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n Tydskrif vir die Suid-Afrikaanse Reg - Met andermanskalf mag jy nie ploeg nie, en andermansgoed kan jy nie verpand nie
The property of another cannot be pledged or mortgaged unless with the owner's consent
The registration of transfer of immovable property pursuant to a fraud perpetrated on the legitimate owner is an empty gesture with no legal consequences as far as the material real rights of the parties involved are concerned. Unless the owner forms the subjective animus transferendi domini the formal completion of the transfer formalities and even the administrative registration of the transfer in the deeds office remain an ineffective paper exercise. No real right of ownership vests in the transferee as a consequence of such a pretence. Registration does not guarantee title, and if it is effected as a result of a feigned power of attorney or of an outright fraud thanks to a falsified signature of the rightful owner, the right apparently created, is no right at all.
What applies to the transfer of ownership as mother right applies equally to the vesting of a limited real right such as a mortgage bond or pledge. Unless the mortgagor or pledgor is the owner of the property ostensibly intended to be bonded by the mortgage or pledge, and subjectively has the intention of vesting a limited real right over his property in the mortgagee or pledgee, the mere completion of the formalities of registering the presumed mortgage (or passing of possession in the case of a pledge) does not vest a limited real right in the intended mortgagee or pledgee. The requirement of a real agreement cannot be circumvented in an abstract system with regard to any derivative mode of acquisition of any real rights, and the prevailing opinion is that no limited real right of security can be vested in an original mode. The underlying principle is encapsulated in the Latin adage res aliena pignori dari non potest, which follows logically from the other well-known principle captured in the phrase nemo plus iuris ad alium transferre potest quam ipse haberet.
As a consequence of these principles, the pledgee is not entitled to transfer the limited real right of pledge to a cessionary of the underlying claim. This is the position even if the pledgor happens to be the debtor of the underlying debt that was secured by the pledge. On cession of the claim the ceded right vests in the cessionary, but as an unsecured claim, and the owner of the erstwhile pledged property may vindicate his property from the former pledgee. Only the owner can vest a limited real right in another, and the pledgee lacks the necessary entitlement. The principle that a security right is accessory to the underlying claim does not result in an abrogation of the overriding principle that without the necessary entitlement (ius disponendi) nobody can effect a limited real right over someone else's property - res aliena pignori dari non potest. The thief can no more vest a real right of pledge over the stolen car than transfer the ownership of the car to another, even though he may ostensibly allow the other party to take possession of the car - and the latter, notwithstanding his innocence and bona fides, will in general have no remedy against the rei vindicatio of the true owner.
It is submitted in this contribution, notwithstanding the foregoing accepted principles of property law, that in exceptional circumstances the creditor who has been misled by the misrepresentation of the true owner regarding the perceived entitlement of the pretender with regard to the owner's property, either positively by his actions (commissio) or by his neglect (omissio) as owner to intervene timeously to rectify the wrong impression that another is the owner and consequently entitled to mortgage the property deemed to be the latter's as security for credit provided, may be estopped from vindicating his property unless the perceived mortgagee is compensated. It is submitted that there is scope to recognise that South African law has developed to the point where a new original mode of acquisition of a limited real right such as a mortgage bond is effective whenever all the requirements of estoppel have been met. This would follow from a consistent application of the reasoning of the supreme court of appeal in the Oriental Products case and could have qualified the recent judgment of the supreme court of appeal in Nedbank v Mendelow.
This principle may be applied where the executor of the deceased estate neglected to intervene timeously to rectify the false impression created by the fraudulent public registration in the deed's office of the perceived transfer of ownership, and this omission enabled the fraudster to misrepresent to a potential credit provider that he is entitled to mortgage the property as security for the credit provided. The mislead party may as estoppel assertor bar the rei vindicatio of the executor on behalf of the estate. It is inherently unfair to allow the beneficiaries effectively to benefit from the failure of the executor of the deceased's estate to act timeously. This is especially so when it will be at the cost of the bona fides of the perceived mortgagee as the third party who acted as the reasonable person, because there was nothing to put him on his guard that there was anything untoward regarding the entitlement of the perceived mortgagor to burden the property. This is particularly so if the fraudster stands to benefit from his own fraud under the guise of being one of the beneficiaries of the estate - notwithstanding the fact that he personally fraudulently falsified the deceased's signature to result in the misrepresentation regarding the ownership of the seemingly mortgaged property. Nobody should stand to benefit from his own misconduct.
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