SAR From Luna

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Syllabus theme 1

Introduction and terminology

Study unit 1.1

Introduction to the law of things

Study unit theme 1.1.1

Terminology

The law of things

- That part of the objective law (specifically private law) that refers to things and a legal subject‟s

relations with the corporeal things at his disposal.

Objective law

- The rules of conduct or norms that apply in a community and arrange the community peacefully.

- It is divided into public and private norms.

Legal subject

- Entity capable of being the bearer of rights and duties as well as the entitlements afforded by rights.

- Basically, a natural or juristic person.

Legal object

- An entity that a legal subject can have a right in regards of.

- Note that a thing (in the context of the law of things) is only ONE type of legal object. There are 4:

1) Things

2) Claims/performances

3) Personality property

4) Intellectual property

Thing

- Don‟t worry about other legal objects for this course, just concentrate on things (no, really,

THINGS).

- A thing is a corporeal legal object to which at least one real right exists.

Subjective right

- This is actually any right in terms of objective law that exists regarding a legal object.

- A subjective right is created when the objective law acknowledges a relationship between a legal

subject and a legal object.

- On the other hand, a person may have a right to dignity, but this is not the same thing; dignity is not

a legal object – haha.

- An example of a subjective right would be if the objective law recognises a relationship between a

natural person (legal subject) and a performance (legal object) because of a contract, a subjective

right is created – namely, a personal right.

- The right created depends on the legal object in the relationship.

- So, a performance will create a personal right, personal property will create a personality right and so

on.

- NB – only a thing can create a real right in a relationship with a legal subject.

- For a subjective right to exist, there must obviously be a valid legal reason for it, most usually a

contract. That‟s not in the book as such, but it makes sense.

- Furthermore, there has to be a relationship between subject and subject (this is in the book). A person

alone on an island has no need for rights because he can‟t enforce them against anyone.

- There also has to be a relationship between subject and object. If there is no legal object, there is

nothing to enforce the right for (this ties in with the need for a valid legal reason for the right).

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- Do not be confused by the word „subjective‟. This word makes me think of people and subjective

situations – which makes me think of personal rights, because such rights are subjective to the people

involved. BUT, a subjective right is ANY right created by a relationship between a legal subject and

object that is recognised by objective law, so it can be a real right as well, if the object is a thing.

- For most of this course, the subjective right that we will deal with will be a real right because this is

the law of things; and a relationship with a THING creates a real right.

Real right

- Again, this is a subjective right with a thing as the legal object.

- This is created by the relationship acknowledged by objective law.

- In this case, such a relationship is a real relationship and will create a real right (if, obviously, such a

relationship is lawful and recognised by objective law).

Study unit 1.2

The concept of things


Definition of a thing

- So, a thing is a corporeal legal object to which a real right relates.

- I disagree with this definition to a degree. I think that a thing is a corporeal legal object to which a

real right COULD POSSIBLY relate. Not all things have real rights attached to them at all times. As

you‟ll see further on in this section, we get things that are not owned by anyone and have no rights

enforced over them. So, according to the definition given in the book, a watch that has been

abandoned by its owner is not a thing and not a legal object because a real right no longer relates to

it. This would cause a serious problem for the person who finds it because it would not be a legal

object anymore and he would not be able to own it.

- Either way, we‟ll go into more detail about a thing now.

- The authors go on to say that a thing is any impersonal, independent part of the corporeal nature

which occupies space, can be controlled by humans and is of use and value to man.

Elements of the definition

- These can also be seen as the characteristics of a thing.

Corporeality

- This means that the thing is physical and can be observed with any five of the human senses.

- This raises the question – can a fart be owned?

- Regarding the argument as to whether incorporeal things should also be considered things for

purposes of the law of things, the following is important:

The argument for the inclusion of incorporeal things is based on the common law view of

things.

It is rejected because this view blurs and makes the different categories of subjective rights

superfluous.

Just be able to repeat this if asked to explain the position.

And „superfluous‟ means „unnecessary‟. So, ironically, it was quite superfluous to use the

word „superfluous‟

- There are exceptions where the positive law does recognise incorporeal things as things though, for

example, security in the form of a bond on a long-term lease or a bond on a personal servitude.

- Rights are regarded as incorporeal things that can be „quasi-controlled‟ (this doesn‟t seem relevant,

but if you look closer… no it‟s not relevant).

Impersonal nature

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- This doesn‟t mean that the thing must not be personal to someone.

- It means that it cannot be a person. So, a human being is not a thing.

- However, limbs and organs of a living person can be, but only in terms of the Human Tissue Act (the

relevant sections of which have probably been repealed by the National Health Act).

- Human hair can be a legal object.

- Human corpses or parts thereof are legal objects, but cannot be traded commercially (they are thus

res extra commercium).

Independence

- It must be a separate and distinct entity that exists independently.

- Accessory things (things that are joined to principle things to create complex things – seen later) lose

their independence and are no longer things; they become part of the complex thing.

- Immovable things only become things when they, in the case of land, are demarcated in an approved

way. In the case of sectional titles, they must be created by the opening of the sectional title register.

- Things like water and air must be delimited into usable and recognisable units first.

Susceptibility to human control

- Obvious – the best example would be the moon.

- Still, it raises the question as to what control really is… hmmm.

Use and value to man

- This is also obvious and includes patrimonial and non-patrimonial value.

- So a sentimental picture could count.

- Value is objective. If something loses its value to one person subjectively, it is still a thing (unless

perhaps it is only of sentimental value to such person).

Occupy space

- …


Classification of things according to their relation to man

Res extra commercium

- These things cannot be owned by a natural or juristic person and cannot have any limited real rights

enforced over them (see how this contradicts the authors‟ first definition of a thing?).

- Note the following examples.

Res omnium communes

- Do not fall within the private legal order, but are common things that may be used by all and are not

susceptible to human control.

- Examples are the high seas and the air.

Res publicae

- Things owned by the state but are destined for the general benefit of the public.

- Examples are harbours, public roads and the seashore.

Res divini iuris

- Not really applicable today.

- In Roman law, temples and city walls where not in the trade.

- Today we don‟t have city walls and churches are owned by the religious denomination applicable

and are thus in the trade.

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Res in commercio

- These things are in the trade and are negotiable.

Res alicuius

- A thing belonging to a natural or juristic person that falls in that person‟s estate.

Res nullius

- A thing that is capable of ownership but is not owned by anyone.

- Things never owned before.

- Things that were owned but were abandoned by their owners (not lost). These things are known as

res derelictae. Things lost are res deperditae.

- Wild animals that have regained their natural freedom.

- Note that domestic animals (cats and dogs etc) are regarded as res alicuius.


Classification of things according to their nature

Singular and complex things

Singular things

- A single thing not composed of different things, like a horse or a statue.

Complex things

- This is, well, complex.

- A complex thing is made up of different things.

There is always a principal thing.

- This is the thing that provides the eventual nature, character, form and function of the thing. An

example would be land.

- The above definition is taken from Sonnekus and Neels with reference to Khan v Minister of Law

and Order.

An accessory thing is then attached to it.

- This thing loses its identity and becomes part of the principal thing to form the complex thing. An

example would be a building constructed upon the land.

- See the following case

JL Cohen Motors v Alberts

Facts

- JCM sold a truck to Alberts with 6 tyres (I assume they were attached to the truck and were not spare

tyres).

- G paid by cheque. More importantly, he entered into a credit transaction (which can happen when

paying by cheque if it is so agreed), by which ownership transferred to him immediately. This wasn‟t

mentioned, but I think its what they‟re trying to say, otherwise Alberts‟ argument in this case is

pointless, you‟ll see.

- The contract was cancelled due to mora debitoris and the truck and the tyres were repossessed by

JCM.

- However, when they came to reclaim the truck, Alberts offered to buy the tyres of the truck.

Idiotically, they agreed.

- Alberts was a real dirt bag and then denied that he entered this agreement to buy the tyres. He argued

instead that the tyres had become his through accessio when he entered into the credit sale

(remember, ownership of the truck transferred to him, even though he defaulted in payment).

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Judgment

- The court used the economic unit test to determine whether:

1) Accession had occurred, and

2) Whether such accession could be divided.

- This test states that accession is the merging of two things that results in the principle and accessory

thing being hard to separate and in the accessory thing losing its independence.

- Court held that accession had not occurred because of the nature and manner of the affixing of the

tyres to the truck. Thus, the tires remained independent things that did not become owned by Albert

through accession.

- Thus, court held in favour of JCM and allowed them to reclaim the tyres.

- By the way, this case is stupid. Even if Albert‟s could prove accession, that would just mean that the

tyres would form part of the principle thing (the truck) and would have been claimed back as part of

the truck as a whole in any case. Whether he had gained ownership of the tyres didn‟t matter, such

ownership would be taken away by the failing of the contract.

- Still, know the economic unit test.

An auxiliary thing may also be involved.

- This thing does not necessarily lose its identity and is not part of the principal thing as such. It is

connected to the principal thing because the economic goal of the auxiliary thing is connected to the

principal thing. An example would be a key to the building constructed upon the land.

- See the following case in this regard:

Senekal v Roodt

- A house (principle thing) was sold with a built in bar (accessory thing). The bar stools where in

dispute, i.e. were they an auxiliary thing and thus part of the house (in which case, ownership would

vest in the buyer)?

- Ackermann J held that for a thing to be an auxiliary thing, it had to comply with 2 requirements:

1) It must be of permanent service to the principal thing.

2) It must be necessary for the effective use of the principal thing.

- Ackermann also held that auxiliary things do not become immovable things if they form part of an

immovable thing.

- The court held that the bar stools were auxiliary things and that the buyer had ownership over them.

- Coetzee J held that a movable thing will be an auxiliary thing if it was the intention of the designer

that it should be used permanently as part of the principle thing. He also held that an auxiliary thing

is regarded as an immovable thing if the principle thing is immovable.

- Even though both held that the chairs were auxiliary things, the two judges had different principles to

support their views. It seems that the view of Ackermann is accepted, as it is the only one mentioned

in the textbook, still – know both views and be able to contrast them.

Fruits may also be involved

- These are the yield of a thing produced regularly by the thing without the thing changing its

character.

- We get two kinds of fruits:

1) Fructus naturales – this would be grapes from a vine or the calf of a cow. You get three types of

these, firstly, fructus pendentes, which are fruits still attached to the principal thing. Secondly, there

are fructus separati, which are fruits separated from the principal thing. Thirdly, there are fructus

percepti, which are fruits gathered.

2) Fructus civiles – these are civil fruits, like interest or dividends on shares.

Fungible and non-fungible things

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- Fungibles are replaceable because they belong to a genus. Non-fungibles are unique and cannot be

replaced.

Movable and immovable things

- The land and everything attached to it either naturally or artificially are regarded as immovables.

- Everything else is movable.

- The distinction between movables and immovables is important for the following reasons:

1) The derivative acquisition of ownership for movables is delivery whilst for immovables it is

registration at the Deeds Office.

2) Real security of immovables is created through mortgage and with movables through pledge or

notarial bond.

3) Immovable things of a minor may be alienated or encumbered by the High Court. This does not

apply to movables.

4) The common law maxim mobilia non habent sequelam does not apply to immovable things (this is a

maxim that applies only to pledge).

5) In terms of S66(1) of the Magistrates‟ Court Act, the movable things of a debtor must first be

excussed before his immovable things.

6) The stipulations of the Alienation of Land Act only apply to immovables, while the Credit

Agreements Act only applies to movables.

7) There is a rebuttable presumption that the person in possession of a movable thing is the owner; this

is not so with immovables.

8) In criminal law, only a movable thing may be stolen and only an immovable thing may be the object

of arson.

9) According to the South African conflict of law rules, immovables are governed by the lex loci rei

sitae (the law of the area in which the property is located applies regarding transfer of ownership).

Movables are governed by the lex loci domicilii of the owner (the law of the place of the owner‟s

domicile prevails).

Consumable and inconsumable things

- Consumable things diminish, perish or substantially decrease in value when used in accordance with

their normal function.

- Etc…

Divisible and indivisible things

- Divisible things can be divided into smaller units whilst preserving the nature and function of the

thing. Also, the sum value of the separate parts must not be less than that of the original thing.

- Etc…

Study unit 1.3

Real rights


Categories of real rights and their entitlements

I‟ve done this study unit first because I think its more important to know what a real right is first.

Real rights

- A subjective right with a thing as the legal object.

Kinds of real rights

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- Ownership is the most obvious. This is a right of a person over his own property and is known as ius

in re sua.

- Limited real rights are rights over another person‟s property and are known as ius in res aliena.

Remember this distinction.

- They are:

1. Servitudes

2. Real security rights

3. Other limited real rights like quitrent, leasehold and the lease of immovable property.

- There is no limit to the type of limited real rights in South African law, unlike Roman law. Thus, we

do not have a numerus clausus of limited real rights. We‟ll go into more detail later.

Entitlements of a real right

- Depending on the right, there are different kinds of entitlements.

- Ownership confers the most entitlements.

- Depending on the right and the agreement (if any), different entitlements can be afforded. As there is

no specific list of real rights, the entitlements are not certain, but here are the most important

entitlements that can attach to a real right or a limited real right:

1) Physical control (ius possidendi)

2) Use of the thing (ius utendi)

3) Enjoyment of the fruits of the thing (ius fruendi)

4) Entitlement to encumber (ius abutendi). This allows a person to encumber a thing with limited real

rights, like an owner leasing out his property.

5) Alienation (ius disponendi) – the ability to give away or sell the thing, which usually vests in the

owner.

6) Vindication (ius vindicandi) – the entitlement to take the thing from anyone who is in unlawful

control thereof.

7) Entitlement to ward off infringements (ius negandi) – allows a person to prevent people from

infringing on the thing (like coming onto your property).

Study unit 1.3.1

Distinction between real rights and personal rights

It is here that the true calibre of the authors of our textbook shines through. I have read better legal

explanations from a couple of blind hedgehogs in a bag. I will now labour endlessly to try and provide an

understandable explanation. If possible, ignore the textbook here.

The difference between a real right and a personal right in terms of legal theory

- This difference has been based on two theories.

Personalist theory

- According to this theory, the difference in the two rights is based on the different ways in which they

operate.

- A real right has absolute operation (enforceable against the whole world Pinky!)

- A personal right only has relative operation (only enforceable against a certain person or people).

Criticism of the Personalist theory

1) Real rights do not always operate absolutely. For example, estoppel may limit the rei vindicatio of

the owner.

2) A personal right can also be enforceable against a non-contracting party if such party has knowledge

of the agreement (that person could be prevented from interfering with the personal right).

3) Personality rights and intellectual property rights also have absolute operation.

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4) Even ownership is never absolute and unlimited. The entitlements of the owner are limited by public

and private law limitations (for example, you may own a pony, but you cannot use that pony to

escape after robbing a bank).

Classical theory

- This theory views a real right as a legal relationship between a legal subject and a thing.

- It views a personal right as the relationship between a legal subject and another legal subject.

Criticism of the Classical theory

1) It has a stupid name.

2) The theory ignores the fact that a real right also includes a relationship between legal subjects.

Remember that for a real right to exist, there have to be other legal subjects to acknowledge this

right, otherwise it is unnecessary.

3) The legal object of a personal object is a performance from another legal subject, it is not that legal

subject himself. So, while it may seem that there is a legal relationship between a person and the

person who owes him a performance, the relationship is actually between the first legal subject and

the performance (think about it, in law of contract, anyone can deliver the performance to the

creditor unless the performance is of a personal specific nature).

Tenable distinguishing differences and consequential differences between real rights and personal rights

- The authors don‟t even know where to put a comma in a sentence but they feel that they can use the

word „tenable‟. In this context, it means that these differences are clear cut, not theoretical and not

open to criticism.

Distinguishing differences

- With a real right, the object is a thing. With a personal right, the object is a performance.

- Real rights are acquired through legal facts such as delivery (i.e. real agreements). Personal rights

originate from an obligation (contract, delict etc).

Consequential differences

- These are differences in the effects that the rights have once they have been identified as either real

or personal.

- Real rights and personal rights are protected by different remedies (real actions only protect real

rights for example).

- Real rights and personal rights afford different entitlements to the holders thereof.

A real right provides an entitlement to do something positive with the thing.

A real right can never create the entitlement to claim a positive thing from another legal subject,

it can only force them NOT to do something (like steal the thing).

A personal right can allow a person to claim a positive or negative performance from a legal

subject.

A personal right may however, also entitle the holder to do something positive with a thing, like

in a loan or a lease of a movable thing.

*Note that in a loan or a lease, a limited REAL right is created (temporary use and enjoyment of

the thing) but this right is coupled with a personal right against the lessor or loaner to allow you

to keep it, so it makes sense that this personal right can entitle you to use the thing positively. If

you have a good understanding of rights and property, you should be able to see how this is

redundant (I saw it for a second but then lost it).

Importance of the distinction

- There is a lot of theoretical importance and some truly inspirational stuff, but for us, the following

are the only things we need to know:

1) Registration – the general rule is that only real rights can be registered at the Deeds Office (the

words „general rule‟ mean that there is a way to register personal rights, but that will come later).

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2) The general rule is that only real rights are enforceable against all third parties and not personal

rights (personal rights are protected from interference by all third parties, but this is not an

entitlement of the right, it is a general principle and rule of contract, so I‟m not sure how personal

rights can be enforced against all third parties).

„Subtraction from the dominium‟ test and the Case-law model

- Do not even read the book for this section – it explains nothing.

The reason for the test

- Only real rights may be registered in terms of the Deeds Registries Act. For example, ownership,

lease, usufruct, real servitudes.

- The problem is that many limited real rights can appear to be personal rights and visa-versa. So, it

could be possible that a person would wish to register a personal right because it appeared to be a

limited real right.

- NBNBNBNBNB!!!! The book only mentions this later but it is imperative for our understanding to

know that the test only applies to LIMITED real rights and their confusion with personal rights.

- This is because we do not have a numerous clausus of limited real rights. So, sometimes people may

agree to create some sort of right that they come up with and mould to their needs that does not fit

the ‘essentialia‟ of a certain limited real right or personal right – still, this newly made right must be

one or the other.

- But how on earth could anyone be as stupid as to confuse a limited real right and a personal right?

Examples will be provided later by case law.

- The reason for the SFTD test is now clear. It helps determine if a right obligates a person to do

something for you with their thing (personal right), or whether it allows you a right over their thing

(real right).

- These two still look familiar because they both hinge on a relationship between a legal subject and

another person‟s thing. The difference lies in whether you have a right to the thing on its own, or

only to the thing in the hands of its owner in the form of a performance. This is what the test will

show.

The „subtraction from the dominium test‟

- Ignore the book here too.

- The test states that a right is only a [limited] real right if it limits or would limit the entitlements of

successive owners.

- In other words – if the right only limits the entitlements of a specific owner and if the limitation does

not adhere to the thing itself, then the right is not a real right but instead a personal right.

- In Ex Parte Geldenuys, the rule was described as follows: If the obligation is a burden upon the land

(a subtraction from the dominium), it is a real right. If the right is only a burden upon a specific

person (owner), it is a personal right.

- To qualify as a real right in terms of this test, the following requirements must be met:

1) The right must limit the entitlements of the owner and such entitlements must be created by his right

of ownership.

2) The right must also apply to the owner‟s successors in title (don‟t think about law of succession here

as such, think about other people who buy the land or become owners of the land in any way at a

later stage). Thus, the right applies to the thing, no-matter who the owner is. The best example of

such a real right would be a servitude (remember that a praedial servitude AND a personal servitude

both create real rights).

Application of the rule

Ex Parte Geldenhuys

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- The testators‟ joint will stated that upon the majority of their first child, the surviving spouse would

have to subdivide the land amongst the children and then distribute this land to the children. Lots

would be drawn to decide who would receive which piece of the subdivided land. The child who

would receive a specified portion of the land (a certain homestead), would pay the other children 200

pounds each.

- The court had to decide whether the right to have the land subdivided was a real right to divide the

land or a personal right to its division and delivery. Also, the court had to decide of the obligation to

pay 200 pounds to each child created a real right to the money or a personal right to its delivery.

- The court held that the right to have the land subdivided created a limitation on the entitlements of

the co-owners of the land (the children) and that this limitation formed a real burden on each

undivided share of the land, not just an obligation on the person. Thus, this right could be registered

in the title deed of the land.

- The court held that even though the right to claim 200 pounds from the applicable child was a

personal right, it was so intimately connected with the real right of the clause that it could be

registered for convenience sake.

Odendaalsrus Gold

- The court had to decide whether the right on a payment of a sum of money could be registered as a

real right.

- The applicant sold his land on which diggings had been proclaimed. He reserved the right of

payment of licence moneys by putting this reservation in the title deed of the land (this means that

when someone wished to purchase and dig on the land of the new owner and paid him licence

moneys to do so, such moneys would have to go to the applicant).

- The court held that this was a real right because it limited the entitlements of the new owner to these

payments and was also applicable to owners in succession.

Lorentz v Melle

- Two co-owners of a large piece of land decided to rather subdivide the land and own one part each.

- This was done and a notarial deed was registered with the transfer of the farm.

- This deed stated that, should a town be built on either piece of land (which would entail selling a part

of that land to a municipality), the owner of the other piece of the land would receive half of the

proceeds of the sale in question.

- M applied to have the right to these proceeds declared as a personal right. The court allowed this

application.

- L appealed, wished to have the right registered in the title deed. This appeal was denied.

- The court held that the land is not burdened by the right. Only the owner is burdened should he

decide to sell any of the land to create a town. Thus, his rights to the money are burdened, but not his

rights to the use and enjoyment of the land in the physical sense, as he would already have sold it.

- The court rejected the Odendaalsrus Gold case because it was not applicable to the situation at hand.

The judge did not disagree with the judgment of the aforementioned case, he just stated that it was

not applicable to the matter at hand. This was said to be so because the other case dealt with mineral

rights and was not of general application and could not set a precedent that would apply to the matter

at hand. In casu, it was held that the certain type of monetary obligation imposed an obligation only

on the owner of the land and not on the land itself.

Pearly Beach Trust

- There was a deed of sale with a condition in it that stated that the buyer of the land would have to

pay a portion of the proceeds received from either a grant of mineral rights or an alienation of the

land through expropriation, to a third party.

- The condition also stated that this would apply to the buyer‟s successors in title as well.

- Here we were dealing with an owner who was obligated to give up proceeds that he would receive

from either mineral grants or from expropriation of the land. Either way, both cases involved an

obligation to pay over parts of the proceeds that he would receive from alienating the land.

- The court then applied the „subtraction from the dominium‟ rule as follows:

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- One of the rights of ownership is the right to alienate the land. One of the entitlements of this is that

you may receive the proceeds of such alienation. If a person is limited from receiving the proceeds of

such alienation (fruits), then the right to ownership is being limited. Thus, one requirement is met,

namely, that an entitlement that springs from ownership is being limited in both cases.

- Secondly, this limitation applies to owners in succession.

- In the Geldenhuys and Lorentz cases, the courts held explicitly that a right to the transfer of money is

a personal right only.

- However, the court in casu held that the condition in question satisfied the subtraction from the

dominium test (as seen above).

- Thus, an obligation to pay to pay a sum of money to another person can create a real right if:

1) The obligation is intended to bind the owner and his successors in title.

2) If the obligation subtracts from the owner‟s right to dispose of the fruits of the property.

- Remember though, not all obligations of an owner to pay money to another person in terms of the

deed of sale create real rights. For the requirements of the test to be met, this obligation must pass to

owners in succession and MOST importantly, the money to be paid must come directly from the

fruits of the property (otherwise it cannot be said that there has been a subtraction of the dominium).

Options, pre-emptive rights and rights involving a prohibition against the alienation of land

- Are these personal rights or are they registrable real rights?

- All these rights limit the owner‟s entitlement to his property.

- Options only confer personal rights and cannot be registered.

- However, pre-emptive rights and rights involving the prohibition of alienation of land are allowed to

be registered (not necessarily because they are real rights – that is not certain).

- There is authority that such rights accrue to the land itself but this is not clear.

- It is submitted that, should it be necessary, such rights can be seen as real rights.

- Still, they are allowed to be registered even if they are seen as personal rights.

- It is also not clear what happens to such rights when they are registered.

- In Cape Explosive Works and Another v Denel, it was held that an option is an offer to enter into a

contract with an agreement to keep that offer open for a certain time.

Cape Explosive Works

- The applicant, Capex, sold land to Armscor.

- The deed of sale included 2 conditions:

1) The land was only to be used for the manufacture of armaments.

2) When the land was no longer needed for this purpose, Armscor would inform Capex. Capex would

then have the first right to repurchase the land (this would give rise to pre-emptive right agreement

should the condition be fulfilled).

- Armscor then sold the land to Denel. The final deed of transfer in this sale did not contain condition

2 and only applied condition 1 to certain parts of the land.

- Denel sought an order to declare that it was encumbered by condition 2.

- Capex sought an order to rectify the deed to include both conditions.

- Denel‟s application succeeded in the court a quo because the condition apparently created a personal

right and could thus not be registered in the title deed in the first place.

- HOWEVER, on appeal, this was changed.

- The court applied the subtraction from the dominium test.

- The court set out the test as follows:

1) The intention of the person who creates the right must intend that it bind the owner AND his

successors in title.

2) The nature of the right or condition must be such that its registration results in a subtraction from the

dominium of the land against which it is registered.

- The court held that condition 1 complied with this as it restricted the use of the land and applied to

successors in title as well.

12

- Condition 2 was also held to be registrable because of its close connection to condition 1 and the fact

that the two conditions were inseparable and acquired their meaning and effectiveness from each

other (this is normal deeds practice, which is confirmed by S63(1) of the Deeds Registries Act).

- Even though the court did not use the Act as authority, its order to register condition 2 because of its

link to condition 1 is actually the application of S63(1) of the Deeds Registries Act (this is my own

observation).

Drawbacks of the subtraction from the dominium rule

- It only applies to limited real rights and cannot be used to ascertain ownership (this isn‟t a drawback

as much as it is just a fact though – ownership is easy to identify and would not fit in with a test like

this).

- The real problem is that personal rights very often do limit the entitlements of the owner (like a loan

of movable property). However, such rights do not necessarily apply to owners in succession.

Conclusion

- This is not easy. Read through it all a few times and talk to the lecturer and tutor about it.

- The subtraction from the dominium test is actually easy to apply:

1) Who does it affect? – Does the obligation affect the owner and successors in title?

2) How does it affect them? – Does this obligation subtract from the dominion (subtract from

the ownership directly by limiting his entitlements).


Registration of personal rights

General rule = NO

- The Deeds Registries Act states this. Ignore the underlined proviso for now.

63 Restriction on registration of rights in immovable property

(1) No deed, or condition in a deed, purporting to create or embodying any personal right, and no condition which does not restrict

the exercise of any right of ownership in respect of immovable property, shall be capable of registration: Provided that a deed

containing such a condition as aforesaid may be registered if, in the opinion of the registrar, such condition is complementary or

otherwise ancillary to a registrable condition or right contained or conferred in such deed.

- A personal right does not become a real right if it is registered in contravention of this rule; it is

merely a personal right that has been registered incorrectly.

- An interested party may apply to a court to order such registration invalid.

- However, personal rights can be validly registered in certain instances (one is already clear from the

excerpt of the Act above – ok, you can stop ignoring the underlined proviso now).

Exceptions to the rule

The proviso in S63(1) of the Deeds Registries Act

- This is merely a statutory confirmation of the deeds practice to register personal rights that are

closely connected to real rights (as seen in the Cape Explosives case, but I don‟t think that case is

authority for this, its more of a coincidence that the authors failed to see).

- The registration of these personal rights does NOT change them into real rights (which isn‟t a

surprise, because a real right isn‟t a real right because it is registrable; it‟s registrable because it‟s a

real right).

- The case here is Low Water Properties. The court held that a personal right that is intimately

connected with a real right may be registered along with such real right in the title deed. However,

this does not turn it into a real right.

S63(2) of the Deeds Registries Act

- This section states that the general prohibition on the registration of personal rights does not apply

13

with reference to any condition in a:

1) mortgage

2) lease

3) certain grants

- It also doesn‟t apply to grants or leases of rights to minerals and prospecting contracts.

- Once again, even if you register these rights, they do not become real rights.

Iura in personam ad rem acquirendam

- These are personal rights against a legal subject for the transfer of a thing.

- These rights can be registered, in which case they will be converted into real rights (Registrar of

Deeds v Ferreira Deep).

- The book gives an example but it makes no sense because it doesn‟t actually comply with the above

definition, still, here goes nothing.

- The best example is apparently a deed of transfer. This document contains an account of the act of

transfer of ownership. I could imagine that this would be attached to a contract of sale once the real

agreement has been concluded.

- So, what would happen would be that a contract of sale would be drawn up. This contract would

create a personal right for the buyer against the seller for performance (specifically the transfer of

ownership of the thing through delivery or registration).

- In terms of normal delivery of a movable, this probably won‟t apply as a written contract is not

required by law.

- However, if a house is being sold, the contract will be drawn up and then the deed of transfer will be

registered to confirm the transfer of ownership (once registration has taken place at the deeds office).

- Once this is done, the personal right to performance cancels and becomes replaced with a real right

to the object of that performance.

- However, this does not lead to a personal right being registered or being converted into a real right

(as the case law explanation states should be the case). It merely leads to a personal right being

extinguished and replaced by a real right once that real right is registered.

- Fanfuckingtastic isn‟t it?

Pre-emptive rights and reversionary rights

- As seen before, such rights can be personal rights and can even be construed as real rights. But more

importantly, whichever type of rights they are seen as, they can be registered.

- IF such rights are seen as personal rights (which they can be and still be registered), then we have

another example of a iura in personam ad rem acquirendam that are registrable as personal rights

and do not terminate upon registration.

- The above point contradicts the first example that the authors give, in which they say that an iura in

personam ad rem acquirendam terminates upon registration.

- We have to check these inconsistencies with the lecturer or tutor.

Sections 20 and 22 of the Alienation of Land Act

- This Act provides that an instalment sale transaction must be recorded in the title deed of the land.

- This has the effect that the instalment-paying buyer (who is not the owner yet) enjoys preferential

treatment if the land should be sold in execution or if the seller becomes insolvent.

- The book goes on to make no sense regarding this (see page 30).

- The only way I can see this leading to the registration of a personal right is if this preferential

treatment gives rise to a personal right. If so, then the provision creating this personal right would be

written in the title deed and this right would be registered.

- The book states that some jurists say that this all gives rise to a real right and that this therefore is not

an example of the registration of personal rights – obviously, because if the rights created by an

instalment sale are already real rights, the question as to their registration is already answered.

Established practice and custom

14

- Certain trade usages and deeds customs have lead to some personal rights being registered anyway.

- Examples are fideicommissary rights, pre-emptive rights and rights on the prohibition to alienation

(if such rights are regarded as personal rights – which they usually are).

Effect of registration of personal rights

- Once again, it does not turn them into real rights (this is confirmed in Low Water Properties and

Another v Wahloo Sand)

- AH!!! The authors seem to have ignored the statement of chief justice De Villiers in the Registrar of

Deeds v The Ferreira Deep case. The judge stated that iura in personam ad rem acquirendam are

personal rights that CONVERT into real rights upon their registration!!!!! This is contrary to what

the authors say, but they never object to it and do not explain why their examples do not follow the

judge‟s statement!!

- Still, the registration of personal rights is not without legal effect - the registrar of deeds will not

allow additional registrations to a title deed that would contradict the personal rights that are already

registered there.

Study unit theme 1.4

The law of things and the Constitution

- The Constitution has an effect on the law of things and the real relationships between legal subjects

and things.

- S25 (the property clause) deals with such matters.

- The reasons for this are:

1) To guarantee and safeguard property.

2) To redress the results of past race based legislation through land, water and related reform.

3) To authorise the deprivation and expropriation of property by the state.

- This chapter deals mainly with the provisions in the property clause and their effect on the law of

things.

The property guarantee clause of the Interim Constitution

- This clause is important for us because this is where the book tries to explain the meaning of

property.

- It stated that every person has the right to acquire and hold rights in property and to dispose of those

rights.

- This specific clause was not carried over in the final Constitution.

- It is a POSITIVE property guarantee clause – it states that you DO have the right to property.

- In the final Constitution, this clause has been replaced with a negative property guarantee clause,

which states that a person may NOT be deprived of property etc. We‟ll get to that soon.

Definition of „property‟ and „rights in property‟ as seen in the Constitution and Interim Constitution

- Neither of the two Constitutions define these.

- Rights in property probably refers to more than just private ownership and it is submitted by authors

that it also includes the following:

1) Limited real rights

2) Personal rights

3) Customary property rights

- Kleyn also points out that in German law, there is a distinction between property in the private law

sense and property in the constitutional law sense. This isn‟t authority for anything; it just explains

that there can very well be a similar distinction in our law (which there is).

- These views are acceptable, however, if a definition is not given by legislation or the Constitution,

the view of the courts will be authoritative in deciding on one (or many, as is the case here).

15

- Remember that the interim Constitution used the term „property rights‟ and the final Constitution

only uses the word „property‟. We can accept that these two mean the same thing. The following

court decisions have given scope to the meaning of „property‟ and „property‟ rights in the

constitutional sense.

Transkei Public Servants Association v Government of the RSA

- The court held that „property rights‟ in the Interim Constitution is sufficiently broad enough to

include state housing subsidies.

- The court also held that there is a wide meaning to „property‟, but did not elaborate on that point.

- From this it could also be said that certain employment benefits such as car allowances and health

benefits may also fall under „rights to property‟. I don‟t see how this ties in with this case, but the

book says it anyway.

In re: Certification of the Constitution of the RSA

- The court stated that intellectual property is not included in „property‟ in its constitutional sense.

Joubert and Others v Van Rensburg and Others

- Court disagreed with the above decision (considering this is a high court case and the previous one is

a constitutional court case, I don‟t know why this opinion matters).

- The court held that „property‟ encompasses a legal tie with a thing. But the court held that this tie is

not limited only to corporeal things.

- Because the final Constitution protects property by prohibiting its deprivation (and not by guarantee

its safety as such, as was in the IC), the court held that this meant that incorporeal things could be

included as well. The argument behind this is not explained.

- However, in the end, the court merely stated that property should contain whatever a layman would

consider to be „his property‟ – which could include rights to patents, inventions and software codes.

- In fact, I actually agree with this case. The whole point of the property clause is to protect a person‟s

fundamental right to what is his. To limit this protection only to the things that you can touch and

feel seems pedantic. From a constitutional standpoint, it doesn‟t make sense that you can only be

protected in terms of corporeal things; the Constitution is the supreme law of the land, why should it

limit itself by applying the principles of the law of things strictly?

Lebowa Mineral Trust Beneficiaries Forum

- Mineral rights are not „property‟ that can be protected by the Constitution.

- This decision has however become redundant, as the Mineral and Petroleum Development Act of

2002 now states that minerals cannot be privately owned (this obviously refers only to minerals in

their raw form underground).

First National Bank of South Africa

- In this case, it was held that ownership of movable, corporeal things is regarded as „property‟,

regardless of whether or not the owner actually exercises his right to ownership or if the thing is sold

subject to an instalment agreement.

- In the latter instance, what I think they‟re trying to say is that even if you are still paying the

instalments on a movable thing, it is still regarded as your property in the constitutional context.

- Thus, neither the subject interest of the owner or the value of the right of ownership has any

influence on the character of the right or the meaning of property in the constitutional context.

Ex parte Optimal Property Solutions

- Held that „property‟ in terms of the Constitution must be read to include any right to, or in property.

- Thus, registered praedial servitutal rights are also included.

- Accordingly, any removal of those rights will be deprivation of property.

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The deprivation clause and the expropriation clause

- The property guarantee clause was just a way to get us started and to introduce us to the concept of

property in its constitutional sense.

- However, only now do we actually start applying the Constitution to this property.

- The book barely explains any of this. Therefore, I‟ve explained it differently.

- This part of the work deals with three parts of the Constitution: the deprivation clause, the

expropriation clause and the general limitation clause.

- The deprivation clause and the expropriation clause are in the same section (s25) and are inextricably

linked.

- Compare these notes to the book and make sure that I‟ve gotten it right.

Deprivation and expropriation

- Both deprivation and expropriation, for our purposes in this course, are performed by the state.

Anyone can deprive a person of property in the broad sense, a private person or the state. However,

we will usually deal with a situation where the state does this. Expropriation can only, however, be

performed by the state.

- Deprivation refers to any form of interference with the use, enjoyment or exploitation of private

property as it results in deprivation of a person‟s right to the property involved. Deprivation is thus a

broad concept that encompasses all forms of interference. Expropriation is a specific type of

deprivation that applies to a narrower and specific form of interferences.

- The above explanation is found in the First National Bank case.

- More specifically, expropriation is a severe form of deprivation and is generally marked with the

transfer of rights to the state. Deprivation, on the other hand, probably just refers to the state

interfering with your right but not taking it away.

- Shockingly, the book does not provide us with examples. But I‟ll try.

- An example of deprivation (that does not qualify as expropriation) would be a municipal by-law that

prohibits you from opening a business on your property. Thus, the state is interfering with your right

to use and enjoyment, but not actually taking the right for itself.

- An example of expropriation could be when your right of ownership is taken away by the state and

transferred to the state for land reform or something.

- All actions by the state that interfere with a person‟s rights in property are deemed to be deprivation

first and foremost and will have to fulfil the requirements in S25(1). However, if such interference is

severe enough to be deemed as expropriation, it will also have to meet the requirements laid out in

S25(2). We‟ll go into this in more detail later.

- Now I will explain the application of each subsection and then show how they work together.

The deprivation clause

S25

(1) No one may be deprived of property except in terms of law of general application, and no law may

permit arbitrary deprivation of property.

- This section applies to all forms of deprivation (even expropriation, because an expropriation is a

type of deprivation and must first comply with the general requirements of a deprivation in the broad

sense before it can be considered further).

- When referring to deprivation in the broad sense (that is, not including expropriation), this section

allows the state to police, regulate or limit the use of property through legislation without such action

amounting to expropriation. Examples of such action could be measures relating to town planning

and zoning, land-use, environmental conservation and health regulations. Thus, it is also known as

the „policing clause‟.

- The Prevention of Illegal Eviction and Unlawful Occupation of Land Act (which governs the

application of the common law remedies to protect ownership) is an example of deprivation.

- The book makes it look as though this manifestation of S25(1) is an exception to the rule. In fact, it

is actually a practical explanation of what deprivation by the state is (when it does not amount to

expropriation).

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- This section is a negative guarantee of property. The IC had a negative and positive guarantee, but

the FC only has this one. It makes no difference.

- Regarding the requirements of this section, all deprivations have to be in terms of law of general

application and must not be arbitrary.

- Law of general application – must be general in the sense that it applies generally to an area and

exclude laws that single out individuals for discriminatory treatment (eg: bills of attainder).

- Arbitrary deprivation – probably amounts to deprivation that is dependent entirely on the will of the

party effecting it. In the First National Bank case, the court decided that the deprivation of property

is arbitrary (in the context of S25) when the law does not provide sufficient reason for the particular

deprivation and/or is procedurally unfair.

- Sufficient reason is established by considering the various aspects of the deprivation, the purpose to

be served and the relationships affected by the legislation. The procedure involved will depend on

what the law is and what procedure has to be followed in creating it, but that will be obvious for each

case.

- If the deprivation contravenes the provisions of S25(1), it has to be weighed up in terms of S36. If it

is not a justified limitation in terms of S25(1) (which contains a specific limitation clause, namely,

that your right to property may be deprived if it is done in terms of law of general application and

non-arbitrarily) or the general limitation clause, it is unconstitutional.

- If the deprivation IS constitutional, then it has to be determined if it is an expropriation, in which

case we‟ll go onto the next step.

The expropriation clause

- Even if an expropriation is clearly an expropriation right from the beginning, it must first comply

with the general definition and requirements of a deprivation. If it does not, then we don‟t even

consider this step.

