IN THE HIGH COURT OF SOUTH AFRICA
EASTERN CAPE DIVISION, MAKHANDA
NOT REPORTABLE
Case No.: CA113/2024
In the matter between:
SEARTEC TRADING (PTY) LIMITED Appellant
and
AGNI STEELS SA (PTY) LIMITED Respondent
JUDGMENT
EKSTEEN ADJP:
[1] The appellant, Seartec Trading (Pty) Limited (Seartec) sued the respondent, Agni
Steel s SA (Pty) Limited (Agni Steels) for payments due in terms of a rental agreement
concluded between the parties. The claim was met with a special plea in which Agni
Steels contended that Seartec had ceded its right title and interest in the rental agreement
2
to a third party before the issue of summons and, accordingly , it lacked locus standi in
iudicio . In a replication, Seartec admitted that it had ceded its rights under the rental
agreement , but contended that it had, before the issue of summons, cancelled the cession
and that the right of action had been ceded back to it. The issue of locus standi raised in
the special plea and replication was separated from the remaining issues in the action
and was decided in limine .1 The Regional Magistrate (the Magistrate) , Gqeberha, found
that Seartec had failed to establish its locus standi and dismissed its action, hence the
current appeal. Background [2] During June 2016 , a company known as Limtech Biometric Solutions (Pty) Limited
(Limtech) entered into an agreement with Agni Steels whereby Limtech would install
certain hardware and software at the premises of Agni Steels. They approached Seartec
to provide a financing solution. Accordingly, Seartec and Agni Steels concluded an
agreement (the rental agreement) whereby Seartec would finance the purchase of the
hardware and software and obtain ownership thereof , while Agni Steels would hire it from
them.
[3] The rental agreement provided for Seartec to cede its rights in terms of the
agreement to a third party, without notice to Agni Steels. Thus, on 20 November 2017,
Seartec ceded its rights under the rental agreement to the trustees for the time being of
the Rental Company Trust (RCT), thereby divesting itself of all its rights under the
1 In a rejoinder Agni Steels had contended that in the event that it is found that Seartec did have locus
standi, it was estopped from relying on the cancellation of the cession. The estoppel was not pursued .
3
agreement. However, as I have said, Seartec contended that the cession had been
cancelled and the debts ceded back to itself before the issue of summons on 24 October
2018, thus establishing its locus standi to enforce the terms of the rental agreement. This
second cession, back to Seartec, was the subject of the dispute at the trial.
[4] Mr Juan Laubscher, the chief executive officer of Seartec , was the only witness.
He explained that the rental agreement was the only agreement which existed between Seartec and Agni Steels. As I have said, it is common cause that the right , title and
interest in the rental agreement had been ceded to the RCT in November 2017. Mr
Laubscher explained that it had formed part of an overarching agreement in terms of which a number of rental agreements were sold to the RCT. The RCT paid an amount of
R171 935,49 (exclusive of VAT) for the rental agreement. It emerged from email correspondence received from one Peter France, a trustee of the RCT , in February 2018,
that the RCT were unhappy with the purchase price paid, which France contended had
been based on a misrepresentation in respect of the duration of the rental agreement.
The di sagreement persisted and on 12 April 2018, Mr France sent a further email to Mr
Laubscher in which he recorded that the agreement that he purchased was not reflective
of the sum paid. A series of emails followed to and fro. In the final email to Mr France,
Mr Laubscher recorded:
‘No problem, I will buy it back. No reason for us to have a dispute on it.’
[5] The offer was gratefully accepted by email on 13 April 2018, and Mr France
delegated the further conduct of the resale to one ‘Cindy’ , an employee of the RCT. Mr
4
Laubscher explained that Seartec then purchased the agreement back for a purchase
price of around R186 000,00. He personally instructed the payment to be made, although
he did not personally release it, and he presented a Standard Bank confirmation of
payment in support of the payment . The confirmation of payment reflects a payment
made from the account of Seartec to ‘The Rental Company’ in the amount of R186 893,81,
on 20 April 2018. In addition to the account name, the confirmation of payment reflects
an account number and a statement reference. Under cross -examination Mr Laubscher
was taxed in this regard and he said that he did not know from personal knowledge whose
account number was reflected there or what the statement reference was . He was also
unable to explain the difference between the purchase price paid by the RCT in November 2017 and the buy back price in April 2018 .
[6] In the interim, on 17 April 2018, Mr Laubscher had addressed an email to Agni
Steels in which he recorded:
‘
Dear Customer
Seartec Trading (Pty) Limited has finalised an agreement with the trustees of the
Rental Company Trust to purchase your equipment lease agreement, effective
immediately.’
Accordingly, Mr Laubscher said that when the summons was issued in October 2018,
Seartec was ‘ the owner ’ of the rental agreement.
