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EX PARTE LOUW.

(ORANGE FREE STATE PROVINCIAL DIVISION.)

 

1971. October 21, 29. ERASMUS, J.

 

Land.-Property subject to a fideicommissum.-Leave to mortgage.­ Application for.-Duty of applicant.-Necessity for a curallor ad item to be appointed.-Act 6.2 of 1955, sec. 33 (1).

 

An applicant who applies to mortgage fideicommissary property should take the Court iinto its confidence and frankly disclose all the facts and circum­ stances in order to show an essential cause for the requested mortg,a,ge or to obtain the cons,ent of the Court under section 33 (1) of Act 62 of 1955.

 

Where an applicant avers in his petition that he wants to mortgage property subject to a fideicommissum in order to pa,y off his ndebtedness to his bank, partly or wholly, because alleged improvements to the property are involved to which an undefined portion of the debt are attributa!ble, it is essential for a curator ad litem to be appointed on behalf of the minor and unborn fideicomm'issary heirs to go into the making of the improvements and the existence of the debt and report to the Court, even where there is a recent sworn valuati_on of the·alleged improvements before the Court.

 

Application to mortgage fideicommissary property. The facts appear from the judgment.

E. K. W. Lichtenberg, for the applicant.

 

Cur. adv. vult. Postea (October 29).

 

Postea (October 29)

 

ERASMUS, J. : This is an application to mortgage fideicommissary pro­ perty. It appears from the papers that the applicant, a brother and a sister are the only children of their parents, the testators, who were mar­ ried in community of property. All three of them are married and have children. The applicant has three minor children, the eldest of whom is fourteen and the youngest one year of age. According to the joint will of applicant's parents the farm De Bron, district Trompsburg, in ex­ tent 2 102 hectare, was bequeathed to the applicant subject to the a life usufruct in favour of his mother and the following further conditions :

"3. In the event of one of our sons dying without children or grandchildren, his bequest will pass to his other brother and sister in the ratio of two­ thirds to the brother and one-third to the sister.

4. In the event of• both of our sons dying without leaving children or grandchildren their bequests will pass to their sister or her children by representatibn."

The applicant's father is already deceased, the surviving spouse adiated

to the conditions of the will; the estate .was massed and the farm was registered in the name of the applicant in.terms of the provisions of the will.

 

The application is mainly for authority to applicant to register a first mortgage bond of R11 600 in terms of the bank's conditions over th-efarm De Bron valued at R80 000 in favour of the Land and Agricul­ tural Bank of South Africa and a draft agreement between the.applicant and the bank is attached to the papers. The usufructuary and the ap­ plicant's brother and sister consented to the suggested mortgage bond on their own behalf and on behalf of their minor and unborn fideicom­ missary heirs while the Master declared that he would abide by the judg­ ment of the court.

 

From Mr. Lichtenberg, who appeared on behalf of the applicant, I understood that the application is made ob causam necessariam (Ex parte Strauss and Another, 1949 (3) S.A. 929 (0) at pp. 944 et seq.) and a factor which may be taken into account in favour of the application is that the brother and sister who are majors gave their consent. This is indeed a factor to be taken into account when considering the applica­ tion, but it cannot be decisive for they cannot consent on behalf of the minor and unborn children who have an interest therein. (Cf. Ex parte Visagie, 1940 C.P.D. 42 at p. 52 and Ex parte de Winnaar, 1959 (1) S.A. 837 (N) at p. 838).

 

It is alleged in the application that applicant made necessary improve­ ments valued at an amount of R14 352 on the farm. In addition he paid, estate duty amounting to R2 640,74 on his inheritance. Both amounts he obtained by means of credit facilities allowed to him by Barclays Bank D.C.O. He alleges that as a result of the improvements and estate duty "he overstrained his finances to such an extent that he has no working oopital available to proceed with farming operations on the said farm".

 

He further declares that he is a full-time farmer and that he can only support his family and himself by income derived from farming opera­ tions on the said farm. He, therefore, made application for a loan at the Landbank, and the Landbank Board approved R11 600.

The other relevant allegations are as follows :

"11. . . . The applicant is still comparatively young and there is no reason why he will not be in a position to pay the Landbank loan in full from his farming operations.

The income which the applicant wiill and can derive from his farming operations should be sufficient to cover the repayments to the Landbank.

