Goudini Chrome (Pty) Ltd v MCC Contracts (Pty) Ltd

• Jurisdiction: South Africa
• Citation: 1993 (1) SA 77 (A)

Goudini Chrome (Pty) Ltd v MCC Contracts (Pty) Ltd
1993 (1) SA 77 (A)

1993 (1) SA p77

Citation	1993 (1) SA 77 (A)
Court	Appellate Division
Judge	Hoexter JA, Nestadt JA, Eksteen JA, Nienaber JA and Nicholas AJA
Heard	September 14, 1992
Judgment	September 28, 1992

Flynote : Sleutelwoorde B

Appeal — Production of evidence — Documentary evidence — Appellant permitted to produce, after argument on appeal, proof of its ownership of land, having produced at hearing of application in Court a quo an C uncertified copy of title deed but having had available for examination the original thereof — Appellant furthermore allowed to produce evidence on appeal of deed of cession of book debts by respondent in favour of bank which effectively negated respondent's claimed lien — Such evidence not D available to appellant at hearing in Court a quo.

Cession — Cession in securitatem debiti — Of book debts — Effect on debtor and creditor lien — Cession divesting lienholder of right to claim contractual remuneration — Lienholder having thereby surrendered lien over debtor's property.

Headnote : Kopnota

E The appellant sought an order evicting the respondent from a property on which the latter had, by agreement, been excavating chrome ore. It appeared that the C company, who owned more than half the shares in the appellant, had in 1989 called for tenders from contractors to do excavation of chrome ore on the property concerned, which was at that stage owned by one D, and that it was eventually agreed upon between C company and the respondent that the latter would move its equipment on to the property and would commence operations, even though a formal contract F had not yet been prepared and signed. Thereafter the respondent was regularly paid for its work by the C company. In April 1990 the appellant entered into an agreement with an overseas company to supply it with at least 200 000 tons of chrome ore extracted from the mine on the property. Meanwhile, negotiations with a view to a formal comprehensive contract with the respondent continued and in June 1990 the managing director of appellant (who was also a director of the C company) suggested to the G respondent that the appellant be substituted for the C company as the contracting party as it was the actual operating company. On 9 July the property was sold by D to the appellant and transfer was passed to it on 14 August 1990. All payments to the respondent continued to be made by the C company. A formal written agreement was never concluded between the parties. Disputes about a number of issues eventually led to the respondent discontinuing work on the property in October 1990, at which stage it claimed that it was still owed a balance in excess of R1,3 H million. In order to ensure payment of that amount the respondent maintained a presence on the property and claimed a lien over the works, which consisted in the main of a stockpile of excavated material containing chrome ore and one or two open pits. This situation led to the appellant launching an urgent application in a Local Division for the respondent's eviction from the property. In the Local Division it was contended inter alia on the respondent's behalf that its debtor and I creditor lien against the C company extended to the appellant, a non-contracting party, on the ground that the appellant was aware of, consented to and authorised the respondent to conduct its excavating activities on the appellant's property. The Local Division upheld this contention and dismissed the application for eviction.

On appeal, the Court held that since the appellant's claim was vindicatory in nature, ownership was an essential averment and had to be adequately proved by it. It appeared that the appellant, in the Court a quo, had in J its founding affidavit made the

1993 (1) SA p78

A positive averment that it was the owner of the property concerned and had annexed a copy of the title deed thereof, which had been signed by the Registrar of Deeds but not certified by him. The respondent objected, submitting that the appellant had not produced admissible evidence to prove such averment. On appeal, the appellant was forced to make an application that further evidence in the form of the original title deed be received in evidence as part of the record. The application was opposed by respondent, and, in order to prevent delay, the appellant was placed on B terms to present the original title deed for inspection by the respondent and to report back to the Court. The respondent thereafter submitted a report to the Court expressing itself satisfied that the copy of the title deed was indeed a true copy of the original title deed, and the Court accordingly received this fact into the record and allowed the application.

