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[2016] ZAGPPHC 77
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BSI Boiler & Steam Installations CC and Another v Executive Toys Commercial (Pty) Ltd and Another (6054/2016) [2016] ZAGPPHC 77 (12 February 2016)
IN
THE HIGH COURT OF SOUTH AFRICA
GAUTENG
DIVISION, PRETORIA
DATE
:
12 February 2016
CASE
NO
: 6054/2016
NOT
REPORTABLE
NOT
OF INTEREST TO OTHER JUDGES
REVISED
In
the matter between:
BSI
BOILER & STEAM INSTALLATIONS
CC
First
Applicant
ANDRIES
JACOBS
Second
Applicant
and
EXECUTIVE
TOYS COMMERCIAL (PTY)
LTD
First
Respondent
VAN
SITTERTS REGISTERED
AUDITORS
Second
Respondent
JUDGMENT
DAVIS
AJ
[1]
In this urgent application the Applicants apply for an order
safeguarding R1,1 million which the Applicants believed to be in
a
trust account operated by the First Respondents' auditors, the Second
Respondent. In part B of the applicants' notice of motion,
being the
"main application",
payment of this amount is
claimed.
[2]
How the disputed amount came to end up in the hands of the
Respondents, came about as follows:
2.1. The Applicants (being either the
First Applicant, represented by the Second Applicant or the Second
Applicant himself, being
a
"boilermaker from Kempton Parl<'
(as he is styled)) had purchased a certain motorhome from Vista
Motorhomes CC (or so they thought) for an amount of R920 334,00 in
October 2013.
2.2. Alleging that the motorhome was
defective, the sale was cancelled and the motorhome was returned and
a second motorhome was
purchased some 18 months later at the same
price.
2.3. Again being dissatisfied, the
Applicants placed the First Respondent in possession of the motorhome
with instructions to sell
it at a sale price of R1,1 million (I shall
return later to the relationship between Vista Motorhomes CC and the
First Respondent).
2.4. After an initial unsuccessful
sale, the First Respondent (being a dealer in luxury and exotic
vehicles) obtained a purchaser
for the motorhome at the stipulated
price.
2.5. By this time the First Respondent
had informed the Applicants that it needed the registration papers of
the vehicle.
2.6. In the meantime further the
purchaser, being anxious to obtain possession and use of the vehicle,
had transferred the cash
portion of the purchase price to a trust
account operated by the Second Respondent who shared the same banker.
2.7. I interpose to state that the
Applicants' agreement with the First Respondent was that the latter
would be entitled to whatever
profit it might raise above R1,1
million. In the end, it sold the vehicle for R1 260 175,44 (VAT
inclusive) of which R1 190 000,00
formed the cash portion, the
balance being made up by the trade-in of a certain Mazda Double-Cab
vehicle.
2.8. What prompted the dispute was
that the First Respondent had established that Vista Motorhomes CC
had financed the vehicle through
Wesbank in terms of which Wesbank
retained ownership until fully repaid in respect of its
"Bank
Installment Sale Agreement
and was registered as the titleholder
on the e-Natis registration documents of the vehicle. The Original
registration documents
were also held by Wesbank.
[3]
What happened thereafter in connection with the R1,1 million in
question, is the following:
3.1. The Second Respondent reported to
the Applicants as follows by way of a letter dated 19 January 2016:
"Re:
Vista 4
-
Mr Andries Jacobs
PROOF
OF FUNDS
We
hereby confirm that we hold an amount of R1 100 000,00 in our ABSA
CIPC Trust account on behalf of Mr Jacobs for the sale of
his Vista
Motorhome under instruction of Executive Toys (Pty) Ltd. Our
instruction further is to release this amount to Mr Jacobs
the moment
we receive the original certificate of registration of the respective
vehicle."
3.2. On 25 January 2016 the First
Respondent confirmed in a letter that it had sold the motorhome on
instructions of the Applicants
for the agreed price of R1.1 million.
It proceeded to state that it could not obtain the registration
documents from either the
Applicants or Vista Motorhomes. The First
Respondent then disclosed its intention to pay Wesbank directly the
amount due to it
on 8 February 2016 from the proceeds of the sale. It
claimed that this was the "standard procedure" in the
industry.
3.3. On 3 February 2016 the
Applicant's attorneys demanded payment of the R1.1 million by 12h00
on Friday 5 February 2016. It stated
the Applicants' case being the
instruction to the First Respondent to find a buyer at the agreed
price, to deliver the vehicle
to such buyer and to pay the agreed
price to the Applicants. The issue of documents and transfer of
ownership was stated to fall
outside the First Respondent's mandate.
3.4. In response, in a long and rather
scathing letter, the First Respondent erroneously states the legal
position to be that only
upon registration does the ownership of a
vehicle pass to the new owner. It goes on to suggest a voluntary
agreement to pay Wesbank
and pay the balance to the Applicants. It
questioned the Applicants' rights to have obtained the Vehicle from
Vista Motorhomes
but confirmed conversations with on Tienie
Schietekat of Vista Motorhomes regarding the direct payment of
Wesbank. It insisted
on a production of the Applicants' purchase
agreement with Vista motorhomes, a confirmation that Wesbank may be
paid and an indemnity
from both the Applicants and Vista Motorhomes
by Tuesday 9 February 2016 failing which, it intended to pay Wesbank
in any event.
