Grobler v Oosthuizen (299/2008) [2009] ZASCA 51; 2009 (5) SA 500 (SCA) ; [2009] 3 All SA 508 (SCA) (26 May 2009)

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[2009] ZASCA 51
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Grobler v Oosthuizen (299/2008) [2009] ZASCA 51; 2009 (5) SA 500 (SCA) ; [2009] 3 All SA 508 (SCA) (26 May 2009)

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THE
SUPREME COURT OF APPEAL
REPUBLIC
OF SOUTH AFRICA
JUDGMENT
Case number: 299/2008
In the matter between:
JACOBUS DAWID GROBLER APPELLANT
and
CECILIA JOHANNA OOSTHUIZEN RESPONDENT
Neutral citation:
Grobler v
Oosthuizen
(299/2008)
[2009] ZASCA 51
(26 May
2009)
CORAM: BRAND, CLOETE, MLAMBO JJA, HURT
et
LEACH AJJA
HEARD: 12 MAY 2009
DELIVERED: 26 MAY 2009
SUMMARY
: Cession of policy
in compliance with terms of sale which proved to be null and void –
policy paid out to heir of cessionary
– claim by cedent against
heir for proceeds of policy – plea of prescription by heir premised
on postulate that cedent's claim
for re-cession of rights under
policy which arose more than three years prior to summons – cession
construed as cession
in securitatem debiti
and
not outright cession – held that re-cession consequently not
required – held further that in the premises plea of prescription

could not succeed.
ORDER
On appeal from
: High Court,
Kimberley (Majiedt, Olivier JJ and Mokgohloa AJ, sitting as court of
appeal against a judgment of Williams J.)
1. The appeal is upheld with costs, including the costs
occasioned by the employment of two counsel.
2. The order of the court a quo is set aside and
replaced by an order in the following terms:
'The appeal is dismissed with costs.'
JUDGMENT
BRAND JA
(Cloete, Mlambo JJA,
Hurt
et
Leach AJJA
concurring)
[1] The appellant, Mr Grobler ('Grobler'), instituted
action against the respondent, Mrs Oosthuizen ('Oosthuizen'), and
other defendants
in the High Court, Kimberley. His particulars of
claim incorporated various causes of action supporting a number of
claims against
the different defendants. Of these only the first
claim against Oosthuizen continues to be of relevance on appeal.
Against this
claim Oosthuizen filed a plea and a counterclaim. She
also raised a special plea of prescription. At the commencement of
proceedings,
the parties agreed and the trial court (Williams J)
ordered that the special plea of prescription should be determined
separately
and prior to all other issues. At the end of the
preliminary proceedings that followed, Williams J dismissed the plea
of prescription
with costs. Oosthuizen's appeal to the full court
against that judgment was, however, successful. In terms of the
judgment of the
full court (Olivier J, with Majiedt J and Mokgohloa
AJ concurring) Oosthuizen's plea of prescription was therefore upheld
with
costs. Grobler's further appeal against the latter judgment is
with the special leave of this court.
[2] In the main, the background facts were presented to
the trial court by way of a stated case. Certain circumscribed areas
of
dispute were, however, reserved for the leading of oral evidence.
But, as will appear from what follows, even the evidence presented
in
this way proved to be largely common cause.
[3] On 14 August 1991 Grobler entered into an agreement
of sale with a company, Mothibi Crushers & Transport (Pty) Ltd.
In terms
of the agreement he purchased an immovable property situated
at Mothibistat, in the erstwhile Republic of Bophuthatswana, from the

company. In entering into the agreement Mothibi Crushers was
represented by Oosthuizen's husband, Mr Gert Hendrik Oosthuizen, as

