IN THE HIGH COURT OF SOUTH AFRICA
( WITWATERSRAND LOCAL DIVISION)
CASE NO: A3090/2006
JOHANNESBURG
In the matter between:
S VAN JAARSVELDT Appellant
and
KOBUS BOSMAN Respondent
JUDGMENT
LEVENBERG, AJ
i. INTRODUCTION
[1] This is an appeal against a judgment of the Vereeniging
Magistrate's Court in favour of the Respondent (plaintiff in the action) in
an amount of R17 015,07.
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[2] The Respondent purchased a Daewoo Matiz motor vehicle (“the
vehicle”) from the Appellant (Defendant in the Court a quo) for a total
amount of R33 814,35. Shortly thereafter the Police took possession of
the vehicle on the basis that it had been stolen from a certain van der
Walt.
[3] The Respondent was able to recover portion of the purchase price
that he had paid from van der Walt. In the result, the Respondent was out
of pocket in an amount of R17 015,07 (i.e. the amount of the judgment).
[4] The learned Magistrate found that the Respondent had established
that the Appellant had breached his warranty against eviction and that
the Respondent had been dispossessed by a person (i.e. van der Walt)
with better title to the vehicle than the Respondent. He accordingly
granted damages in favour of the Respondent for that portion of the
purchase price that the Respondent had been unable to recover.
II. THE EVIDENCE
[5] Three witnesses testified – Van der Walt (for the Respondent), the
Respondent and the Appellant.
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[6] It is common cause on the evidence that van der Walt initially
acquired the vehicle for his wife‟s use. The acquisition of the car was
financed by ABSA Bank.
[7] It is not expressly stated in the evidence what the precise nature of
the arrangement was between van der Walt and ABSA. However, I infer
that it was an instalment sale agreement governed by the now repealed
the Credit Agreements Act, 75 of 1980 (“the Credit Agreements Act”)
from the following:
[7.1] When the Appellant acquired possession of the car from van der
Walt (see below), there was a balance owing on the vehicle to ABSA.
[7.2] The Appellant undertook to pay monthly instalments relating to
the vehicle directly to ABSA.
[7.3] The Appellant contends that, when payment in full of the purchase
price was effected to ABSA, the Appellant would became the owner of
the vehicle. This assumes that, when the final instalment was paid,
van der Walt would have been in a position to transfer ownership to the
Appellant because the agreement with ABSA was an instalment sale
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agreement.
[7.4] It is common cause that, when the outstanding balance was paid to
ABSA, ownership of the vehicle passed to somebody other than ABSA.
The Appellant contends that ownership passed to him, while the
Respondent contends that ownership passed to van der Walt. Ownership
would only have passed if the contract was an instalment sale agreement.
[8] At one time, the Appellant was in partnership with van der Walt‟s
wife. At that stage he was not sufficiently creditworthy to obtain
financing for a vehicle in his own name.
[9] According to van der Walt, during 2003, the Appellant and van
der Walt concluded an oral agreement. Van der Walt maintains that, in
terms of that agreement, the Appellant undertook to pay the monthly
instalments to ABSA while the Appellant was using the vehicle. The
Appellant was to continue using the vehicle until he became sufficiently
creditworthy to pay a deposit and to purchase a vehicle in his own name.
[10] The Appellant maintains that he purchased the vehicle for a total
amount of R46 000,00. He was to pay the purchase price in instalments
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directly to ABSA. He further contends that, when he had paid the
outstanding balance in full to ABSA, the Appellant maintained that he
was to become the owner of the vehicle.
[11] Beyond what is set forth in the previous paragraph, the Appellant
is fairly vague on the terms of the arrangement. However, it is common
cause that he provided a written document to the Respondent when he
sold the vehicle to the Respondent, which he represented to the
Respondent at the time accurately reflected his agreement with van der
Walt. That document (Exhibit “A”) provides, inter alia, as follows:
“Hiermee bevestig ek S van Jaarsveldt dat ek die Daewoo
Matiz voertuig by Jannie van der Walt sal oor neem and
net die maandelikse paaiemente sal betaal asook die
assuransie op die voertuig. Die betaling voortduur tot die
uitstaande bedrag van R46 000.00 wat op 1 Februarie
2003 was of (sic) is en dan sal die voertuig op my naam
geregistreer word.