- Once it has done this and been identified as an expropriation, it also has to pass the stricter

requirements laid out in S25(2) and (3).

- Note that these requirements (public purpose etc) are NOT used to identify whether something is an

expropriation or not. The book does not explain this either. Remember, an expropriation is a

deprivation that is severe, usually in that it transfers rights in property from the person to the state.

- So, for example, just because a deprivation is in public interest, does not mean that it is an

expropriation.

- So, if we are faced with a deprivation, which (after application of S25(1) and, if necessary, S36) is

deemed to be constitutional in the broad sense, but then we have determined that this deprivation is

so severe as to be an expropriation, it will have to comply with the following section as well in order

to be constitutional:

S25

(2) Property may be expropriated only in terms of law of general application-

(a) for a public purpose or in the public interest; and

(b) subject to compensation, the amount of which and the time and manner of

payment of which have either been agreed to by those affected or decided

or approved by a court.

(3) The amount of the compensation and the time and manner of payment must be

just and equitable, reflecting an equitable balance between the public interest and the

interests of those affected, having regard to all relevant circumstances, including-

(a) the current use of the property;

(b) the history of the acquisition and use of the property;

(c) the market value of the property;

(d) the extent of direct state investment and subsidy in the acquisition and

beneficial capital improvement of the property; and

(e) the purpose of the expropriation.

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- Thus, the two basic requirements of expropriation are that compensation must be paid and it must

take place for public purposes or in the public interest.

- „Public purposes‟ has a narrower meaning than „public interest‟. This is evident in that expropriation

may occur for the benefit of one person but still be in the public interest. However, if something is

expropriated for a public purpose, it is to be used for the direct benefit of the public (to build a

school, for example).

- Compensation is only payable for expropriation, not any other forms of deprivation. This is because

expropriation is more severe.

- The amount of compensation must be just and equitable and there must be an equitable balance

between the public interest and those being expropriated.

- S25(4)(a), states that the public interest also includes the nation‟s commitment to, inter alia, land

reform. Therefore, if land is being expropriated for purposes of land reform, it can be said that the

public interest would hold even more weight, which could lead to compensation being reduced.

- In Abrams v Allie NO and others, it was held that the market value should be the starting point and

then added to or subtracted from considering other relevant circumstances. The court held that

valuating how much the property is worth is not an exact science, and therefore the compensation

given might be more or less than the actual market value.

- Nominal compensation would be in contravention of the requirement that compensation be fair and

equitable as well as with the negative guarantee of property which is represented in S25(1) AND

S25(2).

- Note also, that the factors relating to compensation also refer to fairness and equity regarding the

time of payment as well as the manner of payment.

- Thus, if it would be fair and equitable, payment may be delayed or made in something other than

cash, like condoms.

Application of S25(1) and (2) in terms of the First National Bank case

1) S25(1) deals with deprivations and expropriations.

2) If the deprivation (in the broad sense of the word) encroaches upon the provisions and cannot be

justified in terms of S36, the deprivation is unconstitutional (thus, our analysis would end here).

3) However, if it does not encroach upon S25(1) or it does but is justifiable in terms of S36, we should

ask if the deprivation is an expropriation. If so, then this expropriation has to comply with S25(2)

and (3) in order to be constitutional (of course, if we get to this step and determine that the

deprivation is NOT an expropriation, then we leave it there and hold that the deprivation is

constitutional).

Example

- The state comes and takes your land away.

- You go to court because you‟re unhappy.

- This is definitely a deprivation (at least) in the broad sense, so it must comply with S25(1). In this

case, the state‟s action does comply with S25(1) and is a constitutionally allowed deprivation.

- Now, the court looks at the situation and sees that the state actually transferred ownership of your

house to itself.

- Now we‟re dealing with an expropriation.

- Because of this fact, S25(2) and (3) will have to be complied with as well.

Land, water and related reform

- S25(5) to (9) make provision for the national land reform programme.

- This programme consist of three interrelated programs:

1) Land redistribution

2) Land tenure

3) Land restitution

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Land redistribution

The purpose of S25(5) is to foster conditions that enable citizens to gain access to land.

This section creates a socio-economic right which does not place a positive obligation upon the state,

but merely prohibits the state from making any enactment that diminishes access to land.

The right to gain access to land applies to both urban and rural (or agricultural) land.

The Land Reform (Labour Tenants) Act provides for the acquisition of farm land by farm labourers.

The land owner will be entitled to compensation for the land so redistributed.

Fostering conditions which promote a citizen‟s ability to gain access to land refers to circumstances

which make it easier to acquire, for example, subsidised interest rates or purchase prices etc.

Land tenure

The purpose of this is to provide security to people under diverse forms of land control.

Basically, this is supposed to protect the rights of land owners who, due to past racially

discriminatory laws or practices, do not enjoy proper security over their property.

The Constitution has set out ways to do this, inter alia, legal recognition of group or communal

tenure and the formation of administration to confirm existing rights on the one hand and mediate

competing rights on the other.

Land redistribution

- The Interim Constitution states, basically, that any land that:

1) was dispossessed after 19 June 1913 (after the Native Land Act came into force – I

cannot believe the book doesn‟t say this)

2) and such disposition was for the purpose of furthering the object of law which

would have been inconsistent with the prohibition of racial discrimination in terms

of S8(2) had this section been in operation (now S9 of the Constitution)

3) may be restored to the people previously dispossessed.

- So, if land was taken away in terms of law that was racially biased (like the Native Land Act or the

Black Administration Act) it can now be taken back in terms of other racially biased legislation,

namely, the Restitution of Land Rights Act (the Act created in terms of the Interim Constitution to

regulate all this).

- „Right in land‟, or „land rights‟ is defined as any right in land, whether registered or not and may

include:

1) the interest of a labour tenant and share cropper

2) a customary law interest

3) the interest of a beneficiary under a trust arrangement

4) and beneficial occupation for a continuous period of not less than ten years before the dispossession

in question.

- The direct descendents of the persons entitled to institute such claims are also entitled to institute

these claims.

- So… any black person can fuck any white person out of any land, provided that he can prove that he

is black, that the owner of the land is white and that apartheid actually happened between 1913 and

1994.

- There is more detail, but I really cannot write this crap anymore. The study guide just states that we

must briefly discuss land reform – I think this will do.

First National Bank t/a Wesbank v Commissioner for Revenue Services/Minister of Finance 2002 4 SA

768 KH

- This summary of the case could help a lot. I‟ve highlighted what‟s important. You should notice that

most of the principles set out in this summary have already been put in the work above where they

found application. Now you will get them all at once.

20

FactS: Company 1 leased a car from FNB. FNB also leased and sold in terms of an instalment sale

agreement, respectively, two cars to Company 2. FNB retained ownership in all these cases. Company 1 and

2 owned money to the Receiver of Revenue for customs debt and penalties. According to sec 114 of the

Customs and Excise Act 91/ 1964 the government may detain all these vehicles and hold it as security for

the payment of both Companies‟ debt.

Sec 114 provides wide protection to the state for this type of tax debt. It authorizes the Commissioner, for

the purpose of debt recovery, to sell goods without prior judgement or consent from the court. This clause

also gives the Commissioner the authorization to sell goods that do not belong to the customs debtor, but to

third parties (like FNB).

FNB‟s argument was that sec 114 amounts to unfair limitation of their rights as an owner and that it amounts

to expropriation according to sec 25 of the Constitution. Their other argument was that since sec 114 doesn‟t

provide for compensation for the third party‟s goods that was expropriated, it is in conflict with the

provisions of sec 25 and thus invalid. The state, on the other hand, argued that the bank‟s ownership in this

case amounts to something less than “property” as meant in the Constitution and that in reality it is only a

device the bank, as owner, uses to safeguard itself against lessee‟s and buyers of cars.

Judgment of the Cape of Good Hope High Court:

The court found in favour of the Commissioner and thus decided that sec 114 does not amount to

expropriation.

Judgment of the Constitutional Court:

The decision of the High Court is reversed and sec 114 is declared unconstitutional. This results in the

unlawfulness of the detention of the vehicles. The following points are of importance:

1. The court finds sec 25 of the Constitution to be a negative property guarantee clause: It doesn‟t

explicitly guarantee that someone can obtain, keep and dispose of property (as in sec 28(1) of the

interim Constitution). The protection of property is however implicitly included in sec 25 (par [48]).

2. The court states explicitly that „property‟ is not limited to land.

3. The court says it is clear that ownership of a corporeal movable (eg a car) is “property”. The court,

however, warns that at this stage of our constitutional jurisprudence it is practically impossible to

furnish – and judicially unwise to attempt – a comprehensive definition of property for purpose of

section 25

4. The court held that FNB should still be regarded as the owner of the cars and that it will enjoy the

protection of sec 25. Of great importance is the following quote: “Neither the subjective interest of

the owner in the thing owned, nor the economic value of the right of ownership, having regard to the

other terms of agreement, can determine the characterization of the right. It does not matter that the

owner would rather have the purchase price than the vehicle, or that the economic value of the right

of ownership might be small when the contract term draws to an end. A speculator has no less a

right of ownership in goods purchased exclusively for resale because she has no subjective interest

in them or sees them as objects that will produce money on resale.”

5. NB: R Ackerman (pars [58]-[60]) sketches the steps to be followed in applying sec 25.

Step 1: Sec 25(1) is applicable to all property and deals more specifically with deprivation in the

wide sense, which includes expropriation.

Step 2: If the deprivation does not comply with all the provisions of sec 25(1), and cannot be

justified in terms of sec 36 of the Constitution which determines that fundamental rights can only be

limited in terms of law of general application to the extent that the limitation is reasonable and

justifiable in an open and democratic society based on human dignity, equality and freedom, then the

legislative measure which attempt to deprive property is unconstitutional and thus cadit quaestio.

21

Step 3: If the deprivation is not in conflict with sec 25(1), or if it is, could be justified in terms of sec

36, the question arises whether the deprivation also constitutes an expropriation (in which case

compensation becomes an issue). If the legislative measure in dispute is in accordance with the

requirements in sec 25(2) and 25(3), it will qualify as a lawful expropriation. If not, the attempted

expropriation is unconstitutional.

6. Application of these principles by the court: The court finds that sec 114 serves an important

purpose namely the enforcement of the payment of fiscal debt (customs debt and penalties). The

legislator however went too far when he made sec 114 applicable to property of third parties when:

(a) the particular third party has no connection with the transaction giving rise to the debt, where (b)

the property in dispute was in no way connected to the debt and (c) the particular third party created

no false impression by placing the debtor in control of the property, which could have induced the

Commissioner act to his detriment. The deprivation intended by sec 114 is held to be arbitrary

(absence of sufficient reason) and is thus found to be in conflict with sec 25(1). The provisions of

sec 114 is subsequently measured according to the requirements of sec 36: the court finds the

arbitrary deprivation to be not justified because the infringement by sec 114 of sec 25(1) is not

reasonable and justifiable in an open and democratic society based on human dignity, equality and

freedom and is thus unconstitutional.

Syllabus theme 2

Possession and holdership

Study unit 2.1

Definition of control, possession and holdership

Control

- This is an umbrella term for the concepts in this chapter.

- Possession and holdership are thus specific forms of control.

- Van der Walt and Pienaar describe control as the following:

- Control of corporeal things consists of two elements – a physical or corporeal element and a mental

element. The mental element is the basis upon which different categories of control are distinguished

from each other.

- Both the physical and mental element must exist simultaneously.

- Lawfulness is also a factor in control, but only in defining what type of control we are dealing with.

If control is unlawful, it is still regarded as control in the strict legal sense.

- A thief who is in physical possession (corpus element) of a thing also has the animus dominii

(mental element). Thus, his control looks exactly like that of the owner, but because it is unlawful, a

distinction is obviously made.

- Lessees and pledgees also have physical control over the thing, but their mental element is one of

benefiting from the control instead whilst still acknowledging the owner.

- Thus, we see these examples of how the mental element AND lawfulness define which type of

controllers we are dealing with.

- Do not confuse control with ownership. An owner may have control over a thing, but this control is a

mere entitlement or consequence of his ownership. The owner may not always control his thing, but

that does not mean that he loses ownership.

- Thus, control is the physical control over a thing combined with an intention regarding that thing.

The intention will determine what type of control we are dealing with (in the case of the distinction

between an owner, lessee and pledgee for example) and lawfulness will determine whether or not the

controller is an owner or thief (as their respective intentions are the same).

Possession

- A real relationship which consists of physical control over a thing as its owner OR as if the controller

is the owner when he is in fact not, according to the requirements of objective law.

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- Therefore, unless the possessor is the owner, the possession is unlawful.

- Remember that possession is a specific type of control – not all controllers who are not owners are

unlawful controllers! However, any possessor that is not the owner is an unlawful possessor.

- Such unlawful possessors are divided into bona fida and mala fida possessors.

- There position will be dependent on their subjective knowledge of the lawfulness or not of their

possession.

- The bona fida possessor is unaware of the unlawfulness of his possession.

- A mala fida possessor is aware, or should reasonably be aware of the unlawfulness. A thief is the

best example.

- A bona fida possessor may, in time, find out that he is unlawfully in possession, in which case he

will become a mala fida possessor.

- In conclusion, a possessor is a controller with the animus dominii (intention to be the owner).

However, only the actual owner is considered a lawful possessor, because obviously, only an owner

can be vested with the right to ownership in terms of objective law.

Holdership

- Holdership is a relationship in which the holder controls the thing BUT not with the mental attitude

of an owner. Instead, he holds it with the intention to benefit from the control of the thing for

himself.

- This must be distinguished from agency, where the agent holds the thing for the benefit of his

principle.

- I think an agent should be a holder in certain cases. Even though he doesn‟t necessarily hold the

thing for his direct benefit, a contract of agency can benefit the agent through, for example,

compensation. Thus, he is holding the thing in terms of a contract that benefits him – but anyway.

- If the real relationship (holdership) is recognised by the objective law, then it is a lawful relationship.

- Examples of lawful holders are lessees, borrowers or buyers in terms of an instalment agreement.

- Regarding buyers in terms of an instalment agreement, I don‟t see how such a person would lack the

animus dominii to make him a lawful possessor. The intention of the instalment agreement is that

ownership will eventually be transferred to the buyer – so isn‟t there the intention to be the owner?

Anyway…

- Unlawful holdership occurs when the legal ground upon which the holdership is based, terminates or

never existed.

- Once again, we get bona fida and mala fida unlawful holders the same as we do with possessors.

- An example of an unlawful holder would be a lessee in terms of a contract of lease that has expired,

who still controls the leased property. Whether he knows about the expiration of the lease or not, will

determine whether he is mala fida a bona fida.

Ius possessionis and ius possidendi

- The ius possessionis is a claim to continued control until it is terminated according to law.

- The ius possidendi is the entitlement (created by a subjective right) to control the thing.

- The mere fact that a person is in control of a thing affords him a ius possessionis. This is afforded by

law to prevent people from taking the law into their own hands by taking away control without a

court order or something similar.

- A person can have a ius possessionis without having a ius possidendi.

- A thief has a ius possessionis in order to prevent the owner from just coming and taking the thing

back. This allows the thief to use the mandament van spolie to regain control.

- The thief doesn‟t have a ius possidendi however, because he has no actual right in respect of the

thing.

- The book has examples on page 50 and 51, read these.

- How I see it is that the mere fact that you are a controller affords you with a ius possessionis. This is

just so that your control cannot be taken away arbitrarily (self-help).

- However, if you are also actually entitled to use the thing, then you have a ius possidendi as well.

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- You don‟t necessarily need a ius possessionis to have a ius possidendi. Remember, the latter is the

entitlement to control the thing. Thus, an owner may have the entitlement to control the thing in

essence, but the thief still holds the ius possessionis merely because he is in control of the thing.

Is control a fact or a right?

- I don‟t care.

Study unit 2.2

Acquisition of control

- For control to be acquired, two elements must exist simultaneously, namely, the animus and corpus

elements.

- They need to come into existence at the same time though.

- The content of the corpus element will remain the same for all forms of control (see later).

- However, the content of the animus (mental) element will differ and distinguish what form of control

we are dealing with.

The corpus (physical element)

Definition

- Detentio does not require continual physical occupation.

- A person retains control even when he leaves the property but is capable of reassuming occupation at

any time.

- The requirement is that person must be able to manifest his physical power whenever he wishes and

exclude others from such control.

Guidelines for applying the definition

- The nature and destination (use) of a thing, may be decisive in determining whether control is

present.

- The nature of the thing can affect this in the following way – the law will require stricter physical

control in the case of a movable than with an immovable.

- The use of the thing can also affect the determination of control. For example, the control of a

permanent residence of a person will be more strictly addressed than that of a holiday house.

- The law requires stricter rules for the establishment of control than for the continuance of control.

- Therefore, once a person has established control over a thing, he may relinquish direct physical

control but retain his control in the legal sense.

- This brings us to the example of an agent. The principal may give a thing over which he has control

to an agent. In such a case, the principal‟s control is not lost, but merely exercised through the agent

(for example, a person keeping your coat at the desk of a hotel).

- However, for this relationship to exist, the following requirements must be met (this will be a

semester test question):

1) The agent must be in ACTUAL physical control.

2) The agent must exercise the control on behalf of the principle (if he also has his own interest

[animus] in holding it, he will be considered a co-holder). From this requirement, we see that an

agent has no animus with regard to the thing.

3) The agent must obviously have the principal‟s warranty (permission).

- The establishment of control is judged stricter in the case of original acquisition of control than in

derivative acquisition.

- There is also scope for co-control (for example, spouses or partners in a partnership).

The mental element (animus)

- This element of control of called the animus possidendi (intention to control).

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- The animus possidendi may manifest itself as the animus domini (intention to own) or the animus ex

re commodum acquirendi (the intention to control for one‟s own benefit).

- Depending on which one is present, a person may be a possessor or a holder. Remember that a

possessor always and only has animus domini (owner, thief or person performing prescriptive

possession).

- People with the intention to benefit are called holders, such as pledgees, lessees etc.

- Agents are mere detentors and do not have the intention to benefit directly from the control of the

thing.

- The mental element has different requirements, they will now be dealt with.

Mental capacity

- The person must obviously have the necessary mental capacity to understand that he is in control of a

thing before he can said to be in control.

Conscious or objectivated control

- These two are NOT the same thing, but they have the same effect.

- A person has to be conscious of the physical control that he has before he can formulate an intention

regarding the object of his control.

- For example, a person with a ring in his pocket will not be deemed to be the controller unless he is

aware of the ring and consequently formulates an intention.

- However, this has its shortcomings. For example, the owner of a house with its post-box could then

be said to not be the owner (which is a type of controller) of post delivered and still inside the post-

box because he is unaware of its existence there.

- For such a situation, we have objectivated (or projected) control. This type of control is created by

the owner when he buys the house with the post-box and consequently intends to control whatever

post it deposited in his post-box.

- Therefore, even though he may not be aware of the post, he is aware that he has a post-box and has

projected his intention to control whatever is put in such post-box.

Mental intention

- Once it has been established that you are mentally capable to intend to control something, and it has

been established that you are aware enough to be able to form and intention, your animus possidendi

must now manifest itself in one of two ways.

- Once again, the control may be exercised with the animus domini (intention to be the owner – also

called possessio civilis) or with the animus ex re commodum acquirendi (the intention to derive a

benefit from the control – also called possessio naturalis).

- If a person holds a thing FOR ANOTHER without either of the above intentions, he is merely an

agent or detentor, and is NOT a controller.

The two mental elements in more detail

Animus domini

- The legal subject with such an intention controls the thing with the intention of the owner of the

thing and is known as a POSSESSOR.

- There are two types of such controller.

- The first is the controller that is recognised by objective law as the actual owner.

- The second is the controller that is not recognised as above but who controls the thing with the

intention of the owner anyway.

- The legal implications of ownership are not continuously dependent on the owner‟s mental intention.

An owner can lose his animus domini, but he will not lose his ownership or control unless such loss

of intention manifests itself outwardly.

Animus ex re commodum acquirendi

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- Control with the intention to derive a benefit for ONESELF. A person with such control is a

HOLDER.

- This intention exists when the holder derives some specific benefit/s or CAN derive such benefit/s. It

ALSO exists when the controller controls the thing with the intention to derive ANY benefit that

may arise from such control, if any.

- The person must control the thing for his own interest. If it is exclusively in the interest of another,

he is merely an agent. Remember that if the controller AND another share an interest, they are co-

controllers.

Acquisition of control

- As already stated, control is acquired the moment the corpus and animus exist at the same time.

- They need not come into existence at the same time.

Establishing the animus element

- The only requirement for the formulation of the animus element (and consequently, control, should

the corpus element already be apparent) is that the person‟s change of intention must be clearly

visible to the outside world (I‟m guessing this is objective clarity though, otherwise a guy on an

island would control nothing).

Establishing the corpus element

- May happen unilaterally by means of control or occupation.

- For example, picking up something that you find.

- Such control or occupation may be lawful or unlawful – as you will see later, lawful and unlawful

control are both recognised as having legal consequences (obviously, less legal benefits exist for an

unlawful controller, but we‟ll get to that).

- It may also happen bilaterally where control is transferred from one person to another through

delivery of a movable thing or transfer of control of an immovable thing.

- Note that control can be acquired by a principle via his agent.

CASE

Mbuku v Mdinwa

- We‟ll see this case later when we use it again to show that an agent is not entitled to institute the

mandament van spolie.

- For now, just know that this case held that an agent cannot be a controller of a thing because he does

not hold it with either of the two required types of animus.

- The principal actually controls the thing through his agent.

- Think about it – the principle has an intention regarding the thing (either as owner or lessee etc).

Secondly, he has actually met the corpus requirement as well because he need not continually

control the thing, he must just be in a position where he can do so if he wished.

Study unit 2.3

Protection of control


The interdict

- This remedy is available when the applicant‟s control is unlawfully infringed or there is an imminent

unlawful infringement.

- It is not available when your control has been taken away completely – i.e. You cannot regain lost

control with an interdict; you can merely prevent such a loss from occurring.

- If an interdict is obtained, it will have the effect that the court orders the other party to stop the

infringement or stop threatening the imminent infringement.

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- A temporary mandatory or prohibitory interdict is usually granted by way of a motion procedure

until the dispute is decided. If the application is successful, a final interdict is given.

Obtaining a final interdict

- The applicant must prove:

1) A clear right with regard to the property (this does not mean that he must prove a ius possidendi).

This requirement will be discussed in more detail soon.

2) That his control has been infringed or that a reasonable imminent infringement exists (Bosman v

Tworeck).

3) No other effective remedy must be available.

- Considering that the applicant need not prove a ius possidendi, the interdict may be available to

people who control the thing with no intention to own it or benefit from it (agents etc) as well as

actual controllers.

- If the applicant need not prove a ius possidendi, the book states that the interdict is also allowed to

use the interdict (presumably because such person still has an ius possessionis).

Aussenkehr Farms v Walvis Bay Municipality

- Case held that an ius possessionis was sufficient to fulfil the first requirement of the interdict.

- Case also mentioned that a lawful detentor may institute an action for an interdict (not sure if this

includes an agent).

Study unit 2.3.2

The mandament van spolie

- This is an action for the summary return of control from a person who deprived you of your control.

- The action can also apply to a situation where your control is merely limited or interfered with.

- This action is open to any controller of a thing (thus, even an unlawful controller may use it).

- Its purpose is to prevent self-help by making sure that any dispute over the possession of a thing is

decided by a court.

- The mandament can however be excluded by certain legislation.

- The merits of one party possibly having a iura possidendi are not considered.

- It applies to movables and immovable.

- Repairs may also be ordered (but the court may not order that new materials be added in the repairs).

- Cannot be excluded by agreement (Nino Bonino case)

Requirements for mandament

- Held in the case of Yeko v Qana.

1) The control infringed upon must have been peaceful and undisturbed.

This means that there must have obviously been actual control (corpus + animus). Thus, it

applies to possessors and holders (both lawful and unlawful) but NOT to agents or detentors.

The control must have been stable and effective.

Can apply to co-control as well where one co-controller usurps the control of the other.

2) Spoliation

This means that the there must be unlawful, substantial deprivation of control.

Substantial deprivation does not necessarily mean that the spoliator has gained actual control

of the thing, but that he has at least substantially frustrated the control of the applicant.

Unlawful deprivation means that such deprivation was done outside the law (not through a

court order or in terms of legislation) and that it was done without the permission of the

applicant.

Inadmissible defences

1) That the spoliator has a stronger right.

2) That the spoliator did not use violence, fraud or duress to take or substantially impede the control of

the applicant.

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Admissible defences

- Most of these defences are actually just attempts to show that the requirements for the mandament

van spolie have not been met.

1) The fact that the applicant was not in control in the first place.

2) The fact that there was no spoliation by the respondent (Nino Bonino case).

3) Unreasonable delay (similar to the prescription of a claim, but this is more reliant on the court‟s

discretion).

4) If restoration of control is impossible.

5) Counter-spoliation – which is not a defence as such, it is legal self-help which the mandament van

spolie may not prevent – therefore, you can argue that your deprival of control of the other person

was in fact you acting out counter-spoliation (more detail later).

Who may institute the mandament van spolie?

- The institutor of the action must have been in peaceful and undisturbed control at the time of the

spoliation and that he exercised control for his own benefit.

- Therefore, obviously any of the controllers (i.e. holders or possessors) that we know about may do

this and an agent may NOT (Mbuku v Mdinwa.

- This is the obvious situation when control over a corporeal thing is involved. However, when an

incorporeal thing is the object of the „spoliation‟, we are now dealing with the spoliation of quasi-

control.

- Examples of this would be when the quasi-control of a limited real right or other right is unlawfully

interrupted.

- Whether such action may constitute spoliation and thus provide grounds for the use of the

mandament van spolie will now be discussed.

- The next two cases deal with whether or not quasi-controllers of rights may use the action.

Bon Quelle case

- This case was held in the SCA.

- It dealt with the quasi-control of an alleged servitude.

- The appellant disturbed the flow of water that the respondent gathered for the inhabitants of a town

without the consent of the respondent.

- The respondent alleged that he had a servitude that allowed him to access the water and that he was

allowed to institute the mandament van spolie to restore quasi- control of the servitude.

- The appellant averred that the respondent was not entitled to use the action because he was unable to

prove a that such servitude existed.

- The court a quo allowed the mandament van spolie.

- On appeal, the SCA also allowed the action and was of the view that the respondent does not need to

prove the existence of a servitude (because of the nature of the mandament van spolie).

- The court held that quasi-control of the alleged servitude had to be returned to the respondent until it

has been determined whether the servitude exists or not.

- Thus, this case is authority for the fact that the quasi-controller of a servitude may institute the

mandament van spolie (even if the servitude is merely alleged).

Telkom v Xsinet

- This case dealt with the quasi-control of a right other than a limited real right, specifically – a

personal right.

- In the court a quo, the mandament van spolie was allowed to be used by the quasi-controller of a

personal right. But this was overturned by the SCA.

- In this case, Telkom was supplying Xsinet with bandwidth and telephone services. Telkom

disconnected such services and Xsinet successfully instituted the mandament van spolie to regain its

quasi-control of the personal right against Telkom for such services.

- Telkom brought this matter on appeal.

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- The SCA held that the deprivation of or interference with a right other than a limited real right (in

this case, a personal right) is not within the scope of application of the mandament van spolie, unless

such interference also manifests itself physically.

- Such physical manifestation could have been seen if Telkom had terminated its services by coming

onto the property of Xsinet and physically removing telephone cables etc, but that never happened.

- The SCA turned down the statement of the court a quo that the services of Telkom constituted part of

the possession and control of Xsinet‟s premises. Telkom also did not come onto Xsinet‟s premises

and physically remove equipment to terminate the connection.

- Therefore, the court refused to allow the mandament van spolie.

- Zulu v Minister of Works, KwaZulu Natal also agrees that quasi-controllers of personal rights are not

entitled to the action. You can use this for extra authority, but if we get a question on who can apply

the action, we will be asked to use SCA judgments (Bon Quell and Telkom).

Note

- We will get a question on quasi-control and we will be asked to refer to an SCA judgment – there are

only two (seen above).

- It could deal with a servitude, in which case we will refer to the Bon Quell case.

- It could deal with a right other than a limited real right, in which case we will apply the Telkom case.

- However, it could be hard to tell if the right in question is a servitude or something different.

Luckily, if we do get a question like this, the dispute will probably revolve around the provision of

electricity and its subsequent cancellation by one party.

- Remember, electricity is not a corporeal thing over which real rights can exist; only a personal right

to the provision of such electricity will exist (so apply the Telkom case). However, make sure that the

interference is not physical.

- If A and B live next door and B supplies A with electricity, this is a personal right and will probably

not be protected by the mandament van spolie if B stops supplying it.

- However, if B does this by going to A and cutting the mains of A‟s house, we are dealing with the

physical sense of the word „interference‟ as noted in the Telkom case, which was the exception that

the case stated.

- Luckily again, we probably won‟t get asked to use an exception that a case stated but did not use

itself.

- So, the question will deal with two people sharing electricity that is provided by the one. The

provider then shuts off the electricity by way of a switch on his own property – what happens?

- We know it‟s a personal right, so the general rule is that the mandament won‟t apply (Telkom case).

- Furthermore, the provider merely pressed a button on his own premises to interfere with his

neighbour‟s personal right, which means that the exception won‟t apply (Telkom case again).

Co-controllers

- Exclusive control over the thing is not required. Therefore, co-controllers may institute the

mandament van spolie against people who deprive them of their share of the control. Likewise, if

one co-controller usurps the control of the other, the action may be instituted against the former.

- This would apply mostly to spouses and partners (in the legal sense, not like Elton John and David

Furnish).

- The case of Le Riche v PSP Property would be authority for this.

Counter-spoliation

- One of the defences that you can use against a person instituting the mandament van spolie against

you is to aver that you deprived them of their control by performing counter-spoliation.

- Counter-spoliation occurs when a person is unlawfully deprived of the control of a thing and then

reclaims the thing from the person depriving him during the original intrusion. This is lawful self-

help.

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- So when the person who deprived you institutes the mandament van spolie against you for kicking

his teeth in and taking back your bike, you counter his application with counter-spoliation.

- The example of the thief is the most obvious but the least practical – it could happen with any

unlawful deprivation of control.

Requirements

1) Initial control by the respondent.

2) Unlawful deprivation of this control (in the De Beer case, this requirement was neglected and

counter-spoliation was allowed even though the applicant didn‟t commit spoliation against the

defendant).

3) Instanter action by the respondent (this doesn‟t mean „instantly‟ or even necessarily result in instant

action, it means that you act soon enough for that act to not be seen as a new act of spoliation).

- Whether the action is instanter will depend on the discretion of the court.

- Also, note that counter-spoliation is limited to what is essential to restore the spoliated control (or

even quasi-control) – so my example of kicking the thief in the teeth is not the best way (Bosman v

Tworeck).


The exceptio spolii

- This is a special defence that the spoliatus (person deprived of control) may use in virtually any legal

process brought against him by the spoliatus (depriver).

- For example, A sells a car to B on credit and delivers the car to B.

- However, B refuses to pay so A deprives B of control.

- A also then raises an action to claim payment for the car from B.

- B can now raise the exceptio spolii against A‟s claim for payment.

- This will result in the main case being postponed until A returns control of the car to B. After this is

done, A can claim for payment.

- The requirements for this are the same as for the mandament van spolie.

- The only case that every dealt with this is Bank van die Oranje Vrystatt v Rossouw – it merely

confirms that this action is still part of our law – so use this case as authority if you want to use this

defence in an answer.

The possessory action, rei vindicatio and the ius tollendi do not seem important as far as control is

concerned. Read through those last few study unit themes.

The termination of control is also overrated – they write a lot of stuff, but all we‟ll probably have to do is list

the different ways in which control is terminated, namely:

1) Corpore et animo – when both the physical and mental aspects are lost simultaneously – for

example, by selling the thing.

2) Solo corpore – loss of only the physical control, whether intentional or not.

3) Solo animo – loss of only the intention to exercise control.

4) Destruction of the thing

5) Death of the controller

6) Loss through operation of law

Syllabus theme 3

Ownership

Study unit 3.1

Nature, contents and definition of ownership

Study unit 3.1.1

Introduction

Definition of ownership

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- The most comprehensive real right a legal subject can have in relation to a thing.

- The entitlements it creates are NOT absolute and unlimited however, but exist within the limits the

law places on them.

- These limitations may originate from objective law or other rights of other legal subjects, with or

without the permission of the owner, as the case may be.

Nature of ownership

- The following characteristics of ownership give it its nature:

Mother-right

- Many other rights originate from ownership – such as the right to use and enjoyment of the property

in terms of a lease.

Elasticity (NB)

- If any limitation that existed on ownership is extinguished, the ownership automatically becomes

unencumbered again (Gien v Gien).

Indefinite duration

- Normally not linked to a time limit.

- An exception would be a fideicommissum.

Independence

- All limited real rights, although they can be mother-rights at times, are always daughter-rights to

ownership and cannot exist independently of it.

- Ownership however, can exist independently of other rights.

Unlimited (generally)

- Ownership possesses the most comprehensive entitlements over a thing, unless it is limited.

- So, ownership is unlimited unless it is limited (good point).

Individuality

- Ownership confers control of a thing to the owner alone and he may enforce his ownership against

anyone.

- Ownership only provides for individual private ownership or co-ownership.

Contents of ownership

- The contents of ownership are the entitlements that the right affords to the owner.

- There is not a closed list of entitlements – read through what‟s in the book on page 86 and 87

(paragraph 9.3).

- The entitlements may vary depending on the limitations imposed upon the ownership.

- Thus, it is ONE right with different entitlements (Gien v Gien).

- Therefore, remember that ownership is not a bundle of rights – it is ONE right with different

entitlements (Gien v Gien). I wrote this again because we‟ll get asked on it.

- It cannot be determined which entitlements have to be present for ownership to exist – this is because

it is an abstract concept that is more than just the sum total of certain entitlements with regard to the

thing.

- However, ownership with no entitlements is impossible because there would be no sense in this.

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Study unit 3.2

Limitations on ownership


Statutory limitations, personal rights of third parties and limited real rights of third parties

- There are 2 principal ways in which ownership can be limited:

1) Public law limitations or statutory limitations.

2) Private law limitations.

Public law limitations

- Such limitations are allowed because the interests of the community come before those of the

individual.

- Examples:

1) There are statutory provisions for the levying of different kinds of taxation that limit the ownership

of movable AND immovable things (the book gives no examples or names of legislation here).

2) There are statutory provisions that limit the ownership of ONLY immovable property – for example:

S25 of the Constitution,

the Expropriation Act,

the Restitution of Land Rights Act and

the National Heritage Resources Act.

3) There are also statutory provisions that limit the ownership of MOVABLE things:

The Animals Protection Act,

the Road Traffic Act etc.

- We only need to know two of the statutory limitations placed on the ownership of both immovable

and immovable property.

Private law limitations

Personal rights

- An owner can, by way of agreement, limit his entitlements by granting a personal right to a third

party.

- Don‟t be confused just because of the whole subtraction from the dominion test. This test is used to

determine whether a right that limits ownership is a real right or another right. Just because a right

fails the test (as a personal right would) doesn‟t mean that such a right doesn‟t limit ownership, it just

means that the right is not a real right and not registrable (generally).

- Personal rights only exist between the holder and the owner – they cannot be enforced against the

owner‟s successors in title.

Limited real rights

- These rights are enforceable against successors in title. Examples are a fideicommissum or servitude.

Certain limited real rights can also be created without the consent of the owner.

- Neighbour law will be dealt with separately in the next study unit theme.


Law of neighbours – general

- This law, and its manifestations, are also possible limitations on ownership.

- Read through the explanation of neighbour law on pg 91 of the textbook.

- It is usually divided into certain subdivisions – we‟ll deal with these now.

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Study unit them 2.2.3

Law of neighbours

Nuisance

Nuisance in the narrow sense

- Refers mainly to continuous conduct of neighbour that unlawfully infringes on the personality of his

neighbour. However, it can also infringe on such person‟s patrimonial rights.

- The infringement is usually caused by noise, smells smoke or any other manner that caused injury to

a neighbour‟s personality (health, dignity etc) and may also possibly cause patrimonial damages to

the neighbour.

Test for nuisance in the narrow sense

- The answer is found in objective reasonableness. Therefore, the boni mores of the community is

considered.

- Because it concerns the lawfulness or not of an act, the subjective test for reasonableness (the

reasonable person test) is not applied.

- Authority for this in Gien v Gien and Dorland v Smits.

Remedies

- If personality property is wilfully impaired, satisfaction can be claimed with the actio iniuriarum.

- Patrimonial damage can be claimed if it is caused. However, it is not certain whether the plaintiff has

to prove guilt on the part of the defendant (therefore, it is possible that a delictual claim could be

brought, but in the absence of having to prove guilt, the book states no methods for such claim).

- An interdict can be used to stop the action causing the inconvenience.

- The interdict can be used if the applicant can prove that he has a clear right that is being infringed,

that the respondent has committed or intends to commit a delict. Obviously, as is the case in all

interdicts, no other remedy must be available.

- See the Gien case below in regards to the narrow sense of nuisance.

Nuisance in the wide sense

- Refers to the unnatural or abnormal use of land that leads to patrimonial or potential patrimonial loss

of a neighbour. Although this is where the focus lies, it can also cause non-patrimonial damage

(although the book goes on to contradict itself in this regard).

- It can additionally, manifest itself in a single act.

Test

- The test is the same as for the narrow sense – whether the action is legal or not is the issue, so the

objective reasonableness test is used (Malherbe case).

Remedies

- If the act caused damages, damages can be claimed with the actio legis Aquilliae (if guilt is proven).

- If the act is threatening, an interdict can be given to prevent the act. If the act is continuous, an

interdict can be given to put a stop to such action.

- Apparently, the actio iniuriam does not apply because non-patrimonial loss is not suffered here

(there‟s that contradiction).

- See the Malherbe case below regarding the wide sense of nuisance.

Doctrine of abuse of rights

- This doctrine is attached to nuisance with regards to the test for nuisance.

- As we know, the objective reasonableness test revolves around whether the act in dispute is lawful or

not.

- However, some acts that are, strictly speaking, lawful, may be considered unlawful in some cases.

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- Therefore, the use of an entitlement of one‟s land that is usually lawful, normal and natural, may

become unlawful if such person is using it primarily to cause damage to a neighbour and such

damage occurs.

- For example, even though it is perfectly reasonable to drill a borehole in your own land, if you have

drilled this borehole with the intention of damaging your neighbour‟s borehole and such damage

occurs, this seemingly lawful act will be deemed unlawful.

- There doesn‟t appear to be any case law for this.

Gien v Gien

- This deals with nuisance in the narrow sense.

Facts

- The respondent erected a really weird machine on his property that made exploding noises to scare

animals away from his crops. He put it on day and night.

- Obviously, this caused a great deal of noise and discomfort for his neighbour (the applicant)

- The applicant applied for an interdict to stop the respondent from using the machine in a way that

caused a nuisance on his property.

- The respondent argued that he was acting in the interests of his own property and this could not

constitute a nuisance.

Judgment

- The court stated that every landowner‟s right to his property is limited by the rights of others and that

the cornerstone of this principle is neighbour law.

- Each owner must exercise his rights in a way that he does not transgress the boundary between his

and his neighbour‟s rights – if he does transgress this boundary, he is not exercising his rights, but

instead is infringing on his neighbour‟s rights.

- To determine if the defendant is infringing on the latter‟s rights, the objective reasonableness test is

used (this is the test in the case of nuisance in the narrow sense):

1) Where the acts of the respondent reasonable and fair?

2) Did the respondent act in bad faith or with the express and single intention to cause harm or

discomfort for the applicant (not a requirement though)?

3) Was the respondent‟s use of his property normal or abnormal?

