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2024
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[2024] ZAECMKHC 81
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Caterpillar Financial Services South Africa Proprietary Limited v Amlo Trading Close Corporation (2696/2023) [2024] ZAECMKHC 81 (25 June 2024)
IN
THE HIGH COURT OF SOUTH AFRICA
(EASTERN
CAPE DIVISION, MAKHANDA)
NOT
REPORTABLE
CASE
NO.2696/2023
In
the matter between:
CATERPILLAR
FINANCIAL SERVICES SOUTH AFRICA
PROPRIETARY
LIMITED
Applicant
and
AMLO TRADING CLOSE
CORPORATION
Respondent
JUDGMENT
WATT
AJ:
[1]
This is an opposed application in which the Applicant seeks the
return of four units from the Respondent, namely a new caterpillar
medium excavator 320 with serial number ZBN12471; a new caterpillar
medium excavator 320 with serial number DKJ21894; a new caterpillar
backhoe loader 426 with serial number EJ402922 and a new caterpillar
backhoe loader 426 with serial number EJ402924 (“the
Units”).
[2]
On 14 September 2020 the Applicant and the Respondent entered into a
written instalment sale agreement. On 14 September 2020
and 25
November 2020 the Applicant and the Respondent entered into written
schedules to the instalment sale agreement, in which
the purchase of
the Units was financed by the Applicant. The following terms of the
instalment sale agreement are relevant:
(a)
The
Respondent agreed that its payment and performance obligations under
the agreement are absolute and unconditional and all payments
are to
be made by debit order.
[1]
(b)
The
Respondent acknowledged that the Applicant owns and holds title to a
unit, until title is transferred to the Respondent upon
completion of
its obligations to the Applicant. A unit will remain the property of
the Applicant until all the amounts owing have
been paid in full.
Upon completion of all payments pursuant to a schedule, the Applicant
will transfer title and ownership of the
relevant unit to the
Respondent.
[2]
(c)
An event of
default includes the Respondents failure to make payment when due, or
if payment is not received by the Applicant when
due for any
reason.
[3]
(d)
In an event
of default the Applicant may declare the default and cancel the
agreement
[4]
and may shut off
and/or de-rate the unit using the unit monitoring system and it is
expressly recorded that the Respondent consents
to such shutting off
and de-rating of a unit.
[5]
(e)
Any
latitude, extension of time or other indulgence given by the
Applicant to the Respondent will not be construed as any waiver
of
any right. Any waiver of a right must be in writing. Neither party
shall be bound by any express or implied term, representation,
warranty or promise not recorded in the agreement.
[6]
[3]
The first schedule to the instalment sale agreement, entered into on
14 September 2020, relates to the first unit identified
in paragraph
1 above for a total financed sum of R2,208,000.00, to be paid by the
Respondent to the Applicant in instalments of
R79,376.45 per month,
over a period of 36 months. The second schedule to the instalment
sale agreement, entered into on 25 November
2020, relates to the
other three units, identified in paragraph 1 above, for a total
financed sum of R4,651,750.00, to be paid
by the Respondent to the
Applicant in instalments of R167,228.01 per month, over a period of
36 months.
[4]
The instalment sale agreement, together with the two schedules
thereto in which the Units are identified, will collectively
be
referred as the Agreement.
[5]
The Applicant alleges that it cancelled the Agreement as the
Respondent breached its terms, by failing to make full payment
of the
instalments when due and, that as at 21 May 2023, the Respondent was
in arrears in the sum of R2,546,636.70. The Respondent
admits that it
breached the Agreement by failing to make payment of the full
instalments when due to the Applicant.
[6]
From April 2022 various correspondence was exchanged between the
parties and the parties took various actions, which I summarise
as
follows:
(a) On 13 April 2022 the
Applicant directed a letter of demand to the Respondent and afforded
the Respondent until 19 April 2022
to make payment of the arears,
which at that time was the sum of R707,464.49. In this demand the
Respondent was informed that if
it should fail to make payment, the
Applicant would hand over the account to its attorneys, cancel the
Agreement and/or disable
the Units. The Respondent did not formally
respond to this demand and did not make payment as demanded.
