B C Plant Hire cc t/a B C Carriers v Grenco (SA) (PTY) Ltd (1090/2002) [2003] ZAWCHC 70; [2004] 1 All SA 612 (C); 2004 (4) SA 550 (C) (12 December 2003)

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[2003] ZAWCHC 70
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B C Plant Hire cc t/a B C Carriers v Grenco (SA) (PTY) Ltd (1090/2002) [2003] ZAWCHC 70; [2004] 1 All SA 612 (C); 2004 (4) SA 550 (C) (12 December 2003)

IN
THE HIGH COURT OF SOUTH AFRICA
(CAPE OF
GOOD HOPE PROVINCIAL DIVISION)
Case No: A
1090/2002
In the matter
between:
B C PLANT
HIRE CC t/a B C CARRIERS
Appellant
and
GRENCO (SA) (PTY) LTD
Respondent
JUDGMENT:
12 DECEMBER 2003
VAN ZYL J:
INTRODUCTION
[1] This
is an appeal against the decision of the Magistrate’s Court,
Kuilsriver, in terms of which the respondent’s claim against
the
appellant in the amount of R62 700,00 was granted together with
interest
a tempore morae
and costs. A cross-appeal was noted
at a late stage with the leave of the court. It relates to the
rejection by the court
a quo
of one of the causes of action
raised by the respondent in its amended particulars of claim, and to
the court’s refusal to grant
a special order as to costs. Mr H G
McLachlan appeared for the appellant and Mr A Kantor for the
respondent. The court expresses
its appreciation to them for their
helpful submissions and additional arguments arising from
difficulties put to them during the
presentation of their cases.
[2] It is
common cause that the claim arose from an agreement in terms of which
the respondent (plaintiff in the court
a quo
) undertook to
supply and fit a refrigeration unit (“the unit”) on the trailer
of a truck belonging to the appellant (defendant
in the court
a
quo
). On completion of the installation during March 1997, the
respondent duly delivered the vehicle to the appellant. Before
payment
could be made or finance arranged, however, the vehicle was
involved in an accident on 7 May 1997 and the unit was damaged beyond
repair. The respondent claimed its value, being R62 700,00, from the
appellant. The appellant denied liability, however, and refused
to
pay.
THE ISSUES
[3] The
main issues between the parties are, firstly, what the nature of
their agreement was and, secondly, which of the parties must
be held
to have borne the risk of destruction of the unit. These issues are,
of course, materially interlinked.
[4] The
appellant has also raised the identity of the party trading as “BC
Carriers” as an issue. This is clearly a non-issue
in that it is
common cause that the entity trading as “B C Carriers” was at all
relevant times represented by one Braam Coetzee
and was in fact the
defendant in the court
a quo
, irrespective of whether or not
the close corporation trading as such was B C Earthmoving or B C
Plant Hire. In the original particulars
of claim the defendant was in
fact cited as B C Carriers CC and in his affidavit opposing summary
judgment the said Braam Coetzee
admitted that, during July or August
1997 he had concluded an agreement on behalf of the defendant as
cited. It is common cause that
that same defendant took possession of
the unit after it had been installed on its truck. If the appellant
was hence wrongly cited
in later pleadings, it is clearly a simple
misnomer that could not have caused the appellant the slightest
prejudice. See in general
on misnomers the discussion in
Anglo
Dutch Meats (Exports) Ltd v Blaauwberg Meat Wholesalers CC
2002
CLR 292
(C) at 300-314 (par 21-47) and the various authorities cited
there. For present purposes it is hence not necessary to consider
whether
the citation of the appellant in further pleadings was
correct or not.
THE PLEADINGS
[5] The pleadings and respective cases of the
parties are anything but a model of clarity. The cause of action
started off, in the
initial particulars of claim, as an oral
agreement concluded on 5 August 1997 between the respondent,
represented by Johan Coetzee,
and the appellant, represented by Braam
Coetzee. In terms of this agreement the respondent undertook to
supply the said refrigeration
unit and install it [on the trailer of
one of the appellant’s trucks] for the amount of R62 700,00. The
respondent duly performed
its obligations but the appellant refused
to pay the amount owing “as a consequence of the services
rendered”.
