THE SUPREME COURT OF APPEAL OF SOUTH AFRICA
JUDGMENT
Not Reportable
Case No: 845/2019 and 898/2019

In the matter between:
SILOSTRAT (PTY) LIMITED                                               FIRST APPELLANT
THE STANDARD BANK OF
SOUTH AFRICA LIMITED                                             SECOND APPELLANT
SUIDWES LANDBOU (PTY) LIMITED                            THIRD APPELLANT
and
PIETER HENDRIK STRYDOM NO
DEON MARIUS BOTHA NO
CAROLINE MMAKGOKOLO LEDWABA NO
(in their capacities as joint trustees of the Insolvent
Estate of Frederick Barend Christoffel Kirsten)                   FIRST RESPONDENT

THE LAND & AGRICULTURAL
DEVELOPMENT BANK OF SOUTH AFRICA    SECOND RESPONDENT

TECHNICHEM OESBESKERMING
(PTY) LIMITED                                                                   THIRD RESPONDENT

Neutral citation: Silostrat (Pty) Ltd & Others v Pieter Hendrik Strydom N.O &
Others (case no 845/2019 and 898/2019) [2021] ZASCA 93
(25 June 2021)
Coram:
PONNAN, DAMBUZA and NICHOLLS JJA, GORVEN and
MABINDLA-BOQWANA AJJA
Heard:

15 February 2021
Delivered:
This judgment was handed down electronically by circulation
to the parties' representatives by email, publication on the
Supreme Court of Appeal website and release to SAFLII. The
date and time for hand-down is deemed to be 10h00 on 25
June 2021.
Summary: Law of Contract – cession – interpretation of three competing
cessions – principles of interpretation of legal documents applicable –
importation of words not used in the cession not permitted.
Rectification of cession – insufficient evidence to prove mistake common to both
parties to the cession for purposes of a claim for rectification thereof.
Insolvency - Institution of proceedings against the trustees of the insolvent estate
where a debt had been proved and admitted by the trustees improper.

ORDER

On appeal from: Gauteng Division of the High Court, Pretoria (Janse van
Nieuwenhuizen J, sitting as court of first instance):

The appeal in each instance by:
(i)
the first appellant, Silostrat (Pty) Ltd, against paragraphs 2 and 3;
(ii)
the second appellant, Standard Bank, against paragraph 1; and
(iii) the third appellant, Suidwes Landbou (Pty) Ltd, against paragraph 6;
of the order of the court below is dismissed with costs, including those of two
counsel where so employed.

JUDGMENT

Dambuza JA (Ponnan, Nicholls JJA and Gorven and Mabindla-Boqwana
AJJA concurring)

Introduction
[1] Central to this appeal is the validity and ranking of three cessions executed
by Mr Frederick Christoffel Kirsten (Kirsten), whose estate was sequestrated in
August 2016. The three cessionaries were: the second appellant, Standard Bank
of South Africa Limited (Standard Bank or the bank), the third appellant, Suidwes
Landbou (Pty) Ltd, a dealer in agricultural commodities (Suidwes), which had
ceded a portion of its book debt to the second respondent, the Land and
Agricultural Development Bank of South Africa (Land Bank), and the fifth
respondent, Technichem Oesbeskerming (Pty) Ltd (Technichem), a supplier of
agricultural chemicals. In the high court each of the three cessionaries, relying on

their respective cessions, asserted an entitlement to the proceeds of Kirsten’s
2015 maize crop. The first appellant, Silostrat, a grain trader, also laid claim to
those funds, based on contracts of sale for the 2015 maize produce, which it had
concluded with Kirsten at the start of the 2015/16 maize production season.

[2] The high court:
1. Dismissed Standard Bank’s claim against each of the trustees of Kirsten’s
insolvent estate, Suidwes and the Landbank, with costs including those of two
counsel.
2. Dismissed Silostrat’s conditional counterclaim against Standard Bank with
costs including those of two counsel.
3. Dismissed Silostrat’s conditional counterclaim against Suidwes with costs
including those of two counsel.
4. Declared Technichem’s cession dated 5 October 2014 valid and enforceable.
5.  Held that Technichem’s cession predates the cessions relied upon by Suidwes
and the Landbank in respect of Kirsten’s 2015 crop income.
6. Ordered Suidwes to pay Technichem’s costs.
Standard Bank appeals against paragraph (1) of the order of the high court,
Silostrat against paragraphs (2) and (3) and Suidwes against paragraph (6). In
each instance the appeal is with the leave of the high court.

Background
[3] Until his estate was sequestrated in 2016, Kirsten was a widely respected
maize, sunflower and cattle farmer in the North West Province, having taken over
the farming enterprise from his father, and extended it by renting some of the
neighbouring farms. In the course of his farming operations, Kirsten held several
bank accounts and enjoyed credit facilities with Standard Bank. He also enjoyed
credit facilities with Suidwes and Technichem. As security for these credit
facilities, Kirsten executed deeds of cession in favour of his creditors, Standard

Bank, Suidwes and Technichem. He also registered a mortgage bond in favour of
Standard Bank and a General Notarial Covering Bond in favour of Suidwes.

