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FORM A

FILING SHEET FOR EASTERN CAPE JUDGMENT

ECJ NO : 056/2004

PARTIES: Reed and Others v The Master of the High Court and Others

REFERENCE NUMBERS -

• Registrar: 925/03

DATE HEARD: 25 November 2004

DATE DELIVERED: 27 January 2005

JUDGE(S): Plasket J, Dambuza AJ

LEGAL REPRESENTATIVES -

Appearances:

• for the State/Applicant(s)/Appellant(s): EAS Ford SC

• for the accused/respondent(s): S Cole

Instructing attorneys:

• Applicant(s)/Appellant(s): Neville Borman & Botha

• Respondent(s): 1^st Respondent – Schafers Attorneys

2^nd Respondent – Wheeldon, Rushmere & Cole

CASE INFORMATION -

• Topic: As per summary

IN THE HIGH COURT OF SOUTH AFRICA

(EASTERN CAPE DIVISION)

CASE NO: 925/03

DATE DELIVERED:27/1/05

REPORTABLE

In the matter between:

STANLEY TREVOR REED FIRST APPLICANT

MICHAEL HARVEY REED SECOND APPLICANT

ANN MARGARET McKAY THIRD APPLICANT

STANLEY TREVOR REED NO FOURTH APPLICANT

MICHAEL HARVEY REED NO FIFTH APPLICANT

ANN MARGARET McKAY NO SIXTH APPLICANT

and

THE MASTER OF THE HIGH COURT

OF SOUTH AFRICA FIRST RESPONDENT

CLEM GERAGHTY NO SECOND RESPONDENT

MONA MYRA MARY NILAND THIRD RESPONDENT

ANTHONY DESMOND NILAND FOURTH RESPONDENT

________________________________________________________________________________________JUDGMENT__________________________

Review of a decision of the Master to uphold an objection to a liquidation and distribution account.

Whether s35(10) of the Administration of Estates Act 66 of 1965 creates an internal remedy as contemplated by s7(2) of the Promotion of Administrative Justice Act 3 of 2000 – Held that it does not.

Interpretation of will – Held that the Master had misdirected herself in assuming that a bequest had vested in the estate of one DN, and that a substitution provided for in the will was a direct, rather than a fideicommissary substitution – Decision set aside on the basis of it not being objectively rational and based upon a material error of law

______________________________________________________________

PLASKET J:

[A] INTRODUCTION

[1] The applicants are the children of the late Elaine Pearce Reed and Trevor David Reed. (I shall refer to them as the testators.) The applicants litigate in their capacity as heirs and also as executors of the joint deceased estate of their parents. The first respondent is the Master of the High Court and the second respondent is the executor of the deceased estate of the late Dominic Niland, the grandson of the testators.

 

[2] The applicants seek orders in the following terms:

 ‘1. Condoning, to such extent as may be necessary, the applicant’s failure to launch this application within a period of 30 days from the date of the ruling by the first respondent more fully referred to in the annexed affidavit.

  2. Reviewing and setting aside the decision and directive of the first respondent  dated 4 June 2003 (annexure “STR47”) in which the first respondent directed inter alia:

:     2.1. that clause 6 of the Last Will and Testament of E.P. and  T.D.Reed  constituted  a direct substitution;

2.2. that the liquidation and distribution account should be amended to reflect awards to the estate late Dominic Niland;

3. directing that the bequests set out in clause 7(d) read together with clause 8(d) of the aforesaid last will and testament had not vested in Dominic Niland prior to his death;

 4. declaring that such bequests devolve upon first, second and third applicants in accordance with the provisions of clause 6;

 5. declaring that the provisions of clause 6 of the last will and testament constitute a fideicommissary substitution and that such bequests as may have devolved upon the late Dominic Niland prior to his death shall devolve upon first, second and third applicants in accordance with the provisions of clause 6;

6.  directing the first respondent to pay the costs of this application for review;

7.  directing that the second respondent, in the event of the second respondent opposing this application for review, pay the costs thereof jointly and severally with the first respondent, the one paying the other to be absolved;

8.  granting the applicants further and/or alternative relief.’

 

[3] The case has a long, and at times, acrimonious, history. I do not intend dealing with the facts in any great detail. There is no need to do so because, when all is said and done, the facts are largely common cause and uncontroversial. What follows is a synopsis of those facts that are most important for the resolution of the dispute.

 

[4] The testators were, during their lifetimes, married to each other in community of property. On 5 August 1994, they executed a joint will in which the applicants and Dominic Niland were the main beneficiaries. (I shall revert to the terms of the will in due course).

 

[5] Elaine Pearce Reed died on 21 July 1999 and her husband was appointed executor in her estate. Dominic Niland died on 19 February 2000 leaving no children. Trevor David Reed died on 8 December 2000.

 

[6] I turn now to the provisions of the will.

[7] Clause 6 of the will provides as follows:

‘Subject to the substitution contained at the end of paragraphs 7(c)(i), 8(c)(i) and 10(c)(i) hereunder and in the event of any of our children or Dominic Niland dying without lawful issue, we hereby direct that such beneficiary’s interest and inheritance shall devolve upon our remaining children and our grandchild Dominic Niland referred to hereunder in equal shares, share and share alike, but in the event of such beneficiary leaving lawful issue, such beneficiary’s share shall devolve upon such lawful issue in equal shares, share and share alike.’

 

[8] In terms of paragraph 7(c)(i), in the event of Trevor David Reed being the first dying of the testators, a bequest of certain property is made in favour of the third applicant ‘subject to the life long usufruct thereover in favour of the survivor of us’. The same clause states further that in the event of the third applicant ‘predeceasing the first dying of us without lawful issue, we hereby appoint her husband Robert Hector McKay to be the heir to the above mentioned immovable property and caravan park’. In terms of clause 8(c), a similar bequest is made in the event of Elaine Pearce Reed being the first dying and, in terms of clause 10(c)(i) a similar bequest is made in favour of the third applicant in the event of the simultaneous death of the testators.

