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[2013] ZAFSHC 122
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Sherrif Bloemfontein-East v Gainsford and Others (1009/2009) [2013] ZAFSHC 122 (4 July 2013)
FREE STATE HIGH
COURT, BLOEMFONTEIN
REPUBLIC OF SOUTH
AFRICA
Case No. : 1009/2009
In
the matter between:
SHERIFF
BLOEMFONTEIN-EAST
...........................................
Applicant
ALETTA WILHELMINA
GAINSFORD
...............................
First
Claimant
CHRIS
GAINSFORD
.....................................................
Second
Claimant
and
VALLOMBROSA
TRUST, IT 638/2009
............................
Third
Claimant
_____________________________________________________
HEARD ON:
14 JUNE 2013
_____________________________________________________
JUDGMENT BY:
LEKALE, J
DELIVERED ON:
4 JULY 2013
_____________________________________________________
INTRODUCTION AND
BACKGROUND:
[1] These are
interpleader proceedings launched by the applicant sheriff in terms
of Rule 58(1) of Uniform Rules of Court for, effectively,
determination, by this court, of who of the claimants have or has a
valid and/or better claim in respect of a right of usufruct
registered in favour of one
Francois Neethling
(Neethling) over
the property of the third claimant and which has been attached, for
sale in execution, by the applicant at the
instance of the first and
second claimants (the joint claimants). The third claimant (the
Trust) is a trust which has Neethling
as one of its trustees. The
joint claimants, on their part, are a married couple and Neethling’s
joint judgment creditors
who seek to execute against him in his
personal capacity.
[2] On 17 October 2012
the applicant attached the right, title and interest that Neethling
has in and to registered usufruct no.K446/2009S
on the strength of a
writ of execution issued by the Registrar of this court dated 1
October 2012. The Trust, thereafter, laid
claim to the usufruct in
question, through an affidavit deposed to by Neethlingin his capacity
as trustee, on the ground that it
uses the same by agreement with
Neethling, as the usufructuary, who placed it at its disposal by
virtue of a “cession.”
[3] The applicant,
thereafter, initiated the present proceedings by,
inter alia
,
calling upon the claimants to file particulars of their respective
claims by no later than 17 May 2013. The claimants have since
obliged
with Neethling and his co-trustees submitting affidavits in support
of the Trust’s claim. The second claimant, on
behalf of the
joint claimants, made and submitted a deposition in support of the
sale in execution of the attached usufruct on
the basis that they
have a judgment, against Neethling,which they are, in law, entitled
to execute against such a usufruct.
ISSUES RAISED BY
ADVERSE CLAIMS:
[4] The first question
raised by the competing claims made is whether or not, on the papers
filed, the joint claimants have a valid
cause of action against the
applicant in respect of the usufruct concerned with specific
reference to whether the right of usufruct,
as a personal servitude,
is executable and can, as such, be attached and sold in execution of
a judgment against the usufructuary.
[5] The second enquiry,
which arises from the claims, is whether or not the Trust’s
papers set out a valid or enforceable
legal claim against the
applicant
vis-à-vis
the usufruct regard being had to
the nature of the limited real right concerned which can, in law,
only be ceded to the bare dominium
owner and cancellation of the same
is, further, registrable with the deeds registrar.
[6] The final question,
which only arises for determination in the event of the above two
questions both being decided in the affirmative,
is who of the
competing claimants has a better claim to the usufruct as attached by
the applicant.
THE JOINT
CLAIMANTS’ CONTENTIONS:
[7] It is submitted for
the claimants that they are entitled to have the usufruct attached
and sold in execution because the judgment
debt against Neethling
amounts to R260 851.79 plus interest and the sheriff initially
rendered
a nulla bona
return. The usufruct is alienable and
executable in line with applicable case law. The right in question is
an asset in the hands
of Neethling insofar as it gets valued in his
estate. Rule 45(8) of the Rules provides for the procedure for the
attachment of
such a right which was followed to the letter by the
applicant sheriff. There is no proof of “cession”
furnished by
the Trust in the form of registration of cancellation of
the usufruct as required by section 68(2) of Deeds Registries Act 47
of
1937 (the Deeds Act). The usufruct is still registered in the name
of Neethlingand is,as such, attachable and executable in his
hands
according to Mr Tsangarakis appearing for the joint claimants.
