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REPORTABLE
Republic of South Africa
IN THE HIGH COURT OF SOUTH AFRICA
Western Cape High Court: Cape Town
CASE NO A38/20O9
In the matter between:
P K RAQA
Appellant
and
Z J HOFMAN
Respondent
Coram: Saldanha J et Binns-Ward AJ
JUDGMENT
delivered on 29 May 2009
BINNS-WARD AJ:
1]
This appeal raises an interesting question as to the limits of
the reach of the principles set out in Smit v Saipem 1974 (4) SA
918 (A), which recognise the right in given circumstances of a
2
person other than the owner to claim compensation under the
Aquilian action for damage to property.
2]
The appeal is brought against a judgment in Mitchells Plain
magistrates’ court in terms of which the appellant, as first
defendant, was held jointly and severally liable with the second
defendant to pay compensation to the respondent in respect of the
costs of repairing damage to a motor vehicle. The vehicle had
been damaged as a consequence of the negligent driving of the
second defendant, who was acting in the course and scope of his
duties as a taxi driver in the respondent’s employ.
3]
During argument it was conceded by the appellant’s
attorney, Mr Nacerodien, that it was necessary for us to decide
only one issue, namely whether the magistrate had been correct in
holding that the respondent had locus standi to sue in damages
under the Aquilian action. This concession was wisely made, as in
my judgment the other grounds of appeal were so lacking in merit
as not to require discussion.
4]
The relevant facts were essentially not in dispute at the trial.
The respondent’s friend, Mr Ngceza, wished to purchase a motor
3
vehicle. He was unable to pay the purchase price in cash and he
did not qualify for credit from a financial institution. Because of his
friend’s inability to raise finance, the respondent agreed to formally
enter into an instalment sale transaction with a financial institution,
as credit receiver, on the understanding between himself and
Mr Ngceza that the latter would take delivery of the car and would
pay the instalments and insurance premiums that on the face of it
would have been the respondent’s responsibility under the deed of
contract in the instalment sale transaction.
5]
Both parties understood that in the event of a default in any
of the payments due under the instalment sale contract the credit
grantor would look to the respondent, who in turn would look to Mr
Ngceza. Indeed the respondent testified that if Ngceza failed to
purge any default in servicing the instalments he would be entitled
to take possession of the vehicle. At least a tacit understanding to
that effect would be in accordance with the inherent probabilities
because it may be accepted that in such a situation the respondent
would be called upon by the credit grantor to surrender possession
of the car to it, as usually occurs when there is an unremedied
default by the purchaser under an instalment agreement. There
4
was no evidence on the point but it would also be inherently
probable that had the respondent returned the vehicle to the creditgrantor in circumstances where the resale of the vehicle generated
more than the outstanding balance of the finance debt, the free
proceeds would have been passed on by the respondent to Mr
Ngceza. Anything otherwise would be inconsistent with the purely
intermediary role the respondent described himself as fulfilling.
6]
I think that Mr Greig, who appeared on behalf of the
respondent in the appeal, was correct in characterising the
respondent’s right ever to become the possessor of the vehicle as
no more than a contingent one in the overall context of the
aforementioned contractual arrangements. It was contingent on
the failure by Mr Ngceza to comply with the obligations he had
undertaken to pay the instalments.
The respondent’s vested
contractual right against Mr Ngceza on the other hand was
founded on the obligation undertaken by Ngceza to make the
repayments on the vehicle in terms of the instalment agreement
that the respondent had signed. Certainly that was the position
that prevailed at the time of the collision in which the vehicle was
damaged and, as far as we are able to tell, at all times thereafter.
5
There was no suggestion in the evidence that the contingency
which would trigger the respondent’s contingent right to take
possession of the vehicle from Ngceza had eventuated.
7]
To sum up, despite his formal conclusion of what might in
common parlance be called a hire-purchase contract with the
credit grantor, the respondent had no intention of ever acquiring
the vehicle as his own property, or of using it in any way for his
own benefit. In fact the respondent readily conceded that he had
not at any time been in physical possession of the vehicle. The
instalment sale contract was clearly only a means whereby the
respondent, acting as an intermediary, facilitated the purchase of
the vehicle by Mr Ngceza. Whether or not the credit grantor was
aware of the respondent’s intermediary role is not apparent on the
evidence, but on the view I take of the case nothing turns on that.
The fact that the vehicle was registered and insured in the
respondent’s name was purely incidental to the financing of
Mr Ngceza’s purchase of the vehicle through the device of an
instalment sale transaction subscribed to by the respondent.