The Court held that the crucial question in the appeal was whether the C respondent was invested with a right of retention enforceable against the appellant as owner. The Court remarked that the respondent had relied throughout on a debtor and creditor lien and that his loss of possession would therefore extinguish his lien. However, two months before the hearing of the appeal it was discovered by the appellant's attorney that the respondent had executed two cessions in favour of the Standard Bank, one being in respect of its book debts, the other in respect of 'all contracts or other agreements already entered into by the company D (respondent) as well as any retention monies due or which may become due to the company'. The cessions, which were executed in 1989, well before the instant application was launched, were both intended to secure overdraft facilities granted by the bank to the respondent. The terms of each cession were broad enough to encompass the respondent's claim for payment for work done on the property. The respondent contended that it had not been non-suited by the cessions, in view of the fact that a debtor and creditor lien was not restricted in its operation to securing a claim E for remuneration for work done, but extended to all the respondent's rights which, in casu, included its reversionary rights against the bank because the cession was one in securitatem debiti. The Court held that this argument was unsound, as the purpose of a debtor and creditor lien was indeed a restricted one, namely to strengthen the creditor's right to remuneration for work done in respect of the property in his possession, and in any event, as far as its reversionary interest was concerned, the F respondent's debtor was the bank and not the C company. The Court further held that the true position was that the cessions had divested the respondent of the right to claim its contractual remuneration, and that only the bank could thenceforth, and until the overdraft was repaid, recover payment of any amounts due for work done; having surrendered its claim for payment to the bank, the respondent had surrendered any lien it may have had against the C company, or, for that matter, the appellant. The Court accordingly held that the appellant was entitled to the relief G it sought and that the appeal had to succeed.

The decision in the Witwatersrand Local Division in Goudini Chrome (Pty) Ltd v MCC Contracts (Pty) Ltd reversed. H

Case Information

Appeal from a decision in the Witwatersrand Local Division (Labuschagne J). The facts appear from the judgment of Nienaber JA.

C M Eloff for the appellant referred to the following authorities: Ford v Reed Bros 1922 TPD 266; Anderson & Co v Pienaar & Co 1922 TPD 435; Tyre & Motor Supply Co Ltd v Leibrandt 1926 CPD 421; Standard Kredietkorporasie I Bpk v JOT Motors (Edms) Bpk t/a Vaal Motors 1986 (1) SA 223 (A) at 236C-D; Brooklyn House Furnishers Ltd v Knoetze & Sons 1970 (3) SA 264 (A) at 271; Oceana Leasing Services (Pty) Ltd v BG Motors (Pty) Ltd 1980 (3) SA 267 (W) at 272B; Herbstein and Van Winsen The Civil Practice of the Superior Courts in South Africa 3rd ed at 81; Sugden and Others v Beaconhurst Dairies (Pty) Ltd and Others 1963 (2) SA 174 (E) at 187H; Commercial Union Assurance Co of SA Ltd v Van Zyl and Another 1971 (1) SA 100 (E) at J 105B-D; Colman v Dunbar 1933 AD 141 at 161-2;

1993 (1) SA p79

A Bank of Lisbon and South Africa Ltd v The Master and Others 1987 (1) SA 276 (A) at 294C; Van der Merwe Sakereg 2nd ed at 721, 726.

A J Horwitz SC (with him M C Goldblatt) for the respondent referred to the following authorities: Ruskin NO v Thiergen 1962 (3) SA 737 (A); R v Pelunsky 1914 AD 360; Boon v Vaughan & Co Ltd 1919 TPD 77; Union B Government v Lubbe 1927 TPD 455; R v Amod & Co (Pty) Ltd and Another 1947 (3) SA 32 (A); R v Halem and Another 1949 (3) SA 274 (T); R v De Meyer 1949 (3) SA 892 (O); Mabena v Brakpan Municipality 1956 (1) SA 179 (T); Vulcan Rubber Works (Pty) Ltd v South African Railways and Harbours 1958 (3) SA 285 (A); R v Nhlanhla 1960 (3) SA 568 (T); R v Mabindla 1960 (4) SA 307 (E); S v Tielima 1970 (2) SA 264 (T); S v Coetzer 1972 (2) SA 119 (N); C S v Van Pittius and Another 1973 (3) SA 814 (C); S v Miles 1978 (3) SA 407 (N); Singh v Govender Brothers Construction 1986 (3) SA 613 (N); S v Blaauw 1989 (1) SA 202 (A); Gemeenskapsontwikkelingsraad v Williams and Others (1) 1977 (2) SA 692 (W); Ngqumba and Others v State President and Others 1987 (1) SA 456 (E); Kimberley Divisional Council v London and D South African Exploration Co (1885) 2 Buch AC 23; Frye's (Pty) Ltd v Ries 1957 (3) SA 575 (A); Chetty v Naidoo 1974 (3) SA 13 (A); Silberberg and Schoeman The Law of Property 2nd ed at 133 note 114; Graham v Ridley 1931 TPD 476; Hart v Pinetown Drive-In Cinema (Pty) Ltd 1972 (1) SA 464 (D); Radebe and Others v Eastern Transvaal Development Board 1988 (2) SA 785 (A) E ; Putco Ltd v TV and Radio Guarantee Co (Pty) Ltd and Other Related Cases 1985 (4) SA 809 (A); United Building Society v Smooklers's Trustees and...