceedings.
This would allow her to advance her contentions on the
interpretation and application of s 63. The following evidence her
interest and the need for her joinder.

[17]      
First, Mrs Prinsloo would plainly have locus standi to claim
the relief sought in the separated issue in her own right. The
issue separated is ‘whether the benefit
received by [Mrs Prinsloo] is protected
or not in terms of the provisions of Section 63 of the [Act]’
(Emphasis added). It is difficult to envisage a situation in which a
person will have a more direct and substantial
interest than where a
declaration is sought from a court that she, being named, did not
enjoy protection in respect of certain
benefits she had received.

[18]      
Second, the
issue as formulated, is whether the benefits received by Mrs Prinsloo
are protected. Section 63(3)(b)
provides that a person claiming such protection, is the one required
to prove on
a balance of probabilities that protection is afforded to her under
the section. Mrs Prinsloo would be entitled to maintain that
the
proceeds, and hence her channelling thereof to Iceburg, were
protected. This might entail an interpretation of s 63 which Mr
Prinsloo has abandoned[14] but
which she wishes to advance.

[19]      
Third, the trustees’ denial that Mrs Prinsloo has a direct and
substantial interest
in the subject matter of the litigation, the
policy proceeds, or the interpretation of the Act, because she
divested herself completely
of the policy proceeds is a circuitous
argument. The question whether she was entitled to divest herself of
the proceeds of the
policy, that is, that the benefits of the policy
were protected in her hands to deal with as she saw fit, is the very
issue raised
for determination by the separated issue. It is a
question of law on which she should be heard and therefore requires
that she
be joined.

[20]      
Fourth, the separated issue is material not only
to the action by the trustees against Mr Prinsloo but also any claim
Mrs Prinsloo might
wish to pursue in respect of the policy proceeds
in the future. If the issue separated is decided against Mr
Prinsloo, and the proceeds are recovered from Mr Prinsloo, they will
be reflected as
an asset in the accounts of the insolvent joint
estate. In any litigation by her to claim the release thereof from
the insolvent
estate as protected in her hands, the issue whether she
enjoys protection in respect of the proceeds would already have been
decided
in the current litigation. Insofar as such a finding might
not be res judicata against her, because she was not cited as
a party to the present litigation, the possibility arises that
another court in deciding
whether she enjoyed protection in respect
of the benefits of the policy, might reach a different conclusion
irreconcilable with
whatever order the high court might grant if the
trustees’ action was to succeed. There will then be conflicting
judgments,
in respect of the same legal issue. The result will be a
multiplicity of actions, an unnecessary waste of costs and the
duplication
of legal proceedings. This satisfies the test in
paragraph 14 above. Considerations of convenience
and the interests of justice also dictate that Mrs Prinsloo should be
joined.    

Conclusion

[21]      
The proceedings on the separated issue before the high court suffered
from the fatal non-joinder
of Mrs Prinsloo. The parties should have
realised, in committing to the agreement for the determination of the
issue separated,
that Mrs Prinsloo should be joined as a necessary
party. The appeal therefore must be upheld. As to who had the
responsibility
to join Mrs Prinsloo, this could have been resolved
between the parties. Absent agreement on this aspect, either party
would, in
the light of their agreement to separate the issue on the
terms that it was separated, have been vested with the required locus
standi to apply for her joinder. As Mrs Prinsloo is the mother of
Mr Prinsloo, it is reasonable and expedient, to avoid any further
delay,
that Mr Prinsloo be directed to launch an application for her
joinder within 30 days of the date of the order of this Court, unless

she waives the right to be joined and undertakes to abide by the
decision of the court. Such an order is provided for below.

Costs

[22]      
The blame for the matter proceeding before
the high court and initially this Court without the issue of
non-joinder being properly
considered, and resulting in this appeal
being upheld, should be shared between the parties. The agreement
separating the issue
for determination should have addressed the
question of the joinder of all necessary parties as well. In the
exercise of my discretion
on costs, I consider it appropriate that
each party shall be liable for their own costs, both in the high
court and this Court.

Order

[23]      
The following order is granted:

1       
The appeal is upheld;

2       
The order of the high court dated 29 September 2022 is set aside and
substituted with
the following order:

‘(a)    
The action is adjourned sine die;

(b)    
The defendant is directed to launch proceedings for the joinder of
Mrs Nelly Arlene Prinsloo, as a party
to the action, within 30 days
of the date of this order, unless she, before the expiry of that
period, by written notice filed
with the Registrar of this court, has
waived the right to be joined and has undertaken to abide by the
decision of this court;

(c)     
The parties are directed to pay their own costs’; 

3       
The action is remitted to the high court;

4       
The parties are directed to pay their own costs of the appeal.

P
A KOEN

JUDGE
OF APPEAL 

Appearances