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[2014] ZASCA 87
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Pheiffer v Van Wyk and Others (267/13) [2014] ZASCA 87; 2015 (5) SA 464 (SCA) (30 May 2014)
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THE
SUPREME COURT OF APPEAL OF SOUTH AFRICA
JUDGMENT
Not Reportable
Case No: 267/13
In the matter
between:
WILLEM PHEIFFER
…....................................................................................................
Appellant
and
CORNELIUS
JOHANNES VAN
WYK
.................................................................
First
Respondent
AAGJE VAN
WYK
..............................................................................................
Second
Respondent
MARDE (PTY)
LTD
..............................................................................................
Third
Respondent
MARIUS
EKSTEEN
............................................................................................
Fourth
Respondent
Neutral
citation
:
Pheiffer
v Van Wyk
(267/13)
[2014] ZASCA 87
(30
May 2014)
Coram:
Mthiyane DP, Lewis, Mhlantla, Saldulker
JJA and Mathopo AJA
Heard:
19 May 2014
Delivered:
30 May 2014
Summary:
Enrichment lien ─ non-owner of
property ordered by high court to provide security in lieu of a lien
over property: no reason
why enrichment lien cannot be secured by
guarantee furnished by person other than owner.
ORDER
On
appeal from
:
North
Gauteng High Court, Pretoria (Hughes AJ sitting as court of first
instance):
1 The appeal is
dismissed with costs.
2 The order of the
high court is set aside and replaced with the following:
‘
(a)
The appellant is ordered to vacate Portion 2, Farm Bleshoenderpan
211, Registration Division MR, Dardanelin, Alldays, Limpopo
Province
(the property) with immediate effect.
(b) The guarantee
provided by ABSA Bank Ltd on 7 February 2013 on behalf of Marde
(Edms) Bpk is sufficient security for the appellant’s
enrichment claim in respect of improvements to the property.
(c)
The guarantee shall lapse should the appellant not institute action
as contemplated in the order of the high court, within 30
days of
this order.’
JUDGMENT
Mathopo
AJA
(Mthiyane DP, Lewis, Mhlantla
and Saldulker JJA concurring):
[1]
On 19 May 2014 this appeal was heard and the order set out above was
made by the court. It was then indicated that the reasons
for the
order would follow. These are the reasons.
[2]
The issue in the appeal is whether the security tendered by the third
respondent, Marde (Pty) Ltd, is sufficient for the appellant’s
(Willem Pheiffer) enrichment claim in respect of improvements to the
property of the first and second respondents (the Van Wyks).
The
North Gauteng High Court, Pretoria (Hughes AJ) answered this question
in favour of the Van Wyks. It declared the agreement
between the Van
Wyks and Pheiffer null and void
ab
initio
. It ordered the third respondent
to file security in the amount of R2 million in lieu of Pheiffer’s
right of retention in
respect of the property. Furthermore, Pheiffer
was given a period of three months to vacate the property and was
ordered to institute
an action for enrichment within 14 days of the
order. The appeal is directed against the decision that the third
respondent and
not the Van Wyks should file security and serves
before us with the leave of the high court.
[3]
A brief background to the matter is as follows. During October 2001
the first respondent (Cornelius Johannes van Wyk) concluded
an oral
agreement with the appellant for the purchase of the property called
Portion 2 of Farm Bleshoenderpan 211, Registration
Division MR
Limpopo Province (the property) for the purchase price of R3.5
million payable against registration of the property
in the name of
Pheiffer. The property was jointly owned by Van Wyk and his
wife Mrs Aagje van Wyk (the second respondent)
to whom he was married
in community of property. On 26 October 2011 Pheiffer was given
occupation of the property.
[4]
Some time later, Pheiffer prepared a document described as ‘
Koop
van Plaas’
. This document, which purported to be an
agreement of sale of the property, was signed on 1 March 2011 by Van
Wyk only. The document
was antedated to 26 March 2010. It read as
follows:
‘
Hiermee
koop Mr W Pfeiffer … die plaas genaamd Kilimanjaro, Ged: 2,
Bleshoenderpan, Aldays, soos hy staan boerstoots (sic)
vanaf Mr en
Mev CJ Van Wyk … vir die bedrag van R3 500 000,00 … Die
plaas word aan Mr Pfeiffer verkoop met voorwaardes
soos op aanhangsel
uiteengesit.
