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PROPERTY LAW LECTURE NOTES – 2014 (1) [MS L STONE]Section A: Definition and classification of property; real and personal rights***** Van der Walt and Pienaar Introduction to the Law of Property 6 th edition (2006) 1 – 36 Badenhorst et al Silberberg and Schoeman’s The Law of Property 5 th edition (2...

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PROPERTY LAW LECTURE NOTES – 2014 (1) [MS L STONE] Section A: Definition and classification of property; real and personal rights *Van der Walt and Pienaar Introduction to the Law of Property 6th edition (2006) 1 – 36 Badenhorst et al Silberberg and Schoeman’s The Law of Property 5th edition (2006) 1 – 70 Mostert et al The Principles of The Law of Property in South Africa (2010) 19 – 50

1.

Introduction

Van der Walt1 states that “the law of property deals with the rights and actions of persons with regard to things and other forms of property, as well as other relations between persons and property. It describes the ways in which property rights can be acquired and exercised lawfully and the remedies by which they are protected against infringement, as well as the legal results and implications of other relations between persons and property”. 2. Definition and functions of the law of property The Law of Property is the sum totals of the various legal norms which regulate the legal relationships between persons and legal objects and in this regard also the legal relationships inter se [between themselves]. It also regulates the rights and duties between specific individuals and the state. The legal meaning of property Property is everything which can form part of a person’s estate, including corporeal things and incorporeal rights and interests. In the technical sense, property means “rights” of people in/over certain objects; these rights entitle an individual to take certain action in respect of the object. “Property” can also refer to the objects themselves. Property is not only concerned with ownership: it is concerned with real rights in general. It includes: 1. The nature and characteristics of the particular object (corporeal, incorporeal, movable, immovable) 2. The relationship between the person and the object (owner, lessee) 3. The relationship between the person and other persons in respect of the object 4. The weight that the economic/political system attaches to such an object and the relationships involved 5. The Constitution also determines whether such an object and its relationships deserve protection as property or should be regulated by the state (mining rights, for instance). Patrimonial objects “Object” is anything with regard to which a person can acquire and hold a right. Patrimonial rights: A legally valid claim by a subject to a certain object. Real rights A real right is a right to a thing. In general, they are said to be enforceable against the world at large. This gives the owner the right of vindication – taking back his property. A real right is a right which a person holds in a thing which belongs to him (ownership). A legal subject can also 1 Page 7.

have limited real rights in respect of an object where he has a right in a thing belonging to someone else (servitude). There are three legal senses of property: 1. It signifies/refers to ownership of a legal object 2. It refers to the legal object in which the right of ownership relates 3. All the legal relationships that qualify for constitutional protection even though they may not amount to the right of ownership or the object to which ownership relates [Property Clause of the Constitution, for example, security of tenure] Functions of the Law of Property People assert rights to objects that have value to them; that satisfy their economic needs/desires. The law of property is primarily concerned with the regulation of the acquisition and the use of those objects which members of society require for their wants and needs (whether they have sentimental or patrimonial value). The sum total of all the rights which a person can exercise over an object is referred to as dominium or ownership. It includes:     

The right to use The right to alienate The right to destroy The right to exclude others (subject to the Constitution) The right to make property available for use by others

Freedom and responsibilities of property Freedom of property is said to be a basic right. Society, as represented by the state, must guarantee an owner’s power to deal with his/her property as s/he deems fit and protect him/her from interference of others in the exercise of power. However, no society allows absolute freedom. There are various restrictions imposed on owners in the exercise of their rights       

Restrictions under public law Restrictions dealing with building legislation and regulation Other legislation that regulates an owners power to alienate (Credit Agreement Act) Restrictions which fall under the common law (nuisance, encroachment) Contractual restrictions which are self-imposed (leasing a house to a tenant) Mortgage; where the house acts as security Constitutional restrictions which are usually imposed in the public interest

The changing face of the Law of Property New social and economic situations lead to changes in the conception and function of the law of property. For example, leases. Traditionally, an owner was expected to exercise physical control over his property. However, today there is no need for a physical connection between an owner and his property. Property, particularly in a socialist state is also dependent on labour. Without it, property would not function. Conversely, ownership of property gives the owner power over labour and also over resources. Property and things are not identical concepts. Property includes a wide variety of patrimonial assets (in/tangible, in/corporeal) which includes shares in a company or intellectual property.

