Van Deventer v Van Deventer and Another (88/06) [2006] ZASCA 116; [2007] 3 All SA 236 (SCA) (24 November 2006)

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[2006] ZASCA 116
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Van Deventer v Van Deventer and Another (88/06) [2006] ZASCA 116; [2007] 3 All SA 236 (SCA) (24 November 2006)

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THE
SUPREME COURT OF APPEAL
OF
SOUTH AFRICA
Reportable
CASE NO
: 88/06
In the matter between :
VAN DEVENTER, J J
Appellant
and
VAN DEVENTER, C W J
First Respondent
CRONJE, W A
Second Respondent
__________________________________________________________________________
Before: ZULMAN, FARLAM, NUGENT, MLAMBO JJA & MALAN AJA
Heard: 14 NOVEMBER 2006
Delivered:
24 NOVEMBER 2006
Summary: Will – interpretation – price of farm to be its ‘Land
Bank valuation’ – does not require Land Bank itself to determine
the price.
Neutral citation: This judgment may be referred to as Van Deventer
v Van Deventer [2006] SCA 144 (RSA)
__________________________________________________________________________
J U D G M E N T
__________________________________________________________________________
NUGENT JA
NUGENT JA
:
[1] There is nothing quite like a will for fomenting
family dissension. In this case it is the brothers Van Deventer who
are at loggerheads
over the terms of a clause in the joint will of
their late parents. Among the property of their parents were two
farms known respectively
as ‘Dartmouth’ and ‘Oatlands’. In
their joint will made on 13 June 1991 they bequeathed Dartmouth to
their son Johannes (the
appellant) and Oatlands to his brother
Christoffel (the first respondent) subject in each case to a life
usufruct in favour of the
surviving testator. Dartmouth was
bequeathed to Johannes subject to the following additional
testamentary condition (my shortened
translation):
1
‘If [Johannes], after the death of the survivor, decides to sell
[Dartmouth] then our son Christoffel…must be given the first
option
to purchase the said property at the Land Bank
2
valuation as established at the time of the sale. The option must be
exercised in writing within a period of 60 (sixty) days after
the
option has been given.’
(Although expressed as an option the condition more
accurately confers a right of pre-emption.)
[2] Mr van Deventer senior died in 1993 and Dartmouth
was transferred to Johannes subject to the conditions in the will,
both of which
were recorded in the title deed. In February 2004 Mrs
van Deventer died and in consequence the usufruct expired.
[3] Towards the end of 2003 Johannes granted an option
to a company known as Ivory Sun Trading 77 (Pty) Ltd (in which the
second respondent
has an interest) to purchase Dartmouth for
R2 400 000.
3
At about the same time he caused the farm to be valued. The valuer
concluded that its market value (the price that would be paid
in the
open market by a willing buyer to a willing seller) was R3 002 284.
[4] When Ivory Sun Trading expressed its intention to
exercise its option Johannes offered to sell the farm to Christoffel
for its
market value as established by the valuer. Christoffel’s
response was that he was entitled to be offered the farm at its ‘Land
Bank valuation’ before it was sold to a third party. Johannes,
through his attorneys, then wrote to the Land Bank requesting it
to
value the farm but the Land Bank declined to do so. That set the
scene for the dispute that is now before us.
[5] Because the Land Bank declines to value the farm
Johannes contends that the testamentary condition (now incorporated
in the title
deed) is impossible to fulfill and he applied to the
High Court at Pretoria for a declaration that the condition is
invalid and is
to be disregarded. Fourie AJ dismissed the application
but granted leave to appeal to this court. (In view of its findings
it was
not necessary for the court below to deal with an alternative
claim that I will return to later in this judgment.)
[6] Although the condition is registered against the
title of the property it has its origin in the will of the testators
and falls
to be construed in that context. When interpreting a will,
as with any document, a court must strive to ascertain the wishes of
the testator from the language that he or she has used, and
generally, the language must be construed in the context of the
circumstances
that prevailed at the time the will was made.
4
Moreover, there is a presumption that
‘in doubts as to the interpretation of testamentary writings, that
construction should be adopted which would give effect to the
voluntas
of the testator, rather than that which would nullify
the deed.’
