Nomination

Islamic Law of
Property
LAB2033
DR. ZULKIFLI HASAN

Nomination
Conceptual Framework
Content
The practice of nomination

Introduction
Nomination or penamaan-
Insurance
Joint account
EPF
Tabung Haji
Cooperative Societies

Nomination
The process by which a person who has taken
up insurance policies or saved monies in such
bodies (eg. EPF, insurance co, takaful co. )
names certain persons to benefit from such
insurance policies or savings in the event of his
death.

Types of nomination
1. Which has the effect of a nomination of a life
insurance policy made under S 23 of the CLA
1956.
2. Statutory nomination. EPF Act 1991 and CSA
1993.

Nomination under S 23
A policy insurance effected by any man on his own life
and expressed to be for the benefit of his wife or
children or by any woman on her own life and
expressed to be for the benefit of her husband or
children shall create a trust in favour of the objects
therein named.
Part XIII of the Insurance Act 1996: allows licensed
insurance co to pay to the nominees instead of
beneficiaries.
Apply to non-Muslim: S 23 is automatically triggered
resulting the creation of a trust as soon as the
requirements are satisfied.
Muslims: the position is different

Re Yeo Hock Hoe [1938] MLJ 33
A man may insure his life at anytime for their
benefit and any monies payable under the policy
shall not go to pay his debts, but shall be held in
trust for his family…. Even when it is proved
that the policy was effected and the premiums
paid with intent to defraud creditors of the
insured, the fact will not defeat the trust but the
creditors will be entitled to receive only the sum
actually paid by way of premiums.

Conflicting Decision on Nomination
involving Muslims
Re Man Minhat [1965] 2 MLJ 1
Re Bahadun Hj Hassan [1974] 1 MLJ 14
Re Ismail Rentah [1940] MLJ 77

Re Man Minhat [1965] 2 MLJ 1
Muslims nominated his wife to receive the proceeds of
insurance policy after his death.
Suffian Hashim J. applied s 23 CLA.
If there is no legal objection to a muslim altering his
heir’s share by himself during his lifetime by making a
gift through his trustees to a favoured wife, equally
there would be no objection in principle to the validity
of a similar gift made not by himself but by statute.
Comment: Judge failed to differentiate btn gift inter
vivos and s 23.

Re Bahadun Hj Hassan [1974] 1 MLJ 14
Application by the Official administrator for
wtr s 23 policy taken by a Muslim to his wife was
valid 2.
If valid, wtr the money could be paid to this wife or
considered as estate.
Abd Hamid J.
The W could take the insurance moneys
beneficially and would not form part of the
estate.

Re Ismail Rentah [1940] MLJ 77
Nomination made by a muslim. The Deceased- member of
cooperative society and had nominated his daughter to be the
benificiary.
His daughter and six others claimed- estate.
Raja Musa J:
Nomination did not confer a right on the nominee to take
beneficially, as the daughter not merely held the money as trustee
for all the beneficiaries.
The money of the deceased were to be divided among all the
beneficiaries. A gift mortis causa is treated as a disposition by
will.
The nomination could not be treated as a gift inter vivos because
there was never any transfer to the donee.

A gift mortis causa
A gift of personal property in prospect of death,
a death-bed disposition,
an inchoate gift of personal consummated by
the giver’s death.
The ct in the case Re Ismail Rentah concluded
that nomination was a gift mortis causa.

Observation
3 different fatwas on nomination:-
1. Pahang, Selangor, N.9 and Kedah- the
property forms part of the residuary property of
the deceased and therefore must be divided
according to faraid.
2. Kelantan and Perak- nomination under the
EPF is regarded as gift that will take effect upon
death.
3. N. 9 and Kedah- nomination arising from
insurance. Estate property and faraid.

Fatwa on Nomination
Kelantan in 1962, Perak, Pahang, Selangor, N.9,
Kedah, FT including National Fatwa Council in
9 october 1973.
Nominees of the funds in EPF, Post Office Saving
Banks, Insurance and Co-operative operative Societies are in the
position of persons who carry out the will of the deceased
or the testator. They can receive the money of the deceased
from the sources stated to be divided among the persons
entitled to them under the Islamic law of inheritance.

cont
117 th Conference of Rulers 1980: recommended
the AG to amend the laws to reflect the fatwa.
Amendments were made to the relevant
legislation on nominations affecting muslims.

