---

 IN THE HIGH COURT OF SOUTH AFRICA

FREE STATE DIVISION, BLOEMFONTEIN

Reportable: YES/NO

Of Interest to other Judges: YES/NO

Circulate to Magistrates: YES/NO 

Application no: 201 / 2020

In the matter between:

 

NICOLAAS CORNELIUS EKSTEEN                                                     Applicant

and

THE LAND AND AGRICULTURAL DEVELOPMENT

BANK OF SOUTH AFRICA                                                                     Respondent

IN RE:

The application for leave to appeal between:

THE LAND AND AGRICULTURAL DEVELOPMENT

BANK OF SOUTH AFRICA                                                                      Applicant

and

NICOLAAS CORNELIUS EKSTEEN                                                      Respondent

CORAM:                    HEFER AJ

HEARD ON:              29 JULY 2021

DELIVERED ON:     2 SEPTEMBER 2021

[1]        On 1 April 2021, Wright AJ made an order in the following terms:

“1.        Execution of the order as confirmed on 27 February 2020 is suspended until 30 September 2021;

2.         The vehicles and farming implements listed in prayer 2.2.1 of the Notice of Motion (the assets) are to be returned to the Applicant;

3.         The Applicant will be entitled to use the assets for purposes of harvesting, contractual harvesting and transport during this time;

4.         The Applicant will report to the Respondent’s attorney of record on a weekly basis regarding the following:

            4.1       Which specific assets are currently in use;

            4.2       The location where such assets are used;

5.         Representatives of Respondent may inspect the assets at reasonable times and in such manner that it does not interfere with Applicant’s harvesting, contractual harvesting and transport activities;

6.         The Applicant shall return and deliver the assets to the Respondent by no later than 30 September 2021 at his own costs;

7.         The Applicant is to pay the costs of the application, including the Respondent’s costs of opposition.”

[2]        Pursuant to the above order, the Land and Agricultural Development Bank of South Africa (Landbank), filed an application for leave to appeal on 9 April 2021 against this order.

[3]        Four days after the application for leave to appeal had been served on the Applicant, Mr Eksteen, the Applicant launched the present application on the 13^th of April 2021 to be heard on an urgent basis on the 19^th of April 2021.

[4]        On the 19^th of April 2021, the matter was struck off the roll due to a lack of urgency.

[5]        Almost two months after the matter had been struck from the roll, the matter was enrolled for hearing on the 29^th of July 2021, not by the Applicant herein, but indeed by the Respondent, being Landbank.

[6]        The relief sought by the Applicant are as follows:

(a)           That it be declared that the decision of Wright A, dated 1 April, is an interlocutory order that does not have the effect of a final judgment and that operation and execution thereof is not suspended pending the decision of the application for leave to appeal or pending the decision of the appeal against the aforesaid decision; alternatively,

(b)           That the operation and execution of the decision of Wright AJ dated April 2021 not be suspended pending the decision of the Respondent’s application for leave to appeal or, if successful, pending the adjudication of the appeal;

(c)           That Respondent be ordered to pay the costs of this application;

(d)       That the order referred to in paragraph (a) alternatively (b) above shall operate as an interim interdict with immediate effect.”

[7]        As far as the order of Wright AJ is concerned, it is necessary to provide a brief synopsis of the process thus far.

[8]        The Applicant, a farmer from the district Winburg, has been doing business with Respondent since 2013.

[9]        During 2018 a Special- and General notarial bond was registered over all of Applicant’s movable assets, in which some of them were specifically incumbered in favour of the Respondent.  Those that were not specifically incumbered were incumbered in favour of the Respondent under the General Notarial bond.

[10]     During the last quarter of 2019, the Applicant fell into arrears with his contractual obligations as a credit consumer towards the Respondent.

[11]     This indebtedness of the Applicant, in the amount of approximately R9,000,000.00, prompted Landbank to launch an application during January 2020 for perfection of the notarial bond. On 23 January 2020 and in terms of an urgent ex parte application, the Respondent was granted a Rule Nisi in terms of which Landbank was authorised:

(a)  To take possession of all Applicant’s movable assets that were incumbered in its favour in terms of the notarial bond;

(b)  To hold those assets in its possession as if it has a lien over it; and

(c)  To sell the livestock and movable assets as soon as the Rule Nisi was confirmed.

