SAFLII Note: Certain personal/private details of parties or witnesses have been redacted from this document
in compliance with the law and SAFLII Policy
THE SUPREME COURT OF APPEAL OF SOUTH AFRICA
JUDGMENT
Reportable
Case no: 42/2024
In the matter between:
BRIAN GARTH BATTESON N O FIRST APPLICANT
BAREND JOHANNES SAHD N O SECOND APPLICANT
ELZETTE VAN ZYL N O THIRD APPLICANT
and
DEBORAH JOUBERT N O FIRST RESPONDENT
AMANDA RANDALL N O SECOND
RESPONDENT
Neutral citation: Brian Garth Batteson N O and Others v Deborah Joubert N O
and Another (42/2024) [2025] ZASCA 129 (11 September
2025)
Coram: MOKGOHLOA, MOLEFE, KOEN and COPPIN JJA and MODIBA
AJA
Heard: 27 August 2025
Delivered: 11 September 2025
2
Summary: Cession of insurance policy – whether in securitatem debiti –
relevance of evidence in interpreting cession.
ORDER
On appeal from: Eastern Cape Division of the High Court, Makhanda (Dawood
and Mjali JJ and Collett AJ, sitting as a court of appeal):
The application for special leave to appeal is refused with costs.
JUDGMENT
Koen JA ( Mokgohloa, Molefe and Coppin JJA and Modiba AJA
concurring):
Introduction
[1] This is an application in which the applicants, the trustees of the Batfarm
Trust (the trust) seek special leave to appeal against an order of the full court of
the Eastern Cape Division of the High Court, M akhanda (the full court) . The
issue at the heart of the application is whether a cession of a San lam Life
Insurance Policy number 4[...] (the policy) held by the policy holder, the late Jan
Hendrik Abraham Bezuidenhout (the deceased) , to the trust , was a cession in
securitatem debiti (in security of a debt) or an outright cession permanently
divesting the deceased of all rights to the policy.
[2] The Eastern Cape Division of the High Court, M akhanda (the trial court),
in an action by the respondents, the joint liquidators of Geheeltevrede Boerdery
CC (the CC) against the trust, concluded that the cession was not a cession in
3
securitatem debiti.1 On appeal, with the leave of the trial court , the full court held
that the cession was in securitatem debiti.2
[3] On petition for special leave to appeal the judgment of the full court, this
Court directed that the application for special leave be referred for oral argument
in terms of s 17(2) (d) of the Superior Courts Act. 3 It also directed that the parties
had to be prepared to address this Court on the merits of the appeal , should
special leave be granted.
Background
[4] The deceased was the sole member of the CC. On 3 May 2012, the CC sold
the immovable property, described as the remainder of portion 4 (Junction Camp)
of the farm Tarka Bridge No 5[...] in the division of Cradock, with certain water
rights of irrigation for 60 hectares and 30 dairy cows, to the trust.
[5] The terms of the sale agreement further included that: possession and
occupation of the property would pass to the trust from the date of registration of
transfer; the trust would raise a mortgage loan to effect payment of 70% of the
purchase price; and the sale was inseparable from and to be read in conjunction
with the terms of the agreement of lease to be entered into on the same date
between the trust , as lessor , and the CC , as lessee. The mortgage loan, as
foreshadowed in the sale agreement, was obtained from the Standard Bank.
1 The trial court granted the following order:
‘1. The plaintiffs’ claim that the cession of the Santam life insurance policy . . . was a cession in securitatem debiti
be and is hereby dismissed.
2. The cession referred to in paragraph 1 above is found to be an out-and-out cession.
3. The Batfarm Trust has become the owner of the life insurance policy referred to in paragraph 1 above.
4. The plaintiffs shall pay the defendants’ costs of the action, such costs to include . . ..’
2 The full court granted the following order in respect of the issue which was separated for determination:
‘1 The appeal be and is hereby upheld with costs including the costs of the translation of the transcribed evidence.
2 The orders of the court a quo dated 10 August 2022 are set aside and substituted as follows:
2.1 the cession of the Sanlam Life Insurance Policy No 4[...] was a cession in securitatem debiti;
2.2 the Defendants are to pay the Plaintiffs’ costs, inclusive of the costs previously reserved and costs relating
to
the preparation of heads of argument filed in the trial.’
3 Act 10 of 2013.
4
[6] On the same day as the sale, the trust and the CC concluded an agreement
of lease (the first lease) . In terms of the first lease, the trust leased the grazing,
water rights, agricultural lands and the improvements on the immovable property
to the CC for a period of five years from the date of registration of the transfer of
ownership of the property to the trust . The first lease was signed by the first
applicant, Mr Brian Garth Batteson, on behalf of the trust . The deceased signed
the first lease on behalf of the CC and in his personal capacity.
