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[2018] ZASCA 26
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Stu Davidson and Sons (Pty) Ltd v Eastern Cape Motors (Pty) Ltd (260/2017) [2018] ZASCA 26 (23 March 2018)
THE
SUPREME COURT OF APPEAL OF SOUTH AFRICA
JUDGMENT
Not
Reportable
Case
No: 260/2017
In
the matter between:
STU
DAVIDSON AND SONS (PTY) LTD
APPELLANT
and
EASTERN
CAPE MOTORS (PTY) LTD
RESPONDENT
Neutral
citation:
Stu
Davidson v Eastern Cape Motors
(260/2017)
[2018] ZASCA 26 (23 March 2018)
Coram:
Lewis,
Ponnan and Seriti JJA and Pillay and Schippers AJJA
Heard:
22
February 2018
Delivered:
23
March 2018
Summary:
Damages
for breach of warranty – ‘substantial/major’
accident affecting resale of motor vehicle. Terms of warranty
clear.
Special
leave – test for – requires something more than
reasonable prospects of success on appeal. Ultimately court
hearing
appeal decides whether special circumstances exist. No special
circumstances found – appeal struck from the roll
with costs.
ORDER
On
appeal from:
Eastern
Cape Division of the High Court, Port Elizabeth (Rugunanan AJ and
Pickering J sitting as court of appeal):
The
appeal is struck from the roll with costs.
JUDGMENT
Lewis
JA (
Ponnan
and Seriti JJA and Schippers AJA
concurring)
[1]
The litigation between the parties in this matter started in the
Regional Court, Port Elizabeth. The appellant, Eastern Cape
Motors
(Pty) Ltd (Motors), sued the respondent, Stu Davidson and Sons (Pty)
Ltd (Davidson), for damages for breach of a warranty
made in a
contract for the sale of a Volkswagen Transporter motor vehicle (the
vehicle) by Davidson as a trade-in, when the latter
purchased a Ford
Ranger vehicle from Motors. The price for the vehicle paid by Motors
was some R245 000. Motors also claimed costs
incurred in attempting
in its turn to sell the vehicle. Davidson counterclaimed for
rectification of the trade-in declaration.
[2]
The regional court dismissed the claims and did not deal with the
counterclaim for rectification. On appeal to the full bench
of the
Eastern Cape Division of the High Court, Grahamstown, the appeal
court (Rugunanan AJ, Pickering J concurring) found that
Davidson had
breached a clear warranty in the trade-in declaration attached to the
agreement of sale. It ordered that Davidson
pay R95 000 to Motors as
damages for breach of the warranty but dismissed the claim for the
costs associated with trying to sell
the vehicle subsequent to the
trade-in. The issue of rectification was not traversed save in so far
as Davidson contended for a
very wide interpretation of the trade-in
declaration which was not supported by the evidence and rejected by
the appeal court.
[3]
Davidson appeals against the decision of the full bench with
the special leave of this court. This court will not interfere
with a
decision of the full court only because it considers it to be wrong.
What is required, in addition, is some additional factor
or criterion
(
Westinghouse
Brake & Equipment (Pty) Ltd v Bilger Engineering (Pty) Ltd
1986
(2) SA 555
(A) at 561E-F). The fact that leave to appeal has been
granted upon application to the President of this court is not
decisive
of that enquiry. It remains for the court upon a
consideration of the appeal to make that determination. I shall
deal first,
however, with the background to the contract of sale, its
terms, and then with whether the warranty was breached.
[4]
Davidson regularly bought vehicles from Motors. In November 2012, Mr
Patrick Davidson (Patrick) bought a new vehicle from Motors,
a Ford
Ranger, and offered the vehicle in question as a trade-in to Motor’s
representative, Mr C Pommerel. Pommerel agreed
to pay R245 000, and
prepared a written agreement of sale. This comprised an ‘offer
to purchase’ in respect of the
new vehicle bought by Davidson,
‘special conditions of offer to purchase’ and a ‘trade-in
declaration’.
