Turf battle

3 September 2009

In this article it is endeavoured to explore the legal position pertinent to the contractual tenets underpinning the relationship between a fiduciary who concludes a lease contract with a lessee on the one hand, and the relationship between such lessee and the fideicommissary heirs on the other, the powers of the fiduciary's executors and for good measure, the substantive contradistinctions reflected against the relevant Deeds Registry practice and procedures with specific regard to the concurrent estates.

The following key critical aspects will be addressed:

  • The legitimacy of a lease contract concluded by a fiduciary (as lessor) while he/she is concurrently an owner of the leased premises.
  • The legal position pertaining to the continued sustenance of the lease when the fiduciary predeceases the fideicommissary heir.
  • The legal position pertaining to death of the fideicommissary heir before the fiduciary.
  • The feasibility of a land partition between concurrent right holders of the nature of fideicommissary heirs and legatees on death of the fiduciary.
  • Maturity of a fideicommissum: where a fiduciary predeceases the fideicommissary heir, when exactly does the fideicommissary heir acquire ownership, on death of the fiduciary or on registration of the property after death?
  • The competence of the fiduciary's executors vis-à-vis that of the fideicommissary heirs on maturity of the fideicommissum.
  • Can the fideicommissary heirs evict the lessee on death of the fiduciary?
  • Can the legatees evict the lessee on death of the fiduciary?
  • Can the fiduciary's executor evict the lessee?

The foregoing contradistinctions must be discerned against the backdrop of the following court case: Eksteen and Another v Pienaar and Another 1969 (1) SA 17 (O).

Summary of the Case
Hester inherited the farm Blesbokkantoor from her parents. The bequest was subject to the following condition: "On Hester's death and on her husband's death the farm would devolve upon her lawful descendants and if there are none then in three equal shares on the lawful descendants of X, the late Y and the late Z.
  • The said descendants of X were X1 and X2
  • The said descendant of the late Y was Y1
  • The said descendants of the late Z were Z11 and Z2

Hester's husband died.
X died, and thereafter his lawful descendants X1 and X2 also died.
Y1 also subsequently died.

The deaths of the above fideicommissary heirs before the fiduciary (Hester) had the following effect:
The fiduciary (Hester) acquired all their shareholding in the farm. This was well within her rights since the legal position in such circumstances is that should a fideicommissary heir die before the fiduciary or the fideicommissum fail in any way, then, if no provision to the contrary is contained in the will, the fiduciary becomes the out-and-out owner.

Effectively two thirds were now under Hester's ownership while she held a one third under the fideicommissum in favour of Z1 and Z2 (the only surviving fideicommissary heirs). Thus Hester is concurrently owner and fiduciary over the same farm.

Hester then died testate whereupon her will distributed the property as follows:

The 1/6th shares from the late X1, and X2 were now bequeathed to B and Z2 respectively.
The 1/3rd share of the late Y1 was now bequeathed in equal shares to D and E.
Note then that Z1 and Z2 are the only surviving fideicommissary heirs as per the will of their grandparents.
As for Z2, he is acquiring almost the same kind of concurrent holdership that the late Hester had as he is now becoming both legatee and fideicommissary heir.

Essentially the farm is held concurrently, in undefined shares by both legatees and fideicommissary heirs.
The legatees are: B, Z2, D and E by virtue of Hester's last will and testament.
The fideicommissary heirs are Z1 and Z2 by virtue of their grandparents last will and testament.
Note that Z2 is wearing two hats, namely legatee and fideicommissary heir.

The Problem
All these mixed shares of legatees and fideicommissary heirs are undivided. It is virtually a complicated confusing concurrent estate and it would take capabilities bordering on genius to effect a flawless partition under such circumstances.

The Further Problem
During her lifetime, Hester had galvanized complexity into catastrophe by concluding a lease in respect of the so-called greater "undefined portion" of the farm which lease was still valid way after her death.

The fideicommissary heirs and the legatees concluded a partition agreement in terms of which they subdivided the farm up among themselves with marching orders to the lessee. Section 30 of the Deeds Registries Act 47 of 1937 was none of their worries for reasons to be explored below.

