Derivative Acquisition of Ownership: Systems and Methods of Delivery
Introduction to the Acquisition of Ownership
This unit focuses on the derivative acquisition (or transfer) of ownership, distinguishing it from original acquisition.
Learning Outcomes:
Understand the concept of derivative acquisition and how it differs from original acquisition.
Articulate the differences between abstract and causal systems of transfer.
Understand the applicable system in South Africa.
Identify and apply pre-conditions for valid transfer and essential requirements for movables.
Focus specifically on Constitutum possessorium and Attornment.
General Requirements for Derivative Acquisition
Res in commercio: The object must be a thing that is capable of being owned (in commerce).
Nemo plus iuris: The transferor must be the owner of the thing. No one can transfer more rights to another than they themselves have.
Legal Capacity: Both the transferor and the transferee must possess the necessary legal capacity to perform the juristic act.
Legal Reason/Cause (iusta causa): There must be an underlying reason for the transfer, such as a contract of sale, a donation, or a bequest.
Intention (Animus): There must be a clear intention to transfer ownership by the transferor and an intention to receive ownership by the transferee.
Physical Expression (Corpus): The intention must be manifested through a physical act, specifically delivery (for movables) or registration (for immovables).
Payment of Purchase Price: In cash transactions, payment is generally required for ownership to pass, unless credit has been granted.
Abstract Versus Causal Systems of Transfer
Causal System
In a causal system, the validity of the transfer depends strictly on the validity of the underlying legal cause (causa).
If the underlying contract (e.g., a sale agreement) is invalid, the transfer of ownership is also void.
Abstract System (South African Law)
South Africa follows the Abstract System for both movables and immovables.
In this system, the validity of the transfer is independent (abstracted) from the validity of the underlying cause.
There are two distinct agreements:
Obligation-creating agreement: The underlying cause (e.g., the contract of sale).
Real Agreement: The agreement specifically to transfer and receive ownership.
Even if the sale agreement is invalid, ownership passes if the Real Agreement is valid. The Real Agreement requires the intention (animus) to transfer/receive and the physical act (corpus).
Essential Elements of the Real Agreement:
Animus: The objective intention to transfer and receive ownership. It cannot be for a lesser right like a pledge or lease.
Corpus: Expressed through delivery or registration.
Delivery of Movables: Corpus
Delivery is the outward expression of the intention (animus).
It applies exclusively to movable property.
Possession must pass from the transferor to the transferee.
Post-delivery Requirements:
The transferee must have direct physical control of the movable.
The transferee must have the ability to access the object without anyone else's consent.
Actual Versus Constructive Delivery
Publicity Principle: Real rights must be known publicly or be externally perceptible so that third parties can ascertain which rights exist between subjects and objects. This creates legal certainty.
Actual Delivery: The physical handing over of the object.
Constructive Delivery: Delivery where there is no physical handover but a change in legal possession. This places greater emphasis on the true intention of the parties. Types include:
Symbolic Delivery: Handing over a symbol (e.g., keys to a warehouse).
Traditio longa manu: Delivery with the "long hand," pointing out an object that is too bulky to move easily.
Traditio brevi manu: Delivery with the "short hand," where the transferee is already in physical control but holds it for a different reason (e.g., a lessee buying the leased property).
Constitutum possessorium: The former owner remains in physical control but holds the thing on behalf of the new owner.
Attornment: Discussed in detail below.
Attornment
Attornment is a form of constructive delivery involving three parties.
Requirements:
Tripartite Consensus: All three parties (Transferor, Transferee, and a Third Party) must be in agreement regarding their intentions at the exact moment attornment occurs.
Physical Control: At the moment of attornment, the third party must be in direct physical control of the property.
Procedure:
The Transferor must inform the Third Party of the transfer.
The Transferee must inform the Third Party of the transfer.
The Third Party must agree to hold the property on behalf of the Transferee rather than the Transferor.
Limitations:
Attornment is not possible if the third party has passed possession to someone else or if the movable has been stolen.
