ikea-trading-and-design-ag-v-boe-bank-ltd.pdf

ikea-trading-and-design-ag-v-boe-bank-ltd.pdf - THE SUPREME...

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THE SUPREME COURT OF APPEAL OF SOUTH AFRICA Reportable / CASE NO: 77/2003 In the matter between : IKEA TRADING UND DESIGN AG Appellant and BOE BANK LTD Respondent _______________________________________________________________________ Before: ZULMAN, FARLAM, NUGENT, LEWIS JJA & PONNAN AJA Heard: 18 MARCH 2004 Delivered: 1 APRIL 2004 Summary: Meaning of s 1(1) of the Security by Means of Movable Property Act 57 of 1993: description of property in a notarial bond must be such that it is readily recognisable from the description alone: resort to evidence that supplements the description is impermissible. _______________________________________________________________________ J U D G M E N T _______________________________________________________________________ CH LEWIS JA
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2 [1] The meaning of s 1(1) of the Security by Means of Movable Property Act 57 of 1993 is squarely in issue in this appeal. The section provides: ‘1 Legal consequences of special notarial bond over movable property (1) If a notarial bond hypothecating corporeal movable property specified and described in the bond in a manner which renders it readily recognizable, is registered after the commencement of this Act in accordance with the Deeds Registries Act, 1937 (Act 47 of 1937), such property shall- (a) subject to any encumbrance resting upon it on the date of registration of the bond; and (b) notwithstanding the fact that it has not been delivered to the mortgagee, be deemed to have been pledged to the mortgagee as effectually as if it had expressly been pledged and delivered to the mortgagee.’
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3 The central issue is whether a bond registered under the section complied with its requirements such that the ‘mortgagee’ had security in the movable property referred to in the bond, and thus ranked as a secured creditor when the debtor was liquidated. [2] The first respondent, BOE Bank, is the holder of a general covering notarial bond passed in its favour by Woodlam Industries CC (‘Woodlam’) over the latter’s assets in 1991. Woodlam was placed in final liquidation on 28 October 1999. BOE Bank applied to the Eastern Cape High Court for an order that the liquidation and distribution account in respect of Woodlam Industries CC be redrawn so as to reflect its preference by virtue of that bond. At the time of liquidation Woodlam owed BOE Bank R2 403 852.20. The first and second respondents are the liquidators of Woodlam, the
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4 first respondent having been responsible for the drawing of the distribution and liquidation account. [3] The appellant, the third respondent in the court of first instance, is Ikea Trading und Design AG (‘Ikea’), which in 1998 had had registered in its favour a special bond, purportedly under s 1(1) of the Act, over assets of Woodlam listed in a schedule to the bond. The basis on which BOE Bank has attacked this bond is that it did not comply with the requirements of the section in specifying and describing the assets referred to in the bond in a manner which rendered the assets readily recognisable, and that the bond accordingly did not confer on Ikea real security over the items listed. The liquidation and distribution account reflected the sum owing by Woodlam to Ikea as R2 619 951.44.
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5 [4] BOE Bank succeeded before Mbenenge AJ in the court
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