Smith v Rand Bank Bpk

• Jurisdiction: South Africa
• Judge: James JP and Milne J
• Judgment Date: 28 June 1979
• Hearing Date: 11 June 1979
• Court: Natal Provincial Division

Milne J:

The respondent successfully sued the appellant in the magistrate's court for an amount alleged to be due by the appellant as one of the guarantors under a lease agreement which had been ceded to the respondent. I shall refer to the appellant as the defendant and to the respondent as the plaintiff. (In actual fact two defendants were cited in the summons but, since there was no service upon the second defendant, the D action proceeded against the first defendant only.)

The lease was in respect of a 1973 Mazda motor vehicle. It was to endure for a period of 48 months from 6 November 1973. The rental for the whole period of the agreement of lease was to be the sum of R5 366, 54 payable as to an initial amount of R111, 94 and thereafter in monthly rental E payments of R111, 80 per month. It is common cause that the two persons cited as the defendants bound themselves in the following terms:

"We hereby bind ourselves jointly and severally as sureties in solidum with Noord Natal Boorgate (Edms) Bpk as co-principal debtors for the punctual performance by the lessee of all his obligations under or arising from this agreement. We hereby expressly renounce the benefits of division, excussion and cession of action. The lessor or his assigns or a F cessionary shall have the right to grant extensions of time or make any other concession to the lessee without our prior consent and similarly to sell or otherwise deal as he may think fit with the article which forms the subject matter hereof if he has for whatever reason come into possession thereof. We agree that if by virtue of any Act or law or otherwise howsoever the agreement is terminated and/or his liability is G suspended or rendered temporarily unenforceable, we shall be liable forthwith for the performance of all the lessee's obligations and payment of any amount due by him, including damages."

Clause 8 of the lease is in the following terms:

"The lessee agrees that in the event of his failure to make any payment within seven days after such payment became due, or in the event of any H default by him of any of the other terms, conditions or stipulations of this agreement or the goods being stolen and not be (sic) recovered within six weeks or if the goods are so damaged or deteriorated that in the sole discretion of the lessor, repair and/or further maintenance is not warranted, the latter shall be entitled, but not obliged, without notice to the lessee, to terminate the agreement and to enter upon the premises where the goods are being housed and remove the same without prejudice to the lessor's right to recover from the lessee any amount which may be due in terms of para 11 hereof."

Clause 9 of the agreement reads as follows:

"The lessee agrees that on termination of the agreement whether by effluxion of time or for any other cause he will at his own expense deliver to the lessor the

Milne J

goods in good order and condition together with all licence papers, registration certificates and any other relevant documents at that time."

Clause 11 of the agreement provides that:

A "Upon termination of the agreement for whatsoever cause the goods shall after delivery thereof to the lessor by the lessee be sold by the lessor for the best price obtainable by him, such price however at all times to be in the sole discretion of the lessor, in which event: (a) if all rentals, costs and other charges hereinbefore have been paid in full to the lessor, the lessor shall pay to the lessee as a repayment of rentals already paid by the lessee the proceeds of the abovementioned sale less B all costs incurred by the lessor in connection with or incidental to the repossession, storage, repair and sale of the goods and (b) if all rentals, costs and other charges hereinbefore mentioned have not been paid in full to the lessor the lessee shall pay to the lessor as liquidated and pre-estimated damages the present value of the unexpired rentals at that date, together with arrear rentals plus interest thereon, if any, less the proceeds of the sale of the goods after deduction of any costs incurred by the lessor in connection with or incidental to the repossession, storage, repair and sale of the goods."

C Clause 3 of the agreement obliged the lessee, inter alia, to be responsible for the comprehensive insurance of the vehicle and for the due maintenance of the vehicle.

The plaintiff alleged that the lessee failed to make the payments due D under the agreement, as a result of which the plaintiff cancelled the agreement. It was further alleged that the plaintiff sold the leased vehicle on 14 October 1975 at a price of R500, and that at that date the present value of the unexpired rentals was R1 660. Also allegedly due were arrear rentals in the amount of R522, 80, interest thereon in the sum of R85, 07 calculated at 1 per cent per month and insurance premiums of R330, E 69; the total claim being R2 345, 56. In his plea the defendant pleaded that he had no knowledge of these allegations, did not admit them and put the plaintiff to the proof thereof. Particulars had been requested as to the method whereby the plaintiff had repossessed the vehicle and the reply was in the following terms:

F "Die voertuig was verkry in ooreenstemming met die relevante bepalings van klousule 8 van die huurooreenkoms en is daarna verkoop teen die beste prys (in terme van die relevante klousule) nadat 'n waardasie ten bedrae van...