334 c a s e s t u d i e s

modified by an agreement between A and B allowing the usufructuary to change the intended purpose of the property.

In the light of these principles, the usufructuary cannot convert the house into a warehouse or the farm into a hotel, even if the alteration enhances the value of the property or the neighbourhood loses its residential character or the farm is incorporated within the city limits.

However, Menezes Cordeiro54 feels that although the usufructuary has to respect the intended purpose of the property, he/she does not necessarily have to maintain it if it is possible to restore the intended purpose of the property on termination of the usufruct. Therefore, the usufructuary will be entitled to transform the house into a warehouse or the farm into a hotel if it was possible to restore the status quo ante (economically speaking).

Under a hereditary building lease (superÞcies), the holder will not be allowed to change the intended purpose of an existing building. If the right pertains to the construction of future buildings, the holder, being regarded as enjoying the same rights as an owner, will be free to convert the house into a warehouse or the farmhouse into a hotel.

Scotland

Under a lease, a tenant is obliged to use the property for the purposes for which it is let. A tenant who uses property in a manner inconsistent with the objects of the lease is said to ‘invert’ the possession, which is a breach of contract.55 Typically, a lease will provide that the property can only be used for certain purposes, in which case B cannot use the lease for any other purposes without the landlord’s consent. (The landlord can restrain any other use by interdict.) Even if the lease is silent, the common law adopts the position that leases are granted with a view to a particular sort of possession.56 A lease of a dwellinghouse is said to envisage residence: B can therefore not convert the house into a warehouse.57 It makes no difference that the conversion will enhance the value of the property, that it could easily be undone or that the neighbourhood

54Cordeiro, Direitos Reais, p. 654.

55Rankine, Leases, p. 236; Paton and Cameron, Landlord and Tenant, pp. 137–8; McAllister, Leases, para. 3.3.

56Rankine, Law of Leases, p. 236.

57This very example is given by Hume, in Paton, Hume, vol. 2, p. 76 as an instance of inversion of possession.

has lost its residential character.58 There is a procedure by which title conditions can be varied on the grounds, inter alia, of the changing character of the neighbourhood in which the property is situated.59 Only a term of a registrable lease (one which exceeds twenty years’ duration) is, however, within the definition of ‘title condition’.60 As a lease of a property for use as a private dwellinghouse may not exceed twenty years’ duration, this procedure will not be available.

The same common law rules apply to agricultural leases. In one case a tenant of a house and farm was held not to be entitled to trade as a publican from the property.61 If the lease exceeds twenty years’ duration, however, the tenant can apply to the Lands Tribunal to have its terms varied. One of the several factors which the Lands Tribunal will consider is a change in the character of the neighbourhood.62 Tenants of a 1991 Act Tenancy or a Limited Duration Tenancy also benefit from a statutory rule which allows the tenant to diversify beyond agricultural use.63 The tenancy does not cease to be an agricultural tenancy by reason of the diversification. The tenant must send a notice of diversification to the landlord, detailing the proposed changes and how they are to be financed and managed.64 The landlord then has an opportunity to object or to impose reasonable conditions on the tenant,65 but both powers are subject to judicial control.66 The only substantive grounds upon which the landlord can object to the proposed diversification are:

(a)that the use will significantly lessen the amenity of the land or the surrounding area;

(b)that the use will substantially prejudice the use of the land for agricultural purposes in the future;

(c)that the use will be detrimental to the sound management of the estate of which the land consists or forms part;

(d)that the use will cause the landlord to suffer undue hardship or

(e)where the landlord reasonably considers that the notice fails

to show that the proposed changes or the business will be viable.

58But see Skene v. McBrerty (1822) 1 S 369 where, because the landlord had not for some time enforced a term of a lease restricting the tenant to a particular use, it could not later be enforced by interdict because the nature of the lease was said to have changed.

59Title Conditions (Scotland) Act 2003 (henceforth TC(S)A 03), Part 9, especially s. 100(a).

60TC(S)A 03, s. 122(1).

