The Receiver of Revenue Pretoria v C H Hancke & Others

• Jurisdiction: South Africa
• Judge: Innes CJ, Solomon JA, CG Maasdorp JA, De Villiers AJA and AFS Maasdorp Acting AJA
• Judgment Date: 01 February 1915
• Hearing Date: 18 September 1914
• Court: Appellate Division

Innes, C.J.:

The point at issue between the parties concerns the payment of transfer duty. The late Hendrik Petrus Hancke and his wife, who were married in community of property, executed a mutual will under which all their immovable property was bequeathed to their children subject to the right of the Survivor to retain the possession and enjoyment of it during life. It is unnecessary to set out the terms of the testament, because there can be no doubt about its elect. It contains no indication of a desire, to postpone the vesting of the land in the remainder-men till the death of the survivor; and the life interest conferred upon the latter is not fiduciary, but usufructuary in its nature. The testator died in 1901, and his widow, who was also his executrix, accepted the benefits of the will and proceeded to liquidate the estate. In 1903, acting in her private as well as in her official capacity, she passed transfer to herself of all the immovable property which had been previously held in common. The deed recited that such property had been bequeathed by mutual will to the children subject to a usufruct in favour of the survivor and that transfer was being passed "in order to give effect thereto and in terms of section 60 of the Estates Proclamation, 1902"; and the operative portion of the instrument get out the particular disposing clause of the will. No transfer duty was paid upon this transaction. Mm Hancke has now renounced her usufruct in favour of the children and proposes to pass clean transfer to them. It is common cause that while duty is not payable upon the testators half of the property, it is payable upon the usufruct which the testatrix is making over; but the Receiver of Revenue claims duty in addition upon the value of Mrs. Hancke's half-share, and this claim is disputed by the children. An application made by them for a declaration that no duty was payable on their mother's share, and for an order on the Receiver to issue a receipt for duty calculated on the value of the usufruct alone was granted in their favour by MASON, J. The substantial ground of his decision was that the personal rights which vested in the children upon the acceptance of benefits by their mother were rights to compel her to give effect to the will of the testator; that they therefore became entitled to the land by way of legacy or testamentary inheritance, and the contemplated transaction fell under the exemption in section 3 (1) of the transfer duty proclamation of 1902. The matter was then taken on appeal to the Transvaal Provincial Division, which

Innes, C.J.

confirmed the order of the trial Judge on the ground that by the transfer of 1903 the children had obtained dominium, and that the only effect of the proposed transfer would be to pass the usufruct. The dispute now comes before this Court for decision.

Now the transfer of the testator's half share constituted a statutory title which notified, but had no effect upon, the legal position created by his will; the 60th section of the Estates Proclamation is clear upon that point. The transfer into Mrs. Hancke's name of the other half, subject and in order to give effect, to the terms of the mutual will, was not a transaction under the statute at all. That will in itself conveyed no real rights in that half to the heirs in remainder; but the question whether, in spite of that fact, the transfer to the usufructuary created such rights in their favour only presents itself for consideration if the grounds upon which MASON, J., decided the application cannot be supported. And as those grounds are wide and affect the question of liability for transfer duty in its entirety, it will be convenient to consider them first.

The judgments in Rosenberg v Dry's Executors (1911, A.D., p. 678) proceeded upon the assumption that there, as here, the life interest reserved to the survivor was usufructuary; and it was decided that the rights conferred upon the heirs in remainder, in regard to the survivor's half of the property, were merely in personam, the idea being that they rested on a contractual or semicontractual basis. It follows from the very nature of such rights that the heirs become entitled to call upon the survivor either to do or to refrain from doing something in connection with the corpus of the bequest. That in such a case a survivor can make no testament disposing of the property otherwise than as directed by the mutual will is of course clear. But the obligation must cover wider grounds than that. And it seems to me that the rights of the remainder-men must fall under one or other of two alternative descriptions. They must be rights to demand either (1) that the survivor should abide by and give effect to the will of the first dying, or (2) that he should maintain and stereotype his own. In Rosenberg v Dry I expressed the view that the rights of remainder-men after adiation by the survivor were to compel the latter course. The, exact definition of such rights was not necessary for the decision of the issue then before the Court. And

