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[1989] ZASCA 127
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Sarembock v Medical Leasing Services (Pty) Ltd. and Another (143/88) [1989] ZASCA 127; [1991] 1 All SA 16 (A) (29 September 1989)
143/88 /mb
IN THE SUPREME COURT OF SOUTH AFRICA (APPELLATE DIVISION)
In the matter between:
HOWARD LEIGH SAREMBOCK
APPELLANT
and
MEDICAL LEASING SERVICES (PTY LTD)
... 1ST RESPONDENT
BLOOMSBURY CARRIAGE COMPA
NY 2ND RESPONDENT
CORAM
: CORBETT CJ, NESTADT, VIVIER, KUMLEBEN et F H GROSSKOPF JJA
HEARD
: 28 AUGUST 1989
DELIVERED
: 29 SEPTEMBER 1989
JUDGMENT
KUMLEBEN, JA
/...
1.
KUMLEBEN, JA
The appellant sued the first respondent in the
Cape of Good Hope Provincial Division of the Supreme
Court for abatement
of the purchase price paid by him for
a motor car bought from the first
respondent. The second
respondent was joined as a Third Party. For his cause
of
action, based on the
actio quanti minoris
, the appellant
relied
on the fact that, unbeknown to him, the car, a
1981 Porsche 911 SC, was
latently defective at the time
of sale in that its front portion had been
replaced. By
reason of this defect its value at the time of sale, so
the
appellant alleged, was R20 000 less than the price of
R39 500 which he paid
for it: hence the claim for a
reduction of the purchase price to R19 500.
Both the
respondents admitted that the front end of the car had
been replaced but
denied all other material averments in
the particulars of claim. The second respondent, in
2/...
2. amplification of its general denial, alleged that before the sale
was concluded the appellant was told that the car had been involved
in an
accident and that the manner of its repa.ir was explained to him. Despite the
denials on the pleadings, at the trial it was
not disputed that the car was
latently defective and that the defect had reduced its value. Thus the two
issues of fact to be decided
were whether the appellant knew of the defect and
whether the value of the car when sold was less than the price paid for it to
the
extent claimed.
The second respondent is a motor car dealer. The firstrespondent is a leasing
service enabling clients to deal with it rather than
make a direct purchase. The
appellant negotiated with the employees of the second respondent and in effect
bought the car from the
second respondent: once the appellant had decided to
buy, it was
3/...
3.
formally sold to the first respondent who in turn
sold it to the appellant in terms of an instalment sale agree-ment. At the
pre-trial
conference the appellant undertook, were he to fail in his action, to
pay the first respondent's costs. And the second respondent
indemnified the
first respondent in respect of any order made against it in favour of the
appellant. Thus the need for the first
respondent to feature as a party to the
action fell away. By further agreement these arrangements held for this
appeal.
The first of the two issues accounted for most of the evidence. The
appellant, supported by his brother, Dr Brian Sarembock, said
that he was
unaware that the car had been involved in a major accident or of the repairs
effected and was thus unaware of the resultant
defect. Three witnesses for the
second respondent sought to contradict this evidence. They were
4/...
4. Mr Levin, the sole director and shareholder of the second
respondent; Mr Booysen, a salesman employed there; and Mr Caroline, the
administrative manager of the firm. The court (Conradie J) considered, with
respect quite correctly, this issue to be one of straight
credibility and for
convincing reasons found that these three witnesses were dishonest. On this
issue their evidence was conseguently
rejected as false. This conclusion was not
challenged on appeal. As to the second issue, the court held that the appellant
had failed
to prove the value of the car at the time of sale and on this ground
dismissed the claim. It is this finding which is contested in
this appeal.
Before turning to it, the history of this car and some details of its sale to
the appellant ought to be briefly recounted.
5/...
5. The 911 SC is one of a series of Porsche motor cars and is in
about the middle of the range of models of this make. They are imported
from
Germany and are much sought after by motor car enthusiasts primarily as an
investment or for their high performance capabilities
or for both these reasons.
The origin of this particular car is rather obscure. Hearsay, which was received
without objection at
the trial, indicates that it was imported with extensive
front-end damage by a panel-beating firm in Durban. "Parts of another vehicle"
were then grafted on to the front of the damaged one. This was variously
described as "cutting it in half" to create a "mechanical
hybrid" or as the
substitution of the "nose cone" by means of a "front-end graft". Fortunately a
more precise description of what
was done emerges from the evidence. The chassis
of the Porsche consists of a moulded metal frame or plate to which the sills of
the
superstructure
6/...