3.5. On Thursday 4 February 2016, the
Respondents' attorneys stated in an e-mail that the purchaser of the
vehicle had every right
to demand the registration papers from the
First Respondent. It proposed (on instructions) that, if the
Applicants so desire, the
Respondents are prepared to pay the R1.1
million into the said attorney's trust account
"until the
matter is resolved' .
It requested proposals on how the Applicant
intended to indemnity its agent, the First Respondent.
3.6. At 13h51 on Friday 5 February
2016 the Applicants' attorneys gave notice of the Applicants'
intention to launch the urgent
application, which was done later that
day.
3.7. From the Respondents' answering
affidavit, it transpired that the Second Respondent had in the
meantime and prior to the launching
of the urgent application, paid
the funds over to the First Respondent and that the funds are no
longer held in any trust account.
3.8. In addition hereto, a picture of
a close relationship between the First Respondent and Vista
Motorhomes emerged. It transpired
that the first motorhome purchased
by the Applicants was in fact purchased not from Vista Motorhomes,
but from the First Respondent.
This appears from a written document
with a Vista Motorhome letterhead. The return of this vehicle, the
construction and sale of
the second vehicle to the Applicants (at the
same price) and the agreement thereto by the First Respondent is
reflected in a letter
from Vista Motorhomes to the First Respondent
bearing a virtually identical letterhead. During argument in court it
was conceded
that the First Respondent is indeed also an agent of
Vista Motorhomes. Various correspondences between these two parties
also emerged,
all relating to the second vehicle in question.
[4]
Against this backdrop, the Respondents' opposition to the urgent
application must be evaluated. It contends in its papers that
the
position is the following: Wesbank had retained ownership of the
vehicle through its financing of the vehicle to Vista Motorhomes,
the
latter could therefore not transfer ownership thereof to the
Applicants and neither could they in turn transfer ownership to
any
other person. The First Respondent had purchased the vehicle from the
Applicants and then on-sold it to its client, a certain
Mr Van der
Merwe. Should Wesbank exercise its rei vindicatio against Mr Van der
Merwe, a chain reaction of recoveries would have
to take place
between the various sellers and purchasers based on the implied
common law guarantees against eviction.
[5]
Whilst the legal position might be as the Respondents contend, it is
clear that the culprit in the scene is Vista Motorhomes,
an associate
of the First Respondent. There is also a dispute as to the terms of
the agreement between the Applicants and the First
Respondent with
the latter's version being in conflict with the prior correspondence
to which Ihave referred.
[6]
Despite this, the Respondents say the Applicants have no right to
attach the funds and referred me to extracts from the judgment
in
Fedsure Life Assurance v Worldwide African Investment Holdings
2003
(3) SA 268
WLD.
[7]
I had regard to the whole of the aforesaid judgment and find that in
the present application:
7.1. The Applicants have sufficiently
indicated a prima facie quasi- vindicatory right, even if open to
some doubt, to the earmarked
funds in question (Stern and Ruskin NO v
Appleson
1951 (3) SA 800
W).
7.2. As such, the Applicants need not
allege irreparable loss (see Fedsure-case supra at [27] and [28]) and
the issues of an anti-
dissipation interdict as referred to by the
Respondents with reference to Knox D'Arcy Ltd and others v Jamieson
and others
[1996] ZASCA 58
;
1996 (4) SA 348
(A) do not arise
7.3. Having regard to the principles
for interim interdicts as set out in the well-known case of Setiogelo
v Setlogelo
1914 AD 221
at 227 as expounded on in Eriksen Motors
(Welkom) Ltd v Protea Motors, Warrenton and Another
1973 (3) SA 685
A
at 691 C-G, and, in exercising the court's discretion in weighing up
the prejudice which the respective parties may suffer (also
referred
to as the balance of convenience), the earmarked funds, like any
species of property, should be interdicted.
[8]
Having reached the aforesaid conclusions, I am fairly convinced that
whatever prejudice the First Respondent may suffer will
be alleviated
if its associate, Vista Motorhomes or itself on behalf of Vista
Motorhomes, see to the payment of Wesbank, which
in turn will then
relinquish its ownership of the vehicle and the sought after
registration papers, thereby removing any reputational
risk to the
First Respondent and liability to its client, the ultimate purchaser.
There is no similar convenience available to
the Applicants which
would not leave them out of pocket.
[9]
I therefore make the following order:
1. The First Respondent is ordered to
pay the amount of R1.1 million into its attorney's trust account, to
be held pending finalisation
of the relief claimed by the Applicants
in part B of their notice of motion.
2. The amount may be invested in an
interest-bearing trust account.
3. For purposes of determining part B
of the notice of motion, the parties may supplement their respective
papers.
4. The liability for costs of this
application shall be determined at the hearing of aforementioned part
B of the application.
__________________________
N
DAVIS
ACTING
JUDGE OF THE HIGH COURT
Date
Heard: 11 February 2016
Counsel
for Applicant: Adv R Mastenbrok
Instructed
by: Fluxmans Attorneys
Counsel
for Respondent: Adv HF Oosthuizen SC
Instructed
by: Froneman, Roux & Streicher Attorneys
Date
of Judgment: 12 February 2016