Perfecting a General Notarial Bond: You Can't Have your Cake and Eat It! ABSA Bank Limited v Go on Supermarket (Pty) Limited (The Spar Group Limited intervening) (9442/2022) [2022] ZAGPJHC 173 (24 March 2022)

Abstract

A general notarial bond registered over movable property grants the bondholder a real security right enforceable against third parties only if the bond has been perfected by transferring possession of the property to the bondholder. Based on the facts and judgment in Absa Bank Limited v Go On Supermarket (Pty) Limited, this analysis revisits the basic principles of and requirements for the perfection of a general bond. We ultimately criticise the judgment on three scores. Firstly, the court regarded the form of delivery (transfer of possession) applicable in this matter as symbolic delivery, but we point out that it amounted to constitutum possessorium – meaning that the attempted perfection of the bond was ineffective. Secondly, the parties conceded and the court accepted that the general bond could not be perfected over property subject to the special notarial bond of another creditor. We reason that this is incorrect. It is indeed possible to attach property subject to the security right of another creditor, although the first creditor's rights will be preferred over those of the creditor who subsequently attached the property. Thirdly, the court rejected the argument that the general bond could not be perfected over property owned by another creditor in terms of a reservation-of-ownership clause in a sale agreement. However, the court should not have rejected this argument, since it was correct. A general bond indeed cannot cover property belonging to someone other than the debtor, unless the person agreed, and thus it was not possible in this case to attach the property belonging to someone other than the debtor.

Keywords

• notarial bonds
• reservation of ownership
• pledge
• secured transactions
• Law reform
• Real security law