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[1995] ZASCA 158
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First National Bank of SA Ltd v Lynn NO and Others (405/94) [1995] ZASCA 158; 1996 (2) SA 339 (SCA); [1996] 1 All SA 229 (A); (30 November 1995)
Case no 405/94
IN THE SUPREME COURT OF SOUTH AFRICA
APPELLATE DIVISION
In the matter between
FIRST NATIONAL BANK OF SA LTD
Appellant
and
MW LYNN NO
1st Respondent
GB PERRY NO
2nd Respondent
LE SPENDIFF NO
3rd Respondent
TS EVANS NO
4th Respondent
GT GRAHAM NO
5th Respondent
THE MASTER
OF THE SUPREME COURT 6th Respondent
CORAM:
JOUBERT, NESTADT, VAN DEN HEEVER, OLIVIER JJA et VAN COLLER
AJA
HEARD:
19 September 1995
DELIVERED:
30 November 1995
J U D G M E N T
JOUBERT JA:
On 31 December 1984 Natal Earthworks (Pty) Ltd ("the contractor"), as
cedent,
2 executed a deed of cession ("the cession") in favour of
Barclays National Bank Ltd
subsequently known as First National Bank
of Southern Africa Ltd, ("the Bank"), as
cessionary. Thereafter, but
prior to 10 June 1991, the contractor entered into a
construction contract ("the contract") with the Government of Ouaqua
("the employer")
for the construction of a certain public road which comprised two
different sections, viz.
Route 5 (inclusive of a bridge on Route 6) and the rest of Route 6. On 10
June 1991
the contractor was placed in provisional liquidation and finally wound up
on 26 July
1991. The first five respondents are the joint liquidators of the
contractor in liquidation.
I shall refer to them collectively as "the joint liquidators" and
individually by name. A
dispute has arisen between the Bank and the joint liquidators as to who
is entitled to
payment of the balance of the retention monies under the contract. The
joint liquidators
launched an application in the Natal Provincial Division against the Bank
as respondent
for a declaratory order that upon a proper construction of the cession no
security was
conferred on the Bank in respect of retention monies certified in terms
of the contract
for payment by the employer subsequent to 10 June 1991. On 15 December
1993
BROOME DJP granted the application with costs. With leave of the Court
a quo
the
3
Bank now appeals to this Court. The Master (the 6th respondent) abides
the decision
of this Court.
I turn to consider the cession, dated 31 December 1984, which is headed
"Cession of Book Debts." Relevant terms are the following
... "
hereby
cede,
assign,
transfer and make over to and in favour of Barclays
National Bank Limited
(hereinafter referred to as "
the Bank") all our
right title and interest in and to all and any monies and amounts which may
now
[be]
or which may hereafter become due and owing to us by any person
whomsoever as security for the fulfilment of all obligations undertaken
by us to
the Bank
and
as security for the payment of all monies now and from time
to time hereafter owing by us to the Bank
for any cause of debt
whatsoever.
This cession shall remain of full force and effect and be irrevocable so
long as there are monies owing by us to the Bank.
In order to give effect to the Cession herein contained, we hereby
nominate, constitute and appoint the Bank irrevocably and in rem
suam to be our
Attorneys and Agents, with full power and authority for us and in our name or in
its own name to demand, sue for,
recover and receive
all debts
or sums of
money whatsoever
which now
4
or hereafter may
become due, owing, payable or belong
in
g to us.
We do hereby confirm and agree that for so long as this Cession shall
remain in existence we shall conduct
our bank account
or bank accounts
solely at the Bank, that we shall not open or conduct any other account in any
other Banking institution whatsoever
and that we will not further encumber the
said book debts either by factoring or ceding our residual rights therein or in
any other
way, without the prior written
consent of the Bank being first had and obtained
". (My underlining).
Quite obviously the cession is expressed in very wide terms. The
intention of the parties to the cession, i.e. the contractor as cedent
and the
Bank as cessionary, is clear. The main object of making the cession was to
provide the Bank with security (in
securitatem debiti
) in respect of the
contractor's bank account with it. The cession was intended to form a continuing
security for an indefinite period.
The security was wide enough to embrace all
debts, both present and future, which were due and payable, or might become due
and payable
to the contractor by its debtors. It was never
intended
5 by the parties to the cession to limit the security of
the Bank solely to debts due and
payable when the cession was executed since such a limitation would have
severely !
restricted the practical effectiveness of the
security.
A debt is what is due from an obligation. Consult
The Oxford
English
Dictionary
. 2nd ed., 1989, Vol 4 s.v "due" as an adjective: "That
is owing or payable,
as an enforceable obligation or debt" and s.v. "debt" as a noun: "1. That
which is owed
or due; anything (as money, goods or service) which one person is under
obligation to
pay or render to another".
In
Whatmore v Murray
1908 TS 969
at p970 INNES CJ construed a
"debt due"
as follows: "It seems to me that for a debt to be due there must be a
liquidated money
obligation presently claimable by the debtor, for which an action could
presently be
brought against the garnishee. If such an obligation exists, then, to my
mind, a debt is
due." See also
Deloitte Haskins & Sells Consultants (Pty) Ltd v
Bowthorpe Hellerman
Deutsch Pty Ltd
[1990] ZASCA 136
;
1991 (1) SA 525
(A) at p532 G-H: "Section 12 (1)
of the
Prescription Act 68 of 1969
provides that 'prescription shall commence to
run as soon
as the debt is due'. This means that there has to be
a debt
immediately claimable
by
6
the creditor or, stated in another way, that there has to be
a debt in
respect of which the
debtor is under an obligation to perform
immediately.
" (My underlining).
In terms of the deed of cession
the contractor ceded as security to the Bank "all our right title and interest
in and to all . . .
monies . . . which may now [be] or which may hereafter
become due and owing to us by any person whomsoever". The word "monies" is
according to the deed of cession synonymous with "debts or sums of money
whatsoever which now or hereafter may become due, owing,
payable or belonging to
us." The creditor's right of action is the correlative of the debtor's debt. The
debts arising from the indebtedness
of the contractor's debtors could either be
debts presently due and owing on execution of the deed of cession or future
debts becoming
due and payable thereafter .
