Absa Bank Ltd t/a Bankfin v Jordashe Auto CC (402/2001) [2002] ZASCA 130; [2003] 1 All SA 401 (SCA) (27 September 2002)

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Absa Bank Ltd t/a Bankfin v Jordashe Auto CC (402/2001) [2002] ZASCA 130; [2003] 1 All SA 401 (SCA); 2003 (1) SA 401 (SCA) (27 September 2002)

THE SUPREME
COURT OF APPEAL OF SOUTH AFRICA
Case No
402/2001
REPORTABLE
In the matter between
Absa Bank Ltd t/a
Bankfin
Appellant
and
Jordashe Auto CC

Respondent
Before: Schutz, Farlam, Nugent JJA, Jones and Heher AJJA
Heard: 20 September 2002
Delivered: 27 September 2002
Competing
claims to vehicles between seller of alleged consignment stock with
reservation of ownership and bank claiming ownership
under a floor
plan agreement in form of a sale – bank failing to establish
estoppel as it did not rely on a possible representation
by consignor
– bank alleging fraud by consignor – referred back for evidence.
____________________________________________________________
JUDGMENT
___________________________________________________________
SCHUTZ JA and HEHER AJA
[1] This is a dispute about who owns certain 31 motor
vehicles. One contender relies upon its reservation of ownership
when 27 of
the vehicles were delivered to a second-hand motor dealer
for sale on consignment. The other relies upon an alleged fictitious
delivery
of the same 27 vehicles to it by the dealer, under a floor
plan agreement. The remaining four were not delivered to the dealer
and
Absa’s lack of defence to the claim for these vehicles will be
dealt with below. The dealer was one Marais who traded at Nelspruit
under the name of Ritchies Motors (“Ritchies”). That he acted
dishonestly is clear. He and his close corporation are not parties
to the appeal.
[2] The party who sold on consignment is Jordashe Auto
CC (“Jordashe”), which traded at Florida as a second-hand motor
dealer.
It is the respondent in this Court, having been successful
in obtaining a final order for the return of the vehicles in its
urgent
application in the Transvaal Provincial Division. The party
who provided Ritchies with finance under the floor plan and who
claims
that it has acquired ownership of the vehicles by a fictitious
delivery by Ritchies is Absa Bank Ltd (“Absa”). Bankfin was the
division of Absa with whom Ritchies dealt. Jordashe cited and served
Ritchies as the first respondent in the Court of first instance
and
Absa as the second. Ritchies did not oppose the application. The
vehicles had already been or were about to be attached by
Absa. In
this Court Absa is the appellant, having obtained special leave to
appeal. Jordashe was successful not only before the
judge of first
instance (Coetzee AJ) but also before the Full Court (Roux J with
Roos and Bertelsmann JJ concurring).
[3] The record has swelled to 908 pages, but the
founding affidavit of Jordaan was simple and short – 19 pages long.
He alleged
that in 1998 he, as the representative of Jordashe,
concluded an oral agreement with Marais, acting for Ritchies. The
terms were
that Jordashe would deliver vehicles to be sold on
consignment, that any profit over the pre-determined cost price would
be divided
equally, that Ritchies was to pay over Jordashe’s share
(the cost price plus half the profit) upon receiving moneys from the
persons
to whom Ritchies sold, that Ritchies would not be entitled
otherwise than as agreed to sell, pledge or burden the vehicles, and,
finally, that ownership would remain vested in Jordashe until it had
been paid in full. No mention was made in the founding affidavit
as
to the ownership of vehicles which Ritchies might accept as trade-ins
as part payment of the price of vehicles sold by it. However,
in the
replying affidavit, in response to a challenge that certain of the
vehicles had never been owned by it, Jordashe stated that
the
agreement extended also to vehicles that had been traded in, so that
when Ritchies took possession of them it did so as agent
for
Jordashe, which became the owner.
[4] Jordashe’s treatment of its acquisition of the
vehicles it itself delivered to Ritchies was brief. Jordaan said
that vehicles
identified in a Schedule C were bought in the ordinary
course of business, that the price was paid to the sellers and
delivery was
taken. Registration papers were received from the
sellers, but the vehicles were not registered in Jordashe’s name,
as this would
have entailed unnecessary expense and administration.