[6] In his affidavit opposing a summary judgment
application brought against the appellant by the respondent, the said
Braam Coetzee
appears to have admitted that there was an agreement
between the parties in terms of which the appellant “ordered” the
unit from
the respondent. He averred, however, that it was subject to
a suspensive condition that payment would be effected by means of a
financing
agreement to be approved by the appellant’s financial
institution. The application for financing would be approved only
after receipt
of an invoice submitted to it by the respondent. The
invoice was to contain a correct description of the item sold, its
price and
the VAT payable in respect thereof. The respondent failed
to submit such invoice. Consequently the financing agreement was not
concluded
and the suspensive condition was not fulfilled. What the
consequence was of such non-fulfillment does not appear from the
affidavit.
[7] In its plea to the initial particulars of
claim, the appellant denied that an agreement as alleged by the
respondent had been
concluded. In the alternative, should it be held
that there was such an agreement, the appellant averred that it had
concluded such
agreement on behalf and for the benefit of a third
party, namely Bankfin (“the bank”). In terms thereof the
respondent would
sell the unit to the bank, which would become its
owner and would pay its purchase price to the respondent. The
appellant admitted
that the respondent had installed the unit on the
trailer of one of its trucks and that it had been delivered on 8
August 1997, after
which it was written off in an accident. The
appellant had, however, taken delivery thereof on behalf of the bank
and was hence not
liable to pay the said purchase price.
[8] The appellant subsequently amended this plea
to incorporate the allegations that it would conclude a written
credit agreement
with the bank and that the risk in respect of the
unit would not pass from the respondent to the appellant before such
agreement
had been concluded. The appellant pleaded further that the
respondent was, at all relevant times, aware of the fact that the
conclusion
of the credit agreement was dependent on the respondent’s
furnishing full details of the unit to the bank. In any event the
respondent
itself required such details, and also details regarding
the credit agreement, for purposes of insuring the unit. The
respondent
had failed to furnish the required details in that it
first sent a wrong invoice and later sent an invoice to the wrong
address.
As a result the credit agreement was not concluded. A
further amendment related to the date when the appellant took
delivery of the
unit on behalf of the bank.
[9] This plea as amended appears to have prompted
the respondent to effect radical amendments to its particulars of
claim by introducing
a number of alternative causes of action. This
culminated in amended particulars of claim containing five claims.
The first was based
on an oral agreement in terms of which the
respondent “undertook to deposit” the unit with the appellant and
to install the unit
at a price of R62 700,00. The second was based on
a finance agreement between the respondent and ABSA Bank, trading as
“Bankfin”
(“the bank”), in terms of which the bank would buy
the unit for R62 700,00 and the respondent would deliver it to the
appellant.
This agreement was linked to a suspensive condition that
the bank would approve the finance agreement. It was also linked to a
“delivery
agreement” in terms of which the risk in the unit would
pass to the appellant on acceptance of delivery and/or the appellant
would
be obliged to insure it against the risk of damage. The third
claim was apparently based on the appellant’s negligence in not
exercising
a “duty of care” while the unit was in its possession.
The fourth claim related to the respondent’s delivery of the unit
under
the “misapprehension” that one or the other of the
aforesaid alternative agreements had been concluded. The fifth claim
was based
on the appellant’s alleged enrichment at the expense of
the respondent in that the appellant had been paid out for the damage
to
the unit in terms of an insurance policy. Alternatively the
appellant had suffered no loss as a result of the damage to the unit.
[10] Instead of excepting to the amended
particulars of claim on the basis that all, or at least some of, the
various alternative
claims disclosed no cause of action,
alternatively were shockingly vague and embarrassing, the appellant
chose to plead thereto as
before (par 8 above).
THE EVIDENCE
[11] Mr J C J (“Johan”) Coetzee, the executive
director in the refrigeration division of the respondent, testified
that he had,
on a previous occasion, sold the appellant, represented
by Mr Braam Coetzee, a refrigeration unit. This kind of transaction
was normally
financed by a bank, to which the respondent would supply
an invoice in return for payment of the unit. It was also usual,
pending
the finalisation of the financing agreement, to deliver the
unit to the customer who would insure it forthwith. In the present
matter
the unit supplied was a rebuilt unit that was fitted, during
March 1997, onto the trailer of a truck belonging to the appellant.
Initially an incorrect invoice was furnished to the bank, but a new
invoice containing the correct information was furnished, apparently
to the wrong address, during April 1997. Before the bank could pay
the purchase price of the unit, however, it was destroyed in an
accident. The respondent then claimed the amount from the appellant,
which refused to pay.
