South African Deeds Journal South African Deeds Journal March 2008 • Issue No. 14 March 2008 • Issue No. 14 CROSS-BORDER INSOLVENCIES COUCHING OF A WAIVER OF PREFERENCE IN A SECTIONAL BOND WAIVER OF LEGAL EXCEPTIONS REGISTRARS' CONFERENCE RESOLUTIONS OF 2007 THE RECOGNITION OF CUSTOMARY MARRIAGES ACT, 120 OF 1998 Department of Land Affairs CHIEF REGISTRAR OF DEEDS Land Affairs Department: REPUBLIC OF SOUTH AFRICA land affairs
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S o u t h A f r i c a n D e e d s J o u r n a lS o u t h A f r i c a n D e e d s J o u r n a lMarch 2008 • Issue No. 14March 2008 • Issue No. 14
Discussion on section 35A of the Income Tax Act 25Cross-Border Insolvency Law 30
Couching of Waiver of Preference in a Sectional Bond 3Massing and Adiation vis à vis Massing and Election 5Registrars' Conference Resolutions of 2007 8The Recognition of Customary Marriages Act, 120 of 1998 9Beneficiary's Disposal in a Trust and Transfer Duty Implications 17Sales from Estates: Section 18(3) Act 66 of 1965 19Chief Masters Directive 3 of 2006: Appointment of Executorsand/or Master's Representatives in Deceased Estates by the Master 20Waiver of Legal Exceptions 25Change of Names of Building Societies and Banksof Immovable Property in South AfricaDoes Agricultural Land Still Exist given the Stalwo v Wary case? 32
Conveyancing Through the Cases 34
Articles Published in Legal Journals 34
Testamentary Conditions and Redistribution Agreements – Reply 1 35Section 4(1)(b) – A rethink 35Lapsing of Real Rights of Extension 36SADJ – October 2006 – Transfer Duty : Acquisition of Immovable 36Property by a Company, Close Corporation or Trust:Article by PS Franck
The Deeds Registry as a Necessary Economic Infrastructure 2Long Distance Runner 7Reflecting the Past 40 Years 14Deeds Training Spreads its Wings 16
The views expressed in the articles published in this journal do not bind theDepartment of Land Affairs and the Chief Registrar of Deeds. The ChiefRegistrar of Deeds does not necessarily agree with the views of thecontributors.
Anybody who would like to be placed on the mailing list for the SADJ, mustsubmit their postal address to [email protected]
Lesedi Litho Printers88 Visagie Street, PRETORIA
27
The new year has literally commenced
with a bang, albeit with or without load
shedding. This issue is once again
bumper-packed with interesting
articles and news.
Photos are provided on courses and conferences for readers to try
and identify previous Registrars and Deeds Office officials.
The 2007 resolutions taken by the Registrars are included. Please
note that they have become operative with effect from 2 January
2008.
The article chosen as the best article in the previous issue was theone by the former Registrar of Deeds Kimberley, Mr WillieSwanepoel on Fideicommissums. Accolades were received fromfar and wide for the article on Robben Island together with thesuperb photography. Thanks once again Loodt on a well-researched article.
Abelated blessed new year to all.
Contributions may be sent to the Editor:
Via e-mail or post
AS West
Private Bag X659
PRETORIA
0001
This journal is also published on the Department of Land Affairs'
website:
A S West • A Boraine • L J Vosloo • R Rossouw • A van Wyk • M M
Meyer • LKilbourne • I Broodryk • M Grovè • T Maree
Our Front Cover picture this month shows a colourful row of
historic houses on the slopes of Signal Hill in the Cape Town city
bowl, which is known as the “Malay Quarter”, so named after the
inhabitants who have lived there since they were freed from
slavery in the early 1800s. The area is a major tourist attraction,
hence the colourful outside paint schemes of some of the houses.
It is hardly imaginable that in the 1930s, due to the deterioration of
many of these historic buildings, it was considered demolishing
the houses to make way for development. A very informative
paper, written by Cape Town professor Fabio Todescini and
Allen West (Editor) - Deeds TrainingJoanne Dusterhoft - King William's TownTebogo Monnanyana - BloemfonteinAli van der Ross - VryburgHennie Geldenhuys - Office of the Chief Registrar of DeedsLood Vosloo (Sub-Editor) - Cape TownZandré Lombaard (Scribe) - Deeds Training (Scribe)Dorethea Samaai - Directorate: Communication ServicesMarie Grovè - Deeds TrainingElizabeth Govender - PietermaritzburgAlan Stephen - JohannesburgLevina Smit - KimberleyGeorge Tsotetsi - Office of the Chief Registrar of DeedsGustav Radloff - Conveyancer, MacRobert Inc.André Schoeman - Office of the Surveyor General, Pretoria
Couching of waiver of preferencein a sectional bond
By: Marie GrovéDeeds Training, PRETORIA
The Sectional Titles Act, 95 of 1986 does not provide for the waiver of a personal servitude in a sectional bond. The matter was
recently discussed at the Registrars' Conference, and the Registrars resolved that the bond must be made subject to the usufruct and
the waiver must be contained in the bond, and not the annexure:
Unfortunately the conference did not state whether the Power ofAttorney (PA) must be lodged when the usufructuary (or holder of the
personal servitude) appoints an agent by means of a PA. It can be reasoned both ways whether the PAmust be lodged or not.
In the first instance, the PA falls within the ambit of the documents described in Annexure 6B, as referred to in regulation 40 of the
Sectional Title regulations, in which case the PAshould not be lodged.
It can also be reasoned that the personal right is waived in terms of the Deeds Registries Act, 47 of 1937, and not in terms of the
Sectional TitlesAct, 95 of 1986. Therefore the PAmust be lodged.
It is suggested that the waiver of preference in the bond, as directed by the Conference should be set in the example below, namely:
“
“52/2007 Couching of waiver of preference of usufruct
Resolution:
2 91/1996 BATCAVESERF 957 ELDORAIGNE TOWNSHIP City
of Tshwane Metropolitan Municipality 90(NINETY)
SUBJECT TO ALL THE TERMS AND CONDITIONS CONTAINED THEREIN AND A LIFELONG USUFRUCT IN FAVOUR OF
Uncertainty at present prevails as to how the waiver or preference of a real right, such as a usufruct, must be couched in
a sectional bond.
The usufructuary must either personally or in terms of an agent appear before the conveyancer. The bond must be
made subject to the usufruct and the waiver must be contained in the bond and not the annexure.”
Mortgagor hereby binds as a FIRST MORTGAGE, subject to the conditions set out in the annexure to this bond:
Aunit consisting of:
(a) Section No as shown and more fully described on Sectional Plan No SS in the scheme known as inrespect of the land and building or buildings situated at , in the local authority of
of which section the floor area, according to the said sectional plan issquare metres in extent; and
(b) an undivided share in the common property in the scheme apportioned to the said section in accordance with theparticipation quota as endorsed on the said sectional plan.
Held by virtue of Deed of Transfer ST
3
Couching of Waiver of Preferencein a Sectional Bond
By: Marie GrovéDeeds Training, PRETORIA
the professionalism of deeds examiners employed by the
State to ensure the integrity of the registers.
Of course our land registration system and all that it is built
upon only forms part of the total judicial infrastructure on which
our economy is based. If anarchy in a given area escalates to
such an extent that a bank can no longer retrieve its
outstanding debt on a property by way of public auction, then
the best land registration system becomes meaningless.
However, one must not underestimate the value to the
economy of a reliable land register.
The above article originally appeared in the SAKE24 supplement of DIE
BURGER and is reproduced here with kind permission from Media24, and the
author. See also the monetary value of bond and bond registrations published in the
October 2007-issue of the SADJ on pages 15 to 20 which is ancillary to the
essence of this article. It was translated from the original Afrikaans by L J Vosloo. -
EMMA GEEL, IDENTITY NUMBER 520101 0032 00 2, UNMARRIED, WHICH RIGHT IS BEING WAIVED IN FAVOUR OFTHIS BOND, AS WILLAPPEAR LATER ON IN THE BOND
ALEXANDER HONEY,
SIGNED
__________________________CONVEYANCER
__________________________REGISTRAR OF DEEDS
*I, the undersigned, duly authorized by virtue of a power of attorney, signed at Pretoria on 7 January2004, by EMMA GEEL, IDENTITY NUMBER 520101 0032 002, UNMARRIED, the holder of the usufruct over the withinmentioned property, do hereby waive the usufruct on behalf of the usufructuary, in favour of the mortgagee.
Resolutions taken at the Conferenceof Registrars 2007
By: Allen WestDeeds Training, PRETORIA
This article is not intended to provide legal treatise on massedestates, but merely to provide a simple distinction betweenmassing and adiation, and massing and election.
The question begging an answer is whether a will providea limited interest in the massed property in favour of thesurviving spouse. According to 's Mortgage and Pledge(Third Edition) on page 299 it is a prerequisite that thesurviving spouse receives a limited interest in the massedproperty. The authority for this is probably based on theprovisions of section 37 of theAdministration of EstatesAct, 66of 1965. Furthermore the case of
; 1873 Buch 31 provides that “”.Adiation
is thus dependent on the surviving spouse obtaining a limitedinterest in the massed estate.
However, when election occurs in a massed estate entirely,there is no necessity for a limited interest and themay lie distinct from the inheritance.
Thus to summarize, where there is a massed estate, and thesurviving spouse has abided by the terms of the joint will,adiation will be necessary where a limited interest is received,and election necessary where no limited interest is obtained.
must
Wille
Secretary, South AfricanAssociation v Mostert thesupervisor has accepted some benefit under the will
quid pro quo
From a conveyancing perspective the provisions of section 21and regulation 50(2)(b) of the Deeds Registries Act 47 of 1937requires closer perusal.
In the case of massing and adiation, where a joint estate isinvolved, the surviving spouse does not have to join theexecutor in the passing of transfer of the massed property,provided proof is submitted that the surviving spouse hasadiated.
However, where massing and election has occurred, and theproperty forms an asset in the joint estate, the survivingspouse must join the executor in the passing of the transfer ofthe massed property and documentary evidence in the form ofan affidavit from the surviving spouse must be lodged to prove
the election of the surviving spouse Although the latter proofis not a specific requirement in terms of theAct, section 4(1)(a)sanctions the request for same.
In both instances; where the property forms an asset in a jointestate, the joint estate must be divested (see regulation50(2)(c)).
.
The Registrars held their annual conference during November
2007 and 52 resolutions were taken. These resolutions have
become operative from 2 January 2008 and are applicable to
all Deeds Registries.
What follows is merely those conference resolutions deemed
necessary to draw examiners and practitioners attention to
and which has an effect on the day to day practice of
conveyancing.
Given the fact that a death notice cannot be accepted as proof
of children born out of wedlock, it should also not be accepted
as proof that a person died leaving no valid will. Does
conference concur and if so, what proof should be required?
A death notice cannot serve as evidence of intestacy. Proof, in
the form of an affidavit from the executor/representative, must
be insisted upon. However, in the case of a transfer by
endorsement in terms of section 45 of Act No. 47 of 1937, a
regulation 49(1)(g) certificate from the Master will be
acceptable.
RCR 3/2007 - Proof of Intestacy
Resolution:
RCR 4/2007 - Sectional Title Mortgage Bonds
Resolution:
.
