Aris Enterprises (Finance) (Pty) Ltd v Waterberg Koelkamers (Pty) Ltd

• Jurisdiction: South Africa
• Judge: Trollip JA, Muller JA, Hofmeyr JA, Kotze JA and Joubert AJA
• Judgment Date: 24 February 1977
• Citation: 1977 (2) SA 425 (A)
• Hearing Date: 19 November 1976
• Court: Appellate Division

Trollip, J.A.:

In the Transvaal Provincial Division the appellant (plaintiff) claimed from respondent (defendant) the return of (a) a Carma deep freezer, (b) a Sumak refrigerator, and (c) 4 Crolls air-conditioning units. The basis of the claims was that plaintiff had let (a), (b) and (c) to defendant C for three years for use in its butcher shop in Nylstroom under three separate written agreements of lease, dated respectively 20 October 1969, 20 October 1969 and 1 November 1969, and that the leases had expired by effluxion of time. Originally the claims were made by application on notice of motion. Defendant opposed the application. The Court a quo referred the matter to trial. It also ordered that the plaintiff's affidavit supporting the notice of motion was to stand as summons and D that the other pleadings were to be filed in due course. The trial was ultimately heard by COETZEE, J. He granted absolution from the instance on the claims for (a) and (b), but judgment for the plaintiff in respect of (c), and he ordered plaintiff to pay 90 per cent of defendant's costs of suit. Plaintiff has E appealed against the judgment of absolution and the order of costs. There is no cross-appeal against the judgment in respect of (c). We are therefore only concerned with the claims for (a) and (b).

The lease for (a) provided that the total rental was R756, payable in equal monthly rentals of R21 over 36 months commencing on 20 October 1969. The lease for (b) stated that F the total rental was R2 880, payable in equal monthly rentals of R80 over 36 months also commencing on 20 October 1969. Each lease contained the following terms:

"9.

The lessee agrees that on the termination of this agreement, whether by effluxion of time or for any other cause, he will at his own expense deliver to the lessor the goods in good order and condition together with all licence papers, registration certificates and any other relevant documents in possession of the lessee at that time, or hold the goods on behalf of G the lessor pending instructions from the lessor in respect of delivery thereof.

10.

Upon termination of the agreement for whatsoever cause the goods shall, after delivery thereof to the lessor by the lessee, be sold by the lessor for the best price obtainable by him, such price however at all times to be in the sole discretion of the lessor, in which event:

(a)

if all rentals, costs and other charges hereinbefore mentioned have been paid in full to the lessor the lessor shall pay to H the lessee, as a repayment of rentals already paid by the lessee, the proceeds of the abovementioned sale less all costs incurred by the lessor in connection or incidental to the repossession, storage, repair and sale of the goods, and

(b)

if all rentals, costs and other charges hereinbefore mentioned have not been paid in full to the lessor, the lessee shall pay to the lessor, as liquidated and pre-estimated damages, the present value of the unexpired rentals at that date together with arrear rentals plus interest thereon, if any, plus any costs incurred by the lessor in connection with or incidental to the repossession, storage, repair and sale of the goods less the proceeds of the aforesaid sale."

Trollip JA

Plaintiff duly delivered and installed the appliances (a) and (b) in defendant's butcher shop; defendant duly paid all the stipulated rentals; and the leases expired by effluxion of time. The defendant, however, has refused to return the appliances to plaintiff in terms of the above clauses. In the proceedings claiming their return defendant raised various A defences. They can be summarized as follows:

(i)

At the time the leases were entered into, Jacobs, the sole director and shareholder of defendant, and Kondopulos, a director of plaintiff, verbally agreed that on expiry of the leases plaintiff would not physically take back the appliances, they would remain B in defendant's possession, and Jacobs, or any company in which he had an interest, could, in terms of the abovementioned clause 10, purchase them at a nominal price, which would then be paid over to defendant.

(ii)

The common and actual intention of the parties at the time of entering into the leases was that, on due C payment by defendant of all the so-called rentals, it (defendant) would become the owner of the appliances; that the true agreements between them were therefore hire-purchase contracts, disguised so as to evade the provisions of the Hire-Purchase Act, 36 of 1942; and that the leases should D therefore be treated as accordingly rectified.

(iii)

Alternatively to (ii), the defendant pleaded the exceptio doli. The basis of this defence was that, because of the verbal agreement of the parties alleged in para. (i) above, it was mala fide and unconscionable of plaintiff to invoke and enforce by these legal proceedings the provisions of clauses 9 and 10 of the leases according to their E strict tenor.

At the trial the defence in para. (ii) was abandoned by defendant. The reason was, so counsel informed us, that, even if the verbal agreement or the common intention of the parties alleged in paras. (i) and (ii) were established, that did not render the leases hire-purchase contracts, since Jacobs or his F nominee, and not defendant, would then, in accordance therewith, become the ultimate owner of the appliances. Hence, defendant relied on paras. (i) and (iii)

COETZEE, J., preferred the testimony of Jacobs to that of...