its only shareholder and director, who has since passed away and to
whom I shall henceforth refer as 'the deceased'.
[4] Payment of the purchase price was governed by the
somewhat unusual provisions of clause 2 of the sale agreement, which
read
as follows:
'2. Die koopprys is die som van
R300 000 tesame met rente teen 15% per jaar maandeliks
gekapitaliseer vanaf 1 Julie 1991 tot
datum van betaling, betaalbaar
soos volg: op 30 Junie 2001, vir welke bedrag die koper 'n polis by
'n goedgekeurde versekeringsmaatskappy
uitneem, welke polis 'n
opbrengs van R1 200 000.00 op 30 Junie 2001 waarborg en
welke polis deur die koper aan die verkoper
gesedeer word.'
Freely translated from the Afrikaans language, the
clause thus determined the purchase price at R300 000 together
with interest
at 15 per cent, capitalised monthly, from 1 July 1991
payable on 30 June 2001, for which amount the purchaser would acquire
an
insurance policy from an approved insurance company which
guaranteed payment of R1,2m on 30 June 2001 and which policy the
purchaser
would then cede to the seller.
[5] In compliance with his obligations under clause 2,
Grobler acquired not one but three policies from Sanlam Ltd, which
cumulatively
adhered to the stipulated requirements. By mutual
agreement between the parties involved, these policies were, however,
not ceded
to Mothibi Crushers, but to the deceased in its stead. In
point of fact, the cessions of the policies preceded the sale in that

they had been signed by Grobler on 8 August 1991. In terms of the
sale agreement, Grobler was obliged to pay the premiums in terms
of
the policies. For all intents and purposes he did so regularly until
November and December 1996 when he fell into arrears. These
two
premiums were then paid by the deceased, for which Grobler
compensated him in January 1997.
[6] The deceased passed away on 27 January 1997. By that
time the property had not yet been transferred to Grobler. Indeed, it
was
common cause between the parties at the trial that transfer could
in fact never occur and that the agreement of sale was null and
void
from the start. The reason for this, broadly stated, was that
according to the laws of the erstwhile Republic of Bophuthatswana,

where the property was situated, it could only be alienated to
Grobler, who was not a citizen of Bophuthatswana at the time, with

ministerial consent, which consent had never been obtained. In the
beginning, so Grobler testified, he was not aware that the agreement

of sale was void. This only came to his notice after the deceased
purported to cancel the agreement in December 1996 by reason
of
Grobler's failure to pay the premiums on the insurance policies.
[7] After the death of the deceased the executors in his
estate made the policies paid up. Thereafter they ceded two of the
policies
to Oosthuizen as the only heir in the deceased's estate. She
thereafter claimed the surrender value of the policies from Sanlam

who duly paid her the sum of R741 677.24 on 16 September 1997.
Grobler's claim under consideration is for payment of this
amount,
for which he issued summons on 9 June 2000. Against this background
the substructure of Oosthuizen's plea of prescription
can broadly be
stated thus:
•
The underlying basis for Grobler's claim as
formulated in his pleadings, she said, is for re-cession of the
policies which were
ceded to the deceased in compliance with a deed
of sale which proved to be null and void.
•
From the perspective of the deceased his obligation
or 'debt' – as contemplated in Chapter 3 of the
Prescription Act 68
of 1969
– was therefore to re-cede the policies to Grobler.
•
This debt, she said, 'became due' as envisaged by
s 12
of the Act when the cessions occurred, because a claim for
restoration of performance under a void agreement arises at the time

when that performance is rendered.
•
Seeing that the period of prescription provided for
in
s 11(d)
of the Act is three years, she said, Grobler's claim
became prescribed in August 1994 which was long before the death of
the deceased
in 1997.
•
As a matter of law, so Oosthuizen's contentions
concluded, a claim which has become prescribed against a deceased
cannot be enforced
by an enrichment claim against the heir, which is
the ultimate basis of Grobler's claim.
[8] In this court counsel for Grobler conceded that if
the cession of the policies were to be classified as a so-called
'out-and-out'
or outright cession, Oosthuizen's plea of prescription
would be unanswerable. As I see it, that concession was rightly and
fairly
made. In the event of an outright cession, Grobler would have
lost all his rights under the policies against Sanlam by transferring

those rights to the deceased. Nothing would remain vested in him. The
only way in which he could again acquire those rights would
be by way
of re-cession of the policies. Because the cessions were effected in
compliance with his obligations under an agreement
which proved to be
void, his claim for restoration in the form of re-cession would arise
immediately, ie in August 1991. In consequence
it would have been
extinguished by prescription in August 1994 (see eg
Van
Staden v Fourie
1989 (3) SA 200
(A) at
214F-215B).
[9] As formulated in his pleadings, Grobler's claim
indeed appeared to rest on a claim for re-cession of an out-and-out
cession
of the policies to the deceased. This was pointed out and
relied upon by Oosthuizen's counsel as his opening argument on
appeal.
I do not believe, however, that that argument is available to
Oosthuizen, at least not at this late stage. From the outset and as