6. (the bodywork) and other components of the car are
attached. In this case the chassis was cut right through, laterally,
approximately
where the passenger compartment in front begins, that is, just in
front of the foot pedals as one witness put it. The corresponding
front portion
of the chassis of another Porsche 911 SC was then matched and welded to the
remaihing part of the chassis of this car.
The dissection did not take the form
of a straight cut at right angles to the length of the chassis. The fusion was
an irregular
one - in carpentry terms "a tongue and groove joint" - to make it
more secure. Thereafter the front end of the car was rebuilt on
the grafted or
joined chassis. This involved
inter alia
the re-welding of the sills of
the body to the chassis and some reconstruction and welding of the windscreen
pillars.
7/...
7. Thus repaired, the car was sold to Mr Anthony Martin, a used car
dealer in Durban, who was called as a witness for the second respondent.
Martin
said he was aware of the defect at the time of purchase but could no longer
remember precisely what he paid for it. As he
recollected, the price was
"approximately R32 000." On 20 October 1983 he in turn sold it to Levin, acting
on behalf of the secdnd
respondent, for R35 000. According* to Levin, Martin
told him that the car had been damaged and repaired. Without grasping the
technicalities
of this explanation, he was satisfied on what was said to him
that the strength and safety of the car was unimpaired. He accepted
this
assurance from Martin, whom he khew to be a Porsche racing driver. Before going
to Durban Levin already had a prospective buyer,
a Mr van Embden, who was a
personal friend of his. On his return to Cape Town, Levin sold it to Van Embden
for R40 000 at a time
when
8/...
8. the odometer registered 9 000 kilometres. Van Embden
retained it for about a year before trading it in for R35 000 in part payment
for another car bought by him from the second respondent.
Thus the car came to be in the showroom of the second respondent when the
appellant became interested in buying a Porsche. He was
twenty-five years old
and was , running a successful practice as a dental surgeon. Though a tiro in
the field of sports cars, he
decided to buy, as he put it, a "prestigious" car
for investment purposes. Assisted by his brother, Dr Brian Sarembock, he
selected
this particular one. After their first trial run in it, the appellant
asked Booysen whether it had been involved in any major accident.
He replied
that, as a result of a minor one, the bonnet had been damaged and replaced. The
appellant decided to buy the car.
9/...
9. On Wednesday 16 January 1985 Caroline came to
the
appellant's surgery with a written offer to purchase in order to close the deal.
Coincidentally, whilst Caroline was there, another
second-hand car dealer
telephoned the appellant and told him that the car he was on the point of buying
had been "sawn in half."
He was suitably shocked and confronted Caroline with
this information. Caroline put him in touch with Levin by telephone. The latter
emphatically denied this. He there and then dictated a letter over the telephone
to Caroline in which an undertaking to buy back
the car subject to certain
conditions was given. In addition the letter confirmed that the car was a 1981
model and that "every major
component thereof is of the year 1981 or later." (It
did not, one notes, confirm that the car had not been "sawn in half'.) On the
strength of Levin's oral assurance and the contents of the letter, which was
10/...
10. signed by Caroline and the appellant, the latter
signed the offer to purchase. At the foot of this document, with some
instructions
to the seller, the following words appear: "Client aware of front
end damage." (This, one also notes, does not state the nature of
the repair work
and is conveniently consistent with what was told to the appellant, namely, that
the bonnet had been damaged.) According
to this document the purchase price was
R39 500 and the general sales tax was apparently to be paid by the appellant.
There is a
reference to the fact that the appellant was to trade in his BMW
motor car in part payment of the purchase price but no credit for
the trade-in
price features on the document. This is no doubt because this sum is taken into
account in some way in the instalment
sale agreement between the appellant and
the first respondent. Be that as it may, it was common cause on the pleadings
and at the
trial that the purchase price
11/...
11.
was R39 500.
The appellant took delivery of the car. After about a year he and his brother
drove it to Durban and left it with Mr McGee of Durban
Porsche to have the
engine modified and other work done to it. After about a week McGee telephoned
the appellant to tell him that
the car had in fact been "sawn in half". At that
stage he was committed to the extent that he had paid Durban Porsche a deposit
of
R10 000 for parts ordered from overseas. His attorney advised him to go ahead
and have the modification and other work done as planned
notwithstanding this
disturbing disclosure. The total cost of such work eventually amounted to R30
000. He retained the car and continued
to use it.
