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[2019] ZAGPPHC 142
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Standard Bank of South Africa Ltd v Strydom N.O and Others (64891/2015) [2019] ZAGPPHC 142 (9 May 2019)
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Certain
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IN
THE HIGH COURT OF SOUTH AFRICA
(GAUTENG DIVISION, PRETORIA)
REPUBLIC OF SOUTH AFRICA
Case
Number: 64891/2015
9/5/2019
In
the matter between:
THE
STANDARD BANK OF SOUTH AFRICA LTD
Plaintiff
And
PIETER
HENDRIK STRYDOM N.O.
DEON MARIUS BOTHA N.O.
CAROLINE
MMAKGOKOLO LEDWABA N.O.
[In
their capacities as joint provisional trustees of the Insolvent
Estate Frederick Barend Christoffel Kirsten]
First
Defendant
SUIDWES
LANDBOU (PTY) LTD
Second
Defendant
SILOSTRAT
(PTY) LTD
Third
Defendant
THE
LAND AND AGRICULTURAL DEVELOPMENT BANK OF SOUTH AFRICA
Fourth
Defendant
TECHNICHEM
OESBESKERMING (PTY) LTD
Fifth
Defendant
JUDGMENT
JANSE
VAN NIEUWENHUIZEN J
INTRODUCTION
[1]
This
matter centres around the extensive farming operations of a maize
producer, Mr Frederick Barend Christoffel Kirsten (“Kirsten”)
in the Makwassie area, North West Province. Kirsten was well known in
the area as a successful farmer and was by all accounts a
revered
member of the farming community.
[2]
Due
to his success as a maize producer and the extensive scale of his
operations, Kirsten had easy access to credit facilities at
various
financial institutions.
[3]
For
reasons that do not appear from the evidence, Kirsten’s
financial position took a turn for the worse during 2015. This
unfortunate event led to the sequestration of Kirsten in terms of a
provisional sequestration order on 29 April 2016 and thereafter
a
final sequestration order issued on 31 August 2016.
[4]
Kirsten’s
financial demise resulted in massive losses for all the parties
involved in the present litigation. It appears that
Kirsten executed
a variety of cessions in favour of different entities in respect of
the income of his 2015 maize crop.
[5]
The
validity of the different cessions executed by Kirsten forms the crux
of the dispute between the parties.
PARTIES
[6]
The
plaintiff is
THE
STANDARD BANK OF SOUTH AFRICA LTD
,
a public company with limited liability and a registered bank
(“Standard Bank”). Standard Bank advanced production
credit to the tune of R 79 million to Kirsten. Standard
Bank relies on a Deed of Cession dated 22 November 2011 in support
of
its claim to the proceeds of Kirsten’s 2015 maize crop.
[7]
The
first defendant is the duly appointed
TRUSTEES
of the Insolvent Estate of Kirsten (“the Trustees”). The
Trustees oppose the relief claimed by Standard Bank.
[8]
The
second defendant is
SUIDWES
LANDBOU (PTY) LTD
,
a private company of limited liability with its principal place of
business at Leeudoringstad, Northwest Province (“Suidwes”).
Suidwes is an agricultural company that offers a variety of products
and services in the agricultural industry. Suidwes advanced
credit to
Kirsten and the outstanding balance at the time of his sequestration
was in the region R 129 million. Suidwes relies
on a variety of
Deeds of Cession, a General Notarial Bond and a perfection agreement
in support of their claim to the income of
the 2015 maize crop.
[9]
The
third defendant is
SILOSTRAT
(PTY) LTD
a
private company with limited liability (“Silostrat”).
Silostrat specialises in the trade of grain products and entered
into
three forward contracts with Kirsten in respect of 35 000 tons
of his 2015 maize crop. Kirsten failed to deliver in terms
of the
contracts and Silostrat instituted a claim against the Trustees for
breach of contract. Silostrat also instituted conditional
counterclaims against Standard Bank and Suidwes, respectively.
[10]
The
fourth defendant is
LAND
& AGRICULTURAL DEVELOPMENT BANK OF SOUTH AFRICA
(‘the
Landbank”). Suidwes ceded its book debts, including the debt of
Kirsten to the Landbank.
[11]
The
fifth defendant is
TECHNICHEM
OESBESKERMING (PTY) LTD
a
private company with limited liability (“Technichem”).
Technichem sold and delivered agricultural chemicals to Kirsten.
Kirsten did not pay for the products and owes Technichem an amount of
R 7 665 946, 44. Technichem relies on a Deed
of
Cession signed by Kirsten on 5 October 2014 in support of its claim
to the proceeds of the 2015 maize crop.
RELIEF
Standard
Bank
[12]
Standard
Bank claims the following relief:
[12.1]
rectification of clause 1 of the deed of cession, dated 22 November
2011, signed, executed and concluded by Kirsten in its
favour;
[12.2]
an order declaring that it’s cession:
[12.2.1]
is valid and enforceable;
[12.2.2]
pre-dates the deeds of cession of Suidwes and Technichem;
[12.3]
an order that it is entitled to all income and/or monies due and/or
to become due and/or the proceeds realised in respect
of the 2015 and
2016 maize crop harvest of Kirsten;
[12.4]
payment by the Trustees, Suidwes and/or the Landbank and/or Silostrat
of all proceeds realised and/or received by the
respective parties in
respect of the entire 2015/2016 maize crop harvests of Kirsten.
[13]
I
pause to mention that Standard Bank abandoned its claim to Kirsten’s
2016 maize income at the inception of the trial. It,
furthermore,
became clear during the trial that there is no
lis
between
Standard Bank and Silostrat in respect of Standard Bank’s
claim. As a result, Standard Bank did not persist with the
relief
claimed in paragraph 12.4
supra
against
Silostrat.
Silostrat
[14]
At
the inception of the trial, the Trustees and Silostrat settled
Silostrat’s claim against the insolvent estate of Kirsten.
[15]
In
the result, Silostrat only persisted with its condition counterclaims
against Standard Bank and Suidwes, respectively.
Technichem
[16]
Technichem
claims an order that:
[16.1]
its deed of cession, dated 5 October 2014, signed and executed by
Kirsten in its favour is valid and enforceable;
[16.2]
the cession pre-dates and/or supersedes Suidwes and/or the Landbank’s
cessions; and
[16.3]
it is entitled to all income and/or monies due and/or to become due
and/or realised to the Trustees in respect of Kirsten’s
2015
maize crop income.
[16.4]
Suidwes and/or the Landbank must pay all of the proceeds received in
respect of Kirsten’s 2015 maize crops to
it.
[17]
Technichem
did not persist with the relief claimed in paragraphs 16.3 and 16.4
supra
.
FACTS
COMMON CAUSE
[18]
The
parties in writing agreed that the following facts are common cause:
“
1.
The parties admit the fact, conclusion and terms of the agreements on
which the plaintiff (Standard Bank) relies
as set out at paragraphs 5
to 12, 15 and 20 of the particulars of claim and the fulfilment
and/or waiver (as the case may be) of
all relevant suspensive
conditions relating to the agreement.
2.
The parties
admit the fact, conclusion and terms of the agreements on which the
second defendant (Suidwes) and/or the fourth defendant
(Landbank)
relies as set out at paragraphs 12.2.1 (the revolving credit
facilities), 12.2.2 (the 2009 to 2013 cessions), 12.2.4
(the notarial
bond), 12.2.6 (the 2014 cession), 12.2.7 (the sale agreement), 12.2.8
(the SLA) and 12.3.4 (the perfection agreement)
of Suidwes’
plea.
3.
The parties
admit the fact, conclusion and terms of the three sale agreements in
terms of which the third defendant (Silostrat)
purchased quantities
of white maize from Kirsten as listed in paragraphs 5.1 and 5.1 of
Silostrat’s plea.
4.