3.

Sources of property law

The sources of current property law are 2: (a) (Roman-Dutch) common law [which is now subject to the requirement that it must be interpreted in light of the Constitutional ideals of human dignity, freedom and equality] (b) Statutory law (legislation), such as the Diamonds Act 56 of 1986 and the Mineral and Petroleum Resources Development Act 28 of 2002 (c) Case law (precedent) (d) Customary law (e) Constitution (chapter 2) 4.

Characteristics of a “thing”

A thing is the legal object of a real right and is the most important legal object. What is a “thing”? Things are a specific category of property defined with reference to its characteristics. A thing can be defined as a corporeal or tangible object external to persons and which is, as an independent entity, subject to juridical control by a legal subject, to whom it is useful and of value.3 The characteristics of a thing are: 1) Corporeality It must be tangible, meaning that it must occupy space and be capable of sensory perception by any one of the five senses. See the examples referred to by van der Walt on page 14, where he highlights that increasingly, intangible, incorporeal things such as a telephone and bandwidth system constitutes a creditor’s right and is considered property.4 He also cites the example of shares in a company as things, irrespective of the fact that they are neither tangible nor perceptible. 5 2) External to a person A human being can never be the object of a right; they are only ever subjects. Parts of bodies which can no longer be connected to a human being can be regarded as negotiable things, for instance hair used to make a wig. This is, however, subject to the provisions of the Human Tissue Act 65 of 1983, especially regarding the availability of human reproductive cells and organs for the purposes of artificial reproduction and organs for the purposes of organ transplantation (as the sale of organs is strictly prohibited). 6 3) Independent/individual It must be a definite and distinct entity which exists separately. Water, land, sand and air must first be separated by human activity into recognisable and manageable entities before they can be recognised as “things” which fall within legal commerce. Air, for example, must first be contained in cylinders. For example, immovable things come into being after demarcation on an approved and registered surveyor’s plan, diagram, aerial photo or general plan – Deeds Registries Act 47 of 1937 and Land Survey Act 8 of 1997. A building erected on land usually forms part of the immovable thing. 4) Susceptible to human/juridical control 2 Ibid, 4. 3 Ibid, 13. 4 Telkom SA Ltd v Xsinet (Pty) Ltd 2003 (SCA). 5 Ben-Tovin v Ben-Tovin 2001 (C). 6 Van der Walt, 14.

Must be susceptible to human/juridical control. Mountains and the sea, for example, cannot be controlled by humans. 5) Must be of use and value to the legal subject The object must be destined to satisfy the needs of the legal subject. Use/value is determined objectively, but things of purely sentimental value are still recognised as property. 5.

Classification of property

Property can be classified in two ways: 1.1 Property that is negotiable (res in commercio) This is property that can be owned by natural/legal persons or can be the object of other real rights. It is property that is susceptible to private ownership. a. Res alicuius: Things that are owned by natural/legal persons, or things that are in the estate of deceased/insolvent persons. b. Res nullius: Things capable of being owned but which at a particular stage are not owned by anyone (wild animals, birds, and fish). Ownership of such property can be acquired through appropriation or occupation. c. Res derelictae: Things not owned because they have been abandoned by the owner (the owner no longer has the intention to be the owner (animus domini)). “Abandoned” means:  The owner has lost physical control of the property  The owner had the intention to relinquish the property Such property can be acquired through appropriation or occupation. d. Res deperditae: Things which have been lost and are no longer within the physical control of the owner but in respect of which the owner has not lost the intention to be the owner. It cannot be acquired through occupation/appropriation as they are still owned by someone else. 1.2 Property that is non-negotiable (res extra-commercium) This is property which cannot be privately owned. a. Res communes omnium (common things/property): These are things which, by natural law, are common to everyone but are owned by no one: natural resources which fall outside of legal commerce and which are available to everyone (air, running water, the sea). The use of some of these resources is limited by statutory limitations (National Water Act, National Environment Management: Air Quality Act). b. Res publicae: Property that is owned by the state and used for the benefit of the public (roads, national parks, beaches). Classification of things according to their nature 1)