These incidences did not legally or factually connote either
6
ownership or possession by the respondent. 1 On the contrary it is
clear that, apart from any other consideration, the respondent at no
time had the requisite intention to become the owner or possessor
of the vehicle.
8]
In my view the respondent described his position accurately
enough as being the guarantor for the payment for the vehicle by
Mr Ngceza, saying ‘I only stand in for him [i.e. Ngceza] as security’,
and later, in answer to questions put to him in cross-examination:
‘Q.
So in fact you are not the owner of that car, isn’t it so?
A.
Since it’s from the bank, I stand in for the person [i.e. Ngceza] at the
bank, so the bank say it’s mine.
Q.
The bank says it yours, but it isn’t yours, isn’t it, it’s his [i.e. Ngceza’s]
car?
A
That’s correct.’
The ‘guarantee’ that the respondent provided was his contingent
undertaking of the obligations of a purchaser of the vehicle towards
the credit-grantor, underpinned by his credit-worthiness.
It is
difficult to find an entirely accurate label for the undertaking
because of the innominate character of his contract with Ngceza. 2
1
Cf. Akojee v Sibanyoni 1976 (3) SA 440 (W) at 442D.
Mr Grieg described the respondent’s role, not inappositely, in colloquial language as having ‘fronted’
for Ngceza.
2
7
9]
It was pleaded on the respondent’s behalf in the court below
that he was the owner, ‘alternatively the bona fide possessor of the
said vehicle and bore all the risk in relation to any damage caused
thereto’. As will be apparent from the facts described earlier, the
evidence did not bear out the allegations of ownership or bona fide
possession. It also became clear that Mr Ngceza, as possessor,
was in fact, in terms of his agreement with the respondent, the
bearer of risk in relation to the vehicle while it was in his
possession. 3
4
Evidence demonstrating the true situation was
elicited by Mr Nacerodien for the appellant in his crossexamination of the respondent and Mr Ngceza.
On the basis
thereof he contended before the magistrate that the respondent
lacked standing to institute the action.
3
In fairness to the witnesses I should mention that these discrepancies did not reflect adversely on the
impression of the respondent’s evidence, or indeed that of Mr Ngceza, in the witness box as palpably
frank and honest. I suspect that the inaccuracy in the pleading of the claim was in large measure due to
its probably having been brought in the respondent’s name by the insurer of vehicle under the doctrine
of subrogation.
4
It should be pointed out that the position of Ngceza as risk bearer was distinguishable from that of the
respondent in Commercial Union Insurance Co of SA Ltd v Lotter 1999 (2) SA 147 (SCA). In that case
Farlam AJA (as he then was) is reported (at p.155F) as having stated ‘In terms of the adage res perit
domino the risk of an object's being damaged normally rests with the owner. It can pass from the
owner to another by virtue of some legal rule or by contract (for example in the case of sale when the
sale is perfecta), but I cannot see how it can pass from a non-owner to someone else merely by virtue of
a contract between them as against a third party who was not a party to the contract.’ That dictum
should not in my view be understood to denote that in a case like the current one, in which the creditgrantor was the owner of the vehicle and had passed the risk of damage to the respondent, that it was
not competent for the respondent in turn to effectively transfer risk and possession to a third party like
Ngceza. The distinguishing feature was that it was discovered that the vehicle in issue in the Lotter
case had not in fact been owned by the credit grantor when the latter purported to lease it with transfer
of the risk therein to the lessee. In the Lotter case, unlike the current matter, the risk of damage had
never been transferred by the owner.
8
10]
The issue of locus standi was dealt with in the magistrate’s
judgment as follows:
‘The plaintiff has a sufficient interest in the matter to claim the relief he seeks.
The plaintiff has testified that he signed the instalment sale agreement and it
was admitted as Annexure ‘D”. The document marked exhibit “A” which is an
extract from the e-natis system indicates that the plaintiff is the owner of the
vehicle. The registration documents was submitted indicating that the plaintiff
is the owner of the vehicle. These documents were discovered and submitted
to proof (sic) ownership.
No evidence was adduced by the defence to
disprove ownership.
Where property is damaged the person normally entitled to sue is the owner.
In Smit v Saipem….it was held that hire purchasers was entitled to sue by
virtue of his possession of the damaged property.
….Although not in possession of the vehicle the plaintiff clearly has an
interest in the matter as he is a risk bearer.
I cannot imagine that a contract between the plaintiff and the finance
company would not have a provision that all risk of loss or damage vested in
the plaintiff. The plaintiff therefore would most certainly carry the risk of loss.
The plaintiff has a vested interest in the matter and has thus the locus standi
as required by law.
