Contract Forwarding (Pty) Ltd v Chesterfin (Pty) Ltd and Others

Eurotile CC, the debtor, executed several general covering notarial bonds over its movable property in favour of different creditors, including an earlier bond in favour of Chesterfin (Pty) Ltd and a later bond in favour of Contract Forwarding (Pty) Ltd. Contract Forwarding urgently obtained an ex parte interim order authorising it to perfect its general notarial bond by taking possession of Eurotile’s movable assets. The Sheriff executed the order, secured the premises, made an inventory, and handed over the keys, after which Contract Forwarding exercised effective control over the assets. Before the return day of the rule nisi, Eurotile was placed under provisional liquidation. Chesterfin intervened and successfully persuaded the court a quo to set aside the interim order and dismiss Contract Forwarding’s application. Contract Forwarding appealed to the Supreme Court of Appeal.

The appeal was upheld with costs. The order of the court a quo was set aside and replaced with a declaratory order that Contract Forwarding (Pty) Ltd perfected its notarial bond by taking possession of the movables before the advent of the concursus creditorum, and Chesterfin (Pty) Ltd was ordered to pay the costs of its opposition and intervention.

The case confirms and applies the Supreme Court of Appeal’s majority ruling in Development Bank of Southern Africa Ltd v Van Rensburg on the effect of liquidation on the perfection of general notarial bonds. It clarifies that possession obtained under an interim order prior to liquidation validly perfects a pledge and is not undone by the concursus creditorum. The judgment reinforces certainty in South African security and insolvency law and rejects a discretionary or ‘fair and equitable’ approach that undermines established property-law principles.