61Miln v. Mitchell 1787 Mor 15 254 (apparently, use as an ale house was ‘such as, in itself

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Depending on the precise circumstances, B may therefore be able to convert the farm into a hotel.

Although there is no explicit discussion of the issues in respect of liferent as the liferenter is not allowed to encroach upon the substance of the subjects, it is thought that he/she cannot change its character by converting the house into a warehouse or the farm into a hotel. It might make a difference, however, if it were possible to restore the original use quickly and at a low cost, leaving the subjects in exactly the state they were in beforehand, as that would suggest that the substance of the subjects had not been affected.

South Africa

In the absence of a contrary agreement, the tenant under a lease is only entitled to use the property for the purpose for which it has been let according to its previous use or a use to which the property lends itself.67 Hence the tenant of a dwelling house is not allowed to turn it into a stable, a hotel or a blacksmith’s workshop in the same way that the tenant of a shop cannot convert it into a bar, a restaurant or a dwelling house.68 These Roman-Dutch and South African examples illustrate that the tenant will not be able to convert the house into a warehouse. Again, in the case of farmland, the tenant may not convert pastureland into arable land or orchards into pasturage or flower gardens.69 Consequently, the tenant will not be allowed to convert the farm into a hotel.

The permissibility of such alterations is not affected by enhancement of the value of the property or a change in the character of the neighbourhood. Such alterations may be carried out only with the express or implied consent of the landlord. However, some Roman-Dutch writers allow alterations more readily in the initial period of a long lease with the qualification that the tenant must be able to reconvert the land to its former condition at the end of the lease.70 Thus the initial conversion will be permissible if the tenant will be able to reinstate the warehouse as a dwelling house or the hotel as a farm at low cost. This corresponds with

67Van der Linden, Koopmans Handboek, 1.15.12.

68Pothier, Obligations, para. 189; Voet, Commentarius, 19.2.29; Kerr, ‘Lease’, para. 186; Cooper, Landlord and Tenant, p. 207.

69Voet, Commentarius, 19.2.29.

70Ibid.; Cooper, Landlord and Tenant, p. 210; Houghton Estate Co. v. McHattie and Barrat (1894) 1 OR 92 102–3.

the principle that the tenant should be allowed to exploit the property advantageously as long as he/she does not cause harm and can return it in good condition.71

The only personal servitude applicable is usufruct, since neither the usuary nor the habitator has the right to exploit the house or farm to the extent envisaged here. The usufructuary has a duty to restore the property salva rerum substantia, namely to exploit the property without impairing its substance. Originally, the usufructuary was not allowed to alter the physical condition of the house or farm. Later, the emphasis shifted to the intended purpose (economic destiny) of the property. Limited structural alteration of the property was allowed if this was in accordance with its intended purpose.72 South African law will therefore allow a new mode of exploitation if this is the sensible course to take under the circumstances. In an extreme case, the usufructuary was even allowed to sell a farm and retain a usufruct on the proceeds of the sale in order to avoid excessive hardship and because it was clearly to the advantage of the nude owners (minor heirs).73 Thus, in cases of extreme hardship and where it will be to the advantage of the eventual owners, the usufructuary will probably be able to convert a house into a warehouse or a farm into a hotel.

Since advantage to the eventual heir impacts on the question whether conversion should be allowed, the fact that the conversion will significantly enhance the value of the property will be an important factor in favour of allowing the conversion. Again, the changed neighbourhood may make it extremely hard to continue the previous exploitation and will make the conversion of the property a sensible option.

Spain

The tenant of residential premises cannot convert it into a warehouse. He/she cannot even alter the appearance of the premises or its fittings unless expressly authorised by the landlord (Law on Urban Leases, art. 23.1). Such an alteration of the premises will entitle the landlord to terminate the contract (Law on Urban Leases, art. 27.2f).

71See Cooper, Landlord and Tenant, p. 217; De Wet and Van Wyk, Kontraktereg, p. 316.

72See Voet, Commentarius, 7.1.21, 24 and 26.

