Law of Property assignment one

Law of Property PPR3690

Utjiua Tjavara

221072497
Introduction
The question of whether a particular condition may be registered in terms of section 63(1)
of the Deeds Registries Act,19321 has long been a thorn in the sides of legal theorists,
judges and the legal fraternity at large. I will attempt to shed light on how this irksome
issue has been tackled, starting with a rudimentary examination of what real and creditors’
rights are.

What are real rights and personal rights?

A real right is a right that vests in the holder's immediate control or right over corporeal or
material things such as ownership, servitude or pledge2. A real right entitles the owner to
vindicate or enforce it against the world at large. The sum total of all real rights in land is
called absolute ownership. This gives the owner the right to use, alienate, possess or
destroy what they own. However absolute ownership can be broken down into constituent
real rights, which can be owned by another person other than the owner as such
decreasing the owners' total rights of ownership.

Real rights have the following characteristics, firstly the object of a real right is a corporeal
thing e.g., a house. Secondly, real rights allow direct control over a thing e.g., the owner
of a house may choose to sell it or paint it an absurd colour. Lastly, real rights afford a
right of pursuit e.g., the owner of a stolen car has every right to demand its return.
However, these characteristics are not an exhaustive and clear criterion to classify a real
right. Furthermore, real rights are split into two categories namely ownership and limited
real rights.

On the other hand, Creditors’ (Personal) rights can be termed as the right a person has
against another person with regards to an obligation. Personal rights come from
obligations such as contracts or delicts. Just like real rights, personal rights have certain
characteristics that distinguish them from real rights. Firstly, the holder of personal rights

1
No. 47 of 1932
2
Amoo, S. 2014. ''Property Rights, Real rights and Personal Rights''. Property Law in Namibia, Pretoria
South Africa: Pretoria University Law Press, 40
is entitled to a specific performance from a certain person. Secondly in the event of non-
performance, the holder of the real right has a personal action as a remedy.

Common law attempts at distinguishing between real and personal

rights
In an effort to further distinguish between real and creditors’ rights two theories have been
proposed.

Classical Theory

This theory draws inspiration from Roman procedural Law where real and personal rights
were classified as either actiones in rem or actiones in personam. This theory postulates
that rights must be classified according to the differing nature of their objects. As such
this theory argues that the object of a real right is a thing3. This means that the thing itself
is bound to the holder of the real right, creating a direct legal connection between the
holder and the thing. Furthermore, the holder is entitled to control his thing to the fullest
extent of the law. A practical example would be the owner of a house being the lawfully
recognised owner of it and being entitled to do whatever they so wish.

With regards to personal rights, a person becomes bound to the holder of the right to
whom specific performance must be rendered4. In essence, this would be to do or not do
something. This means that the performance becomes the focus or object of the right.
Unlike a real right, this theory proposes no direct legal link between the holder and the
thing in terms of the performance to be rendered.

The Classical Theory in its attempt to distinguish between real and personal rights has
garnered some criticism. Prominent jurists Silberberg and Schoeman express the
criticism that real rights also entail legal relationships between legal subjects.
Furthermore, they also express the criticism that some personal rights like the lease of a
movable thing like a motor vehicle to a degree effects control over a thing. In addition,
this theory is attacked in the sense that the content of a right is not always a guide as to
the nature of a right. For instance, the powers of use and disposition that come from some

3
Amoo (2014:47).
4
Amoo (2014:47).
real rights like the lease of land cannot be distinguished from similar personal rights such
as the lease of a motor vehicle. For all its faults the Classical Theory is very important in
that it has a close link to the subtraction from the dominium test.

Personalist Theory

This theory attempts to differentiate between real and personal rights in terms of whom
the right may be enforced against. According to this theory, the holder of a real right has
an absolute right to a thing and as such may enforce their ownership against the world at
large. In contrast, a personal right may only be enforced against the party that has the
obligation to render its performance.

This theory faces criticism in the sense that not all real rights are absolute. For instance,
the right of pursuit of an owner may be curtailed against a bona fide acquirer of his thing.
Furthermore, if a pledgee alienates a thing voluntarily, she/he may not reclaim it from a
bona fide purchaser. The most often cited criticism is that just because a personal right
binds a specific person to render performance does not mean that third parties should not
respect it. Should a person wilfully impede a personal right delictual liability may befall
them5.

How the Courts have dealt with this issue

Whilst these theories have gone a long way in trying to define and contrast real and
creditors’ rights oftentimes, they have fallen short as such courts have seen fit to develop
and adopt criteria to determine whether a condition can be registered as per section 63(1)
of the Deeds Registries Act.

The Intention of the Parties.

This test was laid down by Nestadt J in Lorentz v Melle and Others6. Furthermore, it was
reiterated by Innes CJ and Streicher JA in Willoughby's Consolidated Co Ltd v Copthall
Stores Ltd7 and Cape Explosive Works Ltd and Another v Denel (Pty) Ltd and Others8

5
Jansen v Pienaar (1881) 1 SC 276
6
Lorentz v Melle and Others 1978 (3) SA 1044
7
Willoughby's Consolidated Co Ltd v Copthall Stores Ltd 1918 AD 1
8
Cape Explosive Works Ltd and Another v Denel (Pty) Ltd and Others [2001] 3 All SA 321 (A)
respectively. In terms of this criteria in order to determine whether a contractual condition
is of a personal or real nature, cognisance must be given to the intention of the parties in
the contract. By intention it is meant that a person who stipulates the condition must have
the intention to not only bind the present owner of the land but also his successors in title.
However as stated by Innes CJ intention is not the sole criterion in determining whether
a condition is of a real or personal nature9. In addition, the nature of the condition must
be to create a servitude, if it fails to do so then the intention of the parties will not be
looked at. Furthermore, it can be inferred that intention cannot bypass the principles of
law. In essence in terms of this interpretation by the court a real right cannot be created
if it places an obligation on the debtor in their personal capacity.

