IN THE NORTH GAUTENG HIGH COURT, PRETORIA 
[REPUBLIC OF SOUTH AFRICA]
CASE NO: 7436/200
Date:12-03-2010
In the matter between: 

WERNER ANTON RAS

JUDGMENT

MOTHLE A J

	3. In terms of Rule 23 of the Uniform Rules of Court, an exception may be taken to a pleading if it is vague and embarrassing or if it lacks averments necessary to sustain an action or a defence, as the case may be. It is the latter ground on which the plaintiff relies, namely, that the counterclaim filed by the defendant lacks the necessary averments to sustain a claim.

	

	

8. The defendant ordered delivery of the transformer from the plaintiff on credit and thus became indebted to plaintiff as per terms of the agreement. The defendant alleges in the counterclaim that the plaintiff failed to deliver the transformer as agreed and thus caused him to suffer damages for non-performance as stated in the building agreement with Skinner Construction. The salient averments in the counterclaim captures, in essence, the cause of action for damages as follows:

8.4	

	11. The question raised by this exception is whether the cession in fact does divest the defendant of the right to sue the plaintiff for damages. The cession is an integral part of the agreement and is provided for in clause 7 (a) thereof.

	

"It is settled law that unless otherwise agreed, a cession in securitatem indebiti results in the cedent being deprived of the right to recover the ceded debt, retaining only the bare dominium or reversionary interest therein.1'
The Court further remarked in paragraph 14 of the judgment that:
"/ am of the view therefore that an effective an unconditional transfer of rights occurred when a cession in securitatem indebiti was executed. The consequence is that respondent was divested of the power to sue the appellant in respect of the unpaid rentals. In order to sue for the recovery of the ceded debts, the respondent should have taken recession of them from their bank."

15. The principle as stated above does not necessarily hold for all contracts where there is a cession in securitatem indebiti. Each contract has to be interpreted as a whole in order to ascertain the intention of the parties. The clause providing for cession should not be interpreted in isolation. See Coopers & Lybrand and Others v Bryant 1995 (3) SA 761 AD at 768G-H as well as Marigold Ice Cream Company (pty) Ltd v National Co-operative Dairies Ltd 1997 (2) SA 671 (WLD)

16. In all three cases cited above, the Courts were called upon to interpret the full terms of the contract of cession in securitatem indebiti. In all three cases the cessionary was a third party (a bank). The present case is distinguishable from the three in that the cession in securitatem indebiti is between the plaintiff and the defendant and is provided for in the same agreement which gave rise to the action and counterclaim.

17. Applying a proper and reasonable construction to the terms of the agreement, it seems to me that the language of clause 7(a) does not expressly state that the cession would cover debts or book debts of the defendant arising between himself and the plaintiff. Further, it does not clearly state whether the cession in securitatum indebiti will include claims for damages by the defendant against the plaintiff, arising out of the very same agreement between them. However, a reading of subclause 8.2 and clause 10 of the agreement reveals that
8.2 "The applicant acknowledges that the creditor is not the manufacturer of the goods. The applicant accordingly indemnifies and holds the creditor harmless against any claim that may be brought against the creditor in consequence of such goods being defective and causing any damage whatsoever, whether through accident or negligence, gross negligence or any other cause."
10. "It is agreed that set-off shall operate automatically as a matter of law at the moment reciprocal debts between the creditor and the applicant come into existence and independently of the will of the parties and it shall not be necessary for either the creditor or the applicant to specifically raise set-off. Upon the operation of an automatic set-off aforementioned, the debts shall be mutually extinguished to the extent of the lesser debt."

18. There is reference to indemnification and set-off as remedies provided for separately in the agreement to deal with claims arising between the parties inter se. It would appear to me that the parties could not have intended that the cession in securitatem indebiti referred to under clause 7(a), was to 

19. The parties could not have intended to include personal claims under the phrase "and other debts and claims of whatsoever nature." It seems that the debts referred to are business debts which were due to the defendant by other parties, his debtors. See Coopers & Lybrand and Others v Bryant supra, where the same words used in a cession in securitatem indebiti, were found to exclude claims for damages.

20. It is trite that for the purpose of deciding an exception, a court must assume the correctness of the factual allegations made in the relevant pleading, unless such allegations are untrue or so impossible that they cannot be accepted. See Van Zyl NO v Bolton 1994 (4) SA 648 (CPD) at 651 E. Assuming that the counter claim has merit and the defendant has divested himself of the right to sue the plaintiff for damages as contended by the plaintiff, then in essence the plaintiff being the holder of the right to sue, becomes both the creditor and debtor to the claim for damages, a situation which in my view is untenable.

22. In the premises, the exception raised by the plaintiff against the defendant's counterclaim cannot succeed. I accordingly make the following order:
1. The exception is dismissed;
2. The plaintiff may, within 10 days from the date of this order file a plea to the defendant's counterclaim;
3. The plaintiff is to pay the defendant the costs of this application.

MOTHLE A J

For the Applicant:
Adv. J Suttner SC
Instructed by Orolowitz Inc
C/o Maritz Smith Van Heerden Inc

Plaintiff's Attorneys
Suite 111, Infotech Building
1st Floor, 1090 Arcadia Street
Hatfield
PRETORIA
For Defendant
Adv. P J Vermeulen
Instructed by Smith and Associates Inc.
Defendant's Attorneys
Waterkloof Golf Club Building
Johan Rissik Driver
Waterkloof
PRETORIA