THE SUPREME COURT OF APPEAL
REPUBLIC OF SOUTH AFRICA

JUDGMENT

Case number: 299/2008

In the matter between:

JACOBUS DAWID GROBLER

APPELLANT

and

CECILIA JOHANNA OOSTHUIZEN

RESPONDENT

Neutral citation:
Grobler v Oosthuizen (299/2008) [2009] ZASCA 51
(26 May 2009)

CORAM:

BRAND, CLOETE, MLAMBO JJA, HURT et LEACH
AJJA

HEARD:

12 MAY 2009

DELIVERED:
26 MAY 2009

SUMMARY:
Cession of policy in compliance with terms of sale which
proved to be null and void – policy paid out to heir of
cessionary – claim by cedent against heir for proceeds of
policy – plea of prescription by heir premised on postulate
that cedent's claim for re-cession of rights under policy
which arose more than three years prior to summons –
cession construed as cession in securitatem debiti and
not outright cession – held that re-cession consequently
not required – held further that in the premises plea of
prescription could not succeed.

ORDER

On appeal from:
High Court, Kimberley (Majiedt, Olivier JJ and
Mokgohloa AJ, sitting as court of appeal against a
judgment of Williams J.)
1.
The appeal is upheld with costs, including the costs occasioned by the
employment of two counsel.
2.
The order of the court a quo is set aside and replaced by an order in
the following terms:
'The appeal is dismissed with costs.'

JUDGMENT

BRAND JA (Cloete, Mlambo JJA, Hurt et Leach AJJA concurring)

[1] The appellant, Mr Grobler ('Grobler'), instituted action against the
respondent, Mrs Oosthuizen ('Oosthuizen'), and other defendants in the High
Court, Kimberley. His particulars of claim incorporated various causes of
action supporting a number of claims against the different defendants. Of
these only the first claim against Oosthuizen continues to be of relevance on
appeal. Against this claim Oosthuizen filed a plea and a counterclaim. She
also raised a special plea of prescription. At the commencement of
proceedings, the parties agreed and the trial court (Williams J) ordered that
the special plea of prescription should be determined separately and prior to
all other issues. At the end of the preliminary proceedings that followed,
Williams J dismissed the plea of prescription with costs. Oosthuizen's appeal
to the full court against that judgment was, however, successful. In terms of
the judgment of the full court (Olivier J, with Majiedt J and Mokgohloa AJ
concurring) Oosthuizen's plea of prescription was therefore upheld with costs.
Grobler's further appeal against the latter judgment is with the special leave of
this court.

[2] In the main, the background facts were presented to the trial court by
way of a stated case. Certain circumscribed areas of dispute were, however,
reserved for the leading of oral evidence. But, as will appear from what
follows, even the evidence presented in this way proved to be largely common
cause.

[3] On 14 August 1991 Grobler entered into an agreement of sale with a
company, Mothibi Crushers & Transport (Pty) Ltd. In terms of the agreement
he purchased an immovable property situated at Mothibistat, in the erstwhile
Republic of Bophuthatswana, from the company. In entering into the
agreement Mothibi Crushers was represented by Oosthuizen's husband, Mr
Gert Hendrik Oosthuizen, as its only shareholder and director, who has since
passed away and to whom I shall henceforth refer as 'the deceased'.

[4] Payment of the purchase price was governed by the somewhat
unusual provisions of clause 2 of the sale agreement, which read as follows:
'2.
Die koopprys is die som van R300 000 tesame met rente teen 15% per jaar
maandeliks gekapitaliseer vanaf 1 Julie 1991 tot datum van betaling, betaalbaar soos
volg: op 30 Junie 2001, vir welke bedrag die koper 'n polis by 'n goedgekeurde
versekeringsmaatskappy uitneem, welke polis 'n opbrengs van R1 200 000.00 op 30
Junie 2001 waarborg en welke polis deur die koper aan die verkoper gesedeer word.'
Freely translated from the Afrikaans language, the clause thus determined the
purchase price at R300 000 together with interest at 15 per cent, capitalised
monthly, from 1 July 1991 payable on 30 June 2001, for which amount the
purchaser would acquire an insurance policy from an approved insurance
company which guaranteed payment of R1,2m on 30 June 2001 and which
policy the purchaser would then cede to the seller.

