Van Aardt v Van Aardt (342/05) [2006] ZAECHC 37; 2007 (1) SA 53 (E) (10 August 2006)

9

FORM A

FILING

SHEET FOR EASTERN CAPE JUDGMENT

ECJ no:33

PARTIES: JACOBUS VAN AARDT V

STEPHANUS VAN AARDT

REFERENCE NUMBERS –

Registrar: CA 342/05 Magistrate:

Supreme Court of appeal/Constitutional Court:EASTERN CAPE DIVISION

DATE HEARD: 22 MAY 2006

DATE DELIVERED: 10 AUGUST 2006

JUDGE(S): JONES J; PICKERING J & MALOPA, AJ

LEGAL REPRESENTATIVES –

Appearances:

for the State/Applicant(s)Appellant(s): ADV JD HUISAMEN

for the accused/respondent(s): ADV AD SCHOEMAN

Instructing attorneys:

Applicant(s)/Appellant(s):

NETTELTONS

Respondent(s):

NOLTE SMIT

CASE INFORMATION – FULL BENCH APPEAL

Nature of proceedings: Appeal – an agreement for the sale of land to a nominated purchaser or his descendant’s containing uncertainty about the identity of the purchaser and making his identity contingent upon the nominated purchaser surviving the seller was found to be a pactum successorium and hence unenforceable.

Topic:

Keywords:

In the High Court of South Africa

(Eastern Cape Division) Case No: 342/-5

Delivered: 10/08/06

In the matter between Reportable

JACOBUS

VAN AARDT

and

STEPHANUS CORNELUIS VAN AARDT

SUMMARY: Appeal – an agreement for the sale of land to a nominated purchaser or his descendants containing uncertainty about the identity of the purchaser and making his identity contingent upon the nominated purchaser surviving the seller was found to be a pactum successorium and hence unenforceable.

JUDGMENT

JONES J:

[1] The appellant and the respondent are brothers. They both owned farms in the Somerset East district, the majority of which had once belonged to their father. They formerly farmed in partnership. On 16 March 2004, during the subsistence of the partnership, they entered into a written agreement in terms of which the appellant sold his farms to the respondent or his descendants by way of a deferred deed of sale. The agreement was concluded in order to give effect to the appellant’s wish that his farms should remain in the Van Aardt family after his death. It required the respondent or his descendants to pay the purchase price on the date of the death of the appellant.

[2] After the dissolution of the partnership between the brothers the appellant needed to raise capital to continue farming on his own account. This prompted him to enter into agreement with one Von Holdt for the sale of the farms which he had formerly sold to the respondent during the subsistence of the partnership. The respondent applied for an interdict restraining the sale and transfer of the farms, citing Von Holdt as the second respondent. Von Holdt did not participate in the proceedings and is not a party to the appeal.

[3] Plasket J granted the interdict. In doing so he held that the deferred contract of sale was not a pactum successorium. He also held that the agreement between the brothers did not lapse when the partnership between the parties was dissolved. The appellant now appeals against these findings, with leave from the court a quo.

[4] A pactum successorium is an ‘agreement which purports to limit a contracting party’s freedom of testation by irrevocably binding him to post-mortem devolution of the right to an asset in his estate. … If the term “pactum successorium” is used to describe a prohibited agreement which seeks, directly or indirectly, to regulate succession on death, and if deprivation or restriction of testamentary freedom is accepted as the basic criterion for the unlawfulness of such n agreement, then the identifying characteristics of a pactum successorium are

(a) that it purports to effect a post mortem disposition of an asset in the estate of a contracting party by providing for a devolution of the right to that asset from the party, after his death, to another person; and

(b) that it seeks to prevent the contracting party from revoking the disposition, either by testament or by act inter vivos.

The former characteristic gives the agreement its testamentary nature, while the latter supplies the ground for its invalidity’.1

[5] Whether these identifying characteristics are to be found in the agreement between the parties in this case depends on whether it contains a restriction upon testamentary freedom of irrevocability. The most commonly used test for this is whether or not the right to acquire the property becomes vested in the party upon whom it devolves prior to the death of the party from whom it devolves2. Do the terms of this contract divest the seller of his right to dispose of the property during his lifetime? Do they confer a right to acquire the property which becomes vested in the purchaser during the lifetime of the seller? This is a matter of interpretation of the agreement.

[5] The terms of the agreement are as follows:

‘UITGESTELDE KOOPKONTRAK

Aangegaan tussen:

STEPHANUS

CORNELUIS VAN AARDT

(ID Nommer 571129 5058 08 2)

of sy Regsopvolgers (NASATE)

Hierna genome die “KOPER’)

EN

JACOBUS VAN AARDT

(ID Nommer 600426 5212 08 0)

(Hierna genoem die VERKOPER’)

DIE PARTYE KOM SOOS VOLG OOREEN:

VASTE EIENDOM

Die KOPER of sy regsopvolgers (NASATE) koop alle vaste eiendom vanaf die VERKOPER by wyse van ‘n uitgestelde Koopooreenkoms.