 

[9] Clause 7(d) provides for the following bequest to Dominic Niland:

‘(i) Any monies which may be owing by him to the said Trevor David Reed as at the time of his death;

(ii) All the testator’s farming livestock, farming vehicles, farming implements and farming equipment unconditionally;

(iii) An undivided one eighth share in our erven being numbers 4307 and 4308 situate in Main Street, Port Alfred:

(iv)  All my immovable farm properties comprising the remainder of the farm Rosehill situate in the Division of Bathurst …after deduction of erf 4758 Port Alfred bequeathed to Ann Margaret MacKay in terms of paragraph 7(c)(i) above, together with the immovable farm property  known as Riverview situate in the division of Bathurst … . This bequest is, however, subject to the lifelong usufruct thereover  in favour of the survivor of us.

 …

(v) The bequests contained in paragraph 7(d)(i) to (iv) above are also subject to the condition that this beneficiary shall assume liability for the payment of a one eighth share of all estate claims, liabilities and duties including estate duty which may be payable in connection with the administration of the estate of the first dying of us inclusive of conveyancing costs, transfer duty and/or donations tax.’ 

 

[10] Similar bequests were made to Dominic Niland in the event of Elaine Pearce Reed being the first dying (see clause 8(d)) and in the event of the testators dying simultaneously (see clause 10(d)).

 

[11] A dispute arose, after the death of Dominic Niland, as to whether the bequest had vested in him prior to his death and had therefore become part of his estate, and whether clause 6 of the will provided for a fideicommissum substitution or a direct substitution. The second respondent lodged an objection to the liquidation and distribution account because it had not made provision for a bequest in favour of the estate of Dominic Niland but had, instead, provided for what would have been inherited by him reverting to the applicants in terms of clause 6 of the will. After a great deal of correspondence between the attorney of the applicants, the first respondent and the second respondent, and the furnishing to the first respondent of opinions drafted by counsel, the first respondent eventually took the decision which is the subject matter of this review.  

[12] That decision is recorded in a letter dated 4 June 2003 written by a member of the first respondent’s staff, Ms V Horn, to the attorney representing the applicants. It states:

‘I refer to your letter dated 20 May 2003 and previous correspondence in this matter and wish to advise that the objection to the account is upheld. The executor is hereby directed to amend the Liquidation and Distribution Account to reflect the awards to the Estate Late Dominic Niland as per the will dated 5 August 1994 as I agree with Advocate Cole’s opinion dated 8 April 2003 that Clause 6 of the Will constitutes a direct substitution.’  

 

[13] The applicants have applied to review and set aside that decision because, they aver, it is bad for want of lawfulness, reasonableness and procedural fairness: their case is that the decision-maker made a material mistake of law, that her decision was irrational and that the decision was taken without the applicants being afforded a proper opportunity to present their case (in the form of a further opinion from counsel).

[B] THE POINTS IN LIMINE

[14] The second respondent took two points in limine that we dismissed. We undertook to give reasons for those decisions when we gave our judgment on the merits. Those reasons follow.

[15] The first point in limine was that, this being an application to review an administrative decision of the first respondent, the applicants were under an obligation, in terms of s7(2) of the Promotion of Administrative Justice Act 3 of 2000 (the PAJA) to exhaust internal remedies before launching review proceedings, and their failure to do so precluded this court from hearing the matter until they have done so.

[16] The second point was that the applicants had not complied with s35(10) of the Administration of Estates Act 66 of 1965. It requires an application to review a direction of the first respondent, or a refusal by the first respondent to sustain an objection, to be launched within 30 days of the taking of the impugned decision, or ‘within such further period as the Court may allow’. The application was launched outside the 30 period and, the second respondent argued, no proper case had been made out for condonation (or, more correctly perhaps, for an extension of the time period).

(a) The Duty to Exhaust Internal Remedies

[17] I shall assume, without deciding, that the decision under challenge is administrative action as defined in s1 of the PAJA. Whether it is or not is largely academic because it is reviewable, either in terms of s1(c) of the Constitution (supplemented if need be by the common law) or in terms of s6(2) of the PAJA, on essentially the same grounds.

[18] Section 7(2) of the PAJA provides:

‘(a) Subject to paragraph (c), no court or tribunal shall review an administrative action in terms of this Act unless any internal remedy provided for in any other law has first been exhausted.

(b) Subject to paragraph (c), a court or tribunal must, if it is not satisfied that any internal remedy referred to in paragraph (a) has been exhausted, direct that the person concerned must first exhaust such remedy before instituting proceedings in a court or tribunal for judicial review in terms of this Act

(c) A court or tribunal may, in exceptional circumstances and on application by the person concerned, exempt such person from the obligation to exhaust any internal remedy if the court or tribunal deems it in the interest of justice.’

[19] Section 7(2) of the PAJA, assuming as I must for present purposes that it is constitutional, limits the fundamental right of access to court by barring resort to judicial review until internal remedies provided by any law have been exhausted (or until the time period for utilising the internal remedy has elapsed). By deferring resort to judicial review in this way, s7(2) restricts the jurisdiction of a court to determine an otherwise justiciable issue before it. Because it interferes with fundamental rights, it must be interpreted restrictively.¹

[20] The section applies to internal remedies, and not simply to any form of potential extra-curial redress. A remedy, in this context, is defined in the New Shorter Oxford English Dictionary² as a ‘means of counteracting or removing something undesirable, redress, relief; legal redress’. Inherent in this concept, as it is used in its legal context is the idea that a remedy, in order to qualify to be regarded as such, must be capable, as a matter of law, of providing what the Constitution terms appropriate relief: it must be an effective remedy. Section 7(2) does not, in other words, place an obligation on a person aggrieved by a decision to exhaust all possible avenues of redress provided for in the political or administrative system – such as approaching a parliamentary committee or a Member of Parliament, or writing to complain to the superiors of the decision-maker. Similarly, it is not required of an aggrieved person that he or she approach one or more of the Chapter 9 institutions – such as the Public Protector or the Human Rights Commission – prior to resorting to judicial review.