[5] When vehicles were delivered by Jordashe to Ritchies
from time to time the keys and registration papers were handed over
and signed
acknowledgements of the reservation of ownership were
obtained.
[6] During October 1999 Jordaan became concerned over
Ritchies’s payment record. On 4 November he went to Nelspruit and
confronted
Marais. He was shocked to discover that certain of the
vehicles held on consignment had been registered in the name of
Ritchies,
contrary to the agreement, and presumably by the use of
falsified transfer of ownership forms. That is Jordaan’s version.
He
demanded the return of all the Jordashe vehicles, only ultimately
to discover that Marais had subjected some of them to a floor plan
agreement with Absa that purports to vest ownership in Absa. Not all
the vehicles on the floor were subject to this agreement, and
eventually Marais agreed that Jordashe could remove those vehicles
not subject to it.
[7] On the same day, 4 November, Jordaan came to an
agreement with Ritchies’s attorneys that, pending an application to
the High
Court by Jordashe for the return of the vehicles, Ritchies
would not deal with, alienate or hypothecate any of those to which
Jordashe
laid claim. We do not find it necessary to deal with the
manner in which this undertaking was respected or not respected, save
to
state that before Jordashe reached the High Court, Absa had issued
summons in the Nelspruit magistrate’s court claiming possession
of
the vehicles. The basis of the claim was ownership. Marais had
consented to judgment. The messenger then attached the vehicles
on
behalf of Absa. This all happened on one day, 9 November 1999.
[8] Jordaan contends that the floor plan agreement is a
simulation. What is in truth a loan of money secured by a pledge of
movables
which have not been delivered to the pledgee, has been
dressed up as a sale and delivery.
[9] Absa’s answer is contained mainly in
the affidavits of Messrs Crous and Badenhorst. The latter’s
various affidavits are lengthy.
Much of them was hearsay and
important parts were struck out. I shall seek to abstract the
essence of the defences. Absa is said
to have obtained ownership
from Ritchies by delivery under the floor plan. The basis for this
contention is to be found in the dealings
between Absa and Ritchies,
in that Ritchies issued invoices to Absa, Absa paid out Ritchies and
Ritchies has not repaid Absa. The
affidavits are not directed
towards showing that Ritchies acquired ownership from the persons
from whom it bought the vehicles.
Thus, apart from the possible
presumption arising from Ritchies’s apparent possession of them,
nemo dat quod non habet
rears its head.
[10] Jordashe’s contention that the floor
plan is a simulation is contested. Delivery is said to have occurred
by Ritchies’s
continued holding of the vehicles being a holding on
behalf of Absa. In other words, no physical transfer having taken
place, Absa
relies on
constitutum possessorium
.
[11] Badenhorst then challenges Jordashe’s version of
what had happened between that firm and Ritchies. In the first place
the
alleged delivery for sale on consignment is challenged. Far from
Jordashe being the victim of Marais, it is charged with having
conspired with Marais to secure finance from Absa by deceit. There
is no direct evidence to support this, but there are deponents
who
claim that Jordashe knew of the existence of the floor plan well
before 4 November 1999. As will appear later in this judgment
the
issue of deceit is now to be referred for evidence, but for the
moment it is convenient to proceed on the assumption that Jordaan’s
evidence is truthful.
[12] Then Absa disputes that Jordashe has proved that it
ever acquired the vehicles from sundry sellers. Jordashe is
challenged to
prove its acquisition of ownership. A constant refrain
is that if Jordaan is shown to have erred in one particular the whole
body
of evidence becomes suspect. This challenge elicited a very
lengthy replying affidavit in which Jordashe seeks to establish its
ownership
vehicle by vehicle and document by document. Certain of
the vehicles were acquired by Ritchies not from Jordashe but from
other
persons. Jordashe’s response is, yes, that is true, these
were the vehicles which were taken by Ritchies as trade-ins, and as
such were also subject to the ownership agreement. This is how the
trade-ins came to be dealt with only in the replying affidavit.
Absa
also makes a point about certain of the vehicles which Jordashe had
claimed that it owned and had delivered to Ritchies –
that those
vehicles were not to be found on Ritchies’s floor on the day of the
attachment, but were on the floor of Jordashe’s
premises at
Florida. Some of them had been advertised for sale in a magazine
called Auto-Trader. Jordaan’s response is that one
of these
vehicles (No 33 on Schedule C) had indeed been delivered to Ritchies
but had been returned for sale by Jordashe as Ritchies
had not
managed to sell it.