KOOPPRYS

Die partye kom ooreen dat die KOPER of sy NASATE by datum van afsterwe van die VERKOPER die eiendom deur ‘n Landbank-waardeerder sal laat waardeer end dat die prys gelykstaande aan die waardasie van die Landbankwaardeerder en/of die opbrengs van Liberty Polis, Polisnommer 58953404700, welke Polisopbrengs nie die Landbankwaardasie sal orskry noe, as kooprys vir die eiendom sal aanbied.

RESTANT VAN LIBERTY POLIS

Die partye kom ooreen dat indein daar ‘n balans oorbly op die Liberty Polis nadat die Landbankwaardeerder die grond waardeer het en die opbrengs van die Polis aangewend is om in die VERKOPER se boedel in te betaal, die balans daarvan aan die KOPERnoorbetaal sal word.

KOPER SE AFSTERWE

Die partye kom ooreen dat indien die KOPER voor die VERKOPER sou sterf, die polis instand gehou sal word deur die VAN AARDT BROERS se gesamentlik rekening totdat die VERKOPER afsterf.

Die partye kom ooreen dat enige betaling wat gemaak word uit VAN AARDT BROERS se gesamenlike rekening afgeskryf sal word teen die lenings rekening wat aan die KOPER deur die VAN AARDT BROERS verskuldig is.

DOMICILIUM

…

KONTRAKBREUK

Die partye kom ooreen dat indien enige van die partye in breek is van die kontrak, die party wat nie in breek is van KONTRAK nie, viertien(14) [dae] kennis aan die partye wat in breek is van die KONTRAK kan gee om sy gebrek in die KONTRAK te herstel. Indien sodanige party nie die gebrek binne die genoemde periode herstel nie, sal die benadeelde party spesifieke nakoming kan eis, en/of die KONTRAK kanselleer en skade eis.

BESKRYWING VAN DIE EIENDOM

Die eiendom van die VERKOPER soos in KLOUSULE 1 uiteengesit se beskrywing is soos volg:

2 eenhede saamgestelde eiendomme bekend as Krantzkloof en Niekerksberg in Somerset Oos Distrik.’

The agreement was subsequently amended in writing to do away with a Landbank evaluation, and to fix the final purchase price as the full proceeds of Liberty Policy No 58953404700.

[6] In concluding that this agreement is not a prohibited pactum successorium Plasket J held that:

‘…..the agreement makes specific provisions for its continued existence in the event of the applicant [the purchaser] predeceasing the first respondent [the seller]. It does so by providing that the purchaser. . . is in fact the “koper of sy regsopvolgers (nasate)”. It thus cannot be said that the sale is conditional on the uncertain event of the seller predeceasing the purchaser.

The deferred sale is thus not contingent on the happening of a future uncertain event: the first respondent as seller will die before the “die koper of sy regsopvolgers (nasate)” because even if the applicant predeceases him, there will always be a “regsopvolger” of the applicant to survive the first respondent. There is, consequently, a vesting of rights that occurred immediately upon the conclusion of the agreement, and not, as in McAlpine,3 merely contingently upon the future uncertain event of which of the parties would die first.’

[7] I am, with respect, not able to agree with this conclusion. In the first place, the learned judge does not take into account that the agreement confines successors in title to descendants. There can never be certainty that the seller will be survived either by the purchaser or his descendants. Secondly, the purchaser is named in the agreement as Stephanus Cornelius van Aardt or his descendants, whoever they may be. This is not a case of the nomination of purchasers as members of a class whose membership is determined on the date of the agreement. The nomination of descendants therefore gives rise to possible uncertainty about the identity of the ultimate purchaser. There may be a number of descendants and those of them who survive the seller, if any, are undetermined until the death of the seller. Rights cannot vest in undetermined members of a class, whether or not the undetermined members all belong to a specified group, such as descendants.

[8] The identity of the descendants is not the only difficulty. The agreement describes the purchaser as Stephanus Cornelius van Aardt or his descendants. The purchaser cannot be both. This is a case of two possible categories of purchaser what are nominated in the alternative and whose nominations are mutually exclusive. The following question arises: if there was a vesting of rights that occurred immediately upon the conclusion of the agreement as Plasket J held, in whom did those rights vest? They cannot have vested in both the respondent and his descendants at the same time because they are not joint purchaser. It is necessary, in order to determine which, to know whether the respondent or one of his descendants has survived the seller. If the respondent and his only present descendant (his son) die before the seller without further issue, the condition will fail and the agreement will lapse. If they do not both die, the identity of the ultimate purchaser can only be determined on the date of the seller’s death. If the purchaser is alive on that date, the right to acquire the farms vests in him, and his descendants fall out of the picture. If he is not, and if he is survived by a descendant or descendants who accept the benefit of the stipulation alteri in their favour, those rights will vest in the descendant or descendants. In the result, the contract must be interpreted to provide that the identity of the seller can only be determined on the date of the seller’s death, which is also the date of payment of the purchaser price and the date upon which the rights of the purchaser may be exercised and enjoyed.

