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[2010] ZAGPPHC 28
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Scheltema Beleggings CC v Commercial Truck and Trailer Sales CC (35420/08) [2010] ZAGPPHC 28 (1 April 2010)
IN
THE HIGH COURT OF SOUTH AFRICA
(NORTH
GAUTENG HIGH COURT - PRETORIA)
CASE
NO. 35420/08
DATE:01/04/2010
In
the matter between:
SCHELTEMA
BELEGGINGS CC Plaintiff
and
COMMERCIAL
TRUCK & TRAILER SALES CC Defendant
JUDGMENT
LEGODIJ,
1.
One old built-up TOYOTA HINO TRUCK with a Matching Grain Trailer,
registered on the 1 January 1970 and the 1 January 1980 respectively
are the subjects of the dispute before me.
2.
When they were both sold to the defendant, Commercial Truck and
Trailer Sales cc, during April 2006, they were registered in
the
names of a third party, one Mr Joseph Robertze. By that
time,
there was already a special notarial bond registered on the 12 April
2005, in favour of Engen Petroleum Limited. In the notarial
bond
aforesaid, there is a mention of both the truck and the trailer. The
mentioning of both the truck and the trailer is the subject
of a
further dispute as it would appear later in this judgment.
3.
On the 31 May 2006, at or near Germiston, both the truck and the
trailer were sold
voct
stocts
to
the plaintiff (Scheltema Beleggins CC) in the amount of R110 000 plus
vat in the amount of R15 400 and thus totalling to R125
400. During
or about June 2006, a total amount of R28 212 was paid to J D Els
Truck Repairs towards the repairs effected on the
truck and the
trailer in question.
4.
Later during or about 2007, the truck and the trailer in question,
were attached and seized from the plaintiff by the Sheriff,
subsequent to a court order that w
T
as
obtained during March 2007, by Engen against Mr Robertze. It was
these attachment and seizure that prompted the plaintiff to
institute
the present action against the defendant claiming R125 400 being in
respect of the purchase price and R28 212 being in
respect of repairs
that were effected on the truck and trailer.
5.
After having heard evidence adduced on behalf of the plaintiff, the
defendant closed its case without leading evidence. Counsel
for the
defendant identified the issues that had to be determined in this
case as follows:
5.1
Whether goods that are in fact the subject matter of a notarial bond
are capable of being sold by the debtor?
5.2
Whether the requirements in terms of section 1 of
Security By Means
of Movable Property Act 37 of 1993
have been complied with?
5.3
What is meant by the words "ordinary course of business" as
referred to in clause 6 and 18(5) of the notarial bond?
5.4
What the plaintiff is entitled to if successful?
6.
The following portions of the notarial bond and case law are of
relevance to the issues raised herein.
"WHEREAS
the said Mortgagor acknowledges itself to be truly and law indebted
to:ENGEN PETROLEUM LIMITED NO. 1989/003 754/06(hereinafter
referred
to as the Mortgagee)
in
the sum ofR200
000
(TWO
HUNDRED THOUSAND RAND) in respect of monies lent and advanced, any
credit granted on supplies by the Mortgagee to the Mortgagor
or any
other case whatsoever. AND WHEREAS the Mortgagor has agreed to bind
itself for the due payment of the aforesaid sum and
interest thereon
and
for
the compliance with all the terms and conditions hereof mortgaging as
security for the fulfilment of the said obligation, hereinafter
mentioned property as well as its right and interest in
J.
I
X
BUILT-UP TOYOTA HINO
TRUCK
WITH
MATCHING GRAIN TRAILER with registration number
CKN
638
NW
and HENRED TRAILER with registration number CKN 637 NW.
NOW
THEREFORE THE APPEARER DECLARED THAT:
A
R
C.
D.
