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[2023] ZAECMKHC 89
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Zeda Car Leasing (Pty) Ltd t/a Avis Fleet Services v Fourie N.O and Others - Appeal (CA 136/2022) [2023] ZAECMKHC 89 (22 August 2023)
IN THE HIGH COURT OF
SOUTH AFRICA
(EASTERN CAPE
DIVISION, MAKHANDA)
Case No. CA 136/2022
Gqeberha District
Court Case No. 14415/2017
In
the matter between:
ZEDA
CAR LEASING (PTY) LTD
t/a
AVIS FLEET SERVICES
Appellant
and
COENIE
FOURIE N.O.
Respondents
JOHAN
ABRAHAM VAN HUYSETEEN N.O.
KYLA
JEAN FOURIE N.O.
(In
their capacities as Trustees of Algoa Bay Auto)
JUDGMENT
LAING J
[1]
This is an appeal against a decision of the
Gqeberha Magistrates’ Court. The court
a
quo
granted judgment against the
appellant in the amount of R 42,634 for damages arising from the sale
of a defective motor vehicle.
[2]
The appellant trades as Avis Fleet Services
(‘Avis’). The respondents are trustees for Algoa Bay
Auto, which acquires
motor vehicles for re-sale to the public. An
outline of the parties’ respective cases follows.
Algoa Bay Auto’s
case
[3]
The respondents pleaded that they purchased
a Nissan NP 200 motor vehicle (‘the vehicle’) from Avis
on 13 April 2017
at Gqeberha. This was done in response to an online
advertisement. The purchase price was R 112,300.
[4]
They alleged that they relied on the
following representations: the vehicle was a 2016 model and still
covered by a full warranty;
the last service had been carried out
after 74,625 kilometres; the odometer reading at the time of purchase
was 79,488 kilometres;
and repairs limited to the value of R 13,190
would be needed. They later sold the vehicle to a third party.
[5]
Subsequently, pleaded the respondents, the
vehicle suffered a major breakdown because of a material defect in
the radiator. A complete
engine replacement was necessary. The
respondents alleged that Avis had been aware of the defect at the
time of the purchase, as
apparent from a service invoice, but had
failed to repair the radiator, alternatively had failed to inform the
respondents.
[6]
The respondents claimed damages in the
amount of R 42,634. This comprised the sum of the actual costs of
repair and a further amount
refunded to the third party because of
the non-disclosed defect.
Avis’s case
[7]
Avis admitted that the respondents had
purchased the vehicle. It went on to plead that Algoa Bay Auto was a
registered user of an
online auction facility called TradersOnline.
By placing an online bid for the vehicle, the respondents had bound
themselves to
certain terms and conditions. These included the
following: the purchase of a motor vehicle was done entirely at the
respondents’
risk; ownership and risk passed from Avis to the
respondents once full payment had been made; a motor vehicle was sold
voetstoots
and Avis accepted no liability for any patent or latent defects.
[8]
The respondents, alleged Avis, were aware
at the time of the purchase that the vehicle needed repairs to the
value of R 13,190.
They were also aware that provision had to be made
for unforeseen repairs in the amount of R 6,000. Avis pleaded that
the respondents
had purchased the vehicle
voetstoots
and had acknowledged that they were satisfied with the condition of
the vehicle.
[9]
In relation to the service invoice, Avis
pleaded that it had not been in possession of the vehicle at the
time. It had been in the
possession of ADT Security (‘ADT’),
which had taken the vehicle to Nissan Eastern Cape (‘Nissan’)
for its
75,000-kilometre service. Avis, consequently, had had no
knowledge of the defect and had subsequently deemed it to be
roadworthy.
It denied that it was indebted to the respondents.
In the court
a quo
[10]
The matter went to trial. The first
respondent, Mr Coenie Fourie, testified in his capacity as a trustee
for Algoa Bay Auto. The
respondents also presented the evidence of
the service manager at Nissan, Mr George Skorbinski. At the
conclusion of the respondents’
case, Avis applied
unsuccessfully for absolution from the instance.
[11]
Avis proceeded to lead the evidence of a
number of witnesses: a supervisor at the company, Mr Gideon
Labuschagne, who was also responsible
for the inspection of motor
vehicles that Avis leased out; a roadworthiness examiner at Dekra
Auto Motors (‘Dekra’),
Mr Abrie Brookman; a creditors
clerk at Avis’s offices, Ms Karen Putter; a general manager at
one of Avis’s divisions,
Mr Wayne Bartley; a costing manager in
Avis’s Finance Department, Ms Gerda Smith; and a manager at
Avis’s Call Centre,
Mr Imtiaz Shiralie.
