Paradise Lost Properties (Pty) Ltd v Standard Bank of South Africa (Pty) Ltd and Another

• Jurisdiction: South Africa
• Citation: 1997 (2) SA 815 (D)

Paradise Lost Properties (Pty) Ltd v Standard Bank of South Africa (Pty) Ltd and Another
1997 (2) SA 815 (D)

1997 (2) SA p815

Citation	1997 (2) SA 815 (D)
Case No	7216/95
Court	Durban and Coast Local Division
Judge	Combrinck J
Heard	August 29, 1996
Judgment	September 27, 1996
Counsel	E S Crots for the applicant; G Lopes for the first respondent

Flynote : Sleutelwoorde B

Landlord and tenant — Rent — Landlord's tacit hypothec — Landlord's hypothec operating over goods of third party — Requirements — Goods to be on leased C premises with knowledge and consent of third party — Lessor to be unaware of fact that goods owned by third party — Goods brought on premises for use of lessee — Goods intended to remain on premises indefinitely.

Landlord and tenant — Rent — Landlord's tacit hypothec — Landlord's hypothec D operating over goods of third party — Hypothec vesting over property of third party based either on implied consent on part of owner of goods or estoppel — Owner bound because of having led landlord to believe goods belonging to tenant — If hypothec based on presumption of tacit consent, evidential burden on owner to rebut such presumption by evidence that landlord knew tenant not E owner — If basis is representation made by owner, owner to produce evidence landlord not induced into erroneous belief because landlord having knowledge of true state of affairs.

Landlord and tenant — Rent — Landlord's tacit hypothec — Landlord's hypothec operating over goods of third party — Requirements — Landlord to be unaware goods not belonging to tenant before hypothec vesting — If landlord knew as F fact goods not belonging to tenant, he cannot be under mistaken belief goods belonging to tenant — Where landlord by exercise of reasonable care could have established goods not tenant's, cannot say he was misled into believing they were tenant's.

Headnote : Kopnota

In order to succeed in proving that a landlord's hypothec operated over property of a third party the lessor must G establish the following: (a) the goods must be on the leased premises with the knowledge and consent of third party; (b) the lessor must be unaware of the fact that the goods are owned by the third party; (c) the goods were brought onto the premises for the use of the lessee; (d) the goods were intended to remain on the premises indefinitely. (At 818F–H.) H

The dictum in Bloemfontein Municipality v Jacksons Ltd 1929 AD 266 at 271 applied.

The basis of the hypothec vesting over property belonging to a third party appears to be either implied consent on the part of the owner or a type of estoppel. It is said that the owner is bound because he had led the landlord to believe ('die skyn verwek') that I the goods belonged to the tenant. If the hypothec is based on the presumption of tacit consent, then there is an evidential burden on the owner to rebut that presumption by evidence that the landlord knew that the tenant was not the owner. Equally, if the basis is a representation made by the owner, it is for him to produce evidence that the landlord was not induced into an erroneous belief because he had knowledge of the true state of affairs. (At 819H–I, read with 820G–H.) J

1997 (2) SA p816

The landlord must be unaware that the goods do not belong to the tenant before the A hypothec vests. If the landlord knew as a fact that the goods did not belong to the tenant he could not have been under the mistaken belief that the goods belonged to him. Where the landlord by the exercise of reasonable care could have established that the goods were not those of the tenant then he cannot be heard to say that he was misled into believing that they were his. (At 822F–H.) B

Cases Considered

Annotations

Reported cases

The following decided cases were cited in the judgment of the Court:

Barclays Western Bank Ltd v Dekker and Another 1984 (3) SA 220 (D)

Bloemfontein Municipality v Jacksons Ltd 1929 AD 266

Fresh Meat Supply Co v Standard Trading Co (Pty) Ltd 1933 CPD 550

Mackay Bros v Cohen (1894) 1 OR 342 C

T R Services (Pty) Ltd v Poynton's Corner Ltd and Others 1961 (1) SA 773 (D)

Case Information

Application for an order declaring that the applicant had perfected its hypothec, as landlord, over property. The facts appear from the reasons for judgment.

E S Crots for the applicant. D

G Lopes for the first respondent.

No appearance for the second respondent.

Cur adv vult.

Postea (September 27). E

Judgment

Combrinck J:

The applicant in this matter applied on notice of motion for the following relief:

'1.

It is declared that the applicant has perfected its hypothec, as landlord, over F the property presently held by the second respondent and which is to be sold by sale in execution on 1 November 1995.

2.

The second respondent is hereby ordered and directed to distribute the proceeds deriving from the sale in execution mentioned in 1 above according to law, taking into consideration the applicant's hypothec which it had over the goods to be sold in execution. G

3.

Alternatively to 2 above the second respondent is hereby ordered not to release any of the proceeds of the sale in execution to be held on 1 November 1995 to the first respondent, pending the final determination of this application or any action that the applicant may institute against the first H respondent to determine the final disposal of the goods presently held by him under attachment.'

The application was opposed by the first respondent and answering and replying affidavits were filed. When the matter came before me for argument it was agreed that there were disputes of fact which could only be resolved by oral evidence and I accordingly by consent the following issues were referred for oral evidence:

(a)

whether or not the goods over which the applicant claims its landlord's tacit hypothec were brought onto the premises for the use of B Woolley; and

(b)

whether Supergro Properties CC and/or the applicant was notified of the first respondent's notarial bond and the reservation of J

1997 (2) SA p817

Combrinck J

ownership by the Hodgsons of the goods over which the applicant claims its A landlord's tacit hypothec; and

(c)

whether the agreement allegedly concluded between the Hodgsons and A Woolley was ever actually concluded; and

(d)

whether the applicant has waived or relinquished its tacit hypothec. B

On these issues I heard the evidence of Farouk Engar, Stuart Lamont, John Crewe, Louis Hansmeyer on behalf of the applicant and Ann Patricia Hodgson on behalf of the respondent. The facts as they appear from the affidavits and the evidence of these witnesses are summarised below. These facts are either common cause or were not placed in issue. C

Shop No 5 in a building known as Margate Sands Business Centre, Margate, was formerly owned by Supergro Properties CC. In terms of a written agreement of lease this shop was let to a person by the name of Anderson acting on behalf of a close corporation to be formed. The date of commencement of the lease was 1 April 1993 and it was to continue for a period of five years with a right of renewal. Dynamic D Shares CC (the close corporation which had been formed) on 22 October 1993, by means of a written agreement ceded, with the consent of Supergro, its right, title and interest in and to the lease to Ann Patricia Hodgson. The effective date was 1 November 1993.

Mrs Hodgson together with her husband traded in the premises as RJ's restaurant. E They sold the business to Alan Woolley in his capacity as a...