4) Where the acts of the respondent harmful to the applicant because the latter was an unusually

sensitive individual, or would they have the same effect upon a normal and not unduly sensitive

person?

Judgment

- The court held that, in light of the above questions, the respondent‟s action amounted to nuisance in

the narrow sense and an interdict was allowed for the applicant.

Malherbe v Ceres Municipality (nuisance in the wide sense)

Facts

- Malherbe owned a building and the municipality planted oak trees on the road outside his house.

- He averred that a nuisance was being caused by the falling leaves of the tree as they blocked his

gutters and caused damage to the walls due to the build-up of rainwater (he also mentioned

something about roots, but this could not be proved).

Judgment

- The court set out the principles when dealing with nuisance of overhanging branches and leaves.

1) Normal and reasonable use of property will not usually give rise to a nuisance, even if it bothers a

neighbour (neighbour law also addresses that you should tolerate certain acts by your neighbour).

2) The planting of oak trees in this case was normal and reasonable use.

3) Therefore, the neighbours have to tolerate the fact that leaves will be blown onto their property that

might have to be cleaned up at their own expense.

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4) A landowner cannot expect his neighbour to clear up leaves from overhanging branches if he himself

allowed such branches to overhang his property in the first place.

5) The landowner can ask the owner of the tree to remove the overhanging branches. If this request is

refused, he may then clear the branches himself or apply for an interdict.

- The fact that Malherbe did not first request the defendant to remove the overhanging branches leads

to the last two requirements of the interdict being failed – namely, that there must be an indication

that the infringement will continue (which is not certain if you have not addressed the problem) and

that no other remedy must be available (asking the municipality would have been available as

another remedy).

- Therefore, the interdict was not granted.


Law of neighbours – encroachments

Encroachments by buildings

- This is when a person erects a building that exceeds the boundaries of his property and thus

encroaches on his neighbour‟s property.

- This is based on the fact that landowners own the airspace above their land and the earth below it and

that neighbours must respect one another‟s property.

- This is also applicable to roofs and balconies that exceed the boundaries in the air.

Remedies

1) A mandatory interdict for removal of the encroaching building

This may not be sought if the neighbour brought no objection for a year and a day.

The court has a wide discretion in ordering this interdict if removal would be unreasonable

(Trustees B Lackey Trust v Annandale).

2) Damages (plus taking of transfer)

These may be ordered by the court instead of eviction.

Transfer of the land or part thereof must also be ordered.

3) Solatium

Non-patrimonial damage claim for discomfort.

4) Eviction order

In some circumstances, (for example, if the encroaching building is built entirely on the

applicant‟s land) the court may order that the applicant may evict the defendant of the

encroaching building.

Encroachment by branches, leaves (fruit) and roots

Branches

- In such a case, the matter will be treated as follows:

- Obviously, the encroachment may be tolerated and left as it is.

- However, if the neighbour wishes to remove the encroachment, he has to follow the procedure set

out in the Malherbe case:

1) Request removal.

2) If such request is refused, he may (after reasonable notice) remove the encroachment himself or

apply for an interdict.

3) If he removes the branches himself, he may not keep them.

- Encroachment by roots is treated the same way.

Fruit and leaves

- If they fall on the neighbour‟s land, such neighbour cannot insist that the owner of the trees clear

them up (because he has tolerated the overhanging branches from whence the fruit or leaves came

and should thus accept the natural effect thereof). This was held in the Malherbe case.

- He may also lay claim to ownership of the fruit IF they fall off the tree.

- Plants planted by one owner on the land of another, become property of the latter by implantatio

once they take root or germinate.

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- Such plants may actually constitute an encroachment if the owner does not want them on his land.

However, unlike encroachments of buildings, a removal order may not be claimed.

The next two study units dealing with boundaries and lateral support are not going to be summarised here.

Just read it and know it on pages 96 and 97.

Study unit theme 3.27

Law of neighbours – interference with the natural flow of water

- The lower tenement must receive the natural flow of water.

- The owner of the higher tenement may not interfere with this flow in any way (examples would be

diverting the flow, decreasing or increasing it etc).

- This is based on a general servitude ex natura loci that lower lying land must receive the natural flow

of water from the upper lying land (Redelighuis v Bazzoni).

- The court in Bazzoni held that this servitude only applies to rural land.

- However, this view was changed in Williams v Harris and it now applies to urban land as well.

- Both cases hold, that should the owner of the upper tenement disturb the natural flow of water, the

owner of the lower tenement apply to stop or prevent this.

Remedies

- An interdict may be applied for – actio aquae pluviae arcendae (still only applicable to rural

tenements).

- Damages may also be claimed with the – interdictum quod vi aut clam.

- I haven‟t confused the two.

Study unit 3.3

The original acquisition of ownership

- This is ownership that is gained unilaterally by the acquirer. No co-operation of a prior owner

occurs, if there even was such an owner.


Occupatio (appropriation)

Definition

- The unilateral appropriation of a corporeal thing which has no owner, but can be owned and is done

so with the intention of becoming the owner.

Requirements

- Physical control (corpus element)

- Owner‟s intention (animus domini)

- Object must be a corporeal thing that belongs to nobody (res nullius or res derelictae).

Animals

- Wild animals are res nullius and are capable of appropriation.

- Wild animals that were captured but regain their natural freedom are also capable of appropriation.

HOWEVER, this common law rule is moderated by the Game Theft Act.

- The Act states that such animals that escape are still considered the property of their owner as long

as they were kept on sufficiently enclosed land, or in a pen, kraal or vehicle.

- Whether such control was sufficient will be determined by the Premier of the applicable province,

who will issue a certificate that will determine which type of animals may be kept in a specific

enclosure etc.

Res derelictae

- We know what this is.

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- The example of a shipwreck is used (Underwater Const v Bell)

- Specifically here, we look at whether immovable property may be abandoned and if it may be

appropriated thereafter.

- It is held, kind of, that immovables can be abandoned or surrendered (Minister van Landbou v

Sonnendecker).

- Van der Merwe is of the opinion, however, that an immovable thing can never become res nullius,

even if it is abandoned, as it will accrue to the state as bona vacantia. The book doesn‟t say much

more but also doesn‟t disagree, so it‟s safe to use this.

Unlawful possession and ownership

- If a person acquires a thing (it must be res nullius as we are dealing with occupatio) but may be

guilty of a crime in possessing it, he can still become the owner thereof through appropriation –

PROVIDED that there is no statutory provision to the contrary.

- An example would be someone who found some abandoned child pornography and took it for

himself – such a person would become the owner.

- An example where legislation would prevent such appropriation would be possession in

contravention of the Game Theft Act.


Treasure trove

- This is the exercise of control with the animus domini over a valuable, long hidden thing of which

the owner cannot be traced.

Requirements

- The treasure must be movable and valuable.

- Must be hidden in the ground or in a structure attached to the land.

- It must be impossible to trace the owner or his successors in title. This still doesn‟t mean that it is a

res nullius, so this is not appropriation.

- Physical control.

- Animus domini.


Accessio

Accession of immovables to immovables

Definition

- Accession is a process whereby the owner of a principal thing becomes the owner of the accessory

thing because it becomes integrally attached to the principal thing, thus losing its independence and

identity.

- This is according to the traditional viewpoint. I don‟t care about the other view point.

- Now we will deal with one of the three classifications of accession, immovable to immovable things.

Immovable to immovable things

- This has four forms:

1) Alluvion (alluvio)

2) Avulsion (avulsio)

3) Arising of an island in a river bed.

4) A river changing its course.

Alluvio

- Refers to the gradual adding of soil to a piece of land next to a public water source due to the flow of

the water.

- Requirements of alluvio:

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1) Must take place gradually and naturally.

2) Land must be situated next to a public river or stream.

3) The land must be agar non limitatus.

Agar non limitatus

- Means that the land is not clearly marked and enclosed on all sides by artificial boundaries and is not

measured out.

- Such land is usually bounded on one side by a natural boundary such as a river.

Avulsio

- The sudden addition of a substantial piece of land through the flow of a river to another‟s land.

- Once such land is firmly merged with the other land, it becomes part of that land.

- Also requires the land to be agar non limitatus.

I don‟t care about the last two.


Accessio

Movables to movables

Requirements

- The merger must not amount to manufacture (specificatio).

- The principal and accessory thing must still be recognisable from each other to distinguish it from

confusio and commixtio.

- The merger must not be easily separable (JL Cohen Motors).

Identifying the principle thing

- The following possibilities exist at common law, it will depend on the facts of each case, which will

criterion will be paramount (JL Cohen Motors).

1) The thing with the greatest value is the principal thing (used in Aldine Timber v Hlatwayo).

2) The thing with the largest weight is the principal thing.

3) The thing without which the other cannot exist is the principal thing.

4) The thing of the owner on whose account the accession was made, is the principal thing.

5) The thing which is decorated by the accession is the principal thing.

6) The thing that gives the end product its character, form, name or function is the principle thing (used

in the Kahn case, where it was decided between the body of a car and the engine that was inserted

later, the engine was the principal thing).


Accession of movables to immovables

- The immovable thing is always the principle thing and the movable thing (if accession has occurred)

will always be the accessory thing.

- If accession occurs, the immovable thing will become part of the land and will become an

immovable itself.

- If accession occurs, the owner of the principle thing will become the owner of the accessory thing as

well (thus, the owner of the land will own the addition to it).

SOWING AND PLANTING (satio et plantatio)

- The rule in this case is omne quod implantatur solo cedit

- This states that all plants on the property of a landowner that have taken root or germinated belong to

the landowner.

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- Even if the plants are removed, they are still owned by the landowner, as it was his land that

nourished them, unless they take root on another person‟s land – then the rule will apply again to this

new landowner.

- The general exception is that plants on the boundary between two properties are owned by the

landowner upon whose land most of the roots of the plants are found. This is an exception in that it

opens us to the possibility that, even though a person may have a plant on his land, this plant will be

owned by his neighbour if most of the roots are on his neighbour‟s land.

- The landowners will co-own the plants if the roots are equally distributed between their land.

- However, another possible exception was raised by the case of Gore v Parvatas, where a company

planted bulbs in the land of another person with the definite intention to remove them. The court held

that the bulbs remained movables and were still owned by the company.

- It is uncertain whether a tenant, who planted plants upon the land of the owner from whom he was

leasing the land, becomes the owner of those plants upon the expiry of the lease.

- According to Van Wezel v Van Wezel’s Trustee, the ownership vests in the landowner and the tenant

only has a ius tollendi.

BUILDING (inaedificatio)

- I‟ve been laughing for the last half an hour at how badly the book puts this.

- Everything built upon the land is part thereof.

- To determine if the movable thing has become part of the land through accession (and therefore,

become property of the owner of the land through accession), we look at the approaches of the

courts.

- A distinction is made between pre-Sumatie criteria and Sumatie criteria.

Pre-Sumatie

- Before the Sumatie case, a traditional approach and new approach were used.

- Both approaches recognised the same the three criteria to be considered, but applied them

differently:

1) The nature and purpose of the attached thing.

2) Manner and degree of attachment.

3) Intention of the owner of the attached thing.

Traditional approach

- Criteria 1 and 2 are applied first. If these criteria can unequivocally tell us whether the movable thing

has been attached, then criterion 3 is not considered (intention).

- However, if 1 and 2 are not unequivocal and cannot give us an answer, the intention of the owner of

the movable thing is decisive (criterion 3).

- Don‟t get confused, in order for accession to occur, the owner of the movable mustn‟t have the

intention to pass ownership to the owner of the immovable through attachment, this will be

derivative acquisition of ownership!!! He must merely intend that the thing is to be attached

indefinitely – another distinction that the textbook ignores.

- MacDonald Ltd v Radin is a case that applied this approach.

New approach (introduced by Theatre Investments case)

- The approach from the outset is that the intention of the owner of the attached thing is decisive.

- The Theatre Investments case introduced this new approach and stated that the REAL intention of

the owner of the attachment is decisive.

- This does not mean that criterion 3 is decisive! Criterion 3 is only the professed intention of the

person (ipse dixit)! This approach wants to work out the TRUE intention of the owner of the attached

thing, which will then be decisive.

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- Criteria 1, 2 and 3 are weighed together to allow us to conclude what the TRUE intention of the

owner of the attached thing was (however, I‟m sure that the „true‟ intention is more often than not

exactly the same as the subjective intention in criterion 3, still, everybody lies).

- The cases that came after and applied this approach, seemed to be slightly confused, but were still

essentially the same.

- Melcorp South Africa v Joint Municipal Pension Fund applied the new approach slightly differently.

- They held that the subjective intention is decisive and that criteria 1 and 2 are used to help determine

the content of criterion 3 (the ipse dixit).

- This looks to me like the court just misunderstood the Theatre Investments case.

- In Konstantz Properties v Spilhaus, the court also applied this approach but criticised it.

- The court stated that emphasising the intention of the owner of the movable thing was based on a

dogmatic view that may require reconsideration in future.

- In Unimark Distributors, the court accepts the new approach and emphasises that the intention is the

most important factor.

- However, in this case, it is not sure whether reference is being made to the TRUE intention or the

subjective intention.

- Sometimes, the word „intention‟ was used on its own, but at others it was used with the adjectives

„professed‟ or „subjective‟.

- It is submitted the court was referring to the REAL intention propounded in the Theatre Investments

case.

- However, the court also points out that the intention is not the only factor; in certain circumstances,

this intention can be overridden by other factors.

- Therefore, the intention has to be determined and judged within light of all relevant facts.

- Even if the intention of the owner can be proved, it might be impossible to give effect to, so the

intention will be meaningless.

- In some instances, the first 2 criteria may be such strong indicators of the intention, that they already

prove the intention by necessarily implication and therefore, no further evidence regarding intention

need be examined (do not confuse this with the traditional approach, the court is not first using

criteria 1 and 2 and then 3 if necessary; it is using all factors to determine the intention, which is

decisive, unless it is impossible to give effect to).

- However, if other evidence has to be brought to determine the intention of the owner of the movable

thing (which would usually happen if he did not profess his intention to anyone), this requires

considerations of reasonableness, common sense or the prevailing standards of society.

- Therefore, together with the professed intention of the owner of the movable, the views of society or

a reasonable member of society should also be considered. This is all to help us determine how

reasonable it was for the owner to have whatever intention he had.

- „An intention which is totally insulated from and devoid of reality cannot be recognised and given

effect to in law‟.

- The textbook is of the opinion that this case added an extra criterion to be considered, i.e.

reasonableness, common sense or the prevailing standards of society.

Please don‟t follow our lecturers‟ example and use „criterium‟ as the singular form of „criteria‟. The singular

of „criteria‟ is „criterion‟. A criterium is a bicycle race on a circuit road course that lasts for one day

(seriously).

The Sumatie criterion (omnibus approach)

- After the Sumatie case, the omnibus approach was recognised.

- This case stated that the primary investigation is to determine whether the purpose (causa) of the

accession is to attach the attached thing to the land or the immovable thing for a permanent or

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indefinite period of time in such a way that it forms a new and independent entity therewith and thus

became immovable.

- Pop quiz! The sentence above is incorrect because it uses a word that doesn‟t belong there. Which

word is this and why is it wrong? The first person to sms me and tell me gets a drink from me

(seriously).

- What we need to know is the factors that will help determine what the purpose of the attachment is

(not the purpose of the thing being attached; we‟re dealing with the purpose of the act of attaching

that thing).

1) Nature and function of the attached thing.

2) The manner of the attachment.

3) The subjective intention (intentio) or the aim (destinatio) of the owner of the attached thing during

such accession (same mistake again, sms me and get a drink!).

4) The action or conduct (factum) of the owner of the attached thing.

5) Any other relevant facts or circumstances.

- The approach of this decision is not favourably considered in the Konstantz Properties case.

- Still, in terms of all the case law mentioned, the subjective intention of the owner of the attached

thing, as a general rule, is the most important factor to determine if accession has actually occurred.

CASES IN DETAIL

Gore NO v Parvatas

Facts

- A company (represented by the applicant) leased land FROM the respondent.

- During the lease, the company planted bulbs on the leased land with the intention of removing them.

- The respondent refused to allow the applicant to remove the bulbs from his land.

- The applicant wanted a spoliation order against the respondent and the respondent requested a

counter-spoliation order, arguing that the bulbs had become his through accession upon plantation.

Judgment

- The rule that all things that become attached to the land also become part of the land and thus owned

by the landowner, is not an absolute one.

- If the intention of an occupant such as a lessee is to plant and remove the plants for his own

commercial gain, this means that these plants retain their independence and accession does not

occur.

- Therefore, it was held that the company owned the bulbs.

MacDonald v Radin

Facts

- The plaintiff sold a refrigerating machine with accessories to J who himself installed it on the

property of which J was the lawful possessor (owner and annexor not the same person).

- J was in the process of purchasing the land in terms of an instalment agreement from the defendant

(in which there was an ownership reservation clause).

- Furthermore, it was held that the refrigerating machine would remain the property of the plaintiff

until all payments on it were effected. In the case of default, the plaintiff would have the right to

come onto the property and remove the machine and its accessories.

- J defaulting on payments to both the plaintiff and the defendant.

- The defendant reclaimed the property and the plaintiff wished to come and remove the machine.

- The defendant claimed that the machine had become part of the property by way of accession and

that ownership vested in them.

- The trial court held for the defendant and the plaintiff appealed this decision.

Judgment

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- The court applied the traditional approach (go read what this is again if you need to).

- Held that the first two criteria were inconclusive and thus regarded the intention of the owner of the

movable thing as being conclusive.

- The appeal was upheld and MacDonald was allowed to remove the machine on condition that no

damage was caused to the premises and that the machine was restored to the position that it was in

before it was installed.

Theatre Investments v Butcher Brothers

Facts

- The appellant leased land from the respondent for a period of 50 years (with the option to renew) and

built a theatre on the land.

- The lease agreement stated that, upon termination of the lease, all buildings and improvements on the

land would accrue to the lessor.

- The lease terminated, but it was in dispute whether the equipment, chairs etc. that were inside the

theatre, were also considered to be accessory things and thus owned by the lessor.

Judgment

- The court introduced the new approach and stated that the real intention of the owner of the movable

thing is decisive and has to be determined taking into account the nature and purpose of the attached

thing as well as the manner of such attachment.

- The court held that because of the long period of the lease as well as the nature of the attachment of

the things in the theatre, that the lessee intended such attachment to be indefinite and that it thus

became immovable and was owned by the lessor due to accession.

Melcorp v Joint Municipal Pension Fund

Facts

- The plaintiff installed lifts in a building for company R. The defendant had provided R with a

mortgage for the erection of the building.

- The contract stipulated that all apparatus installed in the building would remain movable and would

not become fixtures, and furthermore, that the plaintiff withheld the right to remove them until paid

in full (ownership reservation clause in instalment agreement).

- Company R went insolvent and the defendant (as one of the secured creditors, ha ha) caused the

property to be sold in execution and itself bought the building.

- The plaintiff now wishes to remove the lifts, as they were not paid for by Company R.

- The defendant claims that the lifts had become immovable due to accession and that they, in buying

the building, own the lifts too.

- Note that the defendant also averred that the right of removal (as envisaged by the ownership

reservation clause) was a personal right between the plaintiff and R. In other words, it could not

apply to R‟s successors in title (subtraction from the dominium). This isn‟t addressed here for our

purposes.

Judgment

- Court applied the new approach and used the three criteria pointed out by the Theatre Investments

case.

- In this case, the first two criteria (the nature of the attached thing and the manner of this attachment)

did not seem to be in line with the professed intention of the person attaching the thing.

- The court held that the nature of a lift (in that it is an integral part of a multi-storey building and that

it is usually used for 20 years in a building) and the nature of the attachment indicated that the lifts

had been attached permanently and had formed part of the building. However, the ownership

reservation clause showed a clear subjective intention that this not be the case.

- However, as we know, with the new approach, the first two criteria are only used to help us

determine the third criterion (in this court‟s interpretation of the new approach).

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- The question now lay as to whether the objective factors (criteria 1 and 2) or the subjective factors

(the professed intention of the person attaching) held more weight.

- The court held that the subjective intention of the plaintiff outweighed the objective factors and that

the things remained removable.

Note

- Even though the court might not point this out, the intention of the owner in attaching the movable

property does not refer to whether or not he intends to PASS ownership (well it might, but this is not

the content of this intention that the court was interested in). Ownership is not actively passed with

accession, as it is an original way of acquiring ownership.

- What happens is, that if a person attaching a thing to an immovable thing (whether he is the owner of

the movable or not) intends that this attachment be permanent, this intention will tell us whether it

was attached permanently or not.

- If it was attached permanently, then the thing loses its independence and ceases to be a thing

(therefore, the owner loses his ownership over the thing as it is no longer a thing).

- As this happens, the thing becomes part of something owned by someone else and original

acquisition of ownership occurs.

Konstantz Properties v WM Spilhaus

Facts

- The appellant hired P to install an irrigation system on the appellant‟s farm.

- P purchased the components of the system from the respondent. In terms of this agreement, the

respondent reserved ownership of the components until payment of the full purchase price.

- P installed the components on the appellant‟s land but did not pay the respondent for them.

- The question now stood as to whether ownership still vested with the respondent in terms of the

ownership reservation clause or whether the ownership vested in the appellant due to accession.

- Note that the annexor of the components was not the owner.

Judgment

- The most important question is whether the subjective intention was that the movable things be

attached permanently (thus, the court agreed with the Melcorp case).

- The court also referred to and agreed with the decision in MacDonald (where the owner and the

annexor were also not the same person) and stated that the intention of the owner of the movable is

decisive (whether he be the annexor or not).

- Therefore, it was held that the ownership remained with the respondent as it clearly intended that the

components remain movable (at least until they were paid for in full).

- The court stated that this position is not necessarily correct though and should be reconsidered in

future. However, because the parties did not question this position, the court did not feel that it

should act mero motu in deciding this.

- The objection is most probably based on what I have said before, that the intention of the owner (at

least in his capacity of owner) should not be decisive, as original acquisition of ownership does not

regard the intention of the owner.

Specificatio, commixtio and confusio, and acquisition of fruits as original modes of acquisition of ownership

- Read this for 117-120.

- This is so easy that even our lecturers couldn‟t have screwed it up (probably).

- Write some notes on this page if you need.

43


Acquisitive prescription

Definition

- Original acquisition of rights whereby a real right over the thing of another is acquired without his

co-operation through the passage of time provided that certain requirements are fulfilled (most

importantly, the uninterrupted possession thereof for 30 years).

- The new Prescription Act provides for the acquisition of ownership as well as the acquisition of a

servitude. We deal only with the acquisition of ownership here.

- There are two Prescription Acts. The first came into operation on 19 April 1943. The second came

into operation on 1 December 1970 but is not retrospective. Therefore, it was possible that both Acts

could apply to the same period of prescription (if the period began in terms of the old Act but

continued under the new Act).

- However, it‟s been more than 30 years since the new Act was drawn up, so it is very unlikely that

both Acts will apply anymore (unless certain impediments on the prescription have extended the 30

year period, seen later).

Foundation of prescription

- In Pienaar v Rabie, the court stated that common law writers stated that a reasonable foundation of

prescription was a penalty for negligence of the owner in losing possession of his thing.

- However, the court stated that there are no grounds in our common law that states that negligence on

the part of the original owner is a requirement for acquisitive prescriptive.

- Therefore, it held that the foundation of prescription is that it creates legal certainty created by

ownership.

Requirements for prescription

Possession

- S1 of the new Act states:

1 Acquisition of ownership by prescription

Subject to the provisions of this Chapter and of Chapter IV, a person shall by prescription become the owner

of a thing which he has possessed openly and as if he were the owner thereof for an uninterrupted period of

thirty years or for a period which, together with any periods for which such thing was so possessed by his

predecessors in title, constitutes an uninterrupted period of thirty years.

- The Act refers to a „thing‟ and isn‟t more specific than that. Therefore, this general formulation

includes both movable and immovable things.

- The possessor must possess the thing openly as if he were the owner thereof.

- This is a reference to possessio civilis, where both the physical and mental aspects of control are

present simultaneously.

- The person is then known as an unlawful possessor, who can be bona fide or mala fide. Therefore,

even a thief may attain ownership through prescription.

- Possession, as the first requirement of prescription, has certain factors to it that can actually be seen

as the requirements of the requirement.

- Factors of possession:

1) Possession of a movable or immovable thing.

2) Physical control by usucapiens.

3) Animus domini.

4) Exercised openly.

5) Adverse user?

- This last factor states that the possession must be adverse to the true owner and NOT by virtue of a

contract or legal relationship that recognises the ownership of another person (eg. usufruct or lease).

- The general view however, is that this factor merely forms part of possessio civilis (factors 2 and 3

44

above combined) where a person possesses something as though he were the owner, so it isn‟t really

a separate factor or requirement or possession as such.

Uninterrupted period of 30 years

- This second requirement is also seen in S1 of the new Act.

- The Act also states that this period may include the possession of possessors in title, i.e. that the

possession of predecessors may be added to constitute an uninterrupted period of 30 years (this is

called coniunctio temporum).

- However, an important qualification of coniunctio temporum is that it only refers to possessors in

TITLE.

- Therefore, there must be some legal bond between the possessors in succession. This is explained by

stating that a possessor is only a possessor in title if the transfer of possession would have resulted in

the derivative transfer of ownership had the nemo plus iuris rule not applied.

- Therefore, if a person steals a possessed thing from a possessor, the thief is not a possessor in title

because, even if the original possessor was the owner, ownership would not have transferred.

Therefore, the period of prescription will restart for the thief.

Interruption

- Interruption extinguishes the period of prescription and restarts it from the beginning (with certain

statutory exceptions).

- Here we distinguish between natural and judicial (civil) interruption.

- Natural interruption – under the common law, any form of actual loss of possession (see page 42 of

these notes for how this happens) is natural interruption of prescription (whether it be voluntary or

involuntary loss).

- S2 of the New Act states that, a case of INVOLUNTARY loss of possession, will result in natural

interruption UNLESS:

1) Possession is reclaimed at any time through legal proceedings instituted within 6 months of such loss

for the purpose of regaining possession (eg. mandament van spolie), or

2) Possession is lawfully regained in any other lawful way within a year of loss.

- Judicial (civil) interruption – in terms of the common law, this occurs when a possessor is served

with a process document (such as a summons or interdict) that clearly states the owner‟s claim of

ownership on the thing so possessed.

- S4 of the new Act regulated judicial interruption – see the next page.

4 Judicial interruption of prescription

(1) The running of prescription shall, subject to the provisions of subsection (2), be interrupted by the

service on the possessor of the thing in question of any process whereby any person claims ownership in that

thing.

(2) Any interruption in terms of subsection (1), shall lapse, and the running of prescription shall not be

deemed to have been interrupted, if the person claiming ownership in the thing in question does not

successfully prosecute his claim under the process in question to final judgment or if he does so prosecute

his claim but abandons the judgment or the judgment is set aside.

(3) If the running of prescription is interrupted as contemplated in subsection (1), a new period of

prescription shall commence to run, if at all, only on the day on which final judgment is given.

(4) For the purposes of this section 'process' includes a petition, a notice of motion, a rule nisi and any

document whereby legal proceedings are commenced.

Postponement of completion of prescription

3 Completion of prescription postponed in certain circumstances

(1) If-

(a) the person against whom the prescription is running is a minor or is insane, or is a person under

45

curatorship, or is prevented by superior force from interrupting the running of prescription as contemplated

in section 4; or

(b) the person in favour of whom the prescription is running is outside the Republic, or is married to the

person against whom the prescription is running, or is a member of the governing body of a juristic person

against whom the prescription is running; and

(c) the period of prescription would, but for the provisions of this subsection, be completed before or on, or

within three years after, the day on which the relevant impediment referred to in paragraph (a) or (b) has

ceased to exist, the period of prescription shall not be completed before the expiration of a period of three

years after the day referred to in paragraph (c).

(2) Subject to the provisions of subsection (1), the period of prescription in relation to fideicommissary

property shall not be completed against a fideicommissary before the expiration of a period of three years

after the day on which the right of that fideicommissary to that property vested in him.

- If you don‟t understand this, don‟t feel bad.

- Luckily, I spent a lot of time on it, so if you ask me, I‟ll explain it to you because we will probably

get a question on this in the test.

Study unit 3.4

Derivative acquisition of ownership


Definition and requirements for the transfer of ownership

- This refers to when ownership is transferred between two people. It is not created as with original

acquisition of ownership.

- Derivative acquisition of ownership of a movable – delivery.

- Of an immovable – registration.

- Both these are effected with the intention of the owner (or his agent) to transfer ownership to the

acquirer where the acquirer (or his agent) has the intention to receive such ownership.

REQUIREMENTS FOR THE TRANSFER OF OWNERSHIP

General requirements

1) The thing being transferred in ownership must be a res in commercio.

2) Both parties must have the adequate contractual capacity.

3) The transferor must have the entitlement to alienate (nemo plus iuris rule).

Objective requirements

Movables

- Delivery is required.

- This fulfils the publicity function, which requires that the transfer of ownership of movables must be

made public.

- This is accomplished in the case of a movable by placing the receiver in actual control of the thing

(corpus and animus elements must be present).

- This is required because the owner of a thing is a controller and the requirements for control must

obviously be met.

- The corpus element is established by delivery and the animus element is established by the

subjective requirement (seen later).

Immovables

- Registration is required in such a case.

- However, actual control of the immovable is not a requirement for the transfer of ownership as the

registration fulfils the publicity function.

The subjective requirement

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- This requirement is contained in the real agreement.

- This agreement is basically the intentions of both parties to transfer ownership between each other.

- Distinguish this from the obligation creating agreement (the contract of sale or barter for example)

that creates the personal rights to delivery or registration and payment (if applicable).

- The personal rights entitle each party to performance under the agreement. However, the real

agreement only comes into play once the actual performances are given.

- Both agreements can be present simultaneously (the simple sale of bread over the counter, for

example).

- It can also happen that both are not present at once or do not simultaneously have legal force.

- The best example of this would be an instalment sale transaction in terms of the National Credit Act

(see Info Plus v Scheelke). In such a case, the obligation creating agreement is concluded

immediately but the real agreement is subject to a suspensive condition (the payment of all the

instalments).

- The subjective and objective requirements must both be met before ownership will be transferred. In

other words, the respective intentions as well as delivery or registration are required (Air-Kel case).

- When ownership of a MOVABLE is transferred in terms of a contract of sale that precedes the real

agreement, there is a presumption that such sale is a cash sale, i.e. that ownership will only pass upon

full payment of the purchase price. This is also known as the prysbetalings rule.

- The parties may however, expressly or tacitly agree to a credit sale, whereby ownership will be

transferred immediately.

Info Plus v Scheelke

Facts

- Info Plus purchased a car from Wesbank under an instalment sale agreement.

- Wesbank would retain ownership until the purchase price was paid (therefore, the real agreement

was subject to a suspensive condition – payment of full purchase price).

- Info plus then gave the car to a dealer to sell it.

- The dealer sold the car to M using fraudulent documentation that stated that the full purchase price

had been paid to Wesbank and that Info Plus was the owner.

- M then sold and delivered the car to Scheelke.

- When M found out about the fraudulent documentation, he gave birth a full-grown Blesbok and

decided to pay the outstanding purchase price to Wesbank.

- Info Plus is now suing Scheelke for delivery of the car.

Judgment

- The court held a real agreement did exist between Info Plus and Wesbank from the moment of

delivery and no further agreement was required to create this agreement. The enforceability of this

agreement was merely suspended until full payment was effected.

- The court rejected the argument that the purchaser (Info Plus) had to be in possession of the car

when the condition was fulfilled and stated that the requirements for traditio brevi manu need not

have been met. The requirements for delivery were already met when possession was given to Info

Plus.

- When M paid the purchase price to Wesbank, he fulfilled the suspensive condition (it doesn‟t matter

who fulfils a condition) and ownership passed to Info Plus.

- Court also held that the mere deliver of property is not indicative of the intention to transfer

ownership. Therefore, when Info Plus delivered the car to the car dealer, he was only giving them

possession, not ownership (as Info Plus wasn‟t the owner at the time). Therefore, estoppel could not

be used against Info Plus either.

47

Systems of transfer of ownership

Causal

- Requires a valid reason in law for why ownership is being transferred before such transfer can occur.

- For example, a valid contract of sale or barter might have to precede the real agreement.

Abstract

- No such requirement exists in this system.

- Only a valid real agreement (the intention to transfer ownership and the actual delivery or

registration of the thing) is required for ownership to pass.

- See Kriel v Terblanche and the Cape Explosive Works case for more on this.

- This system is used in our law. The difference in effect between causal and abstract is shown below.

- If ownership is transferred despite the obligation-creating agreement being void, the transferor can

obviously not claim back his thing based on his ownership or on a contractual remedy. He may

however, institute an enrichment claim against the receiver (Kriel v Terblanche).

- The abstract system is also considered more equitable with regard to bona fida third parties because

the acquisition of ownership by a bona fida third party is not recognised (Kriel v Terblanche).

- What this means is that you can never put more than five eggs in one chicken. If you do, it will turn

into what is terrifyingly referred to by the Spanish Gypsies as el Eggablo.

- I have no idea what it means.

- The Cape Explosive Works case states that this abstract system also applies to immovable property.

See the following excerpt from the case:

Cape Explosive Works

-In Commissioner of Customs and Excise v Randles, Brothers & Hudson, Ltd 1941 AD 369 at 398

Watermeyer JA said in respect of the passing of ownership of movable property:

“Ownership of movable property does not in our law pass by the making of a contract. It passes when

delivery of possession is given accompanied by an intention on the part of transferor to transfer

ownership and on the part of the transferee to receive it. . . .If the parties desire to transfer ownership

and contemplate that ownership will pass as a result of the delivery, then they in fact have the

necessary intention and the ownership passes by delivery.”

- There is no reason why the same principle should not apply to the transfer of ownership of immovable

property.

Cases where a void obligation-creating agreement will also void the ensuing real agreement (even in the

abstract system)

- Where the contract is for an illegal purpose.

- Where the common law or legislation prescribe certain formalities for the enforcement of the

obligation-creating agreement (as seen in AOLA etc).

- The factors that might lead to the nullity of the obligation-creating agreement might also lead to the

nullity of the real agreement. For example, mistake will lead to a contract of sale being invalid. In

terms of the abstract system, should such a mistake regard what type of contract we are dealing with,

it could affect the real agreement too. If one party believes it is a contract of sale but the other

believes it is a donation, the obligation-creating agreement will be void for lack of consensus

(mistake), but the intention to pass ownership is still present, so the real agreement will stand.

However, if the one party thinks it is a contract of sale and the other a contract of lease, then

different intentions exist regarding ownership and the real agreement cannot be valid.

1.1 A and B conclude a real agreement whereby B wants to transfer ownership of a car to A and A wants to

acquire ownership of the car. However, the obligation-creating agreement is void. After A has acquired control

of the car, A sells the car to C and delivers the car to C. Will B be able to successfully institute the rei vindicatio

against C because the obligation-creating agreement is void? Fully explain the legal position. (4)

2 1.2 Why did the Supreme Court of Appeal in Info Plus v Scheelke & Another 1998 3 SA 184 (SCA) decide

that Info Plus became owner of the car notwithstanding the fact that Info Plus was not in control of the car when

the purchase price was paid? Briefly explain. (2)

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Delivery

Definition

- Delivery entitles the acquirer or his agent to gain actual control of the movable thing.

- This is the objective requirement for the transfer of ownership of a movable.

- We distinguish between actual delivery and constructive delivery (the latter being broken into

different forms).

Actual delivery (traditio vera)

- This occurs when the thing is physically handed over to the receiver or his agent.

- If such delivery is coupled with the respective intentions to transfer ownership, this will constitute a

real agreement and ownership will pass.

- There is only one form of this delivery - de manu in manum or datio de manu in manum (the latter

being when a person‟s agent performs the transfer, but it‟s essentially exactly the same thing).

Constructive delivery (traditio ficta)

- Physical control is not given to the receiver (he may obviously obtain it later by himself) but instead

there is a mere change of intention between the parties that effects the transfer of ownership.

1) Delivery with the short hand (traditio brevi manu)

The receiver is already in possession of the thing.

Delivery takes place through a change in intention.

I rent your car but then decide to buy it.

I pay you the money and keep the car without you having to actually deliver it to me in terms of the

contract of sale.

Therefore, delivery does not actually take place in the common sense.

Do not think that this is actual delivery because the receiver is in physical control of the thing when

the intention to pass ownership comes into being. Actual delivery refers to a situation where physical

control is given to a person with the intention that in that moment and through that action, ownership

will pass.

This form of delivery can also occur in instalment sale transactions.

The buyer is in possession of the thing but is not the owner until he pays the instalments. When he

does however, ownership transfers to him.

This is because once the last instalment is paid, the intention of the parties changes from „ownership

is being reserved for now‟ to „ownership now passes‟.

However, tradition brevi manu is not required for ownership to pass in an instalment sale transaction

(see Info Plus case supra), because the credit receiver need not be in possession of the thing when the

change of intention occurs.

2) Constitutum possessorium

This is the opposite of delivery with the short hand.

Possession remains with the transferor but ownership passes to the receiver through a change of

intention without any physical control being present.

The seller sells you his car but then you immediately rent it out to him.

He is in possession of the car the whole time and never delivers it to you in the common sense.

However, ownership is transferred because he doesn‟t hold it with the animus dominii any longer.

Requirements:

a) The transferor must be the owner of the thing (this seems very obvious, but I think it means that an

agent may not deliver a thing by constitutum possessorium. If this happens, it will actually be

attornment. This isn‟t explained by the textbook, our lecturers need to be shot).

b) The transferor must consent to actually hold the thing on behalf of the acquirer and must not control

with the animus dominii anymore.

49

c) The acquirer must consent that the transferor holds the thing on his behalf and that he, the acquirer,

has the animus dominii.

d) The necessary causa detentionis must be present. An acceptable reason must be present as to why the

transferor holds the thing (this is to prevent fraud). This seems to not be in line with the abstract

system, but this does not refer to a proper reason why ownership was passed, it merely means that a

proper reason must exist for why the passer of ownership still holds the thing in his possession.

3) Attornment

In this case, the object sold is in the possession of a third party at the time that delivery in this

manner takes place.

For example, your car is at the panel beater.

You sell it to me and give me a letter of confirmation of the sale.

Ownership passes even though the car remains with the third party.

I then go and pick the car up from the third party (panel beater).

Therefore, before the conclusion of the sale the panel beater keeps the car on behalf of the seller.

However, after the sale, he keeps it on behalf of the buyer as ownership has passed.

Requirements:

a) There must be a tripartite agreement between all the parties that the third party will hold the thing

NOT on behalf of the owner, but of the acquirer.

b) When the cession of rights occurs (ownership is passed), the third party must be in actual control of

the thing or at least have a right of control (ius possidendi) over the thing. (The Caledon case held

that delivery occurs upon cession of rights and cessionary1 can then claim the thing from the

possessor)

Southern Tankers Unilog v Pescana D’oro

Facts

- Emphasises that the person acting on behalf of the acquirer in the case of attornment must exercise

physical control over the thing.

- PD owned a catch of fish and stored the fish in a storage facility belonging to A.

- D, the agent of PD, organised that A hold the fish.

- D then sold the fish to K, who sold the fish to V.

- However, the fish never left the storage, so physical delivery never took place.

- STU then attained an interim attachment order for the fish as repayment for a prior debt of PD.

- The question was whether attornment had occurred. However, to answer this, the court had to decide

whom the third party was who held the fish on behalf of PD. If attornment had occurred, STU would

not be able to attach the fish, as PD would no longer be the owner.

- V, the alleged current owner, argued that D was the third party holder.

- STU argued that A was the third party holder.

Judgment

- At the time of the conclusion of B was holding the thing on behalf of K (the acquirer) and there was

tripartite relationship between PD, D and K. HOWEVER, B did not have actual physical control

over the fish and could thus not act as the third party holder.