As
security for the due and punctual payment by the aforesaid amounts or
any position thereof and
for
all other sums of money with may at any time become due and owing to
the Mortgagee from any cause of debt whatsoever and for
the
fulfilment by the Mortgagor of all and any terms and conditions of
this notorial bond, the Appearer declared that the Mortgagor
hereby
mortgagor to and in favour of the Mortgagee generally the Mortgagor's
movable property of every description both corporeal
and incorporeal
which shall include book debts to the Mortgage such as the Mortgagor
now has and such as in failure he may become
possessed wheresoever
situation including any lease in respect of the promises in which the
business of the Mortgagor is presently
carried on or may in future be
carried on or may in future be carried on (the property). If the
Mortgagor is a farmer then his
growing crops shall be deemed to be
movable and the subject to the provisions of this special notarial
bond.
The
Mortgagor undertakes that as long as long as this bond subsists he
shall not, save only in the ordinary cause of business, alienate,
sell, transfer, hypothecate, dispose of or in any way give up
possession in my way of any of the movable assets mortgaged hereunder
or any other movable
assets
of which he may in the future become possessed without the prior
written consent thereto of the Mortgagee,
18.5
In the event of the Mortgagor advertising or making known its
invitation to sell or dispose of all or any of its movable assets
other than in the normal course of business,
18.8
....then notwithstanding anything herein contained, the full amount
of the then indebtedness of the Mortgagor to the Mortgagee
shall
immediately become due and payable and recoverable without any
notice"
7.
The
provisions of
section 1
of
Security By Means of Movable Property Act
57 of 1993
is also relevant to some of the issues raised herein.
Section 1
of the Act provide as follows:
"I.
(Legal
consequences of special notarial bond over movable property)
-(!)
If a notarial bond hypothecating corporeal movable property specified
and described in the bond in a manner which renders it
readily
recognisable 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, 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 has expressly been pledged and delivered to the
mortgagee.
8.
Where one is dealing not just with the interpretation of a contract
between the parties, but with an instrument creating a real
right,
which avails against third parties, there cannot be anything more
added to the instrument. The third party must be able
to take the
document and identify the reality on the ground by reference to the
document alone, correlating the description in
it and the property
that fist the description. (See Ikea Trading UND Design Ag v Boe Bank
Ltd
2005 (2) SA 7
SCA at 12 par 13).
9.
In Rosenback & Co. (PTY)Ltd v Dalmonte
1964 (2) SA 195
(N), the
full court dealing with the Natal Act stated that it is not a
compliance with the statute to describe the assets to be
hypothecated
in wide general terms as "goods, wares, merchandise, stock in
trade, fixtures, fittings, furniture and appliances.
It is necessary
to know what are the goods, wares, merchandise and so on, the nature
of them and the types of kind of each of them
and also the number of
them (e.g. so many 1 lb tins of A make of a jam, so many of B make,
so many 5 lb tins of C make biscuits,
so many rolls of suiting
material and of dress material and so on, as in stock list) described
so that at any given moment they
may be indentified, so also with the
fixtures fittings furniture and appliances and any other movables. It
is necessary to know
the particulars of them, of what they consist in
detail.
9.1
All the more so should this be the case where the written document is
not merely a contract, but also an instrument hypothecating
property.
The need for certainty from the instrument itself is not only to
achieve clarity for the parties. An instrument that
gives rise to a
real right of security also constitutes notice to third parties that
the assets are bonded. For such notice to
be effective, third parties
must be able to determine from its terms that the parties is subject
to another's right that particular
this is encumbered. (See Ikea
Trading MD Design Ag's case supra at 14 paragraph 18).
10.
For the property to be pledged in accordance with section 1(1) of the
Act, the unique item of property must be readily recognisable
from
its description in the bond. Whether or not expertise is required in
order to correlate the property and the description is
not the point.
It must be capable of being done merely from the description in the
bond. Where a generic item is sought to be pledged,
it is the unique
item that is the subject of the pledge and it is not enough to
describe it only with reference to its generic
characteristic. Nor is
it sufficient to describe generic items with reference to the source
or date of acquisition as in the case
for them they are recognisable
not from the description in the bond but rather from external source.