[9] In my view the conclusion from this is inescapable that by providing for the person who buys the farms to be either the purchaser or his successors in tilte (descendants), the parties have by necessary implication postponed vesting to the date of the seller’s death, and the only rights that Stephanus Cornelius van Aardt or his descendants acquires on the date of the agreement are contingent. A further conclusion is also inescapable: it is that the contract makes an irrevocable post mortem disposition of the right to acquire the seller’s farms. It is therefore a prohibited pactum successorium.

[10] Counsel have not referred to authority on the issue which is directly in point, and I have not been able to find any. But it seems to me that if the wording in the document under consideration had been contained in a will, the authorities would support the conclusion that the nomination of a beneficiary as ‘Stephanus Cornelius van Aardt or his descendants’ would be a direct substitution of beneficiaries contingent upon Stephanus Cornelius van Aardt surviving the testator.4 That being so, the identity of the ultimate beneficiary would only determined on the date of the testator’s death, with a consequent postponement of vesting to that date. 5 A word of caution is necessary here. While similar principles apply to the construction of statutes, wills and contracts, 6 words in a will need not necessarily bear the same meaning as the same words would bear in a written agreement. Different policy considerations underlie the law of wills, and they generate a different approach involving a different series of presumptions. But where, as here, the agreement purports to dispose of assets on the death of a party, or provides for performance only on the death of a party. I believe that regard may usefully be had to how the words used in the agreement have been interpreted where they used in wills, provided that one bears in mind the difference referred to above.

[11] A second argument was put up on appeal that the agreement lapsed by reason of the dissolution of the partnership between the parties. The suggestion is that the agreement was subject to an implied condition that the parties continue to farm in partnership or that it would lapse on dissolution of the partnership. This argument was raised without vigour, ad understandably so. It has no merit. Is does not even begin to get past the officious bystander and business efficacy tests which are frequently used by the courts to establish the existence or otherwise of an implied or tacit term of this nature. The respondent did not prove a term to this effect.

[12] The result is that the appeal is allowed with costs, and the order of the court a qua is altered to an order that the application is dismissed with costs.

RJW JONES

Judge of the High Court

PICKERING J: I agree.

JD

PICKERING

MALOPA AJ: I agree.

LM MALOPA

Judge of the High Court (Acting)

1 Dale Hutchison, Isolating the Pactum Successorim (1983) 100 SALJ 221 at 231 and 237 quoting Ex parte Calderwood NO: in re Estate Wixley 1981 (3) SA 727 (Z) 735A-C. See further Bornman en De Vos NNO v Potgietersrusse Tabakkorporasie Bpk 1976 (3) SA 488; Corbett, Hofmeyr and Khan, The Law of Succession 2nd ed (1999) 163-165.

2 Jubelius v Griesel NO 1988 (2) SA 610 (C) 623C-1; McAlpine v McAlpine NO and another [1996] ZASCA 127; 1997 (1) SA 736 (A) 750C-751D.

3 McAlpine v McAlpine supra footnote 2 at 7461

4 ‘Generally, the use of the word “or” in linking … persons or classes of person with the appointed beneficiary is regarded as being an indication that a direct substitution is intended. Thus a bequest to “A or B” would normally be interpreter as a bequest to A subject to B being substituted for A should A predecease the testator or be unable for some to take the bequest’: Corbett, Hofmeyer, Kahn, The Law of Succession in South Africa 2nd ed 210. Hudson v Estate Hudson 1926 CPD 278, 280-1; Van Coller v Henny: in re Estate Albertyn 1929 CPD 244,254-5

5 The authors The Law of Succession in South Africa supra state the principle thus at 179: ‘Where a testator, having made a bequest payable upon a future date, has nominated alternative ultimate beneficiaries in direct substitution for any beneficiary, who, because of death prior to such future date or for some other reason, cannot take when the bequest becomes payable, then the uncertainty as to the identity beneficiaries consequent on this substitution will generally cause there to be a postponement of vesting in the ultimate beneficiaries (that is both those originally nominated and the substituted beneficiaries) until the arrival of this future date.’ See further the authorities cited in footnote 19 on page 179.

6 Van Rensburg v Taute 1975 (1) 297 (A) 303; Kellaway Principles of Legal interpretation of Statutes, Contracts and Wills,(Butterworths 1995) 417.