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IN THE MAGISTRATES COURT FOR THE DISTRICT OF DURBAN

HELD AT DURBAN

CASE NO. 62620/98

IN THE MATTER BETWEEN :

Standard Bank of S A Ltd Plaintiff

and

Kurt Robert Knoop N.O. 1st Defendant

Erich Schravesande 2nd Defendant

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JUDGEMENT

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Introduction and Factual background

1)The plaintiff describes itself in its particulars of claim as The Standard Bank of South Africa Limited , a company

registered and incorporated with limited liability according to the laws of the Republic of South Africa and which

carries on business inter alia at 5th Floor, Standard Bank Centre, 96 First Avenue, Durban.

2)At the time of issue of summons the 1st defendant was described as Webs Trading C C a Close Corporation duly

registered and incorporated in accordance with the company laws of the Republic of South Africa and whose chosen

domicilium citandi et executandi was 45B Johnson Road, Maydon Wharf, Durban. First defendant, it appears, was

subsequently placed under final winding up by virtue of a special resolution registered on 28th July 2004 and as such is

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represented by its Liquidator Kurt Robert Knoop, N.O. When reference is made herein to the 1st defendant, it is to be

construed as a reference to the close corporation.

3)The 2nd defendant is Erich Schravesande an adult male whose chosen domicilium citandi et executandi is 64 Venice

Road, Morningside, Durban.

4) The 1st defendant as purchaser and plaintiff as seller entered into an instalment sale agreement on the 8th October

1997.

5) The agreement was entered into in writing and a copy thereof is annexed as “A” to the particulars of claim - it

appears to be a standard form contract. In terms of the agreement 1st defendant purchased a 1996 model Land Cruiser

VX Ltd motor vehicle from the plaintiff.

6)The selling price (including extras) was R 361 000.00 to which stamp duty of R 100.40 was added , bringing the

price to R 361 100.40.

7) First defendant paid an initial payment (deposit) of R 100 000.00

8) Finance charges (interest) were declared to amount to R 138 913.78 calculated at the then annual finance charge

rate (AFCR) of 20.250 %.

9) After the deduction of the deposit and the addition of the interest, the balance of the purchase price was the sum of

R 400 014.18.

10) The balance of the purchase price was to be paid in 53 monthly instalments of R 7407.78 each, commencing on

8/11/97 and the last/final instalment payable on 7/4/02.

11) Ownership of the vehicle remained vested in the plaintiff and was reserved until the full purchase price had been

paid

12) The 1st defendant took delivery of the vehicle

13) The agreement annexure “A” contains standard provisions that were usual in instalments agreements concluded

under the Credit Agreements Act 75 of 1980 , the predecessor of the present National Credit Act 34 of 2005. The pre –

printed agreement, annexure “A”, entitles the plaintiff as seller to inter alia the following rights and/or privileges

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flowing from the agreement viz:

(a) Should 1st defendant fail to pay any instalment on due date then the whole balance then outstanding would

become due and payable and the plaintiff was entitled to cancel the agreement and repossess the vehicle

(b) The interest payable in terms of the agreement, and in the event of cancellation of the agreement, on any

amount outstanding by the 1st defendant to the plaintiff would be at the prime rate of the plaintiff

(c) In the event that the plaintiff obtained a judgment against the 1st defendant, then the 1st defendant

would be liable for the plaintiffs costs on an attorney and client scale

(d) First defendant consented to the jurisdiction of the Magistrates Court

14) The 2nd defendant, in a General Guarantee executed on the 29th July 1997, had bound himself as Surety for and Co-

Principal with the 1st defendant to the plaintiff for all monies then owing or which may in future become owing by the 1st

defendant to the plaintiff, a copy of which Suretyship is annexed as “B” to the particulars of claim. In terms of the

Suretyship the 2nd defendant:

(a) renounced the benefits of excussion

(b) consented to the jurisdiction of the Magistrates Court

(c) agreed that in the event of any judgment being granted in favour of the plaintiff against the 2nd

defendant , then he would be liable for the costs thereof on a scale as between attorney and client.

15) The court was handed a “Statement of facts agreed and definition of issues of fact and law in dispute in terms of

Rule 29(3),4 and 5 ” which was accepted by the court and marked exhibit “A 1”.Such agreement was amended to record

that the defendants abandoned their counterclaim.

16) According to paragraph 9 of the agreed facts the vehicle was stolen approximately some 4 months later whilst in

the possession of the 1st defendant on 6 February 1998 and it was never recovered.

17) According to paragraph 10 of the agreed facts the defendant ( 1st ?) failed to pay the 1st of the instalments (

R7407.67) which was due in November 1997 and/or all subsequent instalments.

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18) In terms of the agreed facts the parties agree that:

1.

In the event that it be found that the 1st defendant was not excused payment by reason of the issues raised in

the plea and defined and set forth hereunder , it is agreed that :-

(a) the plaintiff was entitled to cancel the agreement , annexure “A” , upon the failure to pay the monthly

instalment for November 1997 and subsequent monthly instalments;

(b) as at that date , the amount outstanding in terms of the agreement was R 282 902.74

2.

(a) in the event of a judgment being granted in favour of the plaintiff for R 282 902.74, then the defendants

are liable therefore jointly and severally.