[5] In compliance with his obligations under clause 2, Grobler acquired not
one but three policies from Sanlam Ltd, which cumulatively adhered to the
stipulated requirements. By mutual agreement between the parties involved,
these policies were, however, not ceded to Mothibi Crushers, but to the
deceased in its stead. In point of fact, the cessions of the policies preceded
the sale in that they had been signed by Grobler on 8 August 1991. In terms

of the sale agreement, Grobler was obliged to pay the premiums in terms of
the policies. For all intents and purposes he did so regularly until November
and December 1996 when he fell into arrears. These two premiums were then
paid by the deceased, for which Grobler compensated him in January 1997.

[6] The deceased passed away on 27 January 1997. By that time the
property had not yet been transferred to Grobler. Indeed, it was common
cause between the parties at the trial that transfer could in fact never occur
and that the agreement of sale was null and void from the start. The reason
for this, broadly stated, was that according to the laws of the erstwhile
Republic of Bophuthatswana, where the property was situated, it could only
be alienated to Grobler, who was not a citizen of Bophuthatswana at the time,
with ministerial consent, which consent had never been obtained. In the
beginning, so Grobler testified, he was not aware that the agreement of sale
was void. This only came to his notice after the deceased purported to cancel
the agreement in December 1996 by reason of Grobler's failure to pay the
premiums on the insurance policies.

[7] After the death of the deceased the executors in his estate made the
policies paid up. Thereafter they ceded two of the policies to Oosthuizen as
the only heir in the deceased's estate. She thereafter claimed the surrender
value of the policies from Sanlam who duly paid her the sum of R741 677.24
on 16 September 1997. Grobler's claim under consideration is for payment of
this amount, for which he issued summons on 9 June 2000. Against this
background the substructure of Oosthuizen's plea of prescription can broadly
be stated thus:
•
The underlying basis for Grobler's claim as formulated in his pleadings,
she said, is for re-cession of the policies which were ceded to the deceased in
compliance with a deed of sale which proved to be null and void.
•
From the perspective of the deceased his obligation or 'debt' – as
contemplated in Chapter 3 of the Prescription Act 68 of 1969 – was therefore
to re-cede the policies to Grobler.

•
This debt, she said, 'became due' as envisaged by s 12 of the Act
when the cessions occurred, because a claim for restoration of performance
under a void agreement arises at the time when that performance is rendered.
•
Seeing that the period of prescription provided for in s 11(d) of the Act
is three years, she said, Grobler's claim became prescribed in August 1994
which was long before the death of the deceased in 1997.
•
As a matter of law, so Oosthuizen's contentions concluded, a claim
which has become prescribed against a deceased cannot be enforced by an
enrichment claim against the heir, which is the ultimate basis of Grobler's
claim.

[8] In this court counsel for Grobler conceded that if the cession of the
policies were to be classified as a so-called 'out-and-out' or outright cession,
Oosthuizen's plea of prescription would be unanswerable. As I see it, that
concession was rightly and fairly made. In the event of an outright cession,
Grobler would have lost all his rights under the policies against Sanlam by
transferring those rights to the deceased. Nothing would remain vested in him.
The only way in which he could again acquire those rights would be by way of
re-cession of the policies. Because the cessions were effected in compliance
with his obligations under an agreement which proved to be void, his claim for
restoration in the form of re-cession would arise immediately, ie in August
1991. In consequence it would have been extinguished by prescription in
August 1994 (see eg Van Staden v Fourie 1989 (3) SA 200 (A) at 214F-
215B).