[12] In cross-examination Mr Coetzee testified
that, if the financing agreement between the bank and the appellant
did not go through,
the appellant would be obliged to pay the
respondent, or the unit would have to be returned. At no stage was
there any discussion
about transfer of risk. He emphasised, however,
that on delivery of the unit to the appellant, the appellant had to
insure it because
“he makes money with it” and it was “his
unit”. It was the accepted norm that the customer should insure the
unit the moment
he takes delivery of it because from that time on he
is responsible for it.
[13] Mr Frans van Vianen, the general manager of
the respondent’s refrigeration division, testified that the unit in
the present
matter was mounted under the chassis of the vehicle. He
confirmed Mr Coetzee’s testimony that the customer would be
expected to
insure the unit as soon as he took delivery of it. That
would be the case even if he simply loaned the unit. If he failed to
insure
it, he would be personally responsible for any damage caused
to it.
[14] Mr G A Botha, the national technical director
of the respondent, elaborated on Van Vianen’s evidence by
testifying that the
unit in question was designed in such a way that
one section would fit underneath the trailer and the other inside the
trailer. These
two components would then be connected with
refrigerant hoses and electric cables. In the present case the unit
was “custom fitted”
and required “brackets made up” and
covers fitted over the refrigerant hoses. During the course of
fitting the unit Mr Braam
Coetzee inspected it a few times and
requested certain modifications before it was finally bolted to the
trailer. When asked what
the position would be if the unit were to be
destroyed without insurance being arranged for it, his reaction was
that it would be
“crazy not to insure it”. It was the accepted
norm in the industry that the person who uses the unit or the trailer
must insure
it. Failure to insure it was “like putting warm water
into instant coffee, you just don’t do it”. If the unit should be
destroyed,
however, the supplier would look to the customer for
payment and not to his insurer.
[15] The respondent called a number of further
witnesses. For present purposes it is not necessary to deal with
their evidence other
than to mention that it appears that the
appellant was indeed paid out by its insurer for damage sustained by
it as a result of the
destruction of a refrigerated trailer. In this
regard Mr D Thompson, a motor vehicle assessor and loss adjuster,
testified that the
appellant had been paid out for “a refrigerated
pup semi-trailer”. This included a refrigerated unit attached to
the trailer.
He also mentioned various possibilities as to how the
unit could have been destroyed.
[16] Mr B G Nel, a business consultant in the
employ of the bank, was called to testify for the appellant. He had
been involved in
the negotiations, during March or April 1997, to
conclude a credit agreement (he referred to it as a “lease for use”
or “bruikleen”)
between the bank and the appellant in respect of
the unit. The agreement was never concluded, however, because the
unit was destroyed
before the formalities had been complied with. In
general, he testified, once all the requirements had been met, the
bank would sign
the agreement, pay the supplier and take transfer of
ownership of the unit. It would also sign a ”release note” in
terms of which
the supplier would be empowered to deliver the unit to
the customer with whom the bank had concluded a credit agreement. One
of the
requirements with which the customer had to comply before
payment was made or the release note was signed, however, was to
arrange
short term insurance for the unit for the duration of the
credit agreement. Once this was done delivery by the supplier on
behalf
of the bank could take place.
[17] In his testimony for the appellant Mr S B
(“Braam”) Coetzee confirmed that the unit would be financed by
the bank and denied
that there had ever been any agreement between
the parties that, if the bank should fail to pay, the appellant would
be liable personally.
It had never been suggested to him that,
pending payment by the bank, the appellant would bear the risk of any
damage to or destruction
of the unit. He admitted that the appellant
had been paid out by its insurers for the damage to the trailer, but
denied that it had
also been paid out for the unit, as testified by
Mr Thompson (par 15 above). He would have arranged for insurance of
the unit only
after the financing agreement with the bank had been
finalised.
JUDGMENT OF THE COURT
A QUO
[18] After satisfying himself that the appellant
had been correctly cited as B C Plant Hire CC t/a B C Carriers, the
learned magistrate
turned to the first claim containing the cause of
action based on deposit. It was clear from the evidence that the
appellant had
taken delivery of the unit with a view to retaining it
for his exclusive use. I respectfully agree that there was no
question of
deposit in the sense of
depositum
, one of the
contractus re
emanating from Roman law and still forming part
of our present-day South African law. A contract of
depositum
comes into existence when one person (the
depositor
) entrusts
a movable thing to another person (the
depositarius
) who
undertakes to care for it gratuitously and to return it at the
request of the
depositor
. The
depositarius
has physical
detention of the thing but does not have the right to use it. See
Digest
16.3 and
Code
4.34 and the discussion in Van Zyl
History and Principles of Roman Private Law
(1983) (“Van Zyl
Roman Law
”) 280-282. These principles were accepted in
Roman-Dutch law under the name
depositum
or
bewaergeving
.