The parties
admit the sale and delivery of chemicals to Kirsten as pleaded by the
fifth defendant (Technichem) at paragraph 22.3
of Technichem’s
plea and the fact, conclusion and terms of the cession dated 5
October 2014 referred to in paragraph 22.8
of its plea.
5.
Subject to
section 45(3) of the Insolvent Act, 1936:
5.1
the parties admit that claims have been submitted and proved in the
insolvent estate by Standard Bank, Suidwes, Landbank and Technichem
in terms of the spreadsheet attached marked “A”.
5.2
the Trustee’s admit Silostrat’s claim against Kirsten’s
insolvent estate.
6.
Notwithstanding the above, the parties dispute, and do
not
agree on, the legal efficacy, legal validity and/or enforceability
of:
6.1
Standard Bank’s, Suidwes and/or the Landbank’s, and
Technichem’s respective cessions; and
6.2
the aforesaid notarial bond and the perfection agreement.
7.
The parties admit that Kirsten delivered 22 619-52 tons of WM1
of his 2015 maize crop to Suidwes
silos.”
ISSUES IN
DISPUTE
[19]
Although
the parties recorded in paragraph 6 of the agreement
supra
that
the legal efficacy, legal validity and/or enforceability of
Technichem’s cession is in dispute, it became clear during
the
trial that Technichem’s cession was not disputed by any of the
parties.
[20]
In
the result, the following issues have to be determined:
[20.1]
the interpretation
alternatively
rectification of clause 1 of
Standard Bank’s deed of cession dated 22 November 2011;
[20.2]
whether rectification post
concursus creditorum
is possible;
[20.3]
Suidwes and/or the Landbank’s liability to pay the 2015 crop
proceeds to Standard Bank and/or
whether the crop proceeds form part
of the insolvent estate;
[20.4]
the validity and/or enforceability of:
[20.4.1]
the cessions executed by Kirsten in favour of Suidwes during the
period 2009 to 2014;
[20.4.2]
the General Notarial Bond registered by Kirsten in favour of Suidwes
on 6 May 2014 and the
subsequent perfection agreement;
[20.5]
the conditional counterclaims of Silostrat against Standard Bank and
Suidwes, respectively.
STANDARD
BANK
INTERPRETATION
Pleadings
[21]
Clause
1 of the Deed of Cession dated 22 November 2011 reads as follows:
“
I,
Frederik Barend Christoffel Kirsten (700407 5240 080) (“Cedent”)
cede and transfer in favour of The Standard Bank
of South Africa
Limited (“the Bank”), or anyone who takes transfer of the
Bank’s rights under this cession, all
the Cedent’s rights
in and to all income and/or moneys due and to become due to the
Cedent by agricultural producers (“Producers”)
in respect
of Maize supplied by the Cedent and/or agricultural produce
(“produce”) purchased from Producers and sold
to buyers
of the produce from time to time, upon the terms and conditions set
out in this agreement.”
[22]
In
terms of clause 1, only income derived by Kirsten from the supply of
maize to maize producers and/or agricultural produce purchased
from
agricultural producers and sold to buyers of the produce, was ceded
to Standard Bank. This entails that Standard Bank has
no claim to the
proceeds of Kirsten’s 2015 maize crop.
[23]
In
order to overcome this difficulty, Standard Bank first of all
submitted that the clause should be properly interpreted to include
a
cession of crop income sold, not only to agricultural producers, but
to any other party.
[24]
The
relevant allegations in the particulars of claim pertaining to the
interpretation of clause 1 reads as follows:
“
21.
Properly construed and interpreted, the material and express,
alternatively implied, further alternatively,
tacit terms of the
plaintiff’s deed of cession include the following:
21.1
Kirsten ceded and transferred in favour of the plaintiff all
Kirsten’s rights in and to Kirsten’s
entire maize crop
and all income and/or monies due and to become due to Kirsten in
respect of maize supplied and sold by Kirsten
and/or agricultural
produce purchased from agricultural producers and sold to buyers of
the produce from time to time (clause 1);”
Legal
principles
[25]
In
adjudicating Standard Bank’s claim for the correct
interpretation of clause 1, it is apposite to first have regard
to the legal principles applicable to the interpretation of
contracts.
[26]
The
City of Tshwane Metropolitan Municipality v Blair Atholl Homeowners
Association
(106/2018)
[2018] ZASCA 176
(3 December 2018) (“the
Tshwane
judgment”) is the most recent Supreme Court of Appeal judgment
in respect of the principles pertaining to the interpretation
of
contracts.
[27]
After
referring to divergent views expressed by authors on the subject and
contained in case law, the court remarked as follows
at paragraph
[61]:
“
[61]
It is fair to say that this court has navigated away from a narrow
peering at words in an agreement
and has repeatedly stated that words
in a document must not be considered in isolation. It has repeatedly
been emphatic that a
restrictive consideration of words without
regard to context has to be avoided. It is also correct that the
distinction between
context and background circumstances has been
jettisoned.
[1]
This court, in Natal Joint Municipal Pension Fund v Endumeni
Municipality
2012 ZASCA 13
;
2012 (4) SA 593
(SCA), stated that the
purpose of the provision being interpreted is also encompassed in the
enquiry. The words have to be interpreted
sensibly and not have an
un-business-like result. These factors have to be considered
holistically, akin to the unitary approach.”
[28]
The
court emphasised that the point of departure is the language of the
document in question. The
dissénsus
of
the parties appears after all from the written document which in turn
identifies the justiciable issue. Save for the content
of the
document, extrinsic evidence to contextualise the document may also
be led. [See: par [66] of the
Tshwane
judgment.]
[29]
Guidance
in the process to be undertaken is found in paragraph [71]:
“…
.Clause
6.16 has to be interpreted in relation to the other material clauses
and with regard to the factual matrix underlying its
conclusion,
including its purpose. It has to be interpreted sensibly with a
business-like result. We will, in due course, deal
with the
admissibility of evidence concerning negotiations and the exchanges
between the parties during that process.”
[30]
In
respect of the admissibility of evidence in relation to negotiations,
the court held as follows at paragraphs [76] and [77]:
“
[76]
Insofar as the admissibility of evidence in relation to negotiations
is concerned, this court has recently,
in Van Aardt v Galway
2012
(2) SA 312
(SCA),
para 9, with reference to Van Wyk v Rottcher’s Saw Mills (Pty)
Ltd
1948
(1) SA 983
(A)
at 991, reaffirmed that evidence of the intention of the parties of
their prior negotiations is inadmissible. In Delmas Milling
Co. Ltd v
Du Plessis
1955
(3) SA 447
(A),
at 454, the court excluded, as a general rule, reference to ‘actual’
negotiations and ‘similar statements’.
It is true that at
455A-C there is a suggestion that ‘conceivably’, in
contractual cases where, after regard is had
to surrounding
circumstances, the ambiguity in a written text persisted, one could
have regard to what passed between the parties.
It must be understood
that this statement followed on what was understood to be admissible
in relation to testamentary documents.
It is also true that in
Coopers & Lybrandt & others v Bryant
[1995]
ZASCA 64
;
1995
(3) SA 761
(A),
at 768D-E, the passage from Delmas at 455A-C is cited as support for
the view that evidence of negotiations could, in the face
of enduring
ambiguity, be admitted.
[2]
[77]
In our view, Van Aardt and Van Wyk should be followed. It would be in
line with the parol evidence
rule which we imported and have
maintained and it is consonant with the modern approach to
interpretation of contracts in English
law, the development of which
mirrors developments in our law. Allowing evidence in relation to
negotiations will see further extensive
evidence being led and will
have the effect of minimising the words the parties have chosen to
employ. Endumeni rightly emphasises
the significance of the words the
parties have chosen to record their agreement, though not above
context.
[3]
Permitting evidence of negotiations will lead to further uncertainty.
The words, as an objective measure, are elevated above the
partisan
positions of parties in negotiations and litigation.”