[9] As formulated in his pleadings, Grobler's claim indeed appeared to rest
on a claim for re-cession of an out-and-out cession of the policies to the
deceased. This was pointed out and relied upon by Oosthuizen's counsel as
his opening argument on appeal. I do not believe, however, that that
argument is available to Oosthuizen, at least not at this late stage. From the
outset and as the matter followed its meandering way through two courts,
Grobler's case had always been that the cession of the policies was not an
out-and-out cession but a cession in securitatem debiti and that his claim was
not founded on a re-cession of the policies. In the circumstances, Oosthuizen

could not be prejudiced in any conceivable way by Grobler's change of stance
from his pleadings. That much was rightly conceded on Oosthuizen's behalf.
In these circumstances, I believe, it is no longer open to Oosthuizen to revert
to a literal interpretation of Grobler's pleadings on appeal (see eg Shill v
Milner 1937 AD 101 at 105; Stead v Conradie 1995 (2) SA 111 (A) at 112A-H;
Fourway Haulage SA (Pty) Ltd v National Roads Agency Ltd 2009 (2) SA 150
(SCA) para 14).

[10] As I have said, the nub of Grobler's answer to the prescription plea was
that the cession of the policies was not an out-and-out cession but a cession
in securitatem debiti. In accordance with this construction, the policies were
ceded to the deceased as security for future payment of the purchase price.
The opposing contention by Oosthuizen was that the cession of the policies in
itself constituted payment of the purchase price and should therefore be
construed as an out-and-out cession for value received. The cession
documents themselves support the latter construction, in that each describes
itself as an 'out-and-out cession for value received'. That in itself is, however,
not decisive. As was held by Lord de Villiers CJ in National Bank of South
Africa Ltd v Cohen's Trustee 1911 AD 235 at 246, in response to a similar
reliance on the wording of a cession document, form should not override
substance if on a proper analysis of the transaction as a whole the cession
was made with the purpose of securing a debt owed by the cedent to the
cessionary (see also Bank of Lisbon & South Africa Ltd v The Master 1987 (1)
SA 276 (A) at 294D-E). I respectfully subscribe to this practical approach. As
the evidence in this matter shows, the reference to an 'out-and-out cession'
did not even appear in the documents when they were signed by Grobler.

[11] The true character of the cession therefore depends on the intention of
the parties. In determining the intention of the parties in this case, the deed of
sale appears to be the appropriate point of departure. Unfortunately the deed
of sale is itself inconsistent in its terms. On the one hand there is clause 5
which provides that the purchaser would be entitled to possession of the
property sold 'at the time of the out-and-out cession of the policy in terms of
clause 2'. Further support for the outright cession construction is to be found

in an addendum which was signed on the same day as the deed of sale, that
is 14 August 1991. It provides that Grobler would be liable for any tax that
may become due on the proceeds of the policy 'which had been ceded to the
seller in discharge of the purchase price'.

[12] To the contrary effect is clause 23. In terms of this clause Grobler
undertook to deliver the policy documents to the deceased 'as security for the
outstanding balance of the purchase price'. Closely linked to this clause is
clause 21 which provides for the registration of a covering bond over the
property sold in favour of the deceased 'as security for payment of the
purchase price, together with interest, as set out in clause 2 above'. With
reference to this covering bond, clause 24 provides that, if upon the death of
Grobler, the proceeds of the policy would prove to be less than the
outstanding balance of the purchase price, the deceased would be entitled to
rely on the covering bond for the residue. It goes without saying that the last
mentioned clauses support the construction of a cession in securitatem debiti:
If the purchase price had been discharged by an out-and-out cession of the
policies, future payment of the purchase price would not require to be secured
in any form. Likewise there would be no possibility of any residue of the
purchase price upon the death of Grobler.

[13] In the light of this ambiguity the parties agreed to present oral evidence
on the surrounding or background circumstances to the transaction. Whether
it is the one or the other, incidentally, no longer appears to make any
difference (see eg Masstores (Pty) Ltd v Murray & Roberts Construction (Pty)
Ltd 2008 (6) SA 654 (SCA) para 7; KPMG Chartered Accountants v Securefin
[2009] ZASCA 7 (13 March 2009) para 39). The most important point of the
evidence thus presented, as I see it, was the testimony of Grobler, which
turned out to be undisputed, that both he and the deceased anticipated the
proceeds of the policy to exceed the purchase price of R1,2m on the payment
date of 30 June 2001 and that he, Grobler, would then be entitled to that
excess.