[4] From October 2014, Kirsten defaulted on his loan repayments. He also
failed to deliver the 2015 maize crop, which Silostrat had bought from him. On
13 August 2015, Standard Bank instituted proceedings against Kirsten and the
other parties herein, asserting its entitlement to payment of the balance
outstanding in Kirsten’s loan account from the proceeds of his 2015 maize crop.
On 29 April 2016, his estate was provisionally sequestrated. This triggered a
contest amongst the cessionaries. On 31 August 2016, a final order of
sequestration was granted against Kirsten. After his sequestration, Kirsten was
substituted by his three joint trustees (the Trustees) in the proceedings before the
court below. They are collectively cited as the first respondent in the present
appeal.

The Standard Bank claim
[5] As a client of the bank, Kirsten held an overdraft and several loan accounts.
From 2009, his credit profile was reviewed by the bank during September of each
year. In 2011, Mr Lood Mathee (Mathee), a relationship manager with the bank,
conducted the review of Kirsten’s bank accounts. At that time, Kirsten’s
indebtedness to Standard Bank was R6.5 million. Kirsten had applied for an
increase in his overdraft facility to R 8 million. His financial position was
assessed as ‘extremely strong’ and his farming operation as ‘outstanding’. At that
stage, the bank held no security for the line of credit afforded to Kirsten. The
increase sought was duly approved on condition that he execute a deed of cession
in favour of the bank in respect of his crop income and provide proof of the maize
that he then held in the silos. It was recorded in his bank file that he owed
R16 432 428 to Suidwes and R5 836 988 to another agricultural co-operative,

Senwes Limited. Mathee had to investigate and confirm that Kirsten had paid
these moneys to the respective institutions.

[6] On 6 October 2011, Mathee visited the Suidwes premises where he
discussed Kirsten’s account with the Suidwes relationship manager, Mr Louis
Botha. Botha advised that Kirsten still owed R11,5 million to Suidwes on a
revolving credit loan with a credit limit of R15 million. Mathee recorded this
information in Kirsten’s file, together with the following:
‘With above in mind he will definitely again make use of Suidwes’ assistance for the next
season on the Revolving credit loan. We therefore will not get that confirmation that he will
not make use of any credit facilities at the Co-op. He does not owe Senwes any funds, but they
also make a production facility of R4 million available’.

[7] On 22 November 2011, Kirsten executed a Deed of Cession in favour of
Standard Bank. In the relevant clauses the cession provided:
‘1
Giving of cession
I, Frederik Barend Christoffel Kirsten (700407 5240 080) (“Cedent”) cede and transfer in
favour of The Standard Bank of South Africa Limited (“the Bank”), or anyone who takes
transfer of the Bank’s rights under this cession, all the Cedent’s rights in and to all income
and/or moneys due and to become due to the Cedent by agricultural producers (‘Producers”)
in respect of Maize supplied by the Cedent and/or agricultural produce (“produce”) purchased
from Producers and sold to buyers of the produce from time to time, upon the terms and
conditions set out in this agreement.
Amount secured under this cession
The maximum amount secured under this cession is unlimited.
Continuing covering security
This cession will be a continuing covering security for all amounts (including interest,
collection cost, default administration charges and other cost and fees permissible in terms of
the underlying debt and value added tax) which the Cedent now or in the future may owe to

the Bank for whatever reason whether directly, contingently as surety or otherwise (“debts”)
even if the debts are temporarily settled at any time . . .’

[8] Prior to the execution of this cession, on 16 November 2011, Mathee wrote
to Botha of Suidwes, advising that Kirsten had pledged and ceded to Standard
Bank all crops and all right, title and interest and claims arising from the proceeds
thereof. On 24 November 2011 Mr Olivier of Suidwes responded that Suidwes
had approved Kirsten’s application for a revolving credit against cession of his
crop and that Standard Bank could obtain a cession for surplus production.

[9] Over time Kirsten’s indebtedness to the bank continued to increase
steadily. By October 2012, the balance outstanding on his overdraft facility was
R19 million. But the bank kept approving further loan applications. During the
latter part of 2013, a second production loan was advanced to Kirsten. This loan
was to be repaid in full by 31 August 2014. It was approved on condition that
Kirsten would provide a ‘cession over [his] crop and crop proceeds’. However,
no cession, other than the 2011 cession, was executed by Kirsten in favour of the
bank. A further ‘long term loan’ of R20 million, payable over a 10 year period
was approved in favour of Kirsten, on condition that he would register first
mortgage bonds in favour of the bank over two of his farms.

[10] During the period 17 September 2013 to 22 December 2014, Standard
Bank concluded six instalment sale agreements with Kirsten in relation to the
purchase of farming implements and vehicles. The value of these loan agreements
was R79 367 633.04. The bank’s records revealed that the relevant bank officials
were of the impression that the bank was in possession of an ‘unrestricted cession
of [Kirsten’s] crops and crop income’ executed by him in favour of the bank as
security for his credit facilities.