RCR 6/2007 - Registration of Usufruct over right to extend
Resolution:
Where a sectional title unit is subject to conditions, imposed in
favour of the Home Owners Association, restricting transfer,
etc. must the bond registered over such unit be made specially
subject to such conditions, in the light of RCR 5 of 1987, read
with RCR 22 of 2005?
Yes, sectional bonds must be made subject to restrictive
home-owners association conditions. RCR 13/2002 is hereby
confirmed
Can a usufruct be registered over a right to extend as provided
for in terms of section 25(9) ofAct No. 95 of 1986?According to
RCR 41/2003 and RCR 37/1996, and Act No. 95 of 1986 it is
possible to register a usufruct over an exclusive use area (this
amplifies the registration of a “right over a right” which the law
does not allow).Also, see RCR 44/2003.
No, Act No. 95 of 1986 does not provide for a usufruct to be
RCR 49/2007 - Opening of Sectional Title register and Act
21 of 1940
Resolution:
e
*RCR 52/2007 - Couching of Waiver of Preference in
Sectional Mortgage Bond
Yes, CRC 6 of 2002 is applicable.
Where a sectional title register is opened on land within 95
metres from a main or building restriction road, must the
provisions of section 11(4) of Act No. 21 of 1940 be applied as
per the uniform practice applicable to conventional transfers of
land to two or more persons?
Yes, s ction 11(4) ofAct No. 21 of 1940 must be adhered to.
Uncertainty at present prevails as to how the waiver of
preference of a real right, such as a usufruct, must be couched
in a sectional bond.
The usufructuary must either personally or in terms of an agent
appear before the conveyancer. The bond must be made
subject to the usufruct and the waiver must be contained in the
bond and not the annexure.
Readers are advised to obtain a full set of the resolutions from
their law society or from the Deeds Registry.
Resolution:
Long DistanceRunner
Susan Hurter is an Assistant Registrar of Deeds at the Pretoria Deeds Registry. She is a regular participant in long distancerunning events. In 2007 she participated in five 100-miler ultra marathons. She won all her 100-miler marathons and in theWashie 100 miler she came 9th overall.
Those of us who wonder why Susan does this - It is because she can!
*See also the article by Marie Grovè on page 3 of this issue - Editor
competent to enter into any other marriage, albeit civil or
customary.
The Act thus confirms that spouses married by customary
union may not enter into a civil marriage if either of them is a
spouse in a subsisting customary marriage with any other
person. The same holds for spouses married under civil rites.
They may not enter into a customary union.
Editor's Note:
The Department of Home Affairs who is responsible for the
registration of customary marriages has ceased to register
marriages subsequent to the dates referred to in section 4 and
thus the matter has to be referred to court for verification of the
marriage should the marriage not have been registered
timeously. This is causing undue hardship for the parties who
have entered into customary marriages.
Foot Notes:
1
2
3
4
5
6
Compensation for Occupational Injuries and DiseasesAct
130 of 1993, s 1.
The Income TaxAct 58 of 1962, s 1.
MaintenanceAct 23 of 1962, s 1.
The BlackAdministrationAct, 38 of 1927, s 11(3)(b).
Justice College, Customary Marriages Bench Book,
February 2004, par. 2.1.
Section 3.
13
7
8
9
10
11
12
13
14
15
16
17
18
19
Refer to sections 3(b), 4(a) & 4(c).
Section 10(1).
Section 3(2).
The Minister of Home Affairs extended the period to
November 2002, but despite the expiry period, Home
Affairs has permitted registration to continue.
Justice College, Customary Marriages Bench Book,
February 2004, par. 4.5.
Section 5(a).
Justice College, Customary Marriages Bench Book,
February 2004, par. 4.5.
Section 7(4)(b).
Benett (2004) 236.
1951 (1) SA377 (A).
,
2005 (1) SA580 (CC) handed down on 15 October 2004.
2002 (2) SA209 (T).
In 2007 (3) SA 403
(E) it was held that the failure of parties to register the
customary marriage in terms of the Transkei Marriage
Act does not affect the validity thereof.
Customary Law in SouthAfrica
Nkambula v Linda
Bhe and Others v Magistrate Khayelitsha and Others
Khambule v The Master and Others
Section 9(1)(i) of Act 40 of 1949 reads as follows:
Section 9(1):
(my underlining).
The Act specifically requires that the surviving or divorcedspouse should acquire “sole ownership” in the “whole” or “anyportion” of a property, registered in the name of his or herspouse. The word “any portion” is used and not “any share”,which indicates that when reference is made to “portion” it willbe a “defined” portion and not a “share” in the property.
“No duty shall be payable in respect of theacquisition of property by - ……. (i) the surviving or divorcedspouse who acquires the
registered in the name of his or herdeceased or divorced spouse where that property or portion istransferred to that surviving or divorced spouse as a result ofthe death of his or her spouse or dissolution of their marriage orunion”
sole ownership in the whole or anyportion of property
By way of an example, should a deceased/divorced spousebe the registered owner of an undivided share in the property,i.e. co-owner together with a third party (not his/her spouse),and the surviving/divorced spouse, who is entitled to theproperty, receives transfer of the share of the other spouse,the transaction will not be exempt from transfer duty in termsof section 9(1)(i). The spouse does not receive transfer of the“whole” or a ”portion” of the property and does not acquire“sole ownership”, but merely an undivided share. Strictlyinterpreted transfer duty should be payable in respect of suchtransactions.
Is this an oversight by the legislator?
your views please! - Editor
Exemption Of Transfer Duty: Section 9(1)(i)Of The Transfer Duty Act 40 Of 1949 By Marie Grové
Beneficiary's Disposal in a Trust andTransfer Duty Implications
RELEVANT PROVISIONS OF THE TRANSFER DUTYACT
The following provisions of the Transfer Duty Act 40 of 1949(“Transfer DutyAct”) are relevant:
The following definitions contained in section 1 of the TransferDutyAct:
'property'
any real right in land
held by a discretionary trust
a consequence of or attendant upon the conclusion of anyagreement for consideration with regard to property helby that trust;accompanied by the substitution or variation of that trust'sloan creditors, or by the substitution or addition of anymortgage bond or mortgaged bond creditor; oraccompanied by the change of any trustee of that trust;
in relation to a discretionary trust, the substitution oraddition of one or more beneficiaries with a contingentright to any property of that trust, which constitutesresidential property or shares
means land in the Republic and any fixturesthereon, and includes -
(a) but excluding any right under amortgage bond or a lease or property other than a leasereferred to in paragraph (b) or (c);
(b) ……..(c) ……..(d) a share or member's interest in a residential property
company; or(e) a share or member's interest in a company which is a
holding company (as defined in the Companies Act,1973 (Act 61 of 1973) or as defined in the CloseCorporations Act, 1984 (Act 69 of 1984), as the casemay be), if that company and all of its subsidiarycompanies (as defined in the Companies Act, 1973, orClose Corporations Act, 1984), would be a residentialproperty company if all such companies were regardedas a single entity;
(f) a contingent right to any residential property or share ormember's interest, contemplated in paragraph (d) or (e),
(other than a special trustas defined in section 1 of the Income Tax Act, 1962 (Act58 of 1962)), the acquisition of which is -
(i)d
(ii)
(iii)'residential property' means any dwelling house, holidayhome, apartment or similar abode, improved orunimproved land zoned for residential use in the republic(including any real right thereto), other than -
(a) an apartment complex, hotel, guesthouse or similarstructure consisting of five or more units held by a personwhich has been used for renting to five or more persons,who are not connected persons, as defined in the IncomeTaxAct, 1962 (Act 58 of 1962), in relation to that person; or
(b) any 'fixed property' of a 'vendor' forming part of an'enterprise” all as defined in section 1 of the Value-AddedTaxAct, 1991 (Act 89 of 1991);
'transaction' means -(a) …..(b) …..(c)
or member's interestcontemplated in paragraph (d) or (e) of the definition ofproperty' or a contingent right contemplated in paragraph(f) of that definition;
‘
Section 2 which deals with the imposition of transfer duty inthe following manner:
The following definitions contained in section 1 of the TrustProperty ControlAct are relevant:
It is clear from the definitions of 'property' and 'transaction'contained in the Transfer Duty Act that (for the purpose ofdetermining whether the disposal of a beneficiary's interest ina trust will attract transfer duty) it is imperative that one shouldbe able to differentiate between a “discretionary trust” and atrust which is not a discretionary trust for purposes of the act.
The Transfer Duty Act uses the term “discretionary trust”without defining it. (For the purpose of this memorandum I willaccept that the “discretionary trust” to which the act refers isthe one defined by PAOlivier 'Trustreg en Praktyk' on p 114 asone where the trustees have a discretion as to which of thebeneficiaries will eventually receive the income and/or capitalof the trust. The rights of the beneficiaries are thereforecontingent and not vested).
trust' means any trust consisting of cash or other assets whichare administered and controlled by a person acting in afiduciary capacity, where such person is appointed undera deed of trust or by agreement or under the will of adeceased person.
(1) Subject to the provisions of section 9,for the benefit of the National Revenue Fund a transferduty (hereinafter referred to
on or after thedate of commencement of thisAct
'trust' means the arrangement through which the ownership inproperty of one person is by virtue of a trust instrument madeover or bequeathed -
(a) to another person, the trustee, in whole or in part, to beadministered or disposed of according to the provisionsof the trustee instrument for the benefit of the person orclass of persons designated in the trust instrument or forthe achievement of the object stated in the trustinstrument; or
(b) to the beneficiaries designated in the trust instrument,which property is placed under the control of anotherperson, the trustee, to be administered or disposed ofaccording to the provisions of the trust instrument for thebenefit of the person or class of persons designated in thetrust instrument or for the achievement of the objectstated in the trust instrument, but does not include thecase where the property of another is to be administeredby any person as executor, tutor or curator in terms of theprovisions of the Administration of Estates Act, 1965 (Act66 of 1965);
there shall be levied
as the duty on the value ofany property …. acquired by any person
by way of a transactionor in any other manner…
RELEVANT PROVISIONS OF THE TRUST PROPERTYCONTROL ACT 57 OF 1988
The Trust Property Control Act also does not differentiatebetween a “discretionary trust” and a trust which is not adiscretionary trust. (It does, however, differentiate in itsdefinition of “trust” between:a trust where ownership of the trust assets vest in the trusteesin paragraph - (a) of the definition and;a trust where ownership of the trust assets vest in thebeneficiary/ies - in paragraph (b) of the definition.
Cameron, de Waal and Wunsh Honoré's SouthAfrican Law ofTrusts' (Fifth Edition) p 9 refers to 3.3.1 as a'ownership trust' and to 3.3.2 as a 'bewind trust'.
P A Olivier 'Trustreg en Praktyk' p 111 refers to 3.3.1 as a“privaat trust” and says the following of that category of trust:
b On p 114Olivier defines a 'discretionary trust as follows:
It would thus appear as if Olivier acknowledgesthat one does find another form of the “privaat trust” whereownership of the trust assets still vest in the trustees even ifthey do not have a discretion as to which of the beneficiarieswill eventually receive the income and/or capital.