the matter followed its meandering way through two courts, Grobler's
case had always been that the cession of the policies was
not an
out-and-out cession but a cession
in
securitatem debiti
and that his claim was not
founded on a re-cession of the policies. In the circumstances,
Oosthuizen could not be prejudiced in
any conceivable way by
Grobler's change of stance from his pleadings. That much was rightly
conceded on Oosthuizen's behalf. In
these circumstances, I believe,
it is no longer open to Oosthuizen to revert to a literal
interpretation of Grobler's pleadings
on appeal (see eg
Shill
v Milner
1937 AD 101
at 105;
Stead
v Conradie
[1994] ZASCA 147
;
1995 (2) SA 111
(A) at 112A-H;
Fourway Haulage SA (Pty) Ltd v National Roads
Agency Ltd
[2008] ZASCA 134
;
2009 (2) SA 150
(SCA) para 14).
[10] As I have said, the nub of Grobler's answer to the
prescription plea was that the cession of the policies was not an
out-and-out
cession but a cession
in
securitatem debiti
. In accordance with this
construction, the policies were ceded to the deceased as security for
future payment of the purchase price.
The opposing contention by
Oosthuizen was that the cession of the policies in itself constituted
payment of the purchase price
and should therefore be construed as an
out-and-out cession for value received. The cession documents
themselves support the latter
construction, in that each describes
itself as an 'out-and-out cession for value received'. That in itself
is, however, not decisive.
As was held by Lord de Villiers CJ in
National Bank of South Africa Ltd v Cohen's
Trustee
1911 AD 235
at 246, in response to a
similar reliance on the wording of a cession document, form should
not override substance if on a proper
analysis of the transaction as
a whole the cession was made with the purpose of securing a debt owed
by the cedent to the cessionary
(see also
Bank
of Lisbon & South Africa Ltd v The Master
1987
(1) SA 276
(A) at 294D-E). I respectfully subscribe to this practical
approach. As the evidence in this matter shows, the reference to an
'out-and-out cession' did not even appear in the documents when they
were signed by Grobler.
[11] The true character of the cession therefore depends
on the intention of the parties. In determining the intention of the
parties
in this case, the deed of sale appears to be the appropriate
point of departure. Unfortunately the deed of sale is itself
inconsistent
in its terms. On the one hand there is clause 5 which
provides that the purchaser would be entitled to possession of the
property
sold 'at the time of the out-and-out cession of the policy
in terms of clause 2'. Further support for the outright cession
construction
is to be found in an addendum which was signed on the
same day as the deed of sale, that is 14 August 1991. It provides
that Grobler
would be liable for any tax that may become due on the
proceeds of the policy 'which had been ceded to the seller in
discharge
of the purchase price'.
[12] To the contrary effect is clause 23. In terms of
this clause Grobler undertook to deliver the policy documents to the
deceased
'as security for the outstanding balance of the purchase
price'. Closely linked to this clause is clause 21 which provides for
the registration of a covering bond over the property sold in favour
of the deceased 'as security for payment of the purchase price,

together with interest, as set out in clause 2 above'. With reference
to this covering bond, clause 24 provides that, if upon the
death of
Grobler, the proceeds of the policy would prove to be less than the
outstanding balance of the purchase price, the deceased
would be
entitled to rely on the covering bond for the residue. It goes
without saying that the last mentioned clauses support
the
construction of a cession
in securitatem
debiti
: If the purchase price had been
discharged by an out-and-out cession of the policies, future payment
of the purchase price would
not require to be secured in any form.
Likewise there would be no possibility of any residue of the purchase
price upon the death
of Grobler.
[13] In the light of this ambiguity the parties agreed
to present oral evidence on the surrounding or background
circumstances to
the transaction. Whether it is the one or the other,
incidentally, no longer appears to make any difference (see eg
Masstores (Pty) Ltd v Murray & Roberts
Construction (Pty) Ltd
[2008] ZASCA 94
;
2008 (6) SA 654
(SCA)
para 7;
KPMG Chartered Accountants v Securefin
[2009] ZASCA 7
(13 March 2009) para 39). The
most important point of the evidence thus presented, as I see it, was
the testimony of Grobler, which
turned out to be undisputed, that
both he and the deceased anticipated the proceeds of the policy to
exceed the purchase price
of R1,2m on the payment date of 30 June
2001 and that he, Grobler, would then be entitled to that excess.
[14] Direct support for the security construction is
also to be found in the evidence about the subsequent conduct of the
parties
which was rightly admitted (see eg
Coopers
& Lybrandt v Bryant
[1995] ZASCA 64
;
1995 (3) SA 761
(A)
at 768D), and particularly in the correspondence between the
attorneys acting for the parties at the time. First, there was
the
letter by Grobler's attorneys of 25 September 1991, seeking an
undertaking from the deceased that he would not put up the insurance

