Cornelis Jansen van der Merwe v Nedcor Bank Beperk

Van der Merwe borrowed R230 000 from Nedcor Bank secured by a mortgage bond. After he defaulted on the bond repayments, Nedcor sued him in the Transvaal Provincial Division for the full outstanding amount and obtained default judgment when he failed to defend the action. Van der Merwe applied unsuccessfully for rescission of the default judgment. His defence was based on set-off (skuldvergelyking), relying on an alleged cession to him by a close corporation, Kniehalter Boerdery BK, of a claim against Nedcor. Kniehalter’s alleged claim arose from four instalment sale agreements for Volvo trucks, under which deposits totalling R453 427,60 had been paid to Nedcor. Van der Merwe contended that the contracts were void due to mistake or were repudiated by Nedcor, entitling Kniehalter to repayment of the deposits. Kniehalter allegedly ceded part of this claim (R230 000) to Van der Merwe, who then sought to set it off against his mortgage debt. Nedcor disputed the validity of the cession and the set-off. Kniehalter was subsequently placed in liquidation.

The appeal was dismissed with costs; the refusal of rescission of the default judgment in favour of Nedcor Bank was upheld.

The case reaffirms the South African law principle that a claim may not be partially ceded without the debtor’s consent. It clarifies that even where earlier reasoning of a lower court is incorrect, an appeal will fail if the ultimate outcome is nevertheless correct. The judgment is an important authority on the prohibition against the splitting of claims by cession and its implications for set-off.