See Grotius
Inleidinge
3.7.2; Voet
Commentarius ad
pandectas
16.3.1 and Van der Linden
Koopmans handboek
1.15.5.
On the contract of deposit in South African law see the discussion
and authorities cited in Wille’s
Principles of South African Law
(8
th
edition by Hutchison, Van Heerden, Visser and Van
der Merwe, 1991) (“Wille
Principles
”) 581-583 and the
title “Deposit” by C J Pretorius in
LAWSA
vol 8 part 1
(1
st
reissue 1995) 185-190 (par 123-135).
[19] Regarding the second claim the learned
magistrate rejected the allegation that the appellant had contracted
with the respondent
as agent of the bank, thereby causing a contract
to be concluded between the respondent and the bank in terms of which
the bank would
purchase the unit from the respondent. The evidence
did, however, indicate that there was an understanding between the
parties and
between the appellant and the bank that the bank would
finance the transaction by means of a credit agreement between it and
the
appellant. The bank would then make payment directly to the
respondent. It was common cause, of course, that no such credit
agreement
came into existence. This had nothing to do with any breach
of contract arising from the fact that the corrected invoice did not
reach the bank in time. It was simply because the unit had been
destroyed before such agreement could be concluded.
[20] Of some interest was the learned magistrate’s
finding, on the basis of Nel’s evidence, that the appellant had
taken delivery
of the unit in conflict with the bank’s normal
procedure relating to credit agreements. No agreement had been
signed, no short-term
insurance had been arranged and no release note
had been issued. By acting in this way the appellant had created a
potential risk
situation that became a reality when the unit was
destroyed in an accident. Inasmuch as the bank would clearly not be
prepared to
conclude a credit agreement in respect of a non-existent
unit, and for the same reason an insurer would not be prepared to
insure
it, the appellant was itself the root cause of its inability
to perform in terms of the agreement on which it was placing
reliance.
[21] It was furthermore clear, the learned
magistrate held, that the appellant did not take delivery of the unit
on behalf of the
bank. By the same token, the respondent could not
have been acting on behalf of the bank in delivering it to the
appellant. It was
well nigh unthinkable that the respondent would, at
its risk, deliver the unit to the appellant for its exclusive use
pending finalisation
of the credit agreement. The appellant was fully
aware of the risk that, should the unit be destroyed before
conclusion of the credit
agreement, it would no longer be able to
acquire financing for it and would become personally liable for the
payment thereof. This
would in fact have been the case if the unit
had not been destroyed and the appellant had been unable to arrange
financing for its
payment. It would either have to pay the purchase
price or return the unit to the respondent.
[22] It was true, the learned magistrate held,
that the parties had not expressly agreed that the risk in the unit
would pass to the
appellant on delivery thereof. In this regard,
however, the following passage from
Pahad v Director of Food
Supplies and Distribution
1949 (3) SA 695
(A) at 709 (
per
Van
den Heever JA) was in point:
In
contract the incidence of such unforeseen loss attributable to
neither party depends upon the modalities which the law will read
into agreements in the absence of express stipulation; consequently
the parties must be deemed to have accepted the risk thereby
implied,
for they were in a position to guard themselves against it.
This prompted the learned magistrate to hold, on a
balance of probabilities, that the appellant, in taking delivery of
the unit for
use in its transport business, had by implication
accepted the risk attaching thereto. On the second claim, and more
particularly
the “delivery agreement” alleged therein, the court
held that the claim should succeed with interest and costs. It
refused, however,
to rule that advocates’ fees should be taxed at
High Court tariffs. I am in full agreement with this exercise of the
learned magistrate’s
judicial discretion relating to costs. There
is no indication of any misdirection in this regard. The pleadings
were atrocious and
the facts were simple. Any complexity therein was,
in my view, introduced by the parties themselves. No special order
was justified.
On the contrary, there were eminently good reasons to
deprive the parties of their costs.
SUBMISSIONS ON BEHALF OF THE APPELLANT
[23] Mr McLachlan submitted that the respondent
had failed to prove the existence of a trade usage, as an implied
term of the agreement
between the parties, to the effect that the
risk in the unit would pass to the appellant on its delivery. The
evidence relating to
the commercial norm that the unit would be
insured as soon as it came into use was, according to Mr MacLaclan,
no proof of such a
trade usage. The court had therefore erred in
holding that there was an implied term to this effect.