[14] Direct support for the security construction is also to be found in the
evidence about the subsequent conduct of the parties which was rightly
admitted (see eg Coopers & Lybrandt v Bryant 1995 (3) SA 761 (A) at 768D),
and particularly in the correspondence between the attorneys acting for the
parties at the time. First, there was the letter by Grobler's attorneys of 25
September 1991, seeking an undertaking from the deceased that he would
not put up the insurance policies ceded to him as security for his own debts.
Shortly thereafter this undertaking was then given by the deceased's
attorneys on his behalf. Then there was the letter by the deceased's attorneys
of 29 October 1991 in which they required the original of the policies 'which
had been ceded to our client as security'. Apparently the original policies were
subsequently delivered directly to the deceased, because on 11 November
1991, his own attorneys sought written confirmation from him that he held
these policies 'as security for future payment of the purchase price'. In the
light of all this I am satisfied that the factual finding by both the trial court and
the full court that the policies were ceded to the deceased in securitatem
debiti, should be upheld.

[15] Evaluation of the conclusions arrived at by both the trial court and the
full court in applying the law to these facts, requires some reference to the
opposing theories in our law in regard to cessions in securitatem debiti. The
principle that one debt (the principal debt) can be employed as security for
due performance of another debt (the secured debt), is not in doubt. The
opposing theories relate to the doctrinal basis for this principle. Of these
theories there are essentially two (which are discussed in more detail, eg in W
A Joubert (founding editor) The Law of South Africa 2ed Vol 2 Part 2 sv
'Cession' (P M Nienaber) para 53; De Wet & Yeats Kontraktereg &
Handelsreg 5ed (by De Wet & Van Wyk) 415 et seq; Van der Merwe et al
Contract General Principles 3ed para 12.5.3; Susan Scott The Law of Cession
2ed para 12.2; Van der Merwe, Sakereg 2ed 673 et seq). The one theory is
inspired by the parallel with a pledge of a corporeal asset and is thus loosely
referred to as 'the pledge theory'. In accordance with this theory, the effect of
the cession in securitatem debiti is that the principal debt is 'pledged' to the
cessionary while the cedent retains what has variously been described as the

'bare dominium' or a 'reversionary interest' in the claim against the principal
debtor (see eg Land- en Landboubank van Suid-Afrika v Die Meester 1991 (2)
SA 761 (A) 771C-G; Development Bank of Southern Africa Ltd v Van
Rensburg 2002 (5) SA 425 (SCA) para 50).

[16] Critics of the pledge theory have difficulty with the concept of a real
right of pledge over the personal rights arising from the principal debt (see eg
De Wet & Yeats op cit 416; Van der Merwe Sakereg 683). Concomitantly they
also have difficulty with the description of the interest retained by the cedent in
the personal right against the debtor as that of 'ownership' or 'dominium'. This
difficulty is well formulated in the following dictum by Broome JP in Moola v
Estate Moola 1957 (2) SA 463 (N) at 464B-D:
'The word "dominium" is therefore out of place, and it does not help much to describe
plaintiff as the "owner" of the ceded rights. Ownership of a right of action would seem
to imply the right to sue, and if the right to sue has passed to the cessionary it is
difficult to imagine what can remain with the cedent. The truth probably is that the
cedent by way of security retains only his "reversionary right", that is to say his right
to enforce the ceded right of action after the [secured debt] . . . has been discharged.'
(See also eg Barclays Bank (D, C & O) v Riverside Dried Fruit (Pty) Ltd 1949
(1) SA 937 (C) at 946.)

