Coopers & Lybrand v Bryant

Last updated

Coopers & Lybrand and Others v Bryant [1] is an important case in South African contract law, particularly in the area of contractual interpretation. It was heard in the Appellate Division by Joubert JA, EM Grosskopf JA, MT Steyn JA, Nienaber JA and Howie JA on 15 May 1995, with judgment handed down on 30 May.

Contents

Facts

Bryant sued the Coopers & Lybrand, a firm of chartered accountants and auditors, in a Circuit Court for damages arising from an alleged breach by Coopers & Lybrand of a verbal agreement between them. Coopers & Lybrand, in a special plea to the Bryant's particulars of claim, contended that Bryant's claim was subject to the terms of a deed of cession concluded between him and Standard Bank, and that in consequence he had divested himself of locus standi to institute the action in question. In his replication to the special plea Bryant averred that the deed, on a proper construction, covered only his business debts.

The court a quo dismissed the special plea with costs, and Coopers appealed.

Arguments

The deed provided for the cession in securitatem debiti of Bryant's "right, title and interest to all book debts and other debts and claims of whatsoever nature" to the bank. The issue, therefore, was whether or not the terms of the deed were broad enough to encompass Bryant's claim against the appellants.

CDA Loxton SC, on behalf of the appellants, contended that the plain, ordinary and popular meaning of the words "and other debts and claims of whatsoever nature" were not capable of being restricted to book debts. These words were unambiguous and were intended to give wider security. The clear intention of the parties was to cover all debts of whatsoever nature, including book debts. It was contended that so literal a construction of the cession would not lead to any absurdity; neither would it be contrary to the expressed intention of the parties.

R Wise SC, on behalf of Mr Bryant, argued that, on a proper interpretation of the cession, it did not in its terms include Bryant's claim against the appellants. The parties' intention was that the words "and other debts and claims of whatsoever nature," like book debts, should relate to Bryant's trading business; the claim against the appellants did not.

Judgment

The Appellate Division held that the matter was essentially one of interpretation: "I proceed to ascertain the common intention of the parties from the language used in the instrument." [2] According to the "golden rule," the language had to be given "its grammatical and ordinary meaning, unless this would result in some absurdity, or some repugnancy or inconsistency with the rest of the instrument." [3] The ordinary grammatical meaning of "book debt," the court found, citing the second edition of The Oxford English Dictionary , was a debt owed to a tradesman as recorded in his account books. The court noted, however, that a particular word or phrase ought never to be interpreted in vacuo. [4] The golden rule provided that, having ascertained the literal meaning of the word or phrase in question, the court had to take into consideration the following:

  1. the context in which such word or phrase was used in its interrelation to the contract as a whole, including the nature and purpose of the contract;
  2. the background circumstances which explained the genesis and purpose of the contract: that is to say, matters probably present in the minds of the parties when they contracted; and
  3. extrinsic evidence regarding previous negotiations and correspondence between the parties, as well as their subsequent conduct, "showing the sense in which they acted on the document, save direct evidence of their own intentions." This is necessary when the language of the document is on the face of it ambiguous. [5]

The court determined that the purpose of the cession was to provide the bank, as cessionary, with continuing security for allowing Bryant, as cedent, access to its banking facilities. [6] As to background circumstances, it was common cause that Bryant had two separate accounts with the bank: a private account for his personal affairs and a business account for his one-man trading business. It was also common cause, as a background circumstance, that Bryant, on 4 April 1985, had asked the bank for an increase of his business account's overdraft facilities in the amount of R60,000. [7]

The court held that expression "book debts" in the deed of cession "unquestionably" referred to Bryant's trading debts, and that expressions such as "trading," "records," "accounts," "books" and "in the name of the firm in which I may be trading" were "obviously" intended by the parties to refer to the trading business. [8] Furthermore, there was nothing in the deed to indicate that the parties intended to provide security to the bank for Bryant's personal affairs: [9]

This may be illustrated by means of a few examples such as personal claims of Mr Bryant based on a marriage settlement, a claim to recover a legacy under a will, a vindicatory action to recover his private assets etc.

The parties accordingly had never intended to include personal claims under the phrase "and other debts and claims of whatever nature." It was clear, the court found, "from the nature and purpose of the said cession, including its context as a whole," that the phrase was intended to refer instead to business debts, including claims other than book debts. [10]

As Bryant's claim was clearly a personal one, and therefore unrelated to his trading debts, and as the terms of the deed were accordingly not wide enough to include such a claim, [11] the court found that the cession did not divest Bryant of his claim. [12]

In view of this conclusion, the court found it unnecessary to consider the parties' conduct after 16 April 1985, or any other extrinsic evidence relating to surrounding circumstances. [13]

The appeal was thus dismissed with costs (including the costs of the two counsel) [14] and the decision in the East London Circuit Court, in Bryant v Coopers & Lybrand and Others, reversed by a unanimous judgment.