Cession is a particular method of transferring rights in a movable
incorporeal thing in the same manner in which delivery
(traditio)
transfers rights in a movable corporeal thing. It is in substance an act of
transfer ("oordragshandeling") by means of which the
transfer of a right
(translatio juris)
from the cedent to the cessionary is achieved. The
transfer is accomplished by means of an agreement of transfer
7
("oordragsooreenkoms") between the cedent and the cessionary arising out of a
justa
causa
from which the former's intention to
transfer the right (
animus transferendi)
and
the letter's
intention to become the holder of the right
(animus acquirendi)
appears
or
can be inferred. It is an agreement to divest the cedent of the
right and to vest it in the
cessionary. Moreover, the agreement of
transfer can coincide with, or be preceded by
a
justa causa
which can be an obligatory agreement, also called an
obligationary
agreement, ("verbintenisskeppende ooreenkoms") such as, a contract of
sale, exchange
or donation. See
Johnson v Incorporated General Insurances Ltd
1983 (1) SA 318
(A)
at p331 G. Even an agreement to provide security by means of a cession
in
securitatem debiti
is in itself adequate
justa causa
for
the cession. See De Wet & Van
Wyk,
Die Suid-Afrikaanse Kontraktereg en Handelsreg,
vol 1, 5th
ed, p420: "As 'n
causa
noodsaaklik is vir die cessie, dan is die afspraak dat dit
in securitatem debiti
geskied, tog seker genoegsame
causa
daarvoor . ...". In LAWSA, vol
2 (First Reissue),
1993, s.v. Cession para 229 the constituent elements of cession are
enumerated as
follows:
" (a) it is an act of transfer; (b) the subject matter of the transfer is
a right; and
8 (c) the transfer is effected by agreement between the cedent and the
cessionary".
The legal principles which are relevant to the subject matter of a cession
may,
for purposes of this appeal, be stated as
follows:
1 Logically speaking a non-existent right of action or a non-existent debt
can never in law be transferred as the subject matter of
a cession. Van
Bynkershoek (1673-1743) Vol 3
Observationes Tumultuariae
2448.
2 Where the subject matter of the cession has been described
simpliciter
in the obligatory agreement as the cedent's accrued right or
as a debt presently due and payable
(debitum purum)
its transfer can be
accomplished according to the agreement to transfer in such manner that the
cedent divests himself of it and
vests it in the cessionary. Compare Gomezius (a
16th century Spanish jurist) in his
Commentariorum Variarumque Resolutionum
Juris Civilis,
1572, tomus 2 cap 11 n 28: Item etiam, quod si creditor
cessit alteri per contractum iura sibi competentia contra ilium, quod in
tali
cessione non veniunt debita sub conditione, vel in diem, sed tantum debitum
purum, ita expresse notat Bald in D 31.46 &
ibi Ioan. de
Imola.
9
3 The parties may agree in the obligatory agreement to cede and transfer
to the
cessionary a future or contingent right of action (
spes futurae
actionis),
or a
future or conditional debt
(debitum conditionale, debitum futurum)
as
and when
it comes into existence and accrues or becomes due and payable whereupon
it
will be
transferred
to the cessionary. If it never comes into
existence it will
amount to a non-existent right of action or a non-existent debt which
cannot
qualify as the subject matter of a cession according to 1
supra.
De
Wet & Van
Wyk,
op.cit..
p254:
"Dit beteken egter nie dat mens 'n 'vorderingsreg', wat nog nie bestaan
nie, maar wat in die toekoms mag ontstaan, of 'n vorderingsreg,
waaroor 'n mens
nog nie beskik nie, kan cedeer nie. Hiermee wil ek nie te kenne gee dat mens jou
nie regsgeldig kan verbind om 'n
vorderingsreg, wat jy in die toekoms mag
verwerf, aan 'n ander oor te dra nie. So 'n ooreenkoms is wel geldig, maar dit
maak die
ander nog nie cessionaris nie.
Hy word eers cessionaris indien die
vorderingsreg, nadat dit ontstaan het of verwerf is. aan hom gecedeer is
."
(My underlining)
The following portion of the passage in cap 5 para 4 of the
Commentarius de Actionum
Cessione.
1623, by Sande (1558-1638) has been the cause of some
confusion in our case
law: "Nec tantum actio, sed etiam
futurae actionis spes
utiliter
transfertur, Cod 8.53
(54).3.
Futurae actionis spes est in stipulatione aut contractu
conditionali.
Nam in his
10 nondum res, sed spes tantum nostra
est, eaque ipsa spes cedi potest, quemadmodum &
spes, sive res
futura promitti, vendi, oppignerari potest, D20.1.15pr, D18.4.17,
19
Inst
3.15.4
..." (My underlining). The above portion of the said
passage is translated as
follows by Dr Anders in his
Cession of
Actions
. 1906: (p59)
"Not only an action, but even
the expectation of a future action
may be advantageously transferred, Cod 8.53 (54)3.
The expectation of a
future action is comprised in conditional stipulations or agreements.
For
here the subject-matter has not yet accrued to us, but we have only the hope
thereof, and that very hope may be ceded just as
an expectation or a thing that
will come into existence may form the subject of a promise, sale or pledge." (My
underlining).
The authors De Wet & Van Wyk
loc.cit.
by stressing the
underlined words of Sande maintain at p254 that it is clear "dat sy
futurae
actionis spes
nie 'n verwagting van 'n vorderingsreg is nie, maar 'n
voorwaardelike vorderingsreg." This construction by them, read in the context
of
their elucidating commentary in footnote 18, would appear to be sound and
acceptable, viz. that Sande is dealing with a conditional
right and not a mere
spes
(expectation) of a right as yet non-existent.
I now turn to consider the position of retention money under the contract
between the contractor and the employer. It is not disputed
that the contract
price was R23 146 474-70 which, according to the definition of "contract price"
in Clause 1 (g)
11
of the General Conditions of Contract 1982 ("the General
Conditions") which were
incorporated in the contract, was subject to
such additions thereto or deductions
therefrom as may be made from
time to time under the provisions hereinafter
contained." Final payment was deferred and would become determined and
due on
completion of the work.
The relevant provisions of Clause 62 (1) of the General Conditions of
Contract
read as follows:
"
Certificate and payment
62 (1) The Contractor shall be paid monthly on the certificate of the
Engineer the amount due to him in respect of
(a) the estimated contract value of the permanent work executed up to the
end of the previous month and in addition such amount as
the Engineer may
consider fair and reasonable for any Temporary Works or other special items for
which separate amounts are provided
in the Schedule of Quantities, subject to a
retention of the percentage named in the Tender [5%] until the amount retained
shall
reach the 'Limit of Retention
Money' named in the Tender (hereinafter called 'retention
money*)
..."
