One hundred years of security cession

JurisdictionSouth Africa
Citation(2013) 25 SA Merc LJ 513
Date25 May 2019
AuthorSusan Scott
Published date25 May 2019
Pages513-533
ONE HUNDRED YEARS OF SECURITY
CESSION
SUSAN SCOTT*
Professor, Department of Private Law, University of South Africa
I INTRODUCTION
At the end of a long and rewarding career in academia, I wish to ref‌lect
on one of my favourite topics, security cession, in the light of three
signif‌icant decisions on the issue. I have consistently researched this
fascinating topic since completing my doctoral thesis
1
on the law of
cession in South Africa in 1977, and I intend continuing to do so in my
retirement.
2
As this is my farewell lecture to you, colleagues, I feel free to
speak my mind on issues which are close to my heart and which over the
years have shaped my legal thinking. I also take the liberty of making
some observations of a more personal nature.
3
In this overview of a
period stretching roughly over a hundred years, I brief‌ly relate the
historical background to a recent crucial judgment on the issue, Grobler
v Oosthuizen,
4
compare three judgments, and draw some conclusions.
The judgments that I compare are National Bank of SA Ltd v Cohen’s
Trustee,
5
Grobler v Oosthuizen,
6
and Vanden Avenne-Ooigem v Landbou-
wkrediet en andere
7
a recent decision of the Belgian appeal court (Hof
van Cassatie). I utilise this comparison to state my views brief‌ly on
aspects of South African law such as the value and relevance of Latin,
Roman law, legal history and comparative law; on case law as a source of
law; on the tension between the judiciary and academia (the bench and
the chair);
8
and the interaction between theory and practice.
* BA (Law) LLB (UP) LLD (Unisa). Professor, Department of Private Law, University of
South Africa.
1
Sessie in die Suid-Afrikaanse Reg (LLD thesis, University of South Africa, 1977).
2
Mindful of the adage attributed to Robert Walser (1878–1956) (‘Wenn man nur weiss,
wie wenig man weiss kann es noch gut kommen.’ – When one only knows how little one
knows, things can still turn out f‌ine), I cannot stop now.
3
In his inaugural lecture, Thomas categorically states that a professor delivering such a
lecture to an august audience is entitled to air his views without fear of being contradicted (see
Ph J Thomas ‘Fin de siècle of funktionele Romeinse reg?’ (1997) 60 THRHR 202). I suppose
that this also applies to a professor presenting her farewell message to her colleagues.
4
5
6
Grobler supra note 4 para 17.
7
3 Desember 2010 (C.09.o459.N/1).
8
Ellison Kahn ‘The judges and the professors or bench and chair’ (1979) 96 SALJ 560.
513
(2013) 25 SA Merc LJ 513
© Juta and Company (Pty) Ltd
II HISTORICAL BACKGROUND
I commence my discussion with a brief reference to German law and,
in particular, the German Bürgerliches Gesetzbuch (BGB), which
was adopted in 1900. In the BGB, the pure theoretical viewpoint was
explicitly adopted that ownership of personal rights (claims, creditors’
rights)
9
– Eigentum and Forderungen – is not possible. Nevertheless, the
code, as an exception, made extensive provision for a pledge of claims.
10
Shortly after the adoption of the code, the practical needs of their clients
prompted German lawyers and the courts to provide for an alternative
form of security by means of claims. The most important reason why a
pledge of claims was not accepted by the German credit world was the
requirement of publicity. Because a pledge creates a limited real right for
the pledgee, publicity is required for the vesting of this right. However,
debtors in need of credit facilities generally are unwilling to publicise to
their own debtors that they have taken up a credit facility in whatever
form. In establishing a new form of security, the practical lawyers drafted
the necessary documents to give effect to the wishes of their clients, the
courts engaged their interpretative skills relying on unique German
concepts such as the Germanic Treuhand, and, most importantly, the
legislature followed suit by amending the insolvency law and civil
procedure to accommodate this new form of security – a f‌iduciary
security cession – which is not provided for in the civil code.
11
At this point you may ask: why start with German law in a discussion
of security cessions in South Africa? Apart from the fact that I hold the
German legal system in high esteem, legal development in South Africa
in this f‌ield necessitates considering this system. In 1911 the famous
Lord de Villiers CJ
12
in the renowned case of National Bank of SA Ltd v
Cohen’s Trustee
13
held that a security cession, whatever it may be called,
is always in the nature of a pledge. This view was adopted – sometimes
somewhat reluctantly – in the years to follow,
14
but, during the sixties,
9
See Scott op cit note 1 at 136.
10
Susan Scott The Law of Cession 2 ed (1991) 231; Susan Scott ‘The comparative method in
action – Aspects of the law of cession (part 2)’ (2001) 34 De Jure 1at17.
11
Susan Scott ‘Algehele sekerheidsessies’ (1988) 51 THRHR 434 at 435.
12
See the following sources on this interesting and controversial judge: A A Roberts A
South African Legal Bibliography (1942) 356; E Kahn sv De Villiers, Johan Hendrik (John Henry,
Lord de Villiers, first Baron de Villiers of Wynberg) in Dictionary of South African Biography vol I
W J de Kock (ed) (1968) 224.
13
Supra note 5.
14
Sutherland v Elliott Brothers (1842) 2 M 349 at 350; Van der Byl & Co v Findlay & Kihn
(1892) 9 SC 178 at 181; Estate Van den Heever v Greyling (1907) 24 SC 414 at 422; Rothschild v
Lowndes 1908 TS 493 at 501; Big Sixteen (Pty) Ltd v Trust Bank of Africa Ltd and Another 1978
(3) SA 1032 (C); Holzman NO and Another v Knights Engineering and Precision Works (Pty)
(2013) 25 SA MERC LJ514
© Juta and Company (Pty) Ltd

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