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[2023] ZAFSHC 349
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Botha N.O and Others v Lego Boerdery CC and Another (5856/2022) [2023] ZAFSHC 349 (4 September 2023)
IN
THE HIGH COURT OF SOUTH AFRICA,
FREE
STATE DIVISION, BLOEMFONTEIN
Case number:
5856/2022
Reportable: YES/NO
Of
Interest to other Judges: YES/NO
Circulate
to Magistrates: YES/NO
In
the matter between:
DEON
MARIUS BOTHA N.O.
1
st
Applicant
RALPH
FARREL LUTCHMAN N.O.
2
nd
Applicant
AGRI-COM
COOPERATIVE LTD
3
rd
Applicant
(Registration
number: 2000/0000025/24)
(in
Liquidation)
and
LEGO
BOERDERY CC
1
st
Respondent
(Registration
number: 2004/057421/23)
LENEL
GERHARD OOSTHUIZEN
2
nd
Respondent
JUDGMENT
BY:
REINDERS
J
HEARD
ON:
25 MAY 2023
DELIVERED
ON:
4
SEPTEMBER 2023
This
judgment was handed down in open court and circulated to the parties’
representatives by electronic mail communication
on 4 September 2023
at 15h00.
[1]
On 14 April 2022 the third applicant, Agri-Com Co-Operative Ltd (in
liquidation) [Agri-Com]
was placed under final liquidation by this
court at the behest of The Land and Agricultural Development Bank of
South Africa (Land
Bank). In an urgent application heard on 9
February 2023 the first and second applicants, acting in their
capacities as the joint
liquidators of Agri-Com, obtained on an ex
parte basis an interim order in terms whereof it be entitled to
perfect various securities
granted in favour of Agri-Com by the first
respondent, Lego Boerdery CC (Lego Boerdery). The interim relief was
granted under Part
A of the notice of motion and the
rule nisi
was extended by agreement between the parties. The applicants now
move for confirmation of the
rule nisi
as well as the relief
claimed under Part B against Lego Boerdery and the second respondent
(a member of the first respondent) jointly
and severally, the one
paying, the other to be absolved. Under part B the applicants claim
payment in the amount of
R
2 717 854.90 together with interest thereon.
[2]
Lego Boerdery and the second respondent (duly authorised to act on
behalf of the first respondent) oppose
the relief sought by the
applicants and pray for discharge of the
rule nisi
and
dismissal of the relief sought under Part B. In its answering
affidavit the applicants’
locus standi
to perfect the
security under the notarial bonds (numbers BN8214/2023; BN8662/2014;
BN2906/2016; BN5535/2016) are disputed by the
respondents. The
contention is firstly that there was an out-and-out cession by
Agri-Com to Land Bank of Agri-Com’s claim
against Lego
resulting therein that Agri-Com has no further
locus standi
to
claim from Lego Boerdery – put differently the contention being
that Land Bank should have enforced the claim herein.
The second
contention is that there is no underlying causa for perfection of
these bonds, as first respondent’s indebtedness
to Agri-Com has
been extinguished and, whereas the security held under the notarial
bond is accessory to the existence of the principle
debt, the
applicants are not entitled to an order for the perfection of
security. Moreover, so the opposition goes, based on the
aforementioned grounds of opposition a material dispute of facts
exists which cannot be resolved on the papers.
[3]
That the third applicant and the first respondent entered into five
credit agreements from November 2013 to
February 2018, is common
cause. Four of the five agreements entailed summer production
loans, whilst one was a loan for the
purchase of lime (the liming
loan). The applicants allege that the respondents are indebted to the
third applicant (jointly and
severally) in the amount as claimed
under Part B in respect of these loans and, more in particular, the
fifth loan agreement being
a reconciliation loan.
[4]
During January 2011 Land Bank and Agri-Com entered into a deed of
cession (annexed as “DB5”
to the founding papers –
the deed) which formed the Land Bank’s security for monies lent
and advanced to Agri-Com.
Agri-Com ultimately ceded its book debts to
Land Bank, which included the five credit agreements between itself
and Lego Boerdery.
The nature of this cession and the concomitant
consequences flowing therefrom is in dispute between the parties.