[11] During November 2014, the bank approved a production loan application
of R21 million in Kirsten’s favour. This loan was intended for use in financing
production costs in respect of the 2014 to 2015 maize production season. Part of
this loan amount was a roll-over of the unpaid portion of the loan from the
previous season (2013).1 The loan agreement between Kirsten and the bank
provided that Kirsten would provide collateral security in the form of an
‘unrestricted cession of crops and crop income’ together with an unrestricted
cession of a comprehensive crop insurance, and an ‘input cost insurance contract’.
On 27 November 2014 Standard Bank extended to Kirsten, an overdraft facility
with a maximum limit of R5 000 000.00.2 In the overdraft agreement it was
recorded that under the November 2011 cession the bank was in possession of
collateral security in the form of ‘monies due and to become due [to Kirsten]’.

The Silostrat claim
[12] To ensure payment of the 2014/2015 production loan, Kirsten sold 35 000
tons of his 2015 maize produce to Silostrat. This arrangement was implemented
through a business relationship between Standard Bank and Quattro-Vest (Pty)
Ltd, an entity which conducted the business of ‘arranging’ finance for farmers,
among other things.

[13] Under this arrangement, Kirsten sold his anticipated 2015 maize produce
to Silostrat in three forward contracts, concluded during November 2014, January
2015 and February 2015 respectively. In terms of the first of these agreements
the maize was sold at a variable purchase price, pegged to the SAFEX maize price

1 Three loan agreements were concluded between Kirsten and the Bank on 7 November 2014, 10 November
2014 and 11 November 2014 for R68 400 000.00, R4 985 500.00, and R9 244 900.00 respectively.
2 In this regard it was recorded that Standard Bank held as collateral, a cession of moneys ‘due and to become
due’.

as at 31 July 2015. In the other two contracts the purchase price was fixed. Kirsten
undertook to deliver the maize before July 2015.

[14] Silostrat immediately sold the maize bought from Kirsten by way of ‘back-
to-back’ agreements on the SAFEX commodities exchange, and, consistent with
the contracts concluded with Kirsten, Silostrat was to deliver the maize on 31 July
2015; except that Kirsten never delivered the maize to it.

[15] During May 2015, as Kirsten struggled to meet his obligations under the
various business transactions it became apparent that his creditors were intent on
laying claim to the proceeds of his 2015 maize produce. It turned out that during
the same period over which Kirsten had obtained loans and other credit facilities
from the Standard Bank and Suidwes, he had secured similar credit facilities with
Technichem for amounts running into millions of Rand.

[16] When Silostrat could not perform its obligations under the back-to-back
contracts because of Kirsten’s non-performance, it resorted to ‘buying in’ maize
in order to fulfil its obligations under those contracts. It secured replacement
maize at a higher price than that contracted for with Kirsten, and incurred
purchase costs of R35 288 000.00.

The Suidwes (and the Land Bank) claims
[17]  Kirsten’s relationship with Suidwes also went as far back as October 2009,
when he executed the first of what was to be annual cessions in favour of Suidwes.
The first two clauses thereof provided:
‘Die kliënt sedeer hiermee aan Suidwes, wat die sessie aanvaar, al die kliënt se reg, titel en
belang in die totale opbrengs van alle oeste wat gedurende die 2010 produksieseisoen
geproduseer word, van watter aard total ook al en waar ook al verbou, wat –
1.1
reeds deur die kliënt ingesamel, maar nog nie te gelde gemaak is nie;

1.2
reeds aangeplant is, maar wat nog nie op die land is; en
1.3
alle oeste wat die kliënt in die toekoms mag aanplant.
Die sessie dien as sekuriteit vir die behoorlike betaling deur die kliënt aan Suidwes van
alle gelde wat tans aan Suidwes verskuldig is of in die toekoms verskuldig mag word
ontstaande uit watter skuldoorsaak ook al’.

[18] In terms of the second cession executed by Kirsten in favour Suidwes on
15 October 2010, he ceded to Suidwes ‘all future crops which [he] might in the
future plant’. Clause 3 of that cession provided that it would:
‘. . . bly van krag totdat alle bedrae wat aan Suidwes verskuldig is deur die kliënt
betaal aan is en Suidwes, na betaling . . . die sessie skriftelik gekanselleer het.’
Further cessions were executed in November 2011 and in 2013.

[19] In August 2014, Suidwes concluded a service level agreement with the
Land Bank in terms of which it sold and ceded part of its book debts and related
security to the Land Bank. A portion of Kirsten’s debt with Suidwes was sold to
the Land Bank, while another portion remained with Suidwes. Hence the Land
Bank’s involvement in these proceedings. On 28 October 2014, Kirsten executed
the last of the annual cessions in favour of Suidwes, ceding his right, title and
interest to the crop produced during the 2015 production season.

[20] During May 2015, Suidwes demanded from Kirsten delivery of the 2015
maize crop produce. Subsequently, Kirsten sold 22 619.52 tons of his 2015 maize
crop to Africum, a wholly owned subsidiary of Suidwes. The maize was delivered
to Suidwes’ silos during the period between 14 July 2015 and 21 September 2015.
Africum sold the maize to third parties. The proceeds thereof were paid to
Suidwes, who used some of it to credit Kirsten’s debt due to Suidwes, and the
balance to settle Kirsten’s debt with the Land Bank.

