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[2015] ZAWCHC 38
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Absa Bank Limited v Van Zyl, In re: Absa Bank Limited v Tyhalibongo (12313/14, 12314/14) [2015] ZAWCHC 38 (10 April 2015)
IN THE HIGH COURT OF
SOUTH AFRICA
(WESTERN CAPE DIVISION,
CAPE TOWN)
CASE NO: 12313/14
DATE: 10 APRIL 2015
In the matter between
ABSA BANK
LIMITED
...........................................................................................................
Applicant
And
MEADSIE VAN
ZYL
.............................................................................................................
Respondent
And
In the matter between
CASE NO: 12314/14
ABSA BANK
LIMITED
...........................................................................................................
Applicant
And
LENNOX
TYHALIBONGO
.................................................................................................
Respondent
JUDGMENT
DELIVERED ON 10 APRIL 2015
BLIGNAULT J:
[1] These two applications were heard
together as they involve the same issues of fact and law. They were
brought on notice of
motion and then referred for the hearing of oral
evidence. In the case in which Ms Van Zyl is the respondent (case No
12313/14)
Absa Bank Limited (“Absa Bank”) seeks to
vindicate a Mercedes Benz C 300 vehicle which is in her possession.
In the
case in which Mr Lennox Tyhalibongo is the respondent (case No
12314/14) Absa Bank seeks to vindicate a Mercedes Benz B 200 vehicle
which is in his possession. I propose to discuss application against
Ms van Zyl first and thereafter the application brought against
Mr
Tyhalibongo.
[2] Absa Bank’s claim is the rei
vindicatio, a remedy which is available to the owner of a thing to
recover it from any person
in possession thereof. It claims to be
the owner of the Mercedes Benz C 300. Ms van Zyl does not dispute
that she is in possession
of the vehicle. Her defences to the claim
are that Absa Bank is no longer the owner of the vehicle,
alternatively that it is precluded
from asserting its ownership
through the application of the doctrine of estoppel.
[3] The corporation Business Zone 2157
CC (‘Business Zone’) plays a vital role in these
proceedings. It carried on
business in Worcester as a dealer in
motor vehicles. It was at all material times controlled by one Jaco
Smit. On 21 August 2013
Absa Bank and Business Zone concluded a
Floorplan Agreement. The nature of this agreement appears from
clause 1 thereof which
reads as follows:
‘1.1 The Dealer carries on the
business of selling and/or distributing certain goods, new and/or
used, being vehicles, equipment,
implements or other goods (“Goods”).
1.2 The Dealer requires financial
assistance for the effective conduct of its business and the Bank is
willing to provide such assistance
on the terms and conditions of
this agreement.
1.3 This form of financial assistance
is commonly known as a “floorplan” in the motor
trade/industry and this agreement
represents the floorplan agreement
linked to a floorplan facility approved by the Bank for this purpose.
1.4 The terms and conditions of the
floorplan facility are contained in a floorplan facility letter
signed by the bank and accepted
by the Dealer. The floorplan
facility is subject to the terms and conditions set out in the
floorplan facility letter and the
terms and conditions contained in
this agreement.
1.5 The terms and conditions of the
floorplan facility may be reviewed and/or amended by the Bank from
time to time.
1.6 To the extent of the floorplan
facility limit approved by the Bank, the Dealer may from time to time
request the Bank to purchase
Goods, all of which the Dealer must
choose and approve, from the manufacturer, importer, dealer, other
institutions or persons
(“the Seller”) or alternatively
to purchase Goods from the Dealer.
1.7 The Bank shall be entitled to
comply with such request and to make payment for the Goods (“financed
Goods”) from
the floorplan facility to the Seller or the
Dealer, whichever may apply, or to turn down such request without
giving any reason
therefor.
1.8 In the event of the Bank having
complied with the request, the Dealer shall be obliged to purchase or
re-purchase the financed
Goods from the Bank.