(b) interest is payable on the said judgment from 1 November 1997 to date of payment at the prime rate of the

Standard Bank of South Africa.

(c) the prime rate of the Standard Bank of South Africa is as set forth in the schedule, annexure “B” to the

statement of agreed facts (no such schedule was annexed and it was agreed that plaintiff would put up

proof of same via an affidavit of an officer of the bank in due course should the need arise for same).

19) The defined disputes of fact were delineated in paragraph 11 on pages 5 and 6 of defendants amended plea and

more specifically repeated and set out in paragraph “C 1” of the statement of agreed facts. The court was requested to

ignore the contents of paragraphs “C 2” and “C 3” of the statement of agreed facts. As per the defined issue of factual

dispute, the defendants deny that the installment sale agreement annexure “A” is enforceable on the ground/s that:

1. The Land Cruiser VX Ltd motor vehicle which was the subject of the installment sale agreement

was a motor vehicle illegally imported into the Republic of South Africa, alternatively it was a stolen

motor vehicle

2. In the event of it being found by the court that the said motor vehicle was an illegally imported vehicle, then the

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plaintiff could not have lawfully been in possession of the said motor vehicle and in turn could not place Webs

Trading CC in lawful possession of the said motor vehicle

3. In the premises, the plaintiff could not lawfully comply with its obligation in terms of the installment sale

agreement to give delivery of the said motor vehicle to Webs Trading CC

4. By virtue of the subject of the installment sale agreement not being capable of being in the lawful possession of

anybody in the Republic of South Africa, the installment sale agreement itself is illegal, invalid and unenforceable

5. In the event of it being found by the court that the said motor vehicle was a stolen motor vehicle, then the

plaintiff could not have sold the said motor vehicle to Webs Trading CC and the installment sale agreement is

therefore illegal, invalid and unenforceable

6. By virtue of the installment sale agreement being illegal, invalid and unenforceable, the accessory claim

against the 2nd defendant as surety is unenforceable

20) With regards to the issue of law, the plaintiff contends that even if all such issues of fact pleaded in paragraph 11

of the (amended) plea are decided in favour of the defendants, the agreement is still lawful and binding upon the

defendants and that proof of such facts do not excuse the 1st defendant from performance in terms of the agreement

annexure “A” by reason of the following provisions of annexure “A” which read as follows:-

“2. Delivery

2.1 Purchaser has selected the goods from the supplier thereof (Supplier) and Seller has no

knowledge of the purpose for which the goods are required by the purchaser;

2.2 Purchaser shall, at its own cost, procure and take delivery of the goods from Seller or

Supplier and shall hold the goods on behalf of the Seller for the duration of the agreement. Delivery or tender

of delivery by Seller or Supplier to Purchaser within 30(thirty days) of the date hereof shall be deemed to be

delivery of the goods by Seller to Purchaser. Supplier shall not act as Sellers agent for the purpose of

delivery;

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2.3Purchaser shall inspect the goods on behalf of Seller before taking delivery and shall

accept the goods on Sellers behalf so that ownership of the goods shall pass to Seller. Purchaser

warrants to Seller that the goods will not be defective in any way and shall be suitable for

the purpose for which they have been acquired. Purchaser is not authorized to act as Sellers agent

except for the purpose of inspecting the goods and accepting delivery.

2.4 If this agreement is not subject to the Credit Agreements Act (Act 75 of 1980) the Purchaser agrees that no

warranties or representations have been given or made as to the state, condition or fitness of the

goods. The purchaser takes the goods with all faults and accepts all risks of whatsoever nature

in the goods.”

(My emphasis added)

Read together with:-

“17. Non-Variation

17.1 This is the entire agreement between the parties relating to the goods. Subject to the

provisions of CAA, if CAA applies to this agreement, there are no implied or tacit terms or

conditions to be read into this agreement.

17.2 The schedule was fully completed prior to the signing of this agreement and the

particulars therein are correct.

17.3 This agreement may not be amended, cancelled or novated except and only to the extent that such

amendment, cancellation or novation is reduced to writing and signed by both parties. No relaxation by Seller of

the terms of this agreement shall be deemed to be a waiver of Sellers rights and Seller may enforce the

terms strictly at any time.”

21) By narrowing the issues of dispute to those set out in paragraph 11 on pages 5 and 6 of defendants amended plea

and as reiterated in paragraph “C 1” of the statement of agreed facts as more specifically stipulated and set out in

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paragraph 19 above , the defendants have , by agreement pinned their colours to the mast.

22) Defendants have made the positive allegation in paragraph 11.1 of the plea that the vehicle was illegally imported

into the Republic, alternatively it was a stolen motor vehicle as a result of which the instalment sale agreement is

illegal, invalid and unenforceable.

