Case No 515/97
IN THE SUPREME COURT OF APPEAL
OF SOUTH AFRICA
In the matter of:
P G BISON LIMITED
First Appellant
P G BISON (ALRODE) (PROPRIETARY)
LIMITED
Second Appellant
P G BISON (NATAL) (PROPRIETARY)
LIMITED
Third Appellant
and
THE MASTER OF THE HIGH COURT,
GRAHAMSTOWN
First Respondent
ANDREW STUART PATERSON N O
Second Respondent
CORAM:   HEFER, GROSSKOPF, OLIVIER, SCOTT et STREICHER JJA.

DATE OF HEARING:   18  November 1999
DATE OF DELIVERY:   29 November
Cession in securitatem debiti  - whether transfer of rights to cessionaries had
been suspended  - meaning of “to implement”.
J U D G M E N T
GROSSKOPF JA/ . . .

GROSSKOPF JA:
[1]         The three appellants are proved creditors of a close corporation
in liquidation, Pats Planks CC (“the corporation”).   The corporation used
to purchase  products from the appellants.  On 7 April 1995 and about a
year prior to its liquidation the corporation executed a “General Covering
Cession” in terms whereof it ceded its book debts to the appellants in
securitatem debiti.   The cession ranked second to a prior cession to the
corporation’s bank, but that presented no obstacle to the relief claimed by
the appellants.   (See Bank of Lisbon and South Africa Ltd v The Master
and Others 1987 (1) SA 276 (A) at 294 B - I.)
[2]          It is common cause that the corporation’s attorney inserted the
following additional clause (“the additional clause”) into the deed of
cession prior to its execution by the corporation:
“This cession will not be implemented unless the account is
overdue by 30 days and 7 days notice of the intention to
implement this cession has been given.”

It is also common cause that at the date of the corporation’s liquidation
the account was indeed overdue by thirty days, but the seven days notice
had not been given.
[3]          The second respondent was appointed liquidator of the
corporation.   The first liquidation and distribution account reflects a
portion of the appellants’ claims against the corporation as being “secured
claims”.   As a result of an objection to the first liquidation and
distribution account the first respondent directed the second respondent
to amend the account to reflect the  proceeds of the corporation’s book
debts in the free residue account.   The first respondent gave this ruling
in the belief  that the  transfer of the  rights (book debts) had been
suspended as a result of the additional clause and that the cession
accordingly did not confer any security upon the appellants.
[4]          The appellants (and for that matter the second respondent) did
not agree with the first respondent’s interpretation of the additional clause
and his ruling that no part of the appellants’ claims was secured.   As a

result they brought an application in the Eastern Cape Division of the
High Court in which an order was sought:
1.
Setting aside the first respondent’s direction to the
second respondent to amend the first liquidation and
distribution account of the corporation  to reflect the
proceeds of the book debts in the free residue
account;
2.
Confirming the encumbered asset account number 4 in the
form prepared by second respondent;
3.
That the costs of the application be a cost of
administration in the winding up of the corporation
(in liquidation).
The first respondent indicated that he would abide the decision of the
court a quo and there was no opposition to the application.
[5]         The court a quo  came to the conclusion that on a proper
construction of the additional clause —
“it was the intention of the parties as expressed therein that
the whole agreement was suspended thereby and that in

terms thereof the rights of the corporation against its
[debtors] would not be ceded or transferred to the
applicants until such time as the conditions provided for
have been complied with.”
In the result the first respondent’s ruling was upheld and the appellants’
application dismissed with no order as to costs.   The appellants appeal
to this court with leave of the court a quo.   Both respondents have
indicated that they abide the decision of this court.
[6]         I do not  agree with the learned judge’s interpretation of the
additional clause and his conclusion that the whole agreement had been
suspended.
[7]       The outcome of  the  appeal depends mainly upon the
interpretation of the additional clause, read in context.   The first step in
construing the additional clause is to determine the ordinary grammatical
meaning of the words in order to ascertain the common intention of the
parties.   (See Cinema City (Pty) Ltd v Morgenstern Family Estates (Pty)
Ltd and Others 1980 (1) SA 796 (A) at 803 G - H, 804 C - D;   Coopers

& Lybrand and Others v Bryant 1995 (3) SA 761 (A) at 767 E - F.)
In interpreting  the words used the court must also have regard to the
nature and purpose of the contract (Swart en`n Ander v Cape Fabrix
(Pty) Ltd 1979 (1) SA 195 (A) at 202 C).   “[I]t is the duty of the Court to
construe their language in keeping with the purpose and object which
they had in view, and so render that language effectual” (per Kotzé JA in
West Rand Estates Ltd v New Zealand Insurance Co Ltd 1925 AD 245
at 261).
[8]        In my view the common intention of the parties in this case can
be determined on a proper construction of the additional clause and
without reference to extrinsic evidence.   The additional clause provides
that the “cession will not be implemented” unless the prescribed seven
days notice has been given.   The crucial word in the additional clause is
“implement”.  The first step therefore is to determine the ordinary
meaning of that word in its context.
[9]         The dictionary definitions of the verb “implement” include the