[12]     Two weeks after the Rule Nisi was granted, on the 6^th of February 2020, the Respondent’s representatives visited the farm Danzig where the Applicant resides and made an inventory of all the assets that it attached on the farm in terms of the court order. On that date the Sheriff served the application as well as the Rule Nisi on the Applicant.

[13]     It is common cause that operation of the Rule Nisi was confirmed on 27 February 2020. The operation thereof was however suspended until 21 May 2020. According to Landbank the reason for this was due to attempts for the respective parties’ attorneys to meet in order to find a solution to the Applicant’s problem which were effectively thwarted by the Covid-10 pandemic with its commensurate lockdown consequence.

[14]     It appears that the assets that were attached remained on the farm Danzig for more than a year. It appears further that during the course of March 2021, it came to the knowledge of the Applicant that Landbank intended to:

(a)  arrange for the removal of the incumbered assets; and

(b)  to sell the movable assets in order to reduce the Applicant’s indebtedness.

This prompted the urgent application and subsequent order by Wright AJ referred to. The Applicant remained in possession of the movable assets until 11 March 2021 when the Respondent proceeded to remove the assets from the farm Danzig to premises in Winburg.

[15]     According to Mr Gilliland, who appeared on behalf of the Applicant, the order granted by Wright AJ is an interlocutory order and the order which was granted by her does not have the effect of a final judgment because:

(a)  Wright AJ ordered that the execution of the order that was confirmed on 27 February 2020 be suspended until 30 September 2021;

(b)  The Applicant has to report to the Respondent’s attorneys on a weekly basis regarding which assets that were returned to him are in use and where they can be located;

(c)  Representatives of the Respondent may inspect the assets that were temporarily returned to the Applicant; and

(d)  The Applicant will return and deliver the assets to the Respondent by no later than 20 September 2021 at his own costs.

Mr Gilliland further argued that Landbank’s vested real rights in the Applicant’s movable assets were not destroyed by Wright AJ’s order and that, consequently, her order does not have the effect of a final judgment. According to him it is significant that the Respondent was satisfied to leave the assets on Applicant’s farm in Winburg after it attached those assets during February 2020 already. It was further argued that the Respondent does not have to be in physical possession of the Applicant’s farming implements in order to retain the pledge. It was not even necessary to perfect the Notarial Bond as far as the specially pledged farming implements and equipment are concerned and once the general pledged assets were perfected by means of the perfection order, the Respondent’s personal right in respect thereof was alleviated to a real right, placing it on equal footing with the specially pledged movable assets.  The corpus element of possession is not required according to the Applicant in respect of movables that cannot be easily handled. Temporary loss of possession also does not destroy possession, according to the Applicant.

[16]     Mr Grobler SC assisted by Mr Tsangarakis, on behalf of Landbank, argued that the primary question for purposes of this application is not whether the order is or was appealable, but whether the judgment of Wright AJ is final in its effect and it is suspended by the Landbank’s application for leave to appeal with commensurate, and unavoidable consequence, that the declaratory relief sought by the Applicant stands to be dismissed with costs.

[17]     In JR 209 Investments (Pty) Ltd and Another v Pine Villa Country Estate (Pty) Ltd[1] it was pointed out that, in deciding whether an order is final, one must bear in mind not merely the form of the order but also, and predominantly, its effect.[2]  It was held that the interim interdict was held to be appealable because it affected the whole of a township whereas a pending action concerned only a part of the development.  The right to develop a whole township was not an issue which would be decided in the pending action.

[18]     In Metlika Trading Ltd and Others v Commissioner, South African Revenue Services[3] interdicts were granted by the court a quo and at preserving certain assets (including an interest in an aircraft) pending a claim by the Commissioner of the South African Revenue Services for a declaratory order that the owners of the assets were persons against whom income tax assessments had been raised. The Court accordingly made further orders, inter alia, directing that the aircraft be returned to South Africa.

“The decisive question on appeal was whether the court a quo had jurisdiction to make this order. Streicher JA first considered whether the order was appealable, and then considered whether the court a quo had jurisdiction to make it. Both questions were answered in the affirmative. In coming to this conclusion on the first question, the Learned Judge of Appeal said:

‘The order that steps be taken to procure the return of the aircraft to South Africa, as well as other orders relating to the aircraft, were intended to have immediate effect, they will not be reconsidered at the trial and will not be reconsidered on the same facts by the court a quo. For these reasons they are in effect final orders’.”[4]

[19]     In African Wonderers F.C v Wanderers F.C.[5] the Appellate Division (as it then was), held that the Court a quo intended that the issues raised before it would be finally resolved in an action to be instituted by the club and that all that it was called upon to do was to make an order which would operate pendente lite. For that reason, it was held that the order by the court a quo was therefore not a final and definitive order. It was further held that the doctrine of res judicata could not be applied for the same reason.