1.9 It is agreed that the financed
Goods, which the Bank acquires and pays for, be delivered to the
Dealer or remain in the Dealer’s
possession, on behalf of the
Bank and subject to certain terms, to enable the Dealer to market and
sell or dispose of such financed
Goods to its clients in terms of a
sale, lease, rental or other finance agreement in the normal course
of business.
1.10 The Dealer acknowledges and agrees
that the Bank will at all times remain the owner, titleholder and
financier of the financed
Goods, and that the bank will only stop
being the owner and title-holder of the financed Goods once the bank
has received payment
for the financed Goods and have notified the
Dealer accordingly in writing.
1.11 The Dealer acknowledges that it
has been given an adequate opportunity to read and understand these
terms and conditions and
that the Dealer is aware of all the terms
printed in bold.’
[4] Clause 2.10 of the Floorplan
Agreement reads as follows:
‘The Dealer acknowledges and
agrees that the Bank will at all times remain the owner, title-holder
and financier of the financed
Goods, and that the Bank will only stop
being the owner and the title-holder of the financed Goods once the
Bank has received payment
for the financed Goods and have notified
the Dealer accordingly in writing.’
[5] Clause 3 of the Floorplan Agreement
is headed ‘Sale of Financed Goods by the Dealer’.
Sub-clauses 3.1, 3.4 and
3.7 read as follows:
3.1 The Dealer shall purchase the
financed Goods from the Bank and shall be entitled to sell such
financed Goods and/or dispose
of such financed Goods in terms of
sale, lease, rental and/or other finance agreements in the ordinary
course of the Dealer’s
business, subject to the terms and
conditions of this agreement and the floorplan facility letter.
3.4 The total amount payable by the
Dealer to the Bank in respect of the financed Goods, including all
interest, costs and other
chares shall, subject to clause 3.5 be paid
by the Dealer to the Bank in full –
3.4.1 upon the sale of such financed
Goods or upon the disposal of such financed Goods by the Dealer by
way of a lease or rental
or other finance agreement or upon delivery
of such vehicle pursuant to a sale or disposal, whichever date shall
first occur; or
3.4.2 within such other period as may
have been stipulated in writing by the Bank at the time such financed
Goods was acquired by
the bank from the Seller or the Dealer in terms
of this agreement.
3.7 Against receipt by the Bank of the
amounts owing to the Bank by the Dealer in respect of such financed
Goods, the Bank, shall
at the cost of the Dealer, sign all such
documents and do all such things as may be required in order to
effect transfer of ownership
of the Goods in question to the Dealer.
[6] On 12 July 2013 Business Zone
received a letter from Absa Bank (‘the Facility Letter’)
in terms of which Absa Bank
advised Business Zone that its floorplan
facility had been approved. The Facility Letter was countersigned by
Mr Smit on behalf
of Business Zone on the same date. By his
signature he confirmed ‘that the facility is accepted subject
to the stipulations
and conditions contained herein’. This
letter contains certain salient terms of the proposed Floorplan
Agreement. Clause
7.5 of the Facility Letter reads as follows:
‘Vehicles sold and on floorplan
must be settled within 48 hours.’
Clause 7.7 of the facility letter reads
as follows:
‘The conditions in this letter
can change at the discretion of the Bank.’
[7] Absa Bank purchased the Mercedes
Benz C300 from Business Zone pursuant to the Floorplan Agreement. It
then became the owner
of the vehicle although it remained physically
in possession of Business Zone for purposes of its business. It is
common cause
that Business Zone sold and transferred the vehicle to
Ms van Zyl although it never paid Absa Bank for it. Business Zone
was later
placed in liquidation and there is no prospect of
recovering any damages from it. It is further not in dispute that Ms
van Zyl
was not aware of any defect in the title of Business Zone
when she took transfer of the vehicle.