It appears from Clause 62 (1) (a) that provision was made for monthly
progress payments by the employer to the contractor based on
monthly interim
certificates issued by the engineer as prepayments or advances on the eventual
final contract sum. The
12
interim certificates were to represent only an approximate and
proportional value of the
work done and material on site at a
specific date. Moreover, the amount certified was provisional and remained
subject to adjustment
and readjustment by the engineer in subsequent
certificates.
Clause 62 (1) (a) also provides for a deduction of 5% as retention money
from the monthly progress payments. "The retention money
is retained by the
employer as security for the due performance of the contract by the contractor
and as a fund to be drawn upon
either to complete the work or to rectify defects
should the contractor fail to do so."
(Halbury's Laws of England.
4th ed.
vol 4 (2) (re-issue) para 448).
According to the contract the maintenance period was for twelve months.
In
terms of Clauses 48 (1) and 49 (1) (a) the maintenance period is to
commence from the
date of the certificate of completion in respect of the works. The
engineer is
empowered to extend the maintenance period. Clause 62 (2) stipulates the
manner of
payment of the retention money as follows:
"Where maintenance is specified, one half of the retention money shall
become due and shall be paid to the Contractor when the Engineer
shall have
issued a Certificate of Completion in terms of Sub-Clause 48 (1) hereof and the
other half when the Engineer
shall have certified payment thereof within 14 days of the expiration of
the Period of
13
Maintenance notwithstanding that at such time there may be outstanding
claims by the Contractor against the Employer, provided always
that if at such
time there shall remain to be executed by the Contractor any works ordered
during such period pursuant to Clauses
49 and 50 hereof, the Employer shall be
entitled to withhold payment until the completion of such works of the second
half of the
retention money or so much thereof as shall in the opinion of the
Engineer represent the cost of the work so remaining to be executed
. . .
".
The issue of a final certificate by the engineer to the employer records
the
completion of the contract. In this regard Clause 64
(1) provides as follows:
"The Contract shall not be considered as completed until a Final
Certificate shall have been signed by the Engineer and delivered
to the Employer
stating that the Works have been completed and (where specified) maintained to
his satisfaction. The Final Certificate
shall be given by the Engineer within 14
days of completion of the entire Works or the expiration of the Period of
Maintenance or
latest Period of Maintenance, as the case may be, or as soon
thereafter as any works ordered during such period pursuant to Clauses
49 and 50
hereof shall have been completed to the satisfaction of the Engineer, and full
effect shall be given to this Clause notwithstanding
any previous entry on the
Works or the taking possession, working or using thereof or any part thereof by
the Employer. Provided
always that the issue of the Final Certificate shall not
be a condition precedent to payment to the Contractor of the second half
of the
retention money in accordance with Clause 62 hereof."
In the present matter the accepted crucial events relating to the
retention monies may be tabulated as follows: 1 At a site meeting
on 6 June 1990
the contractor formally requested the employer
to accept Route 5 with the bridge on Route 6 as completed. The
engineer
14
conducted a site inspection and recorded on a "snag list" certain minor
remedial
tasks and operations to be completed by 11 July 1990. On 6 June 1990 the
engineer issued progress certificate 16 in which the release
of 50% of the
retention monies was authorised. R762 835-36 retention money was accordingly
paid by the employer to the contractor.
2 On 11 July 1990 the engineer instructed the contractor to complete the
"snag list" by 31 July 1990. The latter date became the final
date of completion
of Route 5 and the bridge on Route 6. The certificate of completion was issued
on 31 July 1990 when in terms of
Clause 49 (1) (a) the maintenance period of
twelve months commenced to run.
This maintenance period in respect of Route 5
and the bridge on Route 6 was subsequently extended by the engineer to 30 April
1992.
3 On 27 August 1990 the engineer in terms of Clause 48 (1) issued a
certificate of completion in respect of Route 6
when the maintenance period
of twelve months in terms of Clause 49 (1) (a) commenced and would be operative
until 26 August 1991.
15
4 By 29 August 1990 the contractor had completed all work in terms of
the
contract and moved off the site.
5 On 10 February 1991 the last progress certificate 24 prior to the
provisional liquidation of the contractor was issued. It reflected
a sum of Rl
106 376-37 as the balance of the retention money. The parties are agreed that
since February 1991 until October 1991
the employer withheld an amount of Rl 105
589-39 as the balance of the second half of the retention
money.
6
On
10 June 1991 the contractor was placed in provisional
liquidation.
7
On 2 July 1992
the engineer issued a final Certificate of
Completion.
In the present matter we are
concerned with the balance of the retention money in regard to Route 6. Mr
Tselentis.
on behalf of the Bank, contended that in terms of Clause 48
(1) the contractor at the practical completion of the contract acquired
a
contingent right to the balance of the retention money. According to his
argument this contingent right of the contractor by virtue
of the cession vested
in the Bank before 10 June 1991. I cannot agree. In my judgment Clause 62 (2)
confers on the contractor a vested
right to payment of the balance of the
retention money "when the Engineer shall
16 have certified payment
thereof within 14 days of the expiration of the Period
of
Maintenance." But since the period of maintenance did not expire
before 10 June
1991 and no certification of payment by the Engineer occurred before the
said date, it
follows that the contractor acquired no vested right
to the balance of the retention money
before its provisional
liquidation on 10 June 1991. Assuming (without deciding) that
the contractor obtained a contingent right, as claimed by Mr
Tselentis.
then such
contingent right would have vested on 10 June 1991 in the contractor's
insolvent estate
according to the provisions of sec 339 of the Companies Act 61 of 1973
read in
conjunction with
sec 20
(1) (a) and
20
(2) (a) of the
Insolvency Act 24
of 1936
.
In the result I would dismiss the appeal with costs, including the costs of
two
counsel.
C P JOUBERT JA
CONCUR
NESTADT JA
OLIVIER, JA:
This is a dispute between a cessionary of the book debts of a company and
the liquidators of that company as regards
2
the entitlement to receive payment of retention money earned by the
company.
The chronological sequence of events leading to this appeal
is as follows:
1.
On 31 December
1984 Natal Earthworks (Pty) Ltd ("the contractor") executed a deed of cession of
all money "... which may now [be]
or which may hereafter become due and owing to
us ..." in
securitatem debiti
in favour of First National Bank of
Southern Africa Ltd ("the
bank").
2.
Much later on a
date not mentioned in the papers, the contractor concluded a building contract
with the Government of Quaqua ("the
employer").
3.
By 29 August
1990 the contractor had completed all work in terms of the contract and moved
off the site. A "certificate of completion"
was issued on 27 August 1990,
specifying the exact sum that was being retained by the employer against
defective work and
3
for maintenance for the agreed period of one year. At the expiry of this
period, i.e. 27 August 1991, subject to any defect being
repaired, the
contractor's claim for the payment of the retention moneys would become
enforceable.