5
[7] Before turning to the construction of the condition
that is now in issue it is convenient to describe the functions of
the Land
Bank. (The Land Bank has been renamed the Land and
Agricultural Development Bank
6
but for convenience I will continue to refer to it by
its former name.) The Land Bank was established for the purpose of
advancing
loans to farmers and agricultural co-operatives so as to
promote agriculture in the national interest. At the time that the
will
was executed the activities of the Land Bank were governed by
the Land Bank Act 13 of 1944. Section 70 of the Act provided for the
appointment by the Land Bank of valuators ‘to inspect and value
properties for the purposes of this Act.’ The reason that the
Land
Bank required property to be valued is self-evident: generally the
Land Bank advanced moneys against the security of fixed property,
7
which necessarily required the Land Bank to assess the value of the
property. Section 50 of the 2002 Act now provides that ‘the
Bank
may at any time require a valuation in respect of any security or
collateral or property relevant to any agricultural financial
service
rendered or offered by the Bank’ and provides for the appointment
of valuers for that purpose.
[8] Apart from valuing property for its own purposes,
until recently the Land Bank also played a role in the valuation of
farmland
for the purpose of calculating estate duty. The Estate Duty
Act 45 of 1955 levies estate duty (in appropriate cases) on the ‘fair
market value’ of property in the estate of a deceased person.
8
Until 1 February 2006
9
the ‘fair market value’ of immovable property upon which
bona
fide
farming activities were being conducted
10
was, at the election of the executor, either its fair market value,
or the ‘aggregate of the fair agricultural or pastoral value
of the
land and the value which any improvements situated thereon may be
expected to add to such value of the land’ (referred to
in the Act
as its ‘surface value’) together with the fair market value of
any mineral rights attaching to the land.
11
The Act provided further that the ‘surface value’ of the land
was to be determined by a Land Bank valuator appointed in terms
of s
70 of the Land Bank Act, who was required to value the property ‘as
though he were making a valuation for land bank purposes’.
If that
value was not accepted by the fiscus it was to be determined by the
board of the Land Bank.
12
(With effect from 1 February 2006 the ‘fair market value’ of
immovable property on which a
bona fide
farming undertaking is
being carried out is its market value reduced by 30 percent.)
13
[9] Whether the criteria that are used by the Land Bank
when valuing farmland for its own purposes are the same as those that
were
used when valuing farmland for purposes of estate duty is not
altogether clear from the evidence (the former definition in the
Estate
Duty Act seems to suggest that they were)
14
but that is not material for present purposes. What is clear is that
the value that the Land Bank attributes to farmland – whether
in
the conduct of its own business or when valuing it for purposes of
estate duty – does not necessarily coincide with its value
on the
open market.
15
Indeed, it was accepted by both counsel that the value that the Land
Bank attributes to land is generally far lower than its market
value.
[10] It was submitted on behalf of Johannes that the
phrase ‘Land Bank valuation’ in the testamentary condition refers
to an amount
that is to be determined by the Land Bank itself. In
other words, so it was submitted, the testators appointed the Land
Bank to
determine the price at which the farm was to be offered for
sale to Christoffel, and moreover, it was submitted, the Land Bank
was
required to set the price with reference to the market value of
the farm. Because the Land Bank’s functions do not extend to
appraising
property on behalf of third parties, which is no doubt why
it declined the request to do so in the present case, it was
submitted,
the condition is not possible of fulfillment and must be
regarded as not having been inserted.
[11] I do not think that submission correctly reflects
the meaning of the condition. It must have been well-known to the
farming
community, which included the testators, that the value that
the Land Bank attributes to farmland does not necessarily coincide
with
its market value. No purpose would thus be served by appointing
the Land Bank to value the farm if it was to be given its market
value, for its market value would be capable of being established by
any valuer. If it was to be valued in accordance with the criteria
that are applied when valuing farmland for the Land Bank, that would
similarly be capable of being done by any valuer who had knowledge
of
those criteria. On either approach there is no apparent reason for
the testators to have required the valuation to be done by
the Land
Bank itself. In my view it is clear that what the testators had in
mind was merely to ensure that the price at which the
farm was
offered to Christoffel would be the amount which would be attributed
to it if it was being valued by the Land Bank. To
the extent that
there might be any doubt in that regard that is also the construction
to be preferred in order to avoid invalidity.
[12] Precisely what criteria are to be used in valuing
the farm (i.e. those that are applied when determining its value as
collateral,
or those that were formerly applied when determining its
value for estate duty purposes, if those criteria differ) is not a
matter
that we are called upon to decide. Whichever are the
appropriate criteria to be applied there is no suggestion that the
amount is
not capable of being determined by a valuer who has
knowledge of those criteria and in those circumstances there are no
grounds for
finding that the condition cannot be given effect.