The Technichem claim
[21] During the same period as the conclusion of the transactions set out above
(2014), Kirsten bought agricultural chemicals from Technichem under a credit
agreement. As security for this indebtedness Kirsten executed a Deed of Cession
dated 5 October 2014, in terms of which he ceded all of his rights to the income
from his 2015 crop produce to Technichem. In the relevant clause the
Technichem Deed of Cession provided:
‘As sekuriteit vir betaling van enige of alle bedrae geld wat die aansoeker aan TECHNICHEM
verskulding is of mag raak, ongeag wat die skuldoorsaak daarvan is, sedeer en dra en maak die
aansoeker hierby oor aan en ten gunste van TECHNICHEM al die aansoeker se reg, titel,
belang en aanspraak in en op alle oesopbrengste van die aansoeker verbou het of in die toekoms
mag verbou. Verder geskied sodanige sessie op die volgende voorwardes:
Die AANSOEKER verklaar en bevestige dat hy gesamentlik en/of afsonderlik die volgende
gewasse aangeplant en verbou het en/of van voorneme is om dit te bou, gesamentlik en/of
afsonderlik die eienaar daarvan is en dat dit nie aan enige ander party of instansie verpand is,
hetsy by ooreenkoms of statuter nie. . . .’

[22] It was not in dispute that the Technichem cession, having been executed
19 days prior to the 2014 Suidwes cession, ranked before the latter cession. It is
in this context that Suidwes relied on its earlier cessions which, it maintained,
were evergreen. I deal with this contention later in this judgment. By July 2015,
an amount of R8 062 498.94 was owing by Kirsten on his credit account with
Technichem.

The sequestration proceedings
[23]  At the time of sequestration Kirsten’s liabilities exceeded his assets by
approximately R44 751 458.20. Standard Bank, the Land Bank and Technichem
proved their claims against his insolvent estate.3 Silostrat’s claim against the

3 The relevant proven claims against the estate were: Standard Bank in the amount of R 73 072 098.93, Suidwes
– R 87 350.89, Land Bank – R67 17 234. 02, Silostrat R35 288 000.00, and Technichem – R7 665 946.44.

insolvent estate was conceded by the trustees during the course of the trial in the
high court and judgment was entered by agreement in respect thereof.
Nevertheless, Silostrat persisted with its counter claims against Standard Bank
and Suidwes.

Proceedings before the court a quo
[24] On 13 August 2015, Standard Bank instituted proceedings against Kirsten,
Suidwes, and Silostrat for payment of the proceeds of Kirsten’s 2015 crop
produce. For this claim Standard Bank relied on the cession executed by Kirsten
in its favour on 22 November 2011. The Trustees were subsequently substituted
in his place. Later, the Land Bank and Technichem were joined in the
proceedings.

[25] As against Kirsten, Standard Bank claimed payment of the moneys
advanced pursuant to the conclusion of the third production loan agreement
concluded on 10 November 2014, for which the bank held, as security, the deed
of cession executed by Kirsten in its favour on 22 November 2011. The bank
contended that, properly interpreted, that cession meant that Kirsten had ceded
and transferred to it all of his rights in and to his entire maize crop, and to all
income due and to become due to him in respect of maize sold and supplied by
him. It asserted that the amount secured under the cession was unlimited and that
the cession was a continuing covering security for all amounts owed by Kirsten
to the bank at the time of its execution and in the future.

[26] As an alternative, the bank contended that the failure to record in the Deed
of Cession the common intention held by itself and Kirsten as set out above, was
occasioned by a common and bona fide error in the drafting of the cession and
that the cession therefore fell to be rectified to accord with the following intended
meaning:

‘1 Giving of cession
I Frederik Barend Christoffel Kirsten (700407 5240 080) (“Cedent”) cede and transfer in favour
of the Standard Bank of South Africa Limited (“the Bank”), or anyone who takes transfer of
the Bank’s rights under this cession, all the Cedent’s rights in and to the Cedent’s entire Maize
crop and all income and/or moneys due and to become due to the Cedent in respect of Maize
supplied and sold by the Cedent and/or agricultural produce (“produce”) purchased from
agricultural producers and sold to buyers of the produce from time to time, upon the terms and
conditions set out in this agreement.’(Emphasis added.)

[27] The bank maintained that the cession should be interpreted to mean that it
was entitled to all the proceeds of Kirsten’s 2015 and 2016 maize crop harvest. It
sought a declarator that its cession (as rectified, if necessary) was valid and
enforceable, and that it pre-dated the cessions executed by Kirsten in favour of
Suidwes and Technichem. It contended that its cession trumped the others and
therefore all proceeds realised from Kirsten’s 2015 maize produce should be paid
to it. However, the bank later accepted that the 2016 produce fell to be dealt with
in the insolvent estate and abandoned its claim in that regard.

[28] In their plea, the Trustees contended that the interpretation of the cession
advanced by Standard Bank was legally incompetent and that the Standard Bank
cession was void for vagueness, a view shared by all the other parties. A further
contention by the Trustees was that it was not possible to determine from the
cession which maize crop or income was being ceded. Alternatively, the ceded
rights were limited to Kirsten’s rights against agricultural producers in respect of
maize supplied to them, ie, the rights ceded in the cession had nothing to do with
the proceeds of maize sold to grain dealers such as Silostrat and Suidwes.

[29] Suidwes and the Land Bank filed similar pleas. In respect of the Standard
Bank claim they asserted that from 2009 until 2014 Kirsten provided Suidwes

with annual evergreen cessions which trumped those he executed in favour of
Standard Bank and Technichem.