It is evident that the magistrate thought it unnecessary to
characterise the nature of the respondent’s ‘interest’ in the context
of all the evidence, or to analyse whether it was sufficient to give
him standing in a claim formulated under the actio legis Aquiliae.
She appears to have regarded the respondent to have been a
9
standard case example of a hire-purchaser: the evidence showed
clearly that that was not the case.
11]
In Smit v Saipem the plaintiff sued for compensation
consequent upon damage caused by the defendant to certain
immovable property consisting of three erven. In his particulars of
claim the plaintiff alleged that he was ‘in civil possession’ of the
properties by virtue of three separate deeds of sale which provided
that possession and occupation was given to the plaintiffpurchaser on date of signature, from which date all risk of damage
to the properties passed to the purchaser.
12]
The defendant in Smit v Saipem pleaded to the claim as
follows:
‘In
the event of the above Honourable Court finding that the plaintiff
was at all material times to this action in civil possession of the said
erven, having acquired same by virtue of the deeds of sale referred to
in … plaintiff's declaration upon the terms set out… [therein], all of
which is denied, then the defendant states that, as the plaintiff was not
the owner of the said erven at all material times to this action, it, the
defendant, is not in law liable to the plaintiff in respect of the matters
referred to in … the plaintiff's declaration as a result thereof or any
damages.’
10
Wherefore the defendant prays that the plaintiff's claim be dismissed
with costs.’
13]
5
The plaintiff in Smit v Saipem noted an exception to the
defence pleaded in the terms set out above. The relevant grounds
of the exception were framed as follows:
‘(a)
In the event of the above Honourable Court finding that plaintiff
was at all material times to this action in civil possession of the
said erven, having acquired same by virtue of the deeds of
sale referred to in … the plaintiff's declaration upon the terms
set out …[therein], then :
(b)
the fact that plaintiff was or is not as yet the owner of the said
erven does not constitute or disclose a defence in respect of
the matters referred to in ….plaintiff's declaration and the
damages flowing as a result thereof.’
14]
6
Jansen JA formulated the question before the court as being
whether the plaintiff, as lawful possessor (‘regmatige houer’) of the
properties in his own interest, enjoyed a right of recovery against
the defendant who had damaged the properties – and in particular
in respect of the consequent diminution in value of the properties. 7
The learned judge of appeal proceeded with an extensive and
illuminating historical review of the development of the law in this
5
Smit v Saipen, supra at 934G-H.
Ibid. at 934 fin – 935A.
7
Ibid at 926H: ‘Die vraag is dus of die eiser, as regmatige houer van die drie erwe in eie belang, 'n
verhaalsreg het teen die verweerder as dader wat die saak onregmatiglik beskadig het - en wel ten
opsigte van die gevolglike waardevermindering van die erwe.’
6
11
connection.
He took as his point of departure a passage in
De Groot’s (Grotius) Inleiding 8 at 3.37 and van der Keessel’s
explanation
thereof
in
his
Praelectiones 9
at
3.37.5
(Prof. H.L. Gonin’s translation 10 ) as follows:
‘Die strekking daarvan is, dat of die saak nou verlore gegaan het, of verwyder
is of beskadig, nie alleen die eienaars wat die blote of die nuttige
eiendomsreg het, 'n aksie kan instel nie, maar almal wat belang daarby het,
soos bv. 'n bruiklener, skuldeiser 11 of besitter, vir sover hulle belang strek.’
15]
12
For present purposes the qualification added by Jansen JA
to the aforementioned statement by van der Keessel is of critical
significance.
The
learned
judge
said
‘In
gevalle
van
saakbeskadiging ken de Groot dus 'n skadevergoedingsaksie teen
die dader toe aan onder andere persone met bloot persoonlike
regte ten opsigte van die saak "voor zoo veel hy door hem is
verkort" of, soos deur van der Keessel gestel, "vir sover hulle
belang strek". Vermoedelik aanvaar de Groot egter dat diegene
8
‘Inleydinge tot de Hollantsche rechtsgeleertheit’ (pub. The Hague 1631)
‘Praelectiones iuris hodierni ad Hugonis Grotii Introductionem ad iurisprudentiam Hollandicam’.
10
‘Van der Keessel: Praelectiones’ (Translation in 5 volumes), 1961-1967.
11
An obvious example of a ‘creditor’ (Afr. ‘skuldeiser’) in possession of another’s property would be a
pledgee.
12
Ibid. at 927E. My English translation: ‘The effect of this is that if the thing is lost, or obliterated, or
damaged, not only the owners who have the mere or beneficial right of ownership may institute an
action, but also everyone who has an interest in it, such as, for example a borrower for use
(‘bruiklener’), creditor or possessor, to the extent of their interest.’