P A Olivier 'Trustreg en Praktyk' p 114 says the followingregarding the practical use of a 'bewind trust':
I am of the opinion that Oliver's “OmegaTrust” would only be a 'bewind trust' if the office building isregistered in the name of the beneficiaries. If, as is much morecommon, the office building is registered in the name of thetrustees the trust is an 'ownership trust' notwithstanding thefact that the beneficiaries have a vested right as regards theincome and capital of the trust when either income and capitalis distributed by the trustees. I base my opinion on the fact thatthe trustees, before they decided to distribute the capital of thetrust, may (if they are entitled to do so in terms of the provisionsof the trust deed) decide to sell the office building and buyanother in the place thereof. The beneficiaries clearly neverhad a real right in either of the office buildings whilst thebuildings are registered in the name of the trustees. Only whenthe trustees decide to transfer the office building to thebeneficiaries do they acquire a real right. This may neverhappen as the trustees may decide to sell and convert theoffice building into cash and then to distribute the cash to thebeneficiaries.
I also find support for my opinion in:
(a) 2003 (5) SA 674(T) where it was said that “Die trustgoed word normaalweg
aan trustees in eiendomsreg oorgedra ('n uitsonderingis die geval van 'n bewind-trust).”
(b)2002 (4) SA 606 (N) where it was
decided that the trust in question although it only had onebeneficiary was “a trust property so called, where the
“Dié soort trust is eintlik die werklike uitvloeisel van die trust inregstegniese sin met die trustee as eienaar van die trustgoeden met bepaalde of bepaalbare egunstigdes.”
“'nDiskressionêre trust is 'n privaat trust met die besonderekenmerk dat die begunstigdes wat uiteindelik deur dieinkomste en/of kapitaal van die trust bevoordeel gaan wordvolgens die diskresie van òf die trustees òf 'n begunstigdebepaal moet word. Dis … 'n besondere verskynsel van dieprivaat trust.”
“Omdat diebewindtrust wel erkenning geniet, is dit bruikbaar in die vormvan 'n beleggingstrust wat ook 'n vorm van 'n besigheidstrustis. 'n Voorbeeld hiervan kan gevind word waar die lede vanbyvoorbeeld 'n prokureursfirma hulle eie gebou oprig. Ditgeskied in die naam van die Omega Trust. Die vennote of hullefamilietrusts is die begunstigdes en die kapitaal en inkomsteen verliese van d ie Omega Trus t ves t i g i n d i ebegunstigdes.”
Coetzee v Peet Smith Trust en andere
Commissioner, South African Revenue Service v DyefinTextiles (Pty) Ltd
assets of the trust vested in the trustees, as opposed by a'bewind' trust,
The trust was a validand binding one” (my underlining).
(c) 1999 (3)SA 517 (BH) where it was held as regards a trust deedwith only one beneficiary that “there were no 'inherentambiguities' in the affected deeds of transfer. No factshad been placed before the Court relating to a bewindtrust, except the legal principles relating thereto. Itappeared from the affected deeds of transfer that the
. What was involved was an ordinary trustin terms whereof the trustee and not the beneficiary hadthe dominium of the land” (my underlining ”.
As regards the 'ownership trust' I am thus of the opinion thatthe trust may be:a discretionary trust where the trustees have a discretion as towhich of the beneficiaries to benefit when income or capital isdistributed (I will refer to this category of trust as a'discretionary ownership trust') or;One where the founder has given the beneficiaries fixed (orvested) rights. In the trust income and capital but where thetrustees remain owners of the trust assets until they decide todistribute it to the beneficiaries (I will refer to this category oftrust as a 'non-discretionary ownership trust').
Although the said learned writers refer to and discuss manycategories of trust (e.g., as opposed totestamentary trusts, trust in the strict sense as opposed totrusts in the wide sense, family trust as opposed to businesstrusts, etc.), I am of the opinion that, for the purpose ofdetermining the transfer duty implications when abeneficiary's 'interest' in a trust is disposed of, one may acceptthat all trusts will fall into one of the following categories:
the 'bewind trust';
the 'discretionary ownership trust' and
the 'non-discretionary ownership trust'.(Kindly note that this memorandum does not deal with a'special trusts' as defined in section 1 of the Income Tax Act,1962 (Act 58 of 1962)).
Bewind Trusts:If the trust in question is a bewind trust the transfer dutyimplications when a beneficiary's 'interest' in a trust isdisposed of are easy to determine. The beneficiary thusdisposing is owner (or co-owner) of the immovable propertyand therefore has 'a real right in land' which, in terms of thedefinition contained in section 1 of the Transfer Duty Act, is'property' and which, when disposed of, will attract transferduty regardless of whether it is 'residential property' asdefined or not.
Discretionary ownership trusts:The position as regards the disposal of a contingent right in a'discretionary ownership trust' is provided for in the TransferDuty act. 'Transaction' in relation to a discretionary trust, is insection 1 of the Transfer Duty Act, defined as “the substitutionor addition of one or more beneficiaries with a contingent rightto any property of that trust, which constitutes residentialproperty ……..”. In terms of the definitions of 'residentialproperty' and 'transaction' contained in the Transfer Duty Acttransfer duty (read with section 2 of the Act), transfer duty will
where the founder made a gift or bequestdirectly to a beneficiary but vested the control of theassets in a trustee or administrator.
dominium of the Bafokeng land vested in the variousgovernment officials whose names appeared thereon intrust for the tribe
ownership trust' is a personal right and not a real right in landbecause:it is not enforceable against third parties. Should thetrustees, for instance, pass a mortgage bond over the trust'sproperty to secure the repayment of money borrowed by thetrustees, the mortgage would acquire a real right and thebeneficiaries would not be able to enforce their “vested right”against the mortgagee.
It is not registrable in a Deeds Registry2006 (3) SA 342 (SCA) the
following was held as regards a real right in land: “Such a rightis in principle registrable in a Deeds Registry because itconstitutes a 'burden on the land' by reducing the owner's rightof ownership of the land and binds successors in title” and in
1992 (1) SA 879 (A) it was held that “the right to extend” was areal right in land which therefore was, in principle, capable ofregistration.)
It is clear that the use of the word “discretionary trust” in thedefinitions of 'property' and 'transaction' in section 1 of theTransfer Duty Act was an unfortunate one and createsconfusion. I would appreciate the viewpoint of otherpractitioners.
bona fide
(In Dlamini andanother v Joosten and others
Erlax Properties (Pty) Ltd v Registrar of Deeds and others
CONCLUSION
thus be payable if the trust in question is a 'discretionaryownership trust' where the trustees of the trust (in theircapacities as trustees) are the owners of 'residential property'as defined and where beneficiaries are substituted or added insuch a manner that the new beneficiaries acquire a contingentright to any residential property, the acquisition of which is-a consequence of or attendant upon the conclusion of anyagreement for consideration with regard to property held bythat trust; accompanied by the substitution or variation of thattrust's loan creditors, or by the substitution or addition of anymortgage bond or mortgage bond creditor; or accompaniedby the change of any trustee of that trust; 'Non-discretionaryownership trusts’ The position as regards the disposal by abeneficiary of its interests in a 'non-discretionary ownershiptrust' is not so clear. My opinion as regards this category oftrust is as follows: The beneficiary is not the owner of the trustassets but has a vested right (as opposed to a contingentright) regarding any income or capital which the trustees maydecide to distribute. If a beneficiary of such a trust disposes ofits rights as beneficiary the interest disposed of is neither a“real right in land” (see paragraph 4 of this memorandum) noris it a “contingent right in a discretionary trust” and thereforedoes not constitute “property” as defined in section 1 of theTransfer DutyAct.
It would thus appear (incongruent as it may seem) as if thedisposal of a beneficiary's interest in a 'non-discretionaryownership trust' will not attract transfer duty.
The “vested right” of the beneficiary of a 'non-discretionary
REAL RIGHTS IN LAND
By: L J VoslooDeeds Registry, CAPE TOWN
Sales from Estates: Section 18(3) Act 66 of 1965
There has been an ongoing debate as to whether the Master ofthe High Court needs to consent to sales of immovableproperty from a “section 18(3)-estate”, and what proof theDeeds Office requires to ensure that the estate does notexceed the present limit of R125 000,00, notwithstanding RCR3 of 2003.
A letter from the retired Cape Town Master confirmed thatshould a sale from the estate exceed the limit of R125 000,00then it must be referred back to him for the appointment of anexecutor. It has, however, been confirmed that this only appliesto sales directly from the estate, and not to a follow-on sale. Inother words where there is a so-called “same day” transfer andthe heirs in an “section 18(3) estate” transfer the property for ahigher value, then no further deeds office examination queriesneed be made, questioning the section 18(3) procedure.
However, the question now begging an answer is how does theDeeds Registry know that the sale of the immovable propertyis within the R125 000,00 limit?After all it can quite conceivablyhappen that a property is valued at just below R125 000,00, yetthe other assets such as cars, etc. might cause the estate toexceed the limit, having the result that the more formalprocedure of appointing an executor must be followed.
According to the said Master, his office now issuesappointment certificates which list all the assets, and fromsuch document it can then be ascertained what the value of theestate is. Since it is not a requirement to lodge these
appointment certificates for the section 18(3) - transfers, thisinformation is not available to the deeds examiner.
Two schools of thought exist in this regard. Firstly, in the caseof a sale of immovable property from an estate administered interms of section 18(3), the Deeds Office examiner should callfor the appointment certificate by the Master's representativeto ascertain whether the sale falls within the ambit of section18(3). If it appears from such a certificate that the combinedvalue of the immovable property and any other assets in thatestate will have the result that may the maximum amountallowed for a section 18(3) is exceeded, the matter has to bereferred back to the Master for the appointment of anexecutor. This has in fact been suggested by the Master.
Secondly, the Deeds Office should not concern itself with thisissue as regulation 44A(c) covers the deeds office in that theconveyancer, who has signed the preparation clause, hasaccepted responsibility that “such person has in fact beenappointed in that capacity (Master's Representative) and isacting therein in accordance with the powers (that is not to actif the estate exceeds the maximum value permitted by hisappointment) granted to him” (my parenthesis)
Republished with permission from Ghost Digest - Editor
This is a contentious issue and readers are urged to
Chief Masters Directive 3 of 2006: Appointment ofExecutors and/or Master's Representatives inDeceased Estates by the Master
PREAMBLE
PURPOSE
SCOPE
OBJECTIVES
The primary function of the Master is to regulate theadministration of estates. It is the duty of the Master to ensurethat the legal and financial interests of those affected in theadministration of an estate are taken care of in acompassionate manner.
The conduct of a Master must at all times assure the public thatthe manner in which estates are administered is -
• in compliance with the law; and
• that the financial and legal interests of all those who maybe vulnerable will be protected.
The Chief Master recognizes that -
the procedures and forms used in the appointment ofadministrators of estates needs to be standardized -
• to ensure uniformity in all offices;
• to eliminate all forms of corruption; and
• to bring about transparency and consistency in the wayappointments are done.
The purpose of this Directive is to direct all Masters in theperformance of their functions. This Directive is issued in termsof -
Section 14(a) of the 3which entitles the Chief Master as the executive officer of theMaster's offices to
;
Section 3 of the whichrequires the Chief Master to
Section 2(1) of theAdministration of EstatesAct.
This Directive replaces all previously issued directives inrespect of appointments in deceased estates.
