Custom Credit Corporation (Pty) Ltd v Shembe

• Jurisdiction: South Africa
• Judge: Ogilvie Thompson CJ, Wessels JA, Jansen JA, Rabie JA and van Winsen AJA
• Judgment Date: 15 May 1972
• Hearing Date: 24 March 1972
• Court: Appellate Division

F Van Winsen, A.J.A.:

This matter came before the Durban and Coast Local Division by way of a special case stated in terms of Rule of Court 33 (1).

The facts agreed upon by the parties to the special case are as follows:

'1.

G Agreed facts.

(a)

The plaintiff is Custom Credit Corporation (Pty.) Ltd., a company duly incorporated and registered with limited liability according to the laws of the Republic, which carries on business as a finance house at 1401 United Buildings, 291 Smith Street, Durban.

(b)

The defendant is J. G. Shembe of Ekupakameni Home, Inanda, H Natal, a male motor omnibus operator.

(c)

On 25th April, 1968, a written hire-purchase contract was concluded between Southend Motor Company (Pty.) Ltd. and the defendant. A copy of the said contract is annexed hereto marked 'A'.

(d)

The rights of Southend Motor Company (Pty.) Ltd. in the said contract were ceded to the plaintiff in or about April, 1968.

(e)

By summons dated 6th June, 1969, issued out of the above Honourable Court in case 880/69. the plaintiff instituted action against the defendant in which action the plaintiff alleged -

(i)

that the defendant was in arrear with instalments payable in terms of the said contract; and

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(ii)

that by reason of the said default the plaintiff was entitled to claim the full balance of the purchase price outstanding in terms of the said contract, and upon non-payment thereof, to cancel the contract and claim forfeiture of all moneys paid thereunder by the defendant, together with additional relief.

(f)

A In the said summons the plaintiff prayed for judgment against the defendant for:

'(a)

payment of the sum of R7 066,50;

(b)

interest a tempore morae thereon at the rate of 12 per cent per annum from the date of service of this summons to the date of payment;

(c)

costs of suit on the attorney and client scale;

B and, alternatively, in the event of the defendant failing to satisfy that judgment upon demand by the Deputy-Sheriff of this Honourable Court, judgment as follows:

(i)

an order declaring the said agreement to be cancelled;

(ii)

an order authorising the Deputy-Sheriff to take possession of and to deliver to the plaintiff the said 1968 Guy Warrior bus, engine No. 17045, chassis No. WTB 5935, registration No. NES 1027;

(iii)

an order declaring the defendant to have forfeited the sum of R6 633,50;

(iv)

C costs of suit on the attorney and client scale.'

(g)

Default judgment was granted to the plaintiff in the said action on 27th June, 1969. A copy of the order made by the Court is annexed hereto marked 'B'.

(h) (i)

The defendant failed to satisfy the said judgment by paying the sum of R7 066,50.

(ii)

D Accordingly judgment in terms of paras. (a), (b), (c ) and (d) of the said annexure 'B' took effect against the defendant. (The said paragraphs correspond with prayers (i), (ii), (iii) and (iv) above).

(i)

Pursuant to the judgment in terms of paras. (a), (b), (c ) and (d) of annexure 'B' hereto:

(i)

the said contract was cancelled;

(ii)

the Deputy-Sheriff attached and repossessed the motor bus, E registration No. NES 1027, which had been sold by the plaintiff to the defendant under and in terms of the said contract, and which had been in the possession of the defendant at all material times until the attachment;

(j)

In the present action the plaintiff claims:

(i)

that when the Deputy-Sheriff attached and repossessed the aforesaid bus, which was on 17th October, 1969, a fair and reasonable market value of the said bus was R3 000;

(ii)

F the bus was sold at the instance of the plaintiff on 17th May, 1969, (sic ) for R3 000;

(iii)

that the present balance due by reason of instalments unpaid under the said contract is R6 248,40;

(iv)

that the plaintiff has accordingly suffered a loss of profits and of the amount which it would have received as a purchase price had the defendant carried out his obligations in terms of the said contract, in an amount of R3 248,40;

(v)

G that the said sum represents damages which flowed naturally and directly from the defendant's breach of the said contract, alternatively which were within the contemplation of the parties at the time when the said agreement was entered into.

(k)

By reason of the facts alleged in sub-para. (j) hereof the plaintiff claims judgment in the present action in the aforesaid sum of R3 248,40.'

The issue to be determined by the Court was thus formulated:

H 'Whether it is competent and permissible in law for the plaintiff to institute this present action to recover the damages claimed therein.'

The Court a quo answered this question in the negative and consequentially upheld a special plea-in-bar which had been filed by defendant denying plaintiff's right to institute the action referred to in para. (j) of the special case and gave judgment for defendant with costs. It is against this order that the present appeal is brought.

The Court a quo having stated that no direct authority was to be

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found dealing with the issue submitted to it for decision, sought a solution to the problem in the general principle of South African law

'dat alle regshulp wat uit een skuldoorsaak uitspruit in een geding of hofproses aangevra en verhaal moet word'.

The learned Judge concluded that whatever right the plaintiff might have A had to claim damages from defendant by reason of the latter's breach of contract had to be exercised at the time he instituted the action referred to in para. (e) of the special case above quoted. Having failed to do so he was thereafter barred from seeking to enforce it by an action at law.

B Although the special case makes no mention of it, it was common cause that the terms of the Hire-Purchase Act, 36 of 1942, had no application to the agreement between the parties.

The terms of clause 9 of the agreement (annexure 'A' to the special case) upon which plaintiff founded the two actions referred to in paras. (e) and (j) respectively of the special case are as follows:

'Should the purchaser commit any breach of the terms and conditions C of this agreement or fail to pay any instalment or other amount of money due hereunder on due date or should his estate be assigned, or should he attempt to assign or surrender his estate, be sequestrated, or should he commit an act of insolvency or attempt to compromise with the creditors, or being a company go into liquidation or under judicial management or should he have made any incorrect or untrue statement or representation in connection with this agreement or the particulars D relevant thereto or do or suffer to be done any act or thing which may prejudice the seller's right under this agreement, or die, then and upon the happening of any one of those events, the seller shall have the right without prejudice to any claim which he may have against the buyer including any claim for damages,

(a)

to demand payment of the full unpaid balance of all and any sum payable under this agreement, or

(b)

to terminate this agreement whereupon the buyer shall be bound to return the goods at his risk and expense to the seller or as E the seller shall direct and the seller shall be entitled to retain all moneys paid by the buyer under this agreement, including any allowance which may have been credited to him as a 'deposit' and to recover from the buyer all lawful expenses of and incidental to the resumption of possession of the said goods by the seller.'

Since it was not in dispute that defendant was in breach of the terms of F the agreement, plaintiff had the right in terms of that clause to demand from defendant that he implement the agreement by paying the unpaid balance due thereunder. Alternatively plaintiff could sue for cancellation of the agreement. In the latter event clause 9 of the agreement accorded plaintiff the right to retain past payments made to it by defendant, recover possession of the vehicle sold as well as all G lawful expenses in connection with the recovery of possession and in addition to claim...