[21] There are two reasons for this: the first is that resort to Parliament, or one of its committees, or a senior person in the bureaucracy, or a Chapter 9 institution, does not amount to utilising a remedy as that term is understood in public law. (I shall elaborate on this below.) Secondly, these bodies do not have jurisdiction, as a matter of law, to remedy the complaint by issuing binding orders, in the way that courts do, or to determine issues involving rights through the application of the law. They may be able to make political decisions that have the effect of remedying the problem, or of conducting investigations and making recommendations, which, if acted upon, will remedy the problem, but they do not award remedies: they make political or policy choices, rather than determine the merits of an appeal to them or the lawfulness, reasonableness or procedural fairness of the administrative action that is the subject matter of complaint.

[22] These limitations on the so-called duty to exhaust internal remedies at common law have been recognised by the courts. In Bindura Town Management Board v Desai and Co³ an ordinance provided that '[e]very refusal of any local authority or board to grant a certificate, together with the reasons for such refusal, and a copy of the evidence (if any) upon which such reasons are based, shall be submitted by such local authority or board to the Governor, who may after due enquiry order the issue of any licence for which a certificate has been refused.' It was argued that an application to review a refusal to grant a certificate (which refusal was based upon the race of the applicant) was premature because the Governor had not decided on the refusal. Van Den Heever JA (with whom Centlivres CJ concurred) held that there was no general duty to exhaust internal remedies⁴ but, in any event, the ordinance did not create an internal remedy:⁵

‘Here we have no situation comparable to that to which I have alluded. Members of the public complain that they have been wronged by a local authority of which they are completely independent. Not only is there no domestic tribunal to which they may appeal; they also have no remedy. A disappointed applicant does not invoke the assistance of the Governor and he has no right to present his case in writing or adduce argument. The Governor's action is executive, not judicial. There is nothing in sec. 22 or elsewhere in the Item to indicate that the Governor may not order a licence to be issued on grounds entirely unconnected with the merits of the local authority’s refusal of a certificate.’

[23] The nature of the Governor’s powers was even more explicitly held not to be an internal remedy in the court below, in Desai v Bindura Town Management Board⁶ in which Tredgold CJ held:

‘I do not think that the principle in that case is applicable to proceedings under Item 15 of the Act. The consideration by the Governor under sec. 22 is not “a remedy” open to the applicant for a certificate. It is more in the nature of an automatic review. The applicant does not initiate the proceedings, nor has he any right to be heard or to present his case. The Act contains no direction as to the basis upon which the Governor is to consider the matter; but bearing in mind that it is only the refusal of a certificate which is brought before him, it may be inferred that what the Legislature had in mind was some mitigation of any harsh or unreasonable exercise of the powers conferred upon local authorities or the maintenance of a general policy as against possible local vagaries. The procedure is more analogous to the exercise of the prerogative than to a judicial proceeding. I would hasten to add that this is not intended to be an attempt to define the powers of the Governor in considering the refusal of a certificate. But it is not normally the function of the Executive to pronounce upon legal points, and it is safe to assume that it was not for this purpose that the power of review was given by the Act.’

[24] The word ‘internal’ qualifies the word ‘remedy’ in s7(2) of the PAJA. The New Shorter Oxford English Dictionary⁷ defines internal (in this context) to mean ‘intrinsic’, ‘of or pertaining to or interior of something; within the limits of something’ and ‘used or applying within an organisation’.

[25] The dictionary definitions of the words ‘internal’ and ‘remedy’ that I have cited are in harmony with the way the composite term ‘internal remedy’ is understood in the more specialised context with which this matter is concerned: when the term is used in administrative law, it is used to connote an administrative appeal – an appeal, usually on the merits, to an official or tribunal within the same administrative hierarchy as the initial decision-maker – or, less common, an internal review.⁸ Often the appellate body will be more senior than the initial decision-maker, either administratively or politically, or possess greater expertise.⁹ Inevitably, the appellate body is given the power to confirm, substitute or vary the decision of the initial decision-maker on the merits. In South Africa there is no system of administrative appeals. Instead internal appeal tribunals are created by statute on an ad hoc basis.¹⁰

[26] A distinctive feature of internal remedies is that they are extra-curial (or domestic). In Golube v Oosthuizen and another,¹¹ for instance, De Wet J, in the context of deciding whether the applicant was under a duty to exhaust internal remedies, observed that the ‘mere fact that the Legislature has provided an extra-judicial right of review or appeal is not sufficient to imply an intention that recourse to a Court of law should be barred until the aggrieved person has exhausted his statutory remedies’.¹²

[27] A great number of internal remedies are to be found in the statutes. I shall cite but two examples to illustrate what an internal remedy is. The first example is the internal appeal created by s10 of the Social Assistance Act 59 of 1992. This provision states:

‘(1) If an applicant is aggrieved by a decision of the Director-General in the administration of this Act, such applicant may within 90 days after the date on which he or she was notified of the decision, appeal in writing against such decision to the Minister, who may confirm, vary or set aside that decision.

(2) The Minister may at any time reconsider and vary his or her decision.’

[28] The second example is s20 of the Films and Publications Act 65 of 1996. It provides:¹³

‘(1) The Minister or any person who has lodged a complaint with the Board that any publication be referred to a classification committee for a decision and classification in terms of section 17, and any person who applied for the classification of a film, or the publisher or distributor of a publication which formed the subject of any complaint or application in terms of section 16, may within a period of 30 days from the date on which he or she was notified of the decision, which in the case of the classification of a publication shall be the date of publication of the decision in the Gazette, in the prescribed manner appeal to the Review Board.

(2) The chairperson of the Review Board-

(a) may, on good cause shown, suspend the decision appealed against in terms of subsection (1), until the decision is given on the appeal;

(b) shall convene a meeting of the Review Board and inform the appellant of the date and time when the appeal is to be heard;

(c) may determine the procedure to be followed;

(d) may call upon any person who in his or her opinion is an expert on any matter relevant to the appeal, including any person who has experience in or knowledge of any matter referred to in section 6 (4), to give assistance to the Review Board.

