THE SUPREME COURT OF APPEAL
OF SOUTH AFRICA
Case no: 297/2003
REPORTABLE
In the appeal between:
LAND AND AGRICULTURAL BANK
OF SOUTH AFRICA
Appellant
and
J H JANSE VAN RENSBURG NO
M A DLAVANE NO
Respondents
Before:
Harms JA, Zulman JA, Cameron JA, Conradie JA
and Southwood AJA
Appeal:
Monday 17 May 2004
Judgment:
Friday 28 May 2004
Land Bank Act 13 of 1944 (repealed) – Bank’s power under s 34 –
Does not include power to make advances secured by mortgage
bond – Such advances empowered only by s 25 – Bank not
entitled to rely on s 34 in levying execution against fixed property
secured by mortgage bond
JUDGMENT
_____________________________________________________

CAMERON JA:
[1] This is an appeal, with the leave of that court, against an order
granted in the Pretoria High Court (de Villiers J)1 setting aside a
sale in execution conducted at the behest of the appellant, the
Land and Agricultural Bank of South Africa (‘the bank’).  The
order was sought by the liquidators of a farming company (‘the
company’) which had taken substantial loans from the bank
against security of first and second mortgage bonds passed
over its immovable properties.  When the loans covered by
these bonds were not repaid, the bank obtained judgment for
their repayment, together with an order declaring the properties
specially executable.  A warrant of execution was accordingly
issued, the sheriff of the court attached the properties, and the
sale was advertised.  The company was however placed in
liquidation three days before the sale.  The liquidators
(respondents on appeal) tried to stop the sale.  But the bank
went ahead, buying the properties itself.  Hence the
proceedings culminating in this appeal.  In it, only the loan

1 Janse van Rensburg en ‘n ander NNO v Land- en Landboubank van Suid-Afrika 2003 (5)
SA 228 (T), which sets out the facts in full.

covered by the second mortgage bond is at issue, though we
were told that a number of other cases depend on its outcome.
[2] The bank claims it is entitled to the proceeds of the properties
regardless of (and outside) the liquidation.  The liquidators
claim that the properties fall into the company’s liquidation.
What they dispute is that the bank was entitled to sell the
properties and appropriate the proceeds to the satisfaction of
its claims in disregard entirely of the supervening liquidation.2
[3] Which contention is right depends on whether the Land Bank in
enforcing its security was entitled to invoke s 34 of the Land
Bank Act 13 of 1944 (‘the 1944 Act’).  That was the statute in
force when the loans were made and when the sale in
execution took place. The Land Bank’s board granted the two
loans covered by the first mortgage bond under s 25 of the
Act.3  But it purported to make the loan covered by the second
mortgage bond (‘the loan’) in terms of s 34,4 and the company’s

2 It bears mention that the bank’s attitude, if vindicated, would deprive the liquidators of the
major proportion of their fees.  These depend on the size and value of the insolvent estate;
without the farms that is likely to be negligible.
3 Section 25 provides in part: ‘Save as is otherwise provided in this Act, no advance shall be
made – (a) except – (i) on first mortgage of land within the Republic ….’  The further sub-
provisions are not material.  Section 25(2) provides that ‘The board may deviate from the
provisions of subsection (1) by determining alternative security or other conditions on which
advances under this Act may be made.’
4 Section 34(1)(a) provides: ‘Notwithstanding the provisions of section 25 the bank may, on
the conditions that the board may determine make an advance to a farmer to enable him or
her to defray any costs which, in the opinion of the bank, are connected with the production,
cultivation, gathering, processing or marketing of any crops by him or her or pay any debts
incurred by him or her to defray such costs including costs or debt relating to the purchase of
livestock or farming machinery or other implements or equipment and the instalment of such

