Fiduciary and fideicommissary rights

A. FIDUCIARY RIGHTS

Introduction
The rights of a fiduciary are not the same as the rights of a servitude holder, since the fiduciary obtains dominium in the property and the servitude holder does not. It is a limited dominium and not a limited interest, like a personal servitude of usufruct. The fiduciary thus has the power to deal with the land in so far as the terms of the fideicommissum allows him/her to do so (see discussion infra).

A fideicommissum is usually created by will, although it can also be created inter vivos. It must be noted that where a fideicommissum is created in a will and the fideicommissary dies before the event, the fiduciary generally obtains full ownership, while with an inter vivos fideicommissum the rights devolve upon the estate of the fideicommissary (British South Africa Company v Bulawayo Municipality, 1919 A.D. 84 at p. 95).

It is practice that a fideicommissum may be created in a deed of transfer and no separate notarial deed is necessary. However, when it is created inter vivos, the fideicommissary should accept the right in order to ensure that rights are transferred to heirs (see Ex parte Clark, 1944 W.L.D. 71; and Crookes N.O. and Others v Watson and Others, 1956 (1) S.A. 277 (A.D.)).

Types of Fideicommissa
From a registration point of view there are three types of fideicommissa, viz. full fideicommissa, fideicommissa with power of alienation, and fideicommissa residui.

Full Fideicommissa
These can be divided into those which restrict the fiduciary’s rights, e.g. where land is bequeathed subject to the condition that it shall not be alienated but on the death of the fiduciary go to certain heirs, and those which have no restriction, for example land bequeathed to the fiduciary with the condition that on his/her death it is to pass to certain heirs. In the latter case, the fiduciary can transfer or mortgage his/her fiduciary right, that is the transfer or bond is made subject to the fideicommissum (Estate Marincowitz v Marincowitz, 1914 C.P.D. 958; Fick & Fick v Murray & Co., 1917 T.P.D. 226; van der Walt v Registrar of Deeds, 1935 C.P.D. 463; and Ex parte Wessels, 1949 (2) S.A. 99 at p. 104 (O)). There seems no reason why a fiduciary cannot grant a lease or a personal servitude for the period of the fideicommissum . The lease or servitude will be made expressly subject to the fideicommissum . It is submitted that the fiduciary can even grant a praedial servitude for the duration of the fiduciary’s interest. The servitude will thus terminate on the termination of the fideicommissum . In fact with the consent of the fideicommissaries (if ascertained and competent) there is no reason why the fiduciary cannot grant leases or servitudes for any period, ultimately also binding the fideicommissary heirs.

With regard to a fideicommissum with a restriction against alienation, a distinction must be made between a condition which restricts the alienation of the land only, and one which restricts the alienation of the land and the fiduciary right. In cases of doubt, the restriction must be presumed to affect the dominium only and not the fiduciary interest (Fick’s and Marincowitz’s cases, supra). It is suggested, therefore, that provided the restriction is not against alienation of the fiduciary interest itself, the fiduciary has all the powers mentioned of a fiduciary not burdened with a restriction. It would seem, however, that where there is a restriction against alienation of the land itself then (depending on the extent thereof) the Court must of necessity take this into consideration in granting any application for alienation of the land, (Ex parte de Jager, 1926 N.L.R. 413).

If the fiduciary wishes to transfer the land free of the fideicommissary condition then an order of Court is necessary, unless the fideicommissaries are sui juris in which case they can cancel the fideicommissum by notarial deed or by underhand consents. Where the fideicommissaries are sui juris and parties to the actual alienation with a third party, they can be joined in the transfer under section 69bis(1) of the Deeds Registries Act 47 of 1937 (DRA).

If the fiduciary wishes to mortgage the land free from the fideicommissum then an order of Court is also required, but fideicommissaries who are sui juris can, waive preference under section 3(i) (see Ex parte Badenhorst, 1947 (2) S.A. 561 (O.) and regulation 41(7)).

It is submitted that on transfer by an order of Court the condition should be extinguished, and on mortgage by a similar order, the title and bond should be endorsed to indicate that the bond is free of the condition (cf. Oeseldien v Laattoe, 1934 C.P.D. 348). The High Court may grant its consent to the alienation and mortgage of property which is subject to a restriction imposed by will or other instrument in favour of an unborn person as if such unborn person is a minor in esse.

The above is the position where there has been a special bequest of land and it would seem that the same rules apply to the residuary heir in an estate. The fiduciary must hand over immovable property irrespective of the increase in value as from the date of the death of the testator (Revington and Others v Short and Others, 1920 C.P.D. 462).