…
Die totale bedrag uitstaande is R46 000.00 en die
maandelikse paaiemente is R1 400.00 en moet teen of
voor die eerste van elke maand betaal word in the
volgende rekening nommer …
Indien geen betaling ontvang is nie sal die voertuig
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onmiddelik terug versorg word na Jannie van der
Walt en geen terug betaling sal gemaak word nie.”
[emphasis added]
[12] It is common cause that the Respondent purchased the vehicle
from the Appellant on 1 April 2005 (i.e. 26 months later). On the
Appellant‟s version, if he had diligently complied with his obligations
under the alleged agreement, an amount of R36 400,00 ought to have
been paid to ABSA by that date, leaving a balance of R10 000,00.
[13] It is in fact common cause that an amount of R16 056,64 was
owing to ABSA at the time. Accordingly, it can be inferred that, on the
date of the sale to the Respondent, the Appellant was (even on his own
version) in arrears on his payments to van der Walt.
[14] In addition, it is common cause that, from time to time, the
Appellant missed payments to ABSA.
[15] Accordingly, even on the Appellant‟s own version of his
agreement with van der Walt, the Appellant would have forfeited all of
his rights under the alleged agreement as soon as he went into default.
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[16] It is common cause that the Appellant sold the vehicle to the
Respondent on 1 April 2005 for an amount of R33 814,35. The
Respondent discharged the purchase price by paying an amount of
R16 056,64 to ABSA to settle the outstanding balance owing to ABSA
with respect to the vehicle. The balance of R17 015,07 was paid to
Vereeniging Number Plate Centre as the deposit for a new car that was
to be purchased by the Appellant.
[17] It is also common cause that, upon payment of the amount of
R16 056,64, the entire outstanding balance owing to ABSA was thereby
discharged.
[18] Prior to 1 April 2005, Van der Walt lost track of the vehicle. After
the balance of the purchase price had been settled by the Respondent,
van der Walt was able to locate the vehicle by investigating the source of
the deposit.
[19] Van der Walt tracked the vehicle down with the help of Tracker
and the Police, after he had reported the vehicle to the Police as being
stolen.
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[20] Van der Walt then repossessed the vehicle with the help of
Tracker and the Police. In order to recover the vehicle, the Police
approached the Respondent at his place of business. At the time the
vehicle was not on the premises as the Respondent had sent the vehicle
for panelbeating.
[21] According to the Respondent, a number of people descended on
his premises. At that stage, the Respondent testified that
(Record p35):
“I phoned both the, Mr van Jaarsveld senior and his son
to inform them that Mr van der Walt is with me and that
the vehicle is stolen and within about 30 minutes both of
them were in my office, confronting Mr van der Walt to
say to them that the vehicle is not stolen. Here we are.
They knew where the vehicle were and Mr van der Walt
as well and the Police. So everybody knew where the
vehicle was at the panelbeaters. The plaintiff and the
defendant were in my office trying to discuss the matter.”
[22] The Appellant confirms that the Respondent contacted him and
that he attended at the premises and had this discussion with the
Police (Record p43). He also says that he advised the
Respondent:
“Do not let the car go because this is legal. The car is
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mine as far as I know. You have paid the car off so that
makes it mine. I am allowed to sell it.”
[23] The Police then went to the panelbeaters and repossessed the
vehicle. It is not clear under precisely what authority the Police acted.
[24] The Appellant took no legal action to prevent the Police from
recovering the vehicle. The Appellant also took no legal action to
prevent van der Walt from ultimately retaking possession of the vehicle.
In short, the Appellant took no action at all to protect the Respondent.
