The trust lent and advanced a R20 million loan to the company under a written loan agreement. To secure the loan, a special notarial bond (SNB) was registered over the company’s vehicles, machinery and equipment. The company fell in arrears with its loan repayments and remained in breach of the loan agreement. The trust sought to perfect its security by attaching and taking possession of the movables secured by the SNB.

The company, its shareholders and the sole director of the company (the respondents) opposed the trust’s application on the basis that repayment under the loan agreement was contingent upon a company related to the trust (the parent company) allocating sufficient work to the company under a service contract, pursuant to which the revenue earned from the service contract would then be used to repay the loan received from the trust. The respondents alleged that the trust could not enforce the SNB until the aforesaid obligation to the company was fulfilled. The respondents did not provide any details or particulars of the alleged service agreement between the company and the holding company.

The court held that the respondents’ case was bad in law because there was no nexus between the company’s service contract with the parent company and the loan agreement entered into with the trust. The court incorrectly stated that a trust is a legal entity separate from its trustees, founder and beneficiaries. In law, a trust does not have separate juristic personality from its trustees. A trust is a legal arrangement where property is transferred by a founder of a trust to the trustees of a trust who hold and administer such property for and behalf of the beneficiaries of the trust’s property – a trust’s assets are separate from the assets of its trustees. The court said that the trust is separate and distinct from the parent company, and the right of the trustees to perfect the security would not be impacted by commercial agreements entered into with the parent company. The written terms of the loan agreement did not reflect what the respondents alleged. Furthermore,  the loan agreement included a ‘whole agreement’ clause which provides that “[the loan agreement] constitutes the whole agreement between the Parties as to the subject matter [thereof] and no agreements, representations or warranties between the Parties… other that those set out [in the loan agreement] are binding on the Parties”. Accordingly, the trust was authorised to take possession of and execute the assets mortgaged under the SNB.

This judgment affirms that a lender’s right to perfect security under an SNB will be enforced where breach and indebtedness are established and where the SNB’s terms expressly authorise the lender to take possession of and attach the mortgaged property. The rights of the trustees under the loan agreement and the special notarial bond are independent of any rights and obligations of an affiliated company. The trust will not be restricted from perfecting its security due to agreements entered into with affiliated companies, unless a clear nexus can be established between the rights and obligations of an affiliated company and the security holder’s ability to perfect the security. It highlights the importance of the inclusion of a ‘whole agreement’ clause in an agreement to ensure that only the rights and obligations expressly mentioned in the agreement itself are applicable to the subject matter of the agreement.

The full judgment can be accessed here: Ndwammbi N.O and Others v Sematra (Pty) Limited and Others (2020/42224) [2025] ZAGPJHC 939 (25 September 2025)