’
[5]
This document contained several terms which conferred certain rights
on Pheiffer. These included a right to occupy the
property and
effect improvements as he deemed fit. He was also obliged to
repair any damage to the farm. The Van Wyks
were granted
permission to visit the farm. Attorneys were appointed to
prepare a deed of sale between the parties. In addition,
Mr van Wyk
transferred certain accounts, notably the Eskom account for
electricity, to Pheiffer.
[6]
It is common cause that despite numerous indulgences Pheiffer failed
to raise the finance necessary to purchase the property,
with the
result that the Van Wyks purported to cancel the agreement. On 13
June 2012 they concluded a new agreement with the third
respondent
represented by Marius Eksteen (the fourth respondent). In terms of
this agreement, the Van Wyks were obliged to grant
undisturbed
possession of the farm to the third respondent on signature of the
agreement. When the third respondent and Marius
Eksteen attempted to
take occupation of the property from Pheiffer, who was still in
occupation, they were met with an urgent spoliation
application which
was granted against them: the Van Wyks were interdicted from
transferring the property to the third respondent.
[7]
When the Van Wyks sought to evict Pheiffer, he raised the improvement
lien as a defence. In the high court, Pheiffer also raised
a number
of defences against the eviction claim, and contended that he had a
valid and binding agreement in the ‘Koop van
Plaas’
document with Mr Van Wyk. The high court, in a detailed analysis of
the facts and law, held that the agreement was
void
ab
initio
. This finding is not challenged
before us. I consider the concession as to invalidity to have been
properly made. The issue relating
to the form of security to be
tendered was not then placed in dispute. The high court, in the
absence of any dispute regarding
the form of security, exercised its
discretion and ordered the third respondent to file security in the
amount of R2 million and
ordered that Pheiffer vacate the property.
[8]
On 8 February 2013 the third respondent filed a bank guarantee issued
by ABSA Bank. It undertook to pay Pheiffer any sum
not
exceeding R2 million upon receipt of a written demand stating that he
had obtained judgment in the high court against the Van
Wyks in
respect of the alleged improvements made by him on the farm.
The funds would eventually be released upon the production
of a
certified copy of the court order for the judgment.
[9]
On appeal the lien and the form of security ordered and subsequently
furnished, are the central issues. Pheiffer contended that
the high
court erred in the exercise of its discretion in ordering security
instead of a lien because, so he argued, the security
was inadequate
and meaningless since the third respondent was not the owner of the
property. Consequently, the issue on appeal
was narrowed to whether
the high court was correct in the exercise of its discretion since
the third respondent was not the owner
of the property, and that no
claim for enrichment lies against it. The argument is that security
in substitution of Pheiffer’s
improvement lien is not
sufficient to secure the enrichment claim. It is thus the right to
the improvement lien and the adequacy
of the guarantee provided by
the third respondent that is central to the dispute between the
parties on appeal.
[10]
Before these arguments are considered, it is necessary to place the
issue in its proper perspective with regard to the legal
principles
governing improvement liens. To successfully raise the defence
of a lien, it must be alleged and proved that (a)
the person has
possession of the object; (b) that the expenses incurred were
necessary for the salvage of the property or that
it was useful for
the improvement of the object (improvement lien).
[11]
The possessor of the property who has a debtor/creditor lien is not
required to relinquish possession until such time as the
full
contractual amount is paid to him. A debtor/creditor lien is not a
form of real security. It is based upon a contract and
extends to all
expenditure which the lien holder has incurred upon the property in
terms of a contract express or implied with
another party. A lien
holder may retain the property as against the contracting party (but
not against the third parties) until
he has been compensated for the
work and costs incurred. This lien does not exist apart from the
contract and can be a defence
to any vindicatory action.
