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[2013] ZASCA 203
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Van der Molen v Fagan (41/2013) [2013] ZASCA 203 (2 December 2013)
THE SUPREME
COURT OF APPEAL OF SOUTH AFRICA
JUDGMENT
Case No: 41/2013
Not Reportable
In the matter between:
MILES
LOURENS VAN DER
MOLEN
................................................
APPELLANT
and
ILONA
FAGAN
....................................................................................
RESPONDENT
Neutral
citation:
Van der Molen v Fagan (41/2013)
[2013] ZASCA 203
(02
November 2013)
Coram
:
Lewis, Maya, Wallis, Pillay JJA and Swain AJA
Heard
:
20 November 2013
Delivered
:
2 December 2013
Summary
:
Rei vindicatio
- whether
ownership of a motor vehicle fraudulently acquired from seller and
sold to an innocent third party passed to purchaser
who did not make
payment - iusta causa for transfer - whether seller estopped from
asserting ownership of the vehicle against innocent
third party.
ORDER
On appeal from:
South Gauteng High Court,
Johannesburg (Maluleke, Victor and Tshabalala JJ sitting as court of
appeal):
The appeal is dismissed with costs.
JUDGMENT
MAYA JA
(LEWIS, WALLIS, PILLAY JJA and SWAIN AJA
concurring):
[1]
This is a dispute about who owns a 2008
Mercedes-Benz C63 AMG with engine number 15698560027534 and VIN
number WDD2040772F146278
(the vehicle) presently registered in the
appellant’s name
[1]
which the respondent claims as hers. The respondent successfully
brought a vindicatory claim for its return in the South Gauteng
High
Court, Johannesburg (Teffo AJ). The full court of that division
(Tshabalala J, Maluleke J concurring and Victor J dissenting)
affirmed this decision on appeal. The present appeal against the full
court’s judgment is with the leave of this court.
[2]
The relevant background facts are largely
undisputed. On 18 January 2010 the respondent sold the vehicle to Mr
Shameer Amod for
a purchase price of R650 000 which was payable by 18
February 2010. This was in terms of a written agreement of sale (the
agreement)
concluded in Brakpan in the presence of two witnesses, the
respondent’s husband and Mr Shiraz Choonara, Amod’s
companion.
[3]
The respondent handed over the vehicle’s
original registration and licensing documents to Amod upon its
delivery at the latter’s
request, purportedly to enable him to
source finance for payment of the purchase price. But Amod did not
pay the purchase price
by the due date. The respondent’s
attempts to locate him revealed that the address he had furnished was
in fact a vacant
stand. She subsequently opened a case of theft and
fraud against him with the Brakpan police.
[2]
[4]
Unbeknown to the respondent the vehicle had, in
the meantime, been registered in Choonara’s name with effect
from the very
day she concluded the agreement with Amod, 18 January
2010. A few days later, on 27 January 2010, Choonara, armed with the
vehicle’s
original documents procured by his registration and a
roadworthy certificate which proclaimed him its owner, sold the
vehicle to
a car dealership, Victor Miller Cars CC t/a The Cartique
(the Cartique), in Randburg. The vehicle’s trade-in value was
fixed
at R605 000 and, as consideration therefor, the Cartique sold
Choonara a BMW 335i coupe for R370 000 and paid him the balance of
R235 000 in cash. Having established through the relevant body that
no debt was due to any financial institution in respect of
the
vehicle and that it was not stolen, the Cartique duly registered the
vehicle in its name. In September 2010, it sold the vehicle
to the
appellant for a sum of R630 000. The appellant is presently
registered as its owner and BMW Financial Services, which financed
the transaction under an instalment sale agreement, as titleholder.
[5]
The respondent finally traced the vehicle
to the appellant in October 2010 and sued for its return in the high
court. She claimed
that the vehicle still belonged to her as the
agreement contemplated that its ownership would pass to Amod only
after he paid the
full purchase price which he failed to do. She
contended that she was a victim of fraud and that if the vehicle were
returned to
her the appellant would not be left without remedy as he
has a claim for damages against the Cartique which, in turn, would
have
a claim against Choonara.