This Directive addresses the appointment of executors, andMaster's Representatives in terms of the
Administration of EstatesAct, 1965 (Act No. 66 of 1965);
This Directive seeks to achieve the following objectives:-
Compliance with the Promotion ofAdministration of JusticeAct
Judicial Matters Amendment Act, 200
Judicial Matters Amendment Act, 2005
“exercise such supervision over all theMasters in order to bring about uniformity in the practice andprocedure”
“exercise control, direction andsupervision over all the Masters”.
3 of 2000.
To ensure greater transparency and openness in the functionsof the Master.
Establish uniform, fair and transparent appointmentprocedures to be used by Masters of the High Court inappointing executors and Master's Representatives;
To direct the Masters of the High Court with regard to makingappointments of executors and Master's representatives;
Eliminate corruption.
means the person appointed as the ChiefMaster of the High Courts in terms of sections 1 and 2(1) of theAdministration of EstatesAct, 1965.
means (unless otherwise indicated) anestate of a deceased person in terms of the Administration ofEstatesAct, 1965.
means the executor as defined in section 1 of theAdministration of EstatesAct, 1965.
means the Master as defined in section 2 of theAdministration of EstatesAct, 1965.
means the person appointed interms of section 18(3) of the Administration of Estates Act,1965.
means the person appointed / to beappointed as either executor or Master's Representative inthe estate.
This Directive will be effective as from date of signature of theChief Master.
Death Notice (J294)
Every Master is bound by the area of jurisdiction forwhichhe/she is appointed .
• Jurisdiction is determined in terms of section 4(1) of theAct. The ordinary place of residence of the deceasedprior to his death, irrespective of the duration of hisresidence there determines which Master hasjurisdiction.
Ensure that the deceased's residence falls within your area ofjurisdiction.
• If the place of residence falls outside the area ofjurisdiction and there is no appliation on record in terms
of section 4(1) for the Master to assume jurisdiction, theMaster transfer the estate to the appropriate Master'sOffice with jurisdiction.
• The Master can only assume jurisdiction with the consentof the Master who has jurisdiction.
• Once the Master has exercised jurisdiction, for instanceby registering and accepting the will, he shall continue tohave jurisdiction. In such a case, jurisdiction cannot betransferred to or assumed by another Master.
Where the deceased left a will/codicil.
• If the will/codicil has not been lodged yet, it must be calledfor.
• If only a copy has been lodged, the original must be calledfor.
• The Registry Personnel must also check that there is no“live will” filed in Registry, and indicate as such on thedeath notice.
• If a will/codicil was registered but has not yet beenaccepted by the Assistant Master, a JM47 must beplaced on the inside of the soft cover (J257). This Jm47must be removed as soon as the will has beenaccepted / rejected by theAssistant Master.
• Once the will/codicil has been accepted by theAssistant Master, the original will must be filed in the vaultsand a copy must be placed on the file by Registry.
• Any endorsements made on the will/codicil by theAssistant Master, must be noted and taken intoaccount. A will's advice (JM27) must be issued byRegistry, which indicates whether a will/codicil has b e e nrejected or endorsed in any way.
• The Master may release a will delivered to him to a personlawfully requiring it to liquidate and distribute the estate ofthe deceased person outside the RSA, if he is satisfiedthat the deceased testator/testatrix has not left anyproperty in the Republic.
If it is indicated on the death notice that there is a predeceasedspouse, it has to be ascertained from the predeceasedspouse's estate that the will in that estate would have anyeffect on the administration of the estate in question.
This document must be properly signed.
ADeath Certificate, or certified copy thereof, must be lodged inall estates, accept in matters where the person signing theDeath notice was present or identified the body of thedeceased. Even though not required by law in the latterinstance, it would be prudent to call for the Death Certificate.
Marriage Certificate
An original or certified copy of the Marriage certificate or Proofof Registration, issued by HomeAffairs, may be accepted.
AMarriage Certificate must be lodged where the deceased
• died intestate leaving one/more surviving spouse(s) or
• died testate and the spouse claims to be aninterested party due to his/her half share of the estate in
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terms of an alleged marriage in community ofproperty, unless such spouse is named the sole heir in thewill.
Original Will
The original Will, if any, must be lodged or a duplicate originalWill. (Refer to section 8(4B)).
Only copies of registered and accepted wills andcodicils must be on file.
Copies of invalid / rejected wills or codicils are not kept on file,only a note containing the date of the will and the reason why itis invalid / rejected is filed in the file.
Next-of-KinAffidavit (J192)
• The Next-of-Kin Affidavit should be called for wherethe deceased
• left no Surviving Souse or• left a surviving spouse, but he/she will not be the sole
heir and/or• left no valid will, indicating the heirs or• left a will nominating heirs in a class, without specific
mention of the name of the heirs.
The Next-of-Kin affidavit must be completed bysomeone who knew the deceased and his/her family well.
A Commissioner of Oaths, and the person making theaffidavit, must sign the Next-of-Kin affidavit, as well a sany annexure attached thereto. Any alterations oramendments must also be signed accordingly.
Inventory (J243)
A provisional inventory must be lodged in terms ofsection 9 within 14 days after date of death of thedeceased.
If the deceased was married in community of property, theassets of the joint estates of the deceased and the survivingspouse must be reflected in the inventory.
The value of assets must be included as this will indicate whattype of appointment must be issued.
In the case of the death of one or more of the persons whohave massed their estates in terms of section 37, the massedestate must be reflected.
Where an estate is to be administered in terms of Section18(3), a municipal valuation must be lodged as proof of thevalue of the mentioned assets.
The inventory must be signed and dated.
List of creditors (MBU 4)
In all estates, which are administered in terms of section18(3), a full list of creditors must be provided on the form J155.
Where this part of the J155 has not been completed,Written confirmation must be provided that there are nocreditors or a separate list must be provided.
In all estates, where the assets are valued at R50 000, or less,
a declaration must be provided by the applicant, that the matterhas not been reported to any Service Point, in the form of MBU5.
• This form must be dated and duly signed.
Declaration of subsisting marriages and or co-habitationrelationship
In all estates, a declaration must be provided by theapplicant, indicating if the deceased was a partner in of any ofthe following:
• One/more subsisting Customary marriages or• One/more subsisting Religious marriages or• Asame sex co-habitation relationship or• ACivil marriage
If any of the above is applicable, full details must be providedconsisting of:
• Full names of all partners• ID number of each partner (if available)• Contact particulars of each partner (if available)
Where the deceased
• died intestate or• no administrator has been nominated in a valid will or• the nominated administrator is untraceable, incapacitated
or refuses to act or• the nominated administrator in the will is deceased and no
provision is made in the will to substitute or• the nominated administrator in the will, when called
upon by the Master, by notice in writing to take out letter ofappointment within the period specified by the Master,fails to respond to the Master's request,
all interested parties must nominate, in writing, a person to beappointed as executor / Master's Representative. The Mastermust in every of the above-mentioned consider the calling of ameetingin terms of section 18 for the purposes of electing anexecutor.
Nominations should only be obtained from major heirs and/orlegal guardians of minor heirs.
In intestate estates the heirs, in this regard, must bedetermined by examining the Next-of-KinAffidavit.
If there is competition for the office of administrator, the Mastershall give preference to
• the surviving spouse or is/her nominee,• an heir or his/or nominee,• a creditor or his/her nominee,• a tutor/curator so nominated of any heir/creditor who is a
minor/person under curatorship• where there is more than one surviving spouse, all
spouses must be consulted before making anappointment
• it is advisable to follow the process of a formalmeeting in terms of section 18 where there iscompetition for the office of executor in an estate
If a corporation is nominated as an administrator,
• the appointment letter shall be granted to a person who is
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Nominations
an officer / director of the nominated corporation and• has been duly authorized by the said corporationto act on
their behalf and for whose acts and omissions asexecutor the corporation accept liability;
• the Corporation nominated in the will as executor, mustqualify to liquidate and distribute the estate of a deceasedperson in terms of R910, otherwise section 16 cannot beimplemented.
Acceptance of Trust as Executor (J190) / Undertaking andAcceptance of Master's Directions (J155/MB.48)
Where the gross value of the assets of the estate is more thanR125 000 the applicant(s) must complete the J190 induplicate
• Every person applying must complete the J190 in full;• The form must be signed the properly witnessed• Acertified copy of the applicant's ID must be lodged• If the applicant is a lay person, he/she must be
required to be assisted by a person who, to thesatisfaction of the Master, has the necessarycapabilities and trustworthiness to assist him/her. Theagent must confirm so in writing to the Master.
• A legally incapacitated person, such as a minor, maynot act as an administrator of a deceased person
• Any Board of Executors, trust company, publicaccountant and person licensed under Act 44 of 1962,may act as an administrator.
• The will must be checked for any endorsement by theAssistant Master, to the effect that the nominatedexecutor is disqualified in terms of section 4A(3) and4A(1) of the WillsAct 7 of 1953.
• A copy of the Acceptance of Trust as Executor must beforwarded to SARS. Make sure that the estatereference number is inserted on the J190 beforedispatch.
Where the gross value of the estate is R125 000 or less theestate may be administered in terms of Section 18(3), unlessotherwise directed by the Master. Applicant(s) must completeform MB. 48, in duplicate.
• Every person applying must complete the J155 in full;• The form must be signed and properly witnessed;• Acertified copy of the applicant's ID must be lodged;• A legally incapacitated person, such as a minor, may
not act as an administrator of a deceased person;• Instances where the Master may request an
executor to be appointed for such an estate:
• Minors or mental patients being heirs / creditorsof the estate
• Insolvent deceased estates• Will determines property to be sold• Dispute/complaints by creditors and/or heirs
Security in terms of section (in estates with a value of morethan R125 000)
Every person who has not been nominated by will, as anexecutor, must lodge security in terms of section 23;
• In an amount determined by the Master for theproper performance of his functions.
• The amount is determined by the value reflected inthe section 9 inventory (provisional inventory).
The following persons are exempted from furnishing security,unless the Master directs him/her to furnish security (e.g. if he
is insolvent, has committed an act of insolvency or resides or isabout to reside outside the Republic):• The parent, child or surviving spouse of the testator o r
a person who has, in terms of the Will, beenassumed as executor by such person.
• A person nominated by a will executed before 1October 1913 or assumed by such a person and hasnot been directed by the Will to find security.
• A person nominated by a will executed after 1October 1913 and the Master has been directed todispense with security.
• A person who has been exempted from furnishingsecurity by the Court.
The Master may by notice in writing require any executor(dative of testamentary) to lodge security if:• His/Her estate has been sequestrated.• He/She has committed an act of insolvency.• He/She is about to go or has gone to reside outside the
Republic.• There is good reason for it. Refer to section 23(2),
proviso.
Sequence of documents in an Estate file:
The reporting documents must be filed in the following order,in the front section of the file:
• Death Notice (J294)• Death Certificate• Marriage certificate (if any)• Copy of the accepted will (if any)• Next-of-kinAffidavit (J192)• Inventory (J234)• List of creditors of the deceased (MBU 4 - see 8.8
hereunder)• Declaration confirming that the estate has not been
reported to any other Master's Office or service point(MBU 5)
• Declaration of subsisting marriages• Written Nominations for the appointment of an
administrator• Undertaking and Acceptance (J155) OR Acceptance of
Trust as Executor (J190)• Originally signed copy of Letter of Appointment once
issued.