acceptance also referred to s 34.  That provision gave the Land
Bank far-reaching powers of execution against defaulting
debtors (s 34(3)-(7)), statutorily insulated against their
insolvency.5  Section 55, which related to advances under s 25,
gave the bank comparable powers in respect of loans secured
by mortgage bonds.  Both provisions included a power to levy
execution ‘without recourse to a court of law’ (s 34(3)(b) and
(c); s 55(2)(b)).
[4] After the bank advanced the loans, the Constitutional Court
declared s 34(3)(b)-(7), (9) and (10) and s 55(2)(b)-(d)
unconstitutional as violating the rule of law in that they infringed
the right of access to court.6  The declaration that s 55(2)(b)-(d)
was invalid took effect immediately.  But the court granted a
two-year conditional suspension of the invalidity of s 34(3)(b)-
(7), (9) and (10), and gave Parliament the intervening time to
remedy the statute’s constitutional defects.7  Parliament

machinery or equipment and property.’
5 Section 90 of the Insolvency Act 24 of 1936 exempts the Land Bank from the provisions of
the Insolvency Act ‘in relation to any property belonging to an insolvent estate’; while s 339 of
the Companies Act 61 of 1973 provides that in the winding up of a company unable to pay its
debts [the situation obtaining here] ‘the provisions of the law relating to insolvency shall, in so
far as they are applicable, be applied mutatis mutandis in respect of any matter not specially
provided for by this Act’:  see the judgment of de Villiers J 2003 (5) SA 228 (T) 236-237.
6 Bill of Rights s 1: The Republic of South Africa is one, sovereign, democratic state founded
on values that include (c) ‘Supremacy of the constitution and the rule of law’; s 34: ‘Everyone
has the right to have any dispute that can be resolved by the application of law decided in a
fair public hearing before a court or, where appropriate, another independent and impartial
tribunal or forum.’
7 First National Bank of South Africa Ltd v Land and Agricultural Bank of South Africa and
others, Sheard v Land and Agricultural Bank of South Africa and another 2000 (3) SA 626

timeously passed a successor statute.8  Its terms do not affect
the issue before us.
[5] De Villiers J held that the bank could not invoke s 34.  He found
that s 34 did not empower it to advance the loan covered by
the second mortgage bond, and therefore that the provisions of
s 34 did not protect the bank when it proceeded with the sale in
execution in defiance of the supervening liquidation.  He found
however that the loans were valid under s 25:  the mortgage
bonds securing it were therefore not void.  He held further that
even if s 34 did apply, the bank had failed to fulfil the requisites
applicable under the order suspending the invalidity of the
procedures.
[6] In my view both the structure of the statute as a whole and the
provisions of s 34 itself vindicate that conclusion.  The reasons
for this view in summary are:  the statute required the bank, in
general, to advance loans only on the strength of security such
as a mortgage bond.  Exceptionally, it permitted the bank to
advance loans without such security.  Section 34, the vehicle
for the exceptional class of loans, catered only for cases where
the bank could not obtain or had not obtained such security.

(CC) para 17.
8 Land and Agricultural Development Bank Act 15 of 2002, repealing the 1944 Act.

To make up for its absence, the provision gave the bank a
special right to execute against first the unsecured movable
goods and then the immovable property of the defaulting
debtor.  That special protection cannot properly be claimed
when the bank holds a mortgage bond, as it did here.
[7] The premise on which the 1944 Act permitted the bank to make
advances was set out in s 25.  This laid down a general rule
that security over fixed property is a prerequisite for any
advance by the bank.  Section 25(1) namely provided that
‘save as is otherwise provided in this Act, no advance shall be
made’ except on a first mortgage bond (or comparable
security).  The provision then enumerates the types of real
security it contemplates.  The proviso to s 25(1) stated that ‘any
land may be accepted as additional security for an advance,
whether or not on first mortgage’.  Section 25(2) was added in
1998.9 It gave the bank greater flexibility by empowering it to
‘deviate from the provisions of subsection (1) by determining
alternative security or other conditions on which advances
under this Act are made’.  The greater flexibility this provision
introduced did not detract from the general scheme of the
statute, which still contemplated that, where real security was