Instead, the Appellant attempted to put the onus on the Respondent to
stand up to the Police and perhaps risk arrest.
[25] After the vehicle was repossessed, van der Walt paid the
Respondent the amount that the Respondent had paid to ABSA because
van der Walt had benefited from this payment.
[26] The Appellant refused to repay the Respondent the amount of
R17 050,07 that the Respondent had paid to Vereeniging Number Plate
Centre. The Appellant maintained that the Respondent had obtained
valid title and that accordingly he was not liable.
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III. THE LEGAL PRINCIPLES
[27] In Lammers & Lammers v Giovannoni 1955 (3) SA 385 (A),
Schreiner JA analysed the nature of the seller‟s implied warranty against
eviction as it had evolved in the modern law as follows:
At p390A:
“As I understand the nature of the so-called warranty
against eviction the basic obligation of the seller is to
protect the buyer in his possession. As Pothier, Sale, 2,
104 … puts it,
„The immediate and primitive object of this action is
the taking of the act and cause for the buyer, that is to
say, the defence of his cause, with which the seller is
obliged to charge himself, factum defendendi.‟
If he fails to shield the buyer against eviction he must restore the
price and pay the damages suffered by the buyer as a result of the
eviction.”
At p390H:
“It should be observed in the first place that the warranty
against eviction has in certain respects been modified in
the direction of providing more effective help to the
buyer. This was pointed out by JUTA A.J.A.in the giving
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of a judgment of this court in Weber and Pretorius v
Gavronsky Bros., AD 48 at pp51 to 53. The learned Judge
referred to two directions in which the buyer‟s rights had
been extended or improved. Originally there must have
been actual eviction before the buyer could sue the seller,
but that was held not to be essential in Nunan v Meyer, 22
SC 203 … Under the early law, too, the buyer could not
recover from the seller unless he had given him notice of
the owner‟s claim. But the giving of notice had ceased to
be a condition precedent to the buyer‟s claim; he can in
his action against the seller free himself from the
criticism that he had given no notice to the seller by
proving that the latter had no title that could have
made resistance to the true owner possible. …
The object of giving notice to the seller is no longer
simply to lay a formally necessary foundation for an
action against him; a principal object is, it seems, to
convert his general obligation to protect the buyer’s
possession into something more specific. So Voet,
21.2.22 says …
„There are two objects in giving notice, the one that the vendor
may be more certain,‟
- I suppose that this means that he may be informed –
„and the other that, being informed, he may do
something, or undertake the defence.‟
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At p392G:
“Once the seller is called upon to defend the buyer in
his possession but washes his hands of the whole
matter, it does not seem to me to be open to him to
meet the buyer’s claim by saying that the latter could
or should have resisted the true owner’s claim more
energetically or skilfully; for it was open to him, the
seller, to have taken steps to protect the buyer himself.
What those steps would be in any particular case would
depend on the available procedure; including, in
appropriate cases, i.e. where it is the right of the buyer
and not the right of the seller that may provide the means
of resisting the true owner, the taking of a procuratio in
rem suam.”
[emphasis added]
[28] There are three alternative avenues open to a buyer threatened
with eviction:
[28.1] He can defend the claimant‟s claim by conducting a “proper and
competent defence” – i.e. a virilis defensio. (Kerr, The Law of Sale and
Lease, 3rd ed p198) (York & Co. (Pty) Ltd v Jones NO 1962 (1) SA 65
(SR) 68D-E). If the virilis defensio fails, the dispossessed buyer is
entitled to recover damages from his seller.
[28.2] He can notify the seller of the threatened eviction. If the seller
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fails (or is unable) to protect him he can give up the article and recover
damages from the seller.
[28.3] He can give up the article and recover damages from the seller
provided that he can show that the person who came into ownership had
a “legally unassailable claim” to the thing. (Olivier v Van der Bergh,
1956 (1) SA 802 (C) 805H; Garden City Motors (Pty) Limited v Bank of
the Orange Free State 1983 (2) SA 104 (N), 107G-108G.)