 

[20]     In Metlika Trading Ltd and Others supra, Streicher JA said the following:

“The present case is distinguishable from African Wonderers Football Club Ltd and Cronshaw. Whether or not the aircraft should be returned to South Africa and whether or not the other orders relating to the aircraft should be granted is not an issue in the action pending with which the interdict was granted. In these circumstances, coupled with the fact that an application for an interim interdict is a proceeding separate from the main proceedings pending the determination of which it was granted (See Knox D’Arcy Ltd and Others v Jamieson and Others [1996] ZASCA 58; 1996 (4) SA 348 (A) at 359H read with 357C), …”

[21]     Upon consideration of Wright AJ’s order the following aspects are apparent: Firstly, as far as the suspension of the execution of the perfection order as confirmed on 27 February 2020 is concerned, such suspension is for a specified period namely from the date of the order up until the 30^th of September 2021. The suspension is for a specified period of time and not pending the institution of an action, the application for leave to appeal or pending an application for leave to appeal or the appeal itself. It is ordered for a specified period and more importantly, it was granted by implication for a specific reasons namely those as contained in paragraphs 2 and 3 of Wright AJ’s order.

[22]     Secondly, it is clear from the contents of paragraphs 2 to 6 of the order that the order goes beyond the mere stay / suspension of the execution of the perfection order.  The order further enabled the Applicant to take possession of the vehicles and farming implements concerned and utilise such assets for the purposes as specified. As expressed in Metlika Trading Ltd and Others the return of the relevant assets was intended to have immediate effect and will not be reconsidered at a trial or any other proceedings in the future. Although in a lesser degree, these aspects of the order also correspond with the principles expressed in JR 209 Investments-matter to which I was referred to. The order of Wright AJ is also “overboard” and predominantly, its effect is that of a final interdict. Therefore, the main relief sought by the Applicant should fail.

[23]     As far as the alternative relief sought by the Applicant is concerned, the provisions of sections 18(1) and (3) of the Superior Courts Act 10 of 2013 are relevant to the adjudication thereof.

[24]     In terms of section 18(1), unless the court under exceptional circumstances orders otherwise, the operation and execution of a decision or order which has the effect of a final order and which is a subject of an application for leave to appeal or of an appeal, is suspended pending the decision of the application or appeal. In terms of section 18(3) a court may only order otherwise i.e. that operation and execution of a decision is not suspended pending the decision of an application for leave to appeal or appeal, if the party who applies to the court or otherwise, in addition proves on the balance of probabilities that he or she will suffer irreparable harm if the court does not so order and the other party will not suffer irreparable harm if the court so orders.

[25]     In Ntlemeza v Helen Suzman Foundation[6] Navsa JA in discussing what would constitute exceptional circumstances for the purposes of section 18(1) referred to an decision on admiralty law namely MV Ais Mamas: Seatrans Maritime v Owners, MV Ais Mamas and Another 2002 (6) SA 150 (C) where it was recognised that it was not possible to attempt to lay down precise rules as to what circumstances are regarded as exceptional and that each case has to be decided on its own facts. However, in the latter judgment exceptional circumstances were described and discussed as follows:

(a)  Something out of the ordinary and of an unusual nature of which the general rule does not apply;

(b)  Must arise out of or be incidental to a particular case;

(c)  Whether or not exceptional circumstances exist does not depend upon the exercise of discretion but entails a factual finding;

(d)  Depending on the context in which it is used, the word “exceptional” has two shades of meaning: the primary meaning is unusual or different; the secondary meaning is markedly unusual or specially different.

[26]     In University of the Free State v Afriforum and Another[7] the Supreme Court of Appeal agreed that whether exceptional circumstances were present, depends on the facts of each case. “The circumstances must be such as to justify the deviation from the norm”.[8]  Fourie AJA, further held that it was further apparent that requirements introduced by section 18(1) are more onerous than those of the common law.

“Apart from the requirement of exceptional circumstances in section 18(1), section 18(3) requires the applicant ‘in additional’ to prove on a balance of probabilities that he or she will suffer irreparable harm if the order is not made, and that the other party will not suffer irreparable harm if the order is made … Section 18(3), however, has introduced a higher threshold, namely proof on the balance of probabilities that the applicant will suffer irreparable harm if the order is not granted and conversely that respondent will not if the order is granted.”