4.
On 10 February
1991 a progress certificate was issued. It certified a sum of R1106 376,37 as
the balance of the retention money. This
sum would become payable when a final
certificate had been issued by the Engineer which he was obliged to do within 14
days of the
expiration of the retention
period.
5.
On 10 June 1991
the contractor was placed in provisional
liquidation.
6.
The
respondents were appointed as liquidators of the
company,
7.
A final order of
liquidation of the contractor was issued on 26 July
1991.
8.
On 2 July 1992 the
engineer issued a final certificate of completion, which meant that any
retention money, not yet paid
out,
4
had become due and payable.
The respondents contend that the
appellant, the bank, is not a secured creditor in relation to the said retention
money. The crux
of their contention is that there was no indebtedness to the
contractor by the employer in respect of retention money prior to the
provisional order of liquidation, because it was not due and payable to the
contractor prior to the said order. When appellant disputed
this contention, the
respondents approached the Natal Provincial Division for an appropriate
declaratory order.
Broome J who heard the matter defined the issue
between the parties as follows:
"It is trite that when on 10 June 1991 the hand of the law fell on the
company there was a
concursus creditorum
and that all the rights enjoyed
at the moment by the company vested in the liquidator. The corollary is that if
the company had divested
itself of a particular right before that moment then
such right remained where it was and did not vest in the liquidator. The issue
between the applicant and the first respondent is whether or not the cession had
the effect of vesting in the hands of the
5 first respondent the right to the retention
sum,"
The learned judge placed considerable reliance on
the judgment in Muller NO v Trust Bank of Africa 1981(2) SA 117 (N) for support
for the propositions that:
(a) the rights of the parties under a cession
in securitatem debiti
must be determined in accordance with the law of pledge;
(b) a pledgee will, on the sequestration of the pledgor's estate, have a
right to have his claim against the pledgor's estate paid
from the proceeds of a
corporeal movable pledged to him in respect of the claim, in preference to the
claims of other creditors,
if the pledge has before sequestration been perfected
by delivery of the pledged property to the pledgee so as to give him a
jus in
re aliena'
in respect of the pledged property as security for the payment of
his claim.
Broome J held that the effect of the issue of the certificate
of
6
completion on 27 August 1990 did not create a right in favour of
the
contractor to claim payment of the retention money:
"There are just too many uncertainties or contingencies which may arise for
that to be the case. These uncertainties or contingencies
operate in my judgment
so as to indicate that a right to the retention monies cannot be said to have
crystallised or vested in the
company as at the date of the issue of the
certificate of practical completion.... At best for the first respondent, (the
bank) it
enjoyed a mere
spes
or expectation which on the authority of
Muller's
case was not capable of being effectively ceded to the first
respondent prior to the liquidation of the company."
The
ratio
for the decision of Broome J cannot be supported, When the
certificate of completion was issued, it signified the coming into existence
of
a right to claim performance i.e. payment of the retention money subject to a
suspensive condition, viz. the repair of any defects
which might manifest
themselves during the retention period. (For the purpose of this matter it is
not necessary to decide whether
such right had come into existence prior to 27
August 1990).
7
This right was not a
spes,
but a conditional right to claim
performance. (In respect of the meaning of conditions in the true sense and as
used here, see
Jurgens Eiendomsagente v Shane
1990(4) SA 664 (A) at 674 E
- 675 A;
Tuckers Land and Development Corporation (Ptv)Ltd v Strydom
1984(1) SA 1 (A) at 10 C - E; Van der Merwe et al.
Contract: General
Principles.
1993: 204
et seq
. As regards the difference between a
spes
and a right subject to a condition, see Susan Scott,
The Law of
Cession.
2nd ed., 170
et seq
. and cases there cited; Lubbe
1980 THRHR
117
at 119).
A true suspensive condition postpones the enforceability of a personal
right ('n vorderingsreg) until the happening of a future, uncertain
event. The
personal right exists and forms part of the patrimony of the creditor, but its
enforceability is postponed. A
spes.
on the other hand, is merely the
expectation that in future a personal right (whether conditional or not) will
come into existence.
The nature of a right subject to a suspensive condition is
aptly
8
described by De Wet van Wyk (
Kontraktereg en Handelsreg
, 5th
ed.
vol. 1, 150 - 151) as follows:
"Die voorwaarde raak hoegenaamd nie die bestaan van die ooreenkoms nie, en
ook nie die kategorie waarin die ooreenkoms val nie ...
Deur die ooreenkoms
verbind partye hulle. Die een kan hom dus aan hierdie ooreenkoms net so min
onttrek sonder die ander se toestemming
as wat hy hom aan enige ander ooreenkoms
kan onttrek. Uit die ooreenkoms ontstaan voorwaardelike verbintenisse; dit is
immers wat
partye beoog het. Die skuldeiser kan nou wel nie die prestasie
onvoorwaardelik vorder nie, want dan vorder hy meer as waartoe hy
geregtig is,
maar aan die ander kant het hy tog 'n voorwaardelike reg op die prestasie.
Hierdie voorwaardelike reg bestaan werklik,
en het wel deeglik regsgevolge. Die
voorwaardelike skuldeiser kan reeds voor vervulling van die voorwaarde 'n geding
voer ter beskerming
van sy voorwaardelike reg. Die voorwaardelike verbintenis
kan ook die voorwerp wees van geldige sekerheidstelling; dit vererf positief
en
negatief op die skuldeiser en skuldenaar se erfgename; dit is onder lewendes
oordraagbaar; dit word deur die insolvensiewetgewing
in beskerming
geneem."
It is true that under a contract of
locatio conductio opens
the
contractor's right to the contract price is usually
enforceable only
9
upon ultimate completion of the work (including the maintenance work)
(
Thomas Construction (Pty) Ltd v Grafton Furniture Manufacturers (Pty)
Ltd
1988(2) SA 546 (A) at 563 G). It is also correct that the contractor's
claim for payment of the retention money is subject to the
suspensive condition
that the building defects be cured. The contractor cannot enforce payment of the
retention money unless and
until that suspensive condition has been fulfilled.
But the fact that a claim to payment is dependent on the fulfilment of a
condition
does not mean that it comes into existence or "vests" only upon
fulfilment of the condition, On the contrary, the right is created,
it forms
part of the patrimony of the creditor, it "vests" in the creditor; its
enforceability is merely postponed.
