Hippo Quarries (Transvaal) (Pty) Ltd. v Eardley (189/90) [1991] ZASCA 174; 1992 (1) SA 867 (AD); [1992] 1 All SA 398 (A) (28 November 1991)

Hippo Quarries (Transvaal) (Pty) Ltd. v Eardley (189/90) [1991] ZASCA 174; 1992 (1) SA 867 (AD); [1992] 1 All SA 398 (A) (28 November 1991)

The court held that the cession was genuine and not a sham. The intention of the parties was to transfer Hippo's claim against Rietfontein to the plaintiff, thereby enabling the plaintiff to enforce the suretyship executed by the defendant in its favour. The fact that the plaintiff was a dormant company, that no consideration passed, and that the proceeds would ultimately be credited to Hippo did not render the transaction simulated or illegitimate. The arrangement was a legitimate means to a legitimate end, and there was no evidence of dishonesty or an attempt to circumvent the law. The evidentiary burden shifted to the defendant to prove that the cession was not genuine, but the...

Citation
[1991] ZASCA 174
Parties
Appellant: Hippo Quarries (Transvaal) (Pty) Limited; Respondent: Keith Eardley
Court
Supreme Court of Appeal
Jurisdiction
South Africa
Judgment Date
28 November 1991
Case Number
189/90
Procedural Posture
Civil Appeal / Appeal From the Witwatersrand Local Division
Outcome
Appeal upheld; judgment granted in favour of the plaintiff.
Judges
Joubert, Mestadt, Nienaber, Preiss, Krieger
Legal Topics
Cession, Suretyship, Simulation, Mandate Vs Cession, Burden of Proof
Commercial and Corporate Civil Procedure Cession Suretyship Simulation Mandate Vs Cession Burden of Proof

Case Brief

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Parties

Hippo Quarries (Transvaal) (Pty) Limited

Appellant

Keith Eardley

Respondent

Procedural Posture

Civil Appeal / Appeal From the Witwatersrand Local Division

Legal Issues

  1. 1 Whether the cession of a trading debt from Hippo Quarries (Pty) Ltd to Hippo Quarries (Transvaal) (Pty) Ltd was genuine or a sham.
  2. 2 Whether the plaintiff acquired the right to enforce the debt and invoke the suretyship against the defendant.
  3. 3 Whether the arrangement between the companies was contra bonos mores or legally impermissible.

Ratio Decidendi

The court held that the cession was genuine and not a sham. The intention of the parties was to transfer Hippo's claim against Rietfontein to the plaintiff, thereby enabling the plaintiff to enforce the suretyship executed by the defendant in its favour. The fact that the plaintiff was a dormant company, that no consideration passed, and that the proceeds would ultimately be credited to Hippo did not render the transaction simulated or illegitimate. The arrangement was a legitimate means to a legitimate end, and there was no evidence of dishonesty or an attempt to circumvent the law. The evidentiary burden shifted to the defendant to prove that the cession was not genuine, but the...

Court Disposition

Appeal upheld; judgment granted in favour of the plaintiff.

Orders

  • The appeal succeeds with costs.
  • The order of the court a quo is set aside and substituted with judgment in favour of the plaintiff as sought in its summons.