IN THE HIGH COURT OF SOUTH AFRICA

( WITWATERSRAND LOCAL DIVISION)
	CASE NO: A3090/2006
JOHANNESBURG

In the matter between:

S VAN JAARSVELDT	Appellant

and 

KOBUS BOSMAN	Respondent
JUDGMENT

LEVENBERG, AJ
i.	INTRODUCTION
[1]	This is an appeal against a judgment of the Vereeniging Magistrate's Court in favour of the Respondent (plaintiff in the action) in an amount of R17 015,07.
[2]	The Respondent purchased a Daewoo Matiz motor vehicle (“the vehicle”) from the Appellant (Defendant in the Court a quo) for a total amount of R33 814,35. Shortly thereafter the Police took possession of the vehicle on the basis that it had been stolen from a certain van der Walt.
[3]	The Respondent was able to recover portion of the purchase price that he had paid from van der Walt. In the result, the Respondent was out of pocket in an amount of R17 015,07 (i.e. the amount of the judgment).
[4]	The learned Magistrate found that the Respondent had established that the Appellant had breached his warranty against eviction and that the Respondent had been dispossessed by a person (i.e. van der Walt) with better title to the vehicle than the Respondent. He accordingly granted damages in favour of the Respondent for that portion of the purchase price that the Respondent had been unable to recover.
II.	THE EVIDENCE
[5]	Three witnesses testified – Van der Walt (for the Respondent), the Respondent and the Appellant.
[6]	It is common cause on the evidence that van der Walt initially acquired the vehicle for his wife’s use. The acquisition of the car was financed by ABSA Bank. 
[7]	It is not expressly stated in the evidence what the precise nature of the arrangement was between van der Walt and ABSA. However, I infer that it was an instalment sale agreement governed by the now repealed the Credit Agreements Act, 75 of 1980 (“the Credit Agreements Act”) from the following:
[7.1]	When the Appellant acquired possession of the car from van der Walt (see below), there was a balance owing on the vehicle to ABSA.
[7.2]	The Appellant undertook to pay monthly instalments relating to the vehicle directly to ABSA.
[7.3]	The Appellant contends that, when payment in full of the purchase price was effected to ABSA, the Appellant would became the owner of the vehicle. This assumes that, when the final instalment was paid, van der Walt would have been in a position to transfer ownership to the Appellant because the agreement with ABSA was an instalment sale agreement.
[7.4]	It is common cause that, when the outstanding balance was paid to ABSA, ownership of the vehicle passed to somebody other than ABSA. The Appellant contends that ownership passed to him, while the Respondent contends that ownership passed to van der Walt. Ownership would only have passed if the contract was an instalment sale agreement.
[8]	At one time, the Appellant was in partnership with van der Walt’s wife. At that stage he was not sufficiently creditworthy to obtain financing for a vehicle in his own name.
[9]	According to van der Walt, during 2003, the Appellant and van der Walt concluded an oral agreement. Van der Walt maintains that, in terms of that agreement, the Appellant undertook to pay the monthly instalments to ABSA while the Appellant was using the vehicle. The Appellant was to continue using the vehicle until he became sufficiently creditworthy to pay a deposit and to purchase a vehicle in his own name. 
[10]	The Appellant maintains that he purchased the vehicle for a total amount of R46 000,00. He was to pay the purchase price in instalments directly to ABSA. He further contends that, when he had paid the outstanding balance in full to ABSA, the Appellant maintained that he was to become the owner of the vehicle.
[11]	Beyond what is set forth in the previous paragraph, the Appellant is fairly vague on the terms of the arrangement. However, it is common cause that he provided a written document to the Respondent when he sold the vehicle to the Respondent, which he represented to the Respondent at the time accurately reflected his agreement with van der Walt. That document (Exhibit “A”) provides, inter alia, as follows:
“Hiermee bevestig ek S van Jaarsveldt dat ek die Daewoo Matiz voertuig by Jannie van der Walt sal oor neem and net die maandelikse paaiemente sal betaal asook die assuransie op die voertuig. Die betaling voortduur tot die uitstaande bedrag van R46 000.00 wat op 1 Februarie 2003 was of (sic) is en dan sal die voertuig op my naam geregistreer word.
…
Die totale bedrag uitstaande is R46 000.00 en die maandelikse paaiemente is R1 400.00 en moet teen of voor die eerste van elke maand betaal word in the volgende rekening nommer …
Indien geen betaling ontvang is nie sal die voertuig onmiddelik terug versorg word na Jannie van der Walt en geen terug betaling sal gemaak word nie.”
[emphasis added] 
[12]	It is common cause that the Respondent purchased the vehicle from the Appellant on 1 April 2005 (i.e. 26 months later). On the Appellant’s version, if he had diligently complied with his obligations under the alleged agreement, an amount of R36 400,00 ought to have been paid to ABSA by that date, leaving a balance of R10 000,00.
[13]	It is in fact common cause that an amount of R16 056,64 was owing to ABSA at the time. Accordingly, it can be inferred that, on the date of the sale to the Respondent, the Appellant was (even on his own version) in arrears on his payments to van der Walt.
[14]	In addition, it is common cause that, from time to time, the Appellant missed payments to ABSA.
