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Reversal of intent

1 July 2010

This article seeks to explore the effects of registration of state land in one of the three trifurcations of the State as a juristic entity - National, Provincial and Local Government. The salient issue to be addressed is, as the topic suggests, the reversal of an intentional vesting of property from one tier of government to another and the appropriate procedure to follow in effecting such a reversal if ever it is legally possible to do so.

Quite interestingly, this question is based on an empirical registration debacle already faced by one of our Deeds Registries and thus it is by no means fictional or far-fetched.

Salient facts
State land acquired prior to April 1994 by any state level of government and by means of any resources would by law invariably vest in the Republic of South Africa (RSA).

State land acquired after 2003 by the provincial level of government out of own budget would by law vest in the provincial government that so acquired it in terms of the relevant piece of legislation applicable to that particular province, mainly by a provincial State Land Disposal Act.

There was no concrete position with regard to acquisitions of state land between 1994 and 2003, hence this period is known as the "window period" and as such was a potential red zone for registration discrepancies.

The brewing disaster of the said red zone erupted eventually when the KwaZulu-Natal provincial department of public works, out of their own budget acquired land and opted, in the absence of clear policy guidelines, to vest it in the RSA.

Emphasis is placed here on the fact that such vesting was purely intentional and carefully considered by the department.

Motivated by the provisions of the Natal State Land Disposal Act in so far as the acquisition was out of their own budget; the KZN department of public works changed their tune and now wanted to reverse the vesting from RSA into their own name. The basis of their move was inter alia that the vesting in RSA had been a "so-called error" shared by them and the Deeds Office. This was the opening of the proverbial floodgates as such a move was tantamount to challenging the deeds registration principle of vesting and the causal and abstract theories of land transfer.

The thorny question was how to reverse an intentional transfer where no conveyancing error had existed during vesting?

Could this qualify as a rectification transfer without proving the existence of a prior conveyancing error, but merely intention to reverse the transaction?

Could the existing array of deeds practice procedures, e.g. Section 16, Section 31 of Act 47 of 1937 and Section 28(1) Schedule 6 of Act 108 of 1996 etc, provide the possible solution? Questions were thrown back and forth between the said department and the Deeds Registry; neither of the two coming up with a tangible solution.

Upon request for advice or commentary on this issue the following is the approach that the writer proposed:

Core principles
Abstract Theory v Causal Theory of Land Transfer Deeds Practice Circular CRC 9 of 2008 and CRC 10 of 1999

Firstly; the Registrar of Deeds does not decide on matters of correct succession affecting state land. The incumbent in such matters is the relevant officer charged with the duties as detailed in the State Land Disposal Act, 1961.

Therefore, it is immaterial to the Registrar of Deeds who purchased the land and whose budget was used because that is a matter which falls way outside the scope of his/her mandate.

However, it is fully conceded that the Registrar of Deeds is responsible for the correct registration mechanism once parties have decided on the correct transferee.

This is yet another case where the principles of registration based on the Abstract theory as opposed to the Causal theory have to be considered.

The enquirer (KZN Dept. Public Works) should be advised that South African Courts uphold the abstract theory (Prophitius & Another v Campbell and others 2008(3)(SA) 552.

According to the abstract theory; even if the causa is defective, registration is valid as long as there was a clear intention to transfer the land. Whereas according to the causal theory, if the causa is defective, registration is invalid.

In this particular case, clearly the KZN Department of Public Works intentionally vested the land in the RSA and since there were no registration flaws on the part of the Deeds Office, such registration is valid. They had a clear intention to vest it in a particular state organ and only realised later that on policy considerations they should be taking transfer.

Conclusion
Note that the writer did not concern himself with the applicability of Sections 16 and 31 of the Deeds Registries Act 47 of 1937, simply because here we are not concerned with the acquisition per se, but with reversing what has already been vested in a wrong tier of the same organ. The two sections do not even come close to addressing this quagmire.

A formal Rectification Transfer from RSA to the Provincial Government must be procured where there is concrete evidence of the alleged error, or a normal Deed of Transfer if the error cannot be proved. Section 28(1) endorsement is required to update the title regarding the correct sphere of government holding title deeds, therefore it cannot be used to serve as a Rectification Transfer as that would be slavishly applying the provision. The purpose of Section 28(1) is strictly limited to the scope contained in CRC 10 of 1999 read with CRC 9 of 2008.

Wiseman Bhuqa
Deeds Training
Pretoria

Republished with permission from SA Deeds Journal


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