available and was exacted, the sole authorising provision was s
25.  Departures from its norm remained a statutorily avowed
‘deviation’.
[8] Section 34 created the statutory basis for loans made without
the security of a mortgage bond.  It provided that the bank may
make loans to farmers, for limited purposes, without exacting
real security.  Section 34 provided that ‘[n]otwithstanding the
provisions of section 25 the bank may, on the conditions that
the board may determine make an advance to a farmer’ for
certain specified purposes.  These were connected with the
production, cultivation, gathering, processing or marketing of
crops, including costs relating to the purchase of livestock or
farming machinery or other implements or equipment.
[9] Section 34 was thus intended to give the bank greater flexibility
to make advances to needy farmers in the conditions specified,
‘notwithstanding the provisions of section 25’.  Its purpose was
not to replicate or substitute the powers created by s 25, but to
extend them to cases where no real security could be obtained.
The provision for this reason conferred a preference on the
bank, which could attach and execute on movable and
immovable property over which it did not hold any other form of

9 Act 21 of 1998, s 16(b).

security.  Section 55 entitled the bank to execute extra-curially
against secured fixed property.  Section 34 gave it in addition a
form of ‘statutory security’ in respect of first movable and then
immovable property in respect of which no security was given.
[10] When s 25(2) was inserted in 1998, s 34(1) was also
amended.10  Previously, s 34(1) permitted an advance only ‘on
completion of a promissory note by a farmer’.  The amendment
substituted for this the simple power to advance a s 34 loan ‘on
the conditions that the board may determine’.  This change was
coordinate with that made to s 25.  Both gave the bank more
flexibility in regard to the conditions under which it could extend
loans:  those where real security was available under s 25; and
those without such security under s 34.
[11] The bank contended that the amendment enabled it to make
advances under s 34 even where it had real security.  In the
present case, counsel contended, this enabled the board to
advance the loan on the strength of the second mortgage bond
that was registered over the company’s farm properties.  He
conceded that his argument entailed that s 34, thus amended,
would also authorise the bank to make s 34 advances where it
had a first mortgage bond as security.

[12] But this would entail, if correct, that the 1998 amendments
radically changed the scheme and structure of the entire
statute and the purpose of its central provisions.  In particular, it
would imply that the bank was able to advance all loans, those
covered by real security as well as those not, in terms of s 34.
Given the special advantages s 34’s procedures accorded the
bank – which entitled it to a prior preferent claim on the
debtor’s movable property in addition to any fixed property –
there would on this construction be scant reason for the bank
ever to use s 25, which would in effect be rendered redundant.
[13] That conclusion is untenable.  The amendments were plainly
more modest in scope and purpose.  They merely made more
flexible the conditions under which the bank was empowered to
make loans under respectively s 25 and s 34, without
obliterating the distinctive purposes of each provision.
[14] The statute’s provisions have long been so interpreted, and
the Constitutional Court decision declaring s 34’s operative
provisions invalid clearly proceeded from the premise that the
provision was available to the bank only ‘in the absence of

10 Act 21 of 1998, s 18.

contractual security’.11  In Landboubank van Suid-Afrika v
Joubert NO,12 Friedman J explained that (my translation):
‘… the Legislator apparently foresaw the possibility that there would be
cases where, notwithstanding the fact a farmer is not in a position to
provide security, it is nonetheless desirable that money for certain
specified objects, namely those set out in s 34, should be advanced to
him by the Land Bank.  The Legislator therefore, by way of exception,
provided in s 34 that, notwithstanding the provisions of s 25, the bank’s
board may, on completion by him of a promissory note [now, ‘on the
conditions that the board may determine’], make an advance to a farmer
in order to enable him to combat costs in connection with one or other of
the matters mentioned in s 34(1).  Even though no security is provided in
regard to that advance, the Legislator ensured, through the far-reaching
powers accorded to the Land Bank by s 34, that when an advance under
s 34(1) of the Land Bank Act is made to a farmer, the Land Bank is not in
the same position as an ordinary creditor who has made an advance
without security.’
[15] This analysis accurately renders the underlying object of s
34’s special execution procedures, which is to cover the case
where the bank is not able to exact security over fixed property
for its loan.  As Friedman J rightly went on to observe, those
procedures are designed ‘to ensure that the Land Bank, as far
as possible, does not lose money which it has advanced

