REPUBLIC OF SOUTH AFRICA
IN THE HIGH COURT OF SOUTH AFRICA
LIMPOPO DIVISION, POLOKWANE
CASE NO: 13434/2022
(1) REPOR TABLE : NO
(2) OF IN TERES T TO TH E JU D G ES : NO
(3) RE V ISED : NO
DATE 15 Novem ber 2024 SIGNATURE
In the matter between:
LAND AND AGRICULTURAL
DEVELOPMENT BANK OF SA
and
MARDIBOERDERY(PTY)LTD
JUDGMENT
APPLICANT
RESPONDENT
2
MORGAN AJ
INTRODUCTION
[1] This matter comes before me as an opposed motion. The Land and
Agricultural Development Bank of South Africa (“the applicant”) seeks
judgment in the amount of R16 139 663.42 together with interest, and an order
declaring Portion 1 of the Farm Langebaan 89 specially executable by virtue
of two mortgage bonds registered in its favour.
[2] The respondent, Mardi Boerdery (Pty) Ltd (“the respondent”), opposes the
application. At the heart of the dispute lies the applicant’s claim to have
acquired the rights and obligations in question through cession agreements
allegedly concluded with Obaro F inancial Services (Pty) Ltd and Statusfin
Financial Services (Pty) Ltd. However, despite repeated reliance on these
cessions, the applicant has failed to annex the operative cession agreement(s)
to its founding affidavit. That omission goes to the very root of the applicant’s
standing and its cause of action.
[3] The respondent further disputes the indebtedness itself, contending that the
applicant has not proved the existence, enforceability, or quantum of the
obligations it seeks to enforce. The papers reveal material disputes of fact
which, applying the Plascon-Evans principle, cannot be resolved on affidavit.
3
[4] The application is accordingly beset by two fatal deficiencies: procedurally, the
founding papers are inchoate and excipiable for want of compliance with Rule
18(6); substantively, the disputes of fact raised by the respondent preclude
final relief. The cumulative effect of these defects is that the application cannot
succeed.
THE PARTIES
[5] The applicant is the Land and Agricultural Development Bank of South Africa,
a statutory institution established in terms of the Land and Agricultural
Development Bank Act 15 of 2002. Its primary function is to promote and
finance agriculture, and in the present matter it asserts standing as the creditor
of the respondent by reason of alleged cessions of rights from third-party
financial institutions.
[6] The respondent is Mardi Boerdery (Pty) Ltd, a private company duly
incorporated in accordance with the laws of the Republic of South Africa. It is
engaged in farming operations. The respondent is the registered owner of
Portion 1 of the Farm Langebaan 89, which stands hypothecated under two
mortgage bonds registered in favour of the applicant.
[7] The relationship between the parties is not a direct one in the sense of privity
of contract. Rather, the applicant’s standing is premised on the assertion that
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it acquired rights through cessions executed by Obaro Financial Services (Pty)
Ltd and Statusfin Financial Services (Pty) Ltd. It is this alleged chain of title
that forms the fulcrum of the dispute.
THE MATERIAL FACTS
[8] The applicant’s claim is founded on an alleged indebtedness said to have
arisen from loan facilities originally advanced to the respondent by Obaro
Financial Services (Pty) Ltd and Statusfin Financial Services (Pty) Ltd.
According to the applicant, those e ntities ceded their rights, title and interest
under the facilities to the applicant, thereby rendering it the lawful creditor of
the respondent.
[9] As security for the alleged indebtedness, the respondent had registered two
mortgage bonds in favour of the applicant over Portion 1 of the Farm
Langebaan 89. It is on the strength of those bonds, read with the alleged
cessions, that the applicant seeks judgment for the sum of R16 139 663.42
and an order declaring the immovable property specially executable.
[10] The respondent disputes the claim. It denies that the applicant has established
locus standi, noting that the founding affidavit contains repeated references to
cession agreements but fails to annex the agreements themselves. The
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respondent argues that without those documents, the applicant cannot
demonstrate that the rights sued upon were validly transferred to it.
[11] Beyond locus standi, the respondent also contests the alleged indebtedness.