[13] The four other vehicles previously
referred to (Nos 24, 31, 32 and 35 on Schedule C) had not yet been
sent to Ritchies but their
registration papers had. Jordashe deposed
without contradiction that no consignment price had been agreed with
Ritchies in respect
of these vehicles. Ritchies had then
fraudulently put registration papers of the four vehicles forward to
Absa under the floor plan
agreement as being available on its floor.
As the uncontested evidence is that these four vehicles were never in
the hands of Ritchies,
even if
constitutum possessorium
were a
valid method of delivery to Absa, that would not avail Absa, as one
of the requirements, possession by the ‘seller’, would
be absent.
Accordingly it can be stated at once that Absa has no claim to these
four vehicles.
[14] Absa also relies upon estoppel. Jordashe is
said to have made a representation that Ritchies could alienate the
vehicles, this
by permitting them to be displayed for sale on
Ritchies’s floor and by handing over the registration certificates.
Absa is said
to have acted on this representation to its prejudice
by entering into the floor plan agreement and by making payments to
Ritchies
pursuant to it. In response Jordaan, apart from stating
that the agreement is a simulation, contends that the representation
was
made by Marais and not by Jordashe, and that, far from its
misleading Absa, Absa misled itself by not asking for proof of
Ritchies’s
acquisitions of ownership. Attention is also drawn to
the fact, already mentioned, that Absa makes no attempt to prove that
Ritchies
acquired ownership of the vehicles from persons other than
Jordashe. Accordingly, in so far as Jordashe may prove that it was
the
one which acquired and thereafter retained ownership, there is
nothing to contradict that proof.
[15] We now turn to consider whether Absa has
established that it
acquired ownership.
Has Absa acquired ownership by delivery?
[16] In
order to have acquired ownership in this manner Absa has to prove
five things: 1. A delivery. 2. In a form that the law
allows. 3.
By
a person
entitled to pass ownership. 4. Marais intended to pass ownership.
5. Absa intended to receive ownership.
[17] Whether the third requirement
is satisfied depends largely upon whether Jordashe’s version of
the contract reserving ownership
and its ignorance of the existence
of the floor plan until 4 November 1999 is accepted. If it is, then
Marais could never have intended
to pass ownership because he knew he
could not. His purpose would have been to defraud both Absa and
Jordashe. Absa has produced
no direct evidence to contradict the
terms of the contract but it claims that there are clear pointers
that Jordashe knew of the
floor plan well before 4 November. The
fact that it then remained silent, the argument proceeds, indicates
that it was colluding
with Marais in order to obtain finance from
Absa by fraud. If this suspicion becomes established the whole of
Jordaan’s testimony
collapses. Instead of being an innocent victim
of Marais he would emerge as one acting in concert with Marais to
persuade Absa to
part with its money. Hence the need to probe the
matter in evidence.
Jordashe’s complicity?
Reference to evidence.
[18] The pointers to complicity
relied on are those that follow. On 13 October 1999 one De Necker,
an Absa official, visited Jordashe’s
premises at Florida where he
met Jordaan. That much is common cause. According to De Necker he
told Jordaan that he wished to inspect
certain vehicles which were
subject to a floor plan agreement. Jordaan was co-operative and
pointed out vehicles. De Necker then
asked why the vehicles which
were subject to a floor plan agreement between Absa and Ritchies were
were not at the latter’s premises
at Nelspruit, to which Jordaan
responded that Ritchies had difficulty in selling certain models.
Jordaan has a different version
of the conversation in which he
denies that there was any mention of a floor plan.
[19] Another Absa official, one
Auckamp, visited the Florida premises on 28 October 1999, where he
spoke to an employee who was presumably
Mr Boersma. According to
Auckamp, after he had identified himself as an Absa official he
stated that his purpose was to see if he
could find whether certain
vehicles which could not be found at Ritchies’s premises at
Nelspruit were at Florida. Boersma co-operated
in pointing out
vehicles. Boersma’s version is slightly different, to the effect
that all that was said was that as a bank official
Auckamp was
inspecting certain vehicles on behalf of Ritchies.
