Case Notes: Right to Receive Versus Right to Appropriate Proceeds of Insurance Policy Ceded in Securitatem Debiti: Retmil Finanicial Services (Pty) Ltd v Sanlam Life Insurance Company Ltd and others

• Jurisdiction: South Africa
• Pages: 346-359
• Date: 20 August 2019
• Citation: (2016) 28 SA Merc JL 346
• Author: Reghard Brits
• Published date: 20 August 2019

Case Notes

RIGHT TO RECEIVE VERSUS RIGHT TO

APPROPRIATE PROCEEDS OF INSURANCE

POLICY CEDED IN SECURITATEM DEBITI:

RETMIL FINANCIAL SERVICES (PTY) LTD V

SANLAM LIFE INSURANCE COMPANY LTD

AND OTHERS

REGHARD BRITS

Senior Lecturer, Department of Mercantile Law, University of Pretoria

I INTRODUCTION

Retmil Financial Services (Pty) Ltd v Sanlam Life Insurance Company Ltd

and others [2013] 3 All SA 337 (WCC) highlights important aspects

regarding the use of incorporeals as objects of credit security. The

judgment sheds some light on the (or at least a) solution to a tricky

question: what should happen when the ceded claim (in casu one

deriving from a life insurance policy) becomes payable but the debt

secured by the cession is not yet enforceable? What are the rights and

duties of the cedent and cessionary under these circumstances if their

contract makes no express provision for this situation? The judge

resolved the problem — based on what the parties would have intended

in view of the purpose of the transaction — by drawing an interesting

distinction between the cessionary’s right to receive (and keep in trust)

and its right to appropriate the proceeds of the ceded insurance policy.

The case also conf‌irms certain principles regarding the cessionary’s duty

of care with respect to the ceded asset, as well the content of the cedent’s

retained interest.

II FACTS AND LEGAL PROBLEMS

Slabbert was a member of a close corporation that borrowed an amount

of money, repayable in monthly instalments, from Retmil. As security

for the close corporation’s loan, Slabbert bound himself as surety for and

346

(2016) 28 SA Merc LJ 346

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