[15]	Accordingly, even on the Appellant’s own version of his agreement with van der Walt, the Appellant would have forfeited all of his rights under the alleged agreement as soon as he went into default. 
[16]	It is common cause that the Appellant sold the vehicle to the Respondent on 1 April 2005 for an amount of R33 814,35. The Respondent discharged the purchase price by paying an amount of R16 056,64 to ABSA to settle the outstanding balance owing to ABSA with respect to the vehicle. The balance of R17 015,07 was paid to Vereeniging Number Plate Centre as the deposit for a new car that was to be purchased by the Appellant. 
[17]	It is also common cause that, upon payment of the amount of R16 056,64, the entire outstanding balance owing to ABSA was thereby discharged. 
[18]	Prior to 1 April 2005, Van der Walt lost track of the vehicle. After the balance of the purchase price had been settled by the Respondent, van der Walt was able to locate the vehicle by investigating the source of the deposit. 
[19]	Van der Walt tracked the vehicle down with the help of Tracker and the Police, after he had reported the vehicle to the Police as being stolen.
[20]	Van der Walt then repossessed the vehicle with the help of Tracker and the Police. In order to recover the vehicle, the Police approached the Respondent at his place of business. At the time the vehicle was not on the premises as the Respondent had sent the vehicle for panelbeating.
[21]	According to the Respondent, a number of people descended on his premises. At that stage, the Respondent testified that (Record p35):
“I phoned both the, Mr van Jaarsveld senior and his son to inform them that Mr van der Walt is with me and that the vehicle is stolen and within about 30 minutes both of them were in my office, confronting Mr van der Walt to say to them that the vehicle is not stolen. Here we are. They knew where the vehicle were and Mr van der Walt as well and the Police. So everybody knew where the vehicle was at the panelbeaters. The plaintiff and the defendant were in my office trying to discuss the matter.”
[22]	The Appellant confirms that the Respondent contacted him and that he attended at the premises and had this discussion with the Police (Record p43). He also says that he advised the Respondent:
“Do not let the car go because this is legal. The car is mine as far as I know. You have paid the car off so that makes it mine. I am allowed to sell it.”
[23]	The Police then went to the panelbeaters and repossessed the vehicle. It is not clear under precisely what authority the Police acted.
[24]	The Appellant took no legal action to prevent the Police from recovering the vehicle. The Appellant also took no legal action to prevent van der Walt from ultimately retaking possession of the vehicle. In short, the Appellant took no action at all to protect the Respondent. Instead, the Appellant attempted to put the onus on the Respondent to stand up to the Police and perhaps risk arrest.
[25]	After the vehicle was repossessed, van der Walt paid the Respondent the amount that the Respondent had paid to ABSA because van der Walt had benefited from this payment.
[26]	The Appellant refused to repay the Respondent the amount of R17 050,07 that the Respondent had paid to Vereeniging Number Plate Centre. The Appellant maintained that the Respondent had obtained valid title and that accordingly he was not liable.
iII.	THE LEGAL PRINCIPLES
[27]	In Lammers & Lammers v Giovannoni 1955 (3) SA 385 (A), Schreiner JA analysed the nature of the seller’s implied warranty against eviction as it had evolved in the modern law as follows:
At p390A:
“As I understand the nature of the so-called warranty against eviction the basic obligation of the seller is to protect the buyer in his possession. As Pothier, Sale, 2, 104 … puts it, 
	‘The immediate and primitive object of this action is the taking of the act and cause for the buyer, that is to say, the defence of his cause, with which the seller is obliged to charge himself, factum defendendi.’
If he fails to shield the buyer against eviction he must restore the price and pay the damages suffered by the buyer as a result of the eviction.”
At p390H:
“It should be observed in the first place that the warranty against eviction has in certain respects been modified in the direction of providing more effective help to the buyer. This was pointed out by Juta A.J.A.in the giving of a judgment of this court in Weber and Pretorius v Gavronsky Bros., AD 48 at pp51 to 53. The learned Judge referred to two directions in which the buyer’s rights had been extended or improved. Originally there must have been actual eviction before the buyer could sue the seller, but that was held not to be essential in Nunan v Meyer, 22 SC 203 … Under the early law, too, the buyer could not recover from the seller unless he had given him notice of the owner’s claim. But the giving of notice had ceased to be a condition precedent to the buyer’s claim; he can in his action against the seller free himself from the criticism that he had given no notice to the seller by proving that the latter had no title that could have made resistance to the true owner possible. …
The object of giving notice to the seller is no longer simply to lay a formally necessary foundation for an action against him; a principal object is, it seems, to convert his general obligation to protect the buyer’s possession into something more specific. So Voet, 21.2.22 says …
