Bona vacantia mortgage bonds

More often than not practitioners are confronted with mortgage bonds registered in favour of companies that have been finally deregistered thereby having the effect that such mortgage bonds are bona vacantia. This causes undue hardship when having to have the property mortgaged thereunder transferred.

The three options to the avail of practitioners are:

• Approach court to cancel the bond;
• Have the mortgagee reinstated;
• Approach National Treasury to sigh the consent to cancellation.

Only the last option will be discussed as this is the most cost-effective option given the fact that in most cases the value of the property does not merit the costs of having the mortgagee re-instated, or to approach court for the cancellation of the bond.

It is submitted that National Treasury has the full legal capacity to sign the consent to cancellation of a bond and even has the right to institute and proceed legal action based on a claim which vested in it as bona vacantia.

In the recent case of G Walker Engineering CC t/a Atlantic Steam Services v First Garment Rental (Pty) Ltd (2011 (5) SA 14 (WCC)) [2017] ZAWCHC 261 the judge referred as follows:

“[6] It seems to me, with respect, that the learned judge in Broughton overlooked the effect of the proprietary consequences of a company’s deregistration. The effect of the deregistration of a company is that all its property, including any claims (Afr ‘vorderingsregte) it might have against third parties, thereupon vest in the state as bona vacantia (see Rainbow Diamonds Edms Bpk en Andere v Suid-Afrikaanse Nasionale Lewensassuransiemaatskappy [1984] ZASCA 41; 1984(3) SA 1 (A) at 10C-state has the right, should it so decide, to prosecute the action against the defendant”.

The case of Rainbow Diamonds (Edms) Bpk en Andere v Suid Afrikaanse Nasionale Lewensassuransiemaatskappy [1984] (3) 1(A) was based on the Exchequer Act, 1975, the relevant provisions which have survived in the Public Finance Management Act, 1999 (“PFMA”). Regulation 10.3.1 of the Treasury Regulations issued in terms of the PFMA states that where any money, property or right accrues to the state by operation of law (bona vacantia), the relevant treasury may exercise all powers, authority and prerogatives, and fulfil any obligation on behalf of the state.

Based on the above cases, no legal impediment exists prohibiting or preventing National Treasury from consenting to the cancellation of such bonds.

It is trusted that sanity will prevail and that National Treasury will be willing to assist

Allen West
Tonkin Clacey
Pretoria