23) The plaintiff did not replicate to the defendants plea in terms of rule 21 of the Magistrates Court Act 32 of 1944, the

concomitant of which in terms of Rule 21(3) means that the plaintiff shall have been taken to have denied all the

allegations of fact contained in the defendant‟s plea, in particular paragraph 11.1 of the defendants plea. Notwithstanding

the contents of paragraph “C 2” of the statement of agreed facts, plaintiff has conceded in paragraph “A 9” thereof

that the vehicle was stolen subsequent to its sale and delivery to 1st Defendant. However nowhere in the statement of

agreed facts does it appear that plaintiff has conceded that prior to or at the time of its sale the vehicle was a stolen

vehicle or an illegally imported vehicle – in consequence, regard being had to Rule 21(3), and in the absence of an

admission on the pleadings or an agreement regarding such factual allegations , such averments remained to be

proved by defendants. The parties legal representatives however , for the sake of arguing the stated case, informed

the court that the parties agreed that the matter would be argued on the basis of it being accepted that the vehicle

was a stolen motor vehicle alternatively it had been illegally imported into the country.

24) Taking into account what I have stated above, there being an agreed statement of facts ,such constitutes the only

admissible evidence before the court and the court is thus confined to such facts as stated by the parties in addition

to the facts which stand undisputed and/or admitted on the pleadings - the court cannot consider and indeed need not

look outside the boundaries delineated by such facts (Jones and Buckle Rule 29-8, Service 15,2005 ) and as a result

defendants defence would ordinarily fail in the absence of evidence or proof to establish that the vehicle was a stolen

vehicle and/or was an illegally imported vehicle - the agreement that the matter be argued on the basis that it be

accepted that the vehicle was a stolen motor vehicle alternatively it had been illegally imported into the country

however takes care of such dilemma.

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25) In paragraphs 13 and 14 of the particulars plaintiff alleges and makes the averment that the agreement is subject to

the Credit Agreements Act 75 of 1980.In paragraph 13 of the Plea Defendants have accepted that the agreement is a

credit agreement governed by the relevant act. Defendants however have not raised anything in the pleadings or the

agreed facts which makes the slightest allusion or the remotest of references or suggestion to the fact that the

agreement, governed by the provisions and strictures of the Credit Agreements Act 75 of 1980, contains material

which offend against provisions of the Act. More especially the plea has not been couched on the basis that the

agreement contains offensive or unenforceable provisions whereby the parties contract out of warranties implied by

operation of law . Defendants are bound by their pleadings. Likewise plaintiff is bound by its pleadings and most

certainly cannot adopt the stance that the Act does not apply to the agreement as in such a circumstance it is

incumbent on the plaintiff to plead sufficient facts to show that the relevant Act is not applicable[ Botha v Potch Motors

(Edms) Bpk 1963 (1) SA 279 (T); Credit Corporation of SA Ltd v Swart 1959 (1) SA 555 (O) and see also Amlers

Precedents of Pleadings , 6th Edition 2003 at page 118-119].

2.

The Legal Position

1) I have already considered that on what has been presented to me there is nothing which could assist the court at

this stage in making a finding that prior to the sale the vehicle was a stolen vehicle and/or that it was illegally imported

and that the agreement would thus be illegal, invalid and unenforceable – the lack of any evidence in this regard would

at this stage equate same to being meaningless hearsay. Subsequent agreement between the parties however allows

me to accept , for the purposes of argument , that the vehicle was a stolen vehicle and/or that it was illegally

imported.

2) In the light of the aforesaid there exists the question as to what the parties‟ rights and/or obligations were in

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respect of each other, regard being had to the fact that the vehicle was evicted from 1st defendant whilst it was in

possession thereof.

3) The court will also consider the question as to what the parties rights and/or obligations were in respect of each

other, regard being had to the fact that the vehicle would have been susceptible to eviction from 1st defendant by the

Customs and/or Police authorities if it suffered from the dubious status of being a stolen vehicle or being a vehicle

which had been illegally imported into the country.

4) In a contract of sale the seller is enjoined in terms of our common law to provide to the purchaser a warranty

against eviction of the item sold i.e. he must protect the purchaser against eviction- that is all that he is obliged to do

and he is not obligated to make the purchaser the owner of the purchased goods, neither does the seller have to be the

owner of the goods sold. There is no duty in South African law to pass ownership to the purchaser. All that the seller

need do is guarantee vacua possessio to the purchaser – a seller may therefore sell on credit goods belonging to a 3rd

person [ Diemont and Aronstam The Law of Credit Agreements in South Africa 5 ed at pg 128; Van Niekerk v Anmic

Agencies CC 1998 JOL 8 (E) at pg 7-8 ]. It appears therefore that the warranty against eviction does not go so far as to

guarantee to a purchaser that he will become owner of the thing sold [Garden City Motors v Bank of the Orange Free

State 1983 (2) SA 104 (N) at 110H].The warranty against eviction was succinctly stated by Botha JA in Alpha Trust

(Edms) Bpk v Van der Watt 1975 (3) SA 734 (A) at 743H - 744A to be the following:

'Dit is duidelik dat dit vir 'n geldige koopkontrak volgens ons reg geen vereiste is dat die verkoper van die

koopsaak eienaar daarvan moet wees nie. Ofskoon dit die doel van die koopkontrak is dat die koper eienaar van

die verkoopte saak moet word, is die verkoper egter nie verplig om die koper eienaar daarvan te maak nie. Hy

moet die koper slegs in besit stel en hom teen uitwinning vrywaar. Dit beteken dat die verkoper daarvoor

instaan dat niemand met 'n beter reg daartoe die koper wettiglik van die verkoopte saak sal ontneem

nie, en dat hy, die verkoper, die koper in sy besit van die saak sal beskerm.'( my emphasis).