[12]
A real lien (an enrichment lien) is afforded a person who has
expended money or labour on another’s property without
any
prior contractual relationship between the parties. The lien holder
is entitled to retain possession until his enrichment claim
has been
met. It is an established principle of our law that the
owner
of the property subject to a right of retention may defeat the lien
by furnishing adequate security for the payment of the debt.
[13]
It is common cause that Pheiffer was granted permission to effect the
improvements on the property on the basis that he would
be able to
secure the finance necessary to purchase the property. It is also
correct that the mere offer or granting of security
by the owner does
not confer any right of possession on the owner, but a court may, in
its discretion, order cessation of possession
against the provision
of security. The security need not cover the cost of a possible
action by the lien holder since the security
serves as a substitution
for the lien and not as an additional security. A lien may be
defeated by the owner of the property against
whom an enrichment
action lies by furnishing security for the improvements effected
which can take place in the form of either
a payment into court or
the furnishing of a banker’s guarantee.
[14]
In this court, Pheiffer did not assert any contractual entitlement to
remain on the property but contended that as a lien holder
in respect
of the improvements amounting to at least R2 million, effected with
the consent of Van Wyk, he would be obliged to vacate
the property
only against adequate and proper security in respect of his
improvement lien. What Pheiffer now contends is that the
security
that has been tendered is not acceptable because it emanated from the
third respondent, who is not yet the owner of the
property and that
an enrichment claim would not lie against it. The result would be
that the right of retention would be of no
value.
[15]
The submission of Pheiffer is that it is not equitable to make him
lose his security (improvement lien) which is a real right
and
substitute it with a personal right against the third party. On this
basis, it was contended that the discretion cannot be
exercised to
substitute security by a third party. It was argued that the court
below failed to appreciate that there has to be
a
nexus
between the debt and the lien which it secures before it could
exercise its discretion. The essence of this argument is that
as there was no debt owed to Pheiffer by the third respondent,
ordering the third respondent, who is not a party to any enrichment
action, to provide security for the Van Wyks against a claim based on
unjustified enrichment is not sufficient.
[16]
The Van Wyks on the other hand submit that the security tendered by
the third respondent in substitution of Pheiffer’s
improvement
lien is adequate. It was further contended that, by means of the sale
and allowing the third respondent to occupy the
property, the
guarantee which was tendered would provide Pheiffer with the
necessary security to enable his claim to be paid once
he has fully
quantified it and has obtained a judgment to that effect. What the
third respondent has effectively sought to achieve
as an interested
party and new purchaser by providing security is two-fold. First, it
is to assist the Van Wyks to obtain restoration
of their property.
Second, to make it possible that it obtains vacant possession which
Pheiffer successfully resisted. The argument
advanced is that the
longer Pheiffer continues to refuse to vacate the property, the
greater the prejudice the respondents will
suffer as the value of the
property will be diminished.
[17]
It is apposite at this stage to consider the cases relevant to this
issue. In
Bombay Properties (Pty) Ltd
v
Ferrox Construction
1996
(2) SA 853
(W) Coetzee J had distinguished between a debtor/creditor
lien, in which the person relying on a
jus
retentionis
had an enforceable claim in
contract against the owner of the property, and an enrichment /
improvement lien, where there was no
such contractual claim available
to the possessor, and where the court accordingly did not have a
discretion to deprive the lien
holder of its possession and to
substitute for that a meaningless form of security. He concluded that
in the case of a
jus retentionis
based on an enrichment lien, the court does not have jurisdiction to
deprive the lien holder of his possession and that the substitute
security provided by a third party for such a lien would be
meaningless since the respondent in that matter could not bring an
enrichment claim against a non-owner.
[18]
In
Sandton Square Finance (Pty) Ltd and
another
v
Vigliotti
& others
1997 (1) SA 826
(W), De
Villiers J declined to follow the judgment in
Bombay
Properties
on the basis that it was
wrong. He concluded that a court has a discretion in a case of an
improvement lien similar to the one it
has in the case of a
debtor/creditor lien. De Villiers J further held that it is illogical
that the court should have a discretion
in the case of a
debtor/creditor lien but not in the case of an enrichment lien.