(b) On 9 May 2022 the
Applicant directed correspondence to the Respondent in which it
stated that the Respondent is in default and
demanded payment of the
sum of R389,795.31 by 11 May 2022, failing which the Units would be
disabled. The Respondent did not respond
to this demand and did not
make payment as demanded. The Applicant then remotely deactivated the
Units, the exact date of which
is not apparent from the papers.
(c) On 5 August 2022 the
Applicant’s attorneys directed a letter of demand to the
Respondent which afforded the Respondent
an opportunity until 12
August 2022 to make payment of the outstanding arrears which, as at 5
August 2022, was the total sum R1,124,828,02.
(d) On 5 August 2022 the
Respondent responded to the letter of demand and provided reasons
which it alleged were the basis upon
which it could not make payment,
including that it had not received payment from various of its
clients and that the Applicant
had deactivated the Units. The
Respondent requested an opportunity to make payment to the Applicant
by 7 September 2022.
(e) On 19 August 2022 the
Applicant’s attorney addressed an email to the Respondent which
stated that the Applicant agreed
to an extension for payment to be
made by 7 September 2022, failing which the Agreement would be
terminated and legal action instituted
for the recovery of the Units.
The Respondent failed to make payment, as undertaken, by 7 September
2022.
(f) On 12 September 2022
the Applicant’s attorneys directed correspondence to the
Respondent in which the Agreement was cancelled
and sought immediate
return of the Units.
(g) On 18 September 2022
the Respondent made two payments of R400,000.00 each and addressed
correspondence to the Applicant in which
it referred to the payments,
acknowledged that it was not payment of the full sum owing to the
Applicant and requested that the
Units be re-activated. The
Respondent requested a further indulgence until the end of September
2022 to bring its account up to
date.
(h) On 12 October 2022
the Applicant’s attorneys addressed correspondence to the
Respondent in which it confirmed receipt
of the payment of
R800,000.00, that payment of the sum of R250,492.19 should be made by
14 October 2022 and the balance of the
overdue amount (R825,798.00)
should be settled in full by 25 October 2022. This correspondence
states that the proposal should
not be construed as a waiver of the
Applicant’s rights or a revival of the cancelled Agreement.
(i) On 18 October 2022
the Respondent addressed correspondence to the Applicant in which it
undertook to settle the arrears by the
end of November 2022, settle
the total outstanding sum by easter 2023 and make payment of at least
50% of the outstanding arrears
by the end of October 2022.
(j) On 25 October 2022
the Applicant’s attorneys addressed an email to the Respondent
in which it stated that payment of the
sum of R540,000.00 (50% of the
overdue sum) should be paid by 31 October 2022.
(k) On 2 November 2022
the Respondent made payment to the Applicant in the sum of
R250,000.00.
(l) On 3 and 25 November
2022 the Applicant’s attorneys addressed email correspondence
to the Respondent acknowledging receipt
of the payment of R250,000.00
and enquired when the outstanding sum would be paid.
(m) On 8 December 2022
the Respondent made payment to the Applicant in the sum of
R240,000.00. The Applicant re-activated the Units,
although the exact
date on which this was done is not apparent from the papers.
(n) On 18 January 2023
the Applicant’s attorneys addressed email correspondence to the
Respondent which stated the arrear
sum to be R1,346,866.08 and that
this sum, together with legal fees, should be paid by 27 January 2023
failing which legal action
would be taken.
(o) On 6 February 2023
the Respondent made payment to the Applicant in the sum of
R250,000.00.
(p) On 15 February 2023
the Applicant’s attorneys addressed correspondence to the
Respondent which stated that the arrears
is in excess of R1,3 million
and payment of at least R750,000.00 was required by 25 February 2023,
together with the payment of
the normal monthly instalment, for the
Applicant to consider any further settlement proposals. No payment
was made by the Respondent
by 25 February 2023.
(q) On 24 February 2023
the Respondent’s attorneys addressed correspondence to the
Applicant’s attorneys in which it
stated that the Units had
been de-activated for a period of four months and requested an
extension of the terms of payment for
four months.
(r) On 8 March 2023 the
Applicant’s attorney addressed email correspondence to the
Respondent’s attorney which stated
that an extension could only
be considered if at least R850,000.00 was paid towards the arrears.
