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First step

24 February 2011

The question is answered in terms of a number of Registrars' Conference Resolutions - being RCR 2/2006, RCR 12/2008 and Registrar's Circular (Cape Town) 1/2009. They begin by tracing the origin of the resolutions - Trustees of the Insolvent Estate of Foley, Alias Melville, v Natal Bank (1883) 4 NLR 26 and Ex Parte de Jager (1926) 47 NPD 413 - where in both cases reference is made to a prohibition against "alienation" being a prohibition against hypothecation or mortgage. They then analyse the meaning of pledge and mortgage and conclude that their underlying purpose is to provided the creditor with security for the debt and that there is no intention to pass ownership of the property that is the subject matter of the creditor's security, as the dominium in the property remains in the pledgor or mortgagor.

After an analysis of what alienate means in terms of s 1 of the Alienation of Land Act 68 of 1981 and a number of cases - Rogut v Rogut 1982 (3) SA 928 (A), Crous NO v Utilitas Bellville 1994 (3) SA 720 (K) - and Standard Bank of South Africa Ltd v Hunkydory Investments 188 (Pty) Ltd and Others, (No 2) 2010 (1) SA 634 (WCC) which provides an excellent analysis of why the mortgage of immovable property does not amount to alienation, they reason that the obiter dictum in Hunkydory, while dealing with the issue of a 'disposal' correctly sets out the position regarding 'alienation' as it relates to mortgage bonds.

Therefore they conclude, the mortgage of immovable property is not a 'first step' towards 'alienation' and therefore the Registrars' Conference Resolutions referred to above are incorrect and should be rescinded.

Article on De Rebus

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