[7] Clauses 22 and 23 of the first lease provided:
‘22. CESSION OF ASSURANCE POLICY
22.1 It is agreed that JAN HENDRIK ABRAHAM BEZUIDENHOUT shall cede as an
absolute Cession, an existing Life Assurance Policy of R4 000 000 (FOUR MILLION RAND)
on his life to and in favour of the LESSOR, so as to safeguard the LESSOR against payment of
its rental and outstanding balance due by the LESSOR under its Mortgage Bond with a
Financial Institution, in the event of the death of the Sole Member of the LESSEE, JAN
HENDRIK ABRAHAM BEZUIDENHOUT.
22.2 In the event of the LESSEE exercising his option to repurchase the PROPERTY, then
in that event, the LESSOR shall cede the aforesaid Assurance Policy back to the LESSEE
against payment of all the LIFE Premiums paid by the LESSOR, whilst ceded to it, together
with interest thereon at the prime bank overdraft rate.
23. OPTION TO PURCHASE AND RIGHT OF FIRST REFUSAL
23.1 The LESSOR hereby grants the LESSEE a right of first refusal to purchase the
PROPERTY for the sum of R8 650 000.00 (EIGHT MILLION SIX HUNDRED AND FIFTY
THOUSAND RAND), Value Added Tax excluded, provided, that such option is exercised
within the initial period of the lease, as per Clause 2 supra.
23.2 In the event of the LESSEE not having exercised the option to purchase the
PROPERTY in terms of clause 23.1 supra , then and in that event, such option to purchase the
PROPERTY in terms of clause 23.1 supra , then and in that event, such option to purchase the
PROPERTY shall lapse and shall thereafter rever t to a Right of First Refusal only to purchase
such PROPERTY.’
[8] On 14 February 2013, almost a year after the conclusion of the first lease,
the deceased signed a written notification of cession form with Sanlam . The
5
circumstances in which this document was signed and who completed it, are not
known.4 It was indicated on the form, by a cross having been made in the
applicable box, that the cession was ‘Algeheel/Uit en uit’ ( totally/out-and-out).
The form also contained a typed insert that t he date upon which the ‘regte
oorgegaan het’ (rights had transferred), was 14 February 2013.
[9] On 3 January 2017, the trust and the CC entered into a further agreement of
lease (the second lease) . It too was signed by the deceased on behalf of the CC
and in his personal capacity. The second lease was for the period from 1 March
2017 until 28 February 2022. Clause 22 thereof was identical to clause 22 of the
first lease. Clause 23 of the second lease was worded slightly differently:
‘23 OPTION TO PURCHASE AND RIGHT OF FIRST REFUSAL
The LESSOR hereby grants the LESSEE a right of first refusal to purchase the PROPERTY for
the Market Value at the time, Value Added Tax excluded, in the event, that the LESSOR
wishes to dispose of the PROPERTY during the currency of the LEASE.’
[10] On 11 May 2017, the deceased addressed an email to his accountant Mr
Andre David Pretorius (Mr Pretorius) and others, including ‘Ben Sahd – Metcalf
Sahd & Co’. It was in Afrikaans.5 The relevant parts thereof , translated by me
into English, recorded that:
4 The deceased signed the document, but portion thereof was typed and a portion completed in manuscript. The
portion completed in manuscript included information regarding the cessionary, the trust, such as that it was
‘belastingpligtig’ (liable to tax). This was answered in the affirmative. The deceased presumably had no personal
knowledge to confirm whether the trust was ‘belastingpligtig’ casting some doubt as to when and how this form
was completed. The handwriting on page three thereof also seems to be different to the handwriting on page 2.
Not much, if anything, turns on this.
5 The original text of the email, which is in Afrikaans, reads as follows:
5 The original text of the email, which is in Afrikaans, reads as follows:
‘Net ‘n bevestiging van ons gesprekke die laaste tyd rakende my testament en boedel. As boekhouer en eksekuteur
is jy bewus dat ek die plaas en beeste huur van Batfarm Trust. As ek iets oorkom moet julle onmiddelik met
Bennie Sahd van Metcalf Sahd & Co in verbinding tree oor hoe die proses vorentoe sal verloop. Bennie se
telefoon nommers is as volg: . . . Ek het ook onder jou aandag gebring dat daar ‘n polis op my lewe is waarvan
Batfarm tans die eienaar is. Bennie en Brian het toegestem dat die polis weer my eiendom word mits ek aan sekere
voorwaardes voldoen. Dit het gebeur aangesien Batfarm volle beheer oor die grond verkry het. Bennie en Brian is
persone van integriteit en sal nie terug gaan op hulle woord nie. Bennie se kantoor is tans in die proses om die
nodige papierwerk reg te kry.
