UNIT 9

THE LAW OF SUCCESSION

Textbook
K Pillay and R Duplessis, Commercial Law:
Fresh Perspectives 4th edition by (Maskew
Miller Learning) pp. 389-401 (Unit 9).

Case summaries cited in the chapter.

Extracts from legislation cited in the

chapter.

Additional Instructions and notes from the

Lecturer.

Information uploaded in Blackboard.

Learning outcomes
■ Appreciate the concept of freedom of testation.
■ Describe the requirements of testate and intestate
succession.
Freedom of testation
The general rule in our law is that a testator has freedom
of testation. This means that you are free to choose any
person you wish to leave your estate to. Such person is
called a beneficiary or an heir.
Although there is no obligation on a testator to leave
anything to parents, spouse(s), children, siblings or
grandparents, the law does place some limitations on the
testator. Therefore, the freedom of testation is not
absolute.
Some of these limitations are rooted in common law.
When a person dies and has named heirs in their will, the
law allows minor children, whether named in the will or
not, to claim maintenance from the deceased’s estate.
This means that a maintenance claim by a dependent
child will reduce the amount that is available for the heir(s)
named in the will. The effect is that a testator cannot in
their will exclude their minor children from receiving
maintenance from the deceased estate, even if they
exclude the minor children as heirs.

Other limitations on whom you can leave your

possessions to, is regulated by legislation. The
Constitution of the Republic of South Africa, 1996
(Constitution) prohibits unfair discrimination against a
person. In terms of section 9(3), no one may unfairly
discriminate against anyone on the basis of race, gender,
sex, pregnancy, marital status, ethnic or social origin,
colour, sexual orientation, age, disability, religion,
conscience, belief, culture, language, or birth. Any
contents of a will that unfairly discriminate against anyone
on these grounds will be unconstitutional.

In terms of the Pension Funds Act 24 of 1956 (Pension

Funds Act), benefits payable by a pension fund are
excluded from the deceased estate. This means that even
if the testator states in a will that their pension should go to
a particular person, no effect will be given to that
stipulation in the will, because the Act provides for the
trustees of the pension fund to determine (use their
discretion) who should receive a benefit, based on
dependency. For example, if a testator leaves their
pension funds to a named beneficiary in their will, the
bequest will be ignored, and the provisions of the Pension
Funds Act will be applied. In the normal course of events,
the trustees of the pension fund will award the proceeds to
the surviving spouse and any dependent children of the
deceased (“financial dependents”).

Similarly, the Maintenance of Surviving Spouses Act 27 of

1990 provides for a maintenance claim by a surviving
spouse of the deceased. Therefore, if a husband
supported their spouse financially while they stayed at
home to look after their children, they would not be in a
position to support themselves after the death of their
husband, and they would have a claim for their reasonable
maintenance needs from the estate of their late husband.
This too will reduce the amount that is available for the
heir(s) named in the will.
Drafting a valid will
If you made a valid will before you died, we say that you
died testate. Testate succession refers to the transfer of
the deceased’s assets to their heirs in terms of a will.

Testators are people who draw up a will themselves, or

who instruct a lawyer to do so on their behalf.

The Wills Act 7 of 1953 (Wills Act) prescribes the

requirements for making a valid will. A will must be in
writing and signed by the testator in the presence of two
witnesses, who must also sign the will. A witness is
defined in the Act as a person of fourteen years or older,
who is not incompetent to give evidence in a court of law.
The Wills Act states that a testator may ‘sign’ a will either
with a signature, by making their initials, or by making a
mark, such as a thumbprint or a cross, or even by having
someone else sign the will on their behalf. This method
makes it possible for more people to make a will, such as
someone who cannot sign the will because they are
illiterate or paralysed. Where the will is not personally
signed by the testator with a signature, a Commissioner of
Oaths must attach a certificate to the will confirming the
identity of the testator, and that the will is that of the
testator. Witnesses must, however, sign with a signature,
and they may not sign with a mark, as the purpose of their
signatures is to verify the identity of the testator who
signed the will. Any person over the age of 16 years may
draft a will unless, at the time of making the will, the
person is mentally incapable of appreciating the nature
and effect of their act. A person between the ages of 16
and 18 years is still a minor, and this capacity to make a
will without the assistance of the parent or guardian is an
important exception to a minor’s restricted legal capacity.