Letters ofAppointment
Letters of Executorship
Where the gross value of the assets of the estate is more thanR125 000, the Master must, if satisfied that the aboverequirements have been met, issue the Letters ofExecutorship which must contain the following:
• Estate number
• Full names and ID number of the Executor
• If the nominated executor is a corporation, letters ofexecutorship, shall be granted to a personwho is an officer or director of the nominatedcorporation, indicating that he/she is acting onbehalf of said corporation
• Full names and ID number of the deceased,including themaiden name of a woman, or previous surnames wherethe deceased was previously married
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• Where spouses were married in community ofproperty, both the name and ID number of thedeceased and his/her surviving spouse should bereflected and that fact recorded on the Letters ofExecutorship
• Date of death
• Signed by the Assistant Master / Deputy Master /Master
• Contains a date stamp
• It should be prepared and signed in duplicate asone copy must be given to the appointee, and theother must be filed on record
The following documentation must be sent with the Letter ofappointment:
• Estate Duty Return Form (Rev 267)
• Notice to Creditors of the Deceased (J193)
• If security was lodged, an inventory in terms of section 27
must be sent with the letters of appointment.
Letters of Appointment of Master's Representative (Section18(3)
Where the gross value of the estate does not exceed R125000, the estate may be administered in terms of section 18(3),unless otherwise directed by the Master. The Master must, ifsatisfied that all requirements have been met, issue a Letter ofAppointment as Master's Representative which must containthe following:
• Estate number
• Full names and ID number of the appointee
• If the nominated appointee is a corporation, letters ofappointment shall be granted to a person who is an officeror director of the nominated corporation, indicating thathe/she is acting on behalf of said corporation
• Full names and ID number of the deceased, including themaiden name of a woman, or previous surnames wherethe deceased as previously married
• Where spouses where married in community of property,both the name and ID number of the deceased andhis/her surviving spouse should be reflected
• Date of death
• All assets, and the value thereof, as indicated in theInventory on record
• Signed by the Assistant Master / Deputy Master /Master
• Contains a date stamp
• It should be completed in duplicate as one copymust be given to the appointee, and the othermust be filed on record.
The Service Point, at the Magistrate's Office where theperson was so resident, can make an appointment in thefollowing instances
(i) The deceased did not leave a valid will and;(ii) The value of the estate is not more than R50 000 and;(iii) The estate is solvent; and(iv) All the beneficiaries are majors or any one or more ofthe beneficiaries is a minor and is assisted by his/herlegal guardian and the cash assets in the estate areworth R20 000 or less.
All estates, where there is a valid will and/or codicil must bedealt with directly by the Master's Office, irrespective of thevalue of the assets.
Note that the advertisements in terms of section 29 and35, refer to the place the deceased was ordinarily resident
prior to his death. A person is “ordinaryresident” at the place to which the deceased, or otherperson concerned, would return from wandering, his realhomeA fully motivated application for transfer of jurisdictionshould be made by an interested partynot the MasterA “live will” is a will which was lodged under the repealedAdministration of Estates Act 24 of 1913, whilst thetestator/testatrix was still aliveIf the document is signed by the making of an “X”, the markof the signatory must be witnessed by a commissioner ofoathsWhen the deceased died of unnatural causes, a deathcertificate is not issued immediately. The interim proof ofdeath document is then sufficient.The marriage certificate serves as proof of the existenceof the marriage and determines the preference in terms ofsection 19 of theActIn this regard also see2004 (5) SA 331 (CC) and (2) SA 272TPDAny reference to a will includes a reference to a codicilwhere applicable.Once the above documents have been lodged, theexaminer must request Registry to refer the original Will totheAssistant Master for acceptance.E.G. “my children”, “my sons”, etc.Although an executor is not usually appointed in an estatewhere the asset value is R125 000 or less, there may becases where theAssistant Master would decide to appointan executor rather than to make an appointment in termsof section 18(3). Also see Amended Master's Instructionno 6 dated 04 June 1992.Section 9(1)(iii)Recognition of Customary MarriagesAct 120 of 1998Daniels v Campbell 2004 (5) SA 331 CC; Khan v Khan2005 (2) SA 272 T; Amod v Multi Lateral Motor VehicleAccident Fund (Commission for Gender Equalityintervening) 1999 (4) SA 1319 SCA; Ryland v Edras 1997(2) SA690 (C)Mark Gory v Daniel Gerhardus Kolver NO and Other(Erilda Start & others intervening) Case no. CCT 28/06Volks v Robinson 2005 (5) BLLR 446 CCSection 18(1)See the provisions of Section 19(i) and (ii)
12 months
Daniels v Campbell and OthersKhan v Khan 2005
Foot Notes20
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Meyerowitz on th Administration ofEstates
R.910 prohibits the liquidation or distribution of theestates of deceased persons by any person other thanan attorney, notary, conveyancer or law agent.However, any board of executors, trust company,public accountant and person licensed under Act 44 of1962 are permanently exempted from theseprohibitions. Natural persons nominated as executorby Will are also exempted from the prohibitions to theextent as specified in R.910. (R.910 can be found in thehandbook by e
, sixth edition, pp A-63 to A-65 or in the latest2004 edition on pp A-64 to A-66.) A legallyincapacitated person, such as a minor, may also notact as executor of the estate of a deceased personsection 18(6) refers.Where minors or mental patients were involved, anattorney, bank, trust company or accountant should beappointed in section 18(3) estates. An undertakingshould be obtained from this person to deposit the cashdue to the minor into the Guardians Fund within twomonths (60 days) from date of appointment. A note tothis effect should also be affected on the Letters ofAuthority issued in terms of section 18(3). The fileshould be diarized accordingly.Where immovable property is reflected at municipalvaluation, it may appear that the estate is worth R125000 or less, but the sale of immovable property mayresult I this amount being exceeded.Where the nominated executor has been convicted offraud or theft, this may be a “good reason” why he maybe required by the Master to find security. Where anexecutor was ordered by the Master or who in terms orsection 23 was required to find security, must withinthirty days from date of appointment lodge a section 27inventory (final inventory), which reflects all theproperty in the estate. The file must be diarizedaccordingly. When the inventory. When the inventory islodged, you should check whether the section 23security filed, is sufficient to cover all the assets of theestate. If not, additional security should be called for.A full list of documents can be found in the CodeExaminers, and the sequence as set out there in, mustbe followed.After sending off the Letter of Appointments the fileshould be diarized accordingly for the estate account tobe lodged or funds to be deposited as mentioned inFootnote 17 above.This must be signed by the executor personally within30 days after appointment.
Allen West asked the following: “Could you please assist as towhere in the NCAit addresses the waiver of legal exceptions inbonds. As I understand it, the Latin maxims are not permitted,but the defences may still be waived. Am I correct?”
The answer is found in section 90(2)(c)) of the National CreditAct, which provides that a provision of a credit agreement isunlawful if it purports to waive any common law rights that maybe applicable to the credit agreement and have beenprescribed in terms of subsection (5). In terms of subsection(5), the Minister may prescribe particular common law rightsthat may not be waived in a credit agreement.
Regulation 32 of the NCAreads as follows:
“The following common law rights or remedies that areavailable to a consumer may not be waived in a creditagreement:
(a) Exceptio errore calculi;
(b) Exceptio non numeratae pecuniae;(c) Exception non causa debiti.
The unlawful provision is void, not the whole agreement. Theprovision must be severed from the agreement. However, acourt can declare the entire agreement unlawful.
It is has nothing to do with the fact that the provisions are inLatin. It is the provision itself that is unlawful, even if expressedin English.
However, it is advisable to express the other common lawremedies that may still be used in language that the consumerwill understand. You can still use the Latin but should providean explanatory note.”
The exception; de duobus vel pluribus reis debendi may thus still
be waived, but must be in an understandable language - Editor
Discussion On Section 35AOf The Income Tax Act
By: Lizelle KilbourneConveyancer - Igqwetha Training Academy (Pty) Ltd
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The section was implemented on 1 September 2007.
• Apurchaser of immovable property must withhold(i.e. not pay to the seller) a certain percentage ofthe purchase price where
• the seller is a non-resident; and
• the amount due by the purchaser to the seller ismore than R2 million.
• If the non-resident seller is a natural person, 5% ofthe amount due to him/her must be withheld, if theseller is a company then 7,5%, and if the seller is atrust, then 10% must be withheld.
• The amount withheld must be paid to SARS within 14days after 'the date on which the amount was so
Section 35Ain a nutshell:
withheld' (usually date of registration, onepresumes), but where the purchaser ishimself/herself a non-resident, then within 28 days.
• Payment to SARS must be accompanied by aprescribed declaration (I have not seen the form yet).
• If the purchaser knew or ought to have known thatthe seller is a non-resident, and fails to so withholdthe amount, that purchaser is himself/herself/itselfliable to pay the amount to SARS, with interest if latepayment is made, and penalties.
• Where the seller in a property transaction is indeed anon-resident, the estate agent, if any, and theconveyancer who administers the transaction (thesection phrases it as who “...is entitled to payment ofany remuneration or payment in respect of servicesrendered ..') must notify the purchaser in writing thatthis section may be applicable.
• If the estate agent and/or conveyancer knew or oughtto have known that the seller is a non-resident, andthen fails to so warn the purchaser in writing, then thatestate agent and/or conveyancer will be jointly andseverally be liable for the amount, but (thankgoodness for small mercies) limited to the amount ofthe remuneration he/she/they/it would havereceived.
The date of implementation -
As most attorneys, agents and property investors know bynow,the Income Tax Act 58 of 1962 was amended in 2004 by theaddition of section 35A, a section that obliges a purchaser ofproperty to withhold, in cases where the seller is a nonresident, a percentage of the purchase price. This requirement
to withhold proceeds became known as the 'propertywithholding tax on foreigners'. The purpose of section 35A is tomake sure SARS succeeds in collecting any taxes due by non-resident sellers; it may be difficult to convince some non-residents to pay tax on the South African authorities oncethese investors (and their assets) have left the country forgood.
It is also common knowledge that the relevant part of the newsection 35Awas not implemented with immediate effect. In thisregard section 35A(2) states:
Subsection 1 (the subsection creating the withholding tax)shall come into operation on a date to be determined by thePresident by proclamation in the Gazette.
Most role-players in the conveyancing and property industrieshave waited with anticipation these last three years, and a fewpredictions as to when the sections were going to beimplemented were made, but the dates always arrived andwent without any notice in the Government Gazette, andwithout communication from SARS.
I recently learned through media reports that the propertywithholding tax on non-resident property owners would take
who says it is really effective
from 1 September 2007?
What a search to find the government notice
implementing section 35A!
effect on 1 September 2007. There was nothing on the SARSwebsite indicating the authority for this, and no one I spoke tocould initially tell me in which Government notice this date wasproclaimed, so I tried my hand at some electronic and manuallibrary detective work, to no avail. Eventually, Jade Van Wykfrom SARS pointed me in the right direction.
While I admittedly overlooked what would have been obviousto tax experts going through tax legislation with finetoothcombs, I do think that the way the 'announcement' wasmade was unduly obscure. One would think such an importanttax date would merit at least a SARS media release to providetimeous forewarning and clarity to the conveyancingprofession, the international community and the SouthAfricanpublic.