In the present case a suspended right to claim payment of
the
10
retention money came into being on 27 August 1990, As explained by De Wet
and Van Wyk
loc cit
. that right constitutes a legal reality and not a
mere spes.
Inter alia
it can be ceded and it forms part of the deceased
or insolvent estate of the contractor.
In the result, I hold that the court
a quo
erred in its approach
and that its judgment is untenable. On the basis quoted above the court
rejected, unjustifiably, the argument
put forward by the appellant that the
right now under discussion is a right subject to a suspensive condition. Clearly
the court
was of the view that the right only "vested" when payment of the
retention moneys became enforceable. It seems that the court
a quo
considered itself bound by the decision in
Muller NO v Trust Bank of Africa
Ltd and Another
1981(2) SA 117 (N). The facts of that case are stated in
the
11
report of the judgment of the court of first instance
sub nom
.
Trust Bank of Africa Ltd v Muller NO and Another
1979(2) SA 368 (D). In
so far as these decisions, and also
Graham NO v Williams Hunt (Pty)Ltd
1995(1) SA 371 (D), held that the right to claim retention money when it falls
due, is a future right, instead of a conditional right,
and that it "vests" only
when it becomes enforceable, they should not be followed (see also criticism by
Scott,
op, cit.
174 -175 and in 1982 De Jure 183
et seq.;
Farlam
and Hathaway,
Contract: Cases. Materials and Commentary.
3rd ed (eds.
Lubbe and Murray) 1988: 661). Quite simply, the effect of such decisions is to
reduce all conditional rights to
spes
with the untenable consequence,
espoused by the respondents, that if an amount is not forthwith due and payable,
there is no indebtedness,
i.e. there is no creditor and no
12
right to claim performance.
Our law accepts that an existing right of action, subject to a true
condition, whether suspensive or resolutive, can be ceded. This
appears from
Voet
Comment, ad Pand.
18.4.9; Sande,
De Actionum Cessione
5,4;
and cases such as
National Bank of South Africa Ltd. v. Cohen's Trustee
1911 AD 235
at 256;
Mc Neil v Insolvent Estate of Robertson
(1882) 3 NLR
190
at 193
in fine
:
Tayler and RiesLtd v Clift NO and Others
1935
GWL 1
at 12; and it is supported by Scott,
The Law of Cession.
2nd ed.
1991: 170; De Wet en Van Wyk,
Die SA Kontraktereg en Handelsreg
, 5e uit.
1992: 254; Lubbe
Die Oordrag van toekomstige regte
.
1980 THRHR
117).
Thus, at the latest on 27 August 1990, when the "certificate of
completion" was issued, a right of action (vorderingsreg) subject
to
13
a suspensive condition came into being. This right could be ceded by the
contractor. If it had not earlier been effectively ceded
or transferred by the
contractor, the right of action would on that date have "vested" in him, i.e. he
would have become the creditor
entitled to payment of the debt if and when it
became enforceable. After that date and up to the date of the provisional
liquidation
the contractor was entitled (subject to the provisions of the
Insolvency Act relating
to voidable and void dispositions) to cede the right to
a third party. After the date of the provisional liquidation he obviously
could
not do so.
If the contractor, after 27 August 1990 and before 10 June 1991 had ceded
and transferred the conditional right to payment of the
retention moneys to a
third party, the legal effect would have
14
been that the cedent would have retained the "dominium" of the
right
and the cessionary would have acquired the right subject to the aforesaid
condition to enforce the right.
On the insolvency of the cedent the
cessionary would be a secured creditor with a preferent claim
. This was
clearly stated by Joubert JA in
Land- en
Landboubank van Suid-Afrika v
Die Meester 1991(2) SA 761 (A) at 771 D - G.
It is common cause that
the contractor did not, on or after 27 August 1990, purport to cede or transfer
the right to claim the retention
money to the bank.
The bank does not rely on a cession of the said right after 27 August
1990. It bases its entitlement on the prior cession of 31 December
1984. That
cession took place long before the right under
15
discussion came into existence.
Did the cession of 31
December 1984 vest in the bank, the cessionary, the right which came into
existence in August 1990 with the
legal consequences as set out hereinbefore?
This is the crucial question in this appeal.
There are two
approaches to this question, one resulting in a negative answer and, therefore,
success in the appeal for the respondents;
the other approach and, in my view,
the correct one, resulting in the opposite conclusion.
The first
approach takes as its point of departure the construction placed by our courts
on cession. This construction is to the effect
that the cession of a right
requires two juristic acts, viz. the obligationary agreement and the real
agreement. The first agreement
16
creates rights and duties, ia. the right to claim delivery of the
relevant right of action. The second, real, agreement relates to
the actual
delivery (or transfer) of the right of action. This agreement requires consent
to give and take delivery of the relevant
right of action (see
Johnson v
Incorporated General Insurances Ltd
1983(1) SA 318 (A) at 331 G - H). These
two juristic acts may be incorporated in one declaration or document (the
Johnson
-case.
supra,
at 331 G - H).
The attack on the
cedability of the expectation of future rights (
spes
) is then based on
two arguments:
(i) Although it is nationally possible that parties
can enter into a contract relating to the cession or transfer of the expectation
of future rights (a
spes
), they cannot, before the envisaged right
comes
17
into existence,
transfer
that right, They cannot transfer
in
anticipando
that which does not exist. And in order to
transfer
the
right, they will have to conclude the real agreement
after
the
right
had come into existence (which did not occur in the present
case),
This view is expressed succinctly by Lubbe,
op cit
. 128
as
follows:
"Die boustene van die Suid-Afrikaanse vennoensreg is subjektiewe regte, wat
saaklik of persoonlik van aard kan wees. In hierdie stelsel
is geen plek in te
ruim vir 'n sogenaamde
spes
of verwagting, iets wat nog geen
vermoënsbestanddeel is, maar aan 'n ander oorgedra sou kan word
nie."
This view is shared by other academics: De Wet en Van
Wyk,
op cit
.. 254; E Kahn,
Contract and
Mercantile Law through the
Cases
. 1971: 243. A contrary view is that of Scott,
op
cit
.. 178:
"In the case of future rights, the method of transfer facilitates the
possibility of transferring such rights
in anticipando,
as
the
18
transfer is effected by means of an agreement. This transfer agreement can
be concluded
in anticipando,
that is, before the right has materialized,
and if this agreement is the sole requirement for the cession, it is regarded as
a completed
juristic act which cannot be dissolved unilaterally by one of the
parties concerned."
(ii) The second argument is that
there is no common law authority
recognising the cedability of a
spes
. It is contended that the
authorities relied upon by our
courts for the view that a
spes
is
cedable - Sande
op
cit
. 5,4 and Voet,
Comment,
18,4,9 - do not
support the
said view.
