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[1995] ZASCA 64
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Coopers & Lybrand and Others v Bryant (459/93) [1995] ZASCA 64; 1995 (3) SA 761 (AD); [1995] 2 All SA 635 (A) (30 May 1995)
IN THE SUPREME COURT OF SOUTH AFRICA
APPELLATE DIVISION
In the matter between
COOPERS & LYBRAND
First Appellant
COOPERS THERON DU TOIT
Second Appellant
COOPERS & LYBRAND SERVICES (PTY) LTD
Third Appellant
and
ROLF ANTHONY BRYANT
Respondent
Coram:
JOUBERT, EM GROSSKOPF, STEYN, NIENABER et
HOWIE JJA
Heard:
15 May 1995
Delivered:
30 May 1995
JUDGMENT
JOUBERT JA;
This is an appeal against the judgment of LUDORF J in the East London Circuit
Court dismissing with costs a special plea by the appellants
to
2 the
respondent's particulars of claim. Leave to appeal was granted to the
appellants by the Court
a quo
. The appeal is prosecuted by the first
appellant
("Coopers & Lybrand") while the second and third appellants abide the
decision
of this Court.
On 20 December 1991 the respondent ("Mr Bryant") sued the appellants,
a firm of chartered accountants and auditors, for damages arising from
the
breach by them of a verbal agreement he had concluded with them on 20
February 1989 (alternatively, negligent misrepresentation) to advise him
whether or not his proposed business involvement with Henry Phillip
Wholesalers CC (trading as Henco) was financially sound. He contended
that
he acted to his detriment by accepting and acting on their professional
advice
which negligently confirmed the soundness and viability of the proposition.
It
was common cause that Mr Bryant was a businessman.
On 16 October 1992 the appellants raised a special plea to Mr Bryant's
particulars of claim, viz. that his claim against the appellants was subject
to the
terms of a deed of cession, dated 16 April 1985, between him and the
Standard
Bank of South Africa Ltd ("the Bank") in consequence of which he had
3
divested himself of lo
cus standi
to institute the
present action.
In his amended replication to the special plea Mr Bryant
stated
inter alia
that upon a proper construction of the deed of cession
only debts relating to the trading business styled Bryant's and run by him
in
East London were subject to its terms and that the said business was the only
trading business operated by him at the time.
The printed deed of cession, as completed on 16 April 1985, read as
follows:
"The Standard Bank of South Africa Limited. Cession of Book Debts Deed of
Cession
In consideration of The Standard Bank of South Africa Limited (hereinafter
with its successors or assigns referred to as 'the Bank')
allowing me/us/the
Company hereinafter mentioned such banking facilities as the Bank may in its
sole discretion deem fit (either
by way of the continuation of any existing
facilities and/or providing new or further facilities), and/or as security for
guarantees
already given or to be given to the Bank by me/us/the Company subject
to the conditions hereinafter mentioned. I/we, the undersigned,
ROLF ANTHONY
BRYANT
do here pledge, cede, assign and transfer unto and in favour of the Bank all
my/our/the Company's right, title and interest in and
to
all book debts, and
other debts, and claims of whatsoever nature,
present and future, due and to
become due to me/us/the Company and to all rights of action arising
4
thereunder, as a continuing covering security for all sums of
money which I/we/the Company may now or at any time hereafter owe or
be indebted
to the Bank, not withstanding any temporary extinction of such indebtedness, or
extinction of any indebtedness in terms
of the Limitation and Disclosure of
Finance Charges Amendment Act No 90 of 1980, or otherwise, and whether such
indebtedness be incurred
by me/us/the Company in my/our/the Company's name or
in the name of any firm in which I/
we/the Company
may be trading
and either solely or jointly with others in partnership or otherwise, and
whether such indebtedness arise from money already advanced
or hereafter to be
advanced or from Promissory Notes or Bills of Exchange already or hereafter to
be made, accepted or endorsed,
guarantees given or to be given by me/us/the
Company to the Bank on behalf of third parties, or guarantees given or to be
given by
the Bank on my/our/the Company's behalf and whether such liability be
indirect or contingent or otherwise howsoever, including interest,
discount,
commission, law costs, stamps and all other necessary or usual charges and
expenses.