[5]
The special conditions related to both parties’ rights and
obligations in respect of the trade-in. Clause 7 stated, inter
alia,
that the vehicle was sold ‘voetstoots’. Clause 12, which
is presumed to refer to Davidson, stated that the
vehicle was
warranted to be the sole property of Davidson, that the date of first
registration was correctly reflected, that the
odometer reading was
correct, and that ‘the trade-in vehicle offered in this
agreement has not been involved in any accident’.
[6] It is not clear why
this provision was not amended, because Patrick had in fact advised
Pommerel that the vehicle had been involved
in a collision, and
Pommerel had seen pictures of the vehicle which showed at least
cosmetic damage to it.
[7]
The trade-in declaration, on the other hand, contained the following
clause, which is at the heart of the dispute. It read ‘I
/we
warrant and declare that: The vehicle has not been involved in a
substantial/major accident (particularly if it will affect
resale
value).’ It was dated 3 December 2012.
[8] Motors claimed
damages for breach of this warranty on the basis that had it known
that the vehicle had been involved in a major
accident it would not
have purchased it, or would have paid only R150 000. The damages
claimed, and awarded by the full bench,
amounted to the difference
between what Motors had paid for the vehicle, and what it eventually
sold it for – R95 000.
[9]
It transpired after the sale was concluded and Motors tried to sell
it that it had indeed been involved in a major accident,
such that
the manufacturer, Volkswagen, had written off the vehicle and that
the Volkswagen warranty on it had been cancelled despite
the vehicle
being sold new only a year previously. Motors claimed in the
alternative for damages in delict, but it is not necessary,
in view
of the conclusion to which I come, to deal with the delictual claim.
[10]
The evidence before the regional court established that Prestige Auto
Body Repairers, run by a Mr Stols (who gave expert evidence
at the
trial), had provided a written quotation to repair the vehicle for
R261 946, on 17 April 2012 – some months before
Davidson sold
it to Motors. Stols testified that it had been involved in a major
accident, and that the repairs required were extensive.
This evidence
was not gainsaid.
[11]
It was also established that Davidson had in fact itself bought the
vehicle (together with a number of others) from a body
shop, Plastic
Rebuilders, for R130 000. Mr Nicholas Davidson (Nicholas) had made
these purchases and had seen to the repair of
the vehicle in the
Davidson workshop. Davidson had spent about R60 000 (possibly R70
000) on parts in order to repair the vehicle,
and the repair itself
had taken some four to six weeks, although Davidson employees had not
worked on it continuously.
[12]
It is thus clear that the vehicle had been involved in a major
collision. And that it substantially affected resale value was
shown
by the evidence led as to Pommerel’s futile attempts to resell
it to other dealers. He eventually succeeded in selling
it to a Mr C
Hechter for R150 000. That was quite a high price in the
circumstances since the evidence of another dealer, also
not
gainsaid, was that where a manufacturer’s warranty was
cancelled one could sell a vehicle for only half its book value,
which would have been R130 000.
[13]
Hechter testified that had he realized the extent of the damage he
would not have paid R150 000 for the vehicle. He spent a
considerable
sum of money repairing it and eventually sold it at a profit.
[14]
The evidence before the regional magistrate thus established without
any doubt that the vehicle had been involved in a major
collision
before the trade-in, and that the resale value was substantially
affected. What is disputed is whether the statement
in the trade-in
declaration amounted to a warranty. Davidson argues that it is too
vague to be enforceable as a contractual term.
And indeed the
regional magistrate had considered that the statement was merely one
of opinion.
[15]
That was clearly wrong. The statement formed part of a warranty
termed as such in the declaration. Warranties are binding terms
of a
contract. This proposition is so trite that no authority is required
to establish it. And it is not vague – the term
in the contract
clearly indicates that a substantial or major accident is one that
affects resale value. Since Motors had established
that the vehicle
had been involved in a major accident, and that resale value was
indeed affected, that should have been the end
of the matter.