[12]
The magistrate found, at the conclusion of
the trial, that the defect with the radiator had been identified
during the 75,000-kilometre
service. This had been communicated to
Avis on 13 February 2017. The defect had been present at the time of
the sale of the vehicle
to the respondents, who would not have gone
ahead with the purchase had they had known about it. Avis had been
under a duty to
disclose the defect to the respondents. It never did
so. The magistrate found, consequently, that Avis had acted
fraudulently by
deliberately concealing it.
[13]
In the circumstances, the court
a
quo
was satisfied that the respondents
had proved their case. It awarded damages, as claimed.
Basis of appeal
[14]
Avis has appealed against the whole of the
judgment and order of the court
a quo
.
It has listed numerous grounds as the basis for its appeal, the most
pertinent of which being set out below.
[15]
It is contended that the court erred in
fact and in law by failing to attach weight to the absence of
evidence that Avis was contacted
telephonically on 9 February 2017
about the defect with the radiator, that the service invoice had been
addressed and submitted
to ADT, and that Mr Skorbinsky had not been
directly involved in the service itself.
[16]
Avis contends, too, that the court erred by
holding that a warning on the service invoice that the vehicle should
not be driven
was intended for Avis rather than ADT, and by failing
to attach weight to the evidence that Avis had sent the vehicle to an
independent
company, Dekra, which had found no defect.
[17]
The court also erred, contends Avis, by
failing to hold that the office responsible for authorising the sale
of the vehicle was
separate to that which held the information about
the defect with the radiator, that the vehicle was driven for a
further 6,000
kilometres after 9 February 2017 without damage to the
engine, and that it was possible that ADT had arranged for the repair
of
the radiator but not with the assistance of Nissan.
[18]
Avis goes on to contend that the court
erred by failing to attach weight to the evidence that it was
unreasonable to have expected
Avis to have become aware of the defect
because of an email sent by Nissan to an administrative clerk at
Avis’s offices when
the established procedure was for repair
authorisations to have been communicated to technical staff in Avis’s
Maintenance
Department. It also erred by failing to attach weight to
the absence of evidence that any of Avis’s employees who saw
the
service invoice breached a duty to report the defect to Mr
Labuschagne or any other senior manager.
[19]
A further ground of the appeal is that the
court
a quo
incorrectly conflated the tests for negligence and
dolus
and failed to find that Avis was unaware of the defect at the time of
the sale. The court, argues Avis, should have held, too,
that Avis
did not deliberately conceal the defect and that any
misrepresentation about the condition of the radiator was innocent.
[20]
Finally, Avis asserts that the court erred
in holding that the respondents were entitled to the payment of any
damages, and in not
holding that Avis was entitled to its costs,
including those of counsel, at twice the tariff for the Magistrates’
Court.
[21]
The respondents have opposed the appeal.
There is no cross-appeal.
Issues to be decided
[22]
Counsel for the parties were
ad
idem
that the following issues require
determination: (a) whether the vehicle was defective at the time of
sale; and (b) whether Avis
deliberately concealed or misrepresented
the nature of the defect to defraud the respondents. To these, Avis
has added a further
issue, viz. whether it is entitled to costs at a
higher tariff if its appeal succeeds.
[23]
The determination of (a), above, amounts to
an investigation into whether the court
a
quo
arrived at a correct finding on the
facts. If the finding ought to have been that the vehicle was not
defective, then
caedit questio
,
that is the end of the matter. Conversely, if the finding was
correct, then the determination of (b) entails an enquiry into
whether the court
a quo
should have held that there was no deliberate concealment or
misrepresentation with the intention to defraud. This amounts chiefly
to a legal enquiry.
[24]
For immediate purposes, it may be helpful
to commence with the legal enquiry. Before doing so, however, the
relevant principles
must be identified.
Legal framework
[25]
A
contract of sale lies at the heart of the matter. Broadly speaking, a
seller has a common law obligation to,
inter
alia
,
warrant that the subject of the sale is fit for use and to warrant
that there are no latent defects.
[1]
A redhibitory action for rescission of the contract and the
actio
quanti minoris
for a reduction of the price are available to the buyer when the
seller fails to comply with his or her obligations.
