Sarembock v Medical Leasing Services (Pty) Ltd and Another

• Jurisdiction: South Africa

Sarembock v Medical Leasing Services (Pty) Ltd and Another
1991 (1) SA 344 (A)

1991 (1) SA p344

Citation	1991 (1) SA 344 (A)
Court	Appellate Division
Judge	Corbett CJ, Nestadt JA, Vivier JA, Kumleben JA and F H Grosskopf JA
Heard	August 28, 1989
Judgment	September 29, 1989

Flynote : Sleutelwoorde

Sale — Warranties — Against latent defects — Actio quanti minoris — H Reduction of purchase price — Determination of value of thing sold — Res vendita a Porsche motor car with latent defect, being a grafted chassis — Evidence not indicating that sales of such cars with grafted chassis occur with sufficient regularity for them to serve as a guide to market value — Court to do the best it can to make a fair and I reasonable estimate of value of the car by relying on some other legitimate method of valuation — Semble: If evidence indicates that there are sufficient sales of such vehicles to serve as a guide to market value, it may be incumbent upon plaintiff to produce evidence thereof.

Sale — Warranties — Against latent defects — Actio quanti minoris — J Reduction of purchase price — Latent defect affecting resale

1991 (1) SA p345

A price of res vendita (a Porsche motor car), and hence its value as an investment, but not utility thereof as a car — Whether aedilitian remedy available in such circumstances — Evidence establishing that such cars generally bought for investment purposes — Latent defect materially impairing its effectiveness as an investment — Actio quanti minoris succeeding. B

Headnote : Kopnota

As a general rule, in determining the value of the res vendita for the purposes of the actio quanti minoris, the value of an article is to be determined with reference to the price it would fetch in the open market. However, '(t)here may be cases where, owing to the nature of the property, or to the absence of transactions suitable for comparison, the valuator's difficulties are much increased...'. If the evidence proves or indicates that sales of the res vendita with the latent defect C in question (in the present case, a Porsche motor car with a 'grafted chassis') take place with sufficient regularity for them, or certain of them, to serve as a guide to market value, it may well be incumbent upon the plaintiff to produce such evidence. If not, the Court must do the best it can, and, with reliance on some other legitimate method of valuation, make a fair and reasonable estimate on the evidence of the value of the article.

Dictum in Pietermaritzburg Corporation v South African Breweries Ltd D 1911 AD 501 at 516 applied.

In the present appeal, the question was raised whether the aedilitian remedy, the actio quanti minoris, was available to a claimant in a case such as the present where the latent defect affects the resale price of the article, and hence its value as an investment, but not its utility (in the present case, to be used as a car). The Court cited authority describing a defect 'as an abnormal quality or attribute which destroys or substantially impairs the utility or effectiveness of the res E vendita, for the purpose for which it has been sold or for which it is commonly used', and held that the evidence in the present case proved that Porsche motor cars were generally bought for investment purposes, that the presence of the latent defect (ie the grafted chassis) therefore materially impaired its effectiveness as an investment and that its purchase for an investment was known to all concerned. The Court held accordingly that it could not be said that the nature of the defect was a bar to the claim.

Dicta in Holmdene Brickworks (Pty) Ltd v Roberts Construction Co Ltd F 1977 (3) SA 670 (A) at 683H - 684A and in Knight v Trollip 1948 (3) SA 1009 (D) at 1012 - 13 applied.

The decision in the Cape Provincial Division in Sarembock v Medical Leasing Services (Pty) Ltd and Another reversed.

Case Information

Appeal from a decision in the Cape Provincial Division (Conradie J). G The facts appear from the judgment of Kumleben JA.

P B Hodes SC (with him D A Lenhoff) for the appellant referred to the following authorities: SA Oil & Fat Industries Ltd v Park Rynie Whaling Co Ltd 1916 AD 400 at 413; McDaid v De Villiers 1942 CPD 220 at 240 - 1; Maennel v Garage Continental Ltd 1910 AD 137 at 145; Labuschagne Broers v Springs Farm (Pty) Ltd 1976 (2) SA 824 (T) at 827C - H; Knight v H Trollip 1948 (3) SA 1009 (D) at 1012 - 13; Pretorius v Van der Merwe 1968 (2) SA 259 (N) at 263G - 263 in fine ; De Wet and Yeats Kontraktereg en Handelsreg 4th ed at 295; Mackeurtan Sale of Goods in South Africa (5th ed by Hackwill) para 9.5.3 at 134; Dibley v Furter 1951 (4) SA 73 (C) at 82A - H; Holmdene Brickworks (Pty) Ltd v Roberts Construction Co Ltd 1977 (3) SA 670 (A) at 683H - 684A; Grotius Introduction to Dutch I Jurisprudence (Maasdorp's Translation) 3.15.7; Voet 21.1.4 - 5; Reed Bros v Bosch 1914 TPD 578 at 582; Curtaincrafts (Pty) Ltd v Wilson 1969 (4) SA 221 (E) at 222H - 223B. As to costs, see Fripp v Gibbon & Co 1913 AD 354 at 361; Merber v Merber 1948 (1) SA 446 (A) at 453; Smit v Maqabe 1985 (3) SA 974 (T); Letsitele Stores (Pty) Ltd v Roets 1959 (4) SA 579 (T) J at 580B;