following:
The Oxford English Dictionary (1989):
“to complete, perform, carry into effect (a contract,
agreement, etc).”
Webster’s Third New International Dictionary (1993)
“to carry out; to give practical effect to.”
Longman Modern English Dictionary (1984)
“to carry out; esp to give practical effect to.”
Collins English Dictionary (1979)
“to carry out, put into action.”
[10]         The verb ”carry out” is one of the dictionary meanings of
“implement” and in my view that is what “implement” in the present
context probably connotes.   The additional clause accordingly  provides
that the cession will not be carried out (by the cessionary) unless the
account is overdue and notice has been given (to the cedent).  It certainly
does not follow that the actual transfer of the  rights is  suspended.   The
appellants as cessionaries are merely prevented from personally

exercising those rights until the corporation defaults and notice has been
given.   The conclusion that the parties did not intend to suspend the
transfer of the rights is borne out by a number of provisions and clauses
in the deed of cession referred to in [12] to [14] hereunder.
[11]         According to the Oxford English Dictionary the verb
“implement” can also mean “complete”, which would denote that the
cession had in fact been incomplete.   According to such a construction
of the additional clause the  actual transfer of the rights would occur
automatically  seven days after the cessionary had given notice, not to the
corporation’s debtors, but to the corporation as cedent.   I cannot accept
that the parties intended that the transfer of the  rights should be
accomplished in this unusual manner.   Such a construction would
further entail that the parties failed to achieve their purpose of providing
the appellants with security.   As pointed out in [7] above the court
should construe the language used in keeping with the purpose and object
which the parties had in mind.

[12]         There are certain provisions in the deed of cession which
manifest an intention forthwith to transfer the rights.  The following are
examples:
“We . . . do hereby pledge, cede in securitatem debiti,
transfer and make over . . .”
“. . . the claims hereby ceded . . .”
“. . . all claims which we may now  or at any time hereafter
have . . .”
“. . .which we may now be or become bound to perform .
. .”
“. . . then these presents shall operate as a cession of all my
reversionary rights . . .”
(Emphasis added.)
[13]         Some of the clauses in the deed of cession also show a clear
intention of an unconditional transfer of rights.   There is for instance the
clause which provides for the interim collection of debts by the
corporation, but then acting as the agent of the appellants.   This clause

reads as follows:
“ . . . that whether or not my/our debtors will have been
notified of this cession, all sums of money which I/we will
collect from my/our debtors, or any of them, shall be
collected and received by me/us as agent(s) on the creditors’
behalf provided that the creditors collectively [i e the
appellants and other related companies]  shall be entitled at
any time to terminate my/our mandate to collect all or any
such sums of money and that with effect from the
termination of such mandate, I/we will cease to collect or
accept any payments on account of the debts in respect of
which my/our mandate will have been terminated . . .”
It follows that the corporation could enforce the rights as agent of the
appellants only if it had previously divested itself of those rights.
[14]         Further support for the conclusion that the corporation had in
fact divested itself of the  rights is to be found in the following provision:
“I/we agree that the creditors  collectively  shall be entitled
at any time or times hereafter to give notice of this cession
to all or any of my/our debtors and to take such steps as

they may deem fit to recover the amounts respectively
owing by my/our debtors  to  me/us  from  time  to time
and for the time being: . . .”
This provision can be reconciled with the additional clause on the basis
that the appellants will only take steps to recover the debts directly once
they have terminated the corporation’s mandate by giving notice in terms
of the additional clause.
[15]        It should be borne in mind that we are here dealing with a
cession in securitatem debiti.   As a rule  the appellants as cessionaries
would  in any event not be entitled to recover directly from the
corporation’s debtors until such time as the corporation is in default.
(See Land- en Landboubank van Suid-Afrika v Die Meester en Andere
1991 (2) SA 761 (A) at 771 D.)   That may explain why the corporation
in the mean time was afforded the right, as the appellant’s agent, to claim
from its debtors.  The appellants were however entitled to terminate the
corporation’s mandate at any time.   Such termination would ordinarily

take place in the event of the corporation’s default.   The seven days
notice which the appellants were obliged to give in terms of the additional
clause can therefore be regarded as the appellants’ termination of the
corporation’s mandate.
[16]         Reference has been made to the case of  Ovland Management
(Tvl) (Pty) Ltd and Another v Petprin (Pty) Ltd 1995 (3) SA 276 (N)
where the full court  held that upon a proper construction of the cession
in that case, the cedent had not denuded itself of the right to sue on
certain lease agreements.   On a proper construction of the deed of
cession in the present matter I am, however, of the view that the right to
sue did not remain vested in the corporation as cedent.
[17]         There can be no doubt in my opinion that the rights were duly
transferred to the appellants and remained vested in them.    In the result
the cession in securitatem debiti provided the required security.   Such
a result would also accord with the intended purpose and object of the
parties.

[18]         In my judgment the appeal should accordingly be upheld.   The
following order is made:
1.
The appeal is upheld with costs, such costs to be a
cost of administration in the winding up of Pats
Planks CC (in liquidation).
2.
The order of the court a quo is set aside and the
following order is substituted therefor:-
“(i)
The first respondent’s direction
to the second respondent to
amend the first liquidation and
distribution account of Pats
Planks CC (in liquidation) to
reflect the proceeds of the book
debts in the free residue account
is set aside;
(ii)
The encumbered asset account
number 4 in the form prepared
by the second respondent is
confirmed;

(iii)
The costs of this application  to
be a cost of administration in the
winding up of Pats Planks CC (in
liquidation).”
_____________________
F H Grosskopf
Judge of Appeal
HEFER            JA)
OLIVIER        JA)
SCOTT           JA)      CONCUR
STREICHER  JA)