Related Research Articles

<span class="mw-page-title-main">PricewaterhouseCoopers</span> Multinational professional services brand

PricewaterhouseCoopers is an international professional services brand of firms, operating as partnerships under the PwC brand. It is the second-largest professional services network in the world and is considered one of the Big Four accounting firms, along with Deloitte, EY and KPMG.

In common law, a deed is any legal instrument in writing which passes, affirms or confirms an interest, right, or property and that is signed, attested, delivered, and in some jurisdictions, sealed. It is commonly associated with transferring (conveyancing) title to property. The deed has a greater presumption of validity and is less rebuttable than an instrument signed by the party to the deed. A deed can be unilateral or bilateral. Deeds include conveyances, commissions, licenses, patents, diplomas, and conditionally powers of attorney if executed as deeds. The deed is the modern descendant of the medieval charter, and delivery is thought to symbolically replace the ancient ceremony of livery of seisin.

A debtor or debitor is a legal entity that owes a debt to another entity. The entity may be an individual, a firm, a government, a company or other legal person. The counterparty is called a creditor. When the counterpart of this debt arrangement is a bank, the debtor is more often referred to as a borrower.

<i>Non est factum</i> Defence in contract law

Non est factum is a defence in contract law that allows a signing party to escape performance of an agreement "which is fundamentally different from what he or she intended to execute or sign". A claim of non est factum means that the signature on the contract was signed by mistake, without knowledge of its meaning. A successful plea would make the contract void ab initio.

In law, set-off or netting are legal techniques applied between persons or businesses with mutual rights and liabilities, replacing gross positions with net positions. It permits the rights to be used to discharge the liabilities where cross claims exist between a plaintiff and a respondent, the result being that the gross claims of mutual debt produce a single net claim. The net claim is known as a net position. In other words, a set-off is the right of a debtor to balance mutual debts with a creditor.

<i>Re Spectrum Plus Ltd</i>

Re Spectrum Plus Ltd[2005] UKHL 41 was a UK company law decision of House of Lords that settled a number of outstanding legal issues relating to floating charges and recharacterisation risk under the English common law. However, the House of Lords also discussed the power of the court to make rulings as to the law that were "prospective only" to mitigate potential harshness when issuing a ruling that was different from what the law had previously been understood to be.

<i>Re Brumark Investments Ltd</i>

Agnew v Commissioners of Inland Revenue, more commonly referred to as Re Brumark Investments Ltd[2001] UKPC 28 is a decision of the Privy Council relating to New Zealand and UK insolvency law, concerning the taking of a security interest over a company's assets, the proper characterisation of a floating charge, and the priority of creditors in a company winding-up.

<span class="mw-page-title-main">South African property law</span> Important aspects of redistribution agreement

South African property law regulates the "rights of people in or over certain objects or things." It is concerned, in other words, with a person's ability to undertake certain actions with certain kinds of objects in accordance with South African law. Among the formal functions of South African property law is the harmonisation of individual interests in property, the guarantee and protection of individual rights with respect to property, and the control of proprietary relationships between persons, as well as their rights and obligations. The protective clause for property rights in the Constitution of South Africa stipulates those proprietary relationships which qualify for constitutional protection. The most important social function of property law in South Africa is to manage the competing interests of those who acquire property rights and interests. In recent times, restrictions on the use of and trade in private property have been on the rise.

South African contract law

South African contract law is "essentially a modernized version of the Roman-Dutch law of contract", and is rooted in canon and Roman laws. In the broadest definition, a contract is an agreement two or more parties enter into with the serious intention of creating a legal obligation. Contract law provides a legal framework within which persons can transact business and exchange resources, secure in the knowledge that the law will uphold their agreements and, if necessary, enforce them. The law of contract underpins private enterprise in South Africa and regulates it in the interest of fair dealing.

Hansen, Schrader & Co. v De Gasperi is an important case in South African contract law. It was heard by Solomon J in the Witwatersrand High Court from April 15 to 16, 1903.

Van der Westhuizen v Arnold is an important case in South African contract law, heard in the Supreme Court of Appeal on 22 February 2002, with judgment handed down on 29 August.

Schmidt v Dwyer is an important case in South African contract law and the South African law of lease, heard in the Cape Provincial Division by De Villiers JP and Van Wyk J on August 5, 1957, with judgment handed down on August 23. It is important for its consideration of voetstoots clauses and its determination that these cannot nullify warranties.