[13] There is another, subsidiary, matter. As an
alternative to his claim for the condition to be declared invalid,
Johannes claimed
an order (my translation)
16
‘declaring that, in so far as a Land Bank valuation might exist, it
refers to market value and not merely to surface value and/or
value
for farming purposes’
.
What seems to have prompted that alternative claim (the
basis on which it was made was not articulated in the founding
affidavit)
was that upon the death of Mrs van Deventer the farm was
valued by a Land Bank valuer for purposes of estate duty in
accordance with
the procedure formerly provided for in the Estate
Duty Act. The standard-form report that the valuer was required to
complete required
him to provide his estimate of the surface value of
the farm as contemplated by the Estate Duty Act (which he placed at
R1 076 331)
and also to insert its market value (which he
placed at R2 010 000). What seems to have been
contemplated by the alternative
claim was that in the event that a
court were to find that the Land Bank has indeed valued the farm
(when it was valued after the
death of Mrs van Deventer) the value
that the Land Bank attributed to it was the latter value and not the
former. In view of my
finding that the condition does not call upon
the Land Bank to value the property the alternative claim is not
material and also
falls to be refused.
[14] In my view the court below correctly refused the
relief that was claimed. The appeal is dismissed with costs.
___________________
R.W.
NUGENT
JUDGE
OF APPEAL
ZULMAN JA )
FARLAM JA ) CONCUR
MLAMBO JA )
MALAN AJA )
1
‘Indien ons gesegde seun,
na die afsterwe van die
langslewende
van ons sou besluit om ons voormelde plaaseiendom
te verkoop sal ons seun CHRISTOFFEL WESSEL JACOBUS VAN DEVENTER die
eerste opsie
gegee word om die gemelde eiendom te koop teen die
Landbank waardasie soos vasgestel ten tye van sodanige verkoping.
Die opsie
moet skriftelik, binne 'n periode van 60 (sestig) dae
nadat sodanige opsie gegee is, uitgeoefen word.’
2
This is a reference to the Land Bank (now known as the Land and
Agricultural Development Bank of South Africa) that was established
by the Land Bank Act 18 of 1912 and that has continued to exist
since then. The 1912 Act was superseded by the Land Bank Act 13
of
1944, which was in turn superseded by the
Land and Agricultural
Development Bank Act 15 of 2002
.
3
The option was later extended and the price reduced to R2 100 000.
4
The Hon M M Corbett, Gys Hofmeyr and Ellison Kahn
The Law of
Succession in South Africa
2 ed esp 448 and 451.
5
Dwyer v O’Flinn’s Executor
(1857) 3 SC 16
at 32;
Villet’s Estate v Villet’s Estate
1939 CPD 152
at 156;
Ex
Parte Kock NO
1952 (2) SA 502
(C) at 511D-F.
6
By the
Land and Agricultural Development Bank Act 15 of 2002
.
7
Section 25 of the
1944 Act.
8
Section 5(1)(g).
9
This definition was inserted in the Estate Duty Act 45 of 1955 by s
1 of the Estate Duty Amendment Act 59 of 1957 and replaced
with
effect from 1 February 2006 by
s 1(1)
of the
Revenue Laws Second
Amendment Act 32 of 2005
.
10
Amended in 1988 to refer to immovable property on which ‘a
bona
fide
farming undertaking is being carried out’:
s 7
of Act 87
of 1988.
11
In the present case the mineral rights have been alienated and no
longer attach to the land.
12
Section 1(2)(b)(i) of the Estate Duty Act.
13
Definition of ‘fair market value’ amended by s 1(1) of Act 32 of
2005.
14
Section 1(2)(b)(ii), which required a valuer to value land in
accordance with the Land Bank’s instructions ‘as though he were
making a valuation for land bank purposes’.
15
For a discussion of ‘Land Bank value’ for estate duty purposes
see D Meyerowitz
The Law and Practice of Administration of
Estates and Estate Duty
2004 ed para 29.5.
16
‘…dat verklaar word dat, insoverre ʼn Landbankwaardasie mag
bestaan, dit verwys na markwaarde en nie bloot na oppervlaktewaardes
en/of waardasie vir boerderydoeleindes.’