Concerning the fact that the warranty is only against eviction by someone with better legal title , Van Den Heever J A

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said in Lammers and Lammers v Giovannoni 1955 (3) 385 (A) at 397 B-C that “ His implied warranty is not that the

purchaser will not be vexed by the unlawful acts of others. All he warrants is that the purchaser will not be

lawfully evicted because of defective title.” ( my emphasis again) There is thus no eviction if the third person's claim

is not a lawful one. The demand, it is abundantly clear, has to be one that can 'legally be substantiated' - See also

Westeel Engineering (Pty) Ltd v Sidney Clow & Co Ltd 1968 (3) SA 458 (T) at 462A ; Garden City Motors (Pty) Ltd v Bank

of the Orange Free State Ltd supra at 108 F – G and Diemont and Aronstam at pg 128.

5) “The most common form of eviction takes place where a purchaser is deprived of possession of the merx by the

true owner thereof. There is “eviction” if permanent dispossession takes place lawfully even if the person evicting does

not claim to be owner or holder of any of the rights already mentioned. Thus if a Customs Authority lawfully declares

goods to be forfeited, or, acting in terms of Section 20 of the Criminal Procedure Act, the police lawfully seize stolen

motor vehicles, the purchaser is “evicted” – From Sale by AJ KERR ,LAWSA para 88 Vol 24 , 1st re-issue and see also

The Law of Sale and Lease by AJ KERR at pg 195 where it seems the author goes further by qualifying his earlier work

by stating that the rules of eviction applied in the case of a taking/ seizure of goods by Customs Authorities coupled

with a declaration being made by such authority( my emphasis added)

However it must be stressed that according to our present law an actual physical eviction need not necessarily occur

and a threat to do so may suffice if the eviction arises when a third party with a better or superior title to, or

right in, the property, compared with the title or right of the seller actually interferes with the purchaser's vacua

possessio, or threatens to do so. The warranty against eviction has been modified in our law in order to make it more

effective to help the buyer. In this regard it was stated in Lammers and Lammers v Giovannoni 1955 (3) SA 385 (AD) at

391A–B as follows: "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 S.C. 203 (and see Pothier, op. cit. 2,83. 103). 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

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notice has 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…" Thus in the situation where the purchaser can prove that the third party's

claim is legally unassailable the seller remains liable whether notice is given or not.

In summary, in order to invoke the ex lege warranty against eviction, it must be proved on a balance of probabilities

that:

Defendant has been lawfully evicted. [See LAWSA, first re-issue, Volume 24, 87-91, Lammers & Lammers v

Giovannoni 1955 (3) SA 385, Olivier v Van der Berg 1956 (1) SA 802 (C)];

Defendant, as purchaser, gave Plaintiff, as seller, proper notice of the proceedings, calling on the seller for

assistance in defending the case. [See York & Co. (Pty) Limited v Jones N.O (2) 1962 (1) SA 72 (SR)];

Defendant conducted an unsuccessful virilis defensio against the claim. [See York & Co supra].

If defendant gave no notice to plaintiff or no virilis defensio was conducted, defendant must establish that the

claimant‟s title was “legally unassailable.” [See Garden City Motors (Pty) Ltd v The Bank of OFS Ltd 1983 (2) SA

104 N at 107 G-108 H; Olivier v Van der Bergh 1956 (1) SA 802 (C) at 805 H]

See also: Amlers Precedents of Pleadings by LTC Harms, 6ed at pg 357

6)The warranty against eviction is residual, not being one of the essentialia of the contract and is implied by law in

contracts of sale. It is not a warranty which is given (either expressly or tacitly) by the seller .This warranty is imposed

ex lege and has nothing to do with the consensus or absence thereof between the parties to the contract [Van der

Westhuizen v Arnold 2002 (6) SA 453 (SCA) at pg 470 para 43, per Marais JA]. The parties may agree that the

warranty shall be excluded - see PLIT v IMPERIAL BANK LTD 2007 (1) SA 315 (SCA) at p319 para 9.

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7) Because of its residual nature the law recognises that such a warranty may be excluded or renounced expressly:

See Alpha Trust (Edms) Bpk v Van der Watt supra at 745H - 746A.

8)In deciding whether the implied warranty has been excluded by the parties one has to, on an interpretation of the

contract, consider if they have done so by looking at the language of the contract.

9)The intention of the parties to a contract must be gathered from the language used in the contract and not from

what either party understood it to be, were busy contemplating or had in mind : Van Pletsen v Henning 1913 AD 82 at 99

; Philomatt (Pty) Ltd v Mosselbank Developments CC 1997 JOL 59 ( A )

10) It is trite that in interpreting a contractual provision, the words used must be ascribed their ordinary grammatical

meaning within the context in which they were used unless the context indicates otherwise. The context includes not

only the wording of the whole contract but also the background facts in respect of the contract , such as the nature,

genesis and purpose of the contract: See Blackshaws (Pty) Ltd v Constantia Insurance Co Ltd 1983 (1) SA 120 (AD) at

127 A-C , Sun Packaging (Pty) Ltd v Vreulink 1996 (4) SA 176 ( AD) at 184 A-D ,Richter v Bloemfontein Town Council 1922

AD 57 at 69, Coopers & Lybrand and Others v Bryant 1995 (3) SA 761 (A) at 768A-E.

