On 05 June 2024, the high court dealt with the perfection of a special and general notarial bond over moveable assets. The question whether the notarial bond was enforceable turned on whether an event leading to its executability had come to pass. A creditor can ‘perfect’ an executable general notarial bond by taking possession of the moveable assets bonded to create a limited real right to those assets enforceable against third parties and giving secured rights in the event of insolvency of the debtor.

The respondents were indebted to the applicant in excess of R10 million, in breach of their obligations to the applicant, and were selling the stock secured by the special notarial bond to pay other unsecured creditors. The applicant had registered the notarial bond in February 2024 to protect its exposure, and had sent two letters of demand during March 2024 relating to short payments and a failure by the respondents to provide financial documentation. Bank statements at this stage “convincingly showed a business incapable of meeting its obligations.” The applicant sought an order authorising the applicant to perfect its security in terms of the special and general notarial bond.

The court reaffirmed the principle that the registration of a general bond over movable assets does not, by itself, create a limited real right enforceable against third parties. The general component of a notarial bond needs to be perfected by placing the creditor in possession of the movable assets. The court stressed the importance to a creditor that its security, and the preferential rights flowing from that security, will be upheld if a business goes insolvent.

There was no evidence from the respondents to dispute the fact that they had failed to pay the amounts due to the applicant. The bond was therefore enforceable (declared executable) and the applicant was authorised by the court to take physical possession of the assets covered by the notarial bond.

The respondents raised two points in limine, namely that the trusts in this case hadn’t been cited properly and that the application was not urgent. The court rejected both arguments. The trust citations used the phrase “the Trustees for the time being of the trust” which did not prejudice the trusts nor the trustees because trustees inevitably change, and the trust registration numbers were correct. The court rejected the second argument regarding lack of urgency for the reason that every additional day the bond was not perfected, the respondents continued to deplete the assets covered by the bond diminishing the applicant’s security.

Anglo Wealth Shariah (Pty) Ltd v Trustees for the time being of the Mohamed Nazeem Ali Trust and Others (D3814/2024) [2024] ZAKZDHC 34 (5 June 2024) (saflii.org)