Caldeira v Ruthenberg and Others (66/1997) [1998] ZASCA 107 (27 November 1998)

2 VIVIER JA:

This case started as an urgent application on notice of motion in the

Cape Provincial Division for an order setting aside a search warrant which

authorised the seizure of a 1996 Mercedes Benz 600 SL convertible sports

car ("the Mercedes") and for its recovery. The applicants were Ruben

Ruthenberg ("Ruthenberg"), Bloomsbury (Pty) Ltd ("Bloomsbury") and

Randburg Motorlink CC ("Motorlink"). They alleged that Ruthenberg

bought the Mercedes from Bloomsbury which in turn had bought it from

Motorlink which in turn had bought it from Exclusive Boys Toys CC

("Exclusive"). Bloomsbury and Motorlink were dealers in expensive,

exotic second-hand motor cars. Exclusive carried on a similar business

until its beneficial owner, one Pretorius, closed the business and fled the

country on 15 August 1996. The respondents in the application were the

Minister of Safety and Security ("the Minister") as first respondent,

3 sergeant Langford ("Langford") as second respondent and Jose Bonifacio

Caldeira ("Caldeira") as third respondent. Before the matter was heard

the applicants arrived at a settlement with the Minister and Langford as a

result of which the relief claimed against these two respondents was

withdrawn and an interim court order was made directing that the Mercedes

remain in Ruthenberg's possession under seizure pending the outcome of the

application. The Minister and Langford agreed to abide the Court's

decision and have taken no further part in the proceedings. A settlement

was also reached between the applicants to the effect that, as between them,

Motorlink was the owner of the Mercedes. The notice of motion was

thereafter amended and an order was then sought declaring that Motorlink

was the common law owner of the Mercedes and entitled to the free and

undisturbed possession thereof and that Caldeira was estopped from

asserting any rights thereto. This meant that Ruthenberg and Bloomsbury

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no longer had any interest in the orders sought and they have taken no further part in the proceedings. Caldeira in turn brought a counter-application for an order declaring that he was the lawful owner of the Mercedes and entitled to possession of it. The Court a quo (Traverso J) held in favour of Motorlink and granted the order sought by it. Caldeira's counter-application was dismissed and he was ordered to pay the costs of the application and counter-application. With the leave of the Court a quo Caldeira now appeals to this Court.

It was not disputed that Caldeira bought the Mercedes in England on 23 November 1995, that it was registered in his name on 28 November 1995 and that he subsequently, during January 1996, instructed one Gous, a salesman employed by Exclusive, to attend to the importation of the Mercedes to South Africa and to sell it in this country on his behalf. The Mercedes was imported via Namibia by C and M International ("CM") a

5

firm of importers operating out of Walvis Bay. According to the Namibian customs and excise documentation the Mercedes arrived in Namibia on 23 March 1996 and was released on 14 June 1996. It arrived at the premises of Exclusive later in June 1996 and was displayed for sale in Exclusive's showroom. Exclusive also extensively advertised the Mercedes for sale in the Auto Trader car magazine during the period 18 April to 11 July 1996.

It was common cause that on 13 June 1996, ie even before its arrival in South Africa, Exclusive, without the knowledge of Caldeira, fraudulently caused the Mercedes to be registered in its name.

Caldeira's mandate to Exclusive, in so far as may be relevant, was to sell the Mercedes at a minimum price of R560 000-00 to which had to be added a certain profit margin for Caldeira, a commission of six percent for Exclusive plus all the transport and import costs and duties. The mandate was to last for 60 days and Exclusive would not be entitled to

6

deliver the Mercedes to a buyer until Caldeira had been paid the full

purchase price. The 60-day period of the mandate expired and was thereafter renewed from week to week.

