The Enforceability of a ‘No Contest’ Clause?
If you’re afraid that someone might challenge the validity of your will or trust in court after your death, you may be tempted to add what’s called a ‘No Contest’ clause to your document. A ‘No Contest’ clause is a provision in a will that penalizes those who challenge the content and/or validity of a will i.e. disinheriting a beneficiary as a consequence for challenging the testator’s will. An example of such a clause is as follows –
“Any heir or beneficiary who may institute legal proceedings in any court of law challenging the validity of this will or any of its provisions shall automatically forfeit all benefits or advantages accruing to such heir or beneficiary under this will”.
In order for an affected person to contest the will, it must be satisfied that the affected person has ‘standing’ to do so. This typically entails that an affected person must be either a beneficiary named in terms of the will or a non-beneficiary who would otherwise inherit should the will be deemed invalid i.e. heirs receive a share of the estate through the laws of intestate.
The ‘No Contest’ clause was historically referred to as the in terrorem clause as it was designed to strike terror in the hearts of those who wish to create a dispute in terms of the will. The ultimate purpose is to prevent or deter the challenger from receiving any bequest in terms of the will if any challenge is asserted.
The position on the enforceability of the ‘No Contest’ clause in South African law is uncertain as there is a significant lack of authority. However, the relevant arguments for and against the enforceability of the clause are as follows –
The argument that discourages the enforceability of the ‘No Contest’ clause is that the clause may be used as a powerful weapon in the hands of a wrongdoer i.e. someone who may be the cause of an undue influence over the testator may rely on a ‘No Contest’ clause to deter a virtuous beneficiary from pursuing a legitimate will contest. Secondly, a ‘No Contest’ clause denies the affected person their constitutional ‘right to have any dispute that can be resolved by the application of law decided in a fair public hearing before a court or, where appropriate, another independent and impartial tribunal or forum’.
The encouragement of the enforceability of the ‘No Contest’ clause includes, but is not limited to, to (i) giving full effect to the intent of the testator i.e. freedom of testation; (ii) prevent costly and vexatious litigation; and (iii) reduce bickering among members of the same family. The overriding argument in favour of the enforceability of the clause is that the testator has the right to freedom of testation which entitles him/her to make any provisions he or she wants to make in a valid will and the right to have his/her estate divided in whatever manner he or she wishes. South African law dictates that the courts must enforce the provisions of the will according to the maxim voluntas testatorius servanda est, meaning that the will of the testator must be complied with in order to fulfil the constitutional values of freedom, dignity and equality.
Although, it must be noted that freedom of testation has never been absolute. There have been various common law and statutory restrictions that have been placed on freedom of testation over the years such as public policy, equality and unfair discrimination.
The general position that should be adopted in South Africa is that the ‘No Contest’ clause should be enforceable to ensure the fulfilment of the testator’s right to freedom of testation, provided that the provision is prima facie not contra bonos mores. This principle is derived from Barclays Bank DC & O NO v Anderson 1959 2 SA 478 (T) where the court found that since the intention of the testator was to create permanent occupation by the respective family members of the original family farm and not to bring about a disruption of any marriage of a female descendant, the provision was valid and not contra bonos mores. Failure to satisfy the bequest of the testator will be seen to be contrary to the terms of the will and could lead to the loss of all rights and claims to the inheritance.
An exception to this position could be that the affected person must have probable cause for contesting the will and that they must do so in good faith. If the affected person is successful in proving both elements then the clause shall be declared invalid and unenforceable. For example, if an affected person can successfully prove that there is presence of undue influence or a lack of mental capacity then such would suffice as probable cause. However, should the affected person have a groundless challenge and subsequently unsuccessful in proving their case, they will be disinherited.
Ultimately, the use of a ‘No Contest’ clause by a testator shall be valid and enforceable depending on the merits of each case.
By Jayde Vaughan and Nqobile Dlamini
Assisted by Michael Bloom