Despite follow up emails on 16
and 22 March 2023 no response was
received from the Respondent or its attorneys.
(s) On 1 May 2023 the
Respondent made payment to the Applicant in the sum of R600,000.00.
(t) On 31 May 2023 the
Applicant’s attorneys directed correspondence to the Respondent
which stated that the Agreement had
been cancelled, which
cancellation remains effective, and demanded the return of the Units.
(u) On 5 June 2023 the
Respondent’s attorneys directed correspondence to the
Applicants attorneys in which it stated that
payment to the Applicant
would be made within 30 days.
(v) On 9 June 2023 the
Applicant’s attorneys addressed an email to the Respondent’s
attorneys which stated that the
arrears is the sum of R2,546,636.70,
which included unpaid invoices up until June 2023.
(w) No payment was made
by the Respondent, as undertaken in the correspondence of 5 June
2023, and subsequently the application
was launched on 7 August 2023.
[7]
The Respondent’s opposition to the application is premised on
various defences, including:
(a) The Applicant
deactivated the Units, which caused the Respondent harm and its
contracts were terminated due to the inability
to utilize the Units.
(b) The Agreement was not
validly cancelled as it has always been agreed between the parties
that the Respondent would make lump
sum payments to the Applicant,
whenever the Respondent was paid by its clients, and such payment
arrangement was accepted by the
Applicant.
(c) The Applicant failed
to exhaust all other remedies provided for in the provisions of the
National Credit Act 34 of 2005 (“the
NCA”).
(d) The return of the
Units would be prejudicial to the Respondent.
(e) The calculation of
the arrears amount has not been disclosed by the Applicant.
(f) The Respondent
intends to make payment to the Applicant, upon receipt of payment
from its clients.
(g) The Applicant failed
to exhaust all remedies in terms of the provisions of the Consumer
Protection Act 68 of 2008 (“CPA”).
[8]
It is common cause that the application is a
rei vindicatio
for
the return of the Units to the Applicant, which are in the possession
of the Respondent
.
Postponement
[9]
When the matter was called Mr Giwu, who appeared on behalf of the
Respondent, indicated that the Respondent intended to apply
for a
postponement of the application. Mr Louw, who appeared on behalf of
the Applicant, indicated that the Applicant would oppose
such
application. After hearing full argument on the application for a
postponement, I dismissed the application and indicated
that I would
give reasons therefor in this judgment, which I now do.
[10]
In support of the application for a postponement Mr Giwu handed up an
affidavit, deposed to by himself on the date of hearing,
without a
notice of motion. The affidavit consists of four paragraphs which
states:
‘
1. I write this
affidavit seeking postponement of this matter wherein I state that I
received a statement of account from the Applicant’s
attorneys
on the 22
nd
of March 2024 after having the
Respondent’s Answering Affidavit and on a plethora of occasions
requesting this statement
of account without receiving it from the
Applicant.
2. I wish to state
that this statement is a true reflection of amounts as per the
contract and it is of paramount importance for
this Application.
3. I request a period
of 14 (fourteen) days to file and this is accordance with Rule 6(5)€
of the uniform Rules of this Honourable
Court.
4. Costs be reserved.
’
(sic)
[11]
An
applicant for a postponement must show good and strong reasons
therefor and must furnish a full and satisfactory explanation
of the
circumstances that give rise to the application.
[7]
An application for a postponement must be made timeously, as soon as
circumstances would justify the facts which became known to
the
applicant.
[8]
[12]
An
application must be
bona
fide
and not used as a tactical manoeuvre to obtain an advantage.
[9]
The court must weigh the prejudice which will be caused if the
postponement is granted, against the prejudice which would be caused
if it is not granted.
[10]
[13]
The Respondent alleges to have obtained certain documentation from
the Applicant on 22 March 2024, which it wishes to place
before court
in a supplementary affidavit. The Respondent’s heads of
argument, dated 19 March 2024, also states that the
Respondent seeks
an indulgence to file a supplementary affidavit to deal with payments
included in a statement received from the
Applicant. The application
for postponement, based on the sole reason that a supplementary
affidavit is required to be filed was
only made on the date of
hearing of the matter, at least nine days after the Respondent was
aware, and had made known, that it
intended to deliver a
supplementary affidavit. The application was not made timeously and
did not detail what the statements from
the Applicant reflected nor
how these statements would either be destructive of the Applicants
case or benefit of the Respondents
opposition. All the affidavit in
support of the postponement disclosed is that additional
documentation is now available, without
stating the relevance thereof
or why it was of “
paramount importance
”. A full
and satisfactory explanation was not given for the application for a
postponement and it was not made timeously.
