K & D Motors v Wessels

• Jurisdiction: South Africa
• Judgment Date: 09 November 1948
• Citation: 1949 (1) SA 1 (A)

K & D Motors v Wessels
1949 (1) SA 1 (A)

1949 (1) SA p1

Citation	1949 (1) SA 1 (A)
Court	Appellate Division
Judge	Centlivres JA, Greenberg JA, Schreiner JA, Van Den Heever JA and Hoexter AJA
Heard	October 8, 1948
Judgment	November 9, 1948

Flynote : Sleutelwoorde

Contract — Sale disguised as a contract of loan and pledge — Factors to be considered in determining contract — Magistrate's court — Execution — Goods in possession of third party — Messenger issuing interpleader summons — Onus placed on claimant — Whether correct — Whether messenger had acted correctly.

Headnote : Kopnota

In deciding whether an agreement which purports to be a contract of sale is not a disguised contract of loan and pledge, it is certainly relevant to enquire whether the so-called purchaser requires the goods said to be bought either for use or for re-sale, and whether the seller wishes to dispose of the goods or whether the seller merely requires financial accommodation, which the purchaser is prepared temporarily to advance but not without some form of assurance of repayment other than the financial stability of the seller. If the latter is the case, and not the former, it is some indication that the transaction is one of loan and pledge.

In April, 1947, the respondent issued summons against her brother D. for an order cancelling a hire-purchase agreement entered into on 22nd May, 1946, and for the return of the goods, viz. : a lathe and accessories, sold by her to him under the agreement, or the payment of £300, the value of the goods. The particulars showed that the purchase price was payable on 22nd May, 1947, that the ownership in the goods was to remain in the seller (the respondent)

1949 (1) SA p2

until the whole purchase price had been paid and that if the purchaser fell into arrear in the payment of the purchase price the seller would be entitled to claim the cancellation of the agreement and the return of the goods or the price. D. notified the respondent that he was not able to pay the purchase price and that he was willing to deliver the goods to her. The respondent obtained judgment and caused a writ to be issued 'authorising and requiring the messenger to put the respondent in possession of the goods'. In August, 1946, D. who was a partner in the appellant's garage business had brought the goods on to their premises and they were regarded as assets in the firm. Thereafter D. resigned from the partnership, which at the time of the action had not yet been liquidated. The appellant company obtained an interdict restraining the messenger from removing the goods. The messenger caused an interpleader summons to be issued addressed to the respondent as 'execution creditor' and the appellant as 'claimant'. The magistrate's court had ruled that the onus was on the respondent and had found that she had failed to discharge the onus. This decision was reversed by a Provincial Division. On an appeal, leave having been granted,

Held, that as the proceedings were vindicatory the onus had rightly been placed on the respondent.

Held, further, that it was unnecessary to decide whether the messenger was entitled to attach goods in the hands of a third party and whether interpleader proceedings should be taken when such an attachment is made.

Held, further, that the facts showed that the transaction between the respondent and D. was not a sale but a loan.

The decision in the Orange Free State Provincial Division in Wessels v K. & D. Motors reversed.

Case Information

Appeal from a decision in the Orange Free State Provincial Division (FISCHER, J.P. and DE BEER, J.). The facts appear from the judgment of GREENBERG, J.A.

P. J. van Blerk, for the appellant: In arriving at a decision as to whether a sale of the machinery referred to in the hire-purchase agreement and in the warrant of removal was intended by respondent as purchaser and her brother as seller, the principle to be applied is plus enim ralet quod agitur quam quod simulate concipitur; see Colonial Treasurer v Lippert (8 A.C. 309; 2 S.C. 172);Hofmeyer v Gous (10 S.C. 115); Zandberg v Van Zyl (1910 AD at p. 309); Dadoo and Others v Krugersdorp Municipal Council (1920 AD at p. 547); Commissioner of Customs & Excise v Randles Bros. & Hudson Ltd. (1941 AD 369); Beckett & Tower Assets Co. (1891 (1), Q.B. 638). It was not enough for respondent and her brother to think that they had the intention to buy and sell respectively; the intention must be proved as a fact apart from what they thought; see McAdams v Fiander's Trustee & Bell (1919 AD at p. 224); Commissioner for Inland

