Professional Documents
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Document in Compliance With The Law and
Document in Compliance With The Law and
and
JUDGMENT
This judgment is deemed to be handed down upon uploading by the Registrar to the
electronic court file.
Gilbert AJ:
1. The applicant seeks the return of a motor vehicle from the first respondent.
2. The respondents in opposing the relief have not filed answering affidavits but
in a notice in terms of Uniform Rule 6(5)(d)(iii) have raised questions of law. It follows
that the averments in the founding affidavit must be taken as established facts. 1
3. The first respondent (or his son the second respondent, it matters not which
for present purposes), was using a Toyota Fortuna belonging to a director (Pretorius)
of his then employer pursuant to a lease agreement concluded on 11 November
2016. The first respondent feared that when his employment was terminated (which
duly occurred), Pretorius (who remained a director of his now erstwhile employer)
would demand the return of the Toyota Fortuna, particularly as the first respondent
intended instituting action of some kind against his erstwhile employer. But the first
respondent wanted to continue to use the vehicle.
4. So he approached his then friend, the applicant. He asked the applicant
whether the applicant could assist him by approaching Pretorius, purchasing the
vehicle from Pretorius and then leasing the vehicle to him. In that way, the first
respondent envisaged that he and/or his son, the second respondent, could continue
to use the vehicle but would pay rentals to the applicant, his friend.
5. The applicant was succeeded in persuading Pretorius to sell the vehicle
during or about April 2019 for a purchase consideration of R158 446.50. The
applicant needed to finance this purchase of the vehicle and did so through
WesBank by way of an instalment sale agreement pursuant to which the applicant
would pay for the vehicle together with finance charges over a period of 72 months
with monthly instalments of R3 268.82. Wesbank reserved ownership of the vehicle.
6. Having purchased the vehicle, the applicant was in a position to lease the
vehicle to the first respondent.
7. On 27 May 2019, the applicant and the first respondent concluded an oral
agreement in terms of which the applicant leased the vehicle to the first respondent
at a monthly rental of R3 300.00 per month. The monthly rentals were only
marginally more than the instalments that the applicant has to pay to WesBank and
therefore it cannot be said that there was any real profit in this transaction for the
applicant. This accords with this being a transaction between friends pursuant to
which the applicant was seeking to assist the first respondent. The relevance of this
1
Boxer Superstores Mthatha and Another Mbenya 2007 (5) SA 450 (SCA) at 452 F-G; ABSA Bank
Limited v Bianca Cara Prochaska t/a Bianca Cara Interiors 2009 (2) SA 512 (D) at para 9.
will appear later in this judgment as it relates to the respondents’ reliance upon what
they contend are contraventions of the National Credit Act, 2005.
8. The oral lease agreement also provided for an option given to the first
respondent to purchase the vehicle should he pay enough rentals to the applicant to
settle the applicant’s outstanding indebtedness to WesBank under the instalment
sale agreement. This too demonstrates that the transaction is not an arm’s length
commercial transaction but rather a transaction between friends to assist the first
respondent.
9. The oral agreement also provided that it was for the first respondent to
comprehensively insure the vehicle.
10. Throughout, the first respondent remained (and remains) in possession of the
vehicle, whether himself or through his son, the second respondent.
11. The first respondent paid some rentals but fell into arrears. After various
indulgences afforded by the applicant to the first respondent, their friendship frayed
to the extent that eventually the applicant’s attorney on 23 February 2021 addressed
a formal letter to the first respondent’s attorneys in which, after setting out the terms
of the oral lease agreement and the first respondent’s multiple breaches of the lease
agreement in the form of non-payment of monthly rentals and the failure to insure the
vehicle, it was recorded that the first respondent had repudiated the agreement and
that consequent thereupon the applicant cancelled the lease. This letter constituted
both the notice of cancellation and the demand requiring the first respondent to
return the vehicle now that the lease had been terminated.
