[2015] KEHC 2453 (KLR)

REPUBLIC OF KENYA

IN THE HIGH COURT OF KENYA AT NAIROBI

SUCCESSION CAUSE NO. 1374 OF 2004

IN THE MATTER OF THE ESTATE OF CAROLYNE ACHIENG’ WAGAH (DECEASED)

RULING

1. The summons dated 9th April 2010 seeks moneys payable as terminal benefits upon death, pension, group life insurance and shares in a co-operative society.

2. The applicant is the administrator of the estate of the deceased, having obtained representation to it vide a grant of letters of administration intestate dated 14th July 2004.

3. He claims a sum of Kshs. 723,084. 00 from the named respondents being death sum benefits, pension and group life insurance funds assigned by the deceased to her children. He also claims a sum of Kshs. 72,800. 00 being value of the shares she held in the Huduma Savings and Credit Cooperative Society assigned too to the children of the deceased. He complains that the respondents have declined to pay the moneys to the estate despite the same having been confirmed by the court by the orders of 3rd December 2007.

4. The reply to the application is by an officer from the Insurance Company of East Africa Ltd. Her affidavit was sworn on 29th October 2010. The gist of her reply is that the applicant would like to have the benefits released to him as administrator yet that is not proper for pension funds are dealt with in accordance with rules of the relevant pension scheme, the discretion of the scheme trustees and the wishes of the deceased. She states that the applicant wants to have the funds released to him, which would be contrary to the wishes of the deceased who had nominated the funds for the benefit of her children.

5. I have perused the record and seen letters from the respondents, and various other entities, advising the applicant that all the funds that he is seeking from the respondents are subject to the device called nomination, and that that being the case such funds are not available to the estate, and cannot be released to the administrator. They should be handled in accordance with the nomination made by the deceased.

6. It is the law that the funds the subject of a nomination do not form part of the nominator’s estate, and therefore such funds cannot pass under the will of the deceased or vest in his personal representative. Such funds are not subject to the succession process, and should be dealt with in accordance with the law governing the nomination. Nominations are statutory, in the sense of them being specifically provided for by a particular statute.

7. Pensions and related benefits are governed by the Retirement Benefits Act, Cap 197, Laws of Kenya, which states, at Section 36A, that-

“Upon the death of a member of a scheme, the benefit payable from the scheme shall not form part of the estate of the member for the purpose of administration and shall be paid out by the trustees in accordance with the scheme rules.”

8. There is also Regulation 23 of the Retirement Benefits (Occupations Retirement Benefits Schemes) Regulations, 2000, which says that-

“The scheme rules shall provide that upon the death of a member, the benefits payable from the scheme shall be paid to the nominated beneficiary and if the deceased member had not named the beneficiary, then the trustees shall exercise their discretion in the distribution of the benefits to the dependants of the deceased member, provided that the trustees may refuse to pay the nominated beneficiary and the reasons for such refusal shall be so recorded.”

9. From the material before me, the deceased was a member of the Social Service League Staff Retirement Benefits Scheme. She had made a nomination in favour of her children. By virtue of Section 36A of the Retirement Benefits Act, the benefits accruing to the said children do not form part of the estate of the deceased, and should not be the subject of these proceedings. Where issues arise concerning those funds, the process for addressing them is that set out in the Retirement Benefits Act and the subsidiary legislation made under it. The probate court has no jurisdiction over such benefits and it cannot distribute them.

10. Life insurance policies, whether group or personal, are governed by the Insurance Act, Cap 487, Laws of Kenya. Section 111(1), of the said Act provides for nomination of life policies. It states:-

“The holder of a policy of life assurance on his own life may, when effecting the policy or at any time before the policy matures for payment, nominate the person or persons to whom the money secured by the policy shall be paid in the event of death.”

11. From the record, it is clear to me that the deceased had a group life assurance policy in which she had made nominations in favour of her children. By virtue of Section 111 of the Insurance Act, the benefits under the policy did not form part of the estate of the deceased. They were due directly to the beneficiaries, but to be dealt with in accordance with regulations governing the insurance scheme. Such benefits did not form part of the estate, and they were therefore not available for distribution by the personal representative of the deceased.

12. The deceased also held shares in a co-operative society. Under Section 39(11) of the Co-operative Society Act for 1997, upon the death of a cooperator, the society may transfer his share or interest to the person nominated by the cooperator in accordance with the Act or, if no person has been nominated, to such person as may appear to be the personal representative of the deceased.

13. The provision is quite clear that if the cooperator had nominated another to be the beneficiary of the funds, then the value of the shares shall be paid directly to that person. The personal representative can only access the shares where there is no nomination. As it transpires that there was a nomination in place in this case, the shares in the Huduma Savings and Credit Cooperative Society Ltd were not available to the applicant, but to the persons nominated by the deceased.

14. I have noted from the record that the only assets listed as comprising the estate of the deceased are the very same assets the subject of the nominations. The grant was confirmed and there is on record a certificate of confirmation of grant dated 3rd December 2007. I dare say, in view of what I have stated above, that the said certificate is a worthless piece of paper, to the extent that it sought to distribute property that the court had no jurisdiction to distribute in the first place.

15. I do not find merit in the application dated 9th April 2010, and I do hereby dismiss the same with costs.

DATED, SIGNED and DELIVERED at NAIROBI this 25TH DAY OF SEPTEMBER, 2015.

W. MUSYOKA

JUDGE