Circumstances suggest that the alleged “cession”
is, in
fact, in favour of the close corporation which conducts business on
the relevant property and of which Neethling’s
wife is the sole
member. Such a cession is, in law, void insofar as it is not in
favour of the owner of the bare dominium and,
it is probably for this
reason, that the cession is not registered with the deeds registrar
who cannot register the same because
of legal impediments. If the
Trust’s case is that Neethling only made available to it the
use and enjoyment of the benefits
flowing from the usufruct which it
has, in turn, let out to the close corporation for rental, then and
only in that event ,so submits
Mr Tsangarakis, the usufruct is still
available for sale in execution.There is, further, no proof of the
alleged prejudice on the
part of the Trust, in the form of loss of
rental, if the alleged lease contract with the close corporation is
cancelled due to
the sale in execution of the usufruct. The Trust’s
claim should be dismissed with costs.
CONTENTIONS FOR THE
TRUST:
[8] Ms Wright submits
that the Trust’s case is, in fact, not based on the alleged
“cession” when its claim is
looked at properly. The
claim, as it appears fromNeethling’s first affidavit, is simply
that the latter made the use and
enjoyment of the benefits of the
usufruct available toit as a quid pro quo for the improvements it
made on the property and the
general maintenance thereof. Such use
and enjoyment of benefits of the usufruct is alienable while the
usufruct, itself, is not
according to the law. The Trust does not
have to prove its claim in the instant proceedings. All that the law
requires of a claimant
is a statement, which does not even have to be
an affidavit, disclosing a valid cause of action against the
applicant. The extent
of the Trust’s claim is apparent
ex
facie
the particulars of its claim. The usufruct is not
executable insofar as it is inseparably attached to the usufructuary,
who cannot
even lease the same. The joint claimants’ claim,
thus, deserves to be dismissed with costs.
APPLICABLE LEGAL
PRINCIPLES:
[9] The parties are
correctly and effectively
ad idem
on the nature of a usufruct,
as a limited real right creating a personal servitude in favour of
its holder, over the property of
another (
ius in re aliena)
.It
attaches inseparably to the person of the usufructuary as against the
property which belongs to another and is, as such, inalienable
for
its holder has no free hand in dealing with it.It only confers one
aspect of ownership to the usufructuary
viz
. the use and
enjoyment of the fruits and benefits deriving from the property
leaving the bare legal ownership of the property in
the hands of
another. The usufructuary’s ownership extends to such use and
enjoyment and he has an unfettered hand in dealing
with the same once
they have accrued to him. He is at liberty to sell, lease or in any
manner whatsoever alienate the fruits and
benefits flowing from the
property once they have been severed from the tree or gathered by
him. (See
Ex parte van der Watt
1924 OPD 9
at 13- 17;
Durban City Council v Woodhaven Ltd and Others
1987(3)
SA 555(A) at 561G-J;
Zulu and Others v Van Rensburg And Others
1996(4) SA 1256 (LCC) at 1263 D-E and
Vairetti v Zardo
and Others
[2010] ZAWCHC I46
at para
[17]
).
[10] The usufruct, as a
personal servitude, cannot be ceded to a third party and can only be
ceded to the owner of the property
over which it is created and
exists as correctly pointed out for the joint claimants. (See
Durban
City Council v Woodhaven Ltd and Others
(
supra
) at
562B-C and section 66 of the Deeds Act.)
[11] The transfer of a
usufruct to a third party is authorised by section 69 of the Deeds
Actonly where the owner of the property
and the usufructuary act
together in disposing of both the property and the usufruct to the
same person. The two are also allowed
to act in concert where either
of them mortgages either the land or the personal servitude with the
other submitting either the
land or the usufruct as surety. A
mortgaged usufruct contemplated in section 69 of the Deeds Act is
executable at the instance
of the mortgagee.(See
Estate Grabe v
Bornman& Another
1938 OPD 127.)
[12] As correctly
submitted for the Trust, a claimant in interpleader proceedings is
only enjoined to ensure that the extent of
his claim is apparent from
the particulars of his claim so that it may be inferred, with
reasonable certainty, that he has a genuine
and legally enforceable
claim to the disputed item. (See
Corlett Drive Estates v Boland
Bank Bpk
1979(1) SA 863 (C) at 867F-H and
Kamfer v
Redhot Haulage (Pty) Ltd and Another
1979(3) SA 1149 (W) at
1153H.)