Obviously, in interpreting the contract, one would strive to give it business efficacy – indeed such an interpretation is

necessitated in order to render it practical and consistent with good sound commercial sense.

11) It is thus clear that in construing the ambit of an exemption clause between the parties regard should be had at

least to the 'matters probably present to the minds of the parties when they contracted' - i.e. the 'background

circumstances' - See Delmas Milling Co Ltd v Du Plessis 1955 (3) SA 447 (A) at 454G - H; Van Rensburg en Andere v

Taute en Andere 1975 (1) SA 279 (A) at 305C - E. As appears from the passage from Reardon Smith Line v Hansen-

Tangen; Hansen-Tangen v Sanko Steamship Co [1976] 3 All ER 570 (HL), quoted with approval in Cinema City (Pty) Ltd v

Morgenstern Family Estates (Pty) Ltd 1980 (1) SA 796 (A) at 805B and PLIT v IMPERIAL BANK LTD 2007 (1) SA 315 (SCA)

at p319 para 10 : 'No contracts are made in a vacuum: there is always a setting in which they have to be placed. The

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nature of what is legitimate to have regard to is usually described as ''the surrounding circumstances'' but this phrase

is imprecise: it can be illustrated but hardly defined. In a commercial contract it is certainly right that the Court should

know the commercial purpose of the contract and this in turn presupposes knowledge of the genesis of the

transaction, the background, the context, the market in which the parties are operating.'

12) With regard to insurance policies and exemption clauses, the following was said in the matter of Allianz Insurance

Ltd v RHI Refractories Africa (Pty) Ltd [2007] SCA 174 (RSA) at para 7 viz. “The approach to the interpretation of

contracts of insurance, in general, and exemption clauses in particular, has by now become well settled. For the

present it can be summarised by the statement of two basic principles. First, a contract of insurance must be

construed like any other written contract so as to give effect to the intention of the parties as expressed in the policy.

Thus the terms are to be understood in their plain, ordinary sense unless it is evident from the context that the parties

intended them to have a different meaning (see e.g. Blackshaws Ltd v Constantia Insurance Ltd 1983 (1) SA 120 (A) at

126H-127A, Fedgen Insurance v Leyds 1995 (3) SA 33 (A) at 38A-E). Second, whilst the ordinary rule is that the insured

must prove itself to fall within the primary risk insured against by the policy, an exception clause is restrictively

interpreted against the insurer, because it purports to limit what would otherwise be a clear obligation to indemnify

(see eg Van Zyl v Kiln Non-Marine Syndicate Number 510 of Lloyds of London 2003 (2) SA 440 (SCA) at 446A-H).” By

parity of reasoning the same logic and principles should apply to any other contract.

13) It is suggested that courts 'endeavour to confine exemption clauses within reasonable bounds . . . by interpreting

them narrowly. It is also suggested fairly regularly that exemption clauses should be construed contra proferentem –

i.e. against the person for whose benefit the exemption is included, and at whose behest it is drafted – see Christie The

Law of Contract in South Africa 5th ed at 188-191 and 224 – 225. Similarly Scott JA, in Durban's Water Wonderland (Pty)

Ltd v Botha and Another 1999 (1) SA 982 (SCA) at 989 stated:

„Against this background it is convenient to consider first the proper construction to be placed on the

disclaimer. The correct approach is well established. If the language of a disclaimer or exemption clause is

such that it exempts the proferens from liability in express and unambiguous terms, effect must be given to

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that meaning. If there is ambiguity, the language must be construed against the proferens. (See Government of

the Republic of South Africa v Fibre Spinners & Weavers (Pty) Ltd 1978 (2) SA 794 (A) at 804C.)……‟.

It is important to bear in mind, however, that the guides to interpretation, such as contra proferentem, should be

resorted to only where the application of the general principles of interpretation fails to yield a clear meaning (Van der

Westhuizen v Arnold 2002 (6) SA 453 (SCA) at pg 469 para 38).

3.

Application of the Law/Facts :

1) The material surrounding or background circumstances and/or probabilities which the court can have regard to can

be summarised, inter alia, as follows:

the bank is registered as such and its business is to advance finance to clients to enable them to buy

goods.

The purchaser/client is the one who actually sources and selects the goods from the supplier (vide clause

2.1 and 2.2 of the conditions of the agreement).

The bank has no knowledge of the purpose for which the goods are required by the purchaser/client and it

appears in most cases the bank probably never sees the goods as delivery is effected directly from the

supplier to the client( vide clause 2.2 and 2.3 of the conditions of the agreement).

In order to provide security for the financing of the transaction the bank concludes an instalment sale

agreement with the client where the bank is the seller and the client the purchaser (vide line 8-9 of the

face of the agreement, above “description of goods….”).

Reservation of ownership in the goods by the bank (vide clause 4 of the conditions of the agreement), until

the full purchase price and finance charges are paid, effectively secures the bank's 'loan'.

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In this matter the 1st defendant personally via a member of the C C or through an agent, identified and

inspected a Landcruiser VX Ltd, which would be fit for defendants purpose (which was unknown to the bank

as per clause 2.1 of the conditions of the agreement).