[2]
The erstwhile Appellate Division confirmed, in
Phame
(Pty) Ltd v Paizes
,
[3]
that the warranty against latent defects imposes liability on the
seller in terms of the Aedilitian actions where the subject of
the
sale was defective, irrespective of whether or not the seller knew of
such defect at the time.
[4]
[26]
A
seller may, nonetheless, contract out of a warranty against latent
defects, as confirmed by the Appellate Division in
Van
der Merwe v Meades
,
[5]
relying on Roman-Dutch authorities.
[6]
The contractual exclusion is usually referred to as a
voetstoots
clause. Importantly, it does not protect the seller against fraud.
[7]
To prevent the seller from relying on a
voetstoots
clause, the buyer must prove that the seller was aware of the defect
at the time and deliberately concealed it from the buyer.
[8]
[27]
The above principles comprise a basic
framework for the legal enquiry that follows in the paragraphs below.
Application of
principles to the facts
[28]
The material facts of the matter, as
evident from the record, are set out below. The relevant principles
will then be applied thereto.
Material facts
[29]
It was common cause that Avis relied on a
voetstoots
clause to escape liability for any latent defect that there may have
been in the vehicle. The clause in question stated:
‘
5.2
Save for the warranties, undertakings and representations made in
this agreement the vehicle/s
have been inspected by the buyer and are
sold voetstoots and subject to any manufacturers warranties which may
still be applicable
to the vehicle and the seller accepts no
liability for any patent or latent defects in the vehicle.’
[30]
The respondents, in turn, based their case
to a large extent on the contents of a tax invoice sent by Nissan to
Avis’s offices
in Isando. At the foot of the first page of the
document, under the heading, ‘Invoice Report’, appeared
the following:
‘
Next
service 90,000 km
Report
***
Radiator to be replaced ***’
Towards the top of the
second page of the same document, directly underneath the addresses
for Avis and ADT, respectively, appeared
the following:
‘
Water
level
[9]
very low- suggest vehicle not be driven- can overheat’
[31]
It
was not disputed that Avis had leased the vehicle to ADT, which had
taken it to Nissan for a 75,000-kilometre service. The respondents’
witness, Mr Skorbinski, testified that Nissan detected a leak in the
radiator, which was communicated to the relevant employee
at ADT.
[10]
The issue was recorded on the invoice. When asked why, Mr Skorbinski
responded that:
‘
Because
we have made the customer aware at that stage and they requested that
they will take the vehicle away and repair it on their
own. So, I can
give you a bit of background on ADT, is that when their vehicles had
damage, we barely fix damage vehicles. They
would take them away and
fix damaged vehicles on their own.’
[11]
[32]
Mr Skorbinski went on to state:
‘…
What
I was trying to imply is that 99% of… when their [ADT’s]
vehicles are accident related or damaged, they do not
repair it with
Nissan…’
[12]
[33]
The following exchange illustrates the
nature of the relationship between Nissan and ADT, and Nissan and
Avis, respectively:
‘
MR
LAMBRECHTS:
Sir,
you indicated that you would have informed the ADT person of the
issue of the radiator and that it should not be driven.
Of course,
this warning also forms part of the report, part of the invoice.
So, how would Avis be aware of this radiator
leak?
MR SKORBINSKI:
Well,
like I said, if we do find anything untoward on a service which
requires additional work, we put it on the invoice,
on the report
section, and I am not sure from Avis’s side who checks the
invoices or… I am not sure.
MR LAMBRECHTS:
Alright,
then as you said, invoices would have been emailed to Avis for
payment?
MR SKORBINSKI:
Ja
,
that is it.
MR LAMBRECHTS:
That
includes the report that the radiator needs to be replaced?
MR
SKORBINSKI:
That
is it.’
[13]
[34]
It is clear from the record that Nissan
sent the invoice to Avis more for payment than for reporting the leak
in the radiator. That
issue was chiefly for ADT’s attention. It
is also evident that Nissan’s only communication of the issue
to Avis was
by way of the invoice. This appears from the questions
put to Mr Skorbinski by the court
a quo
:
‘
COURT:
Any
repairs made to the radiator from the date it was communicated to
ADT?
MR SKORBINSKI:
No,
we did not carry out any repairs on the radiator.
COURT:
Okay.
Was there any way that would make Avis to be aware of the damage
that needed to be attended to for the motor vehicle?
MR
SKORBINSKI:
Only
on the invoice.’