After an exhaustive review of the said texts, Lubbe,
op cit.
121
concludes as follows:
"Uit hierdie bespreking behoort dit duidelik te wees dat die skrywer hiervan
van mening is dat die gewraakte uitlatings van Sande
en Voet hoegenaamd nie
steun bied vir die gedagte dat volgens ons gemenereg 'n
spes
as sodanig
oordraagbaar sou gewees het nie. Die skynbare afwesigheid van
ander
19
gesagsbronne ten gunste van die oordraagbaarheid van 'n spe
s
bevestig
die vermoede dat so 'n instelling nie in die Romeins-Hollandse gemenereg bestaan
het nie."
The second and opposite approach to the
problem of the cedability of a
spes
proceeds as follows.
It assumes the correctness of the two arguments, (i) and (ii) set out
above, viz. that the transferability of a
spes in anticipando
of the
coming into being of a right is a logical impossibility and that there is no
common law authority upholding such cedability.
It accepts, however,
that, as part of the legal and commercial reality in our country over many
decades, the cession and transfer
in
anticipando
of a
spes
have
been and are daily recognised.
There are many cases reported in our law, from as early as 1882, in which
it has been accepted that a future right can be ceded
20
and transferred in anticipando
. In certain cases this has taken
place without reference to any common law authority, and in others with
reference to the above-mentioned
texts of Sande and Voet.
The list
of decisions of our local and provincial divisions in this respect is a long
one. I mention the main ones:
McNeil v Insolvent Estate of Robertson
(1882) 3 NLR 190
at 193
in fine
:
Consolidated Finance Co Ltd v
Renvid
1912 TPD 1019
at 1023;
Jenkins & Co v Roberts
1912 CPD
937
;
Farmers Co-op Ltd v The Master
1959(3) SA 342 (SR) at 344 G;
Goode. Durrant and Murray Ltd v Hewitt and Connel NNO
1961(4) SA 286 (N)
at 290 G - H;
Industrial Finance & Trust Co Ltd v Schneider &
London
1925 WLD 92
at 93;
Goode. Durrant & Murray (SA) Ltd v Glen and
Wright NNO
1961(4) SA 617 (C);
Schreuder v Steenkamp
1962(4) SA 74
(O);
21
Steverlynck Bros Modern Weaving (Pty) Ltd v D H Gunn, NO
1968(2)
PH A 88 (T);
Western Bank Ltd v Registrar of Financial Institutions
1975(4) SA 37 (T) at 53 E - F;
Thos Barlow & Sons (Natal) Ltd v Dorman
Long (Africa) Ltd
1976(3) SA 97 (D) at 100 F;
Blackman v Wellspread
Investments (Pty) Ltd
1976(2) PH A 73 (C);
Randbank Bpk v Morris NO
1977(2) SA 21 (SEC);
Wispeco (Pty) Ltd v Herrigel NO
1983(2) SA 20
(C).
As far as decisions of this Court are concerned, three cases deserve
mention.
In
National Bank of South Africa Ltd v Cohen's
Trustees
1911 AD 235
, Lawrence J at 256 refers to Sande as authority for the
rule that contingent rights can be ceded. It is, however, not clear whether
the
learned judge had in mind a right subject to a condition or a
22
spes
.
In Waikiki Shipping Co. v. Thos. Barlow &
Sons (Nalan) 1978(1) SA 671 (A) this Court touched on the cedability of a spes
far too
pertinently for its comments to be considered merely
en passant
or
per incuriam
. Jansen JA with whom Trollip, Rabie, Kotze and
Joubert JJA concurred, expressly stated that "No doubt a cession may be framed
to
relate explicitly to the
spes
..." (at 678 A). He also stated
unambiguously that a
spes
may be ceded, and referred to the controversy
relating to the nature and precise effect of such a cession (at 677
H).
The third case is Bank of Lisbon and South Africa Ltd v The
Master
and Others
1987(1) SA 276 (A). That case dealt with the cession of
the reversionary interest resulting from a prior cession
in
securitatem
23
debiti
of book debts to a bank. In discussing the effect of such
a
cession Galgut AJA states at 294 C:
"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 to them. The amounts collected by the
cessionary are credited to the account of the cedent."
I
do not accept that Galgut AJA, in placing his seal of approval on the
cession
of future debts did so
per incuriam
. Rather, in my view,
he gave expression to the well-known commercial practice and the generally
recognised legal position mentioned
above.
Finally, the commercial
and legal institutions of the cession of books debts (defined in
Rennie NO v
The Master
:
Glaum NO v The Master
1980(2) SA 600 (C) at 609 B - C)
and factoring are based on the cedability and transferability of future rights
in anticipando
(see
24
Scott,
op. cit
.. 52 - 53).
The position, in my view,
then is that it has been accepted in commerce and by the courts of our country
for more than a century that
future rights can be ceded and transferred
in
anticipando
. The decisions of our courts have thus been regarded for a very
long period of time as being correct. Clearly these decisions have
been acted
upon and served as the basis for the general and well-known practice of taking
security in the form of the cession of
book debts (including future debts),
cession of existing and future rights in
securitatem debiti
and factoring
of existing and future rights. In these circumstances I am not inclined to hold
that these decisions are wrong (see
Holmes' Executor and Others v Rawbone and
Others
. 1954(3) SA 703 (A) at 711 E - F;
Harris and Others v Minister of
the
25
Interior and Another
1952(2) SA 428 (A) at 454;
John Bell &
Co
Ltd v Esselen
1954(1) SA 147 (A) at 154;
Cullinan v
Noordkaaplandse Aartappelkernmoerkwekers Koöperasie Bpk
1972(1) SA 761
(A) at 767 - 8;
Tuckers Land and Development Corporation (Pty) Ltd v
Strydom
1984(1) SA 1 (A) at 16 - 17;
Rainbow Diamonds (Edms) Bpk v
Sanlam
1984(3) SA 1 (A) at 14
in fine; Du Plessis NO v Strauss
1988(2) SA 105 (A) at 141 F -143 C;
Ellispark Stadion Bpk v Minister van
Justisie
1990(1) SA 1038 (A) at 1051 F - H; see also
Willis Faber
Enthoven (Pty) Ltd v Receiver of Revenue and Another
1992(4) SA 202 (A) at
220 E - G). Although there may be considerations of public policy militating
against upholding the cedability
of future rights (as to which see Lubbe,
op
cit
., 131 - 140), they have not been canvassed in the
26
present case. If it is considered that the present position needs review,
that is a task that should be undertaken by the
legislature.