(3) The Review Board may refuse the appeal and confirm the decision in question, or allow the appeal, either wholly or in part, and give such decision as the Board or executive committee should in its view have given, and amend the classification of the publication or film, specifying the clause of Schedule 1 or 6 upon which the classification is in terms of its decision based, and may impose other conditions in respect of the distribution or exhibition of the publication or film: Provided that the classification, as so amended, and the conditions so imposed, shall not be more restrictive than the classification or conditions appealed against.’

[29] Section 35(10) of the Administration of Estates Act does not create an internal remedy. Instead, it regulates recourse to a court for the purpose of reviewing decisions of the Master. It is, by definition external to the administration, is not domestic to the administrative hierarchy created by the Administration of Estates Act, and is curial in character. Its main purpose appears to be to set a period of time within which decisions must be challenged. It does not say anything about the grounds upon which decisions may be challenged. Those grounds were, prior to 27 April 1994, the grounds of review recognised by the common law.¹⁴ They are now, if the decisions postulated by s35(10) constitute administrative actions for purposes of the PAJA, the grounds set out in s6(2) of that statute. If those decisions are not administrative decisions, the grounds of review will be those postulated by s1(c) of the Constitution, because whatever its character may be, the decision-making power in question involves the exercise of public power and so must comply with the principle of legality that is at the heart of the Constitution’s founding value of the rule of law.¹⁵

[30] In conclusion then, irrespective of whether the decision under attack is administrative action as defined in the PAJA, s7(2) of that Act does not apply, and the first point in limine had to fail.

(b) Condonation

[31] The second respondent has two strings to his bow on the issue of condonation. The first is that as no application for the extension of the 30 day period contemplated by s35(10) of the Administration of Estates Act was launched prior to the expiry of that time period, ‘the executor’s rights to relief in terms of the section finally lapsed’. The second is an alternative to this argument, namely that the application for the extension of the time period does not make out a proper case for condonation.

[32] The first point can be dealt with briefly. If s35(10) is interpreted to mean that it creates an expiry period, it would be an unconstitutional infringement of the right of access to court because 30 days is an unreasonably and unjustifiably short period within which to expect a person to institute proceedings (in the absence of a condonation provision).¹⁶ Interpreting s35(10) to be a provision that creates a time period that is subject to condonation in the event of non-compliance could render it a reasonable and justifiable limitation of the right of access to court.¹⁷

[33] This latter interpretation is to be preferred for two reasons: first, it is an interpretation that gives the provision a constitutional, rather than an unconstitutional, meaning;¹⁸ and secondly, it appears to me to enjoy the great virtue of being fuelled by common sense. I therefore hold that the mere fact that the application was launched more than 30 days after the impugned decision was communicated to the applicants, and they never applied to this court for an extension of the time period before it expired, does not preclude them from seeking relief.

[34] The first applicant has given an explanation for the fact that the application was launched after the expiry of the 30-day period. In essence, it is this. After the decision was taken, the applicants’ attorney had various discussions with members of the staff of the first respondent that established that the decision was taken without reference to the opinion written by Mr Ford (who appeared for the applicants). (This opinion was written in reply to an earlier opinion written by Mr Cole, who appeared for the second respondent, which was, in turn, an answer to an opinion written by Mr Whitehead, who had originally been briefed to advise the applicants.) Consideration was given to alternative ways to deal with the issue, short of instituting proceedings. The attorney was then unable to brief Mr Ford to prepare papers because he was on leave and was later involved in a trial. He then attempted to brief another senior counsel as a matter of urgency but this ‘proved abortive’ and it was decided that it was best to brief Mr Ford after all and to await him being available.

[35] The attorney consulted with Mr Ford on 5 August 2003 and the founding papers were then drafted. The application was launched on 12 August 2003, approximately five weeks outside of the 30-day period. The applicants’ attorney had informed the respondents about the difficulties that he faced. The first respondent was prepared to accommodate him but the second respondent was not. It was only on 4 July 2003, however, that the second respondent’s attorneys communicated that the second respondent was ‘not prepared to consider any indulgence’ and that a formal application for condonation would have to be made.

[36] The second respondent does not take issue with the factual basis upon which the application for condonation is founded. He contends that the applicants’ attorneys should have acted with more haste and should have briefed someone other than Mr Ford, if he was not immediately available. Although he took the view that the applicants did not give sufficient reasons for not launching their application within the 30 day period, he stated that ‘I do not oppose the granting of condonation in respect of the period for an extension to permit the application to be brought’, opting to ‘leave this aspect to the Court’s discretion’. The second respondent makes no claim that he, or anyone else for that matter, is prejudiced by the applicants’ delay in launching the application. At the hearing of the matter, the issue of condonation was argued with a great deal more force than one would have anticipated from a reading of the second respondent’s affidavit.

[37] While it may be so that the applicants’ attorney could have set out with a great deal more detail precisely what steps he took in the first month after the decision was taken, it really would be favouring form over substance to hold that this lack of detail amounted to a failure on the applicants’ part to give a satisfactory explanation for the delay. I am also of the view that the criticism of the applicants’ attorney for waiting for Mr Ford to be available is unreasonable in the circumstances of this particular case. This is a matter that has a long history and it is not without its complications. Even if it would have been possible to have briefed another advocate at short notice, it would have been far from satisfactory given that Mr Ford had been intimately involved in the matter and obviously had a sound knowledge of the issues. In these circumstances, and bearing in mind that there is no prejudice suffered by either respondent as a result of the delay, I am of the view that the applicants have shown good cause for their delay in launching these proceedings to be condoned.

[38] For these reasons, the second point in limine was dismissed at the hearing of the matter. I now turn to the merits.

[C] THE MERITS

(a) The First Respondent’s Reasons

[39] In Ms Horn’s letter of 4 June 2003 in which she upheld the second respondent’s objection to the liquidation and distribution account, she furnished one reason for her decision. She stated that she had upheld the objection ‘as I agree with Advocate Cole’s opinion dated 8 April 2003 that Clause 6 of the Will constitutes a direct substitution’.  

