Seartec Trading (Pty) Limited v Agni Steels SA (Pty) Limited

Seartec Trading (Pty) Limited (Seartec) and Agni Steels SA (Pty) Limited (Agni Steels) entered into a rental agreement in June 2016 whereby Seartec would finance the purchase of hardware and software and obtain ownership thereof, while Agni Steels would hire it from them. On 20 November 2017, Seartec ceded its rights under the rental agreement to the trustees of the Rental Company Trust (RCT), divesting itself of all rights under the agreement. The RCT paid R171,935.49 (exclusive of VAT) for the rental agreement. In February 2018, the RCT expressed dissatisfaction with the purchase price, claiming it was based on a misrepresentation regarding the duration of the rental agreement. After email correspondence, on 12-13 April 2018, Mr. Laubscher (Seartec's CEO) agreed to buy back the rental agreement. On 17 April 2018, Seartec advised Agni Steels that it had finalized an agreement with the RCT to purchase the equipment lease agreement, effective immediately. On 20 April 2018, Seartec paid R186,893.81 to the RCT. Agni Steels defaulted on instalment payments. On 24 October 2018, Seartec issued summons claiming payments due under the rental agreement. Agni Steels raised a special plea contending that Seartec lacked locus standi because it had ceded its rights to the RCT before issuing summons. Seartec replied that it had cancelled the cession and the rights had been re-ceded back to it before issuing summons. The Regional Magistrate found that Seartec failed to establish locus standi and dismissed the action.

• Whether Seartec had locus standi in iudicio to sue for payments under the rental agreement after having ceded its rights to the RCT and subsequently claiming a re-cession of those rights
• Whether there was a valid obligatory agreement between Seartec and the RCT for the repurchase of the rental agreement
• Whether there was a valid transfer agreement (re-cession) of the rights under the rental agreement from the RCT back to Seartec
• Whether the intention to transfer (animus transferendi) and the intention to acquire (animus aquirendi) could be established from the parties' conduct
• Whether Seartec had discharged the onus of proving that the re-cession had been effected

1. The appeal is upheld with costs, such costs to include the costs of counsel to be taxed on scale B, but shall exclude the costs occasioned by the inclusion of pages 205 to 288 of the appeal record. 2. The order of the regional court upholding the special plea with costs is set aside and replaced by the following order: 'The defendant's special plea is dismissed with costs, including the costs of counsel.'

A cession is a bilateral act accomplished by means of a transfer agreement between cedent and cessionary, which must be distinguished from the underlying obligatory agreement (such as a contract of sale) that gives rise to the obligation to transfer. The transfer agreement is established when the cedent has the intention to transfer the personal right (animus transferendi) and the cessionary has the intention to receive it (animus aquirendi). No formalities are prescribed for a transfer agreement, which may be established tacitly by inference from the parties' conduct. A cession, once fully accomplished, may be withdrawn and rights re-ceded by mutual consent of the cedent and cessionary without the consent or involvement of the debtor. To establish locus standi after a re-cession, a party must prove both the obligatory agreement (the repurchase agreement) and the transfer agreement (the actual transfer of rights back). The intention to transfer and acquire may be inferred from conduct including: notification to the debtor that rights have been reacquired "with immediate effect", subsequent enforcement action by the party claiming to have reacquired the rights, and the absence of any enforcement action by the party who allegedly transferred the rights back. Where evidence is uncontroverted and accords with the probabilities in the context of the proven facts, a party may discharge the onus of proof without calling all potentially corroborating witnesses, particularly where such witnesses are equally available to both parties.

The court noted that in the Raliphaswa case, the SCA stated that where a witness is equally available to both parties but not called, it is logically possible to draw an adverse inference against both parties. The party on whom the onus rests has no greater obligation to call such a witness, but the failure may in appropriate circumstances create a risk that the party may be found to have failed to discharge the onus. The court observed that in rental agreements of this nature, it is self-evident that the value of the agreement would differ from time to time depending on amounts outstanding and overdue, interest calculations, and penalty interest on overdue payments. The court also made an obiter comment regarding costs, noting that pages 205-288 of the appeal record (relating to separate High Court proceedings for recovery of equipment) had no bearing on the dispute and should not have been included, and therefore the costs occasioned by their inclusion should be excluded from the costs order.

This case is significant in South African law for clarifying the principles governing cession and re-cession of personal rights, particularly in commercial contexts. It emphasizes the conceptual distinction between the obligatory agreement (the underlying contract creating the obligation to transfer) and the transfer agreement (the actual transfer of rights). The judgment clarifies that: (1) a cession may be withdrawn and rights re-ceded by mutual consent of the original parties without the debtor's involvement or consent; (2) no formalities are required for a transfer agreement, which may be oral or tacit; (3) the intention to transfer (animus transferendi) and intention to acquire (animus aquirendi) may be inferred from the parties' conduct; (4) payment of a purchase price relates to fulfillment of the obligatory agreement, not the transfer agreement itself; (5) in civil cases where evidence is uncontroverted and accords with probabilities, a party may discharge the onus of proof without calling all potentially corroborating witnesses, particularly where such witnesses are equally available to both parties. The case provides guidance on how courts should assess evidence of cession in commercial disputes, particularly regarding locus standi challenges, and demonstrates the application of evidentiary principles in determining whether a party has discharged the onus of proving a re-cession.