Dying without a will

When a person dies intestate, it means that they have
died without leaving a valid will.
The Intestate Succession Act 81 of 1987 (Intestate
Succession Act) would then apply.
This Act would also apply if the deceased left a valid will,
but did not provide for the disposal of all the assets in the
estate.
For example, if the will (in Figure 22.1 above) did not
contain clause 6, the Act would determine who inherits the
residue of the estate, but clause 3 (the appointment of the
executor) and clauses 4 and 5 (the legacy and conditional
bequest) would still be applicable.
The estate will also be administered in terms of the law of
intestate succession if the will is declared invalid by the
Master of the High Court. For example, this would apply in
the event where a will is declared invalid by a court due to
it being forged.
The Intestate Succession Act lists the potential heirs who
may inherit the estate in order of succession. This is
determined by the deceased’s marital status and/or blood
relations. As most people leave behind one or more
spouses, descendants, or parents, only these categories
of heirs are considered in the discussion hereunder. Note
that the law treats adopted children, extra-marital children
and children born of incest in exactly the same way as
natural children or children born of a marriage. The reason
for this relates to section 9 of the Constitution and the right
to equality, as well as the right not to be unfairly
discriminated against on the basis of birth. Bear in mind
that if the deceased has not left a spouse, descendant or
parent, the Act provides for other more remote blood
relatives to inherit.

The concept ‘spouse’ for purposes of the Intestate

Succession Act was originally interpreted very narrowly to
only refer to the survivor of a civil marriage that was
concluded in terms of the Marriage Act 25 of 1961. This
Act requires that the parties to the marriage should be of
the opposite sex.

The following legal developments have been instrumental

in reforming the meaning of ‘spouse’ for purposes of the
Intestate Succession Act:
• In Daniels v Campbell and Others 2004 (5) SA 331 (CC),
the CC held that the concept ‘spouse’ also includes a party
to a monogamous Muslim marriage (only two spouses in
the marriage).
• In Bhe and Others v Khayelitsha Magistrate and Others
2005 (1) SA 580 (CC), the CC held that the concept
‘spouse’ is also applicable to multiple spouses in African
customary law (polygyny).
• The Bhe and Others v Khayelitsha Magistrate and
Others 2005 (1) SA 580 (CC) judgment led to the
enactment of the Reform of Customary Law of Succession
and Regulation of Related Matters Act 11 of 2009
(RCLSRRM), which came into effect on 21 April 2009. The
RCLSRRM states that the ‘estate or part of the estate of
any person who is subject to customary law who dies after
the commencement of this Act and whose estate does not
devolve in terms of that person’s will, must devolve in
accordance with the law of intestate

Meaning of spouse in intestate succession

Succession, as regulated by the Intestate Succession Act
with some changes being made. These changes include
provision being made for more spouses and more
descendants to inherit.

• The term ‘spouse’ was also extended in 2006 with the

enactment of the Civil Union Act 17 of 2006 (Civil Union
Act), which allows for same-sex unions by civil union
partners.

• In Gory v Kolver NO 2007 (4) SA 97 (CC), the CC held

that the concept ‘spouse’ must be read to include a partner
in a same-sex life partnership in which the parties have
undertaken reciprocal duties of support.

• In Govender v Ragavayah NO 2009 (3) SA 178 (D), the

Durban High Court held that the term ‘spouse’ must also
include a party to a monogamous Hindu marriage (only
two spouses in the marriage).

• In the same year as the case above, in Hassam v Jacobs

NO 2009 (5) SA 572 (CC), the CC held that the term
‘spouse’ must be read to include multiple spouses in a
polygynous Muslim marriage.

• In Bwanya v Master of the High Court, Cape Town 2022

(3) SA 250 (CC), the CC held that the term ‘spouse’ should
include a partner in a permanent opposite-sex life
partnership in which the partners have undertaken
reciprocal duties of support.