- A had been the person exercising actual physical control over the thing.

- A was the person who should have held the thing on behalf of K, which was not the case, and he

should have been part of a tripartite relationship with PD and K, which he wasn‟t.

- Therefore, delivery had not occurred by attornment and ownership had not passed to K (or,

consequently, V) when the interim attachment order was given.

- Therefore, PD had remained the owner despite the valid contract of sale and the fish would be

subject to the interim attachment order.

Barclays Western Bank v Ernst

1 Person receiving cession of the rights.

50

Facts

- MK drew up a contract of lease with VC in terms of which VC would lease a car from MK.

- MK entered into a discounting agreement with BWB to discount the lease.

- This agreement stated that delivery of the master discount contract and other documents would

constitute an offer to sell the car to BWB and cede MK‟s lease rights into the contract of lease – the

acceptance of such offer being the payment of purchase price of the car.

- On 19 May, MK sent BWB the documents, but BWB did not pay yet.

- On 21 May, the lease between MK and VC was concluded and VC agreed to hold the car on behalf

of MK until the rights to the car were ceded to BWB, in which case he would hold it on BWB‟s

behalf and attornment would occur.

- The car was delivered to MK on 21 May and, on the same day, MK gave the car to E (the

respondent) who then registered the car in his name.

- Then, on the 26th

of May, BWB effected payment and the cession of rights occurred.

- BWB alleged that it had become owner through attornment.

Judgment

- For ownership to pass by attornment, the person holding the thing for the intended new owner must

be in control of the thing, or have a right to be in control, when the current owner cedes rights to the

intended owner.

- VC was not in possession on the 26th

of May when cession occurred and attornment did not occur.

4) Symbolic delivery (clavium traditio)

The seller passes ownership to the buyer by giving him an instrument by means of which the buyer

can gain exclusive control over the thing.

Keys to a car, for example. Don‟t say the keys to a house! Registration is required there and passing

the keys will mean nothing.

This does NOT refer to a symbol of the thing being delivered.

The delivery of a bill of lading is very similar to this form of delivery. I‟m not sure if it‟s the same

thing or if it is it‟s own form of delivery, the textbook is completely unhelpful in this regard.

Requirements for this form of delivery:

a) Agreement must exist to this specific type of delivery

b) An instrument to gain physical control of the thing must be delivered.

c) The instrument must enable the acquirer to exercise effective control of the thing (absolute genius

from our lecturer‟s there).

5) Delivery through marking (trabium signatio)

This is analogous to symbolic delivery.

One boer sells fifty sheep to another boer.

The second boer comes and marks the fifty sheep in the flock and thus delivery takes place and

ownership is passed.

6) Delivery with the long hand

The thing is pointed out by the seller to the buyer with the intention that ownership should thus pass.

Requirements:

a) Intention that delivery should be so effected.

b) Identification in presence of the thing.

c) The acquirer must be placed in a position from where he can exercise actual and exclusive control

(Escom v Rollomatic).

d) There must be a clear identification of the thing.

- Why do they always say EXCLUSIVE control? What about co-owners?

Eskom v Rollomatic Engineering

Facts

- X, who owned a farm, sold a set of steel towers to R that was positioned on the farm.

- R was responsible for the removal of the towers and restoring the land to its original state.

- When R came to remove the towers he was prevented from doing so as the land was leased out and

the towers had been put into use again by E.

- R successfully instituted the rei vindicatio against E and E appealed

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Judgement

- The court held that the delivery that should have taken place was that of traditio longa manu.

- However, the requirement for this type of delivery is that the buyer must be put in a position from

where he can obtain immediate control over the thing sold.

- Actual physical control over the merx is not necessary, but the thing must be placed in the buyer‟s

disposition so that he alone can deal with it as he pleases.

- This did not happen in casu and thus ownership had not passed to R.

- The appeal was upheld.

In Info Plus v Scheelke 1998 3 SA 184 (SCA) the court decided that transfer of ownership had taken place and

that traditio brevi manu was not the form of delivery in that case. Explain how delivery took place and also why

it was not traditio brevi manu. [4]

Cession of rights

Read this on pg 145 and 146 of the useless textbook.


Registration

- This is left as self-study in our study guide and was not addressed in class.

- It is also very easy, I‟d just be retyping what‟s in the book.

- Read it on pg 147 – 150 and answer the questions below.

Question 1 “A negative system of registration provides protection to the true owner and does not provide „protection of ownership‟ to a bona fide third party.” Explain the meaning of this statement inter alia also with reference to an example. (5)

Question 2

What registration system is followed in our law and why? Give the name of a judgment as authority. (3)

Answer

- Negative registration system (1)

Why? It does not guarantee the correctness of registered information (1)

Cape Explosive Works Ltd and Another v Denel (Pty) Ltd and Others / Reason (1)

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Study unit 3.5

Protection of ownership


Introduction

- There are three categories of remedies – real, delictual and enrichment.

- Real remedies – intended to restore the physical control of thing and get rid of interference with the

exercise of entitlements of the owner.

- Delictual remedies – aimed at compensation for damage or loss with regard to an owner‟s property

resulting from the unlawful and culpable actions of such person.

- Enrichment remedies – aimed at the recovery of a performance by a person who was enriched at the

expense of the owner without a legal ground.


Real remedies: rei vindicatio

Definition

- An action with which an owner can regain control of his movable OR immovable thing which is in

existence and identifiable from any person who is in the unlawful control thereof.

- This action also applies to the fruit of the thing in question.

Requirements

Unimark Distributors v Erf 94 Silvertondale

Facts

- U was a sublessee who had been evicted from the subleased land.

- U claimed that ES was in possession of certain items owned by U or had disposed of them knowing

that U owned them.

- Thus, U claimed the rei vindicatio for the recovery of certain articles on the site.

- In the alternative, he wanted to claim the value of the articles no longer in ES‟s possession using the

actio exhibendum or use an enrichment claim in relation to the sum that ES was enriched by articles

that had attached to the land through accessio (this part of the case is dealt with later).

- ES denied U‟s ownership.

Judgment (with regard to the rei vindicatio)

- To succeed with this action, one must prove that:

1) He is the owner of the thing.

2) The defendant is in control of the thing at the commencement of the proceedings.

3) The thing is still in existence and is clearly identifiable.

- In this case, if the plaintiff had lost ownership of certain articles through accessio, he would not be

able to use the rei vindicatio but may use an enrichment action (seen later).

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- U could only prove the existence and identity of some of the claimed items and the rei vindicatio

was allowed in respect of these items.

- However, the items that could not be found could obviously not be claimed back with this action.

See later how this case applied the actio exhibendum to deal with these lost items.

Defences against the rei vindicatio

Common law position

- At common law, the defences are very simply embodied in an argument that the requirements for the

rei vindicatio have not been met (see them above and use your head).

- The defendant can also prove that he is not in unlawful possession of the thing.

- Thus, he can try and prove that he controls the thing in terms of a lease agreement.

- He can also prove a limited real right that allows him lawful control of the thing.

- Now, if lawful possession can be used as a defence against the rei vindicatio (and if we look at the

definition of the action) how can unlawful control not be a requirement for the use of the action? I

don‟t get it but it really isn‟t a requirement.

- The question that we must ask now is if and how the common law application of the rei vindicatio

has been changed since the coming into operation of the Constitution (specifically S26(3)) and PIE.

There are other possible Acts that could be applicable, but we only use PIE here.

- I will only use case law to explain the position here. Read the absolute rubbish in the book from page

155 – 163 to give you a broad understanding. All of the necessary concepts however, are contained

in the following cases and when we apply this in a question, it will be done in terms of case law

anyway.

- S26(3) of the Constitution states - No one may be evicted from their home, or have their home

demolished, without an order of court made after considering all the relevant circumstances. No

legislation may permit arbitrary evictions.

- PIE requires that any unlawful occupier of land must be evicted in terms of the provisions of the Act

itself. The Act makes sure that the eviction of unlawful occupiers (squatters) happens in a way that is

consistent with the constitutional values.

- Therefore, apart from the defences under common law (basically proving that the requirements are

not met or that you are in lawful occupation), there is a possibility that additional defences against

the rei vindicatio may also come from the Constitution or PIE.

The effect of S26(3) of the Constitution on the application of the rei vindicatio

- If there is no special legislation applicable to the case, the common law will apply (not to say that it

won‟t apply when special legislation is applicable).

- In this case, the question arises as to whether S26(3) of the Constitution changed the common law

requirements.

Ross v South Peninsula Municipality

- This case is held to have been decided incorrectly and was overruled by the SCA in Brisley v

Drotsky.

- The court held that S26(3) did in fact change the common law requirements by adding that the

evictor (yes, when you evict a person from your land, you are using the rei vindicatio in respect of an

immovable thing) must allege relevant circumstances that entitle the court to grant the eviction order.

Brisley v Drotsky

Facts

- Not really important.

- People being evicted, they didn‟t have anywhere else to stay – question as to whether S26(3) of the

Constitution should protect them.

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Judgment

- Held that S26(3) did not change the common law requirements for the use of the rei vindicatio.

- S26(3) can be applied to natural and juristic persons (has horizontal application).

- Court did not state that the onus of proof lay on the proposed evictor to show that relevant

circumstances existed that would entitle the court to evict.

- Instead, the court said that the court must consider all relevant circumstances (can you see how this

doesn‟t change the common law requirements but rather how the court should go about making its

decision).

- Held that circumstances must be relevant to the law.

- The unavailability of alternative accommodation (personal circumstances) of the evictee is not

relevant in law UNLESS another law makes it relevant.

- The court does not have the discretion to reject an eviction order based purely on other „relevant

circumstances‟ in terms of S26(3) if the plaintiff is entitled to eviction.

- He will be so entitled when he can prove that he is the owner and that the defendant is in unlawful

occupation of his land.

- The court held that the ownership of the plaintiff and the possession of the defendant are the only

actual factors that should be considered in terms of S26(3) of the Constitution. The only other

relevant factors could be a constitutional, statutory or contractual right of occupation granted to the

defendant (which was not applicable in casu) and actually just boils down to a closer look at the

occupation of the defendant.

- So, the Constitution has not changed the common law application of the rei vindicatio, it has merely

made sure that the proper requirements for the action are complied with before eviction occurs.

- Court held that an owner has an entitlement to eject an unlawful occupier unless precluded by law

(such as PIE or a specific provision of the Constitution), which was not applicable here.

The affect of the Prevention Illegal Eviction from and Unlawful Occupation of Land Act

- If this Act applies to a case, the common law requirements for the rei vindicatio will be added to.

Such an Act is known as „security of tenure legislation‟.

- This is because any eviction to which the Act applies has to be carried out in terms of a special

procedure in the Act and all relevant circumstances must be considered (including circumstances set

out by the Act) – the test is whether the eviction is just and equitable.

- The Act applies to a person or persons occupying land unlawfully who are then to be evicted by the

owner of such land.

- The land in question does not include business and commercial properties, only a dwelling or shelter

is regarded as a structure that the Act applies to.

- The Act only applies to a natural person unlawfully occupying land as a juristic person cannot

physically control or occupy something.

- The question that we are interested in is whether „unlawful occupier‟ in S1 of PIE includes a person

who initially occupied the land legally but then later, through their own default or breach of contract,

rendered their occupation unlawful (best example, the defaulting lessee).

Ndlovu V Ngcobo: Bekker and another v Jika

Facts

- Two cases heard in one.

- Ndlovu‟s case was one where the lessee‟s lease terminated and he refused to vacate. The court a quo

found that PIE was not applicable.

55

- In Bekker‟s case, the owners of a property had there property repossessed and the new owner (who

repossessed the property) sought to evict the occupiers (previous owners). Court a quo held that PIE

did not apply.

Judgment

- There were (apparently) two legal questions.

- Firstly, does PIE apply to initially lawful occupiers who later render their occupation unlawful

through their own default or breach of contract (as is the case here)?

- Secondly, does the definition of unlawful occupier in S1 of PIE include such occupiers?

- These are exactly the same questions and this is stupid.

- The majority held that the ordinary meaning of the words „unlawful occupier‟ include some who

takes occupation lawfully but then later becomes unlawful in that same occupation.

- The parties advanced interpretations as to these words but the court rejected them and followed the

ordinary meaning.

- Because PIE was now applicable, the court held that it did not provide for the dispossession of

property (from the owner who wishes to evict) but instead just delays the eviction until the court has

considered all the relevant factors.

- Held that, in terms of the Act, all the applicant has to prove is that he is the owner and that the

defendant is in unlawful occupation (can you see how the common law is changed here already?).

- The onus then shifts to the defendant to show why the eviction must not be granted. It is here that the

relevant circumstances have to be considered in order to decide whether or not to grant the order.

- It is not sure whether the court must consider these circumstances mero motu or whether the

defendant has to bring them forward.

- The minority held that the word „occupies‟ should be read to mean „takes occupation of‟ and not‟ is

presently in occupation of‟.

- This interpretation would exclude people who were initially lawful occupiers.

Note

- Remember, an evictee can actually make a defence against the rei vindicatio by applying the stricter

requirements of PIE and considering certain factors.

- I don‟t think S26(3) of the Constitution provides any actual defence against a rei vindicatio unless

the common law requirements have not been met, which renders the Constitution unnecessary.

Estoppel – as a limitation

- This is a universal defence and is looked at here in the context of the rei vindicatio.

- It is merely a limitation however, because it doesn‟t challenge the requirements of the rei vindicatio

(as do the abovementioned defences) but only limits the free application of the rei vindicatio.

Definition

- Where a person causes another to believe that a certain state of things exists through his own

culpable or wilful action and induces the latter to act in that belief (to his detriment), the former

cannot rely on the true state of affairs to argue his case.

- In our context, this basically means that if the owner of a thing made another person believe that he

(the owner) was not the owner of the thing and the other person then took control of the thing, the

owner cannot come later and use the rei vindicatio if estoppel is raised (because by raising the rei

vindicatio, the owner is operating on the fact that he is the owner [which is the truth] even though he

misrepresented otherwise).

Requirements

1) The true owner must have misrepresented that another person is the owner or that another person has

the ius disponendi (that entitlement of ownership that allows a person to alienate a thing, which can

be ceded by the owner).

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2) The third party (estoppel proclaimer) must have acted to his detriment in response to the above

misrepresentation.

3) The detriment of the estoppel proclaimer must be causally connected to the misrepresentation of the

true owner and not of another person.

4) The misrepresentation must have been made culpably.

5) The misrepresentation must be sustainable (i.e. the consequences of raising estoppel must not be

unlawful or against public policy).

- See the next page for case law with regard to the requirements of estoppel.

Konstantz Properties v WM Spilhaus

Facts

- The appellant hired P to install an irrigation system on the appellant‟s farm.

- P purchased the components of the system from the respondent. In terms of this agreement, the

respondent reserved ownership of the components until payment of the full purchase price.

- The appellant then purchased the components from P (he was a bona fide third party to the

instalment agreement between P and the respondent).

- P installed the components on the appellant‟s land but did not pay the respondent for them.

- The question that we are interested in here is whether Konstantz Properties can use estoppel to

prevent WM Spilhaus from instituting the rei vindicatio against them for return of the components

that they bought in good faith from P (who was not the owner at the time of this contract of sale).

Judgment

- The court here confirmed that a culpable (blameworthy or negligent) misrepresentation on the part of

the owner is a requirement for estoppel to apply.

- In this set of facts, the respondent, by selling components to a retailer who would obviously then

resell them to an innocent third party (the appellant in this case) is actually misrepresenting to such

third party that the retailer is fully entitled to alienate the goods and transfer ownership.

- The respondent was held to have acted negligently in creating a foreseeable possibility that an

unsuspecting client would by the components from P.

- Therefore, the appellant was allowed to use estoppel to prevent the respondent from using its

ownership reservation clause as a ground for the rei vindicatio.

Info Plus v Scheelke

Facts

- We look at the case now with regard to the defence of estoppel that was raised. In this case, we have

a very similar situation to the Konstantz case where an innocent third party bought something from a

dealer who had received the thing from the true owner without ownership passing to the dealer. Can

estoppel be raised against the true owner because he misrepresented that the dealer had become the

owner?

- Info Plus purchased a car from Wesbank under an instalment sale agreement.

- Wesbank would retain ownership until the purchase price was paid (therefore, the real agreement

was subject to a suspensive condition – payment of full purchase price).

- Info plus then gave the car to a dealer to sell it.

- The dealer sold the car to M using fraudulent documentation that stated that the full purchase price

had been paid to Wesbank and that Info Plus was the owner.

- M then sold and delivered the car to Scheelke.

Judgment

- Court also held that the mere deliver of property is not indicative of the intention to transfer

ownership.

- Therefore, when Info Plus delivered the car to the car dealer, he was only giving them possession,

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not ownership (as Info Plus wasn‟t the owner at the time) and did not misrepresent otherwise.

- Therefore, estoppel could not be used against Info Plus either.

- No misrepresentation – no estoppel.

- I don‟t think this is correct, it seems as though exactly the same type of misrepresentation occurred

here as did in the Konstantz case.

- Still, the principle is true – no misrepresentation – no estoppel.

Estoppel as a means of acquisition of ownership?

- Read this on the bottom of page 164 to the end of 165.

- There are no cases in this regard, so I think we might get a short question on it.

- Just be able to analyse the different viewpoints.

S buys a motor vehicle from B in terms of an IST. The condition is that ownership does not pass to S unless the

full purchase price is paid. Before the purchase price is paid by S, X steals the vehicle from S and sells it to Z

who is bona fide. In the meantime, S pays the purchase price in full to B whilst S is not in control of the motor

vehicle. Can S claim the motor vehicle from Z with the rei vindicatio if the vehicle is in the control of Z and if

the vehicle is identifiable and in existence? Discuss. [4] A rents a shop from B which A uses for his business. A does not pay his rent instalments to B and B cancels the

lease agreement lawfully whilst A remains in control of the shop. Is the Prevention of Illegal Eviction from and

Unlawful Occupation of Land Act 19 of 1998 applicable in this instance if B intends to evict A from the

premises with the rei vindicatio? Also, explain the principles applicable to the onus of proof in terms of this Act.

[5]


Other real remedies

The actio negatoria

Definition

- A common law action that can be used against a third party who unlawfully appropriates for himself

the entitlements of the rightful holder of a servitude.

- The owner of land may also use this against the lawful servitude holder who exceeds his entitlements

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under such servitude.

Requirements

1) It is a real remedy and can thus only be used by the OWNER of the thing over which the servitude

exists.

2) It has to be instituted with regard to the encroachment of entitlements of the servitude holder or upon

the entitlements of the owner.

3) Applies to movables and immovables.

4) With this remedy, a declaratory order as well as a prohibitory or mandatory interdict may be given.

Where applicable, damages may be claimed as well. In modern practice, this remedy is usually

replaced with a declaratory order or an interdict.

- Why these last two are requirements escapes me.

Interdict

Definition

- A summary court order, usually issued upon urgent application, by which a person is ordered to do

something, not do something, or stop doing something in order to prevent an infringement of

property rights.

- Here, we look at this general remedy in respect of ownership (i.e. we look at the remedy in its

application as a real remedy).

Requirements

1) A clear right with regard to the property (in our instance here, the right must be ownership).

2) That his right has been infringed or that a reasonable imminent infringement exists.

3) No other effective remedy must be available.

Declaratory order

Definition

- This is an order in which the court sets out, upon application, the rights and obligations of the parties

to a dispute before the actual infringement takes place.

Requirements

1) Proof of an actual existing or future right or obligation with regard to property.

2) Proof of an actual and existing real dispute about the right or obligation in question. This

requirement is met if it can be shown that the order will solve the dispute.

3) Convincing reasons as to why the circumstances make it necessary for such order. This would

usually be where such an order will prevent actual infringements of rights or damages.

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Study unit 3.5.4

Delictual remedies

Actio ad exhibendum

Definition

- An action instituted by the owner of a thing against a person who, whilst knowing of the defect in

title of the thing, wilfully terminated his control of the thing, for the value of the thing.

- An example will be when a person takes something that you own and then disposes of it whilst they

know that they are not the owner. You cannot use the rei vindicatio because they are no longer in

possession of the thing. Therefore, you can claim the value of the thing with this action instead.

Requirements (set out in Unimark case)

- The plaintiff must prove that he was the owner of the thing at the date of loss of control by the

defendant. Loss of control includes the destruction, alienation, digestion (?) or consumption of the

thing.

- The plaintiff must prove that, at the time of loss of control, the defendant was aware of the defect of

title in the thing. Whether he should have explicit knowledge of who the owner is or merely that

there is a defect in title is unsure. The Frankel Pollack case is authority for the latter.

- The plaintiff must prove that the loss of control was caused wilfully (negligence is not enough).

- The plaintiff must prove patrimonial damage as a result of the fraudulent loss of control by the

plaintiff as well as the extent of such loss. The measure of damages is calculated with reference to

the value of the thing at the time of loss of control by the defendant (Unimark case).

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Condictio furtiva

Definition

- The owner of a thing (which includes money and res fungibles) or any other interested party (such as

a pledgee of the thing) can institute this action against a thief or the thief‟s heir to claim the thing,

together with the fruit thereof, or to claim the highest value of the thing since the theft thereof.

Requirements

- The plaintiff must be the owner or have another interest in the thing (pledgee, lessee etc.) during

committing of the theft AND at the time of institution of the action.

- If the owner sold the thing in the meantime, he cannot institute the action. However, if the thing was

destroyed at the time of institution of the claim, the former owner (because ownership is terminated

upon destruction of the owned thing) can still use the action.

- It can only be instituted against a thief or his heirs.

- It is an alternative to the rei vindicatio if the thing is still in existence.

- If it is not in existence, the highest value of the thing since the committing of the theft can be claimed

with the action (Minister van Verdediging v van Wyk).

Name three reasons why the claim in terms of the condictio furtiva in the case of Minister van Verdediging v Van Wyk en Andere 1976 1 SA 397 (T) was rejected. (3) (I don’t have this case, find it).

Give 3 (three) requirements for a successful claim with the actio ad exhibendum. [3] The case of Minister van Verdediging v Van Wyk en Andere 1976 1 SA 397 (T) is important to the law in regard

to the condictio furtiva for three reasons. Explain. (You need not refer to the facts of the case.) [3]

- If the owner transfers his ownership of the thing, the action cannot be used.

- A choice must be made – the owner must either use the rei vindicatio or the condictio furtiva, he

may not use both.

- Condictio furtiva can only be used against thief and his heirs, NOT the thief’s accomplices.

- (perhaps the answer to the first question on this case is somewhere in these important points given

by the case).

Study unit 3.6

Termination of ownership

1) Change of legal status of the owner (death, marriage in COP, insolvency).

2) Legal object does not meet the requirements of a thing anymore.

3) The thing becomes a res nullius.

4) Loss of ownership without co-operation of the owner.

5) Transfer of ownership.

This question combines the passing of ownership as well as the termination of ownership:

V is the owner of maize (already harvested) and takes it to the silo of R where it is stored. V now sells the maize

in the silo to K who again sells it to X without R being aware of this. X becomes insolvent and the trustee of X‟s

insolvent estate attaches the maize in the silo. Is X the owner of the maize (or: is the maize part of X‟s insolvent

estate)? Explain! [4]

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Study unit 3.7

Co-ownership


Nature, establishment and forms of co-ownership

- Co-ownership makes it possible for two or more legal subjects to simultaneously own the same

thing.

- The thing is not subdivided between the co-owners (otherwise, they would just become sole owners

of their portion).

- Instead, the co-owners acquire an ideal, undivided share in the thing.

- Only one ownership is awarded to all the parties in proportional shares and no one has the right to a

specific physical part of the thing.

- No party can, to the exclusion of the other/s, exercise specific entitlements to the thing as a whole

(like alienate it).

Establishment and kinds of co-ownership

Bound co-ownership

- This is established when a special legal relationship between co-owners is created.

- This special legal relationship, which establishes the co-ownership, determines how the entitlements

in regard to the thing are exercised.

- The fact of co-ownership is only one of the consequences of the special relationship.

- I think a good example would be when people buy flats in a share-block and sign the register. This

creates sole ownership of each person‟s own flat AS WELL AS co-ownership of the communal areas

of the block of flats.

- Legal consequences:

1) The share in the co-ownership cannot be freely transferred, encumbered or disposed of by a co-

owner.

2) The exercise of the other entitlements of the co-ownership is also regulated by the underlying legal

relationship.

3) It cannot be unilaterally terminated.

Free co-ownership

- With this, the only relationship between the parties is the fact that they are co-owners of the same

thing.

- Legal consequences:

1) The share in co-ownership can be freely transferred, encumbered or disposed of by the co-owner.

2) The exercise of the other entitlements of the co-ownership is not regulated by any underlying legal

relationship (because it doesn‟t exist).

3) It can be unilaterally terminated.

Indicate 3 (three) differences with regard to the legal consequences between bound and free co-ownership. (3)

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Entitlements of free co-ownership

- The following headings are the entitlements. What follows will be an explanation of each.

- Note that this only applies to FREE co-ownership. In the case of bound co-ownership, all

entitlements will be regulated by the special underlying agreement and each case will be different

and falls more within the sphere of the law of contract.

Use

- In the absence of an agreement of use, the common law lays down the entitlements of the co-owners.

- This position was referred to in the case of Sauerman and Another v Schultz:

- Each joint owner is entitled to reasonable use of the property, proportionately to his interest, in

accordance with the object for which the property is intended to be used. He is NOT entitled to

appropriate any portion of the property for himself.

Reasonableness of use

- This is determined by the extent of the co-owner‟s share and the purpose of the ownership.

- If A owns 90% of shares in a farm and B owns 10%, it would not be reasonable for B to use 90% of

the farms pasturage.

- The thing must also be used for the purpose it was intended for in order for such use to be deemed

reasonable.

- The co-owner‟s entitlement to use extends over the whole thing and is not limited by the extent of

his share.

Profit, income and fruit (the same thing, actually)

- All profit, income and fruit of a shared thing are divided between co-owner‟s in proportion to their

shareholding.

- This applies even if the income is generated purely by the efforts of only one of the co-owners.

- An exception is where the use of the thing is divided between the co-owners and each may utilise a

specific part for his own separate use (this would be the agreement mentioned under the previous

heading that would preclude the common law).

Maintenance

- Each is liable, in proportion to his shareholding, for all maintenance expenses (necessary expenses).

- This will probably also apply to useful expenses.

- Luxury expenses incurred by a co-owner are, however, not proportionately recoverable from the

other co-owner.

- Damage caused by a co-owner‟s unreasonable use of the thing can be claimed by the other co-

owner/s.

Ius prohibendi

- Unauthorised legal or administrative action taken by one or more co-owners can be vetoed by the

other/s by way of an interdict.

- This can create an untenable situation between the co-owners.

- If so, the only solution is the right on subdivision of the common thing.

- From this, it should be clear that the actions of each co-owner should occur with the full cooperation

of all the other co-owners.

- If this cannot be achieved, termination of co-ownership is the only solution.

- The unreasonable conduct of a co-owner may also be prohibited by an interdict.

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Right to division

- Any co-owner may at any time unilaterally terminate the co-ownership and effect a pro-rata division

of the thing if he does not agree with the majority decision of the co-owners, UNLESS there is an

agreement that prohibits the division of the co-owned thing for a certain time.

Alienation and encumbrance

- May alienate or encumber your own share at any time unilaterally.

- However, this may not be done contrary to S2 and S3 of the Subdivision of Agricultural Land Act 70

of 1970.

- Consent of the co-owners is necessary if the common thing itself is to be alienated or encumbered.


Termination of free co-ownership

- Once again, bound co-ownership does not appear here because the underlying special agreement will

regulate this.

- Co-ownership is usually terminated by division and I will talk about the requirements and

consequences for division soon.

- However, if division cannot be effected because the thing is physically or by law (Subdivision of

Agricultural Land Act) indivisible, we have a different situation.

Division

- A free co-owner is entitled to demand the division of the common thing at any time (a bound co-

owner may not).

- As already stated, the agreement may however exclude this entitlement for a specific time, but it may

not be excluded all together.

- The co-owners must try to reach an agreement as to the division between themselves. This

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agreement however, will not terminate co-ownership on its own:

- In the case of movables, the division is only effected when the divided things are delivered to the

various owners.

- In the case of immovables, the transfer of subdivision will have to be registered in terms of the

Deeds Registries Act.

- Only if the parties cannot come to such an agreement, may the court be approached to grant an order

for division.

- The action for division, if brought to a court, is called the actio communi dividundo. If the thing is

divisible, the court will try to divide it according to the size of the various co-owners‟ shareholdings.

When division is impossible

- If division is physically or legally indivisible, or where the division would be uneconomical or

inequitable, the court has a wide discretion.

- It can order the alienation of the thing by public auction and divide the proceeds according to the

shareholding of each co-owner (Robson v Theron)

- It can also order the transfer of full ownership to one co-owner and order compensation of the other

co-owners by the former (Robson v Theron).

- The court can order that the thing be auctioned amongst the owners and be acquired by the highest

bidder (Kruger v Terblanche).

- In the last instance, I would imagine that the proceeds would then be shared between the other co-

owners proportionately – thanks for pointing that out professors.

More on the actio communi dividundo

- It is not only used for division. With the division of the thing, it can also provide for a mutual

settlement of expenses and losses between the owners.

- The action may be used to claim necessary expenses for maintenance, the proportionate division of

fruit or damages of the common thing.

- Therefore Robson describes the action as having a “twofold purpose”.

A and B are free co-owners of a luxury yacht. A intends to terminate the co-ownership. B refuses. A comes to you as attorney for advice on this stalemate situation. Explain to A how the actio communi dividundo may be applied in this situation. (2½) Indicate 3 (three) differences with regard to the legal consequences between bound and free co-ownership. (3)

65

Study unit 3.8

Sectional titles


Common law principles

- The common law principles of superficies solo cedit and cuius est solum eius ad caelum have been

amended by the Sectional Titles Act (at least as far as they apply to sectional titles).

- Superficies solo cedit (the surface yields to the ground) is a principle that means that anything built

upon the land accrues to the co-/owner/s of the land.

- However, this has been changed by the Act in that various sectional title owners become individual

owners of their section (unit) of the building.

- If the maxim applied as it did in common law, the entire shareblock would accrue to the all the

sectional title owners as they are co-owners of the land upon which it was built and an individual

shareblock owner would also be a co-owner of his own section, which is not the case in terms of the

Act.

- Cuius est solum eius ad caelum (for whoever owns the soil, it is theirs up to Heaven and down to

Hell) – because the Act defines sections in a three-dimensional manner, this principle cannot apply.

Why is it stated that the superficies solo cedit as well as the cuius est solum eius ad caelum (“heaven to hell”)

principles do not apply to sectional title schemes? Briefly explain with reference to examples. (2)

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The legal nature of sectional ownership

Definitions and concepts

Common property

- in relation to a scheme, means-

(a) the land included in the scheme;

(b) such parts of the building or buildings as are not included in section; and

(c) land referred to in section 26

Section

- means a section shown as such on a sectional plan.

Sectional plan

- in relation to a scheme, means a plan approved by the Surveyor-General-

which is described as a sectional plan;

which shows the building or buildings and the land comprised in the scheme, as divided into two or

more sections and common property; and

which complies with the requirements of section 5, and includes a sectional plan of subdivision,

consolidation or extension as provided for in this Act

Unit

- means a section together with its undivided share in common property apportioned to that section in

accordance with the quota of the section.

Exclusive use area

- means a part or parts of the common property for the exclusive use by the owner or owners of one or

more sections

Participation quota

- The participation quota of an owner of a section is expressed as a percentage (to the fourth decimal)

and is obtained by dividing the floor area of the section by the floor area of the sections in a scheme

(basically, what percentage of the building do you own in your capacity as an individual owner).

- This quota is important because, in terms of S32 of the Act, it determines:

the value of the vote of the owner of the section, in any case where the vote is to be reckoned in

value;

the undivided share in the common property of the owner of the section; and

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the proportion in which each owner must contribute to the levy fund.

Development scheme

- Also referred to as the sectional title scheme.

- This is a scheme by which a building or buildings situated within or to be erected within the

jurisdiction of a local authority is to be divided into 2 or more sections for the purpose of selling or

letting.

- The building(s) must be shown on a sectional plan as such plan defines the relevant sections,

common property, exclusive use areas etc.

(Draft) sectional plan

- The draft sectional plan is a sectional plan that is still to be approved by the surveyor general.

- The sectional plan fulfils the same function as a plan or diagram for purposes of the Deeds Registries

Act.

- It shows the building and the land comprised by the development scheme dividing into two or more

sections as well as common property.

Establishment of a development (sectional title) scheme

- This is the general scheme of things when a person wishes to start a sectional title.

- The developer must, in order to divide the property and create the sectional title, go through the

following stages:

1) The preparatory stage.

2) The approval by the surveyor general of the draft sectional plan.

3) The application to the registrar of deeds for the registration of the sectional plan and the opening of a

sectional title register.

Approval by the surveyor general of the draft sectional plan

- The draft sectional plan must be submitted to the surveyor general

- An approval certificate by an architect or land surveyor stating that the proposed development is not

contrary to any operative town-planning scheme or other restrictions must also be submitted with

this draft.

- If the proposed scheme relates to an existing building which is let for residential purposes, the

application must include

an affidavit by the developer stating that he has complied with the protective measures in favour

of the protected tenants (S4(3)),

or a certificate by the conveyancer

or an affidavit stating that S4(3) does not apply to the scheme.

Opening of the sectional title register

- Once the sectional plan has been approved, the developer may apply to the relevant registrar of deeds

for:

1) The registration of the sectional plan,

2) the opening of the sectional title register and

3) the issuing of certificates of a registered sectional title in respect of each section.

- I can‟t make notes on this anymore. I saw a few easy questions on what I‟ve already written

concerning co-ownership and sectional titles.

- Read from page 194 to 207. We basically have to understand the concepts in this. I doubt we‟ll ever

get asked on it.

Why is it stated that the superficies solo cedit as well as the cuius est solum eius est usque ad caelum (“heaven to hell”) principles do not apply to sectional title schemes? Briefly explain with reference to examples! (2)

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What kind/type of ownership is acquired with regard to a “unit” in terms of the Sectional Titles Act 95 of 1986? Briefly explain. (2)

Syllabus theme 4

Limited real rights

Study unit 4.1

Servitudes


Introduction and terms

Description

- A servitude is a limited real right which confers on the holder thereof, either in his personal capacity

(personal servitude) or in his capacity as the owner of the land (praedial servitude), a certain

entitlement of use and/or enjoyment over the thing of someone else.

- The object of the right of servitude is always a thing.

- The thing can be movable or immovable.

- However, some servitudes can only be registered over immovable things.

- A servitude is a ius in re aliena (a right in respect of another‟s thing).

- A ius in re sua, on the other hand, is a right in respect of a person‟s own thing (of which he is the

owner).

- Judging by Van Schalkwyk‟s extremely long explanation of the above concept and his look of utter

confusion during the explanation, we can assume that this is really hard. Well, it‟s really hard for

him, which means we‟ll get a question on it.

Is your IQ below 80?

- If the answer to this is (embarrassingly) yes, then you should read this (if you got this far in law, you

can assume that your IQ is at least 100).

- All servitudes are real rights – even personal servitudes! Wow!

- In the context of servitudes, it is recommended that the word „creditor‟s right‟ be used instead of

„personal right‟ so that people with IQs under 80 don‟t start connecting personal rights to personal

servitudes. This would be followed by a great gnashing of teeth, banging of desks with wooden

implements and eventually an uprising of confused and upset law students who wouldn‟t pass

anyway.

- It amazes me how the lecturers are able to ramble on about points like this (really, I timed him in

class: it took just under thirteen minutes to explain what I wrote in this paragraph) but they are still

able to complete 100 pages of work in three lectures.

Categories of servitudes

General

- Any real right that satisfies the general requirements of a servitude shall qualify as such.

- Considering that there is no numerous clausus of limited real rights, there is therefore no numerous

clausus of servitudes.

- There are, however, only two categories of servitudes – praedial (real) and personal.

Praedial servitudes

- This is a servitude over the land of another (the servient tenement2) that accrues to the holder thereof

in his capacity as OWNER of another piece of land. The land owned by the holder of the servitude is

known as the dominant tenement3.

2 Also known as the praedium serviens.

3 Also known as the praedium dominans.

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- It therefore adheres to the owner of the dominant tenement (whoever he may be during the existence

of the servitude), which means that owners in title will also have the servitude accrue to them.

- Because it is a real right, the servitude will also bind all owners in succession of the servient

tenement.

- It only applies to IMMOVABLE property.

- The servitude must go some way to increasing the benefit and use of the dominant tenement for its

owner.

- Can you see that this servitude creates a relationship between the two pieces of land? The one

tenement is servient to the dominant tenement. However, such dominance cannot be exercised by the

land on its own, therefore the owner of the dominant tenement (whoever he may be) will exercise

this right and it will accrue to him in his capacity as the owner of the land.

- An example would be a right of way over a farm (servient tenement) in favour of the consecutive

owners of the neighbouring farm (dominant tenement).

- If this right of way only applied to the current owner of the neighbouring farm in has personal

capacity, it would be a personal servitude, which comes next.

- Brace yourself.

Personal servitudes

- Exactly the same thing except that it accrues to the holder of the personal servitude in his personal

capacity (it accrues to his person).

- It is still a real right and thus will BIND owners in succession of the burdened thing but will only

BENEFIT the person to whom it accrues in his personal capacity to the exclusion of all others.

- Therefore, a personal servitude doesn‟t necessarily apply to two pieces of land or two things, one

being subservient to the other.

- It usually just applies between a piece of land OR a movable thing which is servient to a person in

their personal capacity (such person need not own a dominant thing, they are the dominant thing).

- As displayed above, it can apply in exactly the same situation that a praedial servitude would apply,

but in such case, the servitude (for example, a right of way) would only apply to the owner of the

neighbouring land in his personal capacity. His ownership of the land would not be a factor, in fact,

the land of the holder of the personal servitude would not be a factor at all. The only relationship

would be between the servient thing and the servitude holder.

- The best example of a personal servitude would be a usufruct. I don‟t need to explain this. This is a

great example of how a personal servitude is a real right that is very personal – the usufructuary need

not own a dominant tenement, in fact, no such thing exists; it is just the usufructuary and servient

thing that are connected by the personal servitude.

- A personal servitude can apply to both movable and immovable property.

- It cannot be ceded (which seems to be a limitation on the freedom to contract).

- A praedial servitude, on the other hand, can be ceded, but only in a certain manner. The owner of the

dominant tenement may not cede the right to just anyone. He may only „cede‟ the right when he sells

the land. He is not ceding the right in the true sense of the word however. If the owner decides to sell

the dominant tenement, the right becomes transferred with the land to the new owner and there is no

choice in this.

Restrictive conditions

- These occur frequently in the practice of conveyancing.

- These are real burdens (burdens upon land, i.e. limited real rights) whereby erven are encumbered

when a new township is established.

- For example, the conditions of title can state that a house within a specific township can only be

thatch-roofed.

- Although disputed, the traditional approach is to consider restrictive conditions to be servitudes.

- They will either be praedial servitudes or personal servitudes, depending on the circumstances of

each case.

- Therefore, restrictive conditions just fall within the endless possible servitudes. We only address

them because their classification as servitudes is controversial.

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COMMON CHARACTERISTICS OF PRAEDIAL SERVITUDES AND PERSONAL SERVITUDES

- We will look at all the characteristics of both kinds of servitudes. Each characteristic of either type of

servitude is important in its own context as well as in comparison or contradistinction to the

characteristics of the other.

- Here, we look at what the heading says.

Limited real right

- Both have things as objects, restrict the entitlements of the owner of the servient thing and apply (in

principle) to the owners of the burdened thing.

- They are therefore both real rights (more specifically, limited real rights. There is only one true real

right – ownership, all other real rights are limited real rights).

