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[2008] ZAWCHC 292
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SA Taxi Securitisation (Pty) Ltd v Yuong (10249/2008, 9559/2008, 8115/2008) [2008] ZAWCHC 292 (14 November 2008)
JUDGMENT
IN
THE HIGH COURT OF SOUTH AFRICA
(CAPE OF GOOD HOPE PROVINCIAL
DIVISION)
CASE
NO
:
10249/2008
& 9559/2008 & 8115/2008
DATE
:
14
NOVEMBER 2008
In
the
matter
between:
S
A TAXI
SECURITISATION
(
PTYl
LIMITED
Applicant
and
H
W YUONG
Respondent
JUDGMENT
GAUNTLETT,
AJ
By
agreement, this judgment and the orders I shall make apply
mutatis
mutandis
to
case numbers 8115/08, 10249/98, and 9554/08. t have been invited to
address these matters on the bases of the facts in 811 5/08
only.
The
applicant is a registered credit provider under the National Credit
Act, 34 of 2005 (The NCA"), and the lessor of the taxi
vehide to
the respondent. The respondent is a taxi operator, who operates two
other taxis which evidently do not fall within the
ambit of this
application.
The
applicant is purported to cancel the credit transaction/lease
agreement by virtue of what it says are breaches by the respondent.
The respondent denies the validity of the cancellation. The issue
raised by this application is whether the applicant is entitled
to an
interim interdict directing the respondent to deliver to it the
vehicle which is the subject of the agreement, for its preservation
pendente
the
trial action relating to the cancellation. The parties accept that
the determination of the latter may take a considerable period;
it is
suggested that this may be as long as two years, which may perhaps be
overstating It somewhat but clearly they are correct
in the general
approach that a determination, even a first instance, of a trial
action of this kind, may endure for many months.
To
succeed in this application for interim relief the applicant is
required to establish a
prima
facie
right,
a reasonable apprehension of irreparable harm if it is not granted, a
balance of convenience in its favour, and no alternative
remedy
adequate in the circumstances.
In
oral argument, counsel for the respondent ultimately acknowledged
that on the papers the applicant has established that it is
the owner
of the vehicle and the party with which the respondent contracted in
terms of the admitted agreement. Respondent however
contends that the
applicant has not established a
prima
facie
right
in respect of cancellation, and therefore the return of the vehicle.
Respondent also argues that the other
essentiatia
for
an interim interdict are not present.
The
NCA contains no provision like section 17(2) of the Credit Agreements
Act, 75 of 1980, which gave a court specific statutory
authority,
pending the outcome of an action, to make an order regarding the
interim custody of the goods in issue. Section 129(3)
(b) and 129(4)
(a) in contrast make express reference to an Interim attachment
order. It was not argued for the respondent, and
in my view correctly
so
r
that absent express statutory authority under the NCA, the court
lacks the power to regulate interim custody of disputed goods
sold
under a credit transaction. The power of the court arises at common
law (
Setlogelo
v Setloqelo
1914 AD 221)
, is now constitutionally-rooted in the power of the
courts to prevent illegalities and to preserve rights, and is
inherently flexible
in nature (see for instance
Knox
D
'
Arcy
v Jamieson
1996(4) SA 348(A);
Hix Technologies CC v System Publishers Limited (Ptv) Ltd
1997(1) SA 397(A); and most recently
Metlika
Trading Ltd v Commissioner,
SARS
2005(3) SA 1 (SCA)).
I
accordingly conclude that thfs court has the power at common Jaw to
grant, in appropriate cases, an order to secure the interim
custody
of disputed goods in a credit transaction under the NCA. The question
however relates as to what those "appropriate
circumstances"
are. I say this because it was indicated in the course of argument
that what may be said in this ruling may
have a wider application,
but I in turn would stress that this ruling is confined to its own
facts. It relates to an application
for an interim interdict brought
on express grounds of the preservation of disputed goods in a NCA
transaction, and is not intended
to devise a Magna Carta in respect
of all matters of this nature.
Does
the applicant have a
prima
facie
right
in substantive law to the cancellation of the agreement, and to the
return of the vehicle? The lease itself so provides, predicated
upon
a valid cancellation. The enquiry then becomes; has the applicant
established such a right,
prima
facie
even
if open to some doubt?
