Lucas Tshuuya
In a person’s life, the ownership of a thing is in principle the most comprehensive real right to a person’s own thing because it gives a sense of pride and honour as soon as ownership vests in such individual.
Several times, you find a person with less pride, but as soon as such person acquires the ownership of a thing, then the pride springs up and they even start bragging or boasting about an acquired thing.
The ownership of immovable properties like a house poses no problem, because according to the law of things, the ownership of immovable property passes as soon as the thing is registered, whereas the ownership of movable property is passed by delivery.
In Namibia, this seems different when a person acquires a movable property like a vehicle financed through financial institutions like banks, where he/she is given ownership in terms of a credit agreement, which traditionally requires that ownership is passed although the price of such property is not paid in full.
According to the Road Traffic and Transport Act 22 of 1999, a titleholder of a vehicle is defined as a person who is vested with the right to alienate such a vehicle in terms of the common law, or is required to give permission for its alienation in terms of any contract with a person who is the owner of the vehicle, as contemplated in the definition of owner.
The Road Traffic Act further defines owner as a person having the right to the use and enjoyment of the vehicle in terms of the common law, or having a right to the use and enjoyment of the vehicle under a contract with the titleholder thereof, including for any period during which such a person fails to return the vehicle to the titleholder when required to do so in terms of such contract.
If one looks at the above definitions of title holder and owner, one would spot the difference and contradictions as a person cannot be an owner of a vehicle, but only have a right to the use and enjoyment of it, unlike the titleholder.
It is submitted that if a person purchased a vehicle through bank financing/hire purchase, then the ownership of such a vehicle should be suspended until the vehicle is fully paid off. But if such a vehicle is registered onto the borrower’s name before it is fully settled, then that can cause conflicting rights of ownership.
It is trite that in a credit sales agreement, the real owner of such a vehicle is the financial institution which financed it.
It is dogmatic when the financier concludes a credit sales agreement stipulating that it retains ownership of such vehicle while it allows such a vehicle to be registered onto the borrower’s name before it is fully paid off.
It is noteworthy that a credit sales agreement involving immovable property like a house poses no serious risk as immovable property are registered at the deeds office, and the borrower is allotted a title deed registered on his/her name by notary, but endorsed that the banking institution is the bondholder.
The problem lies with movable property such as vehicle purchasing via financial institutions as they are registered on the borrower’s name without any endorsement or caveat as a ringfence on the registration certificate of such vehicle to warn any interested party in a vehicle from the borrower that there is a risk involved that such vehicle, although registered onto the borrower’s name, there is limited ownership.
The consequences of such propensity are that it poses operational risks to a third party who would be interested in purchasing that vehicle from the borrower while it is not fully paid off. The risk would be on the third party if he/she attempts to purchase such a vehicle, as they would risk losing money paid for in case the borrower defaulted and the bank repossessed the vehicle.
This is a predicament, because innocent third parties are not protected because if there was a ringfence attached to the registration certificate of such vehicle, it will protect them from losing their money if they happened to buy such hire purchased vehicle from the borrower unknowingly. This is because if the banking institution comes to collect such a vehicle, the third party would be left out of pocket.
In converse, this practice poses financial risk to financial institutions if titleholders happened to dispose of such vehicles to foreigners living abroad and report them stolen.
To avoid this conundrum, it is recommended that the Road Traffic and Transport Act be amended to allow vehicles to be registered on the financial institutions that financed them until such loan accounts are fully settled, just like our neighbouring South Africa does register hire purchase vehicles on the financial institutions that financed them until they are fully settled.
In so doing, one eliminates fraudulent and dubious transactions from taking place and save third parties the trouble of buying bank financed vehicles from borrowers, unsuspecting that they are being tricked, because once such vehicles are repossessed by the bank, disputes and acts of violence among the parties may ensue.
If the status quo remains, then it is suggested that when a vehicle is purchased through banking institutions, the registration certificate should be ringfenced with a caveat that it is still the property of the bank. If this is implemented, it will guard against unsecured credit transactions.
*Lucas Tshuuya is a candidate for LLM Corporate Law through the University of South Africa.