1949 (1) SA p3

Revenue v Saner (1927 TPD at p. 172). In order to determine what the real intention of respondent and her brother was, the surrounding circumstances and the facts leading up to the contract must be taken into consideration; see Zandberg's case (supra, at pp. 310 - 1). The onus was on respondent to rebut by clear and satisfactory evidence, the presumption that the possessor of the machinery was the owner thereof; see Zandberg's case (supra, at p. 308), and in order to discharge this onus respondent had to prove the sale by which she acquired the ownership. The Court a quo erred in holding that the production by respondent of the hire-purchase agreement relieved her of the onus of proving that on a prior date she acquired ownership in the machinery and that thereby the onus was shifted on to the appellant; the hire-purchase agreement was merely formal and was part of the means adopted to conceal the true character of the arrangement; cf. Gracey Bros v Honikman (27 S.C. 150); and as such it did not affect the incidence of the onus of proof nor did it create any presumption. As to shifting of onus of proof; see Klaassen v Benjamin (1941 TPD at pp. 85 - 88). The machinery, although alleged to be heavy was movable; accordingly a resort to fictitious delivery needed some very special explanation by respondent; see Groenewald v Van der Merwe (1917 AD at p. 239), and cf. Goldinger's Trustee v Whitelaw & Son (1917 AD at p. 74). Clear and satisfactory proof by respondent was required as to what the arrangement actually was; cf. Goldinger's case (supra, at p. 98). The purchase price was not real and serious; it was arrived at simply because it was the total amount of the brother's indebtedness; cf. C.I.R v Saner (1927 TPD at p. 173). There was no sale and ownership did not pass as the animus vendendi was lacking; see Voet (41.1.35); McAdam's case (supra, pp. 223 - 4); Weeks & Another v Amalgamated Agencies Ltd. (1920 AD at p. 230); C.I.R v Saner (supra, at p. 172). The following cases, similar to the type of the present case, are quoted as showing the conclusions at which this Court arrived upon the facts of the cases, viz.: Zandberg's case (supra); Goldinger's case (supra); McAdams' case (supra); Zeeman v Botha's Trustee (1923 AD 167); Bhaijee v Khoja (1937 AD 246). In order to succeed respondent must satisfy this Court that the magistrate was clearly wrong in his finding that the transaction was intended to obtain security and not ownership; see Bitcon v Rosenberg (1936 AD at p. 397). In any event the probabilities are more in favour of a pledge than

1949 (1) SA p4

a sale; cf. Wessels, Law of Contract in South Africa (para. 2057). The interpleader proceedings were misconceived and void. A valid attachment or attempted attachment is a prerequisite to a claim in terms of sec. 69 (1) of Act 32 of 1944 and Rule 41 (1) (ii); see Mhlobo v Love (3 P.H.F. 18). Interpleader, if issued by the messenger is a species of the genus execution; see Bernstein v Visser (1934 CPD at p. 272); although not an integral part of the execution; see Kelly v Lombard (1927 AD at p. 188). An invalid writ is a mere scrap of paper and need not be set aside; see Cohen v Lazar & Co. & Gibbs (1922 TPD at pp. 146, 148); Kaplan v Union Government (1924 TPD 532). The warrant for removal in not stating an alternative does not comply with the magistrate's order which is in the alternative. In order to be valid, a writ must strictly comply with the order which warrants its issue; otherwise it is void ab initio; see Cornforth v Dalton & Roux (43 N.L.R. 116); Emms v Viljoen (1947 (4) S.A.L.R. 78). By appearing in the interpleader proceedings instituted by the messenger, appellant did not admit the validity of the writ; see Mhlobo v Love (supra); Jones & Buckle, Civil Practice of the Magistrates' Courts (5th ed. p. 140). Appellant objected to the writ being put into force against it by obtaining an interdict restraining the messenger from executing the writ. As appellant was not a party to the action which resulted in the writ being issued it had no locus standi to challenge the validity of the writ and consequently could not be held to have admitted the validity thereof. In any event, waiver must be strictly proved and the onus was on the respondent. See Van Heerden v Pretorius (1914 AD at p. 76); Van Niekerk and Union Government v Carter (1917 AD at p. 371); Mears v Pretoria Estate & Market Co., Ltd. (1906, T.S. 661). As the warrant for removal did not, for the reason stated supra, empower the messenger to seize the machinery while in the possession of appellant and to remove it therefrom, such conduct amounted to an injuria; cf. Weeks and Another v Amalgamated Agencies Ltd. (1920 AD at p. 226); moreover the Court had...