Nedcor Bank Ltd v SDR Investment Holdings Co (Pty) Ltd and Others

Nedcor Bank lent money to several related companies owning three wine farms in Stellenbosch, secured by mortgage bonds. After default, liquidation proceedings were instituted but postponed by agreement made an order of court. The agreement authorised Nedcor, if the debt was not settled by a fixed date, to sell the farms by public auction without reserve. After private offers were declined by the respondents, Nedcor proceeded with a single auction of all three farms, which were sold for R31 million. The respondents later sued Nedcor for damages, alleging that it breached implied or tacit contractual terms by refusing to accept a higher private offer, failing to sell the farms separately, and confirming the auction sale too quickly. The High Court upheld several damages claims, leading to Nedcor’s appeal to the Supreme Court of Appeal.

The appeal was upheld with costs. The High Court order was set aside and replaced with an order granting the respondents only R93 986.65 plus interest, and awarding them 20% of their trial costs.

The case is a leading authority reaffirming that implied or tacit contractual terms cannot be introduced where they conflict with clear, valid express terms. It clarifies the limits of good faith and arbitrio boni viri in South African contract law, particularly in the context of a creditor exercising contractual rights to realise security.