I/We/The Company hereby warrants) and represent(s) that I/we/the Company
have/has not prior to this Cession ceded the claims and rights
hereby ceded to
any other person or concern; but if it should so happen that I/we/ the Company,
in breach of this warranty and representation
have/has done so, then this
Cession shall operate as a pledge and cession of my/our/the Company's
reversionary rights, including
all my/our/the Company's rights of action
whatsoever against the prior cessionary, pledgee or other holder of such claim
or claims
for the time being, upon all the same terms and conditions as those
herein contained, mutatis mutandis; and as a pledge and cession
of all
my/our/the Company's remaining right, title and interest in and to the claims
ceded by such prior cession, which pledge and
cession is to come into effect as
a direct cession of the claims in question or the residue thereof and of all
claims and rights
thereafter arising, as the case may be, upon the prior cession
ceasing to exist.
It is further agreed that it shall always be in the discretion of the Bank as
to the extent, nature and duration of the facilities
to be allowed to me/us/the
Company, and that the security afforded by this cession shall not be in
5
substitution for but shall be in addition and without prejudice
to any other security which the Bank may now or in the future hold.
I/We/The
Company hereby undertake(s), whenever called upon by the Bank to do so, to
furnish it with a statement certified by my/our/
the Company's bookkeepers or
auditors, setting out in detail the total amount of the said debts together with
the names and addresses
of the debtors and the amount due by each debtor. The
Bank shall further have the right through either its proper officers or duly
appointed agents at all reasonable times to inspect all my/our/the Company's
relevant records.
It is further agreed that the Bank shall be entitled, and it is hereby
specifically authorised and empowered, to take possession and
control of
my/our/the Company's records, accounts and books at any time should the Bank
deem in its interest to do so, and I/we/the
Company agree(s) to produce such
records, accounts and books to the Bank or in any Court of law when called upon
by the Bank to do
so. I/We/The Company also agree(s) to hand to the Bank all
promissory notes, bills of exchange and other negotiable instruments as
well as
all other documents recording or evidencing any debt due or to become due to
me/us/the Company as soon as any such promissory
note, bill of exchange,
negotiable instrument, document or other evidence is received by me/us/the
Company.
As from the date hereof the Bank shall at all times have the right by itself
or by its nominees or agents to collect all sums of money
due or to become due
to me/us/ the Company in respect of the said debts, and the Bank's right to give
notice of his Cession to any
of the debtors and to draw bills of exchange on or
obtain promissory notes from any of the debtors, hereby recognised and it is
agreed
that the exercise of any such rights shall not be construed as relieving
me/us/ the Company from any liability to the Bank and shall
not prejudice the
Bank's claim against me/us/the Company.
It is further agreed that in the meantime until notice to the contrary is
given by the Bank, I/we/the Company shall act as the Bank's
agent in the
collection of all moneys due or to become due to me/us/ the Company and that all
such moneys shall be paid to the Bank
and shall, if so required by the Bank, be
deposited in a special banking account in the name of the Bank, over which
6
the Bank shall have sole control.
I/We/The Company hereby
nominate(s), constitute(s) and appoint(s) any General Manager or Assistant
General Manager for the time being
or any Branch or Acting Branch Manager of the
Bank as my/our/the Company's true and lawful attorney and agent irrevocably and
in
rem suam, with power of substitution, to exercise all the rights of action
and powers and right accruing to me/us/the Company for
the purpose of calling up
and collecting all the said debts (the right to collect which shall vest in the
Bank on the signing hereof)
and to institute whatsoever legal proceedings the
Bank may consider necessary and to prove any claim in any insolvent estate, and
generally to do all that may be requisite and necessary just as if I/we/the
Company were acting therein, and in particular to recover
all moneys and rights
due to me/us/the Company in respect of the said debts and to grant valid
receipts and acquittances therefor
in my/our/the Company's name, provided,
however, that it shall always be lawful for the Bank either before, during or
after the collection
of the said debts to sue me/us/the Company for the recovery
of all moneys due by me/us/the Company to the Bank and to obtain judgment
against me/us/ the Company and to attach any other of my/our/the Company's
property and to sell it in execution in satisfaction of
such judgment.
I/We/The Company shall be liable and shall reimburse the Bank for all costs,
including attorney and client costs, incurred by the
Bank in the collection of
any such debts, and I/we/the Company further absolve(s) and hold(s) the Bank
blameless for any loss or
damage sustained in or by reason of the collection of
the said debts, or the Bank's failure or omission to collect any of the said
debts.
I/We/The Company further authorise(s) the Bank to retain all moneys owing to
me/us/the Company by the Bank in any deposit or other
account at any Branch of
the Bank, and at any time without prior notice to me/us/the Company by the Bank
in any deposit or other
account at any Branch of the Bank, and at any time
without prior notice to me/us/the Company to set off and apply such moneys or
any portion thereof towards payment of any amount which I/we/the Company may now
or hereafter be indebted in to the Bank.
