Vaswani Roshni Anilkumar v Vaswani Lalchand Challaram and Another

• Jurisdiction: Singapore
• Judge: Chao Hick Tin JA
• Judgment Date: 15 February 2006
• Neutral Citation: [2006] SGCA 6
• Date: 15 February 2006
• Subject Matter: Whether deceased's parents or wife should be paid insurance moneys,General principles,Contest between parents as nominated beneficiaries under policies and deceased's wife as beneficiary of deceased's estate over moneys from insurance policies,Deceased taking out insurance policies prior to marriage and naming parents as beneficiaries,Insurance,Claims,Whether parents proper claimants to insurance moneys,Whether administrator of deceased's estate entitled to sue for and receive payment of policy moneys as forming part of deceased's estate
• Docket Number: Civil Appeal No 85 of 2005
• Published date: 15 February 2006
• Defendant Counsel: Sunil Singh Panoo (Dhillon and Partners)
• Court: Court of Appeal (Singapore)
• Plaintiff Counsel: Ramesh Appoo (Just Law LLC)

15 February 2006

Woo Bih Li J (delivering the judgment of the court):

Background

1 The appellant is the wife of the deceased, Anilkumar Vaswani. The first respondent is the father and the second respondent is the mother of the deceased whom they had adopted. The dispute between the appellant and the respondents is in relation to three insurance policies purchased by the deceased from Great Eastern Life Assurance Co Ltd:

(a) Policy No 16807998 commencing 28 September 1994 (“the First Policy”);

(b) Policy No 19245754 commencing 26 April 1996 (“the Second Policy”); and

(c) Policy No 19951375 commencing 31 December 1996 (“the Third Policy”).

2 The policies were purchased before the deceased’s marriage. He had named the father as beneficiary under the First Policy and both parents as beneficiaries under the Second and Third Policies. Although the terms of each of the policies allowed the deceased to revoke the appointment of beneficiaries and appoint other beneficiaries, the deceased did not revoke the said appointments upon or after his marriage up till the time of his demise on 25 February 2003 at the age of 30. The deceased was estranged from his wife before his death.

3 According to a letter dated 27 March 2003 from the insurer to the parents, the net amounts payable under the policies were:

(a) First Policy - 35,067.09

(b) Second Policy - 69,482.62

(c) Third Policy - 112,323.28

The total was $216,872.99. The insurer is prepared to make payment under the policies but has refrained from doing so because of the competing claims of the parents and the wife to the policy moneys. The parents’ position is that as the named beneficiaries, they are entitled to the policy moneys. The wife’s position is that the estate of the deceased is entitled and as the deceased died intestate, she, as the wife, is entitled to half of the policy moneys. It is undisputed that if the estate were entitled to the policy moneys, then the parents would be entitled to the other half in their capacity as beneficiaries of the estate and not in their capacity as named beneficiaries under the policies.

4 The parents commenced Originating Summons No 387 of 2004 naming the wife and the insurer as the first and second defendants respectively. The primary relief sought by the parents was a declaration that the wife’s contest over the policy moneys was null and void and an order that the insurer make payment of the policy moneys to the parents forthwith. Eventually, the parents dropped the insurer from the action on the understanding that the insurer would pay over the policy moneys to the party declared by the court to be entitled to the same.

5 The district judge relied on In re Schebsman [1944] Ch 83 (“Schebsman”) and concluded that the parents were entitled to the policy moneys. She also found that the father had fully paid the lump sum premium for the Second Policy and concluded that there would have been a resulting trust of the Second Policy in his favour. Although the insurer was no longer a party to the action, the district judge also ordered the insurer to make payment under the policies.

