THE SUPREME COURT OF APPEAL
REPUBLIC OF SOUTH AFRICA

JUDGMENT
Case No: 187/08

MOMENTUM GROUP LIMITED

Appellant

and

P J M VAN STADEN NO

1ST Respondent

NEDBANK LIMITED

2ND Respondent

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Neutral citation:
Momentum Group Ltd v Van Staden NO & another
(187/2008) 60 [2009] ZASCA (29 May 2009)

Coram:
FARLAM, VAN HEERDEN et MLAMBO JJA,
GRIESEL et BOSIELO AJJA

Heard:
21 May 2009
Delivered:
29 May 2009

Summary:
Cession in securitatem debiti – Payment by debtor to
cedent – subsequent claim against debtor by
cessionary – whether debtor had knowledge of the
cession at time of payment to cedent

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___________________________________________________________

ORDER

On appeal from: High Court, Pretoria (Murphy J sitting as court of first
instance).
The appeal is dismissed with costs.
_____________________________________________________
JUDGMENT

VAN HEERDEN JA (Farlam and Mlambo JJA, Griesel and Bosielo
AJJA concurring)
[1] The issue in this appeal is whether, after cession in securitatem
debiti of an insurance policy, payment by the debtor (the insurance
company) to the cedent (the policyholder) immunises the debtor from a
claim by the cessionary under the policy. The answer to this question
turns on the debtor’s knowledge of the cession at the time of payment by
him or her to the cedent.
[2] The first respondent, Mr P J M van Staden, (‘Van Staden’), is the
trustee in the insolvent estate of one Mr Retief van Heerden (‘Van
Heerden’). Van Heerden’s estate was finally sequestrated on 21 January
2003. Van Staden (in his capacity as trustee) and the second respondent,
Nedbank Limited (‘Nedbank’), sued the appellant, Momentum Group
Limited (‘Momentum’), in the Pretoria High Court for payment of an

amount of R250 000, plus interest, out of the proceeds of an insurance
policy issued by Momentum in favour of Van Heerden (‘the policy’).
They claimed to be entitled to this amount by virtue of a cession in
securitatem debiti by Van Heerden of his rights under the policy to
Boland Bank PKS (‘Boland’), Nedbank’s predecessor in title. This claim
succeeded with costs in the court below, Murphy J ordering Momentum
to pay Van Staden the sum of R250 000 out of the proceeds of the policy,
plus interest a tempore morae. With the leave of the court a quo, that
judgment now comes before us on appeal.
[3] The judgment of the trial court, in which the facts are set out in
considerable detail, is reported1 and it is not necessary that they be
repeated. For the sake of convenience, however, I will outline the factual
background very briefly.
[4] On 30 July 1999, Renbes Family Foods CC (‘Renbes’) borrowed a
sum of R750 040 from Boland in terms of a written loan agreement. As
security for this loan, Van Heerden signed a suretyship in favour of
Boland and a deed of cession in terms of which he ceded to Boland all his
rights in a fixed deposit in the amount of R250 000 held with Boland
‘and/or any re-investment, renewal or substitution thereof’. The deed of
cession expressly limited Van Heerden’s liability thereunder to R250 000.
[5] Shortly afterwards, the fixed deposit referred to above was indeed
substituted with a so-called ‘redemption policy’, issued by Momentum on
11 August 1999. A Mr Willem de Wet (‘De Wet’) of Absa Brokers and
Consultants assisted Van Heerden in applying for the policy and made the
arrangements necessary for the release of the fixed deposit of R250 000

1 As Van Staden NO & another v Firstrand Ltd & another 2008 (3) SA 530 (T).

by Boland and the payment of this amount into Momentum’s bank
account.
[6] During the trial, four witnesses testified about the facts and
circumstances surrounding the substitution of the investment. They were:
Mr Deon Hurter (‘Hurter’), a commercial banker in Boland’s employ,
who represented the bank in the negotiations with Renbes and Van
Heerden in regard to the loan and securities, a Mr Tinus de Beer (‘De
Beer’), a risk manager in the employ of Boland, on behalf of the
respondents; and De Wet and a Ms Marietjie de Jager (‘De Jager’), a
broker consultant and marketing advisor at Momentum, on behalf of the
latter.
[7] On 6 August 1999, a letter was written by De Jager to Hurter under
a Momentum letterhead containing its recognised commercial logo. The
letter was faxed to Hurter on the same day. The accompanying fax cover
sheet contains a handwritten inscription made by de Jager in the
following terms:
‘Hello Deon
Hoop dis vir jou voldoende. Laat weet my asb. sodra die fondse oorgeplaas word.
Groete
Marietjie de Jager’
[8] The typed letter reads as follows:
‘Boland Bank: Silverton
Die Bestuurder
Aandag: mnr Deon Hurter
Geagte mnr Hurter