12. (Reference is made to this later).

13. If the application is not granted it will be impossible for the applicant to farm on the property any longer and he will have to move to another place and be compelled to let the property and the lessee will not harve the same iinterest in the property as the applicant and that will necessarily have the effect that the value of the property aind improvements will diminish considerably in the course of time. •

There will.be overstockiing of the farm and the improvements made by the applicant will be neglected.

14. The applicant respectfully a,yers that in all the c1rcumstances it will be to the benefit of all interested parties if the Court grants this applica­ tion."·

(The brackets are mine).

 

I must immediately direct attention to the fact that para. 14 indicates that the application is not only made on the ground of necessity (ob causam necessarium), as Mr. Lichtenberg avers, but also on consent, should the Court give consent on behalf of the unborn fideicommissary heirs in terms of sec. 33 (1) of Act 62 of 1955, which will depend on whether the application is in their interest. Ex parte Blieden, N.O., 1965 (1) S.A. 474 (W) arid at p. 476; Ex parte Marais, 1960 (2) S.A. 197 (G.W.) at p. 198).

 

In the first place the applicant should take the Court into his confi­ dence and frankly disclose all facts and circumstances in order to show an essential cause for the requested mortgage or to obtain the consent of the Court under section 33 (1) of Act 62 of 1955. (Cf. Ex parte Strauss and Another, supra at pp. 946 and 947).

 

In the present case it was not done in the first instance. The petition, as said before, merely avers that an amount of R2 640,73 estate duty was paid by the applicant and that applicant made improvements of R14 352. Then the vague impression is created that the Landbank gran­ ted a loan of Rl 1 600 with the object of providing applicant with "work­ ing capital" to proceed with his farming. Para. 11, also quoted by me, implies that there is no reason why the applicant will not repay the Land­ bank loan.out of his income from the farm. No mention was made of any other debts of the applicant, any losses or of the annual income which the applicant derives from his farming.

 

My Brother HOFMEYR, who heard the application in the first place, wanted clarity and he postponed the application so that the applicant could have the opportunity of supplementing his petition. The applicant reacted and filed a: further affidavit which gives a completely different picture. In that the applicant declares:

"the. amount of R11 600 as such as to be paid into Barclays Bank D.C.O. by applicant to discharge his overdraft of R33 131 partly",

and that his nett farming loss for the financial year which ended on 28th February, 1971 was R4 704. The Master says in his report that it is a stock farm which has a grazing potential of three-quarter sheep per morgen, i.e. it can graze approximately 1 800 sheep. He adds that with the present drop in wool prices and the "additional annual payment of R1 378 on the bond" it is doubtful whether applicant's income will be sufficient for his requirements.

 

I may, however, remark here that the Master's remarks are not entirely correct, because Barclays Bank's loan will be reduced by R11 600 and the applicant will pay a lower rate of interest on this amount at the Land Bank than at his .own bank. The costs in respect of the mortgage will be additional. It, however, appears that the original application, by sup­ pressing certain material facts, not only created a wrong impression in favour of applicant, but the false impression is also intensified by the allegations in para. 13 in regard to what can happen if the application is not granted, e.g. that the applicant will have to let the farm from sheer necessity and that it and the improvements will go to rack and ruin. The averments coincide with the remarks of HOLMES, J., as he then was, in Ex parte de Winnaar, supra at p. 840. These inferences placed before the Court can only be applied successfully if the true facts do not afford another way out. In any event the Court will also in this regard consider what BRINK, J., as he then was, said in Ex parte Hutchinson, N.O., 1952

(2) S.A. 219 (0) at p. 223, viz.: "..................................................... "

 

See also Ex parte Botha and Another, 1952 (2) S.A. 224 (0) at p. 230. The effect of this warning can only be appreciated if it is remembered that most of the·old authorities, who deal with similar applications, stress the fact that the approval of the Court or higher authority is necessary before fideicommissary property may be aliena-ted. (See Groe­ newegen, De Legib. Abrog. 27.9.13; van Leeuwen, Rooms. Holl. Recht.,1.16.9; Sande, Restraints upon Alienation, 1.1.4.52 et seq.; Voet, Com.