Singular and composite things

- Singular things: exist independently without being composed of particular components (plate or a cup).

- Composite things: combinations of different components consisting of independent things forming a new unit (car, building). Although made up of various components, these components have lost their identity (individuality) through their combinations and the composite thing is regarded for purposes of property law as one thing. In relation to composite things, a distinction is drawn between the principal thing and the components. A composite thing has the following elements: principal thing, accessory thing, auxiliary thing, fruits  Principal: exists independently and can be the object of a real right. It does not form part of another thing, either as an auxiliary thing (supplementary thing) or accessory thing (a component of something else) (car, computer, electric kettle).  Accessory: can exist independently but once it is merged/mixed with the principal thing to such an extent that it loses its independence, it becomes an accessory. The law recognises the final product only. Therefore treats the combination for all purposes as a single thing or entity (window frame built into a house, roof of a car, tyres on a car)  Auxiliary: exists separately and independently of the principal thing but because of its economic value, destiny, or use is no longer regarded as an independent thing for purposes of property law. It is not physically attached to the principal thing, but the auxiliary thing is necessary for the effective use of the principal thing (key to a door/car, set of tools that are sold together with the car, desks in a classroom) Senekal v Roodt (1983) 2 SA 602: A home had a built-in bar in it. The bar was made of wood. Bar stools were made to accompany the bar. The stools were not attached to the bar itself; they were loose. It was held that the stools were part of the bar as auxiliary things. Falch v Wessels A stove in a house was not attached in such a way that it could not be removed but the court held that the destiny of the stove was for it to form part of the home as a fixture. Accordingly, the stove was regarded as an auxiliary thing.  Fruits: produced by the principal thing without the principal thing being consumed or destroyed thereby. Before separation, the fruits are accessory to the principal thing but once separated, they exist separately and independently. Natural fruits: the offspring of animals – once they are born, they are separate, but before that they are part of the principal. Fruits of tree/crops harvested from a farm. In the case of natural fruits a further distinction is made between hanging fruits (fructus pendentes), separated fruits (fructus separati) and gathered fruit (fructus percepti). Civil fruits: rent, dividends on shares. Corporeals and incorporeals  Corporeals: tangible  Incorporeals: intangible, things consisting of various categories of rights (intellectual/immaterial/personality property rights) Patents: inventions Trademarks: various names/symbols by which products are sold, logos etc. (Coca-Cola) Service marks: name under which a particular service is provided (South African Airways) Trade secrets: certain processes by which products are made, kept secret from competitors

Copyrights Shares in a company Liquor license: entitles the bearer to trade in liquor Book debts of a company: where a company is owed money Immovable and movable property Immovable property: refers to land and everything that is attached to land permanently by either natural or artificial means. Movable: a corporeal thing is movable such that it can readily be moved from one place to another having regard to its size, nature and composition, without losing its identity or integrity. No single factor is decisive when determining if something is movable or immovable. Note that property may be movable today and later become immovable (minerals that are still underground are immovable until they are extracted from the ground; crops that are not yet harvested [immovable], then harvested [movable]). A movable thing may be attached to an immovable thing by natural or artificial means in such a manner that it loses its identity and becomes an integral part of the immovable. This will be discussed in greater depth under the heading of inaedification. Van der Walt asserts that all things that cannot be classified as immovable, are movables. 7 The distinction between movable and immovable incorporeal property is of practical importance in the following circumstances: (a)