[5]
The deed defines Agri-Com as “the cedent” and Land Bank
as “the cessionary”,
and the more important clauses for
purposes of this judgment are quoted:
“
1.3
The
Cessionary
requires from the
Cedent
to furnish security to it
for the due and punctual:
1.3.1
repayment to the
Cessionary
of the aforementioned cash
credit accounts (working capital overdraft facilities) or
installments
…
2.2
The
Cedent
hereby cedes to the
Cessionary
in
securitatem debiti, all its right, title and interest in all to all
amounts which the Debtors may be owing to or in future become
owing
to the
Cedent
, together with all rights or action which
Cedent
may have or obtain in respect of or against the Debtors
(hereinafter jointly referred to as “the Ceded
Amounts”)
as security for the due and punctual
compliance by the
Cedent
of all its obligations to the
Cessionary
under indebtedness.
2.3
The
Cessionary
, by its signing of this Deed of Cession at the
end hereof, accepts the Cession in securitatem debiti, subject to the
terms and
conditions contained herein.
2.4
It is hereby recorded and agreed that, notwithstanding anything to
the contrary
elsewhere contained in this Deed of
Cession, the
Cessionary
shall be entitled,
in its sole discretion, at any time during the currency of this
Deed
of Cession, to elect to convert any one or more of
the cessions in securitatem debiti referred to in clause
2.2, into
out-and-out security cessions in favour of the Cessionary,
in which event:
2.4.1
The
Cessionary
shall inform the relevant
Cedent
in writing of its decision to do so:
2.4.2
The
Cessionary
shall authorize the relevant
Cedent
to collect all ceded amounts for and on
behalf of the
Cessionary
on such conditions as the Cessionary
deems appropriate; and
2.4.3
The
Cessionary
shall not be entitled to cede its rights or
delegate its obligations in terms of this Deed of Cession to any
third, other than
a successor bank of the
Cessionary
,
should the
Cessionary
cease to exist for whatever reason.
…
5.1
The
Cedent
hereby undertake and warrants that the
Cedent
has not entered into any agreements restricting or excluding the
transferability of the Ceded Amounts;
…
5.3
If the
Cedent
has, contrary to the warrant in terms of clause
5.1, already ceded the Ceded Amounts to another party, then this Deed
of Cession
shall operate as a cession of the
Cedent’s
reversionary rights to the
Cessionary
, including all rights of
action against the prior
Cessionary
.
6.
For the duration of this Deed of Cession and until the cessionary
notifies the
Cedent
in writing that its authority is revoked,
the
Cedent
is authorized to:
6.1
Collect all monies due or to become due and payable to the
cedent under the ceded
amount, in its own name and to issue
valid receipt thereof;
6.2
Take, either itself or through the nominees or agents, all the
requisite steps to collect
the ceded amounts when they become due and
payable from the debtors, including the institution of
appropriate legal proceedings
against those debtors, in any court of
law which has jurisdiction."
…
7.2
The
Cessionary
is entitled at any time and irrespective of
whether the
Cedent
is in breach with any provisions of the
Deed of Cession, to revoke the authority given to the
Cedent
in terms of clause 6 above, pursuant whereto the
Cessionary
will have the irrevocable authority to, in rem suam perform the
actions in terms of clause 6 above.”
[6]
The respondents contend the true nature and implementation of the
cession
to be inconsistent with its ostensible form and to be, on a
purposeful and contextual interpretation thereof, not a true cession
in
securitatem debiti
, but rather an out-and-out cession.
Relying on
Engen Petroleum Ltd v Flotank Transport (Pty) Ltd
(
876/20)
[2022] ZASCA 98
(21 June 2022)
for the distinction
between the two aforementioned cessions, it was submitted by counsel
for the respondents that the cession catered
for in the deed,
constitutes an act of transfer rendering the claim which is ceded to
not fall within the insolvent estate.
[7]
Counsel for applicants placed specific reliance on clause 6
pertaining to the collection
of ceded amounts in terms whereof the
parties agreed that Agri-Com is authorized to collect.
It
was submitted that, as the liquidators are therefore entitled to
recover and administer the claims of the third applicant when
it was
placed in liquidation, they have the necessary
locus
standi
to bring the application.
[8]
In
Engen
supra
Savage AJA writing on behalf of
the full bench held as follow (referencing in accordance with the
judgment):
“
[12]
…The true
character
of a cession
in
securitatem debiti
depends
on the intention of the parties,
[1]
with the wording of the cession being the appropriate point of
departure to determine such intention.
[2]
In
Grobler
v Oosthuizen
(
Grobler
)
[3]
this Court, recognised the existence of opposing theories in our law
regarding cessions
in
securitatem debiti
,
namely the ‘pledge theory’ and the ‘outright
cession theory’. However, it found it unnecessary to resolve
the debate between these theories one way or another.
[4]
[13]
On ‘the pledge theory’ the principal debt is ‘pledged’
to the cessionary on the basis that the cedent
retains ‘bare
dominium’ or a ‘reversionary interest’ in the claim
against the principal debtor.