Evidence
[31]
Having
established the legal principles, the evidence produced by Standard
Bank in respect of the context, factual matrix underlying
the
conclusion of the cession and its purpose, needs to be considered.
[32]
In
doing so, I will disregard any evidence that pertains to the
intention of Standard Bank and Kirsten and to their prior
negotiations.
[33]
Standard
Bank in the past and prior to the conclusion of the 2011 cession
provided credit facilities to Kirsten. The facilities
were reviewed
annually. During September 2011, Mr Lood Mathee (“Mathee”),
the relationships manager at Standard Bank’s
Schweizer-Reneke
branch, attended to the annual review of Kirsten’s credit
facilities.
[34]
The
review included a request by Kirsten for an overdraft facility in the
amount of R 8 million as working capital to
plant 4500
hectares of maize. Mathee, in an internal memo, summarised the
request as follows:
“
Recommendation:
Increased requested in FBC Kirstens name to R8 million as he plants
4500 hectares. In the past Senwes assisted him
with R4 million
production, but will not make use of that this year. The rest of his
input costs will be provided for by selling
the remaining 22 000
tons of maize in the silos [see attached print out]. He will run
short on about R8 million which
he wants to lend from us. FBC
Kirstens financial position extremely strong and trading profitable.
Equity supports the request
and although the facilities are
unsecured, we don’t foresee it at risk as his boerdery praktyke
is outstanding. Harvested
32 000 tons for the last season
despite the wet conditions he had. Very well conducted accounts and
very well respected in
farming community. Positive CFP’s.
Recommend the increase in assistance.
”
[35]
At
that stage Standard Bank did not hold any security for the monies
advanced to Kirsten.
[36]
Mathee
recommended the overdraft facility and forwarded his recommendation
to Winnie Pienaar, a credit evaluation manager of Standard
Bank.
[37]
Pienaar
sanctioned the request subject to certain suspensive conditions. One
of the conditions required a cession of crop income
from Kirsten.
[38]
In
order to comply with the suspensive condition, the 2011 cession was
drafted and signed by Kirsten.
Discussion
[39]
The
obtaining of security for moneys lent and advanced by Commercial
banks is a well-known business practice. In the present instance
Standard Bank was requiring security in respect of an overdraft
facility to be utilised as working capital in the production of
maize. The security so required was contained in the Deed of Cession.
[40]
A
cession is an act of transfer to enable the transfer of a right to
claim (
translatio
juris)
to
take place. In
Johnson
v Incorporated General Insurances Ltd
1983
(1) SA 318
AD the nature of a cession agreement was described as
follows at 319G:
“
It is
accomplished by means of an agreement of transfer
(“oordragsooreenkoms”) between the cedent and the
cessionary
arising out of a justa causa from which the intention of
the cedent to transfer the right to claim to the cessionary (animus
transferendi)
and the intention of the cessionary to become the
holder of the right to claim (animus acquirendi) appears or can be
inferred.”
[41]
In
casu
,
Standard Bank’s interpretation claim is aimed at broadening
Kirsten’s “
right
to claim”.
[42]
In
terms of clause 1 the “
right
to claim”
that was ceded by Kirsten to Standard Bank, consists of:
[42.1] all
income and/or moneys due or to become due to Kirsten
by agricultural
producers in respect of maize supplied by Kirsten; and
[42.2] all
income and/or moneys due or to become due to Kirsten
for agricultural
produce purchased by Kirsten from producers and sold to buyers from
time to time.
[43]
This
is what Kirsten offered and what Standard Bank was prepared to
accept.
[44]
Mr
Lüderitz SC, counsel for Standard Bank, disagrees. Having
referred to a plethora of reported cases, he submitted as follows:
“
In the present
instance, specific regard is to be had to the uncontested (i)
specific context, and surrounding circumstances leading,
and
accompanying intention of the parties pertaining to Standard Bank’s
calling for, and Kirsten’s furnishing of, the
Standard Bank
2011 cession and that Kirsten himself was an agricultural producer.”
[45]
The
reference to the surrounding circumstances (negotiations) and the
intention of the parties is, in view of the
Tshwane
judgment,
manifestly wrong.
[46]
Having
regard to the context and factual matrix pertaining to the conclusion
of the cession, Mr Lüderitz SC, submitted that
the reference to
“
Agricultural
Producers”
did
not make sense. Kirsten himself is a producer of maize and the
possibility that he will supply/sell his maize to other “
Agricultural
producers”
was, although possible, very slim. The income to be derived from
supplying maize to “
Agricultural
producers”
would most probably not realise.
[47]
In
the result, Mr Lüderitz SC, urged this court to give a
reasonable, sensible, and business-like meaning to the words
contained
in clause 1.
[48]
Does
the present wording of clause 1 lead to an absurdity or to an
un-business-like agreement? It is not clear why the drafter of
the
deed of cession limited the cession to income and/or monies due and
to become due from maize supplied by Kirsten to Agricultural
producers and/or agricultural produce purchased from Agricultural
producers and sold to buyers of the produce from time to time.
It is
possible for Kirsten to supply maize to other agricultural producers
and to derive an income from such supply. It is also
possible to
purchase agricultural produce from agricultural producers and sell
the products to buyers. Both activities will therefore
render an
income.
[49]
Standard
Bank’s proposed interpretation of clause 1 will no doubt be
more advantageous to Standard Bank’s claim.
[50]
The
mere fact that Standard Bank chose to limit the cession might not
make good business sense, but it does not result in an absurdity
that
justifies a detraction from the clear wording of clause 1. The
principles applicable to the interpretation of contracts, does
not
allow for an interpretation on the sole ground that it would put the
party claiming the interpretation in a better position.
[51]
In
the premises, Standard Bank’s claim in respect of a proper
interpretation of clause 1 is dismissed.
RECTIFICATION
[52]
Standard
Bank’s claim for the rectification of clause 1 of the deed of
cession is pleaded as follows:
“
22. In
the alternative to paragraph 21.1 above, clause 1 of the plaintiff’s
deed of cession (annexure POC11)
falls to be rectified in the
following circumstances and in the respects set out below:
22.1
the express wording of clause 1 of the plaintiff’s deed of
cession does not correctly record
the true consensus and common
intention of the plaintiff and Kirsten:
22.2
clause 1 of the plaintiff’s deed of cession should have
recorded the following (and which would
have recorded the true
consensus and common intention of the parties thereto):
“
1.
Giving of
cession
I, Frederik Barend
Christoffel Kirsten (700407 5240 080) (“Cedent”) cede and
transfer in favour of The Standard Bank
of South Africa Limited (“the
Bank”), or anyone who takes transfer of the Bank’s rights
under this cession, all
the Cedent’s rights in and to the
Cedent’s entire Maize crop and all income and/or moneys due and
to become due to
the Cedent in respect of Maize supplied and sold by
the Cedent and/or agricultural produce (“produce”)
purchased from
agricultural producers and sold to buyers of the
produce from time to time, upon the terms and conditions set out in
this agreement.”
22.3
the failure in clause 1 of the plaintiff’s deed of cession to
record the said true consensus
and common intention was occasioned by
a common and bona fide error in the drafting of clause 1 of the
plaintiff’s deed of
cession and the furnishing of the
plaintiff’s deed of cession; and
22.4
Kirsten signed and executed the plaintiff’s deed of cession,
and the plaintiff accepted same,
in the bona fide, but mistaken,
belief that clause 1 of the plaintiff’s deed of cession
recorded the correct and true intention,
understanding and agreement
between them.”
Legal
requirements
[53]
In
Amlers
Precedents of Pleadings
7
th
Edition LexisNexis South Africa by LTC Harms at page 336 it is stated
as follows:
“
The following
facts must be alleged and proved:
(a)
An agreement
between the parties which was reduced to writing.