The vehicle was delivered to the 1st defendant or its agent by the supplier.

The bank played no part in the choice, sourcing, selection, inspection and probably the delivery of the

vehicle.

2) The agreement can thus be interpreted against the backdrop of these facts.

3) The court in PLIT v IMPERIAL BANK LTD 2007 (1) SA 315 (SCA) at p321- 322 considered similar provisions as those

under consideration in this case. In fact clauses 2.1 and 2.2 in the PLIT case were in almost identical terms as clauses

2.1 and 2.2 in the current agreement , with the exception that the material portion which is underlined in the

comparison hereunder does not appear in the PLIT matter , whilst the material portion which appears in [….] appears

in addition in the PLIT matter.

Clauses 2.1 and 2.2 in the two matters read as follows:

This matter PLIT

2.1Purchaser has selected the goods from the

supplier thereof (Supplier) and Seller has no

knowledge of the purpose for which the goods are

required by the purchaser

2.1Purchaser has selected the goods and seller has

no knowledge of the purpose for which the goods

are required by the purchaser [and does not

guarantee that the goods are suitable for that

purpose]

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2.2 Purchaser shall, at its own cost, procure and

take delivery of the goods from Seller or Supplier

and shall hold the goods on behalf of the Seller for

the duration of the agreement. Delivery or tender of

delivery by Seller or Supplier to Purchaser within

30(thirty days) of the date hereof shall be deemed

to be delivery of the goods by Seller to Purchaser.

Supplier shall not act as Sellers agent for the

purpose of delivery

2.2 Purchaser shall at its own cost, procure and

take delivery of the goods from Seller or Supplier

[in such manner that seller becomes owner] and

shall hold the goods on behalf of the Seller [, as

owner,] for the duration of the agreement. Delivery

or tender of delivery by seller or supplier to

purchaser within 30 (thirty) days from date hereof

shall be deemed to be delivery of the goods by

Seller to Purchaser. Supplier shall not act as

seller's agent except for the purposes of delivery

4) With regards to the clauses in the Plit matter, the learned judge said the following at para 14 on page 321 of the

judgment regarding the implied warranty against eviction viz.:

“In my judgment these two clauses read together against the background facts set out earlier make it clear

that the parties intended to exclude the warranty. In clause 2.1 the parties record that the bank has in effect

had no part in the selection of the goods. In clause 2.2 it is acknowledged that the bank is not the owner and an

obligation is then placed on the defendant to ensure that the bank becomes the owner. It is repeated in clause

3. As stated by the learned Judge, it makes commercial sense for the parties to place such an obligation on the

defendant, onerous as it may be, to ensure, for the purpose of its security, that the bank becomes the owner of

the goods on delivery. This obligation is inimical to the concept that the bank, in accordance with the implied

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warranty, will protect the defendant in his possession of the aircraft and engines. ”

I can only echo the reasoning of the learned judge in interpreting the almost mirror images of the abovementioned

clauses 2.1 and 2.2 in the current agreement read in tandem with the other provisions of clause 2 and I find that, on a

proper interpretation of the written instalment sale agreement concluded between the parties, the implied warranty

against eviction was excluded.

5) Measured against my finding that the implied warranty against eviction was excluded, it is necessary to consider if

the parties could contract out of liability for an implied warranty that is imposed on the contracting parties by the

common law. What has to be borne in mind is that the agreement between the parties is not an ordinary agreement, it

is a credit agreement and it appears to prima facie fall within the ambit of the Credit Agreements Act 75 of 1980 - this

fact has been pleaded by the plaintiff and accepted by the defendant. There is no averment in the summons or agreed

facts that the vehicle belongs to a group or class of movables which has been exempted from the provisions of the Act

.With this in mind, it is important to note that Section 6(1) (d) of the Credit Agreements Act 75 of 1980 provides

explicitly that:

“A credit agreement or any other agreement or document shall not contain a provision to the effect that –

…

(d)the liability of a credit grantor in terms of any guarantee or warranty which would, but for such provision, be

implied in a credit agreement, is excluded or restricted.”

Accordingly, to the extent that the terms of clause 2 of the agreement in casu purport to exclude or restrict the

plaintiffs liability in terms of the warranty against eviction and/or the warranty against latent defects in respect of the

vehicle sold, they appear to offend against the provisions of section 6(1)(d) of the Act and on such grounds would

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therefore be void and unenforceable [LAWSA (1st reissue), vol 5, part 1, paragraph 19 and 20; Diemont and Aronstam pg

111–113; Jela v Godwana [2000] 2 All SA 557 (E) at pg 561]. The vaguest of references was made in argument to the

applicability of the Act but no argument was crystallized or addressed to me specifically on this topic by either side. I

believe therefore that I have not been requested to consider this specific issue and I therefore refrain from doing so

by making a specific ruling thereon – as previously mentioned in this judgment defendants have not raised anything in

the pleadings or even the agreed facts which makes the slightest allusion or the remotest of references or suggestion

to the fact that the agreement , governed by the provisions and strictures of the Credit Agreements Act 75 of 1980 , is

tainted with illegality because it appears to contain provisions whereby the parties contract out of warranties implied

by operation of law. If it was incumbent for me to pronounce on the validity or otherwise of clause 2 with reference to