Die voorwaardes wat Bennis opgestel het is as volg:
1. Ek moet al die premies wat Batfarm Trust betaal het terug betaal met rente by gereken.
2. Die polis moet sydelings sedeer word as sekuriteit aan Batfarm Trust. Hulle skulde word eers betaal voor die res
van die geld na my boedel uitbetaal.
6
‘Just confirmation of our discussions in recent times regarding my will and estate. As
bookkeeper and executor you are aware that I lease the farm and cattle from Batfarm trust. If
something happens to me then you must immediately get into touch with Bennie Sahd of
Metcalf Sahd & Co as to how the future process will unfold. Bennie’s telephone numbers are
as follows: . . . I also brought to your attention that there is a policy on my life of which
Batfarm is presently the owner. Benn ie and Brian agreed that the policy can again become my
property provided that I co mply with certain requirements. This happened because Batform
obtained full control of the land. Brian and Bennie are persons of integrity and will not go back
on their word. Bennie’s office is in the process of getting the necessary paperwork done.
The conditions that were set by Bennie are as follows:
1. I must pay back all the premiums which Batfarm has paid with interest calculated
thereon.
2. The policy must be ceded laterally as security for Batfarm. Their debt must be paid first
before the rest of the money is paid to my estate.
3. The security (policy proceeds) shall be applied for outstanding rental money, electricity
supply and basic feed purchases if not available on my death and if the cattle
complement is not complete. If there are cattle short then it will be accounted against it.
. . ..’
[11] The deceased died on 1 September 2019 during the currency of the second
lease. His widow and Mr Pretorius were appointed as the joint executors of his
deceased estate. Sanlam, pursuant to the terms of the policy, paid an amount of
R5 089 118 to the trust . The CC was provisionally liquidated on 27 February
2018 and finally wound up on 27 March 2018. The respondents were appointed
as its joint liquidators by the Master of the High Court.
[12] The trust, represented by the second applicant, Mr Barend Johannes Sahd
submitted a written claim against the CC, which he alleged was ‘based on Clause
submitted a written claim against the CC, which he alleged was ‘based on Clause
22 of the Lease Agreement’ and the email of 11 May 2017 (which he said he did
3. Die sekuriteit (Polisgeld) sal aangewend word vir uitstaande huurgeld, kragvoer en ruvoer aankope indien daar
nie beskikbaar is met afsterwe en as die bees getalle nie volledig is nie. As daar bees kort sal dit daarteen af
gereken word.’
7
not receive and which was ‘factually incorrect’),6 on 8 December 2017 for a total
of R13 103 337. This included an amount of R7 650 000 for rental and
R1 786 780 in respect of the Standard bank mortgage liability. The proceeds of
the policy, in the sum of R5 089 118, were set off against the total claim against
the CC, to arrive at a nett claim of R8 014 219.
[13] The founding affidavit referred to a similar claim made by the trust against
the CC , but for an amount of R14 826 117. This claim included the same
amounts, as in the claim of 8 December 2017 , in respect of unpaid rental and the
Standard bank mortgage liability . After the set off of the proceeds of the policy ,
the nett claim was for R9 736 999.
[14] In the action before the trial court, the joint liquidators of the CC , having
taken cession of the claim of the joint executors of the estate of the deceased ,
claimed payment of the sum of R3 600 013, being the difference between the
proceeds of the policy in the sum of R5 089 118 and the rental accepted to be
outstanding in the sum of R1 489 105. Alternatively, they claimed payment of the
sum of R1 089 118, being the difference between the proceeds of the policy in the
sum of R5 089 118 and the value of the policy ceded, in the sum of R4 000 000.
[15] The trust pleaded that the deceased had agreed to cede the policy as an
absolute cession and that it had become the owner of the total proceeds of the
policy. Accordingly, it contended that it was not liable to refund any amount.
[16] At the commencement of the action , the trial court separated the following
issues for determination. First, whether the cession of the policy was a cession in
securitatem debiti. Second, whether the trust had become the owner of the policy.
The reasoning of the full court and the contentions of the trust
6 The reference is to the email in paragraph 10 above.
8
[17] In concluding that the cession was in securitatem debiti the full court
emphasised that regard had to be had to the underlying causa of the cession, the
intention of the parties, and the substance rather than the form of the cession. It
viewed the provisions of clause 22.2 as a separate transaction not dependent on
the death of the deceased . It held that the conflation of the terms of clause 22.2
and the cession in clause 22.1 was misplaced and did not afford support for the
cession being regarded as an absolute cession in the true sense.