(b)
That the
written document did not reflect the common intention of the parties
correctly. The common continuing intention of the
parties, as it
existed when the agreement was reduced to writing, must be
established. It maybe deduced from an antecedent agreement,
for
instance.
(c)
An intention
by both parties to reduce the agreement to writing.
(d)
A mistake in
the drafting of the document.
The mistake must have
been the result of:
(i) a bona
fide mutual error; or
(ii) an
intentional act of the other party.
(e)
The wording
of the agreement as rectified. It does not suffice to give the
general import of the common intention.”
[References to
authorities omitted.]
Evidence
[54]
Mathee
during his evidence made it clear that he was a mere conduit between
Kirsten and Standard Bank. He had no authority to approve
Kirsten’s
credit application. Mathee, furthermore, was not authorised to reach
an agreement with Kirsten on the terms and
conditions pertaining to
the granting of credit to Kirsten.
[55]
As
a consequence, his evidence did not take Standard Bank’s claim
for rectification any further.
[56]
Pienaar,
in her capacity as credit evaluation manager, was authorised to
approve Kirsten’s credit application on terms and
conditions
she deemed fit. Pienaar, however, did not interact with Kirsten
directly and relied on Mathee to facilitate communication
between
herself and Kirsten.
[57]
Pienaar
testified that she received the internal memo from Mathee, referred
to
supra
,
in respect of Kirsten’s request for credit facilities for the
2011 / 2012 financial year. On 29 September 2011, Pienaar
informed
Mathee via an internal memo that Kirsten’s request for an
overdraft increase to the amount of R 8 million
for working
capital requirements was sanctioned (approved). The internal memo
clearly indicates that the expiry date of the sanction
was 30
September 2011.
[58]
The
approval was subject to the following suspensive conditions:
“
The increased
limit is subject to the confirmation of the settlement of the
outstanding debt at Suidwes Co-op.
Cession of
crop
income as well as confirmed in writing by the co-op.
Acceptable proof being
provided of the maize being held by the Co-op.”
[own emphasis]
[59]
Kirsten,
after some hesitation, agreed to the conditions and on 15 November
2011 Mathee completed a document titled “
COLLATERAL
PREPARATION DETAILS”
.
Under the heading “
Select
documents to be prepared”,
Mathee
chose “
Pledges
and Cessions”
and
under the heading “
Items
to be Pledged / Ceded”
he
indicated “
Moneys
due or to become due”
.
[60]
Under
the heading “
Moneys
due and to become due”
,
the following is stated:
“
1.
Amount of Pledge / Cession
:Unrestricted/R
2.
Full name(s) and ID / Reg. number(s)
of
debtor(s) i.e. The person / entity that
owes
the money to our customer
:Suidwes Landbou [edms] Bpk
3.
Address(es) of debtor(s)
:PO Box 6 Leeudoringstad 1840”
[61]
Mathee
further indicated that the cession is on maize.
[62]
The
document was forwarded to Standard Bank’s collateral division
for the drafting of the deed of cession.
[63]
An
overdraft agreement was prepared by Standard Bank’s Credit Risk
division and forwarded to Mathee for signature. The document
reflects
the R 8 million overdraft facility and deals with collateral in
clause 14. The clause reads as follows:
“
14
Collateral
14.1
Collateral required:
FBC Kirsten
-Cession of
crop
income (confirmed in writing by the Co-Operation)”
[own emphasis]
[64]
Both
the overdraft agreement and the cession was signed by Mathee and
Kirsten on 22 November 2011.
[65]
Pienaar
testified that once the agreement was reached between herself and
Kirsten in respect of the cession of crop income, the
agreement was
communicated to the security division. She has no say in the wording
or content of the Deed of Cession. Her involvement
in the transaction
terminates once she had sanctioned the facility.
[66]
Pienaar
explained that a pre-drafted template is used to prepare the Deed of
Cession. She has no insight in the document and does
not know what is
contained therein.
[67]
For
reasons unknown to the court, the drafter of the Deed of Cession was
not called as a witness. It is, however, noteworthy that
the content
of a letter that accompanied the Deed of Cession differs
substantially from the wording of clause 1. The letter was
addressed
to Suidwes and reads as follows:
“
PLEDGE OF
CROPS AND CESSION OF CROP INCOME:
Frederik Barend
Christoffel Kirsten ([….])
The abovementioned party
has pledged and ceded the following to our bank as continuing
security:
•
all
crops, including but not limited to Maize, whether purchased,
produced, yielded or acquired;
and
•
all
rights, title, interest and claims of whatsoever nature and howsoever
occurring, arising out of and in connection with the sale
proceeds of
all crops, as described above.”
[68]
The
reference to “
crops”
is clearly incorrect. Pienaar confirmed during cross-examination that
a cession can only be obtained in respect of crop income.
[69]
Save
for the aforesaid, the words “
and/or
agricultural produce (“produce”) purchased from
agricultural producers and sold to buyers of the produce from
time to
time, upon the terms and conditions set out in this agreement.”
,
was according to Pienaar’s evidence never discussed or agreed
upon by herself and Kirsten.
[70]
It
is clear that the drafter of the Deed of Cession and the letter had
no idea what the agreement between Pienaar and Kirsten was.
The use
of templates by Standard Bank coupled with the fact that the drafter
of the document does not have any knowledge of the
exact agreement
between the parties is unfortunate, to say the least.
[71]
The
facts pertaining to the common intention of Pienaar, on behalf of
Standard Bank and Kirsten are therefore the following:
[71.1]
on 16 September 2011 Kirsten requested an overdraft facility of
R 8 million for working capital to plant
4500 hectares of
maize. The facility pertained to the 2011/2012 planting season.
[71.2]
Pienaar was prepared to grant the facility, but clearly stated that
the facility will terminate on 30 September 2012.
The facility was
further granted on condition that Kirsten provided a cession of
“
crop”
income. In view of the fact that the
overdraft facility was only for the 2011/2012 season coupled with the
fact that the facility
expired on 30 September 2012, the reference to
“
crop”
could only be the crop of the 2011/2012
season.
[72]
There
is simply no evidence that either Pienaar or Kirsten envisaged and/or
intended that the cession will pertain to the income
of future maize
crops. To the contrary, Pienaar testified that she was only concerned
with security for the overdraft increase
in respect of the 2011/2012
financial year.
[73]
In
the result, Pienaar’s evidence fells foul of the requirement
that “
the
common
continuing
intention of the parties, as it
existed
when the agreement was reduced to writing, must be established.”
[74]
In
the premises, the rectification contended for by Standard Bank does
not reflect the true consensus between Pienaar and Kirsten
and is
dismissed.
CONCURSUS
CREDITORUM
[75]
Should
I be incorrect in respect of the rectification claim, the question
arises whether it is possible to claim rectification after
concursus
creditorum
.
[76]
Concursus
was
established on 24 April 2016 when the provisional order for
sequestration was issued.
[77]
Mr
Terblanche SC, counsel for the Trustees, submitted that once
concursus
has
been established rectification of an agreement entered into
pre-sequestration is no longer possible. Should rectification be
granted, Standard Bank will be in a better position than it was when
concursus
was
established. Rectification would, as a result, have a negative impact
on the rights of other creditors.
[78]
The
principle that rectification may not be claimed after
concursus
has
been established is trite and appears from a long list of authorities
dating back to 1911. Innes JA stated the following in
Walker
v Syfret
NO
1911 AD 141:
“
The sequestration
order crystallises the insolvent's position; the hand of the law is
laid upon the estate, and at once the rights
of the general body of
creditors have to be taken into consideration. No transaction can
thereafter be entered into with regard
to estate matters by a single
creditor to the prejudice of the general body. The claim of each
creditor must be dealt with as it
existed at the issue of the order
.”
[79]
In
Ward
v Barrett N.O and Another
1963
(2) SA 546
AD, Steyn JA remarked as follows at 552H–553A in
respect of a claim for the registration of a notarial bond after
concursus
:
“
At that date, the
appellant was entitled to claim registration of the notarial bond.