Case Study: Southern Tankers (Pty) Ltd t/a Unilog v Pescana D'Oro Ltd (Velmar intervening) [2002]
Facts:
Pescana owned a catch of fish discharged in Cape Town (Jan-Feb 2002).
Louis Vos (Dockmaster) arranged storage at Atlantic Cold Storage (ACS) on his account.
Unilog had a claim against Pescana for repairs to the vessel MV San Liberatore totaling .
Sale 1: Pescana sold to Kensa Trading Ltd. 60 tons were delivered and shipped to Mauritius.
Sale 2: Kensa sold the remaining fish to Velmar Ltd. Velmar paid Kensa on 20 May 2002.
Arrest: On 6 June 2002, Combined Shipping & Trading (CST) arrested the catch for dock fees.
Attachment: On 30 August 2002, the High Court issued an interim attachment order for the fish at ACS to confirm jurisdiction over Pescana for Unilog's claim.
Issue: Did ownership pass from Pescana to Velmar via attornment before the attachment? If so, the fish didn't belong to Pescana and couldn't be attached.
The Argument:
Velmar argued ownership passed via a chain (Pescana \rightarrow Kensa \rightarrow Velmar).
Unilog argued there was no valid attornment.
Court Finding:
The third party (ACS) was in physical control.
However, Pescana had not instructed ACS to hold the fish for Velmar, and ACS had not agreed to do so at the time of the purported transfer.
Result: No valid attornment occurred; ownership remained with Pescana, and the attachment was valid.
Constitutum Possessorium
This is the opposite of traditio brevi manu.
The transferor remains in physical control of the thing but no longer as the owner. They now hold it on behalf of the transferee (e.g., as a bailee or lessee).
Requirements:
The transferor must own and possess the thing at the moment of transfer.
The transferor must intend to no longer possess for themselves but on behalf of the transferee.
The transferee must agree that possession remains with the transferor.
The transferor must retain possession based on a contractual relationship (e.g., a lease or storage agreement).
Judicial Scrutiny:
Because the publicity principle is compromised (nothing changes externally), courts scrutinize the intention closely.
It is never presumed; the party relying on it must prove it.
Simulated Transactions: It is often used for simulated sales where a debtor "sells" to a creditor to provide security (a pledge) without actual delivery. If the true intention is security rather than transfer of ownership, the court will find it is a pledge, which requires actual delivery to be valid against third parties.
Registration of Immovables
Registration takes place in the Deeds Registry in accordance with the Deeds of Registries Act.
The Registrar of Deeds oversees this process.
Payment is not a legal requirement for ownership to pass; passing of ownership occurs upon the moment of registration.
Positive Versus Negative Registration Systems
Positive System:
The act of registration guarantees that the person listed is the true owner.
The state guarantees the accuracy of the registry.
A bona fide third party who relies on the registry is fully protected.
Claims can be made against a state compensation fund if errors occur.
Negative System:
The registry records the transfer of ownership, not necessarily the absolute fact of ownership.
There is no state guarantee, although registration is a strong indication of ownership.
Errors can occur (e.g., fraud, or failure to reflect a marriage in community of property).
Prescription and expropriation are often not reflected.
Third parties are not automatically protected from underlying defects.
The South African System
South Africa uses a Modified Negative System.
It uses a Cadastral System: Every piece of land is surveyed, represented by a diagram or general plan kept at the Deeds Office, which describes the specific borders.
While a high standard of accuracy is maintained, the registry does not give an absolute guarantee.
Case Example: Andile is registered as the owner of a stand in Hatfield. Boitomelo checks the registry to ensure he has assets for a loan. However, the registry doesn't show Andile is married in community of property to Diana. In a sale in execution, Andile only owns of the property. Boitomelo is not protected by a guarantee as she would be in a positive system.
Consequences of Errors:
One cannot claim against the state unless there was bad faith or negligence by the Registrar.
Victims of errors may have a delictual claim against the conveyancing firm/attorneys involved.