Consequently I hold that the cession of 31 December
1984 was a valid one and that, if it had incorporated a
transfer in
anticipando
of the right now under discussion (which only came into being at
a much later stage) it would have been legally effective.
Did the
cession of 31 December 1984 incorporate a
transfer
of the right under
discussion
in anticipando
?
The cession sets out that "We (the
contractor) ... do hereby cede, assign, transfer and make over to and in favour
of [the bank] all
our right, title and interest in and to all and any monies and
amounts which may now or which may hereafter become due and owing
to us by any
person whomsoever ... we hereby nominate,
27
constitute and appoint the Bank irrevocably and
in rem suam
to
he
our Attorneys and Agents, with full power and authority for us and in our
name or in its own name to demand, sue for, recover and
receive all debts or
sums of money whatsoever which may now or hereafter become due, owing, payable
or belonging to us..."
In my view, this formulation is wide enough to indicate an intention of
transferring and receiving transfer of the right in
anticipando
.
Especially the words "... transfer and make over..." and the reference to monies
and amounts becoming due and owing in future indicates
a present mutual
intention of now transferring rights as they will come into existence in the
future (see also
Standard General Insurance Co Ltd v SA Brake CC
1995(3)
SA 806 (A) at 815 A - B).
28
I conclude, therefore, that on 31 December 1984 the bank and the
contractor concluded a contract by which the contractor's right to
claim payment
of the retention money (even though that right was subject to a suspensive
condition) when it came into being on 27
August 1990, was transferred to the
bank.
The effect of this cession and transfer is exactly the same as
if the right had been ceded after 27 August 1990 but before 10 June
1991 and as
explained above, following
Land- en Landboubank van Suid-Afrika v Die
Meester, supra
: The cedent, the contractor, retained the "dominium" of the
right and the cessionary, the bank, acquired the right, subject to the
suspensive condition mentioned above, to enforce payment of the retention moneys
if and when it became payable. On the liquidation
of the contractor on 10
June
29
1991, the aforesaid
dominium
fell into the insolvent estate,
and the cessionary became a secured creditor with a preferent
claim
.
The relief sought by the liquidators (the present
respondents), viz. a declaratory order that the bank (the present appellant) is
not, by virtue of the cession of 31 December 1984, a secured creditor, cannot,
for the reasons set out, be granted.
Consequently I agree with the order proposed by my colleague Van den
Heever JA.
P J J OLIVIER JA
VAN DEN HEEVER JA
I have read the judgment of Joubert
A but have come to a different conclusion.
I obviously have no quarrel with his erudite elaboration on the
propositions that a cession is by definition an act of transfer; and
that rights
are transferable only once they come into existence - of importance in view of
the legal fiction equating a cession of
incorporeal rights in securitatem debiti
with the legal institution of a pledge of corporeals as security. The fiction
has its origin
in the practical needs of modem commerce but has caused much
strenuous intellectual gymnastics on the part of scholars and lawyers
in trying
to prise one legal concept into the garb of another not ideally suited.
Similarly, I accept without reservation his factual findings that the
cession in issue here was expressed in very wide terms; and
that there can be no
doubt that it intended to deal with future rights which the contractor would
acquire, not merely with rights
extant as at 31
3
December 1984, the date of the relevant cession.
In my view the questions to be determined are
-
(a)
whether
the cession contemplated a transfer only of the contractor's then exigible debts
and of future ones as and when they became
so exigible; or whether the parties
to the document contemplated also a transfer of the contractor's claims then
extant but imperfect
because, for example, subject to some time clause or
condition, and of similar imperfect claims as and when they arose in the future;
and, if the
latter,
(b)
whether the
contractor's claim against the employer is merely a future claim or such an
imperfect one; and if
so,
(c)
whether present
effective transfer is possible of such a claim, or whether future and contingent
rights are equally incapable of present
"delivery".
In examining the first of
these, a legislator's intention with the phrase debt due is irrelevant, whether
in relation to garnishee
orders in terms of Transvaal Ordinance No 12 of 1904 or
the determination of the
4
date of commencement of the running of prescription under the
Prescription Act. The
inquiry must be what the parties to the cession had in
mind: what the contractor intended to deliver to the Bank which was willing
to
finance, so far as necessary, the contractor's ongoing operation by means of
overdraft facilities, and what the Bank was content
to accept as security for
the recovery of the funds it was prepared to advance.
In defining the ambit of the questions which need to be
answered,
I have used the words
debts
and
claims
because my colleague has done
so, as did the document to be interpreted. The words may be
misleading.
"The subject matter of cession is a right, often referred to as a claim
and less felicitously as the cession of a debt. The expression
'cession of a
right of action' is also used but there is little advantage in doing so since
the right of action (to enforce performance)
is a power which is inherent in the
right (to performance) and cannot be detached from it as a separate cedable
entity."
(per
P M Nienaber, dealing with
Cession
in LAWSA, First
Re-issue Vol
2 par 241. See too the discussion of the judgment in TRUST BANK
OF
5
AFRICA v MULLER NO
1979 (2) SA 368
(D), by Scott in 1982 DE JURE 183 at
186.) I return to this below.
It would make comparatively poor
commercial sense for the Bank to want nothing more than to ensure that the
contractor channelled
into the Bank's possession, money earned only as and when
received as being exigible, in reduction of the contractor's overdraft
with the
Bank. A contractor would ordinarily while things are going well do so in any
event, from self-interest: to keep flowing
the funding it needs to enable it to
earn money by performing under its contract with the employer. It is when things
go wrong -
when the employer stops paying and/or other creditors agitate for
payment of
their
claims - that it becomes important that the Bank
insisted on security; provided, of course, that the commercial content of the
rights
transferred (as distinct from merely undertaken to be transferred) is
worthwhile. In judging what
was
the content of the rights intended to be
transferred and accepted as security, it is relevant that the sequence provided
for in the
agreement between the
6
contractor and the employer, as in most if not all cases of similar
engineering or building contracts, is that the contractor performs
first. It is
only after he has spent energy as well as money for the benefit of the employer,
that performance - payment - by the
employer enriched thereby becomes
due
in the sense of only then becoming exigible.
Due
does not necessarily mean
immediately payable
, as
reference to any dictionary reveals - including the Oxford dictionary which
refers in turn to Wharton's Law Lexicon: "A debt
is said to be
due
the
instant that it has existence as a debt; it may be
payable
at a future
time". It may mean merely "earned" (WARBURTON v HAYWORTH,
6 QBD 1).
See too
BASIL BRIAN NEL NO v THE BODY CORPORATE OF THE SEAWAYS BUILDING AND THE
REGISTRAR OF DEEDS, CAPE TOWN, (AD) (unreported 25
August 1995). This judgment
stressed that the meaning of the word depends on the context in which it is
used.