I/We/The Company further agree(s) that the amount of my/our/the
7
Company's indebtedness to the Bank at any time (including
interest and the rate of interest) shall be determined and proved by a
certificate
signed by any Manager or Accountant of the Bank.
It shall not be necessary to prove the appointment of the person signing any
such certificate, and such certificate shall be binding
on me/us/the Company and
shall be conclusive proof of the amount of my/our/the Company's indebtedness and
shall be valid as a liquid
document against me/us/the Company in any competent
Court for the purpose of obtaining provisional sentence or summary judgment
against
me/us/the Company thereon.
At the option of the Bank any claim arising hereunder may be recovered in any
Magistrate's Court having jurisdiction notwithstanding
that the amount of the
claim may exceed the jurisdiction of the Magistrate's Court to which
jurisdiction I/we/the Company hereby
consent(s).
I/We/The Company hereby choose(s)
domicilium cilandi et executandi
at
10 Gladstone Street, East London
and agree(s) that all notices posted to me/us/ the company by registered post
at that address shall be deemed to have been received
by me/us/the Company
within 2 days after the posting of any such notice
Signed [for and on behalf of the Company] at East London on the 16 day of
April 1985"
(Signed by Mr Bryant and two witnesses)
(My underlining)
The words between square brackets were not deleted and initialled by Mr
Bryant as he should have done since he did not act on behalf
of a company. He
did, however, delete and initial the word "Director" below his signature.
The above deed of cession is
in securitatem debiti
to provide the
Bank
as cessionary with continuing security for allowing Mr Bryant as cedent
banking facilities. As consideration for all sums of money which he owed
or
may owe the Bank he undertook to cede, pledge or transfer to the Bank all
his
8
"right title and interest in and to all
books debts and
other debts and claims of
whatsoever nature,
present and future,
due and to become due to me and to all
rights of action arising
thereunder"
The issue in the present matter is whether the terms of the cession
are
broad enough to encompass the claim of Mr Bryant against the
appellants.
Mr Loxton on behalf of the appellants contended that the plain,
ordinary
and popular meaning of the words "and other debts and
claims of whatsoever
nature" were not capable of being restricted to book debts. These words
were
unambiguous and were intended to give wider security than mere book
debts.
The clear intention of the parties was to cover all debts of whatsoever
nature, including book debts. Such literal construction of
the cession would not
lead to any absurdity, nor would it be contrary to the expressed intention of
the parties.
Mr Wise on behalf of Mr Bryant argued that on a proper interpretation of the
cession it did not in its terms include the claim of
Mr Bryant against the
appellants. The intention of the parties was that the words "and other debts and
claims of whatsoever nature",
like the book debts, should relate to the
trading
9
business of Mr Bryant whereas the claim against the appellants
did not.
The matter is essentially one of interpretation. I proceed to ascertain the
common intention of the parties from the language used
in the instrument.
Various canons of construction are available to ascertain their common intention
at the time of concluding the
cession. According to the 'golden rule' of
interpretation the language in the document is to be given its grammatical and
ordinary
meaning, unless this would result in some absurdity, or some repugnancy
or inconsistency with the rest of the instrument.
Principal Immigration
Officer v Hawabu and Another
1936 A D 26
at p 31,
Scottish Union &
National Insurance Co Ltd v Native Recruiting Corporation Ltd
1934 AD 458
at
p 465-466,
Kalil v Standard Bank of South Africa Ltd
1967 (4) SA 550
(A)
at p 556 D. As regards the ordinary grammatical meaning of the word "book debt"
see the Oxford English Dictionary, 2nd ed., vol
2 s.v. Book, 19 Special
combinations: "book-debt, an amount debited to a person's account, a debt owing
to a tradesman as recorded
in his account-books." In England it has been held
judicially that while book debts are connected with the trade of a tradesman it
is not necessary for them to be entered in the account-books of the
10
business. See
Paul & Frank Ltd and Another v Discount
Bank (Overseas) Ltd
and Another
[1966] 2 All E.R. 922
[ChD];
Stroud's Judicial Dictionary.
5th ed,
vol 1 p 291 s.v. Book debts and
Words and Phrases legally defined.
Butterworths, 3rd ed, vol 1 s.v. Book Debts,
Field NO v Standard Bank
Ltd
1979 (4) SA 452
(ZR) at p 456 H.