Mr Botha was called as a witness for the
12/...
12.
appellant to describe in detail the condition of the car. He
was a qualified motor mechanic employed by the Automobile Association
of South
Africa in Durban as a technical officer to check repairs done to vehicles. He
inspected the car in Durban and drew up a
detailed report. He was critical of
the standard of the repair work involved in the front-end graft. It is
unnecessary to refer to
his evidence in this regard since, as I have said, it
was common cause that the graft amounted to a latent defect. At the conclusion
of his evidence-in-chief he expressed the view that as a result of the graft the
car was possibly less safe to drive. As he put it,
"if the vehicle was in any form of collision after this repair work had been
carried out there is a possibility, notably the side-swipe
type of accident, the
vehicle could be torn in two."
His grounds for this conclusion
proved deficient. Under cross-examination he was obliged to concede that what
he
13/...
13. regarded as below standard welding would not
necessarily have weakened the chassis and, what is more important, it appeared
that
his view was based on a misconception of how the graft had actually been
carried out. Although his evidence in this regard is not
all that explicit, it
appears that he assumed from the welding mark that the cut across the chassis
floor was in a straight line
or more or less in a straight line. This, in his
view, would constitute an inherent weakness. He later, however, conceded that in
the case of a "tongue and groove" graft such an inference could not necessarily
be drawn. Notice was given in terms of Uniform Rule
of Court 36(9)(b) that Botha
would be called as an expert and his "Confidential Report" was attached to the
notice. In the report
all the defects are listed but in the concluding
paragraph, which states that the car was involved in a major collision involving
a front-end graft and that the repair
14/...
14. work is below standard, there is no mention of the car
being less safe. Had he held that view at the time of inspection, it is
most
unlikely that he would have omitted to say so in his report. Moreover, when the
car was modified to increase its engine power
there is no suggestion that the
chassis was strengthened. Yet the appellant was not told by anyone that it was
hazardous for him
to continue driving the car.
On the evidence I am satisfied that the court a
quo
was correct in
concluding that the appellant had failed to prove that the car, though defective
as a result of the graft, was on
that account less safe.
It was common ground that for the appellant to succeed in his claim it was
necessary for him to prove, on a balance of probabilities,
the value of the car
at
15/...
15. the time of sale and, one need hardly add, that such
was less than the purchase price paid. To do so the appellant relied primarily
ón the evidence of his witness, Mr Hoffmann. He was the branch manager of
LSM Distributors (Pty) Ltd of Durban. This firm
was the agent for, and the sole
distributor of, Porsche and Jaguar motor cars in South Africa. He had at the
time of the trial eight
years experience in the "exclusive car market" and
during the previous three years had dealt almost exclusively with Porsche motor
cars. Before he came to Durban in April 1986 he had been with the Johannesburg
branch of his firm. There he had sold about 150 Porches
per year, and of every
100 about 20 were 911 SC models. He and one other employee of his firm are
accredited by it to value Porsche
motor cars.
He examined this particular car when it
16/...
16. arrived in Durban and later at the panel-beaters when
it was "totally stripped." The value he would have placed on that car at
the
time of sale in January 1985, had it not been grafted, would have been between
R40 000 and R45 000. His valuation with the defect,
and the basis for his
estimate, appear from the following two passages in his evidence-in-chief:
"Now what would you say the value of such a car
would've been in January of 1985? Well if you
ask me that question I must say nothing because the value of a car like that
only can be based - it's look, a Porsche, especially
a 911, is really - it's a
classic motor-car and the people who buy this type of cars they obviously not
only enjoy their cars, they
buy these cars for investment purposes. So they want
to have an immaculate car, definitely a car - not a car what was involved in
an
accident. So if you say - let's say a value R20 000,00 to R25 000,00, that's
already on the high side and has only one reason
because if you take the engine
components and the gearbox and take all that things in account, that has
somewhere on the line of
value but not really the car as such so much.
Now you mentioned - you've had, obviously, dealings with the type of person who
buys a Porsche motor
17/...
17.
vehicle? Ja.
And just tell the Court what motivates people to
spend this type of money on a motor car? Look
you see especially in South Africa very clear over the last about say 10, 15
years that a motor vehicle only appreciate in value,
especially a Porsche,
really only appreciate in value and that's the reason they buy the motor-car.