Motorlink's case as to the circumstances under which it acquired the Mercedes was deposed to by its sole member, Rafiek Mohamed. In his founding affidavit he stated that during the middle of July 1996 he received a telephone call from one Landman of Bloomsbury who enquired whether he had a Mercedes Benz 600 SL convertible for sale. He told Landman that he was able to obtain such a vehicle as he knew that Exclusive had one in stock and that he would sell it to Landman for the sum of R750 000-00. He thereafter commenced negotiations with Exclusive, with whom he had had numerous dealings in the past, and it was agreed that he would buy the Mercedes from Exclusive for the sum of R725 000-00. Exclusive had earlier bought another Mercedes from Motorlink for the amount of

7 R652 000-00 which was then still unpaid, and it was agreed that payment

for the Mercedes would be effected by set-off or compensatio and that the

difference of R73 000-00 would be applied towards the reduction of the

purchase price of a Range Rover which Exclusive had bought from

Motorlink for the sum of R390 000-00. The Mercedes was delivered to

Motorlink on 16 July 1996 and registered in its name on 18 July 1996.

The next day Motorlink sold the Mercedes to Bloomsbury for the amount of

R750 000-00 and Bloomsbury in turn sold it to Ruthenberg for the sum of

R807 000-00.

Mohamed stated that upon delivery to Motorlink he was satisfied

that Exclusive was entitled to dispose of the Mercedes, for the following

reasons. Pretorius had told him as early as February or March 1996 that

Exclusive was importing the Mercedes from England. The registration

certificate reflected Exclusive as the owner and it also showed the vehicle

8 status as code 1 which meant that it had not been registered in this country

before so that there was no previous owner here. He further made

enquiries from one Hare of CM who told him that Exclusive had imported

the Mercedes and he obtained a letter from the shippers, Viking Shipping Co

(Pty) Ltd ("Viking"), confirming that all customs duties in respect of the

Mercedes had been paid. Finally he obtained a letter from Exclusive which

stated that there was no money outstanding and no encumbrances on the

Mercedes.

According to Mohamed, therefore, Motorlink purchased the Mercedes and took delivery thereof only after receiving the enquiry from Bloomsbury in mid-July 1996. In his replying affidavit he stated that he received the enquiry on 15 July 1996. His case was that he was at that stage unaware of Caldeira or anyone else who was entitled to the Mercedes.

In answering affidavits both Caldeira and Gous state that on or

9 about 1 July 1966 Caldeira called on Exclusive, terminated the mandate and

removed the Mercedes. According to Gous, Mohamed arrived at

Exclusive's showroom later the same day and spoke to Pretorius in his

presence. During the course of the discussion Pretorius told Gous to get

the Mercedes back from Caldeira at all costs as Mohamed had obtained a

buyer for it. The next day Gous approached Caldeira and told him that a

buyer had been found at the agreed price. Caldeira thereupon reinstated

the mandate and handed the Mercedes back to Gous, emphasising that

Gous was not to relinguish possession unless the full purchase price had

been paid. The following day, 3 July 1996, Gous noticed that the

Mercedes was gone from Exclusive's showroom and Pretorius then told

him that Mohamed had taken it as payment of money owed by Exclusive.

Pretorius added that the arrangement with Mohamed was that he would give

Exclusive another Mercedes which it could sell for cash. (As I will show

10 later it was not disputed that at the beginning of July 1996 Exclusive owed

Motorlink the purchase price of two vehicles.) Pretorius told Gous to

placate Caldeira and to keep him at bay in the meantime. This he

managed to do until 13 August 1996 when Caldeira arrived at Exclusive's

showroom and saw that the Mercedes was missing. Two days later, after

Pretorius had fled the country, Gous disclosed to Caldeira what had

happened to the Mercedes. Caldeira was able to trace the Mercedes and

he reported the matter to the police who obtained the search warrant.

Gous's version is clearly destructive of Motorlink's case that it

bought in good faith. Gous's version, if accepted, means at the very

least that Mohamed was at Exclusive's showroom before Motorlink

purchased the Mercedes and that he saw that it had been removed, which

must have alerted him to the possibility that Exclusive was no longer entitled

to dispose of it. Of course, Gous's version goes much further and, if

11 accepted, shows that Mohamed knew about Caldeira and that Exclusive

could only regain possession by the use of a stratagem.