[16] However, it was
argued that the contract should have been rectified since it did not
reflect the common continuing intention
of the parties. Davidson had,
as I have said, counterclaimed for rectification of the contract so
as to delete the two warranty
clauses in the conditions of sale and
in the trade-in declaration, and to include a clause reading:
‘
The
Transporter has been involved in an accident. Eastern Cape Motors
shall undertake its own investigation into the accident to
determine
whether the Transporter may be traded in or not.’
[17]
The regional magistrate did not consider the counterclaim and the
evidence certainly did not support the claim for rectification.
In
any event, Davidson did not pursue a cross-appeal in respect of the
claim for rectification, and there is no evidence that supports
Patrick’s limited evidence that Pommerel had undertaken to
investigate the extent of the damage to the vehicle himself.
[18]
In the circumstances, there is no merit in the appeal to this court.
That brings me to the question posed earlier in
this judgment: That
two judges of this court gave special leave to appeal does not mean
that we are not required to consider whether
we actually should be
entertaining the appeal at all:
National
Union of Mineworkers v Samancor Ltd
[2011] ZASCA 74
para 15. The normal criterion of reasonable
prospects of success applies to both ‘special leave’ and
‘leave’
(
Westinghouse
at
561E-F). Given that there is no merit at all in the appeal, there are
no reasonable prospects of success, much less special circumstances.
[19]
Here, the amount in issue is minimal. There is no legal question to
be determined. There is no factual dispute that requires
reconsideration. There is no reason why an appellate court should
determine any matter arising from the first appeal further. Again,
it
is trite that where there has been no manifest denial of justice, no
important issue of law to be determined, and the matter
is not of
special significance to the parties, and certainly not of any
importance to the public generally, special leave should
not be
granted. (See
Westinghouse
above and
National
Union of Metalworkers of South Africa & others v Fry’s
Metals (Pty) Ltd
[2005] ZASCA 39).
[20]
As the matter fails to meet the threshold set for special leave, the
appeal should be struck from the roll.
[21]
The appeal is struck from the roll with costs.
_________________________
C
H Lewis
Judge
of Appeal
Pillay
D AJA (concurring separately)
[22]
Two issues arise in this appeal. First, has the appellant shown that
it did not breach a warranty relating to its resale of
a motor
vehicle to the respondent? Second, – a question the court
raised – has the appellant shown special circumstances
to
justify granting special leave to this court? Only if the first
question is answered in favour of the appellant will the
second
question arise.
[23]
By way of background, on 23 November 2012 the respondent, a car
dealership purchased a 2012 VW Transporter T5 motor vehicle
from the
appellant. Mr P Davidson who represented the appellant informed Mr C
W Pommerel, a car salesman for the respondent, that
the vehicle had
been involved in an accident from which it sustained damage. Taking
account of its newness as a 2012 model, its
low odometer reading of 5
400 km, its general external appearance and the appellant’s
representations that the accident was
‘not bad’ or
‘minor’, the respondent settled on the purchase price of
R245 000 for the vehicle.
[24]
The respondent attempted unsuccessfully to resell the vehicle.
Eventually Mr Pommerel asked Mr F McCloud,
a dealer
in pre-owned motor vehicles, to list the vehicle on his online
auction website. At Mr McCloud’s request, Mr Pommerel
ascertained the vehicle’s history from the Volkswagen Group
South Africa (VW), the manufacturers of the vehicle. From this
history it emerged that VW had terminated its maintenance plan and
warranty effectively from 5 June 2012; VW had written off the
vehicle
because of the damage it had sustained in an accident.
[25]
No clarity was forthcoming from Mr Davidson about exactly what damage
the vehicle had sustained. Eventually the respondent
sold it.
Then it instituted action for the difference of R95 000 between the
purchase price of R245 000 and the R150 000 it recovered
on resale.
Its claim was founded on the breach of the warranty in clause 7 of
the trade-in declaration that read:
‘
The
vehicle has not been involved in a substantial/major accident
(particularly if it will affect resale value).’
[26]
In the trial court the material facts to determine whether the damage
to the vehicle had been substantial became common cause.
That VW
wrote off the vehicle and withdrew its warranty went uncontested.