12. What followed was exchanges between the parties’ legal representatives and
which culminated in the launch of these proceedings on 11 March 2021 pursuant to
which the applicant sought the return of the vehicle.
13. As appears from the undisputed facts, the first respondent did not pay (and
has not paid) the rentals that were payable at under the lease agreement, he was
considerably in arrears when the applicant cancelled the agreement in February
2021, and that some eighteen months later he (or his son) still remains in possession
of, and presumably continues to use the vehicle, without payment of any
compensation to the applicant.
14. The respondent’s rule 6(5)(d)(iii) notice is not a model of clarity and therefore
the questions of law raised in opposition are not clearly delineated.2
15. With considerable leeway being afforded by the court in favour of the
respondent given the difficulties in construing the notice, the respondents’ counsel
during the hearing effectively raised three primary legal issues.
16. The primary legal challenge is that the applicant has not made out a cause of
action for the repossession of the vehicle, for the following reasons:
16.1. WesBank is the owner and that this disentitles the applicant from
seeking repossession of the vehicle, particularly in the absence of any
clause in the instalment sale agreement between the applicant and
WesBank that allowed the applicant to have let the vehicle to the first
respondent;
16.2. the oral lease does not contain a term that allowed the applicant to
repossess the vehicle;
16.3. the oral lease does not contain a lex commissoria that entitled the
applicant to repossess the vehicle without first furnishing notice to remedy to
the first respondent.
17. The second legal challenge is that the lease agreement is regulated by the
National Credit Act and so it is necessary for the applicant to first comply with the
provisions of the National Credit Act, including furnishing the requisite notices in
terms of and otherwise complying with sections 129 and 130 of that Act.
18. The third legal challenge is that the principles of the law relating to pledges
needs to applied to the present situation and so require of the applicant to sell the
vehicle at a fair price and then retain only such of the proceed as was due to him
(presumably being the difference between what he had paid and still had to pay
Wesbank and the rentals he had received from the first respondent), and to pay the
balance of the sale proceeds to the first respondent. This argument continues that
the applicant’s repossession and retention of the vehicle without so selling the
vehicle and accounting for the sale proceeds would effectively amount to self-help
and is analogous to an invalid pactum commissorium as applies in the case of a
pledgee retaining a pledged item.
2
Respondent’s counsel that argued the matter was the author of neither the notice nor the heads of
argument.
19. Dealing with the first legal challenge, the legal principle is settled that it is not
open to a lessee to contest the title of a lessor.
20. In Boompret Investments (Pty) Limited and Another v Paardekraal
Concession Store (Pty) Limited 1990 (1) SA 347 (A), Van Heerden JA writing for the
majority at 351H-I said:
“It is, of course, true that in general a lessee is bound by the terms of the
lease even if the lessor has no title to the property. It is also clear that when
sued for ejectment at the termination of the lease it does not avail the lessee
to show that the lessor has no right to occupy the property.”
21. In that matter the question arose whether the general principle also applied
where the lessee not only disputed the lessor’s title but claimed to be entitled to
occupy the property by virtue of a right acquired independent of the lease. After
considering the position, the majority found that as the lessee had not established
such a right, it did not have to resolve that issue.
22. In the present instance, the respondents do not contend for any right to
possess the vehicle independent of the lease agreement between the applicant and
the first respondent. For example, the first respondent does not contend that he is
entitled to ownership of the vehicle through someone other than the applicant, and
so that has a superior right of possession.
