MS STAROSTA’S CLASS
CONSTRUCTIVE MODES OF DELIVERY…continued
Delivery occurs in such a way that the transferor retains physical
control, but thenceforth holds as possessor rather than owner. The
transferee is owner and the transferor only holds on behalf of the
``Opposite of traditio brevi manu and is often confused with tradition
longa manu (in longa manu, the transferee can exercise physical control
at will, while in the case of CP, this is not the case).
``In Groenewald, the situ between Du Toit and Groenewald could be seen
as a case of CP – repairs to threshing machine = could be seen as a
valid causa detentionis (the Court did not consider this. If it had,
ownership would have passed to G by CP and the principle “first in time,
stronger in law would have applied. V would not have got the threshing
``So, with this mode of delivery, transfer is effected primarily on the
basis of a change in intention first and thereafter, the reacquiring of
physical control of the thing in a different capacity.
``If the intention to pass and receive ownership is evident, a transfer
of ownership it occurs despite the fact that the external circumstances
under which the thing is held do not support the change of ownership.
``The real question is whether it is the genuine intention of the
parties to transfer
``Since no publicity is given of the fact of transfer, it is obvious
that constitutum possessorium provides a ready opportunity for abuse.
``Not only can debtors easily defraud their creditors by making use of
this mechanism, but the false impression created by the transferor
retaining possession may induce new creditors to extend credit.
``Constitutum possessorium is never presumed. The party alleging it must
prove that the following requirements have been met:
1. VASCO DRYCLEANERS v TWYCROSS
`The previous owner of Vasco Drycleaners (A) sells his dry-cleaning
business to C.
`In terms of the agreement, A retains ownership until the final
instalment has been paid. (HP agreement – retains res as security for
`C hasn’t paid the full purchase price, cannot pay the instalments and
thus fears repossession.
`Therefore, C approaches Twycross (T - C’s brother-in-law).
`T lends C the money – the same as the amount which is outstanding – to
be paid to A.
`C is to pay T back in instalments, so T wants ownership of the machines
`C pays A, and becomes owner through traditio brevi manu.
`C then transfers ownership of the machines to T. T however does not
want the equipment, C wants to keep it because his dry cleaning
business depends on it – therefore, T and C try to effect what looks
like a sale and lease-back agreement. No actual delivery takes place
from C to T – C is the holder throughout.
`Before C finishes paying T, C goes on to sell the equipment to someone
else (the new owner of V Drycleaners) and warrants that he is the owner.
`T seeks to vindicate the equipment from V DryCleaners claiming that it
`The Courts in general are suspicious of sale and lease-back
arrangements. However, as Van der Walt points out, not all sale and
lease-back agreements are simulated transactions e.g. where the owner of
a thing sells it to a financing institution and then leases it back from
that institution, ownership will be regarded as having been transferred
to the institution, if it is proven that both parties had the actual
intention of transferring ownership to the financing institution. If
intention is not proven, then ownership is not transferred.
`An example of where ownership is not actually transferred (i.e. another
eg of a simulated transaction) are floor-plan agreements, like the one
in Nedcor Bank Ltd v ABSA Bank Ltd – an agreement between a car dealer
and a financing instit In terms of which the dealer gets a cash advance
iro a vehicle of which he is the owner. Advance has to be repaid if
vehicle is sold, or within a certain time period. Fin instit wishes to
acquire own of vehicle as security for repayment of the advance, but
doesn’t want to exercise entitlements of ownership. Actually another
disguised pledge – i.e. a case of bank obtaining security without having
to take possession of the thing used as security i.e. the vehicle.
Crt: SA law doesn’t recognise the validity of a pledge without
possession and, therefore, the fin instit doesn’t acquire ownership of
vehicle – doesn’t make a difference that both parties are bona fide and
There might be a commercial need for the recognition of a form of pledge
without possession – we will talk about this when we do pledge later in
`The Courts are in any event reluctant to infer CP where a third party
2. QUENTY’S MOTORS v STANDARD BANK CREDIT CORPORATION
Parties: Quenty’s Motors (Q), Love Motors (L) and Stannic (S).
`An arrangement between Q and L is entered into, ito Q will deliver cars
to L on consignment.
`L will then sell the cars and give money to Q motors and only then
would ownership pass to the third party.
`Throughout, Q will retain ownership but will give L the registration
papers for purposes of
inspection (for sale)
` S and L had a floor plan agreement – Stannic will ‘buy’ all cars on
L’s showroom floor, thereby providing credit for resale.