It is to be noted that the event for handing over can also be the remarriage of a spouse (cf. e.g. Ex parte Berrange, 1938 W.L.D. 39; and Oxenham v. Oxenham’s Executor, 1945 W.L.D. 57). Further, restrictions which are not fideicommissa are often inserted for the sake of safety in transfers. For example, if a fiduciary on remarriage has to pay out certain amounts only, and not hand over the property, this does not prohibit alienation (Ex parte Gitelson, 1949 (2) SA 881 (O.); and Ex parte van Vuuren, 1947 (2) SA 1142 (T.))

A condition is often inserted, that in the event of the fiduciary not making a will the property is to go to certain persons. It seems, although there seems to be no direct decision on the point, that this is not a restriction on alienation, because no fideicommissum is created when the discretion is left to a person as to whether or not he/she will pass on the property (Mende v Mende, 1938 A.D. 259; Jacobs v van Rensburg, 1939 E.D.L. 158 at pp. 162 and 163; and Ex parte Kemp’s Exor., 1940 W.L.D. 26).

It must always be remembered, however, that bequests are not all similarly worded. For instance, a condition might indicate that the fiduciary does not have the right to dispose of the estate (cf. Robertson v Robertson’s Executors, 1914 A.D. 503). Where, however, there is a restriction on alienation and the fiduciary is given powers to nominate heirs, a fideicommissum is created (C.I.R. v Estate Hollard, 1925 T.P.D. 154; Westminster Bank N.O. and Others v Zinn N.O., 1938 A.D. 57; Estate Watkins-Pitchford and Others v Commissioner for Inland Revenue, 1955 (2) S.A. 437 A.D. at p. 444).

Fideicommissum with Power to Alienate
In many cases the fiduciary is given express power to alienate. In such event there is no restriction on his/her rights (see Brown v Rickard, 2 S.C. 314; Ex parte Berrange, 1938 W.L.D. 39 at p. 41; and Ex parte Muller, 1949 (4) S.A. 429 at p. 435 (O)). If he/she leases or grants a servitude, then the fideicommissaries would have to accept the land subject to it. If he/she mortgages, then the property can be sold free from the condition. The fiduciary could also transfer free from the condition. On transfer the condition should be removed, in terms of section 68(1) of the DRA, since it lapses on transfer.

Fideicommissum Residui
This is created when a fiduciary is directed to hand over, not the whole, but what is left of the property. In this case the fiduciary is entitled to alienate (except by donatio mortis causa or will) three fourths of the property (Estate Smith v Estate Follett, 1942 A.D. 364). There is an exception in the case of a marriage in community, when the fiduciary on massing and adiation can alienate the whole (see Ex parte Muller, 1949 (4) S.A. 429). The fiduciary can alienate the whole property but subject to the providing of security (Ex parte Berrange, 1938 W.L.D. 39). Security is not necessary where the fiduciary is the parent of the fideicommissary. (Mackenzie v Mackenzie’s Est., 1906 23 S.C. 453 at p. 458). The Registrar has no power to call for proof of security.

Lapsing of the fideicommissum on the happening of an event
In the case, for example, of a remarriage or death, the fiduciary or his/her executor must transfer the property to the fideicommissary. The condition itself is the causa for the transfer. If the fideicommissum is created in a will and the fiduciary dies before transfer in his/her favour has been effected, the property may be transferred direct to the fideicommissary heirs free from the fideicommissum (section 14(1)(b)(vi) of the DRA).

B. FIDEICOMMISSARY RIGHTS
The registerability of these rights have been long debated. It is now accepted that they are personal rights which become real on registration. In British S.A. Co. v Bulawayo Municipality, 1919 A.D. 84 at p. 96, the Court held that a fideicommissum created inter vivos becomes a real right on registration. In Ex parte Badenhorst, 1947 (2) S.A. 561 (O.), the Court held that a fiduciary is the owner of property and is entitled, with the consent of the fideicommissaries, (where ascertained and competent) to pass a bond over the property. The fideicommissaries also have the capacity to cancel the condition or waive preference in favour of a bond.

The rights are servitudal even if they are contingent, but they are not classified as personal servitudes, although the owner of the land and the fideicommissary are permitted to dispose of and transfer the land together, in terms of section 69bis (1) of the DRA.

Being real rights on registration it is essential that the rights be cancelled, when necessary, by registration, e.g. if the holder waives in favour of a bond and the land is sold in execution, the condition should lapse. No provision is made for releases of land from the condition.

Provided no obligations are placed on the owner, a fideicommissum may be cancelled by unilateral notarial deed (regulation 61(2)) or by virtue of underhand consents, together with an application in terms of section 68(1) of the DRA.

Allen West
Deeds Training
Pretoria