[5]
On such construction, only the right to enforce the right upon
non-payment is ceded.
[6]
Since a
cession ordinarily entails a transfer of a right, it is the retention
by the cedent of the very substance of the right
around which the
doctrinal debate regarding the pledge theory has centred. This Court,
in
Grobler
,
recognised however that such debate had been resolved, primarily for
pragmatic reasons, with the pledge theory accepted as the
default
position.
[7]
On this basis a
cession
in
securitatem debiti
is
now taken to resemble a pledge, unless the intention of the parties
is different.
[8]
[14]
On the alternative theory –
‘
.
. . a cession
in
securitatem debiti
is
in effect an outright or out-and-out cession on which an undertaking
or
pactum
fiduciae
is
superimposed that the cessionary will re-cede the principal debt to
the cedent on satisfaction of the secured debt. In consequence,
the
ceded right in all its aspects is vested in the cessionary. After the
cession
in
securitatem debiti
the
cedent has no direct interest in the principal debt and is left only
with a personal right against the cessionary, by virtue
of the
pactum
fiduciae,
to
claim re-cession after the secured debt has been discharged.’
[9]
[15]
Although the pledge construction has been recognised as the default
form of security cession,
there is no support for a conclusion that
it has subsumed the field of security cessions.
[10]
This is so since our law favours a recognition of both constructions
of security cession.
[11]
It
therefore remains open to the parties to structure a cession either
as a pledge or as an out-and-out cession, upon which a
pactum
fiduciae
is
superimposed. This is to be determined by reference to the clear
intention of the parties.
[12]
”
[9]
I have carefully considered the submissions and relevant clauses and
find myself in
agreement with the contentions by the applicants.
Ostensibly the same view was taken by my learned sister Van Rhyn,J on
granting
the provisional order. Measured against the principles
enunciated in
Engen
supra
I
am of the view that the whole tenure of the cession agreement points
towards a cession
in
securitatem debiti.
In my view clause
6 makes it abundantly clear that the cession is not an out-and-out
cession. I therefore find that the applicants
have the necessary
locus
standi
in
respect of the cession point that was taken.
[13]
[10]
In proving the respondents’ indebtedness in the amount of R
2 717 854,90
the applicants relied on five loan agreements
and a certificate of balance. The terms of the agreements may be
summarised as follows:
10.1
The first agreement was a summer production credit agreement and term
loan agreement entered into between
the parties on or about 14
November 2013. A quotation was incorporated into the said agreement
in terms of which the calculation
of the amount of the loan advanced
and financing costs incurred over the term of the agreement were set.
The agreement was for
a credit facility made available to the first
respondent totaling R815 987.25 fully repayable on or before 31
August 2014. The
parties agreed that any outstanding amount due under
the agreement would form part of the principal debt owed to the third
applicant
and the security required was a general and special
notariaI bond to the amount of R750 000.00.
10.2
The second agreement was a summer production credit agreement and
term loan agreement entered into between
the parties on or about 11
November 2014. It caused the reconciliation of previous credit
agreements and facilities and extended
further credit facilities to
the amount of R1 464 571.34. A quotation was incorporated into the
said agreement in terms of which
the calculation of the amount of the
loan advanced and the financing costs incurred over the term of the
agreement was set out
and forms the written part of the agreement
which was accepted by the first respondent. The credit facility was
made available
to the first respondent totaling R1 464 571.34 and
which was fully repayable on or before 31 August 2015. The previous
securities
already provided was a general and special notarial bond
in the amount of R750 000.00 and additional security of a general and
special notarial bond in the
amount of R1 000 000.00.
10.3
The third agreement was a credit agreement advanced to the first
respondent for liming and entered into between
the parties on 11
March 2016. It caused additional credit facilities to be added to the
already extended credit facilities by an
additional amount of
R370 567.55. For as long as the summer production facility
remained outstanding, the third agreement
were repayable within 3
years in equal instalments. The previous security already provided
being a general and notarial bond in
the amount of R750 000.00 and a
general and special notarial bond in amount of R1 000 000.00, were
required.
10.4
The fourth agreement was a summer production credit agreement and
term loan agreement entered into between
the parties on or about 10
October 2016. It caused the reconciliation of previous credit
agreements and facilities and extended
further credit facilities to
the amount of R3 255 591.00. The agreement was for a credit facility
made available to the first respondent
totaling R3 255 591.00 fully
repayable on or before 31 August 2017. Security entailed the previous
securities already provided
and the additional security of a notarial
bond in the amount of R580 000.00 over a MC Cormick 135 (2012)
tractor, and a notarial
bond in the amount of R550 000.00 over a
JD1750 planter. The general and special notarial bond for an amount
of R1 130 000.00 and
an additional amount of R226 000.00 was duly
registered.