policies ceded to him as security for his own debts. Shortly
thereafter this undertaking was then given by the deceased's
attorneys
on his behalf. Then there was the letter by the deceased's
attorneys of 29 October 1991 in which they required the original of
the policies 'which had been ceded to our client as security'.
Apparently the original policies were subsequently delivered directly

to the deceased, because on 11 November 1991, his own attorneys
sought written confirmation from him that he held these policies
'as
security for future payment of the purchase price'. In the light of
all this I am satisfied that the factual finding by both
the trial
court and the full court that the policies were ceded to the deceased
in securitatem debiti,
should
be upheld.
[15] Evaluation of the conclusions arrived at by both
the trial court and the full court in applying the law to these
facts, requires
some reference to the opposing theories in our law in
regard to cessions
in securitatem debiti.
The
principle that one debt (the principal debt) can be employed as
security for due performance of another debt (the secured debt),
is
not in doubt. The opposing theories relate to the doctrinal basis for
this principle. Of these theories there are essentially
two (which
are discussed in more detail, eg in W A Joubert (founding editor)
The
Law of South Africa
2ed Vol 2
Part 2
sv
'Cession' (P M Nienaber) para 53; De Wet & Yeats
Kontraktereg
& Handelsreg
5ed (by De Wet & Van
Wyk) 415 et seq; Van der Merwe et al
Contract
General Principles
3ed para 12.5.3; Susan
Scott
The Law of Cession
2ed para 12.2; Van der Merwe,
Sakereg
2ed 673 et seq). The one theory is inspired by the parallel with a
pledge of a corporeal asset and is thus loosely referred to
as 'the
pledge theory'. In accordance with this theory, the effect of the
cession
in securitatem debiti
is that the principal debt is 'pledged' to the cessionary while the
cedent retains what has variously been described as the 'bare

dominium' or a 'reversionary interest' in the claim against the
principal debtor (see eg
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).
[16] Critics of the pledge theory have difficulty with
the concept of a real right of pledge over the personal rights
arising from
the principal debt (see eg De Wet & Yeats
op
cit
416; Van der Merwe
Sakereg
683). Concomitantly they also have difficulty with the description of
the interest retained by the cedent in the personal right
against the
debtor as that of 'ownership' or 'dominium'. This difficulty is well
formulated in the following dictum by Broome JP
in
Moola
v Estate Moola
1957 (2) SA 463
(N) at 464B-D:
'The word "dominium"
is therefore out of place, and it does not help much to describe
plaintiff as the "owner"
of the ceded rights. Ownership of
a right of action would seem to imply the right to sue, and if the
right to sue has passed to
the cessionary it is difficult to imagine
what can remain with the cedent. The truth probably is that the
cedent by way of security
retains only his "reversionary right",
that is to say his right to enforce the ceded right of action after
the [secured
debt] . . . has been discharged.'
(See also eg
Barclays Bank (D, C
& O) v Riverside Dried Fruit (Pty) Ltd
1949
(1) SA 937
(C) at 946.)
[17] In the light of these problems associated with the
pledge theory, an alternative theory had been preferred by the
majority
of academic authors and even in some earlier decisions of
this court (see eg
Lief, NO v Dettmann
1964
(2) SA 252
(A) at 271H;
Trust Bank of Africa
Ltd v Standard Bank of South Africa Ltd
1968
(3) SA 166
(A) at 173G-H and the writings of academic authors
previously cited). According to this 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. It is readily apparent that if the
pactum fiduciae
theory
were to be applied to the facts of this case, the plea of
prescription must be upheld, because Grobler's case would then
depend
on a claim for re-cession which arose in August 1991. But despite the
doctrinal difficulties arising from the pledge theory,
this court has
in its latest series of decisions – primarily for pragmatic reasons
– accepted that theory in preference to
the outright cession/
pactum fiduciae
construction (see eg
Leyds
NO v Noord-Westelike Koöperatiewe Landboumaatskappy Bpk
1985
(2) SA 769
(A) at 780E-G;
Bank of Lisbon and
South Africa Ltd v The Master (supra)
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 NO v Twiggs
[1995] ZASCA 62
;
1995
(3) SA 674
(A) at 676H;
Development Bank of
Southern Africa Ltd v Van Rensburg (supra)
para 50). In the light of these decisions the doctrinal debate must,
in my view, be regarded as settled in favour of the pledge
theory.
[18] In the trial court Williams J therefore quite
rightly accepted that she was bound to apply the pledge theory. Based
on this
theory her reasoning essentially went as follows: after the
cession
in
securitatem
debiti
, dominium or ownership of the
principal debt remained with Grobler; what he therefore essentially
sought to enforce was the
rei vindicatio
;
and in terms of
s 1
of the
Prescription Act, the
prescription
period for the
rei vindicatio
is
30 years. In consequence, the learned judge concluded, Grobler's
claim did not become prescribed. I find this line of reasoning