But a concursus having supervened, she could
not bring an action
against the first respondent for specific performance (cf. Harris v
Trustee of Buissinne,
2 Menz. 105
; Lucas’Trustee v Ismail and
Amod
1905 T.S. 239
at p. 248), and the latter had no authority to
accede to any such claim, as the interests of other creditors will
inevitably have
been prejudiced thereby. The appellant’s
personal right to the registration of the bond, could, therefore, not
be converted
into a jus in rem under a registered bond.”
[80]
The
authority in
Ward
supra
was
followed in
Durmalingam
v Bruce N.O.
1964 (1)
SA 807 DCLD, which dealt with the rectification of a notarial bond
post
concursus
.
At 811 G–H, the court held as follows:
“
At
that date, the respondent was merely a concurrent creditor insofar as
the proceeds of realisation of the certificates relating
to the
International bus are concerned. Assuming the correctness of the
facts alleged in the declaration, the respondent was, at
that date,
entitled to claim rectification of the notarial bond so as to give
him a preference in respect of such proceeds. The
respondent’s
personal right against the insolvent could not be converted in a jus
in rem under a registered bond. A mistake,
moreover, can be rectified
only so long as third parties are not injured thereby. Weinerlein v.
Goch Buildings Ltd.,
1925 A.D. 282
at p. 291
.”
[Also see:
Nedbank Ltd v Chance and Others
2008 (4) SA 209
D&CLD at
par [9].]
[81]
Mr
Lüderitz SC contended that the decision in
Nedbank
supra
was clearly wrong and should not be followed. The decision was,
however, based on the long line of authorities on the subject of
altering a creditor’s rights post
concursus.
Paragraph
[9] of the judgment reads as follows:
“
[9]
On liquidation and by operation of the common law a concursus
creditorum (concourse of creditors)
comes into existence. The effect
of a liquidation order is that it:
‘
crystallises
the insolvent’s position; the hand of the law is laid upon the
estate, and at once the rights of the general
body of creditors have
to be taken into consideration. No transaction can thereafter be
entered into with regard to estate matters
by a single creditor to
the prejudice of the general body.
The
claim of each creditor must be dealt with as it existed at the issue
of the order
.’
[4]
[emphasis
added]
The
insolvent estate is ‘frozen’ and nothing can thereafter
be done by any one creditor that would have the effect of
altering or
prejudicing the rights of other creditors.
[5]
As
between the estate and the creditors and as between the
creditors inter se, their relationship becomes fixed and their
rights and obligations become vested and complete.
[6]
One
consequence of this is that a creditor who at the date of winding-up
was only a concurrent creditor cannot by rectification
of an
agreement alter its position to become a preferent or secured
creditor as this would disturb the concursus.
[7]
The
same must hold for a creditor who seeks rectification to improve its
position from that of a preferent creditor in a certain
amount, to a
preferent creditor in a greater amount. This approach is in line with
the general principle that the claim of each
creditor must be dealt
with as it existed at the date of liquidation. Rectification
post concursus would almost inevitably
prejudice the rights
of other creditors.
”
[82]
It
does not assist Standard Bank to simply assert that the decision in
Nedbank
is
wrong without dealing with each of the authorities on which the
judgment is premised.
[83]
Without
convincing argument and reference to authorities that hold different
views, I am not prepared to interfere with the clear
reasoning and
finding of the court in
Nedbank
supra
.
[84]
In
the premises, the rectification claim could in any event not have
succeeded in view of the
concursus
creditorem
principle.
RESULT
[85]
As
a result of the findings
supra
,
the remainder of the relief claimed by Standard Bank against the
Trustees, Suidwes, the Landbank and Silostrat falls away.
TECHNICHEM
[86]
In
order to adjudicate Technichem’s claim in respect of the
ranking of its cession, it is necessary to have regard to Suidwes
and
the Landbank’s contending claims. It is common cause that
Technichem’s cession in respect of the proceeds of the
2015
crop was executed on 5 October 2014. Suidwes’ cession for the
same crop proceeds was executed on 28 October 2014. In
the result,
Technichem’s cession precedes Suidwes’ cession. As will
appear more fully
infra
Suidwes
ceded its rights in terms of the 28 October 2014 cession to the
Landbank.
[87]
Although
it is common cause that Technichem’s 2014 cession precedes
Suidwes’ 2014 cession, Suidwes and/or the Landbank
claim that
they are still entitled to Kirsten’s 2015 crop income by virtue
of previous cessions and a General Notarial Bond
coupled with a
perfection agreement.
Suidwes
and/or the Landbank
2009 to
2013 cessions:
[88]
In
Suidwes’ plea, the following is alleged in respect of the 2009
to 2013 cessions:
“
12.2.1 during
the period 2009 to 2013, Kirsten acting personally
and the second
defendant, duly represented, entered into written revolving credit
facilities, true copies of which are attached
as “S1” to
“S5”.
12.2.2 during
the period 2009 to 2013, Kirsten executed
cessions in favour of the
second defendant, true copies of which are attached as “S6”
to “S10”.
12.2.3 in
terms of each of the cessions, Kirsten ceded
to the second defendant
his right, title and interest in the total proceeds of crops for the
2009 to 2014 production seasons
and
for all future crops which Kirsten may in the future plant;
”
[own emphasis]
[89]
In
the premises, the question arises whether the 2009 to 2013 cessions
pertain to future crop income, including the 2015 crop income.
[90]
Each
of the cessions define the “
right
to claim”
i.e. the subject-matter of the cession in similar terms. The first
cession signed during 2008 reads as follows:
“
1.
Die kliënt sedeer hiermee aan Suidwes, wat die sessie aanvaar,
al die kliënt se reg,
titel en belang in die totale opbrengs van
alle oeste wat gedurende die 2009 produksieseisoen geproduseer word,
van watter aard
ook al en waar ook al verbou, wat-
1.1
reeds
deur die kliënt ingesamel, maar nog nie te gelde gemaak is nie;
1.2
reeds
aangeplant is, maar wat nog op die land is; en
1.3
alle
oeste wat die kliënte in die toekoms mag aanplant.
”
[91]
“
Alle
oeste”
(all
crops) in clause 1 is defined as all crops that has or will be
cultivated during the 2009 season. In other words, only the
2009 crop
income is ceded in terms of the cession.
[92]
The
reference in clause 1.3 to all crops that may be planted in future,
clearly refers to crops that might be planted after signature
of the
cession. Such crops will, as a result, still form part of the 2009
production season.
[93]
In
support for its contention that the cession includes future crops,
Suidwes relies on clauses 2 and 3, which read as follows:
“
2.
Die sessie dien as sekuriteit vir die behoorlike betaling deur die
kliënt aan Suidwes van
alle gelde wat tans aan Suidwes
verskuldig is of in die toekoms verskuldig mag word ontstaande uit
watter skuldoorsaak ook al.
3.
Hierdie sessie neem ‘n aanvang op datum van ondertekening
hiervan deur die kliënt
en bly van krag totdat alle bedrae wat
aan Suidwes verskuldig is deur die kliënt betaal is en Suidwes,
na betaling van sodanige
bedrae, die sessie skriftelik gekanselleer
het.
”
[94]
In
view of the clearly defined subject-matter that was ceded, i.e. the
crop income of the 2009 production season, the words “
Die
sessie”
(this
cession) in clause 2 and “
Hierdie
sessie”
(this
cession) in clause 3 pertain to the crop income of the 2009
production season. Once the 2009 crop income is depleted, the
subject-matter that was ceded ceases to exist.
[95]
Consequently,
reliance on the 2009 to 2013 cessions does not assist Suidwes and/or
the Landbank in their claim to the entire 2015
crop income.