`L Motors goes into liquidation and Stannic repossesses cars. Q Motors
alleges that it owns some of the cars which Stannic has repossessed and
wants to claim them back via Rei Vindicatio.
Three parties: A, B and C. A wants to transfer own to B, but at time of
delivery, the movable is in the control of C (legally so). Ownership is
transferred from A to B by attornment if C agrees to exercise physical
control on behalf of B and ceases to exercise
physical control on behalf of A. I.e. possessor will no longer hold for
transferor, but for transferee.
1) A tripartite agreement (mental concurrence on the part of all 3
interested parties that the holder will now hold on behalf of
the transferee and not the transferor)
2) The possessor must exercise factual control of the thing or at
least have the right to control the thing at the time of the
This form of constructive delivery has commercial significance because
of the practice of ‘discounting – used by sellers of expensive
consumables e.g. vehicles. E.g. car dealer finds that most people can’t
afford to pay cash – therefore, A grants credit through instalment sale.
A extends credit to C, but keeps ownership of car as security. Problem
is that A is not really in the business of handing out credit, he needs
money, therefore, in practice, sells rights to credit to a third party –
usually a financial institution (B) – at a discount. E.g. A sells to B
at R100 000, but the contract is worth R120 000 with interest.
B needs security for the money that it is putting forward, therefore,
acquires ownership of the car. C, however, has possession of the car –
attornment – A transfers own to B, but C at all times remains in
possession. Starts out by holding for A and then does so for B.
e.g C’s Mazda Etude – he bought it from Mazda Delta and chose FNB as the
financing institution. Therefore, ownership of the Mazda is transferred
from Mazda Delta to FNB through CP as security for the amount owing in
terms of the install sale agreement. C is originally the possessor for
Mazda Delta, but when credit is granted C becomes the possessor on
behalf of FNB. When C pays the final instalment on the car in 4 years
time, he’ll be the owner (through traditio brevi manu).
``With attornment there are two separate transactions:
First thing you have to transfer are the creditor’s rights that is,
the performance owed by C to A (Mazda Delta). These will be
transferred from A (Mazda Delta) to B (FNB) – This is normally done
through a contract of cession.
NB C is not involved in this agreement – Not tripartite.
The real right of ownership must then be transferred (for the
purposes of providing security to B – FNB). This is the real
agreement plus delivery. The real agreement already exists in
contract you have signed. Delivery is achieved by means of
fictitious delivery through attornment. This is tripartite i.e. C
plays a role only in the fictitious delivery and not in the real
CALEDON v WENTZEL
`3 parties: Mayoss (possessor), Caledon (The financial institution and
transferee) and De Vries (the transferor).
`Case involves a discounting transaction.
`M – HP agreement with D for buying cars. In agreement, a clause
stipulates D’s intention to cede his rights to the debt owed by M to C.
Included in this would be the right of ownership. `In signing the
contract, M effectively agrees to this transaction.
NB It is wrong to say that they will ‘cede’ ownership, it has to be
`For transfer, you have to have a tripartite agreement (for cession, two
`M signs credit agreement. In due course, D signs agreement of cession
`C writes to M telling him that he (M) will now be paying C.
` C requests M to sign and return to them an express acknowledgement that
he is henceforth holding the vehicle on behalf of C as owners. On
receipt of the notification M duly signed
and returned the acknowledgement to C. However, after the date of
cession but before he returned the acknowledgement to the C, M had sold
and delivered the vehicle to the National Industrial Credit Corporation
which in turn sold it to a third party (W) in terms of a hire-purchase
` PROBLEM 1 : M has already sold the car to Wentzel (W).
`C sues W for the car.
` PROBLEM 2 M was in possession at time when cession agreement took place
between C and D, but not at time of C’s notification that M would now be
Crt a quo: M had to have been in possession at the time of
notification, therefore, D is still the owner. Thus the Court rejected
C’s claim that it acquired ownership by attornment.
SUMMARY OF CONSTRUCTIVE MODES OF DELIVERY
Three types of fictitious delivery:
1) Transferee is placed in a position to exercise physical control
– traditio longa manu and clavium traditio.
2) Transferee is already in possession. Change of mental element
– traditio brevi manu
3) Where physical control is exercised by someone other than the
transferee – atoirnment and constitutum possessorium.
`Registration in the deeds registry is the mode in terms of which
immovable property is transferred.
`Registration of transfer occurs in the nine deeds offices throughout
`Each registration office is manned by a Registrar of Deeds and several
`“Unalienated” state land may be transferred from the state by a “deed
of grant” only.