Order of succession
(Self-reading)

Administering the estate

As soon as letters of executorship have been issued by
the Master, the Administration of Estates Act requires the
executor to perform the duties listed below:
■ The executor must place an advertisement in the
Government Gazette and in a newspaper that circulates in
the area where the deceased lived. This advertisement
calls for creditors of the estate to submit to the executor
any claims they may have against the estate. A letter of
executorship is an official document in which the executor
is formally appointed by the Master.

■ As soon as the executor has R1 000 on hand, they must

open an estate banking account. All money that is
received by the executor on behalf of the estate must be
deposited into this account.

■ The executor must collect the assets of the estate and

sell them if necessary. The executor must establish who
the creditors are and what amounts are due to them.
Creditors can include a claim for maintenance by a
dependent child or the surviving spouse, as well as
anyone to whom the deceased owed money.

■ The executor must submit a liquidation and distribution

account. This account sets out the deceased’s assets and
liabilities, how they will be dealt with, and who will inherit
the assets.

Regulation 5(1) of the Administration of Estates Act sets

out in detail the format of the liquidation and distribution
account. Other charges on the estate include
administration costs, such as the Master’s fees and the
executor’s remuneration. The executor’s remuneration is
the amount that the executor receives from the estate for
performing the functions of executor. The amount is
calculated at 3.5% of the total (gross) value of the assets,
and 6% on income accrued and collected after the death
of the deceased. An important purpose of the liquidation
and distribution account is to establish whether the estate
is liable for estate duty. Estate duty is a form of tax
payable by a deceased estate. If the value of the
deceased estate is less than a specified amount, there is
no estate duty payable. Where the value of the estate
exceeds such specified amount, the estate duty is
calculated by deducting such specified amount, from the
net value of the estate and the balance is taxed at a
prescribed percentage. Once the Master approves the
liquidation and distribution account, the executor is
required to
Misappropriate means to steal assets, give them away or
sell them for less than their value.
[Exempted means free from and an example of this
exemption can be found in clause 3 of the will in section
22.1.2.
/ Net value means assets less liabilities and any other
allowable deductions.]

advertise in the Government Gazette and in a newspaper

that circulates in the area where the deceased lived, that
the account is open for inspection. This gives interested
parties (creditors and heirs) an opportunity to inspect the
account and to lodge an objection if they think it is
incorrect. For example, a creditor’s claim may not have
been included in the account. If there are any objections,
these problems must be corrected by the executor.
Once the account has lain for inspection free from
objection, the executor pays the creditors and distributes
the rest of the estate to the legatees and heirs, as is due
to them.
The executor is required to close the estate banking
account and the Master will release the executor from
office once the administration of the estate has been
completed.
 UNIT 10
THE LAW OF SECURITY
Textbook
K Pillay and R Duplessis, Commercial Law:
Fresh Perspectives 4th edition by (Maskew
Miller Learning) pp. 402-419 (Unit 10).

Case summaries cited in the chapter.

Extracts from legislation cited in the

chapter.

Additional Instructions and notes from the

Lecturer.

Information uploaded in Blackboard.

Learning outcomes

■ Outline the purpose of security.

■ Distinguish between real and personal security.
■ Identify the types of real security.
■ Discuss the creation of different forms of real security.

Introduction
This chapter discusses the concept of security.
The most common way to secure goods and services is to
pay cash for it, however, what happens when you do not
have the money available immediately, but you will have
the money to pay for it in the future? This is why
businesses and individuals turn to loans.
A loan is a deferred repayment of borrowed money that
usually attracts interest. You may be wondering how it can
be guaranteed that the loan will be paid back. Security is
one way of making sure that this deferred repayment, or
loan, is honoured.

Security
If someone asked you for a loan, would you not be
hesitant to do so without some guarantee that you would
get the money back? If you think about it, the concept of
security is quite basic and so common.

Different types of security

Security may take the form of real security or personal
security. Real security is provided in the form of property
owned by the debtor. A typical example of real security is
a mortgage on a house. This is commonly known as a
mortgage bond. A mortgage is a right of security over
property, which is discussed in more detail below.
Personal security, also called suretyship, is given when
someone agrees to meet the obligations of the debtor if
they are unable to pay the creditor.