Be that as it may, here is what happened in regard to'announcing' the date: Instead of a simple announcement in aGovernment notice stating “in terms of section 35A(2) of theIncome Tax Act, I hereby declare 1 September 2007 as theeffective date …” (or something to this effect), the legislatorchose to amend the section in the 2004 Amendment Act thatamended the Income Tax Act, by means of a furtheramendment Act. This 2007 amendment section states thatsection 30 of the 2004 Amendment Act is amended byinserting the date 1 September. The word “section 35A of theIncome TaxAct” is not mentioned anywhere in this 2007Act.
• Taxation Laws Amendment Act 8 of 2007 waspromulgated on 7 February 2007 in GG 29604. Page 92of this Act contains section 87, which states theamendment to section 30(2) of the Revenue LawsAmendment Act, 2004, to the effect that therelevant date will no longer be a date to be determined byProclamation in the Government Gazette, it will nowbe 1 September 2007.
• Revenue Laws Amendment Act 32 of 2004 waspromulgated on 24 January 2005 in GG 27188. Page 52of this Act contains section 30, which has as its heading“Insertion of Section 35AinAct 58 of 1962'.
Cross-Border Insolvency Law By: Prof. André BoraineUniversity of Pretoria
30
INTRODUCTION
[Ex parteSteyn
BZ Stegmann Ex parteSteyn, ard v Smit & Others: In re Gurr v ZambiaAirways Corporation Ltd
PROPERTY AND CROSS-BORDER RULES IN TERMS OFTHE SOUTHAFRICAN GENERAL LAW
South Africa has a mixed legal system because its common-law the Roman-Dutch law has been significantly influenced byEnglish law in certain areas. Mercantile law, in particularinsolvency and company law, thus has a strong English lawcharacter.
The Insolvency Act 24 of 1936 remains the principal source ofinsolvency law in this jurisdiction, but some provisions relatingto corporate insolvency are found in the Companies Act 61 of1973 and the Close Corporations Act 69 of 1984. Insolvencyprovisions of the Insolvency Act and the general law (i.e.common law) will nevertheless apply to corporate insolvencyin the absence of a particular provision in the relevantlegislation.
The estates of natural persons are sequestrated andcompanies are wound up or liquidated in terms of theapplicable legislation. (For purposes of this discussion theterm “sequestration” will be used in both instances, unlessindicated otherwise.)
With regard to the recognition of foreign appointments, theForeign Trustees and Foreign Liquidators Recognition Act of1907, being the first statutory enactment that applied in theformer Cape Colony, provided that the then Supreme Courtcould recognize the appointment of a foreign representative.Although this Act no longer forms part of South African law,some of its principles survived through precedent.
1979 2 SA309 (O).]
At present there is no legislation in force that deals with cross-border insolvency in SouthAfrica and therefore the general lawand precedent must be applied in this regard. Based on comity,convenience and equity a South African High Court is thus stillentitled to recognize the appointment of a foreignrepresentative. [Ex parte 1902 TS 40;
; W1998 3 SA 175 (SCA).] The
principles of international private law (conflict of laws) will beapplied in such an instance with regard to the treatment ofproperty situated in this jurisdiction.
South Africa adopted the UNCITRAL Model Law on cross-border insolvency as the Cross-Border Insolvency Act 42 of2000 on 8 December 2000. However, it must be noted thatalthough being adopted as an Act of Parliament, this Act willthus only apply to designated countries but no countries havebeen designated as yet.
In view of the introduction of the principle of reciprocity, thisjurisdiction will in future follow a dual approach to therecognition of foreign bankruptcy orders in thatrepresentatives from designated countries will follow theprocedure of the Cross- Border Insolvency Act whilst thosefrom non-designated countries will still have to follow thegeneral law route.
The definition of “property” in the Insolvency Act includes alltypes of property, both movable and immovable, situated inSouth Africa. With regard to property situated in a foreign
supra
jurisdiction, the principles of private international law apply.These rules apply in the case of property situated outside theborders of SouthAfrica (outward bound situation) as well as inthe case of a request by a foreign representative to berecognized in SouthAfrica (inward bound situation).
Apart from property in the Republic, movable property of theinsolvent in a foreign country will vest in the insolvent estate ifthe estate is sequestrated by the court where the insolvent isdomiciled [ 1981 2 SA 152 (W)]. Inprinciple this means that the foreign representative will beable to lay claim to any such property outside his or herjurisdiction without first obtaining such recognition.
In case of immovable property theprinciple applies and recognition must be obtained from theforeign jurisdiction. If the representative fails to obtain thisrecognition, the immovable property remains vested in theinsolvent [1947 4 SA 192 (A);
1959 1 SA180 (D)].
Contrary to the situation with movable property where suchrecognition is deemed to be a mere formality, the recognitionin case of immovable property is a necessity and the courtshave an absolute discretion to reject or approve such anapplication [ 1993 3 SA 359(C)]. In
, the court held that it is imperative for the foreignrepresentative of a juristic person to apply for recognitionwhere the trustee has to deal with either immovable propertyor movable property in SouthAfrica.
After recognition has been obtained the foreignrepresentative may deal with local assets. A South Africancourt may impose conditions on the foreign representative inorder to safeguard the rights and interests of local creditors. Ifrecognition is refused by a South African court, or not appliedfor, a foreign creditor may apply for the sequestration of theestate in this jurisdiction.
In order to be recognized as such in South Africa, the foreignrepresentative must apply to a local High Court for recognitionand assistance. When the rights of a third party (i.e. a localcreditor) may be effected by the application, such person mustbe notified of the application [see 1985 3SA950 (W)].
Granting recognition to a foreign administrator to deal with aninsolvent's immovable property in South Africa is within thelocal court's discretion. This discretion is absolute butrecognition is usually granted in the interests of comity andconvenience. In , Innes JP,while accepting the above rule, went on to state:
“But on the other hand, the same court, acting from motives of
Viljoen v Venter NO
Mavromati v Union Exploration Import (Pty) LtdHymore Agencies Durban (Pty) Ltd v
Gin Nih Weaving Factory
Ex parte Palmer NO: In re HahnWard v Smit: In re Gurr v Zambia Airways Corp Ltd
PROCEDURALAND RELATED MATTERS
Inward bound request
Application for recognition by a foreign representative
Clegg v Priestley
The discretion to recognize foreign orders andappointments
comity or convenience, is equally justified in allowing the orderof the judge of the domicile to operate within its jurisdiction, andin assisting the execution or enforcement of such order. Thematter is entirely one for its own discretion. [See also
, .]
The effect of recognition is that the local assets will be treatedas if the foreign debtor is an insolvent in terms of South Africanlaw, although he or she will not be an insolvent in terms of thisjurisdiction. [ , .] However, our courts willnot adjudicate foreign offences or tax claims. [See
1985 3 SA955 (T).]
The court will describe the mode of notice of the order tointerested parties. The order should deal with the following:
(a) Recognising the appointment of the foreignrepresentative;
(b) Duration of the order;(c) General powers of the foreign representative;(d) Security to be afforded by the foreign representative to the
satisfaction of the Master of the Supreme Court;(e) The service of the order to relevant parties;(f) S u p e r v i s i o n b y t h e M a s t e r a n d p r a c t i c a l
arrangements regarding the administration of theorder and submittal of estate accounts; and
(g) Special conditions regarding meetings of creditors;proof, admission and rejection of claims; plans ofdistribution and the rights and powers of the foreignrepresentative. These procedures will be gleanedfrom the Insolvency and the Companies Act. [See
1990 10SA954 (AD); , .]
South African courts will protect the interests of local creditorsand orders will sometimes state that “[p]roperty can only betransferred once administration costs and local debts havebeen paid before assets may be transferred” [ ,
]. However, a foreign creditor should receive preferentialtreatment if he or she holds a security acknowledged by thelocal forum.
In case of a South African sequestration order, the localrepresentative will seek to recover all assets situated in aforeign jurisdiction. In this respect the laws and procedures ofthe foreign jurisdiction must be complied with. [South Africa isnot a party to any international treaty in this regard but it is arelevant country for the purposes of recognition in terms ofsection426 of the InsolvencyAct 1986 (England).]
Although not compulsory, local representatives sometimesapply for a letter of request at a local court before approachingthe foreign court. In
1996 2 SA 677 (O) the courtdenied such a request by considering the merits of therepresentative's request to pursue assets situated in England.The court disapproved of this approach in
2002 2 SA796 (C) and stated that thecourt is not asked to approve or sanction the actions of therepresentative in the foreign jurisdiction.
Ex partePalmer NO: In re Hahn
The effect of recognition
Ex parte SteynPriestly v
Clegg
The contents of the order
Moolman v Builders & Developers (Pty) LtdEx parte Steyn
Ex parte Steyn
Outward bound request
Ex parte Wessels & Venter NNO: In RePyke-Nott's Insolvent Estate
Gardener andAnother v Walters NNO
supra
supra
supra
supra
The courts have expressed a preference for a single forum ofadministration where the main proceeding is directed by the
[See 1907 TS 657;, .] Nevertheless, if an
application for recognition fails, foreign creditors may alwaysapply for the opening of a local procedure in terms of local law.Where the local statutory requirements can be met, the localestate of a foreign natural person debtor may for instance besequestrated in South Africa. However, it is important to takenote of section 149 of the Insolvency Act in terms of which theSouth African court has a discretion to refuse such an order incase of sequestration based on the principle of conveniencewhere the debtor comes from a non-designated country. Thelocal court has no such discretion in case of a foreign debtorfrom a designated country. When exercising the discretion,the local court will rather be lead by what will happen after thegranting of the order than the convenience of the local courtsas such [ 1933 TPD 304;
1961 4 SA 329(W); 1999 4 SA216 (C).]
ThisAct applies to states designated by the Minister of Justiceby notice in the . The minister may onlydesignate a state if he or she is satisfied that the recognitionaccorded by the law of such a state justifies the application ofthe Act to foreign proceedings in such state. This requirementhas introduced the principle of reciprocity. [See sections 2(a)and (b) of theAct.]
ThisAct applies:
(a) Where a foreign court or representative seeks SouthAfrican assistance in a foreign proceeding; or,conversely,
(b) where such assistance is requested in a foreigncourt in a proceeding under the laws of the Republicrelating to insolvency (a “local proceeding”);
(c) where a foreign and a local insolvency proceedingrun concurrently in respect of the same debtor; or ( d )where creditors or other interested (foreigner)persons apply to commence or to participate in alocal insolvency proceeding [s 2(1)].
The Act will afford certain advantages to representatives andcreditors from foreign jurisdiction of designated countries.These advantages include:
• The Act will provide direct and speedy access andrecognition to foreign representatives or creditors.
• The Act also provides clarity with regard to theranking of foreign creditors by stating that theirranking will not be lower than non-preferent claims oflocal creditors.
• Foreign creditors are entitled to similar notificationsas (local) creditors.
• Local courts will not have a discretion based onconvenience to refuse a local sequestration order [ s e ediscussion ].
As far as the application for recognition is concerned, the Actclearly states that a foreign representative may apply to theHigh Court for recognition of the foreign proceeding in whichhe or she has been appointed. Such application must beaccompanied by the relevant documentary evidence,including a statement of all foreign proceedings that he/she
Application for a local proceeding
Re Estate Morris Ex partePalmer NO: In re Hahn
Morley v Pederson Goode, Durrant& Murray (SA) Ltd and Another v Lawrence
knows relate to the debtor [section 15]. After recognition hasbeen granted, the foreign representative may take part in alocal proceeding [ss 11 and 12] and may intervene in anyproceeding to which the debtor is a party [ss 11, 12 and 24].Upon registration of a foreign proceeding, the foreignrepresentative acquires to initiate legal action tolocus standi
set aside any disposition that is available to a South Africantrustee or liquidator [ss 23].
