The Development Bank of Southern Africa Limited v Van Rensburg NO and Others

Serious Mills (Pty) Ltd borrowed R7,2 million via the North-West Agricultural Bank, which in turn obtained funding from the Development Bank of Southern Africa Ltd (DBSA). Serious Mills secured its indebtedness by a general notarial bond over all its movable property in favour of the Agricultural Bank. The Agricultural Bank ceded and pledged all its rights under the notarial bond to DBSA in securitatem debiti. Serious Mills defaulted on its loan repayments. Anticipating an application for Serious Mills’ winding-up, DBSA urgently obtained an ex parte rule nisi authorising it to take possession of the movable property covered by the notarial bond to perfect its security. The sheriff attached the movables before the winding-up application was presented, but on the same day a provisional winding-up order was granted. The provisional liquidators opposed confirmation of the rule nisi, and the court a quo discharged it, holding that liquidation took precedence and relying on earlier case law.

The appeal was upheld with costs. The order of the court a quo was set aside and replaced with an order confirming the rule nisi to the extent that DBSA had attached movable property covered by the notarial bond on 10 September 1999, and discharging the rule nisi in all other respects.

The case clarifies the rights of a cessionary in securitatem debiti under a general notarial bond, confirms that possession obtained before commencement of winding-up perfects security, and affirms that such a creditor ranks as a secured creditor in liquidation. It also authoritatively interprets section 348 of the Companies Act as referring to the precise time of presentation of a winding-up application.