[17] In the light of these problems associated with the pledge theory, an
alternative theory had been preferred by the majority of academic authors and
even in some earlier decisions of this court (see eg Lief, NO v Dettmann 1964
(2) SA 252 (A) at 271H; Trust Bank of Africa Ltd v Standard Bank of South
Africa Ltd 1968 (3) SA 166 (A) at 173G-H and the writings of academic
authors previously cited). According to this theory a cession in securitatem
debiti is in effect an outright or out-and-out cession on which an undertaking
or pactum fiduciae is superimposed that the cessionary will re-cede the
principal debt to the cedent on satisfaction of the secured debt. In
consequence, the ceded right in all its aspects is vested in the cessionary.
After the cession in securitatem debiti the cedent has no direct interest in the
principal debt and is left only with a personal right against the cessionary, by
virtue of the pactum fiduciae, to claim re-cession after the secured debt has

been discharged. It is readily apparent that if the pactum fiduciae theory were
to be applied to the facts of this case, the plea of prescription must be upheld,
because Grobler's case would then depend on a claim for re-cession which
arose in August 1991. But despite the doctrinal difficulties arising from the
pledge theory, this court has in its latest series of decisions – primarily for
pragmatic reasons – accepted that theory in preference to the outright
cession/ pactum fiduciae construction (see eg Leyds NO v Noord-Westelike
Koöperatiewe Landboumaatskappy Bpk 1985 (2) SA 769 (A) at 780E-G; Bank
of Lisbon and South Africa Ltd v The Master (supra) at 291H-294H; Incledon
(Welkom) (Pty) Ltd v Qwa Qwa Development Corporation Ltd 1990 (4) SA
798 (A) at 804F-J; Millman NO v Twiggs 1995 (3) SA 674 (A) at 676H;
Development Bank of Southern Africa Ltd v Van Rensburg (supra)  para 50).
In the light of these decisions the doctrinal debate must, in my view, be
regarded as settled in favour of the pledge theory.

[18] In the trial court Williams J therefore quite rightly accepted that she was
bound to apply the pledge theory. Based on this theory her reasoning
essentially went as follows: after the cession in securitatem debiti, dominium
or ownership of the principal debt remained with Grobler; what he therefore
essentially sought to enforce was the rei vindicatio; and in terms of s 1 of the
Prescription Act, the prescription period for the rei vindicatio is 30 years. In
consequence, the learned judge concluded, Grobler's claim did not become
prescribed. I find this line of reasoning unsustainable in all three of its
constituent parts. First, for the reasons given, in eg Moola, the concept of
dominium or ownership in its literal sense is ill-suited to describe the cedent's
remaining interest. But the description of that interest as 'ownership' becomes
virtually nonsensical in a case such as this where the principal debt had been
discharged before action was instituted. When Sanlam paid out the policies,
the principal debt was extinguished. Grobler would then be the owner of
nothing and that could hardly constitute the underlying basis for his claim.
Closely related to my first problem is the second, namely that whatever
remedies associated with ownership could be said to be retained by the
cedent, it does not appear to include the rei vindicatio which only pertains to
corporeals (see eg Van der Merwe Sakereg 20-23). Finally, the prescription

period of 30 years in s 1 of the Prescription Act relates to acquisitive
prescription. For extinctive prescription, the period can, in the present context,
only be the three years provided for in s 11(d) of the Act (see eg Evins v
Shield Insurance Co Ltd 1979 (3) SA 1136 (W) at 1141F-G; Barnett v Minister
of Land Affairs 2007 (6) SA 313 (SCA) para 19).

[19] The full court therefore quite rightly, in my view, refused to follow the
reasoning of the trial court. It, in turn, focused on the designation of the
interest retained by the cedent after the cession in securitatem debiti as a
'reversionary interest'. With regard to the meaning of this concept it referred to
the following statement in Incledon (Welkom) (Pty) Ltd v Qwa Qwa
Development Corporation Ltd (supra) at 804I-J:
'When the company executed the [cession in securitatem debiti] it thus retained the
ownership of its rights against the [principal debtor] . . . . That ownership, as appears
from the authorities, consists in a reversionary interest which entitled the owner
(cedent) to claim the re-cession of the rights upon payment of the indebtedness.'
(My emphasis.)
In the light of this statement the full court understood Grobler's reversionary
interest to lie in a claim for re-cession of the policies. Departing from this
premise, the court held that, because of the invalidity of the sale agreement,
Grobler's claim for re-cession must have arisen at the time when the policies
were ceded to the deceased. Thus construed, the court further held, the debt
relied upon by Grobler became prescribed three years later in August 1994.