[8] The first issue is whether Absa
Bank passed ownership of the vehicle to Business Zone. There was a
fair amount of evidence
in regard to the registration procedures that
were applicable to the transfer of vehicles from one owner to
another. There is
a nationwide register of all motor vehicles that
are registered by the various registering authorities. It was
referred in the
evidence as NATIS, an acronym for the National
Traffic Information System. In each case the register would indicate
the title
holder and the owner of the vehicle. These terms are
defined in the
National Road Traffic Act 93 of 1996
but for present
purposes it is sufficient to note that a common law owner would fall
within the definition of a title holder and
a lawful possessor within
the definition of an owner. It appears from the evidence that the
registration of a person as a title
holder is generally regarded in
the trade as proof that he is indeed the common law owner.
[9] Counsel for applicant relied
primarily on clause 2.10 of the Floorplan Agreement for the
contention that ownership of the Mercedes
Benz C300 did not pass to
Business Zone as Absa Bank was never paid for the vehicle. Counsel
for Ms Van Zyl argued, however, that
one must have full regard to the
circumstances in which the vehicle was sold and delivered to Ms Van
Zyl.
[10] It appears from the evidence that
prior to the delivery of the vehicle to Ms Van Zyl Business Zone
received a document in electronic
form and addressed to the
‘Licensing Department’. It bears the heading
‘Confirmation of reregistration’
and confirms that
Business Zone may be reregistered as the title holder and owner of
the Mercedes Benz C 300. The letter is signed
by Mr Faizal Banjoo as
a Manager Credit Control Floorplan of Absa Bank. I shall refer to
this kind of letter as a reregistration
confirmation letter.
[11] Mr Raoul Arendse was employed by
Absa Bank as the National Manager for Absa Vehicle and Asset Finance,
Wholesale Division at
the time when he gave evidence. He was not
involved in the transaction in question and his evidence was confined
to the procedures
applied by Absa Bank in the implementation of their
floorplan agreements. The reregistration confirmation letter is
delivered
by Absa Bank to the dealer in order to enable him to pass
transfer of the vehicle to a purchaser thereof. On receipt of such a
letter the dealer is authorised to cause the vehicle to be
reregistered without the need to refer back to Absa Bank. Mr
Arendse
also explained the working of the Geolock/FAST system. It is
a computer system which is used for the interaction between floorplan
dealers and banks, in this case Absa Bank. It was used inter alia
for the conveyance of reregistration confirmation letters to
Business
Zone including the letter that features in this case.
[12] Mr Lawrence Graham was, at the
time that he gave evidence, a manager employed by Absa Bank as a Team
Leader in its Retail Business
Bank Commercial Asset Finance Legal
Recoveries Department He testified that the 48 hours period
mentioned in clause 7.5 of the
Facility Letter normally applied to
cases where ownership of the vehicle was about to be transferred by
the dealer to a financial
institution. In that event the dealer was
allowed the period of 48 hours in order to reregister the vehicle
into its name so that
it could in turn be reregistered in the name of
the financial institution. Without such reregistration the
financial institution
would not pay the dealer for the vehicle.
[13] Mr Graham testified that Absa Bank
often sent reregistration confirmation letters to Business Zone
before receiving any payment
from it for the vehicle in question. He
stated that Absa Bank would normally assume that a vehicle is sold
for cash unless it
is notified by the dealer that it is to be
transferred to a financial institution.
[14] Ms Cecile Heyns testified that she
was formerly employed by Business Zone in its administration section.
She was responsible
for the operation of the GeoLock/FAST system.
Its purpose was to maintain a full record in electronic form of all
vehicles covered
by a floorplan agreement. The system was controlled
by Absa Bank’s head office in Johannesburg. One of its
functions was
to convey the reregistration confirmation letters from
Absa Bank to Business Zone. She said that she could obtain such
letters
without any difficulty. All she had to do was to click at
the right place on the computer. In some cases this letter was
obtained
only after payment for the vehicle had been made by the
dealer to Absa Bank, in other cases before payment was made. She did
not
know why the one or the other procedure was followed, she simply
acted on instructions. She estimated that she probably received
a
reregistration confirmation letter before payment was made to Absa
Bank in 80% of all cases. In about 20 to 30% of all cases
the
vehicle in question was transferred by Business Zone to a financial
institution.