[40] Ms Horn has also, in terms of rule 53, filed a statement of reasons for the decision. This document consists in the main of a chronology of the events leading up to the launching of the application. It also incorporates by reference the reasoning adopted by Mr Cole in his opinion. In that sense, it does not take the matter much further than the letter of 4 June 2003.

[41] Ms Horn accepted as a fact that Dominic Niland died ‘without formally electing to accept the conditions of the will’.¹⁹ After referring without comment to Mr Whitehead’s opinion, in which, according to her, he concluded that ‘the bequest had not vested in Dominic Niland at the date of his death’, Ms Horn stated that the executor of the estate of Dominic Niland ‘implied that he had elected to accept the terms and conditions of the aforesaid joint will … on behalf of the deceased Dominic Niland and emphatically disagreed with advocate Whitehead SC’s opinion’. She then referred to the objection to the liquidation and distribution account lodged by the executor of Dominic Niland’s estate and to the fact that he argued that ‘the inheritance had vested in his (Dominic Niland’s) estate’.

[42] She then referred to the opinion of Mr Cole, lodged in support of the objection, which, she said, confirmed that clause 6 of the will constituted a direct substitution. She proceeded to say:

‘Advocate Cole takes the view “that an overall consideration of the scheme and layout of the Will conveys the clear intention of the Testator to cater for the death of Dominic without issue before death of the Testator, which therefore provided for a direct substitution in the absence of Dominic“ (paragraph 11 of his opinion, Annexure L). Advocate Cole further argued that “Dominic did not die before the Testator and accordingly the provision for the substitution was not necessary and did not take effect” (paragraph 12 of his opinion, Annexure L) and continued in paragraph 13 that “it is trite law that, if the original instituted heir succeeds, then the substituted heir fails”.’

[43] After stating that she had, prior to taking the decision, arrived at the conclusion that ‘all the parties concerned had more than exhausted their opportunities in terms of the audi alteram partem principle’, she asserted that her ‘action was taken in good faith and leaned more towards being overdue rather than premature’. In the next paragraph, she referred to her decision, stating that she informed the applicants’ attorney of her decision and the basis for it, namely that ‘I agreed with Advocate Cole’s opinion that Clause 6 of the Will constituted a direct substitution²⁰ in that as Dominic Niland was alive as at date of death of the testator – and his executor had (implicitly) elected to accept the terms of the will – his (Dominic Niland’s) inheritance vested in him and that the Amended Liquidation and Distribution Account is to be amended to reflect this’.

[44] Ms Horn stated that the ‘thrust’ of her opposition in this matter is ‘based on the Estate Late EP Reed’s executors’ attorney’s erroneous interpretation of an ambiguity contained in clause 6 of the Last Will and Testament of the estate of the late EP Reed, which ambiguity was exacerbated by the untimely demise of the heir Dominic Niland who died soon after the First and Final Liquidation and Distribution Account was lodged in the estate’. She claimed that her decision was not in conflict with an earlier decision made by one of her colleagues, one Mr Keyter, ‘insofar as his interpretation of the will was that Dominic Niland inherits in terms of clause 8(d) of the will and that in terms of clause 6, ultimately, “the assets will have to be reflected in a Fiduciary Asset Account in Dominic’s estate and awarded to the fideicommissary substitutes”’. She stated further that she duly gave instructions to the applicants’ attorney to amend the liquidation and distribution account in line with her decision to reflect ‘the award to Dominic Niland in terms of clause 8(d) of the will, but subject to the fideicommissary condition created in clause 6 of the will, or institute review proceedings’.

[45] Ms Horn’s answering affidavit does not take the matter any further. In it, she refers back to her reasons and repeats her claim to have acted in good faith and in a procedurally fair manner. She takes exception to the allegation that her decision was irrational, describing this allegation as vexatious, stating that her decision ‘was not reached without considerable forethought and without taking all the circumstances and the history of the matter into consideration’. She also states that her decision is not ‘incorrect in law’ as alleged, any more than ‘the opinions of learned counsel whose opinions, with respect, differed from each other markedly and substantially on salient legal issues’. These are, of course, no answer to the question whether, as a matter of law, she exercised her powers properly: the fact that she thought that she decided properly does not necessarily mean that she did decide properly. Her protestation that she acted in good faith throughout also does not end the matter: while good faith is a necessary condition for the valid exercise of a public power, it is not, in itself, sufficient (even if this impression is created by some of the older cases on the judicial review of official decisions.²¹) In Pharmaceutical Manufacturers Association of South Africa and another: In Re Ex Parte President of the Republic of South Africa and others²² Chaskalson P held that ‘[t]o the extent that Shidiack requires public officials to exercise their powers in good faith and in accordance with the other requirements mentioned by Innes ACJ, it is consistent with the foundational principle of the rule of law enshrined in our Constitution. The Constitution, however, requires more; it places further significant constraints upon the exercise of public power through the Bill of Rights and the founding principle enshrining the rule of law’.

[46] He then held that, in order to be valid, public powers must be exercised and public functions must be performed in an objectively rational manner:²³

‘[85] It is a requirement of the rule of law that the exercise of public power by the Executive and other functionaries should not be arbitrary. Decisions must be rationally related to the purpose for which the power was given, otherwise they are in effect arbitrary and inconsistent with this requirement. It follows that in order to pass constitutional scrutiny the exercise of public power by the Executive and other functionaries must, at least, comply with this requirement. If it does not, it falls short of the standards demanded by our Constitution for such action.

[86] The question whether a decision is rationally related to the purpose for which the power was given calls for an objective enquiry. Otherwise a decision that, viewed objectively, is in fact irrational, might pass muster simply because the person who took it mistakenly and in good faith believed it to be rational. Such a conclusion would place form above substance and undermine an important constitutional principle.’

