National Empowerment Fund v C-Pro Construction (Pty) Ltd and Others (10191/2017) [2017] ZAGPJHC 406 (28 November 2017)

National Empowerment Fund v C-Pro Construction (Pty) Ltd and Others (10191/2017) [2017] ZAGPJHC 406 (28 November 2017)

The court found that the first respondent breached the cession agreement by instructing Suzuki Motors to pay contract proceeds directly to itself rather than to the applicant, in contravention of the express terms of the cession. The cession was intended to operate as both a payment mechanism and security, requiring immediate compliance and not only upon default. The respondent's argument that the applicant's refusal to advance further funds excused its breach was rejected as circular and unsupported by the contract. The breach of the cession constituted default under the loan agreement, entitling the applicant to enforce its security and recover all amounts due. The court held that the...

Citation
[2017] ZAGPJHC 406
Parties
Applicant: National Empowerment Fund; Respondent: C-Pro Construction (Pty) Ltd; Respondent: Standard Bank of South Africa Ltd; Respondent: First National Bank, a division of Firstrand Bank Ltd; Respondent: ABSA Bank Ltd; Respondent: Nedbank Ltd; Respondent: Two Ships Trading 326 (Pty) Ltd t/a Suzuki Motors; Respondent: Lanseria Airport (Pty) Ltd; Respondent: The Walter Sisulu University; Respondent: The Manguang Metropolitan Municipality; Respondent: Development Bank of Southern Africa; Respondent: Tshwane University of Technology; Respondent: University of Johannesburg; Respondent: Hlabatshane School; Respondent: New Sehlabeng Intermediate School; Respondent: New Tweespruit Primary School
Court
South Gauteng High Court, Johannesburg
Jurisdiction
South Africa
Judgment Date
28 November 2017
Case Number
10191/2017
Procedural Posture
Urgent Application / Application for Enforcement of Security Under Loan Agreement
Outcome
Application granted. The applicant is authorised to enforce security and recover all amounts due under the agreement.
Judges
Fisher
Legal Topics
Cession of Contractual Rights, Enforcement of Security, Loan Agreement Breach, Urgent Interdict
Banking and Finance Civil Procedure Cession of Contractual Rights Enforcement of Security Loan Agreement Breach Urgent Interdict

Case Brief

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Parties

National Empowerment Fund

Applicant

C-Pro Construction (Pty) Ltd

Respondent

Standard Bank of South Africa Ltd

Respondent

First National Bank, a division of Firstrand Bank Ltd

Respondent

ABSA Bank Ltd

Respondent

Nedbank Ltd

Respondent

Two Ships Trading 326 (Pty) Ltd t/a Suzuki Motors

Respondent

Lanseria Airport (Pty) Ltd

Respondent

The Walter Sisulu University

Respondent

The Manguang Metropolitan Municipality

Respondent

Development Bank of Southern Africa

Respondent

Tshwane University of Technology

Respondent

University of Johannesburg

Respondent

Hlabatshane School

Respondent

New Sehlabeng Intermediate School

Respondent

New Tweespruit Primary School

Respondent

Procedural Posture

Urgent Application / Application for Enforcement of Security Under Loan Agreement

Legal Issues

  1. 1 Whether the applicant is entitled to enforce security under the loan agreement due to breach by the first respondent.
  2. 2 Whether the cession of proceeds from the Suzuki contract was breached by the first respondent.
  3. 3 Whether the applicant was obliged to advance further funds under the agreement despite alleged breach.

Ratio Decidendi

The court found that the first respondent breached the cession agreement by instructing Suzuki Motors to pay contract proceeds directly to itself rather than to the applicant, in contravention of the express terms of the cession. The cession was intended to operate as both a payment mechanism and security, requiring immediate compliance and not only upon default. The respondent's argument that the applicant's refusal to advance further funds excused its breach was rejected as circular and unsupported by the contract. The breach of the cession constituted default under the loan agreement, entitling the applicant to enforce its security and recover all amounts due. The court held that the...

Court Disposition

Application granted. The applicant is authorised to enforce security and recover all amounts due under the agreement.

Orders

  • The applicant is authorised to debit, as and when funds are available, all accounts held by the first respondent at the second, third, fourth, and fifth respondents for all amounts due under the Credit Facility Agreement.
  • The second, third, fourth, and fifth respondents are ordered to pay to the applicant or its attorneys all amounts due by the first respondent in accordance with the above.