If ever there was an affidavit which called for a comprehensive answer, Gous's affidavit was one. Mohamed's replying affidavit, however, involves in my view a sedulous avoidance of Gous's version.

In his replying affidavit Mohamed reiterated the sequence of events set out in his founding affidavit, stating that he received the request from Landman on 15 July 1996 and that he purchased the Mercedes from Exclusive the next day. Referring to the paragraph in Gous's affidavit containing the latter's version set out above, Mohamed said no more than that he denied the correctness of the "chronological sequence related by Gous" insofar as it differed from the events stated by himself. He did not deal with Gous's allegations that he was present at Exclusive's showroom on or about 1 July 1996 when the Mercedes was no longer in the showroom.

12 In my view Mohamed's replying affidavit does not amount to a denial

of Gous's version, and even if it does, it is certainly not such as to raise a

real or genuine dispute of fact. His denial of the correctness of the

chronological sequence does not assist him, as there can be no doubt that the

events deposed to by Gous took place before Motorlink purchased the

Mercedes.

In the circumstances there is no reason for not accepting Gous's version. It follows from what I have said in regard thereto that Motorlink cannot be regarded as having bought the Mercedes in good faith and that it was not misled into the belief that Exclusive was entitled to dispose of the Mercedes.

That really disposes of the appeal. There are, in addition, other aspects of this case which, in my view, raise a serious doubt as to whether Motorlink acquired the Mercedes in good faith. One of the reasons given

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had personally dealt with Exclusive since its inception two years earlier and

that eighty percent of their dealings had been on a consignment basis.

It is clear from the affidavits filed in this matter that by the end of June 1996 Exclusive was in serious financial difficulties. According to Gous, Motorlink's attorney had on a few occasions earlier that month threatened to liquidate Exclusive unless it paid the amounts owing to Motorlink for two vehicles. In his replying affidavit Mohamed did not deny that Exclusive had failed to pay for two vehicles but stated that it was not unusual for him to wait 10-14 days for payment. He admitted that he had threatened to liquidate Exclusive but explained unconvincingly that he did not really intend doing so.

It seems that the Court a quo accepted, without a critical analysis of the evidence, that Motorlink acquired the Mercedes in good faith. It proceeded to base its decision that Motorlink became the owner of the

15 Mercedes solely on the common law rule stated in Morum Bros Ltd v

Nepgen 191(5 CPD 392 at 394-397. According to this rule the owner of

a movable, if he entrusts it to an agent for sale or a factor who delivers it to

a bona fide purchaser, cannot recover it, in any event not unless he

compensates the buyer for the amount of the price paid. As I have shown,

Motorlink was not a bona fide purchaser, so that the rule, even if it still

forms part of our law, as to which it is not necessary for me to express any

view(cf Pretorius v Loudon 1985(3) SA 845(A) at 860 B-862 I), has

no application to the facts of the present case. The Court therefore erred

in granting the declarator sought by Motorlink. As regards estoppel, I have

already found that Motorlink was not misled into the belief that Exclusive

had an unqualified right to dispose of the Mercedes.

It remains to deal with the counter-application. As between

Motorlink and Caldeira the latter is clearly entitled to the free and

16 undisturbed possession of the Mercedes. The question whether he is also

the common law owner of the Mercedes was, in view of the nature of the

proceedings, not fully canvassed and there is insufficient information on the

papers before me to justify an order to that effect.

In the result, therefore, the following order is made :

1. The appeal succeeds with costs, including the costs of two counsel.

2. The order of the Court a quo is set aside and there is substituted therefor the following:

"1. The application is dismissed.

3. The counter-application succeeds to the extent that it is declared that third respondent (Caldeira) is entitled to the free and undisturbed possession of a 1996 Mercedes Benz 600 SL convertible sports car, the subject matter of this dispute.

4. Third Applicant (Randburg Motorlink CC) is

17 ordered to pay the costs of both the application

and counter-application, including the costs of

two counsel."

W VIVIER JA

VAN HEERDEN DCJ)

HOEXTER JA)

NIENABER JA)

NGOEPE AJA) Concur.