Real remedies

- Both are protected by real remedies.

- This is surprising, considering that they are both real rights, oh wait, that‟s not surprising at all.

Nulli res sua servit

- This means that a person cannot have a servitude over their own thing, otherwise it wouldn‟t be a

servitude, it would merely be an entitlement of ownership.

- The meaning of this rule is obviously the first implication of the rule.

- A good example is that a person may only register a servitude over his own thing, at the earliest,

simultaneously with the register of the thing in the name of another person or the delivery of the

thing (i.e. during alienation of the thing).

- This rule also results in the fact that a servitude lapses by merger.

- Thus, if a person has a servitude in respect of a thing and then becomes the owner of that thing, the

servitude will lapse.

- This is due to the elasticity of ownership. The previously burdened land loses its burden and the

entitlements of ownership of that land are restored4.

- The servitude lapses through confusio in such an instance. This is not the same as confusio in the

context of the original acquisition of ownership, I don‟t think. We‟ll go into more detail later.

- An exception to this rule is that a person can have a servitude over a thing of which he is a co-owner.

- This is because the rule nulli res sua servit only applies where the holder of the servitude is exactly

the same person who owns the land over which the servitude exists. This applies as well to co-

owners: the rule will only apply to them if exactly the same co-owners hold the servitude and own

the thing to which the servitude applies.

- 4 I think a better way to look at it would be that the person who held the servitude (which is actually just a right to an

entitlement of ownership that is enjoyed by a non-owner) was a person who enjoyed an entitlement usually only

connected to ownership, in his capacity as the servitude holder. After becoming owner of the thing, he merely enjoys that

entitlement in his capacity as the owner. The entitlement never changes and doesn‟t end up applying to another person, it

merely applies to the same person in a different capacity and thus ceases to be afforded to that person in terms of a

limited real right of servitude but instead in terms of the real right of ownership. This doesn‟t contradict the book‟s

reasoning, it just adds to it.

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- Therefore, in the case of a praedial servitude, if A owns a farm and simultaneously co-owns a

neighbouring farm with B, A may enjoy a servitude over the co-owned farm. Think – A and B own

the servient tenement but ONLY A owns the dominant tenement and thus ONLY A enjoys the

servitude. A+B does not equal A.

- Similarly, in terms of a personal servitude, if A and B co-own a house, either A or B may enjoy a

usufruct over the house (not both though, because then the servitude would be held by A and B and

the servient object would be owned by A and B as well). Admittedly, the book doesn‟t mention the

application of the exception with regard to personal servitudes so I‟m not sure if this is the position,

but it makes sense.

Servitus servitutis esse non potest

- A servitude may not be conferred over a servitude.

- This means that a servitude holder may not grant a third party a servitude to use his servitude.

- An exception would be that a personal servitude could be constituted over a praedial servitude if the

dominant tenement is burdened by a personal servitude.

- For example. A has a farm (dominant tenement) and B is the owner of a neighbouring farm (servient

tenement).

- A has a right of way in terms of a praedial servitude over B‟s farm.

- A bequeaths his farm to his son X subject to a usufruct (personal servitude) in favour of his wife, Z.

- Upon A‟s death, X becomes the owner of the dominant tenement. Because the praedial servitude

accrues to the owner of the land, it will accrue to X, the owner in succession, and the farm of B will

still be burdened.

- However, Z‟s usufruct will allow her to enjoy the entitlements of X‟s ownership of his farm, one of

them being the praedial servitude of a right of way over B‟s farm.

- Another possibility is where, through a praedial servitude, the ownership of the dominant tenement is

extended; in which case, the usufruct over the dominant tenement could also be extended. However,

there is no legal authority for the extension of ownership – the argument for it is that if ownership

can be limited by a limited real right, why can it not be extended by the limited of real right held by

the owner thereof.

Servitus in faciendo consistere nequit

- This is a principle that states that a servitude cannot make a person do something positive. If this

were the case, the object of the right of servitude would be a performance, which can only be the

object of a personal right, which a servitude is not.

- It can only compel a person to not do something or to allow the servitude holder to do something

(thus, endure something). This is also referred to as the passivity principle.

- If a servitude entitles the servitude HOLDER an entitlement to DO something positive on or with the

servient thing, this is known as a positive servitude (don‟t think of this as a contravention of the rule,

this servitude is only positive from the perspective of the holder and is perfectly valid).

- If it forbids the owner of the servient thing from exercising one of his entitlements then it will be a

negative servitude. I would imagine that a negative servitude could also limit an owner‟s

entitlements for the benefit of the servitude holder.

- Apparently, and this was asked in an exam, the importance of this distinction is that a negative

servitude is more difficult to acquire or lose through prescription.

- ??? – Whatever – parrot learn this.

Exception

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- A servitus oneris ferendi (servitude of wall support) entails that the owner of the servient tenement

must allow the owner of the dominant tenement5 to lean one of his buildings against the wall of a

building on the servient tenement.

- Such a servitude, apart from obligating the owner of the servient tenement to endure such action,

also obligates him to positively act in maintaining his building.

- Voet mentions another possible exception where a person may be compelled to build one of his

buildings higher (servitus altius tollendi). This is a servitude, but it is not sure what its exact contents

are or if it is even an exception.

Case law regarding the passivity principle

Schwedhelm v Hauman

Facts

- H purchased farm from S. Within the deed of transfer, there was a condition that the plaintiff should

be able to draw water from the dam on the land of H.

- However, attached to this was also a condition that the respondent must maintain the pipes.

Judgment

- The court held that no positive obligation could be recognised as (part of) a servitude other than the

two abovementioned exceptions.

- Any positive obligation other than the exceptions is merely a personal right.

- In this regard, any later owner of the servient tenement can only be bound by such positive

obligation (personal right) if he personally bound himself to it.

- Mere knowledge of his predecessor-in-title‟s obligation will not bind him in terms of the doctrine of

notice, he must expressly accept the obligation.

- This means that a personal right can only bind a person in terms of the doctrine of notice if the

personal right is one for the establishment of a real right (ius in personam ad rem acquirendum).

- An important question is whether a positive obligation (personal right) that is necessary for the

maintenance of the servitude can be enforceable on successive owners. For example, an obligation to

maintain the water pipes that provide water that the holder of the servitude may draw.

- The court held that such a positive obligation is NOT enforceable against the subsequent owner of

the servient tenement unless he expressly agrees otherwise.

- However, in this case, the portion of the condition that was disputed (the positive obligation) was a

condition of the sale, and even thought the doctrine of notice is not applicable here, this was an

actual condition of the sale in question (H bought the farm subject to the condition that he maintain

the pipes, i.e. he personally bound himself to it) and case was awarded to the plaintiff

- In this regard, see the Low Water Properties case below.

Low Water Properties v Wahloo Sand

Facts

- LWP owned 2 portions of a farm.

- The remainder of the farm was owned by P.

- P granted LWP a servitude over the remainder of the farm.

- P then sold the farm to WS (the respondent).

- WS refused to comply with certain positive obligations.

- These positive obligations were also necessary for the maintenance of the servitude, as in the

Schwedhelm case.

Judgment

- The court confirmed that a positive obligation cannot be part of a servitude.

5 This implies that such servitudes are always praedial servitudes. I think they could also be personal servitudes if the agreement

was as such.

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- The question now was whether the positive obligations (personal rights) were enforceable against

WS.

- The court held that registration of a personal right does not convert it into a real right.

- The court held that the doctrine of notice was not applicable here.

- Therefore, just because WS knew of the agreement between LWP and P does not mean that he is

bound by the same personal right.

Van der Merwe v Wiese

- Court held obiter that a positive obligation, if agreed on, could be part of a servitude.

- Therefore, the doctrine of notice would apply and such obligation would apply to successors in title

as well.

- The result of this opinion is that it would be possible, by way of agreement, to deviate from the rule

servitus in faciendo consistere nequit.

- This is not binding and a final decision was not made.

- The court held that, if it is agreed between the owners of two pieces of land and contained in the title

deed, that a personal right between them should pass from owner to successive owner and be

binding, the successive owner must be taken to have bought the land with knowledge of this

obligation (doctrine of notice).

- Court accepted that a positive obligation cannot form part of a servitude, but this does not necessarily

mean that it cannot be the object of a personal right that may be enforceable against a subsequent

owner in terms of the doctrine of notice.

- The lecturer‟s seem to disagree with this decision because they are stupid.

Important note on the Low Water Properties and Wiese cases - These are the two cases that sit in contention regarding the rule servitus in faciendo consistere nequit

and the doctrine of notice regarding personal rights that create positive obligations.

- I will summarise and put in perspective both decisions because there was an 8-mark (well, 4 marks

but marked in half-marks) question on this.

- This should help you to answer such a question if we get it and it will also help you get these cases

for any other purpose.

- Regarding a positive obligation

Low Water Properties case stated that it does not form part of a servitude and is not a limited

real right.

On the other hand, the Wiese case stated OBITER that it should form part of the servitude.

- Regarding the doctrine of notice (which will determine whether the positive obligation [in terms of

the personal right] is enforceable against a subsequent owner)

Low Water Properties held that the doctrine of notice does not apply unless otherwise agreed.

Wiese held that it does apply (remember that for this part of the judgment in this case, the

court is accepting that the positive obligation is not part of the servitude because it is

enforced by a personal right. The court‟s previous statement was merely obiter and its

decision is not based on this, so the court is accepting that we are dealing with a personal

right and not a servitude, but that such personal right is subject to the doctrine of notice).

- Hilariously, the lecturers asked students to give their own opinion as to which case is correct. Even

more hilariously, the memo actually says „own view‟ and then proceeds to give an answer for you –

now that really is altruistic isn‟t it?

- „Your‟ view as to which is correct must be the following:

- The Low Water Properties case is correct because the object of a positive obligation is a

performance and this constitutes a personal right, not a limited real right – so a positive obligation

cannot be part of a servitude (1).

- Furthermore, regarding the doctrine of notice: it is only applicable to iura in personam

administrative rem acquirenda and not to other personal rights, therefore Wiese was incorrect in

allowing the doctrine of notice to apply automatically – it should first be agreed upon by the parties

(Low Water Properties).

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- Not only do I think that the Wiese case is closer to the right answer (which I think is found in the

Cape Explosive Works case – you can look back at that to see what I mean) but neither case is

authoritative over the other so the fact that our lecturers only provided one possible „opinion‟ in the

memo is, I believe, the greatest testament to their stupidity so far.

Servitudes must be exercised civiliter modo

- The holder of the servitude must exercise the servitude in a civilised manner with the least possible

disadvantage for the owner of the servient thing.

- Basically, he must act as would the reasonable man.

- However, the holder of the servitude is granted all entitlements that are reasonably necessary for the

exercising of his right.

- Therefore, the interests of the parties must be, as far possible, reconciled.

- In the case of irreconcilable clash, the interests of the servitude holder will take preference, but

obviously within the bounds of the civiliter modo requirement.

- In De Kock v Hanel, it was held that when the terms of a servitude are unambiguous, the civiliter

modo requirement should never prevent the use of the servitude for its clear and properly defined

purpose.

DIFFERENCES BETWEEN PRAEDIAL SERVITUDES AND PERSONAL SERVITUDES

Capacity of servitude holder

- We know.

Transference of a servitude

- A personal servitude is NOT transferable because it adheres to the person of the holder of the

servitude. A personal servitude is therefore a highly personal REAL right.

- However, the different entitlements of a personal servitude are transferable, but such transfer must be

within the scope of the servitude (nemo plus iuris rule).

- Even if all the entitlements of a personal servitude are transferred, the nude personal servitude will

still vest in the servitude holder.

- A praedial servitude, on the other hand, is only transferable jointly with the ownership of the

dominant tenement.

Duration

- A personal servitude cannot exist in perpetuity. Its length will depend on the agreement or

instrument creating it and it can never last longer than the life of its holder.

- A personal servitude can also be held by a juristic person (which doesn‟t die and can technically

continue to exist until its members dissolve it). The common law limits a personal servitude held by

a juristic person to 100 years.

- A praedial servitude can, in principle, be granted in perpetuity.

- However, it isn‟t a requirement that it be so granted.

- S75 of the Deeds Registries Act makes provision for the establishment of a praedial servitude for a

specified amount of time.

- S76 for the lapse of a praedial servitude because of the passage of time.

Termination

- A personal servitude will always end at the death of its holder (or at a specified time).

- A personal servitude does not lapse with the death of the holder but remains „attached‟ to the land

and follows the ownership of the dominant tenement.

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Movables and immovables

- We know.

Land

- A praedial servitude must involve at least two separate pieces of land owned by different people.

- It must be conferred over the one piece of land to the benefit of a person in his capacity as owner of

the other piece of land.

- A personal servitude can be conferred over land or over a movable thing.

- A point left out by the book is that a personal servitude only involves one servient thing and one

dominant PERSON.

Divisibility

- A praedial servitude is indivisible. For example, a right of way in terms of a praedial servitude

cannot be registered over an undivided SHARE of a piece of land – it has to be able to be registered

with respect to any part of the entire piece of the land.

- A personal servitude can be divided. For example, a usufruct may be granted with respect to only an

undivided share of a piece of land.

CONTENTS OF SERVITUDES

Determination of contents

- Apart from complying with the general characteristics of a servitude as explained about, each type of

servitude must comply with its own special requirements (nothing further is stated in this regard in

the book).

- The contents are furthermore determined by the intentions of the parties who create the right.

- Basically, the parties that create the servitude will determine what its contents are (entitlements,

restrictions etc).

Rules of interpretation

- If the written contract or other document (such as a will) that creates the servitude creates

uncertainty, such document has to be interpreted to decide what the parties intended.

- It might not be clear whether the parties wished to conclude a praedial servitude or a personal

servitude. It might not even be clear whether they wished to create a servitude at all.

- In such a case of uncertainty, certain rebuttable presumptions exist.

- The underlying ratio for these presumptions is the in favorem libertatis rule.

- This states that, in the event of ambiguity, preference must be given to the least burdening

interpretation.

- For this reason, it would be, for example, rebuttably presumed that the parties created a personal

right instead of a real right, or a personal servitude instead of a praedial servitude.

- The wording of the (alleged) servitude-creating document has to be interpreted in light of the

surrounding circumstances prevailing at the time that the servitude was (allegedly) granted.

- I put in „allegedly‟ because, though most disputes will be as to whether a personal or a praedial

servitude has been granted; some disputes might actually revolve around whether a servitude has

been created at all. Therefore, this needed to be set out better than it was in our useless textbook.

- See questions on the next page. Explain in your own words the nulli res sua servit characteristic of servitudes (4)

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Why can a servitude of right of way in one instance qualify as a personal servitude and why can a servitude of

right of way in another instance be described as a praedial servitude? Also explain the in favorem libertatis rule

of interpretation and give an example (4)

Does the maxim nulli res sua servit apply to co-ownership? Explain (2)

Distinguish between the essential characteristic of a positive servitude on the one hand and the content of the rule

servitus in faciendo consistere nequit (the principle of passivity) on the other hand. Illustrate your answer with

simple, but clear examples. [4]


Praedial servitudes

Definition and nature of a praedial servitude

- It is a servitude, and therefore a limited real right, over the land of another (servient tenement) to

which the holder is entitled in his capacity as the owner of another piece of land (the dominant

tenement).

- A praedial servitude applies in principle in favour of consecutive owners of the dominant tenement.

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- It is a real right and therefore binds the owners of in succession of the servient tenement.

- It can only be established over an immovable thing and must enhance the use and enjoyment of the

dominant tenement for the owner thereof.

Requirements for the establishment of praedial servitudes

Two tenements

- There must be a dominant and servient tenement.

- This ties in with the next requirement, namely that of utility.

The utility requirement (praedio utilitas)

- The exercising of the servitude must be to the advantage (of utility) to the owner of the dominant

tenement.

- However, it must not merely benefit him in his personal capacity; it must benefit him in his

capacity as owner and thus benefit any successive owner of the land.

- More specifically, the servitude must be beneficial to the dominant tenement in that it enhances the

use and enjoyment of the dominant tenement (for the owner in his capacity as such).

- A benefit for a person in his capacity as owner is a something that will benefit any owner of the

land in his capacity as owner.

- If, for example, the servitude allows the owner of a piece of land to pick lemons from the tree of

his neighbour, it cannot necessarily be said that the next owner would benefit from the picking of

these lemons in his capacity as owner. Therefore, this would probably just be a personal servitude.

- However, if the servitude involves the right of an owner of a farm to draw water from a

neighbouring farm, it can very well be accepted that such a right would be beneficial to an owner

in succession, as all farms, no-matter who owns them, need water and would thus benefit from the

owner‟s right to draw water from a neighbouring farm. This would then lead to a benefit for the

dominant tenement, no matter who owned it.

- There are different interpretations of this, but it immediately appears that the purpose and use of

the dominant tenement will be a determining factor in whether a servitude would benefit the owner

thereof and his successors in title (therefore constituting a praedial servitude).

- Different interpretations of the utility requirement – the question now arises to how narrowly or

widely this requirement must be interpreted. The following interpretations should be identified and

differentiated:

- A very narrow interpretation – the praedial servitude must be to the advantage of the dominant

tenement according to the natural state thereof.

- A moderately wide interpretation – the praedial servitude must be to the advantage of the dominant

tenement according to the natural state and/or the economic destination thereof (favoured by our

courts).

- A wider interpretation – the praedial servitude must be to the advantage of the dominant tenement

in the sense that it increases the sale or letting value thereof.

- Positive law – it appears as though South African case law favours the moderately wide

interpretation6.

- A question arises as to whether the difference between the moderately wide interpretation and the

wider interpretation is necessary.

- In most cases, an advantage which increases the sale or letting value of the dominant tenement will

also increase the natural or economic use of the land.

- However, certain cases might result in a distinction. For example, the right of the owner of the

„dominant tenement‟ to extract mineral water on a „servient tenement‟ will not increase the current

economic use of the dominant tenement (unless the „dominant tenement‟ is used to produce

mineral water for a profit as well, an observation not made by the lecturers). However, it may

increase the market value of the „dominant tenement‟ because a piece of land with such a right

attached may up the selling price of the land.

6 Hotel De Aar v Jonordon Investments (Edms) Bpk 1972 2 SA 400 (A)

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- According to the moderately wide interpretation taken by our courts, a praedial servitude does not

have to only satisfy the residential or agricultural needs of the dominant tenement. It may also

satisfy the industrial or economic needs.

- Therefore, the right to take goods produced on the servient tenement and sell them on the dominant

tenement can be a praedial servitude.

- Furthermore, the benefit need not be immediately exploitable. For example, the right to draw water

from the servient tenement need not entail that such water be used immediately. If the water is

intended to be stored in a reservoir and used later for irrigation on the dominant tenement, the

drawing of water will still be beneficial to the dominant tenement, even if the benefits thereof will

only be reaped later.

- Furthermore, the benefit derived from the right may not be exercised with respect to a piece of land

other than the dominant tenement, even if such other piece of land is owned by the holder of the

servitude.

Vicinitas

- This has two meanings, namely, adjacent and neighbouring.

- The law thus requires that the two tenements must be EITHER adjacent to each other or at least

neighbouring.

- Therefore, the actual requirement is that the two tenements must be neighbouring to such a degree

that the servitude can be beneficially exercised.

- This is merely an extension of the requirement that the dominant tenement must benefit.

- Therefore, the ultimate question is whether the respective tenements are situated in such a way and

the circumstances are as such, that the exercise of the right of servitude will be of benefit to the

owner of the dominant tenement.

- If the servient tenement and dominant tenement are not adjacent, the erven in between need not be

burdened by the servitude.

- A negative praedial servitude does not require the erven in between the tenements to be burdened

as well.

- However, it has been submitted that, in the case of a positive praedial servitude, the erven in

between should also be burdened7.

- This position is not agreed with by our lecturers.

- They state that the ultimate question regarding vicinity of the tenements is whether the dominant

tenement will be able to benefit.

- If, even in a positive praedial servitude, the dominant tenement is in a position whereby it can

benefit from the servient tenement without committing an unlawful act with regard to the erven in

between, the utility principle should be fulfilled.

Perpetua causa

- Usually laid down as a requirement for a praedial servitude.

- The servient tenement must be capable of answering the needs of the dominant tenement on a

permanent basis (indefinitely and without interruption).

- Furthermore, this requires that the dominant tenement must continually have the relevant needs.

- This requirement developed in regard to water servitudes to which it is particularly relevant.

- However, in our law this requirement is not applied so literally that a water source on the servient

tenement must be absolutely perennial.

- In the Schwedhelm case, it was accepted that the servitude of drawing water from a dam fed by a

borehole need not require that the borehole was not allowed to dry up at times.

- Only the permanent and total cessation of the usage capacity of the servient tenement has the result

that this requirement is not complied with, in the view of Van der Merwe.

- De Waal thinks that perpetua causa should not be a factor that should be taken into account when

determining whether the utility requirement has been fulfilled.

7 Briers v Wilson

79

- He states that the utility requirement requires that the servitude should also benefit the successive

owners of the dominant tenement. Therefore, it is argued that the servitude must have a continuing

or permanent foundation.

- Sonnekus and Neels regard the perpetua causa as a separate aspect that should not be a

requirement.

- They argue that the purpose of validity requirements for praedial servitudes is to prevent

immovable property from being too heavily burdened. The perpetua causa requirement actually

creates more of a burden on the servient tenement.

- Furthermore, this requirement promotes no social purpose and creates legal uncertainty.

- Our lecturers agree with this view. Especially in view of the fact that servitudes are created by

agreement. Why then can the parties not agree that the servitude need not be perpetual? A praedial

servitude can be made subject to a resolutive term8 or condition, so why would it need to be

perpetual?

Conclusion as to vicinitas and perpetua principles

- The lecturers‟ conclusion, which will probably give you marks, is that even though both these are

set out as requirements for a praedial servitude, they are merely a logical outcome of the utility

requirement and should not be separate requirements.

- Furthermore, perpetua causa fulfils no social function and should not be a separate requirement at

all.

General requirements

- These general requirements that apply to personal servitudes and praedial servitudes must

obviously also be complied with.

- We‟ve done them already.

TYPES OF PRAEDIAL SERVITUDES

- There is no closed list of servitudes and any limited real right that complies with the requirements

of a praedial servitude will be construed as such.

- Traditionally, there are 3 distinctions made with respect praedial servitudes.

1) Rural and urban praedial servitudes.

2) Positive and negative praedial servitudes.

3) Praedial servitudes conferred in specific terms and those conferred in general terms

(simpliciter).

Rural and urban praedial servitudes

- This will probably end up being pointless.

- The distinction is not found in the type of entitlement provided by the servitude or the location of the

tenements.

- It is found in the use of the dominant tenement.

- If the dominant tenement is used for agricultural purposes, any servitude in relation to it will be rural.

- If it is used for residential, business or industrial purposes, the servitude will be urban.

- This distinction used to be important at common law because the prescription requirements differed

between these two types of servitudes.

- These requirements are now the same for prescription in both urban and rural servitudes so the

difference is completely unimportant.

- Wow, that really was pointless.

8 S75 of the Deeds Registries Act.

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Positive and negative servitudes

- We know this already.

- If you think this refers to a negative obligation as opposed to a positive obligation, think again and

then read the whole section on servitudes again.

- As you know, the only importance in this distinction is that a negative servitude is harder to gain

through acquisitive prescription and harder to lose through extinctive prescription.

Praedial servitudes granted in specific terms and those granted in general terms

Praedial servitudes in specific terms

- This distinction and type of servitude is especially applicable in terms of a praedial servitude for a

right of way (via).

- It is applicable in terms of any servitude that is exercised along a certain route (running electrical

wires, pipes etc) and such servitude may be personal or praedial. Here we deal with praedial

servitudes of a right of way only.

- Usually, a right of way is constituted along a specific route that is determined beforehand by

agreement.

- It must be properly defined and, unless it runs parallel to a boundary line of the servient tenement, it

must be indicated on an approved land surveyor‟s diagram that is registered simultaneously with the

deed of servitude.

Praedial servitudes simpliciter (in general terms)

- For example, a right of way can just be granted over the farm of X, with no further qualifications or

limitations.

- In this case, the holder of the servitude may therefore cross the farm of X using any route that he

wishes, provided that he acts civiliter modo in the exercising of his choice9.

- HOWEVER, one the holder has chosen his path, he may not change it unilaterally.

- The owner of the servient tenement may, however, alter the route, provided that the new one is just

as convenient as the old one.

Nach Investments v Yaldai Investments

Facts

- Contract stipulated that the seller reserved a right of way perpetually (not important) over the

servient tenement and the exact route was to be determined by agreement.

- N argued that servitude was invalid because right of way had not been specified (void for

vagueness).

- Court a quo rejected this – N appealed. The appeal was dismissed.

Judgment

- The determination of the route at the time of constitution of the servitude is not an essentialia for the

servitude (or a requirement, I would imagine, as N‟s argument is that the servitude is void).

- This type of servitude (right of way) can be constituted generally or specifically.

- In a servitude simpliciter, the holder may select any route on the servient tenement as long as he

exercises this choice civiliter modo.

- Also, the intentions of the parties in such a case could be important to determine the validity of the

servitude.

- If the intention was to specify the route, then the servitude would merely be unenforceable until the

route was specified.

9 Nach Investments v Yaldai Investments

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- If the intention was that a route would be agreed upon later, the agreement is valid and once the route

is chosen, the servitude becomes specific.

- Appeal dismissed.

Some examples of praedial servitudes

- Right of way, which may include of or more of the following:

1) The right of foot path (iter)

2) The right to drive cattle (actus)

3) The right of way in the broad sense (via), which may include the abovementioned

entitlements as well as the right of transport.

4) A way of necessity (via necessitatis) – seen later.

- The right to grazing.

- The right to water for livestock.

- The right of drawing water (aquaehaustus).

- The right to goose your neighbour if he ever gets stuck between two cows.

A grants a praedial servitude of right of way over his land in favour of B as owner of the neighbouring farm. The

praedial servitude is granted for 10 years, because A intends to develop a township on his land after 10 years. A,

however, sells the land to C and C refuses B access to use the road. His argument is that the servitude does not

qualify as a praedial servitude because the right is not continually or everlasting. Advise B on his position in law

in this regard! (3) What is a negative praedial servitude (definition) and why is it important to distinguish between positive and

negative praedial servitudes? (2)


Personal servitudes

- A limited real right whereby the holder is granted, in his personal capacity, an entitlement of use and

enjoyment with respect to the movable or immovable thing of another.

The book‟s definition on the nature of a personal servitude

- I think here that the assumption stands that, after going through praedial servitudes, our IQs have

dropped to 50.

- Let‟s carry on.

Prerequisites for the establishment of a personal servitude

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- Before the requirements of registration or prescription can be met in order to create a personal

servitude, it first has to comply with the essential requirements or characteristics of a personal

servitude:

1) The servitude must accrue to the holder in his personal capacity (my head hurts).

2) The servitude must comply with the general requirements that apply to servitudes (discussed

previously).

KINDS OF PERSONAL SERVITUDES

- There is no closed list.

- Still we have a few traditional personal servitudes that we will concentrate on.

Servitutes regulares (well-known common law personal servitudes)

- Consists of the following three:

1) Usufruct

2) Use

3) Dwelling

- These are actually the only kinds that we go into detail on.

Servitutes irregulares

- These are personal servitudes that, at first glance, appear to be praedial servitudes but are actually

conferred on a person in his personal capacity (like a right of way that is only afforded to Bob).

Restrictive conditions of title that are laid down in favour of an individual in his personal capacity

- …

Modern, but typical personal servitudes

- These are as a result of modern legal traffic.

- For example, the servitude of electrical power lines in favour of Escom.

USUFRUCT

Definition

- A personal servitude which allows the holder to use the movable or immovable thing of someone

else and to take the fruits thereof, while keeping the substance of the thing intact.

Object

- Both movable and immovable things can be burdened.

- The same usufruct can also be held over a movable and immovable thing at the same time (such as

over a farm as well as the cattle on the farm).

- Sometimes, a usufruct is conferred over rights or other immaterial things. This cannot be so, at least

not within the scope of the law of things – the object of a real right must be a corporeal thing.

- A new terminology should be applied to such instances in terms of other branches of the law, such as

intellectual property law.

Consumable objects and quasi usufruct

- A consumable cannot be the object of a true usufruct (remember, the usufructuary must maintain the

substance of the thing).

- However, legal practice has led to the creation of a quasi usufruct with respect to consumable things.

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- In this case, the quasi usufructuary actually becomes the OWNER of the consumables but, upon

termination of the quasi usufruct, he has to return consumable things of the same quantity and quality

as those received.

- Note that a quasi usufruct is not a limited real right as the quasi usufructuary becomes the owner of

the consumables.

Entitlements and obligations

General

- The usufructuary may use, enjoy and acquire fruits and benefits of the thing.

- However, he does not have a ius abutendi (the entitlement that the owner has to destroy or consume

an object).

- He must exercise his right civiliter modo, so that the essence of the thing is retained and he must

return the thing to the owner when the usufruct ends.

- The usufruct is granted with regard to a specific asset or assets. The usufructuary may not just

replace the object of the usufruct at a whim and then expect the usufruct to apply to the new object,

even if it is the same type of object.

- In such a case, an entirely new usufruct will have to be established over the replacement thing.

- This new usufruct could be established tacitly though.

- In the case of a usufruct over, for example, a flock of sheep (a universitas rerum or composite thing),

the flock is the object of the usufruct. Of course then, this object will change and constituent

elements of it (sheep) will be replaced naturally by death and birth. This is an exception to the rule

above.

Fruits

- In principle, the usufruct is entitled to the fruit of the thing. A distinction is made between natural

fruits and civil fruits, both of which have different categories that I will now explore, like

Christopher Columbus.

Natural fruits

- Ownership vests in usufructuary upon GATHERING of fruits yielded by plants.

- Regarding the natural offspring of livestock, it is not clear whether they should be gathered or if

mere separation from the mother is necessary.

- We agree with the latter view because of the nature of the offspring and their dependence on their

parent/herd. There is therefore no need to take physical control.

Trees

- Trees regarded as silva caedua may be felled by the usufructuary and taken in ownership by him.

- Silva caedua are trees that are destined to be felled in the normal run of things.

- They must however, be replaced with new plantings by the usufructuary.

Herds of livestock

- Usufruct may gather wool, milk etc from the livestock.

- With regards to the offspring, the usufruct is bound by the salva rerum substantia principle (he must

maintain the thing in essence).

- Applying this to a flock of sheep, it is clear that the herd must be maintained in quantity and

quality10

.

- The only offspring that he can take as fruits are those in surplus of the original amount of animals

burdened by the usufruct (because this original number is owned by the owner of the herd, no the

usufructuary).

10

Geldenhuys v Commissioner for Inland Revenue

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- He can dispose of animals of the original flock, as long as the original number of animals is returned.

- Also, the animals must be of the same quality. If a herd of 20 prize downhill-barefoot-goat-racing

goats was made subject to a usufruct, you cannot return 10 racing goats and 10 normal goats.

- The duty to return the same quantity and quality of animals results in a duty of maintenance for the

usufructuary – he obviously doesn‟t need to increase the herd though.

Geldenhuys v Commissioner for Inland Revenue

Facts

- An estate was bequeathed to heirs but the estate was subject to a usufruct in favour of G.

- A flock of sheep was part of the estate (and thus subject to the usufruct) but many of the sheep died

when G fed them balls of aluminium foil in an attempt to make steel wool.

- G then received permission from the heirs to sell the remaining sheep.

- She sold them at a profit and invested the money. However, she was taxed for this profit.

- She argued that she could not be taxed, as the money had not accrued to her in her personal capacity

as the owner of the sheep.

- I don‟t see this mentioned, but I assume that the money was then the new object of the usufruct (as

agreed between G and the heirs, who were the owners of the sheep) and that she did not own the

money, she would only be entitled to interest that would accrue later (civil fruits).

Judgment

- The usufructuary is the owner of the burdened thing.

- The quasi-usufructuary, however, is the owner.

- Still, in this case, it was held that sheep/cattle are not the object of a quasi-usufructuary (i.e. they are

not consumable things).

- NOTE, that any surplus offspring of the sheep would accrue to the usufructuary as owner because

the usufructuary may acquire fruits (this was not apparent in this case).

- The court stated that she had NOT disposed of the sheep for her benefit as she did not own them.

- She had received the money but it had not accrued to her. She was not entitled to the proceeds of the

sale, only the bare owners were (the heirs).

- She didn‟t have to pay the tax.

- Unfortunately, she was later killed whilst trying to make a milkshake by bouncing a cow up and

down on a trampoline.

Minerals

- There is a lot on this in the book, but it‟s all completely unnecessary.

- In terms of the new Mineral and Petroleum Resources Development Act, minerals (even salt) belong

to the nation or state and not the owner of the land upon which they are found.

- Therefore, any usufruct established over land after 1 May 2004 may not include the right to mine on

that land.

- HOWEVER, if a usufruct was created before this date (which 99.9999% are), the usufructuary may

actually be the holder of an „old right‟ which can be converted in terms of the transitional

arrangements of act into a MINING right granted by the state (more detail later).

Civil fruits

- Rental would be a good example.

- The usufructuary is entitled to the rental as soon as it is claimable.

- If the usufructuary dies after the rental was payable but before it was actually paid, the executor of

the usufructuary‟s estate may collect the outstanding rent.

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Transferability

- Generally no – too personal.

Exceptions

- S66 of the Deeds Registries Act allows the holder of a personal servitude to „transfer‟ that personal

servitude to the owner of the land burdened by the servitude.

- This isn‟t actually a transfer. If a usufruct is transferred to the owner of the servient tenement by a

notarial deed, the usufruct terminates by confusio (because the holder of the servitude is now also the

owner, which cannot happen).

- So what we‟re dealing with is a renunciation of a usufruct by the usufructuary.

- Once the usufructuary renounces his usufruct, it terminates and the nude ownership of the owner of

the servient tenement will expand to its full extend (elasticity of ownership).

- Therefore, what this section is aimed at is actually allowing the usufructuary to waive his right

through a notarial deed and thus restore full ownership to the owner of the servient tenement.

- S69(1) also allows a usufructuary and the owner of the servient tenement to transfer all of their rights

in the land (ownership and usufruct) to a third party who will then become full owner and the

servitude will lapse through confusio as well.

- This is actually just a shortcut so that the usufructuary doesn‟t have to sign a separate notarial deed

to waive his right; he merely has to give power of attorney to give transfer together with the

transferor.

Granting of entitlements to third parties

- The entitlements can be granted to another person, but the right must remain with the usufructuary

(very much like the right of ownership remains with the owner of the servient tenement but his

entitlements vest in the usufructuary – its kind of like a sublease).

- For example, the usufructuary could lease out the land and therefore grant the entitlement of use and

enjoyment to the lessee.

- In terms of land, he could even transfer a real right to a third party by means of registration of a long

term lease agreement.

- Obviously the usufructuary cannot transfer more entitlements than he has under the usufruct (nemo

plus iuris) and if he dies, the usufruct ends and the granted entitlements will as well.

- However, the usufructuary can also grant ALL his entitlements, so long as he retains the right of

usufruct.

- It is argued that this leads to the difference between transfer of the usufruct and granting of its

entitlements to a third party is a „distinction without difference‟.

Encumbrance

- The usufructuary is not the owner of the thing and can therefore not encumber the ownership in the

thing in the sense that ownership could actually be taken away in certain instances (for example, if

the thing is pledged or mortgaged, it could be sold if the debt is not paid off, therefore, such

encumbrances are forbidden).

- However, in terms of S69(3) of the Deeds Registries Act, the usufructuary and the owner of the land

can jointly mortgage the land to the full extent of their respective rights. Therefore, if owner and

usufructuary are joint debtors, they can jointly mortgage the land. This is a condition in which the

usufruct can be encumbered (theoretically).

- However, the usufructuary still waives his usufruct, in essence, so that if necessary, the land can be

sold in execution free of the usufruct.

- In terms of S69(4), the usufructuary as principle debtor may have his usufruct attached and sold in

execution to extinguish his debt (which is also another way to encumber a usufruct).

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- This is also another exception to the rule that a usufruct is not transferable because it will obviously

be transferred to the buyer in execution.

- Do not take this to mean that a usufructuary can BURDEN his usufruct as a form of real security

such as a mortgage or pledge – first of all a usufruct is not a thing over which a real right can exist

and second, S69(4) just allows it to be sold in execution, there is no mention that such sale was

preceded by a mortgage or any other security.

Duties of the usufruct

- We deal only with the ex lege duties that will always apply, no matter how the usufruct was

established.

- These duties could be supplemented by an agreement or testamentary bequest that adds more duties.

However, this is too open ended so we‟ll stick to the ex lege duties.

1) Must use the thing in a civilised manner (civiliter modo). The test for this conduct is the

criterion of reasonableness.

2) On termination of the usufruct, the thing must be returned to the owner with its essence intact

(salva rei substantia).

3) The usufructuary must prepare an inventory of things received under the usufruct. This is to

inform the owner of what has to be returned to him.

4) The usufructuary must, at the request of the owner, give security for the eventual return of the

things salva rei substantia. Apart from one exception below, a testator may not exclude this

requirement. The following exceptions apply in which security need not be given:

If the usufructuary is the father of the owner if the servient thing.

If the usufruct is created by a will and the usufructuary is the mother of the owner

of the servient thing and the usufructuary is exempted in the will from having to

provide security.

If the usufructuary donated the thing to the holder of the nude ownership subject

to a usufruct in his favour.

If the usufruct was established by another act inter vivos and the usufructuary is

explicitly exempted from the obligation to furnish security.

5) He is responsible for the normal maintenance of the thing during the existence of the

usufruct. This duty arises from the salva rei substantia rule.

More detail on the duty of maintenance

- The usufruct is responsible for the normal costs of repair and expenses that a diligens pater familias

would incur in the normal course of events.

- For example, in a residential area, the painting of a house, care of the garden or payment of property

rates would be normal maintenance.

- However, he is not liable for abnormal maintenance (insurance costs, or something that, despite

repeated repairs, breaks down continually).

- He will not be liable for necessary maintenance that is exceptional in its nature and costs (like a roof

blowing off in a hurricane or a herd of wild buffalo becoming jealous of your new lounge suite and

stampeding through your living area).

Can he claim back expenses from the owner incurred in maintaining the servient thing?

- Now you must ignore the last heading! This is not necessarily related to whether or not the

usufructuary was responsible for the maintenance or not, so get it out of your head because it will

confuse you.

- He is NOT entitled to claim compensation for useful or luxury expenses (Brunsdon’s Estate v

Brunsdon’s Estate). Even though he is not responsible to such expenses, they are not necessary and

thus the owner cannot be held responsible for them either.

- However, he does have a ius tollendi with respect to useful and luxury improvements (the right to

remove them), which must be exercised before expiry of the usufruct (Brunsdon’s Estate).

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- Normal maintenance costs are his liability alone – no difficulty there.

- However, so called graviores expensae can be claimed incurred by the usufructuary in maintenance

of the owner‟s thing. These are expenses that are necessary but are so extreme in their nature and

extent that only the owner should be held responsible for them.

Determining the nature and extent of an expense (in order to classify it as graviores expensae)

- In Ex Parte Borland, the court held that the usufructuary must bear the costs of repairs unless they

are heavy or serious, or relate to the permanent use of the property.

- The court held that the test is whether the expenditure claimed by the usufructuary falls into the

category of special or extraordinary expenses (which must obviously also be necessary, as all luxury

or useful expenses, no matter how extravagant or extraordinary, are not claimable).

- Both the nature AND extent of the necessary expenses must be extraordinary for the expense to

qualify as graviores expensae.

- For example, if the usufructuary paints the house (which is normal in nature) but used expensive,

imported paint (which would make the expenditure extraordinary in extent), such expense is not

claimable. The book doesn‟t mention this but it appears as though the use of extraordinarily

expensive paint renders the expense unnecessary.