Some of the words and phrases used in the cession could have been
dispensed with, as the passage from LAWSA points out. In the
7
paragraph immediately following that quoted, the author says
"In the frequently employed phrase 'cession of a right, title and
interest', the words 'title and interest' bear no particular significance
except
perhaps to stress the totality of interests to be transmitted."
The document in question here certainly did so seek to stress the
totality of interests in question.
Juggling all the permutations postulated by the wording used in the
cession, the personal rights intended to be transferred included
rights to money
owing, or which might become owing, to the contractor. The cession does not
limit the rights to be transferred to
the contractor's right to money then
payable; or only as and when money becomes payable in future. I do not think it
is in dispute
that one can effectively cede one's right to money that is payable
perhaps years hence, for example to the money one has invested
on fixed-term
deposit.
In my view the parties to the cession - the document on the strength of
which credit facilities were afforded by the Bank and enjoyed
8
by the contractor - clearly intended to extend the ambit of the rights of
the contractor which were transferred or to be transferred
to the Bank as
security, as widely as lawfully possible. I can think of no reason why, where
the document says the cession is of
"monies due and owing", that should be
understood as though
owing
were an incorrect and tautologous synonym for
due
in the sense of forthwith claimable instead of the phrase meaning
"monies due as well as monies owing"; nor why
owing
should be limited to
mean "owing in a presently calculable amount".
The next question is whether our law places any obstacle in the parties'
way, preventing them from achieving what they set out to
do. The cession in
question emphasised that object by conferring on the Bank, irrevocably and in
rem suam, the right to institute
action for all debts or sums of money due or
owing or payable or belonging to the contractor. Since cession is by definition
an act
of transfer of incorporeal rights, there is perhaps a subconscious
temptation to regard this as the expedient whereby one may put
the cessionary in
possession of a right
9
without transferring ownership of the right to him, just as transfer of
possession without transfer of ownership is effected when
a corporeal object is
pledged. But Scott and Nienaber and doubtless others warn against being misled
by phrases imprecisely used.
A right of action does not exist independently of
the underlying right itself. The former is merely the procedural manifestation
of the latter. A mandatory has no independent right of action, unless he is in
truth a cessionary posing as a mandatory. In MULLER
NO v TRUST BANK OF AFRICA
LTD
1981 (2) SA 117
(N), the court spoke throughout of the cession of a right of
action not yet in existence. That may have misled the court into regarding
the
object of the cession there as the expectation of a future right since the
procedural manifestation of the underlying right would
acquire meaning only once
the underlying right became exigible.
There is nothing in logic that militates against acceptance of the notion
that an extant right may be transferred to another forthwith
despite its being
subject to a condition. If Sande perhaps said it was impossible
10
it was in another age and of procedural rules different to ours, not
rules of logic. Our law on this issue has developed, by fits
and starts but
nevertheless, by trying to argue logically, with the analogy of pledge in mind.
Admittedly logic has problems because
of the dissimilarity between what is
ceded, and what is pledged. In my view the effect of the judgment of my
colleague in TUCKERS
LAND AND DEVELOPMENT CORPORATION (PTY) LTD v STRYDOM
1984
(1) SA 1
(A) 24E-25B is that it is accepted that a contingent right is capable
of immediate transfer. See too, for example, BANK OF LISBON
AND SOUTH AFRICA LTD
v THE MASTER AND OTHERS
1987 (1) SA 276
(A) at 294 C-I; Lubbe in THRHR 1980 128
re BARNHOORN v DUVENAGE
1964 (2) SA 486
(A). (See p 494F-G of this.) If a
contract is concluded between A and B subject to a condition which results in A
acquiring a personal
right which passes to his heirs on the death of A, in my
view there is no reason today to accept that that personal right is incapable
of
being passe by cession. In due course it
11
may prove in money terms to be worth little, or less than the parties
anticipated. The requirement that the object of a cession must
be certain does
not mean that the money value of the (defined) right which is ceded must be
precisely calculable when the transfer
of that right occurs.
To come then to the final issue, whether the retention money could be
properly described as owing by the employer to the contractor
though not yet
exigible, by virtue of the agreement between those two, when the contractor was
liquidated. If so, the right had vested
in the Bank prior to the liquidation of
the company by virtue of the cession.
I did not understand Mr Wallis to argue that the 1984 cession would
relate only to book debts then in existence. His argument was
not that something
more had to be done to bring future contracts within its compass. He accepted
that if a right had vested in the
contractor by the time the contractor was
liquidated he would be out of court. But, he urged, the contractor had no right
when the
certificate was issued on 27 August, by reason of the terms of its
agreement with the employer.
12
The parties to the contract we are concerned with envisaged an ongoing
relationship in the course of which the content of the original
contract could
change substantially. Although they agreed on the overall task to be done, the
parties accepted that delivery could
be effected in separate stages. The
maintenance stage was quite separate from the construction stage. When the
former started, the
employer had been given the full benefit of the contractor's
expenditure and labours, as approved by the engineer on the employer's
behalf.
Clause 33 provides that
"On the completion of the Works the Contractor shall clear away and
remove from the Site all Constructional Plant, surplus materials,
rubbish and
Temporary Works of every kind and leave the whole of the Site and the Works
clean and in a workmanlike condition to the
satisfaction of the Engineer
..."
Since by 29 August 1990 the contractor had completed all work in terms of
the contract and moved off the site, and the work had been
accepted
13
by or on behalf of the employer, the contractor was owed what it had
earned, subject only to the condition that it could forfeit portion
of that if
it did not maintain the work done for the period agreed upon and/or did not
remedy such minor defects as might become
manifest during the period in
question.
In short, in my view the contractor acquired before liquidation a
personal right to performance by the employer of its part of their
bargain. That
performance - payment - was delayed for the maintenance period, and was subject
to the condition that the amount held
in the retention fund could be reduced.
That personal right was transferred in terms of the cession to the Bank before
liquidation
and the Master was in my view correct in upholding the objection of
the appellant to the joint liquidators' account.
The appeal is upheld with costs including the costs of two counsel and
the costs of the application for leave to appeal, which were
reserved. The order
of the court below is replaced with one dismissing the
14
application with costs including the costs of two counsel.
L VAN DEN HEEVER JA CONCUR:
VAN COLLER AJA)