[30] Suidwes and the Land Bank also asserted their rights flowing from the
General Notarial Bond registered by Kirsten in favour of Suidwes over Kirsten’s
movable property, and ceded to the Land Bank on the same day of its registration.
The Notarial Bond had been perfected by agreement between Kirsten and
Suidwes.  It was contended that the General Notarial Bond included Kirsten’s
2015 maize produce. This argument was, however, not pursued on appeal.

[31] Suidwes and the Land Bank further pleaded that although the maize was
delivered by Kirsten to the Suidwes silos and held by Suidwes in pledge on behalf
of both entities, it was then sold by Kirsten to Africum and the latter sold it to
third parties. The proceeds were paid to Suidwes in settlement of Kirsten’s debts
to Suidwes and the Land Bank. Incidentally, the payment made by Africum to
Suidwes became the subject of a separate action instituted by the Trustees of
Kirsten’s insolvent estate against Africum.4

[32] Silostrat responded to the Standard Bank claim with its own claim against
Kirsten’s insolvent estate, for payment of the R35 288 000.00, which it had
suffered as a result of Kirsten’s breach of contract in failing to deliver the 2015
maize produce contracted for in the three forward agreements. It also asserted a
conditional delictual counter-claim against Standard Bank based on alleged
negligence by the bank in failing to ensure that the cession provided by Kirsten
would protect it (Silostrat) in the event of Kisten’s failure to deliver the 35 000
tons of maize.

4 Standard Bank was also party to that action.

[33] As an alternative to that conditional counterclaim, Silostrat claimed
delictual damages against Suidwes for ‘appropriation’ and disposal of the
22 619.52 tons of maize delivered by Kirsten to its silos. Silostrat alleged that
there was a legal duty5 on Suidwes not to interfere with its contractual rights
under the three forward purchase agreements. It contended that by accepting
delivery of Kirsten’s maize and disposing of it with full knowledge of Silostrat’s
contractual rights, Suidwes usurped the  maize and appropriated  it to itself.6

[34] In its plea to the Standard Bank claim, Technichem asserted its entitlement
to the proceeds of Kirsten’s 2015 maize produce on the basis of the unpaid
balance of Kirsten’s indebtedness to it amounting to R7 665 946.44, and its
cession. Technichem disputed Standard Bank’s claim as pleaded under the 2011
cession and maintained that its cession trumped both the Standard Bank and the
Suidwes cessions, as well as the General Notarial Bond relied on by Suidwes.
However, it also conceded the right of the Trustees to the proceeds of Kirsten’s
2016 harvest.

Judgment of the high court
[35] In dismissing Standard Bank’s claim, the high court found that the
interpretation contended for by the bank on the wording of its cession was
untenable. The learned judge further found that, having proved its claim against
the insolvent estate in the sequestration proceedings, Standard Bank had no cause
of action in relation to the 2015 maize crop. Further, no proper basis had been
laid for rectification of the cession as the bank had failed to establish that Kirsten
and the bank were labouring under a common mistake when the cession was

5 Silostrat employed the expression ‘duty of care’, which conduces to confusion and in our legal setting is
inherently misleading (see by way of example: Home Talk Developments (Pty) Ltd and Others v Ekurhuleni
Metropolitan Municipality [2017] ZASCA 77; [2017] 3 All SA 382 (SCA); 2018 (1) SA 391 (SCA) para 25).
6 These claims were conditional upon any dividend that would be paid to Silostrat by the Trustees.

executed. The learned judge held that, in any event, rectification of the cession
subsequent to the establishment of the concursus creditorum would place
Standard Bank in a stronger position than it occupied at concursus creditorum, to
the prejudice of the other creditors.

[36] The high court rejected the interpretation of Suidwes’ cessions as
evergreen. It found that each cession related to the crop produced in a specific
season. As to the Suidwes 2014 cession, the court held that it ranked after the
Technichem cession because it was executed later. With regard to the perfected
General Notarial Bond, it found that, due to the sale by Suidwes of part of its
book debt to the Land Bank, neither entity held any security from Kirsten.

[37] Silostrat’s forward agreements were upheld by the high court (in line with
the concession made by the Trustees). This meant that Silostrat’s claim would be
administered in the insolvent estate. However, as already stated, Silostrat
persisted with its conditional counter claims, even on appeal.

[38] With regard to its delictual claim against Suidwes, the court found that,
contrary to the allegation by Silostrat, Suidwes had not appropriated Kirsten’s
maize. Instead, Kirsten had sold the maize to Africum ‘on his own folio number
in his own name’.

[39] The high court upheld Technichem’s claim, having found that its cession,
executed by Kirsten on 5 October 2014, predated the Suidwes cession. It is
noteworthy that none of the parties have sought to assail this conclusion on
appeal. The court then awarded the costs incurred by Technichem in the
application against Suidwes.

The Standard Bank appeal
[40] I first consider the submission made on behalf of the Trustees and
Suidwes/Land Bank that Standard Bank had no cause of action against them. The
argument was that, given that the bank had proved its claim against the insolvent
estate, its claim in the summons for the same debt against the insolvent estate,
Suidwes and Land Bank was unsustainable.