- On the other hand, if a tornado blew into the house (which would make the nature of the expense, i.e.

the repair of tornado damage, extraordinary) but the damage caused was minimal (the extent of the

expense is normal) – such expense would not be claimable as a graviores expensae either.

- Another possible approach would be to judge the nature and extent of the expenses jointly to

determine if, in a specific case, they qualify as extraordinary.

- In the Borland case, the repairs made by the usufructuary to a dilapidated house on the servient

property was considered to be graviores expensae.

- However, she also repaired houses on the land so that she could rent them out and thus earn an

income. This was not claimable.

Use (usus) and habitatio

- There aren‟t enough marks to waste time on these, read 247-249.

Z is the usufructuary of a farm as well as all the farming implements. During the harvest-season an earthquake causes the roof of the store to collapse. Inside the store an expensive harvester (which is also subject to the usufruct) is destroyed. Because it is harvesting-season, Z immediately buys a new harvester. The roof is also repaired to protect the other implements against the forces of nature. He also decides to paint the store because it was necessary for its maintenance. He also replaces the existing door with a new electric door to improve the use of the store. Answer the following questions bearing these facts in mind (a) Is Z entitled by law to claim as usufructuary, the expenses of the new harvester from the owner, if the harvester is registered in name of the owner of the farm? Briefly explain (1) (b) Is Z entitled by law to claim as usufructuary the expenses for the repair of the roof from the owner of the farm? Briefly explain (1) (c) Is Z entitled by law to claim as usufructuary the expenses for painting the store from the owner of the farm? Briefly explain (1) (d Is Z entitled by law to claim as usufructuary the expenses for the new electric door from the owner? Briefly explain (1) [8]

(a) A grants B a usufruct over a flock of 10 000 sheep. Can B sell 5 000 of the original flock, with the consent and co-operation of A? Explain (1) (b) A grants B a usufruct over a flock of 10 000 sheep. Can B sell 5 000 of the original flock, if there is no natural increase? Explain (1) (c) A grants B a usufruct over a flock of 10 000 sheep. After the passage of 5 years, the flock totals 15 000 of which 5 000 sheep are the natural increase of the original flock. Can B sell the 5 000 natural

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increase of the original flock? Explain (1) (d) Which one of A or B is taxable on the proceeds of each of the sales in (a) and (c) mentioned above? Explain (2)

(a) Explain the real character of a usufruct and indicate why it qualifies as a personal servitude. (3) (b) What do you understand by the salva rei substantia rule as applied to a usufruct? Explain how this rule has been adjusted in respect of a quasi usufruct (5) (c) Distinguish clearly between a usus and a habitatio over a residence, with reference to the question whether the holder of the servitude may let the residence. (2) (well, this is one question that I did find) [10]


The establishment of servitudes

- Either by an original method, like prescription or by a derivative method, like the registration of a

deed of servitude in the deeds office.

- Don‟t confuse this with the original and derivative methods of acquiring ownership, but they are

very similar. Servitudes are after all, like ownership, real rights.

- The most important methods for the establishment of servitudes are:

1) Registration.

2) Prescription.

3) Statute.

4) Expropriation.

5) Delivery in the case of a personal servitude over movable things.

Registration

- The Deeds Registries Act provides for the establishment of a servitude over land by registration in

the deeds office.

- NB!! Only a servitude over immovable property (personal OR praedial) has to be registered!

Therefore, a personal servitude over a movable does not need to be registered.

- There are three causa (reasons) for registration followed by two requirements.

Causa (things that can lead to the creation a servitude by registration)

- An obligation-creating agreement.

- A testamentary bequest.

- An order of court.

- NOTE, these will not create a servitude by registration, they will give you a reason to register the

servitude and thus create it!

- Also note that these causa are NOT requirements for the establishment of a servitude, we use the

abstract system for the establishment of real rights and no actual legal reason is required before a real

agreement can be reached. These are just the three legally recognised possibilities.

Note on obligation-creating agreements

- If the parties have agreed between each other, you must not mistake their obligation-creating

agreement with the real agreement.

- The obligation-creating agreement is embodied in a notarial deed of servitude.

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- This merely creates a personal right for the proposed holder of the servitude to claim that the other

party must PERFORM by co-operating in the establishment of the servitude as a real right by

registration.

- This personal right created by the deed of servitude is a ius in personam administrative servitutem

acquirendam – exactly the same as the right to deliver created by a contract of sale in

contradistinction to the real right of ownership created when deliver actually occurs (real agreement).

Requirements for registration

1) Registration of the servitude against the title deed of the servient tenement.

2) The existence of a real agreement between the parties at the time of registration.

Forms of registration recognised

- Registration of a notarially executed deed of servitude (remember, the obligation-created agreement

is contained in here and the parties sign it. All they do then is take it to the deeds register and register

the actual deed of servitude).

- Registration of a deed of transfer wherein a servitude is reserved (for example, you buy a house and

reserve a servitude in the title deed. When the sale is completed and the house is registered in your

name by registering the title deed at the deeds office, the servitude contained therein will also be

registered).

- Both forms are looked at in more detail now.

Registration of a notarially executed deed of servitude

- The steps taken are the following:

1) The notary must draft and sign the deed of servitude, which must also be signed by both

parties to the servitude and 2 witnesses. This signing must be attested by the notary.

2) He registration process then begins when this document is then sent to the registrar of deeds

for his signature.

3) Sent with it is the title deed of the servient tenement and, in the case of a praedial servitude,

the dominant tenement as well – both with endorsements recorded on them by the deeds

office examiner.

4) The servitude comes into existence as a real right through registration when the endorsement

of the servient tenement is signed by the registrar of deeds. NB!!!

Registration of a deed of transfer wherein a servitude is reserved

- Parties can record a servitude as a condition in the deed of transfer of the land to be transferred.

- The piece of land concerned MUST be transferred simultaneously with the servitude.

- This method saves time and costs as a separate notarial deed is servitude is not required.

- S67 provides for the creation of a personal servitude in this way.

- It states that a personal servitude may be reserved in the deed of transfer in favour of the transferor,

or the transferor and his spouse married IN COP or the transferor‟s surviving spouse to which he was

married IN COP.

- However, if the testator was married OUT of COP, he will have to register the personal servitude in

the name of his spouse in a separate notarial deed of servitude.

- A praedial servitude may be so registered, but only if the owner of the land being transferred with the

condition containing the servitude within its deed of transfer, also owns the other piece of land

involved in the servitude. For example, a deed of transfer contains a praedial servitude involving

farms A and B. The person selling farm B to another person must also own farm A. either A or B

could be the dominant tenement or the servient tenement, it doesn‟t matter, both farms involved in

the proposed servitude must be owned by the seller before he sells one of them.

- If the servient tenement is the one being transferred, the servitude is created as a real right the

moment the registrar puts his signature on the deed of transfer in which the servitude is contained.

- If the dominant tenement is the one being transferred, the servitude is not created by the registration

of the transfer, but as soon as the title deed of the servient tenement is properly endorsed.

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The effect of the registration of a servitude

- The servitude will become enforceable between the parties as well as third parties.

- This means that if a servitude is already registered over a piece of land and that land is sold to a third

party, the servitude will still apply and will be enforceable against him, even if the new owner was

not aware of the servitude, because it is a real right which came into existence through registration.

The effect of an unregistered servitude NB!!!

- Sometimes a servitude-creating agreement is entered into between the parties but registration never

takes place.

- Personal rights still exist, but how does this unregistered servitude (which isn‟t really a servitude)

apply?

- There are 5 instances given.

Instance 1

- The parties have agreed on the terms of the servitude but it is not registered.

- What is the effect of the unregistered servitude for the concerned parties as between themselves

(inter partes)?

- Simply, it will depend on the agreement between the parties whether or not the servitude will be able

to be exercised before it is registered.

Instance 2

- A and B enter into a servitude-creating agreement.

- The servient tenement is sold by B and transferred before registration and the new owner (C) has NO

KNOWLEDGE of the agreement.

- Now we are in a position were the new owner might be obligated to co-operate in the creation

(registration) of the servitude that was agreed on by the other parties.

- Normally, a person is bound to the terms of an agreement to which he was not a party.

- However, if he had knowledge of his predecessor‟s obligation to grant another a real right, he will be

bound in terms of the doctrine of notice.

- Van der Merwe states that the third party should be bound even if he doesn‟t have knowledge of the

obligation.

- His argument is that ownership can be limited by a personal right as well a limited real right (which

is true).

- So, before B sold the servient tenement, his ownership in it was already limited by A‟s personal

right.

- Therefore, in terms of the nemo plus iuris rule, B, whose ownership was limited when he passed it to

C, could not transfer full ownership because you cannot transfer more entitlements than you have.

- This effectively results in C‟s ownership having to fall under the same limitation.

Instance 3

- The same thing as above, but now C KNOWS about the obligation.

- The doctrine of notice will result in C at least having to co-operate in the registration of the

servitude.

- However, is A allowed to enforce the right of servitude against C before registration?

- In Van den Berg v Van Tonder, it was held that this is not generally possible, because C is not a party

to the servitude creating agreement.

- However, the case also states, that if non-exercising of this right would result in irreversible damage

to B but no damage to C, then it should be allowed.

- CRITICISM of Van Schalkwyk and Van der Spuy – it cannot be said that C, in terms of the doctrine

of notice, should be bound to a personal obligation to co-operate in registration but then also say that

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he is not bound by B‟s personal right before execution merely because „C was not a party to the

agreement‟.

- They still agree that C should NOT be bound by B‟s interim personal right, but for different reasons.

- Yes, the personal right of B to compel C to co-operate in the creation of a real right is a iura in

personam ad rem acquirendum, to which the doctrine of notice applies (these are the only personal

rights to which it applies).

- HOWEVER, B‟s right to actually enforce the right of servitude is an „interim‟ creditor‟s right with

no view to creating a real right, and is not a iura in personam ad rem acquirendum and the doctrine

of notice should not apply. THIS is the reason that C should not be bound by this right of B‟s.

- Van der Merwe still holds strong to his previous point as seen in instance 2 – namely that C will be

bound irrespective of his knowledge.

Important question

- What is the precise moment that the knowledge in the 3rd

party (C) should exist for the doctrine of

notice to activate?

- Must it already exist at the conclusion of the contract of sale with B or must it be in existence at the

time of registration in the deeds office? This is NOT a reference to the servitude-creating agreement

and its registration! The stupid book makes it look like this. We‟re talking about C‟s contract of sale

(or other agreement whereby he becomes owner) and the registration of the land in his name.

- In Fry’s v Ries, the court supported the view that the knowledge must exist at the time of conclusion

of the agreement.

- However, we follow the view that the moment of registration of the land in C‟s name is decisive.

Another important question

- Can a third party be bound, in terms of the doctrine of notice, to a verbal servitude-creating

agreement that he was aware of?

- The answer is NO.

- An agreement in respect of the alienation of land („land‟ is also defined as an interest in land by the

AOLA, which is what a servitude is) has to be written.

- So, if the original owners verbally concluded this agreement, even if C heard it, it isn‟t an actual

agreement and C is under no obligation to take notice of it.

Instance 4

- A and B enter into the agreement and before the servitude is registered, the servient tenement is sold

to C, who had no knowledge of their agreement.

- However, C then sells the land to E, who did have knowledge of the agreement.

- Will E be bound?

- According to the doctrine of notice as extended and applied by the appellate division in Grant v

Stonestreet, E will be bound by the servitude-creating agreement vis-à-vis B despite the intermediate

owner (C) having no knowledge of the agreement.

- Van der Merwe‟s argument can be applied again – even though B didn‟t know, he was bound and

therefore his ownership was also limited by the personal right and the nemo plus iuris rule leads to

E‟s ownership being limited in exactly the same way.

Instance 5

- A and B enter into their agreement again but then A sells the servient tenement to C and B sells the

dominant tenement to D before registration of the servitude takes place.

- Can D, the new owner of the dominant tenement, compel C to register the servitude in his (D‟s)

favour?

- In terms of Judd v Fourie, D can do so IF C had knowledge of the obligation at the time of

conclusion of the deed of sale.

- Van der Merwe ruins everything again with a very good point.

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- Even though C‟s ownership is limited by the ius in personam ad servitutem acquirendam because of

the nemo plus iuris rule (as applied before), it is not D‟s right to enforce unless B cedes it to him.

Registration as a result of a testamentary bequest

- Servitude can be bequeathed by a will.

- Testamentary bequest is only a causa for establishment of servitude, not a requirement.

- A legal bond between executor and beneficiary comes into being and the beneficiary obtains a ius in

personam ad servitutem acquirendam.

- Registration still necessary in the case of a servitude over an immovable thing.

- Method of registration is the same as if the causa is an obligation-agreement, therefore, by means of,

notarial deed of servitude; OR

inclusion of a suitable condition in the transfer deed of the servient tenement and

dominant tenement (if any).

Registration in compliance with an order of court

- The Deeds Registries Act empowers the registrar of deeds of servitude in compliance with a court

order.

- The reasons that the court will order the registration will vary. An example of such a reason would

be if a party to a servitude-creating agreement refused to register the servitude agreed upon.

- We only deal with one specific instance where a court orders as such: a way of necessity.

Way of necessity (court order)

- This is one the most important instances in which a court will order the registration of a servitude.

- This is a special form of a right of way (servitude) which is granted over adjacent or neighbouring

land to a landowner who no or insufficient access to a public road.

- It is a praedial servitude because the court grants it to a person in his capacity as the owner of the

piece of land that does not have access to the public road.

Origin of the claim to the way of necessity

- A landowner can have a claim to a way of necessity in the following 2 instances:

1) If his piece is geographically enclosed with NO access to a public road (land-locked

tenement).

2) If an exist is available, but it is inadequate for the reasonable use of the land (in Sanders v

Edwards, a way of necessity was granted because reasonable access to a public road from a

PART of the farm did not exist).

- He must institute an action procedure in either the magistrates‟ court or high court.

The nature of the way of necessity

- The scope and content thereof must be sufficient to satisfy the reasonable needs of the dominant

tenement.

- What these reasonable needs are, are be determined with reference to, inter alia, the nature of usage

of the dominant tenement.

- For example, in Van Rensburg v Coetzee, it was held that in the case of a modern farm, provision

should be made for the entry of, inter alia, agricultural implements, lorries and ordinary vehicles.

- There are 2 kinds of ways of necessity:

1) Ius viae precario – this is a temporary way of necessity that may only be exercised when an

emergency really exists. No compensation is payable for this.

2) Ius viae plenum – a permanent way of necessity that may be exercised continually and the

court may order compensation.

Determination of which tenement the way of necessity must be granted

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- If there is more than one possible route over different neighbouring tenements, the court must

choose.

- The starting point is the common law rule „ter naaster lage en minster schade‟ – the way of

necessity must run over the land which lies between the dominant tenement and the nearest public

road.

- In fitting cases, however, this principle may be deviated from if, for example, the tenement indicated

by the rule is impassable or will be affected too negatively.

Determination of the route and width of the road

- The same common law rule applies.

- The shortest route that will cause the least damage to the owner of the servient tenement is the

appropriate route.

Determination of compensation

- In a permanent way of necessity, the court may order compensation for the owner of the servient

tenement.

- This is because the granting of this type of way of necessity is a type of expropriation.

Registration of the right of way of necessity

- In Van Rensburg v Coetzee, the matter was left open as to whether registration in the deeds office is

necessary after the court has granted the order.

- It is submitted that that such a servitude should still be registered for purposes of legal certainty.

- Therefore, the order of court should only be seen as a causa for the establishment of a servitude and

the registration should be seen as a requirement.

Van Rensburg v Coetzee

Facts

- Owner of farm applied for way of necessity to reach public road.

Judgment

- There are 2 kinds of ways of necessity:

1) Ius viae precario – this is a temporary way of necessity that may only be exercised when an

emergency really exists. No compensation is payable for this.

2) Ius viae plenum – a permanent way of necessity that may be exercised continually and the

court may order compensation.

- However, where the agricultural industry requires almost daily entry and exit, is there a difference

between the two? Such a road would be needed continuously and it would be so important for the

business of the owner of the dominant tenement that every use could be considered an emergency.

- Therefore, the court questions if precario is even suitable for legal use.

- Court also pointed out that the way of necessity must transverse the adjoining land but that this rule

could be relaxed (ter naaster lage en minster schade).

- This case is actually where all of the principles of this entire section of work come from.

Sanders v Edwards

Facts

- Use this case if we deal with a tenement with one part that can reach a public road but with another

that cannot.

- The facts of this case are that one part of a piece of land had access to a road and the other didn‟t

because it was separated by a river from the other part.

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- The owner of the land wished to use the latter part for agricultural purposes and requested a right of

way, which would require the use heavy vehicles and other agricultural implements and he didn‟t

want to build a bridge.

Judgment

- The fact that a farm already has access to a public road does not necessarily mean that the court

cannot grant another way of necessity for a specific part of the farm.

- This is because it may be necessary for each part to have separate access.

- It was held in this case that Edwards was reasonable entitled by way of necessity for the specific part

of his land in view of the high costs of building a bridge and the need for economical exploitation of

the farm.

- The court also applied the rule ter naaster lage en minster schade to decide which piece of land the

way would granted OVER – they had no reason to relax this rule as is mentioned in the Van

Rensburg case.

PRESCRIPTION

- The Prescription Act states the continual and proper use of a servitude for 30 years in respect of an

immovable thing shall acquire the servitude (whether it be personal or praedial).

- Despite the specific reference to immovables, a personal servitude in respect of a movable can also

be attained through prescription.

Requirements

- They are pretty much the same as for the prescription of ownership.

- 30 years of quasi-possession of the servitude as though he were the holder of the servitude. This

means that he must continuously exercise the servitutal rights as though he were the holder of the

right.

- Note also that „holders‟ in succession of the servitude will have their periods of quasi-possession

added up, just as with ownership through prescription.

- However, it is much harder to apply these rules to a negative servitude.

- A positive servitude allows you to do something, so if you want to attain it through prescription, all

you need to do is perform what you are „entitled‟ to do.

- However, a negative servitude only obligates the owner of the servient tenement to NOT do

something. How can you tell how long someone has been exercising a right that makes another

person NOT do something? It can be tricky. Some even think it is impossible.

- Note again that this is the most important result of the distinction between positive and negative

servitudes.

Establishment of a negative servitude through prescription

- The question is: when will there be, for the purposes of prescription, sufficient exercising of those

entitlements to which the holder of a negative servitude is normally entitled?

- All you need to know is this case.

Ellis v Laubscher

Facts

- The question was whether the owner of a lower situated farm had established a negative servitude by

prescription over the higher situated farm of his neighbour, in terms of whereof the lower owner

could forbid his neighbour from taking water that ran through both properties.

- The prescription claim was based on the fact that the lower located owner verbally forbade the other

from taking water (to which he was actually entitled).

- The wuss actually listened to him for 30 years.

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Judgment

- An explicit prohibiting statement, whether verbally or in writing and acquiescence thereto, does not

establish a negative servitude.

- The court also held that the Roman nunciatio operis novi which was a formal prohibitory statement

with the form of an interdict, did not apply in our law, even though in Holland, it could actually lead

to the creation of a servitude by prescription.

- The court also held that the entitlement of the owner on the alleged servient tenement to do

something, also includes his entitlment to not do it – so how do we know whether he was listening to

the demand of his neighbour or if he was just choosing not to do something?

- Most importantly, the court held that the only way it could see a negative servitude being created

through prescription would be through real and continual deeds which are adverse to the upper-

owner‟s use of the river bed.

- Apply this statement to any situation we are given.

Consequences of prescription and the question of registration

- Once the requirements are met, the servitude vests through prescription by operation of law and

therefore, NO registration is necessary.

- However, it is submitted that, in the case of immovable property, it would be safer for the holder to

register it.

- This is because there would be no publicity vis-à-vis third parties.

- Therefore, should it ever be proven that he negligently failed to register it, he could be open to the

defence of estoppel if he tries to enforce his entitlements against a subsequent owner of the servient

tenement.

Read expropriation and legislation on page 266 and 267.

See next page for questions

Koos Viljoen has agreed to allow Innovo Ltd, a cell phone network operator, to erect a transmission

station on a site of 400m2

on his farm Hoogland. The parties wish to provide for this by means of a servitude. Advise the parties on the following aspects: 6.1 What kind (category) of servitude will be appropriate in this case? Briefly substantiate your answer. (1) 6.2 Briefly describe the steps to be taken to register the servitude. (3) 6.3 At what moment will the real right be constituted in favour of Innovo Ltd? (1) 6.4 What is the maximum period that the servitude can exist? (1) [6]

X is the owner of the farm Kransberg. The farm is divided from north to south by a mountain consisting of high

cliffs that make it impassable for vehicles. The western portion of the farm has direct access to a public road. The

portion east of the mountain has no direct access to a public road. X wishes to start farming with rooibos tea on

the eastern portion of the farm for which purpose road access for lorries will be necessary. Advise X whether he

will be entitled to a way of necessity over one of the four neighbouring farms to the east of his farm,

notwithstanding the fact that Kransberg as a whole has access to a public road. Also indicate how the servient

tenement and the route of the access road will be determined, should X be entitled to a way of necessity.

Substantiate your answer with reference to the most relevant case law. [5]

You‟re going to love this question:

In 2001, K and L executed a notarial deed of servitude before a notary whereby K, in his capacity as owner of the

farm, “Soetwater”, granted a right to draw water and to lead water over Soetwater in favour of L, in his capacity

96

as owner of the neighbouring farm, “Brakfontein”, and his successors-in-title. In terms of the deed of servitude,

K and the successive owners of Soetwater, will be obliged to properly maintain the fountain and the water furrow

on Soetwater as long as the right to draw and lead water exists. The notarial deed of servitude was properly

attested by the notary, but due to an oversight, it was never registered and endorsed against the title deeds of the

farms in the deeds office.

In 2002 K sold and transferred the farm, “Soetwater” to M “subject to all existing servitudes and other real

rights”. At the time of the signing of the contract of sale, M was aware of the existence and the contents of the

notarial deed of servitude, but did not bind himself to the compliance thereof. After registration of transfer of

Soetwater in his name, M refuses to co-operate to register the provisions of the notarial deed of servitude. He

refuses to allow L to draw any water from his farm and lead it over Soetwater to Brakfontein. M also denies that

he is obliged to maintain the fountain and water furrow on Soetwaer.

Explain fully whether L is entitled to enforce the rights as set out in the notarial deed of servitude against M. [9]

John Smith, in his capacity of owner of the farm Geluk, and Piet Nel in his capacity as owner of the adjacent farm Misgund, executed a notarial deed before a notary that inter alia contains the following provisions: “(a) Piet Nel hereby grants a perpetual right of way, four metres wide, over the farm Misgund along the route, as indicated on diagram SG 1234/2001 attached hereto, in favour of John Smith, in his capacity as owner of the farm Geluk, and his successors-in-title. (b) Piet Nel and his successors-in-title must properly maintain the road envisaged in clause (a) above. (c) Piet Nel must take the necessary steps to ensure that this notarial deed is properly registered in the deeds‟ office.”

4.1 At what moment in time during the registration process will the right of way be constituted as a real right? (1) 4.2 Indicate, according to the decision in Low Water Properties (Pty) Ltd v Wahloo Sand CC 1999 1 SA 655 (SEC): (i) Why the provision in clause (b) is registrable. (1) (ii) What the nature of the right, contained in clause (b), will be after registration thereof. (1)

4.3 Assume that the notarial deed has been registered and the title deeds have been endorsed accordingly. Explain whether clause (b) will be enforceable in terms of the doctrine of notice by John Smith against Piet Nel‟s successor-in-title, Z, who was unaware of clause (b) when Misgund was transferred into his name. In your answer, distinguish between the different approaches in Schwedhelm v Hauman 1947 1 SA 127 (E) and Van der Merwe v Wiese 1948 4 SA 8 (C). (3) [6]


Termination of servitudes

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1) Fulfilment of condition or expiry of period of time.

2) Registration of notarial deed of cancellation.

3) Waiver or abandonment.

4) Impossibility.

5) Prescription.

6) Expropriation.

7) Merger (confusio)

Fulfilment of condition or expiry of a period of time

Fulfilment of condition

- If there is a resolutive condition in the agreement the servitude will cancel automatically upon its

fulfilment and no formal registration of the lapse is necessary.

Lapse of time

- Death of servitude holder in personal servitude (or 100 years in the case of a juristic person).

- In both praedial servitudes and personal servitudes, after the expiry of an agreed upon time (if any)

the servitude will lapse automatically.

Registration of lapse

- Not a requirement in either case, however, it creates legal certainty and is in the best interest of the

owner of the servient tenement to register the lapse.

Cancellation through notarial deed of cancellation

By virtue of agreement

- Yes, the relevant parties can cancel the servitude by agreement.

- It will only lapse when the deed of cancellation is registered, the agreement is merely the causa.

- The cancellation can, depending on the intentions of the parties, be effective between the parties

even before the registration.

- Third parties can be held liable to the agreement by the doctrine of notice if they are aware of it.

Through court order

- S6(1) of the Deeds Registries Act allows this.

- The order will be the causa and the lapse will occur upon registration.

Waiver or abandonment

- Unilateral waiver will be enforceable between the parties even before the waiver is noted in the title

deed of the servient tenement.

- However, it is not certain whether a waiver is enforceable against third parties if the lapse of the

servitude is not endorsed against the title deeds of the tenements.

- Firstly, if the intention of the person waiving the right to his servitude intended that it should lapse

once its registration in the deeds office has been cancelled, then it will not lapse at all until

registration of the lapse, not even inter partes.

- It is submitted that if his intention was contrary to the above, then the waiver of a servitude, even if

UNREGISTERED, will be enforceable against bona fida third parties third.

- This is based on the fact that an owner can relinquish ownership, with full legal effect, by merely

abandoning his thing – why should that not apply when the holder of a servitude abandons that

servitude?

Impossibility

- This happens when the servitude becomes impossible to exercise.

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- Destruction of the object of the usufruct, for example, or the permanent drying up of a dam from

which a person was allowed, by virtue of a servitude, to draw water.

- HOWEVER, a quasi-usufruct does not end upon the destruction of its object.

- This is because the quasi-usufructuary is the owner of these things and is under an obligation to

return them at the termination of the quasi-usufruct.

Extinctive prescription

- S68 of the Deeds Registries Act states that a servitude will extinguish in this manner if unexercised

for an uninterrupted period of 30 years.

- Regarding the issue of a negative servitude, the Act states that a negative servitude will be deemed to

have been exercised as long as nothing which impairs the enjoyment of the servitude has been done

on the servient tenement.

- What this last point means is that if the owner of the servient tenement has breached the servitude by,

for example, building his wall higher than what is permitted by the negative servitude and then the

holder of the servitude does nothing, this will count as the non-exercise of the right of servitude.

- If the holder allows this building to stand for 30 years, prescription will cause the servitude to lapse.

- The termination is automatic, with no requirement of registration or an order of court.

Expropriation of an existing servitude

- S25(2) of the Constitution finds yet another way to screw over the currently disadvantaged.

- This occurs when the state expropriates land that is encumbered by a servitude. It takes full

dominium by expropriating the land and the servitude upon it.

- Funnily enough, they can take a dominant tenement and keep the entitlment – TIA.

Merger of title

- Do not look at this footnote.11

- Nulli res sua servit – person not have a servitude over own land etc.

- If he buys his own land, it lapses through confusio (in the case of a praedial servitude) and

consolidatio (in the case of a personal servitude).

- Registration not a requirement – but preferable for legal certainty etc.

Is revival possible?

- If a servitude lapses through confusio (insert that question again).

- Practically, what would happen if a person bought a piece of land that he had a servitude over. The

servitude then lapsed through confusio but he later resold that land to another person. Would it

revive? It is not clear in the murky law that applies in South Africa.

- The old writers state that if the initial intention was that confusio should be permanent, then the

servitude should then be expressly established and de novo.

- Lets see what the courts say.

Salmon v Lamb’s Executor & Naidoo

Facts

- An UNREGISTERED praedial servitude to insert a beam into a building on the servient tenement

lapsed through confusio.

- However, a separation of titles occurred and ownership of the former servient tenement was

relinquished again.

11

And you still looked…

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- Did the servitude automatically revive?

Judgment

- No – must be re-established afresh.

Du Toit v Visser

Facts

- A registered servitude lapsed by confusio.

- The servient tenement was then transferred again and the servitude was incorporated by reference in

the title.

Judgment

- The court confirmed that mere separation of title is not sufficient for a servitude to revive.

- Express revival is required.

- The court found that the incorporation of the servitude in the transfer deed, even if effected by mere

reference, as in casu, IS regarded as EXPRESS revival of the servitude.

Eichelgruen v Two Nine Eight South Ridge Road

- Court addressed the same question as in the Du Toit case.

- However, in this case, the lapsed servitude was repeated verbatim in the deed of separation whereby

the servient tenement was once again transferred.

- The court decided that the parties intended that the servitude must be in force anew and that the

inclusion thereof in the deed of transfer effected its revival.

- There must therefore be a real agreement to create the servitude afresh and this intention from the

parties must appear ex facie the transfer deed.

Briefly explain, with reference to the relevant facts, how the principles of confusio (merger of title) and the

“revival” of a servitude were applied in Eichelgruen v Two Nine Eight South Ridge Road (Pty) Ltd 1976 2 SA

678 (D). (2) X, in his capacity as owner of Erf 102 is the holder of a servitude whereby he can prohibit the owner of the

adjacent Erf 103 from planting any trees on Erf 103 within a distance of two metres from the common boundary

line. Explain briefly under which circumstances this servitude will be extinguished by prescription. [3]

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Restrictive conditions

Definition

- In the broad sense, a restrictive condition refers to all restrictions to the use and enjoyment of land.

- However, in this study unit, we will only look at the narrow sense.

- Narrowly, restrictive conditions are restrictions which are registered as limited real rights against the

title deeds of an erf in a new township by the township developer or in terms of the township

development scheme.

- An example would be the prohibitions on the erection of buildings other than dwelling houses within

the township.

Origin

Restrictive covenants

- Before legislation was enacted to regulate township development, the township developer himself

imposed a variety of restrictions on the new erven that he sold and transferred.

- They were contained in the deeds of sale and where therefore contractual in nature. They were

limited real rights.

Conditions of title (TODAY)

- Currently, township development is regulated by the Town-Planning and Townships Ordinances of

the respective provinces.

- In terms of this legislation, the provincial authorities have powers to impose certain restrictions,

known as conditions of title.

- The township developer is statutorily obligated to insert these conditions in the deed of transfer to

which they are relevant.

- This constitutes a limited real right.

Condition of township establishment

- This is an obligation imposed on the township developer by the provincial authorities.

- The integral difference between this and a condition of title is that this is a personal right against the

developer and is not registrable whilst conditions of title are limited real rights and are registrable in

the title deeds of the relevant erves.

Legal nature

Real right

- They are real rights and must be registered.

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- They are also obviously enforceable against owners in title of the respective erf in the township.

- They can be „personal‟ or „praedial‟ – seen later.

Classification as servitudes

- Legal literature and positive law classifies restrictive conditions as servitudes.

- Malan v Ardconnel Investments is the case that recognises this.

- They must obviously comply with the requirements of servitudes, the most important in this regard

being the passivity principle.

- In terms of the passivity principle, the provincial authorities may not create restrictive conditions that

would obligate a landowner in a township to do something.

Classification as praedial restrictive conditions or personal restrictive conditions

General

- Most restrictive conditions are for the benefit of all or some of the other erven in the township and

are thus praedial.

- For example, a restriction may state that no owner within the township may build a house with a

statue of Joost van der Westhuizen in their garden. All the erven in the township will therefore be a

servient tenement and a dominant tenement at once and we will have a reciprocal praedial servitude

of sorts.

- However, a restrictive condition can however also be a personal servitude if it is granted in favour of

a specific person in his personal capacity, for example, a condition that no owner of an erf in the

township may call the developer „Joost‟.

- It is very import that we tell which type of condition it is. This is because it will determine, inter alia,

whether the other owners of erven in a neighbourhood have locus standi in judicio to enforce

restrictive conditions. If so, it would be praedial. It also determines whose consent should be

obtained for the removal of a restrictive condition.

- It can be hard to tell which is which, so we apply the following interpretive methods.

Methods of distinction

- In the past, an agreement between the developer and purchaser of an erf whereby a restrictive

covenant was stipulated for the benefit of the other erf-owners, was construed as a stipulation for the

benefit of a third party.

- This juridical establishment is still used to explain the establishment of praedial restrictive

conditions.

- The following guidelines have been followed to determine whether a restrictive condition that flows

from an agreement is in fact a praedial restrictive condition in favour of the other erven in the

township:

1) All the erf-owners should have derived their ownership from the same person, normally the

developer.

2) The developer must have intended to impose certain restrictions on all the erven, in terms of a

township development scheme.

3) The developer must have intended these restrictions for the benefit of all the other erven in

the scheme.

4) The erven should have been originally purchased on the footing that the restrictions were to

enure (come into effect) for the benefit of all the erven within the scheme.

- These are not strict requirements, they are merely guidelines.

- They become even less important when we look at the case of Malan v Ardconnel Investments (this

is actually where you‟ll get your answer).

Malan v Ardconnel Investments – actual guidelines

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Facts

- A title condition provided that a particular tenement may only be used for industrial purposes.

- Was it praedial or personal?

Judgment

- Firstly, the court pointed out that the restrictive condition concerned need not necessarily apply to all

the erven in the township in order to be praedial.

- Secondly, it is unnecessary to apply the legal notion of stipulatio alteri (stipulation for the benefit of

a third party) or the four „tests‟ derived from English law (shown above) to answer the question.

- The court effectively stated that the test is simply whether the restrictive condition complies with the

requirements of a praedio utilitas. Therefore, if the restriction extends for the benefit of the other

erven as dominant tenements, the registered title condition is probably a praedial servitude.

- The court found this to be so in casu.

Note – the condition need not benefit all the other erven in the township before it can be a praedial servitude.

It can benefit only some and can actually, in principle, benefit only one erf – as long as it does not benefit a

person in his personal capacity alone.

It is sometimes difficult to determine whether a specific restrictive condition is a personal servitude or a praedial servitude. Answer the following questions with regard to the judgment in Malan v Ardconnel Investments (Pty) Ltd 1988 2 SA 12 (A): 6.1 What was the content of the restrictive condition with which the judgment dealt? (1) 6.2 Was this restrictive condition regarded as a personal servitude or as a praedial servitude by the court? (1) 6.3 Give any one of the reasons why this decision is important for the distinction between restrictive

conditions that are praedial servitudes and those that are personal servitudes. (1) [3]

Study unit 4.2

Rights to minerals

Old mineral rights

- These were limited real rights over land that, in principle, entitled the holder to prospect for, mine

and alienate minerals.

- These entitlements were partially governed by the Minerals Act and other such legislation.

- They were registered at the Deeds Office.

- They were transferable.

- Before a mineral right was established over land, the landowner was entitled to the minerals on the

land. They were part of the land that was owned by the landowner, even below the surface, in terms

of the „heaven and hell‟ rule.

- Therefore, the land was the owner of the minerals as components of the land.

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- As soon as the mineral was extracted, it became an individual thing owned by the landowner.

- Do not confuse old mineral rights with the right of a landowner to the minerals in his land.

New mining right (as well as prospecting rights)

- Can only be granted by the state.

- Without such rights, not even the owner of the land upon which the minerals are found may prospect

or mine for these minerals.

- The nation owns all the minerals and the state acts as custodian thereof.

- Granted in terms of the Mineral and Petroleum Resources Development Act.

- A new mining right is a limited real right to BOTH the mineral and the land in which the mineral

lies.

- Therefore, a mineral (whilst still forming part of the land) is regarded as a separate thing from the

land.

- They are not registered at the deeds office, but in the Mineral and Petroleum Titles Registration

Office in Pretoria.

- Such a right is only granted for limited periods and are only transferable with the consent of the

Minister.

- Vesting of ownership of minerals in land before 1 May 2004 occurred ex lege as a result of

ownership of the land. This ownership could also vest in a person if they attained a mineral right in

terms of the Minerals Act.

- However, after this day, ownership does not lie with any single person unless such person is granted

a mineral right and extracts the minerals.

Meaning of the word mineral

- The new Act has a very wide definition of the concept of a mineral, namely,

"mineral"

means any substance, whether in solid, liquid or gaseous form, occurring naturally in or on the earth or in

or under water and which was formed by or subjected to a geological process, and includes sand, stone,

rock, gravel, clay, soil and any mineral occurring in residue stockpiles or in residue deposits, but

excludes

a) water, other than water taken from land or sea for the extraction of any mineral from such water;

b) petroleum; or

c) peat;

- The new definition of „mineral‟ does NOT exclude topsoil from its ambit (unlike the old Act‟s

definition).

- There is a definition of „topsoil‟ but, true to our amazing legislative heritage, this word isn‟t used

once in the Act.

- If the legislature intended this, then it would mean that soil would vest in the state as a mineral as

well and the implication of the Act are much more far-reaching than originally thought.

Conversion of „old order rights‟ into new prospecting and mining rights in terms of the Minerals and

Petroleum Resources Development Act

- Schedule 2 contains transitional arrangements in terms of which old order rights will continue in

force for limited periods after the enactment of the Act, which may vary from 1 to 5 years depending

on the right.

- The holder of this right must apply to the department of mineral and energy affairs within the time

period applicable to his right, for the conversion of his right into a prospecting or mining right in

terms of the Act.

- If the application is not lodged within the prescribed period, the old right lapses.

- Schedule 2 also provides that any person that can prove that his property has been expropriated in

terms of any provision of the Act, may claim compensation from the state.

- Do not take this to mean that if the state mines the minerals under your land that you have had

property expropriated, you never owned the minerals anyway, even if you had a limited real right to

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them (however, I think that a new mining right can actually be considered to be property for

purposes of the Constitution‟s property clause).

- All this part of the Act is doing is repeating the Constitution anyway.

Answer the following questions with regard to “mining rights” granted in terms of the Mineral and Petroleum Resources and Development Act 28 of 2002. 7.1 What is/are the legal object(s) of a mining right? (1) 7.2 In which office are mining rights registered? (1) [2]

X has been granted a mining right in terms of the Mineral and Petroleum Resources Development Act 28 of 2002 to mine copper on the farm Buffelsdrift. (a) What is the nature of X‟s right and what is/are the object(s) of his right? (2) (b) Is this right registrable? Explain. (1)

Study unit 4.3

Real security rights

- We‟re only going to get asked 5 marks on this study unit – they won‟t waste them on the general

principles of real security which we have already done in other subjects anyway. The questions will

be on pledge as I set it out in these notes.

- Read through this part in the book to refresh your memory and then concentrate on what I write on

pledge.


Pledge

- Once again, just read the introduction to refresh your memory.

Establishment of a right of pledge

Requirements

1) The existence of an underlying creditor‟s right (debt) that is secured by the right of pledge.

2) A real agreement whereby the parties create real security right over the pledged thing.

3) Delivery of the thing to the pledgee or a third party who physically controls the thing on his

behalf.

- The pledge agreement is merely the obligation-creating agreement and only creates a personal right

for the establishment of the real right of pledge.

- Only upon deliver of the pledged thing is the real right of pledge created.

- Note that until the real agreement is established, the pledge agreement isn‟t binding on third parties.

If A and B entered into a pledge agreement but B, before delivery of the object, sells it C, A cannot

enforce his personal right against A (unless the doctrine of notice applies, remember, this is a iure in

personam ad rem acquirendum).

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- Unlike normal control, pledge requires the pledgee (or the person holding the thing on his behalf) to

exercise continued physical control – NB.

- In Zandberg v Van Zyl, it was held the right of pledge falls away if the pledgee voluntarily surrenders

physical control of the pledged thing.

DELIVERY

Actual delivery

- We know what this is.

- It obviously fulfils the requirement that physical control be vested in the pledgee because the pledgor

physically hand him the thing.

