McAlpine v McApline NO and Another (299/95) [1996] ZASCA 127; 1997 (1) SA 736 (SCA); [1997] 1 All SA 264 (A); (12 November 1996)

McAlpine v McApline NO and Another (299/95) [1996] ZASCA 127; 1997 (1) SA 736 (SCA); [1997] 1 All SA 264 (A); (12 November 1996)

The majority held that the agreements between the brothers constituted a classic form of pactum successorium, as they provided for the reciprocal transfer of shares in the company upon the death of either party, contingent on survivorship. Applying the vesting test, the court found that the right to the shares did not vest inter vivos but only upon the death of the first-dying, making the disposition mortis causa. The agreements thus fettered the freedom of testation and circumvented testamentary formalities, rendering them invalid under South African law. The court dismissed the appeal, upholding the trial court's decision that the claim for transfer of shares could not succeed.

Citation
[1996] ZASCA 127
Parties
Appellant: Gilroy Clements McAlpine; Respondent: Penny McAlpine NO; Respondent: Stand 37 Anderbolt Extension 11 (Pty) Ltd
Court
Supreme Court of Appeal
Jurisdiction
South Africa
Judgment Date
12 November 1996
Case Number
299/95
Procedural Posture
Civil Appeal / Appeal From Trial Court Judgment
Outcome
Appeal dismissed with costs.
Judges
Corbett, Nienaber, Howie, Olivier, Scott
Legal Topics
Pactum Successorium, Share Transfer on Death, Succession in Commercial Context, Vesting Test, Freedom of Testation
Commercial and Corporate Land and Property Pactum Successorium Share Transfer on Death Succession in Commercial Context Vesting Test Freedom of Testation

Case Brief

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Parties

Gilroy Clements McAlpine

Appellant

Penny McAlpine NO

Respondent

Stand 37 Anderbolt Extension 11 (Pty) Ltd

Respondent

Procedural Posture

Civil Appeal / Appeal From Trial Court Judgment

Legal Issues

  1. 1 Whether the agreements between the brothers constituted an invalid pactum successorium under South African law.
  2. 2 Whether the right to the deceased's shares vested inter vivos or only upon death, determining the validity of the disposition.
  3. 3 Whether the agreements fettered the freedom of testation or circumvented testamentary formalities.

Ratio Decidendi

The majority held that the agreements between the brothers constituted a classic form of pactum successorium, as they provided for the reciprocal transfer of shares in the company upon the death of either party, contingent on survivorship. Applying the vesting test, the court found that the right to the shares did not vest inter vivos but only upon the death of the first-dying, making the disposition mortis causa. The agreements thus fettered the freedom of testation and circumvented testamentary formalities, rendering them invalid under South African law. The court dismissed the appeal, upholding the trial court's decision that the claim for transfer of shares could not succeed.

Court Disposition

Appeal dismissed with costs.

Orders

  • The appeal is dismissed with costs.