[20] A further Absa official, one Van
Heerden, deposes that he telephoned Jordaan on 13 October 1999. His
stated purpose was to find
out whether certain vehicles which
Ritchies
wished to place
on the floor plan and which it
claimed had been bought from Jordashe, had been paid for. He
received an affirmative answer. Van
Heerden concludes his affidavit
by stating that Jordaan was fully aware that vehicles
had been
subjected to the floor plan by Ritchies, but he does not explain why
he makes that statement. Jordaan denies the telephonic conversation
entirely.
[21] Mr van Rensburg was Marais’s
attorney. He states that on 2 November 1999 there was a meeting held
in Pretoria at which Jordaan,
Marais and he were present. At the
meeting, according to Van Rensburg, a list of vehicles subject to the
floor plan was drawn up
at the request of Jordaan and handed to him.
That list is Annexure C to Jordaan’s founding affidavit. It is
headed ‘Vloerplan
Voorraad Soos Op 2 November 1999’. The floor
plan was then discussed with a possible view to Jordashe taking it
over and employing
Marais. Van Rensburg’s impression was that
Jordaan had known of the floor plan for some time. Jordaan agrees
that the meeting
took place on 2 November but states that is was
concerned with Marais’s financial crisis and denies that there was
any mention
of a floor plan. Jordaan does not explain why the list
was dated 2 November or why it referred to floor plan stock.
[22] The probability or improbability
of the versions put forward by either side was debated. In view of
the course that the matter
has taken the less we say on that subject
the better.
[23] In the court of first instance
Absa argued, in the alternative, that should its main defences fail,
Jordashe could not obtain
a final order without evidence, because of
certain conflicts of fact. Neither party asked for a reference to
evidence. Mr van der
Merwe, for Absa, whilst conceding that it bore
the onus to prove the fraud alleged, relied on
Ngqumba en ’n
Ander v Staatspresident en Andere
etc
1988 (4) SA 224(A)
at
259C-263D, which holds that, even where the onus is on the
respondent, it is for the applicant claiming final relief to call for
evidence (We shall assume for the purposes of the present case that
that case was correctly decided). The Court consequently pointed
out
to Mr Davis, for Jordashe, the difficulty which might face him whilst
this decision stood. Bound by Absa’s version and unready
to have
the witnesses tested, his client might lose its case. After an
adjournment we were informed that the parties had agreed
that the
matter be referred back and had prepared a draft order to regulate
the next stage in this protracted case. That draft forms
part of the
order at the end of this judgment.
[24] A further matter, however, had
already been fully argued by Mr van der Merwe, and we intend to
express our views, adverse to
Absa, on this point.
Has an estoppel been established?
[25] On the facts of this case we are
of the view that no estoppel has been established. The submission
was, that by placing the
vehicles on Ritchies’s floor without any
warning of a reservation of ownership, Jordashe had held out to the
world and thus to
Absa that Ritchies was authorized to sell them.
However, this is not a case in which a passer-by was attracted into
Ritchies’s
premises by a display of cars. There is no evidence
that Absa inspected vehicles before ‘buying’ them, and if there
were later
inspections their purpose was to make sure that what it
had ‘bought’ was either still there or had been paid for. Rather
was
Absa induced by papers, Marais’s fraudulent papers, in which
Jordashe had had no part. The papers which Jordashe had sent to
Ritchies
were not used. Marais had fraudulently acquired new
registration papers in his own name. Those were what he used. Those
were what
helped to induce Absa. In Badenhorst’s own words, the
inducement was the presentation of a Ritchies invoice, proof of full
payment
for the vehicle and a registration document. So little did
Absa rely on what was on the floor, that in one case it placed on the
floor plan a vehicle that had never been sent to Nelspruit. Nor was
the registration certificate.
[26] In these circumstances the
fourth requirement for an estoppel (see
NBS Bank Ltd v Cape
Produce Co (Pty) Ltd and Others
2002 (1) SA 396(SCA)
at 412D-E)
has not been established. Supposing that Jordashe did make a
representation, Absa did not rely on it. This being so
it is
unnecessary to consider the other aspects of estoppel. The plea of
estoppel must fail. It is therefore also unnecessary to
give further
consideration to the issues of simulation or delivery by
constitutum
possessorium
.