Subtraction from the dominium test

This test was created in Ex Parte Geldenhuys10. In this case, Mr Adrian Geldenhuys and
his wife bequeathed land to their children in equal shares. In terms of their joint will the
first child to reach the age of majority would be bound together with the surviving testator
or testatrix to divide the land into equal shares by the drawing of lots. However, in the
meantime, the farm would be subject to usufruct in favour of the surviving testator.
Furthermore, the joint will be stated that the child who received the portion containing the
homestead was required to pay 200 pounds to the other children. The testator then
applied to the Registrar of Deeds to register the land in terms of the conditions of the joint
will. The Registrar of Deeds objected to the registration of the provision regarding
payment, the reason being the provision merely created personal rights and that condition
would only be binding to the children and not their heirs.

In determining this issue De Villier JP echoed the statement of Innes CJ in Hollins v

Registrar of Deeds11 that only real rights may be registered and in particular rights that
would burden servient land and which would curtail the owners exercise of ownership
over the land. Furthermore, to come to its conclusion the court looked at whether a
usufruct could be registered. It concluded that a usufruct is akin to a personal servitude

9
Amoo (2014:49).
10
Ex Parte Geldenhuys 1926 OPD 155
11
Hollins v Registrar of Deeds 1904 TS 603
but it also burdens the land and may not be enforced against the present owner or any
future owner of the land. The court found that the determining criteria should not be
whether the condition is a real or personal right, but rather what the corresponding
obligation is. Therefore, if the obligation is placed upon the land, then the right is real but
if the obligation is placed upon a person, then the right is of a personal nature and as per
general principles unregistrable.

Using the above findings, the court proceeded to determine the registrability of the
conditions in the will. With regards to the division of land by drawing of lots, the court
found that they formed a real burden as the subdivision affected and complied with the
rules of ownership. The court based its decision on the principles of co-ownership,
whereby an owner of an undivided share has the right to claim subdivision at any point in
time. In regards to the second and hotly contested clause, the court held that it was a
personal right and as such would ordinarily not be registered, but due to it being so closely
linked to the first clause non registration would result in misrepresentation of the will which
may mislead future purchasers. As such to prevent this difficulty the court allowed the
registration of the second clause.

However, as stated in Nel No v Commissioner for Inland Revenue12 a personal right

registered in terms of the Gildenhuys case would not become a real right. This viewpoint
had previously been expressed by Innes CJ in British South African Company v Bulawayo
Municipality13. The decision regarding the second clause has been taken to mean that
personal rights may be registered so long as they are closely linked to real rights. The
case Lorentz v Melle and Others14 added another layer to the criteria already established
in Ex Parte Geldenhuys15. The court in this case held that in order for a condition to adhere
to the subtraction from the dominium test, it must curtail the rights of the owner in the
physical sense. This interpretation was however rejected in Pearly Beach Trust as the
court held that a condition need not restrict the rights of the owner in the physical sense

12
Nel No v Commissioner for Inland Revenue 1960 (1) SA 227 (A).
13
British South African Company v Bulawayo Municipality 1919 AD.
14
Lorentz v Melle and Others 1978 (3) SA 1044.
15
Ex Parte Geldenhuys 1926 OPD 155.
and that any restriction is sufficient to create a real right. In addition, this decision is often
criticised for the insinuation that some obligations to pay money could create real rights,
which would have adverse effects on landowners and the economy.

Conclusion
Whilst it is clear that it is extremely difficult to determine the registrability of a condition in
terms of section 63(1) of the Deeds Registries Act 1932, the courts have nonetheless
made a fair attempt. Looking at all the cases used to determine the criteria to register a
right in terms of Section 63(1) one can see that the court prefers to answer this question
based on whether a purported condition creates a burden on the land. Furthermore, in
regards to any obligation to pay money the court prefers the obligation to be a product of
the land. In addition, the courts have developed criteria that directly address the question
posed by section 63(1) of the Deeds Registries Act. Firstly, for a condition to be registered
it must be the intention of the parties to bind the present owner and his successors.
Secondly, the condition if registered must essentially amount to a subtraction from the
dominium or in layman's terms limit the owners' rights of ownership16.

16
Cape Explosive Works Ltd and Another v Denel (Pty) Ltd and Others [2001] 3 All SA 321 (A)
Bibliography

1. Amoo, S. 2014. ''Property Rights, Real rights and Personal Rights''. Property Law
in Namibia, Pretoria South Africa: Pretoria University Law Press, 40
2. British South African Company v Bulawayo Municipality 1919 AD
3. Cape Explosive Works Ltd and Another v Denel (Pty) Ltd and Others [2001] 3 All
SA 321 (A)
4. Deeds Registries Act,1932
5. Ex Parte Geldenhuys 1926 OPD 155
6. Hollins v Registrar of Deeds 1904 TS 603
7. Jansen v Pienaar (1881) 1 SC 276
8. Lorentz v Melle and Others 1978 (3) SA 1044.
9. Nel No v Commissioner for Inland Revenue 1960 (1) SA 227 (A)
10. Willoughby's Consolidated Co Ltd v Copthall Stores Ltd 1918 AD 1