The latter is indeed so see RCR 34 of 2007 - Editor
Does Agricultural Land Still Exist giventhe Stalwo v Wary case?
By: Allen WestDeeds Training - PRETORIA
Before commencing with a discussion of[2007] SCA133 (RSA), a case which
has placed the cat among the pigeons, it is apt to first provide abrief background to the Agricultural Land Act 70 of 1970 (theAct), from inception to date.
TheAct was assented to on 28 September 1970 and came intooperation on 2 January 1971. The purpose of the Act is tocontrol the subdivision and use of agricultural land. Since itsinception, the Act underwent numerous amendments. Themost significant of these was the amendment of the definitionof agricultural land, by virtue of Proclamation R100 dated 31October 1995, which included the following to the saiddefinition:
The whole Act was subsequently repealed by section 1 of theSubdivision of Agricultural Land Act Repeal 64 of 1998, whichrepeal will come into operation on a date to be proclaimed bythe President by proclamation in the Gazette (which to datehas not yet occurred).
Subsequent to the amendment of the Act by ProclamationR100 of 1995, uncertainty prevailed as to which land should beclassified as agricultural land. In view of this uncertainty andthe concerns of the Department of Agriculture, the State LawAdvisors in two opinions, 553/2000 and 408/2001, dated 21December 2000 and 25 October 2001, respectively, held thatall “farm property” must, in future, until proof to the contrary hasbeen furnished, be regarded as agricultural land for purposesof applying the provisions of the Act. The latter opinion
reads as follows:
Stalwo (Pty) Ltd vWary Holdings (Pty) Ltd
proviso
interalia
“Provided that land situated in the area of jurisdiction of atransitional council as defined in section 1 of the LocalGovernment Transition Act, 1993 (Act 209 of 1993) whichimmediately prior to the first election of the members ofsuch transitional council was classified as agriculturalland, shall remain classified as such.”
“The Department of Land Affairs, hereinafter referred to as “theDepartment” has requested our opinion on the questionwhether consent for subdivision in terms of the provisions ofthe Subdivision of Agricultural Land Act, 1970 (Act No. 70 of1970) hereinafter referred to as “the 1970 Act”, “in areas whichpreviously included 'agricultural land' but now falls in the newmunicipal jurisdictions, is still required.”
In terms of section 3 of the 1970 Act, the Minister ofAgriculturemust give his or her consent before the subdivision of anyagricultural land can be effected. “Agricultural land” is definedin section 1 of the 1970 Act and includes any land with theexception of “land situated in the area of jurisdiction …” ofcertain local authorities. Therefore, any land falling outsidethe “area of jurisdiction” of the said local authorities was“agricultural land”.
The Department refers us to the Local Government TransitionAct, 1993 (Act No. 209 of 1993) hereinafter referred to as “the1993 Act”, which changed the situation with regard to the areaof jurisdiction of the local authorities existing at that time byextending their areas of jurisdiction. The result is that“agricultural land” which prior to the commencement of the1993 Act fell outside the area of jurisdiction of the localauthorities referred to in section 1 of the 1970 Act, now fallswithin the area of jurisdiction of the “extended” localauthorities.
We are further referred to Proclamation No. R.100 of 1995promulgated in Government Gazette No. 16785 of 31 October1995, hereinafter referred to as “the Proclamation”. In terms ofthe Proclamation, section 1 of the 1970 Act is amended by theaddition of a to the definition of “agricultural land” todeclare land situated in the extended area of jurisdiction (interms of the 1993 Act) of the said local authorities asagricultural land.
According to the submission the validity of the Proclamation isquestioned. The Department is of the view that section 235(9)of the Constitution of the Republic of South Africa, 1993 (ActNo. 200 of 1993), hereinafter referred to as the “InterimConstitution”, under which the Proclamation was issuedprovided only for the assignment of the administration of a lawto an administrator or other authority and did not confer anypowers on the President to amend an Act of Parliament. TheDepartment submits that the Proclamation is anddid not change the situation with regard to the definition of“agricultural land”. “Agricultural land”, according to theDepartment which fell outside the area of jurisdiction of thelocal authorities referred to in section 1 of the 1970 Act andnow falls within the larger area of jurisdiction of transitionalcouncils established in terms of the 1993 Act, is no longer“agricultural land” for the purposes of the 1970 Act. Thereforethe Minister's consent in terms of section 3 of the 1970 Act isno longer required with regard to an application for thesubdivision of such agricultural land.
Under section 235(9)(a), the President assigned theadministration of all laws with regard to agriculture to theMinister of Agriculture, including the 1970 Act, inProclamation No. 102 of 3 June 1994.
In terms of section 235(9)(b) of the Interim Constitutionsubsection (8)(b) thereof shall apply inrespect of an assignment by the President of theadministration to an administrator or other authority doneunder paragraph (a) of section 239(9). Subsection (8)(b)(i),
, clearly provides that when the President assignthe administration of a law, or at any time thereafter, he orshe may such law to regulate its application orinterpretation.
We are therefore of the opinion that the Proclamation, whicheffected the amendment of the definition of “agriculturalland” in terms of section 1 of the 1970 Act, is legally sound.The fact that the amendment has not been done with theinitial assignment in Proclamation No. R. 102 of 1994 doesnot nullify the subsequent Proclamation whatsoever, for thereason that section 235(8)(b) provides that an amendmentmay (also) be done any time after the initial assignment.
Therefore, in our view, the consent in terms of section 3 ofthe 1970 Act by the Minister of Agriculture for the subdivisionof agricultural land is still required. However, in view of thepending repeal of the 1970 Act (see the Subdivision ofAgricultural Land Act Repeal Act, 1998), it is not clearwhether the question posed to us is not at this stage of purelyacademical value.”
mutatis mutandis
inter alia
amend
Kotze v Minister van Landbou
supra
Following on this legal opinion, the Chief Registrar of Deeds,in terms of Chief Registrars' Circular 6 of 2002, laid down auniform practice. The uniform practice is that the registrationof all subdivisions of agricultural land and the increase ofshareholders in agricultural land requires the consent fromthe Minister of Agriculture or a letter from the Department ofAgriculture to the effect that the land in question is notagricultural land as defined in the Act. For the sake ofuniformity, the Registrars of Deeds applied the aboveinstruction to all land, irrespective of its extent, whichcontained the word “farm” in its property description.
In 2003 (1) SA 445 T it washeld that agricultural land still exists for the purposes of theAct, and it consists of all land except land situated within thejurisdiction of the structures named in section 1 of the Act atthe last moment when those structures actually existed. Itwas further held that until the Act is repealed, the writtenconsent of the Minister is still required for the subdivision ofagricultural land. This decision was in line with the practiceof the Department of LandAffairs and in accordance with thepractice laid down by the Chief Registrar of Deeds, referredto .
Now to return to the case that placed the cat among thepigeons. The facts of the case are briefly as follows:
On 6 December 2004 proposed subdivisions of agriculturalland were sold.At the time of the sale the land was still zonedas “agricultural land”. The purchaser brought an applicationto court to presumably compel the seller to give transfer,which application was duly opposed by the seller on thefollowing grounds:
• The agreement did not comply with section 2(1) ofthe Alienation of Land Act 68 of 1981, in that thewritten agreement did not contain a suspensivecondition; and
• The agreement was in contravention of section3(a) of Act 70 of 1970, in that no consent of theMinister was obtained.
The court found that the contract did not fall foul ofthe provisions of the Alienation of Land Act, but, due to thefact that no ministerial consent was obtained for thesubdivision, the contract was void.
Suffice to say, the Supreme Court of Appeal agreed withthe court on theAlienation of Land dispute. However,the court held that the land in question was not agriculturalland and therefore the agreement was valid and binding onthe parties.
The court based its argument on the following grounds:
• The Act is a piece of “old order legislation”envisaged by the Constitution and section 93(8)of the Municipal Structures Act 118 of 2000, andthus the definition of agricultural land mustinclude all municipal structures. This is notcontained in the decision. Furthermore, how cana definition of land include a municipal structure?The below is what is contained in the decision.
“[17] To my mind, there is no question that theAgricultural Land Act is a piece of the 'old orderlegislation' envisaged by the Constitution andsection 93(8) of the Municipal Structures Act.That being so, the words 'municipal council, citycouncil, town council' in the definition of'agricultural land' in the Agricultural Land Actmust be construed to include a category Amunicipality such as the NMMM.
• The status of agricultural land is fluid rather thanstatic and changes with the expansion of localauthorities and new ones.
• The Minister retains, in terms of the definition ofagricultural land, as set out in section 1 of the Act,the power to declare land agricultural land for thepurposes of theAct.
The author agrees that as there is no longer any landsituated outside the jurisdiction of a local authority, there isthus, strictly according to the definition of agricultural land,no more agricultural land.
However, the Department of Land Affairs is of the opinionthat the Minister will have the say as to which land is to bedeemed agricultural land.
At a management meeting with Registrars held on 29October 2007, the Registrars of Deeds held that they willcontinue to apply Chief Registrars Circular 6 of 2002, albeit
, until such time the matter isresolved by the Constitutional Court. The ConstitutionalCourt will be deciding on this matter in due course.
Articles Published in Legal JournalsArticles Published in Legal JournalsHerewith a list of articles published in Legal Journals, which should beof interest to the land practitioner:
2007 TSAR 560 - Extension of schemes in terms of section 25 of the Sectional TitlesAct 95 of 1986 by D J Lots and C J Nagel.
2007 DJ 166 - Commentary on the Civil Union Act 17 of 2006 by L N van Schalkwyk
Conveyancing Through the CasesBy: Allen West
Deeds Training - PRETORIA
The following summaries of cases are of note, however,readers are advised to read the cases
(CPD) Date ofJudgement 28 March 2007; Per; Griessel, J
In the Cape High Court, Justice Griessel delivered ajudgement on 28 March 2007 regarding the validity of analleged agreement that had been concluded to purchaseimmovable property, in terms of an option that had beengranted to the alleged buyer in a lease agreement.
Simply put, an option is an unconditional and irreversible rightthat is given to a person to buy a certain property within acertain time, at a predetermined price. The option is thenexercised in writing by the purchaser, by simply advising theseller that he is now exercising the option, and in doing so, thesale is concluded. The seller may not refuse to then concludethe agreement.
In the present matter, Mr. Mostert had leased certain land to acompany, in terms of which lease the company was granted anoption to buy the property during the duration of the lease, at anagreed sum, subject to an annual escalation. On a certain day,during the existence of the lease, the company's attorney thensent a letter to Mr. Mostert indicating that his client had decidedto exercise the option, and attached a draft Deed of Sale. Thecovering letter invited Mr. Mostert to make such changes to theDeed of Sale as he thought might be necessary, and if he werehappy with it in its present form, to please sign it and return it tothe attorney for his client's signature. Several months went byand the company heard nothing. After the lease expired, Mr.Mostert wanted his property back. The company, however,refused to vacate the property on the grounds that it had
in toto:
CASE NO. 1Exercising Options to Purchase
Mostert/Van der Westhuizen and Another
exercised its option in terms of the lease. Mr. Mostert thensued the company for eviction. The company defended theclaim on the basis that it was entitled to the property on thebasis of having exercised the option.