Accordingly, the fact that a debtor/creditor lien
flows from a
personal right, while an enrichment lien affords a real right, was
not a basis for such a distinction because in both
cases the lien
afforded the holder thereof a form of security for this claim and
concluded that there is no reason for allowing
the substitution of
the security in one case but not in the other.
[19]
In this regard De Villiers J went further and referred at 831D-F to
Voet 16.2.21 (Gane’s translation) which said the
following:
‘
But
is one who has a right of retention held liable to restore the thing
to his opponent whenever the latter tenders sound security
for the
refund of expenses or the payment of wages? It appears that that
ought to be left to the discretion of a circumspect judge
according
as it shall have become clear from circumstances either that he who
ought to restore is deliberately aiming at holding
back possession of
the thing too long under cover of expenses or wages; or on the other
hand that the person owing the expenses
has it in mind to recover the
thing under security, and then by a lengthy and pettifogging
protraction of the suit to make the
following up of the expenses,
wages and the like a difficult matter for this opponent.’
De
Villiers J further observed that Voet in this passage was dealing not
only with debtor/creditor liens but also with improvement
liens.
[20]
It follows that the conclusion reached in the
Bombay
Properties
case that in the case of a
jus retentionis
based on an enrichment lien, the court does not have a discretion to
deprive the lien holder of his possession or that the substitute
security for such a lien would be meaningless is clearly wrong. The
Sandton Square Finance
case made it clear that the court does have a discretion in respect
of an enrichment lien. Quite clearly once it is established
that a
court has a discretion in relation to a debtor/creditor lien, there
is no reason why such a distinction should not extend
to the
enrichment lien. On appeal counsel for Pheiffer did not persist with
the argument that the approach in
Sandton
Square
was wrong. It would consequently
be untenable to allow substitution of security in the one case
(debtor/creditor lien) but not in
the other (enrichment lien).
[21]
The principle articulated in the
Sandton
Square Finance
case is sound and based
on considerations of equity and justice. I do not agree with
the contention that the security tendered
by the third respondent is
meaningless. In my view, once Pheiffer has fully quantified and
proved his claim, he will be entitled
to payment in respect of the
improvements to the property. As soon as sufficient security has been
tendered, Pheiffer has no basis
to continue occupying the property.
As the court below rightly held, he must vacate the property.
[22]
In my view, the court below correctly exercised its discretion. In
doing so it considered various factors: first, Pheiffer
had been in
possession of the property since October 2010, enjoying the use and
privileges, which included movables such as vehicles,
as well as
other benefits attached for purposes of farm life. Secondly, he has
to date not lodged his claim for improvements. Thirdly,
the third
respondent entered into a valid sale agreement with the Van Wyks on
13 June 2012. In terms of the agreement, the Van
Wyks were obliged to
grant occupation of the property to the third respondent on signature
of the agreement.
[23]
The final question is whether the guarantee filed by the third
respondent is sufficient. In my view, the guarantee is
sufficient security for Pheiffer’s enrichment claim in respect
of the improvements on the farm in that it will cover a judgment
debt
obtained against the Van Wyks up to the sum of R2 million.
Furthermore, the guarantee has been furnished by an interested
party,
the purchaser of the property who will enjoy the benefits of the
improved property. There is thus no reason why the enrichment
lien
cannot be secured by the guarantee filed by the third respondent. All
that is required from Pheiffer is for him to submit
to the third
respondent a written demand for the payment of such sums that have
been granted by the court and a certified order
of court that he has
obtained judgment to that effect.
[24]
It is for all the reasons set out above that the order referred to in
the first paragraph was made.
_______________________
R
S Mathopo
Acting
Judge of Appeal
Appearances
For
the Appellant: S J Reinders
Instructed
by:
Bekker
Attorneys, Pretoria
c/o
McIntyre & Van der Post, Bloemfontein
For the Respondents:
B Pretorius (with him W J Edeling)
Instructed
by:
Van
Zyl Le Roux Inc, Pretoria
Christo
Dippenaar Inc, Bloemfontein