1991 (1) SA p346

Ward v Sulzer 1973 (3) SA 701 (A) at 708A; Rondalia Assurance Corporation of SA Ltd v Page and Others 1975 (1) SA 708 (A). The following authorities were also cited: Turkstra v Richards 1926 TPD 276 at 279, 282 - 3; Hersman v Shapiro & Co 1926 TPD 367 at 379 - 80; Klopper v Maloko 1930 TPD 860 at 865; Arendse v Maher 1936 TPD 162 at 165; Rawles v Barnard 1936 CPD 74 at 79; Sandler v Wholesale Coal Suppliers B Ltd 1941 AD 194 at 198; Pennefather v Gokul 1960 (4) SA 42 (N) at 50D - E; Anthony and Another v Cape Town Municipality 1967 (4) SA 445 (A) at 451B - C; Mkwanazi v Van der Merwe and Another 1970 (1) SA 609 (A) at 631F - 632B; Esso Standard SA (Pty) Ltd v Katz 1981 (1) SA 964 (A) at 969H - 970H. A

No appearance for the first respondent. C

B Hoberman SC (with him R S van Riet) for the second respondent referred to Merber v Merber 1948 (1) SA 446 (A) at 543; Neugebauer & Co Ltd v Herman 1923 AD 564 at 575 and Penny v Walker 1936 AD 241 at 260 on the question of costs.

Cur adv vult. D

Postea (September 29).

Judgment

Kumleben JA:

The appellant sued the first respondent in the Cape of Good Hope Provincial Division of the Supreme Court for abatement of the E purchase price paid by him for a motor car bought from the first respondent. The second respondent was joined as a third party. For his cause of action, based on the actio quanti minoris, the appellant relied on the fact that, unbeknown to him, the car, a 1981 Porsche 911SC, was latently defective at the time of sale in that its front portion had F been replaced. By reason of this defect its value at the time of sale, so the appellant alleged, was R20000 less than the price of R39 500 which he paid for it: hence the claim for a reduction of the purchase price to R19 500. Both the respondents admitted that the front end of the car had been replaced but denied all other material averments in the G particulars of claim. The second respondent, in amplification of its general denial, alleged that before the sale was concluded the appellant was told that the car had been involved in an accident and that the manner of its repair was explained to him. Despite the denials on the pleadings, at the trial it was not disputed that the car was latently defective and that the defect had reduced its value. Thus the two issues H of fact to be decided were whether the appellant knew of the defect and whether the value of the car when sold was less than the price paid for it to the extent claimed.

The second respondent is a motor car dealer. The first respondent is a leasing service enabling clients to deal with it rather than make a direct purchase. The appellant negotiated with the employees of the I second respondent and in effect bought the car from the second respondent: once the appellant had decided to buy, it was formally sold to the first respondent who in turn sold it to the appellant in terms of an instalment sale agreement. At the pre-trial conference the appellant undertook, were he to fail in his action, to pay the first respondent's costs, and the second respondent indemnified the first respondent in J respect of any order made

1991 (1) SA p347

Kumleben JA

A against it in favour of the appellant. Thus the need for the first respondent to feature as a party to the action fell away. By further agreement these arrangements held for this appeal.

The first of the two issues accounted for most of the evidence. The appellant, supported by his brother, Dr Brian Sarembock, said that he was unaware that the car had been involved in a major accident or of the B repairs effected and was thus unaware of the resultant defect. Three witnesses for the second respondent sought to contradict this evidence. They were Mr Levin, the sole director and shareholder of the second respondent; Mr Booysen, a salesman employed there; and Mr Caroline, the administrative manager of the firm. The Court (Conradie J) considered, C with respect quite correctly, this issue to be one of straight credibility and for convincing reasons found that these three witnesses were dishonest. On this issue their evidence was consequently rejected as false. This conclusion was not challenged on appeal. As to the second issue, the Court held that the appellant had failed to prove the value of the car at the time of sale and on this ground dismissed the claim. D It is this finding which is contested in this appeal.

Before turning to it, the history of this car and some details of its sale to the appellant ought to be briefly recounted.

The 911SC is one of a series of Porsche motor cars and is in about the middle of the range of models of this make. They are...