23. In a minority judgment, Nestadt JA in Boompret did not depart from the
majority’s view on the legal principle that a lessee cannot contest the title of a lessor
but acknowledged that if a lessee could show a stronger right to the property than
the lessor, such right would enjoy protection.3
24. Any doubt about this principle that a lessee cannot contest the title of a lessor
is removed by the Constitutional Court decision of Mighty Solutions t/a Orlando
Service Station v Engen Petroleum Limited and Another 2006 (1) SA 621 (CC). In
that matter, the Constitutional Court described the right of a lessor to take back the
property upon termination of the lease as a term implied by the common law into a
3
At 358 H-I referring to Pretoria Stadsraad v Ebrahim 1979 (4) SA 193 (T) at 196B, approved on
appeal in Ebrahim v Pretoria Stadsraad 1980 (4) SA 10 (T) at 13H.
lease, being a natural incident of all contracts of lease. 4 The Constitutional Court
declined to develop the law to depart from this principle, which it described as being
at the heart of the common law of lease.5
25. Applying this trite principle, the respondents’ ground of opposition that there is
no term in the lease entitling the applicant to repossess the vehicle dissipates. At the
very least, there is an implied term that the applicant as lessor is entitled to
possession of the vehicle once the lease ends. This founds the applicant’s right to
possess the vehicle.
26. The opposition that the applicant does not have title to the vehicle in that he is
not the owner also dissipates as it is not open to the first respondent to contest the
applicant’s entitlement to the vehicle. As reaffirmed in Mighty Solutions,6 a valid lease
is not dependent on the title of the lessor, and so the lessor does not, unless
otherwise expressly agreed, warrant any entitlement to let. Just as in Mighty
Solutions where the sub-tenant could not dispute the title of the sub-lessor to let the
premises, in the present matter the first respondent as the lessee cannot contest the
title of the applicant as the lessor to let the vehicle. It therefore is not a defence that
the applicant is not the owner of the vehicle or that there is no term in the instalment
sale agreement between the Wesbank as the owner of the vehicle and the applicant
that permits the applicant to let and then take possession of the vehicle.
27. The applicant disavows relying on any ownership to vindicate the vehicle.
Instead, the applicant’s counsel describes the cause of action being a possessory
action in the sense of the applicant asserting a superior title to possess the vehicle
than that of the first respondent. That this is a cognisable cause of action in law,
apart from any vindicatory relief, is firmly established, as appears from Pretoria
Stadsraad.
28. The applicant having chosen to seek relief based upon the possessory action
must establish that he has a superior right to possess to that of the first respondent. 7
This can be contrasted to the mandament van spolie where a court does not look
into the rights of the parties to possess.
4
At para 46.
5
At paras 46 and 68.
6
Para 28.
7
Boompret at 358H-I.
29. The first respondent’s only right to possess is that conferred upon him by the
applicant pursuant to the oral lease. Should the applicant prove that the lease was
validly terminated, that would be the end of any competing right of possession that
the first respondent had.
30. The applicant has in his founding affidavit described the breaches of the oral
lease agreement by the first respondent and how these constitute a deliberate and
unequivocal intention by the first respondent to no longer be bound by the oral
agreement, thereby constituting a repudiation by the first respondent of the lease. In
the absence of the first respondent delivering an answering affidavit to gainsay these
averments and where it appears common cause from the correspondence attached
to the founding affidavit that the first respondent had persistently breached the lease
agreement in failing to pay rentals and insure the vehicle, I am unable find that the
first respondent has raised a bona fide factual dispute that his conduct did not
amount to a repudiation. The first respondent was specifically afforded an indulgence
during the course of the litigation to deliver an answering affidavit but instead chose
to deliver only a Rule 6(5)(d) notice.
31. The applicant having cancelled the lease agreement consequent upon the
first respondent’s repudiation, the first respondent is unable to insist upon first being
furnished notice to remedy before the applicant can cancel. 8 The absence of a lex
commissoria in the oral lease agreement therefore is of no consequence.
32. In relation to the second challenge, the first respondent’s reliance upon the
applicant’s non-compliance with the National Credit Act too must fail. It is clear from
the circumstances giving rise to the conclusion of the oral lease agreement and the
terms of the oral lease itself that the agreement is not a credit transaction as
regulated by the Act, even assuming in favour of the first respondent that the lease
was a ‘credit agreement’ failing within one of the categories described in section 8 of
the Act (which is by no means clear). The parties were not dealing with each other at
arm’s length9 and were not independent of each other and consequently not
necessarily striving to obtain the utmost possible advantage out of the transaction. 10
Should the first respondent have abided the lease agreement, the applicant would
8
South African Forestry Co Limited v York Timbers Limited 2005 (3) SA 323 (SCA) at para 37, at
342D.