[15] I turn to the parties’
respective contentions. Absa Bank’s case is straightforward.
It is founded on clause 2.10
of the Floorplan Agreement. It contends
that ownership of the Mercedes Benz C300 did not pass to Business
Zone because it did
not pay Absa Bank for the vehicle.
[16] Counsel for Ms van Zyl, on the
other hand, submitted that Absa Bank’s conveyance of the
reregistration confirmation letter
to Business Zone amounted to a
transfer of ownership to it. This letter enabled Business Zone to
change the reregistration of
the title holder of the Mercedes Benz
C300 from Absa Bank to Ms van Zyl. Counsel pointed to the evidence
of Mr Graham that reregistration
confirmation letters were regularly
sent to Business Zone through the Geolock/FAST system in cases where
Absa Bank had not been
paid for the vehicle. This evidence was
corroborated by that of Ms Heyns. Such a letter was sufficient to
change the registration
information on the NAFTIS documentation which
it did in the case under consideration.
[17] In my view the contention advanced
on behalf of Ms Van Zyl is sound. The conveyance of the
reregistration confirmation letter
to Business Zone was a typical
form of symbolic delivery and it was understood and treated as such
by the parties to the transaction.
See, as to symbolic delivery,
LAWSA second edition Vol 27 Things para 221:
‘Closely analogous to clavium
traditio and also called “symbolic delivery” in practice
is the case where goods
are transferred by delivery of the documents
of title, bills of lading or warehouse receipts.’
[18] Counsel for Absa Bank advanced
three contentions in answer to Ms van Zyl’s claim. The first
is based on clause 2.10
of the Floorplan Agreement. Counsel argued
that this clause is couched in peremptory terms. As Business Zone
never paid Absa
Bank for the vehicle ownership thereof never passed
to it.
[19] It seems to me that there are two
flaws in this argument. The Floorplan Agreement must be read
together with the Facility
Letter. Both form part of a composite
agreement. The latter was intended to deal specifically with Business
Zone. The former
is a standard agreement which was intended to be of
general application. In my view this is an appropriate case for the
application
of the maxim generalia specialibus non degorant (general
words do not derogate from special ones). Although the maxim is more
often applied in the interpretation of statutes it is also found in
the interpretation of contracts. See Lodhi 2 Properties Investments
CC and Another v Bondev Developments (Pty) Ltd
2007 (6) SA 87
(SCA)
para [11]. Absa Bank was in any event in terms of clause 18.2 the
Floorplan Agreement entitled to waive its rights thereunder
in
writing which is exactly what it did in the present case.
[20] Absa Bank’s second
contention is that Ms van Zyl did not prove that it (Absa Bank) had
abandoned its ownership of the
vehicle. I do not agree with this
submission. Ms van Zyl’s case is not that Absa Bank abandoned
the vehicle. Her defence
is that Absa Bank transferred ownership of
the vehicle to Business Zone who in turn transferred it to her. The
principles that
apply to abandonment are materially different from
those that relate to the transfer of ownership and are not relevant
to the case
at hand.
[21] Absa Bank’s third contention
is that ownership in the vehicle did not pass to Business Zone
because the transaction was
tainted with fraud. Its counsel relied
in this regard upon a judgment of the Supreme Court of Appeal in
Quartermark Investments
(Pty) Ltd v Mkhwanazi and Another
2014 (3) SA
96
(SCA) in particular paras [24] and [25]:
‘[24] This court, in Legator
McKenna Inc and Another v Shea and Others
[2010 (1) SA 35
(SCA) paras
20-22] confirmed that the abstract theory of transfer applies to
movable as well as immovable property. According to
that theory the
validity of the transfer of ownership is not dependent upon the
validity of the underlying transaction. However,
the passing of
ownership only takes place when there has been delivery effected by
registration of transfer coupled with what Brand
JA, writing for the
court in Legator McKenna, referred to as a 'real agreement'. The
learned judge explained that 'the essential
elements of the real
agreement are an intention on the part of the transferor to transfer
ownership and the intention of the transferee
to become the owner of
the property'.