It questions whether the amounts claimed remain due, disputes the quantum
advanced, and challenges the evidential sufficiency of the applicant’s papers.
It further points to the fact that the disputes raised are not peripheral but
material, and thus incapable of resolution on affidavit.
[12] The respondent filed a Rule 41A notice proposing mediation. That avenue was
not pursued, and the matter was argued on the opposed motion roll. The
applicant pressed its claim but remained without the operative cession
instruments.
ISSUES
[13] The application presents three principal issues for determination:
a. The first issue is whether the applicant has established that it is the
lawful creditor of the respondent. This turns on whether the alleged
cession agreements were properly placed before the Court. The
omission to annex those agreements raises the question whether
the applicant’s founding papers are fatally defective under Rule
18(6) of the Uniform Rules of Court.
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b. The second issue is whether the applicant’s founding papers are
inchoate and excipiable. The complaint is that the application lacks
the very operative instruments on which the claim is premised and
that the evidential foundation is inadequate. The Court must decide
whether, notwithstanding the absence of a formal exception, the
defects are such as to justify dismissal.
c. The third issue is whether the disputes raised by the respondent ,
as to the existence, enforceability, and quantum of the alleged
indebtedness, are material disputes of fact incapable of resolution
on affidavit. If such disputes exist, the Plascon-Evans principle
dictates that the matter cannot be resolved by way of motion
proceedings.
[14] These issues go both to the form and the substance of the applicant’s case.
The resolution of any one of them adversely to the applicant is sufficient to
defeat the application; cumulatively, they demonstrate that the relief sought
cannot be granted.
THE PARTIES’ SUBMISSIONS
[15] The applicant submits that it has established its entitlement to the relief sought.
It contends that the loan indebtedness arose under the facilities concluded
with the respondent and that those obligations were ceded to it by Obaro
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Financial Services (Pty) Ltd and Statusfin Financial Services (Pty) Ltd. It relies
on the mortgage bonds registered in its favour as incontrovertible proof of its
security and argues that the respondent has defaulted in repayment. In the
applicant’s view, the absence of a formally annexed cession agreement is not
fatal because the mortgage bonds and the filing notices serve as sufficient
evidence of its rights. It further submits that the respondent has raised no bona
fide dispute of fact that would warrant the dismissal of the application.
[16] The respondent counters that the application is fatally defective. It stresses
that the applicant’s standing depends entirely on the cession agreement(s),
yet none are attached to the founding affidavit. Without those instruments, the
applicant cannot prove that the personal rights it seeks to enforce were ever
validly transferred to it. The respondent further argues that the applicant’s
reliance on mortgage bonds and filing notices cannot cure the omission,
because those documents are collateral to, and no t a substitute for, the
operative cession. It also disputes the alleged indebtedness, both as to
existence and quantum, and argues that the hearsay evidence in the
applicant’s founding papers is insufficient to sustain judgment. Finally, the
respondent submits that given the volume of disputes, including whether the
applicant lawfully holds the rights it asserts, the application falls to be
dismissed with costs
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ANALYSIS
[17] The starting point is that a litigant must establish locus standi by placing before
the Court the instruments that confer the right it seeks to enforce. The
applicant’s case rests on alleged cessions of rights by Obaro Financial
Services (Pty) Ltd and Statusfin Financial Services (Pty) Ltd. Yet, despite
repeated references to such cessions, the applicant has not annexed a copy
of any operative cession agreement to its founding affidavit.
[18] That omission is not a mere technicality. The very foundation of the applicant’s
claim (that it acquired the respondent’s indebtedness) is left unproven. The
Court cannot assume the existence or terms of a cession; they must be
established by the documents themselves. A mortgage bond, while evidencing
security over immovable property, does not in itself prove the transfer of the
underlying personal right to claim repayment. Similarly, filing notices and
ancillary paperwork do not demonstrate that the debt was effectively ceded.
[19] The applicant argued that these collateral documents suffice. That submission
cannot be accepted. Our courts have consistently held that where a cause of
action depends on a written instrument, it must be annexed to the founding
affidavit. The failure to do so is fatal unless cogent reasons are advanced for
its absence, which is not the case here. Without the cession agreement(s), the
applicant has not demonstrated that it is the lawful creditor of the respondent.