[47] The importance of the duty to furnish reasons should not be underestimated.²⁴ It is not an irritating formality that administrators must comply with.²⁵ It serves a number of purposes²⁶ but the central purpose is that it enables courts to control the exercise of public powers and the performance of public functions properly: it is central to making judicial review itself an effective bulwark against arbitrary and oppressive official action.²⁷

[48] It is on the basis of the reasons that Ms Horn has furnished that the objective rationality of her decision must be tested. In order to determine whether there is a rational basis for her decision, it is necessary to ascertain and decide whether her decision is rationally justifiable in relation to the reasons given for it.²⁸ Central to this endeavour is the interpretation of the will. It is to this that I now turn.

(b) The Interpretation of the Will

[49] Two issues are central to the dispute in this matter. They are, first, whether the bequest to Dominic Niland vested in him prior to his death, and was therefore capable of onward transmission to his intestate heirs, and secondly, whether clause 6 of the will provided for a fideicommissary substitution or a direct substitution.

[50] When interpreting a will, as with interpreting a statutory instrument or contract, a court must ascertain from the terms of the instrument the intention of its maker, and give effect to that intention.²⁹

(i) Vesting

[51] Corbett, Hofmeyr and Kahn submit (in a passage cited with approval by the courts on a number of occasions) that an ‘inheritance, bequest or other interest in a deceased estate is said to “vest” in the heir, legatee or other beneficiary concerned if and when the right to it has become unconditionally fixed and established in such person’, that, on vesting, the interest concerned ‘is normally transmissible to the heirs or representatives of the beneficiary upon his or her death or insolvency and forms an asset in the estate’ and that a conditional or contingent interest ‘confers no transmissible right upon the beneficiary unless and until the condition is fulfilled’.³⁰

[52] Clause 7(d) of the will contains the bequest to Dominic Niland. Clause 7(d)(v) provides that the bequests made in the clause are subject to ‘the condition that this beneficiary shall assume liability for the payment of a one eighth share of all estate claims, liabilities and duties including estate duty which may be payable in connection with the administration of the estate of the first dying of us inclusive of conveyancing costs, transfer duty and/or donations tax’.

[53] Mr Cole argued that clause 7(d)(v) did not create a suspensive condition but a modus – that, in other words, it was ‘a clause by which “the testator imposes on him on whom he confers a gift the charge of employing it wholly or in part for certain specified purposes, or the duty of doing something else which restricts or diminishes the extent of the gift or legacy”’.³¹ The importance of this distinction between a suspensive condition and a modus is that the latter ‘is a device by which an obligation can be imposed upon a beneficiary without making his rights conditional’ and that ‘[w]hereas a condition postpones but does not oblige, a modus obliges but does not postpone’.³²

[54] In my view, it is apparent from the plain meaning of the words used in clause 7(d)(v), read within the broader context of the will as a whole, that the bequest to Dominic Niland (as with the similarly worded bequests to the other beneficiaries) was made conditional upon him assuming liability for a portion of the estate’s debts. This conclusion is strengthened by a comparison of clause 7(d)(v) with clause 7(d)(iv). In the latter, the testators provided that the ‘bequest of the farm “Riverview” to the said Dominic Niland is subject to the condition that in the event of my grandson Gary Reed McKay still operating the cheese factory on this farm to be inherited by our grandson, Dominic Niland, hereunder at the time of the death of the first –dying of us, we direct that the said Dominic Niland shall be obliged to permit the said Gary Reed McKay to continue operating such cheese factory in the building being utilised by him on the farm, rent-free, for a period of up to three years from the date of death of the first dying of us’. This ‘condition’ – to use the terminology of the testators – was intended to limit the extent of Dominic Niland’s rights of use of the farm but it had no effect on the legacy vesting in him: if the legacy vested, he obtained the right as defined in clause 7(d)(iv).

[55] Clause 7(d)(v), on the other hand, contemplates a condition that precedes the assumption of the benefits: if the beneficiary is prepared to assume liability for the payment of a portion of the estate’s debts, then he would be entitled to the benefits as defined in clauses 7(d)(i), (ii), (iii) and (iv). It follows, as a matter of logic, that the condition must first be fulfilled before the entitlement to the benefits can arise. In other words, ‘the right does not vest in the beneficiary until the condition is fulfilled’.³³

[56] No admissible evidence has been adduced to establish that Dominic Niland assumed liability for the estate’s liabilities. Indeed, the only direct evidence on this issue is to the effect that he did not. Mr Cole argued, however, that it was not necessary for him to have done so for the interest involved to vest in his estate – that in the absence of a repudiation, he must be taken to have assumed liability, and hence the benefits of the will. He relied, for this argument, on the case of Crookes NO and another v Watson and others³⁴ and, specifically the dictum of Van Den Heever JA that the ‘oft-repeated saying that a legatee does not acquire a legacy unless he accepts it, misplaces the stress; it would be more correct to say that he acquires a right to the subject-matter of the bequest unless he repudiates it’.³⁵

[57] This case is, in my view, distinguishable from the Crookes matter: in this case the legacy is dependant on a suspensive condition, whereas, in Crookes, there were no similar conditions attached to the benefits that accrued to the beneficiary in the trust involved; and secondly, the beneficiary in Crookes had accepted the benefits that the trust provided her and was enjoying those benefits. The statement relied on by Mr Cole appears to me to have been obiter: the case involved whether the trust deed could be amended by mutual assent, despite express provisions to the effect that it could not be amended. Despite the persuasive weight of obiter dicta of the Appellate Division, Crookes is not directly relevant to the present matter and thus, in my view, is of little assistance to the second respondent in this case.

[58] The position is different where, as in this case, the legacy is made subject to a suspensive condition. In circumstances ‘where an appointment to an inheritance or a bequest has been made subject to a suspensive condition, the right to it will generally not vest in the beneficiary concerned unless and until the condition is fulfilled’; and an inheritance or bequest ‘is suspensively conditional where the right to it is made to depend upon the occurrence of some future, uncertain event’.³⁶ In Jowell v Bramwell-Jones and others³⁷ Heher J set out the position thus:

‘Whether a right is “vested” in the sense in which that word is understood in the law of succession depends upon whether the testator intended (according to his will) in using words indicating future enjoyment of a bequest merely to postpone enjoyment of the bequest, as distinct from making the bequest conditional. If the bequest is unconditional, the legatee acquires a vested right in it from the date of the death of the testator (dies cedit), although he cannot enjoy it until the time arrives for enjoyment (dies venit); should the bequest be conditional, the legatee acquires no vested right.’