[14]
I am of the view that the application for a postponement is not made
bona fide
and is a strategy to prolong the litigation and for
the Respondent to retain possession and use of the Units. If a
postponement
was granted, a hearing date would only be sourced in
approximately seven months. Should the documentation received from
the Applicant
have been materially relevant and dispositive of the
Applicant’s case the Respondent could, and should, have deposed
to a
supplementary affidavit and sought leave to file such a
supplementary affidavit on the date of hearing. The Applicant did not
do
so and accordingly I cannot find that the documentation which is
sought to be introduced is relevant or material to the adjudication
of the application.
[15]
The Applicant will suffer prejudice should a postponement be granted.
As the owner of the Units it has a right thereto and
has waited for a
period of almost seven months for the application to be adjudicated,
after having launched the application on
7 August 2023. The
Respondent will not suffer prejudice should the postponement be
refused in circumstances in which it has, in
its answering affidavit,
admitted being in breach of the Agreement, and its defences and
opposition have been set out therein and
will be adjudicated on.
[16]
In the circumstances I found that the Respondent had not made out a
strong case in support of the application for a postponement
and, in
my discretion, I ordered that the postponement be refused. After I
refused the application for a postponement Mr Giwu indicated
he was
ready to proceed with argument in the main application.
Legal
principles applicable to the
rei vindicatio
[17]
“
The
incidence of the burden of proof is a matter of substantive law…and
in the present type of case it must be governed,
primarily, by the
legal concept of ownership. It may be difficult to define dominium
comprehensively…but there can be little
doubt…that one
of its incidents is the right of exclusive possession of the res,
with the necessary corollary that the owner
may claim his property
wherever found, from whomsoever holding it. It is inherent in the
nature of ownership that possession of
the res should normally be
with the owner, and it follows that no other person may withhold it
from the owner unless he is vested
with some right enforceable
against the owner (e.g., a right of retention or a contractual
right). The owner, in instituting a
rei vindicatio, need, therefore,
do no more than allege and prove that he is the owner and that the
defendant is holding the res
-the onus being on the defendant to
allege and establish any right to continue to hold against the
owner…It appears to be
immaterial whether, in stating his
claim, the owner dubs the defendant's holding "unlawful" or
"against his will"
or leaves it unqualified…But if
he goes beyond alleging merely his ownership and the defendant being
in possession (whether
unqualified or described as "unlawful"
or "against his will"), other considerations come into
play. If he concedes
in his particulars of claim that the defendant
has an existing right to hold (e.g., by conceding a lease or a
hire-purchase agreement,
without also alleging that it has been
terminated...his statement of claim obviously discloses no cause of
action. If he does not
concede an existing right to hold, but,
nevertheless, says that a right to hold now would have existed but
for a termination which
has taken place, then ex facie the statement
of claim he must at least prove the termination, which might, in the
case of a contract,
also entail proof of the terms of the
contract.”
[11]
[18]
Ownership
rights are the most comprehensive right a person can have in respect
of property.
[12]
The law
jealously protects the right of ownership, and the correlative right
of the owner in regard to his property, unless the
possessor has some
enforceable right against the owner.
[13]
Discussion
[19]
It is common cause that the Applicant is the owner of the Units,
based on the terms of the Agreement. The Respondent accordingly
has
the onus to establish a right to remain in possession of the Units,
in circumstances in which it admits having breached the
terms of the
Agreement by failing to make payment of the full instalments to the
Applicant when due.
[20]
I have identified the grounds of the Respondent’s defence and
opposition to the relief sought above. In argument Mr Giwu
primarily
pursued and advanced argument relating to the defence that the
Agreement has not been validly cancelled because the Respondent
had
always paid lump sums to the Applicant when able to do so, after
receipt of payments from its clients, and that such payment
arrangement had been accepted by the Applicant. Although the other
defences were not advanced with any vigour in argument, I first
turn
to deal briefly with these defences.