 

ad. Pand., title 1, sec. 70; van Zurk, Codex Batavus, sub voce, "fideicom missum", and van der Linden, Institutes, book 1, sec. VIII. The Roman­ Dutch Law, like our law to-day saw similar cases in a serious light and an applicant or beneficiary who therefore endeavours to pay debts in­ curred by way of mortgage, for which he must obtain .the consent of the Court, may not lose sight hereof. The reasons for this are the vulne­ rability to which fideicommissary heirs are exposed; even where the Court must decide.

 

WATERMEYER, J., as he then was, says in Ex parte Fourie, 1925 C.P.D.43 at p. 44: " ....................." and in Ex parte Visagie, supra DAVIS, J.,

 

as·he then was, says at pp. 8 and 59 : ".·.......·   "

 

In the present case the applicant incurred debts to the amount of R33 131, of which the amount of R14 352 is in respect of improvements. It is not stated when the improvements were made, why it was necessary and whether the difference of R18 779 has anything to do with the im­ provements. The Court is simply approached to allow the registration of a mortgage bond of Rl 1 600 .to pay a portion of the debt at Barclays Bank D.C.O. The applicant placed the Court before an acoomplished fact, a situation against which the Court has issued several warnings. He probably did that as a result ofthe particular conditions of the will, for he says in para. 12 of his application:

"The applicant respectfully a·vers that it is highly improbable that he will die without leaving children or grandchildren."

 

He has, as already mentioned, in fact three minor children and in view of the decided case Ex parte Naude, 1940 C.P.D. 7 as explained in Ex parte Visagie, supra at p. 57, he could take up that attitude, but not­ withstanding that the principle is unfettered that an applicant may not first incur costs and then approach the Oourt. H is conceivable that there may be cases in practice, where it cannot be done or was not done by an applicant and where the application must still be granted, especially in the case of ob causam necessariam, but then the applicant must furnish such particulars that the Court is completely satisfied that the fideicom­ missary heirs will benefit by the mortgage. Ex parte Fourie, supra; Ex parte Blomerus, 1936 C.P.D. 368; Ex parte Visagie, supra at p. 52. In this respect the application is also defective.

 

Two aspects of the merits deserve attention. Where the Court is reques­ ted by an applicant, as in the present case, to pass the said mortgage in order partly to pay off his indebtedness to his bank, it appears to me from the scanty information that the mortgage is prima facie in his own interest and in the interest of the fideicommissary heirs. Mr. Lichtenberg assured the Court that he does not know of any case where such an ap­ plication succeeded under the common law ob causam necessariam.

 

Strauss' s case supra at pp. 945 and 946 gives a summary of applications ob causam necessariam. Such an instance is not mentioned there and I also do not know of such a case. In such a case the applicant's interests in the application is de facto in direct opposition to that of the minors and unborn fideicommissary heirs and it appears to me to be necessary that a curator ad item should have been appointed in this case. (See Merula, Manier van Procederen, 4.40.6.2; van der Linden, Judicieele Praktyk, 1.8.3; van der Keessel, Dictata (ad Grotius) 2.20.11; and Ex parte Visagie, supra at p. 53). I would even go further and say that where an applicant avers in his petition that he wants to mortgage property which is subject to a fideicommissum in order to pay off. his indebtedness to his bank, partly or wholly, because alleged improvements to the pro-

perty are involved to which an undefined portion of the debt is attribu­ table, it appears to me to be essential for a curator ad !item to be appoin­ ted on behalf of the minor and unborn fideicommissary heirs to go into the making of the improvements, the nature and origin of the debt and to report to the Court, even where there is a recent sworn valuation of the alleged improvements before the Court.

 

The second aspect is that the applicant is in my opinion, entitled to pass a mortgage for the amount of the estate duty which he had to pay aon his inheritance and which amounted to R2 640,73 and if he as benefi­ ciary is not in a position to pay it (Ex parte Strauss, supra at p. 945). What is more, the codicil to the will.itself authorises the applicant to encumber the farm for the purposes of paying the estate duty. The main prayer of the application is however of such a nature that I do not know whether it will benefit the applicant in any way if the Court could grant this amount only with the object of passing a mortgage other than that applied for and entered into on the Land Banks' terms. I was also not asked for this. The information contained in the application is too scanty and was not placed before the Court satisfactorily. It was, therefore, dis­ missed for the above reasons.

 

Applicant's Attorneys : van de Wall & Partners.

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