Insurance policy holders
B4 S 167: no difference as the effects of
nomination made by Muslim and non-muslim.
S 167: Under the Insurance Act 1996: Muslim
policyholder can appoint a nominee, as an
executor and not as the beneficiary.
The monies form part of the deceased’s estate.
To distribute in accordance with faraid.

Co-operative operative Societies
Co-operative operative Societies Act 1993: S 24 resolves the issue
on nomination. Nominations are not applicable to
Muslim members.
On the death of the a member, the society may transfer
the shares of such a member:-
Muslim: to the legal representative of such member or a
person entitled to such share pursuant to any distribution
made under the law relating to faraid.
Non-Muslim: to the person nominated.
If the society is unable to ascertain the legal rep (6
months after the death of the member) the society may
pay to the ARB.

EPF
Nominations are allowed for Muslim and non-muslims
under the EPF Act 1991.
Regulation 6 of the EPF Regulations 1991: a member
of the fund may nominate any natural person to receive
his credit due to him at his death.
S 16 (3): when a Muslim member dies after having
made a nomination in accordance with the Regulations,
the persons nominated shall receive the credit of such
deceased member as an executor and not as a
beneficiary and shall distribute the credit in accordance
with the Islamic law.

Cont..
Rule 34 of the EPF Rules 1991: Form EPF4-
shall be signed by the member of the fund in the
presence of witness.
Cautionary statement- For members who are
muslims, the nominee elected will be treated as an
executor/ administrator to the member’s credit.

How Yew Hock v Lembaga KWSP
[1996] 2 MLJ 474
Legal effect to non-muslims.
It was contended by counsel for the executor and
trustee of the deceased that the EPF nomination in
favour of his sister was a form of testamentary
disposition of the deceased’s property and the
document must comply with the Wills Act 1959.
Disposition of the prop under Reg 9 was inconsistent
with the Wills Act and therefore void.
The nomination was a statutory nomination under the
EPF Act, the nomination was valid.

Saniah bt Ali & Ors v Abdullah Ali
[1990] 3 MLJ 135
The deceased nominated the first pt (sister) to
receive the entire amount of the CPF on his
death. The CPF paid out the money to the Pt
pursuant to the Spore CPF Act 1985.
Dt: Under 112 (1) of the Spore admin of Muslim
Law act 1985- muslims dying intestate- faraid.
Issue: wtr the pt was entitled to the entire
amount of the CPF’s money.
Ct held that the CPF’s money was excluded
from the estate of the deceased.

Joint Accounts in Banks
Common law principle: when one joint-account holder
dies, the funds in the account will be subject to the
survivorship principle.
Rationale: when funds are kept in joint bank account,
there is prima facie presumption that the funds in the
account constitute the joint prop- a right of
survivorship attaches to the account.
Effect:
if one party dies, the survivor is in ordinary cases entitled to
the whole amount either the law devolution (rebutted by
evidence of contrary intention) btn joint owners or by the
custom of bankers and express and implied agreement.

Survivorship Principle from Syariah
It is a gift mortis cause and is to be treated as a
testamentary disposition.
The bank mandate which supports the survivorship
principle under a joint account reflects nothing more
than a nomination by one person that the other shall
benefit from his death.
If one party dies, the deceased’s money is regarded as
the asset of the estate of the deceased and will be
distributed in accordance with faraid.

Rosmawati Sharibun & Satu lagi [2002] 4 AMR 4913
2 petitioners applied for the grant of LOA. They were the
immediate beneficiaries of the estate of Dato Sharibun, the
deceased. Dato died on 2.1.2000, leaving behind one W
(Latifah) and 8 children. When he died the deceased left
behind millions of ringgit worth of property. Dispute to
who was entitled to apply for the LOA. The beneficiaries
agreed to divide all the assets according to faraid except the
monies held jointly by the Deceased and W. The W
claimed that the joint accounts were hers as hibah.
Held: there was evidence to prove that the joint account
was not a hibah. The monies belonged to the estate of the
deceased.

Tabung Haji
The effect of nomination- bequest.
Fulfill all the requirements of bequest.

Wan Puziah v Wan Abdullah Muda & Seorang Lagi
(2001) JH 235
The Pt (adopted daughter) claimed one half share
of the savings of the deceased in the LUTH
account. The pt averred that her claim was based
on nomination made by the deceased in 1975.
The dt contended that the nomination was not a
bequest and the pt as not being a waris was not
entitled to have share in the distribution.
Held: the nomination in favour of pt satisfied all
requirements of a wassiyah under hukum syarak.
Nomination in favour of the pt was a bequest.