[21]
Deactivation of the Units
: I accept that the Applicant
deactivated the Units for a period of approximately three to four
months, during which period the
Respondent was not able to utilise
the Units. The Respondent was however, at the time of the
deactivation of the Units, already
in arrears in the sum of
approximately R700,000.00. The deactivation of the Units accordingly
did not cause the Respondent to be
in arrears with its payments.
Clause 10i(i) of the instalment sale agreement provided for the
Applicants to deactivate the Units,
which it did, and the Respondent
did not take any action to have them re-activated at that stage. The
fact that the Units were
deactivated by the Applicant can accordingly
not be a valid basis and defence for the Respondent to remain in
possession of the
Units.
[22]
Remedies
provided for in the NCA
:
The provisions of the NCA are not applicable to the Agreement between
the parties because the Respondent is a juristic person
whose asset
value or annual turnover exceeded the threshold of R1 million
[14]
and/or the Agreement is a large agreement with a principal debt of
R250,000.00 or more.
[15]
[23]
The Respondent will suffer prejudice
: Although the Respondent
does not detail what prejudice it will suffer should the Units be
returned to the Applicant, I accept
that it will suffer some measure
of prejudice as it will no longer be in a position to utilise the
Units. Any prejudice the Respondent
may suffer is however not a valid
defence to the
rei vindicatio
and cannot sustain an opposition
to remain in possession of the Units.
[24]
Calculation
of the arears
:
The Respondent takes issue that the Applicant has not set out its
calculation of the arrears. Apparent from the correspondence
referred
to earlier in this judgment is that the arrears, at certain times,
was set out and was not disputed by the Respondent.
In fact the
Respondent admits, in the correspondence and in its answering
affidavit, that it was in arrears. A detailed calculation
of the
arrears amount owing to the Applicant by the Respondent is not
necessary in the circumstances and is not a defence to a
rei
vindicatio
.
[16]
[25]
Respondent’s
intention to make payment
:
The Respondent states its intention to make payment to the Applicant
in due course, despite the Applicant having cancelled the
Agreement.
The Respondent’s offer to perform and make payment, after the
cancellation of the Agreement, does not defeat the
cancellation of
the Agreement
[17]
and can
therefore not be a valid defence to the return of the Units.
[26]
Remedies
provided for in the CPA
:
The provisions of the CPA are not applicable to the Agreement between
the parties because the Respondent is a juristic person
whose asset
value or annual turnover exceeds the threshold of R2 million.
[18]
[27]
I now turn
to the primary argument advanced by the Respondent, that the
Agreement has not been validly terminated because of the
payment
arrangement between the parties, namely that the Respondent would
make lump sum payments to the Applicant when payments
were received
from its clients and the Applicant accepted such payment arrangement.
The Agreement was cancelled by the Applicant
on 12 September 2022,
after the Respondent failed to make payment of the arrears, as
undertaken, by 7 September 2022. Thereafter
the Applicant was
amendable to the Respondent making payment of the arrears but made
clear that such payment should not be construed
as a revival of the
Agreement, which had been cancelled, or a waiver of the Applicant’s
rights. This is provided for in clause
15 of the instalment sale
agreement. The Respondent did not make full payment of the sums
demanded by the Applicant, at various
times, and also did not make
full payment of the sums it undertook to pay, timeously or at all. In
those circumstances the Respondent’s
argument that the payments
made by it to the Applicant was an acceptable payment arrangement
between the parties and that the Agreement
was not validly cancelled
cannot be accepted or upheld. The argument is not supported by the
correspondence exchanged between the
parties, considered together
with the payments made by the Respondent. The payments made by the
Respondent, after the cancellation
of the Agreement, can also not
defeat the validity of the cancellation.
[19]
I am satisfied that the Applicant validly cancelled the Agreement.
[28]
Mr Giwu
also advanced an argument that the Respondent would be severally
prejudiced by the relief being granted in circumstances
in which the
Respondent only owed the Applicant approximately R800,000.00. This
calculation appears to take into account a payment
made by the
Respondent in the sum of R1 million on 6 September 2023, which
payment is only referenced in the Respondent’s
heads of
argument. I have already held that payment by the Respondent, after
the cancellation of the Agreement, does not defeat
the validity of
the cancellation. Insofar as the Respondent seeks that I exercise a
discretion in its favour, a court has no such
discretion to refuse
relief if the applicant has established the grounds for the
rei
vindicatio.