unsustainable in all three of its constituent parts. First, for the
reasons given, in eg
Moola,
the
concept of dominium or ownership in its literal sense is ill-suited
to describe the cedent's remaining interest. But the description
of
that interest as 'ownership' becomes virtually nonsensical in a case
such as this where the principal debt had been discharged
before
action was instituted. When Sanlam paid out the policies, the
principal debt was extinguished. Grobler would then be the
owner of
nothing and that could hardly constitute the underlying basis for his
claim. Closely related to my first problem is the
second, namely that
whatever remedies associated with ownership could be said to be
retained by the cedent, it does not appear
to include the
rei
vindicatio
which only pertains to corporeals
(see eg Van der Merwe
Sakereg
20-23). Finally, the prescription period of 30 years in
s 1
of
the
Prescription Act relates
to acquisitive prescription. For
extinctive prescription, the period can, in the present context, only
be the three years provided
for in
s 11(d)
of the Act (see eg
Evins v Shield Insurance Co Ltd
1979 (3) SA 1136
(W) at 1141F-G;
Barnett v
Minister of Land Affairs
2007 (6) SA 313
(SCA) para 19).
[19] The full court therefore quite rightly, in my view,
refused to follow the reasoning of the trial court. It, in turn,
focused
on the designation of the interest retained by the cedent
after the cession
in securitatem debiti
as
a 'reversionary interest'. With regard to the meaning of this concept
it referred to the following statement in
Incledon
(Welkom) (Pty) Ltd v Qwa Qwa Development Corporation Ltd (supra)
at
804I-J:
'When the company executed the
[cession
in
securitatem debiti
]
it thus retained the ownership of its rights against the [principal
debtor] . . . . That ownership, as appears from the authorities,

consists in a
reversionary
interest which entitled the owner (cedent) to claim the re-cession of
the rights upon payment of the indebtedness
.'
(My emphasis.)
In the light of this statement the full court understood
Grobler's reversionary interest to lie in a claim for re-cession of
the
policies. Departing from this premise, the court held that,
because of the invalidity of the sale agreement, Grobler's claim for