General
Notarial Bond
and
Perfection Agreement
[96]
The
allegations pertaining to the General Notarial Bond and Perfection
Agreement read as follows:
“
12.2.4 on
6 May 2014, Kirsten registered a general notarial bond
in favour of
the second defendant under registration number BN14/18473 (‘the
notarial bond”), a true copy of which
is attached as “S11”;
12.2.5 In
terms of the notarial bond, Kirsten inter
alia: (a) agreed that all
his movable assets would serve to secure his indebtedness to the
second defendant; and (b) ceded to the
second defendant all his
incorporeal assets;
12.2.6
….
12.2.7 on
28 August 2013 and at Centurion, the second
defendant duly
represented by LJ Smit and the fourth defendant, duly represented by
Theuns Coetzee and Vincent Potloane, entered
into a written Sale
Agreement (“the Sale Agreement”), a true copy of which is
attached as “S12”;
12.2.8 on
26 August 2013 at Centurion, the second defendant
and the fourth
defendant duly represented as aforesaid, entered into a written
Service Level Agreement (“the SLA”).
A true copy of the
SLA, is attached marked “S13”
.
12.2.9 in
terms of the sale agreement the second defendant
agreed to cede to
the fourth defendant its existing and future “A” Sale
Book Debts and “B” Sale Book Debts
including all right,
title and interest both present and future, in and to the related
security (clause 6 of the sale agreement);
12.2.10 the
debts of Kirsten to the second defendant formed part
of the A Sale
Books Debts [with the exception of the month account and code 10
account] and are secured inter alia by the cessions
(annexures S1 to
S10) which constituted the “related security” and the
notarial bond (annexure S11) which constituted
the “real
security” as contemplated in clause 6 of the Sale Agreement.
12.2.11 the
fourth defendant therefore became the cessionary of
the claims of the
second defendant against Kirsten, the cessionary in terms of the
cessions and the holder of the notarial bond;
and
12.2.12 notwithstanding
the cession to the fourth defendant, the
second defendant remains a
concurrent creditor of the estate in the amount of R93,925.67 in
terms of a month account.
”
[97]
In
terms of the Sale Agreement dated 27 August 2013, Suidwes sold and
ceded its present and
future
claims against Kirsten to the Landbank. The agreement excluded
Kirsten’s code 10 and monthly account.
[98]
As
a consequence, Suidwes was divested from its right to claim payment
from Kirsten in respect of the debts it ceded to the Landbank.
At the
conclusion of the cession agreement, the Landbank as cessionary
became entitled to the right transferred in terms of the
cession.
[See:
First
National Bank of SA Ltd v Lynn NO and others
[1995] ZASCA 158
;
1996
(2) SA 339
AT 345 G-J.]
[99]
The
General Notarial Bond was registered on 6 May 2014 over all the
specified corporeal and or incorporeal movable goods of Kirsten.
The
Bond was registered in favour of Suidwes in respect of any debt owed
by Kirsten to Suidwes. At that stage, Kirsten was indebted
to Suidwes
in the amount of R 122 613, 77 in respect of the monthly
account.
[100]
The
security held by Suidwes in terms of the Bond, i.e. the real right,
was ceded to the Landbank on 6 May 2014. Suidwes, however,
did not
cede its personal right to claim the amount due by Kirsten in terms
of the monthly account to the Landbank. The Landbank
as a result
obtained security for a debt owed to Suidwes and Suidwes was in turn
divested of its security.
[101]
The
Agreement to Perfect the General Notarial Bond (Perfection Agreement)
was concluded between Kirsten and Suidwes on 8 May 2015.
In view of
the cession of its security in terms of the Bond to the Landbank,
Suidwes could no longer exercise its rights in terms
of the Bond.
[102]
In
the result, neither the Bond not the perfection agreement provides
security to either Suidwes or the Landbank.
[103]
Consequently,
Technichem’s cession in respect of Kirsten’s 2015 crop
income precedes Suidwes and/or the Landbank’s
cession.
SILOSTRAT
[104]
Silostrat’s
claim is based on three written sale agreements in terms of which it
purchased 35 000 tons of maize from
Kirsten. Upon conclusion of
the agreements with Kirsten, Silostrat immediately re-sold the maize
and had to deliver the maize thus
sold on the same day that Kirsten
had to deliver in terms of the three purchase contracts concluded
with him.
[105]
It
is common cause that Kirsten failed to deliver any maize in terms of
the three purchase agreements to Silostrat. Kirsten did
deliver
22 619, 52 tons of maize to Suidwes’ silos.
[106]
As
a consequence of Kirsten’s breach of contract, Silostrat had to
purchase maize of the same quality as reflected in the
three purchase
agreements to enable it to comply with its obligations in terms of
the re-sale agreements entered into by Silostrat,
subsequent to the
purchase agreements entered into with Kirsten.
[107]
In
the premises, Silostrat alleges that it had suffered damages in the
amount of R 35 288 000, 00.
Conditional
counterclaim: Standard Bank
[108]
Silostrat’s
conditional counterclaim against Standard Bank is premised on the
following allegations:
“
5.6.5
Third Defendant contends that:
5.6.5.1 ….
5.6.5.2 In
the event of the Court finding that rights acquired by Second
Defendant
in terms of a Deed of Cession as reflected in Annexure
“POC22” to the Particulars of Claim trumped and/or
supersede
Plaintiff’s rights in respect of the Deed of Cession
reflected in Annexure “POC11’ to the Particulars of Claim
and the sale of 35 000 tons of maize by Kirsten to Third
Defendant is unenforceable and/or void ab initio, that:
5.6.5.2.1 Plaintiff
breached the duty upon it to ensure that the maize produced by
Kirsten was unencumbered and Kirsten’s rights thereto
unassailable; and to prevent damages to Third Defendant;
5.6.5.2.2 Plaintiff
acted negligent because Plaintiff did not take all reasonable
steps
to establish the existence of the Deed of Cession in favour of Second
Defendant: and
5.6.5.2.3 But
for the breach of duty and the negligence referred to above, the
agreements
reflected in Annexures “POC23”, “POC24”
and “POC25” would not have been concluded, and Plaintiff
would not have suffered any damages;
5.6.5.2.4 consequently
Plaintiff is liable to make payment of the damages suffered
by Third
Defendant to it:”
[109]
A
defendant may, in terms of the provisions of rule 24(4) of the
Uniform Rules of Court, counterclaim conditionally upon the claim
or
defence in convention failing. “
Conditional”
is defined in the
Shorter
Oxford English Dictionary,
Vol
1, 5
th
edition as:
“
Subject to one or
more conditions; depending (on, upon); not absolute; made or granted
on certain conditions or terms.”
[110]
Silostrat’s
counterclaim against Standard Bank is subject to the following
conditions:
[110.1]
a finding that the rights acquired by Suidwes in terms of the Deed
of
Cession dated 28 October 2014 trumped and/or superseded Standard
Bank’s claim in respect of its Deed of Cession dated
22
November 2011; and
[110.2]
that the sale of 35 000 tons of maize by Kirsten to Silostrat
is
unenforceable and/or void
ab initio
.
[111]
In
respect of the of the first condition, I held that Standard Bank did
not have a valid cession in respect of Kirsten’s 2015
maize
crop income. I, furthermore, held that Suidwes’ Deed of Cession
dated 28 October 2014 is valid.
[112]
In
the result, the first condition pertaining to Standard Bank’s
conditional counterclaim has been met.
[113]
In
respect of the second condition, the parties agreed at the inception
of the trial that:
“
The parties admit
the fact, conclusion and terms of the three sale agreements in terms
of which the third defendant (Silostrat)
purchased quantities of
white maize from Kirsten as listed in paragraphs 5.1 and 5.1 of
Silostrat’s plea.”
[114]
Although
Suidwes held otherwise, the evidence overwhelmingly established that
Silostrat’s sale agreements are valid and enforceable.
[115]
This
finding is further borne out by the settlement agreement entered into
between the Trustees and Silostrat.