[25] As has already been mentioned, a
valid underlying agreement to pass ownership, such as in this
instance a contract of sale,
is not required. However, where such
underlying transaction is tainted by fraud, ownership will not pass,
despite registration
of transfer. The high court correctly found
that the contract of sale between Ms Mkhwanazi and Quartermark was
tainted by fraud.
It follows from this and the fact that Ms Mkhwanazi
had no intention to transfer ownership to Quartermark that the
purported registration
of transfer to Quartermark has no effect and
Ms Mkhwanazi remained the owner of the property.’
[20] At first sight the phrase in para
[25] ‘where such underlying transaction is tainted by fraud,
ownership will not pass’
appears to support counsel’s
submission. It must, however, be read in context. The learned judge
referred with approval
to Legator McKenna Inc and Another v Shea and
Others
2010 (1) SA 35
(SCA). In para [22] of the Legator judgment
Brand JA said the following:
‘[22] In accordance with the
abstract theory the requirements for the passing of ownership are
twofold, namely delivery -
which in the case of immovable property is
effected by registration of transfer in the deeds office - coupled
with a so-called
real agreement or 'saaklike ooreenkoms'. The
essential elements of the real agreement are an intention on the part
of the transferor
to transfer ownership and the intention of the
transferee to become the owner of the property (see eg Air-Kel (Edms)
Bpk h/a Merkel
Motors v Bodenstein en 'n Ander
1980 (3) SA 917
(A) at
922E - F; Dreyer and Another NNO v AXZS Industries (Pty) Ltd supra at
para 17). Broadly stated, the principles applicable
to agreements
in general also apply to real agreements. Although the abstract
theory does not require a valid underlying contract,
eg sale,
ownership will not pass - despite registration of transfer - if there
is a defect in the real agreement (see eg Preller
and Others v
Jordaan
1956 (1) SA 483
(A) at 496; Klerck NO v Van Zyl and Maritz
NNO supra at 274A - B; Silberberg and Schoeman op cit at 79 - 80).’
[21] It follows from these authorities
that the proper test is not whether the underlying transaction was
tainted by fraud. It
probably was in the sense that Smit knew that
he did not intend to pay Absa Bank for the vehicle. The true
question, however,
is whether the real agreement between Absa Bank
and Business Zone was void by reason of Business Zone’s fraud.
In my view
it was not. Absa Bank had the intention to pass ownership
of the vehicle to Business Zone and Business Zone obviously had the
intention to become the owner thereof.
[22] I am accordingly of the view that
Absa Bank’s contention that Business Zone’s fraud
vitiated the transfer of ownership
of the Mercedes Benz C300 to
Business Zone, is without merit.
[23] Absa Bank’s vindicatory
action against Ms van Zyl thus falls to be dismissed. It is
accordingly not necessary for me
to consider her alternative defence
of estoppel.
[24] It remains to deal with the case
against Mr Tyhalibongo. The facts in his case are in the main
similar to those in the application
against Ms van Zyl. The one
difference is that in his case a reregistration confirmation letter
or consent to reregistration was
not produced as evidence in court.
It also appeared from the Natis register and that transfer of
ownership of his vehicle was
registered directly from Absa Bank to Mr
Tyhalibongo and not first to Business Zone and then to him. In the
light of Ms Heyns’
evidence in regard to her operation of the
GeoLock/FAR system the inference is, however, inescapable that a
similar letter or
consent emanating from Absa Bank preceded the
transfer of ownership of the Mercedes Benz B200 to him.
[25] In the result, I make the
following orders:
(1) Absa Bank’s application
against Ms van Zyl (case No 12313/14) is dismissed with costs.
(2) Absa Bank’s application
against Mr Tyhalibongo (case No 12314/14) is dismissed with costs.
A P BLIGNAULT