INSAKE MNR R VAN HEERDEN: MOMENTUM BELEGGING 92079647
Hiermee word bevestig dat bogenoemde polis met onmiddellike effek aan Boland
bank gesedeer word. Sodra die fondse na Momentum Lewens se bankrekening
oorgeplaas word kan die polis aanvaar word. Die sessie vorm deel van die polis en
word onmiddellik met aanvaarding teen Boland Bank aangeteken.
U sal derhalwe nie ongesekureer wees tussen die uitbetaling van die fondse en die
uitreiking van die kontrak nie. Die kontrak sal egter binne ‘n week na uitreiking van
die polis beskikbaar wees.

Groete

M de Jager
Momentum Lewens’
(Emphasis added.)

[9] The money was transferred to Momentum’s bank account on 11
August 1999. According to De Beer, he authorised the transfer of the
R250 000 from Boland to Momentum because the former had received an
assurance from Momentum, in the form of the letter from De Jager set out
above, that as soon as the funds were transferred to Momentum, Boland
would become the cessionary of the policy, the cession in Boland’s
favour would be noted on the policy documents and Boland’s security
would be protected.
[10] On 12 December 2000, after certain queries were made,
Momentum granted an interest-free loan against the policy to Van
Heerden in the amount of R267 891.
[11] In the meantime, Renbes was liquidated on 28 November 2000 and
Boland became entitled to enforce its suretyship against Van Heerden. As

the latter was not able to pay the debt, Boland invoked the cession and
attempted to collect its security in the amount of R250 000 from
Momentum. The latter informed Boland, however, that a loan had been
granted against the policy and advised it not to surrender the policy as
this would result in a minimal payout, the value of the policy having been
greatly reduced by the loan. Boland persisted with its claim, ultimately
issuing summons (together with Van Staden) against Momentum in
October 2003. Momentum adopted the stance that it was only obliged to
pay the plaintiffs the surrender value of the policy (subsequent to
deduction of the loan made to Van Heerden) in the amount of R29 690,
payment of which it  tendered in its plea.
[12] The main defences raised by Momentum were, first, that De Jager
lacked authority to bind Momentum to any agreement or to make any
representation on its behalf and, second, that when making the interest-
free loan against the policy to Van Heerden, Momentum (as debtor) had
no knowledge of the cession in favour of Boland and acted bona fide.
Neither of these defences succeeded in the court below.
[13] The legal principles applicable to the present appeal are cogently
stated by P M Nienaber2 as follows:
‘Performance by the debtor, more particularly payment, to the cessionary, the new
creditor, discharges the debt. It should follow as a corollary that payment to the cedent
ought not to release the debtor. Yet it is a well-established rule, based on the palpable
need to protect a blameless debtor who rendered performance to the party he or she
genuinely believed to be the true creditor, that payment to the cedent absolves or at
least releases the debtor, provided that he or she was unaware of the earlier cession or,
if aware thereof, that he or she nonetheless acted in good faith in effecting the
payment. The debtor’s prior knowledge of the cession, however gained, would

2 Joubert (ed) The Law of South Africa 2ed, vol 2 Part 2 (2003) sv ‘Cession’ para 48.

normally exclude good faith and defeat the payment. But it has been said that the
debtor will be released from liability if such debtor can show that, notwithstanding his
or her prior knowledge of the claim by the cessionary, he or she nevertheless paid the
cedent in good faith.
. . .
The rule is essentially based on the blamelessness of the debtor. It may thus be
refined, so it is suggested, to read that the debtor will be deemed to be absolved by
performance or any other form of discharge rendered to the cedent if, at the time
thereof, he or she genuinely and reasonably believed the cedent to be his or her true
creditor.
. . .
Although notice to the debtor of the cession is not a pre-requisite for cession, it is thus
incumbent on the cessionary, in whose interest it is to do so, to inform the debtor of
the cession to him or her at the risk, if this is not done, that his or her claim may be
pre-empted by the unsuspecting debtor’s performance to the cedent . . . whom he or
she genuinely and reasonably identifies as his or her true creditor’.
(Emphasis added, footnotes omitted.)