First National Bank of SA Ltd v Rosenblum and Another is an important case in South African contract law, heard in the Supreme Court of Appeal (SCA) by Marais JA, Navsa JA and Chetty AJA on May 21, 2001, with judgment handed down on June 1. Counsel for the appellant was MD Kuper SC ; PM Wulfsohn SC appeared for the respondents.

First National Bank of SA Ltd v Lynn NO and Others is an important case in South African contract law, especially in the area of cession. It was heard in the Appellate Division by Joubert JA, Nestadt JA, Van den Heever JA, Olivier JA and Van Coller AJA on 19 September 1995, with judgment passed on 29 November. M. Tselentis SC was counsel for the appellant; MJD Wallis SC appeared for the respondents.

<i>Westdeutsche Landesbank Girozentrale v Islington LBC</i> English legal case

Westdeutsche Landesbank Girozentrale v Islington LBC[1996] UKHL 12, [1996] AC 669 is a leading English trusts law case concerning the circumstances under which a resulting trust arises. It held that such a trust must be intended, or must be able to be presumed to have been intended. In the view of the majority of the House of Lords, presumed intention to reflect what is conscionable underlies all resulting and constructive trusts.

<span class="mw-page-title-main">Financial law</span> Legal rules relating to financial instruments and financial assets

Financial law is the law and regulation of the insurance, derivatives, commercial banking, capital markets and investment management sectors. Understanding Financial law is crucial to appreciating the creation and formation of banking and financial regulation, as well as the legal framework for finance generally. Financial law forms a substantial portion of commercial law, and notably a substantial proportion of the global economy, and legal billables are dependent on sound and clear legal policy pertaining to financial transactions. Therefore financial law as the law for financial industries involves public and private law matters. Understanding the legal implications of transactions and structures such as an indemnity, or overdraft is crucial to appreciating their effect in financial transactions. This is the core of Financial law. Thus, Financial law draws a narrower distinction than commercial or corporate law by focusing primarily on financial transactions, the financial market, and its participants; for example, the sale of goods may be part of commercial law but is not financial law. Financial law may be understood as being formed of three overarching methods, or pillars of law formation and categorised into five transaction silos which form the various financial positions prevalent in finance.

Kragga Kamma Estates CC and Another v Flanagan is an important case in the South African law of contract, an appeal from a decision in the South Eastern Cape Local Division by Jansen J. It was heard in the Appellate Division on August 19, 1994, with judgement handed down on September 29. The presiding officers were EM Grosskopf JA, Nestadt JA, Kumleben JA, Howie JA and Nicholas AJA. The appellants' attorneys were Tobie Oosthuizen, Port Elizabeth, and Webbers, Bloemfontein. The respondent's attorneys were Jankelowitz, Kerbel & Schärges, Port Elizabeth, and Lovius-Block, Bloemfontein. HJ van der Linde appeared for the appellants; JRG Buchanan SC for the respondent.

Australian insolvency law regulates the position of companies which are in financial distress and are unable to pay or provide for all of their debts or other obligations, and matters ancillary to and arising from financial distress. The law in this area is principally governed by the Corporations Act 2001. Under Australian law, the term insolvency is usually used with reference to companies, and bankruptcy is used in relation to individuals. Insolvency law in Australia tries to seek an equitable balance between the competing interests of debtors, creditors and the wider community when debtors are unable to meet their financial obligations. The aim of the legislative provisions is to provide:

<i>Royal Trust Bank v National Westminster Bank plc</i>

Royal Trust Bank v National Westminster Bank plc [1996] BCC 613 was a decision of the Court of Appeal in relation to the nature of a floating charge.

<i>Singularis Holdings Limited (in liquidation) v Daiwa Capital Markets Europe Limited</i>

Singularis Holdings Limited v Daiwa Capital Markets Europe Limited[2019] UKSC 50 is a judicial decision of Supreme Court of the United Kingdom relating to the duties owed by a bank where a person acting on behalf of a corporate customer of the bank directs the bank to transfer money out of the company's account as part of a fraudulent scheme.

References

Books

Cases

Notes

  1. ↑ 1995 (3) SA 761 (AD).
  2. ↑ 767D.
  3. ↑ 767D/E-F.
  4. ↑ 767F/G-G and H/I.
  5. ↑ 768A-E.
  6. ↑ 768E/FF.
  7. ↑ 768F-F/G.
  8. ↑ 768G-H.
  9. ↑ 768H-H/I.
  10. ↑ 768I-769A.
  11. ↑ 766A-A/B and B.
  12. ↑ 769B/C.
  13. ↑ 769B-C.
  14. ↑ 769C.
This page is based on this Wikipedia article
Text is available under the CC BY-SA 4.0 license; additional terms may apply.
Images, videos and audio are available under their respective licenses.