6 The wife appealed to the High Court. Choo Han Teck J decided that the three policies were not part of the deceased’s estate and that the insurer would have obtained a valid discharge should it make payment to the parents (see [2005] 3 SLR 625). In the light of this, he was of the view that the privity doctrine was of peripheral relevance. However he was inclined to find a narrow exception to the privity rule relying on the judgment of Mason CJ and Wilson J in Trident General Insurance Co Ltd v McNiece Bros Pty Ltd (1988) 62 ALJ 508 (“Trident”). Choo J also said that the administrator of the estate would have been entitled to demand payment of the policy moneys and then distribute the policy moneys to the persons entitled to them. As the insurer was no longer a party to the action, Choo J declined to make an order against the insurer and he dismissed the wife’s appeal in so far as her appeal was against the declaration of the District Court that the parents were entitled to receive the policy moneys. Being dissatisfied with Choo J’s decision, the wife has appealed to the Court of Appeal.

The court’s reasons and conclusion

7 Various legislation do not address the question as to which of the competing claimants are entitled to the policy moneys. For example, s 73(1) of the Conveyancing and Law of Property Act (Cap 61, 1994 Rev Ed) creates a statutory trust if the insurance policy is expressed to be for the benefit of the insured’s wife or children. However, here, the named beneficiaries were the insured’s parents.

8 Section 61(1) of the Insurance Act (Cap 142, 2002 Rev Ed) states:

In any case where the policy owner of any life policy or accident and health policy of an insurer dies, and the policy moneys are payable thereunder on his death, the insurer may make payment to any proper claimant a prescribed amount of the policy moneys of all such policies issued by the insurer on the deceased’s life without the production of any probate or letters of administration; and the insurer shall be discharged from all liability in respect of the amount paid.

A “proper claimant” is defined by s 61(6)(b) of the Insurance Act to mean “a person who claims to be entitled to the sums in question as executor of the deceased, or who claims to be entitled to that sum (whether for his own benefit or not) and is the widower, widow, parent, child, brother, sister, nephew or niece of the deceased”.

9 As stated by Eusoff Chin J in Manonmani v Great Eastern Life Assurance Co Ltd [1991] 1 MLJ 364, in the context of s 44(1) of the Malaysian Insurance Act 1963, which is in substance the same as s 61(1) of our Insurance Act, the purpose of such a provision is to facilitate and expedite payment by an insurer to a “proper claimant” without the need for the claimant to first obtain letters of administration. Chin J was also of the view that the provision applied where the deceased policy owner had not named any beneficiary in the policy to receive the policy moneys upon his death, in which case it would go to his estate, or where he had specifically stated in the policy that the policy moneys should go to his estate. A similar view is expressed in Poh Chu Chai, Law of Life, Motor and Workmen’s Compensation Insurance (Butterworths, 5th Ed, 1999) at p 120 which states:

When a beneficiary is named under a life insurance policy, the insurer has the express authority of the insured to make payment under the policy to the beneficiary upon the happening of the insured event. If no beneficiary is named in the policy, the insurer is entitled to pay the proceeds of the policy to a proper claimant.

The footnote at the end of this passage refers to the then s 63 of the Insurance Act (Cap 142, 1994 Rev Ed) which is the current s 61.

10 The Contracts (Rights of Third Parties) Act (Cap 53B, 2002 Rev Ed) does not come into play as it is effective only from 1 January 2002.

11 In so far as Choo J was of the view that the administrator of the deceased’s estate would have been entitled to demand payment and then distribute the policy moneys to the person entitled to the same, Choo J seems to have assumed that because the administrator would have been entitled to demand payment, he would also have been entitled to receive payment. This contradicts his finding that the policy moneys are not part of the insured’s estate. We are of the view that at times there is confusion when the concept of entitlement is applied in the context of a contract.

12 When it is said that a person is not “entitled” to the benefit of a contract, one often means that because that person is not a party to the contract, he cannot enforce it. This is based on the doctrine of privity of contract under which only a party to a contract may enforce the contract. On the other hand, it is often also assumed that because a person is a party to the contract he is not only entitled to enforce it but also to receive the benefit thereunder. That conclusion is not always correct. For example, if A enters into a contract with B for B to supply C with certain building materials, A is entitled to demand that B supplies C but A is not entitled to demand that B supplies A himself. The latter would be a variation of the contract which A cannot...