[14] Momentum contended that De Jager was a mere broker with no
authority to bind Momentum. In her testimony, De Jager described her
role as that of a ‘go-between’ between the broker and Momentum: the
broker ensured that all the requisite documents were provided by the
client, handed this documentation to her and she then sent it through to
the Momentum Head Office where all transactions relating to the policy
were attended to.
[15] It is, however, clear from the terms of the contract between De
Jager and Momentum that she was appointed to represent Momentum in
the solicitation and maintenance of policies. It was common cause that
she had authority to use Momentum letterheads and often did so.

[16] I agree with the learned judge that it was eminently reasonable for
Boland to have relied upon De Jager’s conduct and representations and to
assume that she had the necessary authority, at the very least to accept
and record a notification of the existence of the cession of Van Heerden’s
policy in Boland’s favour. As in the case of Glofinco v Absa Bank t/a
United Bank,3 Boland was entitled to assume that De Jager’s functions
encompassed these activities. It could not reasonably have been expected
of it to know of any internal limitations on De Jager’s actions4 and,
therefore, even if De Jager did not have actual authority to deal with
Momentum in the way she did, Momentum is bound by her ostensible
authority.
[17] As regards the factual question whether Momentum had
knowledge of the cession before or at the time of payment of the interest-
free loan to the cedent (Van Heerden), the probabilities in this case point
overwhelmingly to the conclusion that Momentum did have imputed
knowledge of the cession in favour of Boland at the relevant time. This
appears clearly from the terms of De Jager’s fax cover sheet and letter to
Hurter dated 6 August 1999.5 Murphy J made a fairly strong credibility
finding against De Jager6 and there are no grounds to interfere with this
finding. Interestingly, appellant’s counsel did not seek to challenge it in
argument before us in any way.
[18] The knowledge of the cession in favour of Boland to secure Van
Heerden’s debt to it was certainly material and important. It cannot be

3 2002 (6) SA 470 (SCA), where this court held (paras 15-16) that the appointment by a bank of a
branch manager implied a representation to the outside world to the effect that the branch manager is
empowered to represent the bank in the sort of business and transactions that a branch of the bank and
its manager would ordinarily conduct. What this ordinary kind of business is, is a factual matter and
depends on the evidence before the court.
4 See the Glofinco case paras 17-18.
5 Set out in paragraphs 7 and 8 above.
6 See paras 32 to 34 of the reported judgment, at 539H-540E.

gainsaid that, in the ordinary course of business, a reasonable person in
the position of De Jager would be expected to impart this knowledge to
Momentum, the entity who had delegated to her the control and conduct
of its affairs in this regard.7 This being so, Momentum must be said to
have had knowledge of the cession in favour of Boland in August 1999,
long before it authorised and paid out to Van Heerden the loan against the
policy in question. There is nothing in the evidence to indicate that,
despite such knowledge, Momentum can nonetheless be said to have
acted in good faith in paying out such loan.8
[19] Murphy J proceeded from the premise that the cessionary bears the
onus of proving knowledge of the cession on the part of the debtor in a
situation such as the present,9 but on the facts of the present case, nothing
turns on that and this aspect warrants no further discussion.
[20] It follows from the above that Nedbank (Boland’s successor in
title), as pledgee of the proceeds of the policy, was entitled to realise its
security at the time it sought to do so.10 In the meantime, however, Van
Heerden’s estate was sequestrated in January 2003. Van Staden, in his
capacity as trustee of the cedent’s (Van Heerden’s) estate is thus ‘the
person entitled to recover the proceeds [of the policy] as part of his duty
to realise the assets of the estate, but subject to the real right of pledge
held by Nedbank who consequently remains fully protected.’11

7 Town Council of Barberton v Ocean Accident and Guarantee Corporation Ltd 1945 TPD 309 at 311,
subsequently referred to with approval by this court, see eg Wilkens NO v Voges 1994 (3) SA 130 (A)
at 141H.
8 See Brook v Jones 1964 (1) SA 765 (N) at 767E-F.
9 See para 34 of the reported judgment at 540D, read with para 29 at 539C-D.
10 By claiming payment of R250 000 from the proceeds of the policy in February 2001 – see para 11
above.
11Paragraph 42 of the reported judgment of the trial court, at 543B-D.