They enjoy it to drive no doubt.
On the other hand they now also they get at
least their money back plus so they -they can't do really a mistake because it's
- from
the investment point it's one of the really, really good investments
which they can do in these days."
and
"Now knowing the average Porsche buyer as you do
... Ja?
Is he likely to buy a car which has been, for want
of a better term, sawn in half? No, he wouldn't.
Definitely not. Because if he buys a car - this type of car, he wants to buy it
not only to enj oy it, he wants to buy as an investment
and also this type of
car, it's a very, very fast sports car, so if he wants to go for it and wants to
drive that car fast, obviously
it's dangerous. So two purposes why he won't buy
it. He buys the car mostly for investment reasons. So the car without a value he
can't buy.
18/...
18.
And what is the position of Dr Sarembock? What is his position going to be when
he wants to sell this
car? Well, I only can say good luck, I wouldn't
buy it from him."
As appears from these passages, the basic
premise for the value Hoffmann placed on the car is that, with the defect
disclosed, it
would only be bought for the sale or use of certain of its
component parts - for what one might call its "break-up" value.
The reason for this conclusion is in the first-quoted passage restricted to
the attitude of a buyer purchasing for investment purposes.
However, in the
second extract from his evidence he states that a Porsche thus grafted is
"obviously dangerous" and for this reason
as well would not be bought to be
driven. It clearly emerged during cross-examination that he lacked the expert
knowledge to state
as a fact that it was
19/...
19.
dangerous; that this assertion was no more than an
assumption on his part based on what Mr Botha had said in court and on certain
information from other sources - "my technical guys"; and that this supposition
weighed with him in deciding that it had no prospect
of being sold as a motor
car. This is borne out by the following answers he gave under
cross-examination:
"You assumed that that car is dangerous. Am I
correct? Well, we got the statements about it
and we've got the statements from, I believe, that
Mr Botha, for example, was
here yesterday and from
my technical guys."
"And for purposes of the evidence that you've given,
you have assumed that thát car is dangerous? Ja.
With that facts what I got, I gave a valuation.
That's right."
"You've assumed that fact but you don't know that
fact by reason of your own
expertise because you're
not an expert in that field? That's
right."
Thus, for the premise on which Hoffmann's valuation was
based to have validity, it was necessary for the
20/...
20. appellant to prove that the car was in fact dangerous
to drive. This, as I have said, was not established. In point of fact it
seems
to me more likely that a prospective buyer of such a car, when told of a
front-end graft, would want to know whether the sálesman
could give an
assurance that it was
safe
to drive rather than whether it could be
proved to be
unsafe
. Be that as it may, this was not the basis on which
Hoffmann approached the matter and founded his valuation.
Mr Hoberman
, who appeared on behalf of the second respondent,
submitted that the Martin-Levin and Levin-Van Embden sales of this particular
car,
with the buyer in each case knowing of the defect, also serve to refute the
premise of Hoffmann. I consider it unnecessary to rely
on the evidence of these
three witnesses in this regard and am disinclined to do so.
21/...
21. The first sale from Martin to Levin was between
second-hand car dealers and, for reasons still to be stated, Martin's
credibility
on matters of fact is, like that of Levin, suspect. Van Embden's
evidence, which by contrast can be accepted as credible, does not
make it clear
that the nature of the front-end graft was fully or adequately explained to him
or that he properly understood what
was told to him. He said that Levin did give
him details of the damage and repair work, the technicalities of which,
according to
Van Embden, were rather lost on him. To refer to his evidence, he
said that Levin had told him
"that it had been in a motor vehicle accident of some sort and that they were in
Durban fixing up the car and that they were replacing
the front of the car. I
also recall him discussing with me the fact that there's a metal underneath to
the motor vehicle and as a
result of the structure of the car in question the
logical way to fix a car where the front had been in an accident was not to
panelbeat
the parts but to in fact replace the front of the car. Jack also told
me certain technical details which - I'm personally not a technical
man so I
22/...
22.
would not recall in detail what he spoke about when he referred to things in
technical detail."
(In passing, the statement that they were busy
fixing the car in Durban is incorrect. The car had been repaired before it was
delivered
to Martin.) This evidence does not clearly show that Van Embden was
told, or fully appreciated, what a front-end graft entailed.
