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Substitution of the appearer

3 June 2010

The Registrar's conference resolution in RCR18 of 2009 and the obiter dictum in the Namibian case of Roads Construction Company v AE Gams Engineering Company (case No. PS3/2007) - judgement delivered on 14 August 2009, raises important considerations relating to how we apply the provision usually included in the Powers of Attorney which also grants the power of substitution.

Usually the provision reads as follows:
"… I/we …. hereby nominate and appoint … with power of substitution to be my attorney/and agent and to appear before the Registrar of Deeds of any other competent official in the Republic of South Africa and then and there as my/our act and deed declare that …"

Usually the grantor would appoint quite a number of conveyancers from a particular firm so that either of them can act on his/her behalf on the day of execution. Where none of the conveyancers named in the power of attorney is available on the day of execution the preparer of the document has been allowed to insert the name of a new conveyancer purportedly on the basis of the power of substitution in the power of attorney.

The question posed in RCR18 of 2009, sought to bring clarity and certainty to the above practice of allowing a new insertion by the preparer. The Registrars resolved that where the power of attorney is silent on the power of substitution, it would be acceptable for the Deeds Office if any of the agents appointed therein were to be substituted, by the preparer of the Power of Attorney inserting the name of the new agent in the Power of Attorney and the grantor together with the witnesses initialling the insertion, thereby signalling their approval of the substitution. On the other hand should the Power of Attorney already provide for substitution, then it is not necessary for a full initialling, resulting in the preparer initialling such insertion alone.

In the Namibian case the court mentioned in passing that the substitution of one agent by the other cannot happen simply by inserting such new agent's name in the empowering Power of Attorney. Where such power has been granted in the Power of Attorney then proof of such substitution must accompany the Power of Attorney.

Looking at the two positions one may be tempted to think that one of them is based on a complete misunderstanding of the concept of substitution, or else reference to the practice as substitution is a misnomer.

As part of its consideration, the Namibian court looked at the definition of substitution which is defined as, "the appointment by an agent of another person to act in his stead as representing the principal in virtue of his power to do so contained in the Power of Attorney." In applying this definition to the established practice it becomes clear that what the Conference of Registrars referred to as substitution is actually not so. The insertion of another name on the Power of Attorney by the preparer actually amounts to an unauthorised and illegal appointment of another agent to act on behalf of the grantor.

A substitution of the grantee on the authority of the Power of Attorney will practically involve the grantee utilising some legal instrument to bring it into effect. Such instrument would allege the source document from which the authority to act on behalf of the grantor originates, and will have to be lodged as proof.

In the circumstances therefore this obiter dictum, although from a foreign tribunal, is highly persuasive and arouses the need to reconsider the conference resolution in RCR18 of 2009 before compromising the integrity of our resolutions in any future legal scrutiny. The resolution does not seem to be supported by juristic analysis (legal interpretation) or by administrative convenience.

The act of inserting an additional grantee by the preparer or any person for that matter, in the Power of Attorney cannot imply substitution. It can only imply an addition to the grantees already appointed and therefore only available to the grantor provided of course that such insertion is duly authenticated in terms of our practice.

How then can our practice be adjusted?
In order to bring our practice in line with a legally defendable position it is important that the resolution be immediately withdrawn. The practice of appointing a new grantee or appearer on the Power of Attorney can only be done by the grantor of the power and not by the preparer. Upon such appointment/insertion all the signatories of the Power of Attorney must initial the document.

Where the grantee desires to appoint another appearer different to the one already appointed by the principal, he/she can do it if the Power of Attorney authorises such substitution and it is done on a separate document that is lodged together with the Power of Attorney. This would constitute a proper substitution. Any ignorance of this dictum could result in a lot of blushes sooner or later.

M S Mekwe
Deeds Training

Republished with permission from SA Deeds Journal


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