[24] This argument is, to say the least,
surprising in that, as I read the learned magistrate’s judgment, no
mention was made of
any alleged trade usage underlying his finding
that the appellant had by implication accepted the risk attaching to
the unit in taking
delivery thereof. Nor was any mention made in the
pleadings of any such trade usage.
[25] In regard to the passing of risk Mr McLachlan
accepted that the general rule was that a thing perishes at the risk
of its owner
(
res perit domino
). In the present case, however,
the risk could not pass to the appellant by delivery of the unit in
that the agreement between the
parties was not one of purchase and
sale and there had been no express or tacit agreement that the risk
would pass to the appellant
on delivery. The respondent hence
remained the owner of the unit and had to bear the risk of its
destruction. I shall return to this
argument later in considering the
true nature of the relationship between the parties.
[26] Mr McLachlan persisted with the defence
raised by the appellant that the respondent had failed to furnish the
correct particulars
to the bank, alternatively had furnished them to
the wrong address, thereby breaching its agreement with the appellant
or preventing
the fulfillment of a suspensive condition thereto.
There is clearly not the slightest merit in this argument. There is
no suggestion
in the plea to the amended particulars of claim that
the appellant was relying on any suspensive condition. This was
mentioned in
Mr Braam Coetzee’s affidavit opposing summary judgment
(par 6 above) and never again. Nor was there even a whisper in the
plea
that the respondent had been in breach of some or other
agreement by not furnishing the required particulars to the bank. It
is perfectly
clear that the furnishing of particulars to the bank was
intended, purely and simply, to assist the appellant in acquiring
financing
from the bank. There was no indication in the evidence that
the respondent’s undertaking to furnish such particulars was
regarded
as compliance with a contractual obligation or the
fulfillment of a suspensive condition. I find it astounding that no
exception
was raised to the defences raised by the appellant, just as
it is inexplicable that the gobbledygook appearing in the particulars
of claim was not the object of an array of exceptions.
[27] In supplementary heads of argument Mr
McLachlan reiterated that the agreement between the parties was not
one of purchase and
sale, but accepted, after a suggestion from the
court to this effect, that it might indeed have been one of loan for
use (
commodatum
). Inasmuch as this had not been one of the
causes of action raised by the respondent in its amended particulars
of claim, however,
the appellant would be seriously prejudiced if the
matter were not referred back to the court
a quo
so that this
possibility could be properly ventilated. I shall return below to
what I believe was the true nature of the agreement
between the
parties. At this stage I am quite satisfied that the evidence
presented in the court
a quo
was sufficient for purposes of
determining the legal relationship between the parties.
SUBMISSIONS ON
BEHALF OF THE RESPONDENT
[28] In his argument on
behalf of the respondent Mr Kantor submitted that it was the custom
or trade usage in the industry that a
party utilising a unit
belonging to another would be responsible for it from the time of
delivery and should hence insure it. This
appeared from the
uncontradicted evidence, admitted by agreement, appearing from the
summaries of four expert witnesses. Inasmuch
as this argument
revolves around whether or not there was a trade usage to this
effect, I have the same problem as before (par 24
above), namely that
there was no mention of this in the pleadings or in the judgment of
the court
a quo
.
[29] The argument relating to
deposit I have already rejected (par 18 above) inasmuch as there was
clearly no question of the appellant’s
having taken the unit for
safekeeping pending finalisation of the credit agreement. It follows
that the cross-appeal has no merit
on this score or in regard to the
court’s refusal to grant a special order as to costs (par 22
above).
[30] In supplementary heads
of argument Mr Kantor agreed with Mr McLachlan, after a little
prompting by the court, that the nature
of the cause of action in the
applicant’s first and second claims could well be loan for use
(
commodatum
) rather than deposit (
depositum
). He
disagreed with Mr McLachlan’s suggestion, however, that the matter
should be referred back to the court
a quo
to enable the
parties to canvass this possibility fully. It was common cause that
the appellant had used the unit for some time before
its destruction
in the accident. In addition the appellant’s “lack of negligence”
had always been an issue on the pleadings.
