Fischer v Ubomi Ushishi Trading CC and Others 2019 (2) SA 117 (SCA)

The issue before the Supreme Court of Appeal (SCA) in Fischer was whether a real right to a half-share in immovable property vests in a spouse immediately on the dissolution of a marriage in community of property, pursuant to a court order incorporating a settlement agreement in terms of which one spouse waives their half-share in the property in favour of the other, or whether that right only vests after endorsement of transfer in the Deeds Registry. An ancillary issue concerned the nature of the right acquired by the spouse by virtue of a court order.

Facts

Mr and Mrs Haynes (the second and third respondents respectively) were the registered owners of Erf 31865 Goodwood (the property). Their marriage in community of property was dissolved by a divorce order dated 10 December 2012. In terms of the settlement agreement incorporated in the divorce order, Mr Haynes waived his half-share in the property in favour of Mrs Haynes.

The appellant, Mr Fischer having obtained judgment against the first respondent, Ubomi Ushishi Trading CC and Mr Haynes in 2015, applied to the Western Cape Division of the High Court in Cape Town as the court a quo, for an order declaring Mr Haynes’ undivided half-share in the property executable, as the Deeds Registry still reflected him as co-owner of the property. Opposing the application, Mrs Haynes argued that she had acquired full ownership of the property when the divorce order was granted. Alternatively, her personal right to full ownership of the property preceded Mr Fischers’ claim.

The High Court

In its judgment the court considered two cases. In Corporate Liquidators (Pty) Ltd and Another v Wiggill and Others 2007 (2) SA 520 (T) it was held that where parties enter into a settlement agreement regarding the division of their assets, which is made an order of court, as contemplated in s 7(1) of the Divorce Act 70 of 1979 (the Divorce Act), ownership of the immovable property vests immediately. In Middleton v Middleton and Another 2010 (1) SA 179 (D) the court, however, held that a settlement agreement only creates a personal right for the transfer of ownership as the divorce order cannot vest ownership without transfer or delivery. Following the reasoning in the Corporate Liquidators case the court a quo dismissed the application.

Judgment

In a unanimous judgment, the SCA noted s 16 of the Deeds Registries Act 47 of 1937 (DRA) is the starting point in determining when ownership vests on divorce, the section provides:

‘How real rights shall be transferred –

Save as otherwise provided in this Act or in any other law the ownership of land may be conveyed from one person to another only by means of a deed of transfer executed or attested by the registrar, and other real rights in land may be conveyed from one person to another only by means of a deed of cession attested by a notary public and registered by the registrar …’.

Section 16 confirms the principle that transfer of immovable property must take place before the registrar of deeds where the land is situated, ensuring sufficient publicity. The section also plays a central role in the registration system in that it provides for derivative acquisition by requiring execution and attestation of the deed to be in the presence of the registrar this simultaneously also provides for acquisition of ownership in derivative form, in that the moment at which the registrar attests the deed is also regarded as the moment of registration of transfer.

Thus, on a proper construction of s 16 and our common law, as was noted by Innes CJ in Lucas’ Trustee v Ismail and Amod (1905) TS 239 at 242 derivative acquisition of ownership in land requires registration of transfer.

Mrs Haynes’ acquisition of the half-share in the property was derivative, arising from the settlement agreement made an order of court, this gave her a personal right to enforce registration of transfer of the property into her name.

Following from the above, the SCA found that the court a quo erred in its reliance on the Corporate Liquidators case, as in that judgment the court overlooked the common law principles of co-ownership and the applicable provision of s 26 of the DRA, which both require that co-ownership in land is only terminated on attestation of the deed of partition transfer by the registrar. The SCA thus found that the reasoning in Middleton was correct.

Furthermore, s 16 on its plain wording is concerned with the transfer of real rights in land. In enacting the saving provision, ‘[s]ave as otherwise provided in this Act or in any other law’, the SCA noted that the legislators contemplated a law dealing with the transfer of real rights in land. Consequently, s 7(1) of the Divorce Act is not such a law, as that section merely authorises a court to make an order regarding the division of the assets of the parties, making no mention of the transfer of real rights in land.

It was on these grounds that the SCA found that the court a quo erred in its finding that on the granting of the divorce order ownership of the half-share in the property immediately vested in Mrs Haynes.

The appeal, however, failed on the alternative argument, that Mrs Haynes’ personal right to full ownership of the property preceded Mr Fischers’ claim. As at the time that Mrs Haynes acquired the personal right to compel transfer of the half-share of the property into her name, there was no greater or competing right to defeat her claim. There was additionally no suggestion that the agreement was concluded improperly so as to defeat the rights of creditors. The appeal was, therefore, dismissed with costs.

Conclusion

The unanimous judgment by the SCA reaffirms the position in our law that on the dissolution of a marriage in community of property, pursuant to a court order incorporating a settlement agreement in terms of which one spouse waives his half-share in the property in favour of the other, that agreement although binding on the parties does not by itself vest ownership in the other spouse, but merely creates a personal right to enforce transfer. This as vesting requires endorsement of transfer in the Deeds Registry. This can have significant implications not only for creditors and the registered owners, as was illustrated in this case but any other third party they may transact with.

Lulama Lobola BA LLB (UCT) is a legal practitioner at Herold Gie Attorneys in Cape Town.

This article was first published in De Rebus in 2019 (July) DR 22.