10.5
The fifth agreement (annexed to the founding affidavit as annexure
“DB20”) was a summer production
credit agreement and term
loan agreement entered into between the parties on 15 February 2018.
The fifth agreement caused the reconciliation
of previous credit
agreements and facilities and extended further credit facilities to
the amount of R2 084 188.34. A quotation
was incorporated into the
said agreement in terms of which the calculation of the amount of the
loan advanced and financing costs
occurred over the term of the
agreement were set. The agreement was for a credit facility made
available to the first respondent
totaling the amount of R2 084
188.34, fully repayable on or before 31 August 2018. As security the
previous securities already
provided and the additional security of a
notarial bond.
10.6 It is
common cause that the second respondent bound himself as surety and
co-principal debtor, jointly and severally
with the first respondent,
in solidum
for the due performance by the first respondent of
its obligations under the agreement, to the third applicant.
[11]
Relying ostensibly on clause 16.4 of the fifth agreement a
certificate of balance was issued by the
liquidators on 8 November
2022. In terms thereof they say that they have personal knowledge of
the amount of debt and the outstanding
balance on 27 October 2021 to
be R 2 717 854.90.
[12]
The respondents served a notice in terms of Uniform Rule 35(12) on
the liquidators. It is the
same liquidators who attested to the
certificate of balance on 8 November 2022. In the Rule 35(12) notice,
served on 29 March 2023,
the respondents requested copies of all
statements of account held with Agri-Com for the duration of the
contractual relationship
between Lego Boerdery and Agri-Com. In
response applicants did not provide any such statements of account.
The respondents in filing
their opposing affidavit attached six
statements of account (OA 1-6) indicating balances owed by the
respondents to the applicants
as at 28 February 2018. The respondents
aver that from February 2018 the then Agri-Com failed to supply any
monthly account statements
to first respondents. Respondents aver
that during or about May and June 2018 first respondent delivered to
Agri-Com the yield
of first respondents’ sugar bean harvest and
that Agri-Com were to sell same at the market related price and
allocate the
proceeds of such sale against first respondent’s
outstanding indebtedness. The total value of the sugar beans so
delivered
amounted to R 2 389 904.00. It is further averred
that first respondent also delivered soya beans and maize to
Agri-Com’s
silos in Harrismith and that payment thereof was
made by the purchasers (Nu-Pro) directly to Agri-Com in the amount of
R 379 838.38.
First respondent avers that these amounts were not
reflected in accounts and aver that first respondent’s
indebtedness to
Agri-Com was extinguished. It is common cause that
first respondent did not incur further indebtedness towards Agr-Com
after 28
February 2018.
[13]
In their replying affidavit the applicants contend that as a result
of the answering affidavit
the liquidators had to inspect “further
records” of third applicant pertaining to its dealings with the
respondents
– such documents comprising in excess of three
lever arch files. The liquidators aver that a detailed analysis of
the documentation
by the respondents should lead to the conclusion
that these statements cannot refer to the debt owed in respect of the
summer production
loan as that loan was only entered into between the
parties on 15 February 2018 and that the respondents couldn’t
have performed
by 28 February 2018. They state, amongst others, that
the sugar beans allegedly delivered “can never be said to be
delivered
in payment” of the debt owed on the summer production
loan “as it has already been delivered in May 2018.”
Belatedly
in its replying affidavit the applicants annexed a
statement (annexed as “RA2”) indicating merely the Nu-Pro
amount
to have ostensibly been deducted from the respondents’
indebtedness.
[14]
What the applicants move for is final relief in the form of a
judgment in the claimed amount.
They appear to have been appointed as
liquidators only after 27 October 2021. As such they personally did
not have any personal
dealings with the respondents in 2018. The
certificate issued by them was therefore based on the documentation
that they ostensibly
have acquired as liquidators and the certificate
therefore is an aid to prima facie prove the respondents’
indebtedness.
Should I find that the respondents’ version
unsettles the certificate or has the effect that the amount as stated
in the
certificate becomes uncertain, the applicants cannot succeed
in their quest for final relief.
[15]
It is now settled law that when in motion proceedings a dispute of
fact arises on the affidavits,
a final order can be granted only if
the facts averred by the applicant, which have been admitted by the
respondent, together with
the facts alleged by the latter justify
such an order (known as the
Plascon-Evans
rule
[14]
).
