Inheritance and intergenerational inequality July 2017

By JONATHAN COGGER, Published in Law of Succession

The constitutional nature of the right to dispose of property and wealth after death was, for a long time, left unanswered by our judiciary. It took 17- years after the enactment of the Constitution for the Supreme Court of Appeal (SCA) in In re BoE Trust Ltd NO and Others 2013 3 SA 236 (SCA) to confirm that s25 (1) of the Constitution guarantees freedom of testation as a constitutional property right.

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Part of the problem is that s25 only provides implicit protection of property rights and thus is silent on whether ius disponendi (the right to dispose of property said to guarantee private succession) is protected. Section 39(3) of the Constitution recognises all pre-existing rights and freedoms to the extent that they are consistent with the Bill of Rights. Therefore, all pre-existing ownership rights, including private succession, are subject to an interpretation of the property clause as a whole and other rights in the Bill of Rights. The question is whether it can be taken for granted that the right to dispose of property after death, as one incident of property ownership, is protected in spite of the constitutional silence.

Is freedom of testation a constitutional property right?

For many people, the need for such recognition may seem odd. The freedom to dispose of wealth after death has long formed part of South African common law of succession. All our historical sources of law (Roman law, Roman-Dutch law and English law) recognise the right of individual property owners to distribute their assets after death. There are also many reasons to recognise such a constitutional right. First, it has traditionally formed a fundamental part of property ownership, without which the rights of property owners would be incomplete. Second, it is, as held in BOE Trust Ltd an expression of human dignity. Third, it supports widely shared social norms of promoting individual autonomy, security and privacy. Lastly, allowing individuals to dispose of their property after death plays an economic role in incentivising wealth creation, productivity and economic growth. It is accordingly assumed that since the right to property is protected by s25 (which is said to guarantee and protect individual ownership) that this equally protects the right to dispose of property after death. Based on this reasoning, it is perhaps not urprising that the SCA has confirmed that testamentary freedom is protected by s25(1).

Critique of the disjunctive interpretation

The interpretation already discussed is based on a disjunctive or one- dimensional view of the purpose of the property clause, in that the primary concern is solely to protect individual property rights. This is problematic because the property clause is transformative in nature.

The Constitutional Court has consistently stated that property cannot be restricted to private law or traditional notions of property (Shoprite Checkers (Pty) Ltd v MEC for Economic Development Eastern Cape and Others 2015 6 (SA) 125 46). The property clause serves a dual purpose in protecting individual property rights as well as providing a basis for property reform in the public interest. The term "public interest" is qualified in s25(4)(a) of the Constitution to refer to "the nation's commitment to land reform, and to reforms to bring about equitable access to all South Africa's natural resources." The reformist purpose is clearly evident in a simple textual reading of the property clause as whole, phrases which further include: "to foster conditions which enable citizens to gain access to land on an equitable basis" (s25(5)); and land restitution and "equitable redress" (s25(7)). Accordingly, any interpretation of "property" cannot view s25(1) in isolation to the rest of the property clause and, therefore, should not be solely to protect individual testators' rights as the courts have interpreted it. In short, while inheritance currently enjoys constitutional status as a property right, it is doubtful whether this reflects the dual purpose of the property clause.

Normatively, a one-dimensional view of inheritance is heavily influenced by a classic laissez faire notion of fundamental rights that are chiefly concerned with erecting defensive claims to inhibit state interference in private matters. According to this view, the interest of individual property owners will always be ontologically superior to the interests of the collective. State regulation is also viewed as inimical to property freedom, where any infringement of this freedom is automatically viewed as harmful and a derogation of a state of principled and absolute enjoyment of ownership rights.

In sum, this interpretation restricts the role of the state to guarantee negative freedom – how it protects and safeguards property freedom from outside intervention, and, importantly, regulation designed to transform unequal property relations. It therefore fails to reflect the dual purpose of the property clause.

Effects on enduring inequalities

A one-dimensional interpretation of property has drastic consequences for maintaining unequal property relations inherited from colonial and apartheid regimes. Clearly, the purpose of the property clause is designed for more than just protecting pre-existing (predominantly white) property interests. In First National Bank of SA Limited t/a Westbank v Commissioner for the South African Revenue Services and Another, Ackerman J specifically links one of the purposes of the property clause to the "need for ... redressing one of the most enduring legacies of racial discrimination in the past, namely the grossly unequal distribution of land" (First National Bank of SA Limited t/a Wesbank v Commissioner for the South African Revenue Services and Another; First National Bank of SA Limited t/a Westbank v Minister of Finance 2002 (4) SA 768 (CC); 2002 (7) BCLR 702 (CC) 49). A one-dimensional view of inheritance thus ignores South Africa's historical context.

The reasons for including a reformist agenda in s25 was the fear that this section would be used to protect already established white property rights that might entrench a parallel system of private law; "freeze" the unequal status quo; and inhibit legislative reform in the public interest. One of the major premises for including the reform of property is to prevent the persistence of private, and racialised, wealth in a form of de facto privatised apartheid.

A one-dimensional interpretation is also divorced from South Africa's socio-economic context. Inheritance embodies the passing of wealth, power, privilege, status and opportunity (or the lack thereof) of one generation to the next. A decontextualised understanding of inheritance ratifies the continuation of intergenerational class and racial division. The implications for continuing and shielding privatised apartheid cannot be more clearly represented through succession law. Consequently, a decontextualised and one-dimensional view of inheritance enables the continuity in the unequal status quo by legitimising its primary function as a mechanism for the transfer of intergenerational family wealth.

Implications for the constitutional nature of inheritance

The historical and causal link between past unequal development of property holdings and the reformist agenda in the property clause provides important interpretative and normative guidance to an understanding of inheritance law. While private property was subject to intense debate during the constitutional drafting process, inheritance was largely ignored. It is, therefore, imperative that an understanding of the role and function of inheritance be viewed in the same historical context as property generally.

This is not to suggest that free testamentary disposal should not be constitutionally protected as a theoretical and normative point of view. Rather, as Sachs J held in Port Elizabeth Municipality v Various Occupiers 2005 (1) SA 217 (CC) (para 15), "such rights have to be understood in the context of the need for the orderly opening-up or restoration of secure property rights for those denied access to or deprived of them in the past." Unlike this however, the succession law literature has largely ignored the context – both interpretative and historical – of the property clause. A holistic interpretation of the property clause places the institution of inheritance in a new regulatory regime that, at least in theory, increases the level of regulatory reform to address historic racial and economic inequality. In such a context, it is inevitable that pre-existing inheritance interests and rights will be negatively impacted.

Cogger is a PhD Candidate, Public Law Department, University of Cape Town.