Moreover, if Levin
had made a full disclosure of the defect to Van Embden and was nevertheless able
to sell it to him for R40 000,
why - one may ask - did he decide to be devious
and deceitful in selling the car to the appellant for R39 500 a little more than
a year later. Without relying on the evidence of these three witnesses, I
nevertheless consider that the court a
quo
was correct in concluding that
the basis for Hoffmann's valuation of R25 000 -R20 000 for the "car" cannot be
accepted.
23/...
23.
As a general rule the value of an article is to be determined
with reference to the price it would fetch in the open market: see
Pietermaritzburg Corporation v South African Breweries, Ltd
1911 A.D. 501
at 515. However, as Innes JA at page 516 of that judgment observed:
"There may be cases where, owing to the nature of
the property, or to the
absence of transactions
suitable for comparison, the valuator's
difficulties
are much increased
There being no concrete illustration ready to hand of the operation of all these
considerations upon the mind of an actual buyer,
he would have to employ his
skill and experience in deciding what a purchaser, if one were to appear, would
be likely to give."
If the evidence proves or indicates that
sales of such cars with grafted chassis take place with sufficient. regularity
for them,
or certain of them, to serve as a guide to market value, it may well
have been incumbent
24/...
24.
upon the appellant to produce such evidence. If not, the
court must do the best it can and, with reliance on some other legitimate
method
of valuation, make a fair and reasonable estimate on the evidence of the value
of the car. (Cf.
Maennel v Garage Continentai, Ltd
1910 AD 137
at 145 and
Labuschagne Broers v Spring Farm (Pty.) Ltd
1976(2) S.A. 824 (TPD) 827 F
- G.)
What is the evidence on the freguency of sales of such a car? Hoffmann, with
his considerable experience of the sale of Porches, was
on only one occasion
offered one for sale. He turned it down because he considered that it would be
difficult, if not impossible,
for him to dispose of it. Levin does not suggest
that he ever bought or sold such a car, apart from this particular one. Had he
done
so, he would certainly have given evidence to this effect in support
25/...
25.
of that of Martin. The latter's evidence, purporting to rebut
that of Hoffmann, was that there was in fact a market for such cars.
He agreed
that a particular type of buyer - the investor on whom Hoffmann focussed
attention - would not contemplate buying such
a Porsche. But, he said, there is
another category of less affluent Porsche enthusiasts who would be prepared to
buy one though at
a considerably lower price. His evidence does not bear out
this assertion. On the contrary, in reply to the suggestion that it is
"very
uncommon" to come across such a car, Martin agreed that it was "unusual".
Earlier in his evidence-in-chief he had said that
such a car could be easily
sold. In fact he said that they were "very, very saleable at the moment", that
is, in September 1987 when
the trial took place. In support of this statement,
he volunteered the information that in June 1987 he had sold a 1980 Porsche 911
S Targa with a
26/...
26. front-end graft for R45 000 to a Mr Leslie Amas of
Durban. After the second respondent had closed its case, Amas was called by
the
appellant in rebuttal. He happened to be a motor mechanic. He had inspected the
car, which he still owned, and stated unequivocally
that its chassis was intact
and had never been cut or welded: there was no question of its having had a
front-end graft. He added
that had such been the case and had this been
disclosed to him, he would not have bought the car. His evidence was not
challenged
and must therefore be taken to have been accepted by the second
respondent. Thus Martin was caught out in what the trial court called
"an
extraordinary lie" but one which it considered had no more than "anecdotal"
significance and was hardly worth lying about. I
view the matter in a rather
more serious light. It was a deliberate lie told to bolster his evidence on a
vital
27/...
27. aspect of the case on which he had been called to testify. It at the very
least discredits that part of his evidence which was
intended to prove that such
cars are frequently or readily sold in the market place. In fact on all the
evidence the contrary was
established.
I turn now to cónsider whether there is satisfactory evidence on what
the value of this car would have been at the time of
sale had it not been
subject to this front-end graft.
Hoffmann valued it without the defect at R40 000 - R45 000. His competence
and experience to make such a valuation was not disputed.
The learned judge,
however, considered that there were two countervailing considerations which made
this valuation suspect and led
him to conclude that even its upper
28/...