[18] The trust maintains that the full court disregarded the pleadings and the
burden of proof, ignored the evidence of the accountant of the deceased , Mr
Pretorius, and erred in interpreting the cession as one in securitatem debiti . It
contends that, properly interpreted, the cession was not one in securitatem debiti.
The requirement of special leave to appeal
[19] The primary issue before this Court is whether special leave to appeal the
order of the full court should be granted. An appeal will lie against an order of a
full court, on appeal to it , only with the special leave of this Court. Special leave
requires more than reasonable prospects of success : such as that the appeal will
deal with a substantial point of law, or is a matter of great importance to the
parties or the public ; or that the prospects of success on appeal are so strong that
the refusal to grant leave to appeal would result in a denial of justice for the party
seeking leave to appeal.7 This list is not exhaustive.
[20] The trust contends , as regards special leave , that the intended appeal
involves the following: it raises substantial points of law regarding the
interpretation of documentation and evidence in contested action proceedings; it
raises a substantial point of law regarding the adjudication of action proceedings
on appeal where the appeal court ostensibly disregards the pleadings and the
on appeal where the appeal court ostensibly disregards the pleadings and the
7 Westinghouse Brake & Equipment (Pty) Ltd v Bilger Engineering (Pty) Ltd 1986 (2) SA 555 (A) at 561E-F; Stu
Davidson and Sons (Pty) Ltd v Eastern Cape Motors (Pty) Ltd [2018] ZASCA 26; 2018 JDR 0426 (SCA).
9
evidence led during action proceedings and proceeds to consider the matter de
novo (afresh) akin to motion proceedings; it has strong and substantial prospects
of success, in that, the CC, as dominus litis (master of the legal suit) in the action
proceedings, failed to establish its claims ; it seeks to avoid a manifest denial of
justice to the trust , as would follow if leave was refused; and, is of great
importance to the public and to the parties , in that, the issue of the treatment of
action proceedings on appeal and the full bench being bound to the record of the
action proceedings, is foundational to the administration of justice.
[21] Contrary, to the trust’s submission, t he appeal which will follow , should
special leave to appeal be granted by this Court, does not deal with a substantial
point of law. The law as to what is meant by a cession in securitatem debiti is
well settled. 8 The issue for determination really turns on the application of the
peculiar facts of this matter to the law.
[22] Neither is it a matter of great importance to the parties, beyond their
respective commercial interest to achieve success , which does not constitute
special circumstances . Nor is it a matter of great importance to the public. The
trust correctly did not advance the other considerations, save for that referred to
below, with much vigour.
[23] The main consideration persisted with by trust in support of the application
for special leave is that there are such strong prospects of success that the refusal
of special leave to appeal would result in a denial of justice . It follows that if the
prospects of success are poor , or non -existent, the application for special leave
should be dismissed. I turn then to consider the prospects of success with respect
to the specific grounds advanced by the trust.
8 See for example Grobbelaar v Shoprite Checkers [2011] ZASCA 11 ; 2011 JDR 0197 (SCA) , Louis Pasteur
Hospital Holdings (Pty) Ltd v Bonitas Medical Fund [2018] ZASCA 82 and Engen Petroleum Ltd v Flotank
Transport (Pty) Ltd [2022] ZASCA 98; 2022 JDR 1745 (SCA) and the authorities cited therein.
10
The pleadings, the burden of proof and the evidence of Mr Pretorius
[24] The trust relies firstly: on the particulars of claim having alleged that the
cession was in securitatem debiti but only in respect of the rental payments
payable by the CC; that the CC had the evidential burden to prove this version on
a balance of probabilities ; and that having regard to clauses 22.1, 22.1, 23.1 and
23.2 of the first lease, the CC had failed to do so . Whether the cession was
confined to the rentals , or extended to safeguarding the trust in respect of any
mortgage liability , was however not the issue for determination before the trial
court. The issue was simply whether the cession was one in securitatem debiti .
What liability the cession properly safeguarded, if found to be a cession in
securitatem debiti, is for the high court to decide in due course.
[25] The onus to prove that the cession was one in securitatem debiti was
undoubtedly on the CC. Whether it is in securitatem debiti, or an outright cession,
with the deceased having permanently divested hi s estate of all proceeds of the
policy, entails a proper interpretation of the lease agreements. Oral evidence may
be of so me assistance in conducting that exercise, but only insofar as such
evidence is legally admissible.
[26] It is trite law that the interpretation of a contract entails a consideration of
the words used, the context in which they were used and the purpose of the
contractual provision.9 Oral evidence is relevant and admissible, for example as
to the context and purpose enquiries. Evidence of how parties subsequently
implemented the terms of an agreement will also be admissible.10
[27] The CC adduced the evidence of Mr Pretorius to place the relevant
documents before the trial court. During cross examination he was asked to
9 Natal Joint Municipal Pension Fund v Endumeni Municipality [2012] ZASCA 13; [2012] 2 All SA 262 (SCA);
2012 (4) SA 593 (SCA).