In
National
Director of Public Prosecutions v Zuma
[15]
these principles were restated by the Supreme Court of Appeal, with
the addition that the position may be different in the event
where
the respondent’s version consist of bald or unworthy denials,
raises fictitious disputes of facts, is palpably implausible,
farfetched or clearly untenable that the court can reject such
version merely on the papers.
[16]
I have come to the conclusion that I cannot reject the respondents’
version as to the alleged
payments made by first respondent as being
so far-fetched or untenable that I can reject it outright as being
false. On the contrary,
it would seem in all the circumstances
whether there might be good merit in those allegations. In this
respect I find the answers
by the applicants in response to the Rule
35(12) notices, to be significant. One gets the impression from the
allegations that
the applicants simply do not have the full
statements of accounts and supporting papers available. I am in any
event of the view
that the disputes raised cannot be resolved on the
papers and that the application cannot succeed on that score as well.
[16]
I therefore make the following order.
16.1
The extended
rule
nisi
dated 9 February 2023 is uplifted.
16.2
The application is dismissed with costs.
C
REINDERS, J
On
behalf of the applicants:
Adv A
van der Merwe
Instructed
by:
Leahy
Attorneys Inc.
c/o
McIntyre Van der Post Inc.
BLOEMFONTEIN
On
behalf of the respondents:
Adv
JMC Johnson
Instructed
by:
EG
Cooper Majiedt Inc.
BLOEMFONTEIN
[1]
Grobler
v Oosthuizen
[2009]
ZASCA 51
;
2009 (5) SA 500
(SCA) (
Grobler
)
para 11;
Thorogood
v Hoare
1930
EDL 354
;
Fisher
v Schlemmer
1962
4 SA 651
(T);
Nahrungsmittel
GmbH v Otto
[1992]
ZASCA 228
;
1993 1 SA 639
(A);
African
Consolidated Agencies (Pty) Ltd v Siemens Nixdorf Information
Systems (Pty) Ltd
1992
(2) SA 739
(C) at 744.
[2]
Grobler
p
ara
11.
[3]
Grobler
paras
11-15.
[4]
Grobler
para
15.
National
Bank of South Africa Ltd v Cohen’s Trustee
1911
AD 235.
[5]
Grobler
para
15 with reference to
Picardi
Hotels Ltd v Thekweni Properties (Pty) Ltd
[2008]
ZASCA 128
;
2009 (1) SA 493
(SCA) para 3 and other authorities.
[6]
Ibid
para 16 with reference to
Land-
en Landboubank van Suid-Afrika v Die Meester
1991
(2) SA 761
(A) 771C-G;
Development
Bank of Southern Africa Ltd v Van Rensburg
2002
(5) SA 425
(SCA) para 50.
[7]
Grobler
para
17 with reference to
Leyds
N O v Noord-Westelike Koöperatiewe Landboumaatskappy Bpk
1985
(2) SA 769
(A) at 780E-G;
Bank
of Lisbon and South Africa Ltd v The Master
and
Others
1987
(1) SA 276
(A) at 291H-294H;
Incledon
(Welkom) (Pty) Ltd v Qwa Qwa Development Corporation Ltd
[1990]
ZASCA 85
;
1990 (4) SA 798
(A) at 804F-J;
Millman
N O v Twiggs
[1995]
ZASCA 62
;
1995 (3) SA 674
(A) at 676H;
Development
Bank of Southern Africa Ltd v Van Rensburg
fn
6 para 50.
[8]
Grobler
para
17.
[9]
Grobler
para 17.
[10]
3
Lawsa
3
ed para 180.
[11]
2
Lawsa
2
ed para 53; Van der Merwe
Kontraktereg
4
th
ed
(2012) at 427.
[12]
Grobler
paras
11-14;
Worman
v Hughes and Others
1948
(3) SA 495
(A) at 505;
Byron
v Duke Inc
[2002]
ZASCA 58
;
2002 (5) SA 483
(SCA).
This
was also applied by this Court in
Freddy
Hirsch Group (Pty) Ltd v Chickenland (Pty) Ltd
[2011]
ZASCA 22
;
2011 (4) SA 276
(SCA) para 15.
[13]
See
Van
Zyl NO v Good Clothing CC
[1997]
JOL 18
SE for the liquidators’ entitlement to administer and
claim same.
[14]
Plascon-Evans
Paints Ltd v Van Riebeeck Paints (Pty)Ltd
1984(3)SA 623 (A)
[15]
[2009] ZASCA 1
;
2009 (2) SA 277(SCA).