28.
limit was too low. The reasons for this conclusion appear
from the following two passages in the judgment:
"The evidence of sales which Mr Hoffmann did present does not, to my mind, lend
support to his opinion that a 1981 911 SC Porsche
in mint condition would in
January 1985 have sold for between R40 000 and R45 000. The prices upon which he
relied for his view do
not seem to bear him out. There is no evidence of any
sale at R40 000 or less. In fact, the lowest figure recorded was for a car
one
year older than the Plaintiff's; that was R8 000 above the price paid by the
Plaintiff for his vehicle. I have borne in mind
that two of the vehicles used as
examples were 1982 models, one of which was a right hand drive with additional
features. The one
example of a 1981 model sold during May 1985 shows that it
fetched R52 000; it was a right hand drive. Vehicles with left hand drives
cost
about R3 000 less.
Viewed as a whole, it certainly seems to me that the relevant price range is
considerably higher than Mr Hoffmann made out. This
lends support to the Third
Party's case that the price of R39 500 discounted the imperfection."
The other passage reads as follows:
"It does not seem to me that I can, on the evidence before me, say that the
Plaintiff did not
29/...
29.
at the time buy his Porsche for the true value of a grafted 1981 Porsche. I have
found that the Plaintiff was not told of the welded
chassis. These two findings
do not conflict. It is my view that Booysen, who strikes me as a seasoned and
clever and certainly very
experienced operator in the used car market,
might
have feared that he might lose the sale if he told the Plaintiff
about the graft. Of course, in concealing this from him he cheated
him. But it
does not follow that he also robbed him by making him pay more for the car than
it was worth." (My emphasis.)
In this way, in the last-quoted
passage, the court sought - albeit somewhat tentatively - to reconcile the
deliberate concealment
of the defect with the sale of the car at its true value.
I cannot agree with this. It is to my mind against all the probabilities
- and
would have been wholly out of character - for the three dishonest car dealers
(according to Levin, Caroline as well as Booysen
knew of the defect) to have
decided to act as they did but at the same time to have resolved not tp take
full
30/...
30. advantage of their deception. There was an inherent risk that they would
be found out, in which event they would be hard pressed
to persuade anyone that
they had concealed this material defect for the limited purpose of securing a
sale but nevertheless gave
the appellant a sguare deal. In the witness box they
made no attempt to do so.
Turning to the first-quoted passage from the judgment, the reliance upon
certain sales for doubting Hoffmann's valuation is based
on a portion of his
evidence during cross-examination. After furnishing details of the number of
Porsches he was involved in selling
annually, his evidence continues thus:
"Have you got any documentation reflecting the sales of those 911's that may
help us in arriving
at the correct market value? Well, I could
tell you some figures what are in fact just - put together yesterday in
Johannesburg, just
31/...
31.
reflecting the start time of '85. You see in'that short period I couldn't find
all the records also but let's start ...." (and the
witness then proceeds to
give certain details of five sales).
From this evidence one
cannot say with any degree of certainty that the "figures" of these five sales,
which he had obtained in or
from Johannesburg the day before he testified in
court, are based on his personal knowledge and, if so, that they were taken into
account by him in reaching his valuation of R45 000 - R40 000. I shall, however,
assume in favour of the second respondent that this
is the inference to be drawn
from what he said. But there is no suggestion that his valuation was based
solely
on these five sales. His evidence in regard to them can be thus
summarised (the odometer reading at the time of sale is stated in
parenthesis):
Sale 1
32/...
32.
In March 1985 he sold a left-hand drive 1982 Porsche 911 SC
(41 000 kilometres) for R49 000.
Sale 2
In March 1985 he sold a left-hand drive 1978 Porsche 911 SC
Targa (60 000 kilometres) for R31 000. (The Targa has a detachable roof
section.
For this reason it is a more expensive version of the 911 SC.)
Sale 3
In March 1985 he sold a right-hand drive 1982 Porsche 911 SC
(45 000 kilometres), which he described as a "full house", for R51 000.
(A "full
house", in the argot of the trade, refers to a car with certain extra features.
The witness said "with electric windows,
everything" but was not asked to
explain what was included in the term "everything".)
33/...
33. Sale 4
In May 1985 he sold a right-hand drive 1980 Porsche 911 SC (86
000 kilometres), also a "full house", for R47 500.
Sale 5
In May 1985 he sold a right-hand drive 1981 Porsche 911
SC for R52 000. (Odometer reading not given.)