[20] The full court's understanding of the concept 'reversionary interest' is
undoubtedly supported by the statement of this court in Incledon (Welkom) on
which it relied. The question is, however, whether that statement constitutes
good authority. With respect, I think not. First, I believe it would simply amount
to a recapitulation of the outright cession-cum-pactum fiduciae-theory (see
Lawsa op cit para 53 note 14). Secondly, it is, in my view, in direct conflict
with those decisions which held that a claim ceded in securitatem debiti
automatically reverts to the cedent once the secured debt is extinguished and
that in such event a re-cession by the cessionary is not required (see eg
National Bank of South Africa Ltd v Cohen's Trustee (supra) at 246-247; Bank

of Lisbon and South Africa Ltd v The Master (supra) at 294E-F). Susan Scott
(op cit para 12.2.1.3) explains the reasoning behind these decisions as
follows, with reference to the analogy of a pledge:
'The accessory nature of pledge has the effect that on the discharge of the principal
debt, the right of pledge is automatically extinguished. In the case of a pledge of
corporeals the pledgee is, after the extinction of the right of pledge, still in possession
of the pledged article, which he must then hand over to the pledgor. In the case of a
pledge of incorporeals where only the power to realise the right is transferred, this
power reverts to the pledgor automatically rendering it unnecessary for the pledgee
to re-cede it to him.'

[21] The full court did refer to the decisions in National Bank and Bank of
Lisbon. It concluded, however, that they only apply where the secured debt is
extinguished by payment and not to a case such as this where the secured
debt proved to be non-existent from the start. I cannot agree with this
distinction. As appears from Susan Scott's explanation, the reason why a re-
cession was found to be unnecessary in those cases, was based on the
accessory nature of a cession in securitatem debiti. Without a principal debt
the cession cannot stand and it matters not whether the principal debt is
extinguished or never existed at all. This point of view, I believe, also finds
support in the following dictum by Watermeyer J in Standard Bank of SA v
Neethling NO 1958 (2) SA 25 (C) at 30A-D:
'[T]he next point which arises is whether the cession of the policy and the security
created thereby was rendered null and void on the extinction of the principal debt. In
this regard I refer first to Kilburn v Estate Kilburn, 1931 AD 501 at p. 506, where
WESSELS, A.C.J., said:
"It is therefore clear that by our law there must be a legal or natural obligation to
which the hypothecation is accessory. If there is no obligation whatever there can be
no hypothecation giving rise to a substantive claim."
Kilburn's case was not a case where a principal obligation subsequently became
extinguished. It was a case where there never had been a principal obligation. It
seems to me however that there is no distinction in principle between the two cases
. . . After . . . the principal debt was extinguished . . . there remained no obligation to
support the cession by way of security.'

[22] As to the real meaning of the cedent's 'reversionary interest', I can do
no better than to refer to the following explanation by Nienaber JA in
Development Bank of Southern Africa Ltd v Van Rensburg (supra) para 50
with which I respectfully agree:
'This reversionary interest, properly understood, refers to the cedent's interest in the
debtor's performance (ie satisfaction of the principal debt by the debtor) rather than
to his interest in the cessionary's performance (ie re-cession of the principal debt on
satisfaction of the secured debt - which is [sc would be] a right ex contractu against
the cessionary).'
(See also eg Moola v Estate Moola (supra) at 464B-D; P E Streicher
'Toekomstige Regte, Boekskulde en Insolvensie' in Sessie in securitatem
debiti – Quo Vadis? (Susan Scott ed) 136 at 145-146; Van der Merwe et al
Contract op cit 499; Lawsa op cit paras 53 (note 14) 55 and 56 (note 17).)