Mr. Mostert then raised a point in law which he referred to theCourt to be determined as a separate issue, namely that theoption had in fact not been properly exercised, in that theproposed Deed of Sale that was sent to him contained aclause stating that the agreement would be subject to thecompany being able to obtain a bond from a financialinstitution first, within a certain time. In other words, the optionwas not properly exercised because the proposed Deed ofSale contained a suspensive condition.
The company argued that the condition that was attached wasmerely one of several terms and conditions that needed to benegotiated, and that this condition did not affect the questionof price but only the manner of payment. The company alsoargued that Mr. Mostert should have simply replied and statedthat he was not prepared to make it subject to bond approval,and this clause could have been removed as Mr. Mostert hadbeen invited to do in the attorney's letter.
Mr. Mostert however argued, and the Court agreed, that firstlythere was no duty on him to supplement any shortcomings inthe draft Deed of Sale, and secondly, that when one exercisesan option, it must be completely in line with the option that wasgranted above all, it must not introduce terms or conditionsthat were not part of the original option. In this case the optionwas simply worded I the lease, namely that the companywould be entitled to buy the property at a certain price, within acertain period of time. No other terms or conditions wereattached. As such, irrespective of the company's bestintentions, by law, the option was not exercised. As such thecompany's defence was ruled out.
Maharaj & Another v Govindsamy & Another [2007] JOL 19052(D) Case 17125/05 - 12/01/2007
The applicants purchased immovable property from the tworespondents. Their agreement of sale was subject to theapplicant obtaining a loan within 21 days of the date ofsignature. Furthermore, this suspensive condition was for thebenefit of the purchaser who could unilaterally waivecompliance with it. After the applicant failed to fulfill thissuspensive condition, the respondents wrote a letter to theapplicant to inform him that the contract had lapsed. Inresponse the applicants lodged this application to claimtransfer. In his founding affidavit the first applicant asserted
that the respondents were aware that they had, ,already obtained a “pre-approved bond” at the time when theysigned the agreement. The obligation had been fulfilled;alternatively, they had elected to waive compliance with thecondition. In addition, the respondents had not notified them inwriting before purporting to cancel the agreement as wasrequired by a clause in the agreement.
Held that in terms of section 19(1) of theAlienation of LandAct68 of 1981 a seller of immovable property who decides to takeaction as a result of a breach is required to give the buyerwritten notice to rectify the breach before the seller canterminate the contract. Cancellation constitutes a drastic stepthat cannot be taken willy-nilly without following the necessaryprocedure. The agreement was declared to be valid and therespondent was directed to take steps to effect transfer of theproperty into the name of the applicants.
inter alia
LETTER NO. 1TESTAMENTARY CONDITIONS AND REDISTRIBUTION
AGREEMENTS - REPLY 1
causa
causae causa
to the legatee/heir to the asset(s)
“In response to the above article I wish to submit the following:If a transfer of property is done subsequent to a will andredistribution agreement, the refers
entered into between the heirs (interms of the will):- What would have been 2 subsequent
, have become one as the Deeds Registries Actallows it by virtue of section 14(1)(b)(iii). The redistributionshould therefore no longer be seen as another 'transaction'.
I disagree with the conclusion reached in the said article andhold the opinion that any asset transferred in terms of a will andredistribution agreement shall either be fully subject to atestamentary condition or fully exempt therefrom (unless acontrary intention of course appears from the will!).
Fortunately the usual 'exclusion' condition in a will refers to allbenefits received by all beneficiaries in terms of the will. If notso, the next step will be to determine whether a particularbequest/legacy is subject to or exempt from a testamentarycondition.
I believe the intention of the testator should be the determiningfactor as to whether any testamentary condition was intendedto apply or so bequeathed.
If the condition was intended to , thechange of beneficiary by reason of a redistribution agreementshould not affect the condition applying to the asset. The ruleapplies that one cannot transfer more rights than one holds(Nemo Potest rule). Each heir contributes that which he wouldotherwise have inherited to the 'pool of assets for distribution'.When an asset which is subject to a condition is contributed,the condition continues to limit the rights to the asset even afterit has been re-distributed to a different beneficiary.
If the condition was intended to , theassets allocated to him/her in terms of the redistributionagreement will all be subject to the condition.
In the example under discussion A dies and leaves his farm to
his 3 sons subject to the condition that the inheritance shall be
excluded from marital community of property. In terms of the
to the will and theredistribution agreement
apply to the asset(s)
apply to the beneficiary
re-distribution agreement the farm is allocated to one of the 3
sons.
(i) If they also inherit other assets in respect of which nocondition applies, it shall be presumed that the
should not form part of any joint estate irrespectiveof which son receives it;
(ii) If they also inherit other assets in respect of which thesame condition applies, it shall be presumed that
(iii) Athird possibility which does not apply to this example is ifthey also inherit other assets and the testator has placeda condition only on the assets accruing to a particularbeneficiary it shall be presumed thateventually received in terms of a redistribution agreementby shall be excluded from his joint estate withhis/her spouse whilst no condition applies to the assetsredistributed to the other beneficiaries.
The practice regarding affidavits required for the registrationof the rectification of an error in terms of section 4(1)(b) of theDeeds RegistriesAct 47 of 1937 (DRA) and the application fora certified copy in terms of regulation 68(1) of DRA needs arethink.
The article by A S West in issue No. 10 of the on theapplication of section 4(1)(b) of the Deeds Registries Actstates that “although the aforementioned section does notrequire an application or affidavit, this is established practice”.This is true, and so much so that examiners believe that therehas to be an affidavit. Deeds are rejected, even by senior staff,on that basis. With respect, simple proof of the error inregistration should, given the wording of the section, be all thatis required for such a rectification to be made. Admittedly, anapplication makes for better conveyancing practice. However,established practice cannot usurp the provisions of the Actand the insistence on an affidavit should be relaxed, if notabandoned altogether.
The article also correctly points out that section 4(1)(b) does notstipulate who may request the rectification of a deed, yet it is alsoestablished practice that deeds are rejected if someone otherthan the owner applies for their rectification. It is a simple fact that,with few exceptions, owner of land, owners of land, mortgages,etc., do not have, except for the spelling of their names and datesof birth (and sometimes even that!), any idea what requirementsare involved in the registration of deeds.
The last paragraph of that article begs comment as well.Remember, if you make no mistakes, you make nothing.However, if firm A registered the title and firm B is now instructedto pass a bond over the property and realizes that some errorexists in the title, what is there to do? Does firm B sue firm A? Tryto force firm A to attend to the rectification? Blame it on the deedsoffice and its employees for not seeing the error? Must firm B nowtend to the rectification for free? Time is money … and maybe it isthe mad rush to give rectification for free? Time is money … andmaybe it is the mad rush to give good service that can sometimesbe blamed for the errors! Batho Pele shooting itself in the foot?
As regards applications for the issue of certified copies underRegulation 68(1) of the Deeds Registries Act, it is submitted thatconveyancers are responsible for their own misery in thisinstance. The regulation clearly states that the registered owneror his agent may make the application. It continues to specify anaffidavit supporting the application, without specifying who shouldmake that affidavit. Deeds registries insist that the owner mustmake the supporting affidavit, and conveyancers blindly complywith that view, but that practice does not make sense.
It is common knowledge that by far the majority of title deedsnever pass through the hands of the owner, but are retained bythe mortgagee. How can an owner in such a case be required toissue an affidavit as to the whereabouts of the title? He cannotknow where it is!
He believes it to be safe in the custody of the bank. Big mistake!Titles are lost by banks, conveyancers, post offices, couriers,other postal services, but relatively rarely by the owner himself,because he never sees it or has it in his possession. Surely, itwould be far better practice to require the mortgagee orconveyancer, or whoever actually could have handled orpossessed the title at some time, to issue the supporting affidavit.
In terms of RCR 39 of 2003 the following question was asked:
“A real right to extend the scheme is reserved in terms of section25 of the Sectional Titles Act 95 of 1986, but the right, however,lapsed. Is it permissible for an owner of a unit in the scheme or thebody corporate to apply in terms of section 68(1) ofAct 47 of 1937to note the lapsing of the right to extend or must the developerapply?”
The resolution given was:“The body corporate on behalf of the owners may apply in terms ofthe provisions of Section 68(1) of Act 47 of 1937 to note thelapsing of the right to extend.”
In RCR 1/1991, the following question was asked:“Must the building(s) to be erected be completed within the periodreserved in terms of the section 25 of the Sectional TitlesAct 95 of1986 reservation or must the registration of the sectional plan ofextension also be completed within this reserved period?”
By: D LeeCAPE TOWN
LAPSING OF REAL RIGHTS OF EXTENSION
What is the opinion of readers? -Editor
LETTER NO. 3
The resolution given:
“The intention is that only the building(s) must be erected andcompleted within the stipulated time.”
The problem which now arises is that even though the rightmay have lapsed by effluxion of time, RCR 1 of 1991 providesthat only the building(s) need to be completed within thisperiod, the developer can bring his/her application for theregistration of the extension of the scheme at any time, evenyears after the reserved period has lapsed. The developer will,however, have to prove that the building(s) were completedwithin the reserved period.
It may further appear from the perusal of the estimatedparticipation quotas filed with the section 25-reservation thatthe developer has exhausted his/her right by the registrationof all the units reflected in such estimated participation quotas.
Section 25(13) of the Sectional Titles Act 95 of 1986 provides,“with due regard to changed circumstances the developerdoes not need to strictly follow the section 25(2) plans” (myparaphrase); see also Knoetze v Saddlewood CC 2001 I AllSA42 S.E. in this regard.
The developer may therefore still have further registrationspending under such section 25 reservation and it will not bepossible for anyone besides the developer to know whetherthe right has lapsed or not.
It is therefore imperative that RCR 39 of 2003 be withdrawn inthat only the developer may apply, in terms of the provisions ofsection 68(1) of Act 47 of 1937, to note the lapsing of the rightto extend. The danger is that the body corporate couldextinguish a title in terms of which the developer still haspending registrations.
In the SADJ of October 2006 on page 11 the calculation of thetransfer duty payable by each shareholder seems to be incontradiction with the way of determining the transfer dutypayable as provided for in section 2(5) of the Transfer DutyAct(Act 40 of 1949).
Am I missing something?
Congratulations and also thank you for a very goodpublication.
One should note what kind of shares is talked about.Undivided shares in a property is not deemed to be the sameas shares held in a company. As I had the same queryregarding “shares in a company” and “undivided shares in aproperty”, I queried this with SARS Law Writers and NationalTreasury when “shares” was brought into of the Transfer DutyAct, 1940 (“the Act”) as part of the definition of “property” andwas assured that the meaning of the amendment was as is setout below.
Section 2(5) the Act refer to “undivided shares in a property”which means person A has a share (i.e. 50% undivided sharein the property) and person B has the other 50% undividedshare in the property.
However when shares in accompany is sold, i.e. 50% sharesin company ABC the examples as set out in Mr. Franck'sarticle will be used.
Warren HamerBuchanan Boyes
SADJ OCTOBER 2006 TRANSFER DUTY : ACQUISITIONOF IMMOVABLE PROPERTY BY A COMPANY, CLOSECORPORATION OR TRUST:ARTICLE BY PS FRANCK