There are a number of reasons why the facts relating to these sales, such as
they are, cannot be regarded as a ground for refuting
or casting doubt on
Hoffmann's valuation based on his general experience. It was coznmon cause that
there were changes in the exchange
rate, as well as in import restrictions and
duties, which affected the price of second-hand cars already imported. In two
cases "full
house" cars were sold and, as has been pointed out, one does not
know
34/...
34. precisely what this term means or to what extent the extra features
influence the selling price. There is evidence that there
was an increase in the
price of such cars from January 1985 (when the car was sold to the appellant) to
Nay 1985 but the êxtent
of such increase is not adeguately disclosed. In
the light of the known - and unknown - facts relating to these five sales they
cannot,
jointly or severally, serve to disprove Hoffmann's valuation. The
statement in the extract from the judgment that there is no evidence
of any sale
at R40 000 or less is not strictly accurate. The price in the second sale was
R31 000. It is true that the sale price
in the case of the other four sales was
more than R40 000 but, taking into account the considerations to which I have
referred, the
prices to my mind cannot be considered in isolation and do not
serve as a ground for concluding that Hoffmann's
35/...
35.
valuation is wrong.
Of the five sales the last one (Sale 5) is the most comparable. Apart from
the f act that it relates to a right-hand drive car whereas
the car bought by
the appellant was a left-hand drive and that they no doubt had different
odometer readings, the two cars are in
other respects similar. Hoffmann's
unchallenged evidence is that a left-hand drive on a Porsche 911 SC would reduce
its market value
by about 10%. If this is taken into account, together with the
fact that there was an increase in price from January to May, this
sale would
appear to be in line with Hoffmann's valuation.
There is no suggestion that the car bought by the appellant suffered from any
other defects or for
36/...
36. any other reason would not have been sold at the current market price for
such a car. Having concluded that it was not sold as
a grafted car or at a
discount owing to that imperfection, the selling price of R39 500 can be taken
into account - see
Van Zyl v Stadsraad van Ermelo
1979(3) S.A. 549 (AD)
572 G - H -and is an additional factor tending to confirm Hoffmann's
valuation.
In argument
Mr Hoberman
submitted that Hoffmann's estimate was
unacceptable in that it postulated a car in "mint condition". His evidence in
this regard
reads as follows:
"Now based on your experience as a salesman of
Porsche motor vehicles, do you
sell both new and
second-hand Porsche motor cars? Yes.
What would the value of that motor vehicle have
been in let's call it "mint
condition" ... Ja.
37/...
37.
Fair wear and tear excluded ... Yes.
In January of 1985? Round about between
R40 000,00 and R45 000,000.
Between R40 000,00 and R45 000,00? Yes.
Now let me just get this clear at this stage.
When you say that and it was
already presupposed
in my question ... Ja.
But that is a car in mint condition? Yes,
definitely.
And when you give that price it's based on your
experience as ... Obviously. And that's also
based upon that - what we do for example with a car. Look, if we get a car in,
that car get total checked over, that car get a -
not only full workshop report,
it get a service done, major service or minor service, whatever has happened,
and leaves our showroom
with full factory guarantee. That's meaning guarantee on
everything so that's the reason why we base the price round about that
frame."
The inspection of a second-hand car to ensure that it is
in proper working order and the servicing of it are, one would expect, routine
tasks to be undertaken before it is offered for sale and there is nothing to
show
38/...
38.
that this car was not in that sense in "mint condition". The
importance or import of a "full factory guarantee" was not explored in
evidence,
but it is unlikely that this factor significantly influenced the valuation made
by Hoffmann, bearing in mind the comparatively
wide limits of his estimate.
In the result, on an assessment of all the relevant evidence, the appellant,
in my view, has proved that the car without the defect
at the time of sale had a
market value of at least R40 000.
It is self-evident, and common cause, that this car with a front-end graft
has a substantially lower market price than its counterpart
without any such
imperfection. Hoffmann was not asked to estimate the diminution in value since,
as we have seen, his
39/...
39. figures were based on "break-up" value. Martin agreed that the price
would be reduced - though not "drastically reduced" as was
suggested to him -
and said that it would or could be sold at 20% less than the price of what he
called an "undamaged" car. Levin
agreed that he would expect a percentage
reduction of that order. I must say that these estimates seem to be on the low
side if one
takes into account the far-reaching nature of the damage and repair
work. An abatement of 20% would, for instance, amount to no more
than twice the
percentage reduction which is made for a left-hand drive. However, in the
absence of any other evidence in this regard,
this estimate of the required
reduction - furnished by the second respondent's own witnesses - ought to be
accepted. It amounts to
a subtraction of R8 000 from the estimated value of R40
000.