[31] I agree with Mr Kantor
that it is not necessary to refer the matter back to the court
a
quo
. I do, however, have serious difficulty with the suggestion
that the aspect of negligence on the part of the appellant has been
properly
canvassed, if at all. It appears from both the pleadings and
evidence that it is common cause that the destruction of the unit was
caused by an accident in the sense of
casus fortuitus
. Nowhere
is there even the remotest suggestion that the appellant was
negligent in regard to such destruction. Mr Thompson (par 15
above)
certainly did not give evidence to this effect. At most he mentioned
possibilities as to how the damage could have been caused.
THE LEGAL RELATIONSHIP
BETWEEN THE PARTIES
[32] It is common cause
that the parties have both concluded, rightly or wrongly, that they
never entered into any agreement of
purchase and sale with each other
inasmuch as their intention was that the bank would be the purchaser
and would acquire ownership
from the respondent, as seller, subject
to a credit agreement being concluded between the bank and the
appellant. If, as I believe,
it cannot simply be accepted that they
are correct in their perception, and indeed assumption, of the legal
relationship between
them, the question must inevitably arise what
the true nature of their relationship was at the relevant time. In
this regard it must
be borne in mind that none of the witnesses who
testified on behalf of the one or the other of the parties was
legally trained. Yet
much of the evidence led in chief and elicited
in cross-examination was of a legal nature, requiring knowledge of
the relevant law
and applicable legal principles. Not surprisingly a
confused and obfuscating picture emerges. Eventually it must be
resolved judicially
with reference to all the relevant facts and
circumstances, regardless of what the parties or their witnesses may
think this relationship
is.
[33] This approach accords
with the well known Roman legal maxim that
plus valet quod agitur
quam quod simulate concipitur
(“greater value is attached to
what is done than to what appears to be done”) (see
Code
4.22).
In simple language this may be rendered as “true facts have more
value than apparent facts” or “substance bears more
weight than
form”. Frequently, as in the present case, relatively simple facts
are interpreted in an unnecessarily complex way,
conjuring up legal
relationships that simply do not exist. The parties may even,
intentionally or unintentionally, be concealing
or disguising the
true nature of their agreement. As Innes J said in the famous case of
Zandberg v Van Zyl
1910 AD 302
at 309:
Now,
as a general rule, the parties to a contract express themselves in
language calculated without subterfuge or concealment to embody
the
agreement at which they have arrived. They intend the contract to be
exactly what it purports; and the shape which it assumes
is what they
meant it should have. Not frequently, however (either to secure some
advantage which otherwise the law would not give,
or to escape some
disability which otherwise the law would impose), the parties to a
transaction endeavour to conceal its real character.
They call it by
a name, or give it a shape, intended not to express but to disguise
its true nature. And when a Court is asked to
decide any rights under
such an agreement, it can only do so by giving effect to what the
transaction really is; not what in form
it purports to be. The maxim
then applies
plus valet quod agitur quam quod simulate concipitur
.
But the words of the rule indicate its limitations. The Court must be
satisfied that there is a real intention, definitely ascertainable,
which differs from the simulated intention. For if the parties in
fact mean that a contract shall have effect in accordance with
its
tenor, the circumstances that the same object might have been
attained in another way will not necessarily make the arrangement
other than it purports to be. The inquiry, therefore, is in each case
one of fact, for the right solution of which no general rule
can be
laid down.
See also
Kilburn v
Estate Kilburn
1931 AD 501
at 507 (
per
Wessels ACJ):
It is
a well known principle of our law that Courts of law will not be
deceived by the form of a transaction: it will rend aside the
veil in
which the transaction is wrapped and examine its true character and
substance.
Plus valeat quod agitur quam quod simulate concipitur
.
Further authorities are
collected in Wille
Principles
464-465 under the sub-heading
“Disguised contracts”. See also Christie
The Law of Contract
(4
th
edition 2001) 222-224.
[34] Any attempt to establish
from the pleadings the nature of the legal relationship between the
parties is a frustrating, thankless
and fruitless exercise. If the
respondent had stood by its original particulars of claim, that
described a simple contract of purchase
and sale of a refrigeration
unit that the respondent, as seller, would install in the vehicle of
the appellant, as purchaser (par
5 above), it would have been far
better off than it was after radical amendments, introducing an array
of vague or non-existent causes
if action, were effected at a later
stage (par 9 above). The same applies to the appellant. If it had
simply pleaded that the agreement
of purchase and sale was subject to
its acquiring financing from a bank, it could have presented a
defence based on a suspensive
condition that, should it, for whatever
reason, fail to acquire such financing, the agreement would be
regarded as null and void
ab initio
. Yet it insisted, in the
affidavit resisting summary judgment (par 6 above), to link the
non-fulfillment of the suspensive condition
to the respondent’s
failure to furnish certain information to the bank, when it was clear
that the reason why no credit agreement
was ever concluded between
the appellant and the bank was, purely and simply, because the unit
that was to be financed no longer
existed. This relatively
uncomplicated plea was clothed with all manner of complexity when the
appellant apparently chose, in its
plea as amended, to jettison the
suspensive condition and to suggest that it had concluded the
agreement with the respondent on behalf
and for the benefit of the
bank and that the respondent’s failure to furnish certain
information to the bank had scuttled its envisaged
credit agreement
with the bank.