[14]
[35]
The route followed by the invoice from the
time that it was sent to Avis until the time of payment was also not
in dispute. Ms Putter
testified that, on 13 February 2017, she
received an email from Nissan to which copies of invoices were
attached, including the
invoice in question. She was responsible for
the management of Nissan’s account. She sent the invoices to
Avis’s Scanning
Department, where they were loaded onto the
company’s document management system, using Laserfiche
software. Ms Putter was
one of 12 creditors clerks who received
between 40,000 and 50,000 invoices per month. This made the digital
storage of information
necessary, rather than rely on printed copies.
She stated that she was required to reconcile the invoices received
with the statements
that would be prepared for various creditors,
including Nissan. The actual payment of invoices was done by Avis’s
Finance
Department, where costing clerks were responsible for
verifying the actual amounts claimed for any motor vehicle, using the
summarised
information that was stored on the main server, running AS
400 software.
[36]
Ms Putter testified, importantly, that the
first time that she became aware of Nissan’s comments in
relation to the service
carried out on the vehicle was when she was
contacted, on 12 June 2017, by Avis’s supervisor in Gqeberha,
Mr Labuschagne.
The record plainly shows that Ms Putter had nothing
to do with any repairs that may have been required. She explained
this while
under cross-examination:
‘
MR
LAMBRECHTS:
Now
who would communicate at Avis if there is further work that is
required on a vehicle?
MS PUTTER:
A
dealer will go back to our Authorisations [Department]. And for
each and every service, for each and every mishap on a vehicle
or
whatever the fault might be, they know that they always have to
phone Authorisations… and we will allocate authorisation
for that… order number. And based on the order number they
will repair the vehicles.
MR LAMBRECHTS:
So,
Avis would be aware that further work is needed and they would
then give the green light for the further work. Am I correct
I
saying that?
MS
PUTTER:
I
cannot confirm that. I am not a technical person and neither do I
work in Authorisations, so I do not know.’
[15]
[37]
According to Ms Putter’s evidence, it
was incumbent on Nissan to have contacted Avis’s Authorisations
Department for
purposes of reporting an issue. Ms Putter was simply
responsible for managing a limited aspect of the accounting involved
for the
vast number of monthly invoices that Avis received from
creditors.
[38]
The above arrangement was confirmed by Mr
Bartley, who testified that the purpose for which a dealership such
as Nissan sent an
invoice to Avis was purely to receive payment.
There were no technical staff involved in the payment process. He
also stated that
when Nissan contacted Avis for authorisation to
carry out a service, the relevant staff in the Authorisations
Department would
record the request on Avis’s AS 400 system.
The staff would verify that the request was in accordance with the
manufacturer’s
requirements before issuing an order for the
service to proceed, which would also be captured on the system. Only
a summary of
the service would be recorded, not the actual details
thereof, for which the invoice itself would be required. The invoice
was
not loaded onto the system.
[39]
Mr Bartley pointed out, too, that not all
staff had access to the AS 400 system. This was for security reasons,
to protect the information
held by Avis. Similarly, not all staff had
access to the Laserfiche document management system because of the
considerable electronic
bandwidth that would be needed to accommodate
the many thousands of monthly invoices that Avis received. The
company had, at the
time that the dispute arose, more than 20,000
motor vehicles under its ownership and a further 100,000 that it
managed. Mr Bartley
was adamant that an employee responsible for the
sale of an Avis motor vehicle would only be able to obtain a summary
of its service
history from the AS 400 system, he or she would not
have direct access to any invoice issued in relation thereto.
[40]
The following exchange between the court
a
quo
and Mr Bartley is pertinent:
‘
COURT:
Is
there any way that those who have access to the information would
not have known the defects on the motor vehicle? That
were pointed
out by Nissan Eastern Cape…?
MR
BARTLEY:
Ja
,
there is no way that the used car department would know about
information recorded on an invoice and not communicated to
anybody… I do not think the maintenance department even
knew about that. And just on that, if… somebody knew
about
that defect, I mean that defect… is really not an expensive
repair, it is a few hundred rands, it is not…
something
that you want to hide from anybody. If you knew about it, you
would get it repaired or you would make a statement
on it. It is
not an expensive repair, it is like… leaving the oil plug
of the… engine, it is not an expensive
repair, but it can
have catastrophic consequences…’
[16]
[41]
It is very apparent that if Nissan had
wished to bring the defective radiator to the proper attention of
Avis, then it would not
have done so by way of an invoice sent to a
creditors clerk. The evidence of Mr Bartley was that the issue, had
it been seen in
time, could have been dealt with quickly and at very
little expense. There would have been no reason to have concealed it.