	‘There are two objects in giving notice, the one that the vendor may be more certain,’
- I suppose that this means that he may be informed –
	‘and the other that, being informed, he may do something, or undertake the defence.’
At p392G:
“Once the seller is called upon to defend the buyer in his possession but washes his hands of the whole matter, it does not seem to me to be open to him to meet the buyer’s claim by saying that the latter could or should have resisted the true owner’s claim more energetically or skilfully; for it was open to him, the seller, to have taken steps to protect the buyer himself. What those steps would be in any particular case would depend on the available procedure; including, in appropriate cases, i.e. where it is the right of the buyer and not the right of the seller that may provide the means of resisting the true owner, the taking of a procuratio in rem suam.”
[emphasis added] 
[28]	There are three alternative avenues open to a buyer threatened with eviction: 
[28.1]	He can defend the claimant’s claim by conducting a “proper and competent defence” – i.e. a virilis defensio. (Kerr, The Law of Sale and Lease, 3rd ed p198) (York & Co. (Pty) Ltd v Jones NO 1962 (1) SA 65 (SR) 68D-E). If the virilis defensio fails, the dispossessed buyer is entitled to recover damages from his seller.
[28.2]	He can notify the seller of the threatened eviction. If the seller fails (or is unable) to protect him he can give up the article and recover damages from the seller.
[28.3]	He can give up the article and recover damages from the seller provided that he can show that the person who came into ownership had a “legally unassailable claim” to the thing. (Olivier v Van der Bergh, 1956 (1) SA 802 (C) 805H; Garden City Motors (Pty) Limited v Bank of the Orange Free State 1983 (2) SA 104 (N), 107G-108G.)
[29]	The buyer’s claim for breach of the warranty will succeed, even if the buyer is not dispossessed by the owner. It is simply necessary that the dispossession take place by a person with a greater right to the thing than the purchaser. (Kerr, The Law of Sale and Lease, 3rd ed. p195; Moyo v Jani 1995 (2) SA 362 (ZHC).
IV.	APPLICATION OF THE LAW TO THE FACTS OF THE PRESENT CASE
[30]	In the instant case, the Appellant was aware that the Respondent was being dispossessed. He chose to do nothing to defend the Respondent. In that situation, the Respondent cannot be blamed for taking no steps to defend himself. Accordingly, the Respondent is entitled on that ground alone to have recourse to his seller for damages for breach of the warranty against eviction.
[31]	In any event, it is my opinion that the Respondent established on a balance of probabilities that he was dispossessed by someone with “legally unassailable title” for the following reasons.
[32]	First, as noted above, even on the Appellant’s own version, he lost any right to ownership and to dispose freely of the vehicle when he defaulted in the payments to ABSA.
[33]	Second, it is highly unlikely that van der Walt would have disposed of the vehicle without first entering into a written agreement with the Respondent for the following reasons:
[33.1]	The arrangement would simply have been too important to him not to have insisted on a writing.
[33.2]	In terms of section 5(1)(a) of the Credit Agreements Act, a credit agreement must be reduced to writing and signed by or on behalf of every party to it and must contain certain specific terms. Failure to comply with the necessary formalities does not for that reason alone render the credit agreement invalid (Credit Agreements Act, section 5(2)). However, the conclusion of an oral agreement in violation of the provisions of the Credit Agreements Act amounts to a criminal offence. 
[34]	Third, on the Appellant’s version, van der Walt agreed to give up any equity that he had in the vehicle at the time when the sale was effected simply in exchange for the undertaking of the Appellant (whom it is common cause had a bad credit record at the time) that he would pay the instalments to ABSA. It is far more likely that van der Walt simply loaned the car to the Appellant as an accommodation at a time when he was van der Walt’s wife’s partner.
[35]	Fourth, the Appellant’s contention that he purchased the vehicle for a fixed price to be discharged by way of monthly instalments in an equal amount does not square with commercial reality. In the case of an instalment sale agreement, the monthly payments are not usually fixed, but variable, subject to interest rate fluctuations.
[36]	Fifth, the Appellant did not notify van der Walt that he was selling the car to the Respondent. If the Appellant really had the arrangement with van der Walt that he alleges, one would have expected him to have been more open about the sale and to have advised van der Walt that it was taking place.
[37]	Sixth, it is unlikely that van der Walt would have laid a criminal charge and gone to the lengths that he did to recover the vehicle if he had in fact made such an arrangement with the Appellant.
[38]	Seventh, van der Walt’s inherent honesty is corroborated by the fact that he reimbursed the Respondent the amount that the Respondent paid to ABSA, notwithstanding that he may not have had any legal obligation to do so.
[39]	It seems fairly clear that on any version, once ABSA was paid in full, either the Appellant or van der Walt acquired outright ownership of the vehicle. Van der Walt’s version is the more probable. Accordingly, I find that van der Walt probably acquired ownership of the vehicle immediately that the balance was paid to ABSA. Van der Walt thereafter proceeded to lay claim to the vehicle in his capacity as owner.