5
The Law
[7] A cession is e ffected by a bilateral act2 accomplished by means of an agreement
of transfer between the cede nt and the cessionary arising out of a lawful underlying cause
(justa causa) from which the cede nt’s intention to transfer the right ( animus transferendi )
and the cessionary’s intention to become the holder of the right ( animus aquirendi ) appear
or may be inferred.3 In Johnson the Supreme Court of Appeal (the SCA) explained that
the underlying cause constitutes a separate agreement (the obligatory agreement), such
as the contract of sale, exchange or donation, that gives rise to the obligation to transfer
the rights in issue. However, the actual transfer is constituted by a further agreement (the
transfer agreement) , which may coincide with the obligatory agreement or occur
thereafter.4 The conceptual distinction between the obligatory agreement and the transfer
agreement is important5 and I shall revert thereto.
[8] The cede nt may transfer the personal right to the cessionary without the co-
operat ion or knowledge of the debtor6 and the law prescribes no formalities. By parity of
reasoning, a cession, fully accomplished, may be withdrawn against the will of the debtor
by mutual consent of the purchaser and the seller,7 and the rights re- ceded back. Again,
the transfer agreement passing ownership of the rights may be affected orally, whether
the original agreement was in writing or not , and it may be established tacitly , by inference
2 LTA Engineering Co Ltd v Seacat Investments (Pty) Ltd 1974 (1) SA 747 (A) at 762 A.
3 First National Bank of SA Ltd v Lynn NO 1996 (2) SA 339 (A) at 345G -I; and Johnson v Incorporated
General Insurance Ltd 1983 (1) SA 318 (A) at 331G -H.
4 Johnson at 331H; and First National Bank at 345H -I.
5 See Scott. on.Cession. p 27.
6 Paterson’s Executor v Webster, Steele and Co. 1880 -1882 (1) SC 350 where De Villiers CJ at 355 stated
that: ‘No rule is more clearly established in our law than that rights of action may be ceded to third parties
without the consent of the party liable.’
7 Johnson at 332B -G.
6
from the parties’ conduct.8 The transfer agreement between the cede nt and the
cessionary is established when the cede nt has the intention to transfer the personal right
to the cessionary and the cessionary, in turn, has the intention to receive the personal
right.
The finding of the Regional Court
[9] As I have said, the Magistrate found that Seartec had failed to establish its locus
standi . In arriving at this finding , he found, firstly, that the only reasonable conclusion
arising from the proven facts was that the proof of payment in the amount of R186 893,81
was totally unrelated to the rental agreement, and, secondly, that there was no evidence before the court that the RCT intended to re -cede the rental agreement to Seartec .
[10] In respect of the first point, the Magistrate relied only on the proof of payment and
afforded considerable weight to the repurchase price reflected on it. The approach fails
to recognise the distinction between the obligatory agreement and the transfer agreement. The obligatory agreement underlying the cession was the repurchase of the rental agreement. The payment of the purchase price reflects the fulf illment of the
obligatory agreement, but it has no bearing on the transfer agreement. Accordingly, t he
approach constitutes a misdirection in law.
[11] In any event, the reasoning of the M agistrate in respect of the proof of payment ,
cannot be sustained. He noted that Mr Laubscher was unable to confirm the account
8 Botha v Fick 1995 (2) SA 750 (A) at 762 E-H.
7
number of the recipient reflected on the proof of payment nor could he identify the bank’s
statement reference number ‘AC 61002675’. Accordingly, he consider ed that a crucial
link in Seartec’s case , the establishment of the payment of the purchase price, has not
been proved. This, too, constitutes a misdirection in respect of the import of the evidence.
In any civil case the onus is ordinarily discharged by producing credible evidence to
support the case of the party on whom the onus rests. He can only succeed if he satisfies
the court on a preponderance of probabilities that his version is true and accurate and
therefore acceptable. However, in deciding whether that evidence is true or not the court will weigh up and test his allegations against the general probabilities. If the probabilities
favour him, then the court will accept that his version is probably true. As adumbrated
earlier, Mr Laubscher was the only witness and there is no competing version. His
evidence that the proof of payment relat ed to the purchase price of the re- cession was
uncontroverted, and it must be tested against the general body of evidence and the
probabilities. I have set out the sequence of events earlier. Emails passed to and fro between Mr France and Mr Laubscher on the 12
th and 13th April 2018. They culminated
in an agreement that the rental agreement would be repurchased and Mr France delegated the further conduct of the agreement to an employee. Mr Lambrecht s, who
appeared for Agni Steel s, together with Mr van den Bos , acknowledged, correctly, that
the correspondence proved the obligatory agreement. On 17 April, Mr Laubscher
confirmed the finalisation of the agreement in an email to Agni Steels , and the payment
of the R186 893,81 to the RCT followed , on 20 April 20218. There is no evidence of any
other agreement sold by the RCT to Seartec. In my view, the evidence of Mr Laubscher
8
in this regard, seen in the context of the events as they unfolded, accords with all the
probabilities.