40/...
40.
In the result I am satisfied that it has been shown on a
balance of probabilities that the car was worth R32 000 at the time of sale.
This conclusion is reached along lines which differ from those on which the
appellant set out to prove the value of the defective
car. In the particulars of
claim he simply alleged that its value was R20 000 less than was paid for it. In
the reguest for further
particulars further information was sought,
inter
alia
: (i) "Full and precise details as to
how the sum of R20 000,00,
being the diminution in the value of the said vehicle, is calculated and arrived
at; (ii) its market value
at the time of purchase "assuming the def ect to have
existed"; and (ii) its market value "assuming there to have been no latent
defect." The appellant furnished
41/...
41. the figure of R19 500 in reply to (ii) but did not respond further. No
particulars for the purpose of trial were sought. The appellant
was therefore
not bound by the pleadings to prove this aspect of his case in any particular
manner. This
Mr Hoberman
did not dispute. In fact he, very fairly,
conceded that, if the evidence warranted the calculation of the value of the car
in the
manner set out above, he could not point to any prejudice or raise any
valid objection.
The remaining matter, one of law, is whether the aedilitian remedy is
available to a claimant in a case such as the present when the
latent defect
affects the resale price, and hence its value as an investment, but not the
utility of the car to be used as such.
The possibility that this issue would
have to be settled prompted the trial judge to grant leave to
42/...
42.
appeal to
this court
. The question is
comprehensively
dealt with in the appellant's heads of argument. However,
Mr Hoberman
did not submit that, in the event of the value of the car at the time of sale
being proved, the appellant's claim was not well-founded.
In the circumstances I
need but briefly deal with this guestion.
In his particulars of claim the appellant did not allege fraud or breach of
contract on the part of the first respondent. His claim
for relief was based
solely on, and was restricted to, the aedilitian remedy.
The nature and effect of the defect required
to be proved in such a case is thus described in
Holmdene Brickworks (Pty)
Ltd v Roberts Construction
43/...
43.
Co. Ltd
1977(3) S.A. 670 (AD) 683 H - 684A:
"Broadly speaking in this context a defect may be described as an abnormal
guality or attribute which destroys or substantially impairs
the utility or
effectiveness of the
res vendita
, for the purpose for which it has been
sold or for which it is commonly used (see
Dibley v. Furter
,
1951 (4)
S.A. 73
(C) at pp. 80-2, and the authorities there cited; also
Knight v.
Trollip
, 1948(3) S.A. 1009 (D) at pp. 1012-13;
Curtaincrafts (Pty.) Ltd.
v. Wilson
,
1969 (4) S.A. 221
(E) at p. 222; De Wet and Yeats,
Kontraktereg
, 3rd ed., p. 236; Mackeurtan,
Sale of Goods
, 4th ed.,
p.246; Wessels,
Contract
, 2nd ed., para. 4677)."
The
passage in
Knight v Trollip
cited reads as follows:
"As I understand it, a contract of sale under the common law normally imports,
in the absence of variation by express agreement or
necessary intendment, that
the seller undertakes to the purchaser that the "
res vendita
" is, at the
time of contracting, free from any undisclosed defect which renders the
"
res
" unfitted in whole or to a substantial extent for the purposes for
which such a thing is normally used, and/or for any special, even
though
unusual, purpose which the purchaser has, prior to the making of the contract,
made known to the seller."
44/...
44.
The evidence proved that such cars are generally bought for
investment purposes. The presence of this defect therefore materially
impaired
its effectiveness as an investment. If, however, it can possibly be said that
the "utility or effectiveness" of a car of
this kind does not usually or
ordinarily relate to it being bought as an investment, in this case its purchase
for that purpose was
known to all concerned. Thus it cannot be said that the
nature of the defect is a bar to the appellant's claim.
The appeal is allowed with costs, including the costs of two counsel. The
order of the court a
quo
is set aside and the following substituted:
"An order is granted reducing the
purchase
45/...
45.
consideration as it appears in Annexure "A" to the
particulars of
claim to an amount of R32 000 and
the first respondent is ordered to pay the costs
of suit."
M E KUMLEBEN
JUDGE OF APPEAL
CORBETT CJ)
NESTADT JA)
VIVIER JA) Concur
GROSSKOPF FH JA)