2012 (4) SA 593 (SCA).
10 Grobler v Oosthuizen [2009] ZASCA 51; 2009 (5) SA 500 (SCA) ; [2009] 3 All SA 508 (SCA) para 14;
Comwezi Security Services (Pty) Ltd v Cape Empowerment Trust Ltd [2012] ZASCA 126; 2012 JDR 1734 (SCA).
11
express a view on what the wording of the relevant clauses meant and what the
deceased had intended. He responded that he was not a legal expert and had not
prepared the agreements. He confirmed that he had discussed the issue with the
deceased who intended that the policy had to go to the trust ‘as sekuriteit’
(security). He confirmed that the deceased had not paid any premiums after the
policy was ceded.
[28] The trust submitted that the evidence of Mr Pretorius , the Sanlam notice
which refers to an ‘out and out cession’ and ownership having passed, and clause
22.1 of the lease which refers to an ‘absolute’ cession’, incontrovertibly showed
that the deceased knew and intended to cede the policy as an out -and-out cession,
which would permanently divest him of any claim to any part of the proceeds of
the policy. It complains that the full court misdirected itself as it: gave no weight
to this evidence and the pleadings, nor to the assessment of the evidence and the
findings made by the trial court; and interpreted clause 22.1 without reference to
the evidence or the overall evidential onus borne by the CC, to the exclusion of
clauses 22.2 and 23 of the lease agreements.
[29] The evidence of Mr Pretorius as to what the deceased recorded in his
email, constitutes inadmissible hearsay evidence insofar as tendered as the truth
thereof. The deceased was no longer available to explain why he expressed
certain legal conclusions or used words of a technical legal nature in his email to
Mr Pretorius. As a layman his use of legal terminology would not necessarily be
technically correct.
[30] However, insofar as this evidence is admissible to show how the deceased
understood the cession would be implemented, it is significant that the deceased
viewed the policy as having been ceded to the trust as ‘security’. Further, that the
liabilities of the trust had to be paid first before the re mainder of the proceeds
would be paid to his estate.
12
The interpretation of the cession
[31] The primary issue in determining the trust’s prospects of success is the
proper interpretation to be assigned to the words which recorded the cession. As
was said in Airports Company:
‘. . .[ T]he point of departure in an interpretative process is always the language of the
agreement in what is ultimately a unitary exercise. But it is only the starting point in an
exercise to establish the contractual intention of the parties. Equally important in this analysis
is the context within which the language is used in the light of the document as a whole, the
circumstances attendant upon its coming into existence, the apparent purpose to which it is
directed and the material known towards those responsible for its production. Importantly, a
sensible meaning is to be preferred to one that leads to “un-business like” results or undermines
the apparent purpose of the document.’11
[32] The interpretation enquiry is fruitfully commenced with a brief reminder of
what the nature and effect of cessions entail. This will assist in answering the
question whether the words used in the leases , expressing the intention of the
trust and the deceased, resemble that of a cession in securitatem debiti, or not.
[33] Cession is the legal means by which incorporeal rights are transferred: the
cedent is divested of certain rights in the subject matter of what is ceded , in
favour of the cessionary . It generally involves an agreement to cede (pactum
cedendo), often, but not necessarily always, followed by the conclusion of a deed
of cession ,12 which is an abstract legal act independent of the underlying
agreement to cede.13
11 Airports Company South Africa v Big Five Duty Free (Pty) Ltd and Others [2018] ZACC 33; 2019 (2) BCLR
165 (CC); 2019 (5) SA 1 (CC) para 107.
12 There are often the two transactions: the obligationary agreement to cede and then the cession itself – see
Johnson v Incorporated General Insurances Ltd 1983 (1) SA 318 (A) at page 331G -H. But the agreement to cede
is not always followed by a cession document.
13 Grobbelaar and Others v Shoprite Checkers Ltd [2011] ZASCA 11; 2011 JDR 0197 (SCA) at para 18; Brayton
Carlswald (Pty) Ltd and Another v Brews [2017] ZASCA 68; 2017 (5) SA 498 (SCA) at 504 A-C.
13
[34] The extent to which a cedent is divested of his or her rights depends on the
nature of the cession and the underlying causa. Conversely, whether a cession is
in securitatem debiti or not , depends on the extent to which , on a proper
interpretation of the words used, the cedent is divested of rights.
