Fincrop Rsko Management (Edms) Bpk v Van Schalkwyk en Ander (2491/2012) [2012] ZAFSHC 211 (15 November 2012)

Fincrop Rsko Management (Edms) Bpk v Van Schalkwyk en Ander (2491/2012) [2012] ZAFSHC 211 (15 November 2012)

The court found that Fincrop, as financier, had established its entitlement to the crop proceeds through a series of written agreements, including the lease, financing contract, memorandum of agreement, and cession of debtors. The lease was drafted at Fincrop's instance and contained explicit waivers by the landlord of any rights to the crops, including the common law hypothec. The subsequent rectification and amendment of the lease between landlord and tenant, intended to restore the landlord's rights, could not affect Fincrop's rights as an innocent third party, as these rights were acquired prior to the addendum. The court rejected the landlord's argument that the cession was invalid...

Citation
[2012] ZAFSHC 211
Parties
Applicant: Fincrop Risk Management (Edms) Bpk; Respondent: Johannes Petrus van Schalkwyk; Respondent: Frans Willem van Beeck
Court
Free State High Court, Bloemfontein
Jurisdiction
South Africa
Judgment Date
15 November 2012
Case Number
2491/2012
Procedural Posture
Urgent Application / Final Determination of Declaratory Relief After Interim Orders and Settlement Attempts
Outcome
Application granted. Declaratory order in favour of Fincrop as the party entitled to the crop proceeds held in trust. Costs awarded against first respondent.
Judges
J.P. Daffue, R
Legal Topics
Rectification of Contract, Common Law Landlord Hypothec, Cession of Crop Proceeds, Trust Account Payments, Contractual Interpretation
Land and Property Commercial and Corporate Rectification of Contract Common Law Landlord Hypothec Cession of Crop Proceeds Trust Account Payments Contractual Interpretation

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Parties

Fincrop Risk Management (Edms) Bpk

Applicant

Johannes Petrus van Schalkwyk

Respondent

Frans Willem van Beeck

Respondent

Procedural Posture

Urgent Application / Final Determination of Declaratory Relief After Interim Orders and Settlement Attempts

Legal Issues

  1. 1 Whether the applicant (Fincrop) is entitled to the proceeds of the grain crops grown by the tenant on the leased property for the 2011/2012 season.
  2. 2 Whether the rectification and amendment of the lease agreement between landlord and tenant can affect the rights of Fincrop as a third party cessionary.
  3. 3 Whether the landlord's common law hypothec prevails over Fincrop's cession and contractual rights to the crop proceeds.

Ratio Decidendi

The court found that Fincrop, as financier, had established its entitlement to the crop proceeds through a series of written agreements, including the lease, financing contract, memorandum of agreement, and cession of debtors. The lease was drafted at Fincrop's instance and contained explicit waivers by the landlord of any rights to the crops, including the common law hypothec. The subsequent rectification and amendment of the lease between landlord and tenant, intended to restore the landlord's rights, could not affect Fincrop's rights as an innocent third party, as these rights were acquired prior to the addendum. The court rejected the landlord's argument that the cession was invalid...

Court Disposition

Application granted. Declaratory order in favour of Fincrop as the party entitled to the crop proceeds held in trust. Costs awarded against first respondent.

Orders

  • The applicant is declared entitled to the grain grown during the 2011/2012 summer season by the tenant on the farm Lekkerlewe, district Hoopstad, and to the net proceeds paid into trust to attorney Gerrit Coetzee Inc, namely R102,491.53 and R251,482.77 respectively.
  • The first respondent is ordered to pay the costs of the application.