[6]
The appellant strenuously opposed the
application. He argued that (a) the respondent was not the owner of
the vehicle at any time,
and in particular at the time she concluded
the agreement with Amod; (b) if the respondent was the owner of the
vehicle at the
time she concluded the agreement with Amod, then its
ownership passed to Amod upon conclusion of the agreement and Amod
taking
delivery on 18 January 2010; and (c) if ownership did not pass
to Amod, the respondent was estopped from asserting ownership of
the
vehicle. As indicated, neither the court of first instance (which
erroneously ignored the estoppel question) nor the majority
of the
full court were persuaded by the appellant’s contentions. And
an application to strike out allegations made in the
respondent’s
replying affidavit explaining her disputed ownership of the vehicle
in response to (a) above (which, along with
(a), is not pursued in
this appeal) also failed.
[7]
The crisp issues in this appeal are
whether the respondent intended to pass ownership to Amod upon
delivery and whether, if she
did not, she is nonetheless estopped
from asserting ownership of the vehicle. The appellant contended that
if the respondent was
the owner of the vehicle when she concluded the
agreement with Amod then, and as expressly provided for in certain
clauses thereof,
ownership of the vehicle passed from her to Amod
upon conclusion of the agreement and Amod taking delivery of the
vehicle on 18
January 2010. And if ownership did not pass, the
respondent is nevertheless estopped from asserting ownership of the
vehicle because
by handing the vehicle’s original documents
over to Amod she represented that he was its owner, or entitled to
dispose of
it, and also negligently failed to report it as stolen
timeously. This representation was the proximate cause of his acting
to
his prejudice, it was argued. The respondent, on the other hand,
insisted that upon a proper interpretation of the agreement ownership
did not pass because it was reserved until the full purchase price
had been paid and that the appellant failed to prove the necessary
requisites for the defence of estoppel.
[8]
The first issue may be given short shrift. An
agreement that defers payment of the purchase price for a
non-negligible period after
the agreed delivery date, resulting in a
contractually deferred payment, is one for credit and the parties may
validly agree that
ownership shall not pass until the purchase price
has been paid.
[3]
Jumbled as the agreement was, it made clear as evidence of the
parties’ intention in one crucial respect that the parties
contracted for credit and did not contemplate transfer of ownership
until the full purchase price was paid. It is inconceivable
that the
respondent would have released an expensive vehicle to a virtual
stranger before she was paid without reservation of ownership.
And
her subsequent approach to the police to report the vehicle as stolen
when Amod failed to pay by due date is entirely consistent
with a
view that she did not intend ownership to pass to Amod. And Amod,
given his and Choonara’s fraudulent conduct, could
hardly have
intended to acquire ownership of the vehicle. Amod therefore had no
rights to ownership and could not have transferred
ownership to
Choonara. And as Choonara did not become owner, ownership passed
neither to the Cartique nor the last purchaser in
the doomed chain,
the appellant.
[9]
It remains to consider whether the
respondent is estopped from asserting ownership of the vehicle. The
requirements of estoppel
with regard to ownership are
well-established: (a) there must be a representation by the owner, by
conduct or otherwise, that the
person who disposed of his or her
property was its owner or was entitled to dispose of it; (b) the
representation must be made
negligently in the circumstances; (c) the
representation must have been relied upon by the person raising the
estoppel; and (d)
such person’s reliance upon the
representation must be the cause of his or her acting to his
detriment.
[4]
[10]
The appellant argued that the respondent’s
negligent representation, the ‘trigger at the outset’ as
counsel termed
it, lay in her handing over the vehicle’s
‘trappings of ownership’ to Amod. And despite Choonara’s
later
fraud it remained the cause which induced him to act to his
detriment, he argued. Reliance for this submission was placed on a
number of milestone decisions of this and other courts (for example,
Broekman v TCD Motors (Pty) Ltd
1949 (4) SA 418
(T); Grosvenor Motors
(Potchefstroom) Ltd v Douglas
1956 (3) SA 420
(A); Johaadien v
Stanley Porter (Paarl) (Pty) Ltd
1970 (1) SA 394
AD and Electrolux
(Pty) Ltd v Khota & another
1961 (4) SA 244
(W)) which precluded
an owner from vindicating on the basis of estoppel because they had
negligently entrusted to others possession
of their property with the
indicia of dominium or the jus disponendi.