[59] My conclusion is that, properly interpreted, clause 7(d)(v) of the will created a suspensive condition, that Dominic Niland never assumed the liability that was the precondition for the entitlement to the benefits bequeathed to him, and that, as a consequence, the bequest never vested in him and was not capable of onward transmission to his intestate heirs.

[60] Ms Horn, in the letter of 4 June 2003, in her reasons and in her affidavit, appears to accept that Dominic Niland died without electing to accept the conditions attached to the bequest in his favour, takes the view that ‘his executor had (implicitly) elected to accept the terms of the will’ and also aligns herself with the opinion of Mr Cole, who worked from the assumption that Dominic Niland had accepted the condition and that the bequest had vested.

[61] In order for Ms Horn’s decision to meet the standard of objective rationality in circumstances in which she was required to make findings of fact and of law in the exercise of her powers, there must be, in the words of MT Steyn J in Coetzer en ‘n ander v De Kock en andere,³⁸ a ‘duidelike kousale verband tussen die ondersoek en die daaropvolgende besluit’. Put slightly differently, in the words of Froneman DJP in Carephone (Pty) Ltd v Marcus NO and others,³⁹ there must exist, for the disputed decision to be valid, ‘a rational objective basis justifying the connection made by the administrative decision-maker between the material properly available to him and the conclusion he or she eventually arrived at’.

[62] As there was no evidence that the bequest had vested, Ms Horn’s decision was not justifiable: the rational connection between facts and result is absent. The decision is, accordingly, irrational, is invalid and must be set aside.

(ii) Substitution

[63] Clause 6 of the will provides for the substitution of beneficiaries, in the following terms:

‘Subject to the substitution contained at the end of paragraphs 7(c)(i), 8(c)(i) and 10(c)(i) hereunder and in the event of any of our children or Dominic Niland dying without lawful issue, we hereby direct that such beneficiary’s interest and inheritance shall devolve upon our remaining children and our grandchild Dominic Niland referred to hereunder in equal shares, share and share alike, but in the event of such beneficiary leaving lawful issue, such beneficiary’s share shall devolve upon such lawful issue in equal shares, share and share alike.’

[64] In her letter to the applicants’ attorney informing him that she had upheld the second respondent’s objection, Ms Horn directed the attorney to amend the liquidation and distribution account ‘to reflect the awards to the Estate Late Dominic Niland as per the will dated 5 August 1994 as I agree with Advocate Cole’s opinion dated 8 April 2003 that clause 6 of the will constitutes a direct substitution’. In his opinion, Mr Cole had stated that ‘[w]e take the view that an overall consideration of the scheme and layout of the will conveys the clear intention of the testator to cater for the death of Dominic without issue before the death of the testator, which therefore provided for a direct substitution in the absence of Dominic’.

[65] Before turning to the proper approach to the resolution of this issue, and the interpretation of the will, it is necessary to define the terms in issue. Corbett, Hofmeyr and Kahn distinguish between direct and fideicommissary substitutions as follows:⁴⁰

‘A direct substitution occurs when one or more persons are nominated in the will to take the place of the appointed heir or legatee in the event of the latter not taking the inheritance or bequest either because of inability to do so, for instance where the heir or legatee has predeceased the testator or has witnessed the will, or because of unwillingness to do so and refusal to adiate or because of the non-fulfilment of a condition attaching to the institution of the heir or legatee.

A fideicommissary substitution occurs when a testator institutes an heir or makes a bequest on condition that after a certain lapse of time or after some condition has been fulfilled or after the death of such heir or legatee, the inheritance or bequest is to go to another person by way of substitution for the first instituted heir or legatee. In such a case a fideicommissum is created in favour of the person substituted (the fideicommissary), and the instituted heir or legatee (the fiduciary) would be entitled to the inheritance or bequest only for the period allotted by the will.’

[66] The essence of the difference between the two forms of substitution are that a direct substitution creates for the beneficiary and the substitute alternative and mutually exclusive interests in the bequest, while in the case of a fideicommissary substitute, the interests involved are successive.⁴¹

[67] While the form of a substitution may vary, Corbett, Hofmeyr and Kahn say that it usually consists of ‘a condition upon the fulfilment of which the operation of the substitution depends and a dispositive provision stipulating how and to whom the subject-matter of the bequest is to go when the substitution comes into operation. The substitution may be so formulated as to take effect upon the death of the testator or at some date after the testator’s death’.⁴² They proceed as follows:⁴³

‘Straightforward illustrations of these forms would be: (1) “I bequeath my farm to my son A and upon A’s death to his lawful descendants by representation”; or (2) “I bequeath my farm to my son A and if A comes to die without lawful issue, then the farm is to go to the children of B”; or (3) “We, H and W, bequeath our farm to our son A, subject to the survivor of us enjoying the life usufruct thereof, and in the event of A predeceasing the farm is to go to B”.

In illustrations (1) and (2) above the critical enquiry would be whether the conditions in question contemplated A’s death (or death without lawful issue, as the case may be) before the death of the testator only and, therefore, before any vesting in A, in which case the substitution of his lawful descendants or the children of B, as the case may be, would be a direct one, or after the death of the testator and, therefore, after vesting in A, in which case the substitution would be fideicommissary in character. Similarly, in illustration (3) above, the initial, although here not necessarily critical, enquiry would be whether the condition in question contemplated A predeceasing the testator (that is, the first-dying of H and W) or predeceasing the holder of the life usufruct (that is, the survivor). If the former, then the substitution in favour of B would clearly be a direct one, in that if the condition were fulfilled and the substitution took place, the bequest would vest directly in B without any prior vesting in A. If the latter, then the substitution could be either direct or fideicommissary, depending upon whether the bequest vested in A upon the death of the testator. If it did so vest, then the substitution would be a fideicommissary one. If, on the other hand, a consideration of the terms of the will generally led to the conclusion that the testator intended the bequest to vest only upon the death of the holder of the life usufruct, then the substitution would be a direct one. This would be an instance of a direct substitution designed to take effect at some future date, that is after the death of the testator.’