[23] I therefore conclude that, in accordance with the principles emanating
from the pledge theory, Grobler never required a re-cession from the
deceased. Because the principal debt arising from the sale proved to be
invalid, the rights under the policy automatically reverted to him. There was
therefore no claim for re-cession that could become prescribed. This leads
one to Oosthuizen's alternative argument which was based on the postulate
that even though this court – in the series of decisions I have referred to –
opted for the pledge theory it did not thereby in effect forbid the parties to
mould their cession in securitatem debiti in the alternative form of an out-and-
out cession coupled with a pactum fiduciae. The validity of this postulate
appears to be accepted by some authorities (see eg Alexander v Standard
Merchant Bank Ltd 1978 (4) SA 730 (W) 739-740; African Consolidated
Agencies (Pty) Ltd v Siemens Nixdorf Information Systems (Pty) Ltd 1992 (2)
SA 739 (C) at 744F-I; Susan Scott op cit para 12.2.2) while it is doubted by
others (see eg Farlam & Hathaway Contract Cases Materials and
Commentary 3ed (by Lubbe & Murray) 700; Lawsa op cit para 53 footnote 18
and the authorities there cited).

[24] I find it unnecessary to decide this debate one way or the other. Suffice
it to say, in my view, that at best for Oosthuizen, the position must be this:

even if the option of an alternative form of cession in securitatem debiti were
held to be open to the parties, their intention to do so would have to be clearly
expressed. Absent such clear expression of intention, the pledge construction
must prevail (see Lawsa op cit para 53), which means that the default position
will be that the pledge theory will apply. I say this because the contrary view –
contended for by Oosthuizen – which would render the nature of every
cession in securitatem debiti dependent on the court's determination of the
intention of the parties on the facts of that particular case, will in my view give
rise to an unacceptable level of commercial uncertainty. The reality is of
course that in the vast majority of cases the parties to a cession in
securitatem debiti would not have applied their minds one way or the other to
this rather esoteric aspect of their transaction, which in most cases will make
little difference to the terms of their contractual relationship. On the facts of
this case, I can find no clear indication that Grobler and the deceased
intended to mould their cession in securitatem debiti in any particular form. In
the premises the pledge construction must, in my view, carry the day.

[25] The final alternative argument raised by Oosthuizen was that if the
claim under the policy automatically reverted to Grobler, he can still institute
that claim against Sanlam who will in turn be able to recover its payment to
her by means of an enrichment claim. As I see it, this argument has very little
to do with Oosthuizen's defence of prescription which relied on the hypothesis
that a re-cession was essential to Grobler's claim. But, in any event, I find it
untenable. When Sanlam made payment to Oosthuizen it was obviously
unaware that the claims under the policies had reverted to Grobler. In the
circumstances I find the conclusive answer to the argument under
consideration in the following succinct statement by P M Nienaber in Lawsa
(op cit para 54):
'Once the secured debt has been repaid by the cedent to the cessionary the cession
in securitatem debiti has fulfilled its primary function [of securing the secured debt]
and the right [as creditor in terms of the principal debt] reverts to the cedent. The
erstwhile cessionary is no longer the true creditor, but if the debtor who has been
informed of the cession in securitatem debiti but not of its termination, pays him or
her, the debtor will enjoy immunity against any further claim by the cedent.'

In support of this statement the learned author then refers (in note 9), by way
of analogy, to the trite principle of the law of cession that a debtor who
renders performance to the original creditor (the cedent) in ignorance of the
cession, is thereby absolved from liability. Suffice it to say that I too find the
analogy irresistible (see also P E Streicher op cit 149).

[26] One's instinctive reaction is that if the claim to the proceeds of the
policies that Grobler rightfully had against Sanlam had been discharged by
the latter through payment to Oosthuizen, Grobler must have a claim against
her. Any conclusion to the contrary would be too inequitable to contemplate.
But what would the conceptual basis for such a claim be? I think the simple
answer is this: once the principal debt had automatically reverted to the
cedent – either because the secured debt never existed or because it had
been discharged – collection of the principal debt by the erstwhile cessionary
must be for the account of the erstwhile cedent for the recovery of which the
latter then has a claim against the former (see eg Bank of Lisbon and South
Africa Ltd v The Master (supra) 294C-D; Lawsa op cit para 53 note 14). This
being so, Grobler's claim against Oosthuizen arose when she received
payment from Sanlam on 16 September 1997. That took place less than three
years before summons was issued on 9 June 2000. In consequence, the trial
court was right in finding – albeit for different reasons – that Oosthuizen's plea
of prescription could not succeed.