[116]
Consequently,
the second condition pertaining to Silostrat’s counterclaim
against Standard Bank was not met and the conditional
counterclaim is
dismissed.
Conditional
counterclaim against Suidwes
[117]
The
conditional counterclaim against Suidwes is premised on the following
averments:
“
5.6.1
Kirsten did not comply with his obligations in terms of the
agreements reflected in Annexures “POC23”,
“POC24”
and “POC25” to the Particulars of Claim; and did not
deliver any maize as he was obliged to do
in terms of the three
agreements to Third Defendant.
5.6.2
Second Defendant took
delivery of 22 619, 52 tons of maize produced by Kirsten; and
appropriated such maize as its own alternatively
disposed of the
maize, and refused to deliver any Maize to Third Defendant,
notwithstanding demand by Third Defendant for delivery
of Kirsten’s
maize in terms of the three purchase agreements.
5.6.3
As a result of the breach of contract by Kirsten and the
appropriation and/or disposal of the maize for
itself by Second
Defendant, Third Defendant had to purchase white maize of the same
quality as reflected in Annexures “POC23”,
“POC24”
and “POC25”, at a price of R 3 179-00, to enable
Third Defendant to comply with its obligations
in terms of the
re-sale agreements entered by Third Defendant, subsequent to the
purchase agreements entered into with Kirsten,
5.6.4
In the premises, Third Defendant suffered damages in an amount of
R 35 288 888-00 that is
R 1 008, 23 per ton, the
calculation of which appears from columns 4, 5 and 6 above.”
[118]
The
claim is couched as follows:
“
5.6.5.3 In
the alternative, and in the event of the Court finding that the
Second Defendant did not acquire rights in terms of the Deed of
Cession reflected in Annexure “POC22” to the Particulars
of Claim, and that the rights of the Second Defendant did not tramp
and/or supersede Plaintiff’s rights in respect of Plaintiff’s
Deed of Cession reflected in Annexure “POC11” to the
Particulars of Claim, Third Defendant contends that:
5.6.5.3.1 Second
Defendant unlawfully interfered with the rights obtained by Third
Defendant in terms of the three purchase agreements reflected in
Annexures “POC23”, “POC24”, and “POC25”,
whilst Second Defendant was under a legal duty according to the
convictions of the community not to do so, in particular because:
5.6.5.3.1.1 Second
Defendant was informed by Third Defendant of Third Defendant’s
right in terms
of the purchase agreements before appropriation and/or
disposal of the maize by Second Defendant; and
5.6.5.3.1.2 Second
Defendant had undertaken, orally and in writing, not to dispose of
the maize pending
determination of disputes relating to the rights,
title and interest in the maize. A copy of the written undertaking is
annexed
hereto as
ANNEXURE “Z”
.
5.6.5.3.2 Second
Defendant intentionally and recklessly took delivery and/or disposed
of 22 619. 52 tons of maize which had to be delivered to Third
Defendant, and which would have enabled Third Defendant to
partly
comply with its obligations in terms of the re-sale agreements
relating to the maize; and
5.6.5.3.3 Consequently
Second Defendant is indebted to make payment of the damages
suffered
by Third Defendant due to non-delivery of 22 619.52 tons of
maize to Third Defendant, amounting to R 22 805 646-34.”
[119]
It
is common cause that:
[119.1]
Suidwes was aware of the three sale agreements between Silostrat and
Kirsten in respect of the maize produced by Kirsten for the 2015
production season;
[119.2]
22 619, 52 tons of maize produced by Kirsten was delivered at
Suidwes’ silos;
[119.3]
Silostrat demanded delivery of the maize that Kirsten delivered at
Suidwes’ silos;
[119.4]
Suidwes did not deliver the 22 619, 52 tons of maize received
from Kirsten to Silostrat;
[119.5]
Silostrat had to purchase white maize of the same quality in order
to
fulfil its obligations in terms of the re-sale agreements; and
[119.6]
Silostrat suffered damages.
[120]
The
factual dispute pertains to the question whether Suidwes did
appropriate and/or disposed of the maize.
[121]
Should
the answer be in the affirmative, the legal question pertaining to
Suidwes’ liability for the damages suffered by Silostrat
arises.
Evidence
[122]
Silostrat
presented the evidence of Mr van Zyl (“Van Zyl”), a
director of Silostrat. Van Zyl confirmed that the three
sale
agreements were concluded with Kirsten and that Silostrat, in turn,
sold the maize purchased from Kirsten on the Johannesburg
Stock
Exchange (“JSE”).
[123]
Due
to the fact that Standard Bank financed the crop production costs,
Silostrat received a notification from Standard Bank of its
cession
on the crop income and a request that all monies received from the
sale of the maize be paid to Standard Bank.
[124]
Van
Zyl explained the business practice applicable to the grain industry.
In terms of the practice Kirsten had to deliver the maize
he had sold
to Silostrat at a silo registered with the Johannesburg Stock
Exchange (JSE) as a delivery point.
[125]
Once
the maize has been delivered to a silo, the operator of the silo
issues a silo certificate to the owner of the maize, in this
instance, Kirsten. The certificate is a negotiable instrument which
is delivered to the JSE. Once the certificate is delivered,
payment
of the amount agreed in the written sale agreement is made to the
owner of the maize. The silo certificate is then utilised
by
Silostrat to perform in terms of the back-to-back contracts it
concluded on the JSE.
[126]
Van
Zyl testified that he visited Kirsten towards the end of April 2015
to discuss the delivery of the maize. Kirsten indicated
that he would
prefer to deliver the maize at Suidwes’ Makwassie silos, as the
silos were the closest to his farms. Van Zyl
stated that the
Makwassie silos were registered as a delivery point at the JSE and
that he consequently had no problem with the
arrangement.
[127]
Van
Zyl confirmed that the crops were impressive and that he did not
foresee any problems with delivery.
[128]
Van
Zyl’s optimism was, however, short-lived. He testified that his
co-director, Mr Kruger (“Kruger”) during early
May 2015,
contacted a certain Anton Jordaan (“Jordaan”) at Suidwes
in order to appraise him of the delivery of the
35 000 tons of
maize. During the conversation, Jordaan informed Kruger that
Suidwes also had a right to Kirsten’s
crops.
[129]
On
5 May 2015 Suidwes forwarded a copy of the Deed of Cession that was
executed by Kirsten in its favour. The cession pertained
to the
income of Kirsten’s 2015 crop.
[130]
Silostrat
was requested to pay all income derived from the sale of the maize to
Suidwes.
[131]
Suidwes
was made aware of Standard Bank’s cession and in a letter dated
5 May 2015 directed to Silostrat and Standard Bank,
Suidwes gave an
undertaking that Kirstens’ 2015 crop will not be disposed of
pending the finalisation of any disputes in
respect of the right,
title and interest to the crop income.
[132]
During
cross-examination by Mr Daniels SC, counsel for Suidwes, Van Zyl
stated that their case against Suidwes is based on the fact
that
Suidwes took the maize that was delivered at its silos whilst being
fully aware of the contracts Silostrat had with Kirsten.
[133]
Van
Zyl admitted that Africum, a division of Suidwes, bought the maize
from Kirsten. Van Zyl, however, maintained that Africum is
part and
parcel of Suidwes and as a result Suidwes is the actual purchaser of
the maize.
[134]
Mr
Oelofse (“Oelofse”) from Quatro-Vest was the next witness
on behalf of Silostrat. Mr Oelofse’s evidence pertains
to the
business relationship between Standard Bank, Quatro-Vest and
Silostrat. His evidence did not take the conditional counter-claim
against Suidwes any further.
[135]
Mr
Kruger, also a director of Silostrat, testified next. He testified
that Silostrat had, at the time, a “
folio
number
”
with Suidwes. The folio number enabled grain producers to deliver
grain at a Suidwes silo to Silostrat.