[68] Boiled down to basics, the issue is whether clause 6 of the will contemplated Dominic Niland ‘dying without lawful issue’ either before the death of the first-dying testator, or after: if the former situation pertains, and assuming that vesting had occurred, the bequests would have been transmitted to his intestate heirs on his death, it being common cause that he died without lawful issue; if the latter situation pertains, the substitution would have occurred and the bequests would have devolved on the applicants ‘in equal shares, share and share alike’.

[69] In order to determine which of these situations pertains, it is necessary, as always, to ascertain the intention of the testators. That is done by determining ‘what indications (conjecturae) of the testator’s intention can be derived from (i) the language in which the substitution is couched; (ii) the terms of the bequest to which the substitution is attached and the general context in which the substitution appears; (iii) other provisions of the will which cast light upon the intention underlying the substitution; (iv) the dominating scheme or plan of the will, if ascertainable; and (v) such surrounding circumstances as may legitimately be referred to in interpreting a will; and thereafter to weigh these indications without overstressing any one of them’.⁴⁴

[70] If there is a reasonable doubt, however, as to whether a direct or a fideicommissary substitution was intended, it will be presumed that a direct substitution was intended. Centlivres CJ warned, in Van Zyl and others v Van Zyl and others,⁴⁵ that the presumption is to be relied on with caution and is not the cure-all for badly drafted wills:

‘During the course of argument on appeal a large number of cases were referred to but in my opinion it is unnecessary to review any of those cases, excepting in so far as they may lay down principles of law, for the cardinal rule of construction is to ascertain the intention of the testators as expressed in their will, and decided cases, in which the language used by the testators is different from the language of the will under consideration, are of no assistance and only tend to obscure the real question, viz., what was the intention of the testators as gathered from the language used by them? It is a wrong approach to the problem set the Court in the present case to start by saying that when there is a reasonable doubt whether a will provides for a direct or fideicommissary substitution the Court will construe the will in such a manner as to avoid a fideicommissary substitution and then to endeavour to cast doubt on the language used in the will, although that language is reasonably clear. The correct approach is first to enquire from the language used what did the testators intend and, if it appears that it is impossible to say with reasonable certainty what the intention was, then and only then can it be said that a doubt exists.’

[71] In this case, the intention of the testators, when viewed in the wider context of the will, is clear. There are instances where provision has been made for direct substitutions in unambiguous terms that take a different form to clause 6. For instance, in clause 7(c)(i) a bequest of certain property is made to the third applicant but it is made subject to ‘the lifelong usufruct thereover in favour of the survivor of us’ but, in the event of ‘the said Ann Margaret McKay predeceasing the first-dying of us without lawful issue, we hereby appoint her husband, Robert Hector McKay to be the heir to the abovementioned immovable property and caravan park’. This is a strong indication that the testators were alive to the distinction between direct and fideicommissary substitutions and, when they wanted to make a substitution dependant on a beneficiary predeceasing the first-dying of them, they said so in express terms. ⁴⁶

[72] With due regard to the warning of Centlivres CJ about an over-reliance on case law when interpreting a will, it is significant that, in Ex Parte Sadie,⁴⁷ he held that there seemed to him to be no reason ‘why the words “als hy komt te sterven zonder wettige afstammelinge” should be construed as referring only to death before the testator. Grammatically they are not limited to death on or before a particular date and there seems to be no reason why such a limit should be placed upon those words’.⁴⁸

[73] I conclude from the above that when the language used to create the substitution is considered, within the wider context of the will as a whole and the contrasting provisions of clauses 7(c)(i) and 10(c)(i) in particular, the intention of the testators is clear: they intended to, and did, create, by means of clause 6, provision for fideicommissary substitutions.

[74] It follows that Ms Horn’s interpretation of the will was erroneous when she concluded that clause 6 made provision for direct substitutions. In interpreting the will as she did, she committed a material error of law and so did not apply her mind properly to the issues before her. Her decision to uphold the objection must be set aside on that account.⁴⁹

(c) Costs

[75] Mr Ford sought no costs order against the first respondent. He argued, however, that the second respondent’s opposition was mala fide in certain respects and that he should be ordered to pay costs de bonis propriis.

[76] While his criticism of the second respondent certainly seems to have some merit, one must not lose sight of the human element in cases such as this: as it was aptly put by Froneman J in Dreyer v Dreyer NO,⁵⁰ ‘ondervinding leer dat erfregtelike aangeleenthede dikwels sterk emosies aanwakker’. In these circumstances, I take the view that the most equitable course would be to order that the costs are to be born by the estate.

[D] THE ORDER

[77] The following order is made to give effect to the conclusions that I have arrived at above:

(a) The decision of the first respondent, dated 4 June 2003 (annexure ‘STR47’ to the founding affidavit), in which the first respondent directed  that clause 6 of the will of EP and  TD Reed (the will) constituted  a direct substitution, and that the liquidation and distribution account should be amended to reflect awards to the estate of the late Dominic Niland, is set aside.

(b) It is declared that:

(i) the bequests set out in clause 7(d), read with clause 8(d) of the will did not vest in Dominic Niland prior to his death;

(ii) those bequests devolve upon the first, second and third applicants in accordance with the provisions of clause 6 of the will; and

 (iii) the provisions of clause 6 of the will constitute a fideicommissary substitution.

(c) It is directed that the costs of this application shall be borne by the deceased estate of the late EP Reed and TD Reed.

_____________________

C. PLASKET

JUDGE OF THE HIGH COURT

I agree.

_____________________

N. DAMBUZA

ACTING JUDGE OF THE HIGH COURT

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