A member of the public must
be able to establish from the information
lodged at the deeds office whether particular assets of a debtor have
been pledged (whether
or not he requires expert knowledge to do so).
(See lake Trading UND Design Ag at 14-15 par. 14).
11.
The purpose of requiring movables to be specifically described and
enumerated is said to give notice to the public generally
of the
movables specifically hypothecated under the bond. A term could not
be implied into the bond in question since the implication
would
depend on the leading of extrinsic evidence of facts known to the
parties and that would inevitably be to their prejudice.
(See
Durmlingam v Bruce No
1964 (1) SA 807
(D) at 812 G-813B, see further
Ikea Trading and Design AG at 15 par. 23).
12.
Preambles or recitals in a written contract present more of a
problem. The general principle is that, they should be regarded
as a
subordinate to the operative part which, if its meaning is clear,
must be taken as expressing the common intention of the
parties and
so must prevail over anything to the contrary in the preamble. If the
operative part is not clear, recourse may be
had to the preamble to
assist in deciding it. (See Bekker v Total South Africa (PTY) Ltd
1990 (3) SA 159
(T) 171 H - 173 D, see also RH Christie in his book
The Law of Contract in SA 5
th
Edition at 211).
13.
It is said that, it is not always possible to draw a sharp
distinction between the preamble and the operative part, as draftsman
do not always bear the distinction in mind. So, it has been required
that what bears the form of a recital may operate as a term
of the
contract. (See Woodburn Mansions (PTY) Ltd v Dowell
1961 (3) SA 893
D, see also RH Christie's book page 211-212).
14.
As to what is covered by the term "ordinary course of business"
must of necessity depend on its own special circumstances.
(See Est
van Schalkwyk v Hayman & Lessein 1947(2) S 1095 cpd AT 1044 2
nd
Paragraph). The test for determining whether a transaction was in the
ordinary course of business is an objective one, namely,
whether
having regard to the terms of the transaction and was entered into
would normally have been entered into by the solvent
business men.
(See Hendricks NO. V Swanepoel
1962 (4) SA 338
AD at page 345).
15.
The test to be applied is to determine whether an alienation by a
trader of goods forming part of his business was in the ordinary
course of that business is, whether regard to all circumstances, the
alienation was one which would normally have been transacted
by a
solvent business than carrying on a business of that kind. (See
Joosab v Ensor NO
1966 (1) SA 319
at 326 D).
16.
For an alienation to be "in the ordinary course of that
business" it must be made during the continuance of that
business. (See Ensor No v Rensio Motors (PTY) Ltd
1981 (1) SA 815
AD
at 825 C).
DISCUSSIONS,
SUBMISSIONS AND FINDINGS
17.
At the start of the hearing of this matter, I requested the parties
to make a short opening statement with a view to identify
the issues
that had to be determined in this case. It became apparent that
counsel for the plaintiff was uncertain as to what the
defendant was
actually putting in dispute. The pre-trial conference did not appear
to have resolved this uncertainty. For example,
it was still not
clear to the plaintiff whether the validity of the court order that
led to the attachment and seizure of the truck
and trailer in
question was admitted or not. It later transpired that two aspects
were placed in issue by the defendant. It questioned
whether the
order was valid and if so, whether it was executed before the
plaintiff surrendered the truck and the trailer. The
latter issue was
abandoned along the way after evidence was tendered on behalf of the
plaintiff.
18.
The two issues aforesaid, were left to remain unresolved despite the
fact that in the pleadings, they did not appear to have
been the real
issues. For example, in paragraph 8 of the particulars of claim, the
averments relating to the court order and the
execution thereof are
made. The defendant pleaded not to have had knowledge of the
allegations in paragraph 8 of the particulars
of claim. This was
however, despite the fact that the court order was attached to the
particulars of claim. However, the defendant
having pleaded no
knowledge of the averments in paragraph 8 of the particulars of claim
it sought in its plea, to allege that the
plaintiff should not have
parted with possession of the truck and or trailer. Alternatively, it
alleges that the plaintiff should
have taken immediate steps to
recover the possession and use thereof.