[35] A cession which results in a complete transfer of the rights of the cedent
and the cedent thus being permanently divested of all rights and benefits in and to
the subject matter of the cession , and the cessionary becoming the unqualified
owner of what was ceded , is often described as an ‘outright’ or ‘ out-and-out’
cession. But the labelling of a cession as an outright or out-and-out cession, is not
necessarily decisive of the nature and effect thereof.
[36] With a cession in securitatem debiti the intention is not for the cedent to be
divested permanently and totally of the subject matter of the right ceded. The
subject matter of the cession is transferred for the limited purpose of securing an
indebtedness. A cession in securitatem debiti has been described as ‘in effect an
outright or out and out cession on which an undertaking , or pactum fiducia
(fiduciary agreement) , is superimposed , that the cessionary will re -cede the
principal debt to the cedent on satisfaction of the secured debt. ’14 It has also been
remarked that, the truth probably is that the cedent by way of security retains his
reversionary right, that is to say his right to enforce the ceded right of action after
the secured debt has been discharged.
[37] There are thus two forms of security cession. The first form is really a
pledge, where the cedent retains ownership of the right 15 and a reversionary
interest in the subject matter (the policy) of the cession . Upon the debt secured
being discharged , the subject matter of the cession reverts to the cedent (the
14 Grobler v Oosthuizen [2009] ZASCA 51; 2009 (5) SA 500 (SCA) ; [2009] 3 All SA 508 (SCA) para 17.
15 Holzman NO and Another v Knights Engineering 1979 (2) 784 (W) at 788C-G.
14
reversionary interest having remained vested in the cedent ).16 With this theory
there is no need to cede the subject matter of the cession back, or for any other
formality to be complied with, for the cedent to be restored to the legal position
prior to the cession. The second form is the outright cession theory w here a
pactum fiduciae is superimposed that the cessionary will re -cede the subject
matter of the cession to the cedent on satisfaction of the debt 17 secured by the
cession.
[38] It is now accepted that a cession in securitatem debiti can take either of the
aforesaid two forms. This Court in Engen held:
‘Although the pledge construction has been recognized as the default form of security cession,
there is no support for a conclusion that it has subsumed the field of security cessions. This is
so since our law favours a recognition of both constructions of security cession. It therefore
remains open to the parties to structure a cession either as a pledge or as an out -and-out
cession, upon which a pactum fiduciae is superimposed. This is to be determined by reference
to the clear intention of the parties.’18
[39] Common to both forms of cession in securitatem debiti is that ultimately
the cedent is not divested of rights in the subject matter of the cession in toto
(altogether) and in perpetuity . The determining factor, as to w hether a cession is
one in securitatem debiti, is to be gathered from the intention of the parties.19 It is
ascertained from an interpretation of the agreement to cede containing the
underlying obligationary agreement, the pactum de cedendo .20 The ordinary
principles of interpretation, that is , having regard to the text, the context and
purpose,21 not applied in a mechanical fashion but in a coherent manner,22 apply.
16 Louis Pasteur Hospital Holdings (Pty) Ltd v Bonitas Medical Fund [2018] ZASCA 82 para 32.
17 Engen Petroleum Limited v Flotank Transport (Pty) Ltd [2022] ZASCA 98; 2022 JDR 1745 (SCA) para 15.
18 Ibid para 15.
18 Ibid para 15.
19 Bank of Lisbon of South Africa Ltd v The Master and Others 1987 (1) SA 276 (A) at 294E; Grobler v
Oosthuizen [2009] ZASCA 51; 20 09 (5) SA 500 (SCA) ; [2009] 3 All SA 508 (SCA) para 10; National Bank of
South Africa Ltd v Cohen’s Trustee 1911 AD 235 at 244 and 246.
20 Brayton Carlswald (Pty) Ltd and Another v Brews [2017] ZASCA 68; 2017 (5) SA 498 (SCA) para 15.
21 University of Johannesburg v Auckland Park Theological Seminary and Another 2021 (6) SA 1 (CC) para 66;
The Natal Joint Municipal Pension Fund v Endumeni Municiaplity 2012 (4) SA 593 (SCA) para 18.
15
[40] Form should not override substance. If properly construed the object of the
cession is to secure a debt of the cessionary, then it is a cession in securitatem
debiti, whatever the parties choose to call it. 23 Having described a cession as an
out-and-out cession, is accordingly not of itself decisive.24 Nor is a statement that
ownership was transferred conclusive of the cession being an outright cession, if
the transfer of ownership , properly construed, was subject to a pactum fiduciae,
even if implied, that the subject matter of the cession , or what remains thereof,
would revert to the cedent once it has served its purpose.