Section 6(1) (d) of the Credit Agreements Act, and if I was to find that clause 2 was void and/or unenforceable in whole

or in part, such a finding would in any event not render the entire agreement illegal, invalid and/or unenforceable –

such a finding would not, however, without anything more mean that the whole agreement would be visited with

invalidity and unenforceability. A term in an agreement that falls foul of a provision of section 6(1) would itself be void,

but the rest of the contract would be valid if severable[ Jela v Godwana at pg 561;LAWSA (1st reissue), vol 5, part 1,

paragraph 19 and Diemont and Aronstam pg 111–113 ]. In the circumstances without making a pronouncement as to the

validity or otherwise of clause 2, apart from clause 2, I believe that the rest of the contract is valid and enforceable

against the defendants. However if it was to be assumed in favour of the defendants that clause 2 in whole or in part is

void and unenforceable, it is therefore necessary to consider if the warranty against eviction would be available to the

1st defendant purchaser in order to defeat plaintiffs claim.

6) As discussed in 2.5 above, consideration must be given to whether the facts or probabilities indicate whether:

i. Defendant has been lawfully evicted;

ii. 1st Defendant, as purchaser, gave Plaintiff, as seller, proper notice of the proceedings, calling on the seller for

assistance in defending the case;

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iii. Defendant conducted an unsuccessful virilis defensio against the claim;

iv. If defendant gave no notice to plaintiff or no virilis defensio was conducted, defendant was (or is or will be) able

to establish that the claimant‟s title was “legally unassailable.”

7) Has the defendant been lawfully evicted? It has been agreed that the vehicle was stolen and it is clear that the thief

has not been identified. A theft would equate to an unlawful deprivation of use and enjoyment. The authorities already

previously referred to as well as Diemont and Aronstam at pg 128 make it abundantly clear that the warranty applies

only to a lawful deprivation of use and enjoyment: any unlawful deprivation, such as theft, is not covered by the

guarantee. It would run counter to precedent and common sense to allow a purchaser to invoke the warranty in the

face of an unlawful deprivation by an unidentified individual. Defendants therefore fail at this, the 1st and most crucial

hurdle. Furthermore regarding its dubious status of being a stolen or illegally imported vehicle , neither the Police nor

the Department of Customs and Excise has(or had) made demand on 1st defendant or threatened to evict it of the

vehicle , let alone did such authorities physically seize the vehicle and remove it from 1st defendants possession - the

law requires a threatened or actual eviction and under no circumstances can the mere possibility alone of an eviction

by Police or Customs officials be equated to an eviction which could invoke the warranty. The genesis of the eviction

has to be realized in act, fact and definitely by deed.

8) Has 1st Defendant, as purchaser, given Plaintiff, as seller, proper notice of the proceedings, calling on the seller for

assistance in defending the case ?- the answer to this is no , there were no legal proceedings that were initiated in an

attempt to appropriate or evict the vehicle from 1st defendant , the vehicle having been taken illegally from 1st

defendants possession presumably without its knowledge. There is no suggestion that 1st defendant gave the requisite

notice. It appears that 1st defendant could never have given such notice inasmuch as the probabilities suggest that it

was dispossessed of the vehicle surreptitiously and without notice or demand by the furtiveness of the thief.

9) Has 1st Defendant conducted an unsuccessful virilis defensio against the claim? - the answer to this is no. There is no

suggestion that 1st defendant did so. It appears that 1st defendant could never have done so inasmuch as the

probabilities as already mentioned suggest that it was dispossessed of the vehicle surreptitiously and without notice or

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demand by the thief. There was thus no way that 1st defendant could have conducted a defence against an undeclared

and unknown action carried out by an unknown person.

10) The final question to be considered is , if defendant gave no notice to plaintiff or no virilis defensio was conducted ,

defendant is ( or will be ) able to establish that the claimant‟s title was “legally unassailable” - the answer to this is no.

Nobody has come forward and laid claim to the (stolen) vehicle, so in fact the de facto position that exists is that no

claimant exists or for that matter could exist as there is no vehicle to lay claim to. The question also arises whether

defendants can rest their case against the Plaintiff on an alleged unassailability of the Department of Customs and

Excise's title to the vehicle, or for that matter the right of the Police to seize the vehicle. The question for decision is

whether or not such title would indeed be incontestable resulting in "no defence to such claim" being "sustainable in

law" - since the vehicle was not seized or impounded by Customs or the Police it is not necessary to delve into the

realms of speculation and conjecture on this point. The law is clear that a lawful eviction would take place only if the

Customs Authority lawfully seizes and then declares goods to be forfeited, or, acting in terms of Section 20 of the

Criminal Procedure Act, the police lawfully seize stolen vehicles – this did not and has not happened. In addition it may

be mentioned in passing that the mere seizure of the vehicle by the Police or Customs (assuming that to have been

proved) would not constitute an eviction as the possibility would not be excluded that the seized item may yet be

returned by the Police or Customs to the person from whom it was seized [see Minister van Wet en Orde en 'n ander v

Datnis Motors (Midlands) (Edms) Bpk 1989 (1) SA 926 (A); Vrystaat Motors v Henry Blignaut (Edms) Bpk 1996 (2) SA 448

(A) at 459A-B/C; Lavers v Hein & Far BK 1998 (3) SA 195 (SCA) and Bashee Motors (Pty) Ltd v Ntoyabo [2005] JOL

14062 (SCA) at pg 5 para 10 ].It follows that if such circumstances prevailed against 1st defendant, 1st defendant would

not be evicted by the seizure of the vehicle in question and it could and cannot invoke the warranty against eviction.