`Conveyance from one person to another may in general take place by
means of a deed of transfer only.
`The deed of transfer must be prepared in the form prescribed by
regulation by a conveyancer practising within the province where the
deeds registry concerned is situated.
`If the transferor does not execute the deed of transfer personally, a
power of attorney authorising a conveyancer to execute the deed on his
behalf must be lodged.
`Other supporting documents include the existing title deed, rates
clearance certificates in the case of municipal plots of land, and a
transfer duty receipt or exemption certificate.
`The deed is executed by a conveyancer (or the owner) in the presence of
`Thereupon the registrar attests the execution of the deed of transfer
by signing the original as well as the copy of the deed of transfer.
`Upon the affixing of the registrar’s signature to the deed,
registration takes place.
`At this moment ownership is transferred to the new owner.
`Simultaneously the existing deed of transfer is endorsed and replaced
by the new deed of transfer.
Being registered owner is considered to be proof of ownership not only
as far as the
registered owner is concerned but also with regard to a third party
relying on the deeds registry.
`Not nec constructive knowledge – will depend on facts
POSITIVE v NEGATIVE SYSTEM OF REGISTRATION
`Systems of registration are classified either as systems where titles
are registered, or
as systems where deeds are registered.
This corresponds to the classification of systems as either positive or
A positive system is concerned with the registration of title with an
in-built warranty of unimpeachability, that is to say that the accuracy
of information obtained in the deeds office is guaranteed.
`This implies that a bona fide acquirer of ownership can safely assume
that the person in whose name land is registered is its owner - The
rights of a true owner are weakened since, if he does not apply for
rectification of an incorrect registration before the bona fide
acquirer obtains ownership, his right will be lost.
`Under a positive system the state assumes responsibility for an
incorrect registration and is liable to pay for damage suffered on
account of such a registration.
A negative system of registration is primarily concerned with the
recording of rights in land according to a system in which the state
does not guarantee the accuracy of the deeds registry - This implies
that the true owner enjoys a greater amount of protection and a bona
fide acquirer a lesser amount of protection than under a positive system
`The state does not assume responsibility for incorrect registration and
the liability of the state or deeds office officials for incorrect
registration is usually expressly excluded in the relevant legislation.
``South Africa adopted a modified negative system of registration.
`This choice follows from the nature of the system where registration is
based on the real agreement or actual intention of the transferor and
transferee to transfer and acquire ownership.
`Because of this the accuracy of the information in the deeds office is
nowhere expressly guaranteed.
`The Deeds Registries Act expressly excludes the liability of the state
and registration officials for incorrect entries in the deeds registry.
Instances where the deeds registry records do not reflect a true picture
of the legal position pertaining to a particular plot of land:
(a) Real rights may be acquired by various modes which are not reflected
in the deeds
office e.g. where ownership is acquired by prescription, expropriation,
statute or as a result of a marriage in community of property.
In all these instances the true owner is in a stronger position than a
bona fide acquirer who acquires the property from the person registered
as owner in the deeds registry.
(b) Although the registrar does not play a passive role and examines
every deed carefully before registering it, registration may
nevertheless take place without the requirements for transfer having
been complied with. Thus the transferor may not have had the capacity to
transfer the thing, the signature of the transferor may have been forged
or more common in practice, the transferor may have been fraudulently
induced to sign a transfer deed in the belief that it was another type
`In the above cases the court will order rectification of the deeds
registry records in favour of the original owner vis-à-vis a bona fide
(c) It is also possible, though highly improbable, that a deeds registry
official may make an incorrect entry in the deeds.
`Despite the fact that the deeds registry does not always reflect the
true state of affairs, the system affords sufficient security of title
so as not to restrict frequent commercial transactions in respect of
NOT PROBLEMATIC BECAUSE:
(1) In a negative sense nobody can claim that he has acquired ownership
of or a real right in land unless it is registered in his name.
(2) Persons who have acquired ownership by methods such as prescription
and expropriation not reflected in the deeds registry usually apply for
rectification of the deeds registry records as soon as possible.
(3) The registrar and his officials are not passive instruments who
register every deed laid before them. They examine every deed very
carefully in order to avoid incorrect registration.
(4) Incorrect entries seldom occur in practice. It rarely happens that
an entry is made as a result of a forged signature or the transferor
being mistaken as to the true nature of the deed of transfer.
(5) Although there is no obligation on the owner of land to take care
that the deeds registry reflects the correct state of affairs, he be
estopped from asserting that he is the true owner of the land.