re-cession must have arisen at the time when the policies were ceded
to the deceased. Thus construed, the court further held, the
debt
relied upon by Grobler became prescribed three years later in August
1994.
[20] The full court's understanding of the concept
'reversionary interest' is undoubtedly supported by the statement of
this court
in
Incledon (Welkom)
on
which it relied. The question is, however, whether that statement
constitutes good authority. With respect, I think not. First,
I
believe it would simply amount to a recapitulation of the outright
cession-
cum-pactum fiduciae
-theory
(see
Lawsa op cit
para
53 note 14). Secondly, it is, in my view, in direct conflict with
those decisions which held that a claim ceded
in
securitatem debiti
automatically reverts to
the cedent once the secured debt is extinguished and that in such
event a re-cession by the cessionary
is not required (see eg
National
Bank of South Africa Ltd v Cohen's Trustee (supra)
at
246-247;
Bank of Lisbon and South Africa Ltd v
The Master (supra)
at 294E-F). Susan Scott
(
op cit
para 12.2.1.3)
explains the reasoning behind these decisions as follows, with
reference to the analogy of a pledge:
'The accessory nature of pledge
has the effect that on the discharge of the principal debt, the right
of pledge is automatically
extinguished. In the case of a pledge of
corporeals the pledgee is, after the extinction of the right of
pledge, still in possession
of the pledged article, which he must
then hand over to the pledgor. In the case of a pledge of
incorporeals where only the power
to realise the right is
transferred, this power reverts to the pledgor automatically
rendering it unnecessary for the pledgee to
re-cede it to him.'
[21] The full court did refer to the decisions in
National Bank
and
Bank of Lisbon.
It concluded, however, that
they only apply where the secured debt is extinguished by payment and
not to a case such as this where
the secured debt proved to be
non-existent from the start. I cannot agree with this distinction. As
appears from Susan Scott's
explanation, the reason why a re-cession
was found to be unnecessary in those cases, was based on the
accessory nature of a cession
in securitatem
debiti
. Without a principal debt the cession
cannot stand and it matters not whether the principal debt is
extinguished or never existed
at all. This point of view, I believe,
also finds support in the following dictum by Watermeyer J in
Standard Bank of SA v Neethling NO
1958
(2) SA 25
(C) at 30A-D:
'[T]he next point which arises
is whether the cession of the policy and the security created thereby
was rendered null and void
on the extinction of the principal debt.
In this regard I refer first to
Kilburn
v Estate Kilburn
,
1931 AD 501
at p. 506, where WESSELS, A.C.J., said:
"It is therefore clear that
by our law there must be a legal or natural obligation to which the
hypothecation is accessory.
If there is no obligation whatever there
can be no hypothecation giving rise to a substantive claim."
Kilburn's
case was not a case where a principal obligation subsequently became
extinguished. It was a case where there never had been a principal

obligation. It seems to me however that there is no distinction in
principle between the two cases . . . After . . . the principal

debt was extinguished . . . there remained no obligation to support
the cession by way of security.'
[22] As to the real meaning of the cedent's
'reversionary interest', I can do no better than to refer to the
following explanation
by Nienaber JA in
Development
Bank of Southern Africa Ltd v Van Rensburg (supra)
para
50 with which I respectfully agree:
'This reversionary interest,
properly understood, refers to the cedent's interest in the debtor's
performance (ie satisfaction of
the principal debt by the debtor)
rather than to his interest in the cessionary's performance (ie
re-cession of the principal debt
on satisfaction of the secured debt
- which is [
sc
would be] a right
ex
contractu
against the
cessionary).'
(See also eg
Moola v Estate Moola
(supra)
at 464B-D; P E Streicher 'Toekomstige
Regte, Boekskulde en Insolvensie' in Sessie
in
securitatem debiti – Quo Vadis?
(Susan
Scott ed) 136 at 145-146; Van der Merwe et al
Contract
op cit
499;
Lawsa op
cit
paras 53 (note 14) 55 and 56 (note 17).)
[23] I therefore conclude that, in accordance with the
principles emanating from the pledge theory, Grobler never required a
re-cession
from the deceased. Because the principal debt arising from
the sale proved to be invalid, the rights under the policy
automatically
reverted to him. There was therefore no claim for
re-cession that could become prescribed. This leads one to
Oosthuizen's alternative
argument which was based on the postulate
that even though this court – in the series of decisions I have
referred to – opted
for the pledge theory it did not thereby in
effect forbid the parties to mould their cession
in
securitatem debiti
in the alternative form of
an out-and-out cession coupled with a
pactum
fiduciae
. The validity of this postulate
appears to be accepted by some authorities (see eg
Alexander
v Standard Merchant Bank Ltd
1978 (4) SA 730
(W) 739-740;
African Consolidated Agencies
(Pty) Ltd v Siemens Nixdorf Information Systems (Pty) Ltd
1992
(2) SA 739
(C) at 744F-I; Susan Scott
op cit
para 12.2.2) while it is doubted by others
(see eg Farlam & Hathaway
Contract Cases
Materials and Commentary
3ed (by Lubbe &
Murray) 700;
Lawsa op cit
para 53 footnote 18 and the authorities there cited).
[24] I find it unnecessary to decide this debate one way
or the other. Suffice it to say, in my view, that at best for
Oosthuizen,
the position must be this: even if the option of an
alternative form of cession
in securitatem
debiti
were held to be open to the parties,
their intention to do so would have to be clearly expressed. Absent
such clear expression
of intention, the pledge construction must
prevail (see
Lawsa
op
cit
para 53), which means that the default
position will be that the pledge theory will apply. I say this
because the contrary view
– contended for by Oosthuizen – which
would render the nature of every cession
in
securitatem debiti
dependent on the court's
determination of the intention of the parties on the facts of that
particular case, will in my view give
rise to an unacceptable level
of commercial uncertainty. The reality is of course that in the vast
majority of cases the parties
to a cession
in
securitatem debiti
would not have applied
their minds one way or the other to this rather esoteric aspect of
their transaction, which in most cases
will make little difference to
the terms of their contractual relationship. On the facts of this
case, I can find no clear indication
that Grobler and the deceased
intended to mould their cession
in securitatem
debiti
in any particular form. In the
premises the pledge construction must, in my view, carry the day.
[25] The final alternative argument raised by Oosthuizen
was that if the claim under the policy automatically reverted to
Grobler,
he can still institute that claim against Sanlam who will in
turn be able to recover its payment to her by means of an enrichment