11) It is therefore having regard to one, more or all the above considerations in paragraphs 3.6 - 3.10 above that the 1st

and 2nd defendants case has to fail.

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12) At the risk of reiterating what I said earlier in this judgment, it is clear that all the plaintiff was obligated in terms of

the sale was to provide to the 1st defendant a warranty against eviction of the vehicle sold i.e. plaintiff was to protect

the 1st defendant against its lawful eviction - that is all that plaintiff was obliged to do. Plaintiff was not obligated to

make the 1st defendant the owner of the purchased goods, neither did the Plaintiff have to be the owner of the goods

sold in order to vest the 1st defendant with the right to the use and enjoyment of the vehicle. As already said, there is no

duty in South African law to pass ownership to the purchaser. All that the plaintiff had to do in terms of the agreement

was guarantee vacua possessio to the 1st defendant – it has already been said that a seller may sell on credit goods

belonging to a 3rd person [ Diemont and Aronstam The Law of Credit Agreements in South Africa 5 ed at pg 128; Van

Niekerk v Anmic Agencies CC 1998 JOL 8 (E) at pg 7-8 ]. Since the warranty against eviction does not go so far as to

guarantee to a purchaser that he will become owner of the thing sold [Garden City Motors v Bank of the Orange Free

State 1983 (2) SA 104 (N) at 110H] , all that the plaintiff was to do was to comply with its end of the deal which it did by

loaning and advancing finance to enable the purchase of the vehicle and by facilitating delivery and most importantly

giving vacuo possessio to the 1st defendant after 1st defendant had by an exercise of free and conscious will sourced,

inspected and selected the vehicle from any number of vehicles that the supplier had. The obligation to ensure that the

vehicle did not suffer from any “legal disability” was thrown squarely onto the shoulders of the 1st defendant since

plaintiff did not handle or have sight of the vehicle chosen from the supplier. In the face of an attempt or threat of

lawful eviction by someone with better title 1st defendants remedy was to invoke the warranty against eviction. In the

circumstances, the defence set out in paragraph 11 of defendants amended plea does not avail 1st and 2nd defendants as

it does not disclose a proper defence to plaintiffs action. Inasmuch as defendants have abandoned their counterclaim

and not substituted it with any request for alternative relief, I believe it is not necessary for me to consider if the

defendants, whether or not the warranty against eviction has been excluded, would be entitled to the payment of

damages or even the repayment of the purchase price or part thereof [ as contemplated in Vrystaat Motors v Henry

Blignaut (Edms) Bpk 1996 (2) SA 448 (A); Van der Westhuizen v Arnold 2002 (6) SA 453 (SCA)].

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13) In the final result the court gives consideration to the fact that the contract was concluded in October 1997 and the

1st instalment was due in November 1997. The 1st defendant did not pay the 1st instalment in November 1997 or any

subsequent instalment which fell due thereafter. By the time the vehicle was stolen on 6 February 1998 1st defendant

had use and enjoyment of the vehicle and at least three instalments were overdue, owing and payable. By not paying

the arrears, I believe that the purchaser 1st defendant as a credit receiver would lose its entitlement to be reinstated in

rights and obligations which flowed from the terms of the credit agreement. A party has a right to resile from and

claim a rescission of an agreement if he/she is lawfully evicted. Having regard to the aforesaid the court finds that the

1st defendant was not entitled to resile from and claim a rescission of the agreement especially since no lawful eviction

took place. The court also finds that in the circumstances the 1st defendant was not excused payment and that it was

the plaintiff who was entitled to cancel the agreement (annexure “A”) by virtue of 1st defendants breach and to claim

the relief prayed for, upon the failure of the 1st defendant to pay the monthly instalment for November 1997 and the

subsequent monthly instalments.

The order I therefore make is the following:

Judgment is granted in favour of the plaintiff against 1st and 2nd defendants jointly and severally the one paying the

other to be absolved for :

1) Payment of the amount of R 282 902.74;

2) Interest (the determination of which is adjourned sine die) is to be paid on the aforesaid amount from 1 November

1997 to date of payment at the prime rate of the Standard Bank of South Africa, which rate is to be proved via an

affidavit scheduling such rate/s, and which affidavit is to be deposed to by a competently qualified senior official in the

employ of plaintiff; and

3) The 1st and 2nd defendants are ordered to pay the plaintiffs costs, on the attorney and client scale , which costs are

to include the costs of preparation for trial; and

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4) It is declared that the costs of Counsel was warranted , which costs are to include the reasonable fees of Counsel on

brief, same to be taxed and determined by the Taxing Master

Dated at Durban on this the 11th day of January 2008.

G Field

Additional Magistrate

Received copy of this judgment on this the day of 2008

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Plaintiffs Attorney

Received copy of this judgment on this the day of 2008

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Defendants Attorney