In
oral argument, counsel for the applicant traced the documented
failure by the respondent to make due payment to the applicant
under
the lease. He pointed, too, to conflicting and what he said were
inherently implausible explanations by the respondent. The
net
effect, he said, was that the respondent had demonstrably breached
the agreement to a degree far beyond the requirements of
a mere
prima
facie
right
by the applicant to cancel and to seek restoration of its property,
the vehicle. In contending for the converse, the respondent's
counsel
essentially advanced two contentions. The first is that, at the
instance of the applicant, the respondent ceased to make
payment of
the monthly lease instalments to the applicant, and instead it paid,
and continues to pay, a third party; Rich Rewards
(Pty) Limited. It
was established on the papers, and was common cause that Rich Rewards
was in fact a corporatisation of the Taxi
Association of which the
respondent is a member.
In
my view, this unfortunately offers no answer - certainly it does not
rebut the
prima
facie
right
on the
accepted
evidential
test laid down in
Webster
v Mitchell
1948(1) SA 1186(W). I say this for several reasons.
In
his affidavit in the summary judgment proceedings, which were
incorporated by reference in the founding affidavit in the matter
before me, the respondent ascribed to the Chairman of his Taxi
Association the directive that he {the respondent) should alter
his
existing bank debit authorisation in favour of the applicant to one
in favour of Rich Rewards. In his answering affidavit in
this
application, however, the respondent ascribed the initiative to the
applicant itself. Strikingly (and inconsistently with
his
identification of the applicant's Ms Faizel Miller for other
purposes) he does not identify in his affidavit the applicant's
supposed representative in this respect.
His
new version - that it was at the instance of the applicant that the
diversion of payments took place from the applicant to Rich
Rewards -
lacks any documentary corroboration. It is strenuously denied by the
respondent. It is also in my view inherently improbable
that the
applicant, with its arduous system of contracting individually with
individual owners, should, without evident commercial
benefit, wish
to substitute an unsecured system of conduit payment through an
association of taxi drivers. Even were these ordinary
motion
proceedings, and the test applicable in interlocutory proceedings did
not apply, I would not hesitate to reject the shifting
explanation in
this regard as inherently contradictory, inconsistent and beyond
credence.
I
also do not accept that there is in any event any credence in the
assertion by the respondent that he has "religiously"
and
"diligently" paid first the applicant and thereafter Rich
Rewards the monthly rentafs. His own bank records reflect
the
converse. The attempt to explain this by the suggestion that Rich
Rewards was paid in cash is not only not what the respondents
affidavit says, but is inconsistent with a number of instances in his
bank records when he purported to pay Rich Rewards by cheque.
It is
also inconsistent with his use of a bank debit order from the outset.
The lack of proof of the alleged cash payments thus
made "diligently"
to Rich Rewards is a further inconsistent fact; his attempt to blame
this on a seizure by the police
of receipts stumbles on lack of the
usual inventory of what the police allegedly took, which might be
expected to have been handed
to the respondent upon the seizure, and,
yet more importantly, any recorded effort to obtain photocopies from
the police, and,
most of all perhaps, provision by him of proof of
receipts from after the time of the police seizure. Finally, and
perhaps most
unbelievably, there is the respondent's contention that
notwithstanding his discovery of what he contends was a fraud on him
by
Rich Rewards, he stoutly continued, and evidently continues, to
make payment to it under the lease.
In
short, I do not accept the contention that the applicant directed the
respondent to pay Rich Rewards and not it. I do not accept
that the
respondent has paid either the applicant or Rich Rewards. I also do
not understand the basis of the contention that proof
of payment to
Rich Rewards would amount in any way to an discharge of the
obligation under the lease to the applicant, unless it
were apparent
on the papers that it could reasonably be believed that Rich Rewards
was acting in fact, and not according to some
alleged perception of
the respondent himself, as a designated payee for the applicant.
I
accordingly conclude that the applicant has established what is in
fact a very strong right to cancellation and restoration of
the
vehicte in the pending action.
I
turn to the issue of harm. It was stressed for the respondent that
there is no basis to apprehend that he will dispose of the
vehicle,
or subject it to neglect or abuse; it is an essential means of his
livelihood. This overlooks in my mind two considerations,
the first,
at the level of principle, is that the claim by the applicant is
quasi-vindicatory in nature, in which case it is by
clear authority
presumed, unless the contrary is shown, that the applicant will
suffer irreparable harm if the interdict is not
granted. (See
Law
of South Africa
vol 11 (second re-issue) para 318 and authorities collected at
footnote 5). The second is that there is important assistance to
be
found in a line of cases dealing with the situation which arises in
relation to the interim custody of vehicles in analogists
if not
exactly the same circumstances. The
fons
et origo
appears
for all practical purposes to be the judgment of
Greenberq.