[41] The bank did not deny that its cession was in securitatem debiti. It had held
the cession pending the repayment of the moneys advanced to Kirsten. Once it
had proved its claim against the insolvent estate, it fell upon the Trustees to deal
therewith in the course of the administration of the insolvent estate. The claim
had clearly not been disputed by the Trustees. The institution of proceedings
against the insolvent estate and the other parties was contrary to established
principles in the Law of Insolvency. The proceedings instituted by the Trustees
against Africum for payment of the same proceeds clearly illustrate this point.

[42] Regarding the validity and ranking of its cession, Standard Bank contended
that the high court’s interpretation of its cession was unbusinesslike, that it
overemphasised the grammatical and objective meaning of the term ‘agricultural
producers’ rather than considering the purpose of the cession and the context in
which it was executed, and that the court’s interpretation resulted in an absurdity.
It was submitted on behalf of Standard Bank that there was no evidence that any
income was due to Kirsten from agricultural producers to whom he had sold the
maize. The only contemplated sales were to grain dealers, it was argued.
Consequently, the interpretation that took into account the reference to
agricultural producers in the Standard Bank cession was illogical.

[43] The interpretation advanced by the bank runs contrary to the established
approach to interpretation of legal documents that has been repeatedly

emphasised by our courts. Central to the interpretation of legal documents is the
principle that meaning must be attributed to the words used by the parties in the
document. Although evidence of context is admissible as an interpretative aid
such evidence may not be led to alter the meaning of the clear and unambiguous
words used in an agreement.7 The interpretation advanced on behalf of the bank
meant that the words used in the cession would have to be disregarded and other
words substituted in their place.

[44] The bulk of the evidence led on behalf of Standard Bank pertained to the
conditions that were stipulated by the bank for the approval of Kirsten’s
applications for increased credit facilities. It was not disputed that in some
instances the conditions for approval of the credit facilities included that Kirsten
would provide, as security for the loans and overdraft facilities, his ‘crop and crop
proceeds’. The evidence of Mathee and Ms Winnie Pienaar (Pienaar), the bank’s
credit manager who approved Kirsten’s overdraft facility in November 2011,
regarding those conditions, was not in dispute.

[45] However, that was never included in the cession that was executed by
Kirsten in favour of the bank. The Deed of Cession only provided for the cession
of Kirsten’s rights:
‘in and to all income and/or moneys due and to become due to the Cedent by agricultural
producers (“Producers”) in respect of Maize supplied by the Cedent and/or agricultural
produce (“produce”) purchased from Producers and sold to buyers of produce from time to
time, upon the terms and conditions set out in this agreement’. (Emphasis added.)

[46] There was nothing insensible or unbusinesslike about the limitation of the
expected income to that which would be due to Kirsten ‘by agricultural

7 KPMG Chartered Accountants (SA) v Securefin Ltd [2009] ZASCA 7; [2009] 2 All SA 523, 2009 (4) SA 399
(SCA) para 39; Natal Joint Pension Fund v Endumeni Municipality 2012 (4) SA 593 (SCA) at 602-610; City of
Tshwane Municipality v Blair Atholl Homeowners Association fn 7 above.

producers’. The definition of the word ‘produce’ is: ‘make, manufacture or
create’; 8  and its derivative, ‘producer’ is defined as: ‘one who produces:
especially agricultural products or manufactures crude materials into articles of
use’.9 The fact that Kirsten was an agricultural producer in his own right did not
render unbusinessslike or absurd the reference to him purchasing maize or
agricultural produce from other agricultural producers for the purpose of
onselling it. The submission on behalf of Standard Bank that the words used in
the cession had to be interpreted to include ‘expressly, impliedly or tacitly, that
Kirsten ceded to the bank his entire maize crop and all rights thereto, including
the right to the income due or to become due’ was untenable. The high court was
correct in its interpretation of the Standard Bank cession.

Rectification
[47] To meet the onus of proving the alleged mistake common to both parties
to the cession, Standard Bank relied on the evidence of Mathee and Pienaar.
However, neither of them tendered admissible evidence in support of a case of
rectification. Neither of them had the authority to decide on the wording of the
cession nor any contract on behalf of the bank. Mathee viewed himself as merely
a conduit, who only served to facilitate Kirsten’s signature on the cession. Kirsten
did not testify. It is thus difficult to see how, absent his evidence, the bank could
establish a mistake common to the parties. According to Mathee, the Deed of
Cession was drafted by officials of the Standard Bank legal department in
Johannesburg. Neither Kirsten nor Mathee read it before it was signed. Mathee’s
insistence that, in as far as it was not recorded in the Deed of Cession that Kirsten
had ceded his ‘crop and crop proceeds’, the intention of the contracting parties
had not been correctly recorded, was plainly conjecture.

8 Concise Oxford English Dictionary, 2002.
9 Merriam Webster Dictionary.

[48] Consequently there was no factual basis to justify rectification. The high
court’s dismissal of the application for rectification was correct. And its finding
that Standard Bank had no valid cession in respect of Kirsten’s crop income is
unassailable. That being so it is unnecessary to consider the issue of rectification
post concursus creditorum.