[29] The buyer‟s claim for breach of the warranty will succeed, even if
the buyer is not dispossessed by the owner. It is simply necessary that
the dispossession take place by a person with a greater right to the thing
than the purchaser. (Kerr, The Law of Sale and Lease, 3rd ed. p195;
Moyo v Jani 1995 (2) SA 362 (ZHC).
IV. APPLICATION OF THE LAW TO THE FACTS OF
THE PRESENT CASE
[30] In the instant case, the Appellant was aware that the Respondent
was being dispossessed. He chose to do nothing to defend the
Respondent. In that situation, the Respondent cannot be blamed for
taking no steps to defend himself. Accordingly, the Respondent is
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entitled on that ground alone to have recourse to his seller for damages
for breach of the warranty against eviction.
[31] In any event, it is my opinion that the Respondent established on a
balance of probabilities that he was dispossessed by someone with
“legally unassailable title” for the following reasons.
[32] First, as noted above, even on the Appellant‟s own version, he lost
any right to ownership and to dispose freely of the vehicle when he
defaulted in the payments to ABSA.
[33] Second, it is highly unlikely that van der Walt would have
disposed of the vehicle without first entering into a written agreement
with the Respondent for the following reasons:
[33.1] The arrangement would simply have been too important to him
not to have insisted on a writing.
[33.2] In terms of section 5(1)(a) of the Credit Agreements Act, a credit
agreement must be reduced to writing and signed by or on behalf of
every party to it and must contain certain specific terms. Failure to
comply with the necessary formalities does not for that reason alone
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render the credit agreement invalid (Credit Agreements Act, section
5(2)). However, the conclusion of an oral agreement in violation of the
provisions of the Credit Agreements Act amounts to a criminal offence.
[34] Third, on the Appellant‟s version, van der Walt agreed to give up
any equity that he had in the vehicle at the time when the sale was
effected simply in exchange for the undertaking of the Appellant
(whom it is common cause had a bad credit record at the time) that he
would pay the instalments to ABSA. It is far more likely that van der
Walt simply loaned the car to the Appellant as an accommodation at a
time when he was van der Walt‟s wife‟s partner.
[35] Fourth, the Appellant‟s contention that he purchased the vehicle
for a fixed price to be discharged by way of monthly instalments in an
equal amount does not square with commercial reality. In the case of an
instalment sale agreement, the monthly payments are not usually fixed,
but variable, subject to interest rate fluctuations.
[36] Fifth, the Appellant did not notify van der Walt that he was selling
the car to the Respondent. If the Appellant really had the arrangement
with van der Walt that he alleges, one would have expected him to have
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been more open about the sale and to have advised van der Walt that it
was taking place.
[37] Sixth, it is unlikely that van der Walt would have laid a criminal
charge and gone to the lengths that he did to recover the vehicle if he had
in fact made such an arrangement with the Appellant.
[38] Seventh, van der Walt‟s inherent honesty is corroborated by the
fact that he reimbursed the Respondent the amount that the Respondent
paid to ABSA, notwithstanding that he may not have had any legal
obligation to do so.
[39] It seems fairly clear that on any version, once ABSA was paid in
full, either the Appellant or van der Walt acquired outright ownership of
the vehicle. Van der Walt‟s version is the more probable. Accordingly, I
find that van der Walt probably acquired ownership of the vehicle
immediately that the balance was paid to ABSA. Van der Walt thereafter
proceeded to lay claim to the vehicle in his capacity as owner.
[40] The Appellant argued that van der Walt could not have acquired
ownership of the vehicle because, at the time that the Respondent paid
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off the outstanding purchase price of the vehicle, the Respondent was no
longer in possession of the vehicle. Moreover, neither the Appellant nor
the Respondent at that stage had any intention of holding the vehicle on
behalf of van der Walt.