[40]	The Appellant argued that van der Walt could not have acquired ownership of the vehicle because, at the time that the Respondent paid off the outstanding purchase price of the vehicle, the Respondent was no longer in possession of the vehicle. Moreover, neither the Appellant nor the Respondent at that stage had any intention of holding the vehicle on behalf of van der Walt. 
[41]	This argument is unsustainable in the face of the decision of the Supreme Court of Appeal in Info Plus v Scheelke & Another 1998 (3) SA 184 (SCA), 190G-192A. In that case, the appellant had purchased a motor vehicle under an instalment sale agreement, pursuant to which ownership was to remain vested in the seller until receipt of the full amount due by the appellant. The vehicle had been delivered to the appellant at the time that the sale agreement had been concluded. 
[42]	The vehicle was subsequently unlawfully sold by a third party to the first respondent. At a time when the first respondent (and not the appellant) was in possession of the vehicle, the balance of the purchase price was paid to the finance house.
[43]	The appellant instituted action claiming delivery of the motor vehicle based upon a rei vindicatio. The respondents contended that, at the time when the full purchase price was paid, the appellant was no longer in possession and that, accordingly, he could not have acquired ownership. The Supreme Court of Appeal rejected that proposition. At p190G, van Heerden DCJ held:
“The requirement that subsequent to delivery of a merx a hire-purchase contract there should be a further agreement between the parties, in the sense of a mutual intention at the time of the fulfilment of the conditions that ownership should be transferred to the purchaser, with due respect strikes me as somewhat artificial. I would indeed be surprised if a substantial number of sellers give any consideration to the passing of ownership when the condition is fulfilled. And even if a seller should prior to fulfilment inform the purchaser that he no longer intends transferring ownership to the latter, that by itself would surely not preclude a transfer from taking place.
It follows that I agree with Streicher J … that no further real agreement, concluded subsequent to delivery of the merx under a hire-purchase contract, is required. … The real agreement reached when delivery takes place, suffices. Because of the conditional term in the hire-purchase contract that agreement is also conditional. Notwithstanding delivery, ownership of the thing sold therefore does not pass prior to fulfilment of the condition (hereinafter mostly referred to as the material time). But when that happens ownership passes without more, at any rate if the purchaser is then in possession of the merx.
It remains to consider the question whether a different position obtains if the purchaser is no longer in possession at the relevant time. …
I fail to see that a second form of delivery should be required at the material time. It is true that pendente conditione ownership of the thing sold, say, a vehicle, remains vested in the seller, but nevertheless a transfer of possession, which is one of the requirements of transfer of ownership, does take place. Such transfer is effected in terms of a real agreement embodying the intention of both parties that at the material time the purchaser shall without more ado become owner of the vehicle. At the risk of repetition I stress that at such time both requirements for a transfer of ownership are satisfied inasmuch as the conditional delivery ipse jure becomes an unconditional one. … It is therefore not necessary that the purchaser must be in possession of the vehicle at the material time. Such a requirement can only be justified on the premise, which I have already rejected, that conditio existente second real agreement was concluded. That being so, there is no warrant for insisting that oneof the requirements of a traditio brevi manumust nevertheless be satisfied.”
[emphasis added] 
[44]	It is my opinion that the Info Plus case supports the conclusion that ownership of the vehicle passed to van der Walt when the balance of the purchase price was paid in full.
[45]	In any event, even if van der Walt did not acquire ownership of the vehicle from ABSA, his title was superior to that of the Appellant or the Respondent. This is because the Appellant derives his title from van der Walt. Even on the Appellant’s own version, he had defaulted in his payment obligations to van der Walt and had therefore forfeited the ability to defend any claim by van der Walt to repossess the vehicle.
[46]	It is not in dispute that, if the Respondent’s claim is valid, the Respondent has suffered damages in the amount claimed.
[47]	I therefore find that the learned Magistrate correctly gave judgment in favour of the Respondent.
[48]	Accordingly, I propose making the following order:
1.	The appeal is dismissed. 
2.	The Appellant is ordered to pay the Respondent’s costs in the appeal.
______________________________________
P.N. LEVENBERG, AJ                    
ACTING JUDGE OF THE HIGH COURT       

I agree                                                               

______________________________________
SALDULKER,  J                             
JUDGE OF THE HIGH COURT              

Date of Judgment: 21 August 2007