J
{as he then was) in
Morrison
v African Guarantee and Indemnity Co Ltd
1936(1) PH
M),
where
he stated the following;
"If
I am right in the conclusion that the respondent's claim and his
right as to a delivery of the motor car, then whatever
he has to do
with the motor car afterwards he is entitled to a delivery, and he is
entitled to a delivery in the condition on the
day in which he seeks
to enforce his claim for delivery; he is entitled to have the article
kept in the same condition in which
it is on that day, and a refusal
to grant him relief which would ensure this condition would
cause irreparable injury.
It is therefore unnecessary to decide
whether this is a vindicatory right or not.
1
'
This
decision was followed and applied by
MiUin,
J
in
Loader
v De Beer
1947(1) SA 87 (W), where the stated (at 89):
"In
the present case it is quite clear under what arrangement the
respondent has possession of this truck: It is under a hire
purchase
agreement, and he can onty be deprived of that possession if it is
proved that he committed a default entitling the applicant
to reclaim
it.
Therefore,
in this case, there is no reason why at the present stage the
applicant should be put in possession of this truck. But
as I say, he
Is
entitled
to be protected against the respondents alienating if, and he is also
entitled to be protected in accordance with a case
I shall refer to
in a moment [a reference to Morrison
supra].
He
is entitled to be protected against a further deterioration of the
truck by use of it on the part of the respondent.
1
'
Somewhat
more recently there is the full bench decision in
Santambank
Beperk v Dempers
1987(4) SA 639 (0), where reference was made (at 647E-J) to this
earlier line of authority and to the fact that a commercial vehicle
"verminder feitfik daagliks in waarde, veral wanneer dit gebruik
word".
As
against these decisions my attention was also drawn to the reported
decision in
BMW
Financial Services (SA)
(P
\v)
Ltd
v Rathebe
2002(2) SA 368 (W), where
Flemminq.
DJP
dealt with a problem regarding a ctaim for the restitution of a
vehicle
pendente
fite
an
action, arising under the Credit Agreements Act, 75 of 1980. In that
matter the learned judge was unpersuaded that there shouEd
be an
interim order granted in favour of the applicant (on appeal),
concluding as follows (at 374);
"Counsel
relied on applicant's prospects of success. Assuming them to be good,
it does not force (sic) the judicial discretion.
The judicial
discretion must also ask what difference four weeks will make. In the
present case it is not fancible to expect that
by the time applicant
has located the vehicle, the
dies
induciae
....
wiM have expired and the applicant will have obtained cancellation of
the lease. That would with finality determine that the
lessee, the
respondent, has no right to use or even to possess the vehicle. Is
the risk of collision of theft in a week or two
so serious and of
such imminence that there can be a real "apprehension of injury"
in those respects? I think not. Will
an additional few hundred
kilometres harm anything more than insubstantial decrease in value?
That is improbable."
The
last decision is an unreported decision in
Mercedes
Benz Finance (Ptv) Limited v Motlhako
{Case number A3015/20007WLD), where
Jordaan,
AJ, Flemminq, DJP
concurring) was also disinclined to grant an interim order on the
facts of that matter. Significantly without referring to, and
therefore discussing, the earlier decisions to which I have drawn
reference, the court concluded (at page 5) as follows;
"It
is neither necessary nor desirable for me to attempt what such
"damage" or "depreciation
1
'
must entail in order to qualify for the exercise of the Courts
protective powers; Suffice it to say that the mere fact that
the
credit receiver is in possession of the property and continues to use
it in the manner envisaged in the Credit Agreement in
question will
not be sufficient; were it otherwise [as] credit grantor, it would be
entitled to approach the Court as a matter
of right on each occasion
that it institutes proceedings for the return of the goods."
With
this last proposition in my view there can be iittle quarrel. As I
suggested earlier, there can be no basis for contending
that there is
an automatic right to secure custody of affected goods pending the
trial action. As I have endeavoured to stress,
what must be
considered on the facts of each matter is the application of the
trite principles relating to interdicts. What is
to my mind important
about the present matter is that the application is not instituted on
the basis of a mere entitlement, by
virtue of ownership, to interim
custody of the vehicfe. The case is founded upon contentions
regarding relative harm, convenience
and of course the strength of
the right in issue. More narrowly, the basis of the case
r
as I understand it, is that the length of time which may be
anticipated to elapse before the principal action is heard is of such
a nature that there is a pressing need for interim protective relief
related to the preservation of the vehicle.