Types of mortgage bonds

Mortgage bonds can be grouped into seven main types,
which we will cover in this section:
1. the standard mortgage bond
2. kustingbrief
3. covering bond
4. standard building bond
5. participation bond
6. indemnity bond
7. notarial bonds.

Standard mortgage bonds - This is a mortgage bond

where the creditor has security for an existing debt. For
example, if Mdu is indebted to Lyricax (Pty) Ltd, a
mortgage bond can be registered in favour of Lyricax (Pty)
Ltd to provide security for that debt.
Kustingbrief - A kustingbrief is a mortgage bond that is
created to secure the purchase price of land while also
transferring the property into the name of the buyer. This
mortgage bond can be created in favour of the seller of the
property or to another party (a third party), such as a
financial service provider, to enable them to secure a loan
to the buyer so that the buyer can purchase the property.
The mortgage bond is registered at the same time as a
change of ownership.
As the kustingbrief is registered at time of transfer, it will
always create a preference in favour of the mortgagee.
This means that the mortgagee will have a preferential
claim if the mortgagor becomes insolvent. Let us consider
the following example.
Magoo purchased a double-storey house in Pretoria in
2018. Moneytec Bank provided a loan for the purchase,
which is subject to a mortgage bond. In 2022, Magoo
borrows money from General Bank to install a jacuzzi and
a tree house on the property. A further mortgage is created
in favour of General Bank. From this example, the
mortgage in favour of Moneytec Bank is a kustingbrief,
and it takes preference over the mortgage that is held by
General Bank.

Covering bond - This is a mortgage bond that secures a

debt, or debts, which may arise in the future. Unlike a
standard mortgage bond which secures existing debts, the
covering bond is intended to secure future debts.
Standard building bond - This type of mortgage bond
specifically secures the repayment of money borrowed for
improvements to immovable property. In this context,
improvements refer to structural changes to the property,
such as building. This is the reason we refer to this bond
as a building bond.

[A fluctuating overdraft means that the amount of money

that a client owes the bank at any given time goes up and
down.]

Participation bond - A participation bond is an investment

scheme where more than one person provides the capital
required by the debtor, which is then secured by means of
a bond over the property. It is defined in the Participation
Bonds Act 55 of 1981 (Participation Bonds Act) as a
mortgage bond over immovable property. The mortgage
bond here is described as a participation bond, and is
registered as such in the name of a nominee company
and is included in a scheme. This nominee company is
made up of investors who then contribute towards the
capital borrowed by the mortgagor from the investment
company to which the investors belong. To illustrate this,
consider the following scenario where Thuli, Fikile and
Sphe, who are investors in nominee company Y,
collectively provide a loan of R300 000 to Mazwi. The
mortgage created is a participation bond because there is
more than one lender. Each investor in the nominee
company will benefit from the interest on the loan, making
the bond a form of investment for them. Each investor’s
investment is secured by means of the bond over the
mortgagor’s property.

[Capital is cash or other assets, such as equipment,

supplied by the owner to the business.]

Indemnity bond - This type of mortgage bond is created

in favour of a mortgagee who could potentially suffer loss
as a result of the actions of a mortgagor. This typically
works in situations where one person acts as a surety for
a debt of another and wants to secure a guarantee or
claim that will ensure repayment if the surety has to pay in
place of the principal debtor. Therefore, if Mustapha
stands surety for Sani’s debt, a mortgage bond could be
created in favour of Mustapha to ensure that Sani repays
money that is due to the creditor. This is a fairly popular
way of making sure that a surety agreement is honoured
by the principal debtor.

Notarial bond over movable property - A notarial bond is a

pledge over movable assets of a debtor to secure the
position of a creditor for the payment of a debt. It is
important to note that a notarial bond must be registered
with the Deeds Office in the area in which the debtor
resides or conducts business within two months of its
creation. There are two types of notarial bonds: 1. a
general notarial bond 2. a special notarial bond.

A general notarial bond covers or hypothecates all

property in the possession of the debtor at the time of the
passing of the bond. Should the debtor acquire future
assets while the bond is in existence, those assets will
also be included under this bond. Special notarial bonds
are confined to covering only specific assets. These must
be capable of being described, such as a specific car.
Unlike the general bond, here the holder of the bond is a
secured preferential creditor.