[35] When the evidence
presented by the respective parties is considered, one would be
forgiven if the thought should occur that they
were involved in
another case than that set forth in the pleadings. Although both the
Coetzee’s entertained the same understanding,
namely that payment
of the unit would be effected by means of a credit agreement between
the appellant and the bank, it was never
suggested that the
conclusion of such credit agreement was a suspensive condition
attaching to the agreement to supply and install
the unit. There was
no question of any agreement between the respondent and the bank, or
of the appellant’s acting as the bank’s
agent in concluding an
agreement with the respondent for the benefit of the bank. Nor was a
word spoken about the risk of damage
attaching to the unit should it
be damaged while in the possession of the appellant pending the
finalisation of the credit agreement.
There was, indeed, no
discussion of the appellant’s taking delivery of the unit installed
on its vehicle prior to this event. It
was simply a fact that the
appellant took delivery of the unit before the respondent had been
paid and was using it gratuitously
in its transport business at the
time of its destruction.
[36] In considering the
judgment of the court
a quo
, it is, with respect, remarkable
that the learned magistrate was able to avoid becoming hopelessly
confused by the pleadings. I am
in substantial agreement with his
findings based on the evidence presented before him and have no
difficulty in associating myself
with the result to which he has
come. I would, however, in view of the above considerations, approach
the matter somewhat differently.
[37] On the initial
assumption that the parties were correct in rejecting the notion that
their agreement was one of purchase and
sale, I put to counsel,
during the course of argument, the possibility that the appellant’s
gratuitous use of the unit prior to
its destruction and prior to
payment having been made for it, could be regarded as a form of loan
for use or
commodatum
, as it was known in Roman and later
legal historical sources. Although there was no question of any
“delivery agreement”, as
suggested by the respondent in its
amended particulars of claim, the facts could be construed as a tacit
agreement that the appellant
would make use of the unit gratuitously
until such time as its envisaged credit agreement with the bank was
finalised. While using
the unit the appellant would then be burdened
with a strict obligation to take good care of it. In classical Roman
law that would
have included meticulous care (
custodia
), a
strict form of liability incorporating liability for loss or damage
arising from an act of God (
vis maior
) or fortuitous
circumstances (
casus fortuitus
). In the post-classical Roman
law of Justinian, however, the burden on the borrower was lightened
somewhat and no longer included
custodia
liability (see J A C
Thomas
Textbook of Roman Law
(1976) (“Thomas
Roman Law
”)
274-276; Van Zyl
Roman Law
278-279). This was also the case in
Roman-Dutch law (see Grotius
Inleidinge
3.9.7; Voet
Commentarius ad pandectas
13.6.5; Van Leeuwen
Censura
forensis
1.4.5.4; Van der Linden
Koopmans handboek
1.15.4)
and South African law (see Wessels
Contract
par 2090; Wille
Principles
579-580;
LAWSA
15 (first reissue 1999) s.v.
Loan by D J Joubert 152-153 (par 263)).
[38] On reconsideration of
the facts in the present matter, I am quite satisfied that the
parties at no stage gave the slightest thought
to the possibility
that their legal relationship had anything remotely to do with the
loan of the unit for the appellant’s use
pending the finalisation
of the credit agreement between the appellant and the bank. The
appellant simply took delivery of the unit
as installed in its
vehicle and proceeded to use it as its own. There was no discussion
as to any “delivery agreement” and even
less of a loan for use.
There was no indication from their conduct that they regarded the
delivery of the unit as a temporary loan
for use, thereby
demonstrating their intention to conclude a contract to this effect.
The respondent was simply performing in terms
of its agreement with
the appellant, namely to supply and fit the unit, and was clearly
quite happy to wait for its money, knowing
that it would be
forthcoming as soon as the appellant had finalised its credit
agreement with the bank.