[41] The cedent acquires a right of reversion in the subject matter of the cession
once the debt secured by the cession has been discharged.25 In Bank of Lisbon this
Court held:
‘When book debts are ceded in securitatem debiti , . . . the cedent cedes to the cessionary the
exclusive right to claim and receive from the existing and future “book debtors” the amounts
owing by them . . . Any amount collected in excess of the cedent’s debt belongs to the latter.
Thus it cannot be said that by such a cession it was intended to pass ownership.’26
[42] Consequently, if on a proper analysis of a transaction a cession was made
for the purpose of securing a specific debt(s), then the cession is one in
securitatem debiti.27 Whether a cession was intended to be in securitatem debiti,
is a conclusion of law,28 but it is one inextricably intertwined with the facts of the
case.
22 Capitec Bank Holdings Ltd and Another v Coral Lagoon Investments 194 (Pty) Ltd and Others 2022 (1) SA 100
(SCA) para 25.
23 National Bank of South Africa Ltd v Cohen’s Trustee 1911 AD 235 at 246.
24 Grobler v Oosthuizen [2009] ZASCA 51; 2009 (5) SA 500 (SCA); [2009] 3 All SA 508 (SCA)para 10.
25 O’Shea N O v Van Zyl N O and Others (Shaw N O and Others intervening) [2011] ZASCA 156; 2012 (1) SA 90
(SCA); [2012] 1 All SA 303 (SCA) para 36.
(SCA); [2012] 1 All SA 303 (SCA) para 36.
26 Bank of Lisbon and South Africa Ltd v The Master and Others 1987 (1) SA 276 (AD) at 294C-D.
27 Ibid at 294D-E.
28 Engen Petroleum Ltd v Flotank Transport (Pty) Ltd [2022] ZASCA 98 ; 2022 JDR 1745 (SCA) para 16;
Government of the Republic of South Africa v Von Abo [2011] ZASCA 65; (2011 (5) SA 262 (SCA); [2011] 3 All
SA 261 (SCA) paras 18-19.
16
Was the cession by the deceased one in securitatem debiti?
[43] The policy ceded was one of R4 000 000 and it was ceded to safeguard the
payment of rental which would become due to the trust and a mortgage liability
to the Standard Bank. Specifying the value of the policy would, primarily, only
be necessary to ensure that the policy ceded addressed its purpose, that is to be of
sufficient value to ‘safeguard’ the trust against non -payment of rentals and what
might remain due to the Standard Bank on the death of the deceased. Stipulating
the value is therefore consistent with the cession being one in securitatem debiti.
If the cession was not to safeguard the trust against exposure to liability, but an
outright cession vesting dominium (ownership) of the policy in the trust, then the
amount of the policy would be irrelevant, not requiring specification.
[44] To construe the cession as an out -and-out cession transferring all rights in
the policy to the trust , as the trust contends , would be destructive of the stated
purpose of the agreement to cede , namely to ‘safeguard’ the trust against a future
or contingent debt. If the dominium of the policy, following the cession, vested in
the trust, then the word ‘safeguard’ and the reference to the payment of rental and
any outstanding mortgage liability , would be superfluous. The policy would
belong to the trust for it to deal with as it sought fit and for whatever purpose, not
only to safeguard against outstanding rental and potentially bond liability.
[45] It would be unbusinesslike and devoid of any plausible or rational reason
for the deceased , at the stage of concluding the first lease agreement and before
transfer of the property to the trust , to have provided an absolute out -and-out
cession, permanently divesting him and his estate of the proceeds of the policy,
when there was yet no liability for outstanding rental or any liability to the
when there was yet no liability for outstanding rental or any liability to the
Standard Bank. But agreeing to provide a cession in securitatem debiti , with the
right of reversion in respect of any unutilized balance remaining after
safeguarding the trust against potential liability for future rentals that would fall
17
due, and for any outstanding liability once the mortgage bond had been
registered, would be sensible and businesslike.
[46] The reference in the cession to it being ‘absolute’, if viewed in isolation,
might suggest that an outright cession and not in securitatem debiti, was intended.
Similarly, with the wording in the Santam documentation which referred to the
cession as ‘uit-en-uit’. Focusing only on these isolated words fails to address the
substance of the cession agreement in its full context . It would place form above
substance.
[47] Having regard to the potential forms of cession in securitatem debiti in our
law, the use of the se words does not make the cession one not in securitatem
debiti. The cession was , according to its wording, intended to safeguard two
forms of specified indebtedness, at a particular point in time . This clear intention
favours the cession, although described as ‘absolute’, being one subject to a
pactum fiduciae that the balance of the proceeds of the policy, after discharging
what was sought to be safeguarded, reverting to the estate of the deceased after
his death. The cession was not intended to ‘safeguard’ anything beyond the two
listed forms of liability.