[27] Overall, then, Absa has not
established that it acquired ownership of the vehicles.
What remains?
[28] Mr Davis conceded that two
vehicles had been wrongly included in the order. Following the
numbering in annexure C, no 36 was
fully paid for by Ritchies. VW
Jetta BFB202GP had not been claimed in the original claim. It does
not appear on annexure C so that
it should not have been included in
the order. These two vehicles are no longer in issue.
[29] In the papers there was some
debate about the vehicles numbered 12, 14, 16, 25 and 28. Mr Davis
says they should have been included
in the order. But they were not
and there is no cross-appeal. Accordingly Mr Davis agrees that they
are not subjects of this appeal
and that separate proceedings will
have to be brought.
[30] There may yet be room for
argument about whether certain of the vehicles allegedly traded in
have been identified as consignment
stock. In this connection I
would point out that they fall into different classes and that it may
not be necessary for Jordashe
to prove ownership. Possession may
suffice – see
Shenker v Bester
1952 (3) SA 664(A)
at
674H-676B and
Makakole v Officer Commanding
C I D,
Maseru
and Another
L A C (1985-1989) 207 (a decision of the Lesotho
Court of Appeal). These cases may be relevant if it is established
that Absa has
no title to the vehicles.
[31] The main issue remaining is to
be the subject of evidence, whether Jordashe knew of the floor plan,
consented to or acquiesced
in it and remained quiet.
Costs
[32] Mr Davis asked that the costs of
appeal be reserved to that they may follow victory in the oral
hearing. Mr van der Merwe asks
for costs, contending that an
unnecessary appeal was occasioned by Jordashe’s failure to ask for
evidence at first instance. We
agree with this argument.
[33] Although we were not addressed
on the matter it seems to us that the costs orders in favour of
Jordashe against Absa both at
first instance and in the appeal to the
Full Court should be set aside and reserved.
Order
[34] 1. The appeal succeeds with
costs, including the costs of two
counsel, in
respect of all vehicles except the vehicles numbered 24, 31, 32 and
35 on Schedule C. The appeal fails in the case of
those excepted
vehicles.
2. The matter is referred for hearing of oral evidence in the
Transvaal Provincial Division of the High Court of South Africa at
a
date to be arranged with the registrar on the following questions:
2.1 Whether or not Jordashe Auto CC knew of the existence of the
floor plan agreement before the 4
th
November 1999 and if
so,
2.2 since when had it known of the said floor plan agreement,
2.3 if so, whether Jordashe Auto CC consented to or acquiesced in it.
3. The evidence shall be that of any witnesses whom the parties or
either of them may elect to call, subject, however to what is
provided in para 4 hereof.
4. Save for the witnesses whose affidavits are already filed,
neither party shall be entitled to call any witnesses unless:
(a) It has served on the other party, at least 14 days before the
date appointed for the hearing (in the case of a witness to be
called
by Jordashe Auto CC) and at least 10 days before such date (in the
case of a witness to be called by Absa Bank Ltd), a statement
signed
by the witness wherein the evidence to be given in chief by such
person is set out; or
(b) the court, at the hearing, permits such person to be called
despite the fact that no such statement has been so served in respect
of his evidence.
5. Either party may subpoena any person to give evidence at the
hearing, whether such person has consented to furnish a statement
or
not.
6. The fact that a party has served a statement in terms of para 4
hereof, or subpoenaed a witness, shall not oblige such party to
call
the witness concerned.
7. Within 20 days of the making of this order, each of the parties
shall make discovery, on oath, of all documents relating to the
issue
referred to in para 2 thereof, which are or have been at any time in
the possession or under the control of such party. Such
discovery
shall be made in accordance with rule of court 35 of the High Court
Rules, and the provisions of that rule, with regard
to the inspection
and production of documents discovered shall be operative.
8. The costs orders granted in favour of Jordashe against Absa, at
first instance and on appeal to the Full Court, are set aside
and
those costs are reserved. The parties are allowed to make written
submissions with regard to the alteration of this order 8
within
three weeks.
_____________
W P SCHUTZ
JUDGE OF APPEAL
_______________
J A HEHER AJA
ACTING JUDGE
OF APPEAL
CONCUR
FARLAM
JA
NUGENT
JA
JONES
AJA