Fictitious (constructive) delivery

- Poses a problem because this effects delivery by a change of intention, not the handing over of

physical control; and physical control is an utmost requirement of pledge.

Traditio brevi manu

- This is a recognised fictitious delivery of pledge.

- Look at the definition again under ownership (the actions are precisely the same, we‟re just handing

of the right of pledge and not ownership).

- This form of fictitious delivery is recognised because the receiver is in possession the entire time; it

is just the change of intention that turns him into the pledgee but he still has physical control at the

time of this change of intention and can thus continue such control.

Clavium traditio

- This is recognised as well.

- For example, if you give your car as pledge, that doesn‟t mean that the pledgee has to live in the car.

- You can give him the keys to the car and effect delivery like that.

Attornment

- This applies in exactly the same way that it does in ownership and is also a recognised method of

creating a pledge.

- The book doesn‟t explain why, but can you see that when the intentions of the parties change and the

third party holds the object of the pledge on behalf of the pledgee and not the pledgor, we have

fulfilled the control requirement because a third party may hold the thing on behalf of the pledgee.

Traditio longa manu

- Not certain.

- As you know, the receiver would only need to be put in a position where he could obtain exclusive

control, so this method is approached with caution.

- It is submitted that, as long as the rules for this method of deliver are met and the pledgee is in a

position from where he can gain EXCLUSIVE control over the object, it should be accepted.

- Note however, that the exclusive control that the pledgee must be able to gain means that the pledgor

must not be in a position to control the thing.

Constitutum possessorium NB!!!!

- This is what we will get asked on.

- As a general rule, this is not accepted as a method of creating a pledge due to the danger of fraud and

deception (Vasco Drycleaners v Twycross). Obviously, because the pledgor will remain in

possession of the thing the whole time.

- The only exception would be where the pledgor after delivery does not in any way use the thing for

his own benefit and also does not create any false pretence vis-à-vis third parties regarding the nature

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and extent of his right in respect of the thing (Stratford’s Trustees v London and South African

Bank).

Stratford’s Trustees v London and South African Bank

Facts

- A wool dealer pledged wool to the bank but did not physically deliver the wool.

- Instead, he kept control of the wool and, by order and on behalf of the bank he washed the wool.

Judgment

- The court found that a VALID right of pledge had come into being through constitutum

possessorium.

- The parties were in good faith, the wool dealer did not continue to use the thing for his own benefit,

and no false pretences were made regarding the pledgor‟s right in the thing vis-à-vis third parties.

Simulated transactions NB!!

Vasco Drycleaners v Tywcross

Facts

- A sold washing machines to B.

- Contract stated that ownership would remain with A until purchase price paid in full (instalment

agreement).

- B encountered financial difficulty and his brother in law, C, paid the remaining instalments to A.

- Furthermore, they agreed that ownership would pass to C but then he would immediately resell it to

B (constitutum possessorium).

- B would then only gain ownership once he had paid P2 back.

- B then sold business to D (who was bona fide) before he had repaid C.

- C then used the rei vindicatio against D.

Judgment

- The court held that the contract between A and B was not a contract of sale but instead a pledge

disguised as a contract of sale (simulated transaction).

- B could not prove his intention to C, therefore C was not allowed to claim the thing from D.

- The court stated that it would effect to the contract that the parties actually intended (pledge).

- HOWEVER, even in this regard, the court stated that a valid pledge never came into being because B

continued to exercise control over the machine for his own benefit and also created a false pretence

as to his rights in the machines by selling them.

Legal consequences of a pledge

The rule mobilia non habent sequelam

- This rule states that, should the pledgee voluntarily relinquish control of the pledged thing, he may

not reclaim it from the bona fide third party who controls it.

- This is because, by voluntarily relinquishing control, the pledge agreement terminates (remember the

requirements for a pledge) and the pledgee has not real action against the third party.

- However, this rule does not apply to ownership, which means that the owner (pledgor) will be able to

reclaim the thing from the third party with the rei vindicatio.

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Judicial sale in execution of the pledged thing

- This is NOT insolvency. This refers to a situation where the pledged thing is attached by the court

and sold in execution to extinguish the debt owed to a creditor or creditors when the debtor is still

solvent.

- This is done by attaching the pledged thing. There are two ways in which the pledged thing can be

attached and the pledgee has certain rights and powers with regard to the pledged thing, which will

differ depending on how the thing was attached. Now we will look at the two ways of attachment

and the rights that arise in each case.

1) Attachment by the pledge

If the pledgor fails to fulfil his obligations in terms of the pledge, the pledgee may

obtain judgment against the pledgor and let a warrant of execution be issued by the

court.

This warrant will empower the sheriff to sell the thing in execution (note, the

pledgee may not go and sell the thing himself! This right must be created by

agreement and will be seen later).

The right that is created for the pledgee is the following: if other unsecured creditors

have also obtained warrants of execution, the pledgee will have a preferential right

to the proceeds of the pledged object which is sold in execution.

Once again, this is NOT insolvency, we‟ll see that later.

2) Attachment by another creditor

In this instance, there is uncertainty in our case law regarding the right of the

pledgee.

One view is that another creditor may not attach a pledged thing of which he is not

the pledgee (Payn v Yates).

The idiot lecturers make it look as though the decision in Schoeman v Aberdeen

Trading is authority for what happens in this case. This case held obiter that a

pledged thing could be sold in execution upon request of another creditor free of the

pledge, but that the pledgee would have a preferential right to the proceeds of the

sale.

The actual position is contained in the Magistrates‟ Court Act read together with the

Supreme Court rules – if another creditor attaches the pledged object, it can be sold

in execution, however, this sale will be subject to the right of pledge (i.e. the

pledgee will retain his right of pledge over the thing, but will not have a preferential

claim to the proceeds of the sale).

Don‟t let them confuse you! There is NO uncertainty in our law – legislation sets it

out perfectly. There is only uncertainty in our positive law (case law) and this

uncertainty is created by obiter statements! However, the lectures prefer this view

(if we get a question on this I‟m going with the Act; not their opinion). I hate this

subject.

Insolvency of the pledgor

- We know this from ISR.

- The pledgee becomes a secured creditor with regards to the pledged thing (well not really, the book

is wrong again; the pledgee is a secured creditor with regard to the VALUE of the pledged thing. He

cannot claim the thing!).

- In such an instance, his position as a secured creditor gives him the right to either let the trustee of

the insolvent estate „take over‟ the thing and pay the pledgee an agreed amount; OR

- the pledged thing has to be sold by the trustee or the pledgee (I assume on the trustee‟s behalf) and

then the pledgee will have a secured claim to the proceeds of the sale.

- The lecturers, once again, shine with legal brilliance and call the pledgee a secured preferent

creditor. We do not use that terminology in insolvency law because it confuses secured creditors

with statutory preference creditors.

Entitlements and obligations with reference to the pledged thing and fruits thereof

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- In the absence of a pactum antichresis (which is usually the case, we‟ll go into more detail on this

term later) the pledgee may NOT use and enjoy the pledged thing and it‟s fruits.

- The right of pledge will extend over the fruits of the pledged thing; but once again, these fruits

cannot be used or enjoyed.

- This means that the pledgor is NOT entitled to claim the fruits of the pledged thing even though he is

the owner thereof (unless otherwise agreed).

- After termination of the pledge, the pledgee has to return the thing to the pledgor.

- The pledgee must also give account of and return all fruits to the pledgor.

- During the existence of the pledge, the pledgee must properly maintain the object like a diligens

pater familias.

Termination of the right of pledge

1) Extinction the secured claim (settling of the debt for which the thing was pledged, which

would include the sale in execution of the thing after attachment by the pledgee12

as well as

satisfaction of the secured claim of the pledgee against the insolvent estate of the pledgor).

2) Waiver of the right of pledge by the pledgee.

3) Destruction of the pledged object.

4) Confusio – when the pledgee obtains ownership of the pledged thing.

5) A sale in execution and delivery of the pledged object to the buyer.

6) Voluntary surrender of physical control over the pledged thing by the pledgee (Zandberg v

Van Zyl).

See questions on the next page

8.1 Briefly explain the position regarding the validity of an agreement for parate executie in a pledge agreement according to our latest case law on this aspect. (3) Explain whether an agreement for parate executie in a pledge agreement is valid according to the present position

in South African law. You are required to briefly refer to the Constitution and recent case law. [4]

The answer to both of these questions is actually found under the study unit dealing with mortgage,

because the rules apply the same way as for pledge. This question, as you can see, has been asked twice (I

think the mark allocation is different because of reference to the Constitution in the one).

8.2 X owes money to Y and they agree that X will give his TV set as a pledge to Y to secure the debt. The TV set is physically delivered to Y on 15 February 2007. During April 2007 X requests Y to temporarily hand back the TV to X so that he may view a mini-serial during the following three weeks. Y hands back the TV to X on 17 April 2007 on the clear understanding between them that only X may use the TV, that it will be returned immediately to Y after the three weeks and that Y will not lose his right of pledge. On 25 April 2007 X sells and delivers the TV set to Z who was totally unaware of the transactions between X and Y. Z pays the purchase in cash. (a) Was a valid right of pledge constituted on 15 February 2007? Answer only “yes‟ or “no”. (1) (b) Can Y claim the TV back from Z? Substantiate your answer. (3) [7]

Farmer L wishes to borrow R200 000 from M. M is willing to advance the money, but requires security. L is the owner of a tractor with a market value of R600 000 which he uses daily on his farm. L and M enter into a written agreement in terms of which M purchases the tractor for R200 000 from L who immediately leases it back from M at a rental calculated on the basis of 17% per annum of the purchase price. The amount of R200 000 was paid to L when the contract was signed by the parties. In terms of the contract transfer of ownership in favour of M is effected by fictitious delivery on the signing of the contract. L is also granted the right to repurchase the tractor for R200 000 at any time with one month‟s notice. L remained in physical control of the tractor at all relevant times.

12

Take note that there is NO mention made of the sale of the thing after attachment by another creditor of the pledgor! There is no

uncertainty in our law – the pledge continues to operate over the thing sold in execution (Magistrates‟ Court Act).

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The estate of farmer L is sequestrated. M claims the tractor from the trustee of the insolvent estate with the rei vindicatio. In the alternative, M claims to have a secured preferential claim against the estate in the amount of R200 000 based on an alleged pledge constituted by way of constitutum possessorium. The defence of the trustee is that M has acquired neither ownership nor a pledge in terms of the transaction set out above. Will M succeed with - 9.1 the rei vindicatio based on his alleged ownership? (4) 9.2 the alternative claim based on an alleged pledge? (2) Fully substantiate both answers. [6]


Notarial bonds

Description

- A notarial bond confers real security with reference to movable things.

- It differs from pledge in that the security grantor does not have to surrender physical control of the

thing and he still has the use and enjoyment thereof.

- It‟s actually the same as a mortgage, but it‟s over movables.

- There are two types.

- Special notarial bonds confer security over specified movable property of the debtor, whether it be a

single thing or many. Such bonds are regulated mainly by the Security by Means of Movable

Property Act.

- General notarial bonds confer security over all of the movable proper of the debtor and are mainly

governed by the common law.

SPECIAL NOTARIAL BOND

Description

- A form real security created by contract over a specified movable corporeal thing which is

established by registration in the deeds office and without physical control of the hypothecated thing

being passed to the bond holder13

.

- This description is terrible. Firstly, it can be established over more than one thing. Secondly, we can

stop saying „corporeal thing‟ now; all things are corporeal, that‟s what makes them things. Finally,

do not be confused by the „hypothecated thing‟. This is not a hypothec – a hypothecated thing is a

general name for a thing that is given as security for a debt.

Object

- A physical, tangible, touchable, corporeal movable thing14

.

- Hey, if you‟re going to be redundant you might as well do it well.

- It can also be established over a future thing.

- This refers to a thing that either does not yet exist or does exist but is not yet owned by the debtor at

the time of registration of the special notarial bond.

- In such an instance, the real security will only be established when the thing comes into existence or

ownership is obtained by the grantor of the bond15

.

13

This description applies only to a special notarial bond in terms of the Security by Means of Movable Property Act, or, put more

aptly, only a notarial bond over corporeal movable property will be regulated by the Act. The book makes it look as though a

special notarial bond cannot be registered over an incorporeal thing; it can. Because delivery is not a requirement, such a bond

may be registered, it will just not be regulated by the Act. 14

S1(1) of the Security by Means of Movable Property Act

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- See in this regard Bokomo v Standard Bank.

Bokomo v Standard Bank

Facts

- Standard Bank was the holder of a special notarial bond over the movable property of M.

- M was, however, not the owner of the thing at the time of registration of the bond.

- He did eventually become owner and then sold the property to Bokomo.

- Standard Bank wanted to then enforce its real security right and claimed the thing back from

Bokomo.

- Bokomo refused and Standard Bank got very upset. They even thought of changing their slogan to

„Inspired. Motivated. Involved. Weet-Bix Sucks.‟

Judgment

- A special notarial bond can be registered over a future thing, even if such thing exists but is not yet

owned by the security grantor.

- However, it will only become enforceable once such ownership is attained.

- This was the case and the notarial bond was created and enforceable.

- The property had thus been sold subject to the bond, and Standard Bank could enforce their real right

against Bokomo.

- In terms of this decision, it is clear that a special notarial bond grants the entitlement to follow-up

(the security right of the bond holder will apply to consequent owners of the hypothecated thing and

thus transfer of ownership does not terminate a special notarial bond).

- There was a 5 mark question on this.

Execution of notarial deed in the case of a special notarial bond

- A special notarial bond is established through the execution and registration of a special notarial

bond deed in the deeds registry office.

- We deal here with the execution.

- This deed must be properly prepared and executed by the grantor of the security.

- The deed must, obviously, be drafted by a notary.

- It is then executed (signed) by the security grantor or his agent and 2 witnesses.

- This must occur in the presence of the notary and he must sign and affix his notarial stamp to the

deed.

- The movable thing/s being hypothecated must be specified in the deed in a manner that renders

it/them readily recognisable (this is known as the specificity principle).

- The specificity principle was applied in Ikea Trading v Boe where the court held that this

requirement is met if a third party would be capable of identifying the hypothecated movables based

merely on the description in the special notarial bond deed itself WITHOUT the use of extrinsic

evidence.

- Before registration, a special notarial bond deed can only bring about a personal right (as the deed

contains the obligation creating agreement and the real agreement is only created when this is

registered – my own observation).

- Therefore, the execution of the notarial deed is actually conclusion of the obligation creating

agreement in itself.

- The registration of this deed is the conclusion of the real agreement.

15

The book says that the right will only exist once ownership is transferred to the security holder. Hmmm, the security holder is

the creditor, right? If so, the bond would probably lapse by confusio. I‟m disappointed in our lecturers, but not surprised.

111

- A special notarial bond and a general notarial bond can be created in a single notarial deed.16

Registration of a special notarial bond

Procedure

- In the case of the security grantor being a natural person, the deed must be registered where such

person resides AND conducts business. If these are in two separate jurisdictions, the deed must be

registered at the deeds offices in both those areas.

- If the security grantor is a juristic person, it must be registered in the deeds office with jurisdiction in

the area where the legal person‟s head office is situated.

Real agreement

- The content of this agreement is the intention of the parties to create, by registration, a real security

right in favour of the special notarial bond creditor.

- The security holder need not sign the deed, but the real agreement can still be deduced from the

content of the deed.

- No formal requirements exist for the real agreement itself – its existence can be deduced from

circumstantial evidence.

- A special notarial bond creates a real right that is dependent on the existence of an underlying

obligation (debt).

Legal consequences

General

- The burdened thing will now, in terms of S1 of the Security by Means of Movable Property Act, be

deemed to have pledged to the mortgagee as effectually as if it had been expressly pledged and

delivered to the mortgagee.

- The hypothecation will also be subject to any encumbrance that already existed upon the thing.

- The Act also states in S57, that the legal consequences of a special notarial bond are essentially the

same as that of a pledge.

- However, the holder of security in terms of a special notarial bond is actually in a stronger position

than a pledgee. This is because the former‟s real security right has a complete entitlement to follow-

up (seen later).

Insolvency and attachment

- In terms of the Insolvency Act, the holder of a special notarial bond is a secured creditor.

- He holds this position in a dual capacity: firstly as the holder of a „special mortgage‟ (remember the

definition of „special mortgage‟ in ISR) as well as the holder of a pledge.

- He can take over the thing from the trustee at an agreed valuation or, if the trustee sells the thing, he

has a secured claim and takes preference over all other creditors for the proceeds of the sale.

- If several special notarial bonds are registered of the same thing, the rule prior in tempore potior in

iure rule applies and the person who first registered a special notarial bond will enjoy top ranking

(unless he waives his preference in favour of a later holder).

Entitlement to follow-up

- This is very simply a rule that states that should ownership of the property subject to a special

notarial bond be transferred (the grantor is allowed to do this), the bond will not terminate; it will

merely „follow‟ the property and the receiver‟s ownership will be burdened by the bond (as seen in

the Bokomo case).

16

Reeskens v Registrar of Deeds

112

- Therefore, even though a special notarial bond is essentially the same as a pledge in terms of the Act,

the rule mobilia non habent sequelam is not applicable to special notarial bonds. It is only applicable

to actual pledges.

GENERAL NOTARIAL BOND

Definition

- This is NOT a real security right, as it does NOT confer real rights.17

- It is a security right created contractual over ALL the movable property of the grantor of security.

- The holder of the security does not gain physical control of the property.

- Only confers limited preference with reference to the free residue on the insolvency of the debtor.

Object

- Corporeal movable property as well as incorporeal patrimonial interests can form the object of a

general notarial bond.

- Note however that a registered long-term lease of land and a leasehold (whilst being patrimonial

interests) are interests in immovable property.

- In terms of the Deeds Registries Act, „immovable property‟ includes an interest in immovable

property. Therefore, these interests are actually immovable property and cannot be encumbered by a

general notarial bond.

- The bond will operate over all property in the debtor‟s possession at registration of the bond AS

WELL as property attained thereafter.

- It will also operate over all the immovable property to which the debtor is entitled to at the time of

his sequestration18

(if that is the case).

Establishment

- It must be executed and registered at the deeds office.

Execution

- The deed must be drawn up by a notary and executed by the security grantor.

- The process of execution is precisely the same as a special notarial bond.

- The only difference is that the deed need not specify which property the bond is to operate over

(obviously). This means that the specificity principle does not apply to a general notarial bond.

Registration

- It must be registered within 3 months of its execution.

- Registration must be registered in the area/s wherein the debtor resides and concludes business (same

as with a special notarial bond).

- This does NOT create a real right and is obviously an exception to the rule that a personal right may

not be registered.

- The purpose of this registration is to fulfil a publicity function.

- We‟ve seen this „publicity function‟ thing before, but do we know what it is? It refers to the need for

the public to be aware of the situation between the parties (if necessary). In this case, it would fulfil

the publicity function by allowing the public to know the creditworthiness of the debtor.

- A general notarial bond creates a personal right that is dependant on the existence of a principal debt

or other obligation.

Legal consequences

No entitlement to follow-up

17

Contract Forwarding v Chesterfin 18

Cooper v Die Meester

113

- This means that the rule mobilia non habent sequelam is applicable here.

- If the grantor of a general notarial bond alienates the encumbered goods to a third party, such third

party will be entitled to the goods free of the general notarial bond.

- They try to make it very complicated, but it‟s simple – the general notarial bond creates a personal

right that cannot be enforced against owners in succession.

- However, this raises the question of the doctrine of notice.

- If the new owner was aware of the general notarial bond over the property, should he bound to the

bond? The answer is quick and easy – NO, the doctrine of notice only applies to iura in personam

administrative rem acquirendum (personal rights which are aimed at creating real rights).

- A general notarial bond is merely intended to give the holder thereof a preferential claim against the

estate of the debtor should he go insolvent. That is why it is a personal right.

Attachment in execution

- Once again, do not confuse this with insolvency. This is an individual debt collecting procedure;

even though more than one creditor may claim (individually) the attachment of one thing (yes, more

than one form of security can encumber one thing).

- In this regard, unlike a special notarial bond, a general notarial bond confers no preference on the

attachment of the movable assets of a general notarial bond debtor.

- However, what happens when the holder of a general notarial bond actually attaches the assets

encumbered by such bond?

- In such an instance, he is put in the position of a pledgee and in this case, he DOES acquire a

preferential right over other creditors who also lodged warrants for execution against the debtor (do

not confuse this with perfection of the bond, which we will deal with later).

Insolvency

- The most important advantage conferred by a general notarial bond, as mentioned previously, is with

regards to the insolvency of the debtor.

- The holder of a general notarial bond will make the holder thereof a statutory preferent creditor to

the insolvent estate of the debtor (he will have a preferent claim to the free residue, if any).

- In terms of S102 of the Insolvency Act, if more than one general notarial bond is registered over the

movable property of the insolvent, the rule prior in tempore potior in iure hold (which is an

exception to the principle that this rule only applies to real rights).

- The preference in terms of a general notarial bond does not NECESSARILY hold only with respect

to the movable property of the insolvent. If the proceeds of immovable property have also been

carried over to the free residue, such proceeds will also apply (Cooper v Die Meester).

Perfecting

- This refers to a situation where the parties agree that the holder of the general notarial bond is

entitled to acquire control of the burdened assets under certain circumstances (usually non-payment

of the debt).

- Such provision is called a perfecting clause.

- If the debtor refuses to honour the clause, the holder can only acquire control of the movable

property through a court order and the consequent attachment of the goods (the court will only order

this if there is a perfecting clause).

- The right of the holder of the bond once he has obtained control of the property through perfecting is

unclear.

- We seem to follow the decision in Boland Bank v Vermeulen – the perfecting clause boils down to a

pledge agreement (note, only a pledge AGREEMENT! which confers a personal right).

- Upon the bondholder gaining possession of the goods in terms of the perfecting clause, the real right

of pledge is created.

- Look again: the perfecting clause in the notarial bond deed is the pledge agreement (so we have two

contracts in one) and if such clause operates and delivery of the goods occurs, the right of pledge is

created through this delivery.

114

Contract Forwarding v Chesterfin and others

Facts

- The facts of this case are set out terribly – ignore them, read these.

- The 4th

respondent in this appeal had more than one general notarial bond registered over his

movable property.

- Chesterfin obtained the first general notarial bond and Contract Forwarding the second (over the

same property, obviously, because a general notarial bond operates over ALL movable property,

including that already subject to another general notarial bond).

- In the first trial court, Contract Forwarding obtained an urgent order to attach the goods of the 4th

respondent subject to the bond for as long as the 4th

respondent‟s debt persisted, i.e. they utilised

their perfecting clause and converted the general notarial bond into a pledge!

- The court offered relief to Contract Forwarding and a rule nisi was issued.

- However, before the return date of the rule nisi, the 4th

respondent was provisionally liquidated.

- Upon this liquidation, Chesterfin (also a creditor) applied for leave to intervene with Contract

Forwarding‟s application because Chesterfin‟s general notarial bond had been registered first.

- The trial court accepted the application and discharged the rule nisi.

- Contract Forwarding then appealed to the SCA.

Judgment

- Once a creditor has obtained lawful possession of the goods, a pledge is perfected (I know, does the

pledge come about when the bond is perfected? Either way, parrot learn).

- This pledge creates a real right, which means that the prior in tempore potior in iure applies now to

the real right, not the personal right of the general notarial bond. So, even though the general notarial

bond of the respondent was registered first, the right of pledge was created first in favour of the

appellant.

- Therefore, the appellant‟s right is stronger in law.

- The court held that symbolic transfer of the movable property subject to the general notarial bond is

sufficient to create the real agreement of pledge (such transfer being effected in terms of the

perfecting clause, of course).

- The next few points don‟t seem to connect that well to the rest of the case, but they are principles

that could get asked.

- A rule nisi can only be discharged on grounds that go to the route of the creditor‟s entitlement.

- I think this means that the rule nisi in favour of the appellant could only be set aside by an

application by the respondent if the operation of the rule nisi materially and negatively affected the

personal right of the holder of the general notarial bond.

- An intervening liquidation (as in casu) does not stop confirmation of a rule nisi.

- This means that even though the 4th

respondent may have become insolvent after granting of the rule

nisi, this does not prevent the court from confirming the rule nisi (which is a provisional order that

has to be assessed once again by the court on the return date to finalise whether it shall continue or

not).

- HOWEVER, it was also held that the pledge must be perfected in good time (I assume this means

that the goods must be delivered to the holder of the general notarial bond ASAP once he demands

them in terms of the perfecting clause) before the court will finalise the rule nisi.

- I still think the bond should be perfected even though this case refers to the pledge being perfected,

but take this to mean that the movable property has been delivered to the holder of the general

notarial bond who then immediately becomes the pledgee.

- Finally! The court held that the appellant had perfected the general notarial bond (see!?) by taking

possession of the movable property encumbered thereby. Appeal upheld.

- The second and third appellants, however, found the word „nisi‟ very funny and kept on using it in

sexual jokes during the proceedings. Their appeal was accordingly rejected.

Different types of notarial bonds – WE‟RE WORKING WITH SPECIAL AND GENERAL NOTARIAL

BONDS AGAIN!!

115

- Both special and general notarial bonds can also be divided into three different types of bonds.

- The principles behind these bonds over movable property are exactly the same as the principles that

apply to the same types of mortgages over immovable property. We‟ll go into detail on this when we

get to mortgages. I know it should have been the other way around – textbook.

1) Usual notary bond

2) Covering bond

3) Surety bond

- As already mentioned, all three of these also come in the form of a mortgage of immovable property

(seen later).

Termination of the notarial bond

- These methods of termination are also exactly the same for mortgages over immovable property.

1) Extinction of principle debt.

2) Merger of title (confusio).

3) Execution or insolvency sale of the encumbered assets (which is actually just a way of

extinguishing the principle debt – well done Professor).

4) Cancellation of the notarial bond.

5) Destruction of the encumbered thing.

6) A general notarial bond is terminated by the alienation of the movable property (remember, it

creates a personal right and the entitlment of follow-up doesn‟t operate).

7) HOWEVER, the alienation of the asset/s will NOT terminate a special notarial bond because

it is a real right and the entitlment operates.

8) Obviously, if the debtor under a notarial bond gooses the holder of the bond, it will terminate.

Questions

Explain whether a registered special notarial bond, as intended in the Security by means of Movable Property

Act 51 of 1993, grants the entitlement to follow-up. Refer to the facts and judgment in Bokomo v Standard Bank

van Suid-Afrika 1996 4 SA 450 (C). [5] In 1998 F executes and obtains registration of a general notarial bond over all his movable assets in favour of G

as security for the repayment of a loan.

In 2002 F obtains a loan from H and executes and registers a notarial bond in favour of H as security. The

notarial bond in favour of H provides inter alia:

“I, F, hereby specially hypothecate under a notarial bond the following corporeal movables in favour of H as

security for the due repayment of the loan set out above:

(a) One 2002 John Deere harvester model 9660TS with engine number Z278J527 and chassis number

BB00798336;

(b) Five New Holland tractors purchased in 1999 from Voor-Trekkers, Kroonstad.”

F sells and delivers all his movable trade assets, including the above-mentioned harvester and tractors, to K who

is unaware of the notarial bonds. Explain the nature and scope of the respective rights of G and H in terms of

their notarial bonds. Indicate also whether, and if so, to what extent, their respective rights are enforceable

against the new owner K. [5] Explain the importance of the judgment of the Supreme Court of Appeal in Contract Forwarding (Pty) Ltd v

Chesterfin (Pty) Ltd 2003 2 SA 253 (SCA) for the law regarding the perfecting of a general notarial bond.

Indicate also how perfecting was attained in casu and the effect of the subsequent liquidation of the notarial bond

debtor. [5]

116


Mortgage

Description

- A limited real security right over a specified movable thing or things that is established by

registration in the deeds office.

Object of a mortgage

- The object is an immovable thing.

- Usually a piece of land.

- It can also be a sectional title unit in terms of the Sectional Titles Act.

- A sectional title unit consists of a section and an undivided share in the common property.

- Cannot be granted over land in general – therefore, the principle of specificity applies. It must be a

specified piece or pieces of land.

- The mortgage may apply to „all‟ of a person‟s land, as long as ALL of the land is specified in the

mortgage bond.

- The object may also be the undivided share in land of a co-owner (without permission of the other

co-owner).

- In terms of the Deeds Registries Act, a mortgage can be registered over certain limited real rights

over land, for example, a registered long-term lease or a registered right of leasehold.

117

- Regarding these rights, it looks as though this is an exception to the rule that real rights can only be

registered over things and not rights – however, the object of the rights being mortgaged is land;

therefore, the land is actually the object of the mortgage.

Establishment of a mortgage

Requirements

- The existence of a personal right that is secured by the real security right (uh, a debt?).

- A real agreement (the intention of the parties to establish a real security right over the immovable

property).

- Registration of the mortgage bond in the relevant deeds office.

Procedure

- Drafting

- The mortgage bond must be correctly drafted by a CONVEYANCOR (not a notary) who must

certify that he has drafted it.

- The bond must contain the following stipulations:

1) an acknowledging clause and causa (? Just remember this) wherein the nature of the

mortgagee‟s personal right which is to be secured by the mortgage is confirmed.

2) A clause wherein the mortgagor states that he hypothecates the immovable property

concerned under a mortgage in favour of the mortgagee (this is basically the real agreement).

3) The „property‟ or „security‟ clause, which fully sets out the immovable property to be

hypothecated.

- Execution and registration.

- After drafting, the bond must be lodged in the deeds office where the land concerned is found.

- After that, the mortgage bond is executed by the signing thereof by the mortgagor (or the

conveyancer on his behalf) and 2 witnesses.

- Registration, and therefore the VESTING of the real security right, occurs when the registrar signs

the bond.19

- It is not a requirement, but it is standard practice that an endorsement is also affixed to the bond upon

registration.

- This endorsement sets out the particulars of the mortgaged land and is signed by the registrar. Once

again, it is NOT a requirement.20

- However, mala fide or negligent omission by deeds office personnel to attach the endorsement can

make the state liable for damages suffered by the wronged party.21

Standard Bank v Breitenbach – you‟ll see this case later with „follow-up‟

Facts

- B registered a 3rd

mortgage bond over his immovable property with Standard Bank.

- The bond was registered BUT it was not endorsed by the deeds office.

- B then sold the immovable property to a 3rd

party and this property was registered.

- The first two bonds were cancelled but the third bond was not cancelled.

- Standard Bank wanted to pre-empt any attempt from the new buyer an order that this bond was still

valid.

Judgment

- Court held that the requirements of the Deeds Registries Act had been complied with and that a

mortgage bond is valid when the registrar signs it.

19

Standard Band v Breitenbach 20

Ibid 21

Muller v Government of The Republic of South Africa

118

- The deeds office cannot, through its own standard practice (i.e. endorsement) add another

requirement to the statutory requirements set out by the Act.

- Therefore, endorsement is not a requirement.

- This was good news because, at the time, Standard Bank were still fighting with Bokomo and where

now actually thinking of changing their slogan to „Inspired. Motivated. Involved. Breitenbach sucks

because he eats Weet-Bix.‟ That would have been much too long.

Application of the doctrine of notice

- Also known as the doctrine of knowledge (be careful if they use this version in the exam because I

haven‟t found it explained like this in the book).

- An actual mortgage only comes into existence (i.e. the real right of mortgage only exists) when the

mortgage bond is registered.

- Between the time of the mortgage agreement (obligation creating agreement) and the registration

(real agreement), there is only a personal right against the other party to the mortgage that obligates

them to register the mortgage (just as with a servitude).

- However, this personal right is a ius in personam ad hypothecam acquirendam. This is a personal

right aimed at the creation of a real right (specifically, a real security right, which is why the name is

slightly different).

- Such rights are subject to the doctrine of notice!

- Therefore, a third party who buys the land before the bond is registered will still be bound by the

mortgage agreement and will have to register the mortgage at the deeds office.

The dual function of a mortgage bond

- It has a dual function because it:

1) Is a written acknowledgment of the principal debt and

2) Is an instrument that creates a real security right over an immovable thing.

- Because it is a written acknowledgment of a debt, the creditor/mortgagee can use it as evidence to

obtain provisional judgment against a mortgagor regarding the debt.

- The second function obviously enables the mortgagee to enforce his right against the mortgagor and

third parties.

Legal consequences of a mortgage

Registration of multiple mortgages

- Because physical possession by the holder of the mortgage is not requirement (as with a pledge), it is

perfectly possible that more than one mortgage can be registered over the same immovable property.

- The rule prior in tempore potior in iure will obviously apply.

- If the mortgagor goes insolvent, the mortgagees will claim in order of who registered their mortgage

first.

- For example, A‟s farm is subject to three mortgages in favour of B, C and D respectively, of which B

is the first to have his mortgage registered and so on.

- B‟s secured debt is R500 000, C‟s is R300 000 and D‟s is R100 000.

- A is declared insolvent and his farm is sold for R800 000 by the trustee.

- B will claim his debt first: R800 000 – R500 000 = R300 000

- C will claim second: R300 000 – R300 000 = 0

- Therefore, D will have no claim.

- However, a mortgagee may waive his right of preference in favour of another.

- For example, B may waive his right in favour of D (basically ceding it to D) so that D may have a

share.

- In that case, D will claim his R100 000 and then C will claim his R300 000.

- This will leave R400 000 for B to claim.

119

- Such waiver must be registered in the deeds office.

Entitlement to follow-up

- If a bona fide third party buys immovable property that has already been burdened by a mortgage,

can such mortgage still burden that party?

- Firstly, the doctrine of notice doesn‟t apply here. That‟s only because it isn‟t mentioned, which

makes me think that it‟s only applicable to personal rights for the creation of real rights.

- Either way, this is a stupid question – a mortgage creates a real right that will always be enforceable

by the mortgage holder against anyone. Still, we need to do this.

- A situation like this usually never arises, because the Deeds Registries Act states that the registrar

may not attest the transfer of land unless all mortgages registered over it are cancelled. Furthermore,

registration of the bond grants publicity about the existence of the mortgage bond and the new buyer

will probably be aware of the mortgage bond when he looks at the title deed.

- However, nothing is idiot proof. Well, specifically, nothing is „the dude who bought Breitenbach‟s

immovable property‟ proof.

- Once again, in the case of Standard Bank v Breitenbach (look at the facts again on page 157), the

land was sold with the 3rd

bond still registered because the bond had not been endorsed by the deeds

office.

- As we know, the court held that the bond was still valid.

- Secondly, they held that it applied to the new owner of the land because the bank had attained a real

right in respect of the land.

- This real right entitles holders follow-up and can thus be enforced against subsequent owners.

- This decision is therefore important for two reasons. Firstly, it confirms that endorsement isn‟t a

requirement for the creation of a mortgage bond and secondly, this case confirms that a mortgagee

has a fully-fledged real right which is enforceable against third parties.

- The book says „mortgagor‟ in the above point – it‟s wrong.

Execution sale of mortgaged land

- NOT insolvency!

- If land burdened by a mortgage is sold in execution, the mortgagee enjoys a preferential claim with

respect to the proceeds of the sale.

- If multiple mortgages applied – prior in tempore potior in iure applies as explained above.

- Such a sale in execution can arise when the mortgagee judicially attaches the land. If he is the only,

or the first mortgagee, then he will be entitled to the full satisfaction for his claim.

- On the other hand, the land can be attached by another creditor or by a subsequent mortgagee.

- NB – in this instance, the first mortgagee may lay down a reserve price, according to what is owed to

him under his mortgage. The land may not be sold for less than that price.

- Whichever way that the land is attached, the process will then follow as I explained it on 158.

- HOWEVER, servitudes and other limited real rights enjoy preference over a mortgage IF they were

registered first – this doesn‟t change the financial distribution; it just means that the mortgaged land

will have to be sold subject to such limited real right if it was established before the mortgage.

- However, if a limited real right is to be established over land that is already mortgaged, the

mortgagee must consent to this. If he does, he must also consent that the limited real right be

registered free of the mortgage.

- This means that, in any execution sale of mortgaged land at the insistence of the mortgagee, the land

will ALWAYS be sold subject to the subsequently registered servitude.

- Explanation? Should the mortgagor wish to establish a servitude over the land, the mortgagee will

always have to consent to this first. If he accepts the registration of the servitude, he must also accept

that this servitude will pass with the land if he attaches and sells the land through his mortgage.

120

Huur gaat voor koop

- A registered long-term lease as well as a short-term lease where the lessee has gained physical

control of the land, is a limited real right.

- This type of limited real right can be established over mortgaged land without the consent of the

mortgagee.

- If a lease is established over the land BEFORE the mortgage, the general rule of prior in tempore

potior in iure will stand and the land will be sold subject to the lease if it is attached and sold in

execution by the mortgagee.

- The preference of a prior lease over a subsequent mortgage is apparently based on the huur gaat voor

koop rule.22

- However, when the mortgage was established before the lease, we have a different situation. Now

the huur gaat voor koop rule falls away (can you see how my argument in the footnote makes sense?

The preference is based on prior in tempore).

- This means that the land can be sold, in principle, free of the lease by the mortgagee. Still, a certain

process has to be followed and this is seen in the next case.

- In the case of ABSA Bank v Sweet, we had a situation where exactly this problem manifested. The

following principles were set out:

1) The sheriff must first offer the land for sale subject to the lease (which obviously greatly

reduces the purchase price).

2) If the highest bid is enough to satisfy mortgage debt, then the land will be sold subject to the

lease.

3) If not, then the lease will be terminated, the price of the land raised, and the sale in execution

will be free of the lease.

4) Even if the land is not first auctioned subject to the lease, the sale will still be valid IF the

proceeds recovered were still less than the mortgage debt (because then it wouldn‟t have

mattered if they tried first to sell it with the lease).

Insolvency of the mortgagor

- The mortgagee has a secured claim to the proceeds of the mortgaged property.

- However, if the proceeds of the sale will not be adequate to cover the mortgage debt, the trustee may

allow the mortgagee to take over the property at a specified price (S83 of the Insolvency Act).

- If he does not take over the property, which is usually the case, he will claim the outstanding amount

of his claim as a concurrent creditor.

Entitlements and obligations in respect of the mortgaged thing and its fruits

A little understanding?

- I just realised that we have not been told what a mortgage actually does! Simply put, a mortgage is

primarily created so that the mortgagee has a secured claim should the mortgagor go insolvent. Until

your debtor goes insolvent, you don‟t really have to worry about him not paying you: he has money.

If he doesn‟t pay you when he‟s solvent, you can just sue him for the amount in terms of your loan

contract (or whichever contract created your personal right against him) and you won‟t even have to

mention your mortgage. The mortgage is for when things go wrong, i.e. insolvency or the complete

refusal or inability to pay. You can‟t just go and attach your mortgagor‟s property and sell it because

you feel like it, also, you wouldn‟t want to. Furthermore, even if the debtor fails to pay you, you

need to ask a court before you can sell the thing.

22

I disagree. The rule that the buyer of a house that was leased before it was mortgaged must honour the lease is based on huur

gaat voor koop, sure. But the mortgagee doesn‟t need to sell the house subject to the lease because of this. The huur gaat voor

koop rule states that the LESSEE‟S right to a house is stronger than the OWNER‟S right (in certain circumstances, such as

alienation). This rule has no direct application between a lessee and a mortgagee. The only reason that the right of the mortgagee

has to yield to the lessee‟s right is because the latter was sooner in time. Then, once this is established, we can sell the house on

the condition that the buyer accepts the lease and this condition will be based on the huur gaat voor koop rule.

121

The mortgagee‟s right to foreclose the mortgage

- If the mortgagor fails to fulfil his obligations under the contract (eg. missing a payment of the debt),

the mortgagee can claim the full outstanding debt and, if necessary, enforce a sale in execution.

- This is normally contained in foreclosure clause in the bond.