[49] In any event, when Standard Bank approved Kirsten’s 2011 production
loan and accepted his cession, it was aware of the earlier cession executed by
Kirsten in favour of Suidwes, and was also aware that Suidwes had misgivings
about the later cession. Hence, Standard Bank had accepted that its cession could
only obtain in relation to the Kirsten’s surplus production.

Silostrat’s appeal
Delictual claim against Standard Bank
[50] In Silostrat’s conditional counterclaim, it alleged that the Bank breached a
legal duty owed to it. The legal duty, so it was contended, centred on the Bank’s
failure to ensure that Kirsten’s 2015 maize crop was unencumbered by the
Suidwes cession, thereby preventing Silostrat suffering damages. Silostrat’s
conditional counterclaim, which was dependent upon two conditions, was framed
as follows:
‘In the event of the Court finding that:
(i)
[the] rights acquired by [Suidwes] in terms of a Deed of Cession . . . trumped and/or
supersede [Standard Bank’s] rights in respect of the Deed of cession [executed by
Kirsten in favour of Standard Bank], and
(ii)
the sale of 35,000 tons of maize by Kirsten to [Silostrat] is unenforceable and/or
void ab initio . . .’

[51] The high court found that whilst the first condition was met, the second
was not – hence Silostrat’s appeal. Important in this regard, the sale agreements
were concluded between Silostrat and Kirsten. Neither Silostrat, nor the Trustees

or Kirsten contend that these sale agreements are void and/or unenforceable.
Quite the contrary, at the commencement of the trial, and by agreement, the
Trustees admitted Silostrat’s claim. Judgment was accordingly granted in favour
of Silostrat against the insolvent estate, in the same amount as that claimed against
the Bank in the conditional counterclaim. This occurred on the basis that: (i) the
three sale agreements were validly concluded; (ii) Kirsten breached the three sale
agreements by failing to deliver the 35 000 tons of maize to Silostrat; and (iii)
Silostrat suffered damages because of Kirsten’s breach of the three sale
agreements.

[52 ] Moreover, aside from the agreement reached between the trustees and
Silostrat, the evidence of the witnesses for Silostrat established that: (i) the sale
agreements were valid and enforceable and Silostrat would not have been entitled
to terminate them at any point prior to 31 July 2015, being the last day for delivery
by Kirsten; (ii) any assertion that Silostrat could have closed out its position early
would have been premature because Kirsten had a contractual right to make
delivery up until 31 July 2015. In any event, at all times Silostrat sought specific
performance under the three sale agreements and, even after 31 July 2015, it
continued to seek delivery, based on Kirsten’s assurances. It follows that the high
court cannot be faulted in its conclusion that the second condition had not been
met.

[53] Insofar as Silostrat’s counterclaim against Suidwes is concerned: the
appeal by Silostrat against paragraph 3 of the High Court’s order is conditional
upon the success of Standard Bank’s appeal. If Standard Bank’s appeal fails, as I
have shown it must, Silostrat’s appeal must follow that result.

The Suidwes Appeal
[54] The issues that arose in the Suidwes appeal have been considered above. I
may only reiterate that in the light of the conclusion that the Standard Bank
cession did not relate to the proceeds of Kirsten’s produce, it is unnecessary to
determine the ranking thereof as against the Suidwes cession.

[55]  With regard to the Suidwes and Technichem cessions it is indisputable that
the Technichem cession, having been executed on 5 October 2014, predated the
Suidwes cession, which was executed on 24 October 2014. It was in this context
that Suidwes maintained that its earlier cessions, executed between 2009 and
2013, were evergreen. The finding of the high court that they were not evergreen
was not contested.

Against the costs order
[56] The basis of the Suidwes appeal against the costs order awarded against it
was that the dispute between itself and Technichem was limited. Therefore, the
order as to costs should have been limited to the third party proceedings only.
Also the costs order should have been made against Standard Bank as well, it was
argued.

[57] However, although the issues between Technichem and Suidwes were
limited to the ranking of the respective cessions, Technichem had to participate
in all the proceedings in order to protect its interests. The manner in which the
litigation unfolded was relevant to the question of costs. The proceedings in the
high court started with Standard Bank’s claim against the Trustees and Suidwes
together with the Land Bank. However, it became necessary for the court to
consider all three cessions. It would appear that although the contest for the
primacy of each of the cessions was between the three entities, the fact that
Standard Bank had only instituted a claim against the Trustees and Suidwes/Land

Bank, and not against Technichem, must have weighed heavily with the court
when considering the issue of costs. Hence there was no costs order against the
bank.

[58] It was Technichem that had instituted proceedings against Suidwes insofar
as the ranking of the cessions was concerned. After Silostrat had been joined by
agreement between the two parties it (Silostrat) counterclaimed against the
Trustees, Standard Bank and Suidwes. The trial lasted 10 days. As stated,
Techichem had to be present throughout the proceedings in the high court to
protect its interests. There is no valid basis on which this Court can interfere with
the exercise of the high court’s discretion in awarding costs against Suidwes in
these circumstances.

[59] In the result:
The appeal in each instance by:
(i)
the first appellant, Silostrat (Pty) Ltd, against paragraphs 2 and 3;
(ii)
the second appellant, Standard Bank, against paragraph 1; and
(iii) the third appellant, Suidwes Landbou  (Pty) Ltd, against paragraph 6;
of the order of the court below is dismissed with costs, including those of two
counsel where so employed.