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indeed in the majority of cases it would make no practical difference which view was taken. But in the present dispute it may make all the difference. Hence I have anxiously reconsidered the matter in the light of the authorities (including some which were not available on the previous occasion); and as a result I feel that I ought materially to modify not the conclusion at which I then arrived, but some of the reasons which I expressed in connection with it. The present condition of our law with regard to the irrevocability under certain circumstances of mutual wills does not rest directly and solely upon the original Roman-Dutch authorities, but is the result of certain Privy Council judgments, and of a series of South African decisions (mainly those of Cape Courts) interpreting and applying those authorities. The question is discussed by many writers; and the bulk of opinion would seem to base the irrevocability of such wills upon the occurrence of two circumstances: the disposal by the will of the property of the joint estate after the death of the survivor and the acceptance by the latter of some benefit thereunder. (See Grotius, 2, 15, sec. 9; Van leeuwen's R.D. Law, 2, 2, sec. 8; Decker's Note lb., etc. Passages are to be found in the books, however, which in treating of the binding nature of wills executed by one spouse with the authority of the other in respect of the goods of both make no direct mention of the second element above referred to, namely, the acceptance of benefits. Thus Peckius (De Test Conj., 1, 43, secs. 3 and 4) states that there can be no revocation when one spouse with the consent of the other disposes by his own will of the goods of both, or a part of them, for the common benefit of their children. For them, says he, the disposition, though it be revocable on the part of the testator, yet on the part of the consenting spouse passes into a contract, and becomes irrevocable. That proposition is developed on the line that an authority to testate once acted upon and confirmed by the death of the testator is binding and cannot be recalled. (See also Everard, Cons. 60, secs. 2 and 3.) Voet deals with the matter at 28, 32 11; he there remarks that where two persons make a mutual will in such terms that each disposes not of his own property but reciprocally of the goods of the other, or both by mutual consent dispose of their own and their spouses' property then such will, confirmed by the death

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of one spouse, cannot be revoked by the survivor. No mention is made of the acceptance of benefits; but the author after a short discussion of the question refers to the views already expressed in an earlier passage dealing with antenuptial contracts (23, 4, 63). The enquiry with which that section is concerned relates to the amendment of the provisions of antenuptial contracts regulating inheritance. In the course of his argument the author refers to the views of Grotius (2, 15, 9) that the dispositions of a deceased spouse in a mutual will dealing with the joint property after the death of the survivor are irrevocable if the latter has accepted ii benefit under the testament. The criticism of Voet is to the effect that the above statement must be confined to the case where the two spouses testate together, in such manner that the one disposes of the goods of the other, and each gives the other the right to do so. Again he makes no mention of the acceptance of benefits as an element necessary to irrevocability. But from the fact that he does not dissent from the insistence of Grotius on that point, it may fairly be implied that he acquiesced in it. And this view is strengthened on reading the preceding section (62). After stating that in Holland spouses might by mutual consent change by will the dispositions regarding succession to property contained in antenuptial contracts, the author points out that even then one spouse might by last will or otherwise revert to the provisions of the contract. But then comes the following proviso: - "If only the survivor desiring to abide by the antenuptial contract had not enjoyed any benefit from the decision of the first-dying containing the revocation of the antenuptial contract, for otherwise it would be necessary that the whole will of the first-dying should remain, which has been approved of by accepting what was left." So that if sections 62 and 63 are read together, it seems right to include Voet in the number of those jurists who regard the acceptance of benefits by the survivor as essential to a mutual will becoming irrevocable. But whether all the original authorities can be brought into line or not, a definite rule was laid down in Secretary South African Association v Mostert (1873, Buch p. 31) which, to the extent which it covers, has been followed by all South African Courts. It...