This fact alone showed conclusively that the damage to
the vehicle
had been substantial. Accordingly, the appellant had no prospects of
success on appeal. But this is not all. The summary
below of the
evidence from witnesses for both parties proved that the appellant
had breached the warranty.
[27]
The evidence of the expert witness Mr Stoltz that the visible damage
to the vehicle amounted to some R261 946 was challenged
only to the
limited extent that damage to the gearbox was superficial.
Irrespective, and even if the cost of the gearbox in the
amount of
R77 438 were deducted, the balance of the cost of repairs, and
accordingly the damage, was substantial.
[28]
Fearing that if it delayed the sale into the next year, the vehicle
would be valued as an older model, the respondent hastened
to sell
it, but did so at a loss of R95 000, thus proving that the damage
affected its resale value. The uncontested evidence of
Mr McCloud
that vehicles without a manufacturer’s warranty attracted no
more than half their trade-in value was further proof
that the damage
was substantial.
[29]
Mr Hechter, who purchased the vehicle, testified for the appellant
that if he had known of the accident damage he would not
have paid
R150 000 when he bought it from the respondent. He resold it for R212
000 with a two-year warranty after he had repaired
it.
Notwithstanding the repairs and the insurance, this price was still
lower than the R245 000 that the respondent had paid, another
indication that major accident damage affected the resale value of
the vehicle.
[30]
Mr N Davidson, representing the respondent had rebuilt the vehicle.
He must have known that the damage was major from both
his
observations and the price he paid for it. He had paid R130 000 for
the vehicle in the very year of its manufacture when its
book value
was double the price. Spending another R70 000 in parts alone
excluding labour costs amounted to more than half the
price that he
had paid for it. Mr P Davidson’s concession that the cost of
R261 000 for the repairs would be for major damage
settled the
dispute about the scale of the damage to the vehicle.
[31]
On appeal, the appellant conceded that the damage was substantial but
denied that it had breached the warranty. It contended
that the
phrase ‘a substantial/major accident’ is incapable of
‘any objective meaning in the circumstances, and
is accordingly
invalid due to vagueness.’ It persisted that the trade-in
declaration did not capture the intention of the
parties. Pertinently
to the warranty in clause 7, the appellant contended that the parties
had arranged that the respondent would
investigate the accident first
before determining whether it would accept the vehicle as a trade-in.
As the full bench had not
considered this factor, the appellant
submitted that this Court should intervene to reverse its decision.
[32]
Despite the importance of the alleged agreement to inspect the
vehicle before concluding the purchase, the appellant abandoned
its
counter-claim for rectification of their agreement to this effect. It
did not attempt to resurrect its counter-claim by cross-appealing;
inevitably this ground of appeal is dead in the water. Contrary to
the submission for the appellant, the warranty is not vague
or
incapable of meaning; manifestly the appellant warranted that the
vehicle had not been involved in a major accident. It breached
the
warranty; consequently, the respondent was entitled to succeed in its
claim.
[33]
As to the question whether special leave to appeal should be granted,
against the overwhelming weight of evidence that the
appellant had
shown no prospects of success whatsoever, its counsel sensibly
conceded that it had also not shown special circumstances.
This
concession disposes of the appeal.
[34]
In conclusion, I emphasise that merely granting an application for
special leave to appeal on petition is not decisive of the
question
as to whether special circumstances exist. The two judges considering
petitions do not usually have the full record of
the proceedings in
the court below. A full picture of the case sometimes emerges only at
the hearing of the special appeal. Ultimately
the court considering
the appeal decides the question of special leave. Hence I
concur with the majority to strike the matter
from the roll with
costs.
_______________________
D
Pillay
Acting
Judge of Appeal
APPEARANCES
For Appellant:
P Zietsman SC
Instructed
by:
Fred
Stemmett Attorneys c/o Neville Borman & Botha Attorneys,
Grahamstown
Symington & De Kok
Attorneys, Bloemfontein
For
Respondent:
J Nepgen
Instructed by:
Pagdens Attorneys,
Grahamstown
Claude Reid Attorneys,
Bloemfontein