IN THE KWAZULU-NATAL HIGH COURT, DURBAN

REPUBLIC OF SOUTH AFRICA        
  CASE NO.: 3510/2010
Heard:	27 July 2010						        Reportable
Delivered:      16 August 2010
In the matter between
ASHA DEVI MAHARAJ			     			      APPLICANT 
 and 
SANLAM LIFE INSURANCE LIMITED	                            1ST RESPONDENT 
KURT ROBERT KNOOP N.O.                                            2ND RESPONDENT
EUGENE NEL N.O.						      3RD RESPONDENT
M DAWOOD N.O.                                                                4TH RESPONDENT
______________________________________________________________ 
 JUDGMENT
______________________________________________________________ 
DHAYA PILLAY J

Introduction

1.	The applicant claims payment of the sum of R365 700.00 being the proceeds of a policy underwritten by the first respondent.  The first respondent pleads set-off of the debt in the amount of R180 623.94 on the basis that the applicant is indebted to it for her share of a debt incurred by Basant Maharaj (Basant) during their marriage to each other in community of property.  

The facts

2.	The following facts are either common cause or not disputed and are enumerated in sequence of time:

2.1	On 17 April 1989 the applicant and Bassant were married to each other in community of property.  

2.2	During the marriage, Basant and the first respondent entered 	into a broker’s contract on 26 November 2007.

2.3	The first respondent issued the policy plan in favour of Basant 	on 8 August 2008.  

2.4	The effective date of the policy was 1 September 2008. 

2.5	Between December 2008 and May 2009 various policies which 		Basant had commissioned lapsed.  

2.6	On 10 September 2009, the applicant and Basant concluded a 	divorce settlement agreement.

2.7	The first respondent sold and ceded its claim against Basant to 	Debtcor on 20 July 2009.  

2.8	On 16 September 2009 Debtcor issued summons against 	Basant for payment of the sum of R361 000,00 being the 	amount of the commission recoverable once the policies lapsed.

2.9	The applicant and Basant They were divorced on 7 October 2009.  

2.10	On 17 November 2009 they varied their settlement so that Basant ceded to the applicant two policies, the proceeds of 	one such policy being the object of this claim.  

2.11	The first respondent noted the cession of the policy in its record 	on 30 November 2009. 

2.12	Basant’s estate was sequestrated provisionally on 28 January 	2010.
 
2.13	On 10 February 2010 the first respondent certified that the debt 	of R361 247.88 was due and payable by Basant to it in terms of 	the broker’s contract.  

2.14	The applicant did not consent to Basant entering into the 	broker’s contract or to incurring the debt.

2.15	On 12 February 2010, the first respondent admitted Basant’s 	claim for sickness during 15 September 2009 to 21 December 	2009 and the arbitrator informed Basant of this 	admission.  

2.16	Basant’s estate was sequestrated finally on 16 February 2010.  

2.17	On the same day Debtcor re-ceded the claim against Basant to 	the first respondent.  

2.18	The applicant launched this application on 18 March 2010 for 	payment to her of the sum of R365 700.00 by the first 	respondent together with interest from 3 March 2010, and costs.

2.19	The first respondent abandoned its claim for Basant’s half share 	of the debt.

Issues arise for determination

3.	Three issues arise for determination: 

3.1	Was the applicant’s consent to the broking contract a	prerequisite in terms of section 15(1) of the Matrimonial 	Properties Act 88 of 1984 (MPA) for holding her liable for a debt 	Basant incurred?

3.2	Is the applicant jointly liable to the first respondent in terms of 	section 17(5) of the MPA?

3.3	Can the first respondent set-off its claim for R180 623.94 being 	half the debt Basant incurred during the marriage against the 	applicant’s entitlement as cessionary to the proceeds of the 	sickness policy?

Section 15 (2) Consent

4.	The debt arose when the first respondent reversed the commission 	Basant earned on the lapsed policies. The commission was 	remuneration. The broker’s contract also defines it as such. Nothing in 	section 15 (2) of the MPA required the applicant to consent to Basant 	entering into a contract to earn remuneration; consequently, her 	consent was not required when the commission remuneration was 	reversed.

Section 17(5) Joint Liability

5.	Section 17(5) of the MPA provides:
		“Where a debt is recoverable from a joint estate, the spouse who 			incurred the debt or both spouses jointly may be sued therefor, 			and where a debt has been incurred for necessaries for the joint 			household, the spouses may be sued jointly or severally 				therefor.”

6.	This section is intended to protect creditors against spouses who try to avoid liability on the basis of arrangements between them of which creditors are unaware. It allows creditors to sue spouses jointly and severally and in their own name without joining the other spouse. Consequently, insolvency of one spouse after divorce does not extinguish the liability of the solvent spouse for debts of the joint estate. The preferred view, 	however, is that the spouse who did not incur the debt should not be held liable for more than a half share.