Transfer of ownership in movable things takes place by means of delivery of the thing to the receiver (with the intention that ownership be transferred), while transfer of ownership in immovable things takes place by means of registration of the transfer (with the intention of transferring ownership) (in the deeds registry). (b) A contract to alienate immovable things must meet the formalities prescribed in terms of the Alienation of Land Act 68 of 1981 (and possibly the Sectional Titles Act 95 of 1986), being that any contract involving alienation of land must be in writing. A credit agreement in respect of movable things must meet the formalities prescribed by the National Credit Act 34 of 2005. No other formalities are required for the alienation of movable property. (c) Real security in the case of immovable things is provided by means of the registration of mortgages, while, in the case of movable things, security is provided by pledge or the registration of a notarial bond. (d) A minor’s immovable things worth more than R100 000 may be alienated or burdened by his parent or guardian only if an order of the high court is acquired, while immovable things worth less than R100 000 can, in certain circumstances, be alienated or burdened only with the approval of the master of the high court. (e) In cases where a debtor’s assets are sold in execution, his movables must first be attached and then his immovables. For example, A is a debtor and owes B (creditor) R50 000. B goes to court and obtain an order to compel A to settle the debt. The next option is to execute. Here, the court orders attachment of A’s movable assets first. If they are insufficient to satisfy the debts, then B may seek attachment of A’s immovable property. The formalities required for attachment of immovable and movable property differ significantly.

There are a number of approaches to establish whether something is immovable or movable: 7 Ibid, 18.

Draw a distinction between real and personal rights Under this approach, all personal incorporeal rights are movable (book debts, the right to claim the performance/the right to sue). Personal rights are the rights to claim a performance from a particular individual. Draw a distinction between real rights having movable and immovable property as objects If the object of the right is movable, then the real right is an incorporeal movable right (usufruct [right which a person acquires over the use and enjoyment of the property of another for the life of the subject of the usufruct] over movable property [herd of cattle]). Apart from this, there are also trading and similar rights: a liquor license is regarded as a movable incorporeal because it is always issued in respect of particular premises only and cannot be transferred by the licensee at will. It is not an inherent part of the premises, it is something issued by the authorities after satisfying certain requirements. Once the license is issued, the owner cannot transfer the license If the object of the real right is immovable (mineral rights [they are part of the land on which they are embedded], a praedial servitude [the object of the right is immovable – right of way over someone else’s land], a usufruct over land [immovable]), then the real right is an incorporeal immovable right. The Deeds Registry Act defines immovable incorporeal property as including any registered long lease of land or registered right of lease … and a registered right of initial ownership [so it becomes an incorporeal immovable]. Sugar quota: farmers are given a quota to farm a certain amount for the particular season. The right is attached to land. It is regarded as an incorporeal immovable property right. [The difference between a liquor license/sugar quota: the license is issued in respect of a particular property at a certain point in time while the sugar quota is issued in respect to a particular piece of land. The ability to produce sugar is an inherent part of the land]. The classification seems illogical because corporeals are tangible and it is thus difficult to determine whether or not they are im/movable. The importance of the distinction between movable and immovable property: It has a practical significance insofar as the law applicable to each category differs. According to international private law, the law applicable to immovable property is the law of the place where the immovables are situated (lex loci reisitae) [If immovable property is situated in Zimbabwe, then the law of Zimbabwe is applicable, even if the owner is in SA]. With regard to movables, the law of the place in which the owner is domiciled is applicable (lex loci domicilii). In the area of criminal law, the crime of arson can only be committed in respect of immovable property. Theft only pertains to movable property. The creation of the real right of security a. Immovable property: a mortgage bond must be registered in the Deeds Registry. If you want to borr...