[12] In reaching his conclusion that the payment was unrelated to the rental agreement
the Magistrate considered that there were unexplained contradictions between the
amounts claimed in the summons, the price that the RCT paid for the rental agreement ,
in November 2017, and the repurchase price reflected in the proof of payment. I am
unable to discern any contradiction. The amount claimed in the summons is immaterial to the issue before court , and it was not explored in evidence at all. The R171 935,49
(exclusive of VAT) was paid for the rental agreement in November 2017. The rental
agreement provided for interest on the outstanding balance to be calculated from time to
time and for penalty interest to be levied on any overdue payments. It is in the nature of an agreement of this kind that the outstanding balance would fluctuate with time. Whilst
there was some dispute on the pleadings about the reasons for Agni Steels defaulting on
their monthl y payments , and when it occurred, it was common cause that Agni Steels at
some stage stopped payments. In these circumstances it seems self -evident that the
value of the rental agreement would differ from time to time, depending on the amounts outstanding and overdue, and it is unsurprising that Mr Laubscher, who did not testify as
an accountant, was unable to explain how the difference in figures was arrived at. His
evidence, of both the purchase price in November 2017 and April 2018, is uncontroverted.
[13] I turn to the second point, that there was no evidence before court that the RCT
had intended to re- cede the rental agreement to Seartec. As I have explained, the law
9
prescribes no formalities for a transfer agreement which occurs by the manifestation of a
simultaneous intention of the cedent to transfer the right and of the cessionary to become
the holder of the right. The transfer agreement may be tacit and it may be inferred from
the conduct of the parties.9
[14] Mr Laubscher testified that Seartec had purchased the rental agreement and
became the owner thereof. The evidence discussed earlier established that he wrote to Agni Steels on 17 April 2018 to advise them that the sale had been finalised ‘with immediate effect’. Agni Steels , as the debtor, had no role to play in the cession, and the
only logical explanation for the letter is to advise Agni Steels that Seartec was now their creditor, with immediate effect, thus confirming that the transfer of rights had occurred.
[15] Seartec issued summons in October 2018, and the trial proceeded in October
2023. As I have said, it is common cause that Agni Steels defaulted on their instalment
payments, but it was not suggested to Mr Laubscher in cross -examination that the RCT
had ever sent a demand or taken any steps whatsoever against Agni Steel s for the
enforcement of the rights under the agreement. The ineluctable inference to be drawn
from these facts is that they claimed no entitlement to any benefits under the rental
agreement after 17 April 2018, which accords with the uncontroverted evidence of Mr
Laubscher.
9 Botha at 762H.
10
[16] The Magistrate appeared to suggest that Seartec ought to have called Mr France
to confirm the transfer agreement. As I have said, the evidence of Mr Laubscher is
uncontroverted and accords with all the probabilities . Mr France, as a witness, was
equally available to Agni Steels , and they were entitled to consult with him and to call him .
In Raliphaswa10 the SCA noted that where a witness is equally available to both parties,
but not called to give evidence, it is logically possible to draw an adverse inference against
both. The party on whom the onus rests has no greater obligation to call a witness , but
the failure may, in appropriate circumstances, create a risk that it may be found that he
has failed to discharge the onus. For reasons set out earlier I do not consider this to be such a case.
Costs
[17] The parties agree that the costs of the appeal should follow the result. However,
Mr van den Bos submitted that in the event that the appeal is upheld, the costs occasioned
by the inclusion of pages 205 to 288 of the appeal record should be excluded from the costs order. These relate to an action instituted in the High Court for the recovery of the
equipment installed by Limtech at the instance of Agni Steels , which formed the subject
matter of the rental agreement. They have no bearing on the dispute before us and Mr Hewitt , on behalf of Seartec, acknowledged that they ought not to have been included in
the record.
10 In Raliphaswa v Mugivhi [2008] 3 All SA 92 (SCA) at para 15.
11
[18] In the result:
1. The appeal is upheld with costs, such costs to include the costs of counsel to be taxed
on scale B , but shall exclude the costs occasioned by the inclusion of pages 205 to
288 of the appeal record.
2. The order of the regional court upholding the special plea with costs, is set aside and
replaced by the following order:
‘The defendant’s special plea is dismissed with costs, including the costs of counsel.’
J W EKSTEEN
ACTING DEPUTY JUDGE PRESIDENT OF THE HIGH COURT
TOKOTA J:
I agree.
B R TOKOTA
JUDGE OF THE HIGH COURT
12
Appearances:
For Appellant: Adv D Hewitt
Instructed by: Wiese & Wiese Inc
c/o Jacques du Preez Attorneys
GQEBERHA
For Respondent Adv I Lambrechts and Adv A van den Bos
Instructed by: Goldberg & De Villiers
GQEBERHA
Date Heard: 14 February 2025
Date Delivered: 04 March 2025