9
12
aan wie hy 'n verhaalsreg toeken, in elke geval ook houer van die
saak is.’ 13 (my underlining, inserted for emphasis).
16]
Jansen JA found it convenient, notwithstanding the peculiar
facts of the case before the court, to address the question with
regard to the analogous position of a purchaser under a hirepurchase contract. In this regard (excluding what might otherwise
be the position were any of the parties insolvent), the learned
judge observed that having regard to the purchaser’s financial
obligation to the seller in respect of payment of the purchase price,
which remained unaffected by the fate of the res vendita after
delivery, the seller’s economic interest in the true sense was not in
the goods, despite its ownership thereof, but rather in the payment
of the purchase price by the buyer. Seen in that way the claim for
the purchase price, and not the res vendita itself, was the hirepurchase seller’s ‘real asset’ (Afr. ‘werklike bate’). 14 Referring to
Professor Boberg’s contribution on ‘Delict’ in the 1972 Annual
13
My English translation: ‘In cases of damage to property, De Groot therefore acknowledges the
existence of an action for damages in compensation against the person responsible including to persons
with only personal rights in respect of the property “to the extent that he has been negatively affected
thereby” or, as van der Keessel put it “to the extent of their interest”. Presumably, however, De Groot
accepted that those to whom he granted such right of action would in every case also be the possessor
of the property concerned.’
14
Ibid. at 926H-927A.
13
Survey 15 , Jansen JA remarked that it was therefore not surprising
that it was considered desirable that a hire-purchaser should be
afforded a right to claim compensation, based on the diminution of
value of the goods, from a person who wrongfully damaged the res
vendita. The question, the judge said, was whether our law was
sufficiently ‘supple’ 16 to provide the hire purchaser with the remedy
in delict that was, in the context of the (then) recently manifested
phenomenon of the large scale conclusion of hire-purchase
contracts
(nowadays,
technically
labelled
‘instalment
agreements’ 17 ), regarded by commentators like Boberg as
desirable.
17]
It is unnecessary for present purposes to rehearse the
historical analysis undertaken by Jansen JA to arrive at the
affirmative answer he gave to the questions identified in the
passages of the judgment mentioned above. It is sufficient to state
that the learned judge concluded that although our law had
adhered to the principle that a purchaser had no right to a claim
15
S.v. ‘Title to sue’ at pp 161. -166. Boberg considered it desirable that the hire-purchaser should have
an action for damages in its own name because he considered, with reference to the decision in
Kommisaris van Binnelandse Inkomste v Anglo American (OFS) Housing Co Ltd 1960 (3) SA 642 (A),
that ‘hire-purchase buyers enjoy all the de facto rights and duties of ownership without the legal
dominium…’. It was clearly implicit that when venturing this opinion, Boberg considered that the hirepurchaser would be in possession of the subject matter of the hire-purchase contract.
16
Jansen JA used the expression ‘soepel’.
17
See s 1 of the National Credit Act 34 of 2005.
14
under the actio legis Aquiliae before it had taken delivery of the res
vendita, 18 there were nevertheless examples in our jurisprudence
which established recognition of the right of a possessor, who was
not the owner, to a remedy premised on that possessor’s negative
interest in the property - in this regard, the judgments in Melville v
Hooper 3 SC 261 (a claim by a caretaker of livestock, who was
responsible to the owner for their good condition), and Spolander v
Ward 1940 CPD 24 (a claim by a borrower of goods for use, who
was responsible to the hire-purchaser thereof for their safe return),
were cited. 19 Significantly, the learned judge of appeal considered
it appropriate 20 to expressly distinguish the position of the
claimants in the cited cases from that of an insurer. The distinction
was explained on two bases; firstly, the discrete character and
effect of the contract of insurance, and secondly - and of particular
significance to the current case - on the ground that an insurer is
not the possessor (Afr. ‘houer’) of the insured goods.
18
Cf. Grobbelaar v. Van Heerden, 1906 E.D.C. 229
The decision in Spolander v Ward would support the conclusion that on the facts of the current case
Mr Ngceza had locus standi to claim under the lex Aquilia for the damage to the vehicle. Analogous
considerations have allowed a colonus (Roman law: A farmer who gave a fixed portion of the farm’s
produce as payment (instead of money) to the landlord. Black’s Law Dictionary, 8 ed) an action for
compensation by way of an actio utilis ex lege Aquiliae in respect of his positive interest in crops
planted by him on his landlord’s land against a wrongdoer who caused them to be damaged or
destroyed.