[27] For these reasons:
1.
The appeal is upheld with costs, including the costs occasioned by the
employment of two counsel.
2.
The order of the court a quo is set aside and replaced with an order in
the following terms:
'The appeal is dismissed with costs.'

……..……………….
F D J BRAND
JUDGE OF APPEAL

Counsel for Appellant:
F W A DANZFUSS SC

H MURRAY

Instructed by:

VAN DE WALL & VENNOTE

KIMBERLEY

Correspondents:

SCHOEMAN MAREE ING

BLOEMFONTEIN

For Respondent:

S P DE LA HARPE

Instructed By:

ENGELSMAN MAGABANE ING

KIMBERLEY

Correspondents:

NAUDES

BLOEMFONTEIN
THE SUPREME COURT OF APPEAL
REPUBLIC OF SOUTH AFRICA

MEDIA SUMMARY – JUDGMENT DELIVERED IN THE SUPREME COURT OF APPEAL

From:
The Registrar, Supreme Court of Appeal
Date:
May 2009
Status:
Immediate

Please note that the media summary is intended for the benefit of the media and
does not form part of the judgment of the Supreme Court of Appeal

JACOBUS DAWID GROBLER

APPELLANT

and

CECILIA JOHANNA OOSTHUIZEN

RESPONDENT

On … May 2009 the SCA upheld an appeal by Mr Grobler against a judgment in
favour of Mrs Oosthuizen by the full bench of the Kimberley High Court.

The matter arose from an agreement of sale between Mr Grobler and a company,
Mothibi Crushers, on 14 August 1991. In terms of the agreement Grobler purchased
an immovable property from the company. In entering into the sale agreement, the
company was represented by Mrs Oosthuizen's husband, as its only shareholder
and director, who has since passed away and to whom reference is made as 'the
deceased'.

In terms of the sale agreement Grobler ceded three Sanlam policies to the deceased
as security for payment of the purchase price. The property was never transferred to
Grobler and the sale agreement in fact proved to be void from the start. After the
death of the deceased the policies were ceded to Mrs Oosthuizen as his only heir.
She then claimed and received the surrender value of the policies in an amount of
R741 677.24 from Sanlam on 17 September 1997. Grobler's claim under
consideration was for payment of this amount for which he issued summons on 9
June 2000.

Mrs Oosthuizen raised the defence of prescription on essentially the following
grounds:
•
The underlying basis for Grobler's claim, she said, is for re-cession of the
policies which were ceded to the deceased in compliance with an agreement of sale
which proved to be null and void.
•
This claim, she said, 'became due' as envisaged by s 12 of the Prescription
Act 68 of 1969 when the cessions occurred, because a claim for restoration of
performance under a void agreement arises at the time when that performance is
rendered.
•
Seeing that the period of prescription provided for in s 11(d) of the
Prescription Act is three years, she said, Grobler's claim became prescribed in
August 1994 which is long before the death of the deceased in 1997.
•
As a matter of law, so Oosthuizen's contentions concluded, a claim which
became prescribed against a deceased cannot be enforced against an heir, which is
the ultimate basis of Grobler's claim.

In the trial court, Oosthuizen's defence of prescription was dismissed with costs. On
appeal to the full bench, that decision was, however, reversed and the plea of
prescription upheld.

On a further appeal the SCA found that, properly analysed, Grobler's case, was not
based on a claim for re-cession of the Sanlam policies. When the agreement of sale
proved to be invalid, so the court held, the policies automatically reverted to Grobler.
When Mrs Oosthuizen thereafter collected the proceeds of the policies from Sanlam,
she therefore effectively did so for Grobler's account. Thus understood, Grobler's

claim against her for payment of the money she received for his account, arose
when she collected the money from Sanlam on 17 September 1997. Since this was
less than three years before summons was issued in June 2000, the claim for
prescription could not succeed.