[136]
Kruger
was referred to a document dated 26 May 2015, prepared on the
letterhead of Africum Commodities. The document is titled
“
Goedgekeurde
premies vir die 2015/16 lewering seisoen”
and indicates Kirsten as the producer. It contains detailed
information in respect of the tonnage of maize to be delivered, the
silo where the maize will be delivered as well as premiums pertaining
to transport and handling of the maize. The summary of the
information concludes with the word “
Basis”
against
which certain figures appear.
[137]
Kruger
responded that he was not sure what the document is, but that it
seemed to provide a basis on which Africum was prepared
to buy maize
from Kirsten.
[138]
During
cross-examination by Mr Daniels SC, Kruger testified that Suidwes
sold the maize delivered to its silo’s through Africum.
Kruger
confirmed that there was no contractual obligation on Suidwes to
deliver the maize deposited by Kirsten in its silos to
Silostrat.
Kruger, however, maintained that Suidwes was fully aware of the three
purchase contracts concluded between Silostrat
and Kirsten. In view
of the aforesaid knowledge, Suidwes should have accepted the maize on
behalf of Silostrat and not on its own
behalf.
[139]
Upon
further questioning, Kruger testified that Kirsten could have
delivered the maize on Silostrat’s folio number, but was
prevented by Suidwes from doing so. When Kruger could not provide the
name of the person at Suidwes who prevented Kirsten from
delivering
the maize on Silostrat’s folio number, he testified that
Kirsten was forced by Suidwes to deliver the maize to
them.
[140]
The
following exchange between Kruger and Mr Daniels SC is of particular
relevance to Silostrat’s claim against Suidwes:
“
MNR
DANIELS
:
Wie het die mielies by – gelewer by Suidwes?
MNR KRUGER
:
Ons weet mos meneer – U Edele, die mielies wat van –
volgens Suidwes se inligting
wat hulle verskaf het wat inlig, is ‘n
brief wat van mnr Kirsten by hulle gelewer is.
MNR DANIELS
:
Ja, wie was die eienaar van die mielies wat gelewer is by Suidwes
deur Mnr
Kirsten?
MNR KRUGER
:
Volgens die inligting verskaf deur Suidwes wat ek nou net gesien het,
is dit mnr Kirsten wat
dit gelewer het, U Edele, eksuus.
MNR DANIELS
:
En mnr Kirsten, as eienaar, kon besluit aan wie hy wil besit
oorhandig van die mielies, is
dit korrek?
MNR KRUGER
:
U Edele, hy kon besluit of hy kon geforseer geword het. Ek weet nie
wat gebeur het nie.”
[141]
That
concluded the evidence on behalf of Silostrat.
Discussion
[142]
In
its pleadings Silostrat relied on the following factual allegations
in support of its claim that Suidwes unlawfully interfered
with its
rights:
[142.1]
Suidwes was aware of Silostrat’s rights in terms
of the
purchase agreements with Kirsten when it appropriated and/or disposed
of the maize; and
[142.2]
Suidwes gave an undertaking not to dispose of the maize
pending
determination of the dispute between the parties.
[143]
It
became clear during the trial that Suidwes withdrew the undertaking,
relied upon by Silostrat, on 23 July 2008.
[144]
Silostrat
further alleges that Suidwes intentionally and recklessly took
delivery and/or disposed of 22 619.52 tons of maize
which had to
be delivered to Silostrat.
[145]
The
crux of the factual allegations is therefore, that Suidwes
appropriated
alternatively
took delivery
alternatively
disposed of the maize.
[146]
It
is common cause that Kirsten did deliver maize at Suidwes’
silos. There is, however, no evidence that Suidwes “
appropriated”
and/or
sold Kirsten’s maize. To the contrary and on Kruger’s
evidence, Kirsten delivered the maize on his own folio
number in his
own name and sold the maize to Africum.
[147]
In
the result, the evidence presented by Silostrat does not prove the
factual allegations relied upon in support of its condition
counterclaim against Suidwes and the conditional counterclaim is
dismissed.
COSTS
[148]
The
only remaining issue pertains to costs.
[149]
Standard
Bank’s claim against the Trustees, Suidwes and the Landbank
failed and costs should follow suit.
[150]
Silostrat’s
conditional counterclaims against Standard Bank and Suidwes failed
and as a result Standard Bank and Suidwes is
entitled to their costs.
[151]
Technichem’s
claim succeeded. In its particulars of claim, Technichem only
requested a cost order against Suidwes and such
order will follow.
ORDER
[152]
It
is ordered that:
1.
The
plaintiff’s claim against the first, second and fourth
defendants is dismissed with costs, which costs will include the
costs of two counsel.
2.
The
third defendant’s conditional counterclaim against the
plaintiff is dismissed with costs, which costs will include the
costs
of two counsel.
3.
The
third defendant’s conditional counterclaim against the second
defendant is dismissed with costs, which costs will include
the costs
of two counsel.
4.
The
fifth defendant’s deed of cession dated 5 October 2014 is valid
and enforceable.
5.
The
fifth defendant’s deed of cession dated 5 October 2014
pre-dates the cessions relied upon by the second and/or fourth
defendants in respect of Kirsten’s 2015 crop income.
6.
The
second defendant is ordered to pay the fifth defendant’s costs.
N. JANSE
VAN NIEUWENHUIZEN
JUDGE OF
THE HIGH COURT OF SOUTH AFRICA
GAUTENG
DIVISION, PRETORIA
DATE
HEARD
18
February 2019
JUDGMENT
DELIVERED
9 May 2019
APPEARANCES
Counsel
for the Plaintiff:
Advocate K.W.
Lüderitz SC and
Advocate G.E.
Amm
Instructed
by:
Norton Rose
Fulbright South Africa Inc
(011 685
8872)
Ref:
STD10438/Mr A Strachan/
Mr R Petersen
Counsel
for the First Defendant:
Advocate F.
Terblanche SC and
Advocate H.
Fourie SC
Instructed
by:
Loubser &
Loubser Attorneys
(012 997
0041)
Ref: J H
Loubser/LL0241
Counsel
for the Second and
Fourth
Defendants:
Advocate J.P.
Daniels SC and
Advocate J.
Smit
Instructed
by:
Cliffe Dekker
Hofmeyr Inc
(011 562
1356)
Ref: Mr. T
Jordaan
Counsel
for the Third Defendant:
Advocate B.
Bergenthuin SC and Advocate B.
Bergenthuin
Instructed
by:
Grimbeek Van
Rooyen
(
056
212 4251
)
Ref: Mr I van
Rooyen
Counsel
for the Fifth Defendant:
Advocate J.
Pretorius
Instructed
by:
Gerrit Coetzee
Inc
(
018
297 1310
)
Ref: Mr G
Coetzee
[1]
KPMG
Chartered Accountants (SA) v Securefin Ltd & another
2009 (4) SA 399
(SCA) A 409I-410A.
[2]
This
of course finds support by commentators in favour of the subjective
approach – like Myburgh and Kerr.
[3]
See
603F-604A and 604E-F.
[4]
P
er
Innes JA in
Walker
v Syfret
NO
1911
AD 141
at
166. Although these comments were made in respect of a sequestration
order, they are equally applicable to a liquidation order.
[5]
2
Vather
v Dhavraj
1973
(2) SA 232
(N)
at 236B-C.
[6]
3
Incledon
(Welkom) (Pty) Ltd v QwaQwa Development
Corporation
Ltd
[1990]
ZASCA 85
;
1990
(4) SA 798
(A)
at 803G-J.
[7]
Durmalingam
v Bruce
NO
1964
(1) SA 807
(D)
at 811G-H;
Thienhaus
NO v Metje & Ziegler Ltd
1965
(3) SA 25
(A)
at 30A-C;
Klerck
NO v Van Zyl & Maritz NNO
1989
(4) SA 263
(SE)
at 279F-G.