20
Possibly because of the remarks made by Hofmeyr J in Lean v van der Mescht 1972 (2) SA 100 (O)
at 107 in fine that a person who contractually undertakes responsibility to compensate another for
damage to the latter’s property, unrelated to any fault by him in regard to such damage, is for all
practical purposes in the position of an insurer.
19
15
18]
The subsequent judgment of the Appellate Division in
Refrigerated Transport (Edms) Bpk v Mainline Carriers (Edms) Bpk
1983 (3) SA 121 (A) also proceeded on the basis of an acceptance
by the court that the extension of the Aquilian remedy to a claimant
who was not the owner of the property in question was premised
on the presence of the dual attributes of possession of, and riskbearing responsibility by, the claimant in respect of the property in
question. 21
19]
Why then does it appear to have been fundamental to
Jansen JA’s approach, in upholding the exception to the
defendant’s plea in Smit v Saipem, that the plaintiff was the
possessor of the property in question as well as the bearer of the
risk of any damage to, or loss thereof? It seems to me that the
answer lies in the fact that absent either ownership or risk bearing
possession, with their connotation of a direct interest in the
patrimonial value of the affected property, any delictual claim
related to the loss of or damage to the property would have to be
premised on a derivative interest, which in the vast majority of
instances would be founded on a contractual relationship with the
owner or possessor, and would properly be one for compensation
21
See the judgment at p.125B-C.
16
for a loss of or diminution in the value of the derivative interest,
rather than for a loss of or diminution in value of the property as
property. The damages in such a claim would often be for pure
economic loss, and in any event might be affected by issues of
remoteness. 22
It is not necessary to investigate the possible
availability of such a claim in this case because the claim was not
formulated on that basis. In Smit v Saipem it was material to the
decision to recognise standing ex lege Aquiliae that the damage,
and associated diminution in the value of the property, affected the
claimant directly (Afr. ‘regstreeks’ 23 )
20]
In the current case the claim was pleaded as a classical
Aquilian action predicated on allegations of physical damage to
property and the attendant patrimonial consequences.
In
accordance with that approach, it was quantified with reference to
the consequent diminution in the value of the property; of which the
cost of economic repair just happened to afford the most
appropriate measure.
There was however no congruence
between the pleaded claim and the respondent’s contingent
interest in the property. Indeed, as Mr Grieg contended (albeit in
22
Cf. Union Government v Ocean Accident & Guarantee Corporation Ltd 1956 (1) SA 577 (A), at
585-6.
23
See Smit v Saipem, supra, at 932H.
17
an endeavour to support a different proposition), the position of the
respondent vis à vis the vehicle was, apart from the absence of
any ownership interest therein, materially analogous to that of the
seller in a hire purchase transaction with Mr Ngceza, by extension
of reasoning, being essentially akin to the hire purchaser. As soon
as that much is recognised, it follows, using Jansen JA’s reasoning
in Smit v Saipem, 24 that the respondent’s real interest or asset
(‘werklike bate’) was his monetary claim against Ngceza, and not
the motor vehicle as an item of property. The damage to motor
vehicle had no effect on the existence or the value of the
respondent’s monetary claim. It might have affected the value of
what he considered to be his security for the claim, but in law the
only manner in which the vehicle could have stood as effective
security in the circumstances would have been by way of a pledge,
which of course would have given him possession.
Absent
possession the respondent had no cognisable proprietary interest
in the vehicle.
21]
In the circumstances, apart from the fact that he was not the
owner or possessor (‘houer’) of the property, the risk of damage to
the vehicle formally undertaken by the respondent in terms of the
24
See para. [16] and fn.14, above.
18
instalment sale contract subscribed to by him in the circumstances
described earlier had in fact always laid with Ngceza. As a result
of the instalment sale contract and the coterminous and
inextricably related agreement between himself and Mr Ngceza,
the respondent had a contingent financial exposure to the creditgrantor under the instalment sale transaction and a concomitant
contingent financial claim against Ngceza.
The respondent’s
position was entirely distinguishable from that of the borrower for
use, creditor with possession, or possessor in the passage from
the Praelectiones quoted in paragraph [14], above. He did not fall
within the class of claimant to whom, in accordance with the
principles stated in Smit v Saipem, a classical Aquilian action
would be available.
22]
Insofar as the respondent’s evident economic interest in the
payment by Ngceza of the purchase price is concerned, no
allegations of any loss in that regard were pleaded; and indeed the
evidence showed none was sustained. In the premises I consider
that the contention that the evidence showed that respondent
lacked locus standi was well-founded.