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[20] Even if one were to look beyond the standing point, the disputes of fact raised
by the respondent (as to the existence, enforceability, and quantum of the
alleged indebtedness) are material and incapable of resolution on affidavit.
The applicant’s case therefore suffers from two compounding defects: the
absence of the essential cession agreement(s) and the presence of genuine
disputes of fact.
Rule 18(6) of the Uniform Rules – No Cession Agreement
[21] Rule 18(6) of the Uniform Rules of Court provides:
“A party who in his pleading relies upon a contract shall state whether
the contract is written or oral and when, where and by whom it was
concluded, and if the contract is written a true copy thereof or of the part
relied on in the pleading shall be annexed to the pleading.
[22] In the present case, the applicant’s standing rests entirely upon alleged
cessions of rights from Obaro Financial Services (Pty) Ltd and Statusfin
Financial Services (Pty) Ltd. Yet, despite this being the fulcrum of its cause of
action, the applicant failed to annex the cession agreements to its founding
affidavit. Instead, it pleaded that such agreements were “too voluminous” to
attach and elected to rely only on endorsements of mortgage bonds filed at
the Deeds Office. These endorsements, while capable of recording the
substitution of a bondholder, do not disclose the underlying contractual terms
nor establish the transfer of personal rights said to be enforceable.
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[23] Without the cession agreements, the Court cannot be satisfied that a valid
transfer of rights occurred, on what terms, and whether the applicant truly
acquired the locus standi it asserts. To attempt to cure this omission in reply,
after the respondent squarely raised the issue in limine, is impermissible. It is
trite that an applicant must stand or fall by the case made out in its founding
affidavit, and that fatal defects cannot be remedied in reply.
[24] The failure to annex and plead the written cession agreements thus renders
the applicant’s founding papers excipiable and inchoate. On this ground alone,
the application is fatally defective and falls to be dismissed.
[25] Courts have repeatedly stressed that failure to annex a written agreement
when reliance is placed upon it is a material omission. In Moosa and others
NNO v Hassam and others NNO
1, the Court confirmed that the requirement
to annex the contract is peremptory, and a failure to comply renders the
pleading (or affidavit) excipiable.2
[26] Applied here, the applicant’s reliance on cessions without annexing the
cession agreements contravenes the requirements of Rule 18(6). The defect
is not cured by pointing to mortgage bonds or filing notices, which are separate
1 2010 (2) SA 410 (KZP) at para 18.
2 See also, Absa Bank Ltd v Zalvest Twenty (Pty) Ltd and another 2014 (2) SA 119 (WCC).
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instruments. The cession agreement is the operative document conferring the
right of action. Its absence is therefore fatal.
[27] This conclusion is fortified by the principle that an applicant must stand or fall
by its founding papers. The applicant cannot reply or in oral argument supply
what is absent from its founding case.
Hearsay evidence
[28] The respondent’s second preliminary objection concerns the evidentiary basis
of the applicant’s case. The founding affidavit was deposed to by the
applicant’s legal adviser, who was neither a party to the loan agreement nor
involved in the alleged cession transactions. The deponent candidly relies on
documents said to be in the applicant’s possession, without establishing
personal knowledge of the facts underlying them.
[29] It is a fundamental principle of motion proceedings that the affidavit constitutes
both the pleading and the evidence. See the recent decision of Millu v City of
Johannesburg Metropolitan Municipality and Another .
3 The deponent is
required to swear positively to the facts. Where the deponent has no personal
knowledge, and merely transmits information gleaned from records or third
parties, the evidence is hearsay unless an exception applies. Section 3 of the
3 [2024] ZAGPJHC 419 at para 28.
12
Law of Evidence Amendment Act 4 makes it clear that hearsay evidence is
inadmissible unless, inter alia, the Court, in the interests of justice, admits it.
[30] In this matter, the deponent does not establish that she is the custodian of the
records, nor that she verified their accuracy. She does not attest to any
involvement in the negotiation or conclusion of the loan agreement or
cessions. In the absence of such foundation, the entire affidavit, together with
its annexures, is reduced to hearsay.