- The bond holder‟s right to claim execution after obtaining judgment arises ex lege and need not be

stipulated in the mortgage bond (does this mean that the right to claim full payment has to be

contained in the contract? If you read closely, you‟ll see that this omission in the book actually goes

to the root of this entire section of the work).

- A court may refuse to declare mortgaged property executable if such order would be in conflict with

S26 of the Constitution.

Mortgagor‟s entitlment to use and control

- In the absence of a pactum antichresis, the mortgagor retains the use and control of the thing.

Fruits

- Badenhorst states that all fruits of the thing are subject to the mortgage.

- Our lectures disagree and I think that they‟re right.

- Only fruit that has not been separated from the land should subject to the mortgage.

- If the fruits separate they will still belong to the mortgagor, but they become separate, MOVABLE

things.

- The mortgagor is entitled to the fruits that are separated from the thing in the natural course of

things. So, cutting trees of the land is not allowed, unless otherwise agreed. This is probably based

on the fact that the removal and use of certain fruits will lower the value of the property and thus the

security it offers.

Maintenance

- The mortgagor must maintain the thing properly and must use it salva rei substantia (use it in a way

that does not change its substance).

Different kinds of mortgages

Ordinary mortgage bond

- Registered as security for an existing obligation of which the scope is fixed.

- For example, a mortgage registered for security of a loan of R100 000 plus interest of 15% a year.

- This grants preference from the moment of registration of the mortgage because the debt was already

in existence upon registration.

Covering mortgage bond

- Serves as security for a debt incurred AFTER registration of the mortgage and where the outstanding

amount can change from time to time.

- For example, a bond registered to secure future overdrawn bank facilities.

- In terms of S51 of the Deeds Registries Act, such a mortgage bond must state exactly that it secures

a future debt as well as the maximum secured amount.

- If this is not stated, such a mortgage bond will not provide any security or preference for a debt

incurred after its registration. Therefore, I assume that it is still valid but will only apply to debts

incurred before its registration.

- This bond‟s ranking in time will be determined by its date of registration and NOT the date upon

which the future debt arose (S87 of the Insolvency Act).

- This type of bond is an exception to the rule that a real security right vests upon registration. Because

a mortgage bond is dependant on a primary obligation, the real security right will only vest if and

when this obligation comes into existence – however, this security will be granted retrospectively

from the moment of registration.

Kustingsbrief

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- A mortgage bond that is registered simultaneously with the transfer of land that is hypothecated by it.

- It must specifically serve as security for payment of the balance of the purchase price of the land or a

part thereof, or for the payment of money borrowed from a third party in order to pay for the land.

- Requirements:

1) It must be registered simultaneously with the transfer of ownership of the land in the name of

the mortgagor.

2) It must serve as security for the payment of the purchase price of the land or for the payment

of a loan from a third party used to pay for the land.

- Simply put, you buy a house and immediately register a mortgage over the house that secures the

payment of its purchase price. So, you‟re securing the debt owed with regard to the house with the

house itself; if you don‟t pay for the house, the mortgagor can sell the house.

- This could be any mortgage bond actually, but the fact that the security for the debt and the debt

itself originate from the same property, makes it slightly different.

- NB!!! – for the purposes of insolvency, it is important to distinguish whether a mortgage bond

qualifies as a kustingsbrief.

- The Insolvency Act states that no mortgage bond (other than a kustingsbrief) that was lodged with

the registrar of deeds more than two months after the secured debt arose but less than six months

before the sequestration of the mortgagee‟s estate, will give any preference to the mortgage holder.

- So, if we have a situation like this, we have to tell what type of mortgage bond we are dealing with

so that we can know whether or not it provides preference.

Surety mortgage bond

- This is a mortgage bond granted by a surety for the payment of his surety debt.

- For example, A stands surety for B‟s debt of R100 000 to C.

- On top of that, A also allows C to take out security for the payment of A‟s surety debt should B not

pay.

- Therefore, if B does not pay, C‟s claim is protected by the personal security of suretyship.

- But then if the surety doesn‟t pay, C has real security in the form of a surety mortgage bond for this

amount and may attach A‟s immovable property.

Participation bond

- This is registered in terms of the Collective Investment Schemes Control Act.

- In terms of this Act, a number of investors (participants) may provide a company with money in

terms of a collective investment scheme.

- The company then loans this money to an outside borrower. Such loan is secured by a participation

mortgage.

- The mortgage is registered in the name of the company as a representative of the participants (which

is an exception to the rule that you may not be register a mortgage bond in the name of your

agent/representative).

- However, the participants receive a certificate from the company that states their share in the bond

(their participatory interest).

- The debt secured under the mortgage is owed to the individual participants even though nothing is

registered in their names.

- Each participant has a real security right over the hypothecated thing.

- A participant can transfer his right in the bond to a third party (also another exception is found here

in that this cession doesn‟t need to be registered in the deeds office).

- All participants rank equally from the date of registration of the bond even if one person takes up his

interest at a later date.

Termination

- Exactly the same as a notarial bond.

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Special stipulations in mortgage AND pledge agreements

Pactum antichresis

- This clause will allow the mortgagee or pledgee to use and enjoy the thing.

- This entitlment is usually included as a replacement for the payment of interest.

Pactum commissorium (INVALID)

- Entitles the mortgagee or pledgee to retain the thing in ownership if the other party fails in their

obligations under the contract.

- This is invalid as the law tries to protect the pledgor/mortgagor, who is a weaker position, from

exploitation by the pledgee/mortgagee.

- A stipulation that allows the pledgee/mortgagee to take over the thing at a certain PRICE is valid if

this purchase price is market-related at the time of the debtor‟s breach of contract. But this is not the

same thing, so ignore it.

An agreement for parate executie (NB)

- Know the different positions of this type of an agreement with regard to pledges, notarial bonds and

mortgage bonds.

- This is an agreement whereby the pledgee/mortgagee may, if the debtor defaults, sell the burdened

thing without the intervention of the court and the sheriff in order to recover his debt from the

proceeds (the remainder will return to the debtor).

- The danger here is that it could greatly prejudice the debtor because it empowers self-help for the

holder of the security right.

- In a mortgage, it is INVALID (Iscor Housing Utility v Chief Registrar of Deeds).

- However, if the debtor has already defaulted, the parties can then agree to sell the thing to settle the

debts (this is a separate agreement and is valid).

- The position in the case of a pledge or notarial bond is not as clear.

- In the Chief Lesapo case, the constitutional court held that a STATUTORY authorisation of a parate

executie in favour of an organ of state (bank) with respect to movables and immovables was

unconstitutional because it infringed the right to access to courts and the legal process (S34).

- However, this case did not address the COMMON LAW creation of parate executie in pledges

notarial bonds. Still, it did give us the S34 consideration (remember this). For our course, we need to

know the common law position.

- The position with regard to the common law agreement of parate executie is found in SA Bank of

Athens v Van Zyl:

1) Such an agreement is VALID with regard to real security of movable property and is NOT

unconstitutional.

2) However, the manner in which the pledge creates such agreement may be unlawful.

3) Therefore, the court will not enforce an agreement for parate executie if it is immoral or

unlawful.

Questions on mortgages

1) Give the two requirements for a mortgage bond to qualify as a kustingsbrief. (2) 2) Explain in one sentence why it may be important in terms of section 88 of the Insolvency Act 24 of 1936 to ascertain whether a certain mortgage bond is a kustingsbrief or not. (1)

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3) P, an attorney from Pretoria, purchases an erf in Gordon‟s Bay, Western Cape. The purchase price is financed by a loan from ABSA Bank which was granted and paid over to P on 15 March 2004. The registration of transfer of the Gordon‟s Bay erf in the name of P is registered in the Cape Town deeds office on 15 July 2004. Simultaneously with the registration of this transfer, P registers a mortgage bond in favour of ABSA over his residential property in Pretoria as security for the ABSA loan. P has owned his Pretoria property since 1987. The mortgage bond was lodged for registration at the deeds office in Pretoria on 20 June 2004. P‟s estate is sequestrated on 25 September 2004.

- Does the mortgage bond qualify as a kustingsbrief ? Explain briefly. (1)

- Will the mortgage bond, with consideration of section 88 of the Insolvency Act 24 of 1936, confer a preference in favour of ABSA on P‟s insolvency? Substantiate your answer. (3)

4) X is the owner of Erf 23 Erasmusrand. In 2000, he had a mortgage bond registered over Erf 23 in favour of

First National Bank (FNB) as security for a loan of R450 000. In 2001, X leased the said property to Y for a

period of four years in terms of a written lease agreement and Y immediately obtained occupation of the erf. In

2002 X fell in arrears with the payment of his mortgage bond instalments to FNB. Ultimately FNB foreclosed the

mortgage bond and after following the required legal procedure, arranged for the burdened property to be sold in

execution. Explain, with reference to Absa Bank v Sweet 1993 1 SA 318 (C), the respective rights of Y and

FNB, and the sheriff‟s obligations, with regard to the execution sale. Briefly refer also to the facts of the case.

[5] 5) Explain what a kustingsbrief is. (2)

6) Why can it be of paramount importance for purposes of section 88 of the Insolvency Act 24 of 1936, to ascertain whether a mortgage bond qualifies as a kustingsbrief? Illustrate by means of an example. (3)


Real security rights ex lege

- These are real security rights that operate without the parties intending as such.

- They operate in certain circumstances and the parties can obviously choose to waive these rights or

merely not use them (my own observation).

- We will now look at them in detail.


The tacit hypothec of the lessor

- In terms of our common law, the lessor of immovable property has a tacit hypothec over all movable

things (well, not ALL – it operates over the invecta et illata, seen later) that the lessor brings onto the

premises.

- This hypothec grants real security for the payment of rent in arrears.

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- Simply put, if the lessee does not pay his rent on time, the lessor can attach the movable assets (as

may be necessary for the satisfaction of the debt) and will have a preferent claim in such attachment

as well as a secured claim against the insolvent estate of the lessee should he be sequestrated.

- This hypothec is also given statutory recognition in the Insolvency Act.

- The book, unsurprisingly puts this stupidly. The hypothec does not operate in terms of the contract of

lease the moment it is concluded!

- The lessor‟s tacit hypothec is dependent on the presence of a principal obligation. The principal

obligation in this case is not the obligation of the lessee to pay rent, BUT the obligation of the lessee

to pay rent that is in ARREARS. These are two different things and the hypothec will only operate if

the rent is in arrears.

- If the rent is in arrears but then the lessee pays up, the hypothec will terminate until the rent falls in

arrears again.

- Unlike a mortgage then, which operates continually but only grants the right of attachment in terms

of a suspensive condition, i.e. non-payment by the mortgagee (which I don‟t think was stated in the

book); the tacit hypothec of the lessor ONLY operates upon non-payment of rent and is still, even

then, not enforceable yet – seen later.

- ONLY rent – it cannot serve as security for any other debt.

Object of the lessor‟s tacit hypothec

- Movable things of the lessee that are present on the hired premises when the right is enforced. Once

again, not all, but almost everything constitutes invecta et illata that can be subject to the hypothec).

- Invecta et illata which belong to a sub-lessee are also subject to the tacit hypothec of the principal

lessor, but only to the extent that the sub-lessee is in arrears with payment of rent to the SUB-lessor.

- Things of third parties brought onto the premises by the lessee, can also be the object, but only under

certain conditions (seen later).

- Things removed before the hypothec is enforced, will not be subject to it (be careful with this, the

hypothec comes into existence when rent is in arrears, but is also only fully enforceable when it is

perfected by attachment – seen later).

- NB – things hypothecated under a special notarial bond BEFORE the lessor's tacit hypothec is

perfected are NOT subject to the hypothec (I assume even if the hypothec has come into existence, if

the notarial bond is registered before perfection, then this applies – looks like a possible loophole to

me).

Establishment and continued existence

- The establishment of the lessor's tacit hypothec is dualistic.

- The hypothec comes into force as soon rent in arrears is payable („force‟ is a bad word – not only

does the rugby team by the same name suck, this also implies that it is enforceable; it isn‟t.

„Existence‟ would be better).

- However, this does not create a real right of security yet – it has to be perfected.

- PERFECTION occurs when you‟ve had just enough to drink to feel good but not enough to not be

able to perform should the opportunity arise (i.e. a 5 on the Keitthew meter).

- It also occurs when the sheriff attaches the invecta et illata which is still physically present on the

premises (attachment procedure is the same as usual – court, warrant etc).

- Therefore, acquisition of physical control (through the sheriff! The lessor may not do so himself) is a

requirement for the establishment of tacit hypothec as a real right.

- Therefore, the lessor's tacit hypothec only affords a right of attachment (what type of right is that?).

- The real right is constituted by actual judicial attachment.23

- Things removed before attachment cannot be attached in an attempt to perfect the tacit hypothec.24

- However, things may be attached during the process of removal as long as they have not reached

their new destination.25

- For the CONTINUED existence of the lessor's tacit hypothec, the following are necessary:

23

Eight Kaya Sands v Valley Irrigation Equipment 24

Webster v Ellison 25

Ibid

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1) The attachment must continue.

2) The rent in arrears must still be owing.

- NOTE that a lessor's tacit hypothec will grant him a secured claim against the insolvent estate of the

lessee if he is sequestrated without the need for attachment.

- Does this mean that the hypothec is then perfected by insolvency? I think it does – this question

seems to have left our lecturers drooling.

The things of third parties on the premises

- These are only subject in the following circumstances, as set out in Bloemfontein Municipality v

Jacksons:

1) The thing must be present on the premises with the knowledge and express or tacit consent of the

owner (I assume the owner of the movables and not the owner of the premises).

2) It must be indefinitely present there (so if I leave my six pack of Stella Artois at Keigan‟s house by

mistake on a drunken night, that doesn‟t count).

3) It must be destined for the use of the lessee himself (ok, so if I told Keigan that he could drink the

beer as long as he replaced it, then this would apply, but I‟m not a Jew so I‟d probably just let him

have them, in which case he‟d be the owner – wow, I managed to combine pedantry with alcoholism

and anti-Semitism).

4) The third party must not have taken reasonable steps to inform the LESSOR of his ownership of the

thing.

5) The lessor must thus not have known that the third party was the owner. If, at any time before

judicial attachment, the lessor finds out about this, the hypothec over these items terminates.

- This is all a very long-winded way to say that if the lessor didn‟t know and could not have

reasonably known that the third party owned the stuff, he can, on the reliance that the lessee owns

the things, attach them in terms of the hypothec (misrepresentation).

- Contrary to my view, the Bloemfontein Municipality v Jacksons case states that the hypothec over a

third party‟s property is based on the fact that the presence of these requirements creates fictional

consent from the third party that the hypothec may operate over his property.

- This is WRONG, not because I say so, but because the Eight Kaya Sands case stated that it is instead

based on misrepresentation and our lecturers prefer this view.

- Now, we have to consider the position of property brought onto the premises by the lessee that he

has purchased in terms of an instalment sale agreement.

- If he has not yet paid for the items, they still belong to a third party – so what do we do?

- The 5 requirements set out in the Bloemfontein Municipality case can easily be met in such an

instance, and this was the case until the Security by Means of Immovable Property Act came into

force.

- The Act states that the lessor's tacit hypothec does NOT apply to such items (unless they have been

fully paid for, obviously, because then they belong to the lessee).

Legal consequences of the lessor's tacit hypothec

Preference on attachment

- If the lessor attaches the property first, he will enjoy a preferential claim.

- If another creditor has already attached the invecta et illata, it is submitted that he will enjoy no

preference.

- No matter who attaches the items first, real rights like pledge or notarial bond will enjoy preference

IF established BEFORE the hypothec was perfected (i.e. if the items are pledged before the lessor

attaches the items and perfects his hypothec, even if he attaches the items before the pledgee, he will

enjoy no preference).

Preferences on insolvency

- In terms of the Insolvency Act, the lessor automatically acquires a secured right for rent in arrears.

This means that the hypothec perfects upon insolvency of the lessee if, of course, he is arrears in his

rent (otherwise, the hypothec wouldn‟t exist).

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- The Act states that the hypothec only extends over invecta et illata that are on the property at the

time of sequestration and fall within the insolvent estate.

- It‟s not mentioned here, but this probably means that the property of a third party (even if it fulfils

the 5 requirements) cannot be subject to the hypothec in terms of sequestration because statute

requires the property to fall within the insolvent estate of the lessee. No matter how much you beat

around the bush with fictions and misrepresentation, such property is not in the insolvent estate and

the Act makes no reserve for such a situation.

Limitation of preference in insolvency [S85(2) of the Insolvency Act]

- We‟ve done this in ISR.

- In terms of the Insolvency Act, the hypothec only applies to certain amounts of arrear rent in

accordance with the intervals in which the rent is payable.

- Paid in monthly instalments or in smaller instalments – 3 months rent.

- Paid in periods of more than a month by less than 3 months – 6 months rent.

- Longer than 3 months but less than 6 months – 9 months rent.

- Anything longer – 15 months rent at most.

- Any period not covered but still owed is claimed concurrently.

Ranking at insolvency

- On sequestration, the lessor‟s preferent right is retroactively established from the moment the lessee

was in mora with the rent payment.

- This is thus different from the case of attachment. In attachment, the right is only established when

the attachment occurs, which means that all other real security established before the attachment

takes preference over the hypothec.

- In insolvency however, the right is deems to have existed even before the sequestration. It is deemed

to have existed the moment the hypothec came into existence (i.e. the first non-payment of rent).

This is obviously only applicable IF rent was not paid by the insolvent.

- Therefore, any pledges etc. over the property that were established after the lessee failed to pay (i.e.

after establishment of the hypothec) will yield to the hypothec (can you see how this is different to

the case of attachment?).

- This rule is subject to 2 important exceptions found in S2(1) of the Security by Means of Movable

Property Act:

1) The invecta et illata that are still subject to an instalment agreement are not subject to the lessor's

tacit hypothec – attachment thereof will not alter the situation (idiots, these items cannot be attached

anyway – Security by Means of Movable Property Act).

2) Invecta et illata that are hypothecated under a special notarial bond are not subject to the lessor's tacit

hypothec, UNLESS the tacit hypothec was perfect by ATTACHMENT before the special notarial

bond was registered. Therefore, this is an instance where judicial attachment holds an advantage for

the landlord (when doesn‟t it?).

- Regarding the last exception, remember that the insolvency of a debtor stays all sales in execution.

Therefore, the lessor may attach the lessee‟s property in terms of the hypothec and thus perfect his

hypothec. However, if the lessee is sequestrated before conclusion of the sale in execution, the sale

will be stayed and the property will fall into the lessee‟s insolvent estate. In this case, the lessor will

still be able to use his hypothec in regards to the insolvency and he will also have preference over the

holder of a special notarial bond if the attachment (even though it failed) was effected before the

special notarial bond was registered.

Termination of the lessor's tacit hypothec

- Payment of the rent in arrears.

- Removal of the invecta et illata from the rented premises.

- Transfer of ownership of the leased property to another person.

- Destruction of the invecta et illata.

Eight Kaya Sands v Valley Irrigation Equipment

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Facts

- Omitted.

Judgment

- The only remaining common law tacit hypothec is that of the lessor over the invecta et illata of the

lessee (the creditor‟s tacit hypothec is created by statute).

- The tacit hypothec affords the lessor a right over the movables of the lessee as security for payment

of rental in arrears.

- A THIRD PARTY whose movables are available to the lessee and who thereby creates the

appearance that the goods belong to the lessee, exposes those goods to the lessor's tacit hypothec.

This is due to misrepresentation.

- However, as soon as the third party makes his ownership known to the lessor, this legal relationship

changes as the appearance disappears and the hypothec terminates (this brings a point to my mind

though – this means that estoppel cannot be used by the lessor).

- There is no legal obligation between the lessor and the third party and there can be no justification

for the property of the third party serving as security for the debt of the lessee towards the lessor

UNLESS the misrepresentation or appearance that the lessee is the owner persists until the goods are

attached by the lessor.

- Court also pointed out that, before attachment, the hypothec only affords a right of attachment. The

real right is only constituted by the actual judicial attachment.

Questions

Explain the importance of the majority judgment in Eight Kaya Sands v Valley Irrigation Equipment 2003 2 SA

495 (T) for the law with regard to the tacit hypothec of the landlord, with special reference to the position of

movables, belonging to third parties, which are on the leased premises. [4]

P farms on the farm Mazeppa which he leases from Q in terms of a registered long term lease agreement. P inter alia uses a truck on the farm, which belongs to his father, R. R has lent the truck to P since 1998 on the understanding that P may use it as long as he needs it. In 2002 P fell in arrears with the payment of rental to Q. Q took legal action against P and all the movable assets used by P on Mazeppa, including the truck, were judicially attached in terms of a court order obtained by lessor Q. Advise R whether his truck is subject to Q‟s tacit hypothec for rent in arrears. Refer to case law. [5]

Study unit 4.3.7

Tacit hypothec of the credit grantor

Description

- This is a statutory real security right created over a movable thing under an instalment agreement in

terms of the National Credit Act.

- It serves as security for the payment of the outstanding purchase price if, AND ONLY IF, the

buyer‟s estate is sequestrated.

- Therefore, it provides a secured right over the proceeds of the thing when it is sold by the trustee of

the insolvent estate.

Creation

- In terms of S84(1) of the Insolvency Act, the moment that the buyer is sequestrated, the ownership

reserved by the credit grantor in terms of the instalment agreement for security of the outstanding

purchase price, is automatically changed into a tacit hypothec over the movable property.

- This is actually bad for the credit grantor because he is owner of the property until fully paid. He can

therefore claim the thing back as owner if payments are not made.

- However, if the buyer is sequestrated, the seller loses his ownership and is instead just given a

secured right (hypothec) against the insolvent estate to claim the remainder of the purchase price

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when the thing is sold. Therefore, he may not use the rei vindicatio to claim back the thing because it

has now fallen into the insolvent estate and actually belongs to the trustee.

- The tacit hypothec only comes into existence when the credit receiver‟s estate is sequestrated.

- The requirements for the establishment thereof are:

1) The existence of an outstanding debt in terms of an instalment of an instalment agreement.

2) The sequestration of the credit receiver‟s estate.

3) The existence of the res vendita when the estate is sequestrated.

Legal consequences

- Once again, it only comes into being upon sequestration of the debtor‟s estate and confers a secured

claim against the insolvent estate for the proceeds of the res vendita for the payment of the

outstanding purchase price.

- Furthermore, the credit grantor has the choice to change his tacit hypothec into a pledge.

- S84(1) of the Insolvency Act states that the credit grantor may request the trustee to hand over the

thing concerned. He will then hold it in pledge and may liquidate it himself (lodge a secured,

liquidated claim against the estate in terms of this pledge) in terms of S83.

Ranking

- The hypothec of the credit grantor only comes into being upon sequestration of the consumer‟s estate

– that‟s about as late as it gets.

- Therefore, all other real rights established before sequestration will rank higher than this hypothec

(prior in tempore potior in iure).

- Previously, the lessor's tacit hypothec enjoyed a higher ranking over property that was also subject to

a creditor‟s tacit hypothec. However, we know now that property subject to an instalment agreement

(and consequently, subject to a creditor‟s tacit hypothec upon sequestration of the debtor) cannot be

subject to the lessor's tacit hypothec (S2 of the Security by Means of Movable Property Act).

- Therefore, the creditor under the instalment agreement will not only rank higher than the lessor with

regards to the res vendita but the lessor will in fact not even have a hypothec at all.

- It is argued that once the claim of the credit provider is paid out, and then if anything is left from the

proceeds, the tacit hypothec of the lessor should come into existence. This is not law though.

- This is stupid and I‟m not surprised that the lecturers might consider it as a possibility – because they

are stupid. The only way that the credit provider under an instalment sale can have his claim paid out

is if the res vendita is SOLD. After this sale, the thing will not be on the rented property and will not

be in the lessee‟s insolvent estate anymore. This means that the requirements for the establishment of

the lessor's tacit hypothec over the invecta et illata of the lessee have not been met and the hypothec

cannot come into existence over the property.

- Disappointingly but not surprisingly, our lectures have not discussed the ranking situation where the

credit grantor chooses to take the res vendita in pledge instead – can he do this even if other people

rank above him? If he does will he rank as a normal pledgee?

Termination

- Payment of the outstanding purchase price.

- Destruction of the res vendita.

Question

Hmm! Such a nice question! This was in the 2002 re-exam, so Van Schalkwyk was trying to be spiteful.

This combines the hypothecs of both the credit provider under an instalment agreement AND the lessor.

X leases a small-holding from Y. The rental of R5 000 per month is payable on a monthly basis. X brought two

tractors, implements, a new lorry and a light delivery van (“bakkie”) onto the small-holding. All these assets

belonged to X, except the lorry which he had purchased in terms of an installment sale transaction (IST). In terms

of the IST, ownership in the lorry was reserved in favour of the seller, Nedbank, until the full purchase price is

paid.

On 30 September 2001 X executed a special notarial bond in favour of Absa Bank whereby the “bakkie” was

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bound as security for the payment of a loan of R70 000 which was granted to him on the same day. The special

notarial bond was registered in the deeds‟ office on 25 October 2001.

On 23 October 2001 garage Z, in terms of an agreement with X, effected certain necessary repairs to the

“bakkie” and also installed certain luxurious accessories into the “bakkie”. The latter did not increase the market

value of the “bakkie” at all. The contractual price due to garage Z for all the work done, was R25 000. The actual

costs of the necessary repairs amounted to R10 000. While the “bakkie” was still under the control of garage Z,

the estate of X was sequestrated on 30 October 2001. All the other assets were still present on the small-holding

at the time of sequestration.

At the time of sequestration, R30 000, being six months rent in arrears, is due to lessor Y, an amount of R100

000 of the purchase price of the lorry is still due to Nedbank in terms of the IST and the full loan amount of R70

000 is still payable to Absa Bank. Garage Z claims a lien over the “bakkie”, since the amount of R25 000 has not

yet been paid to Z. All these creditors lodged claims with the trustee of X‟s insolvent estate and claim to be

secured preferential creditors.

Answer the following questions:

- Explain whether lessor Y has a real security right and therefore qualifies as a secured preferential

creditor. If so, indicate, with reasons, for which amount he will enjoy a preferential claim and which of

the above mentioned movable assets, if any, are excluded from his real security right. (4)

- 12.2 Why can Nedbank, which reserved its ownership in terms of the IST, not claim the lorry with the rei

vindicatio from the trustee of the insolvent estate? Also explain fully Nedbank‟s position as creditor on

the insolvency of X. (3)

- 12.3 The trustee sold the “bakkie” on the insolvency auction for R85 000. Explain, with a brief

substantiation, how the trustee should distribute the proceeds of the “bakkie” between Absa Bank and

garage Z. (4)

[11]

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Chapter 32

Fucking liens

Description and nature

- This is a right that the controller of the thing of another, upon which he has spent money or labour,

acquires. It comes into being by operation of law.

- It allows him to retain the thing until he is properly compensated.

- The parties may agree on the compensation and its amount.

- If they do not agree, the amount will be for his actual expenses or labour – but at most the degree of

the owner‟s enrichment.26

- Remember negotiorum gestio? I don‟t, but we did in HVR. It‟s not the same as a lien. Negotiorum

gestio confers a right to claim compensation for improvements to another person‟s thing. A lien

entitles you retain the thing as security until that happens.

- This is terribly explained. Let me try.

- Negotiorum gestio is merely one of the ways that a principle debt can be created. A principle debt is

a pre-requisite for a real security right. This debt could also be created by a contract of letting and

hiring of work etc.

- This debt will then, ex lege, be secured by the lien or right of retention.

- So, once again, a lien is not a right to claim compensation for work done to another person‟s thing; it

is real security for this debt!

- There are two categories of liens; we will do that soon.

Object

- Movable or immovable property can be subject to a lien.

Enrichments liens

General

- These are liens that can exist irrespective of whether a contractual relationship exists between the

lien holder and person against whom it operates.

- We‟re not referring to a contractual relationship that creates a lien by agreement (liens operate EX

LEGE!), we are referring to the principal debt and it‟s creation. Therefore, whether the principal debt

was created through contract or not, such a lien may still operate. Another piece of academic

excellence from Van Schalkwyk there.

- Therefore, the negotiorum gestor can exercise this type of lien.

- Ok, negotiorum gestio is a claim that arises when you have, without permission from the owner

thereof, effected certain NECESSARY repairs/improvements to his property. There is no agreement

and thus no contract here, but the owner is still indebted to you – it is this debt that may be secured

by the lien.

Foundation

- Enrichment liens are based on the principle that one person may not be enriched at the expense of

another.

- Note therefore, that a lien can be instituted not only where the money/labour put into the property

increases the value thereof, but also where it prevents the decrease of the value thereof.27

Real right

- This is a REAL RIGHT (unlike the next type of lien – seen later).

- It can be enforced against any person who is the owner of the thing.28

26

Brooklyn House Furnishers v Knoetze and Sons 27

Brooklyn House Furnishers v Knoetze and Sons

132

Types of enrichment liens

- We get salvage liens and improvement liens.

- Salvage liens refer to where necessary money or labour has been spent on the thing of another in

order to maintain it. The retentor can retain the thing until he has been compensated for the

necessary labour or expense.

- Improvement liens arise where the retentor incurs useful expenses (?) in respect of the thing of

another whereby the market value of it is increased.29

He can then retain the thing until he is

compensated for the increase in market value or for his actual expenses incurred, whichever is least.

- Useful expenses? Crap – he means necessary expenses for useful improvements, I‟m pretty sure.

- All in all, an enrichment lien can be exercised in terms of an expense incurred with OR without an

underlying contract, BUT only applies to necessary or useful expenses and NOT luxurious expenses.

Debtor-and-creditor liens

- These only operate over a debt that arises ex contractu.

- These are PERSONAL RIGHTS.

- This could, for example, operate over a debt owed to a mechanic for work done on a car in terms of a

contract. If the debtor doesn‟t pay him, he may retain the car as security for this payment.

- Note that an enrichment lien can apply to this too.

- REMEMBER, this type of lien does not come into operation through agreement! Only the principal

debt does – the lien is created by law.

- Because they are personal rights, a debtor-and-creditor lien is only enforceable against the debtor in

terms of the contract that created the debt (even if he isn‟t the owner).30

- This type of lien is less advantageous than an enrichment lien because it cannot be enforced against

the owner UNLESS he is also the debtor (which leaves you upon to the rei vindicatio). Also, it

provides NO preference should the debtor be sequestrated.

- However, it is better in that it secures the entire contract price agreed to, even if this is more than the

enrichment involved. It can therefore also cover luxurious expenses that were incurred in terms of

the contract.

- Note that this type of lien can therefore be exercised with regard to ANY expense as long as this

expense was incurred in terms of the contract (like putting mags on a car in terms of an agreement).

How to determine what type of lien we are dealing with

- This should already be clear after the way that I explained the different types of liens.

- The book explains it about as well as Joost tried to explain the videotape.

- Apparently, we have to consider 2 things when trying to figure this out:

1) The type of expense incurred.

2) Whether or not there is a contract in respect of the expense.

- Regurgitate this in case we get marks for it.

- However, when trying to figure out what lien we are dealing with, do the following and read the

book if you feel like a laugh.

- First, ask if there is a contract between the holder of the lien, then look at what type of expenses

where incurred with regards to the thing.

If there is no contract

- Well, then it‟s definitely going to be an enrichment lien.

- If the expenses are necessary expenses, this will usually give rise to a salvage lien. Necessary

expenses are those essential for the maintenance or protection of the thing (Brooklyn House

Furnishings).

28

Brooklyn House Furnishers v Knoetze and Sons makes this groundbreaking observation for us. 29

D Glaser & Sons v The Master 30

Ibid

133

- If the expenses are useful expenses, this will give rise to an improvement lien. Useful expenses are

those expenses that improve the thing and increase its market value (Brooklyn House Furnishings).

- Luxurious expenses are never covered by an enrichment lien.

If there is a contract

- Either lien can apply now, however, an enrichment lien will only apply to the necessary and useful

expenses and NOT the luxurious expenses (even if these expenses where incurred in terms of the

contract).

- If there is a contract, the creditor can use a debtor-and-creditor lien against the debtor no matter what

the costs are (as long as they were envisaged by the contract of course).

- You can enforce both types of liens at the same time (but not over the same expenses).

- For example, you can enforce the enrichment lien for the necessary and useful expenses (which is

good because you are then protected with regards to these costs should the owner be sequestrated) –

- You can then enforce the debtor-and-creditor lien for the luxurious costs (in which case you won‟t

enjoy preference for these amounts in sequestration but you will be able to claim the entire contract

amount for these costs in the normal course of things).

- Remember, an enrichment lien can only be exercised against the owner of the thing, so if the debtor

is not the owner, you can never use the enrichment lien against him, you will have to use the debtor-

and-creditor lien.

- On the other hand, should you enforce the debtor-creditor-lien, you may not enforce it against the

owner UNLESS he is the debtor.

- Take into consideration the pros and cons of both these liens and know which would be best to

enforce over which debt in a given set of facts.

Requirements for the establishment and continuation of a lien

1) Physical control – control with the intention to keep the thing as a security object. This applies even

to immovable property because a lien cannot be registered over immovable property – it arises ex

lege (that‟s a bad reason, but the book gives it).

2) The lien holder must have a claim, based on an agreement, unjust enrichment OR negotiorum gestio

(which isn‟t the same as undue enrichment dumbass! Talking to the lecturer there) against the party

who demands delivery of the thing.31

3) The secured debt must be for labour or money spent on the object while the retentor exercised

control over it.32

4) The lien must be exercised over the thing in which respect these costs were incurred – if I have 2 of

your cars and only work on 1, I cannot hold the lien over both or over the one that had no work done

on it.

5) Even if all these requirements are met, a court still has discretion to order that the lien be

relinquished and replaced with another form of satisfactory security (admit it – liens suck).

Legal consequences of liens

- A lien only offers a weapon of defence and not a cause of action (Brooklyn House Furnishers).

- The most important legal consequences of a lien are the following.

Retention entitlement

- The retentor can legally retain the thing until compensated for the amount owed.

Attachment by the retentor

- He can also obtain judgment against the debtor and attach the thing.

- HOWEVER, he then loses his security because the lien terminates upon his voluntary relinquishing

of control to the sheriff.33

31

Singh v Santam Insurance 32

Ibid – an exception would be a hotel owner‟s lien over the baggage of a guest.

134

Attachment by ANOTHER creditor

- If another creditor attempts to attach the thing, the retentor may refuse to allow such attachment

(Assurity Ltd v Truck Sales).

- If he consents to the attachment of acquiesces to it (does nothing), the lien will lapse because he is

then taken to have voluntarily relinquished control.34

- The lien will not lapse if the sheriff attaches the thing against the wishes of the retentor (Assurity Ltd

v Truck Sales).

Insolvency

- If the estate of the debtor is sequestrated, the lien grants a secured claim to the retentor.

- Handing over of the thing to the trustee does not terminate the lien provided that the retentor notifies

the trustee in writing of his right (Insolvency Act).

- On request of the trustee, the retentor is obliged to surrender the control of the thing to the trustee.35

- NB!!! The ranking order when a clash exists between liens and mortgages over LAND is important

and sui generis.

- The order is as follows:

1) Enrichment liens, even if they arose after the mortgage.

2) Mortgages, according to their order of preference.

3) Debtor-and-creditor liens, even if they arose before the mortgages.36

- The book refers to this fleetingly, but it looks very important – in terms of the D Glaser and Sons

case, the ranking order should be the same for liens and special notarial bonds. So, you can replace

„mortgage‟ with „special notarial bond‟ in the above order if necessary.

Obligations of the lien holder

- He must maintain the thing in good condition.

- He will be liable if the thing is damaged or destroyed through his negligence.

- The retentor may also never use the thing for his own advantage.

Loss of lien

- Extinction of the secured debt.

- Voluntary surrender of physical control of the thing.

- Waiver of the lien.

- Merger of title (confusio) – the retentor buys the thing from the debtor.

- Destruction of the thing.

CASES

Questions

1) Since 1994 X has been the owner of an erf in Ballito. In 1996 X borrowed money from his brother-in-law, Z,

to start a business and registered a mortgage bond over the Ballito property in favour of Z, as security for the

loan.

In 2006 X contracted with P, a building contractor, to erect a beach cottage on the erf at a contract price of R

R700 000. P builds the cottage and his actual costs amount to R400 000. While P is still in control of the building

site, the estate of X is sequestrated. The amount due to Z in terms of the mortgage loan is R800 000, and the full

contract price of R700 000 is also still payable to builder P. P hands over the building site to the trustee of the

insolvent estate and simultaneously notifies him in writing that he has a lien in respect of the property. The

property is sold for a total amount of R900 000. Of this amount, the value of the land represents R400 000 and

the improvements (building erected by P) R500 000, according to an evaluator.

33

Orbit Motors v Reeds Cape Ltd 34

Orbit Motors v Reeds Cape Ltd and Assurity Ltd v Truck Sales 35

Roux v Van Rensburg 36

D Glaser and Sons v The Master

135

Explain to P on which liens he may rely and advise him of the most advantageous basis for him to institute his

claim against the estate. Indicate also how the amount of R900 000 will be distributed in terms of your advice to

P. [5]

2) Y is the purchaser of a second-hand motor vehicle from Bank Z in terms of an instalment sale transaction. Y is

still busy paying instalments to Bank Z in terms of the said agreement. X has installed an air-conditioner in the

vehicle in terms of an agreement with Y at a contract price of R10 000. X‟s actual expenses in labour and

components amounted to R5 000. The instalment of the air-conditioner improved the market value of the vehicle

with only R3 000. Y fails to pay X and is also in default with his payments to Bank Z. X is still in control of the

vehicle. Bank Z cancels the instalment sale transaction and ultimately obtains a court order authorising the

judicial attachment of the vehicle on its behalf.

10.1 For what amount can X exercise an enrichment lien over the vehicle against Bank Z? (1)

10.2 What will the effect of the judicial attachment of the vehicle be on the enrichment lien of X? Explain with

reference to relevant case law. (3)

[4]

3) S borrows R500 000 from Bank T in order to purchase an erf and to build a dwelling on it. Simultaneously

with the transfer of the erf into S‟s name, the loan is paid over to S and a mortgage bond is registered over the erf

in favour of Bank T as security for the loan. Building contractor R builds the house at a contract price of R300

000. R‟s actual building costs amount to R200 000.

While R is still in occupation of the building site, the estate of S is sequestrated. No payments have yet been

made to either Bank T or building contractor R. R hands over the building site to the trustee of the insolvent

estate and simultaneously notifies him in writing that he has a lien in respect of the property. The property is sold

for a total amount of R400 000. Of this amount, the dwelling (building operations) represents R250 000,

according to an evaluator.

Explain to R on which liens he may rely and advise him of the most advantageous basis for him to institute his

claim against the estate. Indicate also how the amount of R400 000 will be distributed in terms of your advice to

R. [5]

X sells a caravan to Y in terms of an instalment sale transaction. The caravan is damaged in a collision and Y

takes it to Z for necessary repairs. Y fails to pay his instalments on the caravan to X as well as the repair costs to

Z, who is still in control of the caravan. X obtains an attachment order against Y and the sheriff demands the

handing over of the caravan from Z. The latter protests vigorously, but ultimately hands over the caravan when

the sheriff threatens with police action.

Explain whether the lien of Z is extinguished under these circumstances. Refer to case law. [5]

Good luck

- This is it. I‟m not doing the last two chapters. I‟ve never seen a question on them, read through them

– you never know.

- If you‟re reading this, then you are very special. That‟s because only 18% of our class has exam

entrance. Of that 18%, about half will fail and at least 20% will write the sick test.

- Van Schalkwyk is officially the worst lecturer of all time, so don‟t feel bad if you don‟t do all that

well.

- Think about it, he‟s a professor in the law, he lectures family law, law of things and law of (delict or

something, I‟m not sure), and he achieved all of this, despite being born with a moustache.

SAR From Luna

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Transcript of SAR From Luna