[42]
The costing manager, Ms Smith, corroborated
the testimonies of Ms Putter and Mr Bartley regarding the procedure
that was followed.
A capturing team was responsible for capturing the
details contained in the invoices received. A costing team then
compared the
invoice details with the order details captured by an
authorisation team in relation to the repairs or other work so
authorised.
If the invoice details tallied with the order details,
then a finance team would attend to payment.
[43]
The actual repairs to a motor vehicle,
requested by a dealership such as Nissan, were authorised by the
relevant employee in Avis’s
Authorisations Department. The
manager involved at the time, Mr Shiralie, indicated that Avis’s
records showed, in relation
to the vehicle, that Nissan had only
requested authorisation to carry out a 75,000-kilometre service and
to replace a light bulb.
Significantly, requests and authorisations
for repairs were all conducted telephonically. Mr Shiralie made this
clear during cross-examination:
‘
MR
LAMBRECHTS:
…
So
then, Avis was then aware of the radiator when the job card was
done and then when the invoice was presented?
MR SHIRALIE:
No.
MR LAMBRECHTS:
Why
do you say that?
MR SHIRALIE:
This
[was] only brought to my attention on the 15
th
of June
[2017].
MR LAMBRECHTS:
All
right. Remember my question, sir?
MR SHIRALIE:
Yes.
MR LAMBRECHTS:
I
said that Avis was aware. So, I said Avis was aware of the job
card…
MR SHIRALIE:
No.
MR LAMBRECHTS:
You
disagree with that?
MR SHIRALIE:
I
mean, sorry, at what period?
MR LAMBRECHTS:
Well,
when the job card would be created.
MR SHIRALIE:
That
will be on the day of the service, so we were not aware of it.
MR LAMBRECHTS:
If
a dealership informs you or they do not ask for authorisation, but
they can see that a part might need to be replaced.
How would they
inform you of, of such a situation?
MR SHIRALIE:
So,
they would call in to us and tell us that we [are] either doing a
warranty on this vehicle and this is the part that is
going to be
replaced. So, we would capture it on our system as a history.
MR LAMBRECHTS:
All
right. And…
COURT:
Please,
just a minute. What was your question?
MR LAMBRECHTS:
Your
worship, my question would be, if they were not going to do
repairs at that time and they would highlight an issue, how
would
they inform Avis of, of such an operation?
COURT:
Mm.
MR SHIRALIE:
They
will, they will call us and inform us and we will put it on our
system as a remark or reminder.
MR LAMBRECHTS:
Or
they could make comments on, on the invoices?
MR SHIRALIE:
The
invoices…
MR LAMBRECHTS:
Do
you agree?
MR
SHIRALIE:
We
do not see the invoices, so, if they put it on there, we are not
going to know about it.’
[17]
[44]
The procedure for carrying out repairs to a
motor vehicle entailed direct contact by telephone between the
dealership and the relevant
Avis employee at the Authorisations
Department. It did not involve communication by invoice. Mr Shiralie
also confirmed that Avis’s
AS 400 system only captured the
details of what was required to be authorised, it did not capture
what was reflected on the dealership’s
job card. That stayed
with the dealership in question.
[45]
Avis’s supervisor in Gqeberha, Mr
Labuschagne, inspected the vehicle on 22 March 2017 after the lease
with ADT had expired.
He testified that he had checked the radiator
and seen that the water level was ‘good’ and that there
had seemed to
be nothing wrong. A roadworthiness examiner at Dekra,
Mr Brookman, tested the vehicle on 23 March 2017. He stated that he
had not
noticed any water leaks or cracks in the radiator. Mr
Labuschagne loaded the vehicle details onto the online auction
facility,
TradersOnline, on 11 April 2017, at the instruction of
Avis’s national terminations manager, Mr Peet Strydom. No
history
of the vehicle was provided.
[46]
The first respondent purchased the vehicle
on 12 April 2017. There was no evidence that any employee of Avis was
aware, at the time,
that the radiator was defective.
The legal enquiry in
relation to the material facts
[47]
For
the respondents to have succeeded in their claim, they were required
to have proved that Avis not only had knowledge of the
defective
radiator but that the company also deliberately concealed it. As the
Appellate Division, in
Van
der Merwe v Meades
,
[18]
found, the buyer must prove that the seller, firstly, was aware of
the defect in the
merx
and, secondly,
dolo
malo
concealed its existence from the buyer with the intention of
defrauding him or her.