[13] Claims are adverse
to the applicant if each claim, when proved, discloses a valid cause
of action against the applicant. Any
vested right or interest which a
debtor is himself able to sell or dispose of for value is capable of
attachment and being sold
in execution for the benefit of a judgment
creditor. (See
Nkwana v Hirsch
1956(2) SA (T) at 221H.)
[14] The Income Tax Act
58 of 1962 as amended and Estate Duty Act 45 of 1955 provide for
valuation ofusufructuary and similar interests
for donations tax and
estate duty purposes. The valuation method generally involves
capitalisation at 12 per cent of the annual
value of the right of
enjoyment of the usufructuary property over the expectation of life
of the person receiving the benefit or
such lesser period as the
usufruct may last. (See section 62 of Income Tax Act and section
5(1)(b) of Estate Duty Act.)
APPLICATION OF
LEGAL PRINCIPLES AND FINDINGS:
[15] The property
attached
in casu
is effectively the right of usufruct itself
as opposed to the use and enjoyment of the fruits and benefits of
such a servitude
insofar as the applicant sheriff’s handwritten
notice of attachment dated 1 October 2012 reads as follows:
“
Lê
beslag op die geregistreerde vruggebruik nr.K446/2009S van en ten
gunste van Francois Neethling welke geregistreeris in
die Aktekantoor
oor Plot 7 Springbok LaanVallombrosa, Bloemfontein.”
[16]The answer to the
first two questions herein lies, in my view, in the nature of
usufruct
as a personal
servitude. It is inalienable and cannot even be bequeathed to his
heirs by the usufructuary. The collaboration of
the bare dominium
owner is a
sine qua non
for
transfer of the same to a third party and so is the case in the event
of registration of a mortgage bond over the same. Although
it confers
full ownership (real right) over the use of the propertyas well as
the enjoyment of the fruits deriving therefrom once
the same are
separated or accrue to the holder, it is limited, as a real right, in
that it does not confer ownership of the property
on the
usufructuary, who is saddled with a fiduciary duty to preserve the
substantial character of the same for restoration or
passing over to
the bare dominium owner at the end of the usufructuary period. Once
theusufructuary, as the authorised gatherer,
has taken possession of
the fruits, he is at large to deal with the same. He may sell,
donate, lease or even throw away the pick
at his will. He, thus,
generally has no authority to give possession of or access to the
property to anyone without the collaboration
of the nude property
owner. He serves as the conduit pipe for any third party wishing to
enjoy the use and fruits of the relevant
property. Such a person may
enjoy the benefits and use the usufructuary property only through the
usufructuary.
[17] Usufruct, as a
servitude, embodies both fiduciary and real rights with the result
that its attachment and sale in execution
strike at both such rights.
Mr Tsangarakis contends that it is executable and cites the decision
in
Vos v Farmer
10 CTR 43 (Vos) in support of the joint
claimants’ view in this regard. The Trust’s position, on
the issue, is that
a usufruct is inalienable and, as such, not
executable. In Vos the court confirmed an order of attachment for
sale in execution
of a testamentary life interest in circumstances
where the holder alleged that the same had been sold to another
creditor. There
was, however, no proof of delivery or transfer of the
interest in question to the creditor concerned. The court granted the
order
but stayed execution for a month to enable such creditor an
opportunity to set up any claim she might have had against the life
interest concerned.