[39] The possibility of
transfer of ownership in the unit by accession (
accessio
)
to the appellant’s vehicle did arise. The evidence of Mr Botha
indeed created the impression that the unit, once installed, was
of a
permanent nature and not easily removed. This usually has the effect
that ownership of the principle thing (in this case the
truck
trailer) extends to ownership of the accessory (the unit), in which
event the owner of the principle thing becomes the owner
of the
composite thing (see Thomas
Roman Law
169-170; Grotius
Inleidinge
2.9.1; Voet
Commentarius ad pandectas
41.1.14;
Van der Linden 1.7.2.2; Van der Merwe
Sakereg
(2
nd
edition 1989) 239-232 and 241-243). It would appear that the relevant
vehicle was in fact insured as a “refrigerated vehicle”
and not
as a vehicle and a (separable) unit. Because this possibility was not
properly canvassed in evidence, however, it would not,
I believe, be
appropriate to make any finding in this regard.
[40] After careful
consideration of the facts and circumstances set forth above, I am of
the view that the substance of the agreement
between the parties was
one of purchase and sale (
emptio venditio
), subject thereto
that the seller (the respondent) was required to install the thing
sold (the unit) in the trailer of a vehicle
belonging to the
purchaser (the appellant). Inasmuch as this entails work or labour in
addition to the mere supply of the unit, it
may be said that the
agreement has the complexion of a contract of letting and hiring of
work (
locatio conductio operis
). The work (
opus
) let
out would be the installation of the unit. The lessor (
locator
)
would be the appellant who let out the work and was obliged to pay
for it, whereas the lessee (
conductor
) would be the
respondent, who did the installation. On the other hand there is
authority that, if the person doing the work also
supplies the
material, the agreement would be one of purchase and sale rather than
letting and hiring of work. See Gaius
Institutes
3.147;
Institutes
3.24.4;
Digest
18.1.20; 19.2.2.1; Pothier
Traité du contrat de louage
(“Treatise on the contract of
letting and hiring”) par 394.
[41] In so far as the
respondent, in the present case, has both supplied and fitted the
unit, I would incline to the view that the
agreement should, strictly
speaking, qualify as one of purchase and sale. For purposes of
establishing liability for the destruction
of the unit in this
matter, however, it is really of no consequence whether it is the one
or the other. On the basis that it was
a contract of purchase and
sale the risk passed to the purchaser (the appellant) as soon as the
contract was
perfecta
, namely when the thing (the
merx
)
and the price (the
pretium
) had been determined and the
agreement was, as we have already established, unconditional. It is
then said that the risk falls on
the purchaser (
periculum est
emptoris
). See
Digest
18.6.8pr;
Institutes
3.23.3;
Grotius
Inleidinge
3.14.34; Voet
Commentarius ad pandectas
18.6.1; Van Leeuwen
Censura forensis
1.4.19.5; Pothier
Traité du contrat de vente
(“Treatise on the contract of
sale”) par 309; Van der Linden
Koopmans handboek
1.15.9;
Wessels
Contract
par 2108 and 4900; Wille
Principles
533;
LAWSA
24 (first reissue 2000) s v “Sale” by A J Kerr 93
(par 123).
[42] Similarly, should the
agreement have been one of letting and hiring of work, the risk was
that of the appellant, as lessor, once
the work had been done (the
unit installed), even if the unit had not yet been delivered. See
Digest
19.2.13.5; 19.2.36; 19.2.37; 19.2.59; 19.2.62; Voet
Commentarius ad pandectas
19.2.37; Pothier
Traité du
contrat de louage
(“Treatise on the contract of letting and
hiring”) par 433. So much the more would it be the case if, as
here, the lessor (appellant)
took delivery after obviously approving
the installation of the unit and using it for a considerable time
before its destruction
in the accident. It would be absurd if, under
such circumstances, the lessee (the respondent) should be deprived of
its cost of supplying
and fitting the unit onto the appellant’s
vehicle. If the appellant was foolish enough not to insure the unit
as part of its vehicle,
it has no one to blame but itself. One does
not need to rely on any trade usage or custom in this regard. It is
simply a matter of
common sense. Anything to the contrary would be in
conflict with the most fundamental principles of justice, fairness
and reasonableness.
CONCLUSION
[42] It follows from the
above that the appeal must be dismissed. In the event the following
order is made:
The appeal is
dismissed with costs.
The cross-appeal is
dismissed with costs.
D H VAN ZYL
Judge of the High Court of
South Africa
I agree.
M H E ISMAIL
Acting Judge of the High
Court of South Africa