9
Section 4(1).
have gained no material advantage from this transaction as he was obliged to
transfer ownership of the vehicle to the first respondent. To the contrary, the
applicant exposed himself considerably, for no reward, in incurring credit
indebtedness towards WesBank in acquiring the vehicle at the behest of his then
friend, the first respondent.
33. In relation to the remaining legal ground of opposition, the respondents have
not done nearly enough to make out a case for the application of the legal principles
from the law of pledge to the present facts. What is required of a party seeking to
develop the law has been set out in several cases, including that of Mighty Solutions
in paragraph 39:
“Before a court proceeds to develop the common law, it must: (a) determine
exactly what the common-law position is; (b) then consider the underlying
reasons for it; and (c) enquire whether the rule offends the spirit, purport and
object of the Bill of Rights and thus requires development. Furthermore, it
must (d) consider precisely how the common law can be amended; and (e)
take into account the wider consequences of the proposed change on that
area of law.”
34. Three paragraphs of less than hundred words in a rule 6(5)(d)(iii) notice
referring to a pactum commissorium and self-help, and which are elevated during
argument to a request for the principles of the law of pledge to be applied to the
present situation cannot suffice.
35. In any event, this argument is based upon the transaction being an instalment
sale agreement, the respondents contending that the seller of goods under an
instalment sale agreement is not permitted to repossess the goods without selling
those goods and then transferring any profit arising from that sale to the purchaser. 11
But, as appears from the undisputed terms of the oral agreement, the transaction is
a lease and not an instalment sale agreement.
10
Section 4(2)(b)(iv). Compare Friend v Sendal 2015 (1) SA 395 (GP) para 33 to 37. See also the
recent full court decision of this Division in Heydenrych v Forsyth [2022] ZAGPJHC 391 (31 May
2022).
11
As is effectively provided for in section 131 read with sections 127(2) to (9) of the National Credit
Act.
36. But even if the lease agreement coupled with an option by the first respondent
as lessee to take ownership of the vehicle at the end of the lease if he has paid
sufficient rentals to settle the applicant’s exposure to the financer Wesbank, is to be
construed, as the respondents contend, as a disguised instalment sale agreement, it
would still not assist the respondents. Apart from not having made out even a most
rudimentary case for the development of the law, sufficient consumer legislation is in
place to protect a purchaser in an instalment agreement. 12 The National Credit Act in
specifically excluding certain agreements from its ambit including those which are
not concluded at arm’s length, in circumstances such as these, strongly militates
against any development of the common law to give protection to those falling
beyond the protection afforded by the Act. If the legislature has seen fit to exclude
protection in particular instances (such as in transactions that are not at arm’s length,
such as between friends), a court must be circumspect in extending the law to afford
such protection.
37. The respondents have not made out a defence to the relief sought by the
applicant and the applicant is entitled to possession of the vehicle.
38. An order is made that:
38.1. The first and second respondents, as the case may be, are directed
and ordered to return to the applicant the Toyota Fortuna 3.OD-4D R/B A/T
2012 model, chassis number [....], engine number [....] with registration
number [....] (“the motor vehicle”).
38.2. In the event that the first and/or second respondent, as the case may
be, fail to return the vehicle to the applicant within ten days of this order, the
sheriff and/or deputy sheriff, as the case may be, are authorised and directed
to attach the motor vehicle wherever same may be found and to place the
applicant in possession of the vehicle.
38.3. The first and second respondents are ordered to pay the costs, jointly
and severally.
12
Again, see section 131 read with sections 127(2) to (9) of the National Credit Act.
Gilbert AJ