Cession CR301

Cedent married in community of property failing to obtain spouse’s consent – cession in ordinary course of business –effect of section 15 of the Matrimonial Property Act.

Background

In terms of a written employment agreement the complainant’s employer undertook to pay him an additional amount of remuneration, and in return he agreed that the extra amount be utilized for payment of the premiums on a policy held by him on his own life. The policy was one with a ten year term, and it was a term of the agreement that the complainant would remain in the employ of the employer for ten years and that for this purpose he would cede the policy to the employer as security for the fulfilment by him of his obligation to remain with the employer for ten years.

A further term of the agreement was that the employer was to cancel the security cession within one calendar month of the expiration of the period of ten years provided that the complainant remained in the employer’s full time service throughout that period.

The policy was duly ceded to the employer, and ten years expired. Due to internal changes and restructuring the complainant was thereafter unable to obtain confirmation of the cancellation of the cession from the employer, and the insurer was not prepared to release the maturity benefit to him without confirmation by the employer that it no longer had an interest in the policy.

The complainant contended that the insurer was not entitled to the confirmation it demanded. His reason was that the cession was invalid because he had been married in community of property and that at the time of the execution of the cession his spouse had not provided her written consent as required in terms of section 15 (2) (c) of the Matrimonial Property Act.

Discussion
Section 15 (6) of the Matrimonial Property Act provides, however, that “the provisions of paragraphs (b), (c), (f), (g) and (h) of subsection (2) do not apply when an act contemplated in those paragraphs is performed by a spouse in the ordinary course of his profession, trade or business”. In our view the relevant provision in the agreement was one contracted for in the course of his profession, and that as such the cession fell within the exclusion in subsection (6).

Result
Our determination was that the insurer’s requirement of confirmation from the employer had been justified.

EdeB
March 2011