_________________________
DAMBUZA N
JUDGE OF APPEAL

Appearances:

For the First Appellant:
J G Bergenthuin SC with B Bergenthuin
Instructed by:
Basson Olivier & Coetzee Attorneys,
Pretoria

Du Plooy Attorneys, Bloemfontein

For the Second Appellant:

K W Lüderitz SC with G W Amm
Instructed by:
Norton Rose Fulbright South Africa Inc,
Sandton

Webbers Attorneys, Bloemfontein

For the Third Appellant:
J P Daniels SC with J Smit
Instructed by:

Cliffe Dekker Hofmeyr Inc, Sandton

Pieter Skein Attorneys, Bloemfontein

For the First Respondents:
F H Terblanche SC with H Fourie SC and
M G Mokwena
Instructed by:

Loubser & Loubser Attorneys, Pretoria

EG Cooper Majiedt Inc, Bloemfontein

For the Second Respondent:
MP van der Merwe SC with N Komar
Instructed by:

Ningiza Horner Inc, Petoria

Matsepes Inc, Bloemfontein

For the Third Respondent:
J J Pretorius
Instructed by:
Gerrit Coetzee Inc, Potchefstroom
Horn and Van Rensburg Attorneys,
Bloemfontein.

THE SUPREME COURT OF APPEAL OFSOUTH AFRICA

MEDIA SUMMARY OF JUDGMENT DELIVERED

FROM
The Registrar, Supreme Court of Appeal

DATE
25 JUNE 2021

STATUS

Immediate

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

Silostrat (Pty) Ltd & Others v Pieter Hendrik Strydom N. O. & Others (case no
845/2019 and 898/2019) [2021] ZASCA 93 (25 June 2021)

MEDIA STATEMENT

Today the Supreme Court of Appeal dismissed an appeal against an order of the
Gauteng High Court, Pretoria which dismissed an application by the Standard Bank,
for payment of money by the trustees of the insolvent estate of Mr Frederick Christoffel
Kirsten, a farmer from the North West Province. In the high court the Standard Bank
and four other entities: Silostrat (Pty) Ltd, Suidwes Landbou (Pty) Ltd, Technichem
Osbeskerming (Pty) Ltd and the Land and Agricultural Development Bank of South
Africa, were competing for payment to them of the funds that were realised by the
trustees from Mr Kirsten’s 2015 maize harvest.

Prior to the sequestration in 2016, Kirsten had been a widely respected and seemingly
successful maize and farmer in the region of Makwassie in the Northwest. He had,
however, accumulated enormous amounts of debt with Standard Bank and Suidwes
for loans he had obtained and with Technichem for agricultural products he had bought
on credit.

During the period starting from 2009 to 2014 he had been executing annual cessions
in favour of Suidwes as collateral for the moneys advanced to him. In the cessions he
ceded to Suidwes moneys that he would be receiving from his farming activities. In
November 2011 he had executed a cession in favour of the Standard Bank. In October
2014 he had executed a cession in favour of Technichem.

In 2015 his farming enterprise collapsed. When his estate was sequestrated in 2016
Standard Bank launched court proceedings against the trustees of his insolvent estate
and Suidwes, claiming the moneys realised from Kirsten’s 2015 maize harvest and
relying on the cession that Kirsten had executed in its favour in 2011. Later Silostrat,
a grain trader, and Technichem also entered the fray because of their interest in
moneys realised from Kirsten’s maize produce.

Silostrat’s claim arose from events that took place in 2014, when Kirsten secured the
last of his numerous loans from Standard Bank. To ensure that the Standard Bank
money would be paid, Kirsten sold his then anticipated 2015 maize harvest to Silostrat,
in three forward contracts concluded in December 2014 and January and February
2015. However, after harvest, he sold and delivered the same produce to Africum, a
subsidiary of Suidwes. Consequently, because Kirsten did not honour his obligations
under the forward contracts he had concluded with Silostrat, the latter had to buy
maize to honour contracts it had concluded with third parties in anticipation of the
maize it would be receiving from Kirsten. Silostrat’s claim related to damages it had
suffered as a result of Kirsten’s failure to deliver the maize bought from him in terms
of the forward contracts.

The high court found that the cession executed by Kirsten in favour of Standard Bank
did not relate to the proceeds of his maize produce whereas the cessions he had
executed in favour of Suidwes and Technichem did. For that reason Standard Bank’s
claim was dismissed. The bank had, however, proved its claim in the sequestration
proceedings.

The high court then found that Technichem’s cession superseded Suidwes’ cession
because it was executed earlier. It also found that Silostrat had a valid claim against
the insolvent estate as a result of Kirsten’s breach of the forward contracts. However,

a counterclaim by Silostrat against Standard Bank for damages for breach of an
alleged legal duty on Standard Bank to ensure payment to Silostrat in the event of a
breach by Kirsten was dismissed. So was a claim by Silostrat against Suidwes for
damages allegedly caused by the latter’s receipt of moneys realised from the maize
delivered to Africum. In both instances the court found that there was no such legal
duty on Standard Bank and Suidwes.

On appeal the Supreme Court of Appeal confirmed the findings of the high court,
including an order that Suidwes should pay the costs incurred by Technichem.

--- ends --