[27]     In consideration of the facts upon which the Applicant relies in constituting exceptional circumstances, I will limit myself only to certain facts relied upon by the Applicant. According to the Applicant for the period up until 30 September 2021, he will earn an income in excess of R6.6 million by harvesting his own crops (over which the Respondent has a cession) and by doing contract harvesting and transport work for other farm; the income of which has been tendered and will be paid to the Respondent. The transport income alone, according to the Applicant will amount to R800,000.00 and the Applicant will earn R1,826,250.00 from contract harvesting before the end of September 2021 which will be paid to the Respondent if necessary. The Respondent has also informed Applicant’s attorney that it will appoint representatives to monitor the harvest of Applicant’s crops to ensure that its rights in terms of the cession are not violated.

[28]     As at 31 March 2021 Applicant was indebted to Landbank in the amount of R8,812,970.57 plus interest thereon. Since that date, according to the Applicant, he has sold three farms. The amounts of R2,918,999.99 being the net proceeds was paid to the Respondent to reduce his indebtedness to it on 19 March 2021. As from that date, Applicant is indebted to Landbank in the amount of R5,830,970.58 plus interest thereon.

[29]     The Applicant then states that by the time the appeal is decided he would have settled these indebtedness to the Landbank and it will not have any rights in respect of his assets. Consequently any decision that will be sought on appeal will have no practical effect.

[30]     The Applicant further confirms that he has reduced his indebtedness to Respondent with more than R4.7 million in the last 12 months. Furthermore, the assets have been in his possession since 6 February 2020 despite the Respondent fearing that he may sell them and they were well looked after. Furthermore, according to the Applicant the relevant implements are unique and similar implements are not available to harvest his crops. Apparently, his crops were planted in such a manner that they could be harvested with implements that were bought for that specific purpose and do not damage plants in other rows. In allowing the Applicant to harvest his crops with his implements will put him in a position to pay Respondent within six months and to retain ownership of implements. If he is not able to do so, the Respondent will have to obtain the services of contractors, who do not have the bespoke equipment that is needed to harvest his crops.

[31]     Furthermore, according to the Applicant, if the Respondent proceeds with the sale of his assets, the sale at forced sale values will only realise R3,387,700.00 (including VAT) which will result in the Applicant suffering damages firstly because the market value is much more than the forced sale value and secondly, because he will have to replace them at market value and thirdly, because 15% of the proceeds has to be paid over to SARS. Farmers with whom the Applicant has concluded harvesting – and transport contracts depend on them to harvest and transport their crops to the silos. They stand to suffer damages that he will be accountable for if he does not perform his obligations towards them. The Applicant then states that both his own as well as the farmers with whom he concluded contracts, crops have to be harvested as from April 2021.

“If it is not done immediately, the crops will be lost: soybeans pop out and fall on the ground and flocks of bird feed on sunflowers.”

[32]     Landbank, in response to these allegations, deals extensively with these facts relied upon by the Applicant. According to Landbank, whilst the Applicant is in possession of the assets, he intends to use the same to attend on his harvesting business which will unavoidably result in the deterioration of the value of such assets. As far as the potential earnings of the Applicant is concerned, it is Landbank’s case that the Applicant cannot guarantee what his earnings will amount to. The very nature of farming militates against such guarantee. Additionally, accordingly to the Respondent, the Applicant does not qualify himself as an expert and that it is impropriate for him under these unsubstantiated circumstances to make submissions of an expert nature. Landbank further states that where paragraph 4 of Wright AJ’s order obliges Applicant to provide the Landbank’s attorney of record with a weekly report relevant to specific assets that are currently in use and the location thereof, two weeks later, and the order of Wright AJ notwithstanding, the Applicant in clear contempt of the said order has failed to furnish such reports. Landbank confirms that it removed its assets because it had a court order entitling it to do so because clearly the Applicant proffered no acceptable plans for the repayment of his admitted indebtedness and exposure to Landbank.

[33]     In respect of Applicant’s allegation to the effect that he will not be able to harvest his crops, Landbank responds that objectively speaking it will not be impossible to have the crops harvested.