19.
Eventually, during the proceedings, it transpired that there was only
one issue that had to be determined. That is, whether
the claim by
Engen was unassailable or not. The defendant sought to allege that
the claim was not unassailable. To this, it sought
to argue that in
registering the notarial bond there was no compliance with the
provisions of section 1(1) Security by Meaning
of Movable Property
Act 57 of 1993. This submission which was made during the opening
statement was met with surprise and opposition
by counsel on behalf
of the plaintiff.
20.
The basis for the opposition was that, such a defence had not been
pleaded. I persuaded the plaintiff to run the plaintiffs
case as if
such an averment has specifically been raised in the defendant's
plea, particularly, that non-compliance with the provisions
of
section 1(1) would not change how the plaintiff intended to conduct
its case. For example, it was already intimated that an
official from
the office of Registrar of Deeds would be called as a witness.
21.
I am mentioning all of these simply to show that, the defendant did
not conduct its case in a manner that suggested a strong
point or
case to argue. It was some kind of "playing by the ear to the
plaintiff's case". It was particularly of no surprise
that no
evidence was tendered on behalf of the defendant.
22.
The issues raised in paragraphs 5.1 to 5.4 of this judgment have a
bearing on whether or not the claim by Engen regarding the
court
order and the execution thereof was unassailable? I now turn to deal
with these issues.
Whether
the requirements in terms of section 1 of the Security by Means of
Movable Property Act 37 of 1993 have been complied
with?
23.
This issue was raised in paragraph 5.2 above. The provisions of
section 1 were quoted in paragraph 7 above.
23.1
I see the objectives of section 1 as having to create a presumption
of delivery to the mortgagee of the movable property which
is
hypothecated, in terms of the notarial bond, once such a bond is
registered in terms of the Act and the property in question
is
described therein in a manner that is readily recognisable. Secondly,
the objective is to enable the third parties who may not
necessarily
be parties to the bond agreement to be able to know whether the
property that is offered to them is hypothecated or
not. Effectively,
as I see it, this is to enable a third party to raise as a defence
that the rights of the mortgagee are not supreme
to the third party's
rights. In the present case, the defendant seeks to allege the
unassailability of Engen's claim to the truck
and trailer. This was
done without leading any evidence.
23.2
As it was said earlier in this judgment, where one is dealing not
just with the interpretation of a contract between the parties,
but
with an instrument creating real right which avails against a third
party, there cannot be anything more added to the instrument.
The
third party must be able to take the document and in it identify the
reality on the ground by reference to the document alone,
correlating
the description in it and the property that fits the description. The
defendant aligned itself with these sentiments.
Having done so, it
sought to argue that other portion of the document should be ignored
or that such other portion had no bearing
to the rights and
obligations created in the document or has no relevance to the
description of the goods under the discussion.
23.3
In seeking to argue this point, counsel for the defendant relied on
what was said by R H Christie in his book, (The Law of
Contract in
South Africa, 5
ch
Edition) and the authorities referred to therein, under paragraphs 13
and 13.1 of this judgment.
23.4
Counsel for the defendant, sought to dismiss;
"AND
WHEREAS
the Mortgagor has agreed to bind itself for the due payment of the
aforesaid sum and interest. Jhtron and for the compliance
with all
the terms and conditions hereof mortgaging as security for the
fulfilment of the said obligations ,the hereafter mentioned
property
as well as its right and interest in:
1.
I
X
Built
-up
TOYOTA
HINO
TRUCK
WITH MATCHING
GRAIN
TRAILER with registration number CKN 638 NW and HENRED TRAILER with
registration number CKN 637
NW)"
as
nothing else than a mere preamble or recital which has no legal
standing and which cannot be considered in deciding whether or
not
the description of the bonded property accords with the provisions of
section 1(1).