claim. As I see it, this argument has very little to do with
Oosthuizen's defence of prescription which relied on the hypothesis

that a re-cession was essential to Grobler's claim. But, in any
event, I find it untenable. When Sanlam made payment to Oosthuizen
it
was obviously unaware that the claims under the policies had reverted
to Grobler. In the circumstances I find the conclusive
answer to the
argument under consideration in the following succinct statement by P
M Nienaber in
Lawsa (op cit
para
54):
'Once the secured debt has been
repaid by the cedent to the cessionary the cession
in
securitatem debiti
has
fulfilled its primary function [of securing the secured debt] and the
right [as creditor in terms of the principal debt] reverts
to the
cedent. The erstwhile cessionary is no longer the true creditor, but
if the debtor who has been informed of the cession
in
securitatem debiti
but not of its termination, pays him or her, the debtor will enjoy
immunity against any further claim by the cedent.'
In support of this statement the learned author then
refers (in note 9), by way of analogy, to the trite principle of the
law of
cession that a debtor who renders performance to the original
creditor (the cedent) in ignorance of the cession, is thereby
absolved
from liability. Suffice it to say that I too find the
analogy irresistible (see also P E Streicher
op
cit
149).
[26] One's instinctive reaction is that if the claim to
the proceeds of the policies that Grobler rightfully had against
Sanlam
had been discharged by the latter through payment to
Oosthuizen, Grobler must have a claim against her. Any conclusion to
the contrary
would be too inequitable to contemplate. But what would
the conceptual basis for such a claim be? I think the simple answer
is
this: once the principal debt had automatically reverted to the
cedent – either because the secured debt never existed or because

it had been discharged – collection of the principal debt by the
erstwhile cessionary must be for the account of the erstwhile
cedent
for the recovery of which the latter then has a claim against the
former (see eg
Bank of Lisbon and South Africa
Ltd v The Master (supra)
294C-D;
Lawsa
op cit
para 53 note 14). This being so,
Grobler's claim against Oosthuizen arose when she received payment
from Sanlam on 16 September
1997. That took place less than three
years before summons was issued on 9 June 2000. In consequence, the
trial court was right
in finding – albeit for different reasons –
that Oosthuizen's plea of prescription could not succeed.
[27] For these reasons:
1. The appeal is upheld with costs, including the costs
occasioned by the employment of two counsel.
2. The order of the court a quo is set aside and
replaced with an order in the following terms:
'The appeal is dismissed with costs.'
……
..……………….
F D J BRAND
JUDGE OF APPEAL
Counsel
for Appellant:
F W A DANZFUSS SC
H
MURRAY
Instructed
by: VAN DE WALL & VENNOTE
KIMBERLEY
Correspondents: SCHOEMAN
MAREE ING
BLOEMFONTEIN
For
Respondent: S P DE LA HARPE
Instructed
By: ENGELSMAN MAGABANE ING
KIMBERLEY
Correspondents: NAUDES
BLOEMFONTEIN