7.	Mr K. Maharaj who appeared for the applicant submitted that the debt was not incurred for “procuring necessaries” for the joint household.  In the opinion of the Court, the debt was incurred in the course of Basant earning an income for the joint estate in the ordinary course of his business.  Therefore, such income was necessary for the joint household. Accordingly, the applicant is 	jointly liable. 

Set-Off

8.	To succeed in its defence of set-off, the first respondent must prove the 	following:
	(a)	the indebtedness of the applicant to the first respondent;
	(b)	that the first respondent’s debt was also due and legally 			payable; 
	(c)	that both debts are liquidated debts, in the sense that:
		(i)	they are based on liquid documents,
		(ii)	they are admitted,
(iii)	their money value has been ascertained or is ascertainable,
(d)	that the reciprocal debt was owed by the applicant to the first respondent.

The indebtedness of the applicant to the first respondent

9.	Mr Maharaj submitted that the applicant was not indebted to the first 	respondent because the latter has to “prove its claim for necessaries 	for the joint household”.  

10.	The Court has found above that the applicant’s consent was not required, and that she is jointly liable for her share of the debt due to the first respondent. Furthermore, Mr Chadwick for the first respondent, pointed the Court to the law of cession in terms of which a debtor may raise against 	the cessionary a defence such as set-off which it could have raised against the cedent.  In other words, the first respondent could raise the defence of set-off against the applicant as cessionary for a debt incurred by Basant as cedent. Therefore, the applicant remains indebted to the first requirement.

The first respondent’s debt was also due and legally payable 

11.	The policy became payable on 12 February 2010 and remains due and payable since then.
	
Both debts are liquidated debts

12.	The proceeds of the policy in the amount of R365 700.00 is admitted 	and the commission due in the amount of R361 24,88 has been 	ascertained. Both debts are therefore liquid.

Was the reciprocal debt owed by the applicant to the first respondent?

13.	Mr Maharaj submitted that the debts must be of the same kind. He 	expatiated that the nature of Basant’s and consequently the applicant’s 	claim to the proceeds of the policy differed from the first respondent’s 	claim for a refund of the commission; the former was a consequence of 	the payment of premiums whilst the latter arose from the sale of 	policies; the former relationship was as between insurer and insured, 	whilst the latter was between principal and agent.

14.	This submission is without merit. The Court accepts that both debts 	must be payable to the same persons in the same capacities, 	however, Mr Maharaj’s comparison shows only thatthe causa of each 	debt differs. They are nevertheless liquidated debts due by and to the 	applicant in her personal capacity, whether as Basant’s spouse or 	cessionary of his policy.

15.	Mr Maharaj submitted that when the policy became payable on 12 February 2010, no amount was owed by Basant to the first respondent; furthermore, no amount was due to the first respondent who had by 20 July 2009 ceded its debt to Debtcor.  Relying on Siltek v Business Connexion (081/2008) [2008] ZASCA 136 Mr Maharaj contended that as concursus creditorum had already commenced on 28 January 2010 when Basant was provisionally sequestrated, the debt was neither due nor was there mutuality of indebtedness.  

16.	As stated above, the insolvency of a spouse after divorce does not extinguish the debt of the solvent spouse for debts of the joint estate. Siltek does not apply to debts due by the applicant.

Costs

17.	Until the hearing, the first respondent persisted in claiming set-off of Basant’s debt. Furthermore, Basant ceded his right, title and interest in the policy to the applicant to off-set his liability for maintenance of his minor children. Although the applicant holds the policy as cessionary, she also holds it as mother, guardian and custodial parent of her minor children. As such, this application was also to protect their interests. The applicant should be awarded costs. 

Order
18.	The first respondent is ordered to pay the applicant R185 016.06 being the difference between R365 700.00 and R180 623.94. 
19.	Each party pays its own costs.

_________________________ 
JUDGE DHAYA PILLAY

COUNSEL
Counsel for the Applicant:		Mr. K. Maharaj
Instructing Attorneys:			K. Maharaj Incoporated

			Suite 301, 
			40 Masonic Grove
			Durban
			Tel No.: 031-305-4925
			(Ref: RM/sm/KRI3/0001)
Counsel for the First Respondent:	Adv AIJ Chadwick
Instructing Attorneys:	Shepstone & Wylie
	
	Scotwood 
	35 Samora Machel Street
	Durban 
	(Ref: D Nortje/tn/sanl1.51)

Date of hearing:				 27 July 2010
Date of Judgment:				16 August 2010