[20]
[29]
I also add, as advanced by Mr Louw in argument, that the time period
of 36 months contained in the respective schedules to
the instalment
sale agreement, has lapsed and accordingly the Agreement has
terminated by effluxion of time.
[30]
I am
satisfied that the Respondent has not discharged the onus on it to
prove a legal basis upon which it is entitled to remain
in possession
of the Units and accordingly the Applicant is entitled to the relief
sought, namely the return of the Units. There
is no reason why the
costs should not follow the results, the Agreement makes provision
for the Respondent to pay legal costs on
an attorney and client
scale.
[21]
[31]
In the circumstances the following order is made:
1. The Respondent is
ordered to deliver to the Sheriff of this Court, within 24
(twenty-four) hours of the service of this order
on the Respondent at
its registered address, the following Units:
1.1 a new caterpillar
medium excavator 320 with serial number ZBN12471;
1.2 a new caterpillar
medium excavator 320 with serial number DKJ21894;
1.3 a new caterpillar
backhoe loader 426 with serial number EJ402922; and
1.4 a new caterpillar
backhoe loader 426 with serial number EJ402924.
(“the Units”)
2. In the event of the
Respondent failing to comply with paragraph 1 above, the Sheriff of
this Court is authorised and directed
to take possession of the Units
from wherever he/she may find it, and the Sheriff is authorised to
retain possession of the Units
until delivered to the Applicant or
its duly authorised representative.
3. The Respondent shall
pay the costs of the application on the attorney and client scale.
KL
WATT
ACTING
JUDGE OF THE HIGH COURT
APPEARANCES
For
the Applicant:
Mr
PG Louw, instructed by Netteltons Attorneys, Makhanda.
For
the Respondent:
Mr
N Giwu, instructed by Nceba Giwu Inc., Mthatha
.
Date
heard:
28
March 2024.
Date
delivered:
25
June 2024.
[1]
Clause 1
[2]
Clause 3
[3]
Clause
9(a)
[4]
Clause
10i(b)
[5]
Clause 10 i.(i)
[6]
Clause 15
[7]
McCarthy
Retail Ltd v Shortdistance Carriers
CC
2001 (3) SA 482
(SCA) at paragraphs 28 and 31
[8]
National
Police Service Union v Minister of Safety and Security
2000 (4) SA 11110
(CC) at 1112E
[9]
Myburgh
Transport v Botha t/a SA Truck Bodies
1991 (3) SA 310
(NmS) at 315E
[10]
Myburgh
Transport
supra
at
315G
[11]
Chetty
v Naidoo
1974 (3) SA 13
(A) at 20B-G
[12]
Gien v
Gien
1979 (2) SA 1113
(T) at 1120C
[13]
Oaklands
Nominees (Pty) Ltd v Gelria Mining and Investment Co. (Pty) Ltd
1976 (1) SA 441
(A) at 452A
[14]
Section
4(1)(a)(i) of the NCA
[15]
Section
4(1)(b) of the NCA
[16]
Cater
pillar
Financial Services South Africa (Pty) Ltd v Azania Money Growth
(Pty)
Ltd
2023 JDR 3742 (GJ) at paragraph 17
[17]
Moodley
v Reddy
1985
(1) SA 76
(D) at 82F and
Boland
Bank Ltd v Pienaar and another
1988 (3) 618 (A) at 621G-623B
[18]
Section
5(2)(b) of the NCA
[19]
See
Moodley
supra and Boland Bank supra
above
[20]
See
Acrewood
Property Investments (Pty) Ltd v Pelo Chicken (Pty) Ltd
2021 JDR 2928 (WCC) at paragraph 30 and
Dey
Street Properties (Pty) Ltd v Salentias Travel and Hospitality CC
t/a Van Hobbs Dry Cleaners
(25461/2021) [2022] ZAGPPHC 179 (22 March 2022) at paragraph 52
[21]
Clause
10ii