[21] In the result the appeal must fail and it is dismissed with costs.

__________________

B J VAN HEERDEN
JUDGE OF APPEAL

Appearances:
For the Appellant:
J F Steyn

Gerings Attorneys

c/o Hendriëtte Muller

Pretoria
Instructed by:

Rossouw & Conradie Inc

Bloemfontein

For the Respondent:
F J Erasmus

De Swart Vögel Mahlafonya

Pretoria
Instructed by

Symington & De Kok

Bloemfontein
SUPREME COURT OF APPEAL OF SOUTH AFRICA

MEDIA SUMMARY OF JUDGMENT DELIVERED IN THE SUPREME COURT OF APPEAL

FROM

The Registrar, Supreme Court of Appeal

DATE

STATUS

Immediate

Please note that the media summary is for the benefit of the media and does not form
part of the judgment.

Momentum Group Ltd v Van Staden NO & another
(207/08) [2009] ZASCA 60 (29 May 2009)

Media Statement

Today the Supreme Court of Appeal ('SCA') dismissed an appeal by Momentum Group Limited against a
judgment of Murphy J in the Pretoria High Court.

Briefly stated, the facts giving rise to the litigation are as follows: in July 1999, Renbes Family Foods CC
borrowed R750 000 from Boland Bank PKS. Mr Retief van Heerden stood surety for this loan and signed a
deed of cession in which he ceded to Boland all his rights in a fixed deposit of R250 000 held with Boland
‘and/or any re-investment, renewal or substitution thereof’. Van Heerden’s liability under the deed of cession
was limited to R250 000.

The fixed deposit was substituted with a redemption policy issued by Momentum in August 1999. On 6
August 1999, Ms Marietjie de Jager, a broker consultant and marketing advisor at Momentum, wrote to Mr
Deon Hurter, a commercial banker employed by Boland, confirming that the redemption policy ‘met
onmiddelike effek aan Boland Bank gesedeer word’ and stating that ‘die sessie vorm deel van die polis en
word onmiddelik met aanvaarding teen Boland Bank aangeteken’. On the strength of this letter, Mr Tinus de
Beer, a risk manager in Boland’s employ, authorised the transfer of R250 000 (the amount held under Van
Heerden’s fixed deposit) from Boland to Momentum.

On 12 December 2000, after certain queries were made, Momentum granted an interest-free loan against
the policy to Van Heerden in the amount of R267 891. In the meantime, Renbes was liquidated on 28
November 2000 and Boland became entitled to enforce its suretyship against Van Heerden. As Van
Heerden was not able to pay the debt, Boland invoked the cession and attempted to collect its security in
the amount of R250 000 from Momentum. The latter informed Boland that a loan had been granted against
the policy and that the surrender value thereof was only R29 690.

Van Heerden’s estate was sequestrated on 21 January 2008, the first respondent (Mr PJM van Staden)
being appointed as trustee of the insolvent estate. In his capacity as trustee, Van Staden and the second
respondent, Nedbank, Boland’s successor in title, sued Momentum for payment of R250 000, plus interest,
out of the proceeds of the policy.

The issue on appeal was whether Momentum had knowledge of the cession of the policy in favour of
Boland at the time it granted to Van Heerden the interest-free loan against the policy It was contended on
behalf of Momentum, first, that De Jager lacked authority to bind it to any agreement or to make any
representation on its behalf and, second, that when making the loan against the policy to Van Heerden, it
had no knowledge of the cession. Neither of these defences had succeeded in the court below.

The Supreme Court of Appeal agreed with Murphy J that De Jager did have authority to represent
Momentum, at the very least to accept and record a notification of the existence of the cession of the policy
in Boland’s favour. Boland could not reasonably have been expected to know of any internal limitations on
De Jager’s actions. The SCA also held that, the knowledge of the cession in favour of Boland being material
and important, a reasonable person in De Jager’s position would be expected to impart this knowledge to
Momentum, the entity who had delegated to her the control and conduct of its affairs in this regard.

Momentum must therefore be said to have had knowledge of the cession in Boland’s favour in August 1999,
long before it authorised and paid out to Van Heerden the loan against the policy. There was nothing in the
evidence to indicate that, despite this knowledge, Momentum could nevertheless be said to have acted in
good faith in paying out the loan to Van Heerden.

The appeal was accordingly dismissed with costs.

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