[11]
In my view, these authorities do not
assist the appellant’s case. They are distinguished by the fact
that the owners had handed
their respective goods to dealers or
traders in the particular items who then dealt with the goods with
the owners’ consent
in such a manner as to proclaim that the
dominium or jus disponendi was vested in them. Here, the respondent
had no connection
whatsoever with the Cartique. The basis for holding
someone liable for holding out something is the image he conjured up
which
prompted the other party to react to his prejudice,
[5]
and if due to some new circumstance (in this case Amod’s fraud)
a new image is superimposed on the old one (in this case
Choonara’s
image of ownership which may have been created by the respondent’s
handing over the vehicle’s ‘trappings
of ownership’),
it is the new image to which the other party responds and on which he
relies; the original party can no longer
be held to it even if he
would otherwise have remained liable.
[6]
[12]
It is patently Choonara’s fraud upon the
Cartique’s owner, Mr Victor Miller, which induced the latter to
purchase the
vehicle. Significantly, Miller did nothing much to
interrogate the young Choonara’s suspiciously short period of
ownership
of the expensive vehicle other than to run a check on
whether it was not stolen, and that only after he had concluded the
sale.
It cannot be said by any stretch of the imagination that the
appellant took transfer of the vehicle by reason of any
representation
made by the respondent and nothing she did could have
caused him or the Cartique prejudice. The so-called ‘facilitation
theory’,
which is essentially what the appellant’s
counsel was urging us to apply, has no place in our jurisprudence; we
must adjudge
the matter by the ordinary general principles relating
to estoppel by negligence taking into account, of course, the
fraudulent
intervention of a third party.
[7]
The appellant therefore failed the first hurdle in the discharge of
his duty to establish a representation by the respondent and
his
reliance thereon which was the cause of his acting to his prejudice.
The appeal must, accordingly, fail.
[13]
In the result, the following order is
made:
The appeal is dismissed with costs.
MML MAYA
JUDGE OF APPEAL
APPEARANCES:
FOR APPELLANT:
L
HOLLANDER
DARRYL FURMAN & ASSOCIATES, ROSEBANK
MATSEPES INC, BLOEMFONTEIN
FOR RESPONDENT:
HD
BAER
TROLLIP COWLING & JANEKE, JOHANNESBURG
SYMINGTON & DE KOK,
BLOEMFONTEIN
[1]
In
his heads of argument the appellant indicated that the Sheriff
removed the vehicle from his possession after the dismissal
of his
appeal by the full court.
[2]
Under case number 90/6/2010. Amod was ultimately arrested in 2011 in
another province in connection with various theft
and fraud cases.
[3]
Laing v
S/A Milling Co. Ltd
1921 AD 387
at 395-6; Grosvenor Motors
(Potchefstroom) Ltd v Douglas
1956 (3) SA 420
(A) at 424G;
Lendalease Finance Ltd v Corp De Mercadeo Agricola 1976 (4) SA 464
(A) 489-90.
[4]
Oakland
Nominees (Pty) Ltd v Gelria Mining & Investment Co (Pty) Ltd
1976 (1) SA 441
(A) at 452A-G; Quenty’s Motors (Pty) Ltd v
Standard Credit Corporation Ltd
[1994] ZASCA 41
;
1994 (3) SA 188
at 198G- 199A.
[5]
Southern
Life Association Ltd v Byleveld NO
1989 (1) SA 496
at 505F-G.
[6]
Stellenbosch
Farmers’ Winery Ltd v Vlachos t/a The Liquor Den
2001 (3) SA
597
(SCA) para 18.
[7]
Stellenbosch
Farmers’ Winery Ltd v Vlachos t/a The Liquor Den para 17; OK
Bazaars (1929) Ltd v Universal Stores Ltd
1973 (2) SA 281
at
287H-288B.