[19]
This was subsequently discussed in
Simon
NO and others v Mitsui and Co Ltd and others
,
[20]
where Wunsch J observed as follows:
‘
A
person who colludes with the company’s officers fraudulently to
obtain credit or a creditor which accepts payment knowing
that the
money had been procured fraudulently for the very purpose of paying
it could knowingly be a party to the carrying on of
the business to
with intent to defraud… “Knowingly” means having
actual knowledge or having knowledge in the
form of
dolus
eventualis
,
which in the present context means that a party will be held to have
knowledge if he or she subjectively foresaw the reasonable
or real
possibility that conduct or a course of conduct would result in a
preference or prejudice… and reconciled himself
or herself to
the fact, that he or she nevertheless pursued the conduct or allowed
it to be pursued when he or she could have prevented
it. If a person
has a suspicion that something unlawful is happening and deliberately
shuts his or her eyes to what is going on,
he or she is knowing…’
[21]
[48]
It is not enough for Avis merely to have
been aware of the defect. Avis must also have hidden it from the
respondents, knowing that
they could well have suffered injury or
harm, in the broad legal sense, because of such conduct.
[49]
This
raises, in turn, the question of what would constitute knowledge on
the part of Avis as a juristic person. The subject was
considered in
Anderson
Shipping (Pty) Ltd v Guardian National Insurance Co Limited
,
[22]
where the Appellate Division dealt with the question of whether the
appellant, a private company, had actual or constructive knowledge
of
the facts of a matter. Nicholas AJA held:
‘
Being
a corporation, Anderson does not have a mind, and hence cannot itself
have knowledge. The knowledge of a company can only
be the knowledge
of the “directors and managers who represent the directing mind
and will of the company, and control what
it does”…
[23]
Subordinates, who merely carry out orders from above, do not speak
and act as the company and do not represent the “directing
mind
and will of the company”…
[24]
Their knowledge is not
per
se
the knowledge of the company.’
[25]
[50]
The
law treats the act or state of mind of anyone who represents and
controls a company as the act or state of mind of the company
itself.
[26]
However, as Wunsch
J remarked in
Simon
NO and others v Mitsui and Co Ltd and others
,
it
is a condition of liability for a person with knowledge that he or
she was a party to the carrying on of the business. On this
basis, a
person is not aware of a fact merely because his or her employee or
agent has knowledge thereof.
[27]
[51]
In
the present matter, there is no evidence at all that any of Avis’s
directors was aware of the defect. There is, moreover,
no evidence
that any of its employees was aware. This stands to reason. Nissan’s
reporting of the defect in the radiator
of the vehicle was confined
to two single-line entries on separate pages of an invoice sent to a
creditors clerk at Avis’s
offices in Isando. Ms Putter’s
responsibility was to manage Nissan’s account and to reconcile
the invoice details with
the statement issued in due course. She had
absolutely nothing to do with any repairs that were necessary. The
same could be said
of the relevant employees attached to the
capturing, costing, and finance teams. The invoice was one of 40,000
to 50,000 invoices
that Avis received each month in relation to its
fleet of more than 120,000 motor vehicles. This was a tiny needle in
a very large
haystack. Its location and any access thereto were
restricted to the Laserfiche document management system, not the more
extensive
AS 400 database. Even if an employee involved in the
accounting process had become aware of the issue, then the decision
in
Trucar
Finance & Acceptance Corporation Ltd v Jones’ Garage &
Service Station
is authority for the principle that such knowledge cannot, by
representation, be ascribed to Avis itself.
[28]
[52]
Had it indeed been Nissan’s intention
to bring the issue to the proper attention of Avis, then it would not
have relied on
an invoice but would rather have contacted the
Authorisations Department directly, by telephone. The record
indicates that Nissan
sent the invoice to Avis for payment, not
reporting purposes. Mention of the defect was intended for Nissan’s
customer, ADT.
This was the party that brought the vehicle to Nissan
for its 75,000-kilometre service and which continued using it
afterwards.
Mr Skorbinski’s evidence was to the effect that,
for ‘99%’ of the time, ADT made its own arrangements for
any
repair work required, instead of leaving this to Nissan and (by
implication) Avis.