23.5
I find this submission to have been without basis to say the least.
"Mortgaging as a security for the fulfilment of the
said
obligations, hereinafter mentioned property as well as its right and
interest in" followed by the description of the
property in
question can leave no one in a doubt that the truck and trailer as
described is the subject of the security referred
to therein and
subsequently registered as such.
23.6
As indicated earlier in this judgment, the test applicable to a third
party is an objective one. That is, what a reasonable
man would have
understood from the document on the reading of it. The defendant
adduced no evidence of that reasonable man. Firstly,
the plea itself
did not raise the issue under discussion pertinently and as a
defence. Secondly, as I said, it left no doubt on
the reading of the
notarial bond that the truck and trailer are easily recognisable as
forming part of the bond. Lastly, the truck
and trailer having being
registered as such, created a real right to the Engen in respect of
the truck and the trailer that made
its claim thereon unassailable.
23.7
The other contention by counsel on behalf of the defendant is of
course founded on the wrong premise. That is, because what
he
referred to as "preamble" created no right and obligation,
the only description that has to be considered should be
as in clause
D of the notarial bond. Clause D was quoted earlier in paragraph
6
of
this judgment. The entire document must be read and be given effect
thereto. Selective reading of the document as suggested by
counsel on
behalf of the defendant would offend against his own submission. That
is, only the document in its entirety has to be
considered.
23.8
The dispute is not about goods or property that are described in
general terms in clause D, quoted above. The dispute is about
a truck
and trailer which is described in detail in the document, both of
which have been mentioned as "a security for fulfilment
of the
said obligations". The contention that there has not been
compliance with the provisions of section 1(1) for lack of
proper
description of the Truck and Trailer is in my view, without basis. I
now turn to deal the other two issues identified by
counsel on behalf
of the defendant.
Whether
goods that are in fact the subject matter of notarial bond are
capable of being sold by the debtor
?
24.
This issue has a bearing on the issue raised in paragraph 5.3 of this
judgment. In fact, much of the discussion revolved around
what is
meant by "in the ordinary course of business". This seems
to have been prompted by the fact that the mortgagor
Mr Robetze,
indicated that he was not entitled to sell the truck and trailer to
the defendant without the mortgagee, that is, Engen's
consent.
25.
The contrary view taken by the defendant was that, the mortgagor did
not require the mortgagee's consent in selling the truck
and trailer
to the defendant for they were disposed in the ordinary course of
the Mortgagor's business. This submission was
based mainly on the
wording of clause 6 of the notarial bond quoted earlier in paragraph
6 of this judgment.
26.
To recap on the background, Mr Robertze was in the business of
transportation. He was conveying mealie meal from one place
to the
other and in turn he would be paid for the transportation. He had
only the truck and trailer in his business. There was
also a bakkie
which was not used for the transportation of the mealie meal. There
came a time when he could not sustain the business.
He owed several
people and was unable to meet his obligations. As a result, he
decided to dispose of the truck and trailer and
close down the
business. The truck and trailer was then sold to the defendant in the
sum of R75 000, which money he used to pay
part of his debts and the
other part was used for his personal needs. He had no mandate from
Engen to sell the truck and trailer.
27.
I was urged to find that, the conduct of Mr Roberze in selling the
truck and trailer to the defendant was done in the ordinary
course of
his business. Again, the test is objective. Remember, the question is
whether having regard to all circumstances, the
alienation was the
one which would normally have been transacted by Mr Robertze in his
transport business. For an alienation to
be "in the ordinary
course of that business" it must be made during the continuance
of that business.
28.
It is clear from Mr Robertze's evidence that when he sold the truck
and trailer to the defendant, he did not intend to sustain
or
continue with his transport business. Immediately after he had sold
the truck and trailer, he closed down shops and he was employed
elsewhere.