11 First National Bank of South Africa Ltd v Land and Agricultural Bank of South Africa and
others, Sheard v Land and Agricultural Bank of South Africa and another 2000 (3) SA 626
(CC) para 11.
12 1982 (3) SA 643 (C) 647G-648 (top of page):
‘Nietemin het die Wetgewer blykbaar die moontlikheid voorsien dat daar gevalle sou wees
waar, desondanks die feit dat 'n boer nie in staat is om sekuriteit te verskaf nie, dit nogtans
wenslik sou wees dat geld vir sekere bepaalde doeleindes, Naamlik dié in art 34 vermeld, aan
hom voorgeskiet word deur die Landbank. Die Wetgewer het derhalwe, by wyse van
uitsondering, in art 34 bepaal dat, ondanks die bepalings van art 25, die bank se raad aan 'n
boer, by voltooiing van 'n promesse deur hom, 'n voorskot kan verstrek ten einde hom in staat
te stel om die koste te bestry wat in verband staan met die een of ander aangeleentheid in art
34 (1) vermeld. Ofskoon daar nie ten opsigte van sodanige voorskot sekuriteit verskaf word
nie, het die Wetgewer deur middel van die verreikende magte wat deur art 34 aan die
Landbank verleen word, verseker dat wanneer 'n voorskot ingevolge art 34 (1) van die
Landbankwet aan 'n boer verstrek word, die Landbank nie in dieselfde posisie sal wees soos
'n gewone skuldeiser wat 'n voorskot sonder sekuriteit verstrek het nie.’

without security’.13  Neither before nor after the amendments
did the provisions envisage that the bank would seek to garner
the benefits of s 34 where it had the type of security s 25
envisaged.
[16] It is correct that the purpose for which the loan was
advanced fell within those sanctioned by s 34.  This did not
bring it within the section, for that would be to elevate a
necessary condition for a s 34 loan to a sufficient condition.
Nor does it matter that the bank described the loan as one
under s 34, and that the company accepted it as such.  The
bank had no such power.  Once it had fixed-property security,
the sole provision under which the bank could advance the
loan was s 25.  Given the parties’ joint intention to give and
receive an advance on the basis of the security the company
provided, I think that de Villiers J was correct in concluding that
the loan must be held to have been extended in the exercise of
the bank’s s 25 powers.
[17] This conclusion makes it unnecessary to consider the
alternative basis on which de Villiers J reached his conclusion,
namely that if the advance was validly made under s 34, the

13 1982 (3) SA 643 (C) 648A: ‘Om te verseker dat die Landbank, sover moontlik, nie geld wat
hy sonder sekuriteit voorskiet, verloor nie’.

purpose and effect of the conditions on which the Constitutional
Court suspended its declaration of invalidity required the bank
to observe s 34’s procedures regarding the advertisement and
holding of the sale, which it did not do. It is enough to say that
that conclusion, too, is persuasive, and that the bank’s
argument rests on a unstable paradox in which it invokes s 34
during its suspension yet claims to be able to ignore its
procedures.
[18] The sale was invalid and must be set aside.  The order of the
Court below inadvertently referred to the wrong prayers for
relief.  The order corrects that.
[19] The appeal is dismissed with costs, which include the costs
of two counsel.  The order of the court below is amended to
read as follows:
(a) It is declared that the sale in execution on 8 March 2002 by
the deputy sheriff, Riversdale, under warrant of execution of
this court under case number 24456/01, of the properties set
out in the founding affidavit is invalid and the applicant
liquidators are not bound by it.

(b) The respondent must pay the costs of the application,
including those of two counsel.
E CAMERON
JUDGE OF APPEAL
CONCUR:
HARMS JA
ZULMAN JA
CONRADIE JA
SOUTHWOOD AJA