73See Fourie v. Munnik 1919 OPD 73, 79, 86–7; Gibaud v. Bagshaw 1918 CPD 202, 205; Ex parte KethÕs Estate 1919 EDL 61; Geldenhuys v. CIR 1947 3 SA 256 (C) where the

usufructuary of a herd of cattle was allowed to sell the herd because extreme hardship made it impossible for the herd to be maintained.

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The tenant of a farm cannot convert it into a hotel. Such conversion entitles the landlord to sue for termination of the contract because the farm is no longer exploited in accordance with its intended purpose and used for purposes other than those agreed on (Law on Rural Leases, art. 25.c).74 If the farm is incorporated within the city limits, the planning authority will zone it as ‘urban land’ (suelo urbano) or ‘building land’ (suelo urbanizable). Since the operation of an agricultural lease would then be impossible, the landlord is entitled to terminate the lease (Law on Rural Leases, arts. 7.1.a and 25.e).

A lease governed by Civil Code, art. 1555.2, obliges the tenant to use the property for the purpose specified in the contract75 or, where nothing was agreed, to use it according to the purpose inferred from the nature of the property76 and in accordance with local customs. If the tenant changes the agreed purpose, the landlord is entitled to demand the rescission (rescisio«n) of the contract and to be awarded damages (Civil Code, art. 1556), or to use a special procedure (juicio de desahucio) to evict the tenant (Civil Code, art. 1569.4). Note that the Civil Code will apply only if the lease is not governed by the provisions of the Laws on Urban or Rural Leases.

The fact that the alteration enhances the value of the property or that it can be changed back does not make a difference. If the neighbourhood loses its residential character or the farm is incorporated within the city limits, there are no special provisions that entitle the tenant to change the destination of the property.

Under a usufruct, the usufructuary has to preserve the form and substance of the property in the sense of preserving its intended purpose,77 unless the constitutive title of a usufruct created inter vivos or the Civil Code allow change of the use or intended purpose of the property (Civil Code, art. 467). The rights and duties of the usufructuary are therefore as stipulated in the constitutive deed, and, failing this, as stipulated in the provisions of the Civil Code (Civil Code, art. 470).78 This means that the

74The Spanish Supreme Court of 31 Mar. 1926 held this in a case of a tenant of a wheat farm who built a factory to produce flour. The court decided that in such a case

the tenant does not alter the use of the farm and does not cause damage to, or reduction in, the value of the farm.

75Decisions of the Spanish Supreme Court of 8 Apr. 1952, 24 June 1952, 27 Feb. 1995.

76Lacruz Berdejo, Elementos, vol. 2.2, p. 123 states that the tenant is obliged to use the leased property according to the use and purpose it was leased for.

77Lacruz Berdejo, Elementos, vol. 2.2, p. 25; decision of the Spanish Supreme Court of 27 June 1969.

78Ibid. vol 3.2, pp. 5 and 6.

usufructuary cannot convert the house into a warehouse, or the farm into a hotel, unless the change was allowed in the constitutive title of the usufruct or in the Civil Code. The fact that the alteration enhances the value of the property does not make a difference: the usufructuary may only make improvements to the property in so far as its form or substance is not altered (Civil Code, art. 487). Conversion of the house into a warehouse or the farm into a hotel, although an improvement, also involves an essential change of the property’s substance and its intended purpose. Even though it is possible to change the property back to its previous form at a low cost, the usufructuary will still not be entitled to effect such alterations as they will amount to a change in the intended purpose of the property. The Civil Code contains no rules on the radical change of circumstances of property subject to a usufruct. However, article 519 dealing with compulsory purchase provides that, in such cases, the nude owner is bound either to replace the property by another property of similar condition and value or to pay the usufructuary the legal interest on the proceeds of the property for the remaining term of the usufruct.

Spanish law contains no rules on the content of a hereditary building lease (superÞcies), but it is understood that the holder of the right has very wide powers to achieve the purpose envisaged in the constitutive title of the lease.79

79 Ibid. 187.