29.
The plaintiff having been served with the court order attaching and
seizing the truck and trailer investigated the matter.
Having found
that the order was perfection of the notarial bond, decided not to
find the attachment and seizure. He regarded the
claim by Engen on
the truck and trailer as having been unassailable. That is, there
could not have been any bona fide defence to
Engen
1
s claim.
30.
The plaintiff initially sought to claim from the defendant payment of
over R8 000 being for alleged registration fees spent
by the
plaintiff. This was abandoned along the way and rightly so, as there
was just no sufficient evidence in this regard. I now
turn to deal
with the claim for repairs effected on the truck and trailer. The
issue is raised in paragraph 5.4 above.
What
the plaintiff is entitled to if successful
?
31.
In this regard, counsel for the defendant contended that the claim by
the plaintiff in the amount of R125 400 was not a claim
for the
return of the purchase price, but rather a claim for damages. In
making this submission, counsel for the defendant relied
on paragraph
13 of the particulars of claim which reads in Afrikaans as follows:
"Asgevolgvan
die beslagleggingcn mtitwinning op dicgcncldc voertuig, ly
ciscr
shade en vardcr eiser vanaf venvecrder".
32.
Based on this, the contention was that, the plaintiff did not prove
that it suffered damages. I do not intend wasting much time
on this
issue. It is clear from paragraph 5 of the plaintiffs particulars of
claim that the amount of R125 000 is for the purchase
price. That is,
R110 000 plus vat in the sum of R15 400. Secondly as the defendant
persisted with its contention, the defendant
at the end sought to
amend its prayer 13.1 to read
"betaling
van die koopson van R125
400".
Amendment was accordingly granted as I saw no basis for any
prejudice. I do not think that the defendant could have been
under
any apprehension that the amount of R125 400 was not for the purchase
price or return thereof. It is immaterial whether the
plaintiff used
the truck or not. The crux of the matter is, it paid money to the
defendant for the truck and trailer, and it is
now without them.
33.
Of course there was a concession that the plaintiff claimed refund of
R15 400 from SARS. For this reason, the amount claimed
as the
purchase price ought to be reduced.
34.
As regard the claim for the repairs, in the amount of R28 212, the
contention was that inasmuch as this was a claim for damages,
the
plaintiff can only recover if it adduced evidence to show that the
value of the truck and trailer was increased. The problem
with this
submission is that, the plaintiff was obliged to repair the truck and
trailer for without such repairs no roadw
T
orthy,
certificate could have been issued. The point of the matter is that,
having spent money in repairing the truck and trailer
the plaintiff
is now without the truck and trailer and any part that forms part of
the sum of R28 212. It is a complete waste that
would not be
recovered by whatever means, as the truck and trailer having been
taken by operation of the law or valid court order.
35.
In the amount of R28 212 vat is included. Such amount as it appears
from the quotation is R3 394.86. This amount should also
be deducted
36.
Consequently a judgment is hereby granted against the defendant as
follows:
(a)
The defendant to pay to the plaintiff the sum of R110 000,
(b)
The defendant to further pay to the plaintiff the sum of R24 817.14,
(c)
The defendant to pay interest a temporae on the amounts aforesaid,
(d)
Costs of the action.
M
F LEGODI
JUDGE
OF THE HIGH COURT
WEAVIND
& WEAVING
ATTORNEYS
FOR THE PLAINTIFF
Weavind
Forum, 573 Fehrsen Street
PRETORIA,
0001
Tel
no. 012 346 3098
Ref:
Eckaard Le Roux/pm/V23159
TAITZ
& SKIKNE
C/O
MORRIS POKROY ATTORNEYS
ATTORNEYS
FOR THE DEFENDANT 1
st
floor, Waterhouse Building 531 Fehrsen Streeet Tel: 012 346 3532 Mr
Pokroy/PTo523