[53]
Counsel
for the respondents criticised Avis’s indication that the
vehicle had previously been involved in an accident, as
apparent from
the details listed on the TradersOnline auction facility. The
evidence had been that this was done as a matter of
course, to
protect Avis against possible liability if the opposite was stated
but subsequently found to be untrue. Counsel referred
to the Supreme
Court of Appeal decision in
Odendaal
v Ferraris
,
[29]
where Cachalia JA held:
‘
Where
a seller recklessly tells a half-truth or knows the facts but does
not reveal them because he or she has not bothered to consider
their
significance, this may also amount to fraud.’
[30]
[54]
In that regard, counsel contended that
Avis’s indication that all its motor vehicles had been involved
in accidents was an
attempt to escape its duty to inspect each motor
vehicle properly before selling it to a buyer. This brought its
conduct within
the ambit of fraud, as contemplated in
Odendaal
.
[55]
Cachalia
JA went on to observe, however, that fraud will not lightly be
inferred. The allegation had to be clearly pleaded and the
facts upon
which the inference was sought to be drawn had to be succinctly
stated.
[31]
The respondents
never pleaded this. The argument seems to have emerged much later. In
any event, it fails to address the evidence
that Avis simply had no
knowledge, at the time, of the defective radiator or any other fact
that could have converted its description
of the vehicle to a
half-truth or that ought to have triggered a proper consideration of
the significance thereof.
[56]
A
related argument relied on the decision of in
Knight
v Trollip
,
[32]
where Selke J held that a seller may be held liable where he or she
‘designedly concealed’ the existence of a defect
from the
purchaser or where he or she ‘craftily refrained’ from
informing the purchaser of its existence.
[33]
Counsel asserted that the manner in which Avis had implemented its
document management system and its AS 400 database was such
as to
have given rise to the conduct described above. In other words, Avis
permitted any reporting of the defect to remain buried
within the
vast collection of invoices stored on its Laserfiche software. The AS
400 database, as comprehensive as it was, contained
only a summary of
the details on an invoice and did not allow access by all employees.
[57]
The argument is not persuasive. The
evidence regarding the substantial volume of monthly invoices
received, the sizeable fleet of
motor vehicles owned or managed by
Avis, as well as considerations of available electronic bandwidth and
security imperatives,
explain the organisational structures and
systems that that had been established.
[58]
In
Knight
,
Selke J went on to state as follows:
‘
In
such circumstances, his liability is contingent on his having behaved
in a way which amounts to a fraud on the purchaser, and
it would thus
seem to follow that, in order that the purchaser may make him liable
for such defects, the purchaser must show directly
or by inference,
that the seller actually knew. In general, ignorance due to mere
negligence or ineptitude is not, in such a case
equivalent to
fraud.’
[34]
[59]
The fact that the report on the defect in
the radiator never came to Avis’s attention may give rise to
the suggestion of negligence
but it fails to cross the threshold of
fraud. There was simply no evidence that Avis ‘designedly
concealed’ the defect
or ‘craftily refrained’ from
telling the respondents.
[60]
Counsel
for the respondents also relied on
Connock’s
(SA) Motor Co Ltd v Sentraal Westelike Ko-operatiewe Maatskappy
Bpk
[35]
and the more recent case of
Minister
of Water Affairs and Forestry and others v Durr and others
[36]
to contend, as far as the argument is understood, that ADT had acted
as the agent of Avis when delivering the vehicle to Nissan
for its
75,000-kilometre service. Any information about the defect conveyed
to ADT could, in turn, be imputed to its principal,
Avis.
[61]
Aside from the absence of evidence to
support any suggestion of a principal-agent relationship, as opposed
to one involving a lessor
and a lessee, the necessary facts and
argument were never pleaded. Nothing turns on the point.
Relief and order
[62]
The court is satisfied that the evidence
demonstrates that the respondents failed to prevent Avis from relying
on the
voetstoots
clause. There was no proof that Avis was ever aware of the defect in
the radiator at the time of the sale of the vehicle and that
it
concealed its existence from the respondents. The court
a
quo
misdirected itself in finding
otherwise.
[63]
It is unnecessary, for obvious reasons, to
determine whether the vehicle was defective at the time of the sale.
The respondents
failed to prove fraud.
[64]
The only remaining issue is that of costs.
Counsel for Avis asserted that it was entitled thereto at a higher
tariff. The provisions
of Magistrates’ Court rule 33(8) provide
that:
‘
The
court may on request made at or immediately after the giving of
judgment in any contested action or application in which–
(a)
is involved any difficult question of law
or of fact; or
(b)
…
(c)
…
(d)
…
award costs on any scale
higher than that on which the costs of the action would otherwise be
taxable: Provided that the court may
give direction as to the manner
of taxation of such costs as may be necessary.’