[18] The decision in
Vos
is, however, not a binding authority on this court insofar as it is a
Cape Colony judgment. It is, as such, only of persuasive
effect, if
any, on me where I am sitting. The same applies to
Ex parte
Barnardo’s Trustees
1910 CPD 78
, also relied upon by
the joint claimants, which indicates that a testamentary life
interest in a farm was alienable, in the ordinary
way, in the hands
of the trustees of the insolvent holder thereof. It is, further,
probable that the concept and meaning of life
interest, as dealt with
in those cases, was narrow and restricted to the use and enjoyment of
the fruits excluding the fiduciary
property. The aforegoing prevails
when regard is had to the decision in
Estate Marincowitz v
Marincowitz
1914 CPD 958
at 962 where it was held that
“
It is
quite possible to separate the life interest…from the
obligation of… holding the land or property by way of
fidei
commissum
in
favour of the indicated beneficiaries;”
[19] Decisions
in pari
materia,
which are binding on me, emanate from the Appellate
Division, as it then was, and this Court. In
Fourie v
Munnik
1919 OPD 73
at 83 it was found that the use and
enjoyment of the fruits of the property may be placed at the disposal
of a third party. In
Ex parte van der Watt
(supra) at
13 the court notes
“…
Now
van Leeuwen (
CensuraForensis
,
2.15.14) - … points out that a usufructuary can sell his right
to another …, but adds significantly, “it is
not so much
the right itself of using and enjoying, which passes to another, as
that of taking the benefit of it; for the usufruct
in itself cannot
be transferred”… though he mentions
that
execution can be taken out against the usufructuarywith respect to
the enjoyment of the fruits during the life-time ofthe usufructuary.
Voet (7.1.32) has something to the same effect, and adds that it is
like the case of things subject to a
fideicommissum….
”(
My
underlining for emphasis
)
[20] The Appellate
Division, on its part
,
reiterated the nature of a usufruct as
inseparable from the usufructuary and, further, as inalienable in
Willoughby’s Consolidated Co Ltd v Copthall Stores
Ltd
1913 AD 267
and
Durban City Council v Woodhaven Ltd
and Others
(
supra
) and so has the Land Claims Court in
Zulu and Others v Van Rensburg and Others
1996(4) SA
1236 (LCC) at 1263.
[21] In deed the use and
enjoyment of the benefits of the usufructuary property are executable
inasmuch as any vested right or interest,
which a debtor is himself
able to sell or dispose of for value, is capable of attachment and
being sold in execution for the benefit
of the judgment creditor. In
general judgments for claims soundingin money can only be executed
against the property of the judgment
debtor. The question is,
therefore, whether or not the usufruct in the instant matter is such
a property
vis-à-vis
Neethling. Mr Tsangarakis answers
in the affirmative insofar as he points out that usufructs get
valuated. I am, however, not persuaded
that they get valuated so much
as assets in the estates of usufructuaries than, for tax purposes, as
taxable dispositions in the
hands of donors and taxable acquisitions
by those who benefit from cessation ofusufructs upon deaths of
usufructuaries. The method
of valuation involves determination of the
annual value of enjoyment over the relevant property. In my view what
gets valued are
the enjoyment of the benefits and the use of the
property which, in any event, are alienable in the hands of the
usufructuary,
as his property, and not the fiduciary interest which
he has in the usufructuary property.
[22] The usufruct is not
executable because it is not alienable in the hands of Neethling, as
the usufructuary, in the same way
that a
fideicommissary
property is not executable in the hands of the fiduciary. The law is,
and has always been, that what is executable in the hands
of the
usufructuary are the use and enjoyment of the benefits of the
property regard being had tocase law. The joint claimants,
therefore,
failed to disclose a valid cause of action against the applicant in
relation to the attached usufruct. On the other
hand, the Trust’s
claim is legally recognisable and enforceable insofar as it relates
to the alienable use and benefits flowing
from the property. The
third question, therefore, does not arise for determination in these
proceedings.
ORDER
:
[23] The first and second
claimants’ claim is dismissed with costs inclusive of
applicant’s costs.
[24] The third claimant’s
claim is upheld with costs to be paid by the first and second
claimants, jointly and severally.
______________
L.J. LEKALE, J
On behalf of applicant:
Sheriff- Bloemfontein-East
5 Banes Street
WESTDENE
BLOEMFONTEIN
On behalf of first and
secondclaimants:
Adv.STsangarakis
Instructed by:
Honey-Attorneys
Northridge Mall
Kenneth Kaunda Rd
BLOEMFONTEIN
On behalf of third
claimant: Adv. GJM Wright
Instructed by:
JL Jordaan-Attorneys
Westdene
Bloemfontein
/spieterse