Mufamadi and Others v Dorbyl Finance (Pty) Ltd

• Jurisdiction: South Africa
• Judge: Joubert JA, Hefer JA, Nestadt JA, F H Grosskopf JA and Mahomed AJA
• Judgment Date: 29 March 1994
• Hearing Date: 24 February 1994
• Docket Number: 469/92
• Citation: 1996 (1) SA 799 (A)
• Court: Appellate Division
• Counsel: E Bertelsmann SC for the appellants. P G Robinson for the respondent.

A F H Grosskopf JA:

The appellants were the defendants in an action brought by the respondent as plaintiff in the Supreme Court of Venda. The respondent's main claim was for damages following on the principal debtor's breach of contract. The appellants were sued as sureties and co-principal debtors. The Court a quo (Le Roux CJ) gave judgment in B favour of the respondent, but granted the appellants leave to appeal to this Court. The amount awarded as damages was much less than the sum claimed, but there was no cross-appeal by the respondent.

The parties reached agreement on a number of material issues at two pre-trial conferences. In the result the matter became a stated case for all practical purposes. Only one witness, a director of the respondent, C testified briefly at the trial.

The undisputed factual background is the following. On 10 July 1985 the respondent and Lukoto Bus Service (Pty) Ltd ('the company') entered into a written agreement, styled 'Instalment sale master agreement' ('the agreement'), in terms whereof the respondent agreed to sell to the company D buses and other vehicles. The agreement made provision for separate schedules being signed for every vehicle sold by the respondent to the company. Pursuant to the agreement the respondent sold and delivered 33 buses and other vehicles ('the goods') to the company over a period of time.

It was a term of the agreement that ownership in the goods would not pass E to the company until receipt by the respondent of all amounts payable by the company in respect of the goods. The agreement further provided that in the event of the company failing to make due payment in terms thereof the respondent would be entitled to cancel the agreement and obtain repossession of the goods. The respondent in addition had the right to F claim as damages the difference between the outstanding balance under the agreement, and the 'value' of the goods as determined in accordance with clause 14.2 of the agreement.

The provisions of clause 14.2 are of crucial importance in the determination of the case. The clause reads as follows:

G '14.2 Whenever it is necessary to determine the value of the goods, or any of them, for any purpose under this agreement, such value shall, at the election of the seller, be determined either by the valuation of an appraiser nominated by the seller (whose valuation shall be final and binding on the buyer and the seller), or such value shall be deemed to be the net amount realised on a sale of the goods by the seller on such terms and conditions as the seller deems fit.'

H On 12 December 1986 the four appellants and one Nehemiah Masala Lukoto ('Lukoto') bound themselves in writing to the respondent as sureties for and co-principal debtors with the company for the proper payment of all amounts owing by the company to the respondent.

The company breached the agreement by failing to make payment to the respondent of the instalments due under the agreement, whereupon the I respondent duly cancelled the agreement on 5 July 1990. Prior to cancellation, and as early as 27 June 1990, the respondent obtained an order of the Court a quo for the interim attachment of the goods. In pursuance of the Court order the sheriff attached the goods. The sheriff also attached five additional vehicles which had not been sold by the J respondent to the company. These five vehicles were valued together

F H Grosskopf JA

A with the other vehicles, and they were subsequently sold by the respondent as part of the repossessed goods. It is, however, common cause between the parties that these events have no effect on the outcome...