[31] The applicant’s attempt to argue that a corporate entity may rely on any
authorised officer is misplaced. While the authorities do permit a corporate
official to rely on company records, the essential requirement remains that the
deponent must be able to s wear positively to the truth of the facts alleged. A
blanket reliance on annexed documents, without evidentiary grounding, does
not meet this threshold.
[32] The defect is not trivial. The very existence of the debt, the validity of the
cession, and the calculation of the quantum are all matters introduced by a
deponent without personal knowledge. This strikes at the heart of the
applicant’s case, leaving it built upon inadmissible hearsay evidence.
[33] It would not be in the interests of justice to admit this hearsay evidence.
4 No 45 of 1988, as amended.
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Material disputes of fact
[34] The respondent’s third point in limine is that this matter bristles with disputes
of fact which cannot be resolved on the papers. It is trite that application
proceedings are appropriate only where the facts are common cause or not
seriously disputed, and that where genuine, material conflicts exist, the matter
should proceed by way of trial. The leading authority remains Plascon-Evans
Paints Ltd v Van Riebeeck Paints (Pty) Ltd
5, which holds that a final order may
be granted only if the facts averred by the applicant, which are admitted by the
respondent, together with the respondent’s version of the disputed facts, justify
such an order.
[35] In the present case, the disputes are not peripheral. They strike at the heart of
the applicant’s cause of action:
a. The cession agreements: The respondent denies the validity and
enforceability of the alleged cessions. In the absence of the actual
agreements, their terms, scope, and effect remain in contest.
Whether the applicant has standing is a substantive dispute th at
cannot be resolved by reference to bond endorsements alone.
5 1984 (3) SA 623 (A).
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b. The quantum of indebtedness: The applicant claims R16 139
663.42, supported by a certificate of balance. The respondent
disputes this figure, alleging that the computation includes irregular
charges, applies incorrect interest rates, and ignores payments
actually made. These allegations raise factual issues requiring
proper ventilation by evidence and cross-examination.
c. Compliance with Rule 46A: The applicant maintains that the Rule
is inapplicable as the property is agricultural land. The respondent
contends that compliance remains necessary. The factual use and
characterisation of the property, as well as the procedural
safeguards for execution, are contested issues.
[36] These disputes were reasonably foreseeable at the time of launching the
application. They cannot be dismissed as contrived or insubstantial. Instead,
they demonstrate that motion proceedings were ill-suited, and that the matter
should have been pursued by way of action.
[37] The result is that the applicant has failed to discharge its onus within the
confines of affidavit evidence. The disputes of fact compel the dismissal of the
application.
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COSTS
[38] The general principle is that costs follow the result, unless there are special
circumstances warranting a departure. The applicant sought relief in the
amount of over sixteen million rand, together with an order of special
executability against the respondent’s farm, a drastic remedy. Yet, its founding
papers were fundamentally defective: it failed to annex the very cession
agreements upon which its standing depends; it relied extensively on hearsay
evidence; and it elected to proceed by way of application despite the existence
of manifest disputes of fact.
[39] These shortcomings placed the respondent to unnecessary expense in
opposing proceedings that were ill -conceived from the outset. In such
circumstances, an adverse costs order against the applicant is both just and
equitable.
[40] There is no basis to award costs on the punitive scale sought by the applicant.
Rather, fairness dictates that the applicant, having failed in its application,
should bear the costs of opposition on Scale B.
CONCLUSION
[41] The applicant has failed to make out a proper case for the relief it seeks. Its
founding affidavit is inchoate and excipiable for want of compliance with Rule
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18(6); it is permeated with hearsay evidence tendered by a deponent without
personal knowledge; and it seeks to resolve substantial disputes of fact on
affidavit when such disputes were both foreseeable and material.
[42] I cannot, on the defective papers, grant judgment for more than R16 million or
declare the respondent’s immovable property executable. The applicant must
stand or fall by its founding papers, and here it has fallen short.
[43] Thus, I make the following order:
1. The application is dismissed with costs on party and party scale B.
M MORGAN
Acting Judge of the High Court of South Africa,
Limpopo Division, Polokwane
Date of Hearing: 24 August 2024
Delivered: 15 November 2024