[41] This argument is unsustainable in the face of the decision of the
Supreme Court of Appeal in Info Plus v Scheelke & Another 1998 (3)
SA 184 (SCA), 190G-192A. In that case, the appellant had purchased a
motor vehicle under an instalment sale agreement, pursuant to which
ownership was to remain vested in the seller until receipt of the full
amount due by the appellant. The vehicle had been delivered to the
appellant at the time that the sale agreement had been concluded.
[42] The vehicle was subsequently unlawfully sold by a third party to
the first respondent. At a time when the first respondent (and not the
appellant) was in possession of the vehicle, the balance of the purchase
price was paid to the finance house.
[43] The appellant instituted action claiming delivery of the motor
vehicle based upon a rei vindicatio. The respondents contended that, at
the time when the full purchase price was paid, the appellant was no
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longer in possession and that, accordingly, he could not have acquired
ownership. The Supreme Court of Appeal rejected that proposition. At
p190G, van Heerden DCJ held:
“The requirement that subsequent to delivery of a merx a
hire-purchase contract there should be a further
agreement between the parties, in the sense of a mutual
intention at the time of the fulfilment of the conditions
that ownership should be transferred to the purchaser,
with due respect strikes me as somewhat artificial.
I would indeed be surprised if a substantial number of
sellers give any consideration to the passing of ownership
when the condition is fulfilled. And even if a seller
should prior to fulfilment inform the purchaser that he no
longer intends transferring ownership to the latter, that by
itself would surely not preclude a transfer from taking
place.
It follows that I agree with Streicher J … that no
further real agreement, concluded subsequent to
delivery of the merx under a hire-purchase contract, is
required. … The real agreement reached when delivery
takes place, suffices. Because of the conditional term in
the hire-purchase contract that agreement is also
conditional. Notwithstanding delivery, ownership of the
thing sold therefore does not pass prior to fulfilment of
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the condition (hereinafter mostly referred to as the
material time). But when that happens ownership passes
without more, at any rate if the purchaser is then in
possession of the merx.
It remains to consider the question whether a different position
obtains if the purchaser is no longer in possession at the relevant
time. …
I fail to see that a second form of delivery should be
required at the material time. It is true that pendente
conditione ownership of the thing sold, say, a vehicle,
remains vested in the seller, but nevertheless a
transfer of possession, which is one of the
requirements of transfer of ownership, does take
place. Such transfer is effected in terms of a real
agreement embodying the intention of both parties
that at the material time the purchaser shall without
more ado become owner of the vehicle. At the risk of
repetition I stress that at such time both requirements
for a transfer of ownership are satisfied inasmuch as
the conditional delivery ipse jure becomes an
unconditional one. … It is therefore not necessary that
the purchaser must be in possession of the vehicle at
the material time. Such a requirement can only be
justified on the premise, which I have already rejected,
that conditio existente second real agreement was
concluded. That being so, there is no warrant for insisting
that oneof the requirements of a traditio brevi manumust
nevertheless be satisfied.”
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[emphasis added]
[44] It is my opinion that the Info Plus case supports the conclusion
that ownership of the vehicle passed to van der Walt when the balance of
the purchase price was paid in full.
[45] In any event, even if van der Walt did not acquire ownership of
the vehicle from ABSA, his title was superior to that of the Appellant or
the Respondent. This is because the Appellant derives his title from van
der Walt. Even on the Appellant‟s own version, he had defaulted in his
payment obligations to van der Walt and had therefore forfeited the
ability to defend any claim by van der Walt to repossess the vehicle.
[46] It is not in dispute that, if the Respondent‟s claim is valid, the
Respondent has suffered damages in the amount claimed.
[47] I therefore find that the learned Magistrate correctly gave
judgment in favour of the Respondent.
[48] Accordingly, I propose making the following order:
1. The appeal is dismissed.
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2. The Appellant is ordered to pay the Respondent‟s
costs in the appeal.
______________________________________
P.N. LEVENBERG, AJ
ACTING JUDGE OF THE HIGH COURT
I agree
______________________________________
SALDULKER, J
JUDGE OF THE HIGH COURT
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Date of Judgment: 21 August 2007