South Africa: Can Ownership Of An Article Be Transferred By Constitutum Possessorium If The Seller Is Not In Possession Of The Article?

Introduction

A recent judgment from the High Court in Johannesburg explores whether ownership of an object may pass to another by virtue of the principle of constitutum possessorium if the transferor is not yet the owner nor the possessor of the object at the contract's specified date.

Constitutum possessorium is a method of delivery where someone transfers possession of something to another person while retaining control over it. The transfer of the thing happens by the mere changes of intention in the minds of the transferor and the transferee.

The matter before the court was the one of Denise Hellmann v South African Civil Aviation Authority & CDC Aviation (Pty) Limited & Merchant West (Pty) Limited  where the main dispute was between the plaintiff and the third defendant, who held competing claims for ownership over an aircraft. The plaintiff claimed ownership on the basis of physical delivery, whereas the third defendant claimed ownership on the basis of the principle of constitutum possessorium.

Background

The plaintiff entered into a sale agreement with the second defendant, represented by its erstwhile Chief Executive and sole director Piet Van Blerk (“Van Blerk”  or “third defendant”)  to purchase a brand new light aircraft (“the new aircraft”).  The invoice to the plaintiff was sent in May 2019 and was paid during that same month.

Between 31 October and 4 November 2019, prior to any delivery of the new aircraft to the plaintiff and unbeknownst to the plaintiff, the second defendant also entered into subsequent agreements with the third defendant. In terms of these agreements, the second defendant first sold the new aircraft to the third defendant and then leased back the new aircraft from the third defendant. These agreements provided that ownership would pass by constitutum possessorium to the third defendant by at the latest 5 November 2019.

However, the second defendant neither owned nor possessed the new aircraft at the time when these agreements were concluded nor on the specified date of 5 November 2019.

The second defendant only acquired ownership and took possession of the new aircraft on 6 November 2019, when the second defendant's agent, collected it from the manufacturer in the United States.

It was common cause that the new aircraft was then only physically delivered to the plaintiff on 23 November 2019.

Primary Legal Issues

The primary legal issue in this case turned on whether the third defendant acquired ownership of the new aircraft from the second defendant by delivery through constitutum possessorium, on 5 November 2019. If it did, this would then have been prior to the plaintiff, whose ownership claim depended on the physical delivery that took place on 23 November 2019.

The court's ruling

The first requirement for delivery by constitutum possessorium is that the transferor, in this case, the second defendant, must be the owner and in possession of the relevant thing at the moment of transfer. The court relied on the case of Kaplan v Messenger of Court, Port Alfred  where it was held that “…the person who desires to deliver the article by a constitutum possessorium must at the date of the transaction have  the dominium in the article he desires to deliver, and not merely be a detentor or custodian.” [emphasis added]

The court ruled that the third defendant had not proved ownership of TTD by constitutum possessorium on the transaction date, because at the time, the second defendant neither owned nor possessed the plane.

Instead, the court found that the plaintiff had acquired ownership by delivery on 23 November 2019 when the new aircraft arrived at Lanseria, and the plaintiff was there to collect it.

Furthermore, the court held that it was a reasonable inference from the facts of the case that the second defendant in fact never intended to transfer ownership of the new aircraft to the third defendant because in the language of the court in ABSA Bank Ltd t/a Bankfin v Jordashe Auto CC, “… he knew he could not”. The court, however, held that the second defendant did have the intention to transfer ownership to the plaintiff.

Conclusion

Based on the above, the court found that ownership of the new aircraft did not pass to the third defendant by constitutum possessorium on 5 November 2019 or any later date. Rather, the plaintiff established that ownership of the new aircraft passed to her by physical delivery on 23 November 2019, when the plane arrived at Lanseria.

It can thus be concluded that the court correctly illustrated that ownership of an object may not pass to another by virtue of the constitutum possessorium if the transferor is not yet the owner or the possessor of the object.

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