The mode of construction should never be to interpret the
particular
word or phrase in isolation
(in vacuo)
by
itself. See
Swart en 'n Ander v Cape
Fabrix (Pty) Ltd
1979 (1) SA 195
(A) at p 202 C (per RUMPFF CJ):
"Wat natuurlik aanvaar moet word, is dat, wanneer die betekenis van woorde in
'n kontrak bepaal moet word, die woorde onmoontlik uitgeknip
en op 'n skoon stuk
papier geplak kan word en dan beoordeel moet word om die betekenis daarvan te
bepaal. Dit is vir my vanselfsprekend
dat 'n mens na die betrokke woorde moet
kyk met inagneming van die aard en opset van die kontrak, en ook na die samehang
van die
woorde in die kontrak as geheel."
The correct approach to the application of the 'golden rule' of
interpretation
after having ascertained the literal meaning of the word or phrase in
question
is, broadly speaking, to have regard:
1 to the context in which the word or phrase is used with its
interrelation
to the contract as a whole, including the nature and purpose of the
11
contract, as stated by RUMPFF CJ
supra:
2 to the
background circumstances which explain the genesis and purpose of the contract
i.e. to matters probably present to the minds
of the parties when they
contracted.
Delmas Milling Co Ltd v Du Plessis
1955 (3) SA 447
(A) at p
454 G-H,
Van Rensburg en Andere v Taute en Andere
1975 (1) SA 279
(A) at
p 305 C-E,
Swart's
case
(supra)
at pp 200 E - 201 A, 202 C,
Shoprite Checkers Ltd v Blue Route Property Managers (Pty) Ltd
1994 (2)
SA 172
(C) at p 180 I-J; 3 to apply extrinsic evidence regarding the surrounding
circumstances when the language of the document is on the
face of it ambiguous,
by considering previous negotiations and correspondence between the parties,
subsequent conduct of the parties
showing the sense in which they acted on the
document save direct evidence of their own intentions.
Delmas Milling
case at p 455 A-C,
Van Rensburg's
case at p 303 A-C,
Swart's
case
at p 201 B,
Total South Africa (Pty) Ltd v Bekker NO
[1991] ZASCA 183
;
1992 (1) SA 617
(A)
at p 624 G,
Pritchard Properties (Ply) Ltd v Koulis
1986 (2) SA 1
(A) at
p 10 C-D.
12
As I indicated
supra,
the parties entered into the deed of cession
in
securitatem debiti
to provide the Bank with continuing
security for allowing Mr Bryant banking facilities. For purposes of background
circumstances
it is common cause that Mr Bryant had two separate banking
accounts at the Bank, viz a personal or private account for his personal
affairs
as well as a business account for his trading business which was a one-man
business. It was also common cause as background
circumstances that Mr Bryant on
4 April 1985 requested the Bank for an increase of his business account's
overdraft facilities in
an amount of R60 000.
In the deed of cession the expression "book debts" unquestionably referred to
his trading debts. Expressions such as "trading", "records",
"accounts", "books"
and "in the name of the firm in which I may be trading" in the context of the
operative part of the deed of cession
were obviously intended by the parties to
refer to the trading business. There is nothing in the said deed to indicate
that the parties
intended to provide security to the Bank for Mr Bryant's
personal affairs i.e. for his private account. This may be illustrated by
means
of a few examples such as personal claims of Mr Bryant
13
based on a marriage settlement, a claim to recover a legacy
under a will, a
vindicatory action to recover his private assets etc.
Personal claims of Mr Bryant were never intended by the parties to be included
under the phrase "and other debts and claims of whatsoever nature" in the said
deed. This was correctly conceded by Mr Loxton. To
what debts did the said
phrase refer? From the nature and purpose of the said cession including its
context as a whole, the intention
of the parties was that it was intended to
relate to business debts including claims other than book debts. The present
claim of
Mr Bryant against the appellants is clearly a personal claim which is
unrelated to his trading debts. I accordingly find the argument
of Mr Loxton
that the phrase in question was intended by the parties to include Mr Bryant's
claim against the appellants untenable.
In my judgment on a proper construction
of the deed of cession its terms are not wide enough to include the private
claim of Mr Bryant
against the appellants. The cession accordingly did not
divest Mr Bryant of his private claim against the appellants.
In view of the conclusion to which I have arrived at in regard to the the
construction of the deed of cession it is not necessary
to deal with the
conduct
14 of the parties subsequent to 16 April 1985 or other extrinsic
evidence relating
to surrounding circumstances.
In the result the appeal is dismissed with costs which include the
costs
of two counsel.
C.P. JOUBERT JUDGE OF APPEAL
CONCUR
E M GROSSKOPF JA STEYN JA NIENABER JA HOWIE JA