[34]     I have considered all the facts upon which the Applicant relies in establishing exceptional circumstances for purposes of section 18(3) of the Superior Courts Act. In spite of the Applicant selling three of his farms, he still remains indebted to Landbank in the amount of approximately R5.9 million. According to the Applicant he will earn in excess of R6.6 million before 30 September 2021 and therefore, according to him, he will then extinguish the amount indebted to Landbank. However, the Applicant then states that “allowing me to harvest my crops with my implements will put me in a position to pay the respondent within six months and to retain ownership of my implements”. Considering Applicant’s allegation to the effect that he will earn in excess of R6.6 million before 30 September 2021 it raises question marks not only of how this amount of R6.6 million is calculated, but also why it will then take, on the Applicant’s own version, six months to settle its indebtedness to Landbank. Furthermore, as correctly pointed out by Landbank, the very nature of farming militates against such guarantee.

[35]     Even if it is accepted in favour of the Applicant that the harvesting of his crops necessitates the use of certain unique crops, the Applicant does not explain the alleged unavailability of similar implements to harvest his crops. Furthermore, further use of such implements will indeed unavoidably result in the deterioration of the value of such assets. The fact that the proceeds of the sale of the Applicant’s assets at forced sale values will realise a lesser amount, is part and parcel of the risk when Applicant entered into a credit agreement with Landbank.

[36]     It is significant that the Applicant alleges that if the harvesting did not immediately commence as from April 2021, the crops will be lost. It is common cause that the matter was struck from the roll on the 19^th of April 2021 due to a lack of urgency. More importantly however, since the matter had been struck from the roll, the Applicant failed to take further immediate steps to continue the litigation process. 

[37]     The fact that the assets remained in possession of the Applicant up until approximately 11 March 2021, also does not constitute exceptional circumstances for purposes of section 18(1).

[38]     According to the Applicant, Landbank’s reliance on the matter of Contract Forwarding (Pty) Ltd v Chesterfin (Pty) Ltd[9] is misplaced. Without commenting on the correctness of the judgment of Wright AJ, I associate myself fully with the dicta of Harms JA to the effect that a court, in the exercise of its discretion, cannot refuse an order to an Applicant who has a right to possession of a pledged article to take possession. In the present matter, Landbank has indeed in effect been deprived of its possession. Also, with reference to the Chesterfin-matter, I am also not convinced that Landbank remained vested with its real rights in respect of the movable assets provided for in the general part of its notarial bond.

[39]     With reference to the authorities discussed herein, I therefore find that no exceptional circumstances exist for purposes of section 18(1) of the Superior Courts Act for not suspending the order of Wright AJ pending the decision of the application for leave to appeal or, if successful the appeal itself.

[40]     Whereas the Applicant has failed to show exceptional circumstances and therefore cross the proverbial hurdle for purposes of section 18(3) it is not necessary to consider the requisite of irreparable harm in respect of the respective parties provided for in section 18(3).

[41]     The result of the above finding is that the operation and execution of the order of Wright AJ on 1 April 2021, is indeed suspended pending the decision on the application for leave to appeal, and if successful, the appeal itself.

[42]     The only aspect which remains is the question of costs which include which party should be held liable for the costs in respect of the hearing on 19 April 2021 which were ordered to stand over for later adjudication.

[43]     It appears that there can exist no debate that the Landbank was successful in joining issue with the urgency upon which the application was pivoted. The guiding principle in regards to costs is that “costs are awarded to a successful party in order to indemnify him for the expense to which he has been put through having been unjustly compelled either to initiate or defend litigation, as the case may be …”[10]. There can be no doubt that the Applicant is liable for the costs of the application which will include the costs pertaining to the proceedings that served before Mathebula J on 19 April 2021.

ORDER:

[44]     Therefore I make the following order:

1.    The application is dismissed;

2.    Applicant is to pay the costs of the application which costs will include the costs pertaining to the proceedings on 19 April 2021.

J J F HEFER, AJ

On behalf of the Applicant:             Adv J Gilliland

                                                            Instructed by:

                                                            IPiet Kotze & Partners Attorneys

                                                            IAttorney for Applicant

                                                            Ic/o Spangenberg Zietsman & Bloem Inc

                                                            I6 Seventh Street

                                                            Arboretum

                                                            IBloemfontein

On behalf of the Respondent:        Adv S Grobler SC assisted by S Tsangarakis

                                                            Instructed by:

                                                            EG Cooper – Majiedt Inc

                                                            Attorney for Respondent

                                                            77 Kellner Street

                                                            Westdene

                                                            Bloemfontein

[1] 2009 (4) SA 302 (SCA)

---