The registration of special notarial bonds under the security by means of movable property act and the publicity principle: lessons from developments in Belgium

Abstract

Many people do not own immovable property to offer as security but do have movable property which can be offered as security for the repayment of a debt. In today's world, where the costs of a motor car can exceed that of a house, the increasing value of movable things makes them popular and appropriate security objects. Under the common law pledge, delivery of the movable property from the pledgor (the debtor) to the pledgee (the creditor) has to take place in order for the pledgee to acquire a real security right in the property. Delivery of the property is aimed at ensuring compliance with the publicity principle. The principle of publicity entails that the existence of a real security must be known to the public. With the aim of promoting commerce, certain countries have taken the initiative in reforming their laws on pledge to allow the debtor to retain possession of the movable property that serves as security. Furthermore, technology has advanced to a level where national registration systems which can be accessed easily and at minimal cost can be established. The South African legislature enacted the Security by Means of Movable Property Act 57 of 1993 which makes provision for a pledge without possession. This Act deemed a duly registered notarial bond over specified movable property to have been delivered as if delivery had in fact taken place, thereby substituting the common law delivery requirement with registration in the Deeds Office. On 30 May 2013 the Belgian House of Representatives adopted a Belgian Pledge Act which allows for a non-possessory pledge on movable property subject to registration in a newly created public register called the Electronic Pledge Register. This article therefore examines the efficacy of the registration system of special notarial bonds in South African law and whether this form of registration complies with the publicity principle looking at the developments of a computerised registration system taking place in Belgium.