[48] It is significant that in submitting its total claim against the CC, referred to
in paragraphs 12 and 13 above, which included liability for rental and the bond,
the trust set off against its claims, the proceeds of the policy. If the cedent had
divested himself completely of all rights to the policy, then there would have
been no reason for the trust to set off the proceeds of the policy against its claim.
The trust could deal with the proceeds of the policy however it saw fit. There
would be no reason to give the CC in liquidation the benefit of the trust’s claim
being reduced by the amount of the proceeds of the policy, unless the cession was
to secure that part of the claim.
18
Further concluding observations
[49] The provisions of clause 22.2 do not assist with the interpretation of the
cession. First, it contemplates a repurchase by the CC , which is not what
happened. Clause 22.2 was accordingly not specifically addressed. Notably, even
a second cession in securitatem debiti , of the subject of any reversionary right,
would not necessarily have been precluded. Second, insofar as c lause 22.2 refers
to the policy being ceded ‘back’ in the event of the lessee exercising the option to
repurchase the property, possibly suggesting an outright cession, this is also
consistent with a pactum fiduciae to cede the subject matter of the cession back,
by virtue of the reversionary interest held by the cedent , once the cession had
served its purpose . That is still consistent with the cession being one in
securitatem debiti.
[50] The above interpretation also accords with the deceased’s understanding
recorded in his email of 11 May 2017 to Mr Pretorius that the cession was in
security and that he would receive the proceeds after the trust’s liabilities were
paid. If this was not the intention of the parties, then the trust could have offered
evidence to the contrary. It was not suggested that Mr Batteson, who concluded
both the leases, was not available to testify on the context of this provision and
the purpose it might have had, if the intention was that the cession was not in
securitatem debiti.
[51] It was also suggested that because the cession did not secure debts of the
deceased, but debt s of the CC (and also the trust) , that it was not a cession in
securitatem debiti of debts of the deceased as the cedent . The CC was however
wholly owned by the deceased a s its sole member. It is not uncommon for a
member, a fortiori (all the more) a sole member of a limited liability corporate
entity, to be required to guarantee payment of the corporate entity’s debts ,
19
whether as surety, or such a liability even being undertaken as principal.29 It is, in
any event, permissible to provide security for another person’s debt by way of a
pledge or cession in securitatem debiti. 30 This argument accordingly does not
detract from the construction that the cession was in securitatem debiti.
Conclusion
[52] Borrowing from the wording of Galgut AJA in Bank of Lisbon , following
De Villiers CJ in Cohen’s Trustee:
‘. . . if the cession was made “with the avowed object” 31 of only securing a debt it
would be impossible to hold that dominium had passed to the cessionary.’32
The cession in this application was made with that avowed object.
[53] Having had the benefit of the full record , the evidence and oral argument ,
which the justices of this Court who considered the application for leave to
appeal did not have , I am not persuaded that the full court erred in reaching the
conclusion it did. There are no reasonable prospects of success in any further
appeal to this Court .33 The trust has not established that there are special
circumstances dictating that special leave to appeal should be granted.34
Order
[54] The following order is granted:
The application for special leave to appeal is refused with costs.
29 List v Jungers 1979 (3) SA 106 (AD).
30 Millman NO and Another v Twiggs 1995 (3) SA 674 (AD) at 678F -G and more specifically Twiggs v Millman
NO and Another 1994 (1) SA 458 (C) 461G -I referring to Voet 13.7.2 being authority for the view that a person
may, without taking upon himself the obligation of a surety, bind himself as pledgor for the debt of another.
31 National Bank of SA Ltd v Cohen’s Trustee 1911 AD 235.
32 Bank of Lisbon of South Africa v The Master 1987 (1) SA 276 (A) at 294E.
33 MEC for Health, Eastern Cape v Mkhitha and Another [2016] ZASCA 176 paras 16-17.
34 Westinghouse Brake & Equipment (Pty) Ltd v Bilger Engineering (Pty) Ltd 1986 (2) SA 555 (A)and National
Union of Metalworkers of South Africa and others v Fry’s Metals (Pty) Ltd [2005] ZASCA 39; [2005] 3 All SA
318 (SCA); 2005 (5) SA 433 (SCA); (2005) 26 ILJ 689 (SCA); 2005 (9) BCLR 879 (SCA); [2005] 5 BLLR 430
(SCA).
20
______________________
P A KOEN
JUDGE OF APPEAL
21
Appearances
For the applicants: I J Smuts SC and T S Miller
Instructed by: Wheeldon Rushmere & Cole Inc., Makhanda
Symington De Kok Attorneys, Bloemfontein
For the respondents: D H de la Harpe SC
Instructed by: McCallum Attorneys, Makhanda
E G Cooper Majiedt Inc., Bloemfontein.