While,
as I have indicated, it may not be so that the pessimism of the
parties regarding the ceierity of trial actions in the Cape
is fully
justified on any test a considerable period will elapse. This at best
will be a period of many months, certainly not the
matter of three to
four weeks which exercised the minds of the court in the BMW
decision. The applicant has addressed this aspect
squarely in its
papers, and demonstrated that the residual value of the vehicle
following the elapse of this period of time, will
be greatly reduced
if the vehicle remains in daily use, It seems to me that there is no
basis to contend that it is incumbent upon
an applicant in these
circumstances to establish a greater use beyond that which is
contemplated by the agreement. On the facts
of the present case, the
use of a private vehicle is not an issue; what is established is that
by all probability, the vehicle
will be put to great use
understandably given its function and that this will operate, regard
being had to the anticipated period,
materially to the diminution of
its value.
I
accordingly consider that the requirement of irreparable harm has
been sufficiently established.
I
turn then to the third consideration: the balance of convenience. As
counsel for the applicant pointed out, it is well established
that
the stronger the prospects of success, the less the need for the
balance of convenience to favour the applicant (Joubert
et
a! op cit
para
4 and authorities cited in footnote 4).
In
my view that is the case here. For the reasons
i
have
given, 1 consider that on the papers before me, the applicant has a
very strong prospect of establishing in the trial action
that the
respondent has materially breached the lease, and that it (the
applicant) is accordingly entitled to a declaratory order
confirming
its cancellation and therefore to restoration of the vehicle. But I
have in any event given consideration to the facts
indicated in the
affidavits pertaining to the balance of convenience in this matter. I
am aware that the respondent is a family
man, and that his taxi is
part of his livelihood. Unfortunately with the inconsistency and at
times lack of evident candour which
have been a feature of his
affidavits he forbore to disclose in the present application what he
had indicated in passing in the
summary judgment proceedings: that he
has another two taxis unaffected by this application. These factors
are relevant to the discretion
which I have in this matter, and
which, taken together with a cumulative effect of the other
circumstances I have indicated already,
I exercise in all the
circumstances in favour of the applicant.
As
regards the balance of convenience and aspects touching upon the
applicant, it is of course not implicitly merely to be accepted
that
because it is a corporate entity which makes money through entering
into credit transaction, that inconvenience to it in the
proper sense
is to be disregarded in the course of weighing up the various
factors. As I have indicated, what is in issue in this
matter is a
taxi, a piece of working machinery to be maximally used. It is a
matter of notoriety that great mileages are clocked
up and
considerable wear and tear endured by such vehicles, more
particularly as I have already indicated, when the period at issue
is
a considerable one.
A
last aspect relates to whether, if the order is to be granted, the
interim custody of the taxi should be in the hands of the applicant
or a third party. Counsel for the applicant referred in this regard
to a passage in
Santambank
V Dempers
supra suggesting that the latter in principle would be desirable.
There are two answers to this. The observation may reflect a
desideratum
but
it must yield to fact. Here, f was told from the Bar, it had been
established that the Sheriff had no facility to take taxis
into
indefinite custody.
Conversely
the applicant was willing to do so, under security and with an
undertaking that the taxi would not be used pending the
determination
of the main proceedings. It seems to me that this regime in the
present case will best preserve the vehicle.
The
order I accordingly make is as follows:
Pending
the final outcome of the action instituted by the applicant against
the respondent:
1.1
The respondent is directed to deliver the vehicle into the possession
of the sheriff, who shall deliver it to the applicant,
who shall, in
turn, at its own expense
Transport
it to garaged premises situated at 17 Bompas Avenue, Dunkeld,
Johannesburg;
Retain
the vehicle at such garaged premises under security pending the
outcome of the action instituted by the applicant against
the
respondent, and who shall not use the vehicle, or permit that it be
used during the said period.
1.2
in the event of the respondent failing to comply with the contents of
paragraph 1.1 above within five days of service of this
order on his
attorneys, authorising and directing the sheriff to take the vehicle
into his possession from wherever he may find
it and to return the
vehicle to the applicant as aforesaid.
2.
Directing that the respondent pay the costs of this application,
including the costs of two counsel, and including such costs
as may
have been reserved. This order must be replicated identifying the
different vehicles as between the three applications.
GAUNTLETT,
AJ