As would be expected with any other valid lease, the lessee protested against his marching orders. He did not vacate the farm.

The lessee made a small concession to at least vacate the proposed portion 4, which would become Z2's allocation and as such being a fideicommissary portion of the farm would technically not have been subject to the lease on the death of the fiduciary. More of this anon.

Review of legal questions based on this background
What should have happened to the lease on partition?
Where did the lease attach: between the shares of the fideicommissary heirs and the shares of the legatees?
What should have happened to the double-holdership of Z2 on partition?
Could one safely say that the lease terminated on death of the fiduciary (Hester) so that the fideicommissary heirs had a "clean" or unencumbered title?
Is it correct therefore to assume that based on the aforegoing remark the lease did not terminate against the legatees based on the "Huur gaat voor koop" maxim?

The following principle effectively sheds the light:

"A fiduciary, like a usufructuary who has let property subject to a usufruct, may let the property subject to his rights, only for the period of his own rights" (Voet 19.2.6, Parkin v Lippert 12 SC 179, Crous v Crous 1937 CPD 250)

If the above principle is anything to go by, surely the reader should concede that the lease between Hester (as fiduciary) and the lessee terminated on the death of Hester only as far as the shares held under the fideicommissum, but would still be fully operative on the shares held by the legatees.

There was an utter impasse as to the competence of the fiduciary's executor and the fideicommissary heirs to evict the lessee given the fact that the executor could deal where the shares of the legatees were concerned, but not where the fideicommissary heirs were concerned. Consider the following legal principle:

"The owners in the case of a fideicommissum which has matured are the fideicommissaries themselves and not the deceased estate of the fiduciary"

The foregoing remark can be further expatiated as follows: Although dominium is still in the name of the deceased fiduciary (Hester) with the result that only her executor may evict the lessee, ownership was actually acquired by the fideicommissaries on death of the fiduciary (Hester).

Deeds practitioners would at this point remark that the correct procedure though, provides that "ownership actually passes on registration" (Breytenbach v Van Wijk 1923 AD) and therefore the executor should be dealing!

On the contrary, the court in Anstruther and Others v Chiappini's Trustees 3 Searle 91 found that the foregoing Deeds Practice does not apply to succession by a fideicommissary on death of a fiduciary. In low simplicity, the fideicommissary becomes owner immediately after the death of the fiduciary and does not have to wait for the registration of transfer of the property from the deceased estate. The effect of the latter remark returns to the fact that the executors should not be dealing where the fideicommissum is concerned, but only where the legatees are concerned. Both the executor and the fideicommissary heirs could be perceived as concurrent owners locked in a battle for the turf!

Therefore, with due regard to the circumstances portrayed as aforesaid, each fideicommissary heir had a right to give the lessee a notice to vacate to the proportion of up to his 1/6th undivided share of the property over which the fideicommissum had now acquired dominium.

However, the lessee could still not be evicted as to the 4/6th undivided shares of the legatees because the legatees had not yet become registered owners pending registration of the transfer into their names by the executor.

As the principle goes "…In our modern system a legatee or an heir never acquires the dominium in the legacy or inheritance on the death of the testator, all that he acquires is a right to claim the legacy or inheritance" (Greenberg and Others v Estate Greenberg 1955 (3) SA 361 A). Therefore, the lease continued to operate against the legatees and so the executor was entitled to represent the deceased estate.

The legatees therefore had no locus standi to eject the lessee and consequently the 4/6th share of the farm was effectively subject to the lease. Other than circumstantial considerations, the following statement utterly bolsters the foregoing position:

"according to our law today, a legatee of immovable property has to abide by a lease made by a testator in regard thereto in the same way as a purchaser is bound by a lease over the property bought" (Hitzeroth v Brooks 1964 (4) SA 443 (E)).

The conclusion that was reached, therefore, was to rectify the lease with regard to the correct property to which it applied as eviction of the lessee was not approved. The effect of this was that the lease could only be exercised to the extent of the affected share and also that even on partition the lease would only apply per affected share.

Republished with permission from SA Deeds Journal

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