[65]
This was undoubtedly a matter involving
difficult questions of law and fact. The outcome of the matter was,
moreover, especially
significant for the parties since it would have
a bearing on the conditions of sale for motor vehicles advertised by
Avis on an
online auction facility such as TradersOnline and would
affect the extent to which the respondents would continue to rely on
such
facility for their purchases. The court is persuaded that the
court
a quo
misdirected itself in not applying rule 33(8).
[66]
In the circumstances, it is ordered that:
(a)
the appeal succeeds with costs;
(b)
the order of the court
a
quo
is set aside and replaced with the
following:
(i)
the plaintiff’s claim is dismissed;
and
(ii)
the plaintiff is directed to pay the
defendant’s taxed party and party costs, including counsel’s
fees in amounts not
higher than twice the amounts set out in the
relevant tariff contained in Part IV of Table A to Annexure 2 of the
Magistrates’
Court rules.
JGA LAING
JUDGE OF THE HIGH
COURT
I agree.
M GWALA
JUDGE OF THE HIGH
COURT (ACTING)
APPEARANCE
For
the appellant:
Adv
Kroon, instructed by Poswa Inc. Attorneys, Sandton c/o Wheeldon
Rushmere & Cole Inc., Makhanda.
For
the respondent:
Adv
Lambrechs, instructed by Friedman Scheckter Attorneys c/o
Netteltons Attorneys, Makhanda.
Date
of hearing:
26
May 2023
Date
delivered:
22
August 2023
[1]
AJ Kerr, ‘Sale’, in
LAWSA
(vol 36, 3ed, updated to 31 July 2021), at paragraph 267.
[2]
RH Zulman and H Dicks,
Norman’s
Law of Purchase and Sale in South Africa
(LexisNexis, 6ed, 2017), at 193. The remedies are loosely referred
to as the Aedilitian actions.
[3]
1973
(3) SA 397 (A).
[4]
At 416H.
[5]
1991
(2) SA 1 (A).
[6]
At 4F-G.
[7]
Bosman
Bros v Van Niekerk
1928 CPD 67.
[8]
AJ Kerr, see n1 above, at paragraph 297.
[9]
The original word used was ‘lever’, but Mr Skorbinski
testified that this was a typographical error.
[10]
The record indicates that Mr Skorbinski referred to an ‘ADT
controller’. His or her name, title and responsibilities
are
not apparent.
[11]
Sic. At vol 9 (supplementary record), p 768, lines 13-18.
[12]
Op cit, p 769, line 25, to p 770, lines 1-2.
[13]
Op
cit, p 774, lines 14-25, to p 775, lines 1-3.
[14]
At vol 4, p 318, lines 9-16.
[15]
At
vol 6, p 559, lines 17-25, to p 560, lines 1-5.
[16]
At vol 7, p 636, lines 12-25, to p 637, lines 1-4.
[17]
Op
cit, p 656, line 11, to p 658, line 2.
[18]
See n 5 above.
[19]
At 8E-F.
[20]
1997 (2) SA 475 (WLD).
[21]
At 526 B-D. See, too,
Frankel
Pollak Vinderine Inc v Stanton NO
2000 (1) SA 425
(WLD), at 439H-J, 440D-I, and 443G-H.
[22]
1987 (3) SA 506 (AD).
[23]
The Appellate Division referred to,
inter
alia
,
the English authority of
HL
Bolton (Engineering) Co Ltd v Graham & Sons Ltd
[1957] 1 QB 159
, at 172.
[24]
Tesco
Supermarkets v Nattras
[1971] UKHL 1
;
1972 AC 153
(HL), at 170-1.
[25]
At 515H – 516A.
[26]
Joubert (ed),
LAWSA
(vol 4, part 1, first reissue), at paragraph 55, referred to in
Simon
NO and others v Mitsui and Co Ltd and others
,
n 20 above, at 530A-B.
[27]
Op cit, at 526E-F.
[28]
1963 (1) SA 588 (T).
[29]
2009 (4) SA 313 (SCA).
[30]
At paragraph [29].
[31]
Ibid.
[32]
1948 (